Leading the way - Standard Chartered · challenges the Government of Ghana received support from...

Annual Report 2009

Leading the way in Ghana

Standard Chartered Ghana Annual Report 2009 www.standardchartered.com/gh

Standard Chartered Ghana has delivered record results through a difficult period for the global economy and banking industry

Delivered record income and operating profits

Diversified sources of income in Consumer and Wholesale banking across multiple products

Tight control of expenses and disciplined investment in both businesses

A continued disciplined and proactive approach to risk management

A successful rights issue whichstrengthened the capital adequacy ratioto 22% at the end of 2009

The Bank maintained a liquid, well-capitalised and diversified balance sheet through the financial turmoil.

Launched and implemented 13 sector lending position statements to ensure a consistent approach to the management of environmental and social risks across our business

Refreshed our Board with the appointment of two non-executive directors

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Financial highlights

Non-Financial Highlights

Operational highlights

Operating income

GH? 182.5m2008:GH? 117.1m / 2007: GH? 92.7m

Total assets

GH?1,404.2m2008:GH? 984.9m / 2007: GH? 773.7m

Return on equity

36%2008:37% / 2007:37%

Operating profit

2008 GH? 43.8m / 2007: GH? 43.2m

Earnings per share

2008 GH? 1.89 / 2007: GH? 1.88

Dividend per share

2008 GH? 1.50 / 2007: GH? 1.45

Employees

8002008:760 / 2007:717

Nationalities

122008:11 / 2007:10

Branches

212008:19 / 2007:19

GH?83.7m

GH?2.99

GH?2.47

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02Standard Chartered Ghana Annual Report 2009www.standardchartered.com/gh

Business review Corporate governance Financial statements and notes

About Standard Chartered

Standard Chartered PLC, listed onboth the London Stock Exchange and the Hong Kong Stock Exchange, ranks among the top 25 companies in the FTSE-100 by market capitalisation.

Consumer Banking Wholesale Banking

Helps clients facilitate trade and finance across the fastest growing markets in today's global economy, using our cross-border network. We are at the heart of all principal international trade flows offeringthe knowledge of a local bank with the capabilities of an international financial institution.

Operating income Operating income

GH?75m

Operating profit

GH?27mOperating profit

01 2009 Highlights

02 Contents

04 Notice and Agenda

06 Five Year Financial Summary

07 Chairman's Statement

09 Chief Executive's Review

12 Key Performance Indicators

13 Our Organisation

14 Our Approach

15 SCB Ghana in 2009

17 Consumer Banking

21 Wholesale Banking

25 People

27 Sustainability

31 Risk

Country overview

Operating and Financial review

34 Corporate Information

35 Board of Directors

37 Senior Management

39 Report of the Directors

40 Independent Auditor's Report

41 Statement of Comprehensive Income

42 Statement of Financial Position

43 Statement of Changes in Equity

45 Statement of Cash Flows

46 Notes to the Financial Statements

86 Form of Proxy

GH?106m

GH?49m

We are headquartered in Accra and have operated for over 114 years in the country’s major economic segments, leading the way in Ghana.

Standard Chartered Ghana

Standard Chartered Ghana Limited, listed on the Ghana Stock Exchange is a market-leading financial services firm in Ghana.

Offers innovative products and services to meet the needs of Premium, Small and Medium Enterprises (SME) and Personal customers through lending, wealth management, protection and transactional services. A customer-focused approach enables deeper understanding of customers' evolving needs.

Notice and Agenda

Notice is hereby given that the Annual General Meeting of Standard Chartered Bank Ghana Limited will be held at the Accra International Conference Centre opposite the State House Building, Osu, Accra on Wednesday, 28th April, 2010 at 11.00 a.m. for the ordinary business of the Company.

Agenda

11. To receive the reports of the Directors and Auditors, the Statement of Financial Position as at 31st December,

2 32009 together with the Statement of Comprehensive Income and Retained Earnings for the year ended on

that date.

2. To declare a Dividend.

3. To elect Directors in place of those retiring.

4. To approve Directors' remuneration.

5. To approve the remuneration of the Auditors.

A member of the Company entitled to attend and vote is entitled to appoint a proxy to attend and vote on his/her

behalf.

A proxy need not be a member.

A form of proxy is attached.

Dated this 28th day of January, 2010

BY ORDER OF THE BOARD

Dawn Kwesi Zaney

(Board Secretary)


Following the application of IFRS (International Financial Reporting Standards) the following changes have been made:1 Balance Sheet is now referred to as Statement of Financial Position2 Profit and Loss Account is now referred to as Statement of Comprehensive Income3 Income Surplus Account is now referred to as Retained Earnings

Business review

Five - Year Financial Summary

2005 2006 2007 2008 2009

GH?'000 GH?'000 GH?'000 GH?'000 GH?'000

Interest income 58,196 76,053 94,866 110,402 155,492Interest expense (14,063) (18,349) (30,727) (34,134) (36,073)

Net interest income 44,133 57,704 64,139 76,268 119,419

Commissions and fees 19,889 18,651 19,125 22,765 37,192Other operating income 7,043 8,554 9,468 18,082 25,889

Net Revenue 71,066 84,909 92,732 117,115 182,500

Total operating expenses (32,715) (39,741) (47,770) (71,568) (83,712)Impairment loss (2,926) 1,452 (1,794) (1,707) (15,074)

Operating Profit 35,425 46,620 43,168 43,840 83,714

Other income 10 2 6 - -

Profit before taxation 35,435 46,622 43,174 43,840 83,714

Taxation (12,220) (15,874) (10,136) (10,653) (26,217)

Profit after taxation 23,215 30,748 33,038 33,187 57,497

Transfer to Statutory Reserve Fund (5,804) (3,843) (4,130) (4,148) (7,187)

Retained Profit 17,411 26,904 28,908 29,039 50,310

Shareholders' Funds 64,834 80,636 88,394 89,461 159,578

Total Assets 514,246 711,011 773,737 984,944 1,404,213

Total Deposits 325,471 445,544 534,840 742,290 833,084

Loans & Advances 216,060 239,918 287,069 460,338 408,538

GH? GH? GH? GH? GH?

Earnings per share 1.32 1.75 1.88 1.89 2.99

Proposed Final Dividend per share 1.15 1.30 1.45 1.50 2.47

Return on Assets (PAT/Total Assets) 5% 4% 4% 3% 4%

Return on Equity (PAT/Equity) 36% 38% 37% 37% 36%

Capital Adequacy Ratio 20% 17% 13% 12% 22%

Cost/Income Ratio 46% 47% 52% 61% 46%


Business review

Chairman’s statementA world-class management team

“The Bank has used its strong capital and liquidity position and its increasingly powerful brand to capture market share from competitors and to deepen relationships with customers and clients."

I am delighted to report that 2009 was a year of record income and profits. TheBank has used its strong capital and liquidity position and its increasingly powerful brand to capture market share from competitors and to deepen relationships with customers and clients. Standard Chartered Ghana grew income and profit despite the economic downturn and significant interest rate and foreign exchange headwinds.

�Income increased 56 percent to GH? 182.5 million

� Profit before tax rose 91 percent to GH? 83.7 million

� Normalised earnings per share climbed 58 per cent to GH? 2.99

The Board is recommending an annual dividend of GH? 2.47 per share. Thisrepresents a 65 percent increase over the previous year. Our share continues to be the best performing financial industry stock on the Ghana Stock Exchange.

Throughout the financial crisis and economic downturn, we have consistently produced strong results. We have achieved this by focusing on our strategy and supporting our customers and clients through these difficult times. Throughoutthe crisis we stayed open for business.

Our longevity in Ghana is something we are proud of. Not only does it give us the local knowledge to serve our customers well, it also makes us part of the community. We have been working with many of our clients for generations and the downturn has uniquely helped us to reinforce these valuable relationships. Wehave managed our way through the crisis very well, much to the benefit of our clients and shareholders.

However, we are conscious that the world has changed and that we must work together with the regulator, government and the rest of the industry to secure a better financial system, if we are to focus on the socially-useful aspects of banking.The Bank continues to maintain strong

07

Normalised earnings per share

GH?2.992008:GH?1.89 2007:GH?1.88

Dividend per share

2008: 1.5 2007: 1,45GH? GH?

GH?2.471.0

2.0

3.0

4.0

1.501.451.301.15

Business review

0

liquidity and capital adequacy. In line with the Bank of Ghana's new capital regulations to enhance minimum required paid-up share capital, the Bank successfully concluded a rights issue to raise GH? 48m which was oversubscribed by 23 percent.

2009 was an encouraging year in terms of Ghana's economic outlook as the economy showed its ability to withstand external and internal shocks.

The year ushered in a new democratically elected government which faced several structural and economic challenges. Key challenges included a large budget deficit, high rates of inflation (which had steeply increased in the last quarter of 2008 reaching a peak of 20.7 percent in June 2009) and a depreciating exchange rate which declined by 17.5 percent between January and June 2009 against the US dollar. In an attempt to address these challenges the Government of Ghana received support from both the IMF and the World Bank, and also embarked on a restrictive policy regime. A combination of these measures resulted in a marked improvement in key macroeconomic indicators, as the currency stabilised andinflationary pressures subsided.

As the country moves towards oil production in the later part of 2010, the future indeed remains very bright and it is expected that sustainable development and growth will be delivered across all sectors of the Ghanaian economy,bringing about a better Ghana for our people. A lot however will depend on how the oil revenue will be managed to serve as a driver of strong economic growthacross all major sectors.

In light of the above, Standard Chartered will continue to create new opportunities, diversify our portfolio and ensure we have the flexibility to anticipate and respond to the challenges in our market. We are committed to forging an enduring partnership with the Government and

Economic Outlook

regulators by providing thought leadership and market expertise.

Finally, it is our aim to champion the development of a more modern and sophisticated financial system, leading the way as a key player in the market and migrating best practice in risk management, product development and financial discipline in the Ghanaian economy.

The best way to protect against financial stress and ensure an effective, functioning financial system is to have a sound, well-managed, well-governed institution.

At Standard Chartered we have a proven strategy and a world-class management team, both of which have withstood the test of the last two years.

It is noteworthy to state that the local regulator, at the end of their recent site examination, expressed satisfaction with the Board’s process and strategic management function.

In line with good corporate governance, we have appointed two independent non-executive directors to enhance the independence of the Board and also to strengthen its professional capability in terms of counsel and deliberations. Theyare Mrs. Felicia Gbesemete, a lawyer and Mr. Herbert Morrison, a chartered accountant. Both joined the Board on the 4th of May 2009 with extensive experience from their respective professions. Please join me in welcoming them to the Board.

We recognize the need to build trust in banking and believe international banks are an essential part of any successful economy. We are conscious of the huge responsibilities this places on us as a Board. We however remain committed to this challenge and will continue to build on our strong foundation by being here forprogress, here for the long run and here for our people.

Governance

In summary, 2009 was a successful year for the Bank. We face challenges in the global economic and regulatory environment but the Board believes Standard Chartered has the right strategy for sustainable growth and the Bank enters 2010 with real resilience and momentum.

Ishmael E. Yamson,Chairman25 February 2010

05 06 07 08 09


Shareholder returns over five year period

2.471.881.75

1.32

2.99

1.89

Earnings per share

Dividend per share

Chief Executive’s reviewA clear strategy and strong brand

“The breadth of our business across diverse, fast-growing market segments gives us enormous resilience. We did not let the challenges in the economic environment interrupt our track record of consistently delivering for our shareholders."

Our results tell a compelling story; we produced record profits on the back of record income of GH? 182.5 million. Wehave an ever stronger balance sheet and a broader, deeper client and customer franchise.

The Bank is in great shape – we are in the right market segments and we have a focused strategy.

Our achievements in 2009 were not limited to financial performance in 2009; we made a significant impact in terms of our Sustainability agenda. As a result in May and August 2009, Standard Chartered Bank Ghana was recognised as the “Best Bank – Corporate Social Responsibility” and “Best Company - Corporate Social Responsibility” in the Ghana Banking Awards and Ghana Club 100 Awards respectively. These accolades are a testament to our commitment to the community and to this country.

Despite the increased competitiveness of the financial sector in 2009, Standard Chartered Bank delivered superior financial performance without compromising its standards of service, risk management and its disciplined approach to doing business.

There is no doubt that the global economy started 2010 looking better than it did 12 months ago. After a contraction of nearly 2 percent in 2009, global growth will return in 2010. We expect a modest recovery of perhaps 2 percent this year. However,there is a sharp disparity between the prospects for Ghana and those for Western economies.

If we learned anything from this crisis, it is that the global economy is far less predictable and far more turbulent than many thought.

Ghana is better placed than most parts of the world to weather these risks, but we are not immune, so we cannot be complacent. Thus far, our policymakers have been remarkably effective in responding to the twists and turns of the crisis.

Global economic outlook

09

Business review

Regulation

Country strategy

Wholesale Banking

In 2009 the Bank consistently maintained its capital adequacy ratio well above the regulatory limit of 10 percent and we remain well capitalised. In addition, the Bank successfully fulfilled one of its key objectives for 2009, to increase its paid-up capital to a minimum of GH? 60m.

Regarding the implementation of Basel II, Standard Chartered has continued to remain the market leader. We will actively work towards full implementation by the revised deadline of January 2012.

We have a consistent and clear strategy which is well understood by staff,customers and investors.

Our near term strategic priorities are very clear. Our top priority is to maintain our track record of delivering superior financial performance. To do this, we need to sustain the momentum in Wholesale Banking and complete the transformation of Consumer Banking. We need to stay absolutely focused on the basics of banking - the management of liquidity,capital, risks and costs. And we also need to grasp the opportunity to reinforce our brand.

We remain committed to ensuring the Bank is a great place to work. In 2009 we embarked on a transformational journey called 'Good to Great', which focused on making a difference in the areas of Service, People, Premises and Controls. This initiative has gained strong momentum and has seen increased staffengagement and customer satisfaction since its inception. In 2010 we shall continue to invest in our people and premises while creating an enabling environment in which creativity and ingenuity can flourish.

2009 was an exceptional year for our Wholesale Banking business which saw a 70 percent year-on-year revenue growth. Our focus on deepening our relationships by getting closer to our clients and targeting the growing sectors of the economy brought considerable success to our business.

We executed a number of industry firsts with our Wholesale Bank successfully carrying out the first commodity derivative for a local client, which was also the first of its kind in sub-Saharan Africa. In addition, we were the joint lead-arranger (16th successive year) for a US$1billion syndicated facility for the Ghana Cocoa Board. The transaction was the largest structured soft commodity syndicated deal in Africa. This pioneering performance was delivered despite the continued uncertainty in the financial sector both

locally and internationally during 2009.In October we re-launched our market-leading internet banking platform, Straight2Bank, the first of its kind on the market which supports trade transactions and cross border payments for our SME, Corporate and Institutional Clients.

We are uniquely positioned to offerunparalleled business propositions to the most demanding and sought after customers and we remain the only financial institution in Ghana with a strong presence and track record in the most dynamic markets.

In Ghana our overall strategy is to continue to be the market leader in our segments of choice, whilst continuing to acknowledge our responsibilities to the communities in which we operate.

Going into 2010 we will continue to seize the opportunities the market offers and keep a close eye on the key economic indicators - the interest and exchange rates - to keep us ahead of the curve. Most importantly we will continuously improve the way we work by leveraging on our Group network and migrating best practice to develop world class products and services to meet the needs of the Ghanaian economy.

Until recently this was a largely product-led business, but over the past few months, Francis Mills-Robertson and his team have been driving the Group-led transformation of Consumer Banking so that it, too, focuses on building deep, longstanding relationships with customers. This is a complex change programme andwe are making good progress.

2009 saw the opening of the Bank's 20th and 21st branches in Madina and Achimota respectively. Another sign of Standard Chartered Bank's commitment to continuously invest in Ghana to enhance the interaction points with every one of our valued customers.

We introduced several pioneering products to the Ghanaian market; we launched the market-leading Bancassurance products and introduced mobile and internet banking. We offeredthe SME Business Club to provide training, consultancy and other advisory services to help our clients grow their businesses.

Deploying innovative products and services is a key differentiator of the Brand in Ghana and the “Believe and Win'” campaign set the standard for deposit mobilisation promotions in the local market. As a result, four of our branches won awards in the Africa-wide Branch Sales contest, receiving recognition from

Consumer Banking

Standard Chartered Group. In 2010 we aim to continue to focus on our key market segments by providing customized products and services to cater to our clients needs.

For both businesses, the depth and quality of our client and customer relationships are critical to our strategy and success. This focus on clients and customers, the obsession with the basics of banking, the emphasis on acting as one bank, on doing the right thing - these are key elements of our culture, key aspects of our brand.

Standard Chartered is a rather differentkind of bank. We have been around for more than 150 years, 114 in Ghana. Webelieve in building long-term client and customer relationships. Without diluting our focus on delivering for shareholders, we are committed to being a force-for-good in the communities in which we live and work.

In 2010 we will be investing to build awareness, not least by putting our name on Liverpool Football Club shirts that will be seen on hundreds of millions of television screens around the world. Andwe will be working harder to tell people what we stand for, what makes us different.

Our brand is all about commitment. Weare here for good, to create value for our shareholders, to support and partner our clients and customers and to make a positive contribution to the broader community. We are here for the long term. We persevere when things get tough. Wedo not dodge tough decisions and trade-offs. This is the way we do business: it has underpinned our strategy and success for over 150 years across Asia,Africa and the Middle East; and it will be the foundation for our future.

2010 has started well for both businesses.The performance in January 2010 is particularly pleasing as we have a better balance between the two businesses.

The 4.7 percent GDP growth experienced by the Ghanaian economy in 2009 has facilitated the reduction of Ghana's fiscal imbalance which we can expect to continue to decrease in the long term. With policy reforms aimed at positioning Ghana for sustained economic growth through the modernization of agriculture, infrastructure, oil and gas projects, ICTand private sector developments, we can expect foreign direct investment along with the inflow of remittances and bilateral/donor funds to increase in 2010.

The injection of capital in 2009 by severalbanks in fulfillment of the Central Bank's

Brand

Outlook


Our commitment

Here for good

Chief executive’s review continued

regulatory requirement has increased the lending capacity of banks. It can be expected that the banking sector will create more credit, which will be enhanced as the remaining banks work to conclude their capitalisation by the 2012 deadline. As interest rates and inflation decline, we expect the outlook to be positive and as a result Standard Chartered Bank has revised its 2010 GDP growth forecast from 5.9 percent to 7.7 percent. We remain confident in our ability to deliver another strong performance as Ghana moves to oil producer status in late 2010.

As the long term effects of the global economic crisis unfold, Standard Chartered Bank will continue to build its foundation for sustainable growth in Ghana, ensuring our long term presence and commitment to the communities in which we operate. We will be driven by a courageous commitment to the basics of banking and will be the thought-leaders in the promotion of prudent and superior risk management.

With the support of our hardworking, committed and motivated staff, we will continue to deliver on the expectations of all our stakeholders whilst working in partnership with our Regulators and the people of Ghana.

