Ecobank Rapport Annuel 2006 · 2016. 8. 15. · As at 31 December 611,003 401,272 * Restated for 1...

The Pan African Bank

Ecobank Group

2006 Annual Report

Ecobank Network

Countries in which Ecobank is currently present.

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Ecobank is the leading independent regional bankingGroup in West and Central Africa serving wholesaleand retail customers.

What is our investmentproposition?

We operate in emerging markets with good longterm prospects.

In all our markets, we are recognized as one of theleading banks and we have a growing presence in theinvestment banking sector.

We are well placed to grow revenues and expandmarket share by combining a broad product offeringwith a growing regional presence.

What do we do?

Our business is providing wholesale, retail,investment and transaction banking products andservices to governments and governmentalagencies, multinationals, financial institutions, localcompanies, small, medium and micro enterprises,high net worth individuals and consumers in Africa.

We currently operate in 18 countries in West andCentral Africa.

What is our strategy?

Our goal is to create shareholder value.

To achieve this, we aim to be the leader in regionalbanking in Africa.

We have three strategic priorities at Group level:

� Achieve scale through acquisitions and organicgrowth ;

� Grow our business in existing markets andexpand into new markets ;

� Deliver efficiency through operational andproduct excellence and customer service.

We are creating value…

� In 2006, revenues grew by 47% to US$348 million ;

� Profit Before Tax grew by 75% to US$129 million ;

� Value Added totaled US$142 million.

But there is still more to do.

In this annual report we discuss our business, howit could generate more value for our shareholders,and what we are doing to make it happen.

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2006 Annual Report

» Principal Subsidiaries and Offices » page . . . . . . . . . . 3

» Financial Highlights » page . . . . . . . . . . 4

» Chairman's Address » page . . . . . . . . . . 5

» Directors’ Report » page . . . . . . . . . . 8

» Board of Directors » page . . . . . . . . . 10

» Executive Management » page . . . . . . . . . 14

» Corporate Governance » page . . . . . . . . . 15

» Corporate Social Responsibility » page . . . . . . . . . 19

» Corporate Ethics & Transparency » page . . . . . . . . . 22

» Chief Executive Officer’s Review » page . . . . . . . . . 24

» Manifesto » page . . . . . . . . . 28

» Business and Financial Review » page . . . . . . . . . 29

» Directors' Responsibilities Statement » page . . . . . . . . . 36

» Report of Independent Auditors » page . . . . . . . . . 37

» Consolidated Income Statement » page . . . . . . . . . 38

» Consolidated Balance Sheet » page . . . . . . . . . 39

» Consolidated Statement of Changes in Equity » page . . . . . . . . . 40

» Consolidated Cash Flow Statement » page . . . . . . . . . 41

» Accounting Policies » page . . . . . . . . . 42

» Notes to the Consolidated Financial Statements » page . . . . . . . . . 60

» Five Year Financial Summary » page . . . . . . . . . 83

» Summary of Subsidiaries’ Financials » page . . . . . . . . . 84

» Shareholder Information » page . . . . . . . . . 84

Contents

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Principal Subsidiaries and Offices

Group Office :2, Avenue Sylvanus Olympio - BP 3261 - Lomé (TOGO) - Phone: (228) 221 03 03 / 221 31 68 - Fax: (228) 221 51 19

BeninRue du Gouverneur Bayol01 B.P. 1280 Cotonou - BENINPhone: (229) 21 31 40 23Fax: (229) 21 31 33 85

Burkina-Faso 633, Rue Ilboudo Waogyandé(ex Maurice Bishop)01 B.P. 145, Ouagadougou 01BURKINA-FASOPhone: (226) 50 328 328Fax: (226) 50 318 981

CameroonBoulevard de la Liberté B.P. 582 Douala - CAMEROUNPhone: (237) 343 82 50 / 54

343 84 88 / 89Fax: (237) 343 86 09

ChadAvenue Charles de GaulleN'DjamenaTCHADPhone: (235) 52 43 14Fax: (235) 53 23 45

Cote d’Ivoire Immeuble AllianceAvenue Terrasson de Fougères01 B.P. 4107 - Abidjan 01CÔTE D’IVOIREPhone: (225) 20 31 92 00 / 20 21 10 41Fax: (225) 20 21 88 16

Ghana19, Seventh Avenue Ridge West P.O. Box 16746 Accra North - GHANAPhone: (233) 21 68 11 66 / 67Fax: (233) 21 68 04 28

Guinea BissauAvenue Amilcar CabralB.P. 126Bissau - GUINÉE BISSAUPhone: (245) 72 53 194Fax: (245) 20 73 63

Guinea ConakryAvenue de la RépubliqueB.P. 5687 - ConakryGUINÉEPhone: (224) 30 45 57 77 / 30 45 57 60Fax: (224) 30 45 42 41

Liberia Ashmun & Randall Street, P.O. Box 48251000 Monrovia 10 - LIBERIAPhone: (231) 4788834 / 4788838

4788833Fax: (231) 22 70 29

MaliPlace de la Nation Quartier du Fleuve B.P.E. 1272 Bamako - MALIPhone: (223) 270 06 00Fax: (223) 223 33 05

NigerAngle Boulevard de la Liberté etRue des Bâtisseurs, B.P. 13804Niamey - NIGERPhone: (227) 20 73 71 81Fax: (227) 20 73 72 03 / 04

NigeriaPlot 21, Ahmadu Bello Way P.O. Box 72688 - Victoria IslandLagos - NIGERIAPhone: (234) 1 2626638-44 / 2626710-17Fax: (234) 1 2616568

Senegal8, Avenue Léopold Sédar Senghor B.P. 9095 - Centre Douanes (CD)Dakar - SÉNÉGALPhone: (221) 849 20 00Fax: (221) 823 47 07

Sierra Leone7, Lightfoot Boston StreetP.O. Box 1007 - FreetownSIERRA LEONEPhone: (232) 22 33 01 / 76 88 23 65Fax: (232) 50 51 10 165

Togo 20, Avenue Sylvanus Olympio B.P. 3302 LoméTOGOPhone: (228) 221 72 14Fax: (228) 221 42 37

eProcess International SA 20, Avenue Sylvanus OlympioB.P. 4385 LoméTOGOPhone: (228) 222 23 70Fax: (228) 222 24 34

Ecobank DevelopmentCorporation (EDC)2, Avenue Sylvanus OlympioB.P. 3261 LoméTOGOPhone: (228) 221 03 03 / 221 31 68Fax: (228) 221 51 19

Ecobank Investment CorporationImmeuble Alliance, 4ème Etage Avenue Terrasson de Fougères 01 B.P. 4107 Abidjan 01CÔTE D’IVOIREPhone: (225) 20 21 10 44 / 20 31 92 24Fax: (225) 20 21 10 46

EDC Stockbrokers Limited19, Seventh Avenue Ridge West,P O Box 16746 Accra NorthGHANAPhone: (233) 21 25 17 23 / 21 25 17 24Fax: (233) 21 25 17 34

ESL Securities LimitedPlot 21, Ahmadu Bello WayP. O. Box 72688Victoria IslandLagos – NIGERIAPhone: (234) 1 761 3833 / 761 3703Fax: (234) 1 271 4860

ECV Servicos FinancierosAgencia de Cambios 43 A Avenida Amilcar CabralPraia Santiago - CABO VERDEPhone: (238) 261 78 56Fax: (238) 261 78 60

www.ecobank.com

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2006 Annual Report

In thousands of US dollars, except per share, ratio and headcount data.

At Year end 2006 2005 % Change

Assets 3,503,739 2,199,230 59%Loans and advances to customers 1,919,366 1,022,140 88%Deposits from customers 2,500 178 1,532,478 63%Shareholders' equity 382,088 221,547 72%Total equity 482,315 303,879 59%Book value per share ($) 0.58 0.47* 25%Non - performing loans to total loans (%) 7.9 12.2 37%Headcount (number) 5,860 2,602 125%Branches and locations (number) 305 162 88%

For the Year

Revenues 348,464 236,351 47%Loan loss provision 13,091 14,898 12%Profit before tax 129,299 73,729 75%Profit after tax 86,365 50,939 70%Profit attributable 69,350 41,502 67%

Basic earnings per share (cents) 13 11* 21%Diluted earning per share (cents) 13 11* 21%

Dividend per share (cents) 3 2*

Return on average equity (%) 23.0 23.8 (3%)Return on average assets (%) 3.0 2.5 22%

Other Data

Risk - based capital ratios (%):Total 19.0 21.7Tier 1 19.0 21.7

Number of ordinary shares outstanding (Number in thousands)

Average 518,963 373,545As at 31 December 611,003 401,272

* Restated for 1 for 5 bonus share issue made in 2006

Financial Highlights

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Chairman’s Address

This is my first address as Chairman and I am pleased tosay that I am excited by the prospects for the Group. I strongly believe that we are entering a period of stronggrowth that will further fulfil the vision on which ourinstitution was founded.

2006 was a year of change and progress. Significant stepswere taken to reposition the Group for renewed growthand profitability.

Financial Results

Our 2006 results showed improvements in all keyareas. Total assets grew by 59 per cent to US$3.5 billionand revenues increased by 47 per cent to US$348million. Profit before tax was up 75 per cent to US$129million. Return on average equity was 23 per cent as weincreasingly put the capital raised last year to work.

