Ecobank annual report 2006

The Pan African Bank

Ecobank Group

2006 Annual Report

Ecobank Network

Countries in which Ecobank is currently present.

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Ecobank is the leading independent regional bankingGroup in West and Central Africa serving wholesaleand retail customers.

What is our investmentproposition?

We operate in emerging markets with good longterm prospects.

In all our markets, we are recognized as one of theleading banks and we have a growing presence in theinvestment banking sector.

We are well placed to grow revenues and expandmarket share by combining a broad product offeringwith a growing regional presence.

What do we do?

Our business is providing wholesale, retail,investment and transaction banking products andservices to governments and governmentalagencies, multinationals, financial institutions, localcompanies, small, medium and micro enterprises,high net worth individuals and consumers in Africa.

We currently operate in 18 countries in West andCentral Africa.

What is our strategy?

Our goal is to create shareholder value.

To achieve this, we aim to be the leader in regionalbanking in Africa.

We have three strategic priorities at Group level:

� Achieve scale through acquisitions and organicgrowth ;

� Grow our business in existing markets andexpand into new markets ;

� Deliver efficiency through operational andproduct excellence and customer service.

We are creating value…

� In 2006, revenues grew by 47% to US$348 million ;

� Profit Before Tax grew by 75% to US$129 million ;

� Value Added totaled US$142 million.

But there is still more to do.

In this annual report we discuss our business, howit could generate more value for our shareholders,and what we are doing to make it happen.

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2006 Annual Report

» Principal Subsidiaries and Offices » page . . . . . . . . . . 3

» Financial Highlights » page . . . . . . . . . . 4

» Chairman's Address » page . . . . . . . . . . 5

» Directors’ Report » page . . . . . . . . . . 8

» Board of Directors » page . . . . . . . . . 10

» Executive Management » page . . . . . . . . . 14

» Corporate Governance » page . . . . . . . . . 15

» Corporate Social Responsibility » page . . . . . . . . . 19

» Corporate Ethics & Transparency » page . . . . . . . . . 22

» Chief Executive Officer’s Review » page . . . . . . . . . 24

» Manifesto » page . . . . . . . . . 28

» Business and Financial Review » page . . . . . . . . . 29

» Directors' Responsibilities Statement » page . . . . . . . . . 36

» Report of Independent Auditors » page . . . . . . . . . 37

» Consolidated Income Statement » page . . . . . . . . . 38

» Consolidated Balance Sheet » page . . . . . . . . . 39

» Consolidated Statement of Changes in Equity » page . . . . . . . . . 40

» Consolidated Cash Flow Statement » page . . . . . . . . . 41

» Accounting Policies » page . . . . . . . . . 42

» Notes to the Consolidated Financial Statements » page . . . . . . . . . 60

» Five Year Financial Summary » page . . . . . . . . . 83

» Summary of Subsidiaries’ Financials » page . . . . . . . . . 84

» Shareholder Information » page . . . . . . . . . 84

Contents

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Principal Subsidiaries and Offices

Group Office :2, Avenue Sylvanus Olympio - BP 3261 - Lomé (TOGO) - Phone: (228) 221 03 03 / 221 31 68 - Fax: (228) 221 51 19

BeninRue du Gouverneur Bayol01 B.P. 1280 Cotonou - BENINPhone: (229) 21 31 40 23Fax: (229) 21 31 33 85

Burkina-Faso 633, Rue Ilboudo Waogyandé(ex Maurice Bishop)01 B.P. 145, Ouagadougou 01BURKINA-FASOPhone: (226) 50 328 328Fax: (226) 50 318 981

CameroonBoulevard de la Liberté B.P. 582 Douala - CAMEROUNPhone: (237) 343 82 50 / 54

343 84 88 / 89Fax: (237) 343 86 09

ChadAvenue Charles de GaulleN'DjamenaTCHADPhone: (235) 52 43 14Fax: (235) 53 23 45

Cote d’Ivoire Immeuble AllianceAvenue Terrasson de Fougères01 B.P. 4107 - Abidjan 01CÔTE D’IVOIREPhone: (225) 20 31 92 00 / 20 21 10 41Fax: (225) 20 21 88 16

Ghana19, Seventh Avenue Ridge West P.O. Box 16746 Accra North - GHANAPhone: (233) 21 68 11 66 / 67Fax: (233) 21 68 04 28

Guinea BissauAvenue Amilcar CabralB.P. 126Bissau - GUINÉE BISSAUPhone: (245) 72 53 194Fax: (245) 20 73 63

Guinea ConakryAvenue de la RépubliqueB.P. 5687 - ConakryGUINÉEPhone: (224) 30 45 57 77 / 30 45 57 60Fax: (224) 30 45 42 41

Liberia Ashmun & Randall Street, P.O. Box 48251000 Monrovia 10 - LIBERIAPhone: (231) 4788834 / 4788838

4788833Fax: (231) 22 70 29

MaliPlace de la Nation Quartier du Fleuve B.P.E. 1272 Bamako - MALIPhone: (223) 270 06 00Fax: (223) 223 33 05

NigerAngle Boulevard de la Liberté etRue des Bâtisseurs, B.P. 13804Niamey - NIGERPhone: (227) 20 73 71 81Fax: (227) 20 73 72 03 / 04