This said, we remain watchful on the outlook, we are not complacent as to the risk environment and we enter the year with good momentum. Costs are well controlled and loan impairment in both businesses is contained.

We remain focused on the effectivemanagement of capital, on maintaining excellent levels of liquidity, on improving our risk profile further and on the disciplined execution of our strategy.

We are well-positioned and we are in great shape.

I became the Chief Executive of SCB Ghana in late 2008, when the crisis hit the world of banking. I am immensely proud of the way our staff responded to the crisis, turning it into a strategic opportunity for the Bank. I want to take this opportunity to thank all our staff for their dedication and commitment to the Bank and our clients

I am also enormously appreciative of the support we received from our clients and customers, our investors and our regulators. We did not just weather the crisis; we turned it to our advantage.

Summary

11

Whilst I do not underestimate the challenges and uncertainties before us, I am excited by the opportunities. We are in the right market and we have a clear strategy and a strong brand.

Hemen ShahChief Executive Officer, SCB Ghana & Area General Manager, West & Central Africa25 February 2010

thing and maintaining a high standard of conduct; and lastly, our commitment to our customers and clients – Herefor people: genuinely committing to long-term relationships with people and businesses.

Here for good will launch globally in major media and together with our sponsorship of Liverpool Football Club, we expect a robust return on investment; for many more people to know and understand how we deliver to our customers and clients; and for the brand to play an ever stronger role in delivering our strategic agenda.

Standard Chartered will launch its new brand promise – Here for good – in 2010. On the back of robust and sustained performance, we will use our history, tradition, performance, and culture to significantly increase awareness and knowledge of the Bank, across our footprint and beyond, to drive business growth.

Here for good embodies all that Standard Chartered was, is and will be. It's about our commitment to our footprint – Here for the long run:continually leading the way in Asia,Africa and the Middle East and delivering the benefit of that knowledge and experience to our customers and clients; our commitment to responsible conduct – Here for progress:consistently striving to do the right

Business review


05

Earnings per share

GH?2.99

06 07 08 09

Key performance indicatorsA track record of discipline

05

Return on equity

36%

06 07 08 09 05

Capital Adequacy Ratio

22%

06 07 08 09

Aim: To consistently deliver year-on-yeargrowth in earnings per share.

Earnings per share grew 58 percent, due to strong growth from the two businesses.

Analysis:

Aim: To deliver superior returns on shareholders’ equity compared to the industry average.

The return on shareholders’ equity declined due to the increase in stated capital that occurred in December

Analysis:

Aim: To maintain a capital adequacy ratioabove 10 percent

The Bank maintained a capital adequacy ratio of 22 percent in 2009, an increase of 10 percentage points compared with 2008, comfortably aboveour stated target. This was due to the capital increase in December

Analysis:

1.32

1.751.88 1.89

2.99 36%

38%37% 37% 36%

20%17%

13% 12%

22%

To be the world's best international bank

Continuing to run our balance sheet conservatively

Focusing on organic growth as the primary driver of value creation

13

Our organisationA One Bank culture

Standard Chartered – Here for good

Group and Country

We:

Set overall corporate strategy•

Provide strong governance•

Manage our financial performance•

Manage our capital •

Build corporate brand•

Ensure we are true to our values•

Continue our commitment to a•

sustainable business

Deliver to all our key stakeholders•

including governments, regulators,

shareholders and communities

Consumer Banking Wholesale Banking

Our objective is to:

For further details see page 17

Our markets

Our objective is to:


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•

Provide fast, friendly and accurate serviceProvide solutions to financial needsRecognise and reward the overall relationshipBecome the bank that customersrecommend to friends and colleagues

• Be the core bank to our clients, deepening and broadening relationshipsin our key markets

• Build scale in our key local markets and increase cross-border opportunities across our network

Operating in growth markets with a focus on Asia, Africa and the Middle East, we have:

••••

Deep local knowledge A history of commitmentStrong local governanceStrong cross-border capability


Our approachA strategy for sustainable performance

To be the world’s best international bank

Focusing on Asia, Africa and the Middle East

Building long term, deep relationshipswith our customers and clients

Continuing to manage our balancesheet conservatively

Focusing on organic growth as theprimary driver of value creation

Continuing to nurture and reinforce ourdistinctive culture

Our strategicintent:

How wedeliver

A healthy global economy needs international banks to:• facilitate trade across our markets

enable our clients to conductcross-border business transactions

• service the needs of an increasinglyinternational consumer base

• These are growth markets and we knowthem intimatelyIn the past two years we have celebrated150 years in China, India, Singapore and Hong Kong

The shift to a customer-focused model in Consumer Banking reinforces this approach, whilst becoming a core bank to more of our clients is at the heart of our Wholesale Banking strategy

Acquisitions play an important but secondary role in our strategy

We have a presence in more than 70 markets, yet our unique culture and our values bind us together

•

•

Our capital position, allied with strong liquidity, has enabled us to remain open for business, support our clients and seize business opportunities

As One Bank, leveraging the synergies between our businesses and geographies

Supportedby our ways of working

With an ongoing commitment to sustainable business practices, upholding high standards of corporate governance, social responsibility, environmental protection and employee diversity


Business review

15

Focus on the basics of banking

2008:GH? 117.1m

GH? 182.5m

Our performance

2008:GH? 43.8m

GH? 83.7mProfit before tax

SCB Ghana in 2009Sustained growth and financial discipline

We have never lost sight of these key disciplines:

1 Liquidity We have always taken a conservative approach to liquidity management and have further increased our liquidity during the recent crisis

2 Capital We have taken a proactive approach to managing our capital position, raising capital as and when necessary to support our business

3 Risk We maintain a proactive approach to risk management

4 Costs We continue to manage expenses tightly in the face of continued economic uncertainty

Operating income

Business review


“We have delivered another record performance in 2009 with multiple sources of income growth. We remain focused on effective management of risk and of capital and on maintaining excellent levels of liquidity. We begin 2010 with resilience and momentum, well-positioned and in great shape."

2009 has been a strong validation of all the hard work that has gone into strengthening our position as a bank during a year of market turmoil. Theresults also speak about our ability to balance investment in future growth and delivery of consistent shareholder returns as we once again pay out above market average dividends to our investors.

The Bank managed an impressive period of profit expansion as we experienced double digit plus earnings growth in most of our product lines and grew our business income faster than expenses.

We continue to have a disciplined approach towards the management of our cost base continuously looking at enhancing value on our spend. Our Cost Income Ratio ended at 46 percent which is a significant reduction of 17 percent against 2008.

Despite being disciplined in the risks we take, we have had to take some provisions as a result of challenging economic conditions.

Throughout the challenging year we continued to strengthen our balance sheet to meet current and future demands of our customers.

We are well capitalized, have strong liquidity and a well diversified funding base.

In November 2009, we launched our GH? 48million Renounceable Rights Issue of 1,655,172 ordinary shares of no par value at GH? 29 per share, in compliance with the new regulatory requirement which demanded that banks in Ghana with

foreign majority shareholding increased their capital to GH? 60million by December 31, 2009.

The Offer which was at a ratio of 1 new share for every 10.6309 existing shares held, was oversubscribed by 23 percent and the proceeds will support the growth of our corporate lending portfolio. Thismakes us a solid and attractive investment for all our shareholders.

Looking forward, we are seeing more positive signs emerge within Ghana and the global economy but there still remains a degree of uncertainty. We shall continue to focus on our balance sheet strength, liquidity, improving efficiency on our capital base and maintaining cost discipline. Overall we shall continue to deliver enhanced value for our customers and shareholders.

Sanjay Rughani,Executive Director, Finance

05

Consumer BankingWell positioned for sustainable growth

Our objective

Our Customer Charter aims to:

�provide fast, friendly and accurate service

�provide solutions to financial needs

�recognise and reward the overall banking relationship

�become the bank that customers recommend to friends and

colleagues

Our strategy

Our priorities in 2010

Operating IncomeGH? ’m

06 07 08 09

Our Strategy is based on three pillars:

�pursuing an optimized “participation model” to gain

dominance in the high value segments

�providing distinctive customer focused value propositions

�maintaining back to basics focus on cost, efficiency, risk and

liquidity

�Continue to implement our customer-focused transformation

designed to drive sustainable competitive advantage

�Roll out new customer value propositions for all segments

�Deepen customer relationships by delivering on our

Customer Charter

�Deliver strong asset and deposit growth

�Further enhance efficiencies and productivity through re-

engineering projects

�Maintain disciplined risk, cost and performance

management

34 37

41

55

75

17

Operating profit

GH? 27m2008: GH? 14.9m

Net Promoter Score Index

52.02008: 46.0

Business review

“The implementation of our strategy is on track and we are seeing early success. Our strategic shift towards becoming a more customer-focused consumer bank is helping us gain market share in our chosen market segments.”

Measuring the success of our strategy

Focusing on our customers

Eighteen months ago, Consumer Banking embarked on a major strategic transformation, shifting our emphasis from products to customers, adopting a more disciplined market participation model while enhancing efficiencies and productivity through re-engineering projects.

The transformation of our business is on track and progressing well despite 2009 being a very difficult year. Depreciating currency, challenging credit conditions and subdued demand for asset products created strong headwinds for our business, but we persevered and continued to develop momentum. Wecontinue to grow our balance sheet, gain market share, deliver better customer service, and acquire more customers within our chosen segments while increasing the number of products we sell per customer on a needs-based approach.

We are developing more differentiated and distinct value propositions for our customer segments. In the second half of the year, we launched SmartBanking, our Payroll proposition, in Ghana. Thisunderscores our commitment to customer relevant differentiation leading to distinct propositions for each segment. Payroll customers therefore enjoy a variety of products and service bundles based on their individual and segment needs including current and savings accounts, personal loans and insurance, as well as a package of lifestyle privileges. Demand for this scheme continues to rise and uptake has exceeded our expectations.

Our enhanced focus on our customers is helping us deepen relationships and acquire more new-to-bank customers. Asa consequence of this, in 2009 we gained significant market share growth in deposits and assets in our High Value and SME segments ending the year on a high note with a record profit of GH? 27 million andensuring we continued to rank amongst the top consumer banks in Ghana.

Another testament to our customer focus has been in the area of customer service. We continue to make tremendous progress in our service delivery journey and have seen significant improvements across key customer-relevant metrics leading to a marked increase in our Net Promoter Score (the net number of customers who would recommend the Bank to a colleague or a friend).

In 2010, we shall continue to embed excellent service culture in our DNA, through the introduction of a Customer Charter which has been developed after listening to customers to find out what they really want from a bank. Our Customer Charter objective is to provide fast, friendly and accurate service, solutions to our customers' financial needs, and recognize our customers' overall banking relationship, enabling us to become the Bank that customers recommend to their friends and colleagues

Our proactive approach towards managing risk and our strong cost discipline, combined with continued quarter-on-quarter income and profit growth, has enabled us to invest in our franchise over the second half. We are transforming our distribution network, enhancing remote banking capabilities, hiring more relationship managers, and investing to scale up technology and operations. In delivering our promise of increasing customer accessibility to the Bank, we have also deployed major investments to meaningfully boost our alternate channel solutions such as ATMs,mobile banking and internet banking. Weincreased our ATM fleet to 45, strategically positioned around Ghana with a mix of onsite and offsite locations to offerconvenience to our customers.

In line with our sustainability agenda and our commitment to environmental protection, we have actively migrated 38 percent of our customers from paper to electronic statements.

Investing for Sustainable Growth

This contributes significantly to Standard Chartered's global initiative to save trees and improve our environment.

We have started seeing the fruits of ourfocus on customer needs rather than on products and we will continue to do so in the years ahead. In that regard, our value delivery was focused on SME, Premium Banking and Personal Banking. Income for all these segments grew substantially.

Consumer Banking continues to be an important source of liquidity for Standard Chartered Bank. Our deposit gathering momentum remained strong across all our channels.

As we work our way into 2010 we shall continue to drive growth across our chosen customer segments. We will continue with our segment-driven channel expansion to increase convenience to our chosen segments including Priority Banking.

The implementation of our strategy is strongly on track, we continue to make significant progress in the transformation of our business building, in the process, a solid platform for sustainable long-term growth.

Segment Performance


Francis Chapman Mills-Robertson,Executive Director, Consumer Banking

Distinctive customer-focused value propositions: Our enhanced focus on our customers is helping us deepen relationships

Case Study:

Small and Medium Enterprises (SMEs) play a vital role in the growth of Ghana's economy. It is estimated that they employ almost two-thirds of the labour force and contribute 60 per cent of real gross domestic product (GDP) of Ghana.

While this segment continues to grow at a phenomenal rate, they largely remain under-banked and under-served. Standard Chartered is committed to SME Banking, serving the needs of two segments – small businesses and medium enterprises.

Our customer-focused approach enables us to understand the distinct needs of these segments and to tailor appropriate solutions and products, combining expertise from Consumer Banking and Wholesale Banking. These include transactional services, lending, trade services, cash management and foreign exchange support. As bilateral trade grows and SMEs expand, they face many challenges related to expansion; access to credit and the need for seamless opening of international accounts. Weunderstand these challenges and are uniquely positioned across the major trade corridors of Asia, Africa and the Middle East to serve the cross-border ambitions of our customers.

Based on our experience and customer feedback, we provide insights and know-how to SMEs that go beyond products and services. We share our knowledge on economic updates and emerging business trends at seminars and conferences organized for our SME customers. We have facilitated cross border SME conferences for our customers, to help improve their knowledge and build on their international network. We also have dedicated relationship managers who provide relevant market information and advisory services to our SME customers. Our customers tell us that these insights and opportunities have proven invaluable in arming them with the knowledge to make informed business decisions.

Providing the right support for the growth of our customers' businesses demonstrates our commitment to our customers as well as to the community in which we operate.

SME Banking

19

Our 'Believe and Win' promotion, a mobilization campaign for both existing and new-to-bank customers which spanned a 4-month period, yielded a record incremental deposit growth.

The promotion, which was aimed at driving a savings culture in the market, also rewarded loyal customers, frequent depositors and new customers.

The grand prize of a VW Touareg was presented to the winner, Mr. Isaac Ibrahim by Vishu Ramachandran, Standard Chartered’s Regional Head of Consumer Banking, Middle East, South Asia, Africa,Europe and America.

deposit

Wholesale BankingA consistent client-led strategy

Our objective

• Be the core bank to our clients, deepening and broadening

relationships

• Grow the local scale of the business and increase cross-

border opportunities


Operating incomeGH? ’m

05 06 07 08 09

• Grow product capabilities in our core business

• Strengthen and deepen relationships to become the core bank

to key clients

• Increase cross-border opportunities

• Invest to increase industry coverage and grow our solution

delivery capabilities

• Maintain disciplined management of costs, capital, liquidity and

risk

• Continue to remain true to our values and culture

• Focus on key growth segments in the economy

• Deepen client relationships

• Provide clients with a broader range of solutions and

services

Our strategy

21

37.1

47.9 51.862.5

105.6

Operating profit

GH? 49m2008: GH? 28m

Client income as % total income

64%

Business review

Measuring the success of our strategyWholesale Banking has continued the growth trajectory which has enabled us to show strong financial performance year on year. Our business continued to achieve sustained, strong growth through a relentless focus on executing our client-led strategy.

Against the backdrop of the global economic downturn and macroeconomic challenges in the Ghanaian economy,Wholesale Banking delivered superior financial performance across all metrics – client segments, products and markets. Operating profits for the business rose by 87 percent to GH? 49 million. Operating income reached GH? 106 million, a growth of 70 percent over the previous year.

In terms of expenses, costs were managed tightly. Expenses grew at asignificantly lower rate than income growth. Disciplined capital, liquidity and risk management continue to be key enablers of growth and a source of competitive differentiation.

In a year characterized by macroeconomic challenges for Ghana against a back drop of global economic turmoil, the Wholesale Banking business seized the opportunity to partner its clients by deepening existing relationships, developing new strategic relationships and expanding the product coverage available to clients.

Becoming the core bank for clients

Extending product breadth and depth

Broadening the Wholesale Banking product offering to the Ghanaian market, has played a key role in our continued success. The traditional commercial banking products continue to form the bedrock of our business. Furthermore, through good quality origination and client engagement, Wholesale Banking has successfully combined the local scale of our business with global expertise to address specific needs of our clients in areas such as loan syndications, debt and capital markets solutions, commodity price hedging, currency hedging, structured trade financing and fixed income sales.

Transaction Banking continued to act as the anchor service for most clients. Therewas a 30 percent increase in the number of clients who signed up and were migrated on to the Straight2Bank (S2B) platform which has redefined the way SCB Ghana offers cash management services to its clients, giving us competitive advantage in the market. Our collections proposition has been further enhanced by the introduction of virtual accounts which will revolutionise our clients’reconciliations. Trade finance was a main driver of income growth as we increased our product offering under this segment. Trade Info Manager (TIM) will give our customers visibility over trade transactions processed and give them control over the process. Overall, volumes in both trade finance and cash management grew in 2009, enabling us to improve our performance.Developing Markets, Managing Risks


Our Financial Markets team remains at the forefront of developing the domestic market, with an overriding objective of positioning Ghana as a choice investment destination in the region. We continue to play a thought-leadership role by initiating and promoting dialogue between market players and regulators, aimed at fostering a more efficient bond and foreign exchange market.

Our strategy of being the bank of choice for risk management solutions also paid off in 2009 as we continued to offer our clients protection against the volatilities witnessed across the foreign exchange, interest rates, and commodities markets over the course of the year. Our trading business was focused on translating the uncertainties in the environment into opportunities, and more importantly, itcontinues to serve as a solid platform on which we build our client solutions.

We rolled out our internet banking platform, the first in themarket that supports trade transactions and cross borderpayments to 50 key clients at a special Straight2Bankclinic held inAccra.

“We continue to build our business by focusing on deepening our relationships with our clients and leveraging our international network to provide our clients with the solutions they need to achieve their ambitions, both locally and internationally.”

Mayokun AjibadeArea Head, Global Markets, West Africa

J. Kweku Bedu-Addo Executive Director, Origination and Client Coverage

“The year 2009 was a watershed year for the Wholesale Bank in Ghana. The business achieved truly outstanding financial results in a difficult year characterized by the global economic downturn. Our performance was underscored by focused client attention and responsiveness, complemented by increased product breadth and depth of knowledge of our clients.”

Case Study: Oil and Gas

During 2009, Standard Chartered Bank played a major role in the consortium of banks providing financing for the development of the Jubilee Field. Today, Standard Chartered Bank is considered the Bank of choice for major players in the sector in Ghana, offering Project Export Finance, Structured Trade Finance, Corporate Advisory, Hedging and Cash Management solutions.

Beyond upstream players, Standard Chartered also has relationships with key downstream players and are the lead bank to most of the players in the sector. The Bank provides crucial support to the downstream value chain of activities.

Standard Chartered continues to leverage on it’s product breadth and global expertise to provide the right solutions for companies in the Oil and Gas sector. We are here for progress and proud to be closely associated with an emerging sector in Ghana.