Strategy

During 2006, a Group-wide strategic plan was adoptedto transform Ecobank from a regional to a pan-Africanbanking Group and from a largely wholesale to a morebalanced wholesale and retail banking Group.Consequently, we are extending our footprint furtherinto Central Africa and also into Eastern and SouthernAfrica. We are also building a strong retail bankingbusiness to complement our core wholesale business.

In Nigeria, one of our largest markets, we moved toimprove our market position and distribution byacquiring the branches and liabilities of one of thebanks that failed to survive the industryconsolidation. We opened a new subsidiary in SierraLeone and expanded our network in the oil-richcountries of Central Africa, one of the fastestgrowing regions in the world, by acquiring thesecond largest bank in Chad.

During the year, we also strengthened our total equitywhich now stands at US$482 million. Ecobank Ghanaand Ecobank Nigeria were listed on their respectivestock exchanges. Ecobank Transnational Incorporated,the parent Company of the Group also listedsimultaneously on the 3 stock exchanges in the sub-region. This is the first ever regional listing in Africa.

Corporate Governance

Chief Philip C. Asiodu retired as Chairman of theCompany at the last Annual General Meeting havingreached the mandatory retirement age. Chief Asioducontributed immensely to the progress of the Groupthrough the years. We will miss his wise counsel andexperience. We thank him immensely for hiscontribution to what Ecobank is today.

We welcome the new members of the board whowere appointed since the last shareholders meeting:Alhaji Isyaku Umar, Andre Siaka and Paolo Gomez.These are persons of immense local, regional andinternational experience who will enrich and strengthenthe board. I believe they can count on your usualconstructive support and co-operation.

During the year, we also made changes to the executivemanagement. Mr Offong Ambah joined the board asan executive director in addition to his currentresponsibilities as Managing Director of EcobankNigeria. Mrs Funke Osibodu, our former ManagingDirector in Nigeria resigned from the Group. We aregrateful for her contribution to the development ofEcobank Nigeria and the Group.

Corporate Social Responsibility

Ecobank Foundation, our corporate philanthropicarm, donated to several activities in 2006. Theseincluded projects in Togo, Nigeria and Mali. TheFoundation seeks to ensure that over time, its activitiescover and are distributed among the countries inwhich Ecobank operates. Up to one percent of theGroup profit after tax is made available to theFoundation for its activities and the Foundation isalso free to source funding from other donors.

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2006 Annual Report

We continue to contribute to the communities weoperate in other important ways. We part-sponsoredtwo of the African world Cup teams and contributed tothe development of journalism talent on the continent.

Through an alliance with one of the leadingmicrofinance institutions in the world, we aresupporting and promoting microfinance lending andactions to alleviate poverty in our countries.

Our emphasis on developing our people and buildingdiversity will hopefully create an increasing pool oftalented African banking professionals that willsupport the development and integration of Africaneconomies. Several of our people have beenrecruited to run important government institutionsand to manage other banks.

Corporate Transparency

Our policies require us to operate to internationalstandards. We have often been at the forefront ofimplementing policies and procedures designed toensure that we comply with anti-corruption, anti-money laundering, anti-terrorism and know-your-customer regulations in the countries in which weoperate. Ecobank also maintains strong policiesrelating to transparency and business ethics, as webelieve this positions and safeguards the Group’sreputation in the long-term.

We are probably the only institution in the sub-regionthat reports in accordance with InternationalFinancial Reporting Standards. The consequences ofthis are that our results are more conservative andmore transparent than those of other comparableinstitutions in the regions.

You would also notice significant changes in thepresentation and contents of our annual report. As partof our policy on corporate transparency, we have alsosignificantly increased the level of disclosure in ourannual reports and accounts in order to make themmore relevant and meaningful to our shareholderswhilst at the same time meeting the statutory reportingand disclosure requirement. We will continue to exploreways in which we can improve our reporting anddisclosure so that shareholders, investors andcustomers are adequately informed about our strategy,performance, activities and businesses.

People

We continue to build capacity through external hiresand internal development. Significant investmentwas made in strengthening our management team.We also refreshed the organizational structure tobetter address changing market conditions.

Across the Group, several changes took places whichwere designed to promote talent and build aleadership team based on merit, diversity and depth.We believe the impact of these actions willincreasingly show through in our performance.

What Makes Ecobank Unique

Ecobank is unique in many ways. Firstly, we have themost regional presence in West and Central Africa ofany bank. This gives us greater insight and scope toserve our customers and exploit opportunities.

Secondly, we have a unique regional identity basedon our founding principles. We started as a regionalbank from the onset with shareholders from over 14countries. This regional identity, coupled withnational representation in our local subsidiariesmeans that we are welcome in all our markets as alocal bank that is part of a larger regional Group.

Thirdly, we are building the leading regional bankbrand as an independent banking Group focused onAfrica. Ecobank is increasingly perceived as a modelof the future integration of the African private sector.As a result, Ecobank is often welcome as a preferredpartner by governments and the private sector.

And fourthly, we are building a broad and deep poolof African talent and managers with the skills andexperience to operate across different markets andcultures. This allows Ecobank to compete andsucceed in some of the more challenging anddifficult markets in our region.

Above all, Ecobank has been successful because it isconsidered an independent regional institutionbelonging to no one country or interest Group. Eachof our subsidiaries is viewed as a local bank, eventhough they belong to a larger Group. The regionalstrategy and independent status of Ecobank arefundamental to the founding principles of Ecobankand to our long-term success.

Chairman’s Address (continued)

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The Future

The growth of the economies of our sub-regioncontinued with a positive growth trend. The WorldBank estimates that Sub-Saharan economies willgrow by 5.6% in 2007, one of the highest growth ratesin the world. Clearly, as a commodity-rich region, oureconomies have benefited from the high prices forcrude oil, gold, cocoa, coffee and other commodities.But we believe these results are a positive indicationthat African economies may now be pointing in theright direction. The other vital signs across thecontinent have also been positive with most civil andpolitical unrests increasingly being resolved.

The banking landscape is becoming more challenging.There is increasing interest and investment byinternational investors in African banks. There isrenewed interest by international banks and banksfrom other parts of Africa. All these point toincreased competition for customers and talent and amore challenging business environment in the future.Whilst 2006 was a year of significant progress for theEcobank Group, it is fair to say that much remains tobe done if we are to achieve our mission of buildingEcobank into a world class African banking Group.

Our priorities for the future are clear: deliver increasedvalue to our stakeholders – shareholders, customers,employees and the communities in which we operate.

Mandé Sidibé Chairman

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2006 Annual Report

Principal Activity

Ecobank Transnational Incorporated (ETI) the parentCompany of the Ecobank Group is a bank holding Company.Its principal activity is the provision of banking and financialservices through its subsidiaries and affiliates. It enjoysspecial fiscal, exchange control and legal rights under anagreement with the Government of Togo.

A review of the business of the Group during the 2006financial year and of likely future developments iscontained in the Business and Financial Review section.

Results

The Group's net profit after tax was US$86 million. Netprofit attributable to the Company was US$69 million. Thedetails of the results for the year are set out in theconsolidated profit and loss statement.

The directors approved the financial statements of theCompany and the Group for the year ended 31st December2006 at the meeting of the Board held on 16th March 2007.Messrs Mandé Sidibé and Arnold Ekpe were authorized tosign the accounts on behalf of the Board.

International Financial Reporting Standards(IFRS)

The accounts of ETI and the Group are prepared inaccordance with International Accounting Standard(IAS). These standards have been revised and are nowreferred to as the International Financial ReportingStandards (IFRS).

Dividend

The directors recommend the payment of 3 cents perordinary share as total dividend based on the totalnumber of shares outstanding as at 31st December2006, which one cent per share has already been paid asinterim dividend in January 2007.

Capitalization Issue

The directors propose a capitalization issue of oneordinary share for every ten ordinary shares.

Capital

At the general meeting of shareholders held on 23rd June2006, the authorized capital of the Company was increasedfrom two hundred (200) million dollars to one billion twohundred fifty million (1,250,000,000) dollars divided into5,000,000,000 ordinary shares of 25 cents each.

Of the 226.4 million rights issue shares approved by theEGM of 11th March 2005, 108.2 million shares remainedunissued as at 1st January 2006. These shares wereissued during the year through a private placement of60.7 million shares and the conversion of convertibleloans of US$38 million contracted during the year into47.5 million shares at a price of $0.8 per share.Following the resolution of the general meeting at theEGM of 23rd June 2006 approving a capitalization issue ofone ordinary share for every five ordinary shares held,101.5 million shares were issued. The total numbers ofissued shares outstanding as at 31st December 2006therefore stood at 611 million.

On 11th September, 2006 all the issued shares of theCompany were listed simultaneously on the three stockexchanges of the West Africa sub-Region, namely, theGhana Stock Exchange (GSE) the Nigerian StockExchange (NSE) and regional stock exchange of theUEMOA Zone, the Bourse Régionale des ValeursMobilières (BRVM), based in Abidjan, Côte d’Ivoire.

Directors and Company Secretary

The names of the directors of the Company and thename of the Company Secretary appear on pages 10 to13 of this report.

