Ecobank Transnational Incorporated : 2020 GSE Provisionnal PDF 1.27 MB

January 29, 2021 at 08:42 am EST

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ECOBANK TRANSNATIONAL INCORRORATED

Unaudited Consolidated Financial Statements For year ended 31 December 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated Financial Statements

For the year ended 31 December 2020

CONTENTS

Unaudited Consolidated financial statements:

Press release

Consolidated statement of comprehensive income USD Consolidated statement of comprehensive income GHC Consolidated statement of comprehensive income USD (Three months) Consolidated statement of comprehensive income GHC (Three months) Consolidated statement of financial position USD

Consolidated statement of financial position GHC

Consolidated statement of changes in equity USD

Consolidated statement of changes in equity GHC

Consolidated statement of cash flows USD

Consolidated statement of cash flows GHC

Notes to the unaudited consolidated financial statements

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Press Release

Ecobank Group reports unaudited 2020 full year results

Gross earnings down 7% to $2,169.8 million (stable at GHC 12.1 billion)
Revenue up 2% to $1,649.9 million (up 9% to GHC9.2 billion)
Operating profit before impairment losses up 10% to $606.2 million (up 18% to GHC3.4 billion)
Profit before tax and goodwill impairment down 18% to $330.8 million (down 12% to GHC 1,851.1 million)
Profit before tax down 58% to $171.3 million (down 55% to GHC 958.9 million)
Profit after tax down 66% to $93.9 million (down 63% to GHC 525.7 million)
Total assets up 9% to $25.7 billion (up 12% to GHC 147.1 billion)
Loans and advances to customers stable at $9.2 billion (up 3% to GHC 53.0 billion)
Deposits from customers up 12% to $18.2 billion (up 16% to GHC 104.6 billion)
Total equity up 7%to $2.0 billion (up 10% to GHC 11.5 billion)

Financial Highlights		Unaudited				Audited	% Change
	Year ended 31 December 2020		Year ended 31 December 2019


		US$'000	GHC'000		US$'000	GHC'000	US$	GHC


Income Statement:


Gross Earnings		2,169,776	12,143,426		2,328,822	12,149,390	-7%		0%

Revenue		1,649,911	9,233,936		1,622,259	8,463,273	2%		9%

Operating profit before impairment losses		606,188	3,392,609		548,878	2,863,478	10%		18%

Profit before tax and goodwill impairment		330,760	1,851,142		405,079	2,113,283	-18%		-12%
Profit before tax		171,339	958,922		405,079	2,113,283	-58%		-55%
Profit for the Year		93,925	525,663		274,934	1,434,322	-66%


				-63%

Earnings per share from continuing operations attributable to owners of the parent during the year (expressed in United States cents / pesewas per share):

Basic (cents and pesewas)		0.033	0.182		0.778	4.060		-96%		-96%
Diluted (cents and pesewas)		0.033	0.182		0.778	4.060		-96%		-96%
Earnings per share from discontinued operations attributable to owners of the parent during the year (expressed in United States cents / pesewas per
share):

Basic (cents and pesewas)		0.006	0.035		0.010	0.054		-39%		-35%
Diluted (cents and pesewas)		0.006	0.035		0.010	0.054		-39%		-35%

Financial Highlights		Unaudited			Audited		% Change
	As at 31 December 2020		As at 31 December 2019


		US$'000	GHC'000		US$'000	GHC'000		US$	GHC
Statement of Financial Rosition:


Total assets		25,654,050	147,105,454		23,641,184	130,920,150		9%		12%
Loans and advances to customers


	9,241,360	52,991,807		9,276,608	51,372,000		0%		3%



Deposits from customers		18,238,169	104,581,309		16,246,120	89,967,763		12%		16%

Total equity		2,011,108	11,532,095		1,885,777	10,443,055		7%		10%



Alain Nkontchou	Ade Ayeyemi	Ayo Adepoju
Group Chairman	Group Chief Executive Officer	Group Chief Financial Officer

www.ecobank.com

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Unaudited Consolidated Statement of Comprehensive Income - USD

	Unaudited	Audited	% Change
	Year ended 31 December 2020	Year ended 31 December 2019


	US$'000	US$'000

Interest Income	1,387,612	1,411,998	-2%
Interest Expense	(483,816)	(662,269)	-27%
Net Interest Income	903,796	749,729	21%
Fee and commission income	420,306	459,866	-9%
Fee and commission expense	(32,635)	(40,350)	-19%
Net trading income	318,830	381,691	-16%
Other operating income	39,614	71,323	44%
Non-interest revenue	746,115	872,530	-14%
Operating income	1,649,911	1,622,259	2%
Staff expenses	(456,045)	(490,311)	-7%
Depreciation and amortisation	(104,366)	(108,504)	-4%
Other operating expenses	(483,312)	(474,566)	2%
Operating expenses	(1,043,723)	(1,073,381)	-3%
Operating profit before impairment losses and taxation	606,188	548,878	10%
Impairment losses on loans and advances	(316,515)	(314,177)	1%
Recoveries	130,517	204,262	-36%
Impairment charge on other financial assets	(46,317)	(23,642)	96%
Impairment charges on financial assets	(232,315)	(133,557)	74%
Operating profit after impairment losses before taxation	373,873	415,321	-10%
Net monetary loss arising from hyperinflationary economies	(43,646)	(9,466)	361%
Share of post-tax results of associates	533	(776)	-169%

Profit before tax and goodwill impairment	330,760	405,079	-18%
Goodwill impairment	(159,421)	-	n/m

Profit before tax	171,339	405,079	-58%
Taxation	(80,295)	(134,865)	-40%

Profit for the year from continuing operations	91,044	270,214	-66%
Profit for the year from discontinued operations	2,881	4,720	-39%

Profit for the year	93,925	274,934	-66%
Attributable to:
Owners of the parent	9,553	193,958	-95%
- Continuing operations	7,997	191,409	-96%
- Discontinued operations	1,556	2,549	-39%
Non-controlling interests	84,372	80,976	4%
- Continuing operations	83,047	78,805	5%
- Discontinued operations	1,325	2,171	-39%

	93,925	274,934	-66%
Earnings per share from continuing operations attributable to owners of the parent during the
year (expressed in United States cents per share):
Basic (cents )	0.033	0.778	-96%
Diluted (cents )	0.033	0.778	-96%
Earnings per share from discontinued operations attributable to owners of the parent during the
year (expressed in United States cents per share):
Basic (cents)	0.006	0.010	-39%
Diluted (cents )	0.006	0.010	-39%

Unaudited consolidated statement of comprehensive income
Profit for the year	93,925	274,934	-66%
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange difference on translation of foreign operations	(52,119)	(243,219)	-79%
Impact of Hyperinflation	-	(35,542)
Fair value gain on debt instruments at FVTOCI	89,541	65,924	36%
Taxation relating to components of other comprehensive income that may be subsequently
reclassed to profit or loss	(641)	(1,468)	-56%
Items that will not be reclassified to profit or loss:
Property and equipment revaluation gain	26,833	13,224	103%
Fair value loss equity instruments designated at FVTOCI	-	(184)	n/m
Remeasurements of defined benefit obligations	-	902	n/m
Taxation relating to components of other comprehensive income that will not be subsequently
reclassed to profit or loss	(7,890)	(1,083)	629%

Other comprehensive profit /( loss) for the year, net of taxation	55,724	(201,446)	-128%

Total comprehensive profit for the year	149,649	73,488	104%
Total comprehensive profit / (loss) attributable to:
Owners of the parent	14,171	(14,571)	-197%
- Continuing operations	12,615	(17,120)	-174%
- Discontinued operations	1,556	2,549	-39%
Non-controlling interests	135,478	88,059	54%
- Continuing operations	134,153	85,888	56%
- Discontinued operations	1,325	2,171	-39%

	149,649	73,488	104%

The above unaudited consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. nm-not meaningful

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Unaudited Consolidated Statement of Comprehensive Income - GHC

	Unaudited	Audited	% Change
	Year ended 31 December 2020	Year ended 31 December 2019


	GHC'000	GHC'000
Interest Income	7,765,946	7,366,348	5%
Interest Expense	(2,707,737)	(3,455,036)	-22%
Net Interest Income	5,058,209	3,911,312	29%
Fee and commission income	2,352,296	2,399,106	-2%
Fee and commission expense	(182,646)	(210,505)	-13%
Net trading income	1,784,372	1,991,270	-10%
Other operating income	221,705	372,090	-40%
Non-interest revenue	4,175,727	4,551,961	-8%
Operating income	9,233,936	8,463,273	9%
Staff expenses	(2,552,313)	(2,557,937)	0%
Depreciation and amortisation	(584,097)	(566,062)	3%
Other operating expenses	(2,704,917)	(2,475,796)	9%
Operating expenses	(5,841,327)	(5,599,795)	4%
Operating profit before impairment losses and taxation	3,392,609	2,863,478	18%
Impairment losses on loans and advances	(1,771,416)	(1,639,051)	8%
Recoveries	730,455	1,065,628	-31%
Impairment charge on other financial assets	(259,219)	(123,340)	110%
Impairment charges on financial assets	(1,300,180)	(696,763)	87%
Operating profit after impairment losses before taxation	2,092,429	2,166,715	-3%
Net monetary loss arising from hyperinflationary economies	(244,270)	(49,384)	395%
Share of post-tax results of associates	2,983	(4,048)	-174%

Profit before tax and goodwill impairment	1,851,142	2,113,283	-12%
Goodwill impairment	(892,220)	-	n/m

Profit before tax	958,922	2,113,283	-55%
Taxation	(449,383)	(703,585)	-36%

Profit for the year from continuing operations	509,539	1,409,698	-64%
Profit for the year from discontinued operations	16,124	24,624	-35%

Profit for the year	525,663	1,434,322	-63%
Attributable to:
Owners of the parent	53,464	1,011,873	-95%
- Continuing operations	44,756	998,575	-96%
- Discontinued operations	8,708	13,298	-35%
Non-controlling interests	472,199	422,449	12%
- Continuing operations	464,783	411,123	13%
- Discontinued operations	7,416	11,326	-35%

	525,663	1,434,322	-63%
Earnings per share from continuing operations attributable to owners of the parent during the
year (expressed in pesewas per share):
Basic (pesewas)	0.182	4.060	-96%
Diluted (pesewas)	0.182	4.060	-96%
Earnings per share from discontinued operations attributable to owners of the parent during the
year (expressed in pesewas per share):
Basic (pesewas )	0.035	0.054	-35%
Diluted (pesewas )	0.035	0.054	-35%
Uaudited consolidated statement of comprehensive income
Profit for the year	525,663	1,434,322	-63%
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange difference on translation of foreign operations	95,918	10,044	855%
Impact of Hyperinflation	-	(185,421)
Fair value profit on debt instruments at FVTOCI	501,128	343,923	-46%
Taxation relating to components of other comprehensive income that may be subsequently
reclassed to profit or loss	(3,587)	(7,658)	-53%
Items that will not be reclassified to profit or loss:
Property and equipment revaluation gain	150,174	68,990	118%
Fair value loss equity instruments designated at FVTOCI	-	(960)	n/m
Remeasurements of defined benefit obligations	-	4,706	n/m
reclassed to profit or loss	(44,157)	(5,651)	681%

Other comprehensive profit / (loss) for the year, net of taxation	699,476	227,973	207%

Total comprehensive profit for the year	1,225,139	1,662,295	-26%
Total comprehensive profit attributable to:
Owners of the parent	371,283	962,268	-61%
- Continuing operations	362,575	948,970	-62%
- Discontinued operations	8,708	13,298	-35%
Non-controlling interests	853,856	700,027	22%
- Continuing operations	846,440	688,701	23%
- Discontinued operations	7,416	11,326	-35%

	1,225,139	1,662,295	-26%

The above unaudited consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. nm-not meaningful

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Unaudited Consolidated Statement of Comprehensive Income - USD

	Unaudited	Audited	% Change
	3months ended 31 December 2020	3 months ended 31 December 2019


	US$'000	US$'000
Interest Income	341,959	381,623	-10%
Interest Expense	(109,261)	(172,532)	-37%
Net Interest Income	232,698	209,091	11%
Fee and commission income	117,508	117,329	0%
Fee and commission expense	(9,404)	(13,088)	-28%
Net trading income	61,202	110,831	-45%
Other operating income	34,400	29,104	-18%
Non-interest revenue	203,706	244,176	-17%
Operating income	436,404	453,267	-4%
Staff expenses	(114,673)	(133,584)	-14%
Depreciation and amortisation	(26,979)	(30,973)	-13%
Other operating expenses	(132,680)	(132,864)	0%
Operating expenses	(274,332)	(297,421)	-8%
Operating profit before impairment losses and taxation	162,072	155,846	4%
Impairment losses on loans and advances	(115,991)	(129,141)	-10%
Recoveries	57,837	77,606	-25%
Impairment charge on other financial assets	(12,358)	8,020	-254%
Impairment charges on financial assets	(70,512)	(43,515)	62%
Operating profit after impairment losses before taxation	91,560	112,331	-18%
Net monetary loss arising from hyperinflationary economies	(11,041)	(9,466)	17%
Share of post-tax results of associates	41	(638)	-106%

Profit before tax and goodwill impairment	80,560	102,227	-21%
Goodwill impairment	-	-	n/m

Profit before tax	80,560	102,227	-21%
Taxation	(14,929)	(46,206)	-68%

Profit for the year from continuing operations	65,631	56,021	17%
Profit for the year from discontinued operations	1,231	836	47%

Profit for the year	66,862	56,857	18%
Attributable to:
Owners of the parent	41,126	39,272	5%
- Continuing operations	40,461	38,820	4%
- Discontinued operations	665	452	47%
Non-controlling interests	25,736	17,585	46%
- Continuing operations	25,170	17,201	46%
- Discontinued operations	566	384	47%

	66,862	56,857	18%
nm-not meaningful	Page 5

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Unaudited Consolidated Statement of Comprehensive Income - GHC

	Unaudited	Audited	% Change
	3 months ended 31 December 2020	3 months ended 31 December 2019


	GHC'000	GHC'000
Interest Income	1,954,381	2,059,517	-5%

Interest Expense	(626,023)	(932,701)	-33%
Net Interest Income	1,328,358	1,126,816	18%
Fee and commission income	669,395	634,908	5%
Fee and commission expense	(53,532)	(70,095)	-24%
Net trading income	346,333	596,236	-42%
Other operating income	192,726	154,646	25%
Non-interest revenue	1,154,922	1,315,695	-12%
Operating income	2,483,280	2,442,511	2%
Staff expenses	(655,024)	(1,604,930)	-59%
Depreciation and amortisation	(153,993)	(1,218,390)	-87%
Other operating expenses	(756,163)	(2,312,724)	-67%
Operating expenses	(1,565,180)	(5,136,044)	-70%
Operating profit before impairment losses and taxation	918,100	(2,693,533)	-134%
Impairment losses on loans and advances	(656,937)	(686,044)	-4%
Recoveries	326,512	413,300	-21%
Impairment charge on other financial assets	(70,481)	39,732	-277%
Impairment charges on financial assets	(400,906)	(233,012)	72%
Operating profit after impairment losses before taxation	517,194	(2,926,545)	-118%
Net monetary loss arising from hyperinflationary economies	(63,057)	(49,384)	28%
Share of post-tax results of associates	249	(3,337)	-107%

Profit before tax and goodwill impairment	454,386	(2,979,266)	-115%
Goodwill impairment	-	-	n/m

Profit before tax	454,386	(2,979,266)	-115%
Taxation	(86,089)	(246,957)	-65%
Profit for the year from continuing operations	368,297	(3,226,223)	-111%
Profit for the year from discontinued operations	6,954	4,620	51%

Profit for the year	375,251	(3,221,603)	-112%
Attributable to:
Owners of the parent	228,941	215,180	6%
- Continuing operations	225,185	212,682	6%
- Discontinued operations	3,756	2,498	50%
Non-controlling interests	146,310	95,961	52%
- Continuing operations	143,112	93,839	53%
- Discontinued operations	3,198	2,122	51%

	375,251	311,141	21%
nm-not meaningful

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Unaudited Consolidated Statement of Financial Position - USD

		Unaudited	Audited
		As at 31 December 2020	As at 31 December 2019

		US$'000	US$'000
ASSETS
Cash and balances with central banks		3,814,885	2,829,313

Trading financial assets		157,357	182,662
Derivative financial instruments		91,271	65,459
Loans and advances to banks		1,764,029	1,891,889
Loans and advances to customers		9,241,360	9,276,608
Treasury bills and other eligible bills		1,705,567	1,632,749
Investment securities		6,017,546	4,857,763
Pledged assets		423,599	351,478
Other assets		1,125,249	1,184,770
Investment in associates		4,307	3,664
Intangible assets		146,789	309,974
Property and equipment		853,737	831,182
Investment properties		24,987	21,710
Deferred income tax assets		150,062	116,424
		25,520,745	23,555,645
Assets held for sale and discontinued operations		133,305	85,539

