Annual Report 2012 of Ibbl

FINANCIAL STATEMENTS
for the year ended 31 December 2012
2012 ANNUAL REPORT
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2012 FINANCIAL HIGHLIGHTS (TZS Bn)
Assets
Loans & Advances
Deposits
Shareholders Funds
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Annual Report
Strength in Relationships
2012
Table of Contents
CORPORATE INFORMATION Mission and Vision Company Profile Board of Directors Profile Chairmans Statement Managing Directors Statement Company Information Corporate Social Responsibility 2 3 8 10 14 18 25
FINANCIAL STATEMENT Report of Directors Statement of Directors Responsibility Report of Independent Auditor Profit and Loss Account Balance Sheet Statements of Changes in Equity Cash Flow Statements Notes Key Personnel Location and Contacts 33 41 43 45 46 48 50 52 138 141
VISION MISSION & VALUES
2012 ANNUAL REPORT
Our Mission:
We are committed to remain an innovative Tanzanian Bank offering ser vices of Internationa l Standards
Our Vision:
To be the bank of choice
Our Values:
Flexibilit y Reliabilit y Integrity Prof essionalis m A drive for customer satisfaction
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. 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; Profit after tax of TZS 13,667 million up from TZS 12,529 million in 2011. Groups total deposits grew significantly to TZS 809 billion (2011: TZS 699 billion). Groups loan portfolio increased to TZS 455 billion (2011: TZS 442 billion); and Total assets increased to TZS 967 billion (2011: TZS 841 billion).
GROWTH AND CAPITAL POSITION

Exim Banks 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.
GLOBAL STRATEGIC PARTNETSHIPS AND ALLIANCES
From left: His Exellency, President of The Union of Comoros Mr. Ikililou Dhoinine shaking hands with Exim Banks Director, Mr. Hanif Jaffer, during a courtesy call made to the Presidents office. Looking on is Managing Director, Anthony Grant and Chief Executive Officer, Mr. Dinesh Arora.
The Banks 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.
COMPANY PROFILE
2012 ANNUAL REPORT
Exim Banks 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. The Banks 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.
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;
Bank in Tanzania to launch Credit Cards in association with MasterCard. Tanzanian Bank to establish an overseas banking subsidiary. 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.
FIRST MOVER INITIATIVES
Launch of innovative Faida Savings Account in 2009.
Bank to launch Visa Cards in The Union of Comoros.
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.
COMPANY PROFILE
2012 ANNUAL REPORT
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.
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
Valuing Human Capital: * Gender Sensitivity * Belongingness * Recognition * Encouragement
Buildin Excelle g nce!
BOARD OF DIRECTORS PROFILE

Hon. Juma Mwapachu
Yogesh Manek
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 Tanzanias 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 Kenyas highest awards, The Moran of the Golden Heart (MGH).
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 CEOs Round Table. He is also a trustee for three non-profit organizations and is a Chairman of three Social and Community Service humanitarian organizations.
Hanif Jaffer
2012 ANNUAL REPORT
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. Jaffers 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. Hanifs 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.
Mr. Jamal is the Chairman of Union Trust Investments Limited, one of Tanzanias 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. Jamals position as Director.
CHAIRMANS 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 Banks 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.
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CHAIRMANS 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 countrys 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 governments 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 Tanzanias 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 countrys 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.
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CHAIRMANS 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.
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CHAIRMANS 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
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MANAGING DIRECTORS 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 Tanzanias 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 Banks relationships, to be a bank of choice.
BANK PERFORMANCE 2012

As noted in the Chairmans 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 banks 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
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MANAGING FINANCIALDIRECTORS 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-ofthe 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 banks 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 Banks 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 banks human resources and IT platforms. Exim Bank has been one of the major players in the evolution of Tanzanias 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.
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MANAGING DIRECTORS STATEMENT
2012 ANNUAL REPORT
On behalf of the entire Management Team, the Chairmans 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 Banks 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 banks dedicated employees.
Anthony Grant Managing Director Date: 04th April 2013
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rs e n t r a p h t i w g : n s i r d e n d o l o B h e k a t and s
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COMPANY FINANCIAL STATEMENTS INFORMATION
2012 ANNUAL REPORT
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. CRMDs emphasis remains on sustaining and building on existing relationships as well as providing new customers with a smooth on-boarding experience. CRMDs 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.
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 individuals 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.
RETAIL BANKING
The Exim Banks 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 Banks 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.
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2012 ANNUAL REPORT
INTERNATIONAL BANKING DIVISION AND PAYMENTS

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. 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.
WOMEN ENTREPRENEURS FINANCING (WEF) PROGRAMME

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.
CREDIT MANAGEMENT
Exim Bank maintains a sound credit portfolio accomplished through delivery of superior solutions and liquidity across a full range of products. In todays 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.
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.
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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. 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 women program (WEF) is now accessible from all Exim Branches across the country.
transaction times and efficiency of banking operations that has led to increased customer satisfaction and amplified employee productivity. 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. 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

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.
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 Banks 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
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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.
The Permanent Secretary of the Ministry of Education & Vocational Training, Mr. Selestine Gesimba, cuts a ribbon at the launch of the Banks 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 Banks 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.
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
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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. 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. 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.
agreed remedial actions have been implemented audit findings and overdue issues are reported to senior management and quarterly to Board Audit Committee (BAC).
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. 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 departments value is maximized when it supports management to set strategy, objectives, and helps to balance growth, returns and related risks. The Risk and Compliance departments merged during the year to effectively manage both aspects and bring about synergies in the related areas.
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
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 ATMs 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.
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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 Banks performance.
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.
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 ATMs. 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.
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 ATMs. Started acquiring retail business in Comoros. Launched ATM operations in Djibouti.
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2012 ANNUAL REPORT
Debit 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
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.
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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 has a continuing commitment to be ethical. The Bank takes great pride in its contribution to the nations 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.
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.
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 Banks philanthropic efforts and are often magnified through employee voluntary efforts in various initiatives.
KEY ACTIONS IN 2012 Fostering Talent
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.
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.
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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 Banks unique corporate social responsibility that seeks to improve the schools 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 Banks 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. Mangombe.
The Exim Bank management team takes part in the Banks Vein-to-Vein blood donation drive held at the Banks 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.
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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 Banks 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 Banks employees volunteered for a green environment weekend cleaning exercise of Clock Tower and Ohio Gardens.
The Banks 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.
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.
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2012 ANNUAL REPORT
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2012 ANNUAL REPORT
th year of existence Bank wid e in 2012. The celebration extended to include the multitude of miles tones achieved along the way. The Banks 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.
The Bank celebrated its 15
EXIM BANK FINANCIAL STATEMENTS COMOROS SA
2012 ANNUAL REPORT
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.
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.
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)

Shareholders 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)
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.
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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)

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) Shareholders funds have grown by 39.00%, reached to DJF133 Million (USD 0.70 Million)
From left: Exim Banks 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.
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.
Seated: His Excellency, President of the Republic of Djibouti, Mr. Ismal 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.
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Our relationship with customers:

* Understanding & Empathy * Fairness * Innovative Solutions * Quick Turnaround
Exim The Ba nk of Cho ice
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REPORT OF THE FINANCIAL STATEMENTS DIRECTORS
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 Banks 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.
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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 1 2 3 4 5 6 Mr.Yogesh Manek Mr. Hanif Jaffer Mr. Shaffin Jamal Mr. Pascal Kamuzora Mr. Thomas Wescott Hon. Juma Mwapachu Position Chairman Director Director Director Director Director Nationality Tanzanian Tanzanian Tanzanian Tanzanian American Tanzanian Qualifications Bachelor of Arts Certified Public Accountant ( CPA-T) Masters of Business Administration Master of Arts (Economics) Bachelor of Arts, Government and Economics 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 Companys 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.
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2012 ANNUAL REPORT
8 CORPORATE GOVERNANCE (continued) (I) Asset and Liability Management Committee (ALCO)
Name 1 2 3 Mr. Thomas Wescott Mr. Hanif Jaffer Mr. Pascal Kamuzora Position Chairman Member Member
(ii) Credit Committee (BCC)

Name 1 2 3 Mr. Shaffin Jamal Mr.Yogesh Manek Mr. Hanif Jaffer Position Chairman Member Member
(iii) Risk Management Committee (BRMC)

(iv) Audit Committee (BAC)

(v) Investment Committee (BIC)

Name 1 2 3 4 Mr.Yogesh Manek Mr. Shaffin Jamal Mr. Hanif Jaffer Mr. Thomas Wescott Position Chairman Member Member Member
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2012 ANNUAL REPORT
8 CORPORATE GOVERNANCE (continued) (vi) Executive Committee (EXCOM)

Name 1 2 3 4 Mr.Yogesh Manek Mr. Shaffin Jamal Mr. Hanif Jaffer Hon. Juma Mwapachu Position Chairman Member Member Member
9 CAPITAL STRUCTURE
The Banks 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
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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: 2012 Number of ordinary shares 2,580,000 2,580,000 2,580,000 1,935,000 2,580,000 322,500 322,500 12,900,000 2011 Number of ordinary shares 2,580,000 2,580,000 2,580,000 1,935,000 2,580,000 322,500 322,500 12,900,000
Shareholder 1 2 3 4 5 6 7 Mr.Yogesh Manek Mr. Shaffin Jamal Mr. Hanif Jaffer Mr. Azim Virjee Mr. Azim Kassam Alawa Investments Limited Kandasi Investments Limited Total Directors holding shares are listed below:
Name Nationality 1 2 3 Mr.Yogesh Manek Mr. Shaffin Jamal Mr.Hanif Jaffer Tanzanian Tanzanian Tanzanian
Number of Ordinary Shares 2,580,000 2,580,000 2,580,000
12 FUTURE DEVELOPMENT PLANS

The Board intends to continue a thoughtful and business oriented expansion of the Banks 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.
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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 Groups deposits from customers increased by 17.2% to TZS 723 billion (2011: TZS 617 billion); Groups 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 Companys 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 Tanzanias (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.
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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 banks 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).
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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
04th April 2013 _____________________ Date
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STATEMENT OF FINANCIAL 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

04th April 2013 _____________________ Date
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STATEMENT OF FINANCIAL 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.
Auditors 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 auditors 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 entitys 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 entitys 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 Groups and Companys 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

Report on other Legal and Regulatory Requirements
2012 ANNUAL REPORT
This report, including the opinion, has been prepared for, and only for, the companys 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
2012 ANNUAL REPORT
* Opportu * Linkages * Leverag
Our relat ionships a

nities & Op tions
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g n i h c Rea ched ea r n u the
ing Practic
es
44 44
2012 ANNUAL REPORT
STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