As at 31st December 2006, the Board was composed offourteen (14) directors: eight (8) non executive directorsand six (6) executive directors. Mr. Offong Ambahreplaced Mrs Funke Osibodu as Regional Director forNigeria and therefore was co-opted and subsequentlyapproved by the general meeting of 23rd June 2006 as anexecutive director. Messrs Paolo Gomes, Andre Siakaand Isyaku Umar were co-opted as non-executivedirectors and, in accordance with the Articles ofAssociation of the Company, would be submitted for theapproval of the general meeting to be held in 2007. Inaccordance with the succession policy on the board,Chief Philip Asiodu retired as Chairman of the board inJune 2006 after several years of distinguished service tothe Group, being one of its founding shareholders. Mr.Mandé Sidibé was elected to replace him as Chairmanfor a three year term renewable once.

The Board of Directors met eight (8) times during theyear. The three (3) board committees, namely, theGovernance Committee, the Audit and ComplianceCommittee and the Risk Committee met at varioustimes during the year to deliberate on issues under theirrespective responsibilities.

The ad hoc committee appointed in 2005 to handle theproposed combination with FirstBank Nigeria continuedits work until the agreement with FBN elapsed inSeptember 2006.

Directors’ Report

9


Corporate governance and compliance

The Company maintains corporate policies andstandards designed to encourage good and transparentcorporate governance, avoid potential conflicts ofinterest and promote ethical business practices. Seepages 15 to 18 for details.

The board has adopted the International FinanceCorporation (IFC) Corporate Governance principles andmethodology in 2005 to guide the composition and termsof reference of both the board and its committees.

Subsidiaries

As at the end of 2006, Ecobank had operations in 15countries namely Benin, Burkina Faso, Cape Verde,Cameroon, Chad, Côte d'Ivoire, Ghana, Guinea, Liberia,Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.During 2006, work commenced to secure operationallicenses in Guinea Bissau and Sao Tome & Principe and toacquire a bank in the Central Africa Republic all of whichwere realized at the beginning of 2007 thus bringing thetotal number of countries in which the Group hasoperations to 18.

Our investment banking subsidiary, EcobankDevelopment Corporation (EDC), expanded its activitiesand presence during the year and its management wasstrengthened. All the stock market and brokerageactivities within the Group were effectively transferred toEDC and the EDC name adopted for all ourstockbrokerage units in the three capital centres of theregion namely, Abidjan, Accra and Lagos. eProcessInternational SA, our shared services subsidiary wasalso strengthened to play a more strategic role inimproving efficiency and reducing operational costs.

Ecobank Transnational Incorporated has a majority equityinterest in all its subsidiaries, and provides them withmanagement, operational, technical, training, businessdevelopment and advisory services.

Post Balance Sheet Events

There were no post balance sheet events that couldmaterially affect either the reported state of affairs ofthe Company as at 31st December 2006 or the profit forthe year ended on the same date which have not beenadequately provided for or disclosed.

Responsibilities of Directors

The Board of Directors is responsible for the preparationof the financial statements which give a true and fair viewof the state of affairs of the Company at the end of thefinancial period and of the results for that period. Theseresponsibilities include ensuring that:

� adequate internal control procedures are institutedto safeguard assets, prevent and detect fraud andother irregularities;

� proper accounting records are maintained; � applicable accounting standards are followed; � suitable accounting policies are used and

consistently applied;� the financial statements are prepared on the going

concern basis unless it is inappropriate to presumethat the Company will continue in business.

Independent External Auditors

The joint auditors, PricewaterhouseCoopers, Lagos,Nigeria and PricewaterhouseCoopers, Abidjan, Côted'Ivoire have indicated their willingness to continue inoffice. A resolution will be presented to authorize thedirectors to determine their remuneration.

16th March 2007

16th March 2007.

By order of the Board,Company Secretary

Samuel K Ayim

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2006 Annual Report

Board of Directors

Mandé SidibéChairman

Arnold EkpeGroup Chief

Executive Officer

Christian N.Adovelande

Oba A. Otudeko

J. Kofi BucknorKolapo A. Lawson

Evelyne Tall*Andre Siaka Albert K. Essien*

Patrick Akinwuntan*

Isyaku UmarPaolo Gomes

Offong Ambah*

Christophe J. Lawson*

* Executive Directors

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Board of Directors

The Company has a fourteen-member Board ofDirectors, which oversees and directs the seniorteam that manages the Group. The Board of theCompany is made up of six executive members andeight non-executive members coming mostly fromWest and Central Africa, all of them aredistinguished businessmen and professionals.

Mandé Sidibé (Chairman)

Mandé Sidibé is a former Prime Minister of theRepublic of Mali. Before that, he was special advisorto the President of the Republic of Mali. He is a formerDirector of Société Malienne de Financement(SOMAFI). He served with the Central Bank of WestAfrican States (BCEAO) in various capacities includingDirector of BCEAO-Mali and special advisor to thegovernor of BCEAO. He also worked for theInternational Monetary Fund (IMF) in many capacitiesincluding divisional head, Africa Department-IMFand as principal economist, Africa Department.

Arnold Ekpe

Arnold Ekpe returned as the Company Group ChiefExecutive Officer in 2005. He was the Group ChiefExecutive Officer from 1996 to 2001 when he left to joinUnited Bank for Africa, one of the top three banks inNigeria as Chief Executive Officer from 2002 until 2004.He has over 26 years of African and internationalbanking experience having also worked in Europe,South Africa and West Africa for Citibank and FirstChicago. He was Vice President and Head of Africatrade and corporate finance for Sub-Sahara Africa forCitibank. He executed landmark trade and corporatefinance deals in West and Southern Africa. Mr. Ekpeholds degrees in mechanical engineering (1st classhonours) and Business Administration fromManchester University and Manchester BusinessSchool respectively.

Christian N. Adovelande

Christian Adovelande is the President of the ECOWASBank for Investment and Development (EBID) Group.He was Chairman/Managing Director of CaurisManagement SA and managing Director of CaurisInvestissement SA, a regional venture capitalCompany based in Lomé, Togo. He was CompanySecretary and acting general manager for the AfricaPrivate Investment Guarantee Fund (Fonds GARI S.A.)and also held a number of key positions at the WestAfrican Development Bank (BOAD). He representsEBID on the Board of Directors.

Oba A. Otudeko

Ayoola Oba Otudeko is Chairman of severalcompanies in Nigeria and abroad including HoneywellGroup Limited, the Nigeria Stock Exchange, PivotEngineering Company Limited, Honeywell Flour MillsLimited, Broadview Engineering Company Limited,Fan Milk Plc and Pavillon Technologies Limited.

He is also a Director of the First Bank of Nigeria Plc,Guinness Nigeria Plc, British American Tobacco(Nigeria) Plc and several Chambers of Commerce. Heis Chairman of the Nigerian-South African Chamberof Commerce. He is a Director of several overseascompanies including Delmar Overseas Limited. He isa member, Regional Advisory Board of the LondonBusiness School and chancellor of the OlabisiOnabanjo University, the State University of OgunState, Nigeria. He is a former board member, CentralBank of Nigeria (1990 to 1997), a former chairman ofthe National Maritime Authority Nigeria, a formermember of the Constituent Assembly, Nigeria 1988to 1989 and member of the National EconomicSummit Group. He holds the national merit award ofOfficer of the Federal Republic of Nigeria (OFR). Mr.Otudeko is a chartered accountant and a charteredbanker.

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2006 Annual Report

Board of Directors (continued)

Paolo Gomes

Paulo Gomes was an Executive Director of the WorldBank Group (Washington D.C.) from 1998 to 2006.From 1995 to 1998, he worked for the Ministry ofFinance, Planning and Trade of Guinea Bissau wherehe was a Principal Advisor, Director of StrategicPlanning, Public Investment and Debt. In 1996, he wasAssistant to the Director for Business Development ofMonitor Company in Boston, USA; and in 1997, he wasthe Assistant to the Executive Director of CitizenEnergy Corporation, still in Boston, USA. Mr Gomesholds a Certificate in Political Studies from “Institutd’Etudes Politiques” of Paris, France, a BA inEconomic and International Trade from “Institutd’Etudes Libres de Relations Internationales” ofParis, France, and also a Masters with honours inEconomic Policy and Management, from KennedySchool of Government, in Cambridge, USA.

Kolapo A. Lawson

Kolapo Lawson is the Chief Executive Officer of adiversified industrial and trading Group with operationsin the United Kingdom and across West Africa. He isthe Chairman of Polfa Nigeria and Director of twopublicly quoted companies: Beta Glass PIc. andPharma-Deko PIc. He was a Director of EcobankNigeria from 1989 to 1997 and of Ecobank Togo from1990 to 1993. Mr. Lawson has a degree in Economicsand is a fellow of the Institute of CharteredAccountants in England and Wales and of theInstitute of Chartered Accountants of Nigeria.

Isyaku Umar

Isyaku Umar started his career with UAC of Nigeriafrom 1972 to 1976, he was employed in the KanoState Government and was at various timesSecretary of the Draught Relief Committee, PrincipalPrivate Secretary to the Military Governor. Followingthat, he became the General Manager of Mai-Naisaraand Sons Ltd from 1977 to 1979 and the ManagingDirector of Tofa General Enterprises Ltd. from 1979to date. Mr Umar holds a B. Sc. Social Sciences,Economics from the University of Pittsburgh, and aMasters of Public Administration from USA.

