Description
Innovation Is Life Exim Bank
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
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Partne
2012 FINANCIAL HIGHLIGHTS (TZS Bn)
Assets
Deposits
Loans & Advances
Shareholders’ Funds
ii
2012
Table of
Contents
Annual Report
Strength in
Relationships
CORPORATE INFORMATION
FINANCIAL STATEMENT
Mission and Vision
2
Report of Directors
33
Company Profile
3
Statement of Directors’ Responsibility
41
Board of Directors’ Profile
8
Report of Independent Auditor
43
Chairman’s Statement
10
Profit and Loss Account
45
Managing Director’s Statement
14
Balance Sheet
46
Company Information
18
Statements of Changes in Equity
48
Corporate Social Responsibility
25?
Cash Flow Statements
50
Notes
52
1
Key Personnel
138
Location and Contacts
141
VISION
MISSION &
VALUES
2012 ANNUAL REPORT
Our Mission:
We are committed to remain an
innovative Tanzanian Bank offering
ser vices of International Standards
Our Vision:
To be the bank of choice
Our Values:
• Flexibility
• Reliability
• Integrity
• Professionalism
• A drive for customer satisfaction
2
COMPANY
PROFILE
2012 ANNUAL REPORT
Exim Bank Limited was founded in the year 1997 in the
wake of the new liberalization policy by local entrepreneurs
with a track record of impeccable success in their diversified
businesses. The Bank made a humble beginning with one
branch at Samora Avenue, in the heart of Dar es Salaam
city, posting a steady and robust growth in its customer
base and visibility. Today Exim is ranked amongst the largest
banks in the country.
profusion of footprints in 13 regions with 24 branches and
52 ATMs. In 2012, the Bank entered Kigoma region (Kigoma
Branch) opening up Lake Tanganyika and the landlocked
countries of Central Africa.The Bank also added yet another
branch in Kilimanjaro region (Kilimanjaro Branch) a gateway
to one of the major tourist destinations in the world.
GROWTH AND CAPITAL POSITION
Exim Bank’s impressive upward trajectory motivated and
led to it stretching across boundaries in the year 2007
establishing footprints overseas in The Union of Comoros.
The Bank has two operational branches in the islands of
Moroni and Anjouan. Inspired by this success, Exim Bank
spread its wings further into Djibouti to establish yet
another subsidiary in March 2011, affording a strategic link
to landlocked countries in the Horn of Africa.
Building on being the most innovative bank in Tanzania, the
Bank has rapidly expanded. Exim Bank ranks as the sixth
largest bank in Tanzania in terms of total assets and deposits.
During the year Exim Bank Group financial indicators
depicted a significant performance;
?
?
?
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Profit after tax of TZS 13,667 million up from
TZS 12,529 million in 2011.
Group’s total deposits grew significantly to
TZS 809 billion (2011: TZS 699 billion).
Group’s loan portfolio increased to
TZS 455 billion (2011: TZS 442 billion); and
Total assets increased to TZS 967 billion
(2011: TZS 841 billion).
GLOBAL STRATEGIC PARTNETSHIPS AND
ALLIANCES
From left: His Exellency, President of The Union of Comoros Mr. Ikililou
Dhoinine shaking hands with Exim Bank’s Director, Mr. Hanif Jaffer,
during a courtesy call made to the President’s office. Looking on is
Managing Director, Anthony Grant and Chief Executive Officer, Mr.
Dinesh Arora.
The Bank’s understanding of the customer needs coupled
with a unique customer experience given to each client
has created a strong brand in these markets. Our domestic
prowess and visibility continues to be seen and felt in the
Mr. Yogesh M. Manek, Chairman, Exim Bank and Mr. Ruurd Brouwer,
Director Financial Institutions, FMO at the signing ceremony of a USD 10
millions (TZS 16 billions) loan secured by Exim Bank from FMO.
3
COMPANY
PROFILE
2012 ANNUAL REPORT
Exim Bank’s laudable reputation has brought valued
international partnerships and financial co-operation. These
include strong relations with leading international financial
institutions such as International Finance Corporation
(IFC), Netherlands Development Finance Company (FMO),
Norwegian Trust Fund (NORFUND), PROPARCO and
correspondent banks such as Deutsche Bank, CitiBank,
HSBC, Commerz Bank and Axis Bank.
Exim remains the only local bank to be a member of the
Global Banking Alliance for Women, representing Tanzania.
This alliance brings together financial institutions around the
world to promote women entrepreneurship. It also helps
develop existing micro enterprises managed by women
and encourage new ventures with a potential to grow their
businesses.
Launch of MasterCard in 2005.
The Bank has had significant breakthrough innovations that
positively impact our customers. Through deployment of
world class technology and customer focused products, the
Bank has led in pioneering efforts adding the following to
its credit;
The Bank’s strategic collaborations with MasterCard and
Visa offer customers a window to the global electronic
payment networks. These relationships have allowed us to
provide relevant solutions that respond to ever evolving
customer needs, extending the services of electronic
payments to those who would otherwise not be able to
benefit from their convenience, ease of use and security.
Bank in Tanzania to launch Credit Cards in association
with MasterCard.
Tanzanian Bank to establish an overseas banking
subsidiary.
FIRST MOVER INITIATIVES
Bank in Tanzania to launch Mobile ATM facility.
Bank in Tanzania to launch an exclusive financing
scheme for women.
Bank in Tanzania to launch TANAPA Cards.*
Bank in Tanzania to launch International Debit
MasterCard.
Bank in Tanzania to launch Visa Platinum Cards.
Launch of innovative Faida Savings Account in 2009.
Bank to launch Visa Cards in The Union of Comoros.
4
COMPANY
PROFILE
2012 ANNUAL REPORT
* TANAPA / Exim Cards – These are Debit Cards issued by the Bank to
tourists who are visiting national parks in Tanzania. The card facilitates
payment of park fees charged by Tanzania National Parks(TANAPA) at
the gates.
Exim Bank continues to build an innovative culture where it
formally encourages and supports innovation, empowering
business units through leadership buy-in and advocacy.
HUMAN CAPITAL
Over the years, the Bank has grown – deliberately, carefully
and steadily. It has progressively grown in staff numbers.
The group had 512 employees as at the end of 2010, 614
in 2011 and 680 as of the year ended December 2012.
With a total of 329 female staff, the Bank clearly exhibits
its sensitivity to gender equality. The Bank takes pride in
having established a state of the art training academy at Dar
es Salaam, with an aim to continually upgrade the skills of
the human resources.
Director Mr. Shaffin Jamal presenting long service recognition award to
Mrs. Maria Mwangomola, Assistant Branch Manager, Ubungo branch
during the 15th Anniversary Staff Celebrations.
AWARDS AND RECOGNITIONS
The Bank has been awarded recognition by National
Board of Accountants and Auditors (NBAA) for the Best
Presented Financial Statements in the ‘Banking Category’
for two years running – 2008 and 2009. Exim Bank was also
selected the overall winner for Best Presented Financial
Statements in 2009.
The Chairman of the Bank and Branch Heads during the 15th Anniversary
Staff Celebrations.
The NBAA Award which the Bank received during year 2008 & 2009.
5
COMPANY
PROFILE
The Bank is proud to have been nominated for various
financial awards notably for the prestigious “Sustainable Bank
of the Year 2008 Award” by Financial Times / International
Financial Corporation, “Best Workplace Practices for
Training and Development” in the East Africa CSR Awards
2011. We continue to build our reputation and redefine
what banking can do.
2012 ANNUAL REPORT
MAKING OF A STRONG REGIONAL
BANK
The Bank has placed major thrust and focus on building
strong foundation, through cadre and skill building, adopting
the best in technology, establishing international practices
in risk based supervision and governance to be a sustainable
and strong Regional Bank.
The entire Eastern Africa region continues a path of
strong growth and Exim Bank intends to be a financial
contributor.
...and still growing
6
Valuing Human Capital:
* Gender Sensitivity
* Belongingness
* Recognition
* Encouragement
Buildin
Excelle g
nce!
7
BOARD OF
DIRECTORS’
PROFILE
Yogesh Manek
Hon. Juma Mwapachu
Tom Wescott
?
Mr. Wescott is a career banker and currently
Managing Director of Africa Finance and Capital
Limited (AFC), a financial consulting, advisory
services and investment company.
Prior to establishing AFC, Mr. Wescott worked
for more than 25 years as Senior Bank Executive
with the HSBC Group where he focused on
sub-Saharan Africa.
Ambassador Juma V. Mwapachu has had a
diversified career that spans the public and
the private sectors in Tanzania. He has served
as Tanzania’s Ambassador to France and until
2011 he served as Secretary General of the
East African Community for five years. A lawyer
by training, Ambassador Mwapachu has been
Chairman of the Tanzania Investment Bank,
Tanzania Railways Corporation and Vice Chair
of the University of Dar-es-Salaam Council.
In the business sector, he has been Chair of
Confederation of Tanzania Industries and the
East African Business Council.
He is presently Chair of the University of
Dodoma Council and sits on a number of
Corporate Boards of Directors, local and
international. He holds two doctorate degrees
(Honoris Causa) in literature and in Political
Sciences from the University of Dar-esSalaam and the National University of Rwanda
respectively. President Mwai Kibaki of Kenya
decorated Ambassador Mwapachu in December
2011 with one of Kenya’s highest awards, The
Moran of the Golden Heart (MGH).
8
Mr.Yogesh Manek is an accomplished executive,
investor, and entrepreneur with over 35 years
of experience in managing corporations in
industries that include FMCG manufacturing
and distribution, banking, insurance, agribusiness,
mining, real estate, and logistics.
By capitalizing on his sharp business acumen,
technical expertise, interpersonal skills, and
strategic mindset, among other attributes,
Mr. Manek was instrumental in achieving
unprecedented growth and penetrating new
markets for the companies he had previously
founded and managed. In addition to having
successfully implemented growth-oriented
strategies.
Mr. Manek has instituted significant qualitative
and quantitative improvements in organizations
including the streamlining of operational
processes, the re-organization of capital
resources and strategic assets, and the
implementation of systems that boosted
productivity and dramatically enhanced
customer satisfaction.
Mr. Manek presently sits on many boards as
director and also sits on two advisory boards,
which comprise of a media related company and
an association of CEO’s Round Table. He is also
a trustee for three non-profit organizations and
is a Chairman of three Social and Community
Service humanitarian organizations.
2012 ANNUAL REPORT
Hanif Jaffer
Pascal Kamuzora
Shaffin Jamal
Mr. Hanif Jaffer is a Qualified Certified Public
Accountant, Tanzania and has over 20 years
post qualification experience in Banking,
management information systems and financial
analysis.
He is a Founder Member of Exim Bank, and
has played a major and invaluable role in its
formative years as a Resident Director. Socially
active, Mr. Jaffer has been an involved Rotary for
many years, having reached the apex position as
its President and continuing to work tirelessly
for the cause of humanity.
With business growth strategizing competence
as his stronghold, Mr. Jaffer’s position as the
Director of Exim Bank Tanzania and Comoros
has been influential and significant. As Executive
Director of Intra Business Network (IBN),
comprising a group of businessmen spanning 19
African countries, Mr. Hanif’s networking skills
come into play for best results.
A banker and economist, Mr. Kamuzora served
the National Bank of Commerce (NBC) for
approximately 25 years, rising to the level
of General Manager, before being posted
to Bank of Tanzania in 1992. With a grip on
banking trends and evolving economic drifts,
he is credited with establishing ‘The Tanzania
Institute of Bankers’, where he served as the
first Executive Director for 4 years.
9
Mr. Jamal is the Chairman of Union Trust
Investments Limited, one of Tanzania’s leading
companies with interests in banking, insurance,
real estate development, hospitality, mining, and
agriculture.
He is also the Chairman of Alliance Insurance
Corporation and New Arusha Hotels. Such
diversity lends great versatility and broad appeal
to Mr. Jamal’s position as Director.
CHAIRMAN’S
STATEMENT
“Mwenda usiku amesifiwa kulipokucha” (Toil hard for when
success comes, you will be rewarded). This is the spirit that lifts us
to the top of our game. Exim Bank has worked hard and has been able to
succeed in strengthening our institution. Looking back at 2012, we are proud
that as a bank we now better serve our customers, our communities and the
country. We will continue to deliver our best!
On behalf of the Members of the Board of Directors and myself, I am delighted to present to you Exim Bank’s Annual Report
for the year ended 31 December, 2012.
At Exim Bank, the year 2012 will fondly remain in our memories. It was the year that we celebrated our 15th Anniversary.
The occasion was marked by memorable bank celebrations of staff and customers across Tanzania and indeed in the overseas
banking subsidiaries of Comoros and Djibouti. Staff rededicated themselves to the future. Our ability to attract global talent
is another indication of the faith which Exim Bank and Tanzania generate. In 2012 the Bank welcomed Mr. Anthony Grant as
Managing Director to the Exim family. Mr. Grant had previously worked at Citibank on three continents and in Johannesburg
with an HSBC joint-venture, in addition to serving as MD at various African financial institutions. Consequently, the year
has been another wonderful opportunity to witness the Exim Bank family grow, innovate and continue to demonstrate
unparalleled determination for service excellence and to be truly the ‘best in class.’
10
CHAIRMAN’S
STATEMENT
2012 ANNUAL REPORT
The year 2012 saw Exim Bank continue on a trajectory of strong growth. We have very nearly reached the exceptional
milestone in Tanzanian banking of one trillion shillings in assets. This outstanding accomplishment has been achieved in
Tanzania by only a handful of other banks. Exim Bank also operates the country’s fourth largest network of branches.
Headline numbers for 2012 were strong, including a 16% jump in total deposits to TZS 809 billion in 2012 from TZS 699
billion in 2011.The Group saw a 10% percent increase in after tax profits which rose to TZS 13.7 billion from TZS 12.4 billion
in 2011 despite increased spending on investments for the future. The Group lending portfolio prudently increased to 436
billion from TZS 428 billion in 2011. All the performance indicators are to be found in the financial section to follow.
ECONOMIC LANDSCAPE
TANZANIA
The economy of Tanzania in 2012 continued to position itself well. Relatively speaking,Tanzania stands out as a model of good
economic performance. The national rate of growth has been over 6% percent for 2011 and 2012. The government’s fiscal
debt slowly came down in both years. Indeed, and very positively, we see signs of stability which are contributing to growth
of real GDP, estimated to reach 7% GDP by 2013.
In the last quarter of 2012 the shilling steadied at a high of 1595 against the US dollar, down from about 1750 at the beginning
of the year 2011.The Bank of Tanzania’s cautious monetary and fiscal policy measures supported by Government is expected
to drive inflation further down in the 2012/2013 budget year.
Exim Bank safely navigated the economic environment, strengthened operations as well as our human resources and ensured
that the Bank was positioned to continue profitability into the future. The Bank is also committed to act as a responsible
corporate citizen at a time when many citizens have been adversely affected by the financial crisis of the recent past, by
subsequent economic downturns, drought and fluctuations in commodity prices.
Overall, the economy demonstrated in 2012 a good resilience to shocks and as already said, is expected to remain buoyant
going forward into 2013.
AFFILIATES IN DJIBOUTI AND COMOROS
Our new affiliate Exim Bank in Djibouti was inaugurated by the President of Djibouti, Ismail Omar Guelleh, in December
2011. We saw Exim Bank identifying opportunities and positioning itself to contribute to an economy that was on a path
for growth. The economy of Djbouti is derived in large part from its unique and strategic location on the Red Sea, where it
serves as the only ocean outlet for its large landlocked neighbor, Ethiopia with 90 million people, a country itself growing at
a 7% rate.
In the Union of Comoros, the Exim Bank affiliate in 2012 became the country’s fastest growing financial institution. We
established ourselves on two of the three islands of the Union and prepared plans during the year to expand onto the
remaining third island (Moheli). Exim Bank introduced a wide range of products to the country, including point of sale (POS)
services at hotels, ATMs, funds transfer service such as Money Gram, gold-lending schemes, tailored lending and trade
finance services.
11
CHAIRMAN’S
STATEMENT
2012 ANNUAL REPORT
AMONG HIGHLIGHTS AND ACHIEVEMENTS IN 2012
? In Tanzania, Exim Bank continued to expand its branch network; with new branches launched in Kigoma, along Lake
Tanganyika, gateway to commerce with Burundi and DR Congo; and in Moshi named Kilimanjaro, the second branch in a
town renown for agriculture and tourism; Exim Bank also added a second full service banking location at the agricultural
town of Babati.
? The income stream continued to be diversified, with targeted new products such as mortgage financing (“Nyumba
Yangu”) and a hybrid savings and investment product (“Haba na Haba”).
? We are proud of the launch of the Exim Academy in 2012, with multimedia delivery capacity and two theatres for
instructing the banking participants; the Bank considers training and development to be an investment, and spent an
excess of TZS 335 Million in 2012.
? Relationships were strengthened with international development finance institutions; we closed a $15 million loan for
on-lending to Tanzanian SMEs from the French Proparco.
ENABLING DELIVERY AND PERFORMANCE
The growth of the Bank in 2012 is evidenced in part from the increased net headcount of nearly 127 in Tanzania.This growth
largely was to accommodate the expansion of our full service branches and for strengthening head office controls and for
business expansion, bringing total numbers to nearly 650 people.
The Bank prides itself in an enlightened equal opportunity policy. The numbers of men and women staff in 2012, as in 2011,
were almost 50% each. The Bank practices an internal recruitment policy that seeks talent first within the ranks of the
Bank.
Exim Bank has a distinctive culture, one of the reasons why clients and customers choose to bank with us and why
employees want to join and stay. The values – service, reliability, professionalism and integrity – are a compass, underpinning
all our activities. The Bank in 2012 continued on its journey to create long-term value and to contribute to a positive social
and economic impact on the communities we serve.
Our brand promise, “Innovation is life”, captures our genuine commitment to do more for customers. It also reaches out to our stakeholders and employees, with a simple yet compelling promise. It describes who we are, what we stand for and
what makes the bank different.
SUSTAINABILITY
In the next few years, the Tanzanian market is set for rapid growth, which will open up important opportunities for individuals
and businesses. At Exim Bank, we are determined to use our unique business model to deliver financial services with a value
proposition. This year, we have continued to build our capacity and diversify our channels of delivery through investment in
technology, infrastructure, training and by developing our employees. We have reengineered our operating procedures and
strengthened systems of managing risk. Adopting the ethos of “Kaizen”, the Japanese philosophy of continuous improvement,
we will enhance and further these efforts into 2013.
12
CHAIRMAN’S
FINANCIAL
STATEMENTS
STATEMENT
2012 ANNUAL REPORT
We aim to have a positive impact on people and communities. This objective means making Exim “the Bank of Choice”, and
a great place to work. We are confident, in the end, these attitudes and business model will further distinguish Exim Bank
and continue our growth.
It is true as we say in Kiswahili “Anayelala na mgonjwa ndiye anayejua miugulio” (You cannot understand someone until you
forge a relationship with them), we strive to position ourselves close to our customers and cast our net wide, for example,
to the Kigoma and other less-banked towns of Tanzania.
ACKNOWLEDGEMENT
In conclusion, I would like to deeply thank the Members of the Board of Directors for their strong support, acumen and
guidance provided to me. I would like to extend my warm appreciation to the Bank of Tanzania, Members of Government, our
strategic partners (International Finance Corporation, FMO, Norwegian Trust Fund and PROPARCO), our correspondent
banks PTA Bank, Deutsche Bank, HSBC, Citibank, customers and our legal advisers, consultants and auditors for their
continuing trust and support for Exim Bank.
I also thank the Management and Staff of the Bank, who work hard to deliver excellent service to our customers and clients,
and strive to make the Exim Bank experience unique. Their efforts will help to keep the trust of our key stakeholders.
Yogesh Manek
Chairman
Date: 04th April 2013
13
MANAGING DIRECTOR’S
STATEMENT
YEAR IN REVIEW
2012 was another year of growth and distinction at Exim Bank. Our position in our home Tanzanian market was strengthened.
According to the Tanzania Banking Survey 2012 released this year, Exim Bank maintained its top tier position among Tanzania’s
ten largest banks in almost all major categories. In bank assets, as noted by the Chairman, Exim Bank approached the
exceptional trillion shilling threshold. The branch network is the fourth largest in Tanzania. The East African subsidiaries of
Djibouti and Comoros represented the biggest expansion outside the country of any indigenous Tanzanian bank. Exim Bank
further built on a reputation for innovation and providing quality and unmatched services.
Exim Bank scored another distinctive milestone in 2012 with celebration of the 15th Anniversary across the organization.
The many goodwill and brand building events held throughout the month of August provided opportunity for image building
and to recognize and thank customers and stakeholders.The year saw continuing business expansion at the subsidiaries, with
Exim Bank Comoros remaining the fastest growing bank in that country. Our expectation across the Exim Bank Group is to
maintain a deliberate pace of growth so as to broaden and deepen Exim Bank’s relationships, to be a bank of choice.
BANK PERFORMANCE 2012
As noted in the Chairman’s Statement, the bank continued on a trajectory of growth in 2012. Significant progress was
achieved during the year, notably with regard to the process of change initiated during the prior year 2010-2011 with an
aim to strengthen the bank’s foundation. Exim Bank ended the year 2012 on the doorstep of the coveted trillion shilling
milestone, with total assets soaring by 15% to TZS 966.55 billion in 2012 over TZS 841 billion recorded during the year
ended in December 2011. The audited financial results for the year show that basic earnings per share went up 9% to
14
MANAGING
FINANCIALDIRECTOR’S
STATEMENT
STATEMENTS
2012 ANNUAL REPORT
TZS 1,059 in 2012 from TZS 972 in 2011, and total shareholder funds for the company rose 22.5% to TZS 109.427 billion
in 2012 from TZS 89.313 in 2011.
Across the board, major indicators were up. Exim Bank Comoros achieved a growth of 87% in after tax profit compared to
2011. Exim Bank Djibouti, officially launched by the President of Djibouti in December 2011, recorded 158% growth in total
assets for the year 2012, with total deposits growing 144% during the year 2012.
BANKING OPERATIONS
During the year, planned expansion at the bank included the opening of two strategic branches, at Kigoma on Lake Tanganyika
(a gateway to Burundi, DR Congo and Zambia) as well as the opening of a second branch named Kilimanjaro at Moshi (an
important base for commercial agriculture and tourism). The bank recruited sixty-five new employees, as head office and
control functions were strengthened. The change process initiated in 2010-2011 allowed the bank in 2012 to deepen its
utilization of advanced features of the new core banking system, allowing a more fully automated environment in terms of
information, communications and controls.
The platform and the business creativity Exim Bank continued to launch or further refine exciting asset and liability retail
products admired by the market. One such exciting product launched in January 2012 was “Nyumba Yangu”, a flexible home
loan product available for purchase, construction or renovation. Another popular product was “Haba na Haba”, a recurring
deposit scheme that encourages regular savings habit among lower income earners, salaried employees and corporates
alike. Exim Bank continued to promote our other industry-leading products for savings like Nyota and Tumaini that caters
to students and women.
The state-of–the art multimedia ‘Exim Academy’ was formally inaugurated in 2012. The Center has quickly earned a reputation
as a superior bank training facility in Dar es Salaam, and is highly appreciated by Exim staff. The Academy disseminates the
bank’s vision and values to the team across the network, with mentoring, coaching and counseling provided in both group
and one-to-one settings.
2012 saw Exim Bank continue to strengthen our relationship with international development finance agency partners such
as the Dutch FMO, the World Bank’s IFC, and with the French Proparco from whom Exim Bank agreed a USD$15 million
loan for on-lending to SMEs.
VIEWING THE FUTURE
Since being appointed to the post of MD in the first quarter of 2012, I am extremely upbeat on the future of the bank in
large measure because we are realizing the benefits and crafting new opportunities from the investments made in the bank’s
human resources and IT platforms. Exim Bank has been one of the major players in the evolution of Tanzania’s financial
sector, and we are now prepared to make even more important contributions to the Tanzanian economy and those of our
East African affiliates. We are recommitted to the core of Exim Bank values: innovation, reliability, integrity, professionalism,
and customer satisfaction. Our corporate and individual customers will continue to enjoy world class products.
15
MANAGING DIRECTOR’S
STATEMENT
2012 ANNUAL REPORT
On behalf of the entire Management Team, the Chairman’s devoted guidance and the commitment of the Members of the
Board of Directors is deeply acknowledged. They have enabled the many accomplishments realized during the year by
providing vision and oversight which has positioned the Bank for accelerated growth in 2013. We most importantly extend
our indebtedness to Exim Bank’s loyal customers. Sincere appreciation is also offered to our Regulators for their crucial
work, to our international Partners and correspondent banks for their support, and to the bank’s dedicated employees.
Anthony Grant
Managing Director
Date: 04th April 2013
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COMPANY
FINANCIAL
STATEMENTS
INFORMATION
CORPORATE BANKING
The year 2012 saw the Bank increase its focus on corporate,
small and medium enterprises having strengthened
the Corporate Relationship Management Department
(CRMD).
The CRMD provides a high level of personalized service to
customers while acting as a one stop solution for banking
facilities and advisory services. The department supports
companies from various sectors including international
trade, retail, manufacturing, transportation, construction,
real estate and public utilities.
2012 ANNUAL REPORT
Realising the demand for Housing in a developing nation, the
Bank added yet another appealing product to its retail lending
bouquet, the ‘Nyumba Yangu’ loan meaning ‘My Home’ loan.
The loan facility aims to fund construction, procurement and
renovation of an individual’s residence with flexible terms
and faster turnaround time. With facilitation of refinance
from Tanzania Mortgage Refinance Company (TMRC), the
Bank is able to provide a longer tenor of finance, facilitating
access to a larger share of the market.
CRMD’s emphasis remains on sustaining and building on
existing relationships as well as providing new customers
with a smooth on-boarding experience. CRMD’s approach
is to generate new business through the cross selling of
products and establishing a loyal customer base. This
involves working closely with and supporting the branches
in Dar es Salaam and across the regions.
RETAIL BANKING
The Exim Bank’s Managing Director, Mr. Anthony Grant discussing a point
with Vice President of the United Republic of Tanzania, Dr. Mohammed
Gharib Bilal during Tanzania Homes Expo Exhibition held at Mlimani
City in Dar es Salaam. Looking on is the Bank’s Head of Retail Banking
Department, Mr. Ramakrishna Rao.
Savings Account
Exim Bank is continually designing and delivering need based
retail products and services to enhance customer delight.
Several of these products were launched during the year
2012, as under:
? Current Account for schools,
? Current Account for community traders / used car
dealers and transport operators;
? Haba na Haba, a Recurring Deposit Account to
inculcate the habit of thrift for future. The product
generated a positive response particularly from the
low income segment, thus serving the population.
Mobile Banking
The mobile revolution provided a good platform for the
Bank to launch its Mobile Banking services during the year.
The product is a delight to the customers of the Bank.
From as basic as ‘balance enquiry’ to practically every
possible utility payments, the service facilitates day to day
transactional banking, besides offering Intra bank funds
transfer.The usual transaction alerts provide added benefits
to customers.
18
COMPANY
FINANCIAL
STATEMENTS
INFORMATION
2012 ANNUAL REPORT
INTERNATIONAL BANKING DIVISION
AND PAYMENTS
WOMEN ENTREPRENEURS FINANCING
(WEF) PROGRAMME
The International Banking Division caters to the needs of
corporates and individuals. Providing all trade solutions in
collaboration with some of the leading International banks,
the Bank enjoys a repute of being quick in turnaround time
and ease of service.
Since 2007 when the Bank pioneered the Women
Entrepreneurs Finance Programme (WEF) in Tanzania,
the International Financing Corporation (IFC) remains
a strong partner. WEF is an ongoing endeavour whose
main objectives are to promote development of women
entrepreneurship in business through the enhancement
of existing micro enterprises managed by women, and the
encouragement of new ventures with a potential to grow.
This program also promotes productive employment within
the focus of poverty alleviation and sustainable livelihood.
The division facilitates and undertakes all inward and
outward remittances (domestic and international). The
straight through processing facility provides automatic
credit of inward remittances with an auto email alert to
the beneficiary.
“Remit 2 India” is a new product launched by the division
during the year to enable the expatriate community in
Tanzania to send money to India at a very low rate. This
product has generated great interest in the target customer
segment. The division is equipped with an advanced
technological platform to provide customer service
of international standards at a minimal fee and faster
turnaround.
CREDIT MANAGEMENT
Exim Bank maintains a sound credit portfolio accomplished
through delivery of superior solutions and liquidity across a
full range of products. In today’s competitive environment,
the demand for credit facilities and related services is ever
growing. The Bank enjoys a niche in the Industry being
one of the most market savvy and flexible to the needs of
the Corporates and SMEs. The Bank takes pride in being
regarded as synonym to ‘fast decisions’ on credit.
In 2012, the Bank laid greater emphasis on the approach to
credit monitoring, applying escalating degrees of attention
to monitor, control and manage receivables. These are
tackled using a measured approach and by selecting the most
appropriate method suitable to the particular borrower
while still maintaining a sound relationship.
19
Mrs. Felister Simba, at a training of women entrepreneurs.
The success of WEF is evident in its powerful impact on
2,846 women entrepreneurs and their families who have
benefited from the program since its inception. It has
contributed immensely to the empowerment of Tanzanian
women and has been a source of employment and income
distribution.
The Bank is encouraged by women who have been
strategically building up assets (e.g. fixed deposit, equipment,
etc), and very meticulously managing funds. WEF continues
to support women to develop their businesses.
COMPANY
FINANCIAL
STATEMENTS
INFORMATION
2012 ANNUAL REPORT
In 2012, over 326 women entrepreneurs in different sectors
of the economy have benefitted from the program where
TZS 21.07 billion has been disbursed as of 31st December.
transaction times and efficiency of banking operations that
has led to increased customer satisfaction and amplified
employee productivity.
Exim Bank has provided training to more than 1,344
women from Dar es Salaam, Mwanza, Kilimanjaro,
Arusha, Morogoro, Mtwara, Manyara and Mbeya. The
program offers opportunities to women entrepreneurs
develop their competencies in the areas of financial literacy,
entrepreneurial skills, quality management, advertising,
recruitment and retention of highly qualified employees to
deliver the best service possible.
The department increased network reliability by investing in
fiber connectivity as well as simultaneously implementing a
two-tier backup network that ascertains there is “no single
point of snafu”. We currently have a high level of scalability
with the capacity to handle both geographic expansion and
bandwidth growth.
The women program (WEF) is now accessible from all Exim
Branches across the country.
With this infrastructural breakthrough, the Bank has readily
aligned with Tanzania Revenue Authority to provide online
payments facility (AsyBank) for collection of domestic
custom duties. These services are now accessible online
and the Bank is registered to accept the custom payment
on behalf of TRA for their customers.
We continue to deploy and sustain solutions that give us
colossal levels of security, scalability, network-wide visibility
and access control. These will see the bank establish more
value added products and services for our customers and
make banking effortless.
HUMAN RESOURCES MANAGEMENT
INFORMATION TECHNOLOGY
Exim Bank continues to stretch its reach to the unbanked
population and is casting its net even wider. The year saw
strengthening of its capacity to support the Bank’s other
initiatives building on flexible, secure, scalable and reliable
solutions to meet connectivity requirements.
With a vast and growing branch network, robust service
coverage capability is required across the branches. One of
our achievements in 2012 was our success in improving the
Human Resources (HR) facilitate allocation and alignment of
staff to provide greater consistency in the level of support
made available to units. This has resulted in a full service
HR organization with the capacity to provide strategic
HR direction, guidance, and support to all administrative
executions of the Bank. With the new branches across
Tanzania during the year, we now have over 600 staff
members.
HR department supports the core principles of the Bank
to create and maintain a workplace that provides respect,
dignity, and fairness to all employees. The department
has a focused goal to help enhance employee careers by
practicing staff rotations and providing relevant training to
build on the quality of their professional lives through a fair
benefits program and professional self-development.
20
COMPANY
FINANCIAL
STATEMENTS
INFORMATION
2012 ANNUAL REPORT
and additions to the staff development programs to better
equip new staff and manage up-and-coming supervisory
needs. The Academy has also had great success towards
building loyalty and motivation amongst staff.
Director Mr. Hanif Jaffer presenting long service recognition award to Mrs.
Melkiada Makongela at the 15th Anniversary staff celebrations.
The HR department works closely with Management to
provide analytical and strategic human resource planning,
and direct services for ever-increasing staff engagement. It
continues to support management in all aspects and tactics
to help supervisors support individual and organizational
career development.
The Bank provides an attractive health cover plan for
all active employees. This is supported by provisions of
comprehensive life coverage for all personnel.
The year also saw a realigning of the administrative human
resources procedures, business practices and processes in
line with a changing and dynamic work environment. These
procedures covered the areas of recruitment and selection
and performance management. The new performance
management system has been realigned on best practices.
TRAINING AND DEVELOPMENT:
THE EXIM ACADEMY
The Training and Development department relocated to a
state of the art premises in Ubungo, Dar es Salaam in March
2012. The Exim Academy was inaugurated on the 15th of
October 2012. The Bank has implemented improvement
21
The Permanent Secretary of the Ministry of Education & Vocational
Training, Mr. Selestine Gesimba, cuts a ribbon at the launch of the Bank’s
training hub dubbed ‘The Exim Academy’ in Dar es Salaam. First from the
right is the Exim Bank Board Chairman Yogesh Manek.
The Academy also trains staff from subsidiaries in Comoros
and Djibouti. In total, 1171 trainees from different levels
have been presented with the opportunity to acquire
skills in enhancing their competencies during the year. In
relation to this, the Bank is proud to say that nearly 95%
of all supervisory level positions being held today are by
people who have grown from within. In order to accomplish
this, a total of 30,296 person hours and 3,786 person days
were invested within the same period along with a hefty
investment of TZS 335 million.
One of the biggest accomplishments is the Bank’s own
Management and Leadership Development Program
christened “eMpower”. This is a three year sustainable
program majorly focused on strong leadership skills and
offers 15 varied modules to support the commendable
internal recruitment policy of the Bank and counter the
demands and challenges of managing people.
COMPANY
FINANCIAL
STATEMENTS
INFORMATION
2012 ANNUAL REPORT
Other successful initiatives include the “Personal
Development Program” designed for corporate office staff,
and the “Professional Banker Program” for branch staff.
Both programs have been specifically tailored to provide
the necessary skills and knowledge required to perform in a
professional manner. Endorsing this act is feedback received
from supervisors informing of improved motivation levels,
high levels of morale, engagement and a better understanding
of the procedures and values of the Bank. With high demand
for each of these programs, The Academy is looking into
expanding the agenda offerings for next year.
agreed remedial actions have been implemented audit findings
and overdue issues are reported to senior management and
quarterly to Board Audit Committee (BAC).
It is envisaged that blended learning will be introduced by
way of launching an e-learning platform to encourage selfinitiated and self-managed learning to complement classroom
programs.
For this year, the Bank has enhanced its risk management
framework. Constant efforts are being made to ensure
sound practices through effective compliance with policies
and procedures.The department’s value is maximized when
it supports management to set strategy, objectives, and
helps to balance growth, returns and related risks.
The Bank has been successful in implementing a unique
business model and an effective learning and development
framework that has all the key stakeholders actively involved.
The Academy enjoys unparalleled support from all within the
Bank which attributes to it success.
INTERNAL AUDIT
The Internal Audit function reports to and operates under
a mandate from the Board Audit Committee (BAC) and has
the authority to independently determine the scope and
extent of work to be performed. Board Audit Committee
(BAC) guides and monitors the quality of the internal audit
function.
This work is accomplished by introducing a systematic,
disciplined, risk-based approach to the evaluation and
improvement of the effectiveness of risk management,controls
and governance. Internal auditing enhances management
controls by providing insight and recommendations based on
analysis and assessments of data and business processes.
The department tracks material or significant control
weaknesses identified by internal and external regulators as
well as planned management remedial actions. To ensure that
RISK AND COMPLIANCE
Banks and financial service organizations of all sizes are
now more concerned than ever about managing risk and
compliance. New banking products, increased government
scrutiny and intense focus on standard operating procedures
generate a larger set of rules and regulations.
The Risk and Compliance departments merged during the
year to effectively manage both aspects and bring about
synergies in the related areas.
?
SECURITY AND VIGILANCE
Lapses in security make an impact on all organizations and
the economy at large. Exim Bank is meticulously devoted to
providing security for our customers that guarantee safety
and freedom from danger or anxiety. In the year, this was
communicated to the entire organisation, and proactive
strides taken to put in place protective and defensive
measures specifically adopted to deter, detect and defeat
culpable and criminal acts both covertly and overtly.
The Bank installed anti skimming software on all ATM’s
nationwide, as a fraud preventive measure.
Our security department also works with partners
within and outside the Bank to ensure fraud and other
security threats against the Bank are detected, disrupted
and prevented. Measures such as conducting a bank-wide
awareness campaign addressing the issues of fraud and
forgery were held earlier in the year.
22
COMPANY
FINANCIAL
INFORMATION
STATEMENTS
2012 ANNUAL REPORT
Our employees have responded well to the new procedures
introduced in 2012 which have in turn enhanced internal
and external customer service and strengthened internal
controls. These new measures have largely improved
the execution of branch operations and thus the Bank’s
performance.
?
CUSTOMER SERVICE
Customer Service department plays a major role in liaising
with other functions for faster execution and delivery of
services. In 2012, the department strived to identify, explore
and recommend common protocols of service delivery
standards.
During the year, the department managed to engage itself
in key areas that were formerly considered as challenges,
bringing the Bank to a level of satisfaction as acknowledged by
the customers. Some of the key areas where improvements
in service levels have been made are;
? Issuance of ATM cards, cheque books, Swift receipts
and improving uptime for ATM’s.
? Implementing a full-fledged built-in Queue Management
System.
? Placement of customer services coordinators at
branches with heavy client flow to improve turnaround
time.
? Introduction of a dedicated contact point for customers
complaints and queries.
The Bank continues to pursue activities aimed at getting the
voice of customer (VOC) into the heart of our business.
The department has been able to bring in a substantial
improvement in the service levels at various points.
23
CARDS DIVISION
The Bank offers both Credit Cards and Debit Cards.
These cards are issued to our customers to facilitate their
payments electronically. Exim Bank cards can be used for
online shopping and POS machines displaying VISA and
MASTERCARD logo.
HIGHLIGHTS FOR THE YEAR
? Acquiring business has grown by 167% compared
to last year.
? Card profitability has increased by 200%
compared to last year.
? ATM Uptime has gone up from 91% to 93%.
? Turnaround time of card delivery has reduced
from 13 days to 5 days.
? Our ATM security has been strengthened with
Anti Skimming devices loaded on the ATM’s.
? Started acquiring retail business in Comoros.
? Launched ATM operations in Djibouti.
COMPANY
FINANCIAL
STATEMENTS
INFORMATION
2012 ANNUAL REPORT
Debit Cards
Salary Cards
Cards offered to savings account customers titled FAIDA
CARD. Both the Debit and Credit type cards can be
used worldwide at ATM machines displaying VISA and
MASTERCARD logo.
Salary Cards are debit cards issued by the Bank to employees
of organizations for salary payments. The cards can be used
to withdraw money through Exim Bank and other ATMs
worldwide. In addition to this salary card customers are
offered zero balance facility.
TANAPA Exim Cards
Exim Bank introduced TANAPA Exim Cards to allow
electronic entry fee payments at the Tanzania National
Parks gates. With the service, tourists are able to pay park
fees electronically without any hassle and TANAPA has
simplified its reconciliation process. These are proprietary
debit and prepaid cards and are issued to both account
holders and non account holders. These cards are issued in
both TZS and USD.
Point-Of-Sale (POS) Services
Exim Bank offers electronic payment collections system to
merchants. Our POS services are spread across Tanzania
covering merchant locations and facilitating merchants and
customers to make payments electronically by using VISA
and MasterCard on these machines.
24
CORPORATE SOCIAL
FINANCIAL
STATEMENTS
RESPONSIBILITY
2012 ANNUAL REPORT
Exim Bank integrates corporate social responsibility within
the overall corporate strategy. Our stakeholders expect
more transparency in relation to our interaction with the
environment and society.
Exim Bank contributed to the endeavour for the second
year to support the initiative. The event brought together
people from different parts of the world especially from
East Africa and the Bank had an opportunity to make its
presence felt with 32 staff members participating in the 5
KM Corporate Team Challenge.
Exim Bank has a continuing commitment to be ethical. The
Bank takes great pride in its contribution to the nation’s
general economic development, improving the quality of life
of the local community and society at large.
This section highlights details of our focused CSR endeavours
in 2012.
KEY ACTIONS IN 2012
Fostering Talent
Philanthropy
Through our patronage, we aim to provide a meaningful
response to critical community challenges. During 2012,
we provided financial support to address some of the
most pressing issues in our communities including financing
education and other critical needs. The Bank has developed
significant partnerships with institutions such as Kilakala
Primary School, Internal Auditors Tanzania and Tanzania
Police who are engaged with the industry and community
in different ways. These partnerships form the backbone of
of the Bank’s philanthropic efforts and are often magnified
through employee voluntary efforts in various initiatives.
Kilakala Primary School
The extraordinary in everyday life!
The Safari International Marathon is an annual event that
encourages local Tanzanian athletes to pursue their dreams
and reach higher accomplishments. The event hosted in
Arusha on 9th of September 2012 attracted a large number
of tourists by way of invited international athletes. This is
an ongoing event and has become one of the most popular
event amongst young and old athletes.
25
The Exim Bank Managing Director, Mr. Anthony Grant (Right) talks to
one of the Kilakala Primary School pupils. Looking on third left is the Exim
Bank Assistant General Manager Mr. N.Seshagiri Rao.
Exim Bank is committed to supporting education and this
initiative is aimed at assisting Kilakala Primary School.
CORPORATE SOCIAL
FINANCIAL
STATEMENTS
RESPONSIBILITY
2012 ANNUAL REPORT
This is a government primary school located in Mbagala,
Temeke municipality serving 2,864 students from
disadvantaged families. Exim Bank adopted the school in
August 2012 and started by donating 100 desks as part of
the Bank’s unique corporate social responsibility that seeks
to improve the school’s learning environment.
The Bank has further donated a well-stocked library facility
to the school. Exim Bank will continue supporting various
educational projects in a bid to contribute to uplifting the
education standards in the country.
Recognizing Brave Police Officers
The Inspector General of Police (IGP) Mr. Said Mwema (right) at the
ceremony hosted by the Bank to honor the services of outstanding Police
Officers. Looking on is the Exim Bank Board Chairman, Mr.Yogesh Manek
(centre) and the Exim Bank Managing Director, Mr. Anthony Grant (left).
Exim Bank Vein-to-Vein Blood Drive
The Bank honored five Police Officers from Dar es Salaam, Mwanza and
Tanga regions for serving the nation.
On the Bank’s 15th Anniversary celebrated in August
2012, five police officers from Dar es Salaam, Mwanza and
Tanga regions were honoured for their dedicated work
and tremendous spirit of serving the nation. The police
officers were each awarded with a brand new motorcycle,
a certificate of recognition and a medal. Among those
recognized were; Inspector Abel. B. Swai, Sgt. Vincent C.
Chikupe, A/Inspector Dorina K. Poyo, D.C Banda. M. Mtani
and PC Mathias R. Mang’ombe.
The Exim Bank management team takes part in the Bank’s Vein-to-Vein’
blood donation drive held at the Bank’s headquarters in Dar es Salaam.
Exim Bank hosted a blood donation drive in June 2012. The
event was a tremendous success with 80 units of blood
donated for expectant mothers and children under the age
of six.
26
CORPORATE SOCIAL
FINANCIAL
STATEMENTS
RESPONSIBILITY
2012 ANNUAL REPORT
Blue Hope Orphanage
Among other areas of interest, Exim Bank has also taken
under its wing an orphanage located in Mabibo, Dar es
Salaam. In December 2012, the Managing Director, Mr.
Anthony Grant paid a visit to the orphanage alongside
other staff to present the children with scholastic materials
to aid their educational growth.
?
A cross section of volunteers who turned up to support the Exim Bank
‘Vein-to-Vein’ blood donation drive held at the Bank’s headquarters in Dar
es Salaam.
Exim Bank City Beautification Campaign
The Bank has pledged to support the beautification process
of the city of Dar es Salaam in a bid to improve its image.
In April 2012, the Bank’s employees volunteered for a green
environment weekend cleaning exercise of Clock Tower and
Ohio Gardens.
A team of Exim Bank employees engage in a cleaning exercise of the
Clock Tower gardens adjacent to the Exim Bank Clock Tower Branch in
Dar es Salaam.
27
The Bank’s Assistsnt Marketing Manager Ms. Anita Goshashy poses for
a photo with some of the children at Blue Hope Orphanage Centre in
Mabibo, Dar es Salaam.
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
28
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
The Bank celebrated its 15
th year of existence Bank wid
e in 2012.
The celebration extended to
include the multitude of miles
tones achieved
along the way. The Bank’s
capabilities support growth
and progress
for all its customers, key St
akeholders, Staff and the co
mmunities in the
operational environment. With
influence across Tanzania,
Comoros and
Djibouti, it is positioned to giv
e individuals and institution
s access
to finance and enable them
to
play an important part in soc
29
iety.
EXIM BANK
FINANCIAL
STATEMENTSSA
COMOROS
Exim Bank Tanzania is the first financial institution in Tanzania
to venture establishing footprints outside the country. The
Bank opened its first subsidiary in The Union of Comoros
in the year 2007.
2012 PERFORMANCE HIGHLIGHTS
The fully owned subsidiary of Exim Bank (Tanzania) Ltd in
Comoros, offers universal banking facilities to all customers
in the islands of Moroni and Anjouan. In 2012, the subsidiary
successfully completed five years of operations and continues
to be the fastest growing bank in the country. During the year,
the Bank has shown growth in all the parameters as under:
BUSINESS GROWTH
(Amount in Comoros Francs)
?
Shareholder’s funds at KMF 1.998 billion
(USD 5.41 Million); growth of 37.22%
?
Total Assets moved up by 11.08%, to
KMF 11.88 billion (USD 32.19 Million)
?
Total Deposits moved up by 9.23%, to
KMF 8.94 billion (USD 24.22 Million)
?
CASA stood at 71.46 % of the deposits portfolio.
?
Total Advances jumped by 15.77%, to
KMF 5.57 billion (USD 15.09 Million)
2012 ANNUAL REPORT
However, the country anticipates a growing potential in
Indian Ocean tourism and exploration of natural gas.
? The Bank constructed and inaugurated a new building
for transacting MoneyGram business at Moroni for
providing a more conducive banking environment and
focused attention to different sections of customers.
? The economy is mainly cash based; the Bank continued
its innovative initiatives and installed two POS terminals
at key locations. The outlets besides helping to create
the culture of credit and savings are bringing the nation
further closer to the outside world.
? An off-site ATM was installed at Hotel Retaj Moroni.
? “Banking on Wheels”, an initiative offering banking
facilities at the door-steps of customers in a mobile
van, was launched.
? MoneyGram business was expanded by appointing Sub
Representatives.
PROFITABILITY
The Bank recorded Profit after Tax of KMF 542 million (USD
1.47 million) (2011: KMF 290 million (USD 0.79 million)) a
growth of 86.72%.
The impact of the various initiatives taken by the Bank are
significant when one takes into account the fact that 2012
estimated GDP of Comoros was around USD 1 Billion.
30
EXIM BANK
FINANCIAL
STATEMENTS
DJIBOUTI
SA
2012 ANNUAL REPORT
Exim Bank Djibouti is another fully owned subsidiary of
Exim Bank (Tanzania) Ltd. The subsidiary opened on 09th
March 2011 and offers wholesale banking to customers.
In less than two years, the Bank has positioned itself as a
forward looking financial institution and leader in banking
with innovative products and personalized service. Djibouti
is the port to the world for landlocked Ethiopia (90 million
people).