Restated Group 2011 TZSMillions 65,864 (25,378) 40,486 (6,232) 34,254 14,901 (195) 14,706 5,384 786 (37,643) 17,487 (5,042) 12,445 Restated Company 2011 TZSMillions 63,396 (24,839) 38,557 (6,003) 32,554 13,437 (72) 13,365 4,589 786 (32,180) 19,114 (5,042) 14,072
Group 2012 Note TZSMillions Interest and similar income Interest expense and similar charges Net interest income Loans and advances impairment charge Net interest income after loan impairment charge 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 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 11 7 15 5 6 84,192 (39,214) 44,978 (5,674) 39,304 17,693 (193) 17,500 3,968 1,104 (45,336) 16,540 (2,873) 13,667
Company 2012 TZSMillions 81,805 (38,644) 43,161 (5,579) 37,582 15,218 (168) 15,050 3,043 1,104 (40,970) 15,809 (2,873) 12,936
8 9
244 6,203 20,114
8 4,366 16,819
6,203 19,139
4,366 18,438
45
2012 ANNUAL REPORT
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 Total assets LIABILITIES Deposits from banks Deposits from customers Derivative liabilities Other liabilities Subordinated debts and senior loans Total liabilities SHAREHOLDERS EQUITY Share capital Retained earnings Regulatory and other reserves Total shareholders equity Total equity and liabilities 13 14 24 15 16 17 17 18 19 20 21 22 143,686 132,202 108 435,598 185,148 26,933 3,587 11,938 20,274 642 5,043 1,391 966,550 Restated Group 2011 TZS Million 99,501 121,686 428,032 134,718 20,730 3,669 11,719 17,403 760 1,742 1,050 841,010 Restated Group 2010 TZS Million 82,622 93,210 342,758 134,568 15,764 3,638 16,136 17,479 570 881 676 708,302
23 24 25 26
86,008 722,734 18,433 29,948 857,123
81,887 617,259 19,492 33,059 751,697
44,233 548,770 11 17,950 20,118 631,082
27
12,900 64,833 28 31,694 109,427 966,550
12,900 57,544 18,869 89,313 841,010
12,900 51,244 13,076 77,220 708,302
The financial statements on pages 12 to 91 were approved for issue by the Board of Directors and signed on its behalf by: __________________________ __________________
04th April 2013
Yogesh Manek - (Chairman)
Date
46
2012 ANNUAL REPORT
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012

Company 2012 TZS Million 116,157 127,261 410,600 185,148 26,933 3,587 10,918 17,709 461 7,498 5,043 1,391 912,706 Restated Company 2011 TZS Million 84,447 120,833 408,269 134,718 20,730 3,669 10,311 15,420 644 5,287 1,742 1,050 807,120 Restated Company 2010 TZS Million 68,404 98,348 326,029 134,568 15,764 3,638 15,486 15,855 289 5,287 881 676 685,225
Note 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 Total assets LIABILITIES Deposits from banks Deposits from customers Derivative liabilities Other liabilities Subordinated debts and senior loans Total liabilities SHAREHOLDERS EQUITY Share capital Retained earnings Regulatory and other reserves Total shareholders equity Total equity and liabilities 13 14 15 16 17 17 18 19 20 21 22
23 24 25 26
76,133 684,397 18,119 26,095 804,744
83,724 586,493 19,147 28,933 718,297
47,869 528,392 11 17,718 16,124 610,114
27
12,900 64,697 30,365 107,962 912,706
12,900 57,706 18,217 88,823 807,120
12,900 49,619 12,592 75,111 685,225
28
The financial statements on pages 12 to 91 were approved for issue by the Board of Directors and signed on its behalf by:
__________________________
__________________
04th April 2013 Date
Yogesh Manek - (Chairman)
47
2012 ANNUAL REPORT
STATEMENT OF CHANGES IN EQUITY - GROUP

Regulatory and other Retained reserves earnings TZSMillions TZSMillions 13,076 51,842 (598) 13,076 51,244 12,445
Year ended 31 December 2011 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 Exchange differences on translation of foreign operations Total comprehensive income Transfer to regulatory reserve Transaction with owners: Payment of dividend for 2010 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 Exchange differences on translation of foreign operations Total comprehensive income Transfer to regulatory reserve At end of year
Share capital TZSMillions 12,900 12,900 -
Total TZSMillions 77,818 (598) 77,220 12,445
4,366 8 4,374 1,419
12,529 (1,419)
4,366 8 16,819 -
(4,726) 12,900 18,869 57,544
(4,726) 89,313
12,900 12,900 -
18,869 18,869 -
58,226 (682) 57,544 13,667
89,995 (682) 89,313 13,667
12,900
6,203 244 6,447 6,378 31,694
13,667 (6,378) 64,833
6,203 244 20,114 109,427
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2012 ANNUAL REPORT
STATEMENT OF CHANGES IN EQUITY - COMPANY

Regulatory and other Retained Share capital reserves earnings TZSMillions TZSMillions TZSMillions 12,900 12,900 12,592 12,592 50,217 (598) 49,619 14,072
Year ended 31 December 2011 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 Total comprehensive income Transfer to regulatory reserve Transaction with owners: Payment of dividend for 2010 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 Total comprehensive income Transfer to regulatory reserve At end of year
Total TZSMillions 75,709 (598) 75,111 14,072
4,366 4,366 1,259
14,072 (1,259)
4,366 18,438 -
12,900
18,217
(4,726) 57,706
(4,726) 88,823
12,900 12,900 -
18,217 18,217 -
58,388 (682) 57,706 12,936
89,505 (682) 88,823 12,936
12,900
6,203 6,203 5,945 30,365
12,936 (5,945) 64,697
6,203 19,139 107,962
49
2012 ANNUAL REPORT
STATEMENTS OF CASH FLOWS

Restated Group Company 2011 2012 TZSMillions TZSMillions 60,325 (23,193) 15,004 6,747 (34,479) 786 (6,277) 18,913 79,086 (33,202) 15,066 3,259 (38,200) 1,091 (6,130) 20,970 Restated Company 2011 TZSMillions 57,737 (22,655) 13,663 5,820 (29,753) 786 (6,277) 19,441
Cash flows from operating activities Interest receipts Interest payments Net fee and commission receipts Other income received Payments to employees and suppliers Dividends received Income tax paid Cash flows from operating activities before changes in operating assets and liabilities 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 - other liabilities Net cash generated from / (utilized in) operating activities
Group 2012 Note TZSMillions 81,523 (33,746) 17,526 4,293 (42,753) 1,091 (6,130) 21,804
(10,572) (9,896) (49,211) 775 100,333 4,073 82 (1,059) 56,330
(85,004) (19,221) (19,714) 1,425 65,115 37,654 (31) 1,388 525
(5,181) (7,285) (49,211) (587) 92,735 (7,592) 82 1,028 42,903
(81,741) (14,030) (19,714) 2,183 54,727 35,855 (31) 1,321 (1,989)
50
2012 ANNUAL REPORT
STATEMENTS OF CASH FLOWS (continued)