J. Kofi Bucknor

Kofi Bucknor is a principal of Kingdom Zephyr AfricaManagement Company and the Chief ExecutiveOfficer of J. Kofi Bucknor & Associates in Ghana. Heis an advisor to Prince Alwaleed Bin TalaI BinAbdulaziz Al Saud of Saudi Arabia. He is a formerChairman of the Ghana Stock Exchange and he servedas Managing Director of CAL Merchant Bank inGhana, Executive Director, Corporate Finance, atLehman Brothers in London, treasurer of the AfricanDevelopment Bank in Abidjan, Côte d'Ivoire and Vice-President of Chemical Banking, New York.

Andre Siaka

André Siaka is the Chief Executive Officer ofCameroon Brewery Limited since 1988. Before that,he worked with “Société Générale” in Paris. Mr Siakais a qualified as Engineer from “Ecole Polytechnique”de Paris, France.

Evelyne Tall

Evelyne Tall is Regional Head for the UEMOA Zone(Benin, Burkina Faso, Côte d'Ivoire, Guinea Bissau,Mali, Nigeria, Senegal and Togo) and Cape Verde. Shestarted her banking career in 1981 with Citibank inDakar, Senegal where she worked in various areas,including credit, financial institutions, liabilitymanagement and finally with the regional financialinstitutions unit. She left Citibank to join EcobankMali as Deputy-Managing Director in 1998, and wasmade Managing Director in 2000. The same year, shewas transferred to Ecobank Senegal as ManagingDirector. She was appointed Regional Head of theUEMOA Zone in October 2005. Mrs Tall holds aBachelor’s degree in English from the University ofDakar, Senegal and a diploma in InternationalTrade/Distribution and Marketing from « Ecoled’Administration et de Direction des Affaires» ofParis, France.

13


Offong Ambah

Offong Ambah is the Managing Director of EcobankNigeria and Regional Head for Nigeria. Between 1985and 1991 he worked with International MerchantBank and City Trust Merchant Bank in Nigeria. In1991 started work with Ecobank. He became aGeneral Manager of Ecobank Nigeria and worked inthe Treasury, Corporate Finance, Credit and RetailBanking departments. In 1999, he was transferred toLiberia to set up Ecobank Liberia as ManagingDirector. He left the Ecobank Group in 2002 for UnitedBank for Africa PLC where he worked as ExecutiveDirector. He left UBA in 2005 and was appointedInterim Chairman of the Interim Board of directors ofAllstates Trust Bank by the Central Bank of Nigeria. InMarch 2006, he returned to Ecobank Group asManaging Director of Ecobank Nigeria and RegionalHead of the Nigeria Zone. Mr. Ambah holds a BScEconomics from the University of Lagos and a MScEconomics from the University of Ibadan, Nigeria.

Albert Kobina Essien,

Albert Essien is Regional Head for the WAMZ (Ghana,Guinea, Liberia, Sierra Leone and Gambia). He startedhis banking career in 1986 with the NationalInvestment Bank in Accra, Ghana. He joined theCorporate Banking Department of Ecobank Ghana in1990. In 1997, he became Country Risk Manager. Hewas appointed Deputy-Managing Director in 2001and became Managing Director in December 2002.He was appointed Regional Head of the WAMZ inOctober 2005. Mr Essien holds a B.A. (Hons) inEconomics (1979) from the University of Ghana,Legon, Ghana.

Patrick Akinwuntan

Patrick Akinwuntan is Executive Director in charge ofOperations, Technology & Retail Bank. He is also theManaging Director of eProcess. He joined Ecobank in1996 as Head of Commercial Banking and WesternZone II of Ecobank Nigeria. He then held thefollowing positions in the Group: Group FinancialController, Executive Director (Consumer andCommercial Banking) at Ecobank Nigeria. BeforeEcobank, he worked for Ernst and Young,Manufacturers Merchant Bank, and SpringfountainManagement Consultants in Lagos. Mr. Akinwuntanholds a Master’s Degree in Business Administration(Finance) and is a Fellow of the Institute of CharteredAccountants of Nigeria (FCA) and an associate of theInstitute of Taxation (ACTI).

Christophe Jocktane-Lawson

Christophe Jocktane-Lawson is Executive Director incharge of Corporate Development & Wholesale Bank.He started his banking career in 1985 with Citibank inLibreville, Gabon; he worked in various capacities asa Management Associate, Relationship Manager,Private Sector Head, Public Sector Head, BranchManager, Corporate Bank Group Head, RiskManager, and Deputy General Manager. He leftCitibank and joined Ecobank Benin as GeneralManager in 2000. He later became the Deputy-Managing Director and then Managing Director in2002. Mr Jocktane-Lawson holds a Master’s degreein Finance from Institut d’études Politiques of Paris,France and Bachelor’s degree in Economics from“Université Paris XIII”, France.

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2006 Annual Report

Executive Management (as at 31 January 2007)

Group Executive Management

Arnold Ekpe Group Chief Executive Officer

Evelyne Tall Regional Head, UEMOA

Albert Essien Regional Head, WAMZ

Abou Kabassi Regional Head, CEMAC

Offong Ambah Regional Head, Nigeria

Christophe Jocktane-Lawson Head, Corporate Development & Wholesale Bank

Patrick Akinwuntan Head, Operations, Technology & Retail Bank

Antoine Kayembe Nzongola Group Chief Risk Officer

Laurence do Rego Group Chief Financial Officer

Robert Kwami Group Chief Audit & Compliance Officer

Ronke Wilson Group Chief Human Resources Officer

Samuel Ayim Company Secretary / Group Chief Legal Officer

Country Heads

Cheick Travaly Benin

Aboubacar Youssoufou Burkina Faso

Abou Kabassi Cameroon

Abdel Kader Lawani Cape Verde

Kerim Mahamat Ali Chad

Martin Djedjes Côte d’Ivoire

Samuel Ashitey Adjei Ghana

Anasthasie Darboux Guinea Bissau

Assiongbon Ekué Guinea Conakry

Esijolone Okorodudu Liberia

Yves Coffi Quam-Dessou Mali

Charles Daboiko Niger

Offong Ambah Nigeria

Ehouman Kassi Senegal

Karen Akiwumi-Tanoh Sierra-Leone

Roger Dah-Achinanon Togo

Specialized Subsidiaries

Patrick Akinwuntan eProcess International SA (Togo)

Michael Ashong Ecobank Development Corporation (Togo)

Mahama Iddrissu Ecobank Stockbrokers Limited (Ghana)

Tunde Ayeni ESL Securities Limited (Nigeria)

Adonis Séka Ecobank Investment Corporation (Côte d'Ivoire)

15


Commitment to Corporate Governance

The Ecobank Group is committed to ensuring goodcorporate governance. The Group believes that goodcorporate governance enhances shareholder value.Ecobank has been a pioneer in West African bankingin institutionalizing corporate governance principlesas part of the Group’s corporate culture. To this endEcobank aims at complying with best internationalpractices on corporate governance. Adherence tocorporate governance principles is articulated in anumber of corporate documents. The Articles ofAssociation of the Company and those of itssubsidiaries define the respective roles ofmanagement, the board of directors andshareholders (including the protection of minorityrights) in the administration of the Group. The Grouphas standard written rules for the internal operationof the boards of directors, a corporate governancecharter, a code of conduct for directors and rules onbusiness ethics for staff, all of which aim at ensuringtransparency and accountability within the Group.

The board of directors has adopted the IFC principlesand methodology on corporate governance to guideits corporate governance framework. The Group’sgovernance practices are also guided by the BasleCommittee standards on corporate governance.

In 2006, the board formally adopted the IFC’ssuggested definition of an independent director forapplication throughout the Group. The Board alsoadopted the following criteria for the appointment ofnon-executive directors.

� Independence – Although not all non-executivedirectors need to meet the independent directordefinition referred to above, all directors shouldbe capable of exercising independent judgmentand decision-taking.

� Demonstrated business acumen – Strongbusiness experience and a provenunderstanding of corporate and businessprocesses through a successful track record anda strong reputation in the business community.

� Leadership and Board Experience – Arecognized ability to add value and displayleadership at board level and an ability to assertbalanced and constructive views at board level.

� Special Technical Skills or Expertise –Experience in banking (particularly retailbanking but also commercial and/or investmentbanking), accounting, and/or law and expertisenot readily available to the executive team wouldbe valuable especially if this professionalexperience is in emerging markets.

� Integrity – High level of integrity andprofessional and personal ethics and valuesconsistent with those of the Company.

� Character – Strength of character and abilityand willingness to challenge and probe; soundbusiness judgment; strong interpersonal skills;and the ability to listen carefully andcommunicate with clarity, objectivity and brevity.

� Time Commitment – Sufficient time to effectivelycarry out duties of a non-executive director.

� Additional Considerations – Importance ofbringing more diversity to the board in terms ofage, gender, demographics, etc.

Guided by the Code on Non-Executive Directors of theNational Association of Corporate Directors (NACD) ofthe United States of America, the board adoptedstandard evaluations tools to help assess theperformance of the board as a whole as well as that ofindividual directors.

Governance Structure within the EcobankGroup

The Ecobank Group corporate governance documentsoutline corporate governance policies and clarifygovernance structures throughout the Group.

The key principles underlying the Group's governancestructure are as follows:

� The parent company acts as a "strategicarchitect" with limited involvement inoperational management and decision makingat subsidiaries level. It sets the overall strategyand direction of the Group, develops policies andprocedures and monitors them through reviewsand audits to ensure compliance not only withGroup strategy, policies and procedures but alsowith local laws and regulations.

Corporate Governance

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2006 Annual Report

� Operational decision-making is individualizedand maintained at a level, as close as possible torequired action and customers.