2012 PERFORMANCE HIGHLIGHTS
The highlights of performance in 2012 are as under:
BUSINESS GROWTH
(Amount in Djibouti Francs)
From left: Exim Bank’s Director, Mr. Hanif Jaffer, Chief Executive Officer,
Mr. Dinesh Arora, Board Chairman Mr. Yogesh Manek, Director, Mr.
Shaffin Jamal, Board member, Mr. Nalin Kothari, Exim Bank Djibouti
and Director Mr. Tom Wescott during the official inauguration of Exim
Bank Djibouti.
?
Total Assets have grown by 158%, to
DJF 1760 Million (USD 9.92 Million)
?
Total Deposits have grown from DJF 40 Million
to DJF 743 Million (USD 9.06 Million)
?
Total Advances have grown from DJF 5.2 Million
to DJF 179 Million (USD 1.02 Million)
?
Shareholder’s funds have grown by 39.00%,
reached to DJF133 Million (USD 0.70 Million)
The following are significant achievements during 2012:
? The Bank launched its first ATM machine accepting
debit cards.
? The Bank introduced the first electronic banking
service in Djibouti (Smart statment).
? The first Bank to introduce one day/overnight transfer
worldwide “Swift transfer.”
? MoneyGram Money transfer business was introduced.
The Bank focuses on building human capital through
training and development to ensure par excellence
customer service.
31
Seated: His Excellency, President of the Republic of Djibouti, Mr. Ismaïl
Omar Guelleh during the official inauguration of Exim Bank Djibouti.
Standing from left Mr. Ilyas Moussa, Exim Bank Djibouti Board member
(Current Minister of Finance Djibouti), Board Chairman Mr. Yogesh
Manek, Director, Mr. Shaffin Jamal and Chief Executive Officer, Mr.
Dinesh Arora.
Our relationship with customers:
* Understanding & Empathy
* Fairness
* Innovative Solutions
* Quick Turnaround
Exim…
The Ba
nk
of Cho
ice
32
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
1
2012 ANNUAL REPORT
The directors submit their report together with the audited financial statements for the year ended 31 December
2012, which disclose the state of affairs of the group and company.
2 INCORPORATION
The company is incorporated in Tanzania under Companies Act as a private company limited by shares.
3 OUR VISION
To be the bank of choice.
4 OUR MISSION
We are committed to remain an innovative Tanzanian Bank offering services of international standards.
5 PRINCIPAL ACTIVITIES
The Company is engaged in the business of banking and the provision of related services.
6 BUSINESS DEVELOPMENTS
In 2012, the Company completed its fifteen years of operations and continued to be amongst the top performing banks in
the country on key parameters viz total assets and deposits.
The following achievements were recorded in the year:
? The Bank continued to expand its nationwide network with the launch of two new branches opened during the year;
in Kigoma town on Lake Tanganika and Kilimanjaro, a second branch in Moshi town in the heart of the agricultural and
tourism area.
? The Bank launched new products including “Nyumba Yangu” (Mortgage financing) and “Haba na Haba”(hybrid of savings
and investment plan).
? Additional modules were implemented during the year to leverage the technology platform enabled by the new Core
BANKING SYSTEM, :- Locker Module, Fixed Asset Module, Standing Instructions module, Security Module and Mobile
Banking / SMS alert Module. The expected results will include improved services and at lower costs.
? Partnerships were strengthened with international institutions. A $15 million loan was concluded from Proparco, the
French Development Financial Institution, for on-lending to the SME sector.
? Progress continued at the overseas affiliates, including construction in Comoros of a new branch in Moheli completing
Exim Bank’s footprint on all of the autonomous islands.
? The Staff Training Centre, redesignated “The Exim Academy”, moved to highly refurbished premises in Ubungo – a
multi-media, multi-auditorium environment for learning. A comprehensive Training Needs Analysis of Corporate
Departments and Branch Staff was conducted.
33
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
7 DIRECTORS
The directors of the Company at the date of this report and who have served since 1 January 2012, unless otherwise stated,
are:
Name
Position
Nationality
Qualifications
1
Mr.Yogesh Manek
Chairman
Tanzanian
Bachelor of Arts
2
Mr. Hanif Jaffer
Director
Tanzanian
Certified Public Accountant ( CPA-T)
3
Mr. Shaffin Jamal
Director
Tanzanian
Masters of Business Administration
4
Mr. Pascal Kamuzora
Director
Tanzanian
Master of Arts (Economics)
5
Mr. Thomas Wescott
Director
American
Bachelor of Arts, Government and Economics
6
Hon. Juma Mwapachu
Director
Tanzanian
Bachelor of Law and Post Graduate Diploma in
International law
The Company Secretary as at 31 December 2012 was Adept Chambers, Tanzania.
8 CORPORATE GOVERNANCE
The Board of Directors consists of six members. No director held an executive position in the Bank during the year. The
Board takes overall responsibility for the Bank, including that for identifying key risk areas, considering and monitoring credit
and investment decisions, considering significant financial matters, and reviewing the performance of management business
plans and budgets. The Board is also responsible for ensuring that a comprehensive system of internal control policies and
procedures is operative, and for compliance with sound corporate governance principles.
The Board is required to meet at least four times a year and the Board met four times during the year 2012. The Board
delegates the day to day management of the business to the Strategic Management comprising the Managing Director and
the Chief Executive Officer, assisted by other senior management.The Management team is invited to attend board meetings
and the meetings of various Sub-committees of the Board. The Management remains responsible for the effective control
of all the Company’s operational activities and acting as a medium of communication and coordination amongst the various
business and operational units of the Bank.
The Group and Bank are committed to the principles of effective corporate governance .The directors also recognize the
importance of integrity, transparency and accountability. The Board has the following committees to ensure a high standard
of corporate governance. All committees report to the Board and apart from the Credit Committee which met 20 times, all
other committees met four times each during the year.
34
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
8 CORPORATE GOVERNANCE (continued)
(I) Asset and Liability Management Committee (ALCO)
Name
Position
1
Mr. Thomas Wescott
Chairman
2
Mr. Hanif Jaffer
Member
3
Mr. Pascal Kamuzora
Member
(ii) Credit Committee (BCC)
Name
Position
1
Mr. Shaffin Jamal
Chairman
2
Mr.Yogesh Manek
Member
3
Mr. Hanif Jaffer
Member
(iii) Risk Management Committee (BRMC)
Name
Position
1
Mr. Thomas Wescott
Chairman
2
Mr. Hanif Jaffer
Member
3
Mr. Pascal Kamuzora
Member
(iv) Audit Committee (BAC)
Name
Position
1
Mr. Thomas Wescott
Chairman
2
Mr. Hanif Jaffer
Member
3
Mr. Pascal Kamuzora
Member
(v) Investment Committee (BIC)
Name
Position
1
Mr.Yogesh Manek
Chairman
2
Mr. Shaffin Jamal
Member
3
Mr. Hanif Jaffer
Member
4
Mr. Thomas Wescott
Member
35
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
8 CORPORATE GOVERNANCE (continued)
(vi) Executive Committee (EXCOM)
Name
Position
1
Mr.Yogesh Manek
Chairman
2
Mr. Shaffin Jamal
Member
3
Mr. Hanif Jaffer
Member
4
Hon. Juma Mwapachu
Member
9 CAPITAL STRUCTURE
The Bank’s capital structure for the year under review is shown in note 3.5 of the financial statements.
10 MANAGEMENT
The responsibility for the management of the Bank rests with a team defined as Strategic Management comprising the
Managing Director and the Chief Executive Officer. The Bank is organised in the following departments:
(i)
Accounts and MIS
(ii) Administration and Procurement
(iii) Cards
(iv) Centralised Cheque Issuance Cell
(v) Compliance Cell
(vi) Core Banking System
(vii) Corporate Relationship Management
(viii) Credit Management
(ix) Customer Service
(x) Exim Academy (The Learning and Development Centre)
(xi) Finance
(xii) Human Resources
(xiii) Information Technology
(xiv) Internal Audit
(xv) Marketing and Publicity
(xvi) Operations
(xvii) Projects Management
(xviii) Reconciliation
(xix) Retail Banking
(xx) Risk Management
(xxi) Security and Vigilance
(xxii) Trade Finance and Remittances
(xxiii) Treasury Management
36
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
11 SHAREHOLDERS OF THE COMPANY
The total number of shareholders during the year was 7 (2011: 7 shareholders). The shares of the bank are held as follows:
Shareholder
2012
Number of
ordinary shares
2011
Number of
ordinary shares
1
Mr.Yogesh Manek
2,580,000
2,580,000
2
Mr. Shaffin Jamal
2,580,000
2,580,000
3
Mr. Hanif Jaffer
2,580,000
2,580,000
4
Mr. Azim Virjee
1,935,000
1,935,000
5
Mr. Azim Kassam
2,580,000
2,580,000
6
Alawa Investments Limited
322,500
322,500
7
Kandasi Investments Limited
322,500
322,500
12,900,000
12,900,000
Total
Directors holding shares are listed below:
Name
Nationality
Number of
Ordinary Shares
1
Mr.Yogesh Manek
Tanzanian
2,580,000
2
Mr. Shaffin Jamal
Tanzanian
2,580,000
3
Mr.Hanif Jaffer
Tanzanian
2,580,000
12 FUTURE DEVELOPMENT PLANS
The Board intends to continue a thoughtful and business oriented expansion of the Bank’s Tanzania network and the
footprint of affiliates. Delivery channels will be expanded and deepened, as the Bank rolls out its mobile banking, internet
banking and agency banking services. Improvement in customer services and relationship management will be accelerated
to secure one of the best turnaround times in the market. Accompanied with exceptional complaints handling systems, the
Bank plans to proactively remain ahead of competition.
In an endeavor to build a strong foundation for future growth, the Bank has been implementing a number of transformation
initiatives which include the following:
? Core banking system migration from Flexicube to the new Core Banking Solution (CBS).
? Building a cadre of staff and implement retention policy to ensure availability of skilled and well motivated team to take
the Bank to the next level.
? Putting in place systems and processes to further strengthen transparency and good governance. The intent is to
ensure sustainability of strong growth.
37
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
13 RESULTS AND DIVIDEND
During the year, Exim Bank Group had a 9% increase in profit after tax of TZS 13,667 million (2011:TZS 12,445 million). The
directors recommend payment of a 15% dividend for 2012 (2011: Nil).
14 PERFOMANCE FOR THE YEAR
?
?
?
?
?
The Group recorded a profit before tax of TZS 16,540 million (2011: TZS 17,487 million);
The Group’s deposits from customers increased by 17.2% to TZS 723 billion (2011: TZS 617 billion);
Group’s lending portfolio prudently increased to TZS 436 billion (2011: TZS 428 billion); and
Total assets increased by 14.8% to TZS 967 billion (2011: TZS 842 billion).
15 RISK MANAGEMENT AND INTERNAL CONTROL
The Board accepts final responsibility for the risk management and internal control systems of the Company. It is the task
of management to ensure that adequate internal financial and operational control systems are developed and maintained on
an ongoing basis in order to provide reasonable assurance regarding:
?
?
?
?
?
?
The effectiveness and efficiency of operations;
The safeguarding of the Company’s assets;
Compliance with applicable laws and regulations;
The reliability of accounting records;
Business sustainability under normal as well as adverse conditions; and
Responsible behaviors towards all stakeholders.
The Board assessed the internal control systems throughout the financial year ended 31 December 2012 and is of the opinion
that they met accepted criteria. The Board carries out risk and internal control assessment through Risk Management
Committee.
16 SOLVENCY
The Board of directors confirms that applicable accounting standards have been followed and that the financial statements
have been prepared on a going concern basis. The Board of directors has reasonable expectation that the Group and
Company have adequate resources to continue in operational existence for the foreseeable future.
The Bank has met all the Bank of Tanzania’s (BoT) liquidity and capital adequacy ratios and is considered solvent by the Board
of Directors.
17 EMPLOYEES’ WELFARE
Management and Employees’ Relationship
The Bank is equal opportunity employer. It gives equal access to employment opportunities and ensures that the best
available person is appointed to any given position free from discrimination of any kind and without regard to factors like
gender, marital status, tribe, religion and disability which does not impair ability to discharge duties.
38
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
17 EMPLOYEES’ WELFARE (continued)
Training Facilities
For the year 2012, the Bank increased its spending for staff training by 16.7% to TZS 335 million for staff training in order
to improve employee technical skills and hence effectiveness (2011:TZS 287 million. Training programs have been and are
continually being developed to ensure employees are adequately trained at all levels. All employees have some form of annual
training to upgrade skills and enhance development.
Medical Assistance
All confirmed members of staff with a maximum number of five beneficiaries (dependants including a spouse and four
children) for each employee were availed medical insurance guaranteed by the Board. Currently these services are provided
by Strategis Insurance Tanzania Limited. There is also a Group Life insurance cover for all confirmed staff.
Health and Safety
The Bank has a strong administration department which ensures that a strong culture of safety prevails at all times. A safe
working environment is ensured for all employees and contractors by providing adequate and proper personal protective
equipment, training and supervision as necessary.
Financial Assistance to Staff
Loans and advances under various schemes are available to all confirmed employees depending on the assessment of and
the discretion of management as to the need and circumstances as per bank’s Human Resources (HR) policy approved by
the Board of Directors. This is to assist in promoting the welfare of its employees.
Persons with Disabilities
Applications for employment by disabled persons are always considered, bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with
the company continues and appropriate training is arranged. It is the policy of the company that training, career development
and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employees Benefit Plan
The Bank and all its employees contribute to the National Social Security Fund (NSSF), which is a defined contribution
scheme. Employees contribute 10% and the Bank also contributes 10% to the scheme. The number of employees at the end
of year was 680 (2011: 565 staff).
18 GENDER PARITY
Exim Bank Group had 680 employees, out of which 329 were female and 351 were male. (2011: 286 female 279 male staff).
39
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
19 RELATED PARTY TRANSACTIONS
All related party transactions and balances are disclosed in note 31 to these financial statements.
20 POLITICAL AND CHARITABLE DONATIONS
The company did not make any political donations during the year. Donations made to charitable organizations during the
year amounted to TZS 53 million (2011: TZS 15 million).
21 CORPORATE SOCIAL RESPONSIBILITY
The Bank is committed to the community in which it operates and endeavors to support a variety of national initiatives.
Among other contributions in 2012, the donations below were made to the community.
Donation to various social groups
The Bank donated to various non-governmental organisations (NGOs) which serve the community. Most of the donations
were directed towards protecting the environment, supporting orphans and youth empowerment.
The Bank also contributed to help the needy society by donating to Tushikamane Pamoja Foundation, a non-governmental
organisation (NGO) that was founded to address the lack of resources that is endemic within communities affected by
poverty.
Contribution towards Education
The Bank contributed various items including desks, building of a library, text books and water tanks to the following schools;
Yombo Kilakala Primary, Bahari Beach Primary and Aquinas Secondary. Further, in the efforts to ensure continuous support,
the Bank decided to adopt Yombo Kilakala Primary School so as to create a big impact to the school in the long run.
22 AUDITOR
The auditor, PricewaterhouseCoopers, has expressed its willingness to continue in office and is eligible for re-appointment.
Approved by the board of directors on and signed on its behalf by:
_______________________
Mr.Yogesh Manek
Chairman
40
04th April 2013
_____________________
Date
STATEMENT
FINANCIALOF
DIRECTORS’
STATEMENTS
RESPONSIBILITIES
2012 ANNUAL REPORT
The Directors are required by the Companies Act, CAP 212 Act No. 12 of 2002 to prepare financial statements for each
financial period that give a true and fair view of the state of affairs of the Company and Group as at the end of the financial
year and of their profit or loss for the year. The Directors are also obliged to ensure that the Company keeps proper
accounting records that disclose, with reasonable accuracy, the financial position of the Company. They are also responsible
for safeguarding the assets of the Company.
The Directors accept responsibility for the annual financial statements, which have been prepared using appropriate
accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Financial
Reporting Standards (IFRS) and the requirements of Companies Act, CAP 212 Act No. 12 of 2002. The Directors are of the
opinion that the financial statements give a true and fair view of the state of the financial affairs of the Company and Group
and of their profits in accordance with International Financial Reporting Standards (IFRS). The Directors further accept
responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements,
as well as designing, implementing and maintaining internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement.
Nothing has come to the attention of the Directors to indicate that the Group or Company will not remain a going concern
for at least twelve months from the date of this statement.
_______________________
Mr.Yogesh Manek
Chairman
41
04th April 2013
_____________________
Date
STATEMENT
FINANCIALOF
DIRECTORS’
STATEMENTS
RESPONSIBILITIES
2012 ANNUAL REPORT
Report on the Financial Statements
We have audited the accompanying financial statements of Exim Bank (Tanzania) Limited (the Company) and its subsidiaries,
Exim Bank Comores S.A and Exim Bank Djibouti S.A (together, the Group) which comprise the statements of financial
position of the Group and Company as at 31 December 2012, and their statements of profit or loss and other comprehensive
income, statements of changes in equity and statements of cash flows for the year then ended, and a summary of significant
accounting policies and other explanatory notes.
Directors’ Responsibility for the Financial Statements
The directors are responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards and with the requirements of the Companies Act, CAP 212 Act No. 12 of 2002
and for such internal control, as the directors determine necessary to enable the preparation of financial statements that
are free from material misstatements, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on the 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 our audit to obtain reasonable assurance that 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 the directors, 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 opinion.
Opinion
In our opinion the accompanying financial statements give a true and fair view of the state of the Group’s and Company’s
financial affairs at 31 December 2012 and of their profits and cash flows for the year then ended in accordance with
International Financial Reporting Standards and the Companies Act, CAP 212 Act No. 12 of 2002.
42
REPORT OF THE
FINANCIAL
STATEMENTS
INDEPENDENT
AUDITOR
2012 ANNUAL REPORT
Report on other Legal and Regulatory Requirements
This report, including the opinion, has been prepared for, and only for, the company’s members as a body in accordance with
the Companies Act, CAP 212 Act No. 12 of 2002 and for no other purposes.
As required by the Companies Act, CAP 212 Act No. 12 of 2002, we are also required to report to you if, in our opinion, the
Directors’ Report is not consistent with the financial statements, if the company has not kept proper accounting records, if
the financial statements are not in agreement with the accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law regarding directors’ remuneration and transactions
with the company is not disclosed. In respect of the foregoing requirements, we have no matter to report.
Leonard C Mususa, FCPA-PP
For and on behalf of PriceWaterhouseCoopers
Certified Public Accountants
Dar es Salaam
Date:
04th April 2013
43
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
Our relat
ionships a
* Opportu
* Linkages
* Leverag
nities & Op
tions
ing Practic
es
44 44
cross bord
ers:
g
n
i
h
c
Rea ched
ea
r
n
u
the
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Group
2012
Note TZS’Millions
Restated
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Restated
Company
2011
TZS’Millions
Interest and similar income
5
84,192
65,864
81,805
63,396
Interest expense and similar charges
6
(39,214)
(25,378)
(38,644)
(24,839)
44,978
40,486
43,161
38,557
(5,674)
(6,232)
(5,579)
(6,003)
39,304
34,254
37,582
32,554
17,693
(193)
14,901
(195)
15,218
(168)
13,437
(72)
7
17,500
14,706
15,050
13,365
8
9
3,968
1,104
(45,336)
5,384
786
(37,643)
3,043
1,104
(40,970)
4,589
786
(32,180)
16,540
17,487
15,809
19,114
(2,873)
(5,042)
(2,873)
(5,042)
13,667
12,445
12,936
14,072
244
8
-
-
6,203
4,366
6,203
4,366
20,114
16,819
19,139
18,438
Net interest income
Loans and advances impairment charge
Net interest income after loan
impairment charge
15
Fee and commission income
Fee and commission expense
Net fee and commission income
Foreign exchange income
Other income
Operating expenses
Profit before income tax
Income tax expense
11
Profit for the year
Exchange differences on translation of foreign
operations
Gain on fair valuation of available for sale
financial asset
Total comprehensive income for the year
45
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012
Group
2012
Note TZS’ Million
ASSETS
Cash and balances with Central Banks
Loans and advances to banks
Derivative assets
Loans and advances to customers
Government securities held-to-maturity
Investment securities
– available-for-sale
– held-to-maturity
Other assets
Property and equipment
Intangible assets
Investment in subsidiaries
Current income tax
Deferred income tax
Restated
Group
2011
TZS’ Million
Restated
Group
2010
TZS’ Million
13
14
24
15
16
143,686
132,202
108
435,598
185,148
99,501
121,686
428,032
134,718
82,622
93,210
342,758
134,568
17
17
18
19
20
21
26,933
3,587
11,938
20,274
642
5,043
1,391
20,730
3,669
11,719
17,403
760
1,742
1,050
15,764
3,638
16,136
17,479
570
881
676
966,550
841,010
708,302
86,008
722,734
18,433
29,948
81,887
617,259
19,492
33,059
44,233
548,770
11
17,950
20,118
857,123
751,697
631,082
12,900
64,833
28
31,694
12,900
57,544
12,900
51,244
18,869
13,076
Total shareholders’ equity
109,427
89,313
77,220
Total equity and liabilities
966,550
841,010
708,302
22
Total assets
LIABILITIES
Deposits from banks
Deposits from customers
Derivative liabilities
Other liabilities
Subordinated debts and senior loans
23
24
25
26
Total liabilities
SHAREHOLDERS’ EQUITY
Share capital
Retained earnings
27
Regulatory and other reserves
The financial statements on pages 12 to 91 were approved for issue by the Board of Directors and signed on its behalf by:
__________________________
Yogesh Manek - (Chairman)
46
04th April 2013
__________________
Date
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012
ASSETS
Cash and balances with Central Banks
Loans and advances to banks
Loans and advances to customers
Government securities held-to-maturity
Investment securities
– available-for-sale
– held-to-maturity
Other assets
Property and equipment
Intangible assets
Investment in subsidiaries
Current income tax
Deferred income tax
Note
Company
2012
TZS’ Million
Restated
Company
2011
TZS’ Million
Restated
Company
2010
TZS’ Million
13
14
15
16
116,157
127,261
410,600
185,148
84,447
120,833
408,269
134,718
68,404
98,348
326,029
134,568
17
17
18
19
20
21
26,933
3,587
10,918
17,709
461
7,498
5,043
1,391
20,730
3,669
10,311
15,420
644
5,287
1,742
1,050
15,764
3,638
15,486
15,855
289
5,287
881
676
912,706
807,120
685,225
76,133
684,397
18,119
26,095
83,724
586,493
19,147
28,933
47,869
528,392
11
17,718
16,124
804,744
718,297
610,114
22
Total assets
LIABILITIES
Deposits from banks
Deposits from customers
Derivative liabilities
Other liabilities
Subordinated debts and senior loans
23
24
25
26
Total liabilities
SHAREHOLDERS’ EQUITY
Share capital
Retained earnings
27
12,900
64,697
12,900
57,706
12,900
49,619
Regulatory and other reserves
28
30,365
18,217
12,592
Total shareholders’ equity
107,962
88,823
75,111
Total equity and liabilities
912,706
807,120
685,225
The financial statements on pages 12 to 91 were approved for issue by the Board of Directors and signed on its behalf by:
__________________________
Yogesh Manek - (Chairman)
47
04th April 2013
__________________
Date
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENT OF CHANGES IN EQUITY - GROUP
Year ended 31 December 2011
At start of year as previously reported
Prior year adjustment (Note 32)
At start of year as restated
Share capital
TZS’Millions
12,900
-
Regulatory
and other
Retained
reserves
earnings
TZS’Millions TZS’Millions
13,076
51,842
(598)
Total
TZS’Millions
77,818
(598)
12,900
13,076
51,244
77,220
Profit for the year
Other comprehensive income:
Gain on fair valuation of available for sale
financial assets
Exchange differences on translation of foreign
operations
-
-
12,445
12,445
-
4,366
-
4,366
-
8
-
8
Total comprehensive income
-
4,374
12,529
16,819
Transfer to regulatory reserve
-
1,419
(1,419)
-
(4,726)
(4,726)
Transaction with owners:
Payment of dividend for 2010
At end of year
12,900
18,869
57,544
89,313
Year ended 31 December 2012
At start of year as previously reported
Prior year adjustment (Note 32)
12,900
-
18,869
-
58,226
(682)
89,995
(682)
12,900
-
18,869
-
57,544
13,667
89,313
13,667
-
6,203
-
6,203
-
244
-
244
Total comprehensive income
-
6,447
13,667
20,114
Transfer to regulatory reserve
-
6,378
(6,378)
-
12,900
31,694
64,833
109,427
At start of year as restated
Profit for the year
Other comprehensive income:
Gain on fair valuation of available for sale
financial assets
Exchange differences on translation of foreign
operations
At end of year
48
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENT OF CHANGES IN EQUITY - COMPANY
Year ended 31 December 2011
At start of year as previously reported
Regulatory
and other
Retained
Share capital
reserves
earnings
TZS’Millions TZS’Millions TZS’Millions
Total
TZS’Millions
12,900
12,592
50,217
75,709
-
-
(598)
(598)
12,900
12,592
49,619
75,111
-
-
14,072
14,072
Gain on fair valuation of available for sale
financial assets
-
4,366
-
4,366
Total comprehensive income
-
4,366
14,072
18,438
Transfer to regulatory reserve
-
1,259
(1,259)
-
Transaction with owners:
Payment of dividend for 2010
-
-
(4,726)
(4,726)
12,900
18,217
57,706
88,823
12,900
-
18,217
-
58,388
(682)
89,505
(682)
12,900
-
18,217
-
57,706
12,936
88,823
12,936
-
6,203
-
6,203
Total comprehensive income
-
6,203
12,936
19,139
Transfer to regulatory reserve
-
5,945
(5,945)
-
12,900
30,365
64,697
107,962
Prior year adjustment (Note 32)
At start of year as restated
Profit for the year
Other comprehensive income:
At end of year
Year ended 31 December 2012
At start of year as previously reported
Prior year adjustment (Note 32)
At start of year as restated
Profit for the year
Other comprehensive income:
Gain on fair valuation of available for sale
financial assets
At end of year
49
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Group
2012
Note TZS’Millions
Interest receipts
Restated
Group
Company
2011
2012
TZS’Millions TZS’Millions
Restated
Company
2011
TZS’Millions
81,523
60,325
79,086
57,737
(33,746)
(23,193)
(33,202)
(22,655)
17,526
15,004
15,066
13,663
4,293
6,747
3,259
5,820
(42,753)
(34,479)
(38,200)
(29,753)
1,091
786
1,091
786
Income tax paid
(6,130)
(6,277)
(6,130)
(6,277)
Cash flows from operating activities before
changes in operating assets and liabilities
21,804
18,913
20,970
19,441
(10,572)
(85,004)
(5,181)
(81,741)
(9,896)
(19,221)
(7,285)
(14,030)
(49,211)
(19,714)
(49,211)
(19,714)
775
1,425
(587)
2,183
100,333
65,115
92,735
54,727
4,073
37,654
(7,592)
35,855
82
(31)
82
(31)
- other liabilities
(1,059)
1,388
1,028
1,321
Net cash generated from /
(utilized in) operating activities
56,330
525
42,903
(1,989)
Interest payments
Net fee and commission receipts
Other income received
Payments to employees and suppliers
Dividends received
Changes in operating assets and liabilities:
- loans and advances
- cash reserve requirement
- Government securities
- other assets
- customer deposits
- bank deposits
- Investment securities held to maturity
50
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENTS OF CASH FLOWS (continued)
Investing activities
Group
2012
Note TZS’Millions
Restated
Group
Company
2011
2012
TZS’Millions TZS’Millions
Restated
Company
2011
TZS’Millions
Purchase of equipment
19
(6,389)
(2,733)
(5,262)
(1,855)
Purchase of intangible assets
20
(500)
(692)
(273)
(692)
13
-
13
-
Investment in subsidiary-Exim Bank Djibouti
-
-
(2,211)
-
Investment securities available for sale
-
(600)
-
(600)
(6,876)
(4,025)
(7,733)
(3,147)
-
15,825
-
15,825
-
(4,726)
-
(4,726)
(3,436)
(4,247)
(3,054)
(4,247)
(3,436)
6,852
(3,054)
6,852
145,787
142,435
140,165
138,449
Net cash generated from /(used in)
operating activities
56,330
525
42,903
(1,989)
Net cash used in investing activities
(6,876)
(4,025)
(7,733)
(3,147)
Net cash generated from/(used in)financing
activities
(3,436)
6,852
(3,054)
6,852
191,805
145,787
172,281
140,165
Proceeds from sale of equipment
Net cash used in investing activities
Financing activities
Proceeds from subordinated debts
26
Dividends paid
Repayment of senior loans and subordinated debts
26
Net cash flow generated from /
(used in) financing activities
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
30
51
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES
1
GENERAL INFORMATION
The Bank is a limited liability company and is incorporated and domiciled in United Republic of Tanzania.The address of
its registered office is:
Exim Tower,
1404/45, Ghana Avenue,
Dar-es-Salaam, Tanzania
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).
The measurement basis applied in the preparation of these financial statements is the historical cost basis, except where
otherwise stated in the accounting policies below.The financial statements are presented in Tanzania Shillings (TZS) and
the amounts are rounded to the nearest million, except where otherwise indicated.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates
and assumptions. It also requires management to exercise its judgement in the process of applying the Bank’s accounting
policies.The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed in Note 4.
(i) Amended standards which became effective during the year
There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on
1 January 2012 that would be expected to have a material impact on the Group.
(ii) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the Group
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning
after 1 January 2012, and have not been applied in preparing these financial statements. None of these is expected to
have a significant effect on the financial statements of the Bank, except the following set out below:
Exim Bank Limited (the Bank or Company used interchangeably) and its subsidiaries (together, the Group) provide
retail and corporate banking services in United Republic of Tanzania, The Union of Comores and The Republic of
Djibouti.
The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied in all the years presented, unless otherwise stated.
52
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) Basis of preparation (continued)
Amendment to IAS 1, ‘Presentation of Financial Statements’ regarding other comprehensive income. The main change
resulting from these amendments is a requirement for entities to group items presented in ‘other comprehensive
income’ (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification
adjustments). The amendments do not address which items are presented in OCI. The application of this amendment
will mainly impact the presentation of the primary statements. The amendment is effective for periods beginning on or
after 1 July 2012.
IFRS 13, ‘Fair value measurement’, aims to improve consistency and reduce complexity by providing a precise definition
of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The
requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting
but provide guidance on how it should be applied where its use is already required or permitted by other standards
within IFRSs or US GAAP. The application of IFRS 13 may enhance fair value disclosures in a lot of circumstances. The
standard is effective for periods beginning on or after 1 January 2013.
IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial
liabilities. Issued in November 2009 and October 2012, it replaces the parts of IAS 39 that relate to the classification
and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement
categories: those measured at fair value and those measured at amortised cost. The determination is made at initial
recognition. The classification depends on the entity’s business model for managing its financial instruments and the
contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39
requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a
fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income
statement, unless this creates an accounting mismatch. The directors are yet to assess IFRS 9’s full impact and intend to
adopt IFRS 9 no later than the accounting period beginning on or after 1 January 2015.
(ii) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the bank (continued)
IFRS 10, Consolidated financial statements’, builds on existing principles by identifying the concept of control as the
determining factor in whether an entity should be included within the consolidated financial statements of the parent.
The standard provides additional guidance to assist in the determination of control where this is difficult to assess.
The directors are yet to assess IFRS 10’s full impact and intends to adopt IFRS 10 no later than the accounting period
beginning on or after 1 January 2013.
IFRS 12, ‘Disclosures of interests in other entities’, includes the disclosure requirements for all forms of interests in
other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles.
The directors are yet to assess IFRS 12’s full impact and intends to adopt IFRS 12 no later than the accounting period
beginning on or after 1 January 2013.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material
impact on the Group and the Bank.
53
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Consolidation
The financial statements of the subsidiaries used to prepare the group financial statements were prepared as of the
parent’s reporting date. The consolidation principles are unchanged as against the previous year.
A subsidiary is an entity over which the Group has the power to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing whether the Group controls another
entity.A subsidiary is fully consolidated from the date on which control is transferred to the Group. It is de-consolidated
from the date on which control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed
at the date of exchange, plus costs directly attributable to the acquisition.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred.
(c) Interest income and expense
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and
of allocating the interest income or interest expense over the relevant period.The effective interest rate is the rate that
exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or,
when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. The calculation
includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate,
transaction costs and all other premiums or discounts.
Once a financial asset or group of similar financial assets has been written down as a result of an impairment loss,
interest income is recognised using the rate of interest that was used to discount the future cash flows for the purpose
of measuring the impairment loss.
(d) Fees and commission income
Subsidiaries
Interest income and expense for all interest bearing financial instruments are recognised within interest income or
interest expense in profit or loss for all interest bearing instruments measured at amortised cost using the effective
interest method.
Fees and commissions are generally recognised on an accrual basis when the service has been provided. Loan commitment
fees for loans that are likely to be drawn down are deferred (together with related direct costs) and recognised as an
adjustment to the effective interest rate on the loan.
54
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e) Dividend income
Dividends are recognized in profit or loss in ‘Dividend income’ when the entity’s right to receive payment is
established.
(f) Translation of foreign currencies
Transactions in foreign currencies during the year are converted into the Tanzania Shillings using the exchange rates
prevailing at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in profit or loss.
The results and financial position of the subsidiary which has a functional currency different from the presentation
currency are translated into the presentation currency as follows:
? Assets and liabilities are translated at the closing rate at the date of the balance sheet;
? Income and expenses are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the date of the transactions); and
? All resulting exchange differences except those arising from intra-group monetary assets or liabilities are
recognised as a separate component of equity. Those arising from intra-group monetary assets and liabilities are
recognised in profit or loss for the year.
(g) Financial assets
(i) Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit
or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the
short term or if so classifying eliminates or significantly reduces a measurement inconsistency. Derivatives are also
categorised as held for trading.
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the functional currency). The financial statements are
presented in Tanzania Shillings which is the Company’s functional and presentation currency.
The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss;
loans and receivables; held-to-maturity financial assets; and available-for-sale financial assets. Management determines
the appropriate classification of its financial assets at initial recognition.The Bank uses trade date accounting for regular
way contracts when recording financial asset transactions.
55
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g) Financial assets (continued)
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They arise when the company provides money, goods or services directly to a debtor with no intention
of trading the receivable.
(iii) Held-to maturity
Held-to-maturity assets are non-derivative financial assets with fixed or determinable payments and fixed maturities
that management has the positive intention and ability to hold to maturity. Were the company to sell more than an
insignificant amount of held-to-maturity assets, the entire category would have to be reclassified as available for sale.
(iv) Available-for-sale
Available for sale investments are those intended to be held for an indefinite period of time, which may be sold in
response to needs for liquidity or changes in interest rates, exchange rates or equity prices.
(ii) Loans and receivables
(v) Recognition of financial assets
Purchases and sales of financial assets at fair value through profit or loss, held-to-maturity and available-for-sale are
recognised on the trade-date – the date on which the Group commits to purchase or sell the asset. Financial assets
are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit
or loss. Financial assets carried at fair value through profit and loss are initially recognised at fair value, and transaction
costs are expensed in profit or loss.
(vi) Subsequent measurement on financial assets
In subsequent periods, loans and receivables and held-to-maturity assets are carried at amortised cost using the effective
interest method. Available-for-sale financial assets and financial assets at fair value through profit or loss are carried at
fair value. Gains and losses arising from changes in the fair value of ‘financial assets at fair value through profit or loss’
are included in profit or loss in the period in which they arise. Gains and losses arising from changes in the fair value
of available-for-sale financial assets are recognised directly in equity until the financial asset is derecognised or impaired,
at which time the cumulative gain or loss previously recognised in equity is recognised in the profit or loss account.
However, interest calculated using the effective interest method is recognised in profit or loss. Dividends on availablefor-sale equity instruments are recognised in profit or loss when the Bank’s right to receive payment is established.
(vii) Derecognition of financial assets
Financial assets are derecognised when the contractual rights to receive cash flows from the financial assets have
expired or where the Group has transferred substantially all risks and rewards of ownership.
56
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(h) Financial liabilities
The Group holds financial liabilities at amortised cost at fair value through profit or loss. Financial liabilities are initially
recognised at fair value. Subsequent to initial recognition all financial liabilities other than derivatives are measured
at amortized cost. Derivatives are initially recognized and subsequently measured at fair value.Financial liabilities are
derecognised when extinguished.
Financial liabilities measured at amortised cost are deposits from banks or customers, senior debts and subordinated
debts.
(i) Classes of financial assets and liabilities
The Bank classified the financial assets and liabilities into classes that reflect the nature of information and take into
account the characteristics of those financial instruments. The classification made can be seen in the table as follows:
Financial assets
Cash and balances with Central Banks
Loans and advances banks
Loans and advances to customers
Government securities held to maturity
Investment securities - held to maturity
Investment securities – available for sale
Derivative assets
Other assets excluding prepayments
Category
Loans and receivables
Loans and receivables
Loans and receivables
Held to maturity
Held to maturity
Available for sale
Financial assets at fair value through profit or loss
Loans and receivables
Financial liabilities
Deposits from banks
Deposits from customers
Other liabilities
Derivative liabilities
Financial liabilities at amortized cost
Financial liabilities at amortized cost
Financial liabilities at amortized cost
Financial liabilities at fair value through profit or loss
(j) Impairment of financial assets
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group
of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are
incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after
initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future
cash flows of the financial asset or group of financial assets that can be reliably estimated.
57
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(j) Impairment of financial assets (continued)
(i) Assets carried at amortised cost
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
?
?
?
?
?
?
The estimated period between a loss occurring and its identification is determined by management for each identified
portfolio. In general, the periods used vary between three months and twelve months; in exceptional cases, longer
periods are warranted.
The Group assesses whether objective evidence of impairment exists individually for all financial assets that are
individually significant.
If the Group determines that no objective evidence of impairment exists for an individually assessed financial assets,
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
impairment loss is or continues to be recognised are not included in a collective assessment of impairment.
The amount of the loss is measured as the difference between the assets carrying amount and the present value of
estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial
asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of a provision
account and the amount of the loss is recognised in profit or loss.
When a loan is uncollectible, it is written off against the related provision for loan impairment. Such loans are written
off after all the necessary procedures have been completed and the amount of the loss has been determined.
If, in subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to
an event occurring after the impairment was recognised (such as an improvement in the debtors credit rating), the
previously recognised impairment loss is revised by adjusting the provision account. The amount of the reversal is
recognised in profit or loss in impairment charge for credit losses.
Delinquency in contractual payments of principal or interest;
Cash flow difficulties experienced by the borrower;
Breach of loan covenants or conditions;
Initiation of bankruptcy proceedings;
Deterioration of the borrower’s competitive position; and
Deterioration in the value of collateral.
58
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(j) Impairment of financial assets (continued)
(ii) Assets carried at fair value
In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the
security below its cost is considered in determining whether the assets are impaired. If any such evidence exists for
available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the
current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed
from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are
not reversed through the profit and loss account. If, in a subsequent period, the fair value of a debt instrument classified
as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss
was recognised in profit or loss, the impairment loss is reversed through the profit and loss account.
(k) Derivative financial instruments
Derivatives are initially recognized at fair value on the date on which a derivative contract is entered into and are
subsequently remeasured at their fair value. Fair values are obtained from valuation techniques (for example for swaps
and currency transactions), including discounted cash flow models and options pricing models, as appropriate. All
derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.
(l) Property and equipment
Property and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of these assets.
Depreciation is calculated on the straight line basis to write down their cost to their residual values over their
estimated useful lives, as follows:
Applicable rate
Buildings
Leasehold premises
Motor vehicles
Office equipment
Computer hardware
Furniture and fittings
4%
11%
25%
15% - 20%
25%
15%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
59
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(l) Property and equipment (continued)
Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units).
Gains and losses on disposal of property and equipment are determined by comparing proceeds with their carrying
amount and are taken into account in determining operating profit.
(m) Intangible assets
Intangible assets comprise computer software licences and are recognised at cost. Intangible assets with a definite useful
life are amortised using the straight-line method over their estimated useful economic life, generally not exceeding 4
years.The Bank chooses to use the cost model for the measurement after recognition. Costs associated with maintaining
computer software programmes are recognised as an expense as incurred.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a
reliable estimate of the amount of the obligation can be made.
(o) Income tax
Income tax expense is the aggregate of the charge to the profit and loss account in respect of current income tax and
deferred income tax.
Current income tax is the amount of income tax payable on the taxable profit for the year determined in accordance
with the Tanzanian Income Tax Act.
Deferred income tax is provided in full, using the liability method, for all temporary differences arising between the tax
bases of assets and liabilities and their carrying values for financial reporting purposes. However, if the deferred income
tax arises from the initial recognition of an asset or liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor taxable profit nor loss, it is not accounted for. Deferred
income tax is determined using tax rates and laws that have been enacted or substantively enacted at the balance sheet
date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profits will be
available against which temporary differences can be utilised.
60
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(p) Cash and cash equivalents
(q) Employee benefits
The Bank and all its employees contribute to the National Social Security Fund (NSSF), which is a defined contribution
scheme. A defined contribution plan is a scheme under which the Bank pays fixed contributions into a separate entity
(NSSF). The Bank has no legal or constructive obligation to pay further contributions if the Fund does not have sufficient
assets to pay the employees post employment benefits. Employees contribute 10% and the Bank also contributes 10%
to the scheme. The Bank’s contributions to the defined contribution schemes are charged to profit or loss in the year
to which they relate.
(ii) Other entitlements
The estimated monetary liability for employees’ accrued annual leave entitlement at the balance sheet date is recognised
as an expense accrual.
(r) Share capital
Ordinary shares are classified as ‘share capital’ in equity.
(s) Borrowings
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid
investments with maturities of three months or less, including: cash and balances with Central Banks, Government
Securities with original maturities of 90 days or less and loans and advances to banks. Cash and cash equivalents
excludes the cash reserve requirement held with the Central Banks.
(i) Retirement benefit obligations
Borrowings are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of
transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between proceeds net
of transaction costs and the redemption value is recognised in profit or loss over the period of the borrowings using
the effective interest method.
(t) Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset
and settle the liability simultaneously.
61
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(u) Dividends on distribution
(v) Acceptances and letters of credit
Dividend distribution to the Bank’s shareholders is recognized as a liability in the Group’s financial statements in the
period in which the dividends are approved by the Bank’s shareholders.
Acceptances and letters of credit are accounted for as off-balance sheet transactions and disclosed as contingent
liabilities.
(w) Accounting for leases
Leases of assets are classified as operating leases if the lessor effectively retains all the risks and benefits. Payments made
under operating leases are charged to profit or loss on a straight-line basis over the period of the lease, unless another
systematic basis is more representative of the time pattern in which the benefit is derived from the leased asset.
(x) Comparatives
Except when a standard or an interpretation permits or requires otherwise, all amounts are reported or disclosed
with comparative information. Where necessary, comparative figures have been adjusted to conform to changes in
presentation in the current year.
62
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT
3.1 Credit Risk
3.1.1 Credit Risk Measurement
In measuring credit risk of loan and advances to customers and to banks at a counterparty level, the Group and
Company reflects three components (i) the ‘probability of default’ by the client or counterparty on its contractual
obligations and (ii) current exposures to the counterparty and its likely future development, from which the Group
derives the ‘exposure at default’.
These credit risk measurements, which reflect expected loss (the ‘expected loss model’), are embedded in the Banks’
daily operational management. The operational measurements can be contrasted with impairment allowances required
under IAS 39, which are based on losses that have been incurred at the balance sheet date (the ‘incurred loss model’)
rather than expected losses.
(i)
Group’s internal ratings scale
Group’s rating
Description of the grade
1
2
3
4
5
Current
Especially Mentioned
Sub-standard
Doubtful
Loss
(ii) Exposure at default is based on the amounts the Group or Company expects to be owed at the time of default.
For example, for a loan this is the face value. For a commitment, the Group and Company include any amount
already drawn plus the further amount that may have been drawn by the time of default, should it occur.
(a) Loans and advances
The Group and Company assesses the probability of default of individual counterparties using internal rating tools
tailored to the various categories of counterparty in line with the Bank of Tanzania (BOT) guidelines. Customers
of the Banks’ are segmented into five rating classes. The Group’s rating scale, which is shown below, reflects the
range of default probabilities defined for each rating class. This means that, in principle, exposures migrate
between classes as the assessment of their probability of default changes.
63
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk
3.1.2 Risk Limit Control and Mitigation Policies
The exposure to any one borrower including banks is further restricted by sub-limits covering on- and off-balance sheet
exposures. Actual exposures against limits are monitored daily. Exposure to credit risk is also managed through regular
analysis of the ability of borrowers and potential borrowers to meet interest and capital repayment obligations and by
changing these lending limits where appropriate.
Some other specific control and mitigation measures are outlined below.
The Group and Company employ a range of policies and practices to mitigate credit risk. The most traditional of these
is the taking of security for funds advanced, which is common practice.The Group and Company implements guidelines
on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types for loans and
advances are:
The Group and Company manage limits and control concentrations of credit risk wherever they are identified in
particular, to individual counterparties and groups, and to industries. The Group and Company structure the levels of
credit risk they undertake by placing limits on the amount of risk accepted in relation to one borrower, or groups of
borrowers, and to industry segments. Such risks are monitored on a revolving basis and subject to an annual or more
frequent review, when considered necessary.
(a) Collateral
? Mortgages over residential properties;
? Charges over business assets such as premises, inventory and accounts receivable;
? Charges over financial instruments such as debt securities and equities.
Longer-term finance and lending to corporate entities are generally secured; revolving individual credit facilities are
generally unsecured. In addition, in order to minimise the credit loss the Group and Company will seek additional
collateral from the counterparty as soon as impairment indicators are noticed for the relevant individual loans and
advances.
64
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.2 Risk Limit Control and Mitigation Policies (continued)
(b) Credit-related commitments
The primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees
and standby letters of credit carry the same credit risk as loans. Documentary and commercial letters of credit – which
are written undertakings on behalf of a customer authorising a third party to draw drafts on a bank up to a stipulated
amount under specific terms and conditions – are collateralised by the underlying shipments of goods to which they
relate and therefore carry less risk than a direct loan.
Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans,
guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Group and Company
is potentially exposed to loss in an amount equal to the total unused commitments.
However, the likely amount of loss is less than the total unused commitments, as most commitments to extend credit
are contingent upon customers maintaining specific credit standards. The Group and Company monitors the term to
maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than
shorter-term commitments.
(c) Lending limits (for derivatives and loan book)
The Group and Company maintain strict control limits on net derivative positions (i.e difference between purchases and
sales contracts), by both amount and term. At any one time, the amount subject to credit risk is limited to the current
fair value of instruments that are favourable to the Group and Company (i.e assets where their fair value is positive),
which in relation to derivatives is only a small fraction of the contract, or notional values used to express the volume
of instruments outstanding. This credit risk exposure is managed as part of the overall lending limits with customers,
together with potential exposures from market movements. Collateral or other security is not usually obtained for
credit risk exposures on these instruments, except where the Bank requires margin deposits from counterparties.
Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation of a
corresponding receipt in cash, securities or equities. Daily settlement limits are established for each counterparty to
cover the aggregate of all settlement risk arising from the Bank’s market transactions on any single day.
3.1.3 Impairment and provisioning policies
The internal rating system described in Note 3.1.1 focus more on credit-quality mapping from the inception of the
lending and investment activities. In contrast, impairment provisions are recognised for financial reporting purposes
only for losses that have been incurred at the balance sheet date based on objective evidence of impairment. Due
to the different methodologies applied, the amount of incurred credit losses provided for in the financial statements
are usually lower than the amount determined from the expected loss model that is used for internal operational
management and banking regulation purposes.