Total Assets		25,654,050	23,641,184
LIABILITIES
Deposits from banks		2,357,871	2,207,593
Deposits from customers		18,238,169	16,246,120
Derivative financial instruments		78,631	51,255
Borrowed funds		1,658,341	2,075,001
Other liabilities		890,971	845,970
Provisions		69,392	68,482
Current income tax liabilities		88,477	54,756
Deferred income tax liabilities		59,160	67,556
Retirement benefit obligations		46,552	31,082
		23,487,564	21,647,815
Liabilities held for sale and discontinued operations		155,378	107,592

Total Liabilities		23,642,942	21,755,407
EQUITY
Share capital and premium		2,113,961	2,113,957
Retained earnings and reserves		(623,093)	(637,264)
Equity attributable to owners of the parents		1,490,868	1,476,693
Non-controlling interests		520,240	409,084

Total equity		2,011,108	1,885,777

Total liabilities and equity		25,654,050	23,641,184
The above unaudited consolidated statement of financial position should be read in conjunction with the accompanying notes
	-	(0)

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Unaudited Consolidated Statement of Financial Position - GHC

		Unaudited	Audited
		As at 31 December 2020	As at 31 December 2019

		GHC'000	GHC'000
ASSETS
Cash and balances with central banks		21,875,314	15,668,170

Trading financial assets		902,317	1,011,546
Derivative financial instruments		523,366	362,499
Loans and advances to banks		10,115,295	10,476,903
Loans and advances to customers		52,991,807	51,372,000
Treasury bills and other eligible bills		9,780,062	9,041,837
Investment securities		34,505,812	26,901,320
Pledged assets		2,429,001	1,946,415
Other assets		6,452,403	6,561,019
Investment in associates		24,697	20,290
Intangible assets		841,717	1,716,574
Property and equipment		4,895,499	4,602,920
Investment properties		143,280	120,226
Deferred income tax assets		860,486	644,733
		146,341,056	130,446,452
Assets held for sale and discontinued operations		764,398	473,698

Total Assets		147,105,454	130,920,150
LIABILITIES
Deposits from banks		13,520,504	12,225,209
Deposits from customers		104,581,309	89,967,763
Derivative financial instruments		450,886	283,840
Borrowed funds		9,509,259	11,490,941
Other liabilities		5,109,006	4,684,813
Provisions		397,908	379,240
Current income tax liabilities		507,345	303,228
Deferred income tax liabilities		339,235	374,112
Retirement benefit obligations		266,938	172,126
		134,682,390	119,881,272
Liabilities held for sale and discontinued operations		890,969	595,823

Total Liabilities		135,573,359	120,477,095
EQUITY
Share capital and premium		4,536,400	4,536,378
Retained earnings and reserves		4,012,535	3,641,252
Equity attributable to owners of the parents		8,548,935	8,177,630
Non-controlling interests		2,983,160	2,265,425

Total equity		11,532,095	10,443,055

Total liabilities and equity		147,105,454	130,920,150
The above unaudited consolidated statement of financial position should be read in conjunction with the accompanying notes
	-	(0)

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Unaudited Consolidated Statement of Changes in Equity - USD

Amounts in US$'000

	Share Capital	Retained Earnings	Other Reserves	Total equity and	Non-Controlling	Total Equity
				reserves attributable	Interest

1 January 2019	2,113,957	185,893	(842,367)	1,457,483	275,539	1,733,022
Foreign currency translation differences	-	-	(243,219)	(243,219)	-	(243,219)
Net changes in debt instruments, net of taxes	-	-	59,199	59,199	5,257	64,456
Net changes in equity instruments, net of taxes	-	-	(184)	(184)	-	(184)
Remeasurements of post-employment benefit obligations	-	-	902	902	-	902
Net loss on revaluation of property	-	-	10,315	10,315	1,826	12,141
Impact of adopting IAS 29 at 1 January 2019	-	-	(35,542)	(35,542)	-	(35,542)
Profit for the year	-	193,958	-	193,958	80,976	274,934
Total comprehensive profit for the year	-	193,958	(208,529)	(14,571)	88,059	73,488
Change in minority ownership	-	-	-	-	64,962	64,962
Transfer to other group reserve	-	-	36,382	36,382	-	36,382
Dividend relating to 2018	-	-	-	-	(19,476)	(19,476)
Transfer from share option reserve	-	-	94	94	-	94
Convertible bond - equity component	-	-	(2,695)	(2,695)	-	(2,695)
Transfer to general banking reserves	-	(28,124)	28,124	-	-	-
Transfer to statutory reserve	-	(106,164)	106,164	-	-	-

At 31 December 2019	2,113,957	245,563	(882,827)	1,476,693	409,084	1,885,777
Foreign currency translation differences	-	-	(93,888)	(93,888)	41,769	(52,119)
Net changes in debt investment securities, net of taxes		-	85,449	85,449	3,451	88,900
Net gains on revaluation of property	-	-	13,057	13,057	5,886	18,943
Profit for the year	-	9,553	-	9,553	84,372	93,925
Total comprehensive profit for the year	-	9,553	4,618	14,171	135,478	149,649
Adjustment to ordinary capital	4	-	-	4	-	4
Dividend relating to 2019	-	-	-	-	(24,322)	(24,322)

At 31 December 2020	2,113,961	255,116	(878,209)	1,490,868	520,240	2,011,108

The above unaudited consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

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Unaudited Consolidated Statement of Changes in Equity - GHC

Amounts in GHC '000

	Share Capital	Retained Earnings	Other Reserves	Total equity and	Non-Controlling	Total Equity
				reserves attributable	Interest

1 January 2019	4,536,378	(734,834)	3,223,524	7,025,068	1,328,099	8,353,167
Foreign currency translation differences	-	-	(216,522)	(216,522)	240,626	24,104
Net changes in debt investment securities, net of taxes	-	-	308,839	308,839	27,426	336,265
Net changes in equity investment securities, net of taxes	-	-	(960)	(960)		(960)
Net loss on revaluation of property	-	-	53,813	53,813	9,526	63,339
Remeasurements of post-employment benefit obligations	-	-	4,706	4,706	-	4,706
Impact of adopting IAS 29 at January 1, 2019	-	-	(185,421)	(185,421)	-	(185,421)
Profit for the period	-	1,011,873	-	1,011,873	422,449	1,434,322
Total comprehensive profit for the year	-	1,011,873	(35,545)	976,328	700,027	1,676,355
Change in minority ownership	-	-	-	-	338,905	338,905
Transfer to other group reserve	-	-	189,804	189,804	-	189,804
Dividend relating to 2018	-	-	-	-	(101,606)	(101,606)
Transfer from share option reserve	-	-	490	490	-	490
Convertible bond - equity component	-	-	(14,060)	(14,060)	-	(14,060)
Transfer to general banking reserves	-	(146,722)	146,722	-	-	-
Transfer to statutory reserve	-	(553,854)	553,854	-	-	-

At 31 December 2019	4,536,378	(423,537)	4,064,789	8,177,630	2,265,425	10,443,055

Foreign currency translation differences	-	-	(233,483)	(233,483)	329,401	95,918
Net changes in debt investment securities, net of taxes	-	-	478,226	478,226	19,314	497,540
Net gains on revaluation of property	-	-	73,075	73,075	32,942	106,017
Profit for the year	-	53,465	-	53,465	472,199	525,664
Total comprehensive profit for the year	-	53,465	317,818	371,283	853,856	1,225,139
Adjustment to ordinary capital	22	-	-	22	-	22
Dividend relating to 2019	-	-	-	-	(136,121)	(136,121)

At 31 December 2020	4,536,400	(370,072)	4,382,607	8,548,935	2,983,160	11,532,095

The above uaudited consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

PUBLIC

Page 10

PUBLIC

Unaudited Consolidated Statement of Cash Flows - USD

	Unaudited	Audited
	Year ended 31 December 2020	Year ended 31 December 2019

	US$'000	US$'000
Cash flows from operating activities
Profit before tax	171,339	405,079
Adjusted for:
Foreign exchange income	(214,054)	(42,924)
Net profit from investment securities	(15,340)	(6,879)
Impairment losses on loans and advances	185,998	109,915
Impairment losses on other financial assets	46,317	23,642
Depreciation of property and equipment	81,723	88,144
Net interest income	(903,796)	(749,729)
Amortisation of software and other intangibles	22,643	20,360
Profit on sale of property and equipment	(1,826)	(1,279)
Share of post-tax results of associates	(533)	776
Income taxes paid	(89,342)	(123,782)
Changes in operating assets and liabilities
Trading financial assets	25,305	(60,379)
Derivative financial instruments	(25,812)	(15,545)
Treasury bills and other eligible bills	216,251	180,562
Loans and advances to banks	100,177	(100,064)
Loans and advances to customers	18,869	(26,449)
Pledged assets	(72,121)	(111,044)
Other assets	59,521	(445,602)
Mandatory reserve deposits with central banks	70,052	(135,505)
Other deposits from banks	(110,247)	1,204,157
Deposits from customers	1,992,049	310,121
Derivative liabilities	27,376	21,348
Other liabilities	45,001	(150,587)
Provisions	910	15,503
Interest received	1,387,612	1,411,998
Interest paid	(483,816)	(662,269)

Net cashflow from operating activities	2,534,256	1,159,568
Cash flows from investing activities
Purchase of software	(31,033)	(58,369)
Purchase of property and equipment	(271,429)	(406,367)
Proceeds from sale of property and equipment	170,190	292,304
Purchase of investment securities	(3,511,743)	(2,911,125)
Purchase of investment properties	(8,091)	(4,222)
Disposal of investment properties	3,925	12,047
Redemption of investment securities	2,519,264	2,570,480

Net cashflow used in investing activities	(1,128,917)	(505,252)
Cash flows from financing activities
Repayment of borrowed funds	(580,194)	(671,050)
Proceeds from borrowed funds	344,838	686,359
Dividends paid to non-controlling shareholders	(24,322)	(19,476)

Net cashflow used in financing activities	(259,678)	(4,167)

Net increase in cash and cash equivalents	1,145,661	650,149
Cash and cash equivalents at beginning of year	2,559,766	2,141,855
Effects of exchange differences on cash and cash equivalents	(89,176)	(232,238)

Cash and cash equivalents at end of the year	3,616,251	2,559,766

The above unaudited consolidated statement of cash flows should be read in conjunction with the accompanying notes.

PUBLIC	Page 11

PUBLIC

Unaudited Consolidated Statement of Cash Flows - GHC

	Unaudited	Audited
	Year ended 31 December 2020	Year ended 31 December 2019

	GHC'000	GHC'000
Cash flows from operating activities
Profit before tax	958,922	2,113,283
Adjusted for:
Foreign exchange income	(1,197,982)	(223,933)
Net profit from investment securities	(85,853)	(35,888)
Impairment losses on loans and advances	1,040,961	573,423
Impairment losses on other financial assets	259,219	123,340
Depreciation of property and equipment	457,373	459,844
Net interest income	(5,058,208)	(3,911,312)
Amortisation of software and other intangibles	126,725	106,218
Profit on sale of property and equipment	(10,219)	(6,673)
Share of post-tax results of associates	(2,983)	4,048
Income taxes paid	(500,014)	(645,767)
Changes in operating assets and liabilities
Trading financial assets	141,623	(314,995)
Derivative financial instruments	(144,460)	(81,098)
Treasury bills and other eligible bills	1,210,276	941,986
Loans and advances to banks	560,653	(522,031)
Loans and advances to customers	105,603	(137,984)
Pledged assets	(403,634)	(579,313)
Other assets	333,117	(2,324,691)
Mandatory reserve deposits with central banks	392,055	(706,925)
Other deposits from banks	(617,011)	6,282,048
Deposits from customers	11,148,754	1,617,891
Derivative liabilities	153,213	111,372
Other liabilities	251,854	(785,608)
Provisions	5,093	80,879
Interest received	7,765,946	7,366,348
Interest paid	(2,707,737)	(3,455,036)

Net cashflow from operating activities	14,183,286	6,049,426
Cash flows from investing activities
Purchase of software	(173,682)	(304,509)
Purchase of property and equipment	(1,519,085)	(2,120,004)
Proceeds from sale of property and equipment	952,491	1,524,941
Purchase of investment securities	(19,653,910)	(15,187,246)
Purchase of investment properties	(45,284)	(22,026)
Disposal of investment properties	21,970	62,849
Redemption of investment securities	14,099,376	13,410,112

Net cashflow used in investing activities	(6,318,124)	(2,635,883)
Cash flows from financing activities
Repayment of borrowed funds	(3,247,127)	(3,500,847)
Proceeds from borrowed funds	1,929,927	2,928,034
Dividends paid to non-controlling shareholders	(136,122)	(101,608)
Dividends paid to owners of the parent	-	-

Net cashflow used in financing activities	(1,453,322)	(674,421)

Net increase in cash and cash equivalents	6,411,840	2,739,122
Cash and cash equivalents at beginning of year	14,175,470	10,323,741
Effects of exchange differences on cash and cash equivalents	148,997	1,112,607

Cash and cash equivalents at end of the year	20,736,307	14,175,470

The above unaudited consolidated statement of cash flows should be read in conjunction with the accompanying notes.

PUBLIC	Page 12

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For the year ended 31 December 2020

Notes

General information
Ecobank Transnational Incorporated (ETI) and its subsidiaries (together, 'the Group') provide retail, corporate and investment banking services throughout sub Saharan Africa outside South Africa. The Group had operations in 39 countries and employed over 14,023 people as at 31 December 2020 (31 December 2019: 14,878) .
Ecobank Transnational Incorporated is a limited liability company and is incorporated and domiciled in the Republic of Togo. The address of its registered office is as follows: 2365 Boulevard du Mono, Lomé, Togo. The company has a primary listing on the Ghana Stock Exchange, the Nigerian Stock Exchange and the Bourse Regionale Des Valeurs Mobilieres (Abidjan) Cote D'Ivoire.
The unaudited consolidated financial statements for the period ended 31 December 2020 have been approved by the Board of Directors on 28 January 2021.
Summary of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements to the extent they have not already been disclosed elsewhere. These policies have been consistently applied to all the periods presented, unless otherwise stated. The notes also highlight new standards and interpretations issued at the time of preparation of the consolidated financial statements and their potential impact on the Group. The financial statements are for the Group consisting of Ecobank Transnational Incorporated and its subsidiaries.
2.1 Basis of presentation and measurement
- The Group's consolidated financial statements for the year ended 3 1December 2020 (the Financial Statements) have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB).
  The consolidated financial statements have been prepared under the historical cost convention, except for the following:
- fair value through other comprehensive income and fair value through profit and loss, financial assets and financial liabilities (including derivative instruments) and investment properties measured at fair value
- assets held for sale - measured at fair value less cost of disposal; and
- the liability for defined benefit obligations recognized at the present value of the defined benefit obligation less the fair value of the plan assets and plan assets measured at fair value

The consolidated financial statements are presented in US Dollars, which is the group's presentation currency. The figures shown in the consolidated financial statements are stated in US Dollar thousands.

The consolidated financial statements comprise the consolidated statement of comprehensive income (shown as two statements), the statement of financial position, the statement of changes in equity, the statement of cash flows and the accompanying notes.

The consolidated statement of cash flows shows the changes in cash and cash equivalents arising during the period from operating activities, investing activities and financing activities. Included in cash and cash equivalents are highly liquid investments.

The cash flows from operating activities are determined by using the indirect method. The Group's assignment of the cash flows to operating, investing and financing category depends on the Group's business model.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires Directors to exercise judgment in the process of applying the Group's accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions changed. Management believes that the underlying assumptions are appropriate and that the Group's financial statements therefore present the financial position and results fairly. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 3.

2.2 New and amended standards adopted by the group

The Group applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2020. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

a) Amendments to IFRS 3: Definition of a Business

The amendment to IFRS 3 Business Combinations clarifies that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to create output. Furthermore, it clarifies that a business can exist without including all of the inputs and processes needed to create outputs. These amendments had no impact on the consolidated financial statements of the Group, but may impact future periods should the Group enter into any business combinations.

b) Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform

The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of reliefs, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainty about the timing and/or amount of benchmark- based cash flows of the hedged item or the hedging instrument. These amendments have no impact on the consolidated financial statements of the Group as it does not have any interest rate hedge relationships.

c) Amendments to IAS 1 and IAS 8 Definition of Material

The amendments provide a new definition of material that states, "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The amendments clarify that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. These amendments had no impact on the consolidated financial statements of, nor is there expected to be any future impact to the Group.

d) Conceptual Framework for Financial Reporting issued on 29 March 2018

The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the IASB in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards. This will affect those entities which developed their accounting policies based on the Conceptual Framework. The revised Conceptual Framework includes some new concepts, updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts. These amendments had no impact on the consolidated financial statements of the Group.

e) Amendments to IFRS 16 Covid-19 Related Rent Concessions

On 28 May 2020, the IASB issued Covid-19-Related Rent Concessions - amendment to IFRS 16 Leases The amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a Covid-19 related rent concession from a lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the Covid-19 related rent concession the same way it would account for the change under IFRS 16, if the change were not a lease modification. The amendment applies to annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted. This amendment had no impact on the consolidated financial statements of the Group.