Positioned as the core bank for a key sector

23

We announced a US$250m agriculture support package which included structured facilities covering fertilizer, weedicide and pesticide supply, fish and fruit processing, timber processing, and cocoa post-harvest activities.

SCB Ghana is strategically focused on agricultural activities along the value chain, which are more capital intensive and involve more sophisticated financial structuring. Since the 1990s, we have remained the mandated lead arranger for Ghana Cocoa Board’s(Cocobod) Pre-Export finance.

Our arranged US$1billion Receivables-Backed TradeFinance Facility with Cocobod was adjudged the “DEAL OF THE YEAR” in the pre-export financing category by Trade Finance Magazine.

This facility is one of Sub-Saharan Africa's largest soft th

commodity deals to date. The deal was the 16 in a number of such financing facilities arranged by Standard Chartered for Cocobod.


www.standardchartered.com/gh

PeopleA distinctive culture forcompetitive advantage

Our highlights and achievements in 2009

�

�

�

�

�

Standard Chartered Ghana's talent has continued to

be widely recognised with over 35 Ghanaians holding

key positions across the Standard Chartered Group.

In 2009, 6 of them returned to Ghana to take up key

positions in the business.

We streamlined our recruitment and resourcing

processes, creating a platform to bring on board

over 150 full time employees by Q1 2010

Trained 100% of our employees on Service

Excellence and launched the Service Excellence

Recognition Programme.

Continued to strengthen our Leadership Capability by

coaching all our leaders on the Great Manager

Programme. Their team members or their direct

reports were in turn taken through the Great

Employee Programme

Identified and launched a Country Leadership Team

Forum to enhance communication and clarify our

strategic objectives


As the Global Economic crisis continues to occupy the centre stage of our business activities, a strong focus on our people and the diversity of our culture will continue to be the foundations of our success and sustainability. Central to our commitment to people and diversity is our focus on engagement and creating “A Great Place to Work”. Engagement empowers each and every employee to contribute positively towards creating an enabling working environment. Our five core values shape our employees and strongly support business performance

Our values

The unprecedented market conditions serve to emphasise the importance of strong leadership, a robust performance culture, and the values that drive our business. Our values - courageous, responsive, international, creative and trustworthy -define our culture and are a unique source of competitive advantage. We will continue to embed these values into the fabric of our organization, ensuring that they are deep-rooted and distinctly define the way we do our business. In 2009, Standard Chartered Bank Ghana defined service behaviours and trained all our employees on Service Excellence. The Service Behaviours were derived from our core values and were designed to help employees to build strong and lasting partnerships with customers and other stakeholders.

Our culture and values form a consistent thread in our leadership communications and every aspect of our People processes.In 2010 we will continue to embed our values and culture to drive performance and strengthen accountability. Our values and culture will also form a strong foundation in strengthening our reward and talent development strategies to anchor the growth aspirations in our Consumer and Wholesale Banking businesses.

�

�

�

�

To leverage on our strong engagement and drive

performance and productivity

Continue to strengthen our leadership capability

through strong succession planning with a strong

focus on local talent

Fully embed our Group's values to maintain our

distinctive and unique culture

To maintain sharp focus on recognising and rewarding

performance in order to drive productivity and mitigate

risks

25

Business review

World Class

Engagement: The

exciting growth and

diversity of our business,

coupled with the strength-

based approach to

people management has

led the way in building

engagement across the

Bank, creating a truly

great place to work and

driving business

performance.

Increasing leadership capabilities

Strong leadership is critical to our success, and we take seriously the need to broaden our leadership capabilities. It is through our leaders that we build strong engagement levels for our employees and drive performance. Our leaders are the channel through which our culture and values are expressed throughout the organisation. In 2009, more than 152 Managers were taken through The Great Manager Programme (GMP). Through the GMP, the leaders were equipped with skills to manage, motivate develop and recognize good performance.512 team members or direct reports were in turn empowered to take charge of their own careers and demand more from their leaders through the Great Employee Programme (GEP).

Building a robust pipeline of talent is vital for the success of our business. We believe strongly in building a robust talent pipeline to meet the current and future needs of the business. Our succession planning process in 2009 covered all key positions and the second layer of the organisation. We have a strategic focus to build local talent in key positions and will continue to tap into our rich talent pipeline within and outside the Group. In 2009, 5 Ghanaians were appointed to various international positions while 6 others returned to the country to hold critical roles in the various businesses.

In 2010 our leaders will benefit further from one-on-one coaching and an enhanced training and development curriculum for the critical roles. Further focus on strengthening the Right Start and the International Graduate Recruitment and Developmentprogrammes will ensure that talent is identified early and provided with relevant and timely development intervention.

Communication through the Country Leadership Team will continue to play a pivotal role in disseminating our strategic objectives across the organisation thereby maintaining focus on sustained business

growth.

In Standard Chartered Bank, we are committed to driving a strong performance management culture that embraces our values. At the beginning of the year, every employee is encouraged to set stretching and measurable performance objectives. In 2009, PeopleSoft, the Group IT platform for people management became available to all employees in Ghana. The system has enabled all employees and their line managers to access the new Global online system for managing performance.Managers and employees can set objectives online and have access to review and provide feedback on an ongoing basis throughout the year. Regular coaching is encouraged to reinforce and engrain our culture and values in the daily working life of our employees.

The online system ensures consistent high standards of performance management are maintained while allowing some flexibility to accommodate the diversity of our talent.

Our diversity provides us with a unique competitive advantage. We leverage on the local and Group diversity to remain ahead of the competition and to provide diverse growth opportunities for our people.

In 2009, we stepped up our efforts to promote Flexi hours. The Bank’s flexible working framework creates an inclusive workplace environment where our employees have the opportunity to maximize their potential while enjoying a flexible time, part time or home based arrangement.

We have been proactive in driving gender- based diversity and our Diversity and Inclusion Council has organised a number of forums to raise awareness and drive the diversity agenda at the country level. Some

Strengthening performance culture

Diversity and inclusion

of our leaders attended the “Women in Leadership forum” hosted for talented women across the Group. The participants benefitted from international best practices in personal and professional development.

Retaining and attracting good talent continues to be a focus for the Bank. Our compensation packages are structured to reward sustained performance. Wecontinuously study the market dynamics in order to ensure that our reward packages remain competitive.

Under our Good-to-Great transformational agenda we launched the Service Excellence Recognition programme,deepening the culture of performance, recognition and reward. Over 100 staff have won various awards in 2009 through this programme.

Reward and Recognition


SustainabilityCommitment to our communities

Our sustainable business priorities


�

•

•••

•

Encourage employee participation in community programmes by using their two-day volunteering entitlementFurther embed our sector lending position statements and launch a water position statement. Build depth in our local talent pool.Develop an Environment action plan until 2013.Continue to meet our commitment to invest 0.75% of the previous year's pre-tax operating profit in our community programmes.Continue to contribute to Ghana's educational sector development by delivering on Schools Desk Project and “Reading for Growth” targets

This year we maintained our commitment to building a sustainable business as a bank, simultaneously creating value for our shareholders, supporting our customers and contributing to the communities in which we live and work.This has underpinned our strategy and success for over 114 years in Ghana and it will be the foundation for our future.

Hemen Shah

For a bank, the challenging economic environment we have just been through means that taking sustainability seriously is no longer optional. We have to prove that our business model is sustainable. We have to demonstrate that we make a positive contribution to sustainable growth and development. We have to show that awareness of sustainability issues is deeply embedded in the way we run our business.

As the recipient of the “Best Company -Corporate Social Responsibility “ Award at the Ghana Club 100 Awards 2009 and also having been recognized as Ghana's “Most Socially Responsible Bank” at the last Ghana Banking Awards we have taken on these challenges and remain committed to delivering on our sustainable business agenda to this market.

Banking is vital to building a vibrant economy, locally and globally. Banks can be powerful contributors to economic and social progress. We believe that through building a sustainable business we can deliver broadly, three positive outcomes: contributing to the real economy; promoting sustainable finance; and leading the way in our communities. Our commitment to our clients and customers, to our investors, to our regulators, to other stakeholders in Ghana and to our staff is to be here for good.

Chief Executive Officer, SCB Ghana & Area General Manager, West & Central Africa

As an international financial institution, the greatest contribution we can make to the societies in which we operate is through our direct contribution to the real economy. We believe in promoting sustainable finance to contribute to the challenges and opportunities presented by social and environmental risk. Wealso empower our staff to help tackle the challenges we face in our market, from environmental degradation to ill health.

Our approach

27

Economiccontribution

Leadin

gth

e

way Contributin

gto

sustainable finance

incom

mun

ities

thereal eco

nom

y

Promoting

Pro

tecting

Gre

atpla

ce

Community Responsible

Access

to

Tacklin

gfin

ancialth

eenvi

ronm

en

tto

wor

k

investment selling and marketing

financial services

crim

e

Sustainable finance

Basics of banking

Business review

Highlights 2009Contributing to real economic growthAs an international financial institution, the greatest contribution we can make to the societies in which we operate is through our direct contribution to the real economy.By offering products and services that serve the needs of our clients and customers we can enable individuals, corporates and other financial institutions to act as agents of economic activity.

We are committed to offering products that we fully understand. By listening and responding to the needs of our clients and customers, we ensure that our products and services are deployed effectively to facilitate healthy economic activity.

Corruption, money laundering and terrorist activity can undermine the positive benefits of financial services provision and have a potentially devastating effect on our own business performance. We make tackling financial crime a priority, to guard against the risks posed by these corrosive activities.

A sizeable portion of Ghana’s bankable population currently has no access to basic banking services, and their inability to raise finance has a direct impact on economic activity.

We continue to leverage on our specialised skill set to provide advanced products and services to populations with very specific financing needs.

Our Access 247 product offers banking opportunities to this section of the population. With just GH? 5, customers can open an account with us and enjoy exciting banking services. This has opened up unique banking services to about 22,958 previously unbanked customers between 2007 and 2009.

The Bank of Ghana introduced e-Zwich - a new Universal Electronic Paymentstechnology to ensure all banks in Ghana use a common biometric payment card system and to increase security on all card

Access to finance

transactions in the country.

We upgraded our technology in line with this directive and took the opportunity to successfully enrol over 275 Members ofParliament and their support staff onto the e-Zwich platform.

Treating customers fairly has moved to the top of the agenda for many financial regulators around the globe. We welcome this development and will monitor and adopt new rules and regulations as they come into force in the Ghanaian market.

In Consumer Banking we have increased clarity around the segmentation of customers and developed products and services based on clearly identified needs. We have focused on resolving customer complaints in the shortest possible time, increasing our first time resolution rate from 23 per cent in 2008 to 58 per cent this year. We conducted a thorough analysis to determine the root causes of our customers' complaints. We have employed quick intervention to resolve problems, as well as responding to customer feedback by simplifying the processes required to open an account with us.

In Wholesale Banking it is just as important that we treat our clients fairly and ensure that they are sold appropriate products for their needs. It is also central to our strategy to become the 'core bank' for more clients. We have focused on training our employees to make them aware of the features, mechanics and all potential risks of the products that they sell.

We tackle financial crime in three ways: we minimise the risk that our products and services can be used by money launderers; we deny suspect terrorists access to our banking systems; and we build robust controls against fraud and corruption. In 2009, we significantly enhanced the detection capability of our

Responsible selling and marketing

Tackling financial crime

Access to finance: Our e-Zwich enrolment team signing on a member of parliament

615Number of staff educated under LwHIV

22,958Access 247 accounts opened from 2007 to 2009

777employees who have completedAML e-Learning

1.4 millionbeneficiaries of Seeing is Believingeye care projects in the Eastern and Western regions

60%decrease in Consumer Banking complaints

Seeing is Believing: As part of the 2009 World Sight Day celebrations, we sponsored 100 eye surgeries across each of the 10 regions of Ghana (dubbed the ‘1000 Eyes’ Project) in partnership with the Eye Care Unit of the Ghana Health Service

07 08 09

6362

152


145%(2007-2009)

Increase

Number of Managers who have

undertaken the Great Manager

Programme

anti-money laundering (AML) system, resulting in an increase in the proportion of alerts converted to reported cases. In many cases we are reliant upon the awareness of our employees to prevent criminal financing activity. This year we prioritised the training of our staff, by rolling out a new AML eLearning programme which has been completed by 777 staff. We also enhanced our internal Speaking Up programme, which will be launched in 2010.

The decisions we make around who and what we finance have a real impact on the sustainable development of our markets and the long term viability of our business. Our approach to sustainable finance includes managing the social and environmental risks associated with our lending decisions as well as seizing the opportunities presented by the growth in the renewable energy and environmental finance sector.

In 1997 the Standard Chartered Groupintroduced an environmental and social risk policy that took into account the environmental and social impacts of lending decisions in our Wholesale Banking business. We have been a signatory to the Equator Principles since 2003 and apply them to all project finance and project advisory transactions irrespective of value. In 2009 we implemented a series of 13 sector position statements to ensure that we have a consistent and cohesive approach to managing environmental and social risks across our business and financing activities. These provide guidance to all employees, including relationship managers, credit officers and portfolio managers. We celebrated WorldEnvironment Day by presenting these Position Statements to the Minister of Environment, Science and Technology,challenging businesses to adopt environmentally-friendly policies.

We adopt an approach of constructive engagement to manage social,

Promoting sustainable finance

environmental and governance risks associated with the projects and clients we finance, working with our clients to encourage progress towards international standards. This starts from the moment we establish contact with a client and continues throughout the duration of our relationship.

Our long heritage in Ghana has given us a deep understanding of the market, an appreciation of the challenges we face and a commitment to working in partnership with our stakeholders to overcome these challenges. Our employees are crucial in helping us to achieve this, both as ambassadors for our brand and agents of change. Weempower our employees to participate in our community programmes, through employee volunteering and champion networks. This activity is at the heart of our unique culture and is the reason why many of our people choose to work for us.

Great place to workFor more information on how we make the Bank a great place to work, see page 26.

We are aware that our carbon footprint has an effect on the global environment. However, we believe that by encouraging behavioural changes at both the institutional and individual level, we can mitigate the environmental impact of our business operations. We have had an environmental strategy in place since 1998, which was updated in 2008 and sets targets to 2011. This is managed by our able Country Environment Committee fully supported by our Group Environment Committee that formalises our sustainability commitments.

Our response to the global call to reduce Carbon Dioxide in the environment has resulted in the planting of 22,000 trees across our entire footprint in the country.

We also ensured a successful observance of Earth Hour in Accra on 28 March 2009

Leading the way in our communities

Protecting the environment

by creating awareness through our media partners and the strategic engagements of our key environmental stakeholders.

Over the years our staff have undertaken clean up activities in our communities as part of their employee volunteering actions. This include de-silting of drains and clearing of plastic waste. In 2009, our staff helped to clean up parts of Chorkor and the Dzorwulu Special School.

Community investmentThis year our two global programmes, Seeing is Believing and Living with HIV, as well as our regional programme Nets for Life, made significant progress against their respective targets.

We have successfully undertaken a Comprehensive Eye Care Project in the Eastern Region of Ghana aimed at sight restoration through surgery, prevention of blindness and rehabilitation in partnership with SightSavers International and the Ministry of Health, bringing benefit to over 1 million people.

We also launched a US$150,000 Satellite Eye Care Units Project in partnership with Operation Eyesight Universal to benefit over 300,000 people in 3 towns in the Western Region of Ghana.

We funded the “1000 Eyes Project” during World Sight Day in 2009 to support eye care in Ghana and are currently fundraising towards the US$20 million Group-wide target to fund 20 projects in 20 cities across the world to benefit 20 million people under the New Vision.

As part of World Sight Day celebrations, our staff engage in employee volunteering activities (eye tests), seminars and also fundraise to support the initiative.

We have run a workplace HIV education programme, called Living with HIV, since 1999, which currently involves a network of more than 60 HIV Champions in-

Clean Country

Nets for Life: We celebrated World Malaria Day by distributing 1000 treated bednets, bringing benefit to over 5000 people in Ada

Living with HIV: Our LwHIV team educated about 4000 freshmen of the University of Cape Coast, as our contribution towards Group’s pledge to the Clinton Global Initiative to educate 1million people by 2010

Protecting the environment: We launched the 2nd phase of our ‘Greening Ghana’ initiative to coincide with World Environment Day. We partnered the Ministry of Environment, Science and Technology to plant over 20,000 trees across our footprint.

29

Business review

country. Working with local communities, our HIV Champions delivered face-to-face education sessions to 615 people between 2008 and 2009.

Since Standard Chartered Group made a commitment to the Clinton Global Initiative to educate one million people between 2007 and 2010, we have educated over 10,000 people at the University of Cape Coast (4000), Kwame Nkrumah University of Science and Technology (4000), University of Ghana (1500), Regional Maritime University (400), TV3 (68), others (200) and also received partner pledges totalling 51,860.

We continue to engage in thought-leadership opportunities and also migrate our best in class workplace programme to other corporate entities including the media under the umbrella of the Ghana Business Coalition against HIV/AIDS.

We joined forces with five other donors in 2006 to launch Nets for Life and provide one million long-lasting insecticide treated nets (LLITN) across 15 African countries, including Ghana.

In Ghana we successfully distributed 82,984 LLITNs in 2009 through our partner-on-the-ground, the AnglicanDiocesan Development and Relief Organisation. We also distributed 1000 LLITNs to benefit over 5000 people in Adaduring the National Malaria Day celebrations.

As part of our contribution to improving education in Ghana, we have successfully distributed 5000 dual-desks to 50 deprived schools across the 10 regions of the country. 6 of these schools are supported by 4 of the Bank's Development Organisations (DO) partners. The project which was initiated in 2007 has provided seating space for 10,000 students.

Under our “Reading for Growth” Project, we continued to encourage reading among students, with special attention given to students in deprived communities

by the weekly distribution of Junior Graphic (a children’s version of Ghana's leading newspaper, the Daily Graphic) in partnership with the nation's leading Print Media House – Graphic Communications Group Limited. 40 deprived schools across Ghana receive 20 copies of the newspaper weekly under this project which was initiated in 2007 and ends in 2010.

Highlights 2009

22,000Number of trees planted so far

1,018Number of people who signed upfor the observance of Earth Hour

400%Increase in beneficiaries of Reading for Growth Initiative

5000Number of dual desks distributed under Schools Desk Project

Employee Volunteering: We donated a water storage tank, painted and cleaned up parts of the Dzorwulu Special School as part of activities marking our SME Month celebrations.

Great place to work: We continued to create exciting career opportunities to ensure our talent pipeline remained the best-in-class.

Schools Desk Project: Our commitment to provide 5000 dual desks to deprived school children in 50 schools across the country has brought benefit to over 10,000 children.

07 08 09

Number of LLITNs distributed

82,984

70,281

15,400


439%(2007-2009)

Increase

Risk reviewManaging risk responsibly

Risk Profile

�

�

�

�

Robust risk governance structure and experienced

Risk team

Low exposure to high-risk asset classes and

segments

Diversified portfolio across products and customer

segments

Strong liquidity position

Principal risks and uncertainties

�

�

�

�

�

Changing macroeconomic conditions in Ghana

Changes in regulatory policy

Financial markets dislocation

Reduced access to funding

Exchange rate movements

The management of risk is the bedrock of Standard Chartered’s business. It is our view that effective risk management is fundamental to being able to generate profits consistently and sustainably, thus enhancing the shareholders' value while delivering superior services to our esteemed customers.

