ABIB Annual Report 2009

1 "A Treasure …

In the Sands of Time"

Annual Report2008

A production of BBB Advertising

“A Treasure … in the Sands of Time”

The finest specimen of pearls comes

from the “queen conch” native to

the Caribbean. A true treasure in

the sands of time.

ABIB has stood the test of time and

emerged as a gem among financial

institutions in Antigua and Barbuda.

With bailouts & buyouts and

mergers & acquisitions becoming

more prevalent, ABIB remains

resolute in its quest to protect

its assets, cherish its customers,

nurture its staff and help the

community to prosper.

CORPORATE INFORMATION

PROFESSIONAL ASSOCIATIONS

Antigua & Barbuda Chamber of

Commerce and Industry Ltd.

Antigua Hotels & Tourist Association

Antigua & Barbuda Bankers Association

Bank Administration Institute

Caribbean Association of Indigenous Banks

Employers’ Federation

Antigua & Barbuda Marine Association

AUDITORS

PKF Chartered Accountants & Business Advisors

SOLICITORS

Commodore & Associates

Cordell Sheppard

Roberts & Co.

Sylvia N. Camacho O’Mard

CORPORATE SECRETARY

Marcel Commodore

FOREIGN CORRESPONDENTS

Canada

Toronto Dominion Bank

United States of America

Bank of America International

United Kingdom

Lloyds Bank TSB

Caribbean

Barbados National Bank

1st National Bank of St. Lucia

St. Kitts Nevis Anguilla National Bank Ltd.

LOCATIONS

MAIN OFFICE

ABI Financial Centre

156 Redcliffe Street

P.O. Box 1679, St. John’s, Antigua

Tel: (268) 480-2700

Fax: (268) 480-2750

E-mail: [email protected]

Website:www.abifinancial.com

BRANCHES

Woods Centre

Jolly Harbour

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A N N U A L

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MISSIONWe at ABI Bank Ltd. are committed to maximizing benefits

and opportunities accruing to our stakeholders by providing

innovative and competitive products and services and

strategically leveraging our relationships with local, regional

and international affiliates.

VISION ABI Bank Ltd. resolves that by 2010 it will be the financial

services provider of choice for both private and corporate

customers in Antigua and Barbuda and a leading player in

the OECS sub-region with significant global reach.

“The roots of true achievement lie in the

will to become the best that you can

become.” -Harold Taylor, Author

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We believe in:

Guaranteeing consummate customer

satisfaction through superior products and

excellent services;

Maximizing staff potential by providing an

environment which encourages individual

creativity and optimal productivity;

Investing wisely while taking appropriate

business risks in order to achieve rewarding

results;

Holding ourselves accountable to the

highest ethical and regulatory standards;

Adding value to the community by practicing

corporate social responsibility;

Leading in innovation and entrepreneurship.

CORE VALUES

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579111921232529

Chairman’s Remarks

Financial History

Board of Directors

Directors’ Report

Board Committees

Management Team

Human Resources Management

Cherishing Our Communities

Auditors' Report

CONTENTS

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4 "A Treasure …



Chairman

4 "A Treasure …


CHAIRMAN'S REMARKS

INTRODUCTION

On behalf of the Board of ABI

Bank Ltd. (ABIB), I am pleased to

present the Annual Report for

2008 which reflects another year

of growth and profitability with

resultant returns to shareholders,

notwithstanding the challenging

m a r k e t c o n d i t i o n s l o c a l l y,

regionally and internationally.

The financial crisis presently

affecting global economies has

placed considerable pressure on the

performance and capital positions

of a number of international

banks. Unprecedented volatility

in the securities markets has

resulted in the loss of confidence

by investors which, in turn, has led

to the weakening of large financial

institutions abroad. Consequently,

there have been a number

of acquisitions, bankruptcies

and government interventions

throughout the world economies.

The OECS region is not immune

to the fallout from this crisis. The

international market conditions,

combined with the slowdown in

our economy, dictate the need for

increased prudence and vigilance

in 2009.

D u e t o h e i g h t e n e d r i s k

management, we avoided any

d a m a gi n g e x p o s u re to t h e

financial instruments that sparked

the credit crisis in the past year

and have no direct exposure to the

structured products offered on

the markets or to the sub-prime

mortgage loan market.

ABIB therefore remains a strong

financial institution intent on

realizing its vision of becoming

the financial services provider of

choice in Antigua and Barbuda and

a leading player in the Caribbean

with global reach.

FINANCIAL HIGHLIGHTS

The Bank realized pre-tax profit of

$10,014,245 – an increase of 12.6%

over the prior year. Net after tax

profit amounted to $5,290,002.

Our financial highlights for the

year include:

average assets

customer deposits

shareholders’ equity

Based on the performance for

2008, the Bank declared a dividend

pay out of 20 cents on the dollar.

During the past year our subsidiary,

ASD Financial Services in Miami,

realized its target of achieving

profitability by 2008.

OUTLOOK

Economists predict that there will

not be a significant correction in

global economic conditions until

2010 and we anticipate that this

will continue to impact our region.

Conditions for both credit and

liquidity are anticipated to remain

tight in the financial markets as

investors remain wary of the global

financial situation. At the time of

writing, the challenges being

faced by CL Financial Holdings and

Stanford International Group are

making headlines. We expect the

negative images portrayed by the

international media will no doubt

have an impact on the Caribbean’s

financial sector and, by extension,

the financial sector in Antigua

and Barbuda. However, we have

confidence in the resilience of the

sector and, although the banking

environment is likely to remain

ADAPTABILITYEvolving with your clients means adapting

current services to meet their future needs.

Anonymous

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CHAIRMAN'S REMARKS Continued…

challenging in the short-term, we

expect stability to be maintained

in the market.

ABIB maintains a strong operating

platform and has a clear, focused

strategy. Prudent management

of risk, capital and costs will

continue to be a priority and

we are therefore confident that

the Bank is well-positioned to

confront the turbulent economic

conditions that forecasters are

predicting for 2009.

In response to our stakeholders,

we have made more information

available online and we are very

pleased to support this timely

and cost - ef fec t ive del iver y

method. I n 2009, ABIB wi l l

commence the production of a

semiannual financial report as

well as issue notices to customers

about upcoming products and

initiatives.

ABI Bank Ltd has proven its

strength in both favourable

and unfavourable markets. Our

strategy is sound and we intend to

continue in pursuit of our vision.

Our highest priority is to serve

the interests of our stakeholders

and the communities in which

we operate.

Therefore, although 2009 is

anticipated to be a challenging

year for the financial services

sector, the Board is optimistic

about the Bank’s performance

g o i n g f o r w a r d . We i n t e n d

t o s e e k n e w a v e n u e s t o

strengthen our business and

seize any opportunities that

may present themselves in order

to achieve continued growth

and profitability and deliver to

our investors the highest returns

that come from a commitment

to the h ighest s tandard of

performance.

As we begin another financial

year, we are acutely aware that

the achievements of 2008 could

not have been possible without

the commitment and hard work

of the Board, Management and

Employees. I therefore take this

opportunity to express sincere

gratitude to these individuals

for their contribution during the

past year.

I would also like to thank our

loyal customers and shareholders

for their support and confidence

in ABI Bank Ltd. We look forward

to your continued support as we

take the Bank to a higher level

in 2009 while demonstrating

o u r c o m m i t m e n t t o g o o d

governance and the highest

ethical standards.


Chairman

S l i N C h O’M d

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FINANCIAL HISTORY

RISK TAKINGCarefully picking where risks can be

taken can harvest great rewards.

IFRS Consolidated

Non

Consolidated

/Non IFRS

2008 2007 2006 2005 2004

1,073,552 955,539 827,206 649,943 559,619

989,280 872,126 760,971 583,070 513,709

LOANS 713,366 643,010 505,853 444,614 364,466

62,897 61,485 54,804 45,279 33,162

10,014 4,434 7,032 8,231 7,361

21,223 21,223 18,231 16,064 11,635

0.25 0.22 0.41 0.54 0.63

0.18 0.31 0.22 0.37 0.00

8,322 8,309 7,589 6,074 5,891

129 115 109 107 95

RATIOS %

0.52 0.50 0.95 1.36 1.41

8.47 7.63 14.05 20.99 24.81

0.69 0.83 0.73 0.71 0.71

72.11 73.73 66.47 78.76 70.95

6.73 7.10 7.56 8.21 6.85

7.97 8.66 10.27 11.39 9.90

PROFIT & LOSS

41,938 43,913 29,585 22,100 17,026

6,518 15,846 4,051 5,057 5,620

21,121 13,343 12,652 14,611 8,873

37,111 31,716 26,645 21,180 13,019

EXPRESSED IN EASTERN CARIBBEAN DOLLARS

(000’S OMITTED)

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BOARD OF DIRECTORS

Sylvia N. Camacho O’Mard - Chairman

Mrs. O’Mard is an Attorney-At-Law and

was elected as Chairman of the Board in

2003. She is a graduate of Pace University

School of Law in New York, U.S.A. and

the University of the West Indies, Faculty

of Law.

Mrs. O’Mard is a private practitioner and

specializes in Corporate and Real Estate

Law.

Marcel Commodore –Corporate SecretaryMr. Commodore is an Attorney-at-Law,

operating his own law practice in Antigua.

He is a graduate of the University of the

West Indies – Faculty of Law, and the Hugh

Wooding Law School – Trinidad. He is also

a member of the Antigua & Barbuda Bar

Association and the Antigua & Barbuda

Cricket Association.

Mr. Commodore serves on the Boards of

Blue Cap Enterprises and PKB PrivatBank

Limited in Antigua, Banque de l’Union

Hatienne in Haiti and was appointed

Corporate Secretary to ABIB’s Board

in 1990. Mr. Commodore is a former

professional banker and has a wealth of

experience in the field of Corporate Law.

McAlister AbbottMr. Abbott is the Managing Director of

the ABI Financial Group, and has been

with the Group from its inception in 1990.

Mr. Abbott holds a Diploma and a Post

Graduate Diploma in Banking from the

Graduate School of Banking, University

of Wisconsin, Madison.

Mr. Abbott is a founding member of

Provident Bank & Trust of Belize Ltd. and

has a distinguished career in banking

which started in 1968 at Barclays Bank

plc.

Lady Alice RobertsMrs. Roberts is a Certified General

Accountant and Managing Director

of CMT Corporate Services Ltd. She

is also the Administrator of Roberts

& Co, Attorneys-at-law. Mrs. Roberts

is a member of the Society of Trust

and Estate Practitioners, the Association

of Legal Administrators and the

Institute of Chartered Accountants of

the Eastern Caribbean and Secretary to

the Antigua Branch, Lady Alice has been

a member of the ABIB Board since 2002.

Maurice AntonioMr. Antonio is a prominent Antiguan

businessman specializing in heavy-duty

equipment and real estate development.

He has 24 years of managerial experience

in the airline industry, having worked

with Air Canada and BWIA. Mr Antonio is

a founding member of the ABI Financial

Group.

Dion FrancisM r. Fr a n c i s i s a n e n t r e p r e n e u r

and Managing Director of Kennedy’s

Club Ltd. He is a member of the Board

of Directors of the Antigua Brewery Ltd.

and has served on the Board of ABI Bank

Ltd. since 2004.

Eugene AbbottMr. Abbott is an engineer by profession

with extensive experience in the airline

industry. He is currently the CEO of

Bizjet-To-Yacht, a Chevron Texaco

Branded “Corporate and General Aircraft”

refueling company. Mr. Abbott is a

founding member of the ABI Financial

Group.

Clarvis JosephMr. Joseph is a founding member and

Managing Director of Caribseas Inc.,

one of the leading shipping agencies

in Antigua and Barbuda. He is a past

president of the Antigua and Barbuda

Chamber of Commerce and Industry and

has served on the West Indies Cricket

Board. Mr. Joseph has been a member of

the ABIB Board since 2002.

Edward MeyerMr. Meyer is an entrepreneur and has over

20 years of experience in owning and

directing his own business. He is currently

the Managing Director and co-owner of

TransCaribbean Marketing in Antigua.

Mr. Meyer has been a member of the ABIB

Board since 2002

David Straz Jr.Mr. Straz is a distinguished American

businessman who brings a wealth

of expertise to the Board. He is the

US Ambassador at large for Central

America, Honorary Consul for the

Republic of Liberia and the Republic

of Honduras, Commissioner of the

Florida Transport Commission and Trustee

of the David A. Straz Jr. Foundation. Mr.

Straz was appointed to ABIB’s Board in

2005.