Group 2012 Note TZSMillions 19 20 (6,389) (500) 13 (6,876) Restated Group Company 2011 2012 TZSMillions TZSMillions (2,733) (692) (600) (4,025) (5,262) (273) 13 (2,211) (7,733) Restated Company 2011 TZSMillions (1,855) (692) (600) (3,147)
Investing activities Purchase of equipment Purchase of intangible assets Proceeds from sale of equipment Investment in subsidiary-Exim Bank Djibouti Investment securities available for sale Net cash used in investing activities Financing activities Proceeds from subordinated debts Dividends paid Repayment of senior loans and subordinated debts Net cash flow generated from / (used in) financing activities Cash and cash equivalents at start of year Net cash generated from /(used in) operating activities Net cash used in investing activities Net cash generated from/(used in)financing activities Cash and cash equivalents at end of year
26 26
(3,436) (3,436) 145,787 56,330 (6,876) (3,436)
15,825 (4,726) (4,247) 6,852 142,435 525 (4,025) 6,852 145,787
(3,054) (3,054) 140,165 42,903 (7,733) (3,054) 172,281
15,825 (4,726) (4,247) 6,852 138,449 (1,989) (3,147) 6,852 140,165
30
191,805
51
2012 ANNUAL REPORT
NOTES
1 GENERAL INFORMATION 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 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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. (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 Banks 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:
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2012 ANNUAL REPORT
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 entitys 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 entitys 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 9s 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 10s 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 12s 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.
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2012 ANNUAL REPORT
NOTES (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (b) Consolidation Subsidiaries The financial statements of the subsidiaries used to prepare the group financial statements were prepared as of the parents 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 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. 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 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.
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2012 ANNUAL REPORT
NOTES (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (e) Dividend income Dividends are recognized in profit or loss in Dividend income when the entitys right to receive payment is established. (f) Translation of foreign currencies Items included in the financial statements of each of the Groups 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 Companys functional and presentation currency. 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 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. (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.
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2012 ANNUAL REPORT
NOTES (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (g) Financial assets (continued) (ii) Loans and receivables 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. (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 Banks 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.
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2012 ANNUAL REPORT
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 (j) Impairment of financial assets
Financial liabilities at amortized cost Financial liabilities at amortized cost Financial liabilities at amortized cost Financial liabilities at fair value through profit or loss
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.
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2012 ANNUAL REPORT
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: 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 borrowers competitive position; and Deterioration in the value of collateral.
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 assets 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.
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2012 ANNUAL REPORT
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.
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2012 ANNUAL REPORT
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 assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets 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. (n) 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.
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2012 ANNUAL REPORT
NOTES (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (p) Cash and cash equivalents 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. (q) Employee benefits (i) Retirement benefit obligations 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 Banks 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 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.
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2012 ANNUAL REPORT
NOTES (continued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (u) Dividends on distribution Dividend distribution to the Banks shareholders is recognized as a liability in the Groups financial statements in the period in which the dividends are approved by the Banks shareholders. (v) Acceptances and letters of credit 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.
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2012 ANNUAL REPORT
NOTES (continued)
3 FINANCIAL RISK MANAGEMENT 3.1 Credit Risk 3.1.1 Credit Risk Measurement (a) Loans and advances 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) 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 Groups 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.
Groups internal ratings scale Groups rating 1 2 3 4 5 Description of the grade 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.
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2012 ANNUAL REPORT
NOTES (continued)
3 FINANCIAL RISK MANAGEMENT (continued) 3.1 Credit Risk 3.1.2 Risk Limit Control and Mitigation Policies 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. 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. (a) Collateral 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:
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.
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2012 ANNUAL REPORT
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 Banks 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.
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2012 ANNUAL REPORT
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 Banks on balance sheet items relating to loans and advances and the associated impairment provision for each of the Banks internal rating categories: 31 December 2012 Loans and advances (%) 92.12 0.75 0.59 1.28 5.25 100.00 Impairment provision (%) 4.18 15.33 79.87 100.00 31 December 2011 Loans and advances (%) 95.13 0.31 0.92 0.21 3.43 100.00 Impairment provision (%) 0.43 2.55 2.78 94.24 100.00
Banks rating 1. Current 2. Especially Mentioned 3. Sub-standard 4. Doubtful 5. Loss
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 borrowers competitive position; and Deterioration in the value of collateral. The Groups and Companys 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.
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2012 ANNUAL REPORT
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: Loans and advances to customers Neither past due nor impaired Past due but not impaired Impaired Gross Less: Allowances for impairment Net Company Neither past due nor impaired Past due but not impaired Impaired Gross Less: Allowances for impairment Net 389,096 3,249 37,527 429,872 (19,272) 410,600 127,261 127,261 127,261 401,090 1,354 19,686 422,130 (13,861) 408,269 120,833 120,833 120,833 409,093 3,824 42,410 455,327 (19,729) 435,598 (Amounts are in TZS Million) 31 December 2011 Loans and advances to customers 416,884 1,915 23,444 442,243 (14,211) 428,032 Amounts due from banks 121,686 121,686 121,686 Amounts due from banks 132,202 132,202 132,202
Group
31 December 2012
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 Banks total net loans and advances increased by 0.5% (2011: 24%) while the Groups 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.
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2012 ANNUAL REPORT
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 MSEs Consumer SMEs Corporate Total Total Grades Current 31 December 2011 Grades Current Company Grades Current 31 December 2011 Grades Current 16,544 156,687 227,859 401,090 120,833 31,690 107,970 249,435 389,095 127,261 18,222 166,206 235,669 416,884 121,686 33,481 114,497 261,115 409,093 132,202
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2012 ANNUAL REPORT
NOTES (continued)
3 Group 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: (Amounts in TZS Millions) MSEs 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 (Amounts in TZS Millions) MSEs 31 December 2012 Grades Up to 90 days 31 December 2011 Grades Up to 90 days 13 480 861 1,354 1,035 2,214 3,249 SMEs Corporate Total 36 505 1,374 1,915 1,337 2,487 3,824 SMEs Corporate Total
Company
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2012 ANNUAL REPORT
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: SMEs (Amounts in TZS Millions) Consumer SMEs Corporate Total
Group 31 December 2012 Impaired loans 31 December 2011 Impaired loans Company 31 December 2012 Impaired loans 31 December 2011 Impaired loans
6,143 3,764
12,563 6,924
23,704 12,756
42,410 23,444
SMEs -
Consumer 6,043
SMEs 10,722
Corporate 20,762
Total 37,527
627
3,474
5,604
10,608
19,686
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 Groups and Companys main credit exposure at their carrying amounts, as categorised by industry sector and geographical sectors as of 31 December 2012 and 31 December 2011.
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2012 ANNUAL REPORT
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 (Amounts are in TZS Million)
Trading Transport Wholesale Manu- and comand com- and retail facturing mercial munication trade
Financial institution
Agriculture
Individuals
Others
Total
Balances with Central Banks Loans and advances to banks Government securities held to maturity Investment securities held to maturity
116,882 132,202 185,148 511
3,076
- 116,882 - 132,202 - 185,148 3,587
Loans and advances to customers: Loans to individuals: - Personal loans - Commercial loans Loans to corporate entities: - Corporate customers - SMEs Other assets Derivative assets As at 31 December 2012 2 1,943 108 436,796 100,426 50,134 41,312 82,133 15,217 35,728 14,406 29,912 11,400 2,256 9,620 32,639 6,608 116,629 299,299 35,839 10,060 95,033 10,060 108 22,533 39,326 24,237 168,821 883,585 10,657 79 22,397 1,840 6,293 39,426 1,840
Credit risk exposures relating to Off-balance sheet items are as follows: Financial guarantees andacceptances Loan commitments and other credit related obligations As at 31 December 2012 4,518 148 4,666 18 5,925 25,056 12,490 534 741 1,275 10 1,916 1,926 10 504 514 2,746 2,746 30,790 7,487 38,277 60,935 31,957 92,893
5,943 37,546
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2012 ANNUAL REPORT
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)
Trading and commercial
(Amounts are in TZS Million)

Transport and communication Wholesale and retail Agritrade culture
Financial institutions
Manufacturing
Individuals
Others
Total
Balances with Central Banks Loans and advances to banks 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: - Corporate customers - SMEs Other assets As at 31 December 2011
84,349 121,686 134,718 448
3,138
84,349 121,686 134,718 3,669
4,160 -
16,759
4,160 16,759
2 3,353 342,679
101,445 16,306 86,878
76,302 58,680 134,982
992 21,482 22,474
6,596 34,314 7,721 6,476 -
61,761 47,654 9,827
247,406 159,707 9,827
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 Loan commitments and other credit related obligations As at 31 December 2011
4,096 713 4,809
29,619 23,255 52,874
1,836 1,836
1,483 1,483-
37,034 23,968 61,002
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2012 ANNUAL REPORT
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 (Amounts are in TZS Million)
Financial Manuinstitution facturing
Trading Transport Wholesale and comand com- and retail mercial munication trade
Agriculture
Individuals
Others
Total
91,012 127,261 185,148 511
3,076
91,012
- 127,261 - 185,148 3,587
10,657 -
79 -
21,964 -
6,293 -
38,993 -
2 1,944 -
82,133 15,217 -
25,179 9,388 34,567
28,730 11,044 39,774
2,256 9,620 -
32,639 6,608 -
112,893 283,832 33,954 9,183 87,775 9,183
405,878 100,426
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 Loan commitments and other credit related obligations As at 31 December 2012 4,518 148 4,666 18 5,925 5,943 25,035 5,586 30,621 534 741 1,275 10 1,916 1,926 10 504 514 2,746 2,746 30,790 7,487 38,277 60,915 25,053 85,968
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2012 ANNUAL REPORT
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)
Trading and commercial
(Amounts are in TZS Million)