NigeriaPlot 21, Ahmadu Bello Way P.O. Box 72688 - Victoria IslandLagos - NIGERIAPhone: (234) 1 2626638-44 / 2626710-17Fax: (234) 1 2616568

Senegal8, Avenue Léopold Sédar Senghor B.P. 9095 - Centre Douanes (CD)Dakar - SÉNÉGALPhone: (221) 849 20 00Fax: (221) 823 47 07

Sierra Leone7, Lightfoot Boston StreetP.O. Box 1007 - FreetownSIERRA LEONEPhone: (232) 22 33 01 / 76 88 23 65Fax: (232) 50 51 10 165

Togo 20, Avenue Sylvanus Olympio B.P. 3302 LoméTOGOPhone: (228) 221 72 14Fax: (228) 221 42 37

eProcess International SA 20, Avenue Sylvanus OlympioB.P. 4385 LoméTOGOPhone: (228) 222 23 70Fax: (228) 222 24 34

Ecobank DevelopmentCorporation (EDC)2, Avenue Sylvanus OlympioB.P. 3261 LoméTOGOPhone: (228) 221 03 03 / 221 31 68Fax: (228) 221 51 19

Ecobank Investment CorporationImmeuble Alliance, 4ème Etage Avenue Terrasson de Fougères 01 B.P. 4107 Abidjan 01CÔTE D’IVOIREPhone: (225) 20 21 10 44 / 20 31 92 24Fax: (225) 20 21 10 46

EDC Stockbrokers Limited19, Seventh Avenue Ridge West,P O Box 16746 Accra NorthGHANAPhone: (233) 21 25 17 23 / 21 25 17 24Fax: (233) 21 25 17 34

ESL Securities LimitedPlot 21, Ahmadu Bello WayP. O. Box 72688Victoria IslandLagos – NIGERIAPhone: (234) 1 761 3833 / 761 3703Fax: (234) 1 271 4860

ECV Servicos FinancierosAgencia de Cambios 43 A Avenida Amilcar CabralPraia Santiago - CABO VERDEPhone: (238) 261 78 56Fax: (238) 261 78 60

www.ecobank.com

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2006 Annual Report

In thousands of US dollars, except per share, ratio and headcount data.

At Year end 2006 2005 % Change

Assets 3,503,739 2,199,230 59%Loans and advances to customers 1,919,366 1,022,140 88%Deposits from customers 2,500 178 1,532,478 63%Shareholders' equity 382,088 221,547 72%Total equity 482,315 303,879 59%Book value per share ($) 0.58 0.47* 25%Non - performing loans to total loans (%) 7.9 12.2 37%Headcount (number) 5,860 2,602 125%Branches and locations (number) 305 162 88%

For the Year

Revenues 348,464 236,351 47%Loan loss provision 13,091 14,898 12%Profit before tax 129,299 73,729 75%Profit after tax 86,365 50,939 70%Profit attributable 69,350 41,502 67%

Basic earnings per share (cents) 13 11* 21%Diluted earning per share (cents) 13 11* 21%

Dividend per share (cents) 3 2*

Return on average equity (%) 23.0 23.8 (3%)Return on average assets (%) 3.0 2.5 22%

Other Data

Risk - based capital ratios (%):Total 19.0 21.7Tier 1 19.0 21.7

Number of ordinary shares outstanding (Number in thousands)

Average 518,963 373,545As at 31 December 611,003 401,272

* Restated for 1 for 5 bonus share issue made in 2006

Financial Highlights

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Chairman’s Address

This is my first address as Chairman and I am pleased tosay that I am excited by the prospects for the Group. I strongly believe that we are entering a period of stronggrowth that will further fulfil the vision on which ourinstitution was founded.

2006 was a year of change and progress. Significant stepswere taken to reposition the Group for renewed growthand profitability.

Financial Results

Our 2006 results showed improvements in all keyareas. Total assets grew by 59 per cent to US$3.5 billionand revenues increased by 47 per cent to US$348million. Profit before tax was up 75 per cent to US$129million. Return on average equity was 23 per cent as weincreasingly put the capital raised last year to work.

Strategy

During 2006, a Group-wide strategic plan was adoptedto transform Ecobank from a regional to a pan-Africanbanking Group and from a largely wholesale to a morebalanced wholesale and retail banking Group.Consequently, we are extending our footprint furtherinto Central Africa and also into Eastern and SouthernAfrica. We are also building a strong retail bankingbusiness to complement our core wholesale business.

In Nigeria, one of our largest markets, we moved toimprove our market position and distribution byacquiring the branches and liabilities of one of thebanks that failed to survive the industryconsolidation. We opened a new subsidiary in SierraLeone and expanded our network in the oil-richcountries of Central Africa, one of the fastestgrowing regions in the world, by acquiring thesecond largest bank in Chad.

During the year, we also strengthened our total equitywhich now stands at US$482 million. Ecobank Ghanaand Ecobank Nigeria were listed on their respectivestock exchanges. Ecobank Transnational Incorporated,the parent Company of the Group also listedsimultaneously on the 3 stock exchanges in the sub-region. This is the first ever regional listing in Africa.

Corporate Governance

Chief Philip C. Asiodu retired as Chairman of theCompany at the last Annual General Meeting havingreached the mandatory retirement age. Chief Asioducontributed immensely to the progress of the Groupthrough the years. We will miss his wise counsel andexperience. We thank him immensely for hiscontribution to what Ecobank is today.