Dahlia Francis-EdwardsMrs. Francis-Edwards is a business

woman who serves as the Assistant

Manager at Francis Trading Agency Ltd.,

a family-owned local shipping company.

She holds a BA in International Business

with a minor in Management from Howard

University. Mrs. Francis-Edwards was

elected to the Board of Directors in 2006.

RESPONSIBILITYNurturing high standards ensures that

growth is in the right direction.

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DIRECTORS' REPORT

INTRODUCTION

One year ago, we intimated that

banking was being transformed

on a daily basis. We specifically

commented on the fallout from

the sub-prime crisis, which

resulted in several notable bank

failures. We also alluded to the

fact that we operate in a shrinking

financial space, where events in

one country immediately impact

other countries.

I f there were any i l lusions

regarding this statement, a

recent event in Antigua has

confirmed that fact. The recent

event referred to involves

the Securities and Exchange

Commission (SEC) in the USA

investigating Sir R. Allen Stanford

and three companies of the

Stanford Financial Group. Bank

of Antigua Limited was not

named in the charge but, due to

the common ownership of the

companies, depositors panicked

and there was a run on deposits.

This culminated with five regional

indigenous banks assuming

control of its operations.

There are lessons to be learnt

from this sequence of events and

we are committed to ensuring

that we provide the necessary

level of oversight, not only to

preclude such a development

but to ensure that ABI Bank Ltd.

(ABIB) stands out as a shining

example of how a financial

institution should be managed.

We remain steadfast in our

quest to transform ABIB into a

market leader in all respects.

We continue to make significant

strides and, with the continued

support of management and

staff, we expect to become the

leading bank in Antigua and

Barbuda within a few years. We

are living in a very competitive

world and ABIB is committed

to using technology to improve

on the range and quality of

product offerings made available

to our clients. In this regard,

during the month of March

2009, we launched a co-branded

debit card in collaboration with

the Government of Antigua &

Barbuda that will allow qualified

beneficiaries to purchase goods

from designated merchants in

Antigua and Barbuda.

Very shortly, we will become

the first Bank in Antigua and

Barbuda to make it possible

for our customers to use their

mobile phones to conduct

banking transactions. As well,

we will introduce a Visa branded

Debit Card, which will permit

our customers to access funds

on their accounts from most

countries. Apart from increased

convenience for our customers,

the Debit Card will reduce the

risks faced by merchants from

the high incidence of returned

cheques.

I n addit ion to these local

initiatives, we have taken other

steps to broaden the reach of ABIB,

through a series of strategically

placed investments in financial

institutions and other businesses

in the Caribbean and North

America. We appreciate that it

would take time to realize the

full benefit of these investments,

but we are confident that we will

see the proverbial silver lining in

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DIRECTORS' REPORT Continued…

the performance of these entities.

In short order, these investments

are expected to make a positive

contribution to the performance

of the Bank, and position us to

achieve our stated objective

of becoming the pre-eminent

financial conglomerate in Antigua

and Barbuda.

We now provide a synopsis of

the operating results achieved in

fiscal 2008.

During fiscal 2008, our assets

re co rd e d re a s o n a b l y g o o d

growth and surpassed the $1

billion threshold. In so doing, we

became the first indigenous bank

and the second bank overall in

Antigua and Barbuda to achieve

this milestone. As a result of this

accomplishment, we are now

listed among the top five of the

largest banks operating in the

Eastern Caribbean Currency Union

(ECCU).

Despite this achievement, we

faced a number of challenges

t h ro u g h o u t t h e ye a r. T h e

international financial meltdown

caused a significant reduction in

inward capital flows into Antigua

and Barbuda and a contraction in

economic activity. We experienced

a tightening of liquidity and this,

plus a reduction in the quantity

and quality of available lending

oppor tunit ies, resulted in a

reduction in the growth in our

loans and advances portfolio. All

factors considered, we achieved

satisfactory growth of 10.94%.

As in the past, our loan mix

remained virtually unchanged,

OECS/Government

Debt Securities

Equity Securities

Corporate

Debt Securities

INVESTMENTS

53%

34%

13%

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with credit facilities concentrated

i n t h e a r e a s o f p u b l i c

administration, the distributive

trades, construction and tourism

a n d l a n d d e ve l o p m e n t . To

compensate for the reduction in

attractive lending opportunities,

we increased our investment

in securities. We are pleased to

report that, due to our prudent

investment strategy, we were

not exposed to any loss from the

sub-prime crisis. And while the

effective yield on our investments

decreased from 6.42% to 4.88%,

this was due to the worldwide

underperformance of equities,

resulting from the economic

recession.

The primary source of funds

to support the growth in our

loan and investment portfolios

was customer deposits. In this

regard, our deposits increased

from $872.1M as at September 30,

2007 to $989.3M as at September

30, 2008, an increase of $117.2M

or 13.44%. During the year, we

experienced a major shift in our

deposit mix. We achieved some

success in growing our savings

deposits, which now represent

18.94% of our total deposits.

However, demand deposits

declined significantly, due to

some businesses using these

funds to finance their operations,

rather than approaching the Bank

for financing. Additionally, some

business persons transferred funds

from their chequing accounts to

fixed deposits in order to earn an

increased level of interest income.

As a result of this shift, demand

deposits declined from 21.37% of

total deposits in 2007 to 9.51% of

total deposits in 2008.

In contrast, term (fixed) deposits

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LOANS, ADVANCES AND CREDIT CARDS

Utilities

Construction & Land Development

Distributive Trades

Tourism

Entertainment & Catering

Professional &Other Services

Transportation & Storage

Public Administration

Personal

Credit Cards

Others

Agriculture 0%

Manufacturing 0%

4%

9%

9%

11%

4%

4%6%

26%

24%

2% 1%

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increased by $143.4M, and

now represent 50.04% of our

total deposits. Funds under

Management also increased by

$37.86M, and now represent

12.66% of total deposits. The

increase in these two products

skewed the ratio of high cost

deposits to total deposits and

this is reflected in an increase in

our interest expense. We shall

therefore place greater emphasis

on growing savings and demand

deposits in the year ahead, in an

attempt to reduce the average

cost of funds.

OPERATING RESULTS

The Bank’s tax exempt status

expired at the end of fiscal 2007, so

we commenced paying corporate

income tax from fiscal 2008. The

Bank achieved net income before

tax and losses of associates of

$13.9M in fiscal 2008, representing

an increase of 44.28% over the

prior year. After accounting for

losses incurred by associates and

joint ventures, net income for

the year amounted to $5.27M,

compared with $4.43M in fiscal

2007. This performance resulted

in earnings per share of $0.25

compared with $0.22 the prior

year.

We achieved this result despite

the challenge of the higher cost

of funds referred to earlier. Due

to the increase in our cost of

funds, our Net Interest Income

declined from $43.91M in 2007

to $41.93M in 2008. This decrease

was however offset by an increase

in our fees and commission

income and, in addition, we

benefited from extraordinary

income of approximately $5M.

As a result, our total operating

income increased from $57.25M

to $63.05M. Meanwhile, our

credit loss expense declined by

$9.32M and we experienced an

improvement in our net operating

income.

We continued to exercise good

control over expenditure and,

whereas our net operating income

increased by $15.13M, operating

expenses increased by $5.39M

resulting in a significant increase

in our Operating Profit. With the

changes in the local, regional

and international environment,

we will continue to exercise

prudence in the year ahead to

ensure the continued growth and

advancement of the Bank.


%

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ECONOMIC ACTIVITY

Source: The ECCB Annual Economic and Financial Review 2007 andthe ECCB Economic and Financial Review June 2008

In the f irst quar ter of f iscal

2007/08, economic activity in

Antigua and Barbuda remained

vibrant, although the pace slowed

compared with that of 2006. Based

on preliminary data, real GDP is

estimated to have increased by

6.3%, following an expansion

of 12.2% in 2006. Growth was

broad based, influenced largely by

increased activity in construction

and tourism. The consumer price

index rose by 5.1% during 2007,

on an end of period basis. The

fiscal operations of the central

g o v e r n m e n t r e s u l t e d i n a

lower overall deficit. The total

public sector outstanding debt

increased. Monetary liabilities

and domestic credit rose, while

net foreign assets of the banking

system contracted. Liquidity in

the banking system increased in

2007 and the weighted average

interest rate spread increased

slightly. A smaller overall balance

of payments surplus was recorded,

largely attributable to increased

outflows on the current account.

The double digit growth in

construction activity experienced

since 2005, continued in 2007,

although at a reduced rate. Value

added in the construction sector

is estimated to have expanded

by 12.0% compared with 35.0%

in 2006. The sector’s contribution

to GDP rose by 1.0 percentage

point to 19.9% in 2007. The

expansion was supported in part

by private sector investment in

tourist accommodation, private

d w e l l i n g s a n d c o m m e r c i a l

buildings including a campus

facility by an American university.

The pace of public sector activity

is estimated to have slowed as

some major projects, associated

with preparations for Cricket

World Cup (CWC) 2007, were

completed in the early half of the

year. The focus of activity was on

road development and building

a car park.

For the first six months of 2008,

which represented the second and

third quarters of ABIB’s financial

year, economic activity in Antigua

and Barbuda was estimated to

have expanded, albeit at a slower

rate relative to the corresponding

period of 2007. Growth was driven

mainly by the construction sector

and the tourism industry with

construction activity above the

level in the corresponding period

of 2007. This reflected increased

i nve s t m e n t b y t h e p r i v a t e

sector which focused largely

on commercial development,

including hotels and rental units.

Residential development also

bolstered activity in the sector.

The expansion in construction

activity was supported in part by

an increase in commercial bank

credit for home construction

and renovation. Public sector

activity was mainly associated

with a road rehabilitation and

development programme, an

airport redevelopment project

and the construction of a car

park.

Activity in the tourism industry

increased in the first six months

of 2008, compared with the

corresponding period of 2007,

driven by a rise in stay-over

arrivals. The number of stay-

over visitors increased by 9.0%

to 147,793, in contrast to a 1.2%

contraction in the first half of

2007. Arrivals from the USA rose

by 14.8%, mainly attributable to

increased airlift and marketing

activities. Stay-over arrivals from

Canada increased by 40.4%,

largely on account of favourable

economic developments in that

market. The number of tourists

from the Caribbean grew by

14.1%, in contrast to a decline of

15.7% in the comparable period

of 2007. The increase in Caribbean

visitors was partly attributed to

the hosting of a number of special

events including the 20/20 Cricket

Tournament and the inaugural

Romantic Rhythms Music Festival.

The number of cruise passengers

is estimated to have decreased by

6.0% to 373,735, partly attributable

to a 15.5% reduction to 208 in the

number of cruise calls, as cruise

lines adjusted to the rising cost

of fuel.

T h e c o n s u m e r p r i c e i n d e x

increased by 1.5% during the

review period. The merchandise

trade deficit is estimated to have

widened. The fiscal operations of

the central government resulted

16 "A Treasure …


In a larger overall deficit. The

stock of outstanding public sector

debt fell during the period under

review. Commercial bank liquidity

increased, while the weighted

average interest rate spread

between loans and deposits

narrowed.

Though actual information for

the performance of the Antigua

and Barbuda economy was

unavailable for the third quarter

of 2008, the ECCB forecasted

a decline in economic activity

derived mainly from potential

adverse international economic

developments. The increasing

prospects of faltering economic

growth in major trading partners,

such as the USA and the UK, create

some uncertainty in respect of

increases in tourist arrivals and

foreign direct investments.

Output in the second half of

2008 is projected to be above

the level in the corresponding

period of 2007, fuelled again by

developments in construction and

tourism. The overall deficit of the

central government is projected

to increase, as growth in total

expenditure is likely to outpace

that of total revenue. Downside

risks include a further slow down

in the US economy, reduced airlift

particularly from the USA, the

main market, and unfavourable

weather.

THE FINANCIAL SYSTEM

Source: The ECCB Annual Economic and Financial Review 2007 andthe ECCB Economic and Financial Review June 2008

Monetary liabilities increased by

10.4% to $2,733.4M during 2007,

driven by buoyant economic

activity and inflows of foreign

direct investment. Growth was

recorded for both narrow money

(M1) (4.8%) and quasi money

(12.4%). The expansion in M1

emanated from growth in private

sector demand deposits (8.1%),

as currency held with the public

decreased (6.8%). Strong growth

was reported for all components

of quasi money namely private

sector foreign currency deposits

(27.8%), time deposits (13.8%) and

savings deposits (7.2%).

