Ecobank Transnational Incorporated : Consolidated Audited Financial Statements 30 September 2021 PDF 3 MB

ECOBANK TRANSNATIONAL INCORPORATED

Consolidated Audited Financial Statements

30 September 2021

CONTENTS

Statement of directors' responsibilities

Report of the independent auditors

Consolidated financial statements:

Consolidated income statement

Consolidated statement of other comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the financial statements

ECOBANK TRANSNATIONAL INCORPORATED

Consolidated Audited Financial Statements For the period ended 30 September 2021

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12-119

ECOBANK TRANSNATIONAL INCORPORATED

Consolidated Audited Financial Statements

For the period ended 30 September 2021

Statement of directors' responsibilities

Responsibility for consolidated financial statements

The Directors are responsible for the preparation of the consolidated financial statements for each financial period that give a true and fair view of the financial position of the Group as at 30 September 2021 and the results of its operations, statement of cash flow, income statement and changes in equity for the period ended in compliance with International Financial Reporting Standards ("IFRS"). This responsibility includes ensuring that the Group:

1. keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Group;
2. establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities; and
3. prepares its consolidated financial statements using suitable accounting policies supported by reasonable and prudent judgments and estimates, that are consistently applied.

The Directors accept responsibility for the consolidated financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with IFRS.

Nothing has come to the attention of the Directors to indicate that the group will not remain a going concern for at least twelve months from the date of these financial statements'.

The Directors are of the opinion that the consolidated financial statements give a true and fair view of the state of the financial affairs of the Group and of its profit or loss for the period ended 30 September 2021. The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of the financial statements, as well as adequate systems of internal financial control.

Approval of consolidated financial statements

The consolidated financial statements were approved by the Board of Directors on 2 December 2021 and signed on its behalf by:

Alain Nkontchou	Ade Ayeyemi
Group Chairman	Group Chief Executive Officer

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INDEPENDENT AUDITORS' REPORT

TO THE MEMBERS OF ECOBANK TRANSNATIONAL INCORPORATED

Report on the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Ecobank Transnational Incorporated and its subsidiaries (together referred to as "the Group") set out on pages 7 to 119 which comprise the consolidated statement of financial position as at 30 September 2021, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the period then ended, notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of Ecobank Transnational Incorporated as at 30 September 2021, and its consolidated financial performance and statement of cash flows for the period then ended in accordance with International Financial Reporting Standards (IFRSs).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the requirements of the International Ethics Standards Board for Accountants' (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA code) and other independence requirements applicable to performing audits of financial statements. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and other ethical requirements that are relevant to our audit of consolidated Financial Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matters noted below relate to the consolidated financial statements.

Key audit matters	How our audit addressed the key audit matter
Impairment of loans and advances to customers
Loans and advances to customers constitute a	We focused our testing of the impairment on loans and
significant portion of the total assets of the Group. At	advances to customers on the key assumptions and
30 September 2021, gross loans and advances to	inputs made by Management and Directors. Specifically,
customers was US$ 9,468 million (31 December 2020:	our audit procedures included:
US$9,798 million) against which total loan impairment
amount of US$595 million (31 December 2020:	• Obtaining an understanding of the loan loss
US$558 million) were recorded, thus leaving a net loan	impairment calculation process within the group;
balance of US$8,873 million (31 December 2020:	• Testing the design and determining implementation
US$9,240 million) which represents nearly 35 per cent	of key controls across the processes relevant to the
(31 December 2020: 36 per cent) of the total assets as	Expected Credit Loss ('ECL') (allocation of assets into
at the reporting date (see notes 20 and 21).	stages, model governance, data accuracy and
	completeness, credit monitoring, multiple economic
The basis of the impairment amount is summarised in	scenarios, post model adjustments, individual
the Accounting policies in the consolidated financial	impairment and processing of journal entries and
statements.	disclosures);
	• Assessing the ECL impairment levels by stage to
The Directors exercise significant judgement when	determine if they were reasonable considering the
determining both when and how much to record as	Group's portfolio, risk profile, credit risk
loan impairment. This is because a number of
.

significant assumptions and inputs go into the	management practices and the macroeconomic
determination of expected credit loss impairment	environment.
amounts on loans and advances to customers.	• Challenging the criteria used to allocate asset to
		stage 1, 2 or 3 in accordance with IFRS 9;
The Group has implemented IFRS 9, Financial	• Testing the assumptions, inputs and formulae used
Instruments since 1 January 2018. This standard	in a sample of ECL models with the support of our
requires the Group to recognise Expected Credit	internal credit risk specialists (including assessing
Losses ('ECL') on financial instruments, which involves	the appropriateness of model design and formulae
exercise of significant judgement and estimates. The	used, assessing the Group's approach and
key areas where we identified greater levels of	methodology of incorporating the impacts of COVID-
management judgement and therefore increased	19 in the ECL models, considering alternative
levels of audit focus in the Group's implementation of	modelling techniques and recalculating the
IFRS 9 include:	probability of default, loss given default and
		exposure at default for a sample of models);
i.	Identification and measurement of economic	• Testing the data used in the ECL calculation by
	scenarios to measure ECLs on a forward-looking	reconciling to source systems;
	basis reflecting a range of future economic	• Assessing the adequacy and appropriateness of
	conditions.	disclosures for compliance with the accounting
ii.	Assessment and measurement of Significant	standards.
	Increase in Credit Risk ('SICR') using different
	criteria.	Based on our review, we found that the Group's
iii.	Modelling for estimation of ECL parameters -	impairment methodology, including the model,
		assumptions and key inputs used by Management and
	• probabilities of default (PDs) - 12-month and	Directors to estimate the amount of loan impairment
	lifetime,	losses were appropriate in the circumstances.

1. • loss given default,
   • exposure at default.
2. Completeness and accuracy of data used to calculate the ECL;

Because of the significance of these estimates, judgements and the size of loans and advances portfolio, the audit of loan impairment is considered a key audit matter.

Valuation of goodwill

Goodwill carrying value of US$18.7 million (31	We reviewed the Group's goodwill impairment
December 2020: US$18.8 million) was included in	assessment and calculations looking specifically into the
intangible assets (note 27) in the Group's statement of	valuation model, inputs and key assumptions made by the
financial position as at 30 September 2021. This asset	Management.
has been recognised in the consolidated statement of
financial position as part of intangible assets as a	Our audit procedures included:
consequence of the acquisitive nature of the Group.
		• Testing all relevant controls over the generation of
In line with the requirements of the applicable	the key inputs, e.g. financial forecasts, discount rate,
accounting standard, IAS 36, Impairment of Assets,	revenue growth rate, etc. that go into the valuation
management conducts annual impairment tests to	calculation.
assess the recoverability of the carrying value of	• Engaging our internal valuation specialists to assist
goodwill. This is performed using discounted cash flow	with:
models. As disclosed in note 26, there are a number of
key sensitive judgements adopted by Management in	❖ Critically evaluating whether the model used
determining the inputs into these models which	by Management to calculate the value in use
include:	of the individual Cash Generating Units
•	Projected financial information;	complies with the requirements of IAS 36,
•	Growth rates; and	Impairment of Assets.
• The discount rates applied to the projected
	future cash flows.