Transport Wholesale and com- and retail munication trade
Financial Manuinstitutions facturing
Agriculture
Individuals
Others
Total
69,930 120,833 134,718 538
3,131
69,930 120,833 134,718 3,669
3,259 -
16,759
3,259 16,759
67,441 1,388 327,407 16,306 -
66,339 54,160 -
21,482 21,482
6,596 7,721 -
34,314 6,476 -
59,868 46,160 8,546
234,558 153,693 8,546
86,878 120,499
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 Loan commitments and other credit related obligations As at 31 December 2011
4,096 4,096
29,601 23,255 52,856
1,836 1,836
1,483 -
37,016 23,255 60,271
- 1,483
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2012 ANNUAL REPORT
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 Tanzania Credit risk exposures relating to on-balance sheet bassets are as follows Balances with Central Banks Loans and advances to banks 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 - SMEs Other assets Derivative assets As at 31 December 2012 Credit risk exposures relating to Off-balance sheet items are as follows: Financial guarantees and acceptances Loan commitments and other credit related obligations As at 31 December 2012 60,915 25,053 85,968 20 6,904 6,924 60,935 31,957 92,892 731,871 5,449 82,794 91,012 32,342 185,148 3,587 35,557 257,780 117,262 9,183 5,449 82,794 25,869 11,617 270 2,003 15,467 7,259 877 108 63,470 116,881 132,202 185,148 3,587 35,827 2,003 273,247 124,521 10,060 108 883,584 (Amounts are in TZS Million) Europe America Others Total
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2012 ANNUAL REPORT
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 Tanzania Credit risk exposures relating to on-balance sheet bassets are as follows Balances with Central Banks Loans and advances to banks 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 - SMEs Other assets As at 31 December 2011 Credit risk exposures relating to Off-balance sheet items are as follows: Financial guarantees and acceptances Loan commitments and other credit related obligations As at 31 December 2011 37,015 23,255 60,270 19 713 732 37,034 23,968 61,002 69,930 50,459 134,718 3,669 3,259 16,759 234,558 153,693 8,546 675,591 15,032 15,032 39,798 39,798 14,419 16,397 901 12,848 6,014 1,281 51,860 84,349 121,686 134,718 3,669 4,160 16,759 247,406 159,707 9,827 782,281 (Amounts are in TZS Million) Europe America Others Total
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2012 ANNUAL REPORT
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 Tanzania Credit risk exposures relating to on-balance sheet bassets are as follows Balances with Central Banks Loans and advances to banks 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 - SMEs Other assets As at 31 December 2012 Credit risk exposures relating to Off-balance sheet items are as follows: Financial guarantees and acceptances Loan commitments and other credit related obligations As at 31 December 2012 60,915 60,915 35,558 257,780 117,262 9,183 731,409 5,449 87,188 2,745 35,558 257,780 117,262 9,183 826,791 91,012 31,879 185,148 3,587 5,449 87,188 2,745 91,012 127,261 185,148 3,587 (Amounts are in TZS Million) Europe America Others Total
25,053 85,968
25,053 85,968
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2012 ANNUAL REPORT
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) Tanzania Credit risk exposures relating to on-balance sheet assets are as follows: Balances with Central Bank Loans and advances to banks 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: - Corporate customers - SMEs Other assets As at 31 December 2011 234,558 153,693 8,546 679,792 9,977 39,798 16,398 234,558 153,693 8,546 745,965 3,259 16,759 3,259 16,759 69,930 54,660 134,718 3,669 9,977 39,798 16,398 69,930 120,833 134,718 3,669 (Amounts are in TZS Million) Europe America Others Total
Credit risk exposures relating to off-balance sheet items are as follows: Financial guarantees and acceptances Loan commitments and other credit related obligations As at 31 December 2011 37,016 23,255 60,271 37,016 23,255 60,271
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2012 ANNUAL REPORT
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 Groups and Companys 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 Groups and Companys exposure to foreign currency exchange rate risk at 31 December 2012. Included in the table are the Groups and Companys financial instruments at carrying amounts, categorised by currency.
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2012 ANNUAL REPORT
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 Assets Cash and balances with Central Banks Loans and advances to banks Loans and advances to customers Derivative assets Other assets Total financial assets Liabilities Deposits from customers Deposits from banks Subordinated debts and senior loans Other liabilities Total financial liabilities Net on-balance sheet financial position Credit commitments 259,666 71,732 26,095 9,375 366,868 7,234 255 3,853 194 11,536 2,599 278 2,877 31,128 152 31,280 3,440 3,311 49 6,800 304,067 75,298 29,948 10,048 419,361 32,817 85,684 248,838 7 367,446 530 6,481 900 7,911 362 2,515 34 2,911 20,242 25 22,884 108 843 44,102 1,872 8 1,575 3,455 55,823 94,713 274,197 108 884 425,725 USD EURO GBP KMF Others Total
478 8,622
(3,624) -
34 -
12,822 (3,345) 6,925 -
(6,364) 15,547
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2012 ANNUAL REPORT
NOTES (continued)
(All amounts expressed in million of Tanzania Shillings) As at 31 December 2011 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 Deposits from banks Subordinated debts and senior loans Other liabilities Total financial liabilities Net on-balance sheet financial position Off balance sheet commitments 242,364 48,177 28,933 9,136 328,610 8,277 4,695 4,126 525 17,623 2,667 423 138 3,228 26,290 4,341 609 31,240 279,598 57,636 33,059 10,408 380,701 7,698 78,451 232,973 1,275 320,397 668 24,628 25,296 358 1,239 1,597 11,403 8 18,996 232 30,639 116 116 20,127 104,442 251,969 1.507 378,045 USD EURO GBP KMF Others Total
(8,213) 30,044
7,673 130
(1,631) 5,704
(601) 713
116 -
(2,656) 36,591
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2012 ANNUAL REPORT
NOTES (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 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 Net on-balance sheet financial position Credit commitments 256,405 67,467 26,095 9,301 359,268 6,726 194 6,920 2,599 1 278 2,878 1 1,551 1,552 265,731 67,469 26,095 11,324 370,619 27,524 81,812 248,822 358,158 407 5,445 377 670 6,899 362 2,515 34 2,911 230 209 439 28,293 90,002 249,199 913 368,407 USD EURO GBP KMF Others Total
(1,110) 8,622
(21) -
33 -
- (1,113) -
(2,212) 8,622
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2012 ANNUAL REPORT
NOTES (continued)
(All amounts expressed in million of Tanzania Shillings)
As at 31 December 2011 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 Net on-balance sheet financial position Credit commitments
USD 7,649 77,480 232,206 1,275 318,610
EURO 555 15,221 15,776
GBP 358 1,239 1,597
KES -
KMF 116 116
Total 8,562 94,056 232,206 1,275 336,099
242,054 48,177 28,933 9,136 328,300
8,133 4,695 500 13,328
2,667 423 138 3,228
1,113 1,113
252,854 54,408 28,933 10,408 346,603
(9,690) 30,044
2,448 5,704
(1,631) (1,113) 130 -
116 -
(10,504) 35,878
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2012 ANNUAL REPORT
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 Groups and Companys 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 Groups and Companys exposure to interest rate risks. It includes the Groups and Companys 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.
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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 73,776 28,717 5,979 26,933 108 10,060 186,766 143,686
Up to 1 month As at 31 December 2012 Assets Cash and balances with Central banks Government securities held to maturity Loans and advances to banks Loans and advances to customers Investment securities available for sale Investments securities held to maturity Derivative assets Other assets Total financial assets Liabilities Deposits from Banks Deposits from customers Other liabilities Subordinated debts and senior loans Total financial liabilities Total interest repricing gap 41,486 158,364 199,850 (21,717) 76,482 101,502 149 178,133
1-3 months 1,213 37,318 50,982 89,513
3-12 month 62,490 12,423 94,026 -
1-5 years 47,669 160,371 3,438 -
Total 143,686 185,148 132,202 435,598 26,933 3,587 108 10,060 937,322
168,939 211,478 102,493
13,592 122,895 136,487 (46,974)
30,930 196,586 1,089 228,605
12,031 28,859 40,890
153 153
232,705 18,433 251,138
86,008 722,734 18,433 29,948 857,123
(59,666) 170,588 102,340
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2012 ANNUAL REPORT
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 1-5 Over 5 Interest years years bearing - 61,310 - 4,069 - 3,500 - - 38,555 - 1,057 - - - 99,501 11,070 13 6,964 20,730 169 9,827
As at 31 December 2011 Cash and balances with Central banks
Up to 1 month
1-3 months - 1,750 25,611 2,297 - - - 29,658
3-12 month - 22,033 10,150 2,104 - - - 34,287
Total
Assets - - 85,912 415,111 - - - 497,453 99,501 134,718 121,686 428,032 20,730 3,669 9,827 818,163 Government securities held to maturity 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
68,879 39,612 148,274
Liabilities Deposits from Banks Deposits from customers Other liabilities Subordinated debts and senior loans Total financial liabilities Total interest repricing gap 462,786 34,667 8,738 23,022 26,165 8,122 31,272 - 222,736 751,717 35,607 39,612 74,377 388,409 - - 5000 3,738 - - 2,510 20,424 - 3,231 - 1,470 - 29,802 - - - - - 203,218 19,492 26 81,887 617,259 19,492 33,059
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2012 ANNUAL REPORT
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 1-5 Over 5 Interest years years bearing - 47,669 - - 3,438 - - 73,778 - 28,632 - - - 116,157 - - - 26,933 - 9,183
As at 31 December 2012 Cash and balances with Central banks
Up to 1 month
1-3 months - 1,211 41,603 50,756 - - -
3-12 month - 62,490 9,176 - - -
Total
Assets - - 76,482 90,117 - 149 - 166,748 116,157 185,148 127,261 410,600 26,933 3,587 9,183 879,745 Government securities held to maturity 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 93,570 160,993 202,875 102,410 153,149 Liabilities Deposits from Banks Deposits from customers Other liabilities Subordinated debts and senior loans Total financial liabilities Total interest repricing gap 215,567 135,725 208,404 37,250 20 207,778 804,744 (48,819) (42,153) (47,411) 165,625 102,390 38,648 176,919 - - 13,593 122,132 - 23,892 184,215 11,452 - 297 - 25,798 - - 20 - - - 189,659 18,119 76,133 684,397 18,119 - 26,095
89,327 151,768
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2012 ANNUAL REPORT
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 38,555 142 38,697 84,447 11,070 13 6,964 20,730 8,546
Up to1 month As at 31 December 2011 Assets Cash and balances with Central banks Government securities held to maturity 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 Liabilities Deposits from Banks Deposits from customers Other liabilities Subordinated debts and senior loans Total financial liabilities Total interest repricing gap 81,274 390,738 472,012 12,667 85,059 399,451 169 484,679
1-3 months 1,750 25,611 27,361
3-12 months 22,033 10,150 154 32,337
1-5 years 61,310 1,558 3,500 66,368