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Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For the year ended 31 December 2020

2 Summary of significant accounting policies (continued)

2.3 New and amended standards/ interpretation issued not yet adopted by the group

The following standards have been issued or amended by the IASB but are yet to become effective for annual periods beginning on or after 1 January 2020:

I) IFRS 17 Insurance Contracts

In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Once effective, IFRS 17 will replace IFRS 4 Insurance Contracts (IFRS 4) that was issued in 2005. IFRS 17 applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features.

The overall objective of IFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in IFRS 4, which are largely based on grandfathering previous local accounting policies, IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. The core of IFRS 17 is the general model, supplemented by:

A specific adaptation for contracts with direct participation features (the variable fee approach)
A simplified approach (the premium allocation approach) mainly for short-duration contracts

IFRS 17 is effective for reporting periods beginning on or after 1 January 2023, with comparative figures required. Early application is permitted, provided the entity also applies IFRS 9 and IFRS 15 on or before the date it first applies IFRS 17.

The impact of this standard is not material to the Group.

II) Amendments to IAS 1: Classification of Liabilities as Current or Non-current

In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarify:

What is meant by a right to defer settlement
That a right to defer must exist at the end of the reporting period
That classification is unaffected by the likelihood that an entity will exercise its deferral right
That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be applied retrospectively.

The Group is currently assessing the impact the amendments will have on current practice and whether existing loan agreements may require renegotiation.

III) IFRS 9 Financial Instruments - Fees in the '10 per cent' test for derecognition of financial liabilities

As part of its 2018-2020 annual improvements to IFRS standards process the IASB issued amendment to IFRS 9. The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other's behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.

The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption permitted. The Group will apply the amendments to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.

The amendments are not expected to have a material impact on the Group.

2.4 Foreign currency translation

a) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency').

The consolidated financial statements are presented in United States dollars, which is the Group's presentation currency.

b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the official exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. 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 the income statement.

Changes in the fair value of monetary securities denominated in foreign currency classified as FVTOCI are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in the income statement as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as FVTOCI, are included in other comprehensive income

c) Group companies

The results and financial position of all group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
Income and expenses for each income statement 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 dates of the transactions) and
All resulting exchange differences are recognised in other comprehensive income.

Exchange differences arising from the above process are reported in shareholders' equity as 'Foreign currency translation differences'.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities are taken to 'Other comprehensive income'. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

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Page 14

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For the year ended 31 December 2020

Notes

2.4 Foreign currency translation (continued)

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

d) Classification of Zimbabwe and South Sudan as hyper-inflationary economies

IAS 29 "Financial Reporting in Hyperinflationary Economies" requires that the financial statements of entities whose functional currency is that of a hyperinflationary economy to be adjusted for the effects of changes in a suitable general price index and to be expressed in terms of the current unit of measurement at the closing date of the reporting period. Accordingly, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be computed in the non-monetary items.

The Zimbabwe and South Sudan economies was designated as hyperinflationary . As a result, application of IAS 29 'Financial Reporting in Hyperinflationary Economies' has been applied to all Ecobank entities whose functional currency is the Zimbabwe dollar (Zim$) and South Sudan (SSP)

IAS 29 requires that adjustments are applicable from the start of the relevant entity's reporting period. For Ecobank that was from 1 January 2019. The application of IAS

29 includes:

Adjustment of historical cost non-monetary assets and liabilities for the change in purchasing power caused by inflation from the date of initial recognition to the balance sheet date;
Adjustment of the income statement for inflation during the reporting period;
The income statement is translated at the period end foreign exchange rate instead of an average rate and ;
Adjustment of the income statement to reflect the impact of inflation and exchange rate movement on holding monetary assets and liabilities in local currency.
This resulted in a net monetary loss of $43.6 million recorded in the income statement.

The comparative figures in these consolidated financial statements presented in a stable currency are not adjusted for subsequent changes in the price level or exchange rates. This resulted in an initial difference, arising on the adoption of hyperinflation accounting, between the closing equity of the previous year and the opening equity of the current year. The company recognized this initial difference directly in other comprehensive income.

Sale and repurchase agreements
Securities sold subject to repurchase agreements ('repos') are reclassified in the financial statements as pledged assets when the transferee has the right by contract or custom to sell or repledge the collateral; the counterparty liability is included in deposits from banks or deposits from customers, as appropriate. Securities purchased under agreements to resell ('reverse repos') are recorded as loans and advances to other banks or customers, as appropriate. The difference between sale and repurchase price is treated as interest and accrued over the life of the agreements using the effective interest method. Securities lent to counterparties are also retained in the financial statements.
Determination of fair value
Fair value under IFRS 13, Fair Value Measurement ('IFRS 13') is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market condition (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique.
For financial instruments traded in active markets, the determination of fair values of financial assets and financial liabilities is based on quoted market prices or dealer price quotations. This includes listed equity securities and quoted debt instruments on exchanges (for example, NSE, BVRM, GSE) and quotes from approved bond market makers.

A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer or broker, and those prices represent actual and regularly occurring market transactions on an arm's length basis. If the above criteria are not met, the market is regarded as being inactive. Indications that a market is inactive are when there is a wide bid-offer spread or significant increase in the bid-offer spread or there are few recent transactions.

For all other financial instruments, fair value is determined using valuation techniques. In these techniques, fair values are estimated from observable data in respect of similar financial instruments, using models to estimate the present value of expected future cash flows or other valuation techniques, using inputs existing at the dates of the consolidated statement of financial position.

The Group uses widely recognised valuation models for determining fair values of non-standardized financial instruments of lower complexity, such as options or interest

The output of a model is always an estimate or approximation of a value that cannot be determined with certainty, and valuation techniques employed may not fully reflect all factors relevant to the positions the Group holds. Valuations are therefore adjusted, where appropriate, to allow for additional factors including model risks, liquidity risk and counterparty credit risk. Based on the established fair value model governance policies, and related controls and procedures applied, management believes that these valuation adjustments are necessary and appropriate to fairly state the values of financial instruments carried at fair value in the consolidated statement of financial position. Price data and parameters used in the measurement procedures applied are generally reviewed carefully and adjusted, if necessary - particularly in view of the current market developments.

The fair value of over-the-counter (OTC) derivatives is determined using valuation methods that are commonly accepted in the financial markets, such as present value techniques and option pricing models. The fair value of foreign exchange forwards is generally based on current forward exchange rates. Structured interest rate derivatives are measured using appropriate option pricing models (for example, the Black-Scholes model) or other procedures such as Monte Carlo simulation.

In cases when the fair value of unlisted equity instruments cannot be determined reliably, the instruments are carried at cost less impairment. The fair value for loans and advances as well as liabilities to banks and customers are determined using a present value model on the basis of contractually agreed cash flows, taking into account credit quality, liquidity and costs.

Fee and commission income
The Group applies IFRS 15 to all revenue arising from contracts with clients, unless the contracts are in the scope of the standards on leases, insurance contracts and financial instruments. The Group recognises revenues to depict the transfer of promised service to customers in an amount that reflects the consideration the Group expects to be entitled in exchange for the service. Fees and commissions are generally recognised on an accrual basis when the service has been provided and considering the stage of completion. Fees charged for servicing a loan are recognised in revenue as the service is provided, which in most instances occurs monthly when the fees are levied. Loan syndication fees are recognised as part of fees and commissions income when the syndication has been completed and the Group has retained no part of the loan package for itself or has retained a part at the same effective interest rate as the other participants. Portfolio and other management advisory and service fees are recognised based on the applicable service contracts, usually on a time-apportionment basis. This is especially so as is the case in most instances for the Group where the nature of the service provided is such that the client benefits as the services are provided. Where this is not the case and where the nature of the service provided is such that the customer only benefits on completion such fees are recognised at a point in time and usually when control transfers. Commission and fees arising from negotiating, or participating in the negotiation of, a transaction for a third party - such as the arrangement of the acquisition of shares or other securities, or the purchase or sale of businesses - are recognised on completion of the underlying transaction. Asset management fees related to investment funds are recognised over the period in which the service is provided. Initial fees that exceed the level of recurring fees and relate to the future provision of services are deferred and amortised over the projected period over which services will be provided. The same principle is applied for wealth management, financial planning and custody services that are continuously provided over an extended period of time. Performance-linked fees or fee components are recognised when the performance criteria are fulfilled. 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 under interest income.
Dividend income
Dividends are recognised in the consolidated income statement in 'Dividend income' when the entity's right to receive payment is established which is generally when the shareholders approve the dividend.
Net gains on trading financial assets
Net trading income comprises gains less losses related to trading assets and liabilities, and it includes all fair value changes, dividends and foreign exchange differences.

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Page 15

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For the year ended 31 December 2020

Notes

2 Summary of significant accounting policies (continued)

Impairment of non-financial assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment at each reporting date. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash flows from other assets or group of assets (cash-generating units). The impairment test also can be performed on a single asset when the fair value less cost to sell or the value in use can be determined reliably. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
Share-basedpayments
The Group engages in equity settled share-based payment transactions in respect of services received from certain categories of its employees. The fair value of the services received is measured by reference to the fair value of the shares or share options granted on the date of the grant. The cost of the employee services received in respect of the shares or share options granted is recognised in the consolidated income statement over the period that the services are received, which is the vesting period.
The fair value of the options granted is determined using option pricing models, which take into account the exercise price of the option, the current share price, the risk free interest rate, the expected volatility of the share price over the life of the option and other relevant factors. Except for those which include terms related to market conditions, vesting conditions included in the terms of the grant are not taken into account in estimating fair value.
Non-market vesting conditions are taken into account by adjusting the number of shares or share options included in the measurement of the cost of employee services so that ultimately, the amount recognised in the consolidated income statement reflects the number of vested shares or share options.
Cash and cash equivalents
For purposes of presentation in the statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with financial institutions, other short- term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.
Repossessed collateral and properties
Repossessed collateral are equities, landed properties or other investments repossessed from customers and used to settle the outstanding obligations. Such investments and other assets are classified in accordance with the intention of the Group in the asset class which they belong. Repossessed properties acquired in exchange for loans as part of an orderly realisation are reported in 'other assets' as inventory as it is held for sale in the ordinary course of business. The repossessed properties are recognised when the risks and rewards of the properties have been transferred to the Group. The corresponding loans are derecognised when the Group becomes the holder of the title deed. The properties acquired are initially recorded at cost, which is the lower of their fair value less costs to sell and the carrying amount of the loan (net of impairment allowance) at the date of exchange. They are subsequently measured at the lower of the carrying amount or net realisable value. No depreciation is charged in respect of these properties. Any subsequent write-down of the acquired properties to net realisable value is recognised in the statement of comprehensive income, in 'Other impairments'. Any subsequent increase in net realisable value, to the extent that it does not exceed the cumulative write-down, is also recognised in 'Other impairments'. Gains or losses on disposal of repossessed properties are reported in 'Other operating income' or 'Operating expenses', as the case may be.
Leases
The group leases various offices, branches, houses, ATM locations, equipment and cars. Rental contracts are typically made for fixed periods of 1 to 65 years but may have extension options as described in (ii) below. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
Until the 2018 financial year, leases of property, plant and equipment were classified as either finance or operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.
From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
- fixed payments (including in-substance fixed payments), less any lease incentives receivable
- variable lease payment that are based on an index or a rate
- amounts expected to be payable by the lessee under residual value guarantees
- the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
- payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the affiliate's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date less any lease incentives received
any initial direct costs, and
restoration costs.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment, copiers and other small items of office furniture.

Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor.

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Notes

2 Summary of significant accounting policies (continued)

Investment properties
Properties that are held for long-term rental yields or for capital appreciation or both, and that are not occupied by the entities in the Group, are classified as investment properties. Investment properties comprise office buildings and Commercial Bank parks leased out under operating lease agreements.
Some properties may be partially occupied by the Group, with the remainder being held for rental income or capital appreciation. If that part of the property occupied by the Group can be sold separately, the Group accounts for the portions separately. The portion that is owner-occupied is accounted for under IAS 16, and the portion that is held for rental income or capital appreciation or both is treated as investment property under IAS 40. When the portions cannot be sold separately, the whole property is treated as investment property only if an insignificant portion is owner-occupied.
Recognition of investment properties takes place only when it is probable that the future economic benefits that are associated with the investment property will flow to the entity and the cost can be measured reliably. This is usually the day when all risks are transferred. Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing parts of an existing investment property at the time the cost has been incurred if the recognition criteria are met; and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the date of the consolidated statement of financial position. Gains or losses arising from changes in the fair value of investment properties are included in the consolidated income statement in the year in which they arise. Subsequent expenditure is included in the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the consolidated income statement during the financial period in which they are incurred.
Rental income from investment property is recognised in the income statement on a straight-line basis over the term of the lease.
The fair value of investment properties is based on the nature, location and condition of the specific asset. The fair value is calculated by discounting the expected net rentals at a rate that reflects the current market conditions as of the valuation date adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. The fair value of investment property does not reflect future capital expenditure that will improve or enhance the property and does not reflect the related future benefits from this future expenditure. These valuations are performed annually by external appraisers.
Investment properties are derecognised on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. The gain or loss on disposal is calculated as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised as income or expense in the income statement.
Property and equipment
Items of property and equipment are initially recognised at cost if it is probable that any future economic benefits associated with the items will flow to the group and they have a cost that can be measured reliably. Subsequent expenditure is capitalised to the carrying amount of items of property and equipment if it is measurable and it is probable that it increases the future economic benefits associated with the asset. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repair and maintenance costs are charged to other operating expenses during the financial period in which they are incurred.
Land and buildings comprise mainly branches and offices and are measured using the revaluation model. All other property and equipment used by the Group is stated at historical cost less depreciation. Subsequent to initial recognition, motor vehicles, furniture and equipment, installations and computer equipment are measured at cost less accumulated depreciation and accumulated impairment losses.
Land and buildings, the fair values of which can be reliably measured, are carried at revalued amounts, being the fair value at the date of revaluation less any subsequent accumulated depreciation and impairment losses. If an item of property, plant and equipment is revalued, the entire class of property, plant and equipment to which that asset belongs shall be revalued. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the reporting date. If an asset's carrying amount is increased as a result of a revaluation, the increase shall be credited directly to other comprehensive income. However, the increase shall be recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. If an asset's carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in profit or loss. However, the decrease shall be debited directly to equity under the heading of revaluation reserve to the extent of any credit balance existing in the revaluation surplus in respect of that asset. For assets revalued, any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. Land and buildings are the class of items that are revalued on a regular basis. The other items are evaluated at cost
An independent valuation of the Group's land and buildings was performed by professionally qualified independent valuers to determine the fair value of the land and buildings as at year end. The revaluation surplus net of applicable deferred income taxes was credited to other comprehensive income and is shown in 'revaluation reserve
- property and equipment' in shareholders equity (Note 40). Fair value is derived by applying internationally acceptable and appropriately benchmarked valuation techniques such as depreciated replacement cost or market value approach. The depreciated replacement cost approach involves estimating the value of the property in its existing use and the gross replacement cost. For these appropriate deductions are made to allow for age, condition and economic or functional obsolescence, environmental and other factors that might result in the existing property being worth less than a new replacement. The market value approach involves comparing the properties with identical or similar properties, for which evidence of recent transaction is available or alternatively identical or similar properties that are available in the market for sale making adequate adjustments on price information to reflect any differences in terms of actual time of the transaction, including legal, physical and economic characteristics of the properties.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful

lives, as follows:
- Buildings	25 - 50 years
- Leasehold improvements	25 years, or over the period of the lease if less than 25 years
- Furnitures , equipment Installations	3 - 5 years
- Motor vehicles	3 - 10 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Assets are subject to review for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and value in use.

2.17 Intangible assets

Goodwill
Goodwill represents the excess of the cost of acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiaries and associates at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-generating units is represented by each primary reporting segment.
Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstance indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment is tested by comparing the present value of the expected future cash flows from a cash generating unit with the carrying value of its net assets, including attributable goodwill. Impairment losses on goodwill are not reversed.
Computer software licences
Acquired computer software licences are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised on the basis of the expected useful lives.
Costs associated with maintaining computer software programs are recognised as an expense incurred. Development costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include software development employee costs and an appropriate portion of relevant overheads.

Computer software development costs recognised as assets are amortised using the straight-line method over their useful lives (not exceeding three years).

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Notes

2.18 Income tax

a) Current income tax

Income tax payable (receivable) is calculated on the basis of the applicable tax law in the respective jurisdiction and is recognised as an expense (income) for the period except to the extent that current tax related to items that are charged or credited in other comprehensive income or directly to equity. In these circumstances, current tax is charged or credited to other comprehensive income or to equity (for example, current tax on debt instruments at FVOCI).