Domestic credit increased by

1 4 . 7 % to $ 2 1 7 7 . 0 M , p a r t l y

reflecting growth in private sector

borrowing. Outstanding credit to

the private sector rose by 13.3%,

mirroring increases in credit to

both households (18.8%) and

businesses (18.9%). Net credit to

central government increased by

35.2% to $264.5M. This increase

was the combined result of a

15.6% growth in commercial

bank credit and a 16.9% decrease

in government depos i ts at

commercial banks associated with

financing the overall deficit. Of the

other components of domestic

Credit, net credit to non-financial

public enterprises decreased by

35.1%, reflecting an increase in

deposits (27.4%).

Monetary liabilities (M2) increased

by 4.6% to $2,879.2M during

the first half of 2008, partly

attributable to the expansion in

economic activity. Growth in M2

was reflected in both M1 and

quasi-money. M1 increased by

9.7% to $736.8M, on account of

expansions in both private sector

demand deposits and currency

with the public. Quasi money

grew by 3.0% to $2,142.4M.

Of the components of quasi-

money, private sector savings and

time deposits increased by 5.6%

and 5.3% respectively, while

private sector foreign currency

deposits decreased by 13.0%

($36.5M).

Domestic credit expanded by 3.7%

to $2,281.0M during the review

period, largely reflecting growth

in credit to the private sector

and subsidiaries and affiliates.

Private sector credit increased

by 2.0%, a deceleration from the

8.2% of expansion recorded in

the first half of 2007. This outturn

was the result of a decrease in

credit to businesses which partly

offset a 4.5% increase in credit

to households. Net credit to

subsidiaries and affiliates more

than doubled, ref lecting an

increase in loans and a reduction

in deposits.


172 0 0 8

A N N U A L

R E P O R T

The central government’s net

indebtedness to the banking

sector fell by 12.9% to $230.3M,

reflecting a 16.4% increase in its

deposits at commercial banks

combined with a decrease of 1.0%

in total credit, mainly Treasury

bills and debentures held by

commercial banks. In the rest

of the public sector, the net

deposits of the non-financial

public enterprises fell by 2.7%,

as growth in credit exceeded

that of deposits. The net deposits

position of non-financial public

enterprises decreased by 2.7%

($6.5M) mainly on account of an

expansion in credit extended by

commercial banks.

The distribution of credit by

economic ac t ivity indicates

strong growth in commercial

bank credit for distributive trades

and for personal use. Credit for

distributive trades increased by

18.3% ($36.8M), partly associated

with investments in plant and

equipment. Outstanding loans

for personal use grew by 3.3%

($40.5M), largely for the acquisition

of property partly associated with

reduced mortgage rates and

various government initiatives to

increase home ownership. Among

the other economic activities,

credit for construction increased

by 2.2%, reflective of increased

activity in that sector.

RISK MANAGEMENT

The Bank’s Risk Management

program focuses on the following

nine risk categories:

A. Credit risk. The risk from a

debtor’s failure to meet the

terms of any contract with the

bank or failure to perform as

agreed otherwise.

b. Interest rate risk. Risk from

movement in interest rates.

c. Liquidity risk. Risk from a

bank ’s inabi l i ty to meet

its obligations when they

become due, without incurring

unacceptable losses.

d. Price risk. Risk from changes

in the value of portfolios of

financial instruments.

e. Transaction risk. Risk from

problems with service or

product delivery.

f. Compliance risk. Risk from

violations or nonconformance

with laws, rules, regulations,

prescribed practices, or ethical

standards.

g. Strategic r isk . R isk from

adverse business decisions

or improper Implementation

of those decisions.

h. Foreign exchange risk. Risk

from movement of foreign

exchange rates, found in

cross-border investing and

operating activities.

i. Reputat ion r isk . R isk to

earnings or capital arising from

negative public opinion.

The major risks to ABIB include a

deepening of the global financial

market crisis coupled with a further

downturn in the economy of the

USA, a major trading partner of

Antigua and Barbuda; elevated

international prices of food, fuel

and other commodities; reduced

airlift from the USA and the UK;

and adverse weather. These risks

may lead to further increases

in domestic prices and erode

consumers’ purchasing power,

ultimately further dampening

economic activity in Antigua and

Barbuda.

F r o m a r i s k m a n a g e m e n t

perspective, the Bank has been

and will continue to be proactive

in terms of achieving a competitive

edge in the local and regional

financial services marketplace.

For the upcoming financial year,

the Bank will continue to comply

with capital and risk management

standards prescribed by the

Impending Basel II framework.

This framework, which replaces

the original Basel Capital Accord

enacted in 1988, is intended to

promote public confidence in

the banking system by ensuring

that banks properly evaluate the

various risks they face.

COMPLIANCE

ABIB takes a proac t ive r isk

b a s e d a p p r o a c h t o w a r d s

compliance. In this regard, the

Bank employs a two step process

whereby at the first stage the

18 "A Treasure …


Bank engages in extensive due

diligence on all customers. The

Bank’s due diligence process

involves obtaining customer

information in order to verify

customer identity, source of funds

projected transaction activity on

the account, business interests of

the account holder and beneficial

ownership interest. The Bank also

employs the use of compliance

due diligence software such as

Choice “OFAC” Check List, World

Compliance and World Check in

terms of confirming customer

identity and other background

information.

The second step in the Bank

compliance process involves

that of customer transactions

monitoring. In this regard, the

Bank recently employed the use of

customer transaction monitoring

software, notably Hadrian XM3

Software and Alchemy. Both

systems afford the Bank the

oppor tunity to screen high

volumes of transactions and also

spot patterns of behavior that may

occur over time and over several

different transactions.

From a risk based perspective

the Bank currently uses a risk-

based approach to AML/CFT

monitoring which is in accordance

with international best practices.

In this regard, the Bank accords a

risk rating to customers based on

predetermined parameters and

orients its monitoring disposition

according to the level of risk posed

by the customer.


192 0 0 8

A N N U A L

R E P O R T

BOARD COMMITTEES

CORPORATE

GOVERNANCE

Bank.

Members – Sylvia O’Mard,

Chairman; Eugene Abbott;

Marcel Commodore;

McAlister Abbott; Carolyn Philip.

HUMAN RESOURCES &

EDUCATION

Members – Alice Roberts,

Chairman; Dahlia Francis-

Edwards; Sylvia O’Mard;

McAlister Abbott;

Ambassador Joan Underwood;

Bernadette Knight Roberts;

Everett Christian

EXECUTIVE

Members – Sylvia O’Mard,

Chairman; Clarvis Joseph;

Edward Meyer; Eugene Abbott;

McAlister Abbott;.

AUDIT

Members – Eugene Abbott,

Chairman; Sylvia O’Mard,

Clarvis Joseph, McAlister

Abbott, Bernadette Knight

Roberts, Carolyn Philip,

Avonelle Watson (ex officio)

CREDIT

Members – Dion Francis;

Eugene Abbott, Edward Meyer;

Carolyn Philip; Everett Christian,

Peter Queeley

RISK MANAGEMENT &

COMPLIANCE

Members – Marcel Commodore,

Chairman; Edward Meyer;

Clarvis Joseph;

McAlister Abbott;

Carolyn Philip;

Peter Queeley; Everett Christian

TECHNOLOGY

Members – Dion Francis,

Chairman; Alice Roberts;

McAlister Abbott;

Eugene Abbott; Carolyn Philip;

Etienne Charles

TROUBLE LOANS

taken.

Members – Maurice Antonio,

Chairman; Dion Francis;

Marcel Commodore;

McAlister Abbott;

Everett Christian; Carolyn Philip

20 "A Treasure …


COOPERATIONWorking with employees to recognize and

meet their needs allows the team to soar

to new heights.

EVERETT CHRISTIANCountry Manager

JOSEPH WILLIAMSManager - Woods Branch

ETIENNE CHARLESManager - Information Communication and Technology

NALINIE MCDAVIDManager - Special Projects

LISA ANTONIO WALLManager Loans

HEATHER WILLIAMSAssistant Manager Investments

SALLY DAVIS-MEYERAssistant Manager Operations

MARGRETTA RICHARDSAssistant Manager Credit Card

MANAGEMENT TEAM

Corporate Governance & Asset Liability Management

Human Resources & Strategic Development

Credit Card & Process Improvement

Public Relations & Marketing

Administrative Services

Finance & Accounting

Risk & Compliance

Internal Audit

212 0 0 8

A N N U A L

R E P O R T

22 "A Treasure …


During the period under review

ABI Bank Ltd. (ABIB) continued

to invest in its most significant

treasure – the men and women

who make up the organization.

Talent management activities

featured two major initiatives – the

introduction of SuccessFactors®, an

ICT platform to support the Bank’s

performance management and

balanced scorecard programmes,

and an expansion to the Bank’s

ongoing succession planning

activities.

In keeping with its commitment to

continuous quality improvement,

the HR Department tackled the vital

issue of performance appraisals.

Drawing on international best

practices, an extensive search was

conducted for a technological

platform that would facilitate

the integration of the balanced

s c o r e c a r d w i t h i n d i v i d u a l

per formance appraisals and

development plans. The solution

was found in SuccessFactors®.

SuccessFactors® features the

integration of competenc y-

based appraisals and goal plans.

Al l employees are assessed

on the core competencies of

ethics and integrity, customer

fo c u s a n d j o b k n o w l e d g e.

These core competencies are

then complemented by role

s p e c i f i c co m p e te n c i e s a n d

individual goal plans. These

goal plans are informed by the

balanced scorecards thereby

linking organizational success to

individual performance. Moreover,

it will help to ensure that what

gets measured gets done and that

what gets done gets rewarded.

T h i s i n i t i a t i v e w a s f i r s t

launched in 2005. Since then

a cadre of employees, who

have been identified as having

significant leadership potential,

have benefitted from various

developmental interventions

Including classroom training,

HUMAN RESOURCES MANAGEMENT:PROTECTING & NURTURINGOUR GREATEST TREASURE

232 0 0 8

A N N U A L

R E P O R T

24 "A Treasure …


job rotations, special project

ass ignments and execut ive

co a c h i n g. Th i s s i gn i f i c a n t

investment in talent development

has already produced returns as

participants collaborated to create

policy documents and to design a

supervisory training programme.

Building on the past success,

the HR Department introduced

a new feature to fast track the

development of a few high-

potential employees to assume

managerial roles. Consultants,

Lisa James & Associates, were

tasked with grooming these

employees. One of the employees

was exposed to regional best

practices and traveled to Trinidad

to visit a number of establishments

which had been acknowledged

as leaders in the area of talent

management.

Additionally, other employees

drawn from various staff levels

b e n e f i t e d f r o m E x e c u t i v e

Coaching. These employees were

strategically selected based on

the importance of their respective

portfolios as well as their perceived

leadership potential.

ABIB has set the stage for all

employees to benefit from these

individuals to further enhance and

expand our operations.

OF LIVING

ABIB, cognizant of the economic

challenges confronting Antigua

& Barbuda, helped to ease

the squeeze by negotiating a

corporate discount programme

at Ken’s Club. The response was

overwhelming as employees

from ABIB and its various affiliates

signed up en masse to benefit

from volume discounts thereby

cushioning the impact of rising

prices.

At the centre of our growth is

the development of our human

resources and a fur ther ten

staff members benefited from

grants and scholarships to the

University of the West Indies, the

Antigua & Barbuda International

Institute of Technology, Florida

State University in the U.S.A. and

Nipissing University, Ontario,

Canada during the period under

review. Studies ranged from

Banking & Finance and Business

Administration to Management

Studies and Financial Planning.

This report represents a mere

snapshot of the odyssey that is

ABIB’s commitment to protect,

nurture and cherish the men and

women who strive on a daily basis

to contribute to the success of the

organization. ABIB is confident

that this investment will continue

to yield excellent returns.

HUMAN RESOURCES MANAGEMENT Continued…

252 0 0 8

A N N U A L

R E P O R T

At ABI Bank Ltd. (ABIB), we treasure

the communities in which we live

and work. We believe that as we

grow, our communities too must

grow. We believe that while it

is our duty to protect the assets

entrusted to us by stakeholders,

it is equally our responsibility

to invest in our youth and our

communities so that we can

nurture and develop them.

Recognizing the important role

that we play not only in society,

but in preserving our cultural

heritage, ABIB continued its

community involvement with a

number of support initiatives. Our

efforts addressed the needs of our

communities and the passion of

our employees, who combined

their skills and generosity to help

make a difference.