Total 84,447 134,718 120,833 408,269 20,730 3,669 8,546
131,770 781,212
300 3,534 3,834 23,527
2,150 9,423 3,093 14,666 17,671
677 25,814 26,491 39,877
38,697
182,121 19,147 26
83,724 586,493 19,147 28,933
201,294 718,297
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2012 ANNUAL REPORT
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 Groups and Companys 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 Groups and Companys Asset and Liability Committee to maintain a wide diversification by currency, geography, provider, product and term.
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2012 ANNUAL REPORT
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. Amounts are in TZS Million 1-3 months 135,771 18,190 153,961 3-12 months 202,886 31,812 7,554 242,252 Over 1 year 15,070 24,280 39,350
Group Up to1 month 384,776 41,075 18,433 444,284
As at 31 December 2012 Liabilities Due to customers Deposits from banks Other liabilities Subordinated debt and senior loans Total financial liabilities (contractual maturity dates) Total financial assets (expected maturity dates) As at 31 December 2011 Liabilities Due to customers Deposits from banks Other liabilities Subordinated debt and senior loans Total financial liabilities (contractual maturity dates) Total financial assets (expected maturity dates)
Total 738,502 91,077 18,433 31,834 879,847
178,134
89,511
168,939
313,972
750,559
595,547 83,926 19,147 56 698,677
3,818 311 4,129
21,271 2,683 345 3,894 28,193
1,531 30,734 31,264
622,167 86,920 19,492 34,684 763,263
342,540
104,792
114,623
254,741
816,697
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2012 ANNUAL REPORT
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 1-3 months 123,746 13,797 137,543 3-12 months 195,668 25,504 6,763 227,935 Over 1 year 13,538 21,219 34,757
Company Up to1 month 367,213 37,507 18,120 422,840
As at 31 December 2012 Liabilities Due to customers Deposits from banks Other liabilities Subordinated debt Total financial liabilities (contractual maturity dates) Total financial assets (expected maturity dates) As at 31 December 2011 Liabilities Due to customers Deposits from banks Other liabilities Subordinated debt Total financial liabilities (contractual maturity dates) Total financial assets (expected maturity dates)
Total 700,165 76,808 18,120 27,981 823,074
166,748
93,571
160,994
305,283
816,697
577,019 82,290 19,147 26 678,482
3,614 311 3,925
10,271 2,473 3,116 15,860
26,582 26,582
590,904 85,074 19,147 29,724 724,849
342,540
104,792
114,623
254,741
816,697
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.
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2012 ANNUAL REPORT
NOTES (continued)
3 FINANCIAL RISK MANAGEMENT (continued) 3.3 Liquidity risk (continued) 3.3.4 Derivative cash flows The Banks 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 Groups and Companys 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. Amount are in TZSMillions 1 -3 months (5,144) 5,146 3 -12 months 1-5 years Total (15,677) 15,741
Group At 31 December 2012 Foreign exchange derivatives: Total outflow Total inflow Company Foreign exchange derivatives: Total outflow Total inflow Group and Company At 31 December 2011 Foreign exchange derivatives: Outflow Inflow Interest rate derivatives: Outflow Inflow Total outflow Total inflow (716) 796 (137) 92 (853) 888 (10,533) 10,595 Up to 1 month
(7,179) 7,132
(5,144) 5,146
(12,323) 12,278
Amount are in TZSMillions
(194) 177 (296) 177
(422) 339 (280) 339
(716) 796 (753)
608 (1,469) 1,404
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2012 ANNUAL REPORT
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 Groups and Companys 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.
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2012 ANNUAL REPORT
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: (Amounts are in TZS Million) 15 years 15,318 19,917 50 6,266 5,749 277 Over 5 Years 4,478 4,095 1,367 -
Group
As at 31 December 2012 Outstanding letters of credit, guarantees and indemnities Commitments to extend credit Operating lease commitments Capital commitments As at 31 December 2011 Outstanding letters of credit, guarantees and indemnities Commitments to extend credit Operating lease commitments Capital commitments
No later than 1 year 48,043 5,136 9076 1,565 26,672 23,968 2,003 624
Total 67,839 25,053 9,127 1,565 37,034 23,968 9,119 901
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2012 ANNUAL REPORT
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) 15 years 15,318 19,917 Over 5 Years 4,478 -
Company No later than 1 year 41,118 5,136 9,026 1,448
As at 31 December 2012 Outstanding letters of credit, guarantees and indemnities Commitments to extend credit Operating lease commitments Capital commitments As at 31 December 2011 Outstanding letters of credit, guarantees and indemnities Commitments to extend credit Operating lease commitments Investment commitment Capital commitments As at 31 December 2011
Total 60,915 25,053 9,026 1,448
26,654 23,255 1,954 2,215 356
6,266 5,602 -
4,096 1,367 -
37,016 23,255 8,923 2,215 356
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2012 ANNUAL REPORT
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.
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2012 ANNUAL REPORT
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 Groups and Companys 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). Group As at 31 December 2012 Level 1 Derivative assets Investment securities - equity Total assets Company Investment securities - equity Total assets 25,733 25,733 1,200 1,200 26,933 26,933 25,733 25,733 Amounts are in TZS Million Level 2 108 1,200 1,308 Level 3 Total 108 26,933 27,041 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.
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2012 ANNUAL REPORT
NOTES (continued)
3 FINANCIAL RISK MANAGEMENT (continued) 3.4 Fair value of financial assets and liabilities (continued)
Group and Company As at 31 December 2011 Level 1 Interest rate swap* Investment securities - equity Total assets 19,530 19,530 Amounts are in TZS Million Level 2 1,200 1,200 Level 3 Total 20,730 20,730
*It is not practical to determine the fair value because of lack of appropriate market data. 3.5 Capital management The Banks objectives when managing capital, which is a broader concept than the equity on the face of balance sheets, are:
To comply with the capital requirements set by the Bank of Tanzania; To safeguard the Banks 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 Banks 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.
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2012 ANNUAL REPORT
NOTES (continued)
3 FINANCIAL RISK MANAGEMENT (continued) 3.5 Capital management (continued)
The Banks 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.
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2012 ANNUAL REPORT
NOTES (continued)
3 FINANCIAL RISK MANAGEMENT (continued) 3.5 Capital management (continued) Restated Company 2011 TZSMillion 12,900 57,706 (1,765) (1,050) (644) 67,147
Tier 1 capital Share capital Retained earnings Prepaid expenses Deferred income tax Intangible assets Total qualifying Tier 1 capital Tier 2 capital Subordinated debt Total qualifying Tier 2 capital Total regulatory capital Risk-weighted assets On-balance sheet Off-balance sheet Total risk-weighted assets Required ratio % Tier 1 capital Tier 1 + Tier 2 capital 10 12
Company 2012 TZSMillion 12,900 64,697 (1,735) (1,391) (461) 74,010
7,897 7,897 81,907
7,912 7,912 75,059
503,123 45,292 548,415 Banks ratio 2012 % 13.50 14.94
465,502 33,904 499,406 Banks Ratio 2011 % 13.44 15.03
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.
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2012 ANNUAL REPORT
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 Groups 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.
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2012 ANNUAL REPORT
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. INTEREST AND SIMILAR INCOME Group 2012 TZSMillions Loans and advances to customers Loans and advances to banks Government securities held to maturity Investment securities 59,433 3,206 21,149 404 84,192 6 INTEREST EXPENSE AND SIMILAR CHARGES 34,879 4,959 1,506 39,214 22,415 2,155 808 25,378 34,563 2,806 1,275 38,644 22,165 2,130 544 24,839 Group 2011 TZSMillions 46,299 1,261 17,440 864 65,864 Company 2012 TZSMillions 57,105 3,147 21,149 404 81,805 Company 2011 TZSMillions 43,856 1,261 17,440 839 63,396
Customer deposits Deposits by banks Subordinated debts and senior loans
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2012 ANNUAL REPORT
NOTES (continued)
7 NET FEE AND COMMISSION INCOME Group 2012 TZSMillions 1,782 2,248 3,593 5,269 4,562 302 17,693 Fee and commission expense IFC guarantee fees Borrowing arrangement fees (193) (193) Net fee and commission income 17,500 Group 2011 TZSMillions 1,272 2,745 3,456 4,433 2,645 350 14,901 (35) (160) (195) 14,706 Company 2012 TZSMillions 1,516 1,695 3,038 4,152 4,562 255 15,218 (168) (168) 15,050 Company 2011 TZSMillions 1,247 1,972 3,450 4,123 2,335 310 13,437 (35) (37) (72) 13,365
Fee and commission income Commission on Letters of Credit and Guarantees Commission on telegraphic transfers and other international trade finance activities Commission and fees from banking operations Facility fees from loans and advances Credit/debit card fees and commissions Other fees and commissions
OTHER INCOME 1,091 13 1,104 786 786 1,091 13 1,104 786 786
Dividend income Profit from sale of asset
The Bank earned dividend income from its equity investment in National Microfinance Bank Plc.
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2012 ANNUAL REPORT
NOTES (continued)
9 OPERATING EXPENSES Group 2012 TZSMillions 18,337 1,090 4,023 1,488 1,940 241 204 1,742 494 2,791 3,579 3,619 5,788 45,336 10 STAFF BENEFIT EXPENSES Wages and salaries Social security costs (defined contributions) Other employment costs and benefits 13,395 1,460 3,482 18,337 10,250 1,028 3,497 14,775 12,171 1,412 3,042 16,625 9,165 992 3,214 13,371 Group 2011 TZSMillions 14,775 876 3,267 1,332 1,085 153 181 2,092 518 2,426 3,956 3,040 3,941 37,643 Company 2012 TZSMillions 16,625 968 3,347 1,149 1,796 200 127 1,519 346 2,791 3,152 3,611 5,339 40,970 Company 2011 TZSMillions 13,371 776 2,583 1,223 969 120 85 1,808 351 2,365 2,595 3,036 2,897 32,180
The following items are included within operating expenses: Staff benefit expenses (Note 10) Travelling expenses Depreciation and amortisation (Notes 19 and 20) Repairs and maintenance Advertising and business promotion Directors emoluments Auditors remuneration Legal and professional fees Correspondent bank and SWIFT charges Operating lease rentals Occupancy costs Credit/debit card expenses Other operating expenses
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2012 ANNUAL REPORT
NOTES (continued)
1I NCOME TAX EXPENSE Group and Company 2012 TZSMillions Current income tax current year prior year Deferred income tax current year(Note 22) - prior year 3,171 43 (342) 1 2,873 Group and Company 2011 TZSMillions 5,345 71 (162) (212) 5,042
The tax on the companys profit before income tax differs from the theoretical amount that would arise using the statutory income tax rate as follows: Company 2012 TZSMillions Company 2011 TZSMillions 19,114 5,734 (614) 26 71 (175) 5,042