65
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.3 Impairment and provisioning policies
The impairment provision shown in the balance sheet at period-end is derived from each of the five internal rating
grades. However, the majority of the impairment provision generally comes from the bottom two grades. The table
below shows the percentage of the Bank’s on balance sheet items relating to loans and advances and the associated
impairment provision for each of the Bank’s internal rating categories:
31 December 2012
31 December 2011
Loans and
advances
(%)
Impairment
provision
(%)
Loans and
advances
(%)
Impairment
provision
(%)
92.12
-
95.13
-
2. Especially Mentioned
0.75
-
0.31
0.43
3. Sub-standard
0.59
4.18
0.92
2.55
4. Doubtful
1.28
15.33
0.21
2.78
5. Loss
5.25
79.87
3.43
94.24
100.00
100.00
100.00
100.00
Bank’s rating
1. Current
The internal rating tool assists management to determine whether objective evidence of impairment exists under IAS
39, based on the following criteria set out by the Group and Company:
? Delinquency in contractual payments of principal or interest;
? Cash flow difficulties experienced by the borrower
? Breach of loan covenants or conditions;
? Initiation of bankruptcy proceedings;
? Deterioration of the borrower’s competitive position; and
? Deterioration in the value of collateral.
The Group’s and Company’s policy requires the review of individual financial assets that are above materiality thresholds
at least annually or more regularly when individual circumstances require. Impairment allowances on individually
assessed accounts are determined by an evaluation of the incurred loss at balance-sheet date on a case-by-case basis,
and are applied to all individually significant accounts. The assessment normally encompasses collateral held (including
re-confirmation of its enforceability) and the anticipated receipts for that individual account.
66
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.4 Loans and advances
Loans and advances are summarised as follows:
Group
(Amounts are in TZS’ Million)
31 December 2011
31 December 2012
Loans and
advances to
customers
Amounts
due from
banks
Loans and
advances to
customers
Amounts
due from
banks
409,093
132,202
416,884
121,686
3,824
-
1,915
-
42,410
-
23,444
-
Gross
455,327
132,202
442,243
121,686
Less: Allowances for impairment
(19,729)
-
(14,211)
-
Net
435,598
132,202
428,032
121,686
401,090
120,833
Neither past due nor impaired
Past due but not impaired
Impaired
Company
Neither past due nor impaired
389,096
127,261
Past due but not impaired
3,249
-
1,354
-
37,527
-
19,686
-
Gross
429,872
127,261
422,130
120,833
Less: Allowances for impairment
(19,272)
-
(13,861)
Net
410,600
127,261
408,269
Impaired
120,833
The total impairment provision for loans and advances represents both individually impaired loans and loans assessed
on a portfolio basis. Further information of the impairment allowance for loans and advances to customers is provided
in Note 15.
During the year ended 31 December 2012, the Bank’s total net loans and advances increased by 0.5% (2011: 24%) while
the Group’s total net loans and advances increased by 1.8% (2011: 24%). When entering into new markets, in order to
minimise the potential increase of credit risk exposure, the Bank focused more on the business with large corporate
enterprises or banks with good credit rating or retail customers providing sufficient collateral.
67
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.4 Loans and advances (continued)
(a) Loans and advances neither past due nor impaired
Group
The portfolio of loans and advances that were neither past due nor impaired are classified as current. These fall into the
following categories: (Amounts in TZS’ Millions)
Loans and advances to customers
Advances
to banks
31 December 2012
MSE’s
Consumer
SMEs Corporate
Total
Total
Grades
Current
-
33,481
114,497
261,115
409,093
132,202
-
18,222
166,206
235,669
416,884
121,686
-
31,690
107,970
249,435
389,095
127,261
-
16,544
156,687
227,859
401,090
120,833
31 December 2011
Grades
Current
Company
Grades
Current
31 December 2011
Grades
Current
68
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.4 Loans and advances (continued)
(b) Loans and advances past due but not impaired
Loans and advances less than 90 days past due are not considered impaired, unless other information is available
to indicate the contrary. Gross amount of loans and advances by class to customers that were past due but not
impaired were as follows:
Group
(Amounts in TZS’ Millions)
MSE’s
SMEs
Corporate
Total
-
1,337
2,487
3,824
36
505
1,374
1,915
31 December 2012
Grades
Up to 90 days
31 December 2011
Grades
Up to 90 days
(a) Loans and advances neither past due nor impaired
Company
(Amounts in TZS’ Millions)
MSE’s
SMEs
Corporate
Total
-
1,035
2,214
3,249
13
480
861
1,354
31 December 2012
Grades
Up to 90 days
31 December 2011
Grades
Up to 90 days
69
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.4 Loans and advances (continued)
(b) Impaired loans and advances
The amount of individually impaired loans and advances to customers before taking into consideration the cash flows
from collateral held is TZS 42,410 million (December 2011: TZS 23,444 million). The breakdown of the gross amount
of individually impaired loans and advances by class are as follows:
Group
31 December 2012
(Amounts in TZS Millions)
SME’s
Consumer
SME’s
Corporate
Total
31 December 2011
-
6,143
12,563
23,704
42,410
Impaired loans
-
3,764
6,924
12,756
23,444
SME’s
Consumer
SME’s
Corporate
Total
-
6,043
10,722
20,762
37,527
627
3,474
5,604
10,608
19,686
Impaired loans
Company
31 December 2012
Impaired loans
31 December 2011
Impaired loans
There were no individually impaired loans and advances to banks as at 31 December 2012 (2011: Nil). No collateral is
held by the Group and Company and no impairment provision has been provided against the gross amount.
3.1.5 Investment Securities
The investment securities held by the Group and Company comprise treasury bills issued by the Government, ALAF
bond, Standard Chartered Bond,Tanzania Breweries Bond,Tanzania Oxygen Limited shares (TOL), National Microfinance
Bank Plc (NMB) shares and Tanzania Mortgage Refinancing Company (TMRC)’s shares. Except for TOL shares which
are impaired, other investments were considered to be neither past due nor impaired. These investment securities are
held with the Government or institutions with good financial standing and no history of default.
3.1.6 Concentration of risks of financial assets with credit risk exposure
The following tables break down the Group’s and Company’s main credit exposure at their carrying amounts, as
categorised by industry sector and geographical sectors as of 31 December 2012 and 31 December 2011.
70
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Group
(a) Industry sectors
Financial
institution
(Amounts are in TZS’ Million)
Trading Transport Wholesale
Manu- and comand com- and retail
facturing
mercial munication
trade
Agriculture
Individuals
Others
Total
Balances with Central Banks
116,882
-
-
-
-
-
-
- 116,882
Loans and advances to banks
132,202
-
-
-
-
-
-
- 132,202
Government securities held to
maturity
185,148
-
-
-
-
-
- 185,148
511
3,076
-
-
-
-
-
-
3,587
- Personal loans
-
-
-
-
10,657
79
22,397
6,293
39,426
- Commercial loans
-
-
-
-
1,840
-
1,840
2
82,133
35,728
29,912
2,256
32,639
-
1,943
15,217
14,406
11,400
9,620
6,608
-
35,839
95,033
-
-
-
-
-
-
-
10,060
10,060
Investment securities held to
maturity
Loans and advances to customers:
Loans to individuals:
Loans to corporate entities:
- Corporate customers
- SMEs
Other assets
Derivative assets
As at 31 December 2012
116,629 299,299
108
108
436,796 100,426 50,134
41,312
22,533 39,326 24,237 168,821 883,585
Credit risk exposures relating to
Off-balance sheet items are as
follows:
Financial guarantees andacceptances
4,518
18
25,056
534
10
10
-
30,790
60,935
Loan commitments and other credit
related obligations
148
5,925
12,490
741
1,916
504
2,746
7,487
31,957
5,943 37,546
1,275
1,926
514
2,746
38,277
92,893
As at 31 December 2012
4,666
71
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Group (continued)
(b) Industry sectors (continued)
(Amounts are in TZS’ Million)
Financial
institutions
Manufacturing
Trading
and commercial
Transport
and communication
Balances with Central Banks
84,349
-
-
-
-
Loans and advances to banks
121,686
-
-
-
Government securities held to
maturity
134,718
-
-
448
3,138
- Personal loans
-
- Commercial loans
Investment securities held to
maturity
Wholesale
and retail
Agritrade culture
Individuals
Others
Total
-
-
-
84,349
-
-
-
-
121,686
-
-
-
-
-
134,718
-
-
-
-
-
-
3,669
-
-
-
-
-
4,160
-
4,160
-
-
-
-
-
-
-
16,759
16,759
2
101,445
76,302
992
6,596 34,314
-
61,761
247,406
3,353
16,306
58,680
21,482
7,721
6,476
-
47,654
159,707
-
-
-
-
-
-
-
9,827
9,827
342,679
86,878
134,982
22,474
Loans and advances to customers:
Loans to individuals:
Loans to corporate entities:
- Corporate customers
- SMEs
Other assets
As at 31 December 2011
14,317 40,790 4,160 159,707 782,281
Credit risk exposures relating to off-balance sheet items are as follows:
Financial guarantees and
acceptances
4,096
-
29,619
1,836
-
-
1,483
-
37,034
Loan commitments and other
credit related obligations
713
-
23,255
-
-
-
-
-
23,968
As at 31 December 2011
4,809
52,874
1,836
72
1,483-
61,002
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Company
(a) Industry sectors
Financial
Manuinstitution facturing
(Amounts are in TZS’ Million)
Trading Transport Wholesale
and comand com- and retail
mercial munication
trade
Agriculture
Individuals
Others
Total
91,012
Balances with Central Banks
91,012
-
-
-
-
-
-
-
Loans and advances to banks
127,261
-
-
-
-
-
-
- 127,261
Government securities held to
maturity
185,148
-
-
-
-
-
-
- 185,148
511
3,076
-
-
-
-
-
-
3,587
Investment securities held to
maturity
Loans and advances to customers:
-
Loans to individuals:
-
- Personal loans
-
-
-
-
10,657
79
21,964
6,293
38,993
- Commercial loans
-
-
-
-
-
-
-
-
-
2
82,133
25,179
28,730
2,256
32,639
-
1,944
15,217
9,388
11,044
9,620
6,608
-
33,954
87,775
-
-
-
-
-
-
-
9,183
9,183
405,878 100,426
34,567
39,774
Loans to corporate entities:
- Corporate customers
- SMEs
Other assets
As at 31 December 2012
112,893 283,832
22,533 39,326 21,964 162,327 826,791
Credit risk exposures relating to
Off-balance sheet items are as
follows:
Financial guarantees and acceptances
4,518
18
25,035
534
10
10
-
30,790
60,915
Loan commitments and other credit
related obligations
148
5,925
5,586
741
1,916
504
2,746
7,487
25,053
4,666
5,943
30,621
1,275
1,926
514
2,746
38,277
85,968
As at 31 December 2012
73
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure (continued)
(a) Industry sectors (continued)
Financial
Manuinstitutions facturing
(Amounts are in TZS’ Million)
Trading
and commercial
Transport Wholesale
and com- and retail
munication
trade
Agriculture
Individuals
Others
Total
Balances with Central Banks
69,930
-
-
-
-
-
-
-
69,930
Loans and advances to banks
120,833
-
-
-
-
-
-
-
120,833
Government securities held to
maturity
134,718
-
-
-
-
-
-
-
134,718
538
3,131
-
-
-
-
-
-
3,669
- Personal loans
-
-
-
-
-
-
3,259
-
3,259
- Commercial loans
-
-
-
-
-
-
-
16,759
16,759
67,441
66,339
-
6,596
34,314
-
59,868
234,558
1,388
16,306
54,160
21,482
7,721
6,476
-
46,160
153,693
-
-
-
-
-
-
-
8,546
8,546
86,878 120,499
21,482
Investment securities held to
maturity
Loans and advances to customers:
Loans to individuals:
Loans to corporate entities:
- Corporate customers
- SMEs
Other assets
As at 31 December 2011
327,407
14,317 40,790 3,259 131,333 745,965
Credit risk exposures relating to off-balance sheet items are as follows:
Financial guarantees and
acceptances
4,096
-
29,601
1,836
-
-
1,483
-
37,016
Loan commitments and other
credit related obligations
-
-
23,255
-
-
-
-
-
23,255
As at 31 December 2011
4,096
-
52,856
1,836
-
- 1,483
-
60,271
74
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Group
For these tables, the Group and Company have allocated exposures to regions based on the country of domicile of its
counterparties.
(b) Geographical sectors
(Amounts are in TZS Million)
Tanzania
Europe
America
Others
Total
Balances with Central Banks
91,012
-
-
25,869
116,881
Loans and advances to banks
32,342
5,449
82,794
11,617
132,202
185,148
-
-
-
185,148
3,587
-
-
-
3,587
-
-
-
-
-
-
-
-
-
-
35,557
-
-
270
35,827
-
-
-
2,003
2,003
-
-
-
-
-
Credit risk exposures relating to on-balance sheet bassets
are as follows
Government securities
Investment securities held to maturity
Loans and advances to customers:
Loans to individuals:
- Personal loans
- Commercial loans
Loans to corporate entities:
- Corporate customers
257,780
15,467
273,247
- SMEs
117,262
7,259
124,521
877
10,060
108
108
Other assets
9,183
-
-
Derivative assets
As at 31 December 2012
731,871
5,449
82,794
63,470
883,584
Financial guarantees and acceptances
60,915
-
-
20
60,935
Loan commitments and other credit related
obligations
25,053
-
-
6,904
31,957
85,968
-
-
6,924
92,892
Credit risk exposures relating to
Off-balance sheet items are as follows:
As at 31 December 2012
75
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Group (continue)
(b) Geographical sectors
(Amounts are in TZS Million)
Tanzania
Europe
America
Others
Total
Balances with Central Banks
69,930
-
-
14,419
84,349
Loans and advances to banks
50,459
15,032
39,798
16,397
121,686
134,718
-
-
-
134,718
3,669
-
-
-
3,669
-
-
-
-
-
-
-
-
-
-
3,259
-
-
901
4,160
16,759
-
-
-
16,759
-
-
-
-
-
- Corporate customers
234,558
-
-
12,848
247,406
- SMEs
153,693
-
-
6,014
159,707
8,546
-
-
1,281
9,827
675,591
15,032
39,798
51,860
782,281
Financial guarantees and acceptances
37,015
-
-
19
37,034
Loan commitments and other credit related
obligations
23,255
-
-
713
23,968
60,270
-
-
732
61,002
Credit risk exposures relating to on-balance sheet
bassets are as follows
Government securities
Investment securities held to maturity
Loans and advances to customers:
Loans to individuals:
- Personal loans
- Commercial loans
Loans to corporate entities:
Other assets
As at 31 December 2011
Credit risk exposures relating to
Off-balance sheet items are as follows:
As at 31 December 2011
76
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Company
(b) Geographical sectors
(Amounts are in TZS Million)
Tanzania
Europe
America
Others
Total
Balances with Central Banks
91,012
-
-
-
91,012
Loans and advances to banks
31,879
5,449
87,188
2,745
127,261
185,148
-
-
-
185,148
3,587
-
-
-
3,587
35,558
-
-
-
35,558
-
-
-
-
-
-
-
-
-
-
Credit risk exposures relating to on-balance sheet
bassets are as follows
Government securities
Investment securities held to maturity
Loans and advances to customers:
Loans to individuals:
- Personal loans
- Commercial loans
Loans to corporate entities:
- Corporate customers
257,780
257,780
- SMEs
117,262
117,262
Other assets
9,183
-
-
-
9,183
731,409
5,449
87,188
2,745
826,791
Financial guarantees and acceptances
60,915
-
-
-
60,915
Loan commitments and other credit related obligations
25,053
-
-
-
25,053
85,968
-
-
-
85,968
As at 31 December 2012
Credit risk exposures relating to
Off-balance sheet items are as follows:
As at 31 December 2012
77
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Company (continued)
(b) Geographical sectors (continued)
(Amounts are in TZS’ Million)
Tanzania
Europe
America
Others
Total
Balances with Central Bank
69,930
-
-
-
69,930
Loans and advances to banks
54,660
9,977
39,798
16,398
120,833
134,718
-
-
-
134,718
3,669
-
-
-
3,669
3,259
-
-
-
3,259
16,759
-
-
-
16,759
- Corporate customers
234,558
-
-
-
234,558
- SMEs
153,693
-
-
-
153,693
8,546
-
-
-
8,546
679,792
9,977
39,798
16,398
745,965
Credit risk exposures relating to on-balance sheet
assets are as follows:
Government securities held to maturity
Investment securities held to maturity
Loans and advances to customers:
Loans to individuals:
- Personal loans
- Commercial loans
Loans to corporate entities:
Other assets
As at 31 December 2011
Credit risk exposures relating to off-balance sheet items are as follows:
Financial guarantees and acceptances
37,016
-
-
-
37,016
Loan commitments and other credit related
obligations
23,255
-
-
-
23,255
60,271
-
-
-
60,271
As at 31 December 2011
78
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk
The Group and Company take an exposure to market risks, which is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in market prices. Market risks arise from open positions in
interest rate, currency and equity products, all of which are exposed to general and specific market movements and
changes in the level of volatility of market rates or prices such as interest rates, credit spreads, foreign exchange rates
and equity prices.
The market risks arising from trading and non-trading activities are concentrated in the Group’s and Company’s
treasury department and monitored regularly. Regular reports are submitted to the Group and Company Assets and
Liability Committees (ALCO) and heads of department.
3.2.1 Foreign exchange risk
The Group and Company take on exposure to the effects of fluctuations in the prevailing foreign currency exchange
rates on its financial position and cash flows. ALCO sets limits on the level of exposure by currency and in aggregate
for both overnight and intra-day positions, which are monitored daily. With all other variables held constant, a shift
in foreign exchange rate by 5% on all US Dollar denominated assets and liabilities which is a major foreign currency
exposure to the Group would have resulted in lower or higher profit after tax of TZS 255 million as at 31 December
2012 (2011: TZS 764 million).
The tables below summarises the Group’s and Company’s exposure to foreign currency exchange rate risk at 31
December 2012. Included in the table are the Group’s and Company’s financial instruments at carrying amounts,
categorised by currency.
79
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.1 Foreign exchange risk (continued)
Group
Concentrations of currency risk – on- and off-balance sheet financial instruments. (All amounts expressed in million of
Tanzania Shillings).
As at 31 December 2012
USD
EURO
GBP
KMF Others
Total
Cash and balances with Central Banks
32,817
530
362
20,242
1,872
55,823
Loans and advances to banks
85,684
6,481
2,515
25
8
94,713
248,838
900
-
22,884
1,575
274,197
Derivative assets
-
-
-
108
-
108
Other assets
7
-
34
843
-
884
367,446
7,911
2,911
44,102
3,455
425,725
259,666
7,234
2,599
31,128
3,440
304,067
Deposits from banks
71,732
255
-
-
3,311
75,298
Subordinated debts and senior loans
26,095
3,853
-
-
-
29,948
9,375
194
278
152
49
10,048
366,868
11,536
2,877
31,280
6,800
419,361
478
(3,624)
34
12,822 (3,345)
(6,364)
8,622
-
-
Assets
Loans and advances to customers
Total financial assets
Liabilities
Deposits from customers
Other liabilities
Total financial liabilities
Net on-balance sheet
financial position
Credit commitments
80
6,925
-
15,547
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.1 Foreign exchange risk (continued)
(All amounts expressed in million of Tanzania Shillings)
As at 31 December 2011
USD
EURO
GBP
KMF Others
Total
7,698
668
358
11,403
-
20,127
78,451
24,628
1,239
8
116
104,442
232,973
-
-
18,996
-
251,969
1,275
-
-
232
-
1.507
320,397
25,296
1,597
30,639
116
378,045
242,364
8,277
2,667
26,290
-
279,598
Deposits from banks
48,177
4,695
423
4,341
-
57,636
Subordinated debts and senior loans
28,933
4,126
-
-
-
33,059
9,136
525
138
609
-
10,408
328,610
17,623
3,228
31,240
-
380,701
Net on-balance sheet
financial position
(8,213)
7,673
(1,631)
(601)
116
(2,656)
Off balance sheet commitments
30,044
130
5,704
713
-
36,591
Assets
Cash and balances with Central Banks
Loans and advances to banks
Loans and advances to customers
Other assets
Total financial assets
Liabilities
Deposits from customers
Other liabilities
Total financial liabilities
81
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.1 Foreign exchange risk (continued)
Company
Concentrations of currency risk – on- and off-balance sheet financial instruments. (All amounts expressed in million of
Tanzania Shillings).
As at 31 December 2012
USD
EURO
GBP
KMF Others
Total
Cash and balances with Central Banks
27,524
407
362
-
-
28,293
Loans and advances to banks
81,812
5,445
2,515
-
230
90,002
248,822
377
-
-
-
249,199
-
670
34
-
209
913
358,158
6,899
2,911
-
439
368,407
256,405
6,726
2,599
-
1
265,731
Deposits from banks
67,467
-
1
-
-
67,469
Subordinated debts and senior loans
26,095
-
-
-
-
26,095
9,301
194
278
-
1,551
11,324
359,268
6,920
2,878
-
1,552
370,619
(1,110)
(21)
33
- (1,113)
(2,212)
8,622
-
-
Assets
Loans and advances to customers
Other assets
Total financial assets
Liabilities
Due to customers
Other liabilities
Total financial liabilities
Net on-balance sheet
financial position
Credit commitments
82
-
-
8,622
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.1 Foreign exchange risk (continued)
(All amounts expressed in million of Tanzania Shillings)
As at 31 December 2011
USD
EURO
GBP
KES
KMF
Total
7,649
77,480
232,206
1,275
555
15,221
-
358
1,239
-
-
116
-
8,562
94,056
232,206
1,275
318,610
15,776
1,597
-
116
336,099
242,054
48,177
28,933
9,136
8,133
4,695
500
2,667
423
138
1,113
-
-
252,854
54,408
28,933
10,408
328,300
13,328
3,228
1,113
-
346,603
Net on-balance sheet
financial position
(9,690)
2,448
(1,631) (1,113)
116
(10,504)
Credit commitments
30,044
5,704
-
35,878
Assets
Cash and balances with Central Banks
Loans and advances to banks
Loans and advances to customers
Other assets
Total financial assets
Liabilities
Due to customers
Deposits from banks
Subordinated debts and senior loans
Other liabilities
Total financial liabilities
83
130
-
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.2 Price risk
The Group and Company are exposed to equity securities price risk because of its investment in listed shares classified
on the balance sheet as available for sale.
If the stock market price of shares had increased/decreased by 5% with all other variables held constant, the fair value
reserve in equity would have increased/decreased as a result of gains or losses on equity securities classified as available
for sale by TZS 946 million as at 31 December 2012 (2011:TZS 729 million).
3.2.3 Interest rate risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will
fluctuate because of changes in market interest rates. The Group and Company take on exposure to the effects of
fluctuations in the prevailing levels of market interest rates on both its fair value and cash flow risks. Interest margins
may increase as a result of such changes but may reduce losses in the event that unexpected movements arise. The
Group’s and Company’s Asset and Liability Committee (ALCO) sets limits on the level of mismatch of interest rate
repricing that may be undertaken, which is monitored daily by the Group and Company.
With all other variables held constant, a shift in interest rate by 100 basis points on all interest bearing assets and
liabilities would have resulted in lower or higher profit after tax of TZS 450 million as at 31 December 2012 (2011: TZS
406 million).
The table below summarises the Group’s and Company’s exposure to interest rate risks. It includes the Group’s and
Company’s financial instruments at carrying amounts, categorised by the earlier of contractual repricing or maturity
dates. The Group and Company do not bear any interest rate risk on off-balance sheet items.
84
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.3 Interest rate risk - Group (continued)
(Amounts are in TZS Million)
Non
Over 5 Interest
years bearing
Up to 1
month
1-3
months
3-12
month
1-5
years
Cash and balances with Central banks
-
-
-
-
-
143,686
143,686
Government securities held to maturity
-
1,213
62,490
47,669
73,776
76,482
37,318
12,423
-
-
5,979
132,202
101,502
50,982
94,026
160,371
28,717
-
435,598
-
-
-
-
-
26,933
26,933
149
-
-
3,438
-
-
3,587
Derivative assets
-
-
-
-
-
108
108
Other assets
-
-
-
-
-
10,060
10,060
178,133
89,513
168,939 211,478 102,493
186,766
937,322
41,486
13,592
30,930
-
-
-
86,008
158,364
122,895
196,586
12,031
153
232,705
722,734
Other liabilities
-
-
-
-
-
18,433
18,433
Subordinated debts and senior loans
-
-
1,089
28,859
-
-
29,948
Total financial liabilities
199,850
136,487
228,605
40,890
153
251,138
857,123
Total interest repricing gap
(21,717)
(46,974)
(59,666) 170,588 102,340
As at 31 December 2012
Total
Assets
Loans and advances to banks
Loans and advances to
customers
Investment securities available for sale
Investments securities held to maturity
Total financial assets
185,148
Liabilities
Deposits from Banks
Deposits from customers
85
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.3 Interest rate risk - Group (continued)
(Amounts are in TZS Million)
As at 31 December 2011
Up to 1
month
1-3
months
3-12
month
Non
1-5 Over 5 Interest
years
years bearing
Total
Assets
Cash and balances with Central banks
-
-
-
-
-
99,501
99,501
Government securities held to maturity
-
1,750
22,033
61,310
38,555
11,070
134,718
85,912
25,611
10,150
-
-
13
121,686
415,111
2,297
2,104
4,069
1,057
6,964
428,032
Investment securities available for sale
-
-
-
-
-
20,730
20,730
Investments securities held to maturity
-
-
-
3,500
-
169
3,669
Other assets
-
-
-
-
-
9,827
9,827
497,453
29,658
34,287
68,879 39,612 148,274
818,163
Loans and advances to banks
Loans and advances to customers
Total financial assets
Liabilities
Deposits from Banks
74,377
5000
2,510
-
-
-
81,887
388,409
3,738
20,424
1,470
-
203,218
617,259
Other liabilities
-
-
-
-
-
19,492
19,492
Subordinated debts and senior loans
-
-
3,231
29,802
-
26
33,059
26,165
31,272
- 222,736
751,717
Deposits from customers
Total financial liabilities
462,786
8,738
Total interest repricing gap
34,667
23,022
86
8,122
35,607 39,612
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.3 Interest rate risk - Company (continued)
(Amounts are in TZS Million)
As at 31 December 2012
Up to 1
month
1-3
months
3-12
month
Non
1-5 Over 5 Interest
years
years bearing
Total
Assets
Cash and balances with Central banks
-
-
-
-
-
116,157
116,157
Government securities held to maturity
-
1,211
62,490
47,669
73,778
-
185,148
Loans and advances to banks
76,482
41,603
9,176
-
-
-
127,261
Loans and advances to customers
90,117
50,756
89,327 151,768
28,632
-
410,600
Investment securities available for sale
-
-
-
-
-
26,933
26,933
Investments securities held to maturity
149
-
-
3,438
-
-
3,587
-
-
-
-
-
9,183
9,183
93,570 160,993 202,875 102,410 153,149
879,745
Other assets
Total financial assets
166,748
Liabilities
Deposits from Banks
38,648
13,593
176,919
122,132
Other liabilities
-
-
Subordinated debts and senior loans
-
-
Deposits from customers
23,892
-
184,215 11,452
-
20
-
-
-
297
25,798
-
215,567 135,725 208,404
37,250
-
76,133
189,659
684,397
18,119
18,119
- 26,095
Total financial liabilities
20 207,778
Total interest repricing gap
(48,819) (42,153) (47,411) 165,625 102,390
87
804,744
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.3 Interest rate risk - Company (continued)
(Amounts are in TZS Million)
Non
Over 5 Interest
years bearing
Up to1
month
1-3
months
3-12
months
1-5
years
Cash and balances with Central banks
-
-
-
-
-
84,447
84,447
Government securities held to maturity
-
1,750
22,033
61,310
38,555
11,070
134,718
85,059
25,611
10,150
-
-
13
120,833
399,451
-
154
1,558
142
6,964
408,269
-
-
-
-
-
20,730
20,730
169
-
-
3,500
-
-
3,669
-
-
-
-
-
8,546
8,546
484,679
27,361
32,337
66,368
38,697
81,274
300
2,150
-
-
-
83,724
390,738
3,534
9,423
677
-
182,121
586,493
Other liabilities
-
-
-
-
-
19,147
19,147
Subordinated debts and senior loans
-
-
3,093
25,814
-
26
28,933
472,012
3,834
14,666
26,491
-
12,667
23,527
17,671
39,877
38,697
As at 31 December 2011
Total
Assets
Loans and advances to banks
Loans and advances to customers
Investment securities available for sale
Investments securities held to maturity
Other assets
Total financial assets
131,770 781,212
Liabilities
Deposits from Banks
Deposits from customers
Total financial liabilities
Total interest repricing gap
88
201,294 718,297
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk
Liquidity risk is the risk that a Company is unable to meet its payment obligations associated with its financial liabilities
when they fall due and to replace funds when they are withdrawn. The consequence may be the failure to meet
obligations to repay depositors and fulfil commitments to lend.
3.3.1 Liquidity risk management process
The Group’s and Company’s liquidity management process, as carried out within the Group and Company are monitored
by the Asset and Liability Committee (ALCO) of the individual banks. This includes:
? Day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met. These
include replenishment of funds as they mature or are borrowed by customers. The Group and Company maintain
an active presence in money markets to enable this to happen;
? Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any
unforeseen interruption to cash flow;
?
Monitoring balance sheet liquidity ratios against internal and regulatory requirements; and
?
Managing the concentration and profile of debt maturities.
Monitoring and reporting take the form of cash flow measurement and projections for the next day, week and month
respectively, as these are key periods for liquidity management. The starting point for those projections is an analysis of
the contractual maturity of the financial liabilities and the expected collection date of the financial assets (Note 3.3.3).
3.3.2 Funding approach
Sources of liquidity are regularly reviewed by the Group’s and Company’s Asset and Liability Committee to maintain a
wide diversification by currency, geography, provider, product and term.
89
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk (continued)
3.3.3 Non-derivative cash flows
The tables below present the cash flows payable by the Group and Company under non-derivative financial liabilities
by remaining contractual maturities at the balance sheet date. The amounts disclosed in the table are the contractual
undiscounted cash flows, as the Group and Company manage the inherent liquidity risk based on expected undiscounted
cash flows.
Group
Amounts are in TZS Million
Up to1
month
1-3
months
3-12
months
Over 1
year
Total
384,776
135,771
202,886
15,070
738,502
Deposits from banks
41,075
18,190
31,812
-
91,077
Other liabilities
18,433
-
-
-
18,433
Subordinated debt and senior loans
-
-
7,554
24,280
31,834
Total financial liabilities
(contractual maturity dates)
444,284
153,961
242,252
39,350
879,847
Total financial assets
(expected maturity dates)
178,134
89,511
168,939
313,972
750,559
595,547
3,818
21,271
1,531
622,167
Deposits from banks
83,926
311
2,683
-
86,920
Other liabilities
19,147
-
345
-
19,492
Subordinated debt and senior loans
56
-
3,894
30,734
34,684
Total financial liabilities
(contractual maturity dates)
698,677
4,129
28,193
31,264
763,263
Total financial assets
(expected maturity dates)
342,540
104,792
114,623
254,741
816,697
As at 31 December 2012
Liabilities
Due to customers
As at 31 December 2011
Liabilities
Due to customers
90
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk (continued)
3.3.3 Non-derivative cash flows (continued)
Amounts are in TZS Million
Company
Up to1
month
1-3
months
3-12
months
Over 1
year
Total
367,213
123,746
195,668
13,538
700,165
Deposits from banks
37,507
13,797
25,504
-
76,808
Other liabilities
18,120
-
-
-
18,120
-
-
6,763
21,219
27,981
Total financial liabilities
(contractual maturity dates)
422,840
137,543
227,935
34,757
823,074
Total financial assets
(expected maturity dates)
166,748
93,571
160,994
305,283
816,697
577,019
3,614
10,271
-
590,904
Deposits from banks
82,290
311
2,473
-
85,074
Other liabilities
19,147
-
-
-
19,147
26
-
3,116
26,582
29,724
Total financial liabilities
(contractual maturity dates)
678,482
3,925
15,860
26,582
724,849
Total financial assets
(expected maturity dates)
342,540
104,792
114,623
254,741
816,697
As at 31 December 2012
Liabilities
Due to customers
Subordinated debt
As at 31 December 2011
Liabilities
Due to customers
Subordinated debt
Assets available to meet all of the liabilities and to cover outstanding loan commitments include cash, central bank balances,
items in the course of collection and treasury and other eligible bills; loans and advances to banks; and loans and advances to
customers. In the normal course of business, a proportion of customer loans contractually repayable within one year will be
extended.The Group would also be able to meet unexpected net cash outflows by selling securities and accessing additional
funding sources such as asset-backed markets.
91
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk (continued)
3.3.4 Derivative cash flows
The Bank’s derivatives that are settled on a gross basis include foreign exchange derivatives and currency forwards.
Interest rate swaps are settled on a net basis.
The table below analyses the Group’s and Company’s derivative financial instruments that are settled on a gross basis
into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity
date. Contractual maturities are assessed to be essential for an understanding of the timing of the cash flows on all
derivatives including derivatives classified as ‘liabilities held for trading’. The amounts disclosed in the table are the
contractual undiscounted cash flows.
Group
At 31 December 2012
Amount are in TZS’Millions
Up to 1
month
1 -3
months
3 -12
months
1-5
years
Total
(10,533)
(5,144)
-
-
(15,677)
10,595
5,146
-
(7,179)
(5,144)
-
7,132
5,146
-
Foreign exchange derivatives:
Total outflow
Total inflow
15,741
Company
Foreign exchange derivatives:
Total outflow
Total inflow
Group and Company
-
(12,323)
12,278
Amount are in TZS’Millions
At 31 December 2011
Foreign exchange derivatives:
? Outflow
? Inflow
Interest rate derivatives:
? Outflow
? Inflow
Total outflow
Total inflow
92
(716)
796
-
-
-
(716)
796
(137)
(194)
(422)
92
177
339
-
608
(853)
(296)
(280)
-
(1,469)
888
177
339
-
1,404
(753)
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk (continued)
3.3.5 Off-balance sheet items
(a) Loan commitments
The dates of the contractual amounts of the Group’s and Company’s off-balance sheet financial instruments that
commit it to extend credit to customers and other facilities (Note 29), are summarised in the table below.
(b) Financial guarantees and other financial facilities
Financial guarantees are included below based on the earliest contractual maturity date.
(c) Operating lease commitments
Where the Group or the Company, are the lessee, the future minimum lease payments under non-cancellable operating
leases, are summarised below.
(d) Investment commitments
Investment commitment is with respect to additional equity investment in the subsidiary Exim Bank Djibouti SA.
(e) Capital commitments
These relate to the acquisition of property and equipment.
93
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk (continued)
3.3.5 Off-balance sheet items
Summary of off-balance sheet items:
Group
(Amounts are in TZS Million)
No later
than 1 year
1–5
years
Over 5
Years
Total
48,043
15,318
4,478
67,839
Commitments to extend credit
5,136
19,917
-
25,053
Operating lease commitments
9076
50
-
9,127
Capital commitments
1,565
-
-
1,565
As at 31 December 2012
Outstanding letters of credit, guarantees and indemnities
As at 31 December 2011
Outstanding letters of credit, guarantees and indemnities
26,672
6,266
4,095
37,034
Commitments to extend credit
23,968
-
-
23,968
Operating lease commitments
Capital commitments
2,003
624
5,749
277
1,367
-
9,119
901
94
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk (continued)
3.3.5 Off-balance sheet items (continued)
Summary of off-balance sheet items (continued)
(Amounts are in TZS Million)
Company
No later
than 1 year
1–5
years
Over 5
Years
Total
41,118
15,318
4,478
60,915
Commitments to extend credit
5,136
19,917
-
25,053
Operating lease commitments
9,026
-
-
9,026
Capital commitments
1,448
-
-
1,448
Outstanding letters of credit, guarantees and indemnities
26,654
6,266
4,096
37,016
Commitments to extend credit
23,255
-
-
23,255
Operating lease commitments
1,954
5,602
1,367
8,923
Investment commitment
2,215
-
-
2,215
356
-
-
356
As at 31 December 2012
Outstanding letters of credit, guarantees and indemnities
As at 31 December 2011
Capital commitments
As at 31 December 2011
95
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.4 Fair value of financial assets and liabilities
(a) Financial instruments not measured at fair value
The fair value of financial assets and liabilities not measured at fair value approximate carrying amounts for both Group
and Company, except for Government securities.
(i) Loans and advances to banks
Loans and advances to banks include inter-bank placements and items in the course of collection. The carrying amount
of floating rate placements and overnight deposits is a reasonable approximation of fair value.
The estimated fair value of fixed interest bearing deposits is based on discounted cash flows using prevailing moneymarket interest rates for debts with similar credit risk and remaining maturity.
(ii) Loans and advances to customers
Loans and advances are net of charges for impairment. The estimated fair value of loans and advances represents the
discounted amount of estimated future cash flows expected to be received. Expected cash flows are discounted at
current market rates to determine fair value. The carrying amount is a reasonable approximation of fair value.
(iii) Government and investment securities
The fair value for held-to-maturity assets is based on market prices.Where this information is not available, fair value is
estimated using quoted market prices for securities with similar credit, maturity and yield characteristics. The carrying
amount of investment securities is a reasonable approximation of fair value. The fair value of Government securities
amounts to TZS 189,669million (2011: Approximated carrying amount).
(iv) Deposits from banks and due to customers
The estimated fair value of deposits with no stated maturity, which includes non-interest bearing deposits, is the amount
repayable on demand.
The estimated fair value of interest-bearing deposits not quoted in an active market is based on discounted cash flows
using interest rates for new debts with similar remaining maturity. The carrying amount is a reasonable approximation
of fair value.
(v) Off-balance sheet financial instruments
The estimated fair values of the off-balance sheet financial instruments are based on market prices for similar facilities.
When this information is not available, fair value is estimated using discounted cash flow analysis.
96
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.4 Fair value of financial assets and liabilities (continued)
(b) Fair value hierarchy
IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are
observable or unobservable. Observable inputs reflect market data obtained from independent sources; unobservable
inputs reflect the Group’s and Company’s market assumptions. These two types of inputs have created the following
fair value hierarchy:
? Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed
equity securities and debt instruments on Dar es Salaam Stock Exchange.
? Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices).
?
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
This level includes equity investments and debt instruments with significant unobservable components.
This hierarchy requires the use of observable market data when available. The Group considers relevant and
observable market prices in its valuations where possible.
Group
As at 31 December 2012
Derivative assets
Investment securities - equity
Total assets
Amounts are in TZS Million
Level 1
Level 2
Level 3
Total
25,733
108
1,200
-
108
26,933
25,733
1,308
-
27,041
25,733
1,200
-
26,933
25,733
1,200
-
26,933
Company
Investment securities - equity
Total assets
97
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.4 Fair value of financial assets and liabilities (continued)
Group and Company
Amounts are in TZS Million
As at 31 December 2011
Level 1
Level 2
Level 3
Total
-
-
-
-
19,530
1,200
-
20,730
19,530
1,200
-
20,730
Interest rate swap*
Investment securities - equity
Total assets
*It is not practical to determine the fair value because of lack of appropriate market data.
The Bank’s objectives when managing capital, which is a broader concept than the ‘equity’ on the face of balance sheets,
are:
3.5 Capital management
? To comply with the capital requirements set by the Bank of Tanzania;
? To safeguard the Bank’s ability to continue as a going concern so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
? To maintain a strong capital base to support the development of its business.
Capital adequacy and the use of regulatory capital are monitored daily by the Bank’s management, employing techniques
based on the guidelines developed by the Basel Committee, as implemented by the Bank of Tanzania, for supervisory
purposes. The required information is filed with the Central Banks on a quarterly basis.
The BoT requires each bank or banking group to:
(a) hold the minimum level of Core Capital of TZS 5 billion;
(b) maintain a ratio of core capital to the risk-weighted assets plus risk-weighted off-balance sheet assets (the ‘Basel
ratio’) at or above the required minimum of 10%;
(c) and maintain total capital of not less than 12% of risk-weighted assets plus risk-weighted off-balance sheet items.
98
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.5 Capital management (continued)
? The Bank’s regulatory capital as managed by its Treasury department is divided into two tiers:
? Tier 1 capital: share capital, retained earnings and reserves created by appropriations of retained earnings.
Intangible assets and prepaid expenses are deducted in arriving at Tier 1 capital; and
? Tier 2 capital: qualifying subordinated loan capital, collective impairment allowances and unrealised gains arising on
the fair valuation of equity instruments held as available for sale.
The risk-weighted assets are measured by means of a hierarchy of five risk weights classified according to the nature
of – and reflecting an estimate of credit, market and other risks associated with each asset and counterparty, taking into
account any eligible collateral or guarantees. A similar treatment is adopted for off-balance sheet exposure, with some
adjustments to reflect the more contingent nature of the potential losses.
The table below summarises the composition of regulatory capital and the ratios of the Bank for the year ended 31
December 2012 and year ended 31 December 2011. During those two periods, the Bank complied with all of the
externally imposed capital requirements to which they are subject.
99
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.5 Capital management (continued)
Tier 1 capital
Share capital
Company
2012
TZS’Million
Restated
Company
2011
TZS’Million
12,900
12,900
Retained earnings
64,697
57,706
Prepaid expenses
(1,735)
(1,765)
Deferred income tax
(1,391)
(1,050)
(461)
(644)
74,010
67,147
Subordinated debt
7,897
7,912
Total qualifying Tier 2 capital
7,897
7,912
81,907
75,059
Risk-weighted assets
On-balance sheet
Off-balance sheet
503,123
45,292
465,502
33,904
Total risk-weighted assets
548,415
499,406
Required
ratio
%
Bank’s
ratio 2012
%
Banks
Ratio 2011
%
10
12
13.50
14.94
13.44
15.03
Intangible assets
Total qualifying Tier 1 capital
Tier 2 capital
Total regulatory capital
Tier 1 capital
Tier 1 + Tier 2 capital
The increase capital adequacy ratio is mainly due to the increase in Tier 1 capital due to retained profit for the year in
proportional to risk weighted assets 2012 compared with 2011.
100
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
4
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgment in the process of applying the Group’s accounting policies.
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next
period. Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
(a) Impairment losses on loans and advances
The Group reviews its loan portfolios to assess impairment at least on a quarterly basis. In determining whether an
impairment loss should be recorded in the profit and loss account, the management makes judgements as to whether
there is any observable data indicating that there is a measurable decrease in the estimated future cash flows in an
individual loan in that portfolio. This evidence may include observable data indicating that there has been an adverse
change in the payment status of borrowers, or national or local economic conditions that correlate with defaults
on assets. Management uses estimates based on historical loss experience for assets with credit risk characteristics
and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The
methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed
regularly to reduce any differences between loss estimates and actual loss experience (refer to Note 16 for details).
Were the net present value of estimated cash flows to differ by +/- 1%, the impairment loss is estimated to be TZS 79
million lower or TZS 83 million higher.
(b) Held to maturity investments
The Group follows the guidance of IAS 39 on classifying non-derivative financial assets with fixed or determinable
payments and fixed maturity as held-to-maturity. This classification requires significant judgement. In making this
judgement, the Group evaluates its intention and ability to hold such investments to maturity. If the Group fails to keep
these investments to maturity other than for the specific circumstances – for example, selling an insignificant amount
close to maturity – it will be required to reclassify the entire class as available-for-sale.The investments would therefore
be measured at fair value not amortised cost. If all held-to-maturity investments were to be so reclassified, the carrying
value would increase by TZS4,521 million, with a corresponding entry in the fair value reserve in shareholders’ equity.
(c) Impairment of available for sale equity investments
The Bank determines that available-for-sale equity investments are impaired when there has been a significant or
prolonged decline in the fair value below its cost. This determination of what is significant or prolonged requires
judgment. In making this judgment, the Bank evaluates among other factors, the normal volatility in share price. In
addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee,
industry and sector performance, changes in technology, and operational and financing cash flows.
101
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
4
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
(d) Fair value of derivatives
The fair value of financial instruments that are not quoted in active markets are determined by using valuation techniques.
To the extent practical, models use only observable data; however, areas such as volatilities and correlations require
management to make estimates. Changes in assumptions about these factors could affect reported fair value of financial
instruments.
5
INTEREST AND SIMILAR INCOME
Loans and advances to customers
Loans and advances to banks
Government securities held to maturity
Investment securities
6
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
59,433
46,299
57,105
43,856
3,206
1,261
3,147
1,261
21,149
17,440
21,149
17,440
404
864
404
839
84,192
65,864
81,805
63,396
INTEREST EXPENSE AND SIMILAR CHARGES
Customer deposits
34,879
22,415
34,563
22,165
Deposits by banks
4,959
2,155
2,806
2,130
Subordinated debts and senior loans
1,506
808
1,275
544
39,214
102
25,378
38,644
24,839
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
7
NET FEE AND COMMISSION INCOME
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
Commission on Letters of Credit and
Guarantees
1,782
1,272
1,516
1,247
Commission on telegraphic transfers and other
international trade finance activities
2,248
2,745
1,695
1,972
Commission and fees from banking
operations
3,593
3,456
3,038
3,450
Facility fees from loans and advances
5,269
4,433
4,152
4,123
Credit/debit card fees and commissions
Other fees and commissions
4,562
302
2,645
350
4,562
255
2,335
310
17,693
14,901
15,218
13,437
(193)
(35)
(160)
(168)
(35)
(37)
(193)
(195)
(168)
(72)
17,500
14,706
15,050
13,365
1,091
786
1,091
786
13
-
13
-
Fee and commission income
Fee and commission expense
IFC guarantee fees
Borrowing arrangement fees
Net fee and commission income
8
OTHER INCOME
Dividend income
Profit from sale of asset
1,104
786
The Bank earned dividend income from its equity investment in National Microfinance Bank Plc.