Risk Management Framework

Credit Risk

The Board of Directors has overall responsibility for the establishment and oversight of the Bank's risk management framework. Through our risk management framework, we manage enterprise wide risks with the objective of maximizing risk – adjusted returns while remaining within the acceptable level of risk for any given transaction. It is the responsibility of all the employees to ensure that risk taking is disciplined and focused and that we take into account our social, environmental and ethical responsibilities in taking risks to produce the desired returns.

Standard Chartered Bank is exposed to the following risks in our daily operations, based on the kind of financial instruments we use in Ghana:

�Credit Risk�Market Risk�Liquidity Risk�Operational Risk�Regulatory Risk

Credit risk is the risk that a counterparty to a financial transaction will fail to discharge an obligation, resulting in financial loss to Standard Chartered. Credit exposure arises principally from the Bank's loan and advances to customers, other banks and investments in securities.

Credit risk is managed through a framework which sets out policies and procedures covering the measurement and management of credit risk. There is a clear segregation of duties between transaction originators in the businesses and approvers in the Risk function. All

31

Business review

credit exposure limits are approved within a defined credit approval authority framework.

The Credit Approval Committee which is a sub-committee of the Board is responsible for the credit risk issues. In addition to this both Wholesale Banking and Consumer Banking have risk committeesthat meet frequently to deal with detailed specific risk issues applicable to their respective businesses. These committees are also authorised by the Board to apply duly approved policies and procedures relevant to their respective businesses.

We use a comprehensive credit rating and measurement methodology which informs our risk taking and portfolio management decisions. A standard alphanumerical credit risk grade system is used in both Wholesale and Consumer Banking. Thisgrading is based on our internal estimate of probability of default over a year horizon, with customers or portfolio assessed against a range of qualitative and quantitative factors. The numerical grade run from 1 to 14 and the grades 1Ato 12C are assigned to performing while 13 and 14 are assigned to non-performing.

We regularly monitor credit exposures and external trends which may impact risk management outcomes. We use internal risk management reports in our discussions on the portfolio in both the Credit Approval Committee and Credit Policy Committee meetings. In the Wholesale Bank, accounts are placed on Early Alert (EA) when they exhibit signs of weakness or financial deterioration. Such accounts are subjected to a dedicated process which involves our Group Special Assets Management (GSAM) with the objective of rehabilitating these accounts and where necessary, accelerate the exit.

In Consumer Banking, portfolio delinquency trends are monitored continuously at a detailed level. Accountswhich are past due are subjected to a collection process, managed

independently by the Risk function.

SME is managed under Consumer Banking. We monitor SME accounts regularly and place them on Early Alertwhen they display signs of weakness and financial deterioration. Our GSAM team works with both Consumer Banking Credit and the business on these accounts with a view to minimising losses by either rehabilitating or exiting them.

We define Market Risk as the risk of loss resulting from changes in market prices and rates. Our exposure to market risk arises principally from customer-driven transactions. The objective of our market risk policies and processes is to obtain the optimal balance of risk and return whilst meeting customers' requirement.

The Market Risk Unit approves the limits within delegated authorities and monitors exposures against these limits. Additionallimits are placed on specific instruments and position concentrations whereappropriate.

Our Market Risk Unit is responsible for the day to day management of market risk with an oversight by our Asset and Liability Committee (ALCO). The unit operates based on comprehensive policies and procedures and also an established level of risk appetite in terms of Value at Risk (“VaR”). We use VaR to measure the risk of losses arising from future potential adverse movements in market rates, prices and volatitilities.

VaR models are back tested against actual results to ensure pre-determined levels of accuracy are maintained. Our Market Risk Unit complements the VaRmeasurement by regularly stress testing market risk exposures in order to establish potential risks that may arise from extreme market events that are rare but make significant impact. Stress testing is an integral part of the market risk management framework and considers both historical market events and forward-

Market Risk

looking scenarios.

Consistent stress testing methodology is applied to trading and non-trading books. This methodology assumes that scope for management action would be limited during a stress event, reflecting the decrease in market liquidity that often occurs. The Bank has not identified any limitations of the VaRmethodology it is currently using.

Stress scenarios are regularly updated to reflect changes in risk profile and economic events. The Market Risk unit has the responsibility for reviewing stress exposures and when necessary,enforcing reductions in overall market risk exposure. It also considers stress testing results as part of its supervision of risk appetite.

The Bank's foreign exchange exposures comprise of both the trading and non-trading foreign currency translation exposures. Theseexposures are principally derived from customer driven transactions.

The principal risk to our non-trading portfolios is the risk of losses arising from the fluctuations in the future cash flow or fair values of financial instrument because of change in market interest rates. Interest rate risk is managed through monitoring interest rate gaps and by having pre-approved limits for repricing bands. Our ALCO is responsible for monitoring in order to ensure compliance with these limits and is assisted by the Market Risk Unit in the day to day monitoring of the limits.

The Bank defines liquidity risk as the risk that the Bank either does not have sufficient financial resources available to meet all its obligations and commitments as they fall due, or can only access these financial resources at expensive cost.It is the Bank's policy to maintain adequate liquidity at all times and for all currencies, hence to be in a position to

Foreign Exchange Risk:

Interest Rate Risk:

Liquidity Risk

Buba JannehCountry Chief Risk Officer


“Standard Chartered has a diversified portfolio with low exposure to risky asset classes and segments. We have a robust risk governance structure and an experienced risk team. Our balance sheet and liquidity position remains strong”.

meet all obligations as they fall due. Wemanage liquidity risk both on short-term and medium-term basis. In the short-term, our focus is on ensuring that the cash flow demands can be met through asset maturities, customer deposits and wholesale funding where required. In the medium-term, the focus is on ensuring the balance sheet remains structually sound.

Liquidity risk management is governed by ALCO. This committee is reponsible for both the statutory and prudential liquidity.

A substantial portion of the Bank's assets are funded by customer deposits made up of current and savings accounts and other deposits. These customer deposits, which are widely diversified by type and maturity,represent a stable source of funds. Our lending is normally funded by liabilities in the same currency.

We also maintain significant levels of marketable securities either for compliance with local statutory requirements or as prudential investments of surplus funds.

We define operational risk as the risk of direct or indirect loss due to an event or action resulting from the failure of internal processes, people and systems, or from external events. A consistent set of management procedures has been deployed that seeks to ensure that

Operational Risk.

Operational Risk exposure is contained within appetite through a structured process of identification, assessment, mitigation, control and monitoring.

The Bank's Country Operational Risk Group (CORG) has been established to supervise and direct the management of operational risks across the Bank. CORG is also responsible for ensuring adequate and appropriate policies, and procedures are in place for the identification, assessment, monitoring, control and reporting of operational risks.

Regulatory Risk is the risk of loss arising from a failure to comply with the laws, regulations or codes applicable to the financial services industry. The Bank's Compliance and Assurance unit is responsible for establishing and maintaining an appropriate framework of the Bank's compliance policies and procedures.

Compliance with such policies and procedures is the responsibility of all employees.

Regulatory Risk

Operational Risk (OR) Week: Our Operational Risk Team kitted as defenders in a football game to drive their role home during OR week. Weseized the opportunity to encourage staff to take a look at our controls environment with a view to identifying the key risks that we face and also take appropriate steps to mitigate them.

33

Corporate Information

BOARD OF DIRECTORS

Hemen Shah (Chief Executive Officer)

Samuel Daisie (Non-Executive Director)

Sanjay Rughani (Executive Director, Finance)

Francis Mills-Robertson (Executive Director, Consumer Banking)

Kweku Bedu-Addo (Executive Director- Origination and Client Coverage)

Frederick William Lee (Non-Executive Director)

thFelicia Gbesemete (Non-Executive Director) appointed on 4 May 2009

thHerbert Morrison (Non-Executive Director) appointed on 4 May 2009

SECRETARY Dawn Kwesi Zaney

AUDITORS KPMG

Chartered Accountants

Marlin House

13 Yiyiwa Drive

P. O. Box GP 242, Accra

SOLICITORS Kudjawu & Co.

House No. 5

Yantrabi Road, Labone

Off Labone Crescent

P. O. Box 294

Accra

REGISTRARS NTHC Limited

Martco House

P. O. Box 9563

Airport – Accra

REGISTERED OFFICE Standard Chartered Bank Building

High Street

P. O. Box 768,

Accra

Ishmael Yamson (Chairman)


1 2 3

97 8

1210 11

13 14

64 5

Board of directors

35

1. Ishmael E. Yamson

Chairman

Non-Executive Director

Appointed to the Board on 1 February,2005. Former Chief Executive of Unilever Ghana and current Chairman of the Board of Unilever Ghana. He is a member of the President’s Economic Advisory Council and also Chairman of the Board of the Ghana Investment Promotion Council.

2. Hemen Shah Chief Executive Officer, SCB Ghana and Area GM, West and Central Africa

Appointed to the Board on 29 0ctober,2008. Former Group Head of Strategy for Standard Chartered Bank.He was also Chief Executive Officer for Standard Chartered Bank Tanzania.

3. Sanjay Rughani Executive Director Finance

Appointed to the Board on 26 January 2007. Before this appointment he held the position of Executive Director for Finance in Standard Chartered Bank Tanzania and prior to that he was the Regional Finance Manager for Africa.

Corporate governance

4. Francis Chapman Mills-Robertson Executive Direcor,Consumer Banking

Appointed to the Board on 13 November 2007. Before his appointment he was the Executive Director for Consumer Banking in Standard Chartered Bank Uganda and held the position of Business Development Manager for Consumer Banking Africa.

5. J. Kweku Bedu-Addo Executive Director Origination and Client Coverage

Appointed to the Board on 30 January 2009. Before his appointment, he was the Program Director for Origination and Client Coverage in Standard Chartered Bank Singapore. He also held the position of Executive Director on the Board of Standard Chartered Bank Zambia.

6. Frederick William Lee Non-Executive Director

Appointed to the Board on 30 January 2009. He is currently the Regional Head of Global Markets for Standard Chartered in Africa. He previously held the positions of co-head Wholesale Bank and Regional Head of Financial Markets in the Middle East, Pakistan and Africa at Standard Chartered.

7. Samuel Daisie Non-Executive Director

Appointed to the Board in November 1990.He is an Economist and has held various Directorship positions in the Ministry of Finance and Economic Planning.

8. Felicia Gbesemete Non-Executive Director

Appointed to the Board on 4 May 2009.She is a lawyer by profession and a founding Partner and Director of Lexconsult.

9. Herbert Morrison Non-Executive Director

Appointed to the Board on 4 May 2009. He is Managing Partner of Morrison and Associates, a firm of Chartered Accountants, tax and management consultants.

10. Dawn Kwesi Zaney Board Secretary

Appointed to the Board in October 1997.He is also the Area Head, Legal, WestAfrica with responsibility for SCB Ghana, Sierra Leone, Gambia and Cote d’Ivoire.


Senior Management

37

1. Nana Araba AbbanNaana joined in 1999

Head, Consumer Banking Operations, SSC Africa & Governance, SSC West Africa. Prior to her appointment, she was the Value Centre General Manager for Unsecured Lending, SCB Ghana. She is a member of SCB Group’s Women's Council.

Standard CharteredShe is

.

5. Lucy KimaniLucy joined Standard Chartered in 1988. She is Head of Human Resources and is responsible for developing, reviewing, establishing and recommending Human Resources policies and procedures to enable SCB Ghana deliver its business strategy. Prior to her appointment, she was the Senior Relationship Manager for Wholesale Bank, SCB Kenya. Lucy ensures the HR structure is aligned to business needs; HR productivity, HR headcount and cost are optimal.

6. Emmanuel MayakiEmmanuel joined Standard Chartered in 2006. He is Chief Information Officer,Ghana and Area Head GTO, West Africaand oversees Consumer and Wholesale Banking Operations Units. Emmanuel manages the bank's automation and system enhancement related projects and oversees the development of the right technology framework or architecture for Ghana.

Management CommitteeThe Ghana Management Committee as at 28 February 2010, comprises the executive directors of Standard Chartered Bank Ghana Limited, the Area Head of Legal, West Africa and the following senior executives:

2. Mayokun AjibadeMayokun joined Standard Chartered in 2002. He is Area Head, Global Markets, West Africa. Prior to his appointment, he was the Regional Head of Product Development, Global Markets Africa.Mayokun is responsible for the Global Markets business in Ghana, Cote d'Ivoire,Sierra Leone, Cameroon and Gambia and is co-Head of the Wholesale Bank business in SCB Ghana.

4. Buba JannehBuba joined Standard Chartered in 1994. He is the Country Chief Risk Officer and Area Head of GSAM, West Africa. Prior to his appointment, he was the Head, GSAM, SCB Gambia. Buba is responsible for ensuring that there is a robust risk management culture in the bank.

3. Harry DankyiHarry joined Standard Chartered in 2002. He is Head, Compliance and Assuranceand has direct responsibility for theCompliance and Operational Risk Assurance function in SCB Ghana. Prior to his appointment, Harry was the Head, Accounts Payable and Unit Operational Risk Manager for the Shared Service Centre Finance Department.

7. Nii Okai NunooNii joined Standard Chartered in 2006. He is Area Head, Corporate Affairs, West Africaand has direct responsibility across WestAfrica for developing and protecting relationships with the Bank's key stakeholders in order to build and enhance the reputation of the Bank as one which can deliver long term shareholder value whilst being a force-for-good. Prior to his appointment, he was the Head of Public Affairs, The Coca-Cola Bottling Company of Ghana Ltd.



1

3

5 6

7

23

4

Report of the Directorsto the members of Standard Chartered Bank Ghana Limited

The Directors in submitting to the shareholders their report and financial statements of the Bank for the year ended 31 December 2009 report as follows:

The Bank's Directors are responsible for the preparation and fair presentation of the financial statements, comprising the statement of financial position at 31 December 2009, and the statements of comprehensive income, changes in equity, and cash flows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards, and in the manner required by the Companies Code, 1963 (Act 179), of Ghana and the Banking Act, 2004 (Act 673), of Ghana as amended by the Banking (Amendment) Act, 2007 (Act 738),.of Ghana.

The Directors' responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

The Directors have made an assessment of the company's ability to continue as a going concern and have no reason to believe that the business will not be a going concern in the year ahead.

Profit for the year ended 31 December 2009 before taxation is 83,714 from which is deducted taxation of (26,217) giving a profit for the year after taxation of 57,497

Less: Transfer to Statutory Reserve Fund and Other Reserves of (14,231) leaving a balance of 43,266

to which is added balance on Retained Earnings (Income Surplus Account)brought forward (excluding balance on Statutory Reserve Fund and Other Reserves) of 43,162

giving a cumulative amount available for distribution of 86,428

out of which a final dividend for 2008 of GH¢1.50 per share for ordinary shares and GH¢0.0751 per share for March 2009 and GH¢0.0790 per share for September 2009 for preference shares amounting to (29,089)

was paid leaving a balance on the Retained Earnings (Income Surplus Account) carried forward of 57,339

The Directors are recommending a dividend of GH¢2.47 per share for ordinary shares amounting to GH¢47.6 million.

In accordance with Section 29(c) of the BankingAct, 2004 (Act 673) of Ghana, as amended by the Banking (Amendment)Act, 2007 (Act 738),of Ghana, a cumulative amount of GH¢37.4 million has been set aside to a Statutory Reserve Fund from the Retained earnings.

The Bank is licensed to carry out universal Banking business in Ghana. There was no change in the nature of the Bank's business during theyear.

The Bank is a subsidiary of the Standard Chartered Holdings (Africa) B.V., a company incorporated in The Netherlands.

The Bank has a subsidiary, Standard Chartered Investment Services Limited. The subsidiary did not carry out operational activities duringthe year. The subsidiary's financial statements have not been consolidated with that of the parent as the Directors are of the opinion that it isinsignificant and would present no real value to members.

The financial statements of the Bank, as indicated above, were approved by the Board of Directors on 28 January 2010 and were signed ontheir behalf by:

…………………………………….. ……………………………………Hemen Shah Sanjay RughaniDirector Director

Directors' Responsibility Statement

Financial Statement and Dividend GH?'000

Nature of Business

Holding company

Subsidiary

Approval of the Financial Statements

39


Independent Auditor’s Reportto the members of Standard Chartered Bank Ghana Limited

Report on the Financial Statements

Directors' Responsibility for the Financial Statements

Auditor's Responsibility

Opinion

Report on Other Legal and Regulatory Requirements

We have audited the financial statements of Standard Chartered Bank Ghana Limited which comprise the statement of financial position at 31 December 2009, and the statements of comprehensive income, changes in equity, and cash flows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes as set out on pages 46-85.

The Bank's Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Code, 1963 (Act 179), of Ghana and the Banking Act, 2004 (Act 673), of Ghana as amended by the Banking (Amendment) Act, 2007 (Act 738), of Ghana. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. Theprocedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

In our opinion, the financial statements give a true and fair view of the financial position of Standard Chartered Bank Ghana Limited at 31 December 2009, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Code, 1963 (Act 179), of Ghana and the Banking Act, 2004 (Act 673), of Ghana as amended by the Banking (Amendment) Act, 2007 (Act 738), of Ghana.

Compliance with the requirements of Section 133 of the Companies Code, 1963 (Act 179), of Ghana and Section 78 of the Banking Act,2004 (Act 673), of Ghana as amended by the Banking (Amendment) Act, 2007 (Act 738), of Ghana

We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit.

In our opinion, proper books of account have been kept, and the statement of financial position (Balance Sheet), statement of comprehensive income (Profit and Loss Account), and the retained earnings (Income Surplus account) are in agreement with the books of account.

The Bank's transactions were within its powers, and the Bank complied with the relevant provisions of the Banking Act, 2004 (Act 673), of Ghana as amended by the Banking Amendment Act, 2007 (Act 738), of Ghana.