Our 7th annual ‘Career Affair’ in

2008, hosted over 500 students

from secondary schools across the

twin-island state. The programme

continued to increase students’

awareness of the diversity of

employment opportunities and

career paths. Students attended

workshops and/or seminars in

areas of business, technology,

health, finance, medicine and

manufacturing, which provided an

opportunity for them to interact

with professionals from various

disciplines.

For the 3rd consecutive year,

ABIB also partnered with Lehigh

University to offer a scholarship

to attend the “Global Village

for Future Leaders of Business

and I ndustr y.” S cholarship

recipients are able to hone their

business skills, establish a global

network, enhance leadership and

entrepreneurial skills and increase

their knowledge of business and

various industries.

CHERISHING OURCOMMUNITIES

at the 2008 Career Affair.

26 "A Treasure …


The 2007/8 recipient, Brucella

Marsh, got the opportunity to

network with more than 100

individuals from 50 countries.

She received the best presenter

and speaker Award at the country

panel presentation and was

chosen, along with France, to

deliver an address at the Class

Graduation. Brucella was also

exposed to seminars at the United

Nations and the World Bank and

visited the financial and fashion

(retail) districts in New York as

well as Washington DC, where

she studied politics and business

and met with a White House

representative.

ABIB also invested in other

educational programmes by

providing assistance to primary,

secondary and tertiary institutions

through the sponsorship of spelling

bees, debating competitions,

educational expeditions and

other educational and mentoring

initiatives.

Our commitment to improving

t h e q u a l i t y o f l i f e i n o u r

communit ies was exhibited

through the many partnerships

and various contributions made

to the development of various

organizations and individuals.

We supported civic and non-

profit programmes to enrich

seniors’ lives and assisted the

homeless by providing basic

needs. An annual contribution

was made to the Rotary Club

“Meals on Wheels” programme,

which provides for some 100 less

fortunate families and monthly

donations were provided to the

Amazing Grace Foundation’s

‘Adopt a Child” programme. Our

staff volunteered their time to visit

the patients at the Children’s Ward

of the Holberton Hospital to bring

them some Christmas Cheer as

well as the Fiennes Institute for the

Elderly, where a host of supplies

was donated to the residents.

ABIB’s investment in the area of

sports continues to show that

we care about our community

and are prepared to invest in

its future and the welfare of its

citizens. We partnered with the

Antigua and Barbuda Olympic

Association to offset expenses

of the 22-member contingent

attending the 2008 Bei j ing

Olympics, in addition to outfitting

the team for the event. We are also

proud to have supported other

associations and events such as

the CARICOM 10K Run, the Under

13 International Tennis Federation

(ITF) Development Championship

and the Villa Lions Academy as

well as provided funding to help

teams purchase equipment and

uniforms and facilitate training.

CHERISHING OUR COMMUNITIES Continued…

272 0 0 8

A N N U A L

R E P O R T

Culture and heritage is strongly

r e p r e s e n t e d i n t h e b r o a d

spectrum of arts, humanities,

festivals and organizations and

are very important facets of our

tourism industry that must be

preserved. It is on this assertion

that we invested over $150,000

to become the title sponsor

of the 2008 Queen of Carnival

Pageant. We were also headlined

as a “Euphoria Sponsor” of the first

Antigua & Barbuda Music Festival,

“Romantic Rhythms”, which not

only highlighted international

artistes but served as a platform

for boosting the careers of many

local artistes.

We also continued our sponsorship

of the ABIB/Ottos Comprehensive

Steel Orchestra for the 8th

consecutive year.

In 2007/8, over $265,000 was

committed to social programmes

and events as evidence of our

commitment to community.

This allowed us to continue

to achieve one of our core

va lues of “adding va lue to

the community by practicing

corporate social responsibility.”

This was underscored when ABIB

was awarded the 2008 “Good

Corporate Citizen Award” in

recognition of its outstanding

contribution to Social Services

by the Eastern Caribbean Central

Bank (ECCB).

Rutherford (left) and

Queen of Carnival

interact with a

Branch

28 "A Treasure …


ABI BANK LTD.CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30TH SEPTEMBER, 2008

CONTENTSAUDITORS’ REPORT

CONSOLIDATED BALANCE SHEET

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

CONSOLIDATED STATEMENT OF CASH FLOW

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SCHEDULES TO THE CONSOLIDATED INCOME STATEMENT

29303132333469

AUDITORS’ REPORT TO THE SHAREHOLDERS OF ABI BANK LTD.

We have audited the accompanying Consolidated Financial Statements of ABI Bank Ltd., and its subsidiaries (together, the Group), which comprise the Consolidated Balance Sheet as at 30th September, 2008 and the Consolidated Income Statement, Consolidated Statement of Changes in Shareholders’ Equity and Consolidated Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility For The Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with international financial reporting standards. 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.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with international standards on auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control 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. Opinion

In our opinion, the accompanying Consolidated Financial Statements present fairly, in all material respects, the financial position of the Group as at 30th September, 2008, and its financial performance and cash flows for the year then ended in accordance with international financial reporting standards.

ANTIGUA:

31st March, 2009 Chartered Accountants

Chartered Accountants& business advisers

292 0 0 8

A N N U A L

R E P O R T

/ P.O. Box 159 / Upper Redcliffe Street / St. John's / Antigua / W.I.Tel: (268) 462-0827 / 8 Fax: (268) 462-4747 Email: [email protected]

Partner: Omax A. E. Gardner Wilbur A. Harrigan, OBE

Chartered Accountants

30 "A Treasure …


ABI BANK LIMITED CONSOLIDATED BALANCE SHEET AT 30TH SEPTEMBER, 2008

Restated

Notes 2008 2007

ASSETS

Cash, Cash Equivalents and Due from Banks 3 205,032,726 174,592,418

Loans and Advances to Customers 4 693,458,406 631,120,351

Investment Securities 5 115,138,634 91,571,676

Investment in Associates 6 2,954,520 4,853,365

Intangible Asset 7 2,929,220 -

Investment Property 8 3,440,288 3,519,824

Property and Equipment 9 15,526,422 16,279,953

Other Assets 10 35,071,657 33,601,815

Total Assets $1,073,551,873 $955,539,402

LIABILITIES

Due to Banks 11 8,507,933 8,869,272

Due to Customers 12 989,279,578 872,125,891

Other Liabilities 13 12,867,563 13,059,055

Total Liabilities 1,010,655,074 894,054,218

SHAREHOLDERS’ EQUITY

Share capital 14 21,223,440 21,223,440

Share premium - Page 32 22,503,881 22,503,881

Retained earnings - Page 32 3,598,626 6,214,195

Statutory reserve - Page 32 15 14,674,099 10,626,394

Other reserve - Page 32 16 896,753 917,274

Total Shareholders’ Equity 62,896,799 61,485,184

Total Liabilities and Shareholders’ Equity $1,073,551,873 $955,539,402

Approved on behalf of the Board:

: Director : Director

The attached notes on pages 34 to 68 form part of these financial statements.

312 0 0 8

A N N U A L

R E P O R T

INCOME Restated

Schedule 2008 2007

Interest income 1 88,241,780 81,233,483

Interest expense 2 ( 46,303,920) (37,320,449)

Net Interest Income 41,937,860 43,913,034

Fees and commission income (Net) 3 12,959,694 10,998,492

Other operating income 4 8,160,730 2,344,918

Total Operating Income 63,058,284 57,256,444

Credit Loss expense ( 6,518,396) (15,845,631)

Net operating income 56,539,888 41,410,813

EXPENDITURE

Personnel expenses 5 12,329,735 10,193,812

Depreciation of property and equipment 2,961,634 2,790,585

Other operating expenses 6 21,819,477 18,731,569

37,110,846 31,715,966

OPERATING MARGIN 19,429,042 9,694,847

Impairment loss (Note 7) ( 5,440,780) -

NET INCOME BEFORE LOSSES OF ASSOCIATES

AND TAXATION 13,988,262 9,694,847

Share of losses of associates ( 3,824,017) ( 4,989,218)

Share of losses in joint venture ( 150,000) ( 271,173)

NET INCOME BEFORE TAXATION 10,014,245 4,434,456

Taxation (Note 2.23) ( 4,744,243) -

NET INCOME FOR THE YEAR - Page 32 $5,270,002 $4,434,456

Earnings per share for profit attributable to the

equity holders of the parent (EPS) $0.25 $0.22

ABI BANK LIMITED CONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 30TH SEPTEMBER, 2008

32 "A Treasure …


ABI BANK LIMITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYFOR THE YEAR ENDED 30TH SEPTEMBER, 2008

Share Share Retained Statutory Other

Capital Premium Earnings Reserve Reserve

Balance at 1st October, 2006 18,231,476 16,719,951 9,973,052 8,941,672 937,795

Shares issued 2,991,964 5,783,930 - - -

Net Income for the year - Page 31 - - 8,423,610 - -

Dividends - - ( 6,529,112) - -

Statutory reserve appropriation - - (1,684,722) 1,684,722 -

Amortization - - 20,521 - ( 20,521)

Balance at 30th September

2007 as previously reported 21,223,440 22,503,881 10,203,349 10,626,394 917,274

Prior Year Adjustments (Note 28) - - ( 3,989,154) - -

Balance at 30th September

2007 as restated 21,223,440 22,503,881 6,214,195 10,626,394 917,274

Net income for the year - Page 31 - - 5,270,002 - -

Dividends - - ( 3,858,387) - -

Statutory reserve appropriation - - ( 4,047,705) 4,047,705 -

Amortization - - 20,521 - ( 20,521)

Balance at 30th September, 2008 $21,223,440 $22,503,881 $ 3,598,626 $14,674,099 $896,753

332 0 0 8

A N N U A L

R E P O R T

ABI BANK LIMITED CONSOLIDATED STATEMENT OF CASH FLOWFOR THE YEAR ENDED 30TH SEPTEMBER, 2008

Restated

OPERATING ACTIVITIES 2008 2007

Net Income before taxation 10,014,245 4,434,456

Adjustment for:

Loss on disposal of assets 118,405 156,857

Depreciation of property and equipment 2,961,634 2,790,585

Impairment loss 5,440,780 -

Share of Associates’ losses 3,824,017 4,989,218

Share of Joint venture losses 150,000 271,173

22,509,081 12,642,289

Increase in Loans and Advances to Customers ( 63,870,569) ( 139,180,962)

Increase in Due to Customers 117,153,687 111,155,235

Increase in Other Assets ( 2,012,499) ( 14,149,888)

(Decrease)/Increase in Other Liabilities ( 4,935,736) 1,737,565

NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES 68,843,964 ( 27,795,761)

INVESTING ACTIVITIES

Purchase of Property and Equipment ( 2,246,972) ( 3,151,668)

Acquisition of Intangible Asset ( 8,370,000) -

Investment in Associates - ( 1,279,800)

(Purchase)/Disposal of Investment Securities ( 23,566,958) 28,973,767

NET CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES ( 34,183,930) 24,542,299

FINANCING ACTIVITIES

(Decrease)/Increase in Due to Banks ( 361,339) 8,759,197

Proceeds from issuance of ordinary shares - 8,775,894

Dividends paid to shareholders ( 3,858,387) ( 6,529,112)

NET CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES ( 4,219,726) 11,005,979

NET INCREASE IN CASH, CASH EQUIVALENTS AND DUE FROM BANKS 30,440,308 7,752,517

CASH, CASH EQUIVALENTS AND DUE FROM BANKS - 1ST OCTOBER 174,592,418 166,839,901

CASH, CASH EQUIVALENTS AND DUE FROM BANKS - 30TH SEPTEMBER $205,032,726 $174,592,418

34 "A Treasure …


ABI BANK LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAT 30TH SEPTEMBER, 2008

1. CORPORATE INFORMATION

ABI Bank Ltd. is a private limited company incorporated on 5th January, 1990 under section 358 of

the Banking Act No. 14 of 2005 of Antigua and Barbuda. It is licensed and regulated by the Eastern

Caribbean Central Bank (ECCB).

The Bank is engaged in a wide range of services including retail, corporate and investment banking.

Its principal place of business is 156 Redcliffe Street, St. John’s, Antigua.

The Bank is controlled by a Board of Directors and had a staff complement of 129 employees at the

end of the year (2007 – 117 employees).

The subsidiaries are American Brokerage and Investment Group Inc., Verona Investment Limited and

Caribbean United Transfer Corporation S.A. (CUTC – Haiti). American Brokerage & Investment Group

Inc. is incorporated in the United States of America and is engaged in the holding and management

of an investment brokerage company. Verona Investment Limited is incorporated in Bahamas and

is engaged in investment holding activities. CUTC – Haiti is incorporated in Haiti and is engaged in

money remittance business.