103
1,104
786
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
9
OPERATING EXPENSES
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
18,337
14,775
16,625
13,371
Travelling expenses
1,090
876
968
776
Depreciation and amortisation (Notes 19 and
20)
4,023
3,267
3,347
2,583
Repairs and maintenance
1,488
1,332
1,149
1,223
Advertising and business promotion
1,940
1,085
1,796
969
Directors’ emoluments
241
153
200
120
Auditors’ remuneration
204
181
127
85
1,742
2,092
1,519
1,808
494
518
346
351
Operating lease rentals
2,791
2,426
2,791
2,365
Occupancy costs
3,579
3,956
3,152
2,595
Credit/debit card expenses
3,619
3,040
3,611
3,036
Other operating expenses
5,788
3,941
5,339
2,897
45,336
37,643
40,970
32,180
13,395
10,250
12,171
9,165
Social security costs (defined contributions)
1,460
1,028
1,412
992
Other employment costs and benefits
3,482
3,497
3,042
3,214
18,337
14,775
16,625
13,371
The following items are included within
operating expenses:
Staff benefit expenses (Note 10)
Legal and professional fees
Correspondent bank and SWIFT charges
10 STAFF BENEFIT EXPENSES
Wages and salaries
104
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
1I NCOME TAX EXPENSE
Current income tax – current year
prior year
Deferred income tax – current year(Note 22)
- prior year
Group and
Company
2012
TZS’Millions
Group and
Company
2011
TZS’Millions
3,171
5,345
43
71
(342)
(162)
1
(212)
2,873
5,042
The tax on the company’s profit before income tax differs from the theoretical amount that would arise using the
statutory income tax rate as follows:
Profit before income tax
Tax calculated at the statutory income tax rate of 30% (2011: 30%)
Company
2012
TZS’Millions
Company
2011
TZS’Millions
15,809
19,114
4,743
5,734
(327)
(614)
196
26
(1,783)
-
43
71
1
(175)
2,873
5,042
Tax effect of:
Non-taxable income
Expenses not deductible for tax purposes
Deductible expenses not charged to profit or loss
Under provisions in previous years tax- current tax
Under provision of tax in previous years- deferred tax
Income tax expense
105
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
12 FINANCIAL INSTRUMENTS BY CATEGORY – GROUP
Loans and
receivables
TZS’ Millions
Fair value
through
profit or loss
TZS’ Millions
Held to
maturity
TZS’ Millions
Available
- for - sale
TZS’ Millions
Total
TZS’ Millions
At 31 December 2012
Financial assets
Cash and balances with
Central Banks
143,686
143,686
Loans and advances to
banks
132,202
132,202
Loans and advances to
customers
435,598
435,598
Government securities
185,148
Investment securities
-
Derivative assets
3,587
185,148
26,933
108
Other assets
108
10,060
721,525
30,520
10,060
108
188,735
26,933
937,322
Financial
liabilities at
fair value
through profit
or loss
TZS’Millions
Other
liabilities
at amortised
cost
TZS’Millions
Total
TZS’Millions
Deposits from banks
-
86,008
86,008
Deposits customers
-
722,734
722,734
Derivative liabilities
-
-
-
Other liabilities
-
18,433
18,433
Subordinated debts and senior loans
-
29,948
29,948
-
857,123
857,123
Financial liabilities
106
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
12 FINANCIAL INSTRUMENTS BY CATEGORY – GROUP (continued)
Loans and
Held to
Available
receivables
maturity
- for - sale
Total
TZS’Millions TZS’Millions TZS’Millions TZS’Millions
At 31 December 2011
Financial assets
Cash and balances with Central Banks
99,501
-
-
99,501
Loans and advances to banks
121,686
-
-
121,686
Loans and advances to customers
428,032
-
-
428,032
Government securities
-
134,718
-
134,718
Investment securities
-
3,669
20,730
24,399
9,827
-
-
9,827
659,046
138,387
20,730
818,163
Other assets
Financial
liabilities at
Other
fair value
liabilities
through profit at amortised
or loss
cost
Total
TZS’Millions TZS’Millions TZS’Millions
Financial liabilities
Deposits from banks
-
81,887
81,887
Deposits customers
-
617,259
617,259
Derivative liabilities
-
-
-
Other liabilities
-
19,492
19,492
Subordinated debts and senior loans
-
33,059
33,059
-
751,697
751,697
107
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
12 FINANCIAL INSTRUMENTS BY CATEGORY – COMPANY (continued)
Loans and
receivables
TZS’Millions
Held to
Available
maturity
- for - sale
Total
TZS’Millions TZS’Millions TZS’Millions
At 31 December 2012
Financial assets
Cash and balances with Central Banks
116,157
-
-
116,157
Loans and advances to banks
127,261
-
-
127,261
Loans and advances to customers
410,600
-
-
410,600
Government securities
-
185,148
-
185,148
Investment securities
-
3,587
26,933
30,520
9,183
-
-
9,183
663,201
188,735
26,933
878,869
Other assets
Financial
liabilities
Other
at fair value
liabilities
through profit at amortised
or loss
cost
Total
TZS’Millions TZS’Millions TZS’Millions
Financial liabilities
Deposits from banks
-
76,133
76,133
Deposits customers
-
684,397
684,397
Derivative liabilities
-
-
-
Other liabilities
-
18,119
18,119
Subordinated debts and senior loans
-
26,095
26,095
-
804,744
804,744
108
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
12 FINANCIAL INSTRUMENTS BY CATEGORY – COMPANY (continued)
Loans and
receivables
TZS’Millions
Held to
Available
maturity
- for - sale
Total
TZS’Millions TZS’Millions TZS’Millions
At 31 December 2011
Financial assets
Cash and balances with Central Banks
84,447
-
-
84,447
Loans and advances to banks
120,833
-
-
120,833
Loans and advances to customers
408,269
-
-
408,269
Government securities
-
134,718
-
134,718
Investment securities
-
3,669
20,730
24,399
7,179
-
-
7,179
620,728
138,387
20,730
779,845
Other assets
Financial
liabilities at
Other
fair value
liabilities
through profit at amortised
or loss
cost
Total
TZS’Millions TZS’Millions TZS’Millions
At 31 December 2011
Financial liabilities
Deposits from banks
-
83,724
83,724
Deposits customers
Derivative liabilities
-
586,493
586,493
Other liabilities
-
19,147
19,147
Subordinated debts and senior loans
-
28,933
28,933
-
718,297
718,297
109
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
13 CASH AND BALANCES WITH CENTRAL BANKS
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
26,804
31,586
85,296
15,152
8,949
75,400
25,145
18,662
72,350
14,517
4,815
65,115
143,686
99,501
116,157
84,447
Cash in hand
Clearing account
Statutory Minimum Reserves (SMR)
The SMR deposit is not available to finance the Group’s day-to-day operations and is hence excluded from cash and cash
equivalents for the purpose of the cash flow statement (See Note 30). Cash in hand and balances with Central Banks are
non-interest bearing. All balances are current.
14 LOANS AND ADVANCES TO BANKS
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Items in course of collection
Company
2012
TZS’Millions
Company
2011
TZS’Millions
3,831
22,170
3,821
22,165
Loans and advances to other banks
64,378
34,209
60,542
34,822
Placements with other banks
63,993
65,307
62,898
63,846
132,202
121,686
127,261
120,833
132,202
121,686
127,261
120,833
Current
15 LOANS AND ADVANCES TO CUSTOMERS
Overdrafts
Personal loans
Commercial loans
Other
237,289
2,714
207,959
7,365
240,644
1,433
198,140
2,026
216,598
2,596
207,959
2,717
224,608
1,429
194,081
2,012
Gross loans and advances
Less: Provision for impairment
455,327
(19,729)
442,243
(14,211)
429,871
(19,272)
422,130
(13,861)
Current
Non-current
435,598
246,510
189,088
428,032
280,429
147,603
410,600
230,682
179,918
408,269
210,436
197,833
Provision for impairment losses on loans and advances is broken down as follows:
110
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
15 LOANS AND ADVANCES TO CUSTOMERS (continued)
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
Individually impaired
18,012
12,874
17,480
12,624
Portfolio impairment
1,717
1,337
1,792
1,237
19,729
14,211
19,272
13,861
At end of year
The movements in provision for impairment losses on loans and advances are as follows:
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
14,211
8,022
13,861
7,888
Impairment charges for credit losses
6,329
6,409
6,234
6,180
Amounts recovered during year
(655)
(177)
(655)
(177)
Amounts written off during year
(156)
(43)
(169)
(30)
13
-
-
-
19,729
14,211
19,272
13,861
Charge for the year is made up of:
Impairment charges for credit losses
6,329
6,409
6,234
6,180
Amounts recovered during year
(655)
(177)
(655)
(177)
5,674
6,232
5,579
6,003
At start of year
Adjustment for 2011
At end of year
111
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
15 LOANS AND ADVANCES TO CUSTOMERS (continued)
Analysis of provision account for losses on loans and advances by class is as follows:
GROUP
Year ended 31 December 2012
Individual
Overdraft
customers
SME’s
Others
TZS’Millions TZS’Millions TZS’Millions TZS’Millions
455
3,046
978
14,211
4,956
292
526
555
6,329
(178)
(198)
(279)
(655)
(16)
(153)
(169)
At start of the year
9,732
Provision for loan impairment
Loans recovered during the year
Loans written off during the year
as uncollectable
Adjustment 2011
At end of the year
Total
TZS’Millions
13
13
14,523
533
3,140
1,533
19,729
At start of the year
5,092
280
1,729
921
8,022
Provision for loan impairment
4,683
175
1,317
234
6,409
Loans recovered during the year
-
-
-
(177)
(177)
Loans written off during the year
as uncollectable
(43)
-
-
-
(43)
9,732
455
3,046
978
14,211
Year ended 31 December 2011
At end of the year
112
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
15 LOANS AND ADVANCES TO CUSTOMERS (continued)
COMPANY
Year ended 31 December 2012
Overdraft
TZS’Millions
Individual
customers
SME’s
Others
TZS’Millions TZS’Millions TZS’Millions
Total
TZS’Millions
At start of the year
9,158
444
2,943
1,316
13,861
Provision for loan impairment
4,887
266
526
555
6,234
Loan recovered during the year
(178)
(198)
(279)
(655)
(16)
(152)
(168)
13,867
496
3,038
1,871
19,272
At start of the year
4,990
279
1,702
917
7,888
Provision for loan impairment
4,168
165
1,241
399
5,973
9,158
444
2,943
1,316
13,861
Loan written off during the year
as uncollectable
At end of the year
Year ended 31 December 2011
At end of the year
113
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
16 GOVERNMENT SECURITIES HELD TO-MATURITY
(Amounts are in TZS Million)
Treasury bills and bonds:
Maturing within 90 days from date of acquisition
Maturing after 90 days from date of acquisition
Current
Non current
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
1,213
-
1,213
-
183,935
134,718
183,935
134,718
185,148
134,718
185,148
134,718
63,702
34,853
63,702
34,853
121,446
99,865
121,446
99,865
Treasury bills and bonds are debt securities issued by the Government of the United Republic of Tanzania.
The Bank is holding Treasury bills and bonds with face value of TZS 16,890 million which have been pledged as collateral
by local banks against short term borrowing of TZS 14,000 million. These are not recognised in the financial statements as
assets of the Bank.
As of 31 December 2012, the Bank had pledged Treasury bills and bonds with a face value of TZS 19 million against deposits
from banks of TZS 14 billion.
114
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
17 INVESTMENT SECURITIES
(Amounts are in TZS Million)
Investment securities available-for-sale
Group and
Company
2012
TZS’Millions
Group and
Company
2011
TZS’Millions
85
85
25,733
19,530
1,200
1200
(85)
(85)
26,933
20,730
ALAF Bond
471
538
Standard Chartered Bank Bond
511
538
2,605
2,593
3,587
3,669
149
169
3,438
3,500
Equity securities – at fair value
- Listed investment in Tanzania Oxygen Limited
- Listed investment in National Microfinance Bank Plc
- Tanzania Mortgage Refinancing Company (TMRC) - unlisted
Provision for impairment
Total securities available-for-sale
Investment securities held-to-maturity
Tanzania Breweries Limited Bond
At end of year
Current
Non-current
115
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
18 OTHER ASSETS
(Amounts are in TZS Million)
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
4,054
5,365
3,257
4,165
-
-
-
-
482
1,073
482
1,073
MasterCard receivables
3,630
2,320
3,613
2,320
Visa card receivables
1,540
892
1,540
892
354
177
292
96
1,878
1,892
1,735
1,765
11,938
11,719
10,918
10,311
11,938
10,087
10,918
8,679
-
1,632
-
1,632
Sundry debtors
Receivable from related party (Note 31)
TANAPA cards
Moneygram receivables
Prepaid expenses
Current
Non current
116
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
19 PROPERTY AND EQUIPMENT (GROUP)
(Amounts are in TZS Million)
Office
Leasehold
Motor equipBuildings premises vehicles
ment
Computer
hardware
Furniture
and
fittings
Capital
work in
progress
Total
Cost
2,001 28,116
9,382
5,048
901
7,905
1,214
1,665
Additions
281
413
226
1,220
183
327
83
2,733
Disposals
-
-
(52)
-
-
-
(44)
(96)
Transfers
341
92
-
668
-20
16
(1,097)
-
10,004
5,553
1,075
9,793
1,377
2,008
At 1 January 2011
471
1,705
662
5,976
708
1,115
-
10,637
Charge for the year
367
531
198
1,268
225
176
-
2,765
Disposals
-
-
(52)
-
-
-
-
(52)
Transfers
-
-
-
(20)
20
-
-
-
838
2,236
808
7,224
953
1,291
-
13,350
9,166
3,317
267
2,569
424
717
At 1 January 2011
At 31 December 2011
943 30,753
Depreciation
At 31 December 2011
Net book value
117
943 17,403
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
19 PROPERTY AND EQUIPMENT (GROUP) (continued)
(Amounts are in TZS Million)
Office
Leasehold
Motor equipBuildings premises vehicles
ment
Computer
hardware
Furniture
and
fittings
Capital
work in
progress
Total
Cost
10,004
5,553
1,075
9,793
1,377
2,008
Additions
314
1,243
477
467
145
320
3,423
6,389
Disposals
-
-
(35)
-
-
-
-
(35)
Transfers
-
1,007
31
134
57
35
(1,264)
-
Write-off
-
-
-
-
-
-
(82)
(82)
10,318
7,803
1,548
10,394
1,579
2,363
3,020 37,025
At January 2012
838
2,236
808
7,224
953
1,291
- 13,350
Charge for the year
462
1,173
188
981
445
187
-
3,436
Disposals
-
-
(35)
-
-
-
-
(35)
Transfers
-
-
(43)
43
-
-
-
1,300
3,409
961
8,162
1,441
1,478
9,018
4,394
587
2,232
138
885
At 1 January 2012
At 31 December 2012
943 30,753
Depreciation
At 31 December 2012
Net book value
118
- 16,751
3,020 20,274
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
19
PROPERTY AND EQUIPMENT (COMPANY) (continued)
(Amounts are in TZS Million)
Office
Leasehold
Motor equipBuildings premises vehicles
ment
Computer
hardware
Furniture
and
fittings
Capital
work in
progress
Total
Cost
7,913
5,033
797
7,244
1,141
1,578
2,001
25,707
Additions
281
413
122
746
120
90
83
1,855
Disposals
-
-
(52)
-
-
-
(44)
(96)
Transfers
341
92
-
635
13
16
-1,097
-
-
-
-
-
-
-
-
(239)
8,535
5,538
867
8,625
1,274
1,684
943
27,466
At 1 January 2011
182
1,703
586
5,631
671
1,079
-
9,852
Charge for the year
309
529
165
921
199
123
-
2,246
-
-
(52)
-
-
-
-
(52)
491
2,232
699
6,552
870
1,202
-
12,046
8,044
3,306
168
2073
404
482
943
At 1 January 2011
Write-offs
At 31 December 2011
Depreciation
Disposals
At 31 December 2011
Net book value
119
15,420
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
19 PROPERTY AND EQUIPMENT (COMPANY) (continued)
(Amounts are in TZS Million)
Office
Leasehold
Motor equipBuildings premises vehicles
ment
Computer
hardware
Furniture
and
fittings
Capital
work in
progress
Total
Cost
At 1 January 2012
8,535
5,538
867
8,625
1,274
1,684
943
27,466
Additions
102
646
344
354
136
287
3,393
5,262
Disposals
-
-
(35)
-
-
-
-
(35)
Transfers
-
1,007
31
188
3
35
(1,264)
-
(82)
(82)
Write-off
At 31 December 2012
8,637
7,191
1,207
9,167
1,413
2,006
2,990 32,611
At 1 January 2012
491
2,232
699
6,552
870
1,202
-
12,046
Charge for the year
394
1,030
151
772
418
126
-
2,891
Depreciation
Disposals
(35)
Transfer
At 31 December 2012
Net book value
(35)
10
(10)
-
885
3,262
815
7,334
1,278
1,328
7,752
3,929
392
1,833
135
678
120
14,902
2,990 17,709
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
20 INTANGIBLE ASSETS
Amounts are in TZS Million)
Group
2012
Computer
software
licences
Group
2011
Computer
software
licences
Company
2012
Computer
software
licences
Company
2012
Computer
software
licences
At start of year
760
570
644
289
Additions
500
692
273
692
Write-off
(31)
-
-
-
(587)
(502)
(456)
(337)
642
760
461
644
3,392
2,851
2,675
2,402
(2,750)
(2,091)
(2,214)
(1,758)
642
760
461
644
Movement during the year
Amortisation
At end of year
At 31 December
Cost
Accumulated amortisation
Net book amount
21 INVESTMENT IN SUBSIDIARIES
Company
2012
TZS’Millions
Company
2011
TZS’Millions
Investment in Exim Bank Comores S.A
2,728
2,728
Investment in Exim Bank Djibouti S.A
4,770
2,559
7,498
5,287
During the year, the Bank invested additional capital of TZS 2,211 million (US$ 1.4 million) in Exim Bank Djibouti S.A.
Country of incorporation
% interest held
The Union of Comores
Djibouti
100%
100%
2012 and 2011
Investment in Exim Bank Comores S.A
Investment in Exim Bank Djibouti S.A
121
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
22 DEFERRED INCOME TAX – GROUP AND COMPANY
Deferred income tax is calculated using the enacted income tax rate of 30%. The movement on the deferred income tax
account is as follows:
At start of year
Credit to profit or loss (Note 11)
(Over)/under provision in prior year deferred income tax (Note 11)
At end of year
2012
TZS’Millions
1,050
342
(1)
2011
TZS’Millions
676
162
212
1,391
1,050
The deferred income tax asset and deferred income tax credit in the profit and loss account, are attributable to the following items:
1 Jan 2012
TZS’Millions
Under
Credited
provision
to Profit
- prior year
and loss
TZS’Millions TZS’Millions
31 Dec 2012
TZS’Millions
Deferred income tax asset
Property and equipment
494
(2)
182
674
Provisions
556
1
160
717
1,050
(1)
342
1,391
Net deferred income tax asset
122
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
23 DEPOSITS FROM CUSTOMERS
All amounts are in TZS’Millions
Group
Company
2011
2012
TZS’Millions TZS’Millions
Group
2012
TZS’Millions
Company
2011
TZS’Millions
Current and demand deposits
210,730
203,218
189,659
182,121
Savings accounts
147,957
139,479
136,446
129,060
Fixed deposit accounts
364,047
275,791
358,292
275,312
722,734
617,259
684,397
586,493
709,019
617,018
672,925
585,816
13,716
1,470
11,473
677
Current
Non current
Included in customer deposits above are TZS 1,804 million (2011: TZS 1,546 million) in respect of deposits from related
parties (Note 31).
24 DERIVATIVE ASSETS AND LIABILITIES
All amounts are in TZS’Millions
Group
Notional
contract
amount
2011
2011
Fair values
Fair values
Notional
contract
Assets Liabilities amount
Assets
Liabilities
Foreign exchange derivatives
Forwards
16,000
108
-
1,122
-
-
-
-
-
9,000
-
-
108
-
-
-
Interest rate derivatives
Swaps*
Total derivative liabilities held for trading
123
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
24 DERIVATIVE ASSETS AND LIABILITIES (continued)
All amounts are in TZS’Millions
Company
2011
Fair values
Notional
contract
amount
Foreign exchange derivatives
Forwards
Interest rate derivatives
Swaps*
2011
Fair values
Notional
contract
Assets Liabilities amount
Assets
Liabilities
12,646
-
-
1,122
-
-
-
-
-
9,000
-
-
-
-
-
-
Total derivative liabilities held for trading
* It is not practical to determine the fair value because of lack of appropriate market data.
Use and measurement of derivative instruments
In the normal course of the business, the Bank enters into a variety of derivative transactions for both trading and hedging
purposes. Derivative financial instruments are entered into for trading purposes and for hedging foreign exchange and
interest rate exposures. Derivative instruments used by the Bank in both trading and hedging activities include swaps,
forwards and other similar types of instruments based on foreign exchange rates, interest rates, credit risk and prices of
equities.
The risks associated with derivative instruments are monitored in the same manner as for the underlying instruments. Risks
are also measured across the product range in order to take into account possible correlations.
The fair value of all derivatives is recognised on the balance sheet and is only netted to the extent that a legal right of set off
exists and there is an intention to settle on a net basis.
The Bank entered into an interest rate swap contract with Standard Chartered Bank Tanzania Limited during the year 2009.
Under interest rate swap agreement the bank is a fixed rate payer and the other party is a floating rate payer for the period
of the swaps. The Swap agreement expired on 30 August 2012 and due to the market volatility the Bank did not renew the
contract.
Swaps are transactions in which two parties exchange cash flows on a specified notional amount for a predetermined period.
Interest rate swap contracts generally entail the contractual exchange of fixed and floating rate interest payments in a single
currency, based on a notional amount and an interest reference rate.
Forwards are contractual obligations to buy or sell financial instruments on a future date at a specified price. Forward
contracts are tailor made agreements that are transacted between counterparties in the over the counter market.
124
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
25 OTHER LIABILITIES
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
1,723
2,655
1,723
2,616
693
729
564
647
TANAPA cards
1,346
2,059
1,346
2,059
Master cards
2,304
1,280
2,304
1,280
217
85
217
81
Guarantee and LC margins
6,396
4,797
6,396
4,778
Deferred commission
1,386
1,378
1,350
1,366
Other creditors
4,368
6,509
4,219
6,320
18,433
19,492
18,119
19,147
Bank drafts payable
Accrued expenses
Visa Cards
Other liabilities are expected to be settled within no more than 12 months after the date of the statement of financial
position.
125
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
26 SUBORDINATED DEBTS AND SENIOR LOANS
Group
Company
2011
2012
TZS’Millions TZS’Millions
Company
2011
TZS’Millions
Interest
rate
Group
2012
TZS’Millions
LIBOR +
3%
7,897
7,912
7,897
7,912
Usd 5 million International Finance
Corporation (IFC) floating rate notes
due 2012 (b)
LIBOR +
2.75%
522
1,187
522
1,187
Usd 5 million Proparco floating rate
notes due 2013 (c(i))
LIBOR +
2.3%
1,711
3,097
1,711
3,097
Subordinated debt
Usd 5 million Norfund floating rate
notes due 2015 (a)
Senior loans:
Euro 2 million Proparco floating rate
notes due 2015 (c(ii))
LIBOR +
3.35%
3,853
4,126
-
-
Usd 3 million Norfund floating rate
notes due 2013 (d)
LIBOR +
2.3%
-
949
-
949
Usd 10 million FMO floating rate notes
due 2018 (e)
LIBOR +
2.8%
15,965
15,788
15,965
15,788
29,948
33,059
26,095
28,933
Total
126
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
26 SUBORDINATED DEBTS AND SENIOR LOANS (continued)
Current
Non current
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
7,492
3,257
6,615
3,119
22,456
29,802,
19,480
25,814
(a) The Subordinated Loan of USD 5 million from Norfund was drawn in December 2008. The loan is repayable within 7
years, with a grace period of 5 years. Principal repayment in 4 equal semi-annual instalments, beginning on 31 December
2013. Loan balance as at 31 December 2012 was USD 5 million. Effective Interest rate is 3.98%.
The subordinated debts are subordinated in payment and liquidation to all Senior Indebtedness.
(b) Senior loan of USD 5 million from IFC of which USD 3 million was drawn in 2007 and USD 2 million drawn in 2008.
The loan is repayable within 5 years, starting 2008. Loan balance as at 31 December 2012 was USD 250,000. Effective
Interest rate is 3.26%.
(c) (i) Senior Loan of USD 5 million from Proparco of which USD 2 million was drawn in 2006 and USD 3 million
drawn in 2007. The loan is repayable within 7 years, starting 2008. Loan balance as at 31 December 2012 was
USD 1 million. Effective Interest rate is 2.84%.
(ii) Exim Bank Comores Ltd borrowed EUR 2 million from Proparco as Senior Loan in the year 2010. The loan
is repayable within 5 years, starting 2012. Loan balance as at 31 December 2012 was EUR 2 million. Effective
Interest rate is 5.65%. The Bank (Exim Bank Tanzania) has guaranteed this loan for an amount of EUR 2 million.
(d) Senior Loan of USD 3 million from Norfund, all drawn in 2007. The loan is repayable within 5 years, starting 2008. Loan
balance as at 31 December 2012 was USD 0.25 million. Effective Interest rate is 2.84%.
(e) Senior Loan of USD 10 million from FMO was drawn in December 2011. The loan is repayable within 7 years, with a
grace period of 1.25 years. Principal repayment in 12 equal semi-annual instalments, beginning on 15 April 2013. Loan
balance as at 31 December 2012 was USD 10 million. There was no significant interest charge for the year.
127
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
26 SUBORDINATED DEBTS AND SENIOR LOANS (continued)
The movement in subordinated debts and senior loans is as follows:Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
At start of year
Additions
33,059
-
20,118
15,825
28,933
-
16,124
15,825
Repayments
Exchange differences
(4,448)
1,337
(4,247)
1,363
(3,827)
989
(4,247)
1,231
At end of year
29,948
33,059
26,095
28,933
2012
TZS’Millions
2011
TZS’Millions
12,900
12,900
27 SHARE CAPITAL
Issued and fully paid
12.9 million shares (2011: 12.9 million shares) of TZS 1,000 each
The total authorised number of ordinary shares is 20,000,000 (2011: 20,000,000) with a par value of TZS 1,000 per share
(2011: TZS 1,000 per share). 12.9 million shares are issued and fully paid.
28 REGULATORY AND OTHER RESERVES
Fair value reserve (a)
Regulatory reserves (b)
Currency translation reserve (c)
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
22,575
16,372
22,575
16,372
8,383
2,005
7,790
1,845
736
492
-
-
31,694
18,869
30,365
18,217
128
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
28 REGULATORY AND OTHER RESERVES (continued)
(a) Fair value reserve shows the effect of changes in fair value of available for sale financial instruments. The movement in
fair value reserve is as follows:-
At start of year
Fair value gain/(loss) for the year
At end of year
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
16,372
12,006
16,372
12,006
6,203
4,366
6,203
4,366
22,575
16,372
22,575
16,372
(b) Regulatory reserve credit losses represents an amount set aside to cover additional provision for loan losses and other
assets required in order to comply with the Bank of Tanzania (BOT) prudential guidelines. This reserve is not available
for distribution. The movement in regulatory reserve is as follows:Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
At start of year
2,005
586
1,845
586
Appropriation from retained earnings
6,378
1,419
5,945
1,259
At end of year
8,383
2,005
7,790
1,845
7,431
2,005
6,838
1,845
952
-
952
-
8,383
2,005
7,790
1,845
This is broken down as follows:
Reserve for loans and advances
Reserve for other assets
At end of year
129
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
28 REGULATORY AND OTHER RESERVES (continued)
(c) Currency translation reserve shows the effect of translation of the financial statements of the foreign subsidiary on
consolidation.
Group
Group
Company
Company
2012
2011
2012
2011
TZS’Millions
TZS’Millions
TZS’Millions
TZS’Millions
At start of year
492
484
-
-
Translation differences for the year
244
8
-
-
At end of year
736
492
-
-
29 CONTINGENT LIABILITIES AND COMMITMENTS
(a) Legal proceedings
There were a number of legal proceedings outstanding against the Group and Bank at 31 December 2012. Provision is made
for legal cases where professional advice indicates that it is likely that significant loss will arise. As at 31 December 2011, the
Group and Bank had no contingent liabilities for legal cases against the bank. (2011: Nil). No provision has been made as at
31 December 2012 (2011: Nil). The Directors are of the opinion that the outcome of the litigation in progress will not have
a material financial effect on the financial position or profits of the Group or Company.
(b) Capital commitments
At 31 December 2012, the Bank had capital commitments of TZS 1,448 million (2011: TZS 134 million) in respect of
purchase of the new property in Iringa and opening of new branches in Arusha and Shinyanga. The Bank’s management is
confident that future net revenues and funding will be sufficient to cover this commitment.
130
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
29 CONTINGENT LIABILITIES AND COMMITMENTS (continued)
(c) Loan commitment, guarantee and other financial facilities
In common with other banks, the bank conducts business involving acceptances, letters of credit, guarantees, performance
bonds and indemnities. The majority of these facilities are offset by corresponding obligations of third parties. The nominal
amounts for these off balance sheet items are not reflected in the balance sheet.
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
Acceptances and letters of credit
30,789
14,662
23,885
14,644
Guarantee and performance bonds
37,050
22,372
37,030
22,372
67,839
37,034
60,915
37,016
Contingent liabilities
Nature of contingent liabilities
An acceptance is an undertaking by a bank to pay a bill of exchange drawn on a customer. The bank expects most acceptances
to be presented, and reimbursement by the customer is normally immediate. Letters of credit commit the bank to make
payments to third parties, on production of documents, which are subsequently reimbursed by customers. Guarantees are
generally written by a bank to support performance by a customer to third parties. The bank will only be required to meet
these obligations in the event of the customer’s default.
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
25,053
23,968
25,053
23,255
Other commitments
Undrawn formal stand-by facilities, credit lines and
other commitments to lend
131
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
29 CONTINGENT LIABILITIES AND COMMITMENTS
Nature of commitments
Commitments to lend are agreements to lend to a customer in future subject to certain conditions. Such commitments are
normally made for a fixed period. The bank may withdraw from its contractual obligation for the undrawn portion of agreed
overdraft limits by giving reasonable notice to the customer.
(d) Operating lease commitments
Where the Bank is the lessee, the future minimum lease payments under non-cancellable operating leases are as follows:
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
Not later than one year
2,313
2,003
2,196
1,954
Later than one year and not later than five years
7,989
5,749
7,673
5,602
Later than five years
4,687
1,367
4,687
1,367
14,989
9,119
14,556
8,923
30 ANALYSIS OF CASH AND CASH EQUIVALENTS AS SHOWN IN THE CASH FLOW
STATEMENT
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
Cash and balances with Central Banks (Note 13)
143,686
99,501
116,157
84,447
Less: cash reserve requirement
(85,296)
(75,400)
(72,350)
(65,115)
58,390
24,101
43,807
19,332
1,213
-
1,213
-
132,202
121,686
127,261
120,833
191,805
145,787
172,281
140,165
Government securities (Note 16)
Loans and advances to banks (Note 14)
132
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
30 ANALYSIS OF CASH AND CASH EQUIVALENTS AS SHOWN IN THE CASH FLOW
STATEMENT (continued)
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than 90 days maturity
from date of acquisition: cash and balances with central banks, Government securities and loans and advances to banks. Cash
and cash equivalents exclude the cash reserve requirement held with the Central Banks.
Banks are required to maintain a prescribed minimum cash balance with the Central Banks that is not available to finance
the bank’s day-to-day activities. The amount is determined as 10% for public deposits and 30% for Government deposits for
Bank of Tanzania and for Central Bank of Comores, 25% of the average outstanding customer deposits over a cash reserve
cycle period of two weeks. The Central Bank of Djibouti requires the share capital amount to be maintained with them in a
separate account and not to be used for operational purposes.
31 RELATED PARTY TRANSACTIONS
A number of banking transactions are entered into with related parties in the normal course of business. These include
loans and deposits transactions.The volumes of related-party transactions, outstanding balances at the year-end, and relating
expense and income for the year are as follows:
Advances to customers at 31 December 2012 and 2011 include loans to directors and key management personnel as
follows:
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
At start of year
687
467
687
467
Advanced during the year
320
3,925
320
3,925
(257)
-
(257)
Loans to directors and other key
management personnel
Reclassification of loan of former managing director
Repaid during the year
(28)
(3,448)
(28)
(3,448)
At end of year
979
687
979
687
59
62
59
62
Interest income earned from related parties
133
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
31 RELATED PARTY TRANSACTIONS (continued)
No provisions have been made in respect of loans given to related parties (2011: Nil).
The loans issued to directors and other key management personnel during the year of TZS 320 million (2011: TZS 3,925
million) have interest rates of 10% (2011: 10%).The loans advanced to the directors during the year are secured by mortgage
collateral.
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
1,546
1,011
1,546
1,011
770
7,303
770
7,303
Repaid during the year
(908)
(6,768)
(908)
(6,669)
At end of year
1,408
1,546
1,408
1,546
65
88
65
88
Deposits by directors and other key
management personnel
At start of year
Received during the year
Interest expense incurred
The above deposits carry variable interest rates and are repayable on demand.
134
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
31 RELATED PARTY TRANSACTIONS (continued)
Other transactions have been carried out during the year with related parties by virtue of common shareholding. These are
as follows:
Consultancy service:
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
-
302
-
302
64
41
64
41
64
343
64
343
91
280
91
280
566
356
566
356
384
-
384
-
396
-
396
-
Exim Advisory Services Limited
MAC Group Limited
Group Health Insurance Cover:
Strategis Insurance Limited
Operating lease rentals:
MAC-UTI Properties Limited
Loans and advances to customers:
MAC-UTI Properties Limited
Deposits from customers:
MAC-UTI Properties Limited
135
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
31 RELATED PARTY TRANSACTIONS (continued)
Year-end balances with subsidiaries
Company
2012
TZS’Millions
Company
2011
TZS’Millions
9
3,867
-
-
4,385
3,972
4,385
3,972
At 1 January
-
1,443
Additions during the year
-
-
Repayments during the year
-
(1,443)
At 31 December
-
-
Included in customer deposits:
Exim Bank Comores S.A.
Included in loans and advances to banks:
Exim Bank Comores S.A.
Exim Bank Djibouti S.A.
No interest is charged or earned on the above.
Other receivables from Exim Bank Djibouti S.A.
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
2,252
1,288
1,236
891
Key management compensation
Salaries and other short-term benefits
Key management personnel are described as those persons having authority and responsibility for planning, directing and
controlling the activities of the Group, directly or indirectly.
Directors’ remuneration
Fees and other emoluments paid to directors of the Bank during the year amounted to TZS 200 million (2011: TZS 120
million). Details of payment to individual directors will be tabled at the annual general meeting.
136136
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
31 RELATED PARTY TRANSACTIONS (continued)
Contingent liabilities with related parties
The company has a forward contract with the Comores subsidiary of EUR 1.6 million The Bank’s management is confident
that this forward contract will hedge the EURO against the USD amount that Exim Bank Comores S.A placed with Exim
Bank Djibouti S.A.
Exim Bank Comores S.A. took a EUR 2 million loan facility from Proparco as a Senior Loan in the year 2010. The loan is
repayable within 5 years, starting 2012. Loan balance as at 31 December 2011 was EUR 1.82 million. Effective Interest rate
is 5.65%. Exim Bank Tanzania has provided a guarantee of EUR 2 million to Proparco for this loan.
32 PRIOR YEAR ADJUSTMENT
During the year, management discovered an error made in prior years relating to interest income recognised on facilities
granted to specific customers under the Agricultural Input Trust Fund (AGITF). 40% of the interest income earned on these
facilities is due to AGITF and was recognised in the Bank’s interest income in error. In accordance with IAS 8 (Accounting
policies, changes in accounting estimates and errors) the following adjustments have been made to restate the comparative
figures to the earlier prior period presented.
Group and
Company
31 Dec 2011
Group and
Company
1 Jan 2011
(120)
36
-
(84)
-
Retained earnings reduced by
(682)
(598)
Other assets reduced by
(974)
(854)
292
256
Effect:
Interest income for the year reduced by
Tax charge for the year reduced by
Profit after tax reduced by
Deferred tax asset increased by
137
KEY
FINANCIAL
STATEMENTS
PERSONNEL
2012 ANNUAL REPORT
DIRECTORS
NAME
NATIONALITY
Mr. Yogesh Manek
Mr. Hanif Jaffer
Hon. Juma Mwapachu
Mr. Pascal Kamuzora
Mr. Shaffin Jamal
Mr. Thomas Wescott
Tanzanian
Tanzanian
Tanzanian
Tanzanian
Tanzanian
American
TOP MANAGEMENT
NAME
POSITION
Mr. Anthony Grant
Mr. Dinesh Arora
Managing Director
Chief Executive Officer
SENIOR MANAGEMENT
NAME
POSITION
Mr. Ganesh Kumar S. Iyer
Mr. Neralla S. Rao
Mr. Kuldip Paliwal
Mr. Sreekumar Vamadevan
Mr. Al-Amin Sadruddin Merchant
Mr. Eugen Massawe
Mr. Fredrick Robert
Mr. Geoffrey Kitundu
Mr. Gilbert A. Mwandimila
Mr. Hamad Said
Mr. Issa Hamisi
Mr. John Njau
Mr. Jonathan Ngoma
Mrs. Khilna Mamlani
Mr. Mithilesh Kumar
Mrs. Nancy S. Huggins
Mr. Praveen Mehra
Mrs. Priti Punatar
Mr. R. Ramakrishna Rao
Mr. Sanjay Kachru
Mr. Selemani Ponda
Mr. Vishwanath K. N
Asst. General Manager
Asst. General Manager (Corporate Relations)
Regional Manager (Dar Region)
Regional Manager (Northern Region)
Head Technology
Group Head- Operations
Senior Branch Manager-Moshi Branch
Senior Branch Manager-Hill Park Branch
Head of Treasury
Senior Branch Manager-Mt. Meru
Senior Finance Manager
Senior Branch Manager-Karatu Branch
Chief Internal Auditor
Senior Manager – International Banking Division
Head of Strategy and Planning
Senior Branch Manager-Samora Branch
Head –Credit
Senior Manager -Training and Development
Head-Retail Banking
Head - Cards
Chief Finance Officer
Senior Manager- Cards
EXECUTIVE MANAGERS
NAME
POSITION
Mrs. Anisia S. Charles
Mrs. Anna Mroso
Mr. Bernadius Rwassa
Ms. Catherine Justine
Mr. David Lusala
Credit Administration Manager
Clearing Manager
Human Resources Manager
Credit Monitoring Manager
Risk Manager
138138
KEY
FINANCIAL
STATEMENTS
PERSONNEL
Mr. Edmund Mwasaga
Mrs. Felister Simba
Mr. Frank Matoro
Mr. Frank Mbogo
Mr. Hamid Husain
Mr. Joan Rweyemamu
Mr. Kinemo Kihomano
Mr. Kirit Vaitha
Ms. Mita Shah
Mr. Paul Ntobi
Mr. Pindu Luhoyo
Mr. Raymond Matiko
2012 ANNUAL REPORT
Legal Manager
Credit Origination Manager
Customer Service Manager
Planning, Development & Operations Manager
Compliance Manager
Corporate Relations Manager
Institutional Relations Manager
Administration-Procurement Manager
Reconciliation Manager
Chief Security Officer
Internal Audit Manager
Core Banking Solution Manager
BRANCH MANAGERS
NAME
BRANCH
Mrs. Agnes Kaganda
Mrs. Anna Wesiwasi
Ms. Catherine Ibambasi
Mr. Deogratias Makwaia
Mr. Emmanuel Nkelebe
Mr. Furanaeli Kimaro
Mr. Gabriel Saria
Mr. Iddy Mwacha
Mr. James Nzalalila
Mrs. Joyce Sinamtwa
Mr. Lucas Peter
Mr. Mwinyimkuu Ngalima
Mr. Paul Mbanga
Mr. Phenelant Aloyce
Mr. Rishi Jotangia
Mr. Thomas Beatus
Mr. Timoth Silaa
Clock Tower Branch
Morogoro Branch
Namanga Branch
Tanga Branch
Mtwara Branch
Buguruni Branch
Ubungo Branch
Mbeya Branch
Exim Tower Branch
Temeke Branch
Nyerere Branch
Zanzibar Branch
Kilimanjaro Branch
Kigoma Branch
Mwanza Branch
Iringa Branch
Babati Branch
OVERSEAS SUBSIDIARIES
COMOROS
NAME
POSITION
1. Mr.Ganesan Subramanyam
2. Mr. Mohamed Ahsan
3. Mr. Arpit Parikh
Country Head
General Manager
Assistant General Manager
DJIBOUTI
NAME
POSITION
Mr.
Mr.
Mr.
Mr.
Country Head (Since retired)
Country Head (Current)
Asst. General Manager
Asst. General Manager
Patrick Arthur Bettesworth
Jacky Kayiteshonga
G.Veeranna Naidu
V. N. Gopalakrishnan
139139
FINANCIAL
Region
al
STATEMENTS
2012 ANNUAL REPORT
presence and
for thebeyon
year endedd...
31 December 2012
COMOROS S.A
MOHELI
REGIONAL
PRESENCE
140
REPUBLIC OF DJIBOUTI
LOCATIONS
AND CONTACTS
Arusha Branch
Subzail Building, Goliondoi Road,
P.O.Box 1906,
Arusha, Tanzania
Tel: (027) 2504910/1
Fax: (027) 2504912
Email:[email protected]
Babati Branch
Plot No. 86, Dodoma Transport Complex,
Dodoma Road,
P. O. Box 66, Babati
Manyara, Tanzania
Tel: 027 2530712/2530736
Fax: 027 2530737
Email:[email protected]
Buguruni Branch
274 Block A, Buguruni Area,
Uhuru Road,
P.O.Box25557,
Dar Es Salaam, Tanzania
Tel:0222865414/2865417
Fax: 0222865418
Email: [email protected]
Clock Tower Branch
Samora Avenue,
P.O.Box 9510,
Dar Es Salaam,Tanzania
Tel
022)2129678/80,
Fax: (022)2129682
Email: [email protected]
Exim Tower Branch
Exim Tower,
Ghana Avenue,
P.O.Box 1431,
Dar Es Salaam,Tanzania
Tel: (022) 2293000,
2121129/2113091-93
Fax: (022)2103013/4
Hill Park Branch
70 Mlimani City,
P.O.Box 33885,
Dar Es Salaam, Tanzania
Tel: (022)2411170/71/72
Fax: (022)2411173
Email: [email protected]
Iringa Branch
Plot No. 21 & 22 E
Uhindini Street,
P.O.Box 261,
Iringa, Tanzania
Tel: (026)2700578/581/582
Fax: (026)2700576
Email:[email protected]
2012 ANNUAL REPORT
Karatu Branch
Mt. Meru Branch
Plot No 15,
Block D Karatu,
Ngorongoro Road,
P.O.Box 346,
Karatu, Tanzania
Tel: (027) 2534609/11/12/13
Fax: (027)2534610
Email: [email protected]
TFA Shopping Center, Uhuru Road,
P.O.Box 16286,
Arusha, Tanzania
Tel027)2542724,2548652,2548940
Fax 027)2548545
Email: [email protected]
Mtwara Branch
Kariakoo Branch
Plot No: 19, Block 65 Kariakoo,
Along Morogoro Road Opposite
Umoja wa Vijana Building,
P.O.Box 6332,
Dar Es Salaam, Tanzania
Tel: (022) 2182531/2182549/2182549
Fax: (022) 2182582
Email: [email protected]
Kigoma Branch
Plot No. 193
NIC Building, Lumumba Road,
P.O.Box 1060,
Kigoma, Tanzania
Tel: 028 2802194/5
Fax: 028 2802196
Email: [email protected]
Kilimanjaro Branch
Plot No. 23/I CBD,
Old Moshi Road,
P. O. Box 3001,
Moshi,Tanzania
Tel: 027 2754373/4
Fax: 027 2752895
Email:[email protected]
Mbeya Branch
Plot No, 2A, Block O.
Mwanjelwa Industrial Area’
P.O.Box 2839,
Mbeya,Tanzania
Tel: (025) 250 2814/5
Fax: (025) 250 2814/5
Email: [email protected]
2Tanu Road
P.O.Box 1021,
Mtwara, Tanzania
Tel023)2333871/2333577
Fax023) 2334045
Email: [email protected]
Mwanza Branch
Plot No. 13,Block H,
Lumumba Road,
P.O.Box 6033,
Morogoro,Tanzania
Tel: (023) 2613591/92
Fax: (023) 2613593
Email: [email protected]
Moshi Branch
Plot No 4, Block B,
Boma Road,
P.O.Box 3001, Moshi
Tel027) 2752917/2752522/40
Fax: (027) 2752895
Email:[email protected]
141
Opposite Bandari House,
Independence Avenue,
P.O.Box 729,
Tanga,Tanzania
Tel027)2647288/86
Fax027)26244086
Email: [email protected]
Temeke Branch
TRA Regional Offices,
B.O.Box 42763,
Dar Es Salaam,Tanzania
Tel022)2863928/9
Fax: (022)2863927
Email: [email protected]
Plot No.21, Block K,
Kenyatta Road,
P.O.Box 822,
Mwanza, Tanzania
Tel (28) 2502020/1
Fax: (028) 2502022
Email: [email protected]
Ubungo Branch
Namanga Branch
Zanzibar
Plot No 83,
Ada Estate, Namanga,
P.O.Box 22372
Dar es Salaam, Tanzania
Tel022)2664191/92/93
Fax: (022)2664194
Email:[email protected]
Millenium Business Park,
P.O.Box 55026,
Dar Es Salaam, Tanzania
Tel: (022) 2401451/2
Fax: (022)2401450
Email:[email protected]
Mlandege Street,
Kwality Plaza,
P.O.Box 538,
Zanzibar
Tel: (024)2237194/5
Fax: (024)2237182
Email:[email protected]
Nyerere Road Branch
Plot No 29A, Jacksi Plaza,
Ground Floor,Nyerere Road,
P.O.Box 1431,
Dar Es Salaam, Tanzania
Tel: (022) 2861512/13/14
Fax: (022) 2861516
Email: [email protected]
Samora Avenue Branch
Morogoro Branch
Tanga Branch
9 Samora Avenue,
P.O.Box 1431,
Dar Es Salaam, Tanzania
Tel022)2111861/2119738,
Fax: (022)2119737
Email: [email protected]
Shinyanga Branch
Plot No. H.132, Block A,
Uhuru Road,
P.O Box 141,
Shinyanga, Tanzania
Tel: +255 28 276 2737/ 276 2384
Fax: +255 28 276 3949
Email: [email protected]
Subsidiaries
Exim Bank Comoros S.A
Moroni Branch
P.O.Box 8298,
Place de France,
Moroni
Tel: +269 739400/2
Fax: +269 762588
Exim Bank Comoros S.A
Anjouan Branch
P.O.Box 235,
Mitsamudu, Anjouan
Moroni
Tel: +269 7711265
Fax: +269 7611298
Djibouti Branch
Exim Bank (Djibouti) S.A
Batiment Ougoul,
Avenue G. Clemenceau
P.O.Box 4455,Djibouti.
Tel : +253 21 352601
Fax: +253 21 352601
2003
2005
Opens 3 Branches:
Tanga, Morogoro &
Mwanza
2007
1st Bank to Introduce
MasterCard in Tanzania
Opens 2nd Branch in
Arusha: Mt. Meru
Recognized 6th Largest Bank
in terms of Total Assets
Celebrates 10 Year
Anniversary
Our journey of 15 years
Awarded 1st place for Best
Presented Financial
Statements 2008
Relationship with
NORFUND is Established
Opens 3 Branches: Ubungo,
Zanzibar, Mbeya & Iringa
Introduction of
TANAPA Cards
1997
2000
2002
2004
Exim Bank is
established
Opens 3rd Branch:
Arusha
Opens 7th Branch:
Moshi
Opens 1st Branch
at Samora Avenue
Celebrates 5 Year
Anniversary
At 7 Years, Exim Bank
ranks 8th in Terms of
Deposits
Opens 2nd Branch:
Mtwara
MoneyGram, Salary Cards
and ATM Machines are
introduced
2006
Partnership signing
with PROPARCO
Opens 2 Branches:
Hill Park & Temeke
2011
1st Bank to Introduce Visa
Credit Cards & Mobile
ATM Banking
Opens 1st Subsidiary in
Comoros: Moroni
Opens 8th Branch:
Clock Tower
Relationship with IFC
is established
2009
Opens 2nd Branch in
Comoros: Anjouan
2008
Opens 3 Branches:
Karatu, Namanga &
Nyerere
Establishes
Staff Training Center
Opens 2nd Subsidiary:
Djibouti
Opens 3 Branches:
Samora, Babati & Buguruni
Launches eMpower
Management & Leadership
Development Programme
Migrates to New Core
Banking System
Opens 2 Branches:
Kigoma & Kilimanjaro
2010
2012
Relocation to
Exim Tower
Partnership signing
with FMO
Opens Kariakoo Branch
& Exim Tower Branch
Launches Mobile and
Internet Banking
Introduces Current
Account for NGOs &
SMS Banking
Inauguration of
The Exim Academy
Awarded 1st place for
Best Presented Financial
Statements 2009
Celebrates 15 Year
Anniversary
“A brilliant past,
a golden future”
145
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
A
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146
doc_950450514.pdf
Innovation Is Life Exim Bank
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
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Djibout
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Straterships
Partne
2012 FINANCIAL HIGHLIGHTS (TZS Bn)
Assets
Deposits
Loans & Advances
Shareholders’ Funds
ii
2012
Table of
Contents
Annual Report
Strength in
Relationships
CORPORATE INFORMATION
FINANCIAL STATEMENT
Mission and Vision
2
Report of Directors
33
Company Profile
3
Statement of Directors’ Responsibility
41
Board of Directors’ Profile
8
Report of Independent Auditor
43
Chairman’s Statement
10
Profit and Loss Account
45
Managing Director’s Statement
14
Balance Sheet
46
Company Information
18
Statements of Changes in Equity
48
Corporate Social Responsibility
25?