…………………………………………CHARTERED ACCOUNTANTS13 YIYIWA DRIVE, ABELENKPEP. O. BOX GP242ACCRA

22 February 2010

40Standard Chartered Ghanarr Annual Report 2009www.standardchartered.com/gh

Statement of Comprehensive IncomeFor the year ended 31 December 2009

Note 2009 2008

GH?'000 GH?'000

Interest Income 8 155,492 110,402Interest Expense 9 (36,073) (34,134)

Net Interest Income 119,419 76,268

Net Fees and Commissions Income 10 37,192 22,765Other Operating Income 12 25,889 18,082

Operating Income 182,500 117,115

Operating Expenses 13 (83,712) (71,568)

Operating profit before impairment loss and taxation 98,788 45,547

Impairment loss 15 (15,074) (1,707)

Profit before taxation 83,714 43,840

Taxation - Corporate Tax 17(i) (24,124) (10,653)National Fiscal Stabilisation Levy 17(ii) (2,093) -

Profit for the year 57,497 33,187

Other Comprehensive income

Net change in fair value of available for sale financial assets:

Gains/(Losses) recognised directly in equity 10,183 (9,335)Net amount transferred to the income statement (5,091) 3,984

Other comprehensive income 5,092 (5,351)

Total comprehensive income for the year 62,589 27,836

Basic earnings per share (Ghana Cedi per share) 38 GH¢2.99 GH¢1.89

Diluted earnings per share (Ghana Cedi per share) 38 GH¢2.99 GH¢1.89

Standard Chartered Bank Ghana Limited

41

Financial statements and notes

Statement of Financial PositionAt 31 December 2009

2009 2008

Note GH?'000 GH?'000

Assets

Cash and Balances with Bank of Ghana 19 281,509 146,843Short – Term Government Securities 20(i) 165,307 36,808Due from other Banks and Financial Institutions 21 130,189 117,447Loans and Advances 22 408,538 460,338Other Assets 25 84,791 93,532

1,070,334 854,968Medium-Term Investments in other securities 20(ii) 315,206 115,633Equity Investment 20(iii) 100 1,335Property and Equipment 23 15,590 12,988Intangible Assets 24 - 20Deferred Taxation 18 2,983 -

Total Assets 1,404,213 984,944

Liabilities

Customer Deposits 27 833,084 742,290Due to other Banks and Financial Institutions 28 11,435 10,018Provisions 31 27,387 16,560Borrowing 32 275,516 28,651Interest Payable and other Liabilities 30 90,597 96,708Taxation 17(ii) 6,616 358

1,244,635 894,585Deferred Taxation 18 - 898

Total Liabilities 1,244,635 895,483

Shareholders’ Funds

Share Capital 33(i) 61,131 13,131Retained Earnings 33(ii) 57,339 43,162Statutory Reserve Fund 33(iii) 37,404 30,217Other Reserves 33(iv) 3,704 2,951

Total Shareholders' Funds 159,578 89,461

Total Liabilities and Shareholders' Funds 1,404,213 984,944

Net Assets Value per Share (Ghana Cedis per share) 8.3 5.1

These financial statements were approved by the Board of Directors on 28 January 2010 and signed on its behalf by:

…………………………………. ………………………………..Hemen Shah Sanjay RughaniDirector Director



Statement of changes in EquityFor the year ended 31 December 2009

Share Retained Statutory Other Total

Capital Earnings Reserve Reserves Equity

GH?'000 GH?'000 GH?'000 GH?'000 GH?'000

Balance at 1 January 2009 13,131 43,162 30,217 2,951 89,461

Total comprehensive income for the year

Profit for the year - 57,497 - - 57,497

Other comprehensive income net of income taxGains recognised directly in equity - - - 10,183 10,183Net amount transferred to the income statement - - - (5,091) (5,091)

Total other comprehensive income - - - 5,092 5,092

Total comprehensive income for the year - 57,497 - 5,092 62,589

Regulatory and other reserves

Transfer to statutory reserve - (7,187) 7,187 - -Transfer to other reserves (7,044) - 7,044 -Releases from other reserves - - - (11,383) (11,383)

Total transfers to and from reserves - (14,231) 7,187 (4,339) (11,383)

Transactions with owners recorded directly in equity

Contributions by and distributions to ownersAdditions to share capital 48,000 - - - 48,000Dividends to shareholders - (29,089) - - (29,089)

Total contributions by and distributions to owners 48,000 (29,089) - - 18,911

Balance at 31 December 2009 61,131 57,339 37,404 3,704 159,578


43

For the year ended 31 December 2009


Share Retained Statutory Other Total

Capital Earnings Reserve Reserves Equity

GH?'000 GH?'000 GH?'000 GH?'000 GH?'000

Balance at 1 January 2008 13,131 41,157 26,069 8,037 88,394

Total comprehensive income for the year

Profit for the year - 33,187 - - 33,187

Other comprehensive income net of income taxLosses recognised directly in equity - - - (9,335) (9,335)Net amount transferred to the income statement - - - 3,984 3,984

Total other comprehensive income - - - (5,351) (5,351)

Total comprehensive income for the year - 33,187 - (5,351) 27,836

Regulatory and other reserves

Transfer to statutory reserve - (4,148) 4,148 - -Transfer to other reserves (265) - 265 -

Total transfers to and from reserves - (4,413) 4,148 265 -

Transactions with owners recorded directly in equity

Contributions by and distributions to ownersDividends to shareholders - (26,769) - - (26,769)

Total contributions by and distributions to owners - (26,769) - - (26,769)

Balance at 31 December 2008 13,131 43,162 30,217 2,951 89,461

Statement of changes in EquityStandard Chartered Bank Ghana Limited


Statement of Cash FlowsFor the year ended 31 December 2009

2009 2008

GH?'000 GH?'000

Profit before tax for the period 83,714 43,840Adjustments for:

Depreciation and amortisation 1,543 1,595Net interest Income (119,419) (76,268)Impairment on financial assets 15,074 1,707Gain on sale of investment (370) -

(19,458) (29,126)

Change in investment other than those held for the purpose of trading (248,626) 55,074Change in investments held for trading (84,502) 41,041Change in loans and advances 36,726 (174,976)Change in other assets 8,741 (52,817)Change in customer deposits 90,794 207,450Change in amounts due to other banks 1,417 (33,893)Change in interest payable, other liabilities (6,111) 59,513Change in provisions 10,827 14,393Change in borrowing 246,865 (35,092)Interest income 155,492 110,402Interest expense (36,073) (34,134)

156,092 127,835Income tax paid (25,075) (13,206)

Net cash from operating activities 131,017 114,629

Cash flows from investing activities

Purchase of property and equipment (4,125) (2,848)Proceeds from sale of investment 1,605 1,040

Net cash used in investing activities (2,520) (1,808)

Cash flows from financing activities

Dividends paid (29,089) (26,769)Proceeds from rights issue 48,000 -

Net cash used from/(used in) financing activities 18,911 (26,769)

Net increase in cash and cash equivalents 147,408 86,052

Analysis of changes in cash and cash equivalents during the year

Cash and cash equivalents at 1 January 264,290 178,238Net increase in cash and cash equivalents 147,408 86,052

Cash and cash equivalents at 31 December 411,698 264,290

Analysis of cash and cash equivalents during the year

Cash and balances with Bank of Ghana 281,509 146,843Nostro account balances 2,475 19,090Items in course of collection 27,423 27,054Placement with other Banks 100,291 71,303

411,698 264,290


45

Notes to the Financial StatementFor the year ended 31 December 2009


1. REPORTING ENTITY

Standard Chartered Bank Ghana Limited is a Bank incorporated in Ghana. The address and registered office of the Bank can be found on page 34 of the annual report. The Bank operates with a universal Banking license that allows it to undertake all Banking and related activities.

2. BASIS OF PREPARATION

a. Statement of Compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations as issued by the International Accounting Standards Board (IASB).

b. Basis of measurement

The financial statements are presented in Ghana cedis which is the Bank's functional currency, rounded to the nearest thousand. They are prepared on the historical cost basis except for the following assets and liabilities that are stated at their fair value: derivative financial instruments, financial instruments that are fair value through profit or loss and financial instruments classified as available-for-sale.

c. Use of estimates and judgement

The preparation of financial statements in conformity with IFRS requires management to make judgement, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgement about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in notes 3h (ix), 3h (xi), 3h (xii) 35 and 43.

d. Changes in accounting policies

(i) Overview

Effective 1 January 2009 the Bank has changed its accounting policies in the following areas:

• Determination and presentation of operating segments

• Presentation of financial statements

(ii) Determination and presentation of operating segments

As of 1 January 2009 the Bank determines and presents operating segments based on the information that internally is provided to the Bank's Board of Directors, which is the Bank's chief operating decision maker. This change in accounting policy is due to the adoption of IFRS 8 Operating Segments. Previously operating segments were determined and presented in accordance with IAS 14 Segment Reporting. The new accounting policy in respect of operating segment disclosures is presented as follows.

Comparative segment information has been re-presented in conformity with the transitional requirements of this standard. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on earnings per share.

An operating segment is a component of the Bank that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Bank's other components, whose operating results are reviewed regularly by the bank's board of directors to make decisions about resources allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the Bank's




Board of Directors include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets and income tax assets and liabilities.

Segment capital expenditure is the total cost incurred during the period to acquire property and equipment, and intangible assets.

(iii) Presentation of financial statements

The Bank applies revised IAS 1 Presentation of Financial Statements (2007), which became effective as of 1 January 2009. As a result, the Bank presents in the statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the statement of comprehensive income.

Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

e. Other accounting developments

The Bank has applied Improving Disclosures about Financial Instruments (Amendments to IFRS 7), issued in March 2009, that require enhanced disclosures about fair value measurements and liquidity risk in respect of financial instruments. Theamendments require that fair value measurement disclosures use a three-level fair value hierarchy that reflects the significance of the inputs used in measuring fair values of financial instruments. Specific disclosures are required when fair value measurements are categorised as Level 3 (significant unobservable inputs) in the fair value hierarchy. The amendments require that any significant transfers between Level 1 and Level 2 of the fair value hierarchy be disclosed separately, distinguishing between transfers into and out of each level. Furthermore, changes in valuation techniques from one period to another, including the reasons therefore, are required to be disclosed for each class of financial instruments.

Revised disclosures in respect of fair values of financial instruments are included in note 16

Further, the definition of liquidity risk has been amended and it is now defined as the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The amendments require disclosure of a maturity analysis for non-derivative and derivative financial liabilities, but contractual maturities are required to be disclosed for derivative financial liabilities only when contractual maturities are essential for an understanding of the timing of cash flows. For issued financial guarantee contracts, the amendments require the maximum amount of the guarantee to be disclosed in the earliest period in which the guarantee could be called.

Revised disclosures in respect of liquidity risk are included in note 35(iii).

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these financial statements by the Bank.

a. Basis of Consolidation

(i) Subsidiaries

Subsidiaries are all entities including special purpose entities over which the Bank has the power to directly or indirectly govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights.

Subsidiaries are fully consolidated from the date on which the Bank effectively obtains control. They are de-consolidated from the date that control ceases. Subsidiaries that are considered insignificant are not consolidated and the Bank's interests in those subsidiaries are classified as long term investments.

(ii) Investments in subsidiaries, Associates and Joint Ventures

Investments in subsidiaries, associates and Joint Ventures are held at cost less impairment and dividends from pre-acquisition profits received, if any.


47



b. Revenue Recognition

In the separate financial statements of the Bank, interest income and expense on available-for-sale assets and financial assets and liabilities held at amortised cost, are recognised in the income statement using the effective interest method.

Gains and losses arising from changes in the fair value of financial assets and liabilities held at fair value through profit or loss, as well as any interest receivable or payable, is included in the income statement in the period in which they arise. Gains and losses arising from changes in the fair value of available-for-sale financial assets, other than foreign exchange gains and losses from monetary items, are recognised directly in equity, until the financial asset is derecognised or impaired at which time the cumulative gain or loss previously recognised in equity is recognised in the income statement. Dividends are recognised in the income statement when the Bank's right to receive payment is established.

c. Interest income and Expense

Interest income and expense is recognised in the income statement using the effective interest method. The effective interest rate is the rate that discounts estimated future receipts or payments through the expected life of the financial instruments or, when appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. The effective interest rate is established on initial recognition of the financial asset or liability and is not revised subsequently when calculating the effectiveinterest rate, the Bank estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees received or paid between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Transactions costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or liability.

When a financial asset or a group of similar financial assets have been written down as a result of impairment, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

Interest income and expense on financial assets and liabilities held at fair value through profit or loss is recognised in the income statement in the period they arise.

d. Fees and Commissions

Fees and commission income and expenses that are an integral part of the effective interest rate on financial instruments are included in the measurement of the effective interest rate.

Other fees and commission income, including account servicing fees, investment management fees, sales commission, placement and arrangement fees and syndication fees are recognised as the related services are performed.

Other fees and commission expense relates mainly to transaction and service fees, which are expensed as the services are received.

e. Other Operating Income

Other operating income comprises other income including gains or losses arising on fair value changes in trading assets and liabilities, derecognised available for sale financial assets, and foreign exchange differences.

f. Foreign Currency

Foreign currency transactions are translated into the Bank's functional currency using the exchange rates prevailing at the dates of the transactions. 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. Non-monetary assets and liabilities are translated at historical exchange rates if held at historical cost or exchange rates at the date the fair value was determined if held at fair value, and the resulting foreign exchange gains and losses are recognised in the income statement or shareholders' equity as appropriate.




g. Leases

(i) Classification

Leases that the Bank assumes substantially all the risks and rewards of ownership of the underlying asset are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and present value of the minimum lease payments. Subsequent to initial recognition, the leased asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are classified as operating leases.

(ii) Lease Payments

Payments made under operating leases are charged to the statement of comprehensive Income on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

Minimum lease payments made under finance leases are apportioned between the finance expense and as reduction of the outstanding lease liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

h. Financial Assets and Liabilities

(i) Categorisation of financial assets and liabilities

The Bank classifies its financial assets in the following categories: financial assets held at fair value through profit or loss; loans and receivables and available-for-sale financial assets. Financial liabilities are classified as either held at fair value through profit or loss, or at amortised cost. Management determines the categorisation of its financial assets and liabilities at initial recognition.

(ii) Financial assets and liabilities held at fair value through profit or loss

This category has two sub-categories: financial assets and liabilities held for trading, and those designated at fair value through profit or loss at inception. A financial asset or liability is classified as trading if acquired principally for the purpose of selling in the short term.

Financial assets and liabilities may be designated at fair value through profit or loss when the designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities on a differentbasis, or a group of financial assets and/or liabilities is managed and its performance evaluated on a fair value basis.

(iii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

(iv) Available for sale financial assets

Available-for-sale assets are those non-derivative financial assets that are designated as available for sale or are not classified as financial assets at fair value through profit or loss, loans and receivable and held to maturity.

(v) Financial liabilities measured at amortised cost

This relates to all other liabilities that are not designated at fair value through profit or loss.


49



(vi) Initial Recognition

Purchases and sales of financial assets and liabilities held at fair value through profit or loss, available for sale financial assets and liabilities are recognised on trade- date (the date the Bank commits to purchase or sell the asset). Loans and receivables are recognised when cash is advanced to customers or borrowers.

Financial assets and liabilities are initially recognised at fair value plus directly attributable transaction cost except for those that classified as at fair value through profit or loss.

(vii) Subsequent measurement

Available for sale financial assets are subsequently measured at fair value with the resulting changes recognised in equity. The fair value changes on available for sale financial assets are recycled to the income statement when the underlying asset is sold, matured or derecognised. Financial assets and liabilities classified as at fair value through profit or loss are subsequently measured at fair value with the resulting changes recognised in the income.

Loans and receivables and other liabilities are subsequently carried at amortised cost using the effective interest method, less impairment loss.

(viii). Derecognition

Financial assets are derecognised when the right to receive cash flows from the financial assets has expired or where the Bank has transferred substantially all risks and rewards of ownership. Any interest in the transferred financial assets that is created or retained by the Bank is recognised as a separate asset or liability.

Financial liabilities are derecognised when the contractual obligations are discharged, cancelled or expire.

(ix) Fair value measurement

The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

• Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

• Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category includes instruments valued using quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significantinputs are directly or indirectly observable from market data.

• Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

The determination of fair values of quoted financial assets and financial liabilities in active markets are based on quoted market prices or dealer price quotations. If the market for a financial asset or financial liability is not actively traded or unlisted securities, the Bank establishes fair value by using valuation techniques. These techniques include the use of arms' length transactions, discounted cash flow analysis, and valuation models and techniques commonly used by market participants.

For complex instruments such as swaps, the Bank uses proprietary models, which usually are developed from recognised valuation models. Some or all of the inputs into these models may be derived from market prices or rates or are estimates based on assumptions.

The value produced by a model or other valuation technique may be adjusted to allow for a number of factors as appropriate, because valuation techniques cannot appropriately reflect all factors market participants take into account when entering into a transaction. Management believes that these valuation adjustments are necessary and appropriate to fairly state financial instruments carried at fair value on the balance sheet.




(x) Offsetting

Financial assets and liabilities are set off and the net amount presented in the balance sheet when, and only when, the Bank has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions such as in the Bank's trading activity.

(xi) Amortised cost measurement

The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment.

(xii) Identification and measurement of impairment.

The Bank assesses at each balance sheet date whether there is objective evidence that a financial assets or group of financial assets are impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Objective evidence that financial assets are impaired can include default or delinquency by a borrower, restructuring of a loan and other observable data that suggests adverse changes in the payment status of the borrowers.

The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If the Bank determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised, are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss on a loan and receivable has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the asset's original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the income statement. If a loan and receivable has a variable interest rate, the discount rate for measuring any impairment loss is the current effectiveinterest rate determined under the contract.

The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure, less cost for obtaining and selling the collateral, whether or not foreclosure is probable. For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics (i.e. on the basis of the Bank's grading process which considers asset type, industry, geographical location, collateral type, past due status and other relevant factors). These characteristics are relevant to the estimation of future cash flows for group of such assets being indicative of the debtors' ability to pay all amounts due according to the contractual terms of the assets being evaluated.

Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the historical loss experience for assets with credit risk characteristics similar to those in the Bank. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based, and to remove the effects of conditions in the historical period that do not exist currently.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the income statement.


51



Impairment losses on available-for-sale financial assets are recognised by transferring the difference between the amortised acquisition cost and current fair value out of equity to the income statement. When a subsequent event causes the impairment loss on an available for sale financial asset to decrease, the impairment loss is reversed through the income statement. However, any subsequent recovery in the fair value of an impaired available for sale financial asset is recognised directly in equity.

i. Derivative Financial Instruments

Derivative contracts are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at their fair value. Fair values may be obtained from quoted market prices in active markets, recent market transactions, and valuation techniques, including discounted cash flow models and option pricing models, as appropriate.All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative. The fair value changes in the derivative are recognised in the statement of Comprehensive Income.

j. Cash and Cash Equivalents

Cash and cash equivalents include notes and coins on hand, unrestricted balances held with the Central Bank of Ghana and highly liquid financial assets with maturities less than three months. Cash and cash equivalents are carried at amortised cost in the statement of financial position.

k. Investments in Securities

This comprises investments in short-term Government securities and medium term investments in Government and other securities such as treasury bills and bonds. Investments in securities are categorised as available-for-sale financial assets and carried in the statement of financial position at fair values.

l. Loans and Receivables

This is mainly made up of placements and overnight deposits with Banks and other financial institutions and loans and advances to customers. Loans and receivables are carried in the balance sheet at amortised cost, i.e. gross receivable less impairment allowance.

m. Property, Plant and Equipment

(i) Recognition and measurement

Items of property and equipment are measured at cost less accumulated depreciation and impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, and any other costs directly attributable to bringing the asset to a working condition for its intended use. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components)

(ii) Subsequent costs

The cost of replacing part of an item of property or equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Bank and its cost can be measured reliably. The costs of the day-to-day servicing of property and equipment are recognised in the income statement as incurred.