We welcome the new members of the board whowere appointed since the last shareholders meeting:Alhaji Isyaku Umar, Andre Siaka and Paolo Gomez.These are persons of immense local, regional andinternational experience who will enrich and strengthenthe board. I believe they can count on your usualconstructive support and co-operation.

During the year, we also made changes to the executivemanagement. Mr Offong Ambah joined the board asan executive director in addition to his currentresponsibilities as Managing Director of EcobankNigeria. Mrs Funke Osibodu, our former ManagingDirector in Nigeria resigned from the Group. We aregrateful for her contribution to the development ofEcobank Nigeria and the Group.

Corporate Social Responsibility

Ecobank Foundation, our corporate philanthropicarm, donated to several activities in 2006. Theseincluded projects in Togo, Nigeria and Mali. TheFoundation seeks to ensure that over time, its activitiescover and are distributed among the countries inwhich Ecobank operates. Up to one percent of theGroup profit after tax is made available to theFoundation for its activities and the Foundation isalso free to source funding from other donors.

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2006 Annual Report

We continue to contribute to the communities weoperate in other important ways. We part-sponsoredtwo of the African world Cup teams and contributed tothe development of journalism talent on the continent.

Through an alliance with one of the leadingmicrofinance institutions in the world, we aresupporting and promoting microfinance lending andactions to alleviate poverty in our countries.

Our emphasis on developing our people and buildingdiversity will hopefully create an increasing pool oftalented African banking professionals that willsupport the development and integration of Africaneconomies. Several of our people have beenrecruited to run important government institutionsand to manage other banks.

Corporate Transparency

Our policies require us to operate to internationalstandards. We have often been at the forefront ofimplementing policies and procedures designed toensure that we comply with anti-corruption, anti-money laundering, anti-terrorism and know-your-customer regulations in the countries in which weoperate. Ecobank also maintains strong policiesrelating to transparency and business ethics, as webelieve this positions and safeguards the Group’sreputation in the long-term.

We are probably the only institution in the sub-regionthat reports in accordance with InternationalFinancial Reporting Standards. The consequences ofthis are that our results are more conservative andmore transparent than those of other comparableinstitutions in the regions.

You would also notice significant changes in thepresentation and contents of our annual report. As partof our policy on corporate transparency, we have alsosignificantly increased the level of disclosure in ourannual reports and accounts in order to make themmore relevant and meaningful to our shareholderswhilst at the same time meeting the statutory reportingand disclosure requirement. We will continue to exploreways in which we can improve our reporting anddisclosure so that shareholders, investors andcustomers are adequately informed about our strategy,performance, activities and businesses.

People

We continue to build capacity through external hiresand internal development. Significant investmentwas made in strengthening our management team.We also refreshed the organizational structure tobetter address changing market conditions.

Across the Group, several changes took places whichwere designed to promote talent and build aleadership team based on merit, diversity and depth.We believe the impact of these actions willincreasingly show through in our performance.

What Makes Ecobank Unique

Ecobank is unique in many ways. Firstly, we have themost regional presence in West and Central Africa ofany bank. This gives us greater insight and scope toserve our customers and exploit opportunities.

Secondly, we have a unique regional identity basedon our founding principles. We started as a regionalbank from the onset with shareholders from over 14countries. This regional identity, coupled withnational representation in our local subsidiariesmeans that we are welcome in all our markets as alocal bank that is part of a larger regional Group.

Thirdly, we are building the leading regional bankbrand as an independent banking Group focused onAfrica. Ecobank is increasingly perceived as a modelof the future integration of the African private sector.As a result, Ecobank is often welcome as a preferredpartner by governments and the private sector.

And fourthly, we are building a broad and deep poolof African talent and managers with the skills andexperience to operate across different markets andcultures. This allows Ecobank to compete andsucceed in some of the more challenging anddifficult markets in our region.

Above all, Ecobank has been successful because it isconsidered an independent regional institutionbelonging to no one country or interest Group. Eachof our subsidiaries is viewed as a local bank, eventhough they belong to a larger Group. The regionalstrategy and independent status of Ecobank arefundamental to the founding principles of Ecobankand to our long-term success.

Chairman’s Address (continued)

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The Future

The growth of the economies of our sub-regioncontinued with a positive growth trend. The WorldBank estimates that Sub-Saharan economies willgrow by 5.6% in 2007, one of the highest growth ratesin the world. Clearly, as a commodity-rich region, oureconomies have benefited from the high prices forcrude oil, gold, cocoa, coffee and other commodities.But we believe these results are a positive indicationthat African economies may now be pointing in theright direction. The other vital signs across thecontinent have also been positive with most civil andpolitical unrests increasingly being resolved.

The banking landscape is becoming more challenging.There is increasing interest and investment byinternational investors in African banks. There isrenewed interest by international banks and banksfrom other parts of Africa. All these point toincreased competition for customers and talent and amore challenging business environment in the future.Whilst 2006 was a year of significant progress for theEcobank Group, it is fair to say that much remains tobe done if we are to achieve our mission of buildingEcobank into a world class African banking Group.

Our priorities for the future are clear: deliver increasedvalue to our stakeholders – shareholders, customers,employees and the communities in which we operate.