Cash Flow Statements
50
Notes
52
1
Key Personnel
138
Location and Contacts
141
VISION
MISSION &
VALUES
2012 ANNUAL REPORT
Our Mission:
We are committed to remain an
innovative Tanzanian Bank offering
ser vices of International Standards
Our Vision:
To be the bank of choice
Our Values:
• Flexibility
• Reliability
• Integrity
• Professionalism
• A drive for customer satisfaction
2
COMPANY
PROFILE
2012 ANNUAL REPORT
Exim Bank Limited was founded in the year 1997 in the
wake of the new liberalization policy by local entrepreneurs
with a track record of impeccable success in their diversified
businesses. The Bank made a humble beginning with one
branch at Samora Avenue, in the heart of Dar es Salaam
city, posting a steady and robust growth in its customer
base and visibility. Today Exim is ranked amongst the largest
banks in the country.
profusion of footprints in 13 regions with 24 branches and
52 ATMs. In 2012, the Bank entered Kigoma region (Kigoma
Branch) opening up Lake Tanganyika and the landlocked
countries of Central Africa.The Bank also added yet another
branch in Kilimanjaro region (Kilimanjaro Branch) a gateway
to one of the major tourist destinations in the world.
GROWTH AND CAPITAL POSITION
Exim Bank’s impressive upward trajectory motivated and
led to it stretching across boundaries in the year 2007
establishing footprints overseas in The Union of Comoros.
The Bank has two operational branches in the islands of
Moroni and Anjouan. Inspired by this success, Exim Bank
spread its wings further into Djibouti to establish yet
another subsidiary in March 2011, affording a strategic link
to landlocked countries in the Horn of Africa.
Building on being the most innovative bank in Tanzania, the
Bank has rapidly expanded. Exim Bank ranks as the sixth
largest bank in Tanzania in terms of total assets and deposits.
During the year Exim Bank Group financial indicators
depicted a significant performance;
?
?
?
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Profit after tax of TZS 13,667 million up from
TZS 12,529 million in 2011.
Group’s total deposits grew significantly to
TZS 809 billion (2011: TZS 699 billion).
Group’s loan portfolio increased to
TZS 455 billion (2011: TZS 442 billion); and
Total assets increased to TZS 967 billion
(2011: TZS 841 billion).
GLOBAL STRATEGIC PARTNETSHIPS AND
ALLIANCES
From left: His Exellency, President of The Union of Comoros Mr. Ikililou
Dhoinine shaking hands with Exim Bank’s Director, Mr. Hanif Jaffer,
during a courtesy call made to the President’s office. Looking on is
Managing Director, Anthony Grant and Chief Executive Officer, Mr.
Dinesh Arora.
The Bank’s understanding of the customer needs coupled
with a unique customer experience given to each client
has created a strong brand in these markets. Our domestic
prowess and visibility continues to be seen and felt in the
Mr. Yogesh M. Manek, Chairman, Exim Bank and Mr. Ruurd Brouwer,
Director Financial Institutions, FMO at the signing ceremony of a USD 10
millions (TZS 16 billions) loan secured by Exim Bank from FMO.
3
COMPANY
PROFILE
2012 ANNUAL REPORT
Exim Bank’s laudable reputation has brought valued
international partnerships and financial co-operation. These
include strong relations with leading international financial
institutions such as International Finance Corporation
(IFC), Netherlands Development Finance Company (FMO),
Norwegian Trust Fund (NORFUND), PROPARCO and
correspondent banks such as Deutsche Bank, CitiBank,
HSBC, Commerz Bank and Axis Bank.
Exim remains the only local bank to be a member of the
Global Banking Alliance for Women, representing Tanzania.
This alliance brings together financial institutions around the
world to promote women entrepreneurship. It also helps
develop existing micro enterprises managed by women
and encourage new ventures with a potential to grow their
businesses.
Launch of MasterCard in 2005.
The Bank has had significant breakthrough innovations that
positively impact our customers. Through deployment of
world class technology and customer focused products, the
Bank has led in pioneering efforts adding the following to
its credit;
The Bank’s strategic collaborations with MasterCard and
Visa offer customers a window to the global electronic
payment networks. These relationships have allowed us to
provide relevant solutions that respond to ever evolving
customer needs, extending the services of electronic
payments to those who would otherwise not be able to
benefit from their convenience, ease of use and security.
Bank in Tanzania to launch Credit Cards in association
with MasterCard.
Tanzanian Bank to establish an overseas banking
subsidiary.
FIRST MOVER INITIATIVES
Bank in Tanzania to launch Mobile ATM facility.
Bank in Tanzania to launch an exclusive financing
scheme for women.
Bank in Tanzania to launch TANAPA Cards.*
Bank in Tanzania to launch International Debit
MasterCard.
Bank in Tanzania to launch Visa Platinum Cards.
Launch of innovative Faida Savings Account in 2009.
Bank to launch Visa Cards in The Union of Comoros.
4
COMPANY
PROFILE
2012 ANNUAL REPORT
* TANAPA / Exim Cards – These are Debit Cards issued by the Bank to
tourists who are visiting national parks in Tanzania. The card facilitates
payment of park fees charged by Tanzania National Parks(TANAPA) at
the gates.
Exim Bank continues to build an innovative culture where it
formally encourages and supports innovation, empowering
business units through leadership buy-in and advocacy.
HUMAN CAPITAL
Over the years, the Bank has grown – deliberately, carefully
and steadily. It has progressively grown in staff numbers.
The group had 512 employees as at the end of 2010, 614
in 2011 and 680 as of the year ended December 2012.
With a total of 329 female staff, the Bank clearly exhibits
its sensitivity to gender equality. The Bank takes pride in
having established a state of the art training academy at Dar
es Salaam, with an aim to continually upgrade the skills of
the human resources.
Director Mr. Shaffin Jamal presenting long service recognition award to
Mrs. Maria Mwangomola, Assistant Branch Manager, Ubungo branch
during the 15th Anniversary Staff Celebrations.
AWARDS AND RECOGNITIONS
The Bank has been awarded recognition by National
Board of Accountants and Auditors (NBAA) for the Best
Presented Financial Statements in the ‘Banking Category’
for two years running – 2008 and 2009. Exim Bank was also
selected the overall winner for Best Presented Financial
Statements in 2009.
The Chairman of the Bank and Branch Heads during the 15th Anniversary
Staff Celebrations.
The NBAA Award which the Bank received during year 2008 & 2009.
5
COMPANY
PROFILE
The Bank is proud to have been nominated for various
financial awards notably for the prestigious “Sustainable Bank
of the Year 2008 Award” by Financial Times / International
Financial Corporation, “Best Workplace Practices for
Training and Development” in the East Africa CSR Awards
2011. We continue to build our reputation and redefine
what banking can do.
2012 ANNUAL REPORT
MAKING OF A STRONG REGIONAL
BANK
The Bank has placed major thrust and focus on building
strong foundation, through cadre and skill building, adopting
the best in technology, establishing international practices
in risk based supervision and governance to be a sustainable
and strong Regional Bank.
The entire Eastern Africa region continues a path of
strong growth and Exim Bank intends to be a financial
contributor.
...and still growing
6
Valuing Human Capital:
* Gender Sensitivity
* Belongingness
* Recognition
* Encouragement
Buildin
Excelle g
nce!
7
BOARD OF
DIRECTORS’
PROFILE
Yogesh Manek
Hon. Juma Mwapachu
Tom Wescott
?
Mr. Wescott is a career banker and currently
Managing Director of Africa Finance and Capital
Limited (AFC), a financial consulting, advisory
services and investment company.
Prior to establishing AFC, Mr. Wescott worked
for more than 25 years as Senior Bank Executive
with the HSBC Group where he focused on
sub-Saharan Africa.
Ambassador Juma V. Mwapachu has had a
diversified career that spans the public and
the private sectors in Tanzania. He has served
as Tanzania’s Ambassador to France and until
2011 he served as Secretary General of the
East African Community for five years. A lawyer
by training, Ambassador Mwapachu has been
Chairman of the Tanzania Investment Bank,
Tanzania Railways Corporation and Vice Chair
of the University of Dar-es-Salaam Council.
In the business sector, he has been Chair of
Confederation of Tanzania Industries and the
East African Business Council.
He is presently Chair of the University of
Dodoma Council and sits on a number of
Corporate Boards of Directors, local and
international. He holds two doctorate degrees
(Honoris Causa) in literature and in Political
Sciences from the University of Dar-esSalaam and the National University of Rwanda
respectively. President Mwai Kibaki of Kenya
decorated Ambassador Mwapachu in December
2011 with one of Kenya’s highest awards, The
Moran of the Golden Heart (MGH).
8
Mr.Yogesh Manek is an accomplished executive,
investor, and entrepreneur with over 35 years
of experience in managing corporations in
industries that include FMCG manufacturing
and distribution, banking, insurance, agribusiness,
mining, real estate, and logistics.
By capitalizing on his sharp business acumen,
technical expertise, interpersonal skills, and
strategic mindset, among other attributes,
Mr. Manek was instrumental in achieving
unprecedented growth and penetrating new
markets for the companies he had previously
founded and managed. In addition to having
successfully implemented growth-oriented
strategies.
Mr. Manek has instituted significant qualitative
and quantitative improvements in organizations
including the streamlining of operational
processes, the re-organization of capital
resources and strategic assets, and the
implementation of systems that boosted
productivity and dramatically enhanced
customer satisfaction.
Mr. Manek presently sits on many boards as
director and also sits on two advisory boards,
which comprise of a media related company and
an association of CEO’s Round Table. He is also
a trustee for three non-profit organizations and
is a Chairman of three Social and Community
Service humanitarian organizations.
2012 ANNUAL REPORT
Hanif Jaffer
Pascal Kamuzora
Shaffin Jamal
Mr. Hanif Jaffer is a Qualified Certified Public
Accountant, Tanzania and has over 20 years
post qualification experience in Banking,
management information systems and financial
analysis.
He is a Founder Member of Exim Bank, and
has played a major and invaluable role in its
formative years as a Resident Director. Socially
active, Mr. Jaffer has been an involved Rotary for
many years, having reached the apex position as
its President and continuing to work tirelessly
for the cause of humanity.
With business growth strategizing competence
as his stronghold, Mr. Jaffer’s position as the
Director of Exim Bank Tanzania and Comoros
has been influential and significant. As Executive
Director of Intra Business Network (IBN),
comprising a group of businessmen spanning 19
African countries, Mr. Hanif’s networking skills
come into play for best results.
A banker and economist, Mr. Kamuzora served
the National Bank of Commerce (NBC) for
approximately 25 years, rising to the level
of General Manager, before being posted
to Bank of Tanzania in 1992. With a grip on
banking trends and evolving economic drifts,
he is credited with establishing ‘The Tanzania
Institute of Bankers’, where he served as the
first Executive Director for 4 years.
9
Mr. Jamal is the Chairman of Union Trust
Investments Limited, one of Tanzania’s leading
companies with interests in banking, insurance,
real estate development, hospitality, mining, and
agriculture.
He is also the Chairman of Alliance Insurance
Corporation and New Arusha Hotels. Such
diversity lends great versatility and broad appeal
to Mr. Jamal’s position as Director.
CHAIRMAN’S
STATEMENT
“Mwenda usiku amesifiwa kulipokucha” (Toil hard for when
success comes, you will be rewarded). This is the spirit that lifts us
to the top of our game. Exim Bank has worked hard and has been able to
succeed in strengthening our institution. Looking back at 2012, we are proud
that as a bank we now better serve our customers, our communities and the
country. We will continue to deliver our best!
On behalf of the Members of the Board of Directors and myself, I am delighted to present to you Exim Bank’s Annual Report
for the year ended 31 December, 2012.
At Exim Bank, the year 2012 will fondly remain in our memories. It was the year that we celebrated our 15th Anniversary.
The occasion was marked by memorable bank celebrations of staff and customers across Tanzania and indeed in the overseas
banking subsidiaries of Comoros and Djibouti. Staff rededicated themselves to the future. Our ability to attract global talent
is another indication of the faith which Exim Bank and Tanzania generate. In 2012 the Bank welcomed Mr. Anthony Grant as
Managing Director to the Exim family. Mr. Grant had previously worked at Citibank on three continents and in Johannesburg
with an HSBC joint-venture, in addition to serving as MD at various African financial institutions. Consequently, the year
has been another wonderful opportunity to witness the Exim Bank family grow, innovate and continue to demonstrate
unparalleled determination for service excellence and to be truly the ‘best in class.’
10
CHAIRMAN’S
STATEMENT
2012 ANNUAL REPORT
The year 2012 saw Exim Bank continue on a trajectory of strong growth. We have very nearly reached the exceptional
milestone in Tanzanian banking of one trillion shillings in assets. This outstanding accomplishment has been achieved in
Tanzania by only a handful of other banks. Exim Bank also operates the country’s fourth largest network of branches.
Headline numbers for 2012 were strong, including a 16% jump in total deposits to TZS 809 billion in 2012 from TZS 699
billion in 2011.The Group saw a 10% percent increase in after tax profits which rose to TZS 13.7 billion from TZS 12.4 billion
in 2011 despite increased spending on investments for the future. The Group lending portfolio prudently increased to 436
billion from TZS 428 billion in 2011. All the performance indicators are to be found in the financial section to follow.
ECONOMIC LANDSCAPE
TANZANIA
The economy of Tanzania in 2012 continued to position itself well. Relatively speaking,Tanzania stands out as a model of good
economic performance. The national rate of growth has been over 6% percent for 2011 and 2012. The government’s fiscal
debt slowly came down in both years. Indeed, and very positively, we see signs of stability which are contributing to growth
of real GDP, estimated to reach 7% GDP by 2013.
In the last quarter of 2012 the shilling steadied at a high of 1595 against the US dollar, down from about 1750 at the beginning
of the year 2011.The Bank of Tanzania’s cautious monetary and fiscal policy measures supported by Government is expected
to drive inflation further down in the 2012/2013 budget year.
Exim Bank safely navigated the economic environment, strengthened operations as well as our human resources and ensured
that the Bank was positioned to continue profitability into the future. The Bank is also committed to act as a responsible
corporate citizen at a time when many citizens have been adversely affected by the financial crisis of the recent past, by
subsequent economic downturns, drought and fluctuations in commodity prices.
Overall, the economy demonstrated in 2012 a good resilience to shocks and as already said, is expected to remain buoyant
going forward into 2013.
AFFILIATES IN DJIBOUTI AND COMOROS
Our new affiliate Exim Bank in Djibouti was inaugurated by the President of Djibouti, Ismail Omar Guelleh, in December
2011. We saw Exim Bank identifying opportunities and positioning itself to contribute to an economy that was on a path
for growth. The economy of Djbouti is derived in large part from its unique and strategic location on the Red Sea, where it
serves as the only ocean outlet for its large landlocked neighbor, Ethiopia with 90 million people, a country itself growing at
a 7% rate.
In the Union of Comoros, the Exim Bank affiliate in 2012 became the country’s fastest growing financial institution. We
established ourselves on two of the three islands of the Union and prepared plans during the year to expand onto the
remaining third island (Moheli). Exim Bank introduced a wide range of products to the country, including point of sale (POS)
services at hotels, ATMs, funds transfer service such as Money Gram, gold-lending schemes, tailored lending and trade
finance services.
11
CHAIRMAN’S
STATEMENT
2012 ANNUAL REPORT
AMONG HIGHLIGHTS AND ACHIEVEMENTS IN 2012
? In Tanzania, Exim Bank continued to expand its branch network; with new branches launched in Kigoma, along Lake
Tanganyika, gateway to commerce with Burundi and DR Congo; and in Moshi named Kilimanjaro, the second branch in a
town renown for agriculture and tourism; Exim Bank also added a second full service banking location at the agricultural
town of Babati.
? The income stream continued to be diversified, with targeted new products such as mortgage financing (“Nyumba
Yangu”) and a hybrid savings and investment product (“Haba na Haba”).
? We are proud of the launch of the Exim Academy in 2012, with multimedia delivery capacity and two theatres for
instructing the banking participants; the Bank considers training and development to be an investment, and spent an
excess of TZS 335 Million in 2012.
? Relationships were strengthened with international development finance institutions; we closed a $15 million loan for
on-lending to Tanzanian SMEs from the French Proparco.
ENABLING DELIVERY AND PERFORMANCE
The growth of the Bank in 2012 is evidenced in part from the increased net headcount of nearly 127 in Tanzania.This growth
largely was to accommodate the expansion of our full service branches and for strengthening head office controls and for
business expansion, bringing total numbers to nearly 650 people.
The Bank prides itself in an enlightened equal opportunity policy. The numbers of men and women staff in 2012, as in 2011,
were almost 50% each. The Bank practices an internal recruitment policy that seeks talent first within the ranks of the
Bank.
Exim Bank has a distinctive culture, one of the reasons why clients and customers choose to bank with us and why
employees want to join and stay. The values – service, reliability, professionalism and integrity – are a compass, underpinning
all our activities. The Bank in 2012 continued on its journey to create long-term value and to contribute to a positive social
and economic impact on the communities we serve.
Our brand promise, “Innovation is life”, captures our genuine commitment to do more for customers. It also reaches out to our stakeholders and employees, with a simple yet compelling promise. It describes who we are, what we stand for and
what makes the bank different.
SUSTAINABILITY
In the next few years, the Tanzanian market is set for rapid growth, which will open up important opportunities for individuals
and businesses. At Exim Bank, we are determined to use our unique business model to deliver financial services with a value
proposition. This year, we have continued to build our capacity and diversify our channels of delivery through investment in
technology, infrastructure, training and by developing our employees. We have reengineered our operating procedures and
strengthened systems of managing risk. Adopting the ethos of “Kaizen”, the Japanese philosophy of continuous improvement,
we will enhance and further these efforts into 2013.
12
CHAIRMAN’S
FINANCIAL
STATEMENTS
STATEMENT
2012 ANNUAL REPORT
We aim to have a positive impact on people and communities. This objective means making Exim “the Bank of Choice”, and
a great place to work. We are confident, in the end, these attitudes and business model will further distinguish Exim Bank
and continue our growth.
It is true as we say in Kiswahili “Anayelala na mgonjwa ndiye anayejua miugulio” (You cannot understand someone until you
forge a relationship with them), we strive to position ourselves close to our customers and cast our net wide, for example,
to the Kigoma and other less-banked towns of Tanzania.
ACKNOWLEDGEMENT
In conclusion, I would like to deeply thank the Members of the Board of Directors for their strong support, acumen and
guidance provided to me. I would like to extend my warm appreciation to the Bank of Tanzania, Members of Government, our
strategic partners (International Finance Corporation, FMO, Norwegian Trust Fund and PROPARCO), our correspondent
banks PTA Bank, Deutsche Bank, HSBC, Citibank, customers and our legal advisers, consultants and auditors for their
continuing trust and support for Exim Bank.
I also thank the Management and Staff of the Bank, who work hard to deliver excellent service to our customers and clients,
and strive to make the Exim Bank experience unique. Their efforts will help to keep the trust of our key stakeholders.
Yogesh Manek
Chairman
Date: 04th April 2013
13
MANAGING DIRECTOR’S
STATEMENT
YEAR IN REVIEW
2012 was another year of growth and distinction at Exim Bank. Our position in our home Tanzanian market was strengthened.
According to the Tanzania Banking Survey 2012 released this year, Exim Bank maintained its top tier position among Tanzania’s
ten largest banks in almost all major categories. In bank assets, as noted by the Chairman, Exim Bank approached the
exceptional trillion shilling threshold. The branch network is the fourth largest in Tanzania. The East African subsidiaries of
Djibouti and Comoros represented the biggest expansion outside the country of any indigenous Tanzanian bank. Exim Bank
further built on a reputation for innovation and providing quality and unmatched services.
Exim Bank scored another distinctive milestone in 2012 with celebration of the 15th Anniversary across the organization.
The many goodwill and brand building events held throughout the month of August provided opportunity for image building
and to recognize and thank customers and stakeholders.The year saw continuing business expansion at the subsidiaries, with
Exim Bank Comoros remaining the fastest growing bank in that country. Our expectation across the Exim Bank Group is to
maintain a deliberate pace of growth so as to broaden and deepen Exim Bank’s relationships, to be a bank of choice.
BANK PERFORMANCE 2012
As noted in the Chairman’s Statement, the bank continued on a trajectory of growth in 2012. Significant progress was
achieved during the year, notably with regard to the process of change initiated during the prior year 2010-2011 with an
aim to strengthen the bank’s foundation. Exim Bank ended the year 2012 on the doorstep of the coveted trillion shilling
milestone, with total assets soaring by 15% to TZS 966.55 billion in 2012 over TZS 841 billion recorded during the year
ended in December 2011. The audited financial results for the year show that basic earnings per share went up 9% to
14
MANAGING
FINANCIALDIRECTOR’S
STATEMENT
STATEMENTS
2012 ANNUAL REPORT
TZS 1,059 in 2012 from TZS 972 in 2011, and total shareholder funds for the company rose 22.5% to TZS 109.427 billion
in 2012 from TZS 89.313 in 2011.
Across the board, major indicators were up. Exim Bank Comoros achieved a growth of 87% in after tax profit compared to
2011. Exim Bank Djibouti, officially launched by the President of Djibouti in December 2011, recorded 158% growth in total
assets for the year 2012, with total deposits growing 144% during the year 2012.
BANKING OPERATIONS
During the year, planned expansion at the bank included the opening of two strategic branches, at Kigoma on Lake Tanganyika
(a gateway to Burundi, DR Congo and Zambia) as well as the opening of a second branch named Kilimanjaro at Moshi (an
important base for commercial agriculture and tourism). The bank recruited sixty-five new employees, as head office and
control functions were strengthened. The change process initiated in 2010-2011 allowed the bank in 2012 to deepen its
utilization of advanced features of the new core banking system, allowing a more fully automated environment in terms of
information, communications and controls.
The platform and the business creativity Exim Bank continued to launch or further refine exciting asset and liability retail
products admired by the market. One such exciting product launched in January 2012 was “Nyumba Yangu”, a flexible home
loan product available for purchase, construction or renovation. Another popular product was “Haba na Haba”, a recurring
deposit scheme that encourages regular savings habit among lower income earners, salaried employees and corporates
alike. Exim Bank continued to promote our other industry-leading products for savings like Nyota and Tumaini that caters
to students and women.
The state-of–the art multimedia ‘Exim Academy’ was formally inaugurated in 2012. The Center has quickly earned a reputation
as a superior bank training facility in Dar es Salaam, and is highly appreciated by Exim staff. The Academy disseminates the
bank’s vision and values to the team across the network, with mentoring, coaching and counseling provided in both group
and one-to-one settings.
2012 saw Exim Bank continue to strengthen our relationship with international development finance agency partners such
as the Dutch FMO, the World Bank’s IFC, and with the French Proparco from whom Exim Bank agreed a USD$15 million
loan for on-lending to SMEs.
VIEWING THE FUTURE
Since being appointed to the post of MD in the first quarter of 2012, I am extremely upbeat on the future of the bank in
large measure because we are realizing the benefits and crafting new opportunities from the investments made in the bank’s
human resources and IT platforms. Exim Bank has been one of the major players in the evolution of Tanzania’s financial
sector, and we are now prepared to make even more important contributions to the Tanzanian economy and those of our
East African affiliates. We are recommitted to the core of Exim Bank values: innovation, reliability, integrity, professionalism,
and customer satisfaction. Our corporate and individual customers will continue to enjoy world class products.
15
MANAGING DIRECTOR’S
STATEMENT
2012 ANNUAL REPORT
On behalf of the entire Management Team, the Chairman’s devoted guidance and the commitment of the Members of the
Board of Directors is deeply acknowledged. They have enabled the many accomplishments realized during the year by
providing vision and oversight which has positioned the Bank for accelerated growth in 2013. We most importantly extend
our indebtedness to Exim Bank’s loyal customers. Sincere appreciation is also offered to our Regulators for their crucial
work, to our international Partners and correspondent banks for their support, and to the bank’s dedicated employees.
Anthony Grant
Managing Director
Date: 04th April 2013
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17
COMPANY
FINANCIAL
STATEMENTS
INFORMATION
CORPORATE BANKING
The year 2012 saw the Bank increase its focus on corporate,
small and medium enterprises having strengthened
the Corporate Relationship Management Department
(CRMD).
The CRMD provides a high level of personalized service to
customers while acting as a one stop solution for banking
facilities and advisory services. The department supports
companies from various sectors including international
trade, retail, manufacturing, transportation, construction,
real estate and public utilities.
2012 ANNUAL REPORT
Realising the demand for Housing in a developing nation, the
Bank added yet another appealing product to its retail lending
bouquet, the ‘Nyumba Yangu’ loan meaning ‘My Home’ loan.
The loan facility aims to fund construction, procurement and
renovation of an individual’s residence with flexible terms
and faster turnaround time. With facilitation of refinance
from Tanzania Mortgage Refinance Company (TMRC), the
Bank is able to provide a longer tenor of finance, facilitating
access to a larger share of the market.
CRMD’s emphasis remains on sustaining and building on
existing relationships as well as providing new customers
with a smooth on-boarding experience. CRMD’s approach
is to generate new business through the cross selling of
products and establishing a loyal customer base. This
involves working closely with and supporting the branches
in Dar es Salaam and across the regions.
RETAIL BANKING
The Exim Bank’s Managing Director, Mr. Anthony Grant discussing a point
with Vice President of the United Republic of Tanzania, Dr. Mohammed
Gharib Bilal during Tanzania Homes Expo Exhibition held at Mlimani
City in Dar es Salaam. Looking on is the Bank’s Head of Retail Banking
Department, Mr. Ramakrishna Rao.
Savings Account
Exim Bank is continually designing and delivering need based
retail products and services to enhance customer delight.
Several of these products were launched during the year
2012, as under:
? Current Account for schools,
? Current Account for community traders / used car
dealers and transport operators;
? Haba na Haba, a Recurring Deposit Account to
inculcate the habit of thrift for future. The product
generated a positive response particularly from the
low income segment, thus serving the population.
Mobile Banking
The mobile revolution provided a good platform for the
Bank to launch its Mobile Banking services during the year.
The product is a delight to the customers of the Bank.
From as basic as ‘balance enquiry’ to practically every
possible utility payments, the service facilitates day to day
transactional banking, besides offering Intra bank funds
transfer.The usual transaction alerts provide added benefits
to customers.
18
COMPANY
FINANCIAL
STATEMENTS
INFORMATION
2012 ANNUAL REPORT
INTERNATIONAL BANKING DIVISION
AND PAYMENTS
WOMEN ENTREPRENEURS FINANCING
(WEF) PROGRAMME
The International Banking Division caters to the needs of
corporates and individuals. Providing all trade solutions in
collaboration with some of the leading International banks,
the Bank enjoys a repute of being quick in turnaround time
and ease of service.
Since 2007 when the Bank pioneered the Women
Entrepreneurs Finance Programme (WEF) in Tanzania,
the International Financing Corporation (IFC) remains
a strong partner. WEF is an ongoing endeavour whose
main objectives are to promote development of women
entrepreneurship in business through the enhancement
of existing micro enterprises managed by women, and the
encouragement of new ventures with a potential to grow.
This program also promotes productive employment within
the focus of poverty alleviation and sustainable livelihood.
The division facilitates and undertakes all inward and
outward remittances (domestic and international). The
straight through processing facility provides automatic
credit of inward remittances with an auto email alert to
the beneficiary.
“Remit 2 India” is a new product launched by the division
during the year to enable the expatriate community in
Tanzania to send money to India at a very low rate. This
product has generated great interest in the target customer
segment. The division is equipped with an advanced
technological platform to provide customer service
of international standards at a minimal fee and faster
turnaround.
CREDIT MANAGEMENT
Exim Bank maintains a sound credit portfolio accomplished
through delivery of superior solutions and liquidity across a
full range of products. In today’s competitive environment,
the demand for credit facilities and related services is ever
growing. The Bank enjoys a niche in the Industry being
one of the most market savvy and flexible to the needs of
the Corporates and SMEs. The Bank takes pride in being
regarded as synonym to ‘fast decisions’ on credit.
In 2012, the Bank laid greater emphasis on the approach to
credit monitoring, applying escalating degrees of attention
to monitor, control and manage receivables. These are
tackled using a measured approach and by selecting the most
appropriate method suitable to the particular borrower
while still maintaining a sound relationship.
19
Mrs. Felister Simba, at a training of women entrepreneurs.
The success of WEF is evident in its powerful impact on
2,846 women entrepreneurs and their families who have
benefited from the program since its inception. It has
contributed immensely to the empowerment of Tanzanian
women and has been a source of employment and income
distribution.
The Bank is encouraged by women who have been
strategically building up assets (e.g. fixed deposit, equipment,
etc), and very meticulously managing funds. WEF continues
to support women to develop their businesses.
COMPANY
FINANCIAL
STATEMENTS
INFORMATION
2012 ANNUAL REPORT
In 2012, over 326 women entrepreneurs in different sectors
of the economy have benefitted from the program where
TZS 21.07 billion has been disbursed as of 31st December.
transaction times and efficiency of banking operations that
has led to increased customer satisfaction and amplified
employee productivity.
Exim Bank has provided training to more than 1,344
women from Dar es Salaam, Mwanza, Kilimanjaro,
Arusha, Morogoro, Mtwara, Manyara and Mbeya. The
program offers opportunities to women entrepreneurs
develop their competencies in the areas of financial literacy,
entrepreneurial skills, quality management, advertising,
recruitment and retention of highly qualified employees to
deliver the best service possible.
The department increased network reliability by investing in
fiber connectivity as well as simultaneously implementing a
two-tier backup network that ascertains there is “no single
point of snafu”. We currently have a high level of scalability
with the capacity to handle both geographic expansion and
bandwidth growth.
The women program (WEF) is now accessible from all Exim
Branches across the country.
With this infrastructural breakthrough, the Bank has readily
aligned with Tanzania Revenue Authority to provide online
payments facility (AsyBank) for collection of domestic
custom duties. These services are now accessible online
and the Bank is registered to accept the custom payment
on behalf of TRA for their customers.
We continue to deploy and sustain solutions that give us
colossal levels of security, scalability, network-wide visibility
and access control. These will see the bank establish more
value added products and services for our customers and
make banking effortless.
HUMAN RESOURCES MANAGEMENT
INFORMATION TECHNOLOGY
Exim Bank continues to stretch its reach to the unbanked
population and is casting its net even wider. The year saw
strengthening of its capacity to support the Bank’s other
initiatives building on flexible, secure, scalable and reliable
solutions to meet connectivity requirements.
With a vast and growing branch network, robust service
coverage capability is required across the branches. One of
our achievements in 2012 was our success in improving the
Human Resources (HR) facilitate allocation and alignment of
staff to provide greater consistency in the level of support
made available to units. This has resulted in a full service
HR organization with the capacity to provide strategic
HR direction, guidance, and support to all administrative
executions of the Bank. With the new branches across
Tanzania during the year, we now have over 600 staff
members.
HR department supports the core principles of the Bank
to create and maintain a workplace that provides respect,
dignity, and fairness to all employees. The department
has a focused goal to help enhance employee careers by
practicing staff rotations and providing relevant training to
build on the quality of their professional lives through a fair
benefits program and professional self-development.
20
COMPANY
FINANCIAL
STATEMENTS
INFORMATION
2012 ANNUAL REPORT
and additions to the staff development programs to better
equip new staff and manage up-and-coming supervisory
needs. The Academy has also had great success towards
building loyalty and motivation amongst staff.
Director Mr. Hanif Jaffer presenting long service recognition award to Mrs.
Melkiada Makongela at the 15th Anniversary staff celebrations.
The HR department works closely with Management to
provide analytical and strategic human resource planning,
and direct services for ever-increasing staff engagement. It
continues to support management in all aspects and tactics
to help supervisors support individual and organizational
career development.
The Bank provides an attractive health cover plan for
all active employees. This is supported by provisions of
comprehensive life coverage for all personnel.
The year also saw a realigning of the administrative human
resources procedures, business practices and processes in
line with a changing and dynamic work environment. These
procedures covered the areas of recruitment and selection
and performance management. The new performance
management system has been realigned on best practices.
TRAINING AND DEVELOPMENT:
THE EXIM ACADEMY
The Training and Development department relocated to a
state of the art premises in Ubungo, Dar es Salaam in March
2012. The Exim Academy was inaugurated on the 15th of
October 2012. The Bank has implemented improvement
21
The Permanent Secretary of the Ministry of Education & Vocational
Training, Mr. Selestine Gesimba, cuts a ribbon at the launch of the Bank’s
training hub dubbed ‘The Exim Academy’ in Dar es Salaam. First from the
right is the Exim Bank Board Chairman Yogesh Manek.
The Academy also trains staff from subsidiaries in Comoros
and Djibouti. In total, 1171 trainees from different levels
have been presented with the opportunity to acquire
skills in enhancing their competencies during the year. In
relation to this, the Bank is proud to say that nearly 95%
of all supervisory level positions being held today are by
people who have grown from within. In order to accomplish
this, a total of 30,296 person hours and 3,786 person days
were invested within the same period along with a hefty
investment of TZS 335 million.
One of the biggest accomplishments is the Bank’s own
Management and Leadership Development Program
christened “eMpower”. This is a three year sustainable
program majorly focused on strong leadership skills and
offers 15 varied modules to support the commendable
internal recruitment policy of the Bank and counter the
demands and challenges of managing people.
COMPANY
FINANCIAL
STATEMENTS
INFORMATION
2012 ANNUAL REPORT
Other successful initiatives include the “Personal
Development Program” designed for corporate office staff,
and the “Professional Banker Program” for branch staff.
Both programs have been specifically tailored to provide
the necessary skills and knowledge required to perform in a
professional manner. Endorsing this act is feedback received
from supervisors informing of improved motivation levels,
high levels of morale, engagement and a better understanding
of the procedures and values of the Bank. With high demand
for each of these programs, The Academy is looking into
expanding the agenda offerings for next year.
agreed remedial actions have been implemented audit findings
and overdue issues are reported to senior management and
quarterly to Board Audit Committee (BAC).
It is envisaged that blended learning will be introduced by
way of launching an e-learning platform to encourage selfinitiated and self-managed learning to complement classroom
programs.
For this year, the Bank has enhanced its risk management
framework. Constant efforts are being made to ensure
sound practices through effective compliance with policies
and procedures.The department’s value is maximized when
it supports management to set strategy, objectives, and
helps to balance growth, returns and related risks.
The Bank has been successful in implementing a unique
business model and an effective learning and development
framework that has all the key stakeholders actively involved.
The Academy enjoys unparalleled support from all within the
Bank which attributes to it success.
INTERNAL AUDIT
The Internal Audit function reports to and operates under
a mandate from the Board Audit Committee (BAC) and has
the authority to independently determine the scope and
extent of work to be performed. Board Audit Committee
(BAC) guides and monitors the quality of the internal audit
function.
This work is accomplished by introducing a systematic,
disciplined, risk-based approach to the evaluation and
improvement of the effectiveness of risk management,controls
and governance. Internal auditing enhances management
controls by providing insight and recommendations based on
analysis and assessments of data and business processes.
The department tracks material or significant control
weaknesses identified by internal and external regulators as
well as planned management remedial actions. To ensure that
RISK AND COMPLIANCE
Banks and financial service organizations of all sizes are
now more concerned than ever about managing risk and
compliance. New banking products, increased government
scrutiny and intense focus on standard operating procedures
generate a larger set of rules and regulations.
The Risk and Compliance departments merged during the
year to effectively manage both aspects and bring about
synergies in the related areas.
?
SECURITY AND VIGILANCE
Lapses in security make an impact on all organizations and
the economy at large. Exim Bank is meticulously devoted to
providing security for our customers that guarantee safety
and freedom from danger or anxiety. In the year, this was
communicated to the entire organisation, and proactive
strides taken to put in place protective and defensive
measures specifically adopted to deter, detect and defeat
culpable and criminal acts both covertly and overtly.
The Bank installed anti skimming software on all ATM’s
nationwide, as a fraud preventive measure.
Our security department also works with partners
within and outside the Bank to ensure fraud and other
security threats against the Bank are detected, disrupted
and prevented. Measures such as conducting a bank-wide
awareness campaign addressing the issues of fraud and
forgery were held earlier in the year.
22
COMPANY
FINANCIAL
INFORMATION
STATEMENTS
2012 ANNUAL REPORT
Our employees have responded well to the new procedures
introduced in 2012 which have in turn enhanced internal
and external customer service and strengthened internal
controls. These new measures have largely improved
the execution of branch operations and thus the Bank’s
performance.
?
CUSTOMER SERVICE
Customer Service department plays a major role in liaising
with other functions for faster execution and delivery of
services. In 2012, the department strived to identify, explore
and recommend common protocols of service delivery
standards.
During the year, the department managed to engage itself
in key areas that were formerly considered as challenges,
bringing the Bank to a level of satisfaction as acknowledged by
the customers. Some of the key areas where improvements
in service levels have been made are;
? Issuance of ATM cards, cheque books, Swift receipts
and improving uptime for ATM’s.
? Implementing a full-fledged built-in Queue Management
System.
? Placement of customer services coordinators at
branches with heavy client flow to improve turnaround
time.
? Introduction of a dedicated contact point for customers
complaints and queries.
The Bank continues to pursue activities aimed at getting the
voice of customer (VOC) into the heart of our business.
The department has been able to bring in a substantial
improvement in the service levels at various points.
23
CARDS DIVISION
The Bank offers both Credit Cards and Debit Cards.
These cards are issued to our customers to facilitate their
payments electronically. Exim Bank cards can be used for
online shopping and POS machines displaying VISA and
MASTERCARD logo.
HIGHLIGHTS FOR THE YEAR
? Acquiring business has grown by 167% compared
to last year.
? Card profitability has increased by 200%
compared to last year.
? ATM Uptime has gone up from 91% to 93%.
? Turnaround time of card delivery has reduced
from 13 days to 5 days.
? Our ATM security has been strengthened with
Anti Skimming devices loaded on the ATM’s.
? Started acquiring retail business in Comoros.
? Launched ATM operations in Djibouti.
COMPANY
FINANCIAL
STATEMENTS
INFORMATION
2012 ANNUAL REPORT
Debit Cards
Salary Cards
Cards offered to savings account customers titled FAIDA
CARD. Both the Debit and Credit type cards can be
used worldwide at ATM machines displaying VISA and
MASTERCARD logo.
Salary Cards are debit cards issued by the Bank to employees
of organizations for salary payments. The cards can be used
to withdraw money through Exim Bank and other ATMs
worldwide. In addition to this salary card customers are
offered zero balance facility.
TANAPA Exim Cards
Exim Bank introduced TANAPA Exim Cards to allow
electronic entry fee payments at the Tanzania National
Parks gates. With the service, tourists are able to pay park
fees electronically without any hassle and TANAPA has
simplified its reconciliation process. These are proprietary
debit and prepaid cards and are issued to both account
holders and non account holders. These cards are issued in
both TZS and USD.
Point-Of-Sale (POS) Services
Exim Bank offers electronic payment collections system to
merchants. Our POS services are spread across Tanzania
covering merchant locations and facilitating merchants and
customers to make payments electronically by using VISA
and MasterCard on these machines.
24
CORPORATE SOCIAL
FINANCIAL
STATEMENTS
RESPONSIBILITY
2012 ANNUAL REPORT
Exim Bank integrates corporate social responsibility within
the overall corporate strategy. Our stakeholders expect
more transparency in relation to our interaction with the
environment and society.
Exim Bank contributed to the endeavour for the second
year to support the initiative. The event brought together
people from different parts of the world especially from
East Africa and the Bank had an opportunity to make its
presence felt with 32 staff members participating in the 5
KM Corporate Team Challenge.
Exim Bank has a continuing commitment to be ethical. The
Bank takes great pride in its contribution to the nation’s
general economic development, improving the quality of life
of the local community and society at large.
This section highlights details of our focused CSR endeavours
in 2012.
KEY ACTIONS IN 2012
Fostering Talent
Philanthropy
Through our patronage, we aim to provide a meaningful
response to critical community challenges. During 2012,
we provided financial support to address some of the
most pressing issues in our communities including financing
education and other critical needs. The Bank has developed
significant partnerships with institutions such as Kilakala
Primary School, Internal Auditors Tanzania and Tanzania
Police who are engaged with the industry and community
in different ways. These partnerships form the backbone of
of the Bank’s philanthropic efforts and are often magnified
through employee voluntary efforts in various initiatives.
Kilakala Primary School
The extraordinary in everyday life!
The Safari International Marathon is an annual event that
encourages local Tanzanian athletes to pursue their dreams
and reach higher accomplishments. The event hosted in
Arusha on 9th of September 2012 attracted a large number
of tourists by way of invited international athletes. This is
an ongoing event and has become one of the most popular
event amongst young and old athletes.
25
The Exim Bank Managing Director, Mr. Anthony Grant (Right) talks to
one of the Kilakala Primary School pupils. Looking on third left is the Exim
Bank Assistant General Manager Mr. N.Seshagiri Rao.
Exim Bank is committed to supporting education and this
initiative is aimed at assisting Kilakala Primary School.
CORPORATE SOCIAL
FINANCIAL
STATEMENTS
RESPONSIBILITY
2012 ANNUAL REPORT
This is a government primary school located in Mbagala,
Temeke municipality serving 2,864 students from
disadvantaged families. Exim Bank adopted the school in
August 2012 and started by donating 100 desks as part of
the Bank’s unique corporate social responsibility that seeks
to improve the school’s learning environment.
The Bank has further donated a well-stocked library facility
to the school. Exim Bank will continue supporting various
educational projects in a bid to contribute to uplifting the
education standards in the country.
Recognizing Brave Police Officers
The Inspector General of Police (IGP) Mr. Said Mwema (right) at the
ceremony hosted by the Bank to honor the services of outstanding Police
Officers. Looking on is the Exim Bank Board Chairman, Mr.Yogesh Manek
(centre) and the Exim Bank Managing Director, Mr. Anthony Grant (left).
Exim Bank Vein-to-Vein Blood Drive
The Bank honored five Police Officers from Dar es Salaam, Mwanza and
Tanga regions for serving the nation.
On the Bank’s 15th Anniversary celebrated in August
2012, five police officers from Dar es Salaam, Mwanza and
Tanga regions were honoured for their dedicated work
and tremendous spirit of serving the nation. The police
officers were each awarded with a brand new motorcycle,
a certificate of recognition and a medal. Among those
recognized were; Inspector Abel. B. Swai, Sgt. Vincent C.
Chikupe, A/Inspector Dorina K. Poyo, D.C Banda. M. Mtani
and PC Mathias R. Mang’ombe.
The Exim Bank management team takes part in the Bank’s Vein-to-Vein’
blood donation drive held at the Bank’s headquarters in Dar es Salaam.
Exim Bank hosted a blood donation drive in June 2012. The
event was a tremendous success with 80 units of blood
donated for expectant mothers and children under the age
of six.
26
CORPORATE SOCIAL
FINANCIAL
STATEMENTS
RESPONSIBILITY
2012 ANNUAL REPORT
Blue Hope Orphanage
Among other areas of interest, Exim Bank has also taken
under its wing an orphanage located in Mabibo, Dar es
Salaam. In December 2012, the Managing Director, Mr.
Anthony Grant paid a visit to the orphanage alongside
other staff to present the children with scholastic materials
to aid their educational growth.
?
A cross section of volunteers who turned up to support the Exim Bank
‘Vein-to-Vein’ blood donation drive held at the Bank’s headquarters in Dar
es Salaam.
Exim Bank City Beautification Campaign
The Bank has pledged to support the beautification process
of the city of Dar es Salaam in a bid to improve its image.
In April 2012, the Bank’s employees volunteered for a green
environment weekend cleaning exercise of Clock Tower and
Ohio Gardens.
A team of Exim Bank employees engage in a cleaning exercise of the
Clock Tower gardens adjacent to the Exim Bank Clock Tower Branch in
Dar es Salaam.
27
The Bank’s Assistsnt Marketing Manager Ms. Anita Goshashy poses for
a photo with some of the children at Blue Hope Orphanage Centre in
Mabibo, Dar es Salaam.
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
28
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
The Bank celebrated its 15
th year of existence Bank wid
e in 2012.
The celebration extended to
include the multitude of miles
tones achieved
along the way. The Bank’s
capabilities support growth
and progress
for all its customers, key St
akeholders, Staff and the co
mmunities in the
operational environment. With
influence across Tanzania,
Comoros and
Djibouti, it is positioned to giv
e individuals and institution
s access
to finance and enable them
to
play an important part in soc
29
iety.
EXIM BANK
FINANCIAL
STATEMENTSSA
COMOROS
Exim Bank Tanzania is the first financial institution in Tanzania
to venture establishing footprints outside the country. The
Bank opened its first subsidiary in The Union of Comoros
in the year 2007.
2012 PERFORMANCE HIGHLIGHTS
The fully owned subsidiary of Exim Bank (Tanzania) Ltd in
Comoros, offers universal banking facilities to all customers
in the islands of Moroni and Anjouan. In 2012, the subsidiary
successfully completed five years of operations and continues
to be the fastest growing bank in the country. During the year,
the Bank has shown growth in all the parameters as under:
BUSINESS GROWTH
(Amount in Comoros Francs)
?
Shareholder’s funds at KMF 1.998 billion
(USD 5.41 Million); growth of 37.22%
?
Total Assets moved up by 11.08%, to
KMF 11.88 billion (USD 32.19 Million)
?
Total Deposits moved up by 9.23%, to
KMF 8.94 billion (USD 24.22 Million)
?
CASA stood at 71.46 % of the deposits portfolio.
?
Total Advances jumped by 15.77%, to
KMF 5.57 billion (USD 15.09 Million)
2012 ANNUAL REPORT
However, the country anticipates a growing potential in
Indian Ocean tourism and exploration of natural gas.
? The Bank constructed and inaugurated a new building
for transacting MoneyGram business at Moroni for
providing a more conducive banking environment and
focused attention to different sections of customers.
? The economy is mainly cash based; the Bank continued
its innovative initiatives and installed two POS terminals
at key locations. The outlets besides helping to create
the culture of credit and savings are bringing the nation
further closer to the outside world.
? An off-site ATM was installed at Hotel Retaj Moroni.
? “Banking on Wheels”, an initiative offering banking
facilities at the door-steps of customers in a mobile
van, was launched.
? MoneyGram business was expanded by appointing Sub
Representatives.
PROFITABILITY
The Bank recorded Profit after Tax of KMF 542 million (USD
1.47 million) (2011: KMF 290 million (USD 0.79 million)) a
growth of 86.72%.
The impact of the various initiatives taken by the Bank are
significant when one takes into account the fact that 2012
estimated GDP of Comoros was around USD 1 Billion.
30
EXIM BANK
FINANCIAL
STATEMENTS
DJIBOUTI
SA
2012 ANNUAL REPORT
Exim Bank Djibouti is another fully owned subsidiary of
Exim Bank (Tanzania) Ltd. The subsidiary opened on 09th
March 2011 and offers wholesale banking to customers.
In less than two years, the Bank has positioned itself as a
forward looking financial institution and leader in banking
with innovative products and personalized service. Djibouti
is the port to the world for landlocked Ethiopia (90 million
people).
2012 PERFORMANCE HIGHLIGHTS
The highlights of performance in 2012 are as under:
BUSINESS GROWTH
(Amount in Djibouti Francs)
From left: Exim Bank’s Director, Mr. Hanif Jaffer, Chief Executive Officer,
Mr. Dinesh Arora, Board Chairman Mr. Yogesh Manek, Director, Mr.
Shaffin Jamal, Board member, Mr. Nalin Kothari, Exim Bank Djibouti
and Director Mr. Tom Wescott during the official inauguration of Exim
Bank Djibouti.