(iii) Depreciation

Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of an item of property and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated.




The estimated useful lives for the current and comparative periods are as follows:

Buildings 50 yearsLeasehold improvements life of lease up to 50 yearsIT equipment and vehicles 3 - 5 yearsFixtures and fittings 5 - 10 years

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

Gains and losses on disposal of PPE are determined by comparing proceeds from disposal with the carrying amounts of PPE and are recognised in the income statement as other income.

n. Intangible Assets

(i) Software

Software acquired by the Bank is stated at cost less accumulated amortisation and accumulated impairment losses.

Subsequent expenditure on software assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

Amortisation is recognised in the statement of comprehensive income on a straight-line basis over the estimated useful life of the software, from the date that it is available for use. The estimated useful life of software is three to five years.

o. Taxation

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

p. Deferred Taxation

Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future.Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

q. Post Balance Sheet Events

Events subsequent to the balance sheet date are reflected in the financial statements only to the extent that they relate to the year under consideration and the effect is material.

r. Dividend

Dividend income is recognised when the right to receive income is established. Dividend payable is recognized as a liability in the period in which they are declared.


53



s. Deposits, amounts due to Banks and Borrowings

This is mainly made up of customer deposit accounts, overnight placements by Banks and other financial institutions and medium term borrowings. They are categorised as other financial liabilities carried in the balance sheet at amortised cost.

t. Provisions

A provision is recognised if, as a result of a past event, the Bank has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

u. Financial Guarantees

Financial guarantees are contracts that require the Bank to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.

Financial guarantees are initially recognised at their fair value, and the fair value is amortised over the life of the financial guarantee. The financial guarantees are subsequently carried at the higher of the amortised amount and the present value of any expected payment (when a payment under the guarantee has become probable).

v. Employee Benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement when they are due.

(ii) Defined benefit plans

The Bank's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and any unrecognised past service costs. The discount rate is the yield at the reporting date on a long-dated instrument on the Ghana market. The calculation is performed using the projected unit credit method.Changes in the fair value of the plan liabilities are recognised in the statement of comprehensive income.

Actuarial gains and losses on the plan are recognised in the statement of comprehensive income.

(iii) Termination benefits

Termination benefits are recognised as an expense when the Bank is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date. Termination benefits for voluntary redundancies are recognised if the Bank has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.

(iv) Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Bank has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

w. Impairment on Non-financial Assets

The carrying amount of the Bank's non-financial assets other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated.




An impairment loss is recognized if the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessment of the time value of money and risks specific to the asset. Impairment losses are recognised in the statement of Comprehensive Income.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

x. Share Capital

(I) Ordinary Shares

Ordinary shares are classified as Equity

(ii) Preference share capital

The Bank classifies capital instruments as financial liabilities or equity instruments in accordance with the substance of the contractual terms of the instrument. The Bank's preference shares are irredeemable and non-cumulative with respect to dividend payments. Accordingly, they are presented as a component of issued capital within equity.

y. Earnings per Share.

The Bank presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank by the number of ordinary shares outstanding during the period. TheBank has no convertible notes and share options which could potentially dilute its EPS and therefore the Bank's Basic and diluted EPS are essentially the same.

z. Segment Reporting.

A segment is a distinguishable component of the Bank that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Bank's primary format for segment reporting is based on business segments.

aa. Share based Payment Transactions

Employees of the Bank participate in share based payment transactions with the Bank's Parent company. The Parent allocates cost to the Bank representing the fair value of the share based payments attributable to the employees of the Bank. The allocated cost is recognised as an expense in each period.

ab. New Standards and Interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2009, and have not been applied in preparing these financial statements. These are disclosed as follows:

i. IFRS 3 - Business Combinations for financial statements annual periods commencing on or after 1 July 2009. This new standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with some contingent payments subsequently re-measured at fair value through income. Goodwill may be calculated based on the parent's share of net assets or it may include goodwill related to the minority interest. All transaction costs will be expensed. This standard is not expected to have any impact on the Bank's financial statements;

ii. IAS 27 amendment - Consolidated and Separate Financial Statements for financial statements annual periods commencing on or after 1 July 2009. This requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control. They will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value and a gain or loss is


55



recognised in profit or loss. It is not expected to have any impact on the financial statements;

iii. IAS 39 amendment - Eligible hedged items for financial statements annual periods commencing on or after 1 July 2009.The amendment makes two significant changes. It prohibits designating inflation as a hedgeable component of a fixed rate debt. It also prohibits including time value in the one-sided hedged risk when designating options as hedges. This change will have no impact on the Bank's financial statements.

iv. IFRS 5 amendment - Improvements to IFRSs 2008 - IFRS 5 Non-current Assets Held for Sale and Discontinued Operations for financial statements annual periods commencing on or after 1 July 2009. This change will have no impact on the Bank's financial statements;

v. IFRIC 17 - Distributions of Non-cash Assets to Owners for financial statements annual periods commencing on or after 1 July 2009. This applies to the accounting for distributions of non-cash assets (commonly referred to as dividends in specie) to the owners of the entity. The interpretation clarifies that: a dividend payable should be recognised when the dividend is appropriately authorised and is no longer at the discretion of the entity; an entity should measure the dividend payable at the fair value of the net assets to be distributed; and an entity should recognise the difference between the dividend paid and the carrying amount of the net assets distributed in profit or loss. It is not expected to have any impact on the financial statements;

vi. IFRS 2 amendment - Group Cash-settled Share-based Payment Transactions (withdrawal of IFRIC 8 and IFRIC 11) for financial statements annual periods commencing on or after 1 January 2010. The amendment clarifies the accounting for group cash-settled share-based payment transactions. The entity receiving the goods or services shall measure the share-based payment transaction as equity-settled only when the awards granted are its own equity instruments, or the entity has no obligation to settle the share-based payment transaction. The entity settling a share-based payment transaction when another entity in the group receives the goods or services recognises the transaction as equity-settled only if it is settled in its own equity instruments. In all other cases, the transaction is accounted for as cash-settled. This change will have no impact on the Bank's financial statements;

vii. IAS 32 amendment - IAS 32 Financial Instruments: Presentation - Classification of Rights Issues for financial statements annual periods commencing on or after 1 February 2010. The amendment clarifies the accounting treatment when rights issues are denominated in a currency other than the functional currency of the issuer. The amendment states that if such rights are issued pro rata to an entity's existing shareholders for a fixed amount of currency, they should be classified as equity regardless of the currency in which the exercise price is denominated. This change will have no impact on the Bank's financial statements;

viii. IAS 24 amendment - Related Party Disclosures Revised 2009 - for financial statements beginning on or after 1 January 2011. It is not expected to have any impact on the financial statements; and IFRS 9 - Financial Instruments - for financial statements beginning on or after 1 January 2013. The amendments clarify that if a financial asset is reclassified out the fair value through profit or loss category it must be assessed for embedded derivatives at the date of reclassification. In addition, a contractthat includes an embedded derivative that cannot be separately measured, is prohibited from being reclassified out of the 'at fair value through profit or loss' category. This change will have no impact on the Bank's financial statements.




4. NON – PERFORMING LOANS RATIO

Percentage of gross non-performing loans (“substandard to loss”) to total credit/advances portfolio (gross) 10% (2008: 5%).

5. CONTINGENT LIABILITIES AND COMMITMENTS

2009 2008

GH?'000 GH?'000

(i) Contingent Liabilities

�Pending Legal Suits 520 509

(ii) Commitments for Capital Expenditure

�Under Contract Nil Nil

(iii) Unsecured Contingent Liabilities and Commitments

�This relates to commitments for trade letters of credit and guarantees. 134,077 82,425

6. SOCIAL RESPONSIBILITY COST

An amount of GH¢126,975 (2008: GH¢45,266) was spent as part of social responsibility of the Bank.

7. SEGMENTAL REPORTING

Segmental information is presented in respect of the Bank's business segments. The Bank is organised into two main business segments:Wholesale Banking and Consumer Banking.

Some of the Bank's corporate costs are managed centrally and standardised basis are used to allocate these costs to the business segmentson a reasonable basis.

Class of Business

Consumer Wholesale

Banking Banking Unallocated Total

GH?'000 GH?'000 GH?'000 GH?'000

Net Interest Income 55,500 62,200 1,719 119,419Non Funded Income 19,700 43,400 (19) 63,081

Operating Income 75,200 105,600 1,700 182,500

Operating Expenses (44,300) (45,400) 5,988 (83,712)

Operating profit before Impairment Losses and Taxation 30,900 60,200 7,688 98,788

Impairment Loss (4,400) (10,674) - (15,074)

Profit before taxation 26,500 49,526 7,688 83,714

Total Assets 119,000 867,800 417,413 1,404,213

Total Liabilities 513,605 334,200 396,830 1,244,635


57



8. INTEREST INCOME

(i) Classification2009 2008

GH?'000 GH?'000

Placements, Special Deposits 9,427 13,517Investment Securities 52,768 31,032Loans and Advances 93,297 65,853

155,492 110,402

(ii) Categorisation2009 2008

GH?'000 GH?'000

Financial assets at fair value through profit and loss:

Held for trading 34,047 6,241

Available for sale instruments 18,721 24,791Loans and receivables 102,724 79,370

155,492 110,402

Included under interest income on loans and receivable is a total amount of GH¢Nil (2008: GH¢Nil) accrued on impaired financial assets.

9. INTEREST EXPENSE

2009 2008

GH?'000 GH?'000

Current Accounts 128 -Time and other Deposit 13,548 15,274Overnight and Call Account 6,984 8,465Borrowings 15,413 10,395

36,073 34,134

Total interest expense on financial liabilities held at amortised cost was GH¢36,073,000 (2008: GH¢34,134,000).




10. NET FEE AND COMMISSION INCOME

2009 2008

GH?'000 GH?'000

Fee and Commission Income [Note 10(i)] 39,481 25,915Fee and Commission Expense [Note 10(ii)] (2,289) (3,150)

Net Fee and Commission Income 37,192 22,765

i. Fee and commission income

Customer account serving fees 11,683 7,715Letters of credit issued 5,294 5,610Others 22,504 12,590

Total Fee and Commission income 39,481 25,915

ii. Fee and commission expense

Inter-Bank transaction fees (2,289) 3,150

The fee and commission income and expense disclosed above are fees other than those included in determining the effective interest rate onfinancial instruments.

11. OTHER INCOME

Other income for the year was GH¢Nil (2009: GH¢Nil).

12. OTHER OPERATING INCOME

2009 2008

GH?'000 GH?'000

Gains on Foreign Exchange 25,889 18,082

13. OPERATING EXPENSES

Staff Cost (Note 14) 39,527 33,836Advertising and Marketing 927 542Administrative 28,999 28,308Training 383 588Depreciation and amortisation 1,543 1,595Directors' Emoluments 1,752 1,300Auditors' Remuneration 98 70Donations and Sponsorship 301 182Others 10,182 5,147

83,712 71,568


59



14. STAFF COST

2009 2008

GH?'000 GH?'000

Wages, Salaries, Bonus and Allowances 32,680 25,452Social Security Cost 2,042 2,137Pension and Retirement Benefit 1,168 1,221Severance Pay 1,087 3,332Other Staff Cost 2,550 1,694

39,527 33,836

The average number of persons employed by the Bank during the year was 800 (2008: 760). Included in this figure is staff of 182 (2008: 171)who work at the Shared Service Centre for processing transactions of six (6) countries in WestAfrica. For the purpose of analysis, about 55%of transactions processed are for the Ghana Office.

15. IMPAIRMENT LOSS

2009 2008

GH?'000 GH?'000

Specific impairment 340 405Portfolio impairment 16,648 3,047Recoveries (1,914) (1,745)

Impairment loss 15,074 1,707

16. FINANCIAL INSTRUMENTS CLASSIFICATION SUMMARY

Financial instruments are classified among four recognition principles: held at fair value through profit or loss (comprising trading anddesignated), available-for-sale, held-to-maturity and loans and receivables. These categories of financial instruments have been combinedfor presentation on the face of the balance sheet.




16. FINANCIAL INSTRUMENTS CLASSIFICATION SUMMARY (CONT'D)

16a The Bank's classification of its principal financial assets and liabilities are summarised below:

Designated

at fair value Total

through profit Available Loans & Carrying Fair

Trading or Loss for Sale Receivables Amount Value

GH?'000 GH?'000 GH?'000 GH?'000 GH?'000 GH?'000

Cash and balances with Bank of Ghana (Note 19) - - - 281,509 281,509 281,509Gov't Securities (Note 20) 99,580 - 380,933 - 480,513 480,513Due from other Banks and financial institutions (Note 21) - - - 130,189 130,189 130,189Loans and Advances (Note 22) - - - 408,538 408,538 408,538Equity Investment (Note 20) - - 100 - 100 100

Total at 31/12/09 99,580 - 381,033 820,236 1,300,849 1,300,849

Cash and balances with Bank of Ghana (Note 19) - - - 146,843 146,843 146,843Gov't Securities (Note 20) 15,078 - 137,363 - 152,441 152,441Due from other Banks and financial institutions (Note 21) - - - 117,447 117,447 117,447Loans and Advances (Note 22) - - - 460,338 460,338 460,338Equity Investment (Note 20) - - 1,335 - 1,335 1,335

Total at 31/12/08 15,078 - 138,698 724,628 878,404 878,404

Financial

Designated Liabilities

at fair value Measured at Total

through profit Amortised Carrying Fair

Note Trading or Loss Cost Amount Value

GH?'000 GH?'000 GH?'000 GH?'000 GH?'000

Customer Deposits 27 - - 833,084 833,084 833,084Due to other Banks and financial institutions 28 - - 11,435 11,435 11,435Other Liabilities 30 4,794 - - 4,794 4,794Borrowings 32 - - 275,516 275,516 275,516

Total at 31/12/09 4,794 - 1,120,035 1,124,829 1,124,829

Customer Deposits 27 - - 742,290 742,290 742,290Due to other Banks and financial institutions 28 - - 10,018 10,018 10,018Other Liabilities 30 875 - - 875 875Borrowings 32 - - 28,651 28,651 28,651

Total at 31/12/08 875 - 780,959 781,834 781,834


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16b Fair value hierarchy as defined under Note 2(h-x) analysis

The table below analyses financial instruments measured at fair value at the end of the reporting period by the level in fair value hierarchy, into which the fair value measurement is categorised.

Level1 Level 2 Level 3 Total

Note GH?'000 GH?'000 GH?'000 GH?'000

Cash and balances with Bank of Ghana 19 - 281,509 - 281,509Government Securities 20 - 480,513 - 480,513Due from other Banks and financial institutions 21 - 130,189 - 130,189Loans and Advances 22 - 408,538 - 408,538Equity Investment 32 - - 100 100

Total at 31/12/09 - 1,300,749 100 1,300,849

Cash and balances with Bank of Ghana 19 - 146,843 - 146,843Government Securities 20 - 152,441 - 152,441Due from other Banks and financial institutions 21 - 117,447 - 117,447Loans and Advances 22 - 460,338 - 460,338Equity Investment 32 - 1,235 100 1,335

Total at 31/12/08 - 878,304 100 878,404

Customer Deposits 27 - 833,084 - 833,084Due to other Banks and financial institutions 28 - 11,435 - 11,435Other liabilities 21 - 4,794 - 4,794Borrowings 32 - 275,516 - 275,516

Total at 31/12/09 - 1,124,829 - 1,124,829

Customer Deposits 27 - 742,290 - 742,290Due to other Banks and financial institutions 28 - 10,018 - 10,018Other liabilities - 875 - 875Borrowings 32 - 28,651 - 28,651

Total at 31/12/08 - 781,384 - 781,384




17. TAXATION 2009 2008

GH?'000 GH?'000

(i) Income tax expense

Current Tax [Note 17(iii)] 29,240 12,070Deferred Tax [Note 18] (5,116) (1,417)

24,124 10,653

ii) Taxation Payable

Payments

Balance at during Charge for Balance at

1/1/09 the year the year 31/12/09

GH¢'000 GH¢'000 GH¢'000 GH¢'000

Income Tax:-

2005 to 2008 358 (1,600) 1,600 3582009 - (22,688) 27,640 4,952

358 (24,288) 29,240 5,310National Fiscal Stabilisation Levy - (787) 2,093 1,306

358 (25,075) 31,333 6,616

(iii) Reconciliation of Effective Tax Rate

Analysis of tax charge in the year: 2009 2008

GH?'000 GH?'000

The charge for taxation based upon the profits for the year comprises:

Current tax on income for the year 27,640 11,877Adjustments in respect of prior periods 1,600 193

Total current tax 29,240 12,070Deferred tax:Origination/(reversal) of temporary differences (5,116) (1,417)

Tax on profits on ordinary activities 24,124 10,653

Effective tax rate 28.8% 24.3%

The effective tax rate for the year is higher than the standard rate of corporation tax in Ghana, 25% (2008: 25%).

The differences are explained below:2009 2008

GH?'000 GH?'000

Profit before tax 83,714 43,840

Tax at 25% (2008:25%) 20,928 10,960Non-deductible expenses 8,117 1,409Tax exempt revenues (996) (64)Capital allowances (409) (428)(Over)/Under provision in previous years 1,600 193Deferred taxes (5,116) (1,417)

Current tax charge 24,124 10,653


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The income tax for the year is based on a tax rate of 25% on profit before tax.

The tax liabilities up to 2004 have been agreed with the Internal Revenue Service. The remaining liabilities are subject to the agreement of theInternal Revenue Service.

National Fiscal Stabilization Levy is a levy introduced by the Government as a charge on profit before tax effective July 2009. The rateapplicable to the bank is 5%.

(iv) Tax Recognised Directly in Equity

Current tax credit/charge on available-for-sale assets for the year was Nil (2008: Nil).

18. DEFERRED TAXATION

2009 2008

GH?'000 GH?'000

Balance at 1 January 898 2,916Released for the year (5,116) (1,417)Others (Note 33(iv)) 1,235 (601)

Balance at 31 December (2,983) 898

(i) Recognised deferred tax assets and liabilities.

Deferred tax assets and liabilities are attributable to the following:

2009 2008

Assets Liabilities Net Assets Liabilities Net

GH?'000 GH?'000 GH?'000 GH?'000 GH?'000 GH?'000

Property and equipment - 2,272 2,272 - 2,211 2,211Portfolio impairment (3,832) - (3,832) (761) - (761)Unrealised gains - on trading investments 933 933 - 49 49Available for sale assets 1,235 1,235 (601) - (601)Provisions (3,591) - (3,591) - - -

Net tax (assets)/liabilities (7,423) 4,440 (2,983) (1,362) 2,260 898

Included in deferred taxes are amounts of GH¢1,235,000 (2008: GH¢600,750) recognised directly in equity in respect of mark to market valuation on available for sale financial assets.