Where the Group has tax losses that can be relieved against a tax liability for a previous year, it recognises those losses as an asset, because the tax relief is recoverable by refund of tax previously paid. This asset is offset against an existing current tax balance. Where tax losses can be relieved only by carry-forward against taxable profits of future periods, a deductible temporary difference arises. Those losses carried forward are set off against deferred tax liabilities carried in the consolidated statement of financial position. The Group does not offset income tax liabilities and current income tax assets.

b) Deferred income tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from the initial recognition of an asset or liability in transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the date of the consolidated statement of financial position and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

The principal temporary differences arise from depreciation of property, plant and equipment, revaluation of certain financial assets and liabilities, provisions for pensions and other post-retirement benefits and carry-forwards; and, in relation to acquisitions, on the difference between the fair values of the net assets acquired and their tax base, fair value changes on investment securities (available for sale financial assets under IAS 39), tax loss carried forward, revaluation on property and equipment. Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred income tax is provided on temporary differences arising from investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the difference will not reverse in the foreseeable future.

The tax effects of carry-forwards of unused losses or unused tax credits are recognised as an asset when it is probable that future taxable profits will be available against which these losses can be utilised.

Deferred tax related to fair value re-measurement of investment securities (available for sale financial assets under IAS 39), which are recognised in other comprehensive income, is also recognised in the other comprehensive income and subsequently in the consolidated income statement together with the deferred gain or loss.

Provisions
Provisions for restructuring costs and legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable than not that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. The Group recognises no provisions for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management's best estimate of the expenditures required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
Employee benefits
1. Pension obligations

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive

obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan.

Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.

Past-service costs are recognised immediately in income.

For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary

basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

b) Other post-retirement obligations

The Group also provides gratuity benefits to its retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit pension plans. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. These obligations are valued annually by independent qualified actuaries.

c) Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

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Notes

2 Summary of significant accounting policies (continued)

Profit-sharingand bonus plans

The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the company's shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

e) Short term benefits

The Group seeks to ensure that the compensation arrangements for its employees are fair and provide adequate protection for current and retiring employees. Employee benefits are determined based on individual level and performance within defined salary bands for each employee grade. Individual position and job responsibilities will also be considered in determining employee benefits. Employees will be provided adequate medical benefits and insurance protection against disability and other unforeseen situations. Employees shall be provided with retirement benefits in accordance with the Separation and Termination policies. Details of employee benefits are available with Group or Country Human Resources

Borrowings
Borrowings are recognised initially at fair value 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 the income statement over the period of the borrowing using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contracts is discharged, cancelled or expired. The difference between the carrying amount of financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the income statement as other operating income.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
Compound financial instruments
Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder.
The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry.
Fiduciary activities
Group companies commonly act as trustees and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions. An assessment of control has been performed and this does not result in control for the group. These assets and income arising thereon are excluded from these financial statements, as they are not assets of the Group.
Share capital
1. Share issue costs
  Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or to the acquisition of a business are shown in equity as a deduction, net of tax, from the proceeds.
2. Dividends on ordinary shares
  Dividends on ordinary shares are recognised in equity in the period in which they are approved by Ecobank Transnational Incorporated's shareholders. Dividends for the year that are declared after the reporting date are disclosed in the subsequent events note.
3. Treasury shares
  Where the company purchases its equity share capital, the consideration paid is deducted from total shareholders' equity as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders' equity.
Segment reporting
The Group's segmental reporting is in accordance with IFRS 8, Operating Segments ("IFRS 8"). Operating segments are reported in a manner consistent with the internal reporting provided to the Group Executive Committee, which is responsible for allocating resources and assessing performance of the operating segments and has been identified by the Group as the Chief Operating Decision Maker (CODM).
All transactions between business segments are conducted on an arm´s length basis, with intra-segment revenue and costs being eliminated in head office. Income and expenses directly associated with each segment are included in determining business segment performance.
In accordance with IFRS 8, the Group has the following business segments: Corporate & Investment Banking, Commercial Banking and Consumer Banking.
Non-currentassets (or disposal groups) held for sale
Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Immediately before classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance with the Group's accounting policies. Thereafter the assets (or disposal group) are measured at the lower of their carrying amount or fair value less cost to sell. Any impairment loss on a disposal group is first allocated to reduce goodwill and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to financial assets, deferred tax assets, investment properties, insurance assets and employee benefit assets, which continue to be measured in accordance with the Group's accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss until finally sold. Property, equipment and intangible assets, once classified as held for sale, are not depreciated or amortised.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interests in its former subsidiary after the sale.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the statement of financial position.

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Notes

2 Summary of significant accounting policies (continued)

Discontinued operations:
As discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operation, is part of single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with the with a view to resale. The Group presents discontinued operations in a separate line in the income statement.
Net profit from discontinued operations includes the net total of operating profit and loss before tax from operations, including net gain or loss on sale before tax or measurement to fair value less costs to sell and discontinued operations tax expense. A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Group´s operations and cash flows. If an entity or a component of an entity is classified as a discontinued operation, the Group restates prior periods in the Income statement.
Comparatives
Except when a standard or an interpretation permits or requires otherwise, all amounts are reported or disclosed with comparative information.
Where IAS 8, Accounting policies ("IAS 8"), changes in accounting estimates and errors' applies, comparative figures have been adjusted to conform with changes in presentation in the current year.
Financial assets and liabilities

2.29.1 Financial assets - Classification and Measurement Policies

Financial assets are measured at initial recognition at fair value, and are classified and subsequently measured at fair value through profit or loss (FVTPL), fair value through other comprehensive income (FVTOCI) or amortized cost based on our business model for managing the financial instruments and the contractual cash flow characteristics of the instrument. For non-revolving facilities, origination date is the date the facility is disbursed while origination date for revolving facilities is the date the line is availed. Regular-way purchases and sales of financial assets are recognized on the settlement date. All other financial assets and liabilities, including derivatives, are initially recognized on the trade date at which the Bank becomes a party to the contractual provisions of the instrument.

a) A financial asset is measured at amortized cost if it meets both of the following conditions:

the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, debt instruments in this category are carried at amortized cost using the effective interest rate method. Amortized cost is calculated taking into account any discount or premium on acquisition, transaction costs and fees that are an integral part of the effective interest rate. Impairment on financial assets measured at amortized cost is calculated using the expected credit loss approach. The carrying amount of these assets is adjusted by any expected credit loss allowance recognised. Interest income from these financial assets is included in 'Interest and similar income' using the effective interest rate method.

b) A debt instrument is measured at FVTOCI only if it meets both of the following conditions and is not designated as at FVTPL:

the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial asset; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Debt instruments are those instruments that meet the definition of a financial liability from the holder's perspective, such as loans, government and corporate bonds and trade receivables purchased from clients in factoring arrangements without recourse. Movements in the carrying amount of these assets are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses on the instrument's amortised cost which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in Net Losses/Income from investment securities '. Interest income from these financial assets is included in 'Interest income' using the effective interest rate method.

c) A debt instrument is measured at FVTPL

Debt instruments measured at FVTPL include assets held for trading purposes, assets held as part of a portfolio managed on a fair value basis and assets whose cash flows do not represent payments that are solely payments of principal and interest. Financial assets may also be designated at FVTPL if by so doing eliminates or significantly reduces an accounting mismatch which would otherwise arise. These instruments are measured at fair value in the Consolidated Statement of Financial Position, with transaction costs recognized immediately in the Consolidated Income Statement as part of Net trading income. Realized and unrealized gains and losses are recognized as part of Net trading income in the Consolidated Income Statement.

d) Equity Instruments

Equity instruments are instruments that meet the definition of equity from the holder's perspective; that is, instruments that do not contain a contractual obligation to pay and that evidence a residual interest in the issuer's net assets. Equity instruments are measured at FVTPL. However, on initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect for strategic or long term investment reasons to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis. On adoption of the standard, the Group did designate some of it equity instruments as FVTOCI. Gains and losses on these instruments including when derecognized/sold are recorded in OCI and are not subsequently reclassified to the Consolidated Income Statement. For equity instruments measured at FVTPL, changes in fair value are recognized in the Consolidated Income Statement. Dividends received are recorded in Interest income in the Consolidated Income Statement. Any transaction costs incurred upon purchase of the security are added to the cost basis of the security and are not reclassified to the Consolidated Income Statement on sale of the security (this only apply for equity instruments measured at FVTOCI).

e) Business model assessment

Business model reflects how the Group manages the assets in order to generate cash flows. That is, whether the Group's objective is solely to collect the contractual cash flows from the assets or is to collect both the contractual cash flows and cash flows arising from the sale of assets. If neither of these is applicable (e.g. financial assets are held for trading purposes), then the financial assets are classified as part of 'other' business model and measured at FVTPL. Factors considered by the Group in determining the business model for a Group of assets include past experience on how the cash flows for these assets were collected, how the asset's performance is evaluated and reported to key management personnel, how risks are assessed and managed and how managers are compensated. For example the liquidity portfolio of assets, which is held by Ecobank Ghana (subsidiary of the Group) as part of liquidity management and is generally classified within the hold to collect and sell business model. Securities held for trading are held principally for the purpose of selling in the near term or are part of a portfolio of financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-termprofit-taking. These securities are classified in the 'other' business model and measured at FVTPL. The Group makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management.

Other factors considered in the determination of the business model include:

the stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether management's strategy focuses on earning contractual interest revenue, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those assets or realising cash flows through the sale of the assets;
how the performance of the portfolio is evaluated and reported to the Group's management;
the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
how managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
the frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about future sales activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Group's stated objective for managing the financial assets is achieved and how cash flows are realised.

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Notes

2 Summary of significant accounting policies (continued)

2.29 Financial assets and liabilities (continued)

The Group may decide to sell financial instruments held with the objective to collect contractual cash flows without necessarily changing its business model if one or more of the following conditions are met:

When the Group sells financial assets to reduce credit risk or losses because of an increase in the assets' credit risk. The Group considers sale of financial assets that may occur in assets held with the sole objective of collecting cashflows to be infrequent if the sales is one-off during the financial year and/or occurs at most once during the quarter or at most three (3) times within the financial year.
Where these sales are infrequent even if significant in value. A sale of financial assets is considered infrequent if the sale is one-off during the financial year and/or occurs at most once during the quarter or at most three (3) times within the financial year.
Where these sales are insignificant in value both individually and in aggregate, even if frequent. A sale is considered insignificant if the portion of the financial assets sold is equal to or less than five (5) per cent of the carrying amount (book value) of the total assets within the business model.
When these sales are made close to the maturity of the financial assets and the proceeds from the sales approximates the collection of the remaining contractual cash flows. A sale is considered to be close to maturity if the financial assets has a tenor to maturity of not more than one (1) year and/or the difference between the remaining contractual cash flows expected from the financial asset does not exceed the cash flows from the sales by ten (10) per cent.

Other reasons: The following reasons outlined below may constitute 'Other Reasons' that may necessitate selling financial assets from the portfolio held with the sole objective of collecting cashflows category that will not constitute a change in business model:

Selling the financial asset to realize cash to deal with unforeseen need for liquidity (infrequent).
Selling the financial asset to manage credit concentration risk (infrequent).
Selling the financial assets as a result of changes in tax laws or due to a regulatory requirement e.g. comply with liquidity requirements (infrequent).
Other situations also depends upon the facts and circumstances which need to be judged by the management

Financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis are measured at FVTPL because they are neither held to collect contractual cash flows nor held both to collect contractual cash flows and to sell financial assets.

f) Assessment of whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. Principal may change over the life of the instruments due to repayments. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making the assessment, the Group considers:

contingent events that would change the amount and timing of cash flows;
leverage features;
prepayment and extension terms;
terms that limit the Group's claim to cash flows from specified assets (e.g. nonrecourse asset arrangements); and
features that modify consideration of the time value of money - e.g. periodical reset of interest rates.

2.29.2 Financial liabilities

The accounting for financial liabilities remains largely unchanged, except for financial liabilities designated at fair value through profit or loss (FVTPL). Gains and losses on such financial liabilities are now required to be presented in other comprehensive income (OCI), to the extent that they relate to changes in own credit risk. The Group did not hold any such assets at year end.

Derivative liabilities are classified as at FVTPL and are measured at fair value with the gains and losses arising from changes in their fair value included in the consolidated income statement and are reported as 'Net trading income'. These financial instruments are recognised in the consolidated statement of financial position as 'Derivative financial instruments.

Financial liabilities that are not classified as at fair value through profit or loss are measured at amortised cost. Financial liabilities measured at amortised cost are deposits from banks and customers, other deposits, financial liabilities in other liabilities, borrowed funds for which the fair value option is not applied, convertible bonds and subordinated debts.

The adoption of IFRS 9 has fundamentally changed the Group's accounting for loan loss impairments by replacing IAS 39's incurred loss approach with a forward-looking expected credit loss (ECL) approach. IFRS 9 requires the Group to record an allowance for ECLs for all loans and other debt financial assets not held at FVTPL, together with lease receivables loan commitments and financial guarantee contracts. No impairment loss is recognized on equity investments.

The allowance is based on the ECLs associated with the probability of default in the next twelve months unless there has been a significant increase in credit risk since origination. If the financial asset meets the definition of purchased or originated credit impaired (POCI), the allowance is based on the change in the ECLs over the life of the asset.

The Group measures loss allowances at an amount equal to lifetime ECL, except for the following, for which they are measured as 12-month ECL:

debt investment securities that are determined to have low credit risk at the reporting date; and
other financial instruments (other than lease receivables) on which credit risk has not increased significantly since their initial recognition.

Loss allowances for lease receivables are always measured at an amount equal to lifetime. The Group generally considers a debt security to have low credit risk when their credit risk rating is equivalent to the globally understood definition of 'investment grade'.

12-month ECL are the portion of ECL that result from default events on a financial instrument that are possible within the 12 months after the reporting date.

Expected Credit Loss Impairment Model

The Group's allowance for credit losses calculations are outputs of models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. The expected credit loss impairment model reflects the present value of all cash shortfalls related to default events either over the following twelve months or over the expected life of a financial instrument depending on credit deterioration from inception. The allowance for credit losses reflects an unbiased, probability- weighted outcome which considers multiple scenarios based on reasonable and supportable forecasts.

The Group adopts a three-stage approach for impairment assessment based on changes in credit quality since initial recognition:

Stage 1 - Where there has not been a significant increase in credit risk (SICR) since initial recognition of a financial instrument, an amount equal to 12 months expected credit loss is recorded. The expected credit loss is computed using a probability of default occurring over the next 12 months. For those instruments with a remaining maturity of less than 12 months, a probability of default corresponding to remaining term to maturity is used.
Stage 2 - When a financial instrument experiences a SICR subsequent to origination but is not considered to be in default, it is included in Stage 2. This requires the computation of expected credit loss based on the probability of default over the remaining estimated life of the financial instrument.
Stage 3 - Financial instruments that are considered to be in default are included in this stage. Similar to Stage 2, the allowance for credit losses captures the lifetime expected
credit losses.

The guiding principle for ECL model is to reflect the general pattern of deterioration or improvement in the credit quality of financial instruments since initial recognition. The ECL allowance is based on credit losses expected to arise over the life of the asset (life time expected credit loss), unless there has been no significant increase in credit risk since origination.

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Notes

2 Summary of significant accounting policies (continued)

Measuring ECL - Explanation of inputs, assumptions and estimation techniques

a) Measurement

ECL are a probability-weighted estimate of credit losses. They are measured as follows:

financial assets that are not credit-impaired at the reporting date: as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive);
financial assets that are credit-impaired at the reporting date: as the difference between the gross carrying amount and the present value of estimated future cash

flows;

undrawn loan commitments: as the present value of the difference between the contractual cash flows that are due to the Group if the commitment is drawn down and the cash flows that the Group expects to receive; and
financial guarantee contracts: the expected payments to reimburse the holder less any amounts that the Group expects to recover.

b) Restructured financial assets

If the terms of a financial asset are renegotiated or modified or an existing financial asset is replaced with a new one due to financial difficulties of the borrower, then an assessment is made of whether the financial asset should be derecognized and ECL are measured as follows.

If the expected restructuring will not result in derecognition of the existing asset, then the expected cash flows arising from the modified financial asset are included in calculating the cash shortfalls from the existing asset.
If the expected restructuring will result in derecognition of the existing asset, then the expected fair value of the new asset is treated as the final cash flow from the existing financial asset at the time of its derecognition. This amount is included in calculating the cash shortfalls from the existing financial asset that are discounted from the expected date of derecognition to the reporting date using the original effective interest rate of the existing financial asset.

c) Credit-impaired financial assets

At each reporting date, the Group assesses whether financial assets carried at amortized cost and debt financial assets carried at FVTOCI are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable data:

significant financial difficulty of the borrower or issuer;
a breach of contract such as a default or past due event;
the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;
it is becoming probable that the borrower will enter bankruptcy or other financial reorganization; or
the disappearance of an active market for a security because of financial difficulties;
observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio.