Profit before income tax Tax calculated at the statutory income tax rate of 30% (2011: 30%) 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
15,809 4,743 (327) 196 (1,783) 43 1 2,873
105
2012 ANNUAL REPORT
NOTES (continued)
12 FINANCIAL INSTRUMENTS BY CATEGORY GROUP Fair value through profit or loss TZS Millions
Loans and receivables TZS Millions At 31 December 2012 Financial assets Cash and balances with Central Banks Loans and advances to banks Loans and advances to customers Government securities Investment securities Derivative assets Other assets 10,060 721,525 143,686 132,202 435,598
Held to maturity TZS Millions
Available - for - sale TZS Millions
Total TZS Millions
143,686 132,202 435,598 185,148 3,587 108 26,933 185,148 30,520 108 10,060 108 188,735 Financial liabilities at fair value through profit or loss TZSMillions 26,933 937,322
Other liabilities at amortised cost TZSMillions 86,008 722,734 18,433 29,948 857,123
Total TZSMillions 86,008 722,734 18,433 29,948 857,123
Financial liabilities Deposits from banks Deposits customers Derivative liabilities Other liabilities Subordinated debts and senior loans -
106
2012 ANNUAL REPORT
NOTES (continued)
12 FINANCIAL INSTRUMENTS BY CATEGORY GROUP (continued) Loans and Held to Available receivables maturity - for - sale Total TZSMillions TZSMillions TZSMillions TZSMillions At 31 December 2011 Financial assets Cash and balances with Central Banks Loans and advances to banks Loans and advances to customers Government securities Investment securities Other assets 99,501 121,686 428,032 9,827 659,046 134,718 3,669 138,387 20,730 20,730 99,501 121,686 428,032 134,718 24,399 9,827 818,163
Financial liabilities at Other fair value liabilities through profit at amortised or loss cost Total TZSMillions TZSMillions TZSMillions Financial liabilities Deposits from banks Deposits customers Derivative liabilities Other liabilities Subordinated debts and senior loans 81,887 617,259 19,492 33,059 751,697 81,887 617,259 19,492 33,059 751,697
107
2012 ANNUAL REPORT
NOTES (continued)
12 FINANCIAL INSTRUMENTS BY CATEGORY COMPANY (continued) Loans and receivables TZSMillions At 31 December 2012 Financial assets Cash and balances with Central Banks Loans and advances to banks Loans and advances to customers Government securities Investment securities Other assets 116,157 127,261 410,600 9,183 663,201 185,148 3,587 188,735 26,933 26,933 116,157 127,261 410,600 185,148 30,520 9,183 878,869 Held to Available maturity - for - sale Total TZSMillions TZSMillions TZSMillions
Financial liabilities Other at fair value liabilities through profit at amortised or loss cost Total TZSMillions TZSMillions TZSMillions Financial liabilities Deposits from banks Deposits customers Derivative liabilities Other liabilities Subordinated debts and senior loans 76,133 684,397 18,119 26,095 804,744 76,133 684,397 18,119 26,095 804,744
108
2012 ANNUAL REPORT
NOTES (continued)
12 FINANCIAL INSTRUMENTS BY CATEGORY COMPANY (continued) Loans and receivables TZSMillions At 31 December 2011 Financial assets Cash and balances with Central Banks Loans and advances to banks Loans and advances to customers Government securities Investment securities Other assets 84,447 120,833 408,269 7,179 620,728 134,718 3,669 138,387 20,730 20,730 84,447 120,833 408,269 134,718 24,399 7,179 779,845 Held to Available maturity - for - sale Total TZSMillions TZSMillions TZSMillions
Financial liabilities at Other fair value liabilities through profit at amortised or loss cost Total TZSMillions TZSMillions TZSMillions At 31 December 2011 Financial liabilities Deposits from banks Deposits customers Derivative liabilities Other liabilities Subordinated debts and senior loans 83,724 586,493 19,147 28,933 718,297 83,724 586,493 19,147 28,933 718,297
109
2012 ANNUAL REPORT
NOTES (continued)
13 CASH AND BALANCES WITH CENTRAL BANKS Group 2012 TZSMillions Cash in hand Clearing account Statutory Minimum Reserves (SMR) 26,804 31,586 85,296 143,686 Group 2011 TZSMillions 15,152 8,949 75,400 99,501 Company 2012 TZSMillions 25,145 18,662 72,350 116,157 Company 2011 TZSMillions 14,517 4,815 65,115 84,447
The SMR deposit is not available to finance the Groups 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 TZSMillions Items in course of collection Loans and advances to other banks Placements with other banks 3,831 64,378 63,993 132,202 Current 132,202 Group 2011 TZSMillions 22,170 34,209 65,307 121,686 121,686 Company 2012 TZSMillions 3,821 60,542 62,898 127,261 127,261 Company 2011 TZSMillions 22,165 34,822 63,846 120,833 120,833
15 LOANS AND ADVANCES TO CUSTOMERS Overdrafts Personal loans Commercial loans Other Gross loans and advances Less: Provision for impairment 237,289 2,714 207,959 7,365 455,327 (19,729) 435,598 246,510 189,088 240,644 1,433 198,140 2,026 442,243 (14,211) 428,032 280,429 147,603 216,598 2,596 207,959 2,717 429,871 (19,272) 410,600 230,682 179,918 224,608 1,429 194,081 2,012 422,130 (13,861) 408,269 210,436 197,833
Current Non-current
Provision for impairment losses on loans and advances is broken down as follows:
110
2012 ANNUAL REPORT
NOTES (continued)
15 LOANS AND ADVANCES TO CUSTOMERS (continued) Group 2012 TZSMillions Individually impaired Portfolio impairment At end of year 18,012 1,717 19,729 Group 2011 TZSMillions 12,874 1,337 14,211 Company 2012 TZSMillions 17,480 1,792 19,272 Company 2011 TZSMillions 12,624 1,237 13,861
The movements in provision for impairment losses on loans and advances are as follows: Group 2012 TZSMillions At start of year Impairment charges for credit losses Amounts recovered during year Amounts written off during year Adjustment for 2011 At end of year Charge for the year is made up of: Impairment charges for credit losses Amounts recovered during year 14,211 6,329 (655) (156) 13 19,729 Group 2011 TZSMillions 8,022 6,409 (177) (43) 14,211 Company 2012 TZSMillions 13,861 6,234 (655) (169) 19,272 Company 2011 TZSMillions 7,888 6,180 (177) (30) 13,861
6,329 (655) 5,674
6,409 (177) 6,232
6,234 (655) 5,579
6,180 (177) 6,003
111
2012 ANNUAL REPORT
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 SMEs Others TZSMillions TZSMillions TZSMillions TZSMillions At start of the year Provision for loan impairment Loans recovered during the year Loans written off during the year as uncollectable Adjustment 2011 At end of the year Year ended 31 December 2011 At start of the year Provision for loan impairment Loans recovered during the year Loans written off during the year as uncollectable At end of the year 5,092 4,683 (43) 9,732 280 175 455 1,729 1,317 3,046 921 234 (177) 978 8,022 6,409 (177) (43) 14,211 13 14,523 533 3,140 1,533 9,732 4,956 (178) 455 292 (198) (16) 3,046 526 (279) (153) 978 555 Total TZSMillions 14,211 6,329 (655) (169) 13 19,729
112
2012 ANNUAL REPORT
NOTES (continued)
15 LOANS AND ADVANCES TO CUSTOMERS (continued) COMPANY Year ended 31 December 2012 Individual customers SMEs Others TZSMillions TZSMillions TZSMillions 444 266 (198) (16) 2,943 526 (279) (152) 1,316 555
Overdraft TZSMillions At start of the year Provision for loan impairment Loan recovered during the year Loan written off during the year as uncollectable 9,158 4,887 (178)
Total TZSMillions 13,861 6,234 (655) (168)
At end of the year Year ended 31 December 2011 At start of the year
13,867
496
3,038
1,871
19,272
4,990
279
1,702
917
7,888
Provision for loan impairment
4,168
165
1,241
399
5,973
At end of the year
9,158
444
2,943
1,316
13,861
113
2012 ANNUAL REPORT
NOTES (continued)
16 GOVERNMENT SECURITIES HELD TO-MATURITY (Amounts are in TZS Million) Group 2012 TZSMillions 1,213 183,935 185,148 Group 2011 TZSMillions 134,718 134,718 Company 2012 TZSMillions 1,213 183,935 185,148 Company 2011 TZSMillions 134,718 134,718
Treasury bills and bonds: Maturing within 90 days from date of acquisition Maturing after 90 days from date of acquisition
Current Non current
63,702 121,446
34,853 99,865
63,702 121,446
34,853 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
2012 ANNUAL REPORT
NOTES (continued)
17 INVESTMENT SECURITIES (Amounts are in TZS Million) Group and Company 2012 TZSMillions Group and Company 2011 TZSMillions
Investment securities available-for-sale 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
85 25,733 1,200 (85)
85 19,530 1200 (85)
Total securities available-for-sale Investment securities held-to-maturity ALAF Bond Standard Chartered Bank Bond Tanzania Breweries Limited Bond
26,933
20,730
471 511 2,605
538 538 2,593
3,587 At end of year Current Non-current 149 3,438
3,669
169 3,500
115
2012 ANNUAL REPORT
NOTES (continued)
18 OTHER ASSETS Group 2012 TZSMillions Sundry debtors Receivable from related party (Note 31) TANAPA cards MasterCard receivables Visa card receivables Moneygram receivables Prepaid expenses 4,054 482 3,630 1,540 354 1,878 (Amounts are in TZS Million) Group 2011 TZSMillions 5,365 1,073 2,320 892 177 1,892 Company 2012 TZSMillions 3,257 482 3,613 1,540 292 1,735 Company 2011 TZSMillions 4,165 1,073 2,320 892 96 1,765
11,938
11,719
10,918
10,311
Current Non current
11,938 -
10,087 1,632
10,918 -
8,679 1,632
116
2012 ANNUAL REPORT
NOTES (continued)
19 PROPERTY AND EQUIPMENT (GROUP) (Amounts are in TZS Million) Computer hardware 1,214 183 -20 Furniture and fittings 1,665 327 16
Office Leasehold Motor equipBuildings premises vehicles ment Cost At 1 January 2011 Additions Disposals Transfers 9,382 281 341 5,048 413 92 901 226 (52) 7,905 1,220 668
Capital work in progress
Total
2,001 28,116 83 (44) (1,097) 2,733 (96) -
At 31 December 2011 Depreciation At 1 January 2011 Charge for the year Disposals Transfers At 31 December 2011
10,004
5,553
1,075
9,793
1,377
2,008
943 30,753
471 367 838
1,705 531 2,236
662 198 (52) 808
5,976 1,268 (20) 7,224
708 225 20 953
1,115 176 1,291
10,637 2,765 (52) 13,350
Net book value
9,166
3,317
267
2,569
424
717
943 17,403
117
2012 ANNUAL REPORT
NOTES (continued)
19 PROPERTY AND EQUIPMENT (GROUP) (continued) (Amounts are in TZS Million) Computer hardware Furniture and fittings
Office Leasehold Motor equipBuildings premises vehicles ment Cost At 1 January 2012 Additions Disposals Transfers Write-off At 31 December 2012 Depreciation At January 2012 Charge for the year Disposals Transfers At 31 December 2012 838 462 - 1,300 Net book value 9,018 2,236 1,173 3,409 4,394 961 587 808 188 (35) 7,224 981 (43) 8,162 2,232 10,004 314 10,318 5,553 1,243 1,007 7,803 1,075 477 (35) 31 1,548 9,793 467 134 10,394
Total
1,377 145 57 1,579
2,008 320 35 2,363
943 30,753 3,423 (1,264) (82) 6,389 (35) (82)
3,020 37,025
953 445 43 1,441 138
1,291 187 1,478 885
- 13,350 - 3,436 (35) -
- 16,751 3,020 20,274
118
2012 ANNUAL REPORT
NOTES (continued)
19 PROPERTY AND EQUIPMENT (COMPANY) (continued)
(Amounts are in TZS Million) Computer hardware Furniture and fittings
Office Leasehold Motor equipBuildings premises vehicles ment Cost At 1 January 2011 Additions Disposals Transfers Write-offs At 31 December 2011 Depreciation At 1 January 2011 Charge for the year Disposals At 31 December 2011 182 309 491 Net book value 8,044 1,703 529 2,232 3,306 586 165 (52) 699 168 5,631 921 6,552 2073 7,913 281 341 8,535 5,033 413 92 5,538 797 122 (52) 867 7,244 746 635 8,625
Total
1,141 120 13 1,274
1,578 90 16 - 1,684
2,001 83 (44) -1,097 943
25,707 1,855 (96) (239) 27,466
671 199 870 404
1,079 123 1,202 482
943
9,852 2,246 (52) 12,046
15,420
119
2012 ANNUAL REPORT
NOTES (continued)