?
Total Assets have grown by 158%, to
DJF 1760 Million (USD 9.92 Million)
?
Total Deposits have grown from DJF 40 Million
to DJF 743 Million (USD 9.06 Million)
?
Total Advances have grown from DJF 5.2 Million
to DJF 179 Million (USD 1.02 Million)
?
Shareholder’s funds have grown by 39.00%,
reached to DJF133 Million (USD 0.70 Million)
The following are significant achievements during 2012:
? The Bank launched its first ATM machine accepting
debit cards.
? The Bank introduced the first electronic banking
service in Djibouti (Smart statment).
? The first Bank to introduce one day/overnight transfer
worldwide “Swift transfer.”
? MoneyGram Money transfer business was introduced.
The Bank focuses on building human capital through
training and development to ensure par excellence
customer service.
31
Seated: His Excellency, President of the Republic of Djibouti, Mr. Ismaïl
Omar Guelleh during the official inauguration of Exim Bank Djibouti.
Standing from left Mr. Ilyas Moussa, Exim Bank Djibouti Board member
(Current Minister of Finance Djibouti), Board Chairman Mr. Yogesh
Manek, Director, Mr. Shaffin Jamal and Chief Executive Officer, Mr.
Dinesh Arora.
Our relationship with customers:
* Understanding & Empathy
* Fairness
* Innovative Solutions
* Quick Turnaround
Exim…
The Ba
nk
of Cho
ice
32
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
1
2012 ANNUAL REPORT
The directors submit their report together with the audited financial statements for the year ended 31 December
2012, which disclose the state of affairs of the group and company.
2 INCORPORATION
The company is incorporated in Tanzania under Companies Act as a private company limited by shares.
3 OUR VISION
To be the bank of choice.
4 OUR MISSION
We are committed to remain an innovative Tanzanian Bank offering services of international standards.
5 PRINCIPAL ACTIVITIES
The Company is engaged in the business of banking and the provision of related services.
6 BUSINESS DEVELOPMENTS
In 2012, the Company completed its fifteen years of operations and continued to be amongst the top performing banks in
the country on key parameters viz total assets and deposits.
The following achievements were recorded in the year:
? The Bank continued to expand its nationwide network with the launch of two new branches opened during the year;
in Kigoma town on Lake Tanganika and Kilimanjaro, a second branch in Moshi town in the heart of the agricultural and
tourism area.
? The Bank launched new products including “Nyumba Yangu” (Mortgage financing) and “Haba na Haba”(hybrid of savings
and investment plan).
? Additional modules were implemented during the year to leverage the technology platform enabled by the new Core
BANKING SYSTEM, :- Locker Module, Fixed Asset Module, Standing Instructions module, Security Module and Mobile
Banking / SMS alert Module. The expected results will include improved services and at lower costs.
? Partnerships were strengthened with international institutions. A $15 million loan was concluded from Proparco, the
French Development Financial Institution, for on-lending to the SME sector.
? Progress continued at the overseas affiliates, including construction in Comoros of a new branch in Moheli completing
Exim Bank’s footprint on all of the autonomous islands.
? The Staff Training Centre, redesignated “The Exim Academy”, moved to highly refurbished premises in Ubungo – a
multi-media, multi-auditorium environment for learning. A comprehensive Training Needs Analysis of Corporate
Departments and Branch Staff was conducted.
33
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
7 DIRECTORS
The directors of the Company at the date of this report and who have served since 1 January 2012, unless otherwise stated,
are:
Name
Position
Nationality
Qualifications
1
Mr.Yogesh Manek
Chairman
Tanzanian
Bachelor of Arts
2
Mr. Hanif Jaffer
Director
Tanzanian
Certified Public Accountant ( CPA-T)
3
Mr. Shaffin Jamal
Director
Tanzanian
Masters of Business Administration
4
Mr. Pascal Kamuzora
Director
Tanzanian
Master of Arts (Economics)
5
Mr. Thomas Wescott
Director
American
Bachelor of Arts, Government and Economics
6
Hon. Juma Mwapachu
Director
Tanzanian
Bachelor of Law and Post Graduate Diploma in
International law
The Company Secretary as at 31 December 2012 was Adept Chambers, Tanzania.
8 CORPORATE GOVERNANCE
The Board of Directors consists of six members. No director held an executive position in the Bank during the year. The
Board takes overall responsibility for the Bank, including that for identifying key risk areas, considering and monitoring credit
and investment decisions, considering significant financial matters, and reviewing the performance of management business
plans and budgets. The Board is also responsible for ensuring that a comprehensive system of internal control policies and
procedures is operative, and for compliance with sound corporate governance principles.
The Board is required to meet at least four times a year and the Board met four times during the year 2012. The Board
delegates the day to day management of the business to the Strategic Management comprising the Managing Director and
the Chief Executive Officer, assisted by other senior management.The Management team is invited to attend board meetings
and the meetings of various Sub-committees of the Board. The Management remains responsible for the effective control
of all the Company’s operational activities and acting as a medium of communication and coordination amongst the various
business and operational units of the Bank.
The Group and Bank are committed to the principles of effective corporate governance .The directors also recognize the
importance of integrity, transparency and accountability. The Board has the following committees to ensure a high standard
of corporate governance. All committees report to the Board and apart from the Credit Committee which met 20 times, all
other committees met four times each during the year.
34
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
8 CORPORATE GOVERNANCE (continued)
(I) Asset and Liability Management Committee (ALCO)
Name
Position
1
Mr. Thomas Wescott
Chairman
2
Mr. Hanif Jaffer
Member
3
Mr. Pascal Kamuzora
Member
(ii) Credit Committee (BCC)
Name
Position
1
Mr. Shaffin Jamal
Chairman
2
Mr.Yogesh Manek
Member
3
Mr. Hanif Jaffer
Member
(iii) Risk Management Committee (BRMC)
Name
Position
1
Mr. Thomas Wescott
Chairman
2
Mr. Hanif Jaffer
Member
3
Mr. Pascal Kamuzora
Member
(iv) Audit Committee (BAC)
Name
Position
1
Mr. Thomas Wescott
Chairman
2
Mr. Hanif Jaffer
Member
3
Mr. Pascal Kamuzora
Member
(v) Investment Committee (BIC)
Name
Position
1
Mr.Yogesh Manek
Chairman
2
Mr. Shaffin Jamal
Member
3
Mr. Hanif Jaffer
Member
4
Mr. Thomas Wescott
Member
35
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
8 CORPORATE GOVERNANCE (continued)
(vi) Executive Committee (EXCOM)
Name
Position
1
Mr.Yogesh Manek
Chairman
2
Mr. Shaffin Jamal
Member
3
Mr. Hanif Jaffer
Member
4
Hon. Juma Mwapachu
Member
9 CAPITAL STRUCTURE
The Bank’s capital structure for the year under review is shown in note 3.5 of the financial statements.
10 MANAGEMENT
The responsibility for the management of the Bank rests with a team defined as Strategic Management comprising the
Managing Director and the Chief Executive Officer. The Bank is organised in the following departments:
(i)
Accounts and MIS
(ii) Administration and Procurement
(iii) Cards
(iv) Centralised Cheque Issuance Cell
(v) Compliance Cell
(vi) Core Banking System
(vii) Corporate Relationship Management
(viii) Credit Management
(ix) Customer Service
(x) Exim Academy (The Learning and Development Centre)
(xi) Finance
(xii) Human Resources
(xiii) Information Technology
(xiv) Internal Audit
(xv) Marketing and Publicity
(xvi) Operations
(xvii) Projects Management
(xviii) Reconciliation
(xix) Retail Banking
(xx) Risk Management
(xxi) Security and Vigilance
(xxii) Trade Finance and Remittances
(xxiii) Treasury Management
36
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
11 SHAREHOLDERS OF THE COMPANY
The total number of shareholders during the year was 7 (2011: 7 shareholders). The shares of the bank are held as follows:
Shareholder
2012
Number of
ordinary shares
2011
Number of
ordinary shares
1
Mr.Yogesh Manek
2,580,000
2,580,000
2
Mr. Shaffin Jamal
2,580,000
2,580,000
3
Mr. Hanif Jaffer
2,580,000
2,580,000
4
Mr. Azim Virjee
1,935,000
1,935,000
5
Mr. Azim Kassam
2,580,000
2,580,000
6
Alawa Investments Limited
322,500
322,500
7
Kandasi Investments Limited
322,500
322,500
12,900,000
12,900,000
Total
Directors holding shares are listed below:
Name
Nationality
Number of
Ordinary Shares
1
Mr.Yogesh Manek
Tanzanian
2,580,000
2
Mr. Shaffin Jamal
Tanzanian
2,580,000
3
Mr.Hanif Jaffer
Tanzanian
2,580,000
12 FUTURE DEVELOPMENT PLANS
The Board intends to continue a thoughtful and business oriented expansion of the Bank’s Tanzania network and the
footprint of affiliates. Delivery channels will be expanded and deepened, as the Bank rolls out its mobile banking, internet
banking and agency banking services. Improvement in customer services and relationship management will be accelerated
to secure one of the best turnaround times in the market. Accompanied with exceptional complaints handling systems, the
Bank plans to proactively remain ahead of competition.
In an endeavor to build a strong foundation for future growth, the Bank has been implementing a number of transformation
initiatives which include the following:
? Core banking system migration from Flexicube to the new Core Banking Solution (CBS).
? Building a cadre of staff and implement retention policy to ensure availability of skilled and well motivated team to take
the Bank to the next level.
? Putting in place systems and processes to further strengthen transparency and good governance. The intent is to
ensure sustainability of strong growth.
37
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
13 RESULTS AND DIVIDEND
During the year, Exim Bank Group had a 9% increase in profit after tax of TZS 13,667 million (2011:TZS 12,445 million). The
directors recommend payment of a 15% dividend for 2012 (2011: Nil).
14 PERFOMANCE FOR THE YEAR
?
?
?
?
?
The Group recorded a profit before tax of TZS 16,540 million (2011: TZS 17,487 million);
The Group’s deposits from customers increased by 17.2% to TZS 723 billion (2011: TZS 617 billion);
Group’s lending portfolio prudently increased to TZS 436 billion (2011: TZS 428 billion); and
Total assets increased by 14.8% to TZS 967 billion (2011: TZS 842 billion).
15 RISK MANAGEMENT AND INTERNAL CONTROL
The Board accepts final responsibility for the risk management and internal control systems of the Company. It is the task
of management to ensure that adequate internal financial and operational control systems are developed and maintained on
an ongoing basis in order to provide reasonable assurance regarding:
?
?
?
?
?
?
The effectiveness and efficiency of operations;
The safeguarding of the Company’s assets;
Compliance with applicable laws and regulations;
The reliability of accounting records;
Business sustainability under normal as well as adverse conditions; and
Responsible behaviors towards all stakeholders.
The Board assessed the internal control systems throughout the financial year ended 31 December 2012 and is of the opinion
that they met accepted criteria. The Board carries out risk and internal control assessment through Risk Management
Committee.
16 SOLVENCY
The Board of directors confirms that applicable accounting standards have been followed and that the financial statements
have been prepared on a going concern basis. The Board of directors has reasonable expectation that the Group and
Company have adequate resources to continue in operational existence for the foreseeable future.
The Bank has met all the Bank of Tanzania’s (BoT) liquidity and capital adequacy ratios and is considered solvent by the Board
of Directors.
17 EMPLOYEES’ WELFARE
Management and Employees’ Relationship
The Bank is equal opportunity employer. It gives equal access to employment opportunities and ensures that the best
available person is appointed to any given position free from discrimination of any kind and without regard to factors like
gender, marital status, tribe, religion and disability which does not impair ability to discharge duties.
38
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
17 EMPLOYEES’ WELFARE (continued)
Training Facilities
For the year 2012, the Bank increased its spending for staff training by 16.7% to TZS 335 million for staff training in order
to improve employee technical skills and hence effectiveness (2011:TZS 287 million. Training programs have been and are
continually being developed to ensure employees are adequately trained at all levels. All employees have some form of annual
training to upgrade skills and enhance development.
Medical Assistance
All confirmed members of staff with a maximum number of five beneficiaries (dependants including a spouse and four
children) for each employee were availed medical insurance guaranteed by the Board. Currently these services are provided
by Strategis Insurance Tanzania Limited. There is also a Group Life insurance cover for all confirmed staff.
Health and Safety
The Bank has a strong administration department which ensures that a strong culture of safety prevails at all times. A safe
working environment is ensured for all employees and contractors by providing adequate and proper personal protective
equipment, training and supervision as necessary.
Financial Assistance to Staff
Loans and advances under various schemes are available to all confirmed employees depending on the assessment of and
the discretion of management as to the need and circumstances as per bank’s Human Resources (HR) policy approved by
the Board of Directors. This is to assist in promoting the welfare of its employees.
Persons with Disabilities
Applications for employment by disabled persons are always considered, bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with
the company continues and appropriate training is arranged. It is the policy of the company that training, career development
and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employees Benefit Plan
The Bank and all its employees contribute to the National Social Security Fund (NSSF), which is a defined contribution
scheme. Employees contribute 10% and the Bank also contributes 10% to the scheme. The number of employees at the end
of year was 680 (2011: 565 staff).
18 GENDER PARITY
Exim Bank Group had 680 employees, out of which 329 were female and 351 were male. (2011: 286 female 279 male staff).
39
REPORT OF THE
FINANCIAL
STATEMENTS
DIRECTORS
2012 ANNUAL REPORT
19 RELATED PARTY TRANSACTIONS
All related party transactions and balances are disclosed in note 31 to these financial statements.
20 POLITICAL AND CHARITABLE DONATIONS
The company did not make any political donations during the year. Donations made to charitable organizations during the
year amounted to TZS 53 million (2011: TZS 15 million).
21 CORPORATE SOCIAL RESPONSIBILITY
The Bank is committed to the community in which it operates and endeavors to support a variety of national initiatives.
Among other contributions in 2012, the donations below were made to the community.
Donation to various social groups
The Bank donated to various non-governmental organisations (NGOs) which serve the community. Most of the donations
were directed towards protecting the environment, supporting orphans and youth empowerment.
The Bank also contributed to help the needy society by donating to Tushikamane Pamoja Foundation, a non-governmental
organisation (NGO) that was founded to address the lack of resources that is endemic within communities affected by
poverty.
Contribution towards Education
The Bank contributed various items including desks, building of a library, text books and water tanks to the following schools;
Yombo Kilakala Primary, Bahari Beach Primary and Aquinas Secondary. Further, in the efforts to ensure continuous support,
the Bank decided to adopt Yombo Kilakala Primary School so as to create a big impact to the school in the long run.
22 AUDITOR
The auditor, PricewaterhouseCoopers, has expressed its willingness to continue in office and is eligible for re-appointment.
Approved by the board of directors on and signed on its behalf by:
_______________________
Mr.Yogesh Manek
Chairman
40
04th April 2013
_____________________
Date
STATEMENT
FINANCIALOF
DIRECTORS’
STATEMENTS
RESPONSIBILITIES
2012 ANNUAL REPORT
The Directors are required by the Companies Act, CAP 212 Act No. 12 of 2002 to prepare financial statements for each
financial period that give a true and fair view of the state of affairs of the Company and Group as at the end of the financial
year and of their profit or loss for the year. The Directors are also obliged to ensure that the Company keeps proper
accounting records that disclose, with reasonable accuracy, the financial position of the Company. They are also responsible
for safeguarding the assets of the Company.
The Directors accept responsibility for the annual financial statements, which have been prepared using appropriate
accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Financial
Reporting Standards (IFRS) and the requirements of Companies Act, CAP 212 Act No. 12 of 2002. The Directors are of the
opinion that the financial statements give a true and fair view of the state of the financial affairs of the Company and Group
and of their profits in accordance with International Financial Reporting Standards (IFRS). The Directors further accept
responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements,
as well as designing, implementing and maintaining internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement.
Nothing has come to the attention of the Directors to indicate that the Group or Company will not remain a going concern
for at least twelve months from the date of this statement.
_______________________
Mr.Yogesh Manek
Chairman
41
04th April 2013
_____________________
Date
STATEMENT
FINANCIALOF
DIRECTORS’
STATEMENTS
RESPONSIBILITIES
2012 ANNUAL REPORT
Report on the Financial Statements
We have audited the accompanying financial statements of Exim Bank (Tanzania) Limited (the Company) and its subsidiaries,
Exim Bank Comores S.A and Exim Bank Djibouti S.A (together, the Group) which comprise the statements of financial
position of the Group and Company as at 31 December 2012, and their statements of profit or loss and other comprehensive
income, statements of changes in equity and statements of cash flows for the year then ended, and a summary of significant
accounting policies and other explanatory notes.
Directors’ Responsibility for the Financial Statements
The directors are responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards and with the requirements of the Companies Act, CAP 212 Act No. 12 of 2002
and for such internal control, as the directors determine necessary to enable the preparation of financial statements that
are free from material misstatements, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on the 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 our audit to obtain reasonable assurance that 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 the directors, 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 opinion.
Opinion
In our opinion the accompanying financial statements give a true and fair view of the state of the Group’s and Company’s
financial affairs at 31 December 2012 and of their profits and cash flows for the year then ended in accordance with
International Financial Reporting Standards and the Companies Act, CAP 212 Act No. 12 of 2002.
42
REPORT OF THE
FINANCIAL
STATEMENTS
INDEPENDENT
AUDITOR
2012 ANNUAL REPORT
Report on other Legal and Regulatory Requirements
This report, including the opinion, has been prepared for, and only for, the company’s members as a body in accordance with
the Companies Act, CAP 212 Act No. 12 of 2002 and for no other purposes.
As required by the Companies Act, CAP 212 Act No. 12 of 2002, we are also required to report to you if, in our opinion, the
Directors’ Report is not consistent with the financial statements, if the company has not kept proper accounting records, if
the financial statements are not in agreement with the accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law regarding directors’ remuneration and transactions
with the company is not disclosed. In respect of the foregoing requirements, we have no matter to report.
Leonard C Mususa, FCPA-PP
For and on behalf of PriceWaterhouseCoopers
Certified Public Accountants
Dar es Salaam
Date:
04th April 2013
43
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
Our relat
ionships a
* Opportu
* Linkages
* Leverag
nities & Op
tions
ing Practic
es
44 44
cross bord
ers:
g
n
i
h
c
Rea ched
ea
r
n
u
the
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Group
2012
Note TZS’Millions
Restated
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Restated
Company
2011
TZS’Millions
Interest and similar income
5
84,192
65,864
81,805
63,396
Interest expense and similar charges
6
(39,214)
(25,378)
(38,644)
(24,839)
44,978
40,486
43,161
38,557
(5,674)
(6,232)
(5,579)
(6,003)
39,304
34,254
37,582
32,554
17,693
(193)
14,901
(195)
15,218
(168)
13,437
(72)
7
17,500
14,706
15,050
13,365
8
9
3,968
1,104
(45,336)
5,384
786
(37,643)
3,043
1,104
(40,970)
4,589
786
(32,180)
16,540
17,487
15,809
19,114
(2,873)
(5,042)
(2,873)
(5,042)
13,667
12,445
12,936
14,072
244
8
-
-
6,203
4,366
6,203
4,366
20,114
16,819
19,139
18,438
Net interest income
Loans and advances impairment charge
Net interest income after loan
impairment charge
15
Fee and commission income
Fee and commission expense
Net fee and commission income
Foreign exchange income
Other income
Operating expenses
Profit before income tax
Income tax expense
11
Profit for the year
Exchange differences on translation of foreign
operations
Gain on fair valuation of available for sale
financial asset
Total comprehensive income for the year
45
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012
Group
2012
Note TZS’ Million
ASSETS
Cash and balances with Central Banks
Loans and advances to banks
Derivative assets
Loans and advances to customers
Government securities held-to-maturity
Investment securities
– available-for-sale
– held-to-maturity
Other assets
Property and equipment
Intangible assets
Investment in subsidiaries
Current income tax
Deferred income tax
Restated
Group
2011
TZS’ Million
Restated
Group
2010
TZS’ Million
13
14
24
15
16
143,686
132,202
108
435,598
185,148
99,501
121,686
428,032
134,718
82,622
93,210
342,758
134,568
17
17
18
19
20
21
26,933
3,587
11,938
20,274
642
5,043
1,391
20,730
3,669
11,719
17,403
760
1,742
1,050
15,764
3,638
16,136
17,479
570
881
676
966,550
841,010
708,302
86,008
722,734
18,433
29,948
81,887
617,259
19,492
33,059
44,233
548,770
11
17,950
20,118
857,123
751,697
631,082
12,900
64,833
28
31,694
12,900
57,544
12,900
51,244
18,869
13,076
Total shareholders’ equity
109,427
89,313
77,220
Total equity and liabilities
966,550
841,010
708,302
22
Total assets
LIABILITIES
Deposits from banks
Deposits from customers
Derivative liabilities
Other liabilities
Subordinated debts and senior loans
23
24
25
26
Total liabilities
SHAREHOLDERS’ EQUITY
Share capital
Retained earnings
27
Regulatory and other reserves
The financial statements on pages 12 to 91 were approved for issue by the Board of Directors and signed on its behalf by:
__________________________
Yogesh Manek - (Chairman)
46
04th April 2013
__________________
Date
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012
ASSETS
Cash and balances with Central Banks
Loans and advances to banks
Loans and advances to customers
Government securities held-to-maturity
Investment securities
– available-for-sale
– held-to-maturity
Other assets
Property and equipment
Intangible assets
Investment in subsidiaries
Current income tax
Deferred income tax
Note
Company
2012
TZS’ Million
Restated
Company
2011
TZS’ Million
Restated
Company
2010
TZS’ Million
13
14
15
16
116,157
127,261
410,600
185,148
84,447
120,833
408,269
134,718
68,404
98,348
326,029
134,568
17
17
18
19
20
21
26,933
3,587
10,918
17,709
461
7,498
5,043
1,391
20,730
3,669
10,311
15,420
644
5,287
1,742
1,050
15,764
3,638
15,486
15,855
289
5,287
881
676
912,706
807,120
685,225
76,133
684,397
18,119
26,095
83,724
586,493
19,147
28,933
47,869
528,392
11
17,718
16,124
804,744
718,297
610,114
22
Total assets
LIABILITIES
Deposits from banks
Deposits from customers
Derivative liabilities
Other liabilities
Subordinated debts and senior loans
23
24
25
26
Total liabilities
SHAREHOLDERS’ EQUITY
Share capital
Retained earnings
27
12,900
64,697
12,900
57,706
12,900
49,619
Regulatory and other reserves
28
30,365
18,217
12,592
Total shareholders’ equity
107,962
88,823
75,111
Total equity and liabilities
912,706
807,120
685,225
The financial statements on pages 12 to 91 were approved for issue by the Board of Directors and signed on its behalf by:
__________________________
Yogesh Manek - (Chairman)
47
04th April 2013
__________________
Date
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENT OF CHANGES IN EQUITY - GROUP
Year ended 31 December 2011
At start of year as previously reported
Prior year adjustment (Note 32)
At start of year as restated
Share capital
TZS’Millions
12,900
-
Regulatory
and other
Retained
reserves
earnings
TZS’Millions TZS’Millions
13,076
51,842
(598)
Total
TZS’Millions
77,818
(598)
12,900
13,076
51,244
77,220
Profit for the year
Other comprehensive income:
Gain on fair valuation of available for sale
financial assets
Exchange differences on translation of foreign
operations
-
-
12,445
12,445
-
4,366
-
4,366
-
8
-
8
Total comprehensive income
-
4,374
12,529
16,819
Transfer to regulatory reserve
-
1,419
(1,419)
-
(4,726)
(4,726)
Transaction with owners:
Payment of dividend for 2010
At end of year
12,900
18,869
57,544
89,313
Year ended 31 December 2012
At start of year as previously reported
Prior year adjustment (Note 32)
12,900
-
18,869
-
58,226
(682)
89,995
(682)
12,900
-
18,869
-
57,544
13,667
89,313
13,667
-
6,203
-
6,203
-
244
-
244
Total comprehensive income
-
6,447
13,667
20,114
Transfer to regulatory reserve
-
6,378
(6,378)
-
12,900
31,694
64,833
109,427
At start of year as restated
Profit for the year
Other comprehensive income:
Gain on fair valuation of available for sale
financial assets
Exchange differences on translation of foreign
operations
At end of year
48
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENT OF CHANGES IN EQUITY - COMPANY
Year ended 31 December 2011
At start of year as previously reported
Regulatory
and other
Retained
Share capital
reserves
earnings
TZS’Millions TZS’Millions TZS’Millions
Total
TZS’Millions
12,900
12,592
50,217
75,709
-
-
(598)
(598)
12,900
12,592
49,619
75,111
-
-
14,072
14,072
Gain on fair valuation of available for sale
financial assets
-
4,366
-
4,366
Total comprehensive income
-
4,366
14,072
18,438
Transfer to regulatory reserve
-
1,259
(1,259)
-
Transaction with owners:
Payment of dividend for 2010
-
-
(4,726)
(4,726)
12,900
18,217
57,706
88,823
12,900
-
18,217
-
58,388
(682)
89,505
(682)
12,900
-
18,217
-
57,706
12,936
88,823
12,936
-
6,203
-
6,203
Total comprehensive income
-
6,203
12,936
19,139
Transfer to regulatory reserve
-
5,945
(5,945)
-
12,900
30,365
64,697
107,962
Prior year adjustment (Note 32)
At start of year as restated
Profit for the year
Other comprehensive income:
At end of year
Year ended 31 December 2012
At start of year as previously reported
Prior year adjustment (Note 32)
At start of year as restated
Profit for the year
Other comprehensive income:
Gain on fair valuation of available for sale
financial assets
At end of year
49
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Group
2012
Note TZS’Millions
Interest receipts
Restated
Group
Company
2011
2012
TZS’Millions TZS’Millions
Restated
Company
2011
TZS’Millions
81,523
60,325
79,086
57,737
(33,746)
(23,193)
(33,202)
(22,655)
17,526
15,004
15,066
13,663
4,293
6,747
3,259
5,820
(42,753)
(34,479)
(38,200)
(29,753)
1,091
786
1,091
786
Income tax paid
(6,130)
(6,277)
(6,130)
(6,277)
Cash flows from operating activities before
changes in operating assets and liabilities
21,804
18,913
20,970
19,441
(10,572)
(85,004)
(5,181)
(81,741)
(9,896)
(19,221)
(7,285)
(14,030)
(49,211)
(19,714)
(49,211)
(19,714)
775
1,425
(587)
2,183
100,333
65,115
92,735
54,727
4,073
37,654
(7,592)
35,855
82
(31)
82
(31)
- other liabilities
(1,059)
1,388
1,028
1,321
Net cash generated from /
(utilized in) operating activities
56,330
525
42,903
(1,989)
Interest payments
Net fee and commission receipts
Other income received
Payments to employees and suppliers
Dividends received
Changes in operating assets and liabilities:
- loans and advances
- cash reserve requirement
- Government securities
- other assets
- customer deposits
- bank deposits
- Investment securities held to maturity
50
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
STATEMENTS OF CASH FLOWS (continued)
Investing activities
Group
2012
Note TZS’Millions
Restated
Group
Company
2011
2012
TZS’Millions TZS’Millions
Restated
Company
2011
TZS’Millions
Purchase of equipment
19
(6,389)
(2,733)
(5,262)
(1,855)
Purchase of intangible assets
20
(500)
(692)
(273)
(692)
13
-
13
-
Investment in subsidiary-Exim Bank Djibouti
-
-
(2,211)
-
Investment securities available for sale
-
(600)
-
(600)
(6,876)
(4,025)
(7,733)
(3,147)
-
15,825
-
15,825
-
(4,726)
-
(4,726)
(3,436)
(4,247)
(3,054)
(4,247)
(3,436)
6,852
(3,054)
6,852
145,787
142,435
140,165
138,449
Net cash generated from /(used in)
operating activities
56,330
525
42,903
(1,989)
Net cash used in investing activities
(6,876)
(4,025)
(7,733)
(3,147)
Net cash generated from/(used in)financing
activities
(3,436)
6,852
(3,054)
6,852
191,805
145,787
172,281
140,165
Proceeds from sale of equipment
Net cash used in investing activities
Financing activities
Proceeds from subordinated debts
26
Dividends paid
Repayment of senior loans and subordinated debts
26
Net cash flow generated from /
(used in) financing activities
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
30
51
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES
1
GENERAL INFORMATION
The Bank is a limited liability company and is incorporated and domiciled in United Republic of Tanzania.The address of
its registered office is:
Exim Tower,
1404/45, Ghana Avenue,
Dar-es-Salaam, Tanzania
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).
The measurement basis applied in the preparation of these financial statements is the historical cost basis, except where
otherwise stated in the accounting policies below.The financial statements are presented in Tanzania Shillings (TZS) and
the amounts are rounded to the nearest million, except where otherwise indicated.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates
and assumptions. It also requires management to exercise its judgement in the process of applying the Bank’s accounting
policies.The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed in Note 4.
(i) Amended standards which became effective during the year
There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on
1 January 2012 that would be expected to have a material impact on the Group.
(ii) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the Group
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning
after 1 January 2012, and have not been applied in preparing these financial statements. None of these is expected to
have a significant effect on the financial statements of the Bank, except the following set out below:
Exim Bank Limited (the Bank or Company used interchangeably) and its subsidiaries (together, the Group) provide
retail and corporate banking services in United Republic of Tanzania, The Union of Comores and The Republic of
Djibouti.
The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied in all the years presented, unless otherwise stated.
52
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) Basis of preparation (continued)
Amendment to IAS 1, ‘Presentation of Financial Statements’ regarding other comprehensive income. The main change
resulting from these amendments is a requirement for entities to group items presented in ‘other comprehensive
income’ (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification
adjustments). The amendments do not address which items are presented in OCI. The application of this amendment
will mainly impact the presentation of the primary statements. The amendment is effective for periods beginning on or
after 1 July 2012.
IFRS 13, ‘Fair value measurement’, aims to improve consistency and reduce complexity by providing a precise definition
of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The
requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting
but provide guidance on how it should be applied where its use is already required or permitted by other standards
within IFRSs or US GAAP. The application of IFRS 13 may enhance fair value disclosures in a lot of circumstances. The
standard is effective for periods beginning on or after 1 January 2013.
IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial
liabilities. Issued in November 2009 and October 2012, it replaces the parts of IAS 39 that relate to the classification
and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement
categories: those measured at fair value and those measured at amortised cost. The determination is made at initial
recognition. The classification depends on the entity’s business model for managing its financial instruments and the
contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39
requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a
fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income
statement, unless this creates an accounting mismatch. The directors are yet to assess IFRS 9’s full impact and intend to
adopt IFRS 9 no later than the accounting period beginning on or after 1 January 2015.
(ii) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the bank (continued)
IFRS 10, Consolidated financial statements’, builds on existing principles by identifying the concept of control as the
determining factor in whether an entity should be included within the consolidated financial statements of the parent.
The standard provides additional guidance to assist in the determination of control where this is difficult to assess.
The directors are yet to assess IFRS 10’s full impact and intends to adopt IFRS 10 no later than the accounting period
beginning on or after 1 January 2013.
IFRS 12, ‘Disclosures of interests in other entities’, includes the disclosure requirements for all forms of interests in
other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles.
The directors are yet to assess IFRS 12’s full impact and intends to adopt IFRS 12 no later than the accounting period
beginning on or after 1 January 2013.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material
impact on the Group and the Bank.
53
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Consolidation
The financial statements of the subsidiaries used to prepare the group financial statements were prepared as of the
parent’s reporting date. The consolidation principles are unchanged as against the previous year.
A subsidiary is an entity over which the Group has the power to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing whether the Group controls another
entity.A subsidiary is fully consolidated from the date on which control is transferred to the Group. It is de-consolidated
from the date on which control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed
at the date of exchange, plus costs directly attributable to the acquisition.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred.
(c) Interest income and expense
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and
of allocating the interest income or interest expense over the relevant period.The effective interest rate is the rate that
exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or,
when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. The calculation
includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate,
transaction costs and all other premiums or discounts.
Once a financial asset or group of similar financial assets has been written down as a result of an impairment loss,
interest income is recognised using the rate of interest that was used to discount the future cash flows for the purpose
of measuring the impairment loss.
(d) Fees and commission income
Subsidiaries
Interest income and expense for all interest bearing financial instruments are recognised within interest income or
interest expense in profit or loss for all interest bearing instruments measured at amortised cost using the effective
interest method.
Fees and commissions are generally recognised on an accrual basis when the service has been provided. Loan commitment
fees for loans that are likely to be drawn down are deferred (together with related direct costs) and recognised as an
adjustment to the effective interest rate on the loan.
54
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e) Dividend income
Dividends are recognized in profit or loss in ‘Dividend income’ when the entity’s right to receive payment is
established.
(f) Translation of foreign currencies
Transactions in foreign currencies during the year are converted into the Tanzania Shillings using the exchange rates
prevailing at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in profit or loss.
The results and financial position of the subsidiary which has a functional currency different from the presentation
currency are translated into the presentation currency as follows:
? Assets and liabilities are translated at the closing rate at the date of the balance sheet;
? Income and expenses are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the date of the transactions); and
? All resulting exchange differences except those arising from intra-group monetary assets or liabilities are
recognised as a separate component of equity. Those arising from intra-group monetary assets and liabilities are
recognised in profit or loss for the year.
(g) Financial assets
(i) Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit
or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the
short term or if so classifying eliminates or significantly reduces a measurement inconsistency. Derivatives are also
categorised as held for trading.
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the functional currency). The financial statements are
presented in Tanzania Shillings which is the Company’s functional and presentation currency.
The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss;
loans and receivables; held-to-maturity financial assets; and available-for-sale financial assets. Management determines
the appropriate classification of its financial assets at initial recognition.The Bank uses trade date accounting for regular
way contracts when recording financial asset transactions.
55
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g) Financial assets (continued)
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They arise when the company provides money, goods or services directly to a debtor with no intention
of trading the receivable.
(iii) Held-to maturity
Held-to-maturity assets are non-derivative financial assets with fixed or determinable payments and fixed maturities
that management has the positive intention and ability to hold to maturity. Were the company to sell more than an
insignificant amount of held-to-maturity assets, the entire category would have to be reclassified as available for sale.
(iv) Available-for-sale
Available for sale investments are those intended to be held for an indefinite period of time, which may be sold in
response to needs for liquidity or changes in interest rates, exchange rates or equity prices.
(ii) Loans and receivables
(v) Recognition of financial assets
Purchases and sales of financial assets at fair value through profit or loss, held-to-maturity and available-for-sale are
recognised on the trade-date – the date on which the Group commits to purchase or sell the asset. Financial assets
are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit
or loss. Financial assets carried at fair value through profit and loss are initially recognised at fair value, and transaction
costs are expensed in profit or loss.
(vi) Subsequent measurement on financial assets
In subsequent periods, loans and receivables and held-to-maturity assets are carried at amortised cost using the effective
interest method. Available-for-sale financial assets and financial assets at fair value through profit or loss are carried at
fair value. Gains and losses arising from changes in the fair value of ‘financial assets at fair value through profit or loss’
are included in profit or loss in the period in which they arise. Gains and losses arising from changes in the fair value
of available-for-sale financial assets are recognised directly in equity until the financial asset is derecognised or impaired,
at which time the cumulative gain or loss previously recognised in equity is recognised in the profit or loss account.
However, interest calculated using the effective interest method is recognised in profit or loss. Dividends on availablefor-sale equity instruments are recognised in profit or loss when the Bank’s right to receive payment is established.
(vii) Derecognition of financial assets
Financial assets are derecognised when the contractual rights to receive cash flows from the financial assets have
expired or where the Group has transferred substantially all risks and rewards of ownership.
56
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(h) Financial liabilities
The Group holds financial liabilities at amortised cost at fair value through profit or loss. Financial liabilities are initially
recognised at fair value. Subsequent to initial recognition all financial liabilities other than derivatives are measured
at amortized cost. Derivatives are initially recognized and subsequently measured at fair value.Financial liabilities are
derecognised when extinguished.
Financial liabilities measured at amortised cost are deposits from banks or customers, senior debts and subordinated
debts.
(i) Classes of financial assets and liabilities
The Bank classified the financial assets and liabilities into classes that reflect the nature of information and take into
account the characteristics of those financial instruments. The classification made can be seen in the table as follows:
Financial assets
Cash and balances with Central Banks
Loans and advances banks
Loans and advances to customers
Government securities held to maturity
Investment securities - held to maturity
Investment securities – available for sale
Derivative assets
Other assets excluding prepayments
Category
Loans and receivables
Loans and receivables
Loans and receivables
Held to maturity
Held to maturity
Available for sale
Financial assets at fair value through profit or loss
Loans and receivables
Financial liabilities
Deposits from banks
Deposits from customers
Other liabilities
Derivative liabilities
Financial liabilities at amortized cost
Financial liabilities at amortized cost
Financial liabilities at amortized cost
Financial liabilities at fair value through profit or loss
(j) Impairment of financial assets
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group
of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are
incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after
initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future
cash flows of the financial asset or group of financial assets that can be reliably estimated.
57
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(j) Impairment of financial assets (continued)
(i) Assets carried at amortised cost
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
?
?
?
?
?
?
The estimated period between a loss occurring and its identification is determined by management for each identified
portfolio. In general, the periods used vary between three months and twelve months; in exceptional cases, longer
periods are warranted.
The Group assesses whether objective evidence of impairment exists individually for all financial assets that are
individually significant.
If the Group determines that no objective evidence of impairment exists for an individually assessed financial assets,
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
impairment loss is or continues to be recognised are not included in a collective assessment of impairment.
The amount of the loss is measured as the difference between the assets carrying amount and the present value of
estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial
asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of a provision
account and the amount of the loss is recognised in profit or loss.
When a loan is uncollectible, it is written off against the related provision for loan impairment. Such loans are written
off after all the necessary procedures have been completed and the amount of the loss has been determined.
If, in subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to
an event occurring after the impairment was recognised (such as an improvement in the debtors credit rating), the
previously recognised impairment loss is revised by adjusting the provision account. The amount of the reversal is
recognised in profit or loss in impairment charge for credit losses.
Delinquency in contractual payments of principal or interest;
Cash flow difficulties experienced by the borrower;
Breach of loan covenants or conditions;
Initiation of bankruptcy proceedings;
Deterioration of the borrower’s competitive position; and
Deterioration in the value of collateral.
58
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(j) Impairment of financial assets (continued)
(ii) Assets carried at fair value
In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the
security below its cost is considered in determining whether the assets are impaired. If any such evidence exists for
available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the
current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed
from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are
not reversed through the profit and loss account. If, in a subsequent period, the fair value of a debt instrument classified
as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss
was recognised in profit or loss, the impairment loss is reversed through the profit and loss account.
(k) Derivative financial instruments
Derivatives are initially recognized at fair value on the date on which a derivative contract is entered into and are
subsequently remeasured at their fair value. Fair values are obtained from valuation techniques (for example for swaps
and currency transactions), including discounted cash flow models and options pricing models, as appropriate. All
derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.
(l) Property and equipment
Property and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of these assets.
Depreciation is calculated on the straight line basis to write down their cost to their residual values over their
estimated useful lives, as follows:
Applicable rate
Buildings
Leasehold premises
Motor vehicles
Office equipment
Computer hardware
Furniture and fittings
4%
11%
25%
15% - 20%
25%
15%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
59
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(l) Property and equipment (continued)
Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units).
Gains and losses on disposal of property and equipment are determined by comparing proceeds with their carrying
amount and are taken into account in determining operating profit.
(m) Intangible assets
Intangible assets comprise computer software licences and are recognised at cost. Intangible assets with a definite useful
life are amortised using the straight-line method over their estimated useful economic life, generally not exceeding 4
years.The Bank chooses to use the cost model for the measurement after recognition. Costs associated with maintaining
computer software programmes are recognised as an expense as incurred.
ProvisionsProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a
reliable estimate of the amount of the obligation can be made.
(o) Income tax
Income tax expense is the aggregate of the charge to the profit and loss account in respect of current income tax and
deferred income tax.
Current income tax is the amount of income tax payable on the taxable profit for the year determined in accordance
with the Tanzanian Income Tax Act.
Deferred income tax is provided in full, using the liability method, for all temporary differences arising between the tax
bases of assets and liabilities and their carrying values for financial reporting purposes. However, if the deferred income
tax arises from the initial recognition of an asset or liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor taxable profit nor loss, it is not accounted for. Deferred
income tax is determined using tax rates and laws that have been enacted or substantively enacted at the balance sheet
date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profits will be
available against which temporary differences can be utilised.
60
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(p) Cash and cash equivalents
(q) Employee benefits
The Bank and all its employees contribute to the National Social Security Fund (NSSF), which is a defined contribution
scheme. A defined contribution plan is a scheme under which the Bank pays fixed contributions into a separate entity
(NSSF). The Bank has no legal or constructive obligation to pay further contributions if the Fund does not have sufficient
assets to pay the employees post employment benefits. Employees contribute 10% and the Bank also contributes 10%
to the scheme. The Bank’s contributions to the defined contribution schemes are charged to profit or loss in the year
to which they relate.
(ii) Other entitlements
The estimated monetary liability for employees’ accrued annual leave entitlement at the balance sheet date is recognised
as an expense accrual.
(r) Share capital
Ordinary shares are classified as ‘share capital’ in equity.
(s) Borrowings
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid
investments with maturities of three months or less, including: cash and balances with Central Banks, Government
Securities with original maturities of 90 days or less and loans and advances to banks. Cash and cash equivalents
excludes the cash reserve requirement held with the Central Banks.
(i) Retirement benefit obligations
Borrowings are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of
transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between proceeds net
of transaction costs and the redemption value is recognised in profit or loss over the period of the borrowings using
the effective interest method.
(t) Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset
and settle the liability simultaneously.
61
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(u) Dividends on distribution
(v) Acceptances and letters of credit
Dividend distribution to the Bank’s shareholders is recognized as a liability in the Group’s financial statements in the
period in which the dividends are approved by the Bank’s shareholders.
Acceptances and letters of credit are accounted for as off-balance sheet transactions and disclosed as contingent
liabilities.
(w) Accounting for leases
Leases of assets are classified as operating leases if the lessor effectively retains all the risks and benefits. Payments made
under operating leases are charged to profit or loss on a straight-line basis over the period of the lease, unless another
systematic basis is more representative of the time pattern in which the benefit is derived from the leased asset.
(x) Comparatives
Except when a standard or an interpretation permits or requires otherwise, all amounts are reported or disclosed
with comparative information. Where necessary, comparative figures have been adjusted to conform to changes in
presentation in the current year.
62
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT
3.1 Credit Risk
3.1.1 Credit Risk Measurement
In measuring credit risk of loan and advances to customers and to banks at a counterparty level, the Group and
Company reflects three components (i) the ‘probability of default’ by the client or counterparty on its contractual
obligations and (ii) current exposures to the counterparty and its likely future development, from which the Group
derives the ‘exposure at default’.
These credit risk measurements, which reflect expected loss (the ‘expected loss model’), are embedded in the Banks’
daily operational management. The operational measurements can be contrasted with impairment allowances required
under IAS 39, which are based on losses that have been incurred at the balance sheet date (the ‘incurred loss model’)
rather than expected losses.
(i)
Group’s internal ratings scale
Group’s rating
Description of the grade
1
2
3
4
5
Current
Especially Mentioned
Sub-standard
Doubtful
Loss
(ii) Exposure at default is based on the amounts the Group or Company expects to be owed at the time of default.
For example, for a loan this is the face value. For a commitment, the Group and Company include any amount
already drawn plus the further amount that may have been drawn by the time of default, should it occur.
(a) Loans and advances
The Group and Company assesses the probability of default of individual counterparties using internal rating tools
tailored to the various categories of counterparty in line with the Bank of Tanzania (BOT) guidelines. Customers
of the Banks’ are segmented into five rating classes. The Group’s rating scale, which is shown below, reflects the
range of default probabilities defined for each rating class. This means that, in principle, exposures migrate
between classes as the assessment of their probability of default changes.
63
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk
3.1.2 Risk Limit Control and Mitigation Policies
The exposure to any one borrower including banks is further restricted by sub-limits covering on- and off-balance sheet
exposures. Actual exposures against limits are monitored daily. Exposure to credit risk is also managed through regular
analysis of the ability of borrowers and potential borrowers to meet interest and capital repayment obligations and by
changing these lending limits where appropriate.
Some other specific control and mitigation measures are outlined below.
The Group and Company employ a range of policies and practices to mitigate credit risk. The most traditional of these
is the taking of security for funds advanced, which is common practice.The Group and Company implements guidelines
on the acceptability of specific classes of collateral or credit risk mitigation. The principal collateral types for loans and
advances are:
The Group and Company manage limits and control concentrations of credit risk wherever they are identified in
particular, to individual counterparties and groups, and to industries. The Group and Company structure the levels of
credit risk they undertake by placing limits on the amount of risk accepted in relation to one borrower, or groups of
borrowers, and to industry segments. Such risks are monitored on a revolving basis and subject to an annual or more
frequent review, when considered necessary.
(a) Collateral
? Mortgages over residential properties;
? Charges over business assets such as premises, inventory and accounts receivable;
? Charges over financial instruments such as debt securities and equities.
Longer-term finance and lending to corporate entities are generally secured; revolving individual credit facilities are
generally unsecured. In addition, in order to minimise the credit loss the Group and Company will seek additional
collateral from the counterparty as soon as impairment indicators are noticed for the relevant individual loans and
advances.
64
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.2 Risk Limit Control and Mitigation Policies (continued)
(b) Credit-related commitments
The primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees
and standby letters of credit carry the same credit risk as loans. Documentary and commercial letters of credit – which
are written undertakings on behalf of a customer authorising a third party to draw drafts on a bank up to a stipulated
amount under specific terms and conditions – are collateralised by the underlying shipments of goods to which they
relate and therefore carry less risk than a direct loan.
Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans,
guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Group and Company
is potentially exposed to loss in an amount equal to the total unused commitments.
However, the likely amount of loss is less than the total unused commitments, as most commitments to extend credit
are contingent upon customers maintaining specific credit standards. The Group and Company monitors the term to
maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than
shorter-term commitments.
(c) Lending limits (for derivatives and loan book)
The Group and Company maintain strict control limits on net derivative positions (i.e difference between purchases and
sales contracts), by both amount and term. At any one time, the amount subject to credit risk is limited to the current
fair value of instruments that are favourable to the Group and Company (i.e assets where their fair value is positive),
which in relation to derivatives is only a small fraction of the contract, or notional values used to express the volume
of instruments outstanding. This credit risk exposure is managed as part of the overall lending limits with customers,
together with potential exposures from market movements. Collateral or other security is not usually obtained for
credit risk exposures on these instruments, except where the Bank requires margin deposits from counterparties.
Settlement risk arises in any situation where a payment in cash, securities or equities is made in the expectation of a
corresponding receipt in cash, securities or equities. Daily settlement limits are established for each counterparty to
cover the aggregate of all settlement risk arising from the Bank’s market transactions on any single day.
3.1.3 Impairment and provisioning policies
The internal rating system described in Note 3.1.1 focus more on credit-quality mapping from the inception of the
lending and investment activities. In contrast, impairment provisions are recognised for financial reporting purposes
only for losses that have been incurred at the balance sheet date based on objective evidence of impairment. Due
to the different methodologies applied, the amount of incurred credit losses provided for in the financial statements
are usually lower than the amount determined from the expected loss model that is used for internal operational
management and banking regulation purposes.