A loan that has been renegotiated due to a deterioration in the borrower's condition is usually considered to be credit-impaired unless there is evidence that the risk of not receiving contractual cash flows has reduced significantly and there are no other indicators of impairment. In addition, a retail loan that is overdue for 90 days or more is considered impaired.

In making an assessment of whether an investment in debt securities is credit-impaired, the Group considers the following factors.

The market's assessment of creditworthiness as reflected in the bond yields.
The rating agencies' assessments of creditworthiness.
The issuer's ability to access the capital markets for new debt issuance.
The probability of debt being restructured, resulting in holders suffering losses through voluntary or mandatory debt forgiveness.

d) Presentation of allowance for ECL in the statement of financial position

Loan allowances for ECL are presented in the statement of financial position as follows:

Financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets;
Loan commitments and financial guarantee contracts: generally, as a provision;
Where a financial instrument includes both a drawn and an undrawn component, and the Group cannot identify the ECL on the loan commitment component separately from those on the drawn component: the Group presents a combined loss allowance for both components. The combined amount is presented as a deduction from the gross carrying amount of the drawn component. Any excess of the loss allowance over the gross amount of the drawn component is presented as a provision; and
Debt instruments measured at FVTOCI: no loss allowance is recognised in the statement of financial position because the carrying amount of these assets is their fair value. However, the loss allowance is disclosed and is recognised in the fair value reserve in Consolidated Statement of Comprehensive Income.

e) Write-off

Loans and debt securities are written off (either partially or in full) when there is no realistic prospect of recovery. This is generally the case when the Group determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. The average write-off period is between 1 year. However, in some cases this might be constrained by existing legal or regulatory requirements and thus could take much longer than the stated year.

However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due.

f) Definition of default

The Group considers a financial asset to be in default which is fully aligned with the credit-impaired, when it meets one or more of the following criteria:

Quantitative criteria

The borrower is more than 90 days past due on its contractual payments . Qualitative criteria
The borrower meets unlikeliness to pay criteria, which indicates the borrower is in significant financial difficulty. These are instances where: · The borrower is in long-term forbearance
· The borrower is deceased · The borrower is insolvent
· The borrower is in breach of financial covenant(s)
· An active market for that financial asset has disappeared because of financial difficulties · Concessions have been made by the lender relating to the borrower's financial difficulty · It is becoming probable that the borrower will enter bankruptcy
· Financial assets are purchased or originated at a deep discount that reflects the incurred credit losses.

The criteria above have been applied to all financial instruments held by the Group and are consistent with the definition of default used for internal credit risk management purposes. The default definition has been applied consistently to model the Probability of Default (PD), Exposure at Default (EAD) and Loss given Default (LGD) throughout the Group's expected loss calculations.

An instrument is considered to no longer be in default (i.e. to have cured) when it no longer meets any of the default criteria for a consecutive period of six months. This period of six months has been determined based on an analysis which considers the likelihood of a financial instrument returning to default status after cure using different possible cure definitions.

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Notes

2 Summary of significant accounting policies (continued)

Measuring ECL - Explanation of inputs, assumptions and estimation techniques

g) Explanation of inputs, assumptions and estimation techniques: Exposure at Default (EAD), Probability of Default (PD) and Loss Given Default (LGD)

ECL is measured on either a 12-month (12M) or Lifetime basis depending on whether a significant increase in credit risk has occurred since initial recognition or whether an asset is considered to be credit-impaired. Expected credit losses are the discounted product of the PD, EAD, and LGD, defined as follows:

The PD represents the likelihood of a borrower defaulting on its financial obligation (as per "Definition of default (2.29.6f above) and credit-impaired financial assets" (2.29.6c above)), either over the next 12 months (12M PD), or over the remaining lifetime (Lifetime PD) of the obligation. This 12M PD is used to calculate 12- month ECLs. The Lifetime PD is used to calculate lifetime ECLs for stage 2 and 3 exposures.

EAD is based on the amounts the Group expects to be owed at the time of default, over the next 12 months (12M EAD) or over the remaining lifetime (Lifetime
EAD). For example, for a revolving commitment, the Group includes the current drawn balance plus any further amount that is expected to be drawn up to the current contractual limit by the time of default, should it occur.
Loss Given Default (LGD) represents the Group's expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty, type and seniority of claim and availability of collateral or other credit support. LGD is expressed as a percentage loss per unit of exposure at the time of default (EAD). LGD is calculated on a 12-month or lifetime basis, where 12-month LGD is the percentage of loss expected to be made if the default occurs in the next 12 months and Lifetime LGD is the percentage of loss expected to be made if the default occurs over the remaining expected lifetime of the loan.

The ECL is determined by projecting the PD, LGD and EAD for each future month and for each individual exposure or collective segment. These three components are multiplied together and adjusted for the likelihood of survival (i.e. the exposure has not prepaid or defaulted in an earlier month). This effectively calculates an ECL for each future month, which is then discounted back to the reporting date and summed. The discount rate used in the ECL calculation is the original effective interest rate or an approximation thereof.

The Lifetime PD is developed by applying a maturity profile to the current 12M PD. The maturity profile looks at how defaults develop on a portfolio from the point of initial recognition throughout the lifetime of the loans. The maturity profile is based on historical observed data and is assumed to be the same across all assets within a portfolio and credit grade band. This is supported by historical analysis.

The 12-month and lifetime EADs are determined based on the expected payment profile, which varies by product type:

For amortising products and bullet repayment loans, this is based on the contractual repayments owed by the borrower over a 12month or lifetime basis. This will also be adjusted for any expected overpayments made by a borrower. Early repayment/refinance assumptions are also incorporated into the calculation.
For revolving products, the exposure at default is predicted by taking current drawn balance and adding a "credit conversion factor" which allows for the expected drawdown of the remaining limit by the time of default. These assumptions vary by product type and current limit utilisation band, based on analysis of the Group's recent default data. The 12-month and lifetime LGDs are determined based on the factors which impact the recoveries made post default. These vary by product type.

The 12-month and lifetime LGDs are determined based on the factors which impact the recoveries made post default. These vary by product type:

For secured products, this is primarily based on collateral type and projected collateral values, historical discounts to market/book values due to forced sales, time to repossession and recovery costs observed.
For unsecured products, LGD's are typically set at product level due to the limited differentiation in recoveries achieved across different borrowers. These LGD's are influenced by collection strategies, including contracted debt sales and price.

Forward-looking economic information is also included in determining the 12-month and lifetime PD, EAD and LGD. These assumptions vary by product type.

The assumptions underlying the ECL calculation - such as how the maturity profile of the PDs and how collateral values change etc. - are monitored and reviewed on a There have been no significant changes in estimation techniques or significant assumptions made during the reporting period.

h) Significant Increase in Credit Risk (SICR)

At each reporting date, the Group assesses whether there has been a significant increase in credit risk (SICR) for exposures since initial recognition by comparing the risk of default occurring over the remaining expected life from the reporting date and the date of initial recognition. The assessment considers borrower-specific quantitative and qualitative information without consideration of collateral, and the impact of forward-looking macroeconomic factors. The common assessments for SICR on retail and non-retail portfolios include macroeconomic outlook, management judgement, and delinquency and monitoring. Forward looking macroeconomic factors are a key component of the macroeconomic outlook. The importance and relevance of each specific macroeconomic factor depends on factors such as the type of product, industry, borrower, geographical region etc.

The Group adopts a multi factor approach in assessing changes in credit risk. This approach considers: Quantitative, Qualitative and Back stop indicators which are critical in allocating financial assets into stages. The quantitative models considers deterioration in the credit rating of obligor/counterparty based on the Group's internal rating system or external ratings while qualitative factors considers information such as expected forbearance, restructuring, exposure classification by licensed credit bureau etc. A backstop is typically used to ensure that in the (unlikely) event that the quantitative indicators do not change and there is no trigger from the qualitative indicators, an account that has breached the 30 days past due criteria for SICR and 90 days past due criteria for default is transferred to stage 2 or stage 3 as the case may be except where there is a reasonable and supportable evidence available without undue cost to rebut the presumption.

i) Forward-looking information incorporated in the ECL models

The assessment of Expected Credit Losses incorporates the use of forward-looking information. The Group has identified the key economic variables impacting its credit risk and expected credit losses and performed historical analysis to determine the significance and impact of these economic variables on its credit risk and expected credit losses. Significant economic variables and the impact of these variables on credit losses vary by clusters and affiliates within the Group. The key drivers for credit risk for the Group are: commodity prices, oil export, foreign exchange rates and prime lending rate. The impact of these economic variables on the expected credit losses has been determined by performing principal component analysis to understand the significant variables and estimate the impact that changes in these variables have had historically on default rates and on the components on expected credit losses.

Forecasts of these economic variables (the "base economic scenario") are provided by Ecobank Group's Economics team (as well as from other credible external sources such as Business Monitor International (BMI), International Monetary Fund (IMF), World Bank, respective Central Banks etc) on a quarterly basis and provide the best estimate view of the economy over the next five years. After five years, to project the economic variables out for the full remaining lifetime of each instrument, the forecast of the forecast for the fifth year is held constant to reduce the impact of estimation uncertainty in the long run. The impact of these economic variables on the PD, EAD and LGD has been determined by performing statistical regression analysis to understand the impact changes in these variables have had historically on default rates and on the components of LGD and EAD.

In addition to the base economic scenario, the Group's Economics team also provide other possible scenarios along with scenario weightings. The number scenarios used is set based on the analysis of each major product type to ensure non-linearities are captured. The number of scenarios and their attributes are reassessed at each reporting date. At 1 January 2018 and 31 December 2018, the Group concluded that three scenarios appropriately captured non-linearities. The scenario weightings are determined by a combination of statistical analysis and expert credit judgement, taking account of the range of possible outcomes each chosen scenario represents. The Group measures expected credit losses as a probability weighted expected credit losses. These probability-weighted expected credit losses are determined by running each of the scenarios through the relevant expected credit loss model and multiplying it by the appropriate scenario weighting (as opposed to weighting the inputs). For the current reporting dates, the weighting attached to the Base case, Optimistic and Downturn scenarios were 55%, 25% and 20% respectively.

The assessment of SICR is performed using the changes in credit risk rating (as a proxy for lifetime PD) along with qualitative and backstop indicators. This determines whether the whole financial instrument is in Stage 1, Stage 2, or Stage 3 and hence whether 12-month or lifetime ECL should be recorded. Following this assessment, the Group measures ECL as either a probability weighted 12-month ECL (Stage 1), or a probability weighted lifetime ECL (Stages 2 and 3).

As with any economic forecasts, the projections and likelihood of occurrence are subject to high degree of inherent uncertainty and therefore the actual outcomes may significantly differ from those projected. The Group considers these forecasts to represent its best estimate of possible outcomes and has analysed the non-linearities an asymmetry within the Group's different portfolios to establish that the chosen scenarios are appropriately representative of the range of scenarios.

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Notes

2 Summary of significant accounting policies (continued)

j) Expected Life

For instruments in Stage 2 or Stage 3, loss allowances reflect expected credit losses over the expected remaining lifetime of the instrument. For most instruments, the expected life is limited to the remaining contractual life. An exemption is provided for certain instruments with the following characteristics: (a) the instrument includes both a loan and undrawn commitment component; (b) we have the contractual ability to demand repayment and cancel the undrawn commitment; and (c) our exposure to credit losses is not limited to the contractual notice period. For products in scope of this exemption, the expected life may exceed the remaining contractual life and is the period over which our exposure to credit losses is not mitigated by our normal credit risk management actions. This period varies by product and risk category and is estimated based on our historical experience with similar exposures and consideration of credit risk management actions taken as part of our regular credit review cycle. Products in scope of this exemption include credit cards, overdraft balances and certain revolving lines of credit. Judgment is required in determining the instruments in scope for this exemption and estimating the appropriate remaining life based on our historical experience and credit risk mitigation practices.

2.29.7 Interest income

Interest income and expense for all interest-bearing financial instruments are recognized within 'interest income' and 'interest expense' in the consolidated income statement using the effective interest method. The Group calculates interest income by applying the EIR to the gross carrying amount of financial assets other than credit- impaired assets. When a financial asset becomes credit-impaired (as set out in Note 2.29.5) and is, therefore, regarded as 'Stage 3', the Group calculates interest income by applying the effective interest rate to the net amortised cost of the financial asset. If the financial assets cures and is no longer credit-impaired, the Group reverts to calculating interest income on a gross basis.

Under both IFRS 9 and IAS 39, interest income is recorded using the effective interest rate (EIR) method for all financial instruments measured at amortised cost, financial instruments designated at FVTPL. Interest income on interest bearing financial assets measured at FVTOCI under IFRS 9, similarly to interest bearing financial assets classified as available-for-sale or held to maturity under IAS 39 are also recorded by using the EIR method. The effective interest method is a method of calculating the amortized 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. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees and points 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.

For purchased or originated credit-impaired financial assets, the Group calculates interest income by calculating the credit-adjusted EIR and applying that rate to the amortised cost of the asset. The credit-adjusted EIR is the interest rate that, at original recognition, discounts the estimated future cash flows to the amortised cost of the assets.

Interest income on all trading assets and financial assets mandatorily required to be measured at FVTPL is recognised using the contractual interest rate in net trading income.

2.29.9 Reclassification of financial assets

Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Group changes its business model for managing financial assets.

A change in the Group's business model will occurs only when the Group either begins or ceases to perform an activity that is significant to its operations such as:

Significant internal restructuring or business combinations;
Disposal of a business line i.e. disposal of a business segment
Any other reason that might warrant a change in the Group's business model as determined by management based on facts and circumstances

The following are not considered to be changes in the business model:

A change in intention related to particular financial assets (even in circumstances of significant changes in market conditions)
A temporary disappearance of a particular market for financial assets.
A transfer of financial assets between parts of the Group with different business models.

When reclassification occurs, the Group reclassifies all affected financial assets in accordance with the new business model. Reclassification is applied prospectively from the 'reclassification date'. Reclassification date is 'the first day of the first reporting period following the change in business model. Gains, losses or interest previously recognised are not be restated when reclassification occurs.

There were no changes to any of the Group's business models during the current period.

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Notes
2	Summary of significant accounting policies (continued)

2.29.11 Modification of financial assets

The Group sometimes renegotiates or otherwise modifies the terms of loans provided to customers. This may be due to commercial renegotiations, or for distressed loans, with a view to maximising recovery.

Such restructuring activities include extended payment term arrangements, payment holidays and payment forgiveness. Restructuring policies and practices are based on indicators or criteria which, in the judgement of management, indicate that payment will most likely continue. These policies are kept under continuous review. Restructuring is most commonly applied to term loans.

The risk of default of such assets after modification is assessed at the reporting date and compared with the risk under the original terms at initial recognition, when the modification is not substantial and so does not result in derecognition of the original asset. The Group monitors the subsequent performance of modified assets. The Group may determine that the credit risk has significantly improved after restructuring, so that the assets are moved from Stage 3 or Stage 2 (Lifetime ECL) to Stage 1 (12-month ECL). This is only the case for assets which have performed in accordance with the new terms for six consecutive months or more.

The Group continues to monitor if there is a subsequent significant increase in credit risk in relation to such assets through the use of specific models for modified assets.

When the contractual terms of a financial asset are modified, the Group evaluates whether the cash flows of the modified asset are substantially different. The Group does this by considering, among others, the following factors:

If the borrower is in financial difficulty, whether the modification merely reduces the contractual cash flows to amounts the borrower is expected to be able to pay.
Whether any substantial new terms are introduced, such as a profit share/equity-based return that substantially affects the risk profile of the loan.
Significant extension of the loan term when the borrower is not in financial difficulty.
Significant change in the interest rate.
Change in the currency the loan is denominated in.
Insertion of collateral, other security or credit enhancements that significantly affect the credit risk associated with the loan.

If the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed to have expired. In this case, the original financial asset is derecognized and a new financial asset is recognised at fair value. Any difference between the amortized cost and the present value of the estimated future cash flows of the modified asset or consideration received on derecognition is recorded as a separate line item in profit or loss in the Other operating income item.

Quantitative criteria

A modification would lead to derecognition of existing financial asset and recognition of a new financial asset, i.e. substantial modification, if the discounted present value of the cash flows under the new terms, including any fees received net of any fees paid and discounted using the original effective interest rate, is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial asset.

In addition to the above, the bank shall also consider qualitative factors as detailed below.

Qualitative criteria

Scenarios where modifications will lead to derecognition of existing loan and recognition of a new loan, i.e. substantial modification, are:

The exchange of a loan for another financial asset with substantially different contractual terms and conditions such as the restructuring of a loan to a bond; conversion of a loan to an equity instrument of the borrower
Roll up of interest into a single bullet payment of interest and principal at the end of the loan term
Conversion of a loan from one currency to another currency

If the cash flows of the modified asset carried at amortized cost are not substantially different, then the modification does not result in derecognition of the financial asset. In this case, the Group recalculates the gross carrying amount of the financial asset and recognizes the amount arising from adjusting the gross carrying amount as a modification gain or loss in profit or loss as part of impairment charge for the year.

Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. The Group derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial assets that are transferred to a third party but do not qualify for derecognition are presented in the statement of financial position as 'Pledged Assets', if the transferee has the right to sell or repledge them.

On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset transferred), and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss.

2.30 Financial guarantee contracts and loan commitments

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial guarantees are given to banks, financial institutions and others on behalf of customers to secure loans, overdrafts and other banking facilities.

Financial guarantee contracts are initially measured at fair value and subsequently measured at the higher of:

The amount of the loss allowance; and
The premium received on initial recognition less income recognised in accordance with the principles of IFRS 15.

Loan commitments provided by the Group are measured as the amount of the loss allowance.

For loan commitments and financial guarantee contracts, the loss allowance is recognised as a provision. However, for contracts that include both a loan and an undrawn commitment and the Group cannot separately identify the expected credit losses on the undrawn commitment component from those on the loan component, the expected credit losses on the undrawn commitment are recognised together with the loss allowance for the loan. To the extent that the combined expected credit losses exceed the gross carrying amount of the loan, the expected credit losses are recognised as a provision.

2.31 Offsetting financial instruments

In accordance with IAS 32, the Group reports financial assets and liabilities on a net basis on the statement of financial position only if 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. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in event of default, insolvency or bankruptcy of the company or the counterparty.

Income and expenses are presented on a net basis only when permitted under IFRSs, or for gains and losses arising from a group of similar transactions such as in the trading activity.

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Unaudited consolidated financial statements 31 Dec. 2020

	PUBLIC
Ecobank Transnational Incorporated
Unaudited consolidated financial statements
For the year ended 31 December 2020
Notes
2	Summary of significant accounting policies (continued)

2.32 Classes of financial instruments

The Group classifies the financial instruments 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 below:

Financial assets

Category (as defined by IFRS9)

Fair Value Through Profit or Loss (FVTPL)

Amortised Cost

Fair Value Through Other Comprehensive Income (FVTOCI)

Class (as determined by the Group)

Trading financial assets Derivative financial instruments

Cash and balances with central banks Loans and advances to banks Loans and advances to customers Other assets excluding prepayments

Treasury bills and other eligible bills Investment securities

Pledged assets

Financial liabilities

Category (as defined by IFRS9)

Financial liabilities at fair value through profit or loss Financial liabilities at amortised cost

Class (as determined by the Group)

Derivative financial instruments Deposits from banks Deposits from customers Borrowed funds

Other liabilities, excluding non-financial liabilities

Off balance sheet financial instruments Category (as defined by IFRS9)

Loan commitments

Guarantees, acceptances and other financial facilities

Class (as determined by the Group)

Loan commitments

Guarantees, acceptances and other financial facilities

3 Critical accounting estimates, and judgements in applying accounting policies

The preparation of financial statements requires the use of accounting estimates, which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Group's accounting policies. 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.

This note provides an overview of the areas that involve a higher degree of judgement or complexity, and major sources of estimation uncertainty. Detailed information about each of these estimates and judgements is included in the related notes together with information about the basis of calculation for each affected line item in the financial statements.

Impairment losses on loans and advances
The Group reviews its loan portfolios to assess impairment at least monthly. Where impairment has been identified, an allowance for impairment is recorded. The allowance is based on the ECLs associated with the probability of default in the next twelve months unless there has been a significant increase in credit risk since origination in which case loss allowance is measured at an amount equal to lifetime ECL. If the financial asset meets the definition of purchased or originated credit impaired (POCI), the allowance is based on the change in the ECLs over the life of the asset.
The Group generally considers a debt security to have low credit risk when their credit risk rating is equivalent to the globally understood definition of 'investment grade'.
Loss allowances on such low credit risk instrument are recognised at the equivalent of 12-month ECL.
The measurement of the expected credit loss allowance for financial assets measured at amortised cost and FVTOCI is an area that requires the use of complex models and significant assumptions about future economic conditions and credit behaviour (e.g. the likelihood of customers defaulting and the resulting losses). A number of significant judgements are also required in applying the accounting requirements for measuring ECL, such as the expected life of the instrument, determination of significant increase in credit risk, selection of appropriate macro-economic variables and other forward-looking information etc.

(i) Determining criteria for significant increase in credit risk and choosing appropriate models and assumptions for the measurement of ECL

The assessment of SICR and the calculation of ECL both incorporate forward-looking information. In assessing SICR, the Group has performed historical analysis and identified the key economic variables impacting credit risk and expected credit losses for each portfolio. These economic variables and their associated impact on the PD, EAD and LGD vary by financial instrument. Expert judgment has been applied in this process.

(ii) Establishing the number and relative weightings of forward-looking scenarios for each type of product/market and the associated ECL

The scenario weightings applied in the incorporation of the forward-looking information into the calculation of ECL are determined by a combination of statistical analysis and expert credit judgement, taking account of the range of possible outcomes each chosen scenario is representative of. The forward-looking information used in ECL are based on forecasts. As with any economic forecasts, the projections and likelihoods of occurrence are subject to a high degree of inherent uncertainty and therefore the actual outcomes may be significantly different to those projected. The Group considers these forecasts to represent its best estimate of the possible outcomes and has analysed the non-linearities and asymmetries within the Group's different portfolios to establish that the chosen scenarios are appropriately representative of the range of possible scenarios.

(iii) Establishing groups of similar financial assets for the purposes of measuring ECL

In determining whether an impairment loss should be recorded in the income statement, the Group makes judgements as to movement in the level of credit risk on the instrument since origination. 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.

b) Fair value of financial instruments

The fair value of financial instruments that are not quoted in active markets are determined by using valuation techniques. Where valuation techniques (for example, models) are used to determine fair values, they are validated and periodically reviewed by qualified personnel independent of the area that created them. To the extent practical, models use only observable data; however, areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect reported fair value of financial instruments. Fair value is determined using valuation techniques. In these techniques, fair values are estimated from observable data in respect of similar financial instruments, using models to estimate the present value of expected future cash flows or other valuation techniques, using inputs existing at the dates of the consolidated statement of financial position.

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Page 26

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For the year ended 31 December 2020

Notes

3 Critical accounting estimates, and judgements in applying accounting policies (Continued) c) Goodwill impairment

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2.17. These calculations require the use of estimates. The recoverable amount of all CGUs has been determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a three-year period. Cash flows beyond the three-year period are extrapolated using the estimated growth rates. By adjusting the three main estimates (cashflows, growth rate and discount rates) by 10%, no impairment charge on goodwill will arise.

Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
Business model assessment
Classification and measurement of financial assets depends on the results of the SPPI and the business model test (please see financial assets sections of Note 2.29.1). The Group determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed and how the managers of the assets are compensated. The Group monitors financial assets measured at amortised cost or fair value through other comprehensive income that are derecognised prior to their maturity to understand the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held. Monitoring is part of the Group's continuous assessment of whether the business model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the classification of those assets.
Hyper-inflationaryaccounting
Beginning July 1, 2019, the Group has designated Zimbabwe as a hyper-inflationary economy in accordance with IAS 29, Financial Reporting in Hyper-Inflationary Economies, and has therefore employed the use of the hyper-inflationary accounting to consolidate and report its Zimbabwe operating subsidiary. The determination of whether an economy is hyper-inflationary requires the Group to make certain estimates and judgements, such as assessment of historic inflation rates and anticipation of future trends. In addition, the application of hyperinflationary accounting in accordance with IAS 29 requires the selection and use of price indices to estimate the impact of inflation on the non-monetary assets and liabilities, and results of operations of the Group. The selection of price indices is based on the Group's assessment of various available price indices on the basis of reliability and relevance. Changes in any such estimates may significantly impact the carrying value of those nonmonetary assets or liabilities, and results of operations, which are subject to hyper-inflationary adjustments, and the related gains and losses within the consolidated statements of loss and comprehensive loss.

____________________________________________________________________________________________________________

PUBLIC

Page 27

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For year ended 31 December 2020

Notes

(All amounts in thousands of US dollar unless otherwise stated)

4 Fair value of financial assets and liabilities

(a) Financial instruments not measured at fair value

The table below summarises the carrying amounts and fair values of those financial assets and liabilities not measured at fair value on the group's consolidated statement of financial position.

								Carrying value		Fair value
Financial assets:						31 Dec 2020		31 Dec 2019		31 Dec 2020		31 Dec 2019

Cash and balances with central banks						3,814,885	2,829,313	3,814,885	2,829,313
Loans and advances to banks						1,764,029	1,891,889	1,989,763	2,246,431
Loans and advances to customers						9,241,360	9,276,608	9,324,917	9,325,099
Other assets (excluding prepayments)						919,434	1,154,675	919,434	1,154,675
Financial liabilities:
Deposits from banks						2,357,871	2,207,593	2,406,094	2,018,980
Deposit from customers						18,238,169	16,246,120	18,335,158	16,371,061
Other liabilities (excluding deferred income)						807,813	781,493	807,813	781,493
Borrowed funds						1,658,341	2,075,001	2,191,461	2,191,461
(i) Cash
The carrying amount of cash and balances with banks is a reasonable approximation of fair value
(ii) 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 money-market interest rates for debts with similar credit risk and remaining maturity.
(iii) 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.
(iv) Deposit from banks, due to customers and other deposits
	The estimated fair value of fixed 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 estimated fair value of fixed 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. For those notes
	where quoted market prices are not available, a discounted cash flow model is used based on a current yield curve appropriate for the remaining term to maturity.
(v) Other assets
	The bulk of these financial assets have short term (less than 12 months) maturities and their amounts are a reasonable approximation of fair value
(vi) Other liabilities
	The carrying amount of financial liabilities in other liabilities is a reasonable approximation of fair value as these are short term in nature
(b) Fair value hierarchy
	IFRS 13 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from
	independent sources; unobservable inputs reflect the Group's market assumptions. These two types of inputs have created the following fair value hierarchy:
i)	Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity securities and debt instruments on exchanges.
ii)	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).
iii)	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.
						31 December 2020			31 December 2018
			Level 1	Level 2	Level 3		Level 1		Level 2		Level 3
	Treasury and other eligible bills	881,905			823,662		-	879,087	753,662	-
	Trading Financial Assets/ Financial Assets held for trading	131,635			25,722		-	166,724	15,938	-
	Derivative financial instruments	-			91,271		-	-	65,459	-
	Pledged assets	-			423,599		-	-	351,478	-
	Investment securities		1,078,939			4,938,522		85		776,839		4,080,834	90
	Total financial assets		2,092,479			6,302,776		85		1,822,650		5,267,371	90
	Derivative financial instruments		-			78,631		-		-		51,255	-
	Total financial liabilities		-			78,631		-		-		51,255	-

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Page 28

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For year ended 31 December 2020

Notes

(All amounts in thousands of US dollar unless otherwise stated)

There are no movements between Level 1 and Level 2. The following table presents the changes in Level 3 instruments for the available for sale securities:

4 Fair value of financial assets and liabilities (continued)
													31 Dec 2020	31 Dec 2019
													Level 3	Level 3
Opening balance											90		60,165
Disposal											-		(60,075)
Transfer from level 3 to level 2											-		-
Gains & losses recognised in other comprehensive income											5		-
Closing balance											85		90
Total gains or losses for the period included in profit or loss for assets held at the end of the reporting period											-		-
Level 3 fair value measurement
	The table below sets out information about significant unobservable value inputs used at year end in measuring financial instruments categorised as Level 3 in the fair value hierarchy.

	Type of financial instrument		Fair value as at 31		Valuation technique		Significant unobservable input	Change in unobservable input by 10 basis point	Change in unobservable input by 50
			December 2020										basis point

	OCEANIC HEALTH MANAGEMENT		85		Discounted cash		Weighted average cost of capital		91	95
				flow

(c) Financial instrument classification
							FVTOCI - Debt		Equity Instruments at	FVTOCI - Equity		Liabilities at fair	Liabilities at
31 December 2020	Amortised cost		FVTPL				value through	Total
		Instruments		FVTPL	instruments		amortized cost
									profit or loss
Assets

Cash and balances with central banks	3,814,885	-	-	-	-	-	-		3,814,885
Trading financial assets	-	157,357	-	-	-	-	-		157,357
Derivative financial instruments	-	91,271	-	-	-	-	-		91,271
Loans and advances to banks	1,764,029	-	-	-	-	-	-		1,764,029
Loans and advances to customers	9,241,360	-	-	-	-	-	-		9,241,360
Treasury bills and other eligible bills	-	-	1,705,567	-	-	-	-		1,705,567
Investment securities - Equity instruments	-	-	-	236,598	85	-	-		236,683
Investment securities - Debt instruments	-	-	5,780,863	-	-	-	-		5,780,863
Pledged assets	423,599	-	-	-	-	-	-		423,599
Other assets, excluding prepayments	919,434		-		-		-	-		-	-		919,434
Total	16,163,307	248,628	7,486,430	236,598	85	-	-		24,135,048
Liabilities
Deposits from banks	-	-	-	-	-	-	2,207,593		2,207,593
Deposit from customers	-	-	-	-	-	-	16,246,120		16,246,120
Derivative financial instruments	-	-	-	-	-	51,255	-		51,255
Borrowed funds	-	-	-	-	-	-	2,075,001		2,075,001
Other liabilities, excluding non-financial liabilities	-		-		-		-	-		-	781,493		781,493
Total	-	-	-	-	-	51,255	21,310,207		21,361,462

							FVTOCI - Debt		Equity Instruments at	FVTOCI - Equity		Liabilities at fair	Liabilities at
31 December 2019	Amortised cost		FVTPL				value through	Total
		Instruments		FVTPL	instruments		amortized cost
									profit or loss

Assets

Cash and balances with central banks	2,829,313	-	-	-	-	-	-		2,829,313
Trading financial assets	-	182,662	-	-	-	-	-		182,662
Derivative financial instruments	-	65,459	-	-	-	-	-		65,459
Loans and advances to banks	1,891,889	-	-	-	-	-	-		1,891,889
Loans and advances to customers	9,276,608	-	-	-	-	-	-		9,276,608
Treasury bills and other eligible bills	-	-	1,632,749	-	-	-	-		1,632,749
Investment securities - Equity instruments	-	-	-	163,904	90	-	-		163,994
Investment securities - Debt instruments	-	-	4,693,769	-	-	-	-		4,693,769
Pledged assets	351,478	-	-	-	-	-	-		351,478
Other assets, excluding prepayments	1,154,675		-		-		-	-		-	-		1,154,675
Total	15,503,963	248,121	6,326,518	163,904	90	-	-		22,242,596
Liabilities
Deposits from banks	-	-	-	-	-	-	2,207,593		2,207,593
Deposit from customers	-	-	-	-	-	-	16,246,120		16,246,120
Derivative financial instruments	-	-	-	-	-	51,255	-		51,255
Borrowed funds	-	-	-	-	-	-	2,075,001		2,075,001
Other liabilities, excluding non-financial liabilities	-		-		-		-	-		-	781,493		781,493
Total	-		-		-		-	-		51,255	21,310,207		21,361,462

_________________________________________________________________________________________________________________________________________________________

Page 29

Unaudited consolidated financial statements 31 Dec. 2020

PUBLICEcobank Transnational Incorporated

Unaudited consolidated financial statements

For year ended 31 December 2020

Notes

(All amounts in thousands of US dollar unless otherwise stated)

5 Financial Risk Management

The Group's capital management objectives are:

To comply with the capital requirements set by regulators in the markets where the Group's entities operate and safeguard the Group's ability to continue as a going concern;
To maintain a strong capital base that supports the development of the business; and
To sustain a sufficient level of returns for the Group's shareholders.

On a consolidated basis, the Group is required to comply with Basel II/III capital requirements set by the BCEAO for banks headquartered in the UEMOA zone. On a standalone basis, banking subsidiaries are required to maintain minimum capital levels and minimum capital adequacy ratios which are determined by their national or regional regulators.

The Group's capital is divided into two tiers:

Tier 1 capital: share capital (net of treasury shares), retained earnings, reserves created by appropriations of retained earnings, and non-controlling interests allowed as Tier 1 capital by the regulator. Certain intangibles and goodwill are deducted in calculating Tier 1 capital; and
Tier 2 capital: subordinated debt and other loss-absorbing instruments, certain revaluation reserves, and noncontrolling interests allowed as Tier 2 capital by the regulator.

Risk-weighted assets are calculated in accordance with regulatory guidelines. Credit risk-weighted assets are measured by applying a hierarchy of risk weights related to the nature of the risks associated with each of the Group's on- and off- balance sheet asset classes. Operational risk weighted assets are calculated by applying a scaling factor to the Group's average gross income over the last three years. Market risk-weighted assets are calculated by applying factors to the Group's trading exposures to foreign currencies, interest rates, and prices.

The table below summarises the composition of regulatory capital and the ratios of the Group. The Group has remained compliant with the minimum regulatory capital adequacy ratio requirements (7.65% Tier 1 CAR and 9.9% Total CAR in 2020).