The Bank’s interest in Associates and Joint Venture is accounted for by the equity method.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1) Basis of Preparation

These financial statements are prepared in accordance with International Financial Report-

ing Standards (IFRS) on the basis of historical cost and no adjustment has been made to take

into account the effects of inflation, except for equity investments which were revalued. The

Group has adopted the following IFRS, which are relevant to its operations:

IFRS 3 Business Combinations

IFRS 7 Financial Instruments: Disclosures

IAS 1 Presentation of Financial Statements

IAS 7 Cash Flow Statements

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

IAS 16 Property, Plant and Equipment

IAS 18 Revenue

IAS 24 Related Party Disclosures

IAS 27 Consolidated Financial Statements

IAS 28 Investment in Associates

IAS 31 Interests in Joint Venture

IAS32 Financial Instruments: Presentation

IAS 36 Impairment of Assets

IAS 37 Provisions, Contingent Liabilities and Contingent Assets

IAS 39 Financial Instruments: Recognition

IAS 40 Investment Property

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2. SIGNIFICANT ACCOUNTING POLICIES - (Cont’d)

2.2) Statement of Compliance

The financial statements at 30th September, 2008 have been prepared in accordance with

International Financial Reporting Standards (IFRS). The Group’s transition date was 1st

October, 2005.

2.3) Basis of Consolidation

The consolidated financial statements include the assets and liabilities and results of

operations of the Bank and its wholly owned subsidiaries, American Brokerage and Investment

Group, Inc., Verona Investment Limited and Caribbean United Transfer Corporation S.A. for

the year ended 30th September, 2008.

All material intra-group balances, transactions and gains are eliminated on consolidation.

Uniform accounting policies have been applied for like transactions and other events in similar

circumstances. Accounting policies of the subsidiaries have been changed where necessary

to ensure consistency with the accounting policy adopted by the Bank.

2.4) Significant accounting judgements and estimates

In the process of applying the Group’s accounting policies, management has used its

judgements and made estimates in determining the amounts recognised in the financial

statements. The most significant uses of judgements and estimates are as follows:

a) Impairment of loans and advances to customers

The Bank reviews its problem loans and advances to customers at each reporting date to

assess whether an allowance for impairment should be recorded in the income statement.

In particular, judgement by management is required in the estimation of the amount and

timing of future cash flows when determining the level of allowance required. Such estimates

are based on assumptions about a number of factors, and actual results may differ, resulting

in future changes to the allowance.

b) Impairment of equity investments

The Bank’s interest in Associates and Joint Venture is accounted for by the equity method.

Under the equity method the investment is initially recognised at cost and the carrying

amount is increased or decreased to recognize the Group’s share of the profit or loss of the

associates/joint venture after the date of acquisition. After application of the equity method,

the investment is further examined for any impairment loss. Dividends declared by the

investee reduce the carrying amount of the investment.


36 "A Treasure …



2.5) Change in Accounting Policies

The accounting policies adopted are consistent with those used in the previous financial

year.

2.6) Currency Translations

The consolidated financial statements are presented in Eastern Caribbean Dollars which is

the Bank’s functional and presentation currency. The functional currency of the Subsidiary

companies is United States Dollars.

Foreign currency transactions during the year have been translated at the rates ruling on

the dates of the transactions.

Assets and liabilities in foreign currencies at the year end were converted at the rates ruling

at the balance sheet date.

Losses and/or gains arising from foreign currency transactions during the year or from

translation of foreign currency balances at the year end are recognised in the income

statement.

2.7) Financial instruments – initial recognition and subsequent measurement

(i) Date of recognition

Purchases or sales of financial assets are recognised on the trade date, i.e. the date

that the Group commits to purchase or sell the asset.

(ii) Initial recognition of financial instruments

The classification of financial instruments at initial recognition depends on the

purpose for which the financial instruments were acquired and their characteristics.

All financial instruments are measured initially at their fair value.

(iii) Held-to-maturity financial investments

Held-to-maturity financial investments are those which carry fixed or determinable

payments and have fixed maturities and which the Group has the intention and

ability to hold to maturity. After initial measurement, held-to-maturity financial

investments are subsequently measured at amortised cost using the effective interest

rate method, less allowance for impairment.


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2.7) Financial instruments – initial recognition and subsequent measurement (cont’d)

(iv) Financial assets at fair value through profit or loss

An instrument is classified at fair value through profit and loss if it is held for trading or

is designated as such upon initial recognition. Financial instruments are designated

at fair value through profit and loss if the Bank manages such investments and makes

purchase and sale decisions based on their value in accordance with the Bank’s

documented risk management and investment strategy. Upon initial recognition,

attribute transaction costs are recognized in profit or loss when incurred. Financial

instruments at fair value through profit and loss are measured at fair value, and

changes herein are recognized in profit or loss.

(v) Available-for-sale financial investments

Financial assets available for sale are those intended to be held for an indefinite

period of time but which may be sold in response to needs for liquidity or changes in

interest rates, exchange rates or equity prices. After initial measurement, available-

for-sale financial investments are subsequently measured at fair value. Unrealised

gains and losses are recognised directly in equity in the ‘Available-for-sale reserve’.

When the security is disposed of, the cumulative gain or loss previously recognised

in equity is recognised in the income statement. Where the Group holds more than

one investment in the same security they are deemed to be disposed of on a first-in,

first-out basis. Interest earned whilst holding available-for-sale financial investments

is reported as interest income using the effective interest rate method. Dividends

earned, whilst holding available-for-sale financial investments are recognised in

the income statement when the right of the payment has been established. The

losses arising from impairment of such investments are recognised in the income

statement.

(vi) Loans and advances to customers

Loans and advances to customers are financial assets with fixed or determinable

payments and fixed maturities that are not quoted on an active market. After

initial measurement, loans and advances to customers are subsequently measured

at amortised cost using the effective interest rate method, less allowance for

impairment.


38 "A Treasure …



2.8) Financial instruments-derecognition of financial assets and liabilities

(i) Financial assets

A financial asset is derecognised where:

material delay to a third party under a ‘pass-through’ arrangement and either:

(a) the Group has transferred substantially all the risks and rewards of the asset, or:

(b) the Group has neither transferred nor retained substantially all the risks and

rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has

entered into a pass-through arrangement, and has neither transferred nor retained

substantially all the risks and rewards of the asset nor transferred control of the asset, the

asset is recognised to the extent of the Group’s continuing involvement in the asset.

(ii) Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged

or cancelled or expires. Where an existing financial liability is replaced by another from

the same lender on substantially different terms, or the terms of an existing liability are

substantially modified, such an exchange or modification is treated as a derecognition

of the original liability and the recognition of a new liability, and the difference in the

respective carrying amounts is recognised in profit or loss.

2.9) Repurchase and reverse repurchase agreements

Securities purchased under agreements to resell at a specified future date (‘reverse repos’)

are not recognised on the balance sheet. The corresponding cash paid, including accrued

interest is recognised on the balance sheet as a ‘Cash collateral on securities borrowed and

reverse repurchase agreements’. The difference between the purchase and resale prices is

treated as interest income and is accrued over the life of the agreement using the effective

interest rate method.


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2.10) Determination of fair value

The fair value for financial instruments traded in active markets at the balance sheet date is

based on their quoted market price or dealer price quotations, without any deduction for

transaction costs.

For all other financial instruments not listed in an active market, the fair value is determined

by using appropriate valuation techniques.

2.11) Impairment of financial assets

The Group assesses at each balance sheet date whether there is any objective evidence that a

financial asset or a group of financial assets is impaired. A financial asset or a group of financial

assets is deemed to be impaired if, and only if, there is objective evidence of impairment as

a result of one or more events that has occurred after the initial recognition of the asset and

that loss event (or events) has an impact on the estimated future cash flows of the financial

asset or the group of financial assets that can be reliably estimated.

(i) Loans and advances to customers

For loans and advances to customers carried at amortised cost, the Bank first

assesses individually whether objective evidence of impairment exists individually

for financial assets that are individually significant, or collectively for financial

assets that are not individually significant. If the Bank determines that no objective

evidence of impairment exists for an individually assessed financial asset, whether

significant or not, it includes the asset in a group of financial assets with similar credit

risk characteristics and collectively assesses them for impairment. Assets that are

individually assessed for impairment and for which an impairment loss is, or continues

to be recognised are not included in a collective assessment of impairment.


40 "A Treasure …



2.11) Impairment of financial assets (cont’d)

(ii) Held-to-maturity financial investments

For held-to-maturity investments the Group assesses individually whether there is

objective evidence of impairment. If there is objective evidence that an impairment

loss has been incurred, the amount of the loss is measured as the difference between

the asset’s carrying amount and the present value of estimated future cash flows. The

carrying amount of the asset is reduced and the amount of the loss is recognised in the

income statement.

Subsequent reversals of impairment losses realized will be credited to the income

statement.

(iii) Available-for-sale financial investments

For available-for-sale financial investments, the Group assesses at each balance sheet

date whether there is objective evidence that an investment or a group of investments

is impaired. In the case of equity investments classified as available-for-sale, objective

evidence would include a significant or prolonged decline in the fair value of the

investment below its cost. Where there is evidence of impairment, the cumulative loss

- measured as the difference between the acquisition cost and the current fair value, less

any impairment loss on that investment previously recognised in the income statement

- is removed from equity and recognised in the income statement. Impairment losses

on equity investments are not reversed through the income statement; increases in their

fair value after impairment are recognised directly in equity.

iv) Renegotiated loans

Where possible, the Bank seeks to restructure rather than to take possession of collateral.

This may involve extending the payment arrangements and the agreement of new loans'

conditions. Once the terms have been renegotiated, the loan is no longer considered

past due. Management continuously reviews renegotiated loans to ensure that all criteria

are met and that future payments are likely to occur. The loans continue to be subject

to an individual or collective impairment assessment, calculated using the loan’s original

effective interest rate.

2.12) Leasing

The determination of whether an arrangement is, or contains a lease is based on the substance

of the arrangement and requires an assessment of whether the fulfillment of the arrangement

is dependent on the use of a specific asset or assets and the arrangement conveys a right to

use the asset.


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2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.12) Leasing (cont’d)

(i) Group as a lessee

Operating lease payments are not recognised in the balance sheet. Any rentals payable

are accounted for on a straight-line basis over the lease term and included in ‘Other

operating expenses’.

(ii) Group as a lessor

Leases where the Bank does not transfer substantially all the risk and benefits of ownership

of the asset are classified as operating leases. The Group leases its investment property

as an operating lease, thus recognising rental income. Initial costs incurred in negotiating

leases are added to the carrying amount of the leased asset and recognised over the lease

term on the same basis as rental income. Contingent rents are recognised as revenue

in the period in which they are earned. Rental income is included in ‘Other operating

income’

2.13) Recognition of income and expenses

Revenue is recognised to the extent that it is probable that the economic benefits will flow

to the Group and the revenue can be reliably measured. The following specific recognition

criteria must also be met before revenue is recognised:

(i) Interest income and expense

For all financial instruments measured at amortised cost and interest bearing financial

instruments classified as available-for-sale financial investments, interest income or

expense is recorded at the effective interest rate.

(ii) Fee and commission income

The Group earns fee and commission income from a diverse range of services it provides

to its customers. Fee income can be divided into the following two categories:

(a) Fee income earned from services that are provided over a certain period of

time

Fees earned for the provision of services over a period of time are accrued over that

period. These fees include commission income and asset management, custody

and other management and advisory fees. Loan commitment fees for loans that are

likely to be drawn down and other credit related fees are deferred (together with any

incremental costs) and recognised as an adjustment to the effective interest rate on

the loan.


42 "A Treasure …


2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

2.13) Recognition of Income and Expenses (cont’d)

(ii) Fee and commission income (cont’d)

(b) Fee income from providing transaction services

Fees arising from negotiating or participating in the negotiation of a transaction for a

third party - such as the arrangement of the acquisition of shares or other securities or

the purchase or sale of businesses - are recognised on completion of the underlying

transaction.

(iii Dividend income

Revenue is recognised when the Group’s right to receive the payment is established.

(iv) Rental income and expense

Rental income arising on investment property is accounted for on a straight-line basis

over the lease term on ongoing leases and is recorded in the income statement in

‘Other operating income’. Rental expense is recorded in the income statement as ‘Other

operating expense’.