19. CASH AND BALANCES WITH BANK OF GHANA

2009 2008

GH?'000 GH?'000

Cash on Hand 27,702 25,974Balances with Bank of Ghana 253,807 120,869

281,509 146,843




20. INVESTMENT

(i) Short-Term Government Securities

2009 2008

GH?'000 GH?'000

Treasury Bills 121,375 20,359Government Bonds 43,932 16,449

165,307 36,808

The Government Bonds consist of Ghana Government fixed and floating rate instruments. The floating rate instruments are benchmarkedagainst the 91 day Treasury Bill rate plus a markup.

(ii) Medium-Term Investment in other Securities

2009 2008

GH?'000 GH?'000

Government Bonds 315,206 115,633

These are fixed and floating Government of Ghana Bonds maturing between 2010 and 2013. The floating rate instruments are benchmarked against the 91 day Treasury Bill rate plus a markup.

(iii) Equity Investment

2009 2008

GH?'000 GH?'000

Investment in subsidiary 100 100Visa Inc. - 1,235

100 1,335

Investment in subsidiaries represented the Bank's equity interest in Standard Chartered Investment Services Limited, a wholly ownedsubsidiary, which was incorporated in 2005.

Investment in Visa Inc. represented the Bank's holding of 19,066 Common Stock of Visa Inc. This was sold off during the year.

21. DUE FROM OTHER BANKS AND

FINANCIAL INSTITUTIONS

2009 2008

GH?'000 GH?'000

Nostro Account Balances 2,475 19,090Items in course of Collection 27,423 27,054Placement with other Banks 100,291 71,303

130,189 117,447


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22. LOANS AND ADVANCES

i. Analysis by Type

2009 2008

GH?'000 GH?'000

Overdrafts 162,812 168,424Term Loans 272,017 304,130

Gross Loans and Advances 434,829 472,554Impairment allowance (26,291) (12,216)

Net Loans and Advances 408,538 460,338

The above constitutes loans and advances (including credit bills negotiated) to customers and staff.

ii. Key ratios on Loans and Advances

a. Loan loss provision ratio was 6% (2008: 3%).b. Gross non-performing loan ratio was 10% (2008: 5%).c. Ratio of fifty (50) largest exposure (gross funded and non-funded) to total exposures was 42% (2008: 48%).

iii. Analysis by Business Segments

2009 2008

GH?'000 GH?'000

Agriculture, Forestry and Fishing 7,703 11,533Mining and Quarrying 2,211 5,857Manufacturing 89,062 109,315Construction 9,338 6,100Electricity, Gas and Water 7,600 4,765Commerce and Finance 259,256 281,592Transport, Storage and Communication 6,242 4,902Services 19,900 22,604Miscellaneous 33,517 25,886



iv. Analysis by Type of Customer

2009 2008

GH?'000 GH?'000

Individuals 38,567 48,303Private Enterprises 345,232 364,560Joint Private and State Enterprises 17,513 28,989Public Institutions - 4,816Staff 33,517 25,886






23. PROPERTY AND EQUIPMENT

Assets in course Land and Furniture & Motor

of construction Buildings Computers Equipment Vehicles Total

GH?000 GH?000 GH?000 GH?000 GH?000 GH?000

Cost

Balance at 1/1/09 692 11,643 9,493 5,048 175 27,051Additions 1,969 1,422 348 182 204 4,125Reclassification - - 2,630 - - 2,630

Balance at 31/12/09 2,661 13,065 12,471 5,230 379 33,806

Depreciation

Balance at 1/1/09 - 3,033 7,733 3,127 170 14,063Charge for the year - 519 557 432 15 1,523Reclassification - - 2,630 - - 2,630

Balance at 31/12/09 - 3,552 10,920 3,559 185 18,216

Carrying amount

Balance at 31/12/09 2,661 9,513 1,551 1,671 194 15,590

Cost

Balance at 1/1/08 89 11,559 7,867 4,513 175 24,203Additions 961 84 1,390 413 - 2,848Disposal (358) - 236 122 - -Reclassification - - 2,630 - - 2,630

Restated balance at 31/12/08 692 11,643 12,123 5,048 175 29,681

Depreciation

Balance at 1/1/08 - 2,546 7,191 2,654 156 12,547Charge for the year - 487 542 473 14 1,516Reclassification - - 2,630 - - 2,630

Restated balance at 31/12/08 - 3,033 10,363 3,127 170 16,693

Carrying amount

Restated balance at 31/12/08 692 8,610 1,760 1,921 5 12,988


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(i) Operating leases

Non cancellable operating lease rentals are payable as follows:

2009 2008

GH?'000 GH?'000

Less than one year 173 469Between one and 5 years 466 223More than 5 years 7,127 496

7,766 1,188

24. INTANGIBLEASSETS

Restated

2009 2008

GH?'000 GH?'000

Cost

Balance at 1 January 3,008 3,008Additions - -Reclassification (2,630) (2,630)

Gross value at 31 December 378 378

Amortisation

Balance at 1 January 2,988 2,909Charge for the year 20 79Reclassification (2,630) (2,630)

Balance at 31 December 378 358

Carrying amount - 20

This relates to the cost of purchased software.

25. OTHER ASSETS

2009 2008

GH?'000 GH?'000

Accounts Receivable and Prepayments 47,679 64,924Accrued Interest Receivable 16,846 8,787Impersonal Accounts 20,266 19,821

84,791 93,532

26. DERIVATIVES

Included in other liabilities are fair values of cross currency swaps of GH¢4,794,000; (2008: GH¢875,597). The fair value movement onthese derivatives are recognised in statement of Comprehensive Income.




27. CUSTOMER DEPOSIT AND CURRENT ACCOUNTS 2009 2008

GH?'000 GH?'000

Current Accounts 418,112 398,049Time Deposit 66,781 71,046Savings Deposit 248,145 188,313Call Deposit 100,046 84,882

833,084 742,290

i. Analysis by Type of Depositors

Individuals and other Private Enterprises 830,896 694,169Public Enterprises 2,188 48,121

833,084 742,290

Ratio of twenty largest depositors to total deposit is 20% (2008: 21%).

28. DUE TO OTHER BANKS AND FINANCIAL INSTITUTIONS

2009 2008

GH?'000 GH?'000

Inter-Bank Balance 5,000 10,018Nostro Account Balances 6,435 -

11,435 10,018

29. DIVIDENDS

2009 2008

GH?'000 GH?'000

Ordinary Dividend 26,394 25,513Preference Dividend 2,695 1,256

29,089 26,769Payments during the year (29,089) (26,769)

Balance at 31 December - -

The Directors are recommending a dividend of GH¢2.47 per share for ordinary shares (2008: GH¢1.50 per share) amounting to

GH¢47.6 million (2008: GH¢26.4 million).

30. INTEREST PAYABLE AND OTHER LIABILITIES

Restated

2009 2008

GH?'000 GH?'000

Accrued Interest Payable 3,185 3,113Other Creditors and Accruals 82,618 98,522Others (Note 26) 4,794 875

90,597 102,510

After a review of its provisions, the Bank reclassified a number of liabilities from provisions to other liabilities. Comparative information has been represented accordingly.


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31. PROVISIONS

Staff related Others Total

GH?'000 GH?'000 GH?'000

Balance at 1 January 10,137 6,423 16,560Charged to Income Statement 5,920 16,357 22,277

16,057 22,780 38,837Utilised during the year (9,975) (1,475) (11,450)

Balance at 31 December 6,082 21,305 27,387

Staff related

This relates to provisions made for staff related obligations. These are expected to be utilised during the year 2010.

Others

This comprises provisions made for various operational obligations during the year. These are expected to be utilised during the year 2010.Provisions include retired staff medical benefit of GH¢762,516 (2008: GH¢762,516).

32. BORROWING 2009 2008

GH?'000 GH?'000

Intra-Group 265,796 15,239Short-term Loan 9,720 13,412

275,516 28,651

The short -term loan represents borrowing on the local market with interest rates bench marked against the 91-day Treasury Bill rate.

33. CAPITAL AND RESERVES

(i) Share Capital (Stated Capital)

2009 2008

No of Shares Proceeds No of Shares Proceeds

'000 GH?'000 '000 GH?'000

(a). Ordinary Shares

AuthorisedNo. of Ordinary Shares of no par value 100,000 100,000

Issued and Fully PaidIssued for Cash Consideration 5,655 48,001 4,000 1Transferred from Income SurplusAccount 13,596 4,040 13,596 4,040

19,251 52,041 17,596 4,041

(b). Preference Shares

Issued and Fully Paid

No. of Preference Shares 17,486 9,090 17,486 9,090

Total Share Capital 61,131 13,131

There is no share in treasury and no call or installment unpaid on any share. The preference shares are irredeemable and non-cumulative with respect to dividend payments.




(ii) Retained Earnings (Income Surplus Account)

This represents the residual of cumulative annual profits that are available for distribution to shareholders.

(iii) Statutory Reserve

This represents amounts set aside as a non-distributable reserve from annual profits in accordance with section 29 of the Banking Act, 2004(Act 673), of Ghana and guidelines from the Central Bank which gives specific dispensation to all banks for the 2009 and 2010 financial years.

(iv) Other Reserves

2009 2008

GH?'000 GH?'000

Market-to-market gains/(losses) on availability for sale securities 4,939 (2,403)Deferred taxes recognised directly in equity (1,235) (721)Transfers from retained earnings - 4,339Fair value of Visa shares - 1,736

3,704 2,951

34. RELATED PARTY TRANSACTIONS

(i) Parent and ultimate controlling party

The bank is a subsidiary of Standard Chartered Holdings (Africa) B.V and its ultimate parent company is Standard Chartered PLC.

(ii) Transactions with Directors, Officers and other Employees

The following are loan balances due from related parties:2009 2008

GH?'000 GH?'000

Directors 759 315Officers and other Employees 32,758 25,571

33,517 25,886

Interest rates charged on balances outstanding from related parties are lower than the bank's market rate for similar products. This is due tothe risk inherent in these products. Mortgages and secured loans granted are secured over property of the respective borrowers. Otherbalances are not secured and no guarantees have been obtained

No impairment losses have been recorded against balances outstanding during the period with key management personnel, and no specificallowance has been made for impairment losses on balances with key management personnel at the period end.


71



Key management personnel compensation for the period comprised:2009 2008

GH?'000 GH?'000

Short-term employee benefits 410 237Post-employment benefits 762 762Share-based payment transactions 1,520 1,102

2,692 2,101

iii. Associated Companies

Amounts due from associated companies at the balance date sheet were as follows:

Nostros 2,130 19,034Inter Bank advances 41,291 25,303

43,421 44,337

Amounts due to associated companies at the Balance sheet date were as follows:

Short -Term Borrowing 265,796 15,239Other Creditors Outstanding 6,435 1,528

272,231 16,767

iv. Management and Technical Services Fees

The Bank has one agreement with its parent company. Total charges and provisions made in respect of this agreement amounted toGH¢299,095 (2008: GH¢308,035) The Bank has four (4) other agreements with the SCB Group under the Technology Transfer Regulation(LI1547) of Ghana which are pending approval by the Ghana Investment Promotion Council (GIPC). Recharges accruing under theseagreements totaling GH¢13,874,849 (2008: GH¢8,182,394) have been provided for by management on the basis of constructiveobligations. These recharges are, however, not due for settlement until the agreements are approved by GIPC.

v. Share based Payments

Included in staff cost is an amount of GH¢1,520,000 (2008: GH¢1,102,112) payable to the Holding company in respect of value of equity settled share based payments allocated to employees of the Bank on a group arrangement basis.




35. FINANCIAL RISK MANAGEMENT

(i) Introduction and Overview

The Bank has exposure to the following risks from its use of financial instruments:

�credit risk�liquidity risk�market risks�operational risks.

This note presents information about the Bank's exposure to each of the above risks, the Bank's objectives, policies and processes for measuring and managing risk, and the Bank's management of capital.

Risk Management framework

The Board of Directors has overall responsibility for the establishment and oversight of the Bank's risk management framework. TheBoard has established the Asset and Liability Management committee (ALCO), Credit Committee and the Country Operational Risk Group (CORG), which are responsible for developing and monitoring the Bank's risk management policies in their specified areas. Allthese committees include members of Bank's Management Committee and report regularly to the Board of Directors on their activities.

The Bank's risk management policies are established to identify and analyse the risks faced by the Bank, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions, products and services offered. The Bank, through its training and management standards and procedures, has developed a disciplined and constructive control environment, in which all employees understand their roles and obligations.

The Bank's Audit Risk Committee (ARCO) is responsible for monitoring compliance with the Bank's risk management policies and procedures, and reviewing the adequacy of the risk management framework in relation to the risks faced by the Bank. This committee is assisted in these functions by a risk management structure in all the units of the Bank which ensures a consistent assessment of risk management controls and procedures.

(ii) Credit Risk

Credit Risk Management

Credit risk is the risk of financial loss to the Bank if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Bank's loans and advances to customers and other Banks and investment securities.

The Credit Committee (CC), a sub-committee of the board has responsibility for credit risk issues. Procedures for managing credit risk are determined at the business levels with specific policies and procedures being adapted to different risk environment and business goals. Risk officers are located in the business to maximise the efficiency of decision making.

The businesses working with the Risk Officers take responsibility for managing pricing for risk, portfolio diversification and overall asset quality within the requirements of Bank's standards, policies and business strategy.

Wholesale Banking

Within the Wholesale Banking business, a numerical grading system of 1–14 with 1 being the highest quality is used for quantifying the risk associated with a counterparty. The grading is based on a probability of default measure, with customers analysed against a range of quantitative and qualitative measures. Expected Loss is used for further assessment of individual exposures and portfolio analysis.There is a clear segregation of duties with loan applications being prepared separately from the approval


73



Consumer Banking

For consumer Banking standard credit application forms are generally used to process and approve loans. As with Wholesale Banking, origination and approval roles are segregated.

Problem Credit Management and Provisioning

Consumer Banking

An account is considered to be in default when payment is not received on the due date. Accounts that are overdue by more than 30 days are considered delinquent. These accounts are closely monitored and subject to a collections process.

The process used for raising provisions is dependent on the product. For mortgages, individual impairment provisions (“IIP”) are generally raised at 150 days past due based on the difference between the outstanding amount of the loan and the present value of the estimated future cash flows. For unsecured products, individual provisions are raised for the entire outstanding amount at 150 days past due. For all products where there is certainty of impairment, such as cases involving Bankruptcy, fraud and death, the loss recognition process is accelerated.

A portfolio impairment provision (“PIP”) is held to cover the inherent risk of losses, which although not identified, are known through experience to be present in the loan portfolio. PIP covers both performing loans and loans overdue for less than 150 days. Theprovision is set with reference to past experience using flow rate methodology, as well as taking account of judgment factors such as the economic and business environment and the trends in a range of portfolio indicators.

Wholesale Banking

In Wholesale Banking, accounts or portfolios are placed on Early Alert when they display signs of weakness. Such accounts and portfolios are subject to a dedicated process with oversight involving Senior Risk Officers and Group Special Asset Management (“GSAM”). Account plans are re-evaluated and remedial actions are agreed and monitored until complete. Remedial actions include, but are not limited to, exposure reduction, security enhancement, exit of the account or immediate movement of the account into the control of GSAM, the specialist recovery unit.

Loans are designated as impaired and considered non-performing where recognised weakness indicates that full payment of either interest or principal becomes questionable. Impaired accounts are managed by GSAM, which is independent of the main businesses of the Bank. Where any amount is considered uncollectible, an individual impairment provision is raised, being the difference between the loan carrying amount and the present value of estimated future cash flows. In any decision relating to the raising of provisions, the Bank attempts to balance economic conditions, local knowledge and experience, and the results of independent asset reviews. Where it is considered that there is no realistic prospect of recovering an element of an account against which an impairment provision has been raised, than that amount will be written off.

A portfolio impairment provision is held to cover the inherent risk of losses, which although not identified, are known through experience to be present in any loan portfolio. In Wholesale Banking, the portfolio impairment provision is set with reference to past experience using loss rates, and judgmental factors such as the economic environment and the trends in key portfolio indicators.




Set out below is an analysis of various credit exposures.

Analysis by credit grade of loans and advances

Loans and Receivables

2009 2008

GH?'000 v

Impaired loans

Individually impaired 48,609 29,639Allowance for impairment (7,121) (6,781)

Impaired loans, net of individual provisions 41,488 22,858

Loans past due but not impaired

Past due up to 30 days 285 -Past due 31-60 days 568 8,637Past due 61-90 days - -Past due 91-120 days 10,985 -Past due 121-150 days 7,189 -Past due more than 150 days 26,133 -

45,160 8,637

Loans neither past due nor impaired

Credit grading 1-12 or equivalent 338,538 434,278Less: Portfolio impairment provision (16,648) (5,435)

Total net loans 408,538 460,338

Analysis of credit concentration risk

The concentration of loans and advances by business segment and customer types are disclosed in Note 22 (iii) and 22 (iv) respectively. Investment securities are held largely in Government instruments.

Maximum credit exposure

At 31 December 2009, the maximum credit risk exposure of the Bank in the event of other parties failing to perform their obligations is detailed below. No account has been taken of any collateral held and the maximum exposure to loss is considered to be the instruments' balance sheet carrying amount or, for non-derivative off-balance sheet transactions, their contractual nominal amounts.

2009 2008

GH?'0000 GH?'000

Short-Term Government Securities 165,307 36,808Placements with other Banks 100,291 71,303Loans and Advances 408,538 460,338Unsecured Contingent liabilities and commitments 134,077 87,391

808,213 655,840


75



Fair value of collateral held

The Bank holds collateral against loans and advances to customers in the form of mortgage interests over property, other registered securities over assets, and guarantees. Estimates of fair value are based on the value of collateral assessed at the time of borrowing, and generally are not updated except when a loan is individually assessed as impaired.

An estimate of the fair value of collateral and other security enhancements held against financial assets is shown below

Loans and Receivables

2009 2008

GH?'000 GH?'000

Against impaired assets 29,657 5,343Against past due but not impaired assets 26,615 13,648

56,272 18,991

(ii) Liquidity Risk

The Bank defines liquidity risk as the risk that the Bank will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

It is the policy of the Bank to maintain adequate liquidity at all times, and for all currencies. Hence the Bank aims to be in a position to meet all obligations, to repay depositors, to fulfil commitments to lend and to meet any other commitments.

Liquidity risk management is governed by the Bank's Asset and Liability Management Committee (ALCO), which is chaired by the Chief Executive Officer. ALCO is responsible for both statutory and prudential liquidity. These responsibilities include the provision of authorities, policies and procedures.

ALCO has primary responsibility for compliance with regulations and Bank policy and maintaining a liquidity crisis contingency plan.

A substantial portion of the Bank's assets are funded by customer deposits made up of current and savings accounts and other deposits. These customer deposits, which are widely diversified by type and maturity, represent a stable source of funds. Lending is normally funded by liabilities in the same currency.

The Bank also maintains significant levels of marketable securities either for compliance with local statutory requirements or as prudential investments of surplus funds.

ALCO oversees the structural foreign exchange and interest rate exposures that arise within the Bank. These responsibilities are managed through the provision of authorities, policies and procedures that are co-ordinated by ALCO. Compliance with Bank ratios is also monitored by ALCO

An analysis of various maturities of the Bank's assets and liabilities is provided below.