65
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.3 Impairment and provisioning policies
The impairment provision shown in the balance sheet at period-end is derived from each of the five internal rating
grades. However, the majority of the impairment provision generally comes from the bottom two grades. The table
below shows the percentage of the Bank’s on balance sheet items relating to loans and advances and the associated
impairment provision for each of the Bank’s internal rating categories:
31 December 2012
31 December 2011
Loans and
advances
(%)
Impairment
provision
(%)
Loans and
advances
(%)
Impairment
provision
(%)
92.12
-
95.13
-
2. Especially Mentioned
0.75
-
0.31
0.43
3. Sub-standard
0.59
4.18
0.92
2.55
4. Doubtful
1.28
15.33
0.21
2.78
5. Loss
5.25
79.87
3.43
94.24
100.00
100.00
100.00
100.00
Bank’s rating
1. Current
The internal rating tool assists management to determine whether objective evidence of impairment exists under IAS
39, based on the following criteria set out by the Group and Company:
? Delinquency in contractual payments of principal or interest;
? Cash flow difficulties experienced by the borrower
? Breach of loan covenants or conditions;
? Initiation of bankruptcy proceedings;
? Deterioration of the borrower’s competitive position; and
? Deterioration in the value of collateral.
The Group’s and Company’s policy requires the review of individual financial assets that are above materiality thresholds
at least annually or more regularly when individual circumstances require. Impairment allowances on individually
assessed accounts are determined by an evaluation of the incurred loss at balance-sheet date on a case-by-case basis,
and are applied to all individually significant accounts. The assessment normally encompasses collateral held (including
re-confirmation of its enforceability) and the anticipated receipts for that individual account.
66
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.4 Loans and advances
Loans and advances are summarised as follows:
Group
(Amounts are in TZS’ Million)
31 December 2011
31 December 2012
Loans and
advances to
customers
Amounts
due from
banks
Loans and
advances to
customers
Amounts
due from
banks
409,093
132,202
416,884
121,686
3,824
-
1,915
-
42,410
-
23,444
-
Gross
455,327
132,202
442,243
121,686
Less: Allowances for impairment
(19,729)
-
(14,211)
-
Net
435,598
132,202
428,032
121,686
401,090
120,833
Neither past due nor impaired
Past due but not impaired
Impaired
Company
Neither past due nor impaired
389,096
127,261
Past due but not impaired
3,249
-
1,354
-
37,527
-
19,686
-
Gross
429,872
127,261
422,130
120,833
Less: Allowances for impairment
(19,272)
-
(13,861)
Net
410,600
127,261
408,269
Impaired
120,833
The total impairment provision for loans and advances represents both individually impaired loans and loans assessed
on a portfolio basis. Further information of the impairment allowance for loans and advances to customers is provided
in Note 15.
During the year ended 31 December 2012, the Bank’s total net loans and advances increased by 0.5% (2011: 24%) while
the Group’s total net loans and advances increased by 1.8% (2011: 24%). When entering into new markets, in order to
minimise the potential increase of credit risk exposure, the Bank focused more on the business with large corporate
enterprises or banks with good credit rating or retail customers providing sufficient collateral.
67
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.4 Loans and advances (continued)
(a) Loans and advances neither past due nor impaired
Group
The portfolio of loans and advances that were neither past due nor impaired are classified as current. These fall into the
following categories: (Amounts in TZS’ Millions)
Loans and advances to customers
Advances
to banks
31 December 2012
MSE’s
Consumer
SMEs Corporate
Total
Total
Grades
Current
-
33,481
114,497
261,115
409,093
132,202
-
18,222
166,206
235,669
416,884
121,686
-
31,690
107,970
249,435
389,095
127,261
-
16,544
156,687
227,859
401,090
120,833
31 December 2011
Grades
Current
Company
Grades
Current
31 December 2011
Grades
Current
68
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.4 Loans and advances (continued)
(b) Loans and advances past due but not impaired
Loans and advances less than 90 days past due are not considered impaired, unless other information is available
to indicate the contrary. Gross amount of loans and advances by class to customers that were past due but not
impaired were as follows:
Group
(Amounts in TZS’ Millions)
MSE’s
SMEs
Corporate
Total
-
1,337
2,487
3,824
36
505
1,374
1,915
31 December 2012
Grades
Up to 90 days
31 December 2011
Grades
Up to 90 days
(a) Loans and advances neither past due nor impaired
Company
(Amounts in TZS’ Millions)
MSE’s
SMEs
Corporate
Total
-
1,035
2,214
3,249
13
480
861
1,354
31 December 2012
Grades
Up to 90 days
31 December 2011
Grades
Up to 90 days
69
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.4 Loans and advances (continued)
(b) Impaired loans and advances
The amount of individually impaired loans and advances to customers before taking into consideration the cash flows
from collateral held is TZS 42,410 million (December 2011: TZS 23,444 million). The breakdown of the gross amount
of individually impaired loans and advances by class are as follows:
Group
31 December 2012
(Amounts in TZS Millions)
SME’s
Consumer
SME’s
Corporate
Total
31 December 2011
-
6,143
12,563
23,704
42,410
Impaired loans
-
3,764
6,924
12,756
23,444
SME’s
Consumer
SME’s
Corporate
Total
-
6,043
10,722
20,762
37,527
627
3,474
5,604
10,608
19,686
Impaired loans
Company
31 December 2012
Impaired loans
31 December 2011
Impaired loans
There were no individually impaired loans and advances to banks as at 31 December 2012 (2011: Nil). No collateral is
held by the Group and Company and no impairment provision has been provided against the gross amount.
3.1.5 Investment Securities
The investment securities held by the Group and Company comprise treasury bills issued by the Government, ALAF
bond, Standard Chartered Bond,Tanzania Breweries Bond,Tanzania Oxygen Limited shares (TOL), National Microfinance
Bank Plc (NMB) shares and Tanzania Mortgage Refinancing Company (TMRC)’s shares. Except for TOL shares which
are impaired, other investments were considered to be neither past due nor impaired. These investment securities are
held with the Government or institutions with good financial standing and no history of default.
3.1.6 Concentration of risks of financial assets with credit risk exposure
The following tables break down the Group’s and Company’s main credit exposure at their carrying amounts, as
categorised by industry sector and geographical sectors as of 31 December 2012 and 31 December 2011.
70
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Group
(a) Industry sectors
Financial
institution
(Amounts are in TZS’ Million)
Trading Transport Wholesale
Manu- and comand com- and retail
facturing
mercial munication
trade
Agriculture
Individuals
Others
Total
Balances with Central Banks
116,882
-
-
-
-
-
-
- 116,882
Loans and advances to banks
132,202
-
-
-
-
-
-
- 132,202
Government securities held to
maturity
185,148
-
-
-
-
-
- 185,148
511
3,076
-
-
-
-
-
-
3,587
- Personal loans
-
-
-
-
10,657
79
22,397
6,293
39,426
- Commercial loans
-
-
-
-
1,840
-
1,840
2
82,133
35,728
29,912
2,256
32,639
-
1,943
15,217
14,406
11,400
9,620
6,608
-
35,839
95,033
-
-
-
-
-
-
-
10,060
10,060
Investment securities held to
maturity
Loans and advances to customers:
Loans to individuals:
Loans to corporate entities:
- Corporate customers
- SMEs
Other assets
Derivative assets
As at 31 December 2012
116,629 299,299
108
108
436,796 100,426 50,134
41,312
22,533 39,326 24,237 168,821 883,585
Credit risk exposures relating to
Off-balance sheet items are as
follows:
Financial guarantees andacceptances
4,518
18
25,056
534
10
10
-
30,790
60,935
Loan commitments and other credit
related obligations
148
5,925
12,490
741
1,916
504
2,746
7,487
31,957
5,943 37,546
1,275
1,926
514
2,746
38,277
92,893
As at 31 December 2012
4,666
71
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Group (continued)
(b) Industry sectors (continued)
(Amounts are in TZS’ Million)
Financial
institutions
Manufacturing
Trading
and commercial
Transport
and communication
Balances with Central Banks
84,349
-
-
-
-
Loans and advances to banks
121,686
-
-
-
Government securities held to
maturity
134,718
-
-
448
3,138
- Personal loans
-
- Commercial loans
Investment securities held to
maturity
Wholesale
and retail
Agritrade culture
Individuals
Others
Total
-
-
-
84,349
-
-
-
-
121,686
-
-
-
-
-
134,718
-
-
-
-
-
-
3,669
-
-
-
-
-
4,160
-
4,160
-
-
-
-
-
-
-
16,759
16,759
2
101,445
76,302
992
6,596 34,314
-
61,761
247,406
3,353
16,306
58,680
21,482
7,721
6,476
-
47,654
159,707
-
-
-
-
-
-
-
9,827
9,827
342,679
86,878
134,982
22,474
Loans and advances to customers:
Loans to individuals:
Loans to corporate entities:
- Corporate customers
- SMEs
Other assets
As at 31 December 2011
14,317 40,790 4,160 159,707 782,281
Credit risk exposures relating to off-balance sheet items are as follows:
Financial guarantees and
acceptances
4,096
-
29,619
1,836
-
-
1,483
-
37,034
Loan commitments and other
credit related obligations
713
-
23,255
-
-
-
-
-
23,968
As at 31 December 2011
4,809
52,874
1,836
72
1,483-
61,002
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Company
(a) Industry sectors
Financial
Manuinstitution facturing
(Amounts are in TZS’ Million)
Trading Transport Wholesale
and comand com- and retail
mercial munication
trade
Agriculture
Individuals
Others
Total
91,012
Balances with Central Banks
91,012
-
-
-
-
-
-
-
Loans and advances to banks
127,261
-
-
-
-
-
-
- 127,261
Government securities held to
maturity
185,148
-
-
-
-
-
-
- 185,148
511
3,076
-
-
-
-
-
-
3,587
Investment securities held to
maturity
Loans and advances to customers:
-
Loans to individuals:
-
- Personal loans
-
-
-
-
10,657
79
21,964
6,293
38,993
- Commercial loans
-
-
-
-
-
-
-
-
-
2
82,133
25,179
28,730
2,256
32,639
-
1,944
15,217
9,388
11,044
9,620
6,608
-
33,954
87,775
-
-
-
-
-
-
-
9,183
9,183
405,878 100,426
34,567
39,774
Loans to corporate entities:
- Corporate customers
- SMEs
Other assets
As at 31 December 2012
112,893 283,832
22,533 39,326 21,964 162,327 826,791
Credit risk exposures relating to
Off-balance sheet items are as
follows:
Financial guarantees and acceptances
4,518
18
25,035
534
10
10
-
30,790
60,915
Loan commitments and other credit
related obligations
148
5,925
5,586
741
1,916
504
2,746
7,487
25,053
4,666
5,943
30,621
1,275
1,926
514
2,746
38,277
85,968
As at 31 December 2012
73
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure (continued)
(a) Industry sectors (continued)
Financial
Manuinstitutions facturing
(Amounts are in TZS’ Million)
Trading
and commercial
Transport Wholesale
and com- and retail
munication
trade
Agriculture
Individuals
Others
Total
Balances with Central Banks
69,930
-
-
-
-
-
-
-
69,930
Loans and advances to banks
120,833
-
-
-
-
-
-
-
120,833
Government securities held to
maturity
134,718
-
-
-
-
-
-
-
134,718
538
3,131
-
-
-
-
-
-
3,669
- Personal loans
-
-
-
-
-
-
3,259
-
3,259
- Commercial loans
-
-
-
-
-
-
-
16,759
16,759
67,441
66,339
-
6,596
34,314
-
59,868
234,558
1,388
16,306
54,160
21,482
7,721
6,476
-
46,160
153,693
-
-
-
-
-
-
-
8,546
8,546
86,878 120,499
21,482
Investment securities held to
maturity
Loans and advances to customers:
Loans to individuals:
Loans to corporate entities:
- Corporate customers
- SMEs
Other assets
As at 31 December 2011
327,407
14,317 40,790 3,259 131,333 745,965
Credit risk exposures relating to off-balance sheet items are as follows:
Financial guarantees and
acceptances
4,096
-
29,601
1,836
-
-
1,483
-
37,016
Loan commitments and other
credit related obligations
-
-
23,255
-
-
-
-
-
23,255
As at 31 December 2011
4,096
-
52,856
1,836
-
- 1,483
-
60,271
74
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Group
For these tables, the Group and Company have allocated exposures to regions based on the country of domicile of its
counterparties.
(b) Geographical sectors
(Amounts are in TZS Million)
Tanzania
Europe
America
Others
Total
Balances with Central Banks
91,012
-
-
25,869
116,881
Loans and advances to banks
32,342
5,449
82,794
11,617
132,202
185,148
-
-
-
185,148
3,587
-
-
-
3,587
-
-
-
-
-
-
-
-
-
-
35,557
-
-
270
35,827
-
-
-
2,003
2,003
-
-
-
-
-
Credit risk exposures relating to on-balance sheet bassets
are as follows
Government securities
Investment securities held to maturity
Loans and advances to customers:
Loans to individuals:
- Personal loans
- Commercial loans
Loans to corporate entities:
- Corporate customers
257,780
15,467
273,247
- SMEs
117,262
7,259
124,521
877
10,060
108
108
Other assets
9,183
-
-
Derivative assets
As at 31 December 2012
731,871
5,449
82,794
63,470
883,584
Financial guarantees and acceptances
60,915
-
-
20
60,935
Loan commitments and other credit related
obligations
25,053
-
-
6,904
31,957
85,968
-
-
6,924
92,892
Credit risk exposures relating to
Off-balance sheet items are as follows:
As at 31 December 2012
75
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Group (continue)
(b) Geographical sectors
(Amounts are in TZS Million)
Tanzania
Europe
America
Others
Total
Balances with Central Banks
69,930
-
-
14,419
84,349
Loans and advances to banks
50,459
15,032
39,798
16,397
121,686
134,718
-
-
-
134,718
3,669
-
-
-
3,669
-
-
-
-
-
-
-
-
-
-
3,259
-
-
901
4,160
16,759
-
-
-
16,759
-
-
-
-
-
- Corporate customers
234,558
-
-
12,848
247,406
- SMEs
153,693
-
-
6,014
159,707
8,546
-
-
1,281
9,827
675,591
15,032
39,798
51,860
782,281
Financial guarantees and acceptances
37,015
-
-
19
37,034
Loan commitments and other credit related
obligations
23,255
-
-
713
23,968
60,270
-
-
732
61,002
Credit risk exposures relating to on-balance sheet
bassets are as follows
Government securities
Investment securities held to maturity
Loans and advances to customers:
Loans to individuals:
- Personal loans
- Commercial loans
Loans to corporate entities:
Other assets
As at 31 December 2011
Credit risk exposures relating to
Off-balance sheet items are as follows:
As at 31 December 2011
76
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Company
(b) Geographical sectors
(Amounts are in TZS Million)
Tanzania
Europe
America
Others
Total
Balances with Central Banks
91,012
-
-
-
91,012
Loans and advances to banks
31,879
5,449
87,188
2,745
127,261
185,148
-
-
-
185,148
3,587
-
-
-
3,587
35,558
-
-
-
35,558
-
-
-
-
-
-
-
-
-
-
Credit risk exposures relating to on-balance sheet
bassets are as follows
Government securities
Investment securities held to maturity
Loans and advances to customers:
Loans to individuals:
- Personal loans
- Commercial loans
Loans to corporate entities:
- Corporate customers
257,780
257,780
- SMEs
117,262
117,262
Other assets
9,183
-
-
-
9,183
731,409
5,449
87,188
2,745
826,791
Financial guarantees and acceptances
60,915
-
-
-
60,915
Loan commitments and other credit related obligations
25,053
-
-
-
25,053
85,968
-
-
-
85,968
As at 31 December 2012
Credit risk exposures relating to
Off-balance sheet items are as follows:
As at 31 December 2012
77
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.1 Credit Risk (continued)
3.1.6 Concentration of risks of financial assets with credit risk exposure - Company (continued)
(b) Geographical sectors (continued)
(Amounts are in TZS’ Million)
Tanzania
Europe
America
Others
Total
Balances with Central Bank
69,930
-
-
-
69,930
Loans and advances to banks
54,660
9,977
39,798
16,398
120,833
134,718
-
-
-
134,718
3,669
-
-
-
3,669
3,259
-
-
-
3,259
16,759
-
-
-
16,759
- Corporate customers
234,558
-
-
-
234,558
- SMEs
153,693
-
-
-
153,693
8,546
-
-
-
8,546
679,792
9,977
39,798
16,398
745,965
Credit risk exposures relating to on-balance sheet
assets are as follows:
Government securities held to maturity
Investment securities held to maturity
Loans and advances to customers:
Loans to individuals:
- Personal loans
- Commercial loans
Loans to corporate entities:
Other assets
As at 31 December 2011
Credit risk exposures relating to off-balance sheet items are as follows:
Financial guarantees and acceptances
37,016
-
-
-
37,016
Loan commitments and other credit related
obligations
23,255
-
-
-
23,255
60,271
-
-
-
60,271
As at 31 December 2011
78
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk
The Group and Company take an exposure to market risks, which is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in market prices. Market risks arise from open positions in
interest rate, currency and equity products, all of which are exposed to general and specific market movements and
changes in the level of volatility of market rates or prices such as interest rates, credit spreads, foreign exchange rates
and equity prices.
The market risks arising from trading and non-trading activities are concentrated in the Group’s and Company’s
treasury department and monitored regularly. Regular reports are submitted to the Group and Company Assets and
Liability Committees (ALCO) and heads of department.
3.2.1 Foreign exchange risk
The Group and Company take on exposure to the effects of fluctuations in the prevailing foreign currency exchange
rates on its financial position and cash flows. ALCO sets limits on the level of exposure by currency and in aggregate
for both overnight and intra-day positions, which are monitored daily. With all other variables held constant, a shift
in foreign exchange rate by 5% on all US Dollar denominated assets and liabilities which is a major foreign currency
exposure to the Group would have resulted in lower or higher profit after tax of TZS 255 million as at 31 December
2012 (2011: TZS 764 million).
The tables below summarises the Group’s and Company’s exposure to foreign currency exchange rate risk at 31
December 2012. Included in the table are the Group’s and Company’s financial instruments at carrying amounts,
categorised by currency.
79
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.1 Foreign exchange risk (continued)
Group
Concentrations of currency risk – on- and off-balance sheet financial instruments. (All amounts expressed in million of
Tanzania Shillings).
As at 31 December 2012
USD
EURO
GBP
KMF Others
Total
Cash and balances with Central Banks
32,817
530
362
20,242
1,872
55,823
Loans and advances to banks
85,684
6,481
2,515
25
8
94,713
248,838
900
-
22,884
1,575
274,197
Derivative assets
-
-
-
108
-
108
Other assets
7
-
34
843
-
884
367,446
7,911
2,911
44,102
3,455
425,725
259,666
7,234
2,599
31,128
3,440
304,067
Deposits from banks
71,732
255
-
-
3,311
75,298
Subordinated debts and senior loans
26,095
3,853
-
-
-
29,948
9,375
194
278
152
49
10,048
366,868
11,536
2,877
31,280
6,800
419,361
478
(3,624)
34
12,822 (3,345)
(6,364)
8,622
-
-
Assets
Loans and advances to customers
Total financial assets
Liabilities
Deposits from customers
Other liabilities
Total financial liabilities
Net on-balance sheet
financial position
Credit commitments
80
6,925
-
15,547
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.1 Foreign exchange risk (continued)
(All amounts expressed in million of Tanzania Shillings)
As at 31 December 2011
USD
EURO
GBP
KMF Others
Total
7,698
668
358
11,403
-
20,127
78,451
24,628
1,239
8
116
104,442
232,973
-
-
18,996
-
251,969
1,275
-
-
232
-
1.507
320,397
25,296
1,597
30,639
116
378,045
242,364
8,277
2,667
26,290
-
279,598
Deposits from banks
48,177
4,695
423
4,341
-
57,636
Subordinated debts and senior loans
28,933
4,126
-
-
-
33,059
9,136
525
138
609
-
10,408
328,610
17,623
3,228
31,240
-
380,701
Net on-balance sheet
financial position
(8,213)
7,673
(1,631)
(601)
116
(2,656)
Off balance sheet commitments
30,044
130
5,704
713
-
36,591
Assets
Cash and balances with Central Banks
Loans and advances to banks
Loans and advances to customers
Other assets
Total financial assets
Liabilities
Deposits from customers
Other liabilities
Total financial liabilities
81
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.1 Foreign exchange risk (continued)
Company
Concentrations of currency risk – on- and off-balance sheet financial instruments. (All amounts expressed in million of
Tanzania Shillings).
As at 31 December 2012
USD
EURO
GBP
KMF Others
Total
Cash and balances with Central Banks
27,524
407
362
-
-
28,293
Loans and advances to banks
81,812
5,445
2,515
-
230
90,002
248,822
377
-
-
-
249,199
-
670
34
-
209
913
358,158
6,899
2,911
-
439
368,407
256,405
6,726
2,599
-
1
265,731
Deposits from banks
67,467
-
1
-
-
67,469
Subordinated debts and senior loans
26,095
-
-
-
-
26,095
9,301
194
278
-
1,551
11,324
359,268
6,920
2,878
-
1,552
370,619
(1,110)
(21)
33
- (1,113)
(2,212)
8,622
-
-
Assets
Loans and advances to customers
Other assets
Total financial assets
Liabilities
Due to customers
Other liabilities
Total financial liabilities
Net on-balance sheet
financial position
Credit commitments
82
-
-
8,622
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.1 Foreign exchange risk (continued)
(All amounts expressed in million of Tanzania Shillings)
As at 31 December 2011
USD
EURO
GBP
KES
KMF
Total
7,649
77,480
232,206
1,275
555
15,221
-
358
1,239
-
-
116
-
8,562
94,056
232,206
1,275
318,610
15,776
1,597
-
116
336,099
242,054
48,177
28,933
9,136
8,133
4,695
500
2,667
423
138
1,113
-
-
252,854
54,408
28,933
10,408
328,300
13,328
3,228
1,113
-
346,603
Net on-balance sheet
financial position
(9,690)
2,448
(1,631) (1,113)
116
(10,504)
Credit commitments
30,044
5,704
-
35,878
Assets
Cash and balances with Central Banks
Loans and advances to banks
Loans and advances to customers
Other assets
Total financial assets
Liabilities
Due to customers
Deposits from banks
Subordinated debts and senior loans
Other liabilities
Total financial liabilities
83
130
-
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.2 Price risk
The Group and Company are exposed to equity securities price risk because of its investment in listed shares classified
on the balance sheet as available for sale.
If the stock market price of shares had increased/decreased by 5% with all other variables held constant, the fair value
reserve in equity would have increased/decreased as a result of gains or losses on equity securities classified as available
for sale by TZS 946 million as at 31 December 2012 (2011:TZS 729 million).
3.2.3 Interest rate risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will
fluctuate because of changes in market interest rates. The Group and Company take on exposure to the effects of
fluctuations in the prevailing levels of market interest rates on both its fair value and cash flow risks. Interest margins
may increase as a result of such changes but may reduce losses in the event that unexpected movements arise. The
Group’s and Company’s Asset and Liability Committee (ALCO) sets limits on the level of mismatch of interest rate
repricing that may be undertaken, which is monitored daily by the Group and Company.
With all other variables held constant, a shift in interest rate by 100 basis points on all interest bearing assets and
liabilities would have resulted in lower or higher profit after tax of TZS 450 million as at 31 December 2012 (2011: TZS
406 million).
The table below summarises the Group’s and Company’s exposure to interest rate risks. It includes the Group’s and
Company’s financial instruments at carrying amounts, categorised by the earlier of contractual repricing or maturity
dates. The Group and Company do not bear any interest rate risk on off-balance sheet items.
84
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.3 Interest rate risk - Group (continued)
(Amounts are in TZS Million)
Non
Over 5 Interest
years bearing
Up to 1
month
1-3
months
3-12
month
1-5
years
Cash and balances with Central banks
-
-
-
-
-
143,686
143,686
Government securities held to maturity
-
1,213
62,490
47,669
73,776
76,482
37,318
12,423
-
-
5,979
132,202
101,502
50,982
94,026
160,371
28,717
-
435,598
-
-
-
-
-
26,933
26,933
149
-
-
3,438
-
-
3,587
Derivative assets
-
-
-
-
-
108
108
Other assets
-
-
-
-
-
10,060
10,060
178,133
89,513
168,939 211,478 102,493
186,766
937,322
41,486
13,592
30,930
-
-
-
86,008
158,364
122,895
196,586
12,031
153
232,705
722,734
Other liabilities
-
-
-
-
-
18,433
18,433
Subordinated debts and senior loans
-
-
1,089
28,859
-
-
29,948
Total financial liabilities
199,850
136,487
228,605
40,890
153
251,138
857,123
Total interest repricing gap
(21,717)
(46,974)
(59,666) 170,588 102,340
As at 31 December 2012
Total
Assets
Loans and advances to banks
Loans and advances to
customers
Investment securities available for sale
Investments securities held to maturity
Total financial assets
185,148
Liabilities
Deposits from Banks
Deposits from customers
85
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.3 Interest rate risk - Group (continued)
(Amounts are in TZS Million)
As at 31 December 2011
Up to 1
month
1-3
months
3-12
month
Non
1-5 Over 5 Interest
years
years bearing
Total
Assets
Cash and balances with Central banks
-
-
-
-
-
99,501
99,501
Government securities held to maturity
-
1,750
22,033
61,310
38,555
11,070
134,718
85,912
25,611
10,150
-
-
13
121,686
415,111
2,297
2,104
4,069
1,057
6,964
428,032
Investment securities available for sale
-
-
-
-
-
20,730
20,730
Investments securities held to maturity
-
-
-
3,500
-
169
3,669
Other assets
-
-
-
-
-
9,827
9,827
497,453
29,658
34,287
68,879 39,612 148,274
818,163
Loans and advances to banks
Loans and advances to customers
Total financial assets
Liabilities
Deposits from Banks
74,377
5000
2,510
-
-
-
81,887
388,409
3,738
20,424
1,470
-
203,218
617,259
Other liabilities
-
-
-
-
-
19,492
19,492
Subordinated debts and senior loans
-
-
3,231
29,802
-
26
33,059
26,165
31,272
- 222,736
751,717
Deposits from customers
Total financial liabilities
462,786
8,738
Total interest repricing gap
34,667
23,022
86
8,122
35,607 39,612
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.3 Interest rate risk - Company (continued)
(Amounts are in TZS Million)
As at 31 December 2012
Up to 1
month
1-3
months
3-12
month
Non
1-5 Over 5 Interest
years
years bearing
Total
Assets
Cash and balances with Central banks
-
-
-
-
-
116,157
116,157
Government securities held to maturity
-
1,211
62,490
47,669
73,778
-
185,148
Loans and advances to banks
76,482
41,603
9,176
-
-
-
127,261
Loans and advances to customers
90,117
50,756
89,327 151,768
28,632
-
410,600
Investment securities available for sale
-
-
-
-
-
26,933
26,933
Investments securities held to maturity
149
-
-
3,438
-
-
3,587
-
-
-
-
-
9,183
9,183
93,570 160,993 202,875 102,410 153,149
879,745
Other assets
Total financial assets
166,748
Liabilities
Deposits from Banks
38,648
13,593
176,919
122,132
Other liabilities
-
-
Subordinated debts and senior loans
-
-
Deposits from customers
23,892
-
184,215 11,452
-
20
-
-
-
297
25,798
-
215,567 135,725 208,404
37,250
-
76,133
189,659
684,397
18,119
18,119
- 26,095
Total financial liabilities
20 207,778
Total interest repricing gap
(48,819) (42,153) (47,411) 165,625 102,390
87
804,744
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.2 Market risk (continued)
3.2.3 Interest rate risk - Company (continued)
(Amounts are in TZS Million)
Non
Over 5 Interest
years bearing
Up to1
month
1-3
months
3-12
months
1-5
years
Cash and balances with Central banks
-
-
-
-
-
84,447
84,447
Government securities held to maturity
-
1,750
22,033
61,310
38,555
11,070
134,718
85,059
25,611
10,150
-
-
13
120,833
399,451
-
154
1,558
142
6,964
408,269
-
-
-
-
-
20,730
20,730
169
-
-
3,500
-
-
3,669
-
-
-
-
-
8,546
8,546
484,679
27,361
32,337
66,368
38,697
81,274
300
2,150
-
-
-
83,724
390,738
3,534
9,423
677
-
182,121
586,493
Other liabilities
-
-
-
-
-
19,147
19,147
Subordinated debts and senior loans
-
-
3,093
25,814
-
26
28,933
472,012
3,834
14,666
26,491
-
12,667
23,527
17,671
39,877
38,697
As at 31 December 2011
Total
Assets
Loans and advances to banks
Loans and advances to customers
Investment securities available for sale
Investments securities held to maturity
Other assets
Total financial assets
131,770 781,212
Liabilities
Deposits from Banks
Deposits from customers
Total financial liabilities
Total interest repricing gap
88
201,294 718,297
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk
Liquidity risk is the risk that a Company is unable to meet its payment obligations associated with its financial liabilities
when they fall due and to replace funds when they are withdrawn. The consequence may be the failure to meet
obligations to repay depositors and fulfil commitments to lend.
3.3.1 Liquidity risk management process
The Group’s and Company’s liquidity management process, as carried out within the Group and Company are monitored
by the Asset and Liability Committee (ALCO) of the individual banks. This includes:
? Day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met. These
include replenishment of funds as they mature or are borrowed by customers. The Group and Company maintain
an active presence in money markets to enable this to happen;
? Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any
unforeseen interruption to cash flow;
?
Monitoring balance sheet liquidity ratios against internal and regulatory requirements; and
?
Managing the concentration and profile of debt maturities.
Monitoring and reporting take the form of cash flow measurement and projections for the next day, week and month
respectively, as these are key periods for liquidity management. The starting point for those projections is an analysis of
the contractual maturity of the financial liabilities and the expected collection date of the financial assets (Note 3.3.3).
3.3.2 Funding approach
Sources of liquidity are regularly reviewed by the Group’s and Company’s Asset and Liability Committee to maintain a
wide diversification by currency, geography, provider, product and term.
89
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk (continued)
3.3.3 Non-derivative cash flows
The tables below present the cash flows payable by the Group and Company under non-derivative financial liabilities
by remaining contractual maturities at the balance sheet date. The amounts disclosed in the table are the contractual
undiscounted cash flows, as the Group and Company manage the inherent liquidity risk based on expected undiscounted
cash flows.
Group
Amounts are in TZS Million
Up to1
month
1-3
months
3-12
months
Over 1
year
Total
384,776
135,771
202,886
15,070
738,502
Deposits from banks
41,075
18,190
31,812
-
91,077
Other liabilities
18,433
-
-
-
18,433
Subordinated debt and senior loans
-
-
7,554
24,280
31,834
Total financial liabilities
(contractual maturity dates)
444,284
153,961
242,252
39,350
879,847
Total financial assets
(expected maturity dates)
178,134
89,511
168,939
313,972
750,559
595,547
3,818
21,271
1,531
622,167
Deposits from banks
83,926
311
2,683
-
86,920
Other liabilities
19,147
-
345
-
19,492
Subordinated debt and senior loans
56
-
3,894
30,734
34,684
Total financial liabilities
(contractual maturity dates)
698,677
4,129
28,193
31,264
763,263
Total financial assets
(expected maturity dates)
342,540
104,792
114,623
254,741
816,697
As at 31 December 2012
Liabilities
Due to customers
As at 31 December 2011
Liabilities
Due to customers
90
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk (continued)
3.3.3 Non-derivative cash flows (continued)
Amounts are in TZS Million
Company
Up to1
month
1-3
months
3-12
months
Over 1
year
Total
367,213
123,746
195,668
13,538
700,165
Deposits from banks
37,507
13,797
25,504
-
76,808
Other liabilities
18,120
-
-
-
18,120
-
-
6,763
21,219
27,981
Total financial liabilities
(contractual maturity dates)
422,840
137,543
227,935
34,757
823,074
Total financial assets
(expected maturity dates)
166,748
93,571
160,994
305,283
816,697
577,019
3,614
10,271
-
590,904
Deposits from banks
82,290
311
2,473
-
85,074
Other liabilities
19,147
-
-
-
19,147
26
-
3,116
26,582
29,724
Total financial liabilities
(contractual maturity dates)
678,482
3,925
15,860
26,582
724,849
Total financial assets
(expected maturity dates)
342,540
104,792
114,623
254,741
816,697
As at 31 December 2012
Liabilities
Due to customers
Subordinated debt
As at 31 December 2011
Liabilities
Due to customers
Subordinated debt
Assets available to meet all of the liabilities and to cover outstanding loan commitments include cash, central bank balances,
items in the course of collection and treasury and other eligible bills; loans and advances to banks; and loans and advances to
customers. In the normal course of business, a proportion of customer loans contractually repayable within one year will be
extended.The Group would also be able to meet unexpected net cash outflows by selling securities and accessing additional
funding sources such as asset-backed markets.
91
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk (continued)
3.3.4 Derivative cash flows
The Bank’s derivatives that are settled on a gross basis include foreign exchange derivatives and currency forwards.
Interest rate swaps are settled on a net basis.
The table below analyses the Group’s and Company’s derivative financial instruments that are settled on a gross basis
into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity
date. Contractual maturities are assessed to be essential for an understanding of the timing of the cash flows on all
derivatives including derivatives classified as ‘liabilities held for trading’. The amounts disclosed in the table are the
contractual undiscounted cash flows.
Group
At 31 December 2012
Amount are in TZS’Millions
Up to 1
month
1 -3
months
3 -12
months
1-5
years
Total
(10,533)
(5,144)
-
-
(15,677)
10,595
5,146
-
(7,179)
(5,144)
-
7,132
5,146
-
Foreign exchange derivatives:
Total outflow
Total inflow
15,741
Company
Foreign exchange derivatives:
Total outflow
Total inflow
Group and Company
-
(12,323)
12,278
Amount are in TZS’Millions
At 31 December 2011
Foreign exchange derivatives:
? Outflow
? Inflow
Interest rate derivatives:
? Outflow
? Inflow
Total outflow
Total inflow
92
(716)
796
-
-
-
(716)
796
(137)
(194)
(422)
92
177
339
-
608
(853)
(296)
(280)
-
(1,469)
888
177
339
-
1,404
(753)
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk (continued)
3.3.5 Off-balance sheet items
(a) Loan commitments
The dates of the contractual amounts of the Group’s and Company’s off-balance sheet financial instruments that
commit it to extend credit to customers and other facilities (Note 29), are summarised in the table below.
(b) Financial guarantees and other financial facilities
Financial guarantees are included below based on the earliest contractual maturity date.
(c) Operating lease commitments
Where the Group or the Company, are the lessee, the future minimum lease payments under non-cancellable operating
leases, are summarised below.
(d) Investment commitments
Investment commitment is with respect to additional equity investment in the subsidiary Exim Bank Djibouti SA.
(e) Capital commitments
These relate to the acquisition of property and equipment.
93
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk (continued)
3.3.5 Off-balance sheet items
Summary of off-balance sheet items:
Group
(Amounts are in TZS Million)
No later
than 1 year
1–5
years
Over 5
Years
Total
48,043
15,318
4,478
67,839
Commitments to extend credit
5,136
19,917
-
25,053
Operating lease commitments
9076
50
-
9,127
Capital commitments
1,565
-
-
1,565
As at 31 December 2012
Outstanding letters of credit, guarantees and indemnities
As at 31 December 2011
Outstanding letters of credit, guarantees and indemnities
26,672
6,266
4,095
37,034
Commitments to extend credit
23,968
-
-
23,968
Operating lease commitments
Capital commitments
2,003
624
5,749
277
1,367
-
9,119
901
94
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.3 Liquidity risk (continued)
3.3.5 Off-balance sheet items (continued)
Summary of off-balance sheet items (continued)
(Amounts are in TZS Million)
Company
No later
than 1 year
1–5
years
Over 5
Years
Total
41,118
15,318
4,478
60,915
Commitments to extend credit
5,136
19,917
-
25,053
Operating lease commitments
9,026
-
-
9,026
Capital commitments
1,448
-
-
1,448
Outstanding letters of credit, guarantees and indemnities
26,654
6,266
4,096
37,016
Commitments to extend credit
23,255
-
-
23,255
Operating lease commitments
1,954
5,602
1,367
8,923
Investment commitment
2,215
-
-
2,215
356
-
-
356
As at 31 December 2012
Outstanding letters of credit, guarantees and indemnities
As at 31 December 2011
Capital commitments
As at 31 December 2011
95
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.4 Fair value of financial assets and liabilities
(a) Financial instruments not measured at fair value
The fair value of financial assets and liabilities not measured at fair value approximate carrying amounts for both Group
and Company, except for Government securities.
(i) Loans and advances to banks
Loans and advances to banks include inter-bank placements and items in the course of collection. The carrying amount
of floating rate placements and overnight deposits is a reasonable approximation of fair value.
The estimated fair value of fixed interest bearing deposits is based on discounted cash flows using prevailing moneymarket interest rates for debts with similar credit risk and remaining maturity.
(ii) Loans and advances to customers
Loans and advances are net of charges for impairment. The estimated fair value of loans and advances represents the
discounted amount of estimated future cash flows expected to be received. Expected cash flows are discounted at
current market rates to determine fair value. The carrying amount is a reasonable approximation of fair value.
(iii) Government and investment securities
The fair value for held-to-maturity assets is based on market prices.Where this information is not available, fair value is
estimated using quoted market prices for securities with similar credit, maturity and yield characteristics. The carrying
amount of investment securities is a reasonable approximation of fair value. The fair value of Government securities
amounts to TZS 189,669million (2011: Approximated carrying amount).
(iv) Deposits from banks and due to customers
The estimated fair value of deposits with no stated maturity, which includes non-interest bearing deposits, is the amount
repayable on demand.
The estimated fair value of interest-bearing deposits not quoted in an active market is based on discounted cash flows
using interest rates for new debts with similar remaining maturity. The carrying amount is a reasonable approximation
of fair value.
(v) Off-balance sheet financial instruments
The estimated fair values of the off-balance sheet financial instruments are based on market prices for similar facilities.
When this information is not available, fair value is estimated using discounted cash flow analysis.
96
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.4 Fair value of financial assets and liabilities (continued)
(b) Fair value hierarchy
IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are
observable or unobservable. Observable inputs reflect market data obtained from independent sources; unobservable
inputs reflect the Group’s and Company’s market assumptions. These two types of inputs have created the following
fair value hierarchy:
? Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed
equity securities and debt instruments on Dar es Salaam Stock Exchange.
? Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices).
?
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
This level includes equity investments and debt instruments with significant unobservable components.
This hierarchy requires the use of observable market data when available. The Group considers relevant and
observable market prices in its valuations where possible.
Group
As at 31 December 2012
Derivative assets
Investment securities - equity
Total assets
Amounts are in TZS Million
Level 1
Level 2
Level 3
Total
25,733
108
1,200
-
108
26,933
25,733
1,308
-
27,041
25,733
1,200
-
26,933
25,733
1,200
-
26,933
Company
Investment securities - equity
Total assets
97
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.4 Fair value of financial assets and liabilities (continued)
Group and Company
Amounts are in TZS Million
As at 31 December 2011
Level 1
Level 2
Level 3
Total
-
-
-
-
19,530
1,200
-
20,730
19,530
1,200
-
20,730
Interest rate swap*
Investment securities - equity
Total assets
*It is not practical to determine the fair value because of lack of appropriate market data.
The Bank’s objectives when managing capital, which is a broader concept than the ‘equity’ on the face of balance sheets,
are:
3.5 Capital management
? To comply with the capital requirements set by the Bank of Tanzania;
? To safeguard the Bank’s ability to continue as a going concern so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
? To maintain a strong capital base to support the development of its business.
Capital adequacy and the use of regulatory capital are monitored daily by the Bank’s management, employing techniques
based on the guidelines developed by the Basel Committee, as implemented by the Bank of Tanzania, for supervisory
purposes. The required information is filed with the Central Banks on a quarterly basis.
The BoT requires each bank or banking group to:
(a) hold the minimum level of Core Capital of TZS 5 billion;
(b) maintain a ratio of core capital to the risk-weighted assets plus risk-weighted off-balance sheet assets (the ‘Basel
ratio’) at or above the required minimum of 10%;
(c) and maintain total capital of not less than 12% of risk-weighted assets plus risk-weighted off-balance sheet items.
98
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.5 Capital management (continued)
? The Bank’s regulatory capital as managed by its Treasury department is divided into two tiers:
? Tier 1 capital: share capital, retained earnings and reserves created by appropriations of retained earnings.
Intangible assets and prepaid expenses are deducted in arriving at Tier 1 capital; and
? Tier 2 capital: qualifying subordinated loan capital, collective impairment allowances and unrealised gains arising on
the fair valuation of equity instruments held as available for sale.
The risk-weighted assets are measured by means of a hierarchy of five risk weights classified according to the nature
of – and reflecting an estimate of credit, market and other risks associated with each asset and counterparty, taking into
account any eligible collateral or guarantees. A similar treatment is adopted for off-balance sheet exposure, with some
adjustments to reflect the more contingent nature of the potential losses.
The table below summarises the composition of regulatory capital and the ratios of the Bank for the year ended 31
December 2012 and year ended 31 December 2011. During those two periods, the Bank complied with all of the
externally imposed capital requirements to which they are subject.
99
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
3
FINANCIAL RISK MANAGEMENT (continued)
3.5 Capital management (continued)
Tier 1 capital
Share capital
Company
2012
TZS’Million
Restated
Company
2011
TZS’Million
12,900
12,900
Retained earnings
64,697
57,706
Prepaid expenses
(1,735)
(1,765)
Deferred income tax
(1,391)
(1,050)
(461)
(644)
74,010
67,147
Subordinated debt
7,897
7,912
Total qualifying Tier 2 capital
7,897
7,912
81,907
75,059
Risk-weighted assets
On-balance sheet
Off-balance sheet
503,123
45,292
465,502
33,904
Total risk-weighted assets
548,415
499,406
Required
ratio
%
Bank’s
ratio 2012
%
Banks
Ratio 2011
%
10
12
13.50
14.94
13.44
15.03
Intangible assets
Total qualifying Tier 1 capital
Tier 2 capital
Total regulatory capital
Tier 1 capital
Tier 1 + Tier 2 capital
The increase capital adequacy ratio is mainly due to the increase in Tier 1 capital due to retained profit for the year in
proportional to risk weighted assets 2012 compared with 2011.
100
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
4
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgment in the process of applying the Group’s accounting policies.
The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next
period. Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
(a) Impairment losses on loans and advances
The Group reviews its loan portfolios to assess impairment at least on a quarterly basis. In determining whether an
impairment loss should be recorded in the profit and loss account, the management makes judgements as to whether
there is any observable data indicating that there is a measurable decrease in the estimated future cash flows in an
individual loan in that portfolio. This evidence may include observable data indicating that there has been an adverse
change in the payment status of borrowers, or national or local economic conditions that correlate with defaults
on assets. Management uses estimates based on historical loss experience for assets with credit risk characteristics
and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The
methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed
regularly to reduce any differences between loss estimates and actual loss experience (refer to Note 16 for details).
Were the net present value of estimated cash flows to differ by +/- 1%, the impairment loss is estimated to be TZS 79
million lower or TZS 83 million higher.
(b) Held to maturity investments
The Group follows the guidance of IAS 39 on classifying non-derivative financial assets with fixed or determinable
payments and fixed maturity as held-to-maturity. This classification requires significant judgement. In making this
judgement, the Group evaluates its intention and ability to hold such investments to maturity. If the Group fails to keep
these investments to maturity other than for the specific circumstances – for example, selling an insignificant amount
close to maturity – it will be required to reclassify the entire class as available-for-sale.The investments would therefore
be measured at fair value not amortised cost. If all held-to-maturity investments were to be so reclassified, the carrying
value would increase by TZS4,521 million, with a corresponding entry in the fair value reserve in shareholders’ equity.
(c) Impairment of available for sale equity investments
The Bank determines that available-for-sale equity investments are impaired when there has been a significant or
prolonged decline in the fair value below its cost. This determination of what is significant or prolonged requires
judgment. In making this judgment, the Bank evaluates among other factors, the normal volatility in share price. In
addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee,
industry and sector performance, changes in technology, and operational and financing cash flows.
101
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
4
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
(d) Fair value of derivatives
The fair value of financial instruments that are not quoted in active markets are determined by using valuation techniques.
To the extent practical, models use only observable data; however, areas such as volatilities and correlations require
management to make estimates. Changes in assumptions about these factors could affect reported fair value of financial
instruments.
5
INTEREST AND SIMILAR INCOME
Loans and advances to customers
Loans and advances to banks
Government securities held to maturity
Investment securities
6
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
59,433
46,299
57,105
43,856
3,206
1,261
3,147
1,261
21,149
17,440
21,149
17,440
404
864
404
839
84,192
65,864
81,805
63,396
INTEREST EXPENSE AND SIMILAR CHARGES
Customer deposits
34,879
22,415
34,563
22,165
Deposits by banks
4,959
2,155
2,806
2,130
Subordinated debts and senior loans
1,506
808
1,275
544
39,214
102
25,378
38,644
24,839
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
7
NET FEE AND COMMISSION INCOME
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
Commission on Letters of Credit and
Guarantees
1,782
1,272
1,516
1,247
Commission on telegraphic transfers and other
international trade finance activities
2,248
2,745
1,695
1,972
Commission and fees from banking
operations
3,593
3,456
3,038
3,450
Facility fees from loans and advances
5,269
4,433
4,152
4,123
Credit/debit card fees and commissions
Other fees and commissions
4,562
302
2,645
350
4,562
255
2,335
310
17,693
14,901
15,218
13,437
(193)
(35)
(160)
(168)
(35)
(37)
(193)
(195)
(168)
(72)
17,500
14,706
15,050
13,365
1,091
786
1,091
786
13
-
13
-
Fee and commission income
Fee and commission expense
IFC guarantee fees
Borrowing arrangement fees
Net fee and commission income
8
OTHER INCOME
Dividend income
Profit from sale of asset
1,104
786
The Bank earned dividend income from its equity investment in National Microfinance Bank Plc.