19 PROPERTY AND EQUIPMENT (COMPANY) (continued) (Amounts are in TZS Million) Computer hardware Furniture and fittings
Office Leasehold Motor equipBuildings premises vehicles ment Cost At 1 January 2012 Additions Disposals Transfers Write-off 8,535 102 5,538 646 1,007 867 344 (35) 31 8,625 354 188
Total
1,274 136 3
1,684 287 35
943 3,393 (1,264) (82)
27,466 5,262 (35) (82)
At 31 December 2012 Depreciation At 1 January 2012 Charge for the year Disposals Transfer
8,637
7,191
1,207
9,167
1,413
2,006
2,990 32,611
491 394
2,232 1,030
699 151 (35)
6,552 772
870 418
1,202 126
12,046 2,891 (35)
10
(10)
At 31 December 2012
885
3,262 3,929
815 392
7,334 1,833
1,278 135
1,328 678
14,902
Net book value
7,752
2,990 17,709
120
2012 ANNUAL REPORT
NOTES (continued)
20 INTANGIBLE ASSETS Group 2012 Computer software licences Movement during the year At start of year Additions Write-off Amortisation At end of year At 31 December Cost Accumulated amortisation Net book amount 21 INVESTMENT IN SUBSIDIARIES Company 2012 TZSMillions Investment in Exim Bank Comores S.A Investment in Exim Bank Djibouti S.A 2,728 4,770 7,498 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 2012 and 2011 Investment in Exim Bank Comores S.A Investment in Exim Bank Djibouti S.A The Union of Comores Djibouti 100% 100% % interest held Company 2011 TZSMillions 2,728 2,559 5,287 3,392 (2,750) 642 2,851 (2,091) 760 2,675 (2,214) 461 2,402 (1,758) 644 760 500 (31) (587) 642 570 692 (502) 760 644 273 (456) 461 289 692 (337) 644 Amounts are in TZS Million) Group 2011 Computer software licences Company 2012 Computer software licences Company 2012 Computer software licences
121
2012 ANNUAL REPORT
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: 2012 TZSMillions 1,050 342 (1) 1,391 2011 TZSMillions 676 162 212 1,050
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
The deferred income tax asset and deferred income tax credit in the profit and loss account, are attributable to the following items: Under Credited provision to Profit - prior year and loss TZSMillions TZSMillions
1 Jan 2012 TZSMillions Deferred income tax asset Property and equipment Provisions Net deferred income tax asset
31 Dec 2012 TZSMillions
494 556 1,050
(2) 1 (1)
182 160 342
674 717 1,391
122
2012 ANNUAL REPORT
NOTES (continued)
23 DEPOSITS FROM CUSTOMERS Group 2012 TZSMillions Current and demand deposits Savings accounts Fixed deposit accounts 210,730 147,957 364,047 722,734 Current Non current 709,019 13,716 All amounts are in TZSMillions Group Company 2011 2012 TZSMillions TZSMillions 203,218 139,479 275,791 617,259 617,018 1,470 189,659 136,446 358,292 684,397 672,925 11,473 Company 2011 TZSMillions 182,121 129,060 275,312 586,493 585,816 677
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 Group All amounts are in TZSMillions 2011 Fair values Notional contract amount Foreign exchange derivatives Forwards Interest rate derivatives Swaps* Total derivative liabilities held for trading 108 9,000 16,000 108 1,122 Notional contract Assets Liabilities amount 2011 Fair values
Assets
Liabilities
123
2012 ANNUAL REPORT
NOTES (continued)
24 DERIVATIVE ASSETS AND LIABILITIES (continued) Company All amounts are in TZSMillions 2011 Fair values Assets Liabilities -
2011 Fair values Notional contract amount Foreign exchange derivatives Forwards Interest rate derivatives Swaps* Total derivative liabilities held for trading 12,646 Notional contract Assets Liabilities amount 1,122
9,000
* 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
2012 ANNUAL REPORT
NOTES (continued)
25 OTHER LIABILITIES Group 2012 TZSMillions Bank drafts payable Accrued expenses TANAPA cards Master cards Visa Cards Guarantee and LC margins Deferred commission Other creditors 1,723 693 1,346 2,304 217 6,396 1,386 4,368 Group 2011 TZSMillions 2,655 729 2,059 1,280 85 4,797 1,378 6,509 Company 2012 TZSMillions 1,723 564 1,346 2,304 217 6,396 1,350 4,219 Company 2011 TZSMillions 2,616 647 2,059 1,280 81 4,778 1,366 6,320
18,433
19,492
18,119
19,147
Other liabilities are expected to be settled within no more than 12 months after the date of the statement of financial position.
125
2012 ANNUAL REPORT
NOTES (continued)
26 SUBORDINATED DEBTS AND SENIOR LOANS
Subordinated debt Usd 5 million Norfund floating rate notes due 2015 (a) Senior loans: Usd 5 million International Finance Corporation (IFC) floating rate notes due 2012 (b)
Interest rate LIBOR + 3%
Group 2012 TZSMillions
Group Company 2011 2012 TZSMillions TZSMillions
Company 2011 TZSMillions
7,897
7,912
7,897
7,912
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
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) Usd 10 million FMO floating rate notes due 2018 (e)
LIBOR + 2.3% LIBOR + 2.8%
949
949
15,965
15,788
15,965
15,788
Total
29,948
33,059
26,095
28,933
126
2012 ANNUAL REPORT
NOTES (continued)
26 SUBORDINATED DEBTS AND SENIOR LOANS (continued) Group 2012 TZSMillions Current Non current 7,492 22,456 Group 2011 TZSMillions 3,257 29,802, Company 2012 TZSMillions 6,615 19,480 Company 2011 TZSMillions 3,119 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
2012 ANNUAL REPORT
NOTES (continued)
26 SUBORDINATED DEBTS AND SENIOR LOANS (continued) The movement in subordinated debts and senior loans is as follows:Group 2012 TZSMillions At start of year Additions Repayments Exchange differences At end of year 27 SHARE CAPITAL 33,059 (4,448) 1,337 29,948 Group 2011 TZSMillions 20,118 15,825 (4,247) 1,363 33,059 Company 2012 TZSMillions 28,933 (3,827) 989 26,095 Company 2011 TZSMillions 16,124 15,825 (4,247) 1,231 28,933
Issued and fully paid 12.9 million shares (2011: 12.9 million shares) of TZS 1,000 each
2012 TZSMillions 12,900
2011 TZSMillions 12,900
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 Group 2012 TZSMillions Fair value reserve (a) Regulatory reserves (b) Currency translation reserve (c) 22,575 8,383 736 31,694 Group 2011 TZSMillions 16,372 2,005 492 18,869 Company 2012 TZSMillions 22,575 7,790 30,365 Company 2011 TZSMillions 16,372 1,845 18,217
128
2012 ANNUAL REPORT
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:Group 2012 TZSMillions At start of year Fair value gain/(loss) for the year At end of year 16,372 6,203 22,575 Group 2011 TZSMillions 12,006 4,366 16,372 Company 2012 TZSMillions 16,372 6,203 22,575 Company 2011 TZSMillions 12,006 4,366 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 TZSMillions At start of year Appropriation from retained earnings At end of year This is broken down as follows: Reserve for loans and advances Reserve for other assets At end of year 7,431 952 8,383 2,005 2,005 6,838 952 7,790 1,845 1,845 2,005 6,378 8,383 Group 2011 TZSMillions 586 1,419 2,005 Company 2012 TZSMillions 1,845 5,945 7,790 Company 2011 TZSMillions 586 1,259 1,845
129
2012 ANNUAL REPORT
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 TZSMillions TZSMillions TZSMillions TZSMillions At start of year Translation differences for the year At end of year 492 244 736 484 8 492 -
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 Banks management is confident that future net revenues and funding will be sufficient to cover this commitment.
130
2012 ANNUAL REPORT
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 TZSMillions Contingent liabilities Acceptances and letters of credit Guarantee and performance bonds 30,789 37,050 67,839 14,662 22,372 37,034 37,030 60,915 22,372 37,016 23,885 14,644 Group 2011 TZSMillions Company 2012 TZSMillions Company 2011 TZSMillions
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 customers default. Group 2012 TZSMillions Other commitments Undrawn formal stand-by facilities, credit lines and other commitments to lend 25,053 23,968 25,053 23,255 Group 2011 TZSMillions Company 2012 TZSMillions Company 2011 TZSMillions
131
2012 ANNUAL REPORT
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 TZSMillions Not later than one year Later than one year and not later than five years Later than five years 2,313 7,989 4,687 14,989 Group 2011 TZSMillions 2,003 5,749 1,367 9,119 Company 2012 TZSMillions 2,196 7,673 4,687 14,556 Company 2011 TZSMillions 1,954 5,602 1,367 8,923
30 ANALYSIS OF CASH AND CASH EQUIVALENTS AS SHOWN IN THE CASH FLOW STATEMENT Group 2012 TZSMillions Cash and balances with Central Banks (Note 13) Less: cash reserve requirement 143,686 (85,296) 58,390 Government securities (Note 16) Loans and advances to banks (Note 14) 1,213 132,202 191,805 Group 2011 TZSMillions 99,501 (75,400) 24,101 121,686 145,787 Company 2012 TZSMillions 116,157 (72,350) 43,807 1,213 127,261 172,281 Company 2011 TZSMillions 84,447 (65,115) 19,332 120,833 140,165
132
2012 ANNUAL REPORT
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 banks 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 TZSMillions Group 2011 TZSMillions Company 2012 TZSMillions Company 2011 TZSMillions
Loans to directors and other key management personnel
At start of year Advanced during the year Reclassification of loan of former managing director Repaid during the year At end of year Interest income earned from related parties
687 320 (28) 979 59
467 3,925 (257) (3,448) 687 62
687 320 (28) 979 59
467 3,925 (257) (3,448) 687 62
133
2012 ANNUAL REPORT
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 TZSMillions Deposits by directors and other key management personnel At start of year Received during the year Repaid during the year At end of year 1,546 770 (908) 1,408 1,011 7,303 (6,768) 1,546 1,546 770 (908) 1,408 1,011 7,303 (6,669) 1,546 Group 2011 TZSMillions Company 2012 TZSMillions Company 2011 TZSMillions
Interest expense incurred
65
88
65
88
The above deposits carry variable interest rates and are repayable on demand.
134
2012 ANNUAL REPORT
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: Group 2012 TZSMillions 64 Group 2011 TZSMillions 302 41 Company 2012 TZSMillions 64 Company 2011 TZSMillions 302 41
Consultancy service: Exim Advisory Services Limited MAC Group Limited
64 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 396 384 566 91
343
64
343
280
91
280
356
566
356
384
396
135
2012 ANNUAL REPORT
NOTES (continued)
31 RELATED PARTY TRANSACTIONS (continued) Year-end balances with subsidiaries Company 2012 TZSMillions 9 Company 2011 TZSMillions 3,867
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.
4,385 4,385
3,972 3,972
No interest is charged or earned on the above. Other receivables from Exim Bank Djibouti S.A. At 1 January Additions during the year Repayments during the year At 31 December Group 2012 TZSMillions Key management compensation Salaries and other short-term benefits 2,252 1,288 1,236 891 Group 2011 TZSMillions Company 2012 TZSMillions 1,443 (1,443) Company 2011 TZSMillions
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.
136 136
2012 ANNUAL REPORT
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 Banks 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 Banks 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 Effect: Interest income for the year reduced by Tax charge for the year reduced by Profit after tax reduced by Retained earnings reduced by Other assets reduced by Deferred tax asset increased by (120) 36 (84) (682) (974) 292 Group and Company 1 Jan 2011 (598) (854) 256
137
KEY FINANCIAL STATEMENTS PERSONNEL
2012 ANNUAL REPORT
DIRECTORS NAME
Mr. Yogesh Manek Mr. Hanif Jaffer Hon. Juma Mwapachu Mr. Pascal Kamuzora Mr. Shaffin Jamal Mr. Thomas Wescott
NATIONALITY
Tanzanian Tanzanian Tanzanian Tanzanian Tanzanian American
TOP MANAGEMENT NAME