� Individual accountability and responsibility areinstitutionalized and embedded throughempowerment and the granting of relevantlevels of authority.

� Coordination at the corporate centre and Grouplevel is achieved through high levels ofinteraction between parent company and itssubsidiaries as well as amongst subsidiaries atboard and executive management levels.

� Clear terms of reference and accountability arelaid out for committees at board and executivelevels. There is effective communication andinformation sharing outside of meetings. TheGroup operates an ‘open-door’ policy.

The following are the governance units within theGroup:

� The Company Board of Directors � Country Board of Directors � Group Executive Management Committee � Country Executive Management Committee � Annual Country Heads Meeting.

Appropriate sub-committees are also set up, eitheron a permanent or ad hoc basis to handle issues asthey arise. A brief overview of the roles andresponsibilities of each of the governance units isprovided in the following paragraphs.

Board of Directors

The Company Board of Directors is elected by, andaccountable to, the Company's shareholders for theproper and effective administration of the EcobankGroup. Their primary responsibility is to foster thelong-term success of the Company, consistent withits fiduciary responsibility to the shareholders. TheGroup’s governance charter requires the Board ofDirectors to be guided by the following principles:

� Clear delineation and segregation ofresponsibilities between executive managementand board to ensure non interference of the boardin the operational management of the Group ;

� Objective judgment on corporate affairsindependent of executive management ;

� Actions on a fully informed basis, in good faith,with due diligence and care and in the bestinterest of the Group and its shareholders ;

� Compliance with applicable laws and regulationsin line with Group strategy and direction ;

� Local legislation to prevail in the event of anyconflict between Group policies and local laws ;

� Transparency and avoidance of conflict of interestbetween directors and the business of theEcobank Group ;

� Full disclosure of accurate, adequate and timelyinformation regarding personal interests ofdirectors.

The board recently approved the enlargement of itsmembership to include five additional executivedirectors. With the retirement of the former Chairman,Chief Philip C Asiodu and co-option of three new non-executive directors, the membership of the Board is nowfourteen, comprising six executive and eight non-executive directors (refer to pages 10 to 13). The boardhas a policy of ensuring that there are more non-executive directors than executives on the board.

The board has three committees, namely, theGovernance Committee, the Audit and ComplianceCommittee and the Risk Committee. The currentcomposition and terms of reference of thecommittees are summarized below:

Governance Committee

Composition

In 2006, the Committee comprised of four members(the Board Chairman (for the time being), the ChiefExecutive Officer and two non executive directors –Messrs Christian Adovelande and Oba Otudeko). TheCompany Secretary is the secretary to the Committee.

Responsibilities

� Formulates, reviews and generally ensuresimplementation of policies applicable to all unitsof the Group and ensure good governancethroughout the Group ;

� Manages the relationship between the Companyand its shareholders and subsidiaries, includingrelationships with the boards of subsidiaries ;

Corporate Governance (continued)

17


� Formulates new and reviews existing Group-wide policies including organizational structure ;

� Handles relationship with regulators and thirdparties ;

� Manages board affairs in between the meetingsof the board or when the board is not sitting ;

� Recommends the appointment of executive andnon-executive directors ;

� Reviews the human resources strategy andpolicies of the Group and the remuneration ofsenior executives.

Audit and Compliance Committee

Composition

Membership in 2006 was composed of two non-executive directors (Messrs Mandé Sidibé and KofiBucknor) and two shareholders (Social Security andNational Insurance Trust of Ghana represented by itsGeneral Manager, Finance, Mr. Kwasi Boatin; and Mr.Ayi A. Amavi) with the Chief Executive Officer inattendance, where appropriate.

All members have business knowledge and skills andfamiliarity with accounting practices and concepts.

The Group Chief Audit and Compliance Officer andthe Group Chief Financial Officer serve as thesecretaries to the committee.

Responsibilities

� Reviews internal controls including financial andbusiness controls ;

� Reviews internal audit function and audit activities ;� Facilitates dialogue between auditors and

management regarding outcomes of audit reviews ;� Makes proposals with regard to external

auditors and their remuneration ;� Works with external auditors to review annual

financial statements before full board approval ;� Ensure compliance with all applicable laws,

regulations and operating standards.

Risk Committee

Composition

Composed of four members in 2006, namely, MessrsKolapo Lawson, as Chairman, Christian Adovelande,Kofi Bucknor and the Group Chief Executive Officer.Members have good knowledge of business, finance,banking, general management and credit. The GroupChief Risk Officer serves as Secretary to the Committee

Responsibilities

� Participates in the determination and definitionof policies and guidelines for the approval ofcredit, operational, market/price and other riskswithin the Group; defining acceptable risks andrisk acceptance criteria ;

� Sets and reviews credit approval limits formanagement ;

� Reviews and ratifies operational and creditpolicy changes initiated by management ;

� Ensures compliance with the bank's credit policiesand statutory requirements prescribed by theregulatory or supervisory authorities ;

� Reviews periodic credit portfolio reports andassesses portfolio performance ;

� Reviews all other risks i.e. technology, market,insurance, reputation, regulations, etc.

Country Boards of Directors

Ecobank subsidiaries operate as separate legal entitiesin their respective countries. The Company is themajority shareholder in all the subsidiaries but hostcountry citizens and institutions are typically investorsin the local subsidiaries. Each subsidiary has a board ofdirectors, the majority of whom are non- executivedirectors.

The Group Governance Charter requires that countryboards be guided by same governance principles as theCompany. As a rule, but subject to local regulations andthe size of the board, the boards of directors ofsubsidiaries have the same number of committees asthe Company.

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2006 Annual Report

Corporate Governance (continued)

The boards of directors of the subsidiaries areaccountable to the subsidiaries' shareholders for theproper and effective administration of the subsidiary inline with the overall Group direction and strategy.These boards also have statutory obligations based oncompany and banking laws in the respective countries. In the event of any conflict between the Company andlocal laws, the local legislation prevails.

Group Executive Management Committee

The Group Executive Management Committee iscomprised of the Group Chief Executive Officer, theregional and Group business heads and Groupfunctional heads, currently a total of thirteenmembers. They are responsible for the operationalmanagement of the Group and its subsidiaries.

The Group Executive Management Committee isresponsible to the board and plays an important rolein the Company’s corporate governance structure.The Committee manages the broad strategic andpolicy direction of the Group, submits them to theboard for approval where necessary, and overseestheir implementation. The Committee has decision-making powers in specific areas of Groupmanagement. In particular, the committee workswith and assists the Chief Executive Officer to:

� Define and develop Group strategy ;� Confirm alignment of individual subsidiaries'

plans with overall Group strategy ;� Track and manage strategic and business

performance against plan ;� Implement Group policy and decisions ;� Make recommendations on various issues

relating to staff ;� Track and monitor progress and accomplishments

on major Group initiatives and projects at affiliatelevel ;

� Recommend opening or closing of subsidiaries ;� Articulate appropriate response to

environmental factors, regulations, governmentpolicies competition and other such issuesacross the Group ;

� Articulate policies for advancing Group objectives ;� Make important decisions in areas where

delegation of authority is granted to the committee.

Country Executive Management

The Country Executive Management Committeeconsists of the country head, and other seniorexecutive members of each subsidiary. In addition tothe day-to-day management of the subsidiary’soperations, the role of a country's ExecutiveManagement Committee includes the following:

� Managing the strategic objectives of thecountry's operation in line with Group strategy ;

� Defining overall business goals and objectivesfor the country’s operation ;

� Ensuring alignment of operating plans withoverall Group strategy ;

� Approving business unit direction and strategies ;� Making decisions on operating plans and budgets ;� Reviewing the financial reporting and control

framework ;� Tracking and managing country strategic and

business performance against plan ;� Tracking and monitoring progress and

accomplishments on major initiatives andprojects at country level ;

� Articulating appropriate response to environmentalfactors, regulation, government policies,competition and other such issues in the country ;

� Articulating policies for advancing businessobjectives in the country ;

� Advising the Company on adaptation of overallstrategy to the specificities of the local environment ;

� Advising on local laws and regulation impactingon Group policies.

Annual Country Heads Meeting

The Annual Country Heads Meeting is an annualmeeting of all Managing Directors and GroupFunctional Heads across the Group, to review andreflect on Group strategy and policies. The meetingplays a key role in facilitating the harmonization andintegration of the Group strategy. Its role includes:

� Sharing and disseminating information,experiences and best practices across the Group ;

� Initiating policies that encourage integration andpromote the 'One-bank concept' ;

� Promoting integration and standardization ofGroup policies and procedures ;

� Promoting and monitoring compliance withGroup operational standards ;

� Contributing to the formulation of Group policies.

19


Introduction

The main purpose of this section is to illustrate thediversity and wide range of corporate socialresponsibility and sustainability policies and projectslaunched and supported by Ecobank

Corporate social responsibility refers to thecontribution by businesses to sustainabledevelopment. It covers a company’s participation infields such as human rights, human resources,relations with clients, suppliers and otherstakeholders, corporate governance, environmentand contribution to the community and the society ingeneral. It is increasingly viewed as a strategic issueto ensure the development of a sustainable world andto enhance business competitiveness. It is high onthe priority list of a number of internationalorganizations and investors who seek to increasebusiness awareness and involvement .