103
1,104
786
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
9
OPERATING EXPENSES
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
18,337
14,775
16,625
13,371
Travelling expenses
1,090
876
968
776
Depreciation and amortisation (Notes 19 and
20)
4,023
3,267
3,347
2,583
Repairs and maintenance
1,488
1,332
1,149
1,223
Advertising and business promotion
1,940
1,085
1,796
969
Directors’ emoluments
241
153
200
120
Auditors’ remuneration
204
181
127
85
1,742
2,092
1,519
1,808
494
518
346
351
Operating lease rentals
2,791
2,426
2,791
2,365
Occupancy costs
3,579
3,956
3,152
2,595
Credit/debit card expenses
3,619
3,040
3,611
3,036
Other operating expenses
5,788
3,941
5,339
2,897
45,336
37,643
40,970
32,180
13,395
10,250
12,171
9,165
Social security costs (defined contributions)
1,460
1,028
1,412
992
Other employment costs and benefits
3,482
3,497
3,042
3,214
18,337
14,775
16,625
13,371
The following items are included within
operating expenses:
Staff benefit expenses (Note 10)
Legal and professional fees
Correspondent bank and SWIFT charges
10 STAFF BENEFIT EXPENSES
Wages and salaries
104
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
1I NCOME TAX EXPENSE
Current income tax – current year
prior year
Deferred income tax – current year(Note 22)
- prior year
Group and
Company
2012
TZS’Millions
Group and
Company
2011
TZS’Millions
3,171
5,345
43
71
(342)
(162)
1
(212)
2,873
5,042
The tax on the company’s profit before income tax differs from the theoretical amount that would arise using the
statutory income tax rate as follows:
Profit before income tax
Tax calculated at the statutory income tax rate of 30% (2011: 30%)
Company
2012
TZS’Millions
Company
2011
TZS’Millions
15,809
19,114
4,743
5,734
(327)
(614)
196
26
(1,783)
-
43
71
1
(175)
2,873
5,042
Tax effect of:
Non-taxable income
Expenses not deductible for tax purposes
Deductible expenses not charged to profit or loss
Under provisions in previous years tax- current tax
Under provision of tax in previous years- deferred tax
Income tax expense
105
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
12 FINANCIAL INSTRUMENTS BY CATEGORY – GROUP
Loans and
receivables
TZS’ Millions
Fair value
through
profit or loss
TZS’ Millions
Held to
maturity
TZS’ Millions
Available
- for - sale
TZS’ Millions
Total
TZS’ Millions
At 31 December 2012
Financial assets
Cash and balances with
Central Banks
143,686
143,686
Loans and advances to
banks
132,202
132,202
Loans and advances to
customers
435,598
435,598
Government securities
185,148
Investment securities
-
Derivative assets
3,587
185,148
26,933
108
Other assets
108
10,060
721,525
30,520
10,060
108
188,735
26,933
937,322
Financial
liabilities at
fair value
through profit
or loss
TZS’Millions
Other
liabilities
at amortised
cost
TZS’Millions
Total
TZS’Millions
Deposits from banks
-
86,008
86,008
Deposits customers
-
722,734
722,734
Derivative liabilities
-
-
-
Other liabilities
-
18,433
18,433
Subordinated debts and senior loans
-
29,948
29,948
-
857,123
857,123
Financial liabilities
106
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
12 FINANCIAL INSTRUMENTS BY CATEGORY – GROUP (continued)
Loans and
Held to
Available
receivables
maturity
- for - sale
Total
TZS’Millions TZS’Millions TZS’Millions TZS’Millions
At 31 December 2011
Financial assets
Cash and balances with Central Banks
99,501
-
-
99,501
Loans and advances to banks
121,686
-
-
121,686
Loans and advances to customers
428,032
-
-
428,032
Government securities
-
134,718
-
134,718
Investment securities
-
3,669
20,730
24,399
9,827
-
-
9,827
659,046
138,387
20,730
818,163
Other assets
Financial
liabilities at
Other
fair value
liabilities
through profit at amortised
or loss
cost
Total
TZS’Millions TZS’Millions TZS’Millions
Financial liabilities
Deposits from banks
-
81,887
81,887
Deposits customers
-
617,259
617,259
Derivative liabilities
-
-
-
Other liabilities
-
19,492
19,492
Subordinated debts and senior loans
-
33,059
33,059
-
751,697
751,697
107
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
12 FINANCIAL INSTRUMENTS BY CATEGORY – COMPANY (continued)
Loans and
receivables
TZS’Millions
Held to
Available
maturity
- for - sale
Total
TZS’Millions TZS’Millions TZS’Millions
At 31 December 2012
Financial assets
Cash and balances with Central Banks
116,157
-
-
116,157
Loans and advances to banks
127,261
-
-
127,261
Loans and advances to customers
410,600
-
-
410,600
Government securities
-
185,148
-
185,148
Investment securities
-
3,587
26,933
30,520
9,183
-
-
9,183
663,201
188,735
26,933
878,869
Other assets
Financial
liabilities
Other
at fair value
liabilities
through profit at amortised
or loss
cost
Total
TZS’Millions TZS’Millions TZS’Millions
Financial liabilities
Deposits from banks
-
76,133
76,133
Deposits customers
-
684,397
684,397
Derivative liabilities
-
-
-
Other liabilities
-
18,119
18,119
Subordinated debts and senior loans
-
26,095
26,095
-
804,744
804,744
108
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
12 FINANCIAL INSTRUMENTS BY CATEGORY – COMPANY (continued)
Loans and
receivables
TZS’Millions
Held to
Available
maturity
- for - sale
Total
TZS’Millions TZS’Millions TZS’Millions
At 31 December 2011
Financial assets
Cash and balances with Central Banks
84,447
-
-
84,447
Loans and advances to banks
120,833
-
-
120,833
Loans and advances to customers
408,269
-
-
408,269
Government securities
-
134,718
-
134,718
Investment securities
-
3,669
20,730
24,399
7,179
-
-
7,179
620,728
138,387
20,730
779,845
Other assets
Financial
liabilities at
Other
fair value
liabilities
through profit at amortised
or loss
cost
Total
TZS’Millions TZS’Millions TZS’Millions
At 31 December 2011
Financial liabilities
Deposits from banks
-
83,724
83,724
Deposits customers
Derivative liabilities
-
586,493
586,493
Other liabilities
-
19,147
19,147
Subordinated debts and senior loans
-
28,933
28,933
-
718,297
718,297
109
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
13 CASH AND BALANCES WITH CENTRAL BANKS
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
26,804
31,586
85,296
15,152
8,949
75,400
25,145
18,662
72,350
14,517
4,815
65,115
143,686
99,501
116,157
84,447
Cash in hand
Clearing account
Statutory Minimum Reserves (SMR)
The SMR deposit is not available to finance the Group’s day-to-day operations and is hence excluded from cash and cash
equivalents for the purpose of the cash flow statement (See Note 30). Cash in hand and balances with Central Banks are
non-interest bearing. All balances are current.
14 LOANS AND ADVANCES TO BANKS
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Items in course of collection
Company
2012
TZS’Millions
Company
2011
TZS’Millions
3,831
22,170
3,821
22,165
Loans and advances to other banks
64,378
34,209
60,542
34,822
Placements with other banks
63,993
65,307
62,898
63,846
132,202
121,686
127,261
120,833
132,202
121,686
127,261
120,833
Current
15 LOANS AND ADVANCES TO CUSTOMERS
Overdrafts
Personal loans
Commercial loans
Other
237,289
2,714
207,959
7,365
240,644
1,433
198,140
2,026
216,598
2,596
207,959
2,717
224,608
1,429
194,081
2,012
Gross loans and advances
Less: Provision for impairment
455,327
(19,729)
442,243
(14,211)
429,871
(19,272)
422,130
(13,861)
Current
Non-current
435,598
246,510
189,088
428,032
280,429
147,603
410,600
230,682
179,918
408,269
210,436
197,833
Provision for impairment losses on loans and advances is broken down as follows:
110
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
15 LOANS AND ADVANCES TO CUSTOMERS (continued)
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
Individually impaired
18,012
12,874
17,480
12,624
Portfolio impairment
1,717
1,337
1,792
1,237
19,729
14,211
19,272
13,861
At end of year
The movements in provision for impairment losses on loans and advances are as follows:
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
14,211
8,022
13,861
7,888
Impairment charges for credit losses
6,329
6,409
6,234
6,180
Amounts recovered during year
(655)
(177)
(655)
(177)
Amounts written off during year
(156)
(43)
(169)
(30)
13
-
-
-
19,729
14,211
19,272
13,861
Charge for the year is made up of:
Impairment charges for credit losses
6,329
6,409
6,234
6,180
Amounts recovered during year
(655)
(177)
(655)
(177)
5,674
6,232
5,579
6,003
At start of year
Adjustment for 2011
At end of year
111
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
15 LOANS AND ADVANCES TO CUSTOMERS (continued)
Analysis of provision account for losses on loans and advances by class is as follows:
GROUP
Year ended 31 December 2012
Individual
Overdraft
customers
SME’s
Others
TZS’Millions TZS’Millions TZS’Millions TZS’Millions
455
3,046
978
14,211
4,956
292
526
555
6,329
(178)
(198)
(279)
(655)
(16)
(153)
(169)
At start of the year
9,732
Provision for loan impairment
Loans recovered during the year
Loans written off during the year
as uncollectable
Adjustment 2011
At end of the year
Total
TZS’Millions
13
13
14,523
533
3,140
1,533
19,729
At start of the year
5,092
280
1,729
921
8,022
Provision for loan impairment
4,683
175
1,317
234
6,409
Loans recovered during the year
-
-
-
(177)
(177)
Loans written off during the year
as uncollectable
(43)
-
-
-
(43)
9,732
455
3,046
978
14,211
Year ended 31 December 2011
At end of the year
112
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
15 LOANS AND ADVANCES TO CUSTOMERS (continued)
COMPANY
Year ended 31 December 2012
Overdraft
TZS’Millions
Individual
customers
SME’s
Others
TZS’Millions TZS’Millions TZS’Millions
Total
TZS’Millions
At start of the year
9,158
444
2,943
1,316
13,861
Provision for loan impairment
4,887
266
526
555
6,234
Loan recovered during the year
(178)
(198)
(279)
(655)
(16)
(152)
(168)
13,867
496
3,038
1,871
19,272
At start of the year
4,990
279
1,702
917
7,888
Provision for loan impairment
4,168
165
1,241
399
5,973
9,158
444
2,943
1,316
13,861
Loan written off during the year
as uncollectable
At end of the year
Year ended 31 December 2011
At end of the year
113
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
16 GOVERNMENT SECURITIES HELD TO-MATURITY
(Amounts are in TZS Million)
Treasury bills and bonds:
Maturing within 90 days from date of acquisition
Maturing after 90 days from date of acquisition
Current
Non current
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
1,213
-
1,213
-
183,935
134,718
183,935
134,718
185,148
134,718
185,148
134,718
63,702
34,853
63,702
34,853
121,446
99,865
121,446
99,865
Treasury bills and bonds are debt securities issued by the Government of the United Republic of Tanzania.
The Bank is holding Treasury bills and bonds with face value of TZS 16,890 million which have been pledged as collateral
by local banks against short term borrowing of TZS 14,000 million. These are not recognised in the financial statements as
assets of the Bank.
As of 31 December 2012, the Bank had pledged Treasury bills and bonds with a face value of TZS 19 million against deposits
from banks of TZS 14 billion.
114
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
17 INVESTMENT SECURITIES
(Amounts are in TZS Million)
Investment securities available-for-sale
Group and
Company
2012
TZS’Millions
Group and
Company
2011
TZS’Millions
85
85
25,733
19,530
1,200
1200
(85)
(85)
26,933
20,730
ALAF Bond
471
538
Standard Chartered Bank Bond
511
538
2,605
2,593
3,587
3,669
149
169
3,438
3,500
Equity securities – at fair value
- Listed investment in Tanzania Oxygen Limited
- Listed investment in National Microfinance Bank Plc
- Tanzania Mortgage Refinancing Company (TMRC) - unlisted
Provision for impairment
Total securities available-for-sale
Investment securities held-to-maturity
Tanzania Breweries Limited Bond
At end of year
Current
Non-current
115
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
18 OTHER ASSETS
(Amounts are in TZS Million)
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
4,054
5,365
3,257
4,165
-
-
-
-
482
1,073
482
1,073
MasterCard receivables
3,630
2,320
3,613
2,320
Visa card receivables
1,540
892
1,540
892
354
177
292
96
1,878
1,892
1,735
1,765
11,938
11,719
10,918
10,311
11,938
10,087
10,918
8,679
-
1,632
-
1,632
Sundry debtors
Receivable from related party (Note 31)
TANAPA cards
Moneygram receivables
Prepaid expenses
Current
Non current
116
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
19 PROPERTY AND EQUIPMENT (GROUP)
(Amounts are in TZS Million)
Office
Leasehold
Motor equipBuildings premises vehicles
ment
Computer
hardware
Furniture
and
fittings
Capital
work in
progress
Total
Cost
2,001 28,116
9,382
5,048
901
7,905
1,214
1,665
Additions
281
413
226
1,220
183
327
83
2,733
Disposals
-
-
(52)
-
-
-
(44)
(96)
Transfers
341
92
-
668
-20
16
(1,097)
-
10,004
5,553
1,075
9,793
1,377
2,008
At 1 January 2011
471
1,705
662
5,976
708
1,115
-
10,637
Charge for the year
367
531
198
1,268
225
176
-
2,765
Disposals
-
-
(52)
-
-
-
-
(52)
Transfers
-
-
-
(20)
20
-
-
-
838
2,236
808
7,224
953
1,291
-
13,350
9,166
3,317
267
2,569
424
717
At 1 January 2011
At 31 December 2011
943 30,753
Depreciation
At 31 December 2011
Net book value
117
943 17,403
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
19 PROPERTY AND EQUIPMENT (GROUP) (continued)
(Amounts are in TZS Million)
Office
Leasehold
Motor equipBuildings premises vehicles
ment
Computer
hardware
Furniture
and
fittings
Capital
work in
progress
Total
Cost
10,004
5,553
1,075
9,793
1,377
2,008
Additions
314
1,243
477
467
145
320
3,423
6,389
Disposals
-
-
(35)
-
-
-
-
(35)
Transfers
-
1,007
31
134
57
35
(1,264)
-
Write-off
-
-
-
-
-
-
(82)
(82)
10,318
7,803
1,548
10,394
1,579
2,363
3,020 37,025
At January 2012
838
2,236
808
7,224
953
1,291
- 13,350
Charge for the year
462
1,173
188
981
445
187
-
3,436
Disposals
-
-
(35)
-
-
-
-
(35)
Transfers
-
-
(43)
43
-
-
-
1,300
3,409
961
8,162
1,441
1,478
9,018
4,394
587
2,232
138
885
At 1 January 2012
At 31 December 2012
943 30,753
Depreciation
At 31 December 2012
Net book value
118
- 16,751
3,020 20,274
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
19
PROPERTY AND EQUIPMENT (COMPANY) (continued)
(Amounts are in TZS Million)
Office
Leasehold
Motor equipBuildings premises vehicles
ment
Computer
hardware
Furniture
and
fittings
Capital
work in
progress
Total
Cost
7,913
5,033
797
7,244
1,141
1,578
2,001
25,707
Additions
281
413
122
746
120
90
83
1,855
Disposals
-
-
(52)
-
-
-
(44)
(96)
Transfers
341
92
-
635
13
16
-1,097
-
-
-
-
-
-
-
-
(239)
8,535
5,538
867
8,625
1,274
1,684
943
27,466
At 1 January 2011
182
1,703
586
5,631
671
1,079
-
9,852
Charge for the year
309
529
165
921
199
123
-
2,246
-
-
(52)
-
-
-
-
(52)
491
2,232
699
6,552
870
1,202
-
12,046
8,044
3,306
168
2073
404
482
943
At 1 January 2011
Write-offs
At 31 December 2011
Depreciation
Disposals
At 31 December 2011
Net book value
119
15,420
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
19 PROPERTY AND EQUIPMENT (COMPANY) (continued)
(Amounts are in TZS Million)
Office
Leasehold
Motor equipBuildings premises vehicles
ment
Computer
hardware
Furniture
and
fittings
Capital
work in
progress
Total
Cost
At 1 January 2012
8,535
5,538
867
8,625
1,274
1,684
943
27,466
Additions
102
646
344
354
136
287
3,393
5,262
Disposals
-
-
(35)
-
-
-
-
(35)
Transfers
-
1,007
31
188
3
35
(1,264)
-
(82)
(82)
Write-off
At 31 December 2012
8,637
7,191
1,207
9,167
1,413
2,006
2,990 32,611
At 1 January 2012
491
2,232
699
6,552
870
1,202
-
12,046
Charge for the year
394
1,030
151
772
418
126
-
2,891
Depreciation
Disposals
(35)
Transfer
At 31 December 2012
Net book value
(35)
10
(10)
-
885
3,262
815
7,334
1,278
1,328
7,752
3,929
392
1,833
135
678
120
14,902
2,990 17,709
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
20 INTANGIBLE ASSETS
Amounts are in TZS Million)
Group
2012
Computer
software
licences
Group
2011
Computer
software
licences
Company
2012
Computer
software
licences
Company
2012
Computer
software
licences
At start of year
760
570
644
289
Additions
500
692
273
692
Write-off
(31)
-
-
-
(587)
(502)
(456)
(337)
642
760
461
644
3,392
2,851
2,675
2,402
(2,750)
(2,091)
(2,214)
(1,758)
642
760
461
644
Movement during the year
Amortisation
At end of year
At 31 December
Cost
Accumulated amortisation
Net book amount
21 INVESTMENT IN SUBSIDIARIES
Company
2012
TZS’Millions
Company
2011
TZS’Millions
Investment in Exim Bank Comores S.A
2,728
2,728
Investment in Exim Bank Djibouti S.A
4,770
2,559
7,498
5,287
During the year, the Bank invested additional capital of TZS 2,211 million (US$ 1.4 million) in Exim Bank Djibouti S.A.
Country of incorporation
% interest held
The Union of Comores
Djibouti
100%
100%
2012 and 2011
Investment in Exim Bank Comores S.A
Investment in Exim Bank Djibouti S.A
121
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
22 DEFERRED INCOME TAX – GROUP AND COMPANY
Deferred income tax is calculated using the enacted income tax rate of 30%. The movement on the deferred income tax
account is as follows:
At start of year
Credit to profit or loss (Note 11)
(Over)/under provision in prior year deferred income tax (Note 11)
At end of year
2012
TZS’Millions
1,050
342
(1)
2011
TZS’Millions
676
162
212
1,391
1,050
The deferred income tax asset and deferred income tax credit in the profit and loss account, are attributable to the following items:
1 Jan 2012
TZS’Millions
Under
Credited
provision
to Profit
- prior year
and loss
TZS’Millions TZS’Millions
31 Dec 2012
TZS’Millions
Deferred income tax asset
Property and equipment
494
(2)
182
674
Provisions
556
1
160
717
1,050
(1)
342
1,391
Net deferred income tax asset
122
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
23 DEPOSITS FROM CUSTOMERS
All amounts are in TZS’Millions
Group
Company
2011
2012
TZS’Millions TZS’Millions
Group
2012
TZS’Millions
Company
2011
TZS’Millions
Current and demand deposits
210,730
203,218
189,659
182,121
Savings accounts
147,957
139,479
136,446
129,060
Fixed deposit accounts
364,047
275,791
358,292
275,312
722,734
617,259
684,397
586,493
709,019
617,018
672,925
585,816
13,716
1,470
11,473
677
Current
Non current
Included in customer deposits above are TZS 1,804 million (2011: TZS 1,546 million) in respect of deposits from related
parties (Note 31).
24 DERIVATIVE ASSETS AND LIABILITIES
All amounts are in TZS’Millions
Group
Notional
contract
amount
2011
2011
Fair values
Fair values
Notional
contract
Assets Liabilities amount
Assets
Liabilities
Foreign exchange derivatives
Forwards
16,000
108
-
1,122
-
-
-
-
-
9,000
-
-
108
-
-
-
Interest rate derivatives
Swaps*
Total derivative liabilities held for trading
123
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
24 DERIVATIVE ASSETS AND LIABILITIES (continued)
All amounts are in TZS’Millions
Company
2011
Fair values
Notional
contract
amount
Foreign exchange derivatives
Forwards
Interest rate derivatives
Swaps*
2011
Fair values
Notional
contract
Assets Liabilities amount
Assets
Liabilities
12,646
-
-
1,122
-
-
-
-
-
9,000
-
-
-
-
-
-
Total derivative liabilities held for trading
* It is not practical to determine the fair value because of lack of appropriate market data.
Use and measurement of derivative instruments
In the normal course of the business, the Bank enters into a variety of derivative transactions for both trading and hedging
purposes. Derivative financial instruments are entered into for trading purposes and for hedging foreign exchange and
interest rate exposures. Derivative instruments used by the Bank in both trading and hedging activities include swaps,
forwards and other similar types of instruments based on foreign exchange rates, interest rates, credit risk and prices of
equities.
The risks associated with derivative instruments are monitored in the same manner as for the underlying instruments. Risks
are also measured across the product range in order to take into account possible correlations.
The fair value of all derivatives is recognised on the balance sheet and is only netted to the extent that a legal right of set off
exists and there is an intention to settle on a net basis.
The Bank entered into an interest rate swap contract with Standard Chartered Bank Tanzania Limited during the year 2009.
Under interest rate swap agreement the bank is a fixed rate payer and the other party is a floating rate payer for the period
of the swaps. The Swap agreement expired on 30 August 2012 and due to the market volatility the Bank did not renew the
contract.
Swaps are transactions in which two parties exchange cash flows on a specified notional amount for a predetermined period.
Interest rate swap contracts generally entail the contractual exchange of fixed and floating rate interest payments in a single
currency, based on a notional amount and an interest reference rate.
Forwards are contractual obligations to buy or sell financial instruments on a future date at a specified price. Forward
contracts are tailor made agreements that are transacted between counterparties in the over the counter market.
124
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
25 OTHER LIABILITIES
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
1,723
2,655
1,723
2,616
693
729
564
647
TANAPA cards
1,346
2,059
1,346
2,059
Master cards
2,304
1,280
2,304
1,280
217
85
217
81
Guarantee and LC margins
6,396
4,797
6,396
4,778
Deferred commission
1,386
1,378
1,350
1,366
Other creditors
4,368
6,509
4,219
6,320
18,433
19,492
18,119
19,147
Bank drafts payable
Accrued expenses
Visa Cards
Other liabilities are expected to be settled within no more than 12 months after the date of the statement of financial
position.
125
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
26 SUBORDINATED DEBTS AND SENIOR LOANS
Group
Company
2011
2012
TZS’Millions TZS’Millions
Company
2011
TZS’Millions
Interest
rate
Group
2012
TZS’Millions
LIBOR +
3%
7,897
7,912
7,897
7,912
Usd 5 million International Finance
Corporation (IFC) floating rate notes
due 2012 (b)
LIBOR +
2.75%
522
1,187
522
1,187
Usd 5 million Proparco floating rate
notes due 2013 (c(i))
LIBOR +
2.3%
1,711
3,097
1,711
3,097
Subordinated debt
Usd 5 million Norfund floating rate
notes due 2015 (a)
Senior loans:
Euro 2 million Proparco floating rate
notes due 2015 (c(ii))
LIBOR +
3.35%
3,853
4,126
-
-
Usd 3 million Norfund floating rate
notes due 2013 (d)
LIBOR +
2.3%
-
949
-
949
Usd 10 million FMO floating rate notes
due 2018 (e)
LIBOR +
2.8%
15,965
15,788
15,965
15,788
29,948
33,059
26,095
28,933
Total
126
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
26 SUBORDINATED DEBTS AND SENIOR LOANS (continued)
Current
Non current
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
7,492
3,257
6,615
3,119
22,456
29,802,
19,480
25,814
(a) The Subordinated Loan of USD 5 million from Norfund was drawn in December 2008. The loan is repayable within 7
years, with a grace period of 5 years. Principal repayment in 4 equal semi-annual instalments, beginning on 31 December
2013. Loan balance as at 31 December 2012 was USD 5 million. Effective Interest rate is 3.98%.
The subordinated debts are subordinated in payment and liquidation to all Senior Indebtedness.
(b) Senior loan of USD 5 million from IFC of which USD 3 million was drawn in 2007 and USD 2 million drawn in 2008.
The loan is repayable within 5 years, starting 2008. Loan balance as at 31 December 2012 was USD 250,000. Effective
Interest rate is 3.26%.
(c) (i) Senior Loan of USD 5 million from Proparco of which USD 2 million was drawn in 2006 and USD 3 million
drawn in 2007. The loan is repayable within 7 years, starting 2008. Loan balance as at 31 December 2012 was
USD 1 million. Effective Interest rate is 2.84%.
(ii) Exim Bank Comores Ltd borrowed EUR 2 million from Proparco as Senior Loan in the year 2010. The loan
is repayable within 5 years, starting 2012. Loan balance as at 31 December 2012 was EUR 2 million. Effective
Interest rate is 5.65%. The Bank (Exim Bank Tanzania) has guaranteed this loan for an amount of EUR 2 million.
(d) Senior Loan of USD 3 million from Norfund, all drawn in 2007. The loan is repayable within 5 years, starting 2008. Loan
balance as at 31 December 2012 was USD 0.25 million. Effective Interest rate is 2.84%.
(e) Senior Loan of USD 10 million from FMO was drawn in December 2011. The loan is repayable within 7 years, with a
grace period of 1.25 years. Principal repayment in 12 equal semi-annual instalments, beginning on 15 April 2013. Loan
balance as at 31 December 2012 was USD 10 million. There was no significant interest charge for the year.
127
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
26 SUBORDINATED DEBTS AND SENIOR LOANS (continued)
The movement in subordinated debts and senior loans is as follows:Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
At start of year
Additions
33,059
-
20,118
15,825
28,933
-
16,124
15,825
Repayments
Exchange differences
(4,448)
1,337
(4,247)
1,363
(3,827)
989
(4,247)
1,231
At end of year
29,948
33,059
26,095
28,933
2012
TZS’Millions
2011
TZS’Millions
12,900
12,900
27 SHARE CAPITAL
Issued and fully paid
12.9 million shares (2011: 12.9 million shares) of TZS 1,000 each
The total authorised number of ordinary shares is 20,000,000 (2011: 20,000,000) with a par value of TZS 1,000 per share
(2011: TZS 1,000 per share). 12.9 million shares are issued and fully paid.
28 REGULATORY AND OTHER RESERVES
Fair value reserve (a)
Regulatory reserves (b)
Currency translation reserve (c)
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
22,575
16,372
22,575
16,372
8,383
2,005
7,790
1,845
736
492
-
-
31,694
18,869
30,365
18,217
128
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
28 REGULATORY AND OTHER RESERVES (continued)
(a) Fair value reserve shows the effect of changes in fair value of available for sale financial instruments. The movement in
fair value reserve is as follows:-
At start of year
Fair value gain/(loss) for the year
At end of year
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
16,372
12,006
16,372
12,006
6,203
4,366
6,203
4,366
22,575
16,372
22,575
16,372
(b) Regulatory reserve credit losses represents an amount set aside to cover additional provision for loan losses and other
assets required in order to comply with the Bank of Tanzania (BOT) prudential guidelines. This reserve is not available
for distribution. The movement in regulatory reserve is as follows:Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
At start of year
2,005
586
1,845
586
Appropriation from retained earnings
6,378
1,419
5,945
1,259
At end of year
8,383
2,005
7,790
1,845
7,431
2,005
6,838
1,845
952
-
952
-
8,383
2,005
7,790
1,845
This is broken down as follows:
Reserve for loans and advances
Reserve for other assets
At end of year
129
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
28 REGULATORY AND OTHER RESERVES (continued)
(c) Currency translation reserve shows the effect of translation of the financial statements of the foreign subsidiary on
consolidation.
Group
Group
Company
Company
2012
2011
2012
2011
TZS’Millions
TZS’Millions
TZS’Millions
TZS’Millions
At start of year
492
484
-
-
Translation differences for the year
244
8
-
-
At end of year
736
492
-
-
29 CONTINGENT LIABILITIES AND COMMITMENTS
(a) Legal proceedings
There were a number of legal proceedings outstanding against the Group and Bank at 31 December 2012. Provision is made
for legal cases where professional advice indicates that it is likely that significant loss will arise. As at 31 December 2011, the
Group and Bank had no contingent liabilities for legal cases against the bank. (2011: Nil). No provision has been made as at
31 December 2012 (2011: Nil). The Directors are of the opinion that the outcome of the litigation in progress will not have
a material financial effect on the financial position or profits of the Group or Company.
(b) Capital commitments
At 31 December 2012, the Bank had capital commitments of TZS 1,448 million (2011: TZS 134 million) in respect of
purchase of the new property in Iringa and opening of new branches in Arusha and Shinyanga. The Bank’s management is
confident that future net revenues and funding will be sufficient to cover this commitment.
130
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
29 CONTINGENT LIABILITIES AND COMMITMENTS (continued)
(c) Loan commitment, guarantee and other financial facilities
In common with other banks, the bank conducts business involving acceptances, letters of credit, guarantees, performance
bonds and indemnities. The majority of these facilities are offset by corresponding obligations of third parties. The nominal
amounts for these off balance sheet items are not reflected in the balance sheet.
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
Acceptances and letters of credit
30,789
14,662
23,885
14,644
Guarantee and performance bonds
37,050
22,372
37,030
22,372
67,839
37,034
60,915
37,016
Contingent liabilities
Nature of contingent liabilities
An acceptance is an undertaking by a bank to pay a bill of exchange drawn on a customer. The bank expects most acceptances
to be presented, and reimbursement by the customer is normally immediate. Letters of credit commit the bank to make
payments to third parties, on production of documents, which are subsequently reimbursed by customers. Guarantees are
generally written by a bank to support performance by a customer to third parties. The bank will only be required to meet
these obligations in the event of the customer’s default.
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
25,053
23,968
25,053
23,255
Other commitments
Undrawn formal stand-by facilities, credit lines and
other commitments to lend
131
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
29 CONTINGENT LIABILITIES AND COMMITMENTS
Nature of commitments
Commitments to lend are agreements to lend to a customer in future subject to certain conditions. Such commitments are
normally made for a fixed period. The bank may withdraw from its contractual obligation for the undrawn portion of agreed
overdraft limits by giving reasonable notice to the customer.
(d) Operating lease commitments
Where the Bank is the lessee, the future minimum lease payments under non-cancellable operating leases are as follows:
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
Not later than one year
2,313
2,003
2,196
1,954
Later than one year and not later than five years
7,989
5,749
7,673
5,602
Later than five years
4,687
1,367
4,687
1,367
14,989
9,119
14,556
8,923
30 ANALYSIS OF CASH AND CASH EQUIVALENTS AS SHOWN IN THE CASH FLOW
STATEMENT
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
Cash and balances with Central Banks (Note 13)
143,686
99,501
116,157
84,447
Less: cash reserve requirement
(85,296)
(75,400)
(72,350)
(65,115)
58,390
24,101
43,807
19,332
1,213
-
1,213
-
132,202
121,686
127,261
120,833
191,805
145,787
172,281
140,165
Government securities (Note 16)
Loans and advances to banks (Note 14)
132
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
30 ANALYSIS OF CASH AND CASH EQUIVALENTS AS SHOWN IN THE CASH FLOW
STATEMENT (continued)
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than 90 days maturity
from date of acquisition: cash and balances with central banks, Government securities and loans and advances to banks. Cash
and cash equivalents exclude the cash reserve requirement held with the Central Banks.
Banks are required to maintain a prescribed minimum cash balance with the Central Banks that is not available to finance
the bank’s day-to-day activities. The amount is determined as 10% for public deposits and 30% for Government deposits for
Bank of Tanzania and for Central Bank of Comores, 25% of the average outstanding customer deposits over a cash reserve
cycle period of two weeks. The Central Bank of Djibouti requires the share capital amount to be maintained with them in a
separate account and not to be used for operational purposes.
31 RELATED PARTY TRANSACTIONS
A number of banking transactions are entered into with related parties in the normal course of business. These include
loans and deposits transactions.The volumes of related-party transactions, outstanding balances at the year-end, and relating
expense and income for the year are as follows:
Advances to customers at 31 December 2012 and 2011 include loans to directors and key management personnel as
follows:
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
At start of year
687
467
687
467
Advanced during the year
320
3,925
320
3,925
(257)
-
(257)
Loans to directors and other key
management personnel
Reclassification of loan of former managing director
Repaid during the year
(28)
(3,448)
(28)
(3,448)
At end of year
979
687
979
687
59
62
59
62
Interest income earned from related parties
133
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
31 RELATED PARTY TRANSACTIONS (continued)
No provisions have been made in respect of loans given to related parties (2011: Nil).
The loans issued to directors and other key management personnel during the year of TZS 320 million (2011: TZS 3,925
million) have interest rates of 10% (2011: 10%).The loans advanced to the directors during the year are secured by mortgage
collateral.
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
1,546
1,011
1,546
1,011
770
7,303
770
7,303
Repaid during the year
(908)
(6,768)
(908)
(6,669)
At end of year
1,408
1,546
1,408
1,546
65
88
65
88
Deposits by directors and other key
management personnel
At start of year
Received during the year
Interest expense incurred
The above deposits carry variable interest rates and are repayable on demand.
134
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
31 RELATED PARTY TRANSACTIONS (continued)
Other transactions have been carried out during the year with related parties by virtue of common shareholding. These are
as follows:
Consultancy service:
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
-
302
-
302
64
41
64
41
64
343
64
343
91
280
91
280
566
356
566
356
384
-
384
-
396
-
396
-
Exim Advisory Services Limited
MAC Group Limited
Group Health Insurance Cover:
Strategis Insurance Limited
Operating lease rentals:
MAC-UTI Properties Limited
Loans and advances to customers:
MAC-UTI Properties Limited
Deposits from customers:
MAC-UTI Properties Limited
135
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
31 RELATED PARTY TRANSACTIONS (continued)
Year-end balances with subsidiaries
Company
2012
TZS’Millions
Company
2011
TZS’Millions
9
3,867
-
-
4,385
3,972
4,385
3,972
At 1 January
-
1,443
Additions during the year
-
-
Repayments during the year
-
(1,443)
At 31 December
-
-
Included in customer deposits:
Exim Bank Comores S.A.
Included in loans and advances to banks:
Exim Bank Comores S.A.
Exim Bank Djibouti S.A.
No interest is charged or earned on the above.
Other receivables from Exim Bank Djibouti S.A.
Group
2012
TZS’Millions
Group
2011
TZS’Millions
Company
2012
TZS’Millions
Company
2011
TZS’Millions
2,252
1,288
1,236
891
Key management compensation
Salaries and other short-term benefits
Key management personnel are described as those persons having authority and responsibility for planning, directing and
controlling the activities of the Group, directly or indirectly.
Directors’ remuneration
Fees and other emoluments paid to directors of the Bank during the year amounted to TZS 200 million (2011: TZS 120
million). Details of payment to individual directors will be tabled at the annual general meeting.
136136
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
NOTES (continued)
31 RELATED PARTY TRANSACTIONS (continued)
Contingent liabilities with related parties
The company has a forward contract with the Comores subsidiary of EUR 1.6 million The Bank’s management is confident
that this forward contract will hedge the EURO against the USD amount that Exim Bank Comores S.A placed with Exim
Bank Djibouti S.A.
Exim Bank Comores S.A. took a EUR 2 million loan facility from Proparco as a Senior Loan in the year 2010. The loan is
repayable within 5 years, starting 2012. Loan balance as at 31 December 2011 was EUR 1.82 million. Effective Interest rate
is 5.65%. Exim Bank Tanzania has provided a guarantee of EUR 2 million to Proparco for this loan.
32 PRIOR YEAR ADJUSTMENT
During the year, management discovered an error made in prior years relating to interest income recognised on facilities
granted to specific customers under the Agricultural Input Trust Fund (AGITF). 40% of the interest income earned on these
facilities is due to AGITF and was recognised in the Bank’s interest income in error. In accordance with IAS 8 (Accounting
policies, changes in accounting estimates and errors) the following adjustments have been made to restate the comparative
figures to the earlier prior period presented.
Group and
Company
31 Dec 2011
Group and
Company
1 Jan 2011
(120)
36
-
(84)
-
Retained earnings reduced by
(682)
(598)
Other assets reduced by
(974)
(854)
292
256
Effect:
Interest income for the year reduced by
Tax charge for the year reduced by
Profit after tax reduced by
Deferred tax asset increased by
137
KEY
FINANCIAL
STATEMENTS
PERSONNEL
2012 ANNUAL REPORT
DIRECTORS
NAME
NATIONALITY
Mr. Yogesh Manek
Mr. Hanif Jaffer
Hon. Juma Mwapachu
Mr. Pascal Kamuzora
Mr. Shaffin Jamal
Mr. Thomas Wescott
Tanzanian
Tanzanian
Tanzanian
Tanzanian
Tanzanian
American
TOP MANAGEMENT
NAME
POSITION
Mr. Anthony Grant
Mr. Dinesh Arora
Managing Director
Chief Executive Officer
SENIOR MANAGEMENT
NAME
POSITION
Mr. Ganesh Kumar S. Iyer
Mr. Neralla S. Rao
Mr. Kuldip Paliwal
Mr. Sreekumar Vamadevan
Mr. Al-Amin Sadruddin Merchant
Mr. Eugen Massawe
Mr. Fredrick Robert
Mr. Geoffrey Kitundu
Mr. Gilbert A. Mwandimila
Mr. Hamad Said
Mr. Issa Hamisi
Mr. John Njau
Mr. Jonathan Ngoma
Mrs. Khilna Mamlani
Mr. Mithilesh Kumar
Mrs. Nancy S. Huggins
Mr. Praveen Mehra
Mrs. Priti Punatar
Mr. R. Ramakrishna Rao
Mr. Sanjay Kachru
Mr. Selemani Ponda
Mr. Vishwanath K. N
Asst. General Manager
Asst. General Manager (Corporate Relations)
Regional Manager (Dar Region)
Regional Manager (Northern Region)
Head Technology
Group Head- Operations
Senior Branch Manager-Moshi Branch
Senior Branch Manager-Hill Park Branch
Head of Treasury
Senior Branch Manager-Mt. Meru
Senior Finance Manager
Senior Branch Manager-Karatu Branch
Chief Internal Auditor
Senior Manager – International Banking Division
Head of Strategy and Planning
Senior Branch Manager-Samora Branch
Head –Credit
Senior Manager -Training and Development
Head-Retail Banking
Head - Cards
Chief Finance Officer
Senior Manager- Cards
EXECUTIVE MANAGERS
NAME
POSITION
Mrs. Anisia S. Charles
Mrs. Anna Mroso
Mr. Bernadius Rwassa
Ms. Catherine Justine
Mr. David Lusala
Credit Administration Manager
Clearing Manager
Human Resources Manager
Credit Monitoring Manager
Risk Manager
138138
KEY
FINANCIAL
STATEMENTS
PERSONNEL
Mr. Edmund Mwasaga
Mrs. Felister Simba
Mr. Frank Matoro
Mr. Frank Mbogo
Mr. Hamid Husain
Mr. Joan Rweyemamu
Mr. Kinemo Kihomano
Mr. Kirit Vaitha
Ms. Mita Shah
Mr. Paul Ntobi
Mr. Pindu Luhoyo
Mr. Raymond Matiko
2012 ANNUAL REPORT
Legal Manager
Credit Origination Manager
Customer Service Manager
Planning, Development & Operations Manager
Compliance Manager
Corporate Relations Manager
Institutional Relations Manager
Administration-Procurement Manager
Reconciliation Manager
Chief Security Officer
Internal Audit Manager
Core Banking Solution Manager
BRANCH MANAGERS
NAME
BRANCH
Mrs. Agnes Kaganda
Mrs. Anna Wesiwasi
Ms. Catherine Ibambasi
Mr. Deogratias Makwaia
Mr. Emmanuel Nkelebe
Mr. Furanaeli Kimaro
Mr. Gabriel Saria
Mr. Iddy Mwacha
Mr. James Nzalalila
Mrs. Joyce Sinamtwa
Mr. Lucas Peter
Mr. Mwinyimkuu Ngalima
Mr. Paul Mbanga
Mr. Phenelant Aloyce
Mr. Rishi Jotangia
Mr. Thomas Beatus
Mr. Timoth Silaa
Clock Tower Branch
Morogoro Branch
Namanga Branch
Tanga Branch
Mtwara Branch
Buguruni Branch
Ubungo Branch
Mbeya Branch
Exim Tower Branch
Temeke Branch
Nyerere Branch
Zanzibar Branch
Kilimanjaro Branch
Kigoma Branch
Mwanza Branch
Iringa Branch
Babati Branch
OVERSEAS SUBSIDIARIES
COMOROS
NAME
POSITION
1. Mr.Ganesan Subramanyam
2. Mr. Mohamed Ahsan
3. Mr. Arpit Parikh
Country Head
General Manager
Assistant General Manager
DJIBOUTI
NAME
POSITION
Mr.
Mr.
Mr.
Mr.
Country Head (Since retired)
Country Head (Current)
Asst. General Manager
Asst. General Manager
Patrick Arthur Bettesworth
Jacky Kayiteshonga
G.Veeranna Naidu
V. N. Gopalakrishnan
139139
FINANCIAL
Region
al
STATEMENTS
2012 ANNUAL REPORT
presence and
for thebeyon
year endedd...
31 December 2012
COMOROS S.A
MOHELI
REGIONAL
PRESENCE
140
REPUBLIC OF DJIBOUTI
LOCATIONS
AND CONTACTS
Arusha Branch
Subzail Building, Goliondoi Road,
P.O.Box 1906,
Arusha, Tanzania
Tel: (027) 2504910/1
Fax: (027) 2504912
Email:[email protected]
Babati Branch
Plot No. 86, Dodoma Transport Complex,
Dodoma Road,
P. O. Box 66, Babati
Manyara, Tanzania
Tel: 027 2530712/2530736
Fax: 027 2530737
Email:[email protected]
Buguruni Branch
274 Block A, Buguruni Area,
Uhuru Road,
P.O.Box25557,
Dar Es Salaam, Tanzania
Tel:0222865414/2865417
Fax: 0222865418
Email: [email protected]
Clock Tower Branch
Samora Avenue,
P.O.Box 9510,
Dar Es Salaam,Tanzania
Tel
022)2129678/80,Fax: (022)2129682
Email: [email protected]
Exim Tower Branch
Exim Tower,
Ghana Avenue,
P.O.Box 1431,
Dar Es Salaam,Tanzania
Tel: (022) 2293000,
2121129/2113091-93
Fax: (022)2103013/4
Hill Park Branch
70 Mlimani City,
P.O.Box 33885,
Dar Es Salaam, Tanzania
Tel: (022)2411170/71/72
Fax: (022)2411173
Email: [email protected]
Iringa Branch
Plot No. 21 & 22 E
Uhindini Street,
P.O.Box 261,
Iringa, Tanzania
Tel: (026)2700578/581/582
Fax: (026)2700576
Email:[email protected]
2012 ANNUAL REPORT
Karatu Branch
Mt. Meru Branch
Plot No 15,
Block D Karatu,
Ngorongoro Road,
P.O.Box 346,
Karatu, Tanzania
Tel: (027) 2534609/11/12/13
Fax: (027)2534610
Email: [email protected]
TFA Shopping Center, Uhuru Road,
P.O.Box 16286,
Arusha, Tanzania
Tel
027)2542724,2548652,2548940Fax
027)2548545Email: [email protected]
Mtwara Branch
Kariakoo Branch
Plot No: 19, Block 65 Kariakoo,
Along Morogoro Road Opposite
Umoja wa Vijana Building,
P.O.Box 6332,
Dar Es Salaam, Tanzania
Tel: (022) 2182531/2182549/2182549
Fax: (022) 2182582
Email: [email protected]
Kigoma Branch
Plot No. 193
NIC Building, Lumumba Road,
P.O.Box 1060,
Kigoma, Tanzania
Tel: 028 2802194/5
Fax: 028 2802196
Email: [email protected]
Kilimanjaro Branch
Plot No. 23/I CBD,
Old Moshi Road,
P. O. Box 3001,
Moshi,Tanzania
Tel: 027 2754373/4
Fax: 027 2752895
Email:[email protected]
Mbeya Branch
Plot No, 2A, Block O.
Mwanjelwa Industrial Area’
P.O.Box 2839,
Mbeya,Tanzania
Tel: (025) 250 2814/5
Fax: (025) 250 2814/5
Email: [email protected]
2Tanu Road
P.O.Box 1021,
Mtwara, Tanzania
Tel
023)2333871/2333577Fax
023) 2334045Email: [email protected]
Mwanza Branch
Plot No. 13,Block H,
Lumumba Road,
P.O.Box 6033,
Morogoro,Tanzania
Tel: (023) 2613591/92
Fax: (023) 2613593
Email: [email protected]
Moshi Branch
Plot No 4, Block B,
Boma Road,
P.O.Box 3001, Moshi
Tel
027) 2752917/2752522/40Fax: (027) 2752895
Email:[email protected]
141
Opposite Bandari House,
Independence Avenue,
P.O.Box 729,
Tanga,Tanzania
Tel
027)2647288/86Fax
027)26244086Email: [email protected]
Temeke Branch
TRA Regional Offices,
B.O.Box 42763,
Dar Es Salaam,Tanzania
Tel
022)2863928/9Fax: (022)2863927
Email: [email protected]
Plot No.21, Block K,
Kenyatta Road,
P.O.Box 822,
Mwanza, Tanzania
Tel (28) 2502020/1
Fax: (028) 2502022
Email: [email protected]
Ubungo Branch
Namanga Branch
Zanzibar
Plot No 83,
Ada Estate, Namanga,
P.O.Box 22372
Dar es Salaam, Tanzania
Tel
022)2664191/92/93Fax: (022)2664194
Email:[email protected]
Millenium Business Park,
P.O.Box 55026,
Dar Es Salaam, Tanzania
Tel: (022) 2401451/2
Fax: (022)2401450
Email:[email protected]
Mlandege Street,
Kwality Plaza,
P.O.Box 538,
Zanzibar
Tel: (024)2237194/5
Fax: (024)2237182
Email:[email protected]
Nyerere Road Branch
Plot No 29A, Jacksi Plaza,
Ground Floor,Nyerere Road,
P.O.Box 1431,
Dar Es Salaam, Tanzania
Tel: (022) 2861512/13/14
Fax: (022) 2861516
Email: [email protected]
Samora Avenue Branch
Morogoro Branch
Tanga Branch
9 Samora Avenue,
P.O.Box 1431,
Dar Es Salaam, Tanzania
Tel
022)2111861/2119738,Fax: (022)2119737
Email: [email protected]
Shinyanga Branch
Plot No. H.132, Block A,
Uhuru Road,
P.O Box 141,
Shinyanga, Tanzania
Tel: +255 28 276 2737/ 276 2384
Fax: +255 28 276 3949
Email: [email protected]
Subsidiaries
Exim Bank Comoros S.A
Moroni Branch
P.O.Box 8298,
Place de France,
Moroni
Tel: +269 739400/2
Fax: +269 762588
Exim Bank Comoros S.A
Anjouan Branch
P.O.Box 235,
Mitsamudu, Anjouan
Moroni
Tel: +269 7711265
Fax: +269 7611298
Djibouti Branch
Exim Bank (Djibouti) S.A
Batiment Ougoul,
Avenue G. Clemenceau
P.O.Box 4455,Djibouti.
Tel : +253 21 352601
Fax: +253 21 352601
2003
2005
Opens 3 Branches:
Tanga, Morogoro &
Mwanza
2007
1st Bank to Introduce
MasterCard in Tanzania
Opens 2nd Branch in
Arusha: Mt. Meru
Recognized 6th Largest Bank
in terms of Total Assets
Celebrates 10 Year
Anniversary
Our journey of 15 years
Awarded 1st place for Best
Presented Financial
Statements 2008
Relationship with
NORFUND is Established
Opens 3 Branches: Ubungo,
Zanzibar, Mbeya & Iringa
Introduction of
TANAPA Cards
1997
2000
2002
2004
Exim Bank is
established
Opens 3rd Branch:
Arusha
Opens 7th Branch:
Moshi
Opens 1st Branch
at Samora Avenue
Celebrates 5 Year
Anniversary
At 7 Years, Exim Bank
ranks 8th in Terms of
Deposits
Opens 2nd Branch:
Mtwara
MoneyGram, Salary Cards
and ATM Machines are
introduced
2006
Partnership signing
with PROPARCO
Opens 2 Branches:
Hill Park & Temeke
2011
1st Bank to Introduce Visa
Credit Cards & Mobile
ATM Banking
Opens 1st Subsidiary in
Comoros: Moroni
Opens 8th Branch:
Clock Tower
Relationship with IFC
is established
2009
Opens 2nd Branch in
Comoros: Anjouan
2008
Opens 3 Branches:
Karatu, Namanga &
Nyerere
Establishes
Staff Training Center
Opens 2nd Subsidiary:
Djibouti
Opens 3 Branches:
Samora, Babati & Buguruni
Launches eMpower
Management & Leadership
Development Programme
Migrates to New Core
Banking System
Opens 2 Branches:
Kigoma & Kilimanjaro
2010
2012
Relocation to
Exim Tower
Partnership signing
with FMO
Opens Kariakoo Branch
& Exim Tower Branch
Launches Mobile and
Internet Banking
Introduces Current
Account for NGOs &
SMS Banking
Inauguration of
The Exim Academy
Awarded 1st place for
Best Presented Financial
Statements 2009
Celebrates 15 Year
Anniversary
“A brilliant past,
a golden future”
145
FINANCIAL
STATEMENTS
2012 ANNUAL REPORT
for the year ended 31 December 2012
A
s
k
n
a
Th
g
i
B
r
u
o
l
l
to a s!!!
on
r
t
a
P
146
doc_950450514.pdf