Mandé Sidibé Chairman

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2006 Annual Report

Principal Activity

Ecobank Transnational Incorporated (ETI) the parentCompany of the Ecobank Group is a bank holding Company.Its principal activity is the provision of banking and financialservices through its subsidiaries and affiliates. It enjoysspecial fiscal, exchange control and legal rights under anagreement with the Government of Togo.

A review of the business of the Group during the 2006financial year and of likely future developments iscontained in the Business and Financial Review section.

Results

The Group's net profit after tax was US$86 million. Netprofit attributable to the Company was US$69 million. Thedetails of the results for the year are set out in theconsolidated profit and loss statement.

The directors approved the financial statements of theCompany and the Group for the year ended 31st December2006 at the meeting of the Board held on 16th March 2007.Messrs Mandé Sidibé and Arnold Ekpe were authorized tosign the accounts on behalf of the Board.

International Financial Reporting Standards(IFRS)

The accounts of ETI and the Group are prepared inaccordance with International Accounting Standard(IAS). These standards have been revised and are nowreferred to as the International Financial ReportingStandards (IFRS).

Dividend

The directors recommend the payment of 3 cents perordinary share as total dividend based on the totalnumber of shares outstanding as at 31st December2006, which one cent per share has already been paid asinterim dividend in January 2007.

Capitalization Issue

The directors propose a capitalization issue of oneordinary share for every ten ordinary shares.

Capital

At the general meeting of shareholders held on 23rd June2006, the authorized capital of the Company was increasedfrom two hundred (200) million dollars to one billion twohundred fifty million (1,250,000,000) dollars divided into5,000,000,000 ordinary shares of 25 cents each.

Of the 226.4 million rights issue shares approved by theEGM of 11th March 2005, 108.2 million shares remainedunissued as at 1st January 2006. These shares wereissued during the year through a private placement of60.7 million shares and the conversion of convertibleloans of US$38 million contracted during the year into47.5 million shares at a price of $0.8 per share.Following the resolution of the general meeting at theEGM of 23rd June 2006 approving a capitalization issue ofone ordinary share for every five ordinary shares held,101.5 million shares were issued. The total numbers ofissued shares outstanding as at 31st December 2006therefore stood at 611 million.

On 11th September, 2006 all the issued shares of theCompany were listed simultaneously on the three stockexchanges of the West Africa sub-Region, namely, theGhana Stock Exchange (GSE) the Nigerian StockExchange (NSE) and regional stock exchange of theUEMOA Zone, the Bourse Régionale des ValeursMobilières (BRVM), based in Abidjan, Côte d’Ivoire.

Directors and Company Secretary

The names of the directors of the Company and thename of the Company Secretary appear on pages 10 to13 of this report.

As at 31st December 2006, the Board was composed offourteen (14) directors: eight (8) non executive directorsand six (6) executive directors. Mr. Offong Ambahreplaced Mrs Funke Osibodu as Regional Director forNigeria and therefore was co-opted and subsequentlyapproved by the general meeting of 23rd June 2006 as anexecutive director. Messrs Paolo Gomes, Andre Siakaand Isyaku Umar were co-opted as non-executivedirectors and, in accordance with the Articles ofAssociation of the Company, would be submitted for theapproval of the general meeting to be held in 2007. Inaccordance with the succession policy on the board,Chief Philip Asiodu retired as Chairman of the board inJune 2006 after several years of distinguished service tothe Group, being one of its founding shareholders. Mr.Mandé Sidibé was elected to replace him as Chairmanfor a three year term renewable once.

The Board of Directors met eight (8) times during theyear. The three (3) board committees, namely, theGovernance Committee, the Audit and ComplianceCommittee and the Risk Committee met at varioustimes during the year to deliberate on issues under theirrespective responsibilities.

The ad hoc committee appointed in 2005 to handle theproposed combination with FirstBank Nigeria continuedits work until the agreement with FBN elapsed inSeptember 2006.

Directors’ Report

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Corporate governance and compliance

The Company maintains corporate policies andstandards designed to encourage good and transparentcorporate governance, avoid potential conflicts ofinterest and promote ethical business practices. Seepages 15 to 18 for details.

The board has adopted the International FinanceCorporation (IFC) Corporate Governance principles andmethodology in 2005 to guide the composition and termsof reference of both the board and its committees.

Subsidiaries

As at the end of 2006, Ecobank had operations in 15countries namely Benin, Burkina Faso, Cape Verde,Cameroon, Chad, Côte d'Ivoire, Ghana, Guinea, Liberia,Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.During 2006, work commenced to secure operationallicenses in Guinea Bissau and Sao Tome & Principe and toacquire a bank in the Central Africa Republic all of whichwere realized at the beginning of 2007 thus bringing thetotal number of countries in which the Group hasoperations to 18.

Our investment banking subsidiary, EcobankDevelopment Corporation (EDC), expanded its activitiesand presence during the year and its management wasstrengthened. All the stock market and brokerageactivities within the Group were effectively transferred toEDC and the EDC name adopted for all ourstockbrokerage units in the three capital centres of theregion namely, Abidjan, Accra and Lagos. eProcessInternational SA, our shared services subsidiary wasalso strengthened to play a more strategic role inimproving efficiency and reducing operational costs.

Ecobank Transnational Incorporated has a majority equityinterest in all its subsidiaries, and provides them withmanagement, operational, technical, training, businessdevelopment and advisory services.