2.14) Cash, cash equivalents and due from banks

Cash and cash equivalents comprises cash on hand, current accounts with central banks and

amounts due from banks on demand or with an original maturity of three months or less.

Due from banks includes placements with banks and financial institutions for over three

months but less than one year.

2.15) Equity Investments

The Group’s investments in its associates and joint venture are accounted for using the equity

method of accounting. An associate is an entity in which the Group has significant influence

and which is neither a subsidiary nor a joint venture.

Under the equity method, the investment in the associates/joint venture is carried in the

balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of

the associates/joint venture. Losses in excess of the cost of the investment in an associate

are recognised only when the Group has incurred legal or constructive obligations on its

behalf. The income statement reflects the Group’s share of the results of operations of the

associates/joint venture. Material profits and losses resulting from transactions between

the Group and the associates/joint venture are eliminated to the extent of the interest in the

associates/joint venture.


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2.16) Intangible Asset

Intangible assets acquired by the Bank are initially recognized at cost. Subsequent to initial

recognition, intangible assets are measured at fair value established through an annual

impairment test. Any increase in value is credited directly to shareholders’ equity and not

recycled (except to the extent that it reverses a revaluation decrease which has been previously

recognized as an expense); and any decrease in value is recognized as an expense (except

to the extent that it reverses a revaluation increase which has been previously credited to

shareholders’ equity.

2.17) Investment Property

The Group holds an investment property, formerly its head office which earns rental income.

Investment property is measured at cost.

2.18) Property and equipment

Property and equipment is stated at cost excluding the costs of day-to-day servicing, less

accumulated depreciation and accumulated impairment in value. Changes in the expected

useful life are accounted for by changing the amortisation period or method, as appropriate,

and treated as changes in accounting estimates.

Depreciation is calculated using the straight-line method to write down the cost of property

and equipment to their residual values over their estimated useful lives. Land is not

depreciated. The assets are depreciated at the following rates:

Buildings and Leasehold Improvement 2%

Equipment 15%

Furniture and fittings 10%

Computer hardware and software 20%

Motor vehicles 20%

An item of property and equipment is derecognised upon disposal or when no future economic

benefits are expected from its use or disposal. Any gain or loss arising on derecognition of

the asset is recognised in the income statement in the year the asset is derecognised.


44 "A Treasure …



2.19) Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that a non-financial

asset may be impaired. If any such indication exists, the Group makes an estimate of the

asset’s recoverable amount. Where the carrying amount of an asset exceeds its recoverable

amount, the asset is considered impaired and is written down to its recoverable amount.

An assessment is made at each reporting date as to whether there is any indication that

previously recognised impairment losses may no longer exist or may have decreased. If such

indication exists, the recoverable amount is estimated. A previously recognised impairment

loss is reversed only if there has been a change in the estimates used to determine the asset’s

recoverable amount since the last impairment loss was recognised.

2.20) Financial guarantees and commitments

In the ordinary course of business, the Group gives financial guarantees, consisting of letters

of credit, guarantees and acceptances.

The Group’s potential liability under acceptances, guarantees and letters of credit is reported

as a contingent liability. The Group has equal and offsetting claims against its customers in

the event of a call on these commitments.

2.21) Thrift Fund

The Bank operates a defined contribution Thrift Fund. The contribution payable to a defined

contribution plan is limited to a fixed percentage of the employees’ base salary and is recorded

as an expense.

2.22) Provisions

Provisions are recognised when the Bank has a present obligation (legal or constructive) as

a result of a past event, and it is probable that an outflow of resources embodying economic

benefits will be required to settle the obligation and a reliable estimate can be made of the

amount of the obligation.


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2.23) Taxation

Income tax expense represents current tax. Income tax expense is recognized in profit or

loss except to the extent that it relates to items recognized directly in equity, in which case

it is recognized in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates

enacted or substantively enacted at the reporting date, and any adjustments to tax payable

in respect of previous years.

The Bank was granted a five (5) year tax exemption by the Government of Antigua and

Barbuda which expired on the 30th September, 2007. The Bank is subject to taxes at the

rate of thirty (30%) for the period November to December 2007 and twenty-five (25%) for

the period thereafter.

2.24) Treasury shares

Own equity instruments which are acquired are deducted from equity and accounted for at

weighted average cost. No gain or loss is recognised in the income statement on the purchase,

sale, issue or cancellation of the Bank’s own equity instruments.

2.25) Fiduciary assets

Assets held in a fiduciary capacity are not reported in the financial statements, as they are

not the assets of the Group.

2.26) Dividends on ordinary shares

Dividends on ordinary shares are recognised as a liability and deducted from equity when

they are approved by the Board of Directors.

Dividends for the year that are approved after the balance sheet date are disclosed as an

event after the balance sheet date.


46 "A Treasure …



2.27) Statutory reserve

Section 14 (1) of the Banking Act 2005, requires that a Bank transfers to a reserve fund at the

end of each financial year a minimum of 20% of its net income until the reserve fund is equal

to its paid up capital.

2.28) Share Premium

Proceeds from the issuance of shares above par value are recorded as share premium.


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Restated

3. CASH, CASH EQUIVALENTS AND DUE FROM BANKS 2008 2007

Cash on hand 8,917,045 12,762,056

Deposit with Central Bank 48,961,028 44,985,749

Due from Banks on demand 34,121,797 67,656,101

Due from other financial institutions 7,000,000 1,815,360

Due from Banks – maturing over 3 months

but less than one year 106,032,856 47,373,152

$205,032,726 $174,592,418

The Bank is required under the Eastern Caribbean Central Bank Act, 1983 (Article 33 of the

Agreement) to maintain a non-interest bearing cash reserve account which when added to cash on

hand must be equivalent to at least 6% of its total deposit liabilities excluding inter-bank deposits.

These funds are not available for the Bank’s day to day operations. The effective yield on cash resources

was 3.93%. (2007: 3.13%).

4. LOANS AND ADVANCES TO CUSTOMERS

Restated

a) Analysis of Loans and Advances to Customers 2008 2007

Personal 140,406,965 90,738,078

Business and Government 433,365,967 454,349,218

Overdrafts 112,898,091 76,417,628

Credit card advances 10,966,633 10,279,210

Accrued interest 15,728,467 11,226,198

713,366,123 643,010,332

Allowance for loans and advances impairment ( 19,907,717) ( 11,889,981)

Total Loans and Advances to Customers $693,458,406 $631,120,351

The effective yield on loans and advances during the year was 11.39% (2007: 12.83%). As at 30th

September, 2008, non productive loans and advances to customers totaled $56,906,848 (2007:

$39,386,227).

48 "A Treasure …


4. LOANS AND ADVANCES TO CUSTOMERS (Cont’d)

b) Allowance for Loans and Advances Impairment

Restated

2008 2007

Balance – 1st October 11,889,981 13,038,752

Credit loss for the year 6,518,396 15,845,631

Other credit loss 1,532,513 874,608

Written off during the year ( 33,173) (17,869,010)

Balance - 30th September $19,907,717 $11,889,981

5. INVESTMENT SECURITIES

Long Term Securities - Bonds 80,583,504 63,702,847

Minority Equity Securities 10,192,911 8,561,238

Securities Under Management 24,362,219 19,307,591

$115,138,634 $91,571,676

Assets Designated as Fair Value Through Profit and Loss

Equity Securities (Quoted) 6,777,347 5,276,108

Equity Securities (Unquoted) 812,150 5,657,871

7,589,497 10,933,979

Available for Sale

Equity Securities (Unquoted) 6,936,310 6,931,045

Held to Maturity

Government Debt Securities (Quoted) 38,954,515 20,060,736

Corporate Debt Securities (Quoted) 17,302,882 37,388,520

Corporate Debt Securities (Unquoted) 44,355,430 16,257,396

100,612,827 73,706,652

Total Investment Securities $115,138,634 $91,571,676

The effective yield on investments during the year was 4.88% (2007 – 6.42%).


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Restated

6. INVESTMENT IN ASSOCIATES 2008 2007

(a) Redcliffe Holdings Limited 2,954,520 2,753,676

(b) Banque de l’Union Haitienne S.A. - 2,099,689

Total $2,954,520 $4,853,365

(a) Redcliffe Holdings Limited

The Bank has a 29% interest (2007: 29%) in Redcliffe Holdings Limited, a company incorporated in

Antigua and Barbuda. Redcliffe Holdings Limited is not listed on any public exchange.

2008 2007


Share of Associate’s profits 200,844 157,653

Dividends received - ( 200,818)

Balance – 30th September $2,954,520 $2,753,676

Share of Associate’s balance sheet

Current Assets 282,065 240,010

Non-current assets 5,725,448 5,851,981

Current liabilities ( 605,623) ( 648,866)

Non-current liabilities ( 2,447,370) (2,689,449)

Net Assets $2,954,520 $2,753,676

Share of Associate’s revenue and profit

Revenue 877,056 854,712

Profit 200,844 157,653

The above financial data relates to the period June 1 to May 31 2008 and 2007.

50 "A Treasure …


6. INVESTMENT IN ASSOCIATES cont’d

(b) Banque de l’Union Haitienne S.A.

The Bank has a 45% interest (2007: 45%) in Banque de l’Union Haitienne S.A. (BUH), a company

incorporated in Haiti. BUH is not listed on any public exchange.

Restated

2008 2007


Advances - 1,279,800

Share of Associate’s losses ( 2,448,833) ( 1,718,010)

Losses applied to Advances 349,144 -

Balance – 30th September $- $2,099,689

Share of Associate’s balance sheet

Loans 33,283,680 32,548,210

Investments 4,714,868 3,239,858

Other Assets 51,760,215 52,503,157

Deposits ( 85,852,173) (83,240,288)

Other liabilities ( 7,457,214) ( 7,306,980)

Net Liabilities $( 3,550,624) $( 2,256,043)

Share of Associate’s revenue and loss

Revenue 7,835,768 7,719,199

Loss ( 2,448,833) ( 1,718,010)


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7. INTANGIBLE ASSET 2008 2007

Cost of Intangible 8,370,000 -

Impairment Loss ( 5,440,780) -

Balance at 30th September $2,929,220 $ -

The Bank purchased 100% of the money remittance business of Societe Caraibeanne de Banque S.A.

(SOCABANK) in Haiti known as Socatransfer. The amount of US$3.1 million was paid for the exclusive

patent, trademark and other intellectual property rights that were expected to benefit the Bank over

a considerable period of time. The value was based on a third party valuation of the business.

However, due to the difficulties experienced in perfecting the licences in the United States of America,

Canada and the Turks and Caicos, the revenues previously anticipated were not forthcoming, thus

the Directors decided that it was prudent to write down the investment.

8. INVESTMENT PROPERTY 2008 2007

Balance at 1st October - Land 860,000 860,000

Balance at 1st October - Building 3,976,827 3,976,827

4,836,827 4,836,827

Accumulated depreciation ( 1,396,539) ( 1,317,003)

Balance at 30th September $3,440,288 $3,519,824

The Bank is the registered owner of an office building located on High Street that formerly housed its

headquarters. The property is presently rented to an associated company. Negotiations are in-train

for the sale of the property.