Ecobank’s Commitment

We are committed to ensuring that we remain a Groupthat cares about the impact it has on society. Ecobankhas a long history of commitment to the communitiesin which it operates. Contributing to the improvementof living conditions through financing individuals andbusinesses, supporting local communities and localeconomic development, building greater social andhuman capital are all an integral part of ourfoundation and identity.

Economic Performance

Revenues generated in 2006 were over US$348 million.In generating these revenues, we made loans andprovided assistance of over US$1.8 billion togovernments and government agencies, companies,small and medium scale enterprises, microfinanceinstitutions and individuals of over US$128 million.

We collectively paid over US$42 million in taxes togovernments in West and Central Africa, making us oneof the largest tax payers and thus contributing toeconomic development and social welfare.

Ecobank Foundation

Ecobank Foundation a social responsibility initiativestarted operations in 2005. It is through theFoundation that Ecobank drives its corporate socialresponsibility to support community and socialdevelopment in a sustainable manner.

Up to one percent of the Group’s profit after tax may bedonated to Ecobank Foundation for funding projectsand supporting communities in countries whereEcobank is present.

Ecobank Foundation has thus far made donationsamounting to over US$650 thousand and hassupported twelve (12) projects in three (3) countries.

The Foundation focuses on projects in the areas of:Education, Health, Culture and Research.

In addition to funding from Ecobank, the Foundationmay also seek funding from third parties to support itsactivities.

Human Capital

Ecobank employs over 5,860 people across 305branches, offices and kiosks. We estimate that wedirectly support up to 5 times our number ofemployees or over 29,000 people. Through ourcontractors, suppliers and distributors, we believewe directly and indirectly provide employment to amuch larger number of people across West andCentral Africa.

Ecobank also gives training opportunities to about200 University undergraduates and high schoolleavers across the Group.

Our human development programmes are alsotraining an increasing number of professionals notonly in the banking sector but also in related areassuch as technology, telecommunications andtechnology-enabled processes.

Corporate Social Responsibility & Sustainability

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2006 Annual Report

Corporate Social Responsibility & Sustainability (continued)

Environment and Safety

As a banking Group, Ecobank finances projectsacross many sectors. In financing projects, Ecobankadheres to the IFC environmental Code. Accordingly,projects that we finance are screened to ensure thatthey do not unduly damage the environment and donot pose a safety hazard. Ecobank is currentlyreviewing the Equator Principles to fully evaluate itsapplicability to its activities.

Ecobank as a matter of policy does not financeprojects involving arms and gambling or projectswhose impact on the individual or the environmentare generally considered to be unacceptable.

As a bank, Ecobank’s internal activities do nottypically have an adverse impact on the environmentwhen compared with other industries. Nonetheless,we are actively considering ways to improve ourenvironmental responsibility and minimize adverseimpact on the environment. These include ways inwhich we can reduce energy usage, paper usage andcarbon dioxide emissions. We anticipate that furtherinvestments in technology and the increasingadoption of remote contact technology such as videoconferencing will reduce the need for road and airtravel and their adverse environmental effects whilesaving the Group significantly in transportation costs.

Microfinance and Poverty Alleviation

Ecobank has partnered with Accion International,one of the leading microfinance institutions in theworld to establish microfinance institutions incountries where Ecobank operates. Under thisarrangement, the parties are working to launchmicrofinance banks in Ghana and Nigeria in 2007.These institutions will target loans to the poorersegment of the society.

Ecobank also finances existing microfinanceinstitutions through providing lines of credit. Theserelations are evolving into alliances where they alsodistribute simple banking products such as savingsaccounts and money transfer products.

Ecobank’s strategy in the microfinance sector is notto actively compete with microfinance institutions butrather to support them and partner with them toreach those customers that would typically not comeinto an Ecobank branch.

Education, Employment and Health

Through the Ecobank Foundation, we providedcomputers and learning aids to communities in Chadand in Mali. Through our internal and externaltraining and development programmes, we areincreasing the banking talent pool in West andCentral Africa.

In Nigeria, Ecobank partnered with the National AidsAwareness Campaign to open centres in universitiesto educate the youths on Aids. Currently the bankoperates 7 centres across Nigeria.

Diversity

Ecobank, by virtue of its spread, is one of the mostdiversified groups in Africa in terms of its people.Ecobank also has a policy of ensuring diversity in itsemployee talent pool without compromising thequality of its staff. Regular reports are presented andmonitored to ensure adherence to policy. Employeescome from over 16 nationalities and communicate inEnglish and French which are the official languagesof the institution.

In terms of gender diversity, 40 per cent of theemployees are female and the balance male. Interms of representation at the management level, 75out of 257 management staff are female. 3 out of 16country managing directors are female and one outof five of our executive directors is also female. TheGroup has employees with physical disability acrossits network. 2.2 per cent of the staff are over 50 yearsold and 86 per cent of staff are under 40 years.

21


Application of Technology

Ecobank has been at the forefront of the adoption oftechnology. The Group has a policy of “One Person,One PC” whereby all employees across the Group areentitled to a PC or a laptop for undertaking their job.

In addition, Ecobank operates a regionaltelecommunications network that provides most of itstelecommunications and technology needs, includingtelecommunications linkages, shared gateways,internet and email services. The widespread adoption oftechnology and telecommunications has been critical tothe successful development and expansion of the Group.

The Group is currently implementing the first sharedservices centre in West Africa that would consolidateand centralize many of the activities and servicescurrently being carried out across the manysubsidiaries of the Group.

Sports

Ecobank supports sports in many ways. Through ourvarious subsidiaries we donate to sporting activitiesin the communities in which we operate. In addition,some of our subsidiaries have sports teams thatcompete an participate in local sporting activities.

In 2006, Ecobank was one of the largest contributorsto the African world cup teams. We acted as officialbankers and co-sponsored the Ghanaian andTogolese teams to the world cup

Indicator 2006 2005 %Change

Revenues (US$‘000) 348,464 236,351 47Corporate Tax (US$‘000) 42,934 22,790 88Return on Average Equity (%) 23 23.8 (3)Efficiency Ratio (%) 59 63 (6)Earnings per share (cents) 13 11 18Return on Average Assets (%) 3.0 2.5 20Capital Adequacy (%) 19.0 21.7 (12)

Employees 5,860 2,602 125

% female staff 40 38 5% female staff at executive level 25 22 14

Investment in training and development (US$‘000) 2,921 2,165 20Corporate social respons. Expenditure (US$‘000) 654 710 (8)

Key Sustainability Indicators

22

2006 Annual Report

Ecobank Group has codified policies on corporateethics which applies to directors and employeesacross the Group. These policies are regularlyreviewed to ensure that they are in line withinternational practice.

Code of Conduct for Directors

Directors across the Group are required to sign acode of conduct that enjoins them to adhere tocertain principles of the Group. This is in addition toany local rules or codes governing directors’ conduct.

The code of conduct covers issues such as ;

Fiduciary responsibility:Directors are required to act in the best interest ofthe Company and in protection of shareholderinterests, to act to preserve the assets of theCompany and further its business interests; and torecognize the interest of other stakeholders such asemployees, customers and the communities in whichwe operate.

Conflict of interest:To avoid of conflict of interest in dealing with theCompany, Directors may not utilize their position onthe board to their advantage. A director must obtainthe approval and consent of the board where there isa potential area of conflict of interest and mustdisclose all material facts related thereto. Directorsmust also disclose any direct or indirect interest inany loans, contracts or credit facilities granted by anyCompany in the Group.

Confidentiality:Directors are required to observe the utmostconfidentiality with respect to information relating tothe Company including information relating topersonnel, transactions and other matters relatingto the operations of the Company.

Attendance at Meetings:Directors are required to endeavour to attend allboard meetings and to conduct themselves in amanner that will foster the smooth running of theboard of directors.

Non Interference:Directors may not interfere in the day to day runningof the Company and to maintain the utmost dignity intheir dealings with management and employees ofthe Company. Directors are enjoined to exerciseindependent judgment in evaluating managementand their actions.

Disclosure of any information that may affect thedirector’s relationship with the Group.

Insider Dealings:A director may not utilize information obtained in hiscapacity as director to enrich himself throughadvantageous acquisition of shares or othersecurities issued or to be issued by the Company.

Rules of Business Ethics

All employees of the Group are required to sign andadhere to the Group rules on doing business. Theserules require all employees to conduct themselves ina manner that is in the overall interest of the Group.Violation of the rules of business ethics may result insanctions, including dismissal.

Compliance:All employees must comply with local laws andregulations in the conduct of their duties as well asthe Company’s internal policies and procedures.They must also endeavour to promote a culture ofcompliance.

Confidentiality:All employees must avoid intentional or unintentionaldisclosure of sensitive or confidential information tounauthorized persons. Sensitive information includeinformation relating to customers of the Group, tradesecrets, non-public information, information arisingfrom our dealing with governments, regulators orvendors/suppliers and any information that ispotentially prejudicial to the Group.

Conflict of Interest:Employees must avoid circumstances in which theirpersonal interest conflicts or may appear to conflictwith the interest of Ecobank or its customers.

Corporate Ethics & Transparency

23


Reporting of Violations:An employee who suspects a possible violation of alaw, regulation or our rules of business ethics isencouraged to report such violations to his/hersupervisor. Employees are expected to beresponsible in reporting such possible violations.Ecobank also has in place a whistleblower policywhere employees may anonymously report incidentsor situations that are damaging or potentiallydamaging to the institution. This facility is maintainedthrough an independent international third party toensure its effectiveness and to protect the identity ofany whistleblower.