Post Balance Sheet Events

There were no post balance sheet events that couldmaterially affect either the reported state of affairs ofthe Company as at 31st December 2006 or the profit forthe year ended on the same date which have not beenadequately provided for or disclosed.

Responsibilities of Directors

The Board of Directors is responsible for the preparationof the financial statements which give a true and fair viewof the state of affairs of the Company at the end of thefinancial period and of the results for that period. Theseresponsibilities include ensuring that:

� adequate internal control procedures are institutedto safeguard assets, prevent and detect fraud andother irregularities;

� proper accounting records are maintained; � applicable accounting standards are followed; � suitable accounting policies are used and

consistently applied;� the financial statements are prepared on the going

concern basis unless it is inappropriate to presumethat the Company will continue in business.

Independent External Auditors

The joint auditors, PricewaterhouseCoopers, Lagos,Nigeria and PricewaterhouseCoopers, Abidjan, Côted'Ivoire have indicated their willingness to continue inoffice. A resolution will be presented to authorize thedirectors to determine their remuneration.

16th March 2007

16th March 2007.

By order of the Board,Company Secretary

Samuel K Ayim

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2006 Annual Report

Board of Directors

Mandé SidibéChairman

Arnold EkpeGroup Chief

Executive Officer

Christian N.Adovelande

Oba A. Otudeko

J. Kofi BucknorKolapo A. Lawson

Evelyne Tall*Andre Siaka Albert K. Essien*

Patrick Akinwuntan*

Isyaku UmarPaolo Gomes

Offong Ambah*

Christophe J. Lawson*

* Executive Directors

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Board of Directors

The Company has a fourteen-member Board ofDirectors, which oversees and directs the seniorteam that manages the Group. The Board of theCompany is made up of six executive members andeight non-executive members coming mostly fromWest and Central Africa, all of them aredistinguished businessmen and professionals.

Mandé Sidibé (Chairman)

Mandé Sidibé is a former Prime Minister of theRepublic of Mali. Before that, he was special advisorto the President of the Republic of Mali. He is a formerDirector of Société Malienne de Financement(SOMAFI). He served with the Central Bank of WestAfrican States (BCEAO) in various capacities includingDirector of BCEAO-Mali and special advisor to thegovernor of BCEAO. He also worked for theInternational Monetary Fund (IMF) in many capacitiesincluding divisional head, Africa Department-IMFand as principal economist, Africa Department.

Arnold Ekpe

Arnold Ekpe returned as the Company Group ChiefExecutive Officer in 2005. He was the Group ChiefExecutive Officer from 1996 to 2001 when he left to joinUnited Bank for Africa, one of the top three banks inNigeria as Chief Executive Officer from 2002 until 2004.He has over 26 years of African and internationalbanking experience having also worked in Europe,South Africa and West Africa for Citibank and FirstChicago. He was Vice President and Head of Africatrade and corporate finance for Sub-Sahara Africa forCitibank. He executed landmark trade and corporatefinance deals in West and Southern Africa. Mr. Ekpeholds degrees in mechanical engineering (1st classhonours) and Business Administration fromManchester University and Manchester BusinessSchool respectively.

Christian N. Adovelande

Christian Adovelande is the President of the ECOWASBank for Investment and Development (EBID) Group.He was Chairman/Managing Director of CaurisManagement SA and managing Director of CaurisInvestissement SA, a regional venture capitalCompany based in Lomé, Togo. He was CompanySecretary and acting general manager for the AfricaPrivate Investment Guarantee Fund (Fonds GARI S.A.)and also held a number of key positions at the WestAfrican Development Bank (BOAD). He representsEBID on the Board of Directors.

Oba A. Otudeko

Ayoola Oba Otudeko is Chairman of severalcompanies in Nigeria and abroad including HoneywellGroup Limited, the Nigeria Stock Exchange, PivotEngineering Company Limited, Honeywell Flour MillsLimited, Broadview Engineering Company Limited,Fan Milk Plc and Pavillon Technologies Limited.

He is also a Director of the First Bank of Nigeria Plc,Guinness Nigeria Plc, British American Tobacco(Nigeria) Plc and several Chambers of Commerce. Heis Chairman of the Nigerian-South African Chamberof Commerce. He is a Director of several overseascompanies including Delmar Overseas Limited. He isa member, Regional Advisory Board of the LondonBusiness School and chancellor of the OlabisiOnabanjo University, the State University of OgunState, Nigeria. He is a former board member, CentralBank of Nigeria (1990 to 1997), a former chairman ofthe National Maritime Authority Nigeria, a formermember of the Constituent Assembly, Nigeria 1988to 1989 and member of the National EconomicSummit Group. He holds the national merit award ofOfficer of the Federal Republic of Nigeria (OFR). Mr.Otudeko is a chartered accountant and a charteredbanker.

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2006 Annual Report

Board of Directors (continued)

Paolo Gomes

Paulo Gomes was an Executive Director of the WorldBank Group (Washington D.C.) from 1998 to 2006.From 1995 to 1998, he worked for the Ministry ofFinance, Planning and Trade of Guinea Bissau wherehe was a Principal Advisor, Director of StrategicPlanning, Public Investment and Debt. In 1996, he wasAssistant to the Director for Business Development ofMonitor Company in Boston, USA; and in 1997, he wasthe Assistant to the Executive Director of CitizenEnergy Corporation, still in Boston, USA. Mr Gomesholds a Certificate in Political Studies from “Institutd’Etudes Politiques” of Paris, France, a BA inEconomic and International Trade from “Institutd’Etudes Libres de Relations Internationales” ofParis, France, and also a Masters with honours inEconomic Policy and Management, from KennedySchool of Government, in Cambridge, USA.