52 "A Treasure …


9. PROPERTY AND EQUIPMENT

Computer,

Leasehold Furniture Motor

Improvement & Equipment Vehicle Land Total

COST

At 1st October 2007 5,611,165 20,230,024 396,567 2,613,600 28,851,356

Additions 53,426 2,050,509 143,037 - 2,246,972

Disposals - ( 1,028,648) - - ( 1,028,648)

At 30th September 2008 5,664,591 21,251,885 539,604 2,613,600 30,069,680

ACCUMULATED DEPRECIATION

At 1st October 2007 1,071,773 11,355,056 144,574 - 12,571,403

Depreciation 528,800 2,283,575 69,723 - 2,882,098

Disposals - ( 910,243) - - ( 910,243)

At 30th September 2008 1,600,573 12,728,388 214,297 - 14,543,258

NET BOOK VALUE

At 30th September 2008 $4,064,018 $8,523,497 $325,307 $2,613,600 $15,526,422

COST

At 1st October 2006 5,461,136 17,668,755 221,082 2,613,600 25,964,573

Additions 150,029 2,826,154 175,485 - 3,151,668

Disposals - ( 264,885) - - ( 264,885)

At 30th September 2007 5,611,165 20,230,024 396,567 2,613,600 28,851,356

ACCUMULATED DEPRECIATION

At 1st October 2006 581,380 9,297,508 89,494 - 9,968,382

Depreciation 490,393 2,165,576 55,080 - 2,711,049

Disposals - ( 108,028) - - ( 108,028)

At 30th September 2007 1,071,773 11,355,056 144,574 - 12,571,403

NET BOOK VALUE

At 30th September 2007 $4,539,392 $8,874,968 $251,993 $2,613,600 $16,279,953


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Restated

10. OTHER ASSETS 2008 2007

Accrued income 10,293,631 8,403,154

Prepayments 918,347 1,166,782

Due from affiliates 16,440,908 17,596,382

Other receivables 7,418,771 6,435,497

$35,071,657 $33,601,815

11. DUE TO BANKS

Correspondent Banks 8,507,933 8,663,082

Broker accounts - 206,190

$8,507,933 $8,869,272

12. DUE TO CUSTOMERS

Savings 184,525,408 160,299,541

Demand 92,627,379 183,861,060

Term 573,671,031 430,216,718

Funds under management 123,368,602 85,510,040

Accrued interest 15,087,158 12,238,532

$989,279,578 $872,125,891

The effective rate of interest on amounts during the year was 4.93% (2007: 4.47%)

13. OTHER LIABILITIES 2008 2007

Managers’ cheques 3,879,863 5,112,366

Unpresented cheques 1,252,749 1,688,259

Accounts payable and accruals 2,990,708 6,258,430

Corporation tax liability 4,744,243 -

$12,867,563 $13,059,055


54 "A Treasure …


Restated

14. SHARE CAPITAL 2008 2007

Authorised

25,000,000 ordinary shares of $1.00 each $25,000,000 $25,000,000

Issued and fully paid

21,860,440 (2007 – 21,860,440) shares of $1.00 each 21,860,440 21,860,440

Treasury Shares

637,000 shares of $1.00 each ( 637,000) ( 637,000)

$21,223,440 $21,223,440

15. STATUTORY RESERVE

Balance - 1st October 10,626,394 8,941,672

Current year appropriation 4,047,705 1,684,722

Balance - 30th September $14,674,099 $10,626,394

16. OTHER RESERVE

Appraisal surplus on the revaluation of

Land 260,715 260,715

Building 2,047,030 2,047,030

2,307,745 2,307,745

Deficit arising upon the acquisition of the assets

and liabilities of Fidelity Trust Bank Limited ( 1,034,486) ( 1,034,486)

1,273,259 1,273,259

Amortisation ( 376,506) ( 355,985)

$896,753 $917,274

The portion of the reserve, which relates to the building of Fidelity Trust Bank Limited, is being

amortised at a rate of 2% per annum.


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17. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

2008 2007

Carrying Value Fair Value Carrying Value Fair Value

ASSETS

Cash, Cash Equivalents and Due from Banks 205,032,726 205,032,726 174,592,418 174,592,418

Loans and Advances to Customers 693,458,406 693,458,406 631,120,351 631,120,351

Investment Securities 115,138,634 115,990,250 91,571,676 91,953,545

Investment in Associates 2,954,520 2,954,520 4,853,365 4,853,365

LIABILITIES

Due to Banks 8,507,933 8,507,933 8,869,272 8,869,272

Due to Customers 989,279,578 989,279,578 872,125,891 872,125,891

The table above shows a comparison of the carrying amounts and fair values of the Group’s financial

assets and liabilities.

The following describes the assumptions used to determine fair values for the Group’s financial

instruments:

Assets and liabilities for which fair value approximates carrying value

Liquid Financial Instruments

For financial assets and financial liabilities that are liquid or have a short term maturity it is assumed

that the carrying amounts approximate to their fair value. This assumption is applied to demand

deposits and savings deposits.

Fixed Rate Financial Instruments

The fair value of fixed rate interest bearing deposits is based on discounted cash flows using prevailing

rates. These deposits are assumed to approximate their carrying value. This assumption is applied

to term deposits.

Loans and advances to customers are also assumed to approximate fair value.

Quoted Securities

For quoted securities issued, the fair values are calculated based on quoted market prices.


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18. FINANCIAL GUARANTEES AND COMMITMENTS

To meet the financial needs of customers, the Bank enters into various irrevocable commitments and

contingent liabilities.

The outstanding commitments and contingent liabilities are as follows:

2008 2007

Contingent Liabilities

Financial guarantees 1,579,733 2,182,475

Letters of credit 3,075,716 5,515,682

Undrawn Commitments

Loans and Advances approved not yet drawn 121,908,738 77,711,419

Credit Card commitments 21,267,857 20,927,121

Contingent liabilities

Letters of credit and financial guarantees commit the Bank to make payments on behalf of customers

in the event of a specific act, generally related to the import or export of goods. Financial guarantees

and letters of credit carry the same credit risk as loans.

Undrawn commitments

Commitments to extend credit represent contractual commitments to make loans and revolving credits.

Commitments generally have fixed expiry dates, or other termination clauses. Since commitments

may expire without being drawn upon, the total contract amounts do not necessarily represent future

cash requirements. However, the potential credit loss is less than the total unused commitments since

most commitments to extend credit are contingent upon customers maintaining specific standards.

The Bank monitors the term to maturity of credit commitments because longer-term commitments

generally have a greater degree of credit risk than shorter-term commitments.


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18. FINANCIAL GUARANTEES AND COMMITMENTS (Cont’d)

Legal claims

Litigation is a common occurrence in the banking industry due to the nature of the business. The

Group has an established protocol for dealing with such legal claims. Once professional advice has

been obtained and the amount of damages reasonably estimated, the Group makes adjustments to

account for any adverse effects which the claims may have on its financial standing.

At year end, the Group had three (3) unresolved legal claims.

The Group has been advised by its legal advisor that it is possible, but not probable, that these

actions will succeed and accordingly no provision for any claims has been made in these financial

statements.

19. FUTURE RENTAL COMMITMENT

As at 30th September, 2008, the Bank held a lease on its place of operation. The lease is renewable

every two years.

20. FIDUCIARY ACTIVITIES

The Bank provides custody and trustee discretionary investment management services to third parties.

Those assets that are held in a fiduciary capacity are not included in these financial statements.

(a) Repurchase and Reverse Repurchase Transactions (REPOS)

The Bank facilitated repurchase and reverse repurchase transactions in US Government Agency

(AAA) rated securities with Standard Bank Plc, United Kingdom for clients on margin during

the financial year. At 30th September, 2008 this margin value was US$56.22 million (EC$151.79

million) with market value of these assets of US$63.46 million (EC$171.34 million). In margin

transactions, the Bank extends credit to its customers, subject to various internal margin

requirements, collateralized by cash and securities in the customer’s accounts. Such activities

may expose the Bank to off-balance sheet risk in the event that a customer is unable to fulfill his

contracted obligations and the Bank has to purchase or sell the financial instrument underlying

the contract at a loss or in the event that the customer is unable to satisfy margin requirements.

The Bank seeks to mitigate the risks associated with its customer’s activities by monitoring the

margin levels and requiring the customers to deposit additional collateral or reduce their position

when necessary.


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20. FIDUCIARY ACTIVITIES (Cont’d)

(b) Securities

The Bank effects securities transactions for clients on either a cash or margin basis. In a cash basis

transaction, the Bank’s clients pay the securities purchase price in full and the Bank executes the

transactions.

As at 30th September, 2008, the Bank engaged in short selling of securities which resulted in cash

proceeds of US$10.67 million (EC$28.8 million) held in its account at Standard Bank Plc. This short

position was closed on 8th October, 2008.

The Bank’s broker for these transactions is ASD Brokerage and Investment Inc. (a wholly owned

subsidiary of American Brokerage and Investment Group Inc.). ASD Brokerage and Investment

Inc. is a non-clearing brokerage firm. Transactions are cleared through Ridge Clearing and

Outsourcing Solutions Inc., USA.

ABI Bank Ltd. is also a licensed broker of the Eastern Caribbean Securities Exchange.


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21. RELATED PARTY TRANSACTIONS

Parties are considered related if one party has the ability to control and or exercise significant

influence over the other party in making financial and operational decisions. It is further considered

to be a transfer of resources or obligations between related parties regardless of whether a price is

charged.

The related transactions carried out on commercial terms and conditions for the Group are as

follows:-

ASSETS 2008 2007

Cash, Cash Equivalents and Due from Banks 9,618,300 41,348,413

Loans and Advances to Customers 50,324,138 13,071,410

Other Assets 13,473,663 16,117,963

LIABILITIES

Due to Customers 13,221,470 15,693,115

Other Liabilities 810,000 357,777

Income and Expenses

Interest income 4,318,188 61,329

Rental income 198,000 349,200

Management fees 2,484,000 2,378,613

Interest expense 134,922 1,137,024

Occupancy 4,629,900 4,433,470

Key Management Compensation

Salaries and other benefits 1,774,489 1,698,076

Directors’ fees and expenses 500,547 508,380

22. EVENTS AFTER THE BALANCE SHEET DATE

The Group declared dividends in January 2009 totaling $4,316,561 to be paid to shareholders on

record at 30th September, 2008.


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23. EARNINGS PER SHARE

Basic earnings per share are calculated by dividing the net profit attributable to shareholders by the

weighed average number of shares in issue during the year (21,223,440 in 2008 and 19,767,663 in

2007).

24. RISK MANAGEMENT

Introduction

Risk is inherent in the Group’s activities but it is managed through a process of ongoing identification,

measurement and monitoring, and other controls subject to risk limits. This process of risk management

is critical to the Group’s continuing profitability and each individual within the Group is accountable for

the risk exposures relating to his or her responsibilities. The Group is exposed to credit risk, liquidity

risk and market risk, the latter being subdivided into trading and non-trading risks. It is also subject

to operating risks.

Management structure

The Board of Directors is responsible for the overall risk management approach and for approving

the risk strategies and principles.

The Risk & Compliance Committee has the overall responsibility for the development of the risk

strategy.

Management is responsible for implementing principles, frameworks, policies and limits. It is

responsible for the fundamental risk issues and manages and monitors relevant risk decisions.

The Risk Management Department is responsible for implementing and maintaining risk related

procedures to ensure an independent control process. The department is also responsible for

monitoring compliance with risk principles, policies and limits, across the Group. This unit also ensures

the complete capture of the risks in risk measurement and reporting systems.

Internal Audit

Risk management processes throughout the Group are audited annually by the internal audit function

that examines both the adequacy of the procedures and the Group’s compliance with the procedures.

Internal Audit discusses the results of all assessments with management, and reports its findings and

recommendations to the Audit Committee.


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24. RISK MANAGEMENT (Cont’d)

Measurement and reporting systems

Monitoring and controlling of risks are conducted based on limits established by the Group. These

limits reflect the business strategy and market environment of the Group as well as the level of risk

that the Group is willing to accept, with additional emphasis on selected industries. In addition,

the Group monitors and measures the overall risk bearing capacity in relation to the aggregate risk

exposure across all risk types and activities.

Information compiled from all the businesses is examined and processed in order to analyse, control

and identify early risks. This information is presented and explained to the Board of Directors, the Risk

Committee, and the head of each business division. The report includes aggregate credit exposure,

credit metric forecasts, hold limit exceptions, liquidity ratios and risk profile changes. On a quarterly

basis detailed reporting of industry, customer and geographic risks are provided.

Senior management assesses the appropriateness of the allowance for credit losses on a quarterly

basis. The Risk & Compliance Committee receives a comprehensive risk report once a quarter which is

designed to provide all the necessary information to assess and conclude on the risks of the Group.

Mitigation

As part of its overall risk management, the Group uses the principle of matching and on a limited

basis derivative and other instruments to manage exposures resulting from changes in interest rates,

foreign currencies, equity risks, credit risks, and exposures arising from forecast transactions.

The risk profile is assessed before entering into hedge transactions, which are authorized by the

appropriate level of seniority within the Group. The Group actively uses collateral and concentration

limits to reduce its credit risks exposures.

Concentrations arise when a number of counterparties are engaged in similar business activities,

or activities in the same geographic region, or have similar economic features that would cause

their ability to meet contractual obligations to be similarly affected by changes in economic or

other conditions. Concentrations indicate the relative sensitivity of the Group’s performance to

developments affecting a particular industry or geographical location.

In order to avoid excessive concentrations of risk, the Group’s policies and procedures include specific

guidelines to focus on maintaining a diversified portfolio. Identified concentrations of credit risks are

controlled and managed accordingly.


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Credit Risk Management

The Group takes on exposure to credit risk which is the risk that a counterparty will be unable

to pay amounts in full when due, causing the Group to incur financial loss. The ability of such

counterparties to meet contractual obligations would be similarly affected by changing economic

or other conditions.