Know-Your Customer:The Ecobank Group Anti-Money Laundering and Anti-Terrorism Policy requires all staff to know thecustomers who do business with bank. Detailinformation requirements are provided which shouldbe updated regularly to reflect the changing status ofthe customer. Reports of suspicious transactions arerequired to be made and followed up. Ecobankcooperates with regulatory and security authoritiesto fight against illegal financial transactions.

Transparency

We are implementing our policy on transparency byincreasing the level of disclosure in our annualreports and accounts. This is designed to ensure thatour stakeholders, employees, shareholders,regulators, customers and the market at large areadequately informed on developments in Ecobank.

Accordingly, we have provided supplementalinformation on our directors and seniormanagement, information relating to theremuneration of our directors, information ondirector related loans, disclosure on other aspects ofthe bank’s activities relating to corporate governanceand corporate social responsibility and sustainability.

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2006 Annual Report

Chief Executive Officer’s Review

We had a very good year in 2006 but we have the potentialto do much better.

We grew assets by 59 per cent to US$3.5 billion, increasedrevenues by 47 per cent to US$348 million and pre-taxprofits rose by 75 per cent to US$129 million. We increasedmarket share in many of our markets and extended ourmarket reach in West and Central Africa.

We are addressing our weak position in the Nigerianmarket, one of the largest, most competitive andfastest growing markets in Africa. We are investing inour people to improve customer service and sales.We are investing in technology to enhance efficiencyand reduce costs. And we are rolling out newproducts to sustain market competitiveness andcreate new market opportunities. The benefits ofthese actions are already becoming evident in thisyear’s results.

We recognize that our future success will come notonly from playing to our strength as the leadingindependent regional bank brand but also inaddressing our areas of weakness.

Financial Results

In 2006, we increased revenues by 47 per cent toUS$348 million. This was as a result of significantgrowth in business volumes, a positive exchange ratemovement, an acquisition in Nigeria and a growth infees and commissions.

Our business in UEMOA and CEMAC regions benefitedfrom a positive exchange rate fluctuation. The 11 percent increase in the Euro to US dollar rate improvedreported revenues by US$7 million. On the other hand,a weak local currency in Guinea depressed revenuesby US$5 million.

Overall, profit before tax grew by 75 per cent toUS$129 million. This was a respectable performancecompared to the previous year and given theincreased competition in all our markets.

Operating margins improved even as we have beeninvesting heavily in expanding our distributionchannels and in technology. We added 143 newbranches and offices during the year and investedover US$9 million in upgrading our technology. Atthe same time, we invested over US$30 million inproviding additional capital to our existingsubsidiaries and in acquiring a bank in Chad.

Despite these, our value added rose by 61 per cent toUS$142 million.

Review of 2006

The major development in 2006 was the listing ofEcobank Transnational Incorporated on the threestock exchanges in the sub-region namely theBourse Régionale des valeurs Mobilières in Abidjan,the Ghana Stock exchange in Accra and the NigeriaStock Exchange in Lagos. This landmark event wasthe first ever triple listing in Africa.

In addition, two of our major subsidiaries, namelyEcobank Nigeria and Ecobank Ghana were listed in2006. Again, this is designed to enhance shareholdervalue by providing a market-related and efficientbasis for valuing the Ecobank Group and minimizingany discount due to our holding Company structure.

We also took a number of steps to deepen and growthe Ecobank franchise through organic growth andby acquisitions. We extended our reach in WestAfrica by opening a new subsidiary in Sierra Leoneand later in Guinea Bissau early in 2007.

25


We grew our Nigerian business by the acquisition ofthe branches and deposit liabilities of All StatesTrust Bank, one of the banks that did not survive theconsolidation of the industry. In Central Africa , weincreased our network to three countries by theacquisition of majority interests in BIAT, the secondlargest bank in Chad and early in 2007 in BICA, thelargest bank in Central Africa Republic of whichregulatory approval is pending.

We expanded our distribution by increasing thenumber of branches and offices from 162 to 305;introduced 109 ATMs; 58 kiosks and over 500 directsales agents.

We raised US$87 million in additional capital tostrengthen our capital base and to finance thegrowth of the Group.

We launched a major microfinance initiative andpartnered with ACCION to implement it across ournetwork.

Our Strategy

In 2006, we held a Group-wide retreat in which wedefined the strategic framework and targets to guidethe collective efforts of the Group for the next threeyears. These strategic objectives will form the basisof all balanced scorecards not only for the leadershipteam but for all employees in the Group. These targetand principles have been set out in a manifestowhich will be made available in all branches andpremises across the Group.

Our core strategic objectives are to build scalethrough acquisitions and organic growth; grow ourcustomer base, products , distribution and markets;achieve efficiency and reduce costs throughoperational and product excellence; and deliversuperior shareholder returns.

Our priorities for the plan period cover:

Building Financial Strength:Strengthening our capital base to support the growthof existing businesses, expansion into new marketsand the ability to withstand unexpected marketdevelopments. We intend to raise additional equityand long-term capital from the local, regional andinternational markets and to maintain a conservativecapital adequacy ratio.

Focusing on Operational Excellence:To improve efficiency and better manage costs, weare investing in improving our technology, processesand systems. Work has already commenced onsignificant upgrades or replacements of our existingoperating systems and an overhaul of our operatingprocesses. This will involve standardization andcentralization of our middle and back officeoperations in a shared services centre for the Groupwhich is currently under construction along withback up and disaster recovery sites.

Improving Our Business Mix:We are working to build a balanced businessfranchise that is diversified not only by geographybut by products, customers and markets. We havecommenced an aggressive push into the retailmarket and are investing in ATMs, POSs, kiosks anddirect sales agents.

Expanding Distribution:We will expand our distribution by expanding intonew markets and deepening our presence in existingmarkets. We are also expanding our contact pointsby opening new branches, increasing the number ofour sales people and entering into alliances toexpand our reach.

Building Capacity: With the increasing competitiveness in the bankingsector, there is increasing competition for talent. Weare investing in deepening our leadership poolthrough a combination of training, exposure todifferent operating environments and an attractivework environment along with a revampedrecruitment and compensation system. Of increasingimportance is the need to nurture a sales andcustomer service culture in our people to enhanceour market competitiveness.

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2006 Annual Report

Chief Executive’s Review (continued)

Risk Management and Controls:As we grow our network, we are exposed toincreased risks. We are taking steps to address thisby investing in modern risk management tools thatwill enable us better manage and control the variousrisks we are exposed to.

Nigeria:Nigeria represents the second largest and one of thefastest growing markets in Sub-Sahara Africa.Greater success in Nigeria will significantly affectthe overall performance of the Group. Accordingly,we are taking steps to improve our competitivenessthrough organic growth and acquisitions. Weacquired the branches and the deposit liabilities ofone of the failed banks and are looking to acquiremore to increase our distribution and market share.Our discussions with FirstBank of Nigeria weredesigned to move Ecobank to a leadership position inthe Nigerian market

Our Markets

We operate in emerging African markets that offerexcellent growth opportunities for efficientbusinesses. There are several reasons why webelieve these markets are particularly attractive.

Firstly, they are grossly underbanked compared withother emerging markets with further room forgrowth not only in product offerings but also in newmarkets and new customers.

Secondly, some of these markets, especially thecountries of Central Africa are experiencingsignificant economic growth from the discovery andproduction of crude oil.

Thirdly, the reduction in civil and social unrest andthe liberalization of many of these economies haverekindled interest and attracted new investmentsfrom international investors.

Fourthly, there is a large untapped retail sector thatis poorly serviced. Empirical data from the mobiletelephone sector and the microfinance sectorssuggest that with the appropriate strategy, thereexists a large retail market to be tapped.

The key to success in these markets is not dissimilarto what obtains in other markets. There is the needto build scale in distribution, in capital and in talent.

We are addressing these challenges by raisingadditional capital, by opening new branches and officesand by recruiting, training and retaining talented people.

Our operations are currently grouped into 4 regionscovering West and Central Africa. These arediscussed in more detail in the Business andFinancial review section of this annual report.

Execution

In 2006, we further refined our business strategy andtook several initiatives to accelerate the execution ofthe strategy. Key performance indicators weredeveloped to track the key strategic goals of scale,growth, efficiency and shareholder value.

We successfully completed most of the goals weoutlined in the 2006 annual report and in some casessubstantially exceeded our targets.

Scale: We grew the size of the bank by over 59% to abalance sheet of US$3.5 billion. We ended the yearwith a market capitalisation of US$1.44 billionmaking us one of the top 10 banks in Sub-SaharaAfrica ( excluding the Republic of South Africa ) interms of size and market capitalisation. We alsoextended our geographical reach.

In many of these markets, we saw a significant gainin market share arising from a more aggressivecustomer and deposit acquisition strategy and theopening of new branches.

Growth: We grew gross revenues by 46% to US$419million. Deposits grew by 88% to US$2.5 billion andprofits grew by 75% to US$129 million. We grew ourcustomer base by over 65% to half a million customersand the number of branches increased by 83% to 305.Through alliances and alternative channels, thenumber of customer contact points increased from 197to 1,370. A significant part of this growth was due to theincreasing success of our retail strategy.