Maturities of assets and liabilities

0-3 months 3-6 months 6-12months over 1 year 2009 2008

GH?'000 GH?'000 GH?'000 GH?'000 GH?'000 GH?'000

Assets

Cash and Balances with Bank of Ghana 281,509 - - - 281,509 146,843Short-Term Government Securities 69,239 95,910 158 - 165,307 36,808Due from other Banks and Financial Institutions 56,093 74,096 - - 130,189 117,447Loans and Advances 158,523 17,382 20,765 211,868 408,538 460,338Investment in Subsidiaries - - - 100 100 1,335Other Assets 59,611 454 907 23,819 84,791 93,532Medium-Term Government Securities 9,238 35,324 4,666 265,978 315,206 115,633Property, Plant and Equipment - - - 15,590 15,590 12,988Intangible Assets - - - - - 20Deferred Tax - - - 2,983 2,983 -

634,213 223,166 26,496 520,338 1,404,213 984,944

Liabilities

Customer Deposits 581,296 105,807 34,858 111,123 833,084 742,290Due to other Banks and Financial Institutions 11,270 58 15 92 11,435 10,018Interest Payables and other Liabilities 60,623 454 907 23,819 85,803 106,365Taxation - - 6,616 - 6,616 358Deferred Tax - - - - - 898Borrowings 258,301 17,215 - 275,516 28,651Provisions - - 27,387 - 27,387 6,028Derivative - - - 4,794 4,794 875

Total Liabilities 911,490 106,319 86,998 139,828 1,244,635 895,483

Net liquidity Gap

Total Assets 634,213 223,166 26,496 520,338 1,404,213 984,944Total Liabilities 911,490 106,319 86,998 139,828 1,244,635 895,483

Net Liquidity Gap (277,277) 116,847 (60,502) 380,510 159,578 89,461

(ii) Market Risks

Management of Market Risk

The Bank recognises market risk as the exposure created by potential changes in market prices and rates, such as interest rates, equity prices and foreign exchange rates. The Bank is exposed to market risk arising principally from customer driven transactions.

Market risk is governed by the Bank's Market Risk unit which is supervised by ALCO, and which agrees policies, procedures and levels of risk appetite in terms of Value at Risk (“VaR”). The unit provides market risk oversight and guidance on policy setting. Policies cover both the trading and non-trading books of the Bank. The non trading book is defined as the Banking book. Limits are proposed by the businesses within the terms of agreed policy.


77



The unit also approves the limits within delegated authorities and monitors exposures against these limits. Additional limits are placed on specific instruments and currency concentrations where appropriate. Sensitivity measures are used in addition to VaR as risk management tools.

VaR models are back tested against actual results to ensure pre-determined levels of accuracy are maintained. Bank's Market Risk unit complements the VaR measurement by regularly stress testing market risk exposures to highlight potential risks that may arise from extreme market events that are rare but plausible. Stress testing is an integral part of the market risk management framework and considers both historical market events and forward looking scenarios. Ad hoc scenarios are also prepared reflecting specific market conditions. A consistent stress testing methodology is applied to trading and non-trading books.

Stress scenarios are regularly updated to reflect changes in risk profile and economic events. The unit has responsibility for reviewing stress exposures and, where necessary, enforcing reductions in overall market risk exposure. It also considers stress testing results as part of its supervision of risk appetite. The stress test methodology assumes that management action would be limited during a stress event, reflecting the decrease in liquidity that often occurs. Contingency plans are in place and can be relied on in place of any liquidity crisis. The Bank also has a liquidity crisis management committee which also monitors the application of its policies.

The Bank has not identified any limitations of the VaR methodology it is currently using.

Foreign Exchange Exposure

The Bank's foreign exchange exposures comprise trading and non-trading foreign currency translation exposures. Foreign exchange exposures are principally derived from customer driven transactions. Concentration of foreign currency denominated assets and liabilities are disclosed in note 36.

Sensitivity Analysis

A 5% strengthening of the cedi against the following currencies at 31 December 2009 would have impacted equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2008.

Sensitivity analysis

Effect in cedis

Profit or loss

GH?'000

31 December 2009

USD (1,941)GBP (668)EUR 183Others 7

31 December 2008

USD (348)GBP 52EUR (57)Others 454




A best case scenario 5% weakening of the Ghana cedi against the above currencies at 31 December would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

Interest Rate Exposure

The principal risk to which non-trading portfolios are exposed is the risk of loss from fluctuations in the future cash flows or fair values of financial instrument because of a change in market interest rates. Interest rate risk is managed principally through monitoring interest rate gaps and by having pre-approved limits for repricing bands. The ALCO is the monitoring body for compliance with these limits and is assisted by the Bank's Market Risk unit in its day-to-day monitoring activities.

The management of interest rate risk against interest rate gap limits is supplemented by monitoring the sensitivity of the Bank's financial assets and liabilities to various standard and non-standard interest rate scenarios. Standard scenarios that are considered on a monthly basis include a 100 basis point (bp) parallel fall or rise in market interest rates.

A change of a 100 basis points in interest rates at the reporting date would have impacted equity and profit or loss by the amounts shown below

100 bp 100 bp

Increase Decrease

GH?'000 GH?'000

31 December 2009

Interest Income impact 1,555 (1,555)Interest Expense impact (361) 361

Net impact 1,194 (1,194)

31 December 2008

Interest Income impact 1,100 (1,100)Interest Expense impact (341) 341

Net impact 759 (759)

(ii) Operational Risks

Operational risk is the risk of direct or indirect loss due to an event or action resulting from the failure of internal processes, people and systems, or from external events. The Bank seeks to ensure that key operational risks are managed in a timely and effective manner through a framework of policies, procedures and tools to identify assess, monitor, control and report such risks.

The Bank's Country Operational Risk Group (CORG) has been established to supervise and direct the management of operational risks across the Bank. CORG is also responsible for ensuring adequate and appropriate policies, procedures are in place for the identification, assessment, monitoring, control and reporting of operational risks.

The CORG is responsible for establishing and maintaining the overall operational risk framework and for monitoring the Banks key operational risk exposures. This unit is supported by Wholesale Banking and Consumer Banking Operational Risk units. These units are responsible for ensuring compliance with policies and procedures in the business, monitoring key operational risk exposures, and the provisions of guidance to the respective business areas on operational risk.

(vi) Compliance and Regulatory Risk

Compliance and Regulatory risk includes the risk of non-compliance with regulatory requirements. The Bank's compliance and Regulatory Risk function is responsible for establishing and maintaining an appropriate framework of the Banks compliance policies and procedures. Compliance with such policies and procedures is the responsibility of all managers.

(vii) Capital Management

The Central Bank sets and monitors capital requirements for the Bank. Under the guidelines of the Central bank, the bank is required to maintain a prescribed ratio of total capital to total risk-weighted assets.


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The Bank's capital is analysed into two tiers:

Tier 1 capital, which includes ordinary paid up share capital, permanent preference shares and disclosed reserves, after deducting some assets such as investments in capital of other Banks and financial institutions.

Tier 2 capital, which includes some reserves such as the element of the fair value reserve relating to unrealised gains on equity instrumentsclassified as available-for-sale.

Various limits are applied to elements of the capital base, and other assets are giving various classifications such as claims on government,claims on the Central Bank and contingent liabilities and risk-weighted assets are determined according to specified requirements that seekto reflect the varying levels of risk attached to assets and off-balance sheet exposures.

The Bank's policy is to maintain a strong capital base so as to maintain investor, and market confidence and to sustain future development ofthe business. The impact of the level of capital on shareholders' return is also taken into consideration, and the Bank recognises the need tomaintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by asound capital position.

The Bank has complied with all externally imposed capital requirements throughout the period.

There have been no material changes in the Bank's management of capital during the period.

36. CONCENTRATION OF GHANA CEDI EQUIVALENT OF FOREIGN CURRENCY

DENOMINATED ASSETS, LIABILITIES AND OFF BALANCE SHEET ITEMS

USD GBP EUR Others 2009 2008

GH?'000 GH?'000 GH?'000 GH?'000 GH?'000 GH?'000

Assets

Cash and Balances with Bank of Ghana 195,174 5,857 2,992 357 204,380 120,111Due from other Banks and Financial Institutions 2,233 11,091 - 541 13,865 26,338

Loans and Advances 99,822 12,980 45,552 - 158,354 200,044Other Assets 108,388 257 364 296 109,305 7,503

Total Assets 405,617 30,185 48,908 1,194 485,904 353,996

Liabilities

Customer Deposits 436,617 42,629 42,011 21 521,278 317,655Due to other Banks and Financial Institutions 5,139 40 1,256 - 6,435 15,239Interest Payable and other Liabilities 2,689 870 1,980 1,036 6,575 19,093

Total Liabilities 444,445 43,539 45,247 1,057 534,288 351,987

Net-on Balance Sheet Position (38,828) (13,354) 3,661 137 (48,384) 2,009




36. CONCENTRATION OF GHANA CEDI EQUIVALENT OF FOREIGN CURRENCY DENOMINATED ASSETS, LIABILITIES AND

OFF BALANCE SHEET ITEMS (CONT'D)

USD GBP EUR Others 2009 2008

GH?'000 GH?'000 GH?'000 GH?'000 GH?'000 GH?'000

Off-Balance Sheet CreditsAnd Commitments 113,871 883 7,682 142 122,578 107,964

At 31 December 2008

Total Assets 287,260 16,210 40,682 9,844 353,996Total Liabilities (294,222) (15,175) (41,835) (755) (351,987)

Net-on Balance Sheet Position (6,962) 1,035 (1,153) 9,089 2,009

Off-balance Sheet CreditAnd Commitments 99,615 515 7,115 719 107,964

37. DIRECTORS' SHAREHOLDING

The Directors named below held the following number of shares in the Bank as at 31 December 2009:

Ordinary Shares

2009 2008

Ishmael Yamson 2,000 2,000

38. NUMBER OF SHARES IN ISSUE

(i) Dividend and net assets per share

Dividend and net assets per share are based on 19,251,214 (2008: 17,596,042) ordinary shares in issue during the year.

(ii) Basic and diluted earnings per share

The calculation of basic and diluted earnings per share at 31 December 2009 was based on the profit attributable to ordinary shareholders ofGH¢57,497,000 (2008: GH¢33,187,000) and 19,251,214(2008: 17,596,042) shares in issue.


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39. NUMBER OF SHAREHOLDERS

The company had 4,861 ordinary and 1,041 preference shareholders at 31 December 2009 distributed as follows:

(i) Ordinary Shares

Number of

Range of shares Shareholders Holding Percentage

1 - 1,000 4,533 892,571 4.631,001 - 5,000 259 555,546 2.895,001 - 10,000 41 319,905 1.66Over 10,000 32 17,483,192 90.82

4,865 19,251,214 100.00

(ii) Preference Shares

Number of

Range of shares Shareholders Holding Percentage

1 - 1,000 811 289,939 1.661,001 - 5,000 158 249,359 1.435,001 - 10,000 19 202,262 1.15Over 10,000 32 16,744,523 95.76

1,020 17,486,083 100.00

40. EMPLOYEE BENEFITS

(i) Defined Contribution Plans

(a) Social Security

Under a national pension scheme, the company contributes 12.5% of employee's basic salary to the Social Security and National InsuranceTrust (SSNIT) for employee pensions. The Bank's obligation is limited to the relevant contributions, and these have been recognised in thefinancial statements. The pension liabilities and obligations, however, rest with SSNIT.

(b) Provident Fund

The Bank has a provident fund scheme for staff under which the Bank contributes 7% of staff basic salary. The Bank's obligations under theplan is limited to the relevant contributions and these have been recognised in the financial statements.

(ii) Defined Benefit Scheme

Retired Staff Medical Plan

The Bank has a scheme to pay the medical cost of some retired staff and their spouses from the date of retirement till death. Under thescheme, the Bank pays the medical cost of eligible persons with a cost cap of GH¢500 per person. The scheme is accounted for as a definedbenefit plan. The total provision carried in the balance sheet in respect of this scheme was GH¢762,516 (2008: GH¢ 762,516).




41. DETAILS OF SHAREHOLDERS AT 31 DECEMBER 2009

(i) Details of 20 Largest Ordinary Shareholders at 31 December 2009

Name of Number of Percentage (%)

Shareholder Shares held holding

Standard Chartered Holdings (Africa) BV 13,363,516 69.42

Social Security & National Insurance Trust 2,761,102 14.34

BBGN/SSB TST X71 AX71 6169E 387,289 2.01

BBGN/RBC Dexia Investor Services Trust 165,000 0.86

Teachers Fund 95,047 0.49

BBGN / EPACK Investment Fund Limited 92,868 0.48

Ghana Union Assurance Co Limited 72,464 0.38

Council for University of Ghana. Endowment 60,390 0.31

SSNIT SOS Fund 38,835 0.20

Edward Kojo Amoma Anim-Addo 35,708 0.19

BBGN/Unilever Ghana Managers Pension Fund 37,498 0.19

Estate of Poku Francis K Mr 28,710 0.15

University of Science & Technology 24,750 0.13

Enterprise Insurance Co. Limited 24,249 0.13

BBG NOM/ELAC Policyholders Fund 25,231 0.13

Government of Ghana 21,102 0.11

BBGN/SSB Eaton Vance Tax-Managed Emerging Market 20,600 0.11

BBGN/Barclays Mauritius Re Deut Victorie Africa Index II 19,579 0.10

BBG NOM/Unilever Ghana Provident Fund 19,263 0.10

Kudjawu, Norbert Kwasivi 18,900 0.10

17,312,101 89.93


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41. DETAILS OF SHAREHOLDERS AT 31 DECEMBER 2009 (CONT'D)

(ii) Details of 20 Largest Preference Shareholders at 31 December 2009

Name of Number of Percentage (%)

Shareholder Shares held holding

Standard Chartered Holdings (Africa) BV 15,220,598 87.04%

Barton Kwaku Glymin Jnr. 322,734 1.85%

SSNIT SOS Fund 307,692 1.76%

Edward K Amoma Anim-Addo 106,806 0.61%

Ghana Union Assurance Co Limited 99,351 0.57%

BBGN/Emerging Markets Mgmt Africa Fund 86,585 0.50%

CSS-CSS01 86,585 0.50%

Norbert Kwasivi Kudjawu 68,775 0.39%

Ophelia F. Akosa-Bempah 54,150 0.31%

Kwaku Akosah- Bempah 40,654 0.23%

Clifford Aryee 25,000 0.14%

Ebenezer Magnus Boye 25,000 0.14%

Edmund Akoto-Bamfo 22,401 0.13%

E3A Holdings Company Limited 20,661 0.12%

Anthony Minkah 20,268 0.12%

Safo Kwame Eddie 20,000 0.11%

Edem Yankson 20,000 0.11%

John Percival Awuku Nyako 20,000 0.11%

SIC - Provident Fund 19,231 0.11%

SIC - Life Business 19,231 0.11%

16,605,722 94.96%




42. COMPARATIVE INFORMATION

The comparative financial information, where considered necessary, have been reclassified to achieve consistency with presentation of current year figures.

Restatement of fair value of collateral

The Bank reviewed the fair values of its collateral held against loans and advances to customers. The review resulted in the restatement of the disclosures made in the prior year financial statements as follows:

Loans and ReceivablesRestated

2008 2008

GH?'000 GH?'000

Against impaired assets 721,517 5,343Against past due but not impaired assets 300,107 13,648

1,021,624 18,991

Since the restatement only impacts presentation and disclosure aspects, there is no impact earnings per share.

43. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

The following sets out the Bank's basis of establishing fair values of the financial instruments disclosed under note 16.

Cash and balances at central Banks

The fair value of floating rate placements and overnight deposits is their carrying amounts. The estimated fair value of fixed interest bearing deposits is based on discounted cash flows using the prevailing money-market rates for debts with a similar credit risk and remaining maturity.

Loans and advances to customers

Loans and advances are net of allowance 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.

Investment securities

Investment securities with observable market prices, including debt are fair valued using that information. Equity instruments held that do not have observable market data to reliably estimate their fair values are presented at cost. Debt securities that do not have observable market data are fair valued by either discounting cash flows using the prevailing market rates for debts with a similar credit risk and remaining maturity or using quoted market prices for securities with similar credit, maturity and yield characteristics.

Deposits and borrowings

The estimated fair value of deposits with no stated maturity is the amount repayable on demand. The estimated fair value of fixed interest bearing deposits and other borrowings without quoted market prices is based on discounting cash flows using the prevailing market rates for debts with a similar credit risk and remaining maturity.

Debt securities in issue subordinated liabilities and other borrowed funds

The aggregate fair values are calculated based on quoted market prices. For those notes where quoted market prices are not available, a discounted cash flow model is used based on a current market related yield curve appropriate for the remaining term of maturity.

Derivatives

The fair value of derivatives is based on discounted cash flows of using observable market quotes of similar credit risk and maturity.


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Form of Proxy

I.....................................................................................................................................................................................................................................

(Block Capitals Please)

Of

.......................................................................................................................................................................................................................................

Being Member/Members of STANDARD CHARTERED BANK GHANA LIMITED hereby appoint

.......................................................................................................................................................................................................................................

Of

....................................................................................................................................................................................…..

or failing him the duly appointed Chairman of the Meeting, as my / our Proxy to vote for me / us on my / our behalf at the Annual General Meeting

of the Company to be held at 11.00 am on Wednesday, 28th day of April, 2010 and at every adjournment thereof.

Please indicate with an X in the spaces below how you wish your votes to be cast.

RESOLUTION FOR AGAINST

1. Declaring a dividend

2. Electing the following Directors - Mr. Francis Mills-Roberston

- Mr. Sanjay Rughani

3 Approving Directors’ remuneration.

4. Approving the remuneration of the Auditors

Signed this............................ day of ................................2010 Signature.........................................................

IMPORTANT: Before posting the Form of Proxy above, please tear off this part and retain it - see over. If you wish to insert in the blank space

on the form the name of any person, whether a Member of the company or not, who will attend the meeting and vote on your behalf, you may

do so; if you do not insert a name, the Chairman of the Meeting will vote on your behalf. If this Form is returned without any indication as to how

the person appointed a proxy shall vote, he will exercise his discretion as to how he votes or whether he abstains from voting. To be valid, this

Form must be completed and must reach the Registered Office of the Company not less than 48 hours before the time fixed for holding the

Meeting or adjourned Meeting.

This Form is only to be completed if you will NOT attend the Meeting

CUT HERE CUT HERE


FIR

ST

FO

LD H

ER

E

The SecretaryStandard Chartered Bank, Ghana LimitedHead OfficeP. O. Box 768, Accra

SE

CO

ND

FO

LD H

ER

E

PLEASEAFFIXSTAMPHERE

THIRD FOLD HERE

CUT HERE CUT HERE

IMPORTANT: A person attending the meeting should not produce this form

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88Standard Chartered Ghanarr Annual Report 2009www.standardchartered.com/gh

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