Kolapo A. Lawson

Kolapo Lawson is the Chief Executive Officer of adiversified industrial and trading Group with operationsin the United Kingdom and across West Africa. He isthe Chairman of Polfa Nigeria and Director of twopublicly quoted companies: Beta Glass PIc. andPharma-Deko PIc. He was a Director of EcobankNigeria from 1989 to 1997 and of Ecobank Togo from1990 to 1993. Mr. Lawson has a degree in Economicsand is a fellow of the Institute of CharteredAccountants in England and Wales and of theInstitute of Chartered Accountants of Nigeria.

Isyaku Umar

Isyaku Umar started his career with UAC of Nigeriafrom 1972 to 1976, he was employed in the KanoState Government and was at various timesSecretary of the Draught Relief Committee, PrincipalPrivate Secretary to the Military Governor. Followingthat, he became the General Manager of Mai-Naisaraand Sons Ltd from 1977 to 1979 and the ManagingDirector of Tofa General Enterprises Ltd. from 1979to date. Mr Umar holds a B. Sc. Social Sciences,Economics from the University of Pittsburgh, and aMasters of Public Administration from USA.

J. Kofi Bucknor

Kofi Bucknor is a principal of Kingdom Zephyr AfricaManagement Company and the Chief ExecutiveOfficer of J. Kofi Bucknor & Associates in Ghana. Heis an advisor to Prince Alwaleed Bin TalaI BinAbdulaziz Al Saud of Saudi Arabia. He is a formerChairman of the Ghana Stock Exchange and he servedas Managing Director of CAL Merchant Bank inGhana, Executive Director, Corporate Finance, atLehman Brothers in London, treasurer of the AfricanDevelopment Bank in Abidjan, Côte d'Ivoire and Vice-President of Chemical Banking, New York.

Andre Siaka

André Siaka is the Chief Executive Officer ofCameroon Brewery Limited since 1988. Before that,he worked with “Société Générale” in Paris. Mr Siakais a qualified as Engineer from “Ecole Polytechnique”de Paris, France.

Evelyne Tall

Evelyne Tall is Regional Head for the UEMOA Zone(Benin, Burkina Faso, Côte d'Ivoire, Guinea Bissau,Mali, Nigeria, Senegal and Togo) and Cape Verde. Shestarted her banking career in 1981 with Citibank inDakar, Senegal where she worked in various areas,including credit, financial institutions, liabilitymanagement and finally with the regional financialinstitutions unit. She left Citibank to join EcobankMali as Deputy-Managing Director in 1998, and wasmade Managing Director in 2000. The same year, shewas transferred to Ecobank Senegal as ManagingDirector. She was appointed Regional Head of theUEMOA Zone in October 2005. Mrs Tall holds aBachelor’s degree in English from the University ofDakar, Senegal and a diploma in InternationalTrade/Distribution and Marketing from « Ecoled’Administration et de Direction des Affaires» ofParis, France.

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Offong Ambah

Offong Ambah is the Managing Director of EcobankNigeria and Regional Head for Nigeria. Between 1985and 1991 he worked with International MerchantBank and City Trust Merchant Bank in Nigeria. In1991 started work with Ecobank. He became aGeneral Manager of Ecobank Nigeria and worked inthe Treasury, Corporate Finance, Credit and RetailBanking departments. In 1999, he was transferred toLiberia to set up Ecobank Liberia as ManagingDirector. He left the Ecobank Group in 2002 for UnitedBank for Africa PLC where he worked as ExecutiveDirector. He left UBA in 2005 and was appointedInterim Chairman of the Interim Board of directors ofAllstates Trust Bank by the Central Bank of Nigeria. InMarch 2006, he returned to Ecobank Group asManaging Director of Ecobank Nigeria and RegionalHead of the Nigeria Zone. Mr. Ambah holds a BScEconomics from the University of Lagos and a MScEconomics from the University of Ibadan, Nigeria.

Albert Kobina Essien,

Albert Essien is Regional Head for the WAMZ (Ghana,Guinea, Liberia, Sierra Leone and Gambia). He startedhis banking career in 1986 with the NationalInvestment Bank in Accra, Ghana. He joined theCorporate Banking Department of Ecobank Ghana in1990. In 1997, he became Country Risk Manager. Hewas appointed Deputy-Managing Director in 2001and became Managing Director in December 2002.He was appointed Regional Head of the WAMZ inOctober 2005. Mr Essien holds a B.A. (Hons) inEconomics (1979) from the University of Ghana,Legon, Ghana.

Patrick Akinwuntan

Patrick Akinwuntan is Executive Director in charge ofOperations, Technology & Retail Bank. He is also theManaging Director of eProcess. He joined Ecobank in1996 as Head of Commercial Banking and WesternZone II of Ecobank Nigeria. He then held thefollowing positions in the Group: Group FinancialController, Executive Director (Consumer andCommercial Banking) at Ecobank Nigeria. BeforeEcobank, he worked for Ernst and Young,Manufacturers Merchant Bank, and SpringfountainManagement Consultants in Lagos. Mr. Akinwuntanholds a Master’s Degree in Business Administration(Finance) and is a Fellow of the Institute of CharteredAccountants of Nigeria (FCA) and an associate of theInstitute of Taxation (ACTI).