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In terms of countries, we increased our countrypresence to 15 from 13 and to 18 early in 2007,further deepening our presence in West Africa andextending our network in Central Africa. We believethe full impact of our growth initiatives will begin toshow in the second half of 2007.

We also have identified professionals to drive ourinitiative to grow revenues in wholesale, retail,investment and transaction banking and havelaunched new products in cash management andtrade that leverage on our unique regional presence.

Our “Ecobank Everywhere” strategy has improvedaccessibility and reach, which together with a moreoutward focus, positions the Group to grow its corebusinesses. We not only offer our products throughour branches and sales force but also throughalliances, outsourcing and kiosks.

Efficiency: Even as we grew the Group, our operatingmetrics remained stable and in some cases showedconsiderable improvement during the year underreview. Operating losses measured as a percentageof profit before tax which improved to 3% from 4%.Our operating margin increased by 47% fromUS$236 million to US$348 million; the cost/incomeratio improved slightly to 59% from 63%; and non-performing loans as a percentage of total loansimproved from 13% to 8%.

Improving efficiency, building operational excellenceand improving customer service are prerequisites forachieving the strategic objectives of Ecobank. Acomplete review of our technology platform includingthe hardware, software and telecommunications wasundertaken. As a result, the Group is now implementinga shared services centre that will include a data centre,call centre, shared gateways and other value-addedservices that are designed to improve efficiency andcustomer service.

The Group is taking steps to centralize its middle andback office operations in a shared services centre. Workon this commenced in 2006 and when completed,should result in considerable costs savings andefficiency improvements. Service levels are beingdeveloped for all major operating processes in theGroup and these are currently being rolled out.

During 2006 we launched the ONEBANK project tofurther integrate our operations and activities acrossthe countries in which we operate. In addition to theshared services centre (the first of its kind by a bankin West and Central Africa), this will includereplacing our current technology platform (hardware and software) with more powerful andmore robust and scalable systems capable ofmeeting our growing needs in the medium term,upgrading and modernizing our processes andimproving and further standardizing our physical andoperating infrastructure such as our branches.

Shareholder Value: Measured in terms of totalshareholder returns ( capital gains plus income fromdividends and other payouts), 2006 was a record yearfor our shareholders. The share price moved from 80cents a share at the beginning of 2006 to 1 dollars ashare. Along with a 1 for 5 bonus issue and a dividendof 3 cents a share, this gave a total return toshareholders of 59% for the year. This will be verydifficult to match in the coming years.

A focus on shareholder value and a consequence ofour listing means that we will increasingly adopt astock market approach in running the Company andresponding to shareholder issues. In addition tochanges to our management information andreporting system, we have set up an investorrelations function that will focus on addressing theinformation and other needs of our shareholders in atimely and efficient manner.

Conclusion

We are confident we have the right strategy. Ourfocus going forward is on execution: building scale,growing the business, improving efficiency anddelivering superior shareholder returns

Arnold Ekpe Group Chief Executive Officer

28

… Manifesto

Building a world class African Banking Group

Non-negotiables

Key Measures

GROWTH

COMPLIANCE

RISK MANAGEMENT

Organic andby acquisitions

Zero tolerance for non-compliance

Effectively manage risksacross our businesses

PEOPLE STRENGTH

Committed and productive

work force

BUSINESS GROWTH

Grow revenues, customersand distribution

OPERATIONAL EXCELLENCE

To improve efficiency andreduce costs

CUSTOMER SERVICE

Efficient and convenient customer service

FINANCIAL PERFORMANCE

Superior financial performance

FINANCIAL STRENGTH

Adequate capital to support the business

BALANCED BUSINESS MIX

Across markets, customersand products

BRAND DEVELOPMENT

Position Ecobank as the leading bank brand

in Africa

PUTTING THE CUSTOMER FIRST

Meeting customer needs promptly and accurately

PERFORMANCE

Continuously striving to do better

PUTTING THE INSTITUTION FIRST

Ecobank before personal and other interests

SCALE

Leading Bank in Middle Africa

EFFICIENCY

Operational and product excellence

SHAREHOLDER VALUE

Superiorshareholder

returns+ + =

…The Pan African Bank

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Business and Financial Review

Financial Summary

By all standards Ecobank delivered the strongestfinancial results in the history of the Group in 2006.Profit before tax increased by 75% to US$129.3 million.Profit after tax followed similar trend, growing by 70%to US$86.4 million. Profit attributable to equityshareholders also improved to US$69.4 million,representing growth rate of 67%. This offers improvedearnings per share of 13 cents (2005: 11 cents).

Recording a growth rate of 59% total assets of theGroup increased to US$3.5 billion.

Likewise almost all the ratios of the Group reportedsignificant improvements. Cost-to-income ratioimproved to 59% from previous year’s level of 63% asa result of strong growth in revenues. Despiteincreased capital and asset base, return on averageequity and return on average assets were 3% (2005:2.5%) and 23% (2005: 23.8%) respectively.

Fig 1: Profit before tax (PBT) - Profit after tax (PAT)2002 - 2006 (US$m)

Key Factors impacting the Results

Revenue Growth

Operating income grew by 47% to US$348 million asa result of strong growth in net interest income andfees and commissions. Net interest income was upby 66% to US$181 million resulting from stronggrowth in loans and advances.

Non interest revenue improved by 31% to US$167million strongly influenced by 26% increase in fees

and commissions and 22% increase in tradingincome. The ratio of non interest income to totalincome was 48% compared to 54% in 2005.

Impairment Losses

Despite significant increase in loans and advances, loanloss expense improved to US$13 million compared toUS$15 million recorded in 2005. Ecobank Benincontributed US$5 million to this due to deterioration inexposures in cotton and construction industries. Theimprovement in loan loss expense was as a result ofsignificant recoveries made in Ecobank Côte d’Ivoireand Ecobank Togo for credits which had earlier beenfully provided for, as well as better risk managementacross the Group. Recovery efforts have beenintensified and it is expected that substantial part of theprovisioned amounts will be recovered in 2007.

Operating Expenses

Operating expenses increased by 39% to US$206million compared to revenue growth of 47%, hencethe improvement in efficiency ratio.

Fig 2: Revenue and Operating Expenses 2002 - 2006 (US$m)

Staff cost increased by 43% as a result of increase instaff numbers to support the increasing businessvolumes. Ecobank Nigeria increased its staffstrength from under 1,000 to close to 3,000 tosupport extensive expansion in the branch network.

Other operating expenses increased by 37% in line withgrowing business volumes, technology improvement andcost relating to aggressive retail strategy of the Group.

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2006 Annual Report

Balance Sheet Growth

Underlying the 59% growth in total assets was asignificant growth recorded in deposits which alsoenabled the Group to increase its credit portfolio.

Fig 3: Balance Sheet Growth 2002 - 2006 (US$b)

Liquidity

Customer deposits increased by 63% to US$2.5 billionrepresenting 83% of total liabilities (2005: 81%) with10.8% one month net liquidity gap (2005: 17.4%).Average deposits grew by 34.5% to US$2.0 billion. Thisstrong deposit growth was aided by the Group’saggressive retail strategy culminating into massiveincrease in branch network in all the bankingsubsidiaries, particularly Ecobank Nigeria.

Risk Assets

With increased product offerings in all our businesssegments, average loans and advances to customersgrew to US$1.5 billion, representing an increase of 51%over 2005. The Group’s net loan loss expenses amountedto 0.9% of average loans compared to 1.5% in 2005.

Capital

During the year the Company continued its capitalraising programme which began in 2005. Mainlyfrom private placements, a total of US$87 millionwas raised primarily from international investors.

This contributed strongly to increase in total equityfrom US$304 million to US$482 million, offering Tierone capital ratio of 19.0% (2005: 21.7%). This was thesame as total capital ratio, well above target of 12%.

Business Segments

The Group continued to pursue diverse strategies inenhancing the performance of all its businesssegments, reflecting positively on performance.

Retail Banking

The Group’s retail banking business was structuredto provide a range of products and services to meetthe needs of clients in small and medium scalebusinesses as well as the micro finance sector.

During the year, the Group launched a new retailstrategy to leapfrog its performance in the segment.We focused on organic investments and acquisitions,resulting in addition of 143 branches and offices,most of which were in Nigeria. Branches and officesgrew from 162 to 305.

The Group continued to develop mutually beneficialrelations with partners of common interest. Ecobanksigned a partnership agreement with ACCIONInternational to develop its micro finance business.

The Group’s card programme continued to make morein roads in the West African sub region. EcobankNigeria, yet again, led the way in the card business inNigeria. In addition to being the first bank to launchMasterCard in Nigeria, the subsidiary issued the firstlocal currency credit card in West Africa under thename, Ecobank Naira Credit Card. Ecobank Ghanacontinued to pioneer the Visa Card business in Ghana.In the UEMOA Region, Ecobank Card maintained themarket leader position. By close of the year over156,000 (2005: 90,000) cards had been issued and over100 (2005: 35) ATMs were in use.

The Group is aware of some specific risks associatedwith this segment of the market. Thereforeappropriate risks mitigation factors have beeninstituted to enable it enjoy the full benefits of theenormous potential the segment offers.

Business and Financial Review (continued)

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Wholesale Banking

Ecobank specializes in serving the public sector,multinational institutions, financial institutions and othermajor players in the private sector which constitute thewholesale banking segment of the market.

E

Ecobank Rapport Annuel 2006 · 2016. 8. 15. · As at 31 December 611,003 401,272 * Restated for 1...

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