Mr. Anthony Grant Mr. Dinesh Arora
POSITION
Managing Director Chief Executive Officer
SENIOR MANAGEMENT NAME

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
POSITION
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

Mrs. Anisia S. Charles Mrs. Anna Mroso Mr. Bernadius Rwassa Ms. Catherine Justine Mr. David Lusala
POSITION
Credit Administration Manager Clearing Manager Human Resources Manager Credit Monitoring Manager Risk Manager
138 138
KEY FINANCIAL STATEMENTS PERSONNEL
2012 ANNUAL REPORT
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
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

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
BRANCH
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

1. Mr.Ganesan Subramanyam 2. Mr. Mohamed Ahsan 3. Mr. Arpit Parikh
POSITION
Country Head General Manager Assistant General Manager
DJIBOUTI NAME
Mr. Mr. Mr. Mr. Patrick Arthur Bettesworth Jacky Kayiteshonga G.Veeranna Naidu V. N. Gopalakrishnan
POSITION
Country Head (Since retired) Country Head (Current) Asst. General Manager Asst. General Manager
139 139
presence and d... for thebeyon year ended 31 December 2012
FINANCIAL Region al STATEMENTS
2012 ANNUAL REPORT
COMOROS S.A
REPUBLIC OF DJIBOUTI
MOHELI
REGIONAL PRESENCE
140
LOCATIONS AND CONTACTS
2012 ANNUAL REPORT
Arusha Branch
Subzail Building, Goliondoi Road, P.O.Box 1906, Arusha, Tanzania Tel: (027) 2504910/1 Fax: (027) 2504912 Email:eximarusha@eximbank-tz.com
Karatu Branch
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:eximbabati@eximbank-tz.com
Plot No 15, Block D Karatu, Ngorongoro Road, P.O.Box 346, Karatu, Tanzania Tel: (027) 2534609/11/12/13 Fax: (027)2534610 Email: eximkaratu@eximbank-tz.com
Mt. Meru Branch
TFA Shopping Center, Uhuru Road, P.O.Box 16286, Arusha, Tanzania Tel:(027)2542724,2548652,2548940 Fax :( 027)2548545 Email: eximmtmeru@eximbank-tz.com
Tanga Branch
Mtwara Branch
Opposite Bandari House, Independence Avenue, P.O.Box 729, Tanga,Tanzania Tel:(027)2647288/86 Fax:(027)26244086 Email: eximtanga@eximbank-tz.com
Kariakoo Branch
Buguruni Branch
274 Block A, Buguruni Area, Uhuru Road, P.O.Box25557, Dar Es Salaam, Tanzania Tel:0222865414/2865417 Fax: 0222865418 Email: eximbuguruni@eximbank-tz.com
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: eximkariakoo@eximbank-tz.com
2Tanu Road P.O.Box 1021, Mtwara, Tanzania Tel:(023)2333871/2333577 Fax:(023) 2334045 Email: eximmtwara@eximbank-tz.com
Temeke Branch
Mwanza Branch
TRA Regional Offices, B.O.Box 42763, Dar Es Salaam,Tanzania Tel:(022)2863928/9 Fax: (022)2863927 Email: eximtemeke@eximbank-tz.com
Kigoma Branch
Clock Tower Branch
Samora Avenue, P.O.Box 9510, Dar Es Salaam,Tanzania Tel:(022)2129678/80, Fax: (022)2129682 Email: eximclocktower@eximbank-tz.com
Plot No. 193 NIC Building, Lumumba Road, P.O.Box 1060, Kigoma, Tanzania Tel: 028 2802194/5 Fax: 028 2802196 Email: eximkigoma@kigoma-tz.com
Plot No.21, Block K, Kenyatta Road, P.O.Box 822, Mwanza, Tanzania Tel (28) 2502020/1 Fax: (028) 2502022 Email: eximmwanza@eximbank-tz.com
Ubungo Branch
Millenium Business Park, P.O.Box 55026, Dar Es Salaam, Tanzania Tel: (022) 2401451/2 Fax: (022)2401450 Email:eximubungo@eximbank-tz.com
Namanga Branch
Kilimanjaro Branch
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
Plot No. 23/I CBD, Old Moshi Road, P. O. Box 3001, Moshi,Tanzania Tel: 027 2754373/4 Fax: 027 2752895 Email:eximkilimanjaro@eximbank-tz.com
Plot No 83, Ada Estate, Namanga, P.O.Box 22372 Dar es Salaam, Tanzania Tel:(022)2664191/92/93 Fax: (022)2664194 Email:eximnamanga@eximbank-tz.com
Zanzibar
Mlandege Street, Kwality Plaza, P.O.Box 538, Zanzibar Tel: (024)2237194/5 Fax: (024)2237182 Email:eximznz@eximbank-tz.com
Nyerere Road Branch
Mbeya Branch
Hill Park Branch
70 Mlimani City, P.O.Box 33885, Dar Es Salaam, Tanzania Tel: (022)2411170/71/72 Fax: (022)2411173 Email: eximhillpark@eximbank-tz.com
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: eximmbeya@eximbank-tz.com
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: eximnyerere@eximbank-tz.com
Subsidiaries
Exim Bank Comoros S.A
Moroni Branch P.O.Box 8298, Place de France, Moroni Tel: +269 739400/2 Fax: +269 762588
Samora Avenue Branch
Morogoro Branch
Iringa Branch
Plot No. 21 & 22 E Uhindini Street, P.O.Box 261, Iringa, Tanzania Tel: (026)2700578/581/582 Fax: (026)2700576 Email:eximiringa@eximbank-tz.com
Plot No. 13,Block H, Lumumba Road, P.O.Box 6033, Morogoro,Tanzania Tel: (023) 2613591/92 Fax: (023) 2613593 Email: eximmorogoro@eximbank-tz.com
9 Samora Avenue, P.O.Box 1431, Dar Es Salaam, Tanzania Tel:(022)2111861/2119738, Fax: (022)2119737 Email: eximsamora@eximbank-tz.com
Exim Bank Comoros S.A

Anjouan Branch P.O.Box 235, Mitsamudu, Anjouan Moroni Tel: +269 7711265 Fax: +269 7611298
Shinyanga Branch
Moshi Branch
Plot No 4, Block B, Boma Road, P.O.Box 3001, Moshi Tel:(027) 2752917/2752522/40 Fax: (027) 2752895 Email:eximmoshi@eximbank-tz.com
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: eximshinyanga@eximbank-tz.com
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
141
2003
2005
2007
2009
2011
Opens 3 Branches: Tanga, Morogoro & Mwanza Relationship with IFC is established
1st Bank to Introduce MasterCard in Tanzania Opens 8th Branch: Clock Tower
Opens 1st Subsidiary in Comoros: Moroni Opens 2nd Branch in Arusha: Mt. Meru Celebrates 10 Year Anniversary Relationship with NORFUND is Established Introduction of TANAPA Cards
1st Bank to Introduce Visa Credit Cards & Mobile ATM Banking Recognized 6th Largest Bank in terms of Total Assets Awarded 1st place for Best Presented Financial Statements 2008 Opens 3 Branches: Ubungo, Zanzibar, Mbeya & Iringa Opens 2nd Branch in Comoros: Anjouan
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
Our journey of 15 years
1997
Exim Bank is established Opens 1st Branch at Samora Avenue
2000
2002
Opens 3rd Branch: Arusha Celebrates 5 Year Anniversary
2004
Opens 7th Branch: Moshi At 7 Years, Exim Bank ranks 8th in Terms of Deposits MoneyGram, Salary Cards and ATM Machines are introduced
2006
2008
2010
2012
Opens 2nd Branch: Mtwara
Partnership signing with PROPARCO Opens 2 Branches: Hill Park & Temeke
Opens 3 Branches: Karatu, Namanga & Nyerere Establishes Staff Training Center
Relocation to Exim Tower Opens Kariakoo Branch & Exim Tower Branch Introduces Current Account for NGOs & SMS Banking Awarded 1st place for Best Presented Financial Statements 2009
Partnership signing with FMO Launches Mobile and Internet Banking Inauguration of The Exim Academy Celebrates 15 Year Anniversary

145
2012 ANNUAL REPORT
A s k n a Th g i B r u o l l to a s!!! on r t a P
146

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FINANCIAL STATEMENTS

for the year ended 31 December 2012

2012 ANNUAL REPORT

g Thinkind Ahea os r o m o C Driver s

Streng Relatio th in nships

gic Strate ips h s r e n t Par

2012 FINANCIAL HIGHLIGHTS (TZS Bn)

Loans & Advances

VISION MISSION & VALUES

2012 ANNUAL REPORT

2012 ANNUAL REPORT

GROWTH AND CAPITAL POSITION

GLOBAL STRATEGIC PARTNETSHIPS AND ALLIANCES

2012 ANNUAL REPORT

Launch of MasterCard in 2005.

FIRST MOVER INITIATIVES

Launch of innovative Faida Savings Account in 2009.

Bank to launch Visa Cards in The Union of Comoros.

2012 ANNUAL REPORT

AWARDS AND RECOGNITIONS

2012 ANNUAL REPORT

MAKING OF A STRONG REGIONAL BANK

...and still growing

Valuing Human Capital: * Gender Sensitivity * Belongingness * Recognition * Encouragement

Buildin Excelle g nce!

BOARD OF DIRECTORS PROFILE

2012 ANNUAL REPORT

2012 ANNUAL REPORT

ECONOMIC LANDSCAPE TANZANIA

AFFILIATES IN DJIBOUTI AND COMOROS

2012 ANNUAL REPORT

AMONG HIGHLIGHTS AND ACHIEVEMENTS IN 2012

ENABLING DELIVERY AND PERFORMANCE

CHAIRMANS FINANCIAL STATEMENTS STATEMENT

2012 ANNUAL REPORT

Yogesh Manek Chairman Date: 04th April 2013

MANAGING DIRECTORS STATEMENT

BANK PERFORMANCE 2012

MANAGING FINANCIALDIRECTORS STATEMENT STATEMENTS

2012 ANNUAL REPORT

VIEWING THE FUTURE

MANAGING DIRECTORS STATEMENT

2012 ANNUAL REPORT

Anthony Grant Managing Director Date: 04th April 2013

COMPANY FINANCIAL STATEMENTS INFORMATION

2012 ANNUAL REPORT

COMPANY FINANCIAL STATEMENTS INFORMATION

2012 ANNUAL REPORT

INTERNATIONAL BANKING DIVISION AND PAYMENTS

WOMEN ENTREPRENEURS FINANCING (WEF) PROGRAMME

COMPANY FINANCIAL STATEMENTS INFORMATION

2012 ANNUAL REPORT

HUMAN RESOURCES MANAGEMENT

COMPANY FINANCIAL STATEMENTS INFORMATION

2012 ANNUAL REPORT

TRAINING AND DEVELOPMENT: THE EXIM ACADEMY

COMPANY FINANCIAL STATEMENTS INFORMATION

2012 ANNUAL REPORT

RISK AND COMPLIANCE

SECURITY AND VIGILANCE

COMPANY FINANCIAL INFORMATION STATEMENTS

2012 ANNUAL REPORT

HIGHLIGHTS FOR THE YEAR