The Group structures the levels of credit risk it undertakes by placing limits on the amount of risk

accepted in relation to one borrower or groups of borrowers, and to geographical and industry

segments, bearing in mind the prudential guidelines recommended by the Eastern Caribbean

Central Bank (ECCB). Credit risk from financial investments is minimized through holding a diversified

portfolio of investments, purchasing securities and advancing loans only after careful assessment of

the borrower and placing deposits with financial institutions with a strong capital base. Exposure

to credit risk is further managed by obtaining collateral to support lendings and through ongoing

analysis of the ability of borrowers to meet interest and capital repayment obligations. Limits on

the level of credit risk by borrower, product, industry sector and by country must be approved by

the Board of Directors.

An analysis of the Bank’s loans and advances to customers is as follows:

Significant Concentration

i) Credit classified by size of lending

2008 2007

Size Amount Percent of Amount Percent of

$000 $000 portfolio $000 portfolio

Up to 100 74,899 11% 76,881 12%

Over 101 - 500 94,472 13% 94,927 15%

Over 501 - 1,000 49,231 7% 42,215 6%

Over 1,000 494,764 69% 428,987 67%

Total $713,366 100% $643,010 100%

ii) Credit classified by geographic sector

Territory 2008 2007

$ 000 (%) $ 000 (%)

OECS and CARICOM $713,366 100% $643,010 100%


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Credit Risk Management (cont’d)

Significant Concentration (cont’d)

iii) Credit classified by economic sector

2008 2008 2007 2007

Sector $000 % $000 %

Agriculture 233 0.03% 375 0.06%

Manufacturing 2,351 0.33% 1,226 0.20%

Public Utilities 31,075 4.36% 28,472 4.40%

Construction 77,691 10.9% 49,436 7.70%

Distribution Trade 65,731 9.21% 53,968 8.40%

Tourism 59,720 8.37% 40,424 6.30%

Entertainment & Catering 26,824 3.76% 18,422 2.86%

Transportation & Storage 41,324 5.79% 34,113 5.31%

Professional Services 27,290 3.83% 25,833 4.00%

Public Administration 187,615 26.3% 193,610 30.1%

Personal 184,152 25.8% 193,507 30.1%

Other 9,360 1.31% 3,624 0.56%

Total $713,366 100% $643,010 100%

Foreign Exchange Risk Management

Foreign exchange risk is the risk that the value of a financial instrument will fluctuate due to changes

in the exchange rates.

While the substantial portion of the Group’s transactions and assets and liabilities are denominated

in Eastern Caribbean dollars, the Group is still exposed to some level of foreign exchange risk as it

holds customer deposit accounts that are denominated in other foreign currencies mainly United

States Dollars, Pound Sterling and Euro.

In order to manage the risk associated with the movement in currency exchange rates, the Group

maintains investments and cash in each operating currency, which are sufficient to match liabilities

denominated in the same currency. Management also sets limits on the level of exposure to be

maintained by currency and in total for overnight and intra-day positions.

Interest Rate Risk Management

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in

market interest rates. The Group is exposed to interest rate risk when the returns earned from invested

assets are insufficient either to maintain or fulfill minimum returns requirements of its liabilities.


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Interest Rate Risk Management (cont’d)

The Group mitigates its interest rate risk by matching the maturity periods of its assets and liabilities.

The Group also makes decisions on holding its fixed rate securities to maturity to mitigate any interest

rate changes in the market.

The effective interest rates on the Group’s financial assets and liabilities are as set out below:

2008 2007

Loans and Advances to Customers 11.39% 12.83%

Due to Customers 4.93% 4.47%

Liquidity Risk and Funding Management

Liquidity risk is the risk that the Group will be unable to meet its payment obligations when they

fall due under normal and stress circumstances. To limit this risk, management arranges diversified

funding sources in addition to its core deposit base, manages assets taking into consideration liquidity

and monitors future cash flows and liquidity on a daily basis. This incorporates an assessment of

expected cash flows and the availability of high grade collateral which could be used to secure

additional funding if required.

In addition, the Group maintains a statutory deposit with the Eastern Caribbean Central Bank

which when added to cash equal to 6% of amounts due to customers.

The liquidity position is assessed and managed under a variety of scenarios, giving due consideration

to stress factors relating to both the market in general and specifically to the Group.

In order to manage liquidity risks, management sets limits on the minimum level of cash resources

that should be maintained in each operating currency sufficient to meet reasonable demands. On a

weekly basis, management also monitors a number of key liquidity ratios as outlined below:

2008 2007

Cash Reserve/Deposits 6.42% 6.01%

Liquid Assets 24.08% 22.14%

Loans to Deposits 71.61% 73.47%


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Liquidity Risk and Funding Management (cont’d)

The maturity profile of the Group’s assets and liabilities as at September 30, 2008 and 2007 are

outlined below:

0-3 3-6 6-12 1-5 Over

ASSETS Total months months months years 5 years

2008 (000) (000) (000) (000) (000) (000)

Cash, Cash Equivalents and due from Banks 205,033 191,124 - 8,909 5,000 -

Loans and Advances to Customers 693,458 224,810 4,241 9,888 65,714 388,805

Investment Securities 115,139 24,540 6,366 17,804 2,000 64,429

Investment in Associates 2,955 - - - - 2,955

Intangible Asset 2,929 2,929

Investment Property 3,440 - - 3,440 - -

Property and Equipment 15,526 - - - - 15,526

Other Assets 35,072 27,042 16 8,014 - -

TOTAL ASSETS 1,073,552 467,516 10,623 48,055 72,714 474,644

LIABILITIES

Due to Banks 8,508 8,508 - - - -

Due to Customers 989,280 413,520 145,755 193,800 236,205 -

Other Liabilities 12,867 12,867 - - - -

TOTAL LIABILITIES 1,010,655 434,895 145,755 193,800 236,205 -

NET LIQUIDITY GAP $63,897 $32,621 $(135,132) $(145,745) $(163,491) $474,644

2007

TOTAL ASSETS 955,540 363,825 10,630 58,329 69,603 453,153

TOTAL LIABILITIES 894,055 509,431 110,736 253,358 17,492 3,038

NET LIQUIDITY GAP $ 61,485 $(145,606) $(100,106) $(195,029) $52,111 $450,115

Repayments which are subjected to notice are treated as if notice were to be given immediately. However, the

Group expects that many customers will not request repayment on the earliest date the Group could be required

to pay and the table does not reflect the expected cash flows indicated by the Group’s deposit retention history.


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25. CAPITAL

The primary objective of the Group’s capital management is to ensure that the Group maintains

healthy capital ratios in order to support its business and to maximize shareholders’ value. The Group

also seeks to ensure compliance with Eastern Caribbean Central Bank (ECCB) capital requirements.

The Group manages its capital structure and makes adjustments to it in the light of changes in

economic conditions and the risk characteristics of its activities. In order to maintain or adjust the

capital structure, the Group may adjust the amount of dividend payment to shareholders, return

capital to shareholders or issue capital securities.

2008 2007

Deposits/Tier 1 Capital 6.73% 7.10%

Total Capital /Risk Weighted Assets 7.97% 8.66%

Regulatory capital consists of Tier 1 capital, which comprises share capital, share premium and

retained earnings including current year profit. Tier 2 Capital includes revaluation surplus and other

reserves.

26. INVESTMENT IN SUBSIDIARIES 2008 2007

American Brokerage & Investment Group, Inc. 1,552,829 1,568,979

Verona Investment Limited 8,221,824 -

$9,774,653 $1,568,979

27. INVESTMENT IN JOINT VENTURE

The Group has entered into a joint venture agreement with another financial institution for the

provision of financial and application services. Straight Through Processing, Inc. (STP) was incorporated

in Antigua and Barbuda and delivers business-to-business data processing and business process

outsourcing services to small and medium size financial services companies.


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27. INVESTMENT IN JOINT VENTURE cont’d

2008 2007

Balance – 1st October - -

Advances 150,000 -

Share of Associate’s losses ( 150,000) (271,173)

Losses applied to Advances - 271,173

Balance – 30th September $- $-

Share of Joint Venture’s balance sheet

Current Assets 114,516 178,409

Non-current assets 216,217 878,556

Current liabilities (1,656,762) (3,528,007)

Non-current liabilities (3,975,905) (3,528,007)

Net Liabilities $(5,301,934) $(4,463,350)

Share of Joint Venture’s revenue and loss

Revenue 71,676 679,206

Loss ( 838,584) (1,863,264)


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28. RESTATEMENT OF PRIOR YEAR

In 2007 the reported losses for one of the subsidiaries and two associated companies were understated

giving rise to a prior year adjustment of $3,989,154.

Consequently, the 2007 comparative figures have been restated to give effect to following

restatement:-

Previously Restated

Subsidiary Reported Amount Change

Interest expense 36,575,984 37,320,449 744,465

Personnel expenses 10,031,792 10,193,812 162,020

Other operating expenses 18,058,552 18,731,569 673,017

$64,666,328 $66,245,830 1,579,502

Associates

Share of Associates’ losses $2,579,566 $4,989,218 2,409,652

$3,989,154

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SCHEDULE 1 RESTATED

INTEREST INCOME 2008 2007

Due from Banks 7,468,922 5,344,286

Loans and Advances to Customers 75,367,420 67,352,097

Investment Securities 5,046,558 5,778,148

Past due Loans and Advances to Customers - 2,512,212

Other 358,880 246,740

$88,241,780 $81,233,483

SCHEDULE 2

INTEREST EXPENSE

Savings 4,750,483 5,001,433

Demand 1,103,619 2,172,104

Term 32,235,245 26,211,873

Funds under management 7,820,791 3,190,574

Other 393,782 744,465

$46,303,920 $37,320,449

SCHEDULE 3

NET FEES AND COMMISSION INCOME

Portfolio and other management fees 1,130,566 1,316,240

Credit related fees and commissions 5,038,081 4,042,896

Finance fees 816,542 967,402

Service fees 2,836,521 2,710,791

Brokerage fees 3,802,396 831,592

Exchange and revaluation 4,177,572 4,673,861

Total fees and commission income 17,801,678 14,542,782

Brokerage fees paid ( 1,089,710) ( 183,375)

Credit related expenses ( 3,752,274) ( 3,360,915)

Total fees and commission expense ( 4,841,984) ( 3,544,290)

Net fees and commission income $12,959,694 $10,998,492

ABI BANK LIMITED SCHEDULES TO THE CONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 30TH SEPTEMBER, 2008

70 "A Treasure …


RESTATED

SCHEDULE 4 2008 2007

OTHER OPERATING INCOME

Dividend 221,074 254,147

Rental 688,357 628,188

Share Redemption - Visa 2,589,854 -

Stale dated cheques 3,274,264 -

Non-trading income 661,823 890,073

Recoveries 725,358 572,510

$8,160,730 $2,344,918

SCHEDULE 5

PERSONNEL EXPENSES

Salaries, wages and allowances 8,838,077 7,565,031

Staff bonus and gifts 1,335,237 829,980

Social Security and Medical Benefits 680,556 492,390

Uniforms 206,435 213,607

Training 415,855 428,664

Other staff costs 853,575 664,140

$12,329,735 $10,193,812


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RESTATED

SCHEDULE 6 2008 2007

OTHER OPERATING EXPENSES

Office and General Expenses

Office 3,807,593 2,593,831

Printing and stationery 497,242 537,052

Advertising 1,504,648 1,400,367

Travel and entertainment 1,241,972 602,744

Communication charges 357,925 466,295

Bank license 62,841 66,876

Subscriptions and donations 320,790 215,200

Bank charges 742,207 781,305

Computer expenses 811,886 799,687

ATM expenses 191,674 186,741

Security services 293,104 254,949

Loss on disposal of assets 118,405 156,857

Strategic management 39,313 136,809

9,989,600 8,198,713

Occupancy

Office rent and utilities 5,921,601 5,656,277

Repairs and maintenance 237,175 218,512

Cleaning 56,678 66,213

6,215,454 5,941,002

Other expenses

Insurance 481,703 720,403

Audit fees 220,000 161,004

Directors fees and expenses 532,947 508,381

Legal and professional fees 1,895,773 823,453

Management fees 2,484,000 2,378,613

5,614,423 4,591,854

TOTAL $21,819,477 $18,731,569

"A Treasure …


ABIB Annual Report 2009

Documents

Transcript of ABIB Annual Report 2009