	30 June 2020		31 Dec 2019
Tier 1 capital
Share capital	2,113,957	2,113,957
Retained earnings	334,658	245,563
IFRS 9 Day One transition adjustment	99,767	99,767
Statutory reserves	584,396	584,396
Other reserves	(1,800,758)	(1,618,813)
Non-controlling interests	253,866	241,775
Less: goodwill	(181,441)	(191,634)
Less: intangibles	(116,900)	(118,340)
Less: other deductions	-		-
Total qualifying Tier 1 capital	1,287,545	1,356,671
Tier 2 capital
Subordinated debt and other instruments	260,330	271,185
Revaluation reserves	117,662	102,955
Minority interests included in Tier 2 capital	62,274	63,785
Total qualifying Tier 2 capital	440,266	437,925

Total regulatory capital	1,727,811	1,794,596
Risk-weighted assets:
Credit risk weighted assets	11,591,226	12,126,499
Market risk weighted assets	173,183	82,123
Operational risk weighted assets	3,294,858		3,294,858
Total risk-weighted assets	15,059,267	15,503,480

Tier 1 Capital Adequacy Ratio	8.5%	8.8%

Total Capital Adequacy Ratio	11.5%		11.6%

____________________________________________________________________________________________________________________________________________________________________

Page 30

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For year ended 31 December 2020

Notes

(All amounts in thousands of US dollar unless otherwise stated)

				6		5
		Unaudited		Audited
		Year ended 31 December 2020	Year ended 31 December 2019
		US$'000		GHC'000	US$'000	GHC'000
6	Net interest income
	Interest income
	Loans and advances to banks	36,033		201,663	109,085	569,093
	Loans and advances to customers:	752,009		4,208,714	727,912	3,797,494
	Treasury bills and other eligible bills	220,554		1,234,358	195,266	1,018,696
	Investment securities	359,650		2,012,827	332,265	1,733,416
	Financial assets held for trading measured at FVTPL	16,347		91,488	37,739	196,883
	Others	3,019		16,896	9,731	50,766
		1,387,612		7,765,946	1,411,998	7,366,348
	Interest expense

	Deposits from banks	65,441		366,249	115,320	601,621
	Due to customers:	289,424		1,619,798	351,723	1,834,927
	Borrowed funds	121,975		682,648	174,208	908,838
	Interest expense for lease liabilities	3,808		21,312	6,458	33,691
	Others	3,168		17,730	14,560	75,959
		483,816		2,707,737	662,269	3,455,036
7	Net fee and commission income

	Fee and commission income:
	Credit related fees and commissions	127,808		715,294	134,470	701,526
	Portfolio and other management fees	7,478		41,852	21,243	110,824
	Corporate finance fees	12,072		67,562	13,951	72,782
	Cash management and related fees	185,246		1,036,753	198,499	1,035,563
	Card management fees	64,605		361,570	79,430	414,384
	Brokerage fees and commissions	3,418		19,129	5,383	28,083
	Other fees	19,679		110,136	6,890	35,944
		420,306		2,352,296	459,866	2,399,106
	Fee and commission expense

	Brokerage fees paid	1,739		9,733	1,459	7,612
	Other fees paid	30,896		172,913	38,891	202,893
		32,635		182,646	40,350	210,505
8	Net trading income

	Foreign exchange	237,960		1,331,773	295,558	1,541,917
	Trading income on securities	80,870		452,599	86,133	449,353
		318,830		1,784,372	381,691	1,991,270
9	Other (expense)/ operating income

	Net investment income	15,340		85,852	6,879	35,888
	Lease income	206		1,153	4,173	21,770
	Dividend income	5,539		31,000	7,935	41,397
	Other	18,529		103,700	52,336	273,035
		39,614		221,705	71,323	372,090
10	Impairment losses on loans and advances and other financial assets

	Impairment losses on loans and advances	316,515		1,771,416	314,177	1,639,051
	Recoveries	(130,517)		(730,455)	(204,262)	(1,065,628)
	Impairment charge on other financial assets	46,317		259,219	23,642	123,340
		232,315		1,300,180	133,557	696,763
11	Operating expenses

	Staff expenses	456,045		2,552,313	490,311	2,557,937
	Depreciation and amortisation	104,366		584,097	108,504	566,062
	Other operating expenses	483,312		2,704,917	474,566	2,475,796
		1,043,723		5,841,327	1,073,381	5,599,795
12	Taxation

	Current income tax	123,063		688,738	126,462	659,748
	Deferred income tax	(42,768)		(239,355)	8,403	43,837
		80,295		449,383	134,865	703,585

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Page 31

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC
Ecobank Transnational Incorporated
Unaudited consolidated financial statements
For year ended 31 December 2020
Notes
(All amounts in thousands of US dollar unless otherwise stated)
13 Earnings per share
Basic	31 Dec 2020
Basic earnings per share is calculated by dividing the net profit attributable to equity holders of the company by the
weighted average number of ordinary shares in issue outstanding during the period.
Profit attributable to equity holders of the Company from continuing operations	7,997
Profit/ (Loss) attributable to equity holders of the Company from discontinued operations	1,556
Weighted average number of ordinary shares in issue (in thousands)	24,592,619
Basic earnings per share (expressed in US cents per share) from continuing operations	0.033
Basic earnings per share (expressed in US cents per share) from discontinued operations	0.006
Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The company has two categories of dilutive potential ordinary shares: convertible debts and share options granted to employees.

The convertible debt is assumed to have been converted into ordinary shares, and the net profit is adjusted to eliminate the interest expense less the tax effect. For the share options, a calculation is made to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

	31 Dec 2020
Profit attributable to equity holders of the company from continuing operations	7,997
Interest expense on dilutive convertible loans	-
	7,997
Profit attributable to equity holders of the company from discontinued operations	1,556
Interest expense on dilutive convertible loans	-
Adjusted profit	1,556
Weighted average number of ordinary shares in issue (in thousands)	24,592,619
Adjustment for dilutive convertible loans	-

Weighted average number of ordinary shares for diluted earnings per share (in	24,592,619
Dilutive earnings per share (expressed in US cents per share) from continuing operations	0.033
Dilutive earnings per share (expressed in US cents per share) from discontinued operations	0.006

31 Dec 2019

191,409

2,549

24,592,619

0.778

0.010

31 Dec 2019

191,409

2,549

24,592,619

0.778

0.010

_____________________________________________________________________________________________________________

Page 32 Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For year ended 31 December 2020

Notes

(All amounts in thousands of US dollar unless otherwise stated)

			5.734			5.54
		Unaudited		Audited
		As at 31 December 2020		As at 31 December 2019

		US$'000	GHC'000		US$'000	GHC'000
14	Cash and balances with central banks
	Cash in hand	722,818	4,144,783		636,886	3,526,947
	Balances with central banks other than mandatory reserve deposits	1,897,433	10,880,260		927,741	5,137,644
	Included in cash and cash equivalents	2,620,251	15,025,043		1,564,627	8,664,591
	Mandatory reserve deposits with central banks	1,194,634	6,850,271		1,264,686	7,003,579
		3,814,885	21,875,314		2,829,313	15,668,170
15	Trading financial assets
	Debt securities
	- Government bonds	157,357	902,317		182,662	1,011,546
		157,357	902,317		182,662	1,011,546
16	Loans and advances to banks
	Items in course of collection from other banks	72,728	417,037		64,238	355,737
	Deposits with other banks	1,198,904	6,874,755		1,226,587	6,792,594
	Placements with other banks	492,397	2,823,503		601,064	3,328,572
		1,764,029	10,115,295		1,891,889	10,476,903
17	Loans and advances to customers
	Analysis by type:
	Overdrafts	1,122,111	6,434,410		1,494,408	8,275,733
	Credit cards	3,961	22,713		3,450	19,105
	Term loans	8,552,939	49,044,263		8,193,847	45,375,886
	Mortgage loans	135,778	778,578		141,953	786,107
	Gross loans and advances	9,814,789	56,279,964		9,833,658	54,456,831
	Less: allowance for impairment	(573,429)	(3,288,157)		(557,050)	(3,084,831)

		9,241,360	52,991,807		9,276,608	51,372,000
	Staging of loans and advances to customers:
	Stage 1	7,876,281	45,164,172		7,711,504	42,704,767
	Stage 2	1,184,343	6,791,260		1,163,855	6,445,196
	Stage 3	750,226	4,301,946		955,666	5,292,287
	Gross loans and advances	9,810,850	56,257,378		9,831,025	54,442,250
18	Treasury bills and other eligible bills
	Maturing within three months	670,513	3,844,856		381,444	2,112,361
	Maturing after three months	1,035,054	5,935,206		1,251,305	6,929,476
		1,705,567	9,780,062		1,632,749.0	9,041,837
19	Investment securities
	Debt securities
	- At FVTOCI listed	2,520,023	14,450,316		1,901,387	10,529,501
	- At FVTOCI unlisted	3,261,828	18,703,974		2,793,413	15,469,360
	Total	5,781,851	33,154,290		4,694,800	25,998,861
	Equity securities
	- At FVTOCI unlisted	85	487		90	498
	- At FVTPL listed	1,691	9,697		2,169	12,011
	- At FVTPL unlisted	234,822	1,346,516		161,735	895,657
		236,598	1,356,700		163,994	908,166

	Total investment securities	6,018,449	34,510,990		4,858,794	26,907,027
	Allowance for impairment	(903)	(5,178)		(1,031)	(5,707)
		6,017,546	34,505,812		4,857,763	26,901,320

_____________________________________________________________________________________________________________________

Page 33

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For year ended 31 December 2020

Notes

(All amounts in thousands of US dollar unless otherwise stated)

5.73

5.54

20 Other assets Fees receivable Accounts receivable

Repossessed assets from customers Prepayments

Sundry receivables

Impairment provision on receivables

Right-of-useassets
Included in the amount for property and equipment in the statement of financial position are right-of-use assets show below:
Land and buildings Motor Vehicles Furniture and equipment Installations
Deposits from banks Operating accounts with banks Deposits from banks
Deposit from customers Current accounts
Term deposits Savings
Other liabilities Accrued income Unclaimed dividend Accruals
Obligations under customers' letters of credit Bankers draft
Accounts payable Other liabilities
Lease liabilities
included in the amount for borrowings in the statement of financial position are lease liability show as below:
Short term Long term

Unaudited		Audited
As at 31 December 2020		As at 31 December 2019
US$'000	GHC'000		US$'000	GHC'000
10,642	61,023		9,302	51,513
288,252	1,652,895		738,616	4,090,308
186,392	1,068,809		170,389	943,580
205,815	1,180,184		156,458	866,433
548,006	3,142,377		236,368	1,308,958
1,239,107	7,105,288		1,311,133	7,260,792
(113,858)	(652,885)		(126,363)	(699,773)
1,125,249	6,452,403		1,184,770	6,561,019
65,798	377,299		86,672	479,972
517	2,965		778	4,308
875	5,017		2,254	12,482
524	3,005		41	227
67,714	388,286		89,745	496,989
873,417	5,008,348		612,892	3,394,073
1,484,454	8,512,156		1,594,701	8,831,136
2,357,871	13,520,504		2,207,593	12,225,209
11,526,088	66,092,894		9817747	54,368,719
3,163,157	18,138,175		3574917	19,797,175
3,548,924	20,350,240		2853456	15,801,869
18,238,169	104,581,309		16,246,120	89,967,763
83,158	476,845		64,477	357,061
4,503	25,821		4,144	22,949
153,797	881,903		202,518	1,121,504
29,151	167,158		68,482	379,240
25,604	146,818		27,929	154,665
161,736	927,427		51,830	287,024
433,022	2,483,034		426,590	2,362,370
890,971	5,109,006		845,970	4,684,813
2,406	13,796		36,791	203,741
63,851	366,134		88,316	489,076
66,257	379,930		125,107	692,817

_____________________________________________________________________________________________________________________

Page 34

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Uaudited consolidated financial statements

For the year ended 31 December 2020

Notes

(All amounts in thousands of US dollar unless otherwise stated)

Note 26: GEOGRAPHICAL REGION FINANCIAL PERFORMANCE - USD

Ecobank groups its business in Africa into four geographical regions. These reportable operating segments are Nigeria, Francophone West Africa (UEMOA), Anglophone West Africa (AWA), Central, Eastern and Southern, Africa (CESA).

In 000 of $
	NIGERIA	UEMOA	AWA	CESA	OTHERS AND CONSO	Ecobank Group
					ADJUSTMENT(1)

Income Statement Highlights for the period ended 31 December 2020

Net interest income	160,679	309,548	313,386	211,828	(91,645)	903,796
Net fees and commission income	107,899	200,870	162,912	220,101	54,333	746,115
Operating income	268,578	510,418	476,298	431,929	(37,312)	1,649,911
Impairment losses on financial assets	11,875	46,705	41,121	23,073	109,541	232,315
Total operating expenses	216,418	304,071	232,860	246,268	44,106	1,043,723
Operating profit after impairment losses	40,285	159,642	202,317	162,588	(190,959)	373,873
Net monetary loss arising from hyperinflationary economy	-	-	-	(43,646)	-	(43,646)
Share of loss from associates	-	-	-	(103)	636	533
Profit before tax and goodwill impairment	40,285	159,642	202,317	118,839	(190,323)	330,760
Goodwill impairment	-	-	-	-	(159,421)	(159,421)
Profit before tax	40,285	159,642	202,317	118,839	(349,744)	171,339
Balance Sheet Highlights as at 31 December 2020
Total assets	5,689,609	9,999,385	4,335,094	5,927,288	(297,326)	25,654,050
Total Liabilities	5,190,418	9,172,027	3,738,058	5,337,861	204,578	23,642,942


In 000 of $
	NIGERIA	UEMOA	AWA	CESA	OTHERS AND CONSO	Ecobank Group
					ADJUSTMENT(1)

Income Statement Highlights for the period ended 31 December 2019

Net interest income	102,690	290,809	264,184	193,921	(101,875)	749,729
Net fees and commission income	153,040	217,500	172,076	250,424	79,490	872,530
Operating income	255,730	508,309	436,260	444,345	(22,385)	1,622,259
Impairment losses on financial assets	6,713	32,477	53,979	2,899	37,489	133,557
Total operating expenses	242,760	302,148	203,386	259,194	65,893	1,073,381
Operating profit after impairment losses	6,257	173,684	178,895	182,252	(125,767)	415,321
Net monetary loss arising from hyperinflationary economy	-	-	-	(9,466)	-	(9,466)
Share of post-tax results of associates	-	-	3	(159)	(620)	(776)
Profit before tax	6,257	173,684	178,898	172,627	(126,387)	405,079

Balance Sheet Highlights as at 31 December 2019
Total assets	5,932,641	8,960,332	3,576,629	5,597,660	(426,078)	23,641,184
Total Liabilities	5,439,475	8,263,104	3,122,567	5,080,545	(150,284)	21,755,407

ETI & Others comprise ETI, the Holdco, eProcess (the Group's technology service company), the International business in Paris, and also the impact of other affiliates and structured entities of ETI. The impact of consolidation eliminations is also included in 'ETI & Others'.