Christophe Jocktane-Lawson

Christophe Jocktane-Lawson is Executive Director incharge of Corporate Development & Wholesale Bank.He started his banking career in 1985 with Citibank inLibreville, Gabon; he worked in various capacities asa Management Associate, Relationship Manager,Private Sector Head, Public Sector Head, BranchManager, Corporate Bank Group Head, RiskManager, and Deputy General Manager. He leftCitibank and joined Ecobank Benin as GeneralManager in 2000. He later became the Deputy-Managing Director and then Managing Director in2002. Mr Jocktane-Lawson holds a Master’s degreein Finance from Institut d’études Politiques of Paris,France and Bachelor’s degree in Economics from“Université Paris XIII”, France.

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2006 Annual Report

Executive Management (as at 31 January 2007)

Group Executive Management

Arnold Ekpe Group Chief Executive Officer

Evelyne Tall Regional Head, UEMOA

Albert Essien Regional Head, WAMZ

Abou Kabassi Regional Head, CEMAC

Offong Ambah Regional Head, Nigeria

Christophe Jocktane-Lawson Head, Corporate Development & Wholesale Bank

Patrick Akinwuntan Head, Operations, Technology & Retail Bank

Antoine Kayembe Nzongola Group Chief Risk Officer

Laurence do Rego Group Chief Financial Officer

Robert Kwami Group Chief Audit & Compliance Officer

Ronke Wilson Group Chief Human Resources Officer

Samuel Ayim Company Secretary / Group Chief Legal Officer

Country Heads

Cheick Travaly Benin

Aboubacar Youssoufou Burkina Faso

Abou Kabassi Cameroon

Abdel Kader Lawani Cape Verde

Kerim Mahamat Ali Chad

Martin Djedjes Côte d’Ivoire

Samuel Ashitey Adjei Ghana

Anasthasie Darboux Guinea Bissau

Assiongbon Ekué Guinea Conakry

Esijolone Okorodudu Liberia

Yves Coffi Quam-Dessou Mali

Charles Daboiko Niger

Offong Ambah Nigeria

Ehouman Kassi Senegal

Karen Akiwumi-Tanoh Sierra-Leone

Roger Dah-Achinanon Togo

Specialized Subsidiaries

Patrick Akinwuntan eProcess International SA (Togo)

Michael Ashong Ecobank Development Corporation (Togo)

Mahama Iddrissu Ecobank Stockbrokers Limited (Ghana)

Tunde Ayeni ESL Securities Limited (Nigeria)

Adonis Séka Ecobank Investment Corporation (Côte d'Ivoire)

15


Commitment to Corporate Governance

The Ecobank Group is committed to ensuring goodcorporate governance. The Group believes that goodcorporate governance enhances shareholder value.Ecobank has been a pioneer in West African bankingin institutionalizing corporate governance principlesas part of the Group’s corporate culture. To this endEcobank aims at complying with best internationalpractices on corporate governance. Adherence tocorporate governance principles is articulated in anumber of corporate documents. The Articles ofAssociation of the Company and those of itssubsidiaries define the respective roles ofmanagement, the board of directors andshareholders (including the protection of minorityrights) in the administration of the Group. The Grouphas standard written rules for the internal operationof the boards of directors, a corporate governancecharter, a code of conduct for directors and rules onbusiness ethics for staff, all of which aim at ensuringtransparency and accountability within the Group.

The board of directors has adopted the IFC principlesand methodology on corporate governance to guideits corporate governance framework. The Group’sgovernance practices are also guided by the BasleCommittee standards on corporate governance.

In 2006, the board formally adopted the IFC’ssuggested definition of an independent director forapplication throughout the Group. The Board alsoadopted the following criteria for the appointment ofnon-executive directors.

� Independence – Although not all non-executivedirectors need to meet the independent directordefinition referred to above, all directors shouldbe capable of exercising independent judgmentand decision-taking.

� Demonstrated business acumen – Strongbusiness experience and a provenunderstanding of corporate and businessprocesses through a successful track record anda strong reputation in the business community.

� Leadership and Board Experience – Arecognized ability to add value and displayleadership at board level and an ability to assertbalanced and constructive views at board level.

� Special Technical Skills or Expertise –Experience in banking (particularly retailbanking but also commercial and/or investmentbanking), accounting, and/or law and expertisenot readily available to the executive team wouldbe valuable especially if this professionalexperience is in emerging markets.

� Integrity – High level of integrity andprofessional and personal ethics and valuesconsistent with those of the Company.

� Character – Strength of character and abilityand willingness to challenge and probe; soundbusiness judgment; strong interpersonal skills;and the ability to listen carefully andcommunicate with clarity, objectivity and brevity.

� Time Commitment – Sufficient time to effectivelycarry out duties of a non-executive director.

� Additional Considerations – Importance ofbringing more diversity to the board in terms ofage, gender, demographics, etc.

Guided by the Code on Non-Executive Directors of theNational Association of Corporate Directors (NACD) ofthe United States of America, the board adoptedstandard evaluations tools to help assess theperformance of the board as a whole as well as that ofindividual directors.