_________________________________________________________________________________________________________________________________________________________________

Page 35

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Uaudited consolidated financial statements

For the year ended 31 December 2020

Notes

(All amounts in thousands of US dollar unless otherwise stated)

Note 27: BUSINESS FINANCIAL PERFORMANCE - USD

The group operating segments are described below:

Corporate & Investment Bank: Focuses on providing one-stop banking services to multinationals, regional companies, government and government agencies, financial institutions and international organizations across the network. This unit provides also Treasury activities.
Commercial banking: Focuses on serving local corporates, small and medium corporates ,SMEs, Schools, Churches and local NGOs and Public Sector.
Consumer: Focuses on serving banking customers that are individuals

In 000 of $

	CIB	Commercial	Consumer	Others	Consolidation	Ecobank Group
	Adjustments


Income Statement Highlights for the period ended 31 December 2020

Net interest income	547,638	180,513	227,689	(52,642)	598	903,796
Net fees and commission income	150,019	100,375	134,442	31,323	(28,488)	387,671
Other income	227,256	89,017	35,262	205,872	(198,963)	358,444
Operating income	924,913	369,905	397,393	184,553	(226,853)	1,649,911
Impairment losses on financial assets	122,715	51,408	21,583	36,609	-	232,315
Total operating expenses	415,730	281,808	324,010	148,561	(126,386)	1,043,723
Operating profit after impairment losses	386,468	36,689	51,800	(617)	(100,467)	373,873
Net monetary loss arising from hyperinflationary economy	(19,695)	(13,245)	(8,220)	(2,486)	-	(43,646)
Share of loss from associates	(103)	-	-	636	-	533
Profit before tax and goodwill impairment	366,670	23,444	43,580	(2,467)	(100,467)	330,760
Goodwill impairment	-	-	-	-	(159,421)	(159,421)
Profit before tax	366,670	23,444	43,580	(2,467)	(259,888)	171,339
Balance Sheet Highlights as at 31 December 2020
Total assets	14,605,862	1,372,176	1,083,583	3,898,172	4,694,257	25,654,050
Total Liabilities	12,226,798	4,280,485	6,413,383	1,814,006	(1,091,730)	23,642,942


In 000 of $
	CIB	Commercial	Consumer	Others	Consolidation	Ecobank Group
	Adjustments


Income Statement Highlights for the period ended 31 December 2019

Net interest income	395,196	155,217	211,917	(13,421)	820	749,729
Net fees and commission income	151,819	104,651	168,085	25,053	(30,092)	419,516
Other income	266,698	100,052	36,912	225,178	(175,826)	453,014
Operating income	813,713	359,920	416,914	236,810	(205,098)	1,622,259
Impairment losses on financial assets	60,660	32,737	15,452	24,708	-	133,557
Total operating expenses	423,275	277,461	334,561	62,730	(24,647)	1,073,381
Operating profit after impairment losses	329,778	49,722	66,901	149,372	(180,451)	415,321
Net monetary loss arising from hyperinflationary economy	-	-	-	(9,466)	-	(9,466)
Share of post-tax results of associates	(156)	-	-	(620)	-	(776)
Profit before tax	329,622	49,722	66,901	139,286	(180,451)	405,079

Balance Sheet Highlights as at 31 December 2019
Total assets	13,898,717	1,750,062	1,003,741	4,013,305	2,975,359	23,641,184
Total Liabilities	12,957,810	3,813,213	5,505,945	1,942,446	(2,464,007)	21,755,407

_________________________________________________________________________________________________________________________________________________________________

Page 36

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For the year ended 31 December 2020

Notes

(All amounts in thousands of US dollar unless otherwise stated)

Note 28: GEOGRAPHICAL REGION FINANCIAL PERFORMANCE - GHC

In 000 ,000 of GHC

					OTHERS AND

	NIGERIA	UEMOA	AWA	CESA	CONSO	Ecobank Group
					ADJUSTMENT(1)

Income Statement Highlights for the period ended 31 December 2020

Net interest income	899	1,732	1,754	1,186	(513)	5,058
Net fees and commission income	604	1,124	912	1,232	304	4,176
Operating income	1,503	2,856	2,666	2,418	(209)	9,234
Impairment losses on financial assets	66	261	230	129	614	1,300
Total operating expenses	1,211	1,702	1,303	1,378	247	5,841
Operating profit after impairment losses	226	893	1,133	911	(1,071)	2,092
Net monetary loss arising from hyperinflationary economy	-	-	-	(244)	-	(244)
Share of post-tax results of associates	-	-	-	(1)	4	3
Profit before tax and goodwill impairment	226	893	1,133	666	(1,067)	1,851
Goodwill impairment	-	-	-	-	(892)	(892)
Profit before tax	226	893	1,133	666	(1,959)	959
Balance Sheet Highlights as at 31 December 2020

Total assets	32,625	57,338	24,858	33,988	(1,704)	147,105
Total Liabilities	29,763	52,594	21,435	30,608	1,173	135,573


In 000,000 of GHC
					OTHERS AND

	NIGERIA	UEMOA	AWA	CESA	CONSO	Ecobank Group
					ADJUSTMENT(1)

Income Statement Highlights for the period ended 31 December 2019

Net interest income	536	1,517	1,378	1,012	(532)	3,911
Net fees and commission income	798	1,135	898	1,306	415	4,552
Operating income	1,334	2,652	2,276	2,318	(117)	8,463
Impairment losses on financial assets	35	169	282	15	196	697
Total operating expenses	1,266	1,576	1,061	1,352	345	5,600
Operating profit after impairment losses	33	907	933	951	(657)	2,167
Net monetary loss arising from hyperinflationary economy				(49)	-	(49)
Share of post-tax results of associates	-	-	-	(1)	(3)	(4)
Profit before tax	33	907	933	901	(661)	2,113

Balance Sheet Highlights as at 31 December 2019
Total assets	32,854	49,621	19,807	30,999	(2,361)	130,920
Total Liabilities	30,123	45,759	17,292	28,135	(832)	120,477

(1) ETI & Others comprise ETI, the Holdco, eProcess (the Group's technology service company), the International business in Paris, and also the impact of other affiliates and structured entities of ETI. The impact of consolidation eliminations is also included in 'ETI & Others'

_________________________________________________________________________________________________________________________________________________________________

Page 37

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For the year ended 31 December 2020

Notes

(All amounts in thousands of US dollar unless otherwise stated)

Note 29: BUSINESS FINANCIAL PERFORMANCE - GHC

The group operating segments are described below:

Corporate & Investment Bank: Focuses on providing one-stop banking services to multinationals, regional companies, government and government agencies, financial institutions and international organizations across the network. This unit provides also Treasury activities.
Commercial banking: Focuses on serving local corporates, small and medium corporates ,SMEs, Schools, Churches and local NGOs and Public Sector.
Consumer: Focuses on serving banking customers that are individuals

In 000,000 of GHC
CIB	Commercial	Consumer	Others	Consolidation	Ecobank Group
Adjustments

Income Statement Highlights for the period ended 31 December 2020

Net interest income	3,065	1,010	1,274	(295)	-	5,058
Net fees and commission income	840	562	752	175	(159)	2,170
Other income	1,272	498	197	1,152	(1,113)	2,006
Operating income	5,177	2,070	2,223	1,032	(1,268)	9,234
Impairment losses on financial assets	687	288	121	205	(1)	1,300
Total operating expenses	2,327	1,577	1,813	831	(707)	5,841
Operating profit after impairment losses	2,163	205	289	(4)	(561)	2,092
Net monetary loss arising from hyperinflationary economy	(110)	(74)	(46)	(14)	-	(244)
Share of post-tax results of associates	(1)	-	-	4	-	3
Profit before tax and goodwill impairment	2,052	131	243	(14)	(561)	1,851
Goodwill impairment	-	-	-	-	(892)	(892)
Profit before tax	2,052	131	243	(14)	(1,453)	959
Balance Sheet Highlights as at 31 December 2020

Total assets	83,753	7,868	6,213	22,353	26,918	147,105
Total Liabilities	70,111	24,545	36,776	10,402	(6,261)	135,573

In 000,000 of GHC
CIB	Commercial	Consumer	Others	Consolidation	Ecobank Group
Adjustments

Income Statement Highlights for the period ended 31 December 2019
Net interest income	2,062	810	1,106	(70)	3	3,911
Net fees and commission income	792	546	877	131	(158)	2,188
Other income	1,391	522	193	1,175	(918)	2,363
Operating income	4,245	1,878	2,176	1,236	(1,072)	8,463
Impairment losses on financial assets	316	171	81	129	-	697
Total operating expenses	2,208	1,448	1,745	327	(128)	5,600
Operating profit after impairment losses	1,721	259	350	780	(944)	2,166
Net monetary loss arising from hyperinflationary economy	-	-	-	(49)	-	(49)
Share of post-tax results of associates	(1)	-	-	(3)	-	(4)
Profit before tax	1,720	259	350	728	(944)	2,113

Balance Sheet Highlights as at 31 December 2019

Total assets	76,968	9,691	5,559	22,225	16,477	130,920
Total Liabilities	71,758	21,117	30,491	10,757	(13,646)	120,477

_________________________________________________________________________________________________________________________________________________________________

Page 38

Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

Ecobank Transnational Incorporated

Unaudited consolidated financial statements

For year ended 31 December 2020

Notes

(All amounts in thousands of US dollar unless otherwise stated)

31 Contingent liabilities and commitments a) Legal proceedings

The Group is a party to various legal actions arising out of its normal business operations. The Directors believe that, based on currently available information and advice of counsel, none of the outcomes that result from such proceedings will have a material adverse effect on the financial position of the Group, either individually or in the aggregate. The amounts that the directors believe will materialize are disclosed in Note 36.

b)Capital commitments

At 31 December 2020, the Group had capital commitments of $ 5.2 m (December 2019: $ 5.2m) in respect of buildings and equipment purchases. The Group's management is confident that future net revenues and funding will be sufficient to cover this commitment.

c) Loan commitments, guarantee and other financial facilities

At 31 December 2020 the Group had contractual amounts of the off-statement of financial position financial instruments that commit it to extend credit to customers guarantees and other facilities are as follows:

	31 Dec 2020		31 Dec 2019
Guaranteed commercial papers and bankers acceptances	62,781	136,357
Documentary and commercial letters of credit	1,263,847	1,308,351
Performance bond, guarantees and indemnities	1,569,149	1,759,919
Loan commitments	905,654		452,255
	3,801,432		3,656,882

d) Tax exposures

The Group is exposed to ongoing tax reviews in some subsidiary entities. The Group considers the impact of tax exposures, including whether additional taxes may be due. This assessment relies on estimates and assumptions and may involve series of judgments about future events. New information may become available that causes the Group to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities would impact tax expense in the period in which such a determination is made. The total amount of tax exposure as at 31 December 2020 is $138 million (December 2019 : $ 150 million). Based on Group's assessment, the probable liability is not likely to exceed $ 9 million (December 2019 : $ 9 million) which provisions have been made in the books in Note 36.

_______________________________________________________________________________________________________________________________________________

Page 39

Unaudited consolidated financial statements 31 Dec. 2020

PUBLICEcobank Transnational Incorporated

Unaudited consolidated financial statements

Year ended 31 December 2020

32 Impact assessment of the COVID-19

The COVID-19 outbreak has developed rapidly in 2020, with a significant number of infections worldwide. Consequently, in most countries, a lot of measures were taken to contain the virus: limiting the movement of people, restricting flights and closing borders, temporarily closing businesses and schools, and cancelling events. This pandemic is having an immediate impact on businesses such as tourism, transport, retail, and entertainment. In response, the central banks of countries where ETI operates, along with respective governments, intervened with monetary and fiscal measures aimed at mitigating market concerns and providing liquidity to the market.

At Ecobank, the management team has taken appropriate steps to assess the impact on the Group's financial statement based on the information available as of date.

Governance around the pandemic

On the outset of the pandemic in the continent in February 2020, the Group set up a Steering Committee, chaired by Group Risk Management, to monitor and mitigate any risk arising from the worldwide pandemic under two Task Forces:

•A COVID-19 Task Force focusing on Staff and Customer Safety and ensuring compliance to directives and measures taken by the various local government and authorities. This Task Force is monitoring governance around COVID-19 in affiliates, compliance to Group directives related to customers, staff safety and Business Continuity. In all affiliates, there is either a COVID-19 task Force or a Committee overseeing the management of the COVID-19 issues and chaired by an Executive. In most affiliates, the Task Force is composed of the Crisis Management Team (CMT) members

•A COVID-19 Task Force focusing on the Portfolio Impact of ongoing economic events, from a risk and client activity crisis management perspective. The Task Force conducts activities such as portfolio stress tests and provides guidance on portfolio and other actions to all Business and Risk officers in the bank

An online portal for Groupwide COVID-19 Preparedness Assessment was developed, where affiliates capture on a weekly basis their status of compliance with the various requirements. Responses are extracted and reviewed centrally by the Task Force to identify gaps and areas that require specific attention and support. The Task Force proactively provides support where necessary to ensure that all affiliates are complying with all the requirements and protocols. The data protection across the data centres and the integrity of the data have been tested.

Impact on Capital and Liquidity

The Company's capital and liquidity remain resilient despite unprecedented challenges from the Covid-19 pandemic. As the world manages the fallout from a second wave of infections, the Company continues to monitor the situation proactively and provides guidance and support to its subsidiaries as needed.

During the year, various regulators that monitor the Group's banking subsidiaries responded to the risks associated with the pandemic by implementing a variety of actions to safeguard both capital and liquidity. These have included delays or reductions in prudential requirements, implementation of frameworks for restructuring credit facilities and providing payment moratoriums to customers, provision of liquidity support to banks, and reductions in cash reserve ratios. In June 2020, the Group's regulator extended the transition schedule for implementation of Basel II/III capital adequacy requirements in UEMOA by one year.

The Group has fully complied with UEMOA Basel II/III prudential regulations since implementation on 31 December 2017. As at 30 June 2020, the Tier 1 and Total capital adequacy ratios were 8.5% and 11.5%, respectively.

The Company has continued to meet all its debt obligations. Although some regulators temporarily suspended or limited dividend payments, reducing the dividend cash flows that the Company obtains from its subsidiaries, the Company has benefitted from its strong liquidity buffers in addition to a structure that ensures that liquidity is optimized across its network. Group Treasury manages foreign currency liquidity centrally for the Group, ensuring that surplus liquidity from affiliates is deployed optimally and in compliance with local regulatory requirements. This model gives affiliates access to the Group's surplus foreign currency liquidity pool and is an affirmation of the strategic advantage that Ecobank has operating as a Banking Group. The Group maintains strong relationships with many development finance institutions (DFIs) and other institutional investors. Despite muted activity in capital markets during the year, the Group has successfully raised funding directly by affiliates and indirectly via the Holdco to support its objectives. Group liquidity has also been bolstered by steady customer deposit growth due to the accelerated pace of digital adoption during the pandemic. The Company also implemented several cost reduction measures related to staff mobility, travel, and the use of digital infrastructure.

Impact on Revenue

The COVID-19 Pandemic has impacted some sectors of the economy. However, the level of impact depends on the nature of the industry. Considering that some clients may be much more vulnerable than others, we worked closely with our credit customers to assess their liquidity and operational cash flow needs and offered different relief measures such as credit restructures and granting of moratoriums for customers having financial difficulty in meeting up their repayment obligations. In terms of reduced volume of economic activities, this has translated into lower revenue for some of our subsidiaries. In addition, regulators have restricted dividend payment from affiliates and management fees in some cases. The impact of dividends and management fees is zero at the level of the consolidated income statement.

Impairment charges and credit risk

Considering the disruption to economic and market activities and the resultant heightened probabilities of default occasioned by the pandemic, the Group has put in place measures to recognize the impact which the pandemic has on the impairment numbers as a result of worsening macro-economic variables which have been incorporated into the forward-looking information (FLIs) within the ECL model used in determining impairment charges.

We conducted stress tests to determine the sectors, countries, and products most vulnerable to the Covid-19 pandemic and its fall out. We identified specific vulnerable obligors across the businesses. As a result, we froze further lending in some sectors and Financial Institutions. To ensure a consistent and systematic engagement across the Group, we issued policy guidance. Group Risk Management provided guidance to help manage the loan portfolio during the COVID-19 crisis. The guidance lists the sectors that were deemed to be vulnerable to the economic impact due to the COVID pandemic.

We reached out to vulnerable obligors to identify mitigating measures that can be taken to avoid distress and default. We have also worked in line with specific regulatory or government guidance in various markets to provide forbearance or accommodation of various types.

Conclusion

We will continue to monitor the development of the situation locally and globally and follow recommended measures and guidelines issued by all countries we operate in and their counterparts in other jurisdiction where we are operating, World Health Organization (WHO) and other health authorities. Based on the current assessment, the directors are confident that the going concern of the company will not be threatened by COVID 19 and would be able to continue to operate in the foreseeable future.

_____________________________________________________________________________________________________________

Page 40 Unaudited consolidated financial statements 31 Dec. 2020

PUBLIC

About Ecobank:

Incorporated in Lomé, Togo, Ecobank Transnational Incorporated (ETI) is the parent company of the leading independent pan-African banking Group, Ecobank, present in 35 African countries. The Ecobank Group is also represented in France through its subsidiary EBI SA in Paris. ETI also has representative offices in Dubai-United Arab Emirates, London-UK,Beijing-China,Johannesburg-South Africa, and Addis Ababa-Ethiopia.

ETI is listed on the stock exchanges in Lagos, Accra, and the West African Economic and Monetary Union (UEMOA) - the BRVM - in Abidjan.

The Group is owned by more than 600,000 local and international institutional and individual shareholders. It employs 14,023 people in 39 different countries in 733 branches and offices. Ecobank is a full-service bank, providing wholesale, retail, investment and transaction banking services and products to governments, financial institutions, multinationals, international organisations, medium, small and micro businesses and individuals. Additional information may be found on the Group's corporate website at: www.ecobank.com.

Investor Relations :

Ecobank is committed to continuous improvement in its investor communications. For further information, including any suggestions as to how we can communicate more effectively, please contact Ecobank Investor Relations via ir@ecobank.com. Full contact details below:

Investor contact:

Ato Arku

+228 22 21 03 03

+228 92 40 90 09

aarku@ecobank.com

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ETI - Ecobank Transnational Inc. published this content on 29 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 January 2021 13:41:04 UTC.

End-of-day quote Nigerian S.E. Other stock markets 06:00:00 2024-05-16 pm EDT			5-day change	1st Jan Change
24.05 ^NGN	0.00%		0.00%	+15.07%

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	1st Jan change	Capi.
ECOBANK TRANSNATIONAL INCORPORATED	+15.07%	388M
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COMMONWEALTH BANK OF AUSTRALIA	+8.26%	137B

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