Governance Structure within the EcobankGroup

The Ecobank Group corporate governance documentsoutline corporate governance policies and clarifygovernance structures throughout the Group.

The key principles underlying the Group's governancestructure are as follows:

� The parent company acts as a "strategicarchitect" with limited involvement inoperational management and decision makingat subsidiaries level. It sets the overall strategyand direction of the Group, develops policies andprocedures and monitors them through reviewsand audits to ensure compliance not only withGroup strategy, policies and procedures but alsowith local laws and regulations.

Corporate Governance

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2006 Annual Report

� Operational decision-making is individualizedand maintained at a level, as close as possible torequired action and customers.

� Individual accountability and responsibility areinstitutionalized and embedded throughempowerment and the granting of relevantlevels of authority.

� Coordination at the corporate centre and Grouplevel is achieved through high levels ofinteraction between parent company and itssubsidiaries as well as amongst subsidiaries atboard and executive management levels.

� Clear terms of reference and accountability arelaid out for committees at board and executivelevels. There is effective communication andinformation sharing outside of meetings. TheGroup operates an ‘open-door’ policy.

The following are the governance units within theGroup:

� The Company Board of Directors � Country Board of Directors � Group Executive Management Committee � Country Executive Management Committee � Annual Country Heads Meeting.

Appropriate sub-committees are also set up, eitheron a permanent or ad hoc basis to handle issues asthey arise. A brief overview of the roles andresponsibilities of each of the governance units isprovided in the following paragraphs.

Board of Directors

The Company Board of Directors is elected by, andaccountable to, the Company's shareholders for theproper and effective administration of the EcobankGroup. Their primary responsibility is to foster thelong-term success of the Company, consistent withits fiduciary responsibility to the shareholders. TheGroup’s governance charter requires the Board ofDirectors to be guided by the following principles:

� Clear delineation and segregation ofresponsibilities between executive managementand board to ensure non interference of the boardin the operational management of the Group ;

� Objective judgment on corporate affairsindependent of executive management ;

� Actions on a fully informed basis, in good faith,with due diligence and care and in the bestinterest of the Group and its shareholders ;

� Compliance with applicable laws and regulationsin line with Group strategy and direction ;

� Local legislation to prevail in the event of anyconflict between Group policies and local laws ;

� Transparency and avoidance of conflict of interestbetween directors and the business of theEcobank Group ;

� Full disclosure of accurate, adequate and timelyinformation regarding personal interests ofdirectors.

The board recently approved the enlargement of itsmembership to include five additional executivedirectors. With the retirement of the former Chairman,Chief Philip C Asiodu and co-option of three new non-executive directors, the membership of the Board is nowfourteen, comprising six executive and eight non-executive directors (refer to pages 10 to 13). The boardhas a policy of ensuring that there are more non-executive directors than executives on the board.

The board has three committees, namely, theGovernance Committee, the Audit and ComplianceCommittee and the Risk Committee. The currentcomposition and terms of reference of thecommittees are summarized below:

Governance Committee

Composition

In 2006, the Committee comprised of four members(the Board Chairman (for the time being), the ChiefExecutive Officer and two non executive directors –Messrs Christian Adovelande and Oba Otudeko). TheCompany Secretary is the secretary to the Committee.

Responsibilities

� Formulates, reviews and generally ensuresimplementation of policies applicable to all unitsof the Group and ensure good governancethroughout the Group ;

� Manages the relationship between the Companyand its shareholders and subsidiaries, includingrelationships with the boards of subsidiaries ;

Corporate Governance (continued)

17


� Formulates new and reviews existing Group-wide policies including organizational structure ;

� Handles relationship with regulators and thirdparties ;

� Manages board affairs in between the meetingsof the board or when the board is not sitting ;

� Recommends the appointment of executive andnon-executive directors ;

� Reviews the human resources strategy andpolicies of the Group and the remuneration ofsenior executives.

Audit and Compliance Committee

Composition

Membership in 2006 was composed of two non-executive directors (Messrs Mandé Sidibé and KofiBucknor) and two shareholders (Social Security andNational Insurance Trust of Ghana represented by itsGeneral Manager, Finance, Mr. Kwasi Boatin; and Mr.Ayi A. Amavi) with the Chief Executive Officer inattendance, where appropriate.

All members have business knowledge and skills andfamiliarity with accounting practices and concepts.

The Group Chief Audit and Compliance Officer andthe Group Chief Financial Officer serve as thesecretaries to the committee.

Responsibilities

� Reviews internal controls including financial andbusiness controls ;

� Reviews internal audit function and audit activities ;� Facilitates dialogue between auditors and

management regarding outcomes of audit reviews ;� Makes proposals with regard to external

auditors and their remuneration ;� Works with external auditors to review annual

financial statements before full board approval ;� Ensure compliance with all applicable laws,

regulations and operating standards.

Risk Committee

Composition

Composed of four members in 2006, namely, MessrsKolapo Lawson, as Chairman, Christian Adovelande,Kofi Bucknor and the Group Chief Executive Officer.Members have good knowledge of business, finance,banking, general management and credit. The GroupChief Risk Officer serves as Secretary to the Committee

Responsibilities

� Participates in the determination and definitionof policies and guidelines for the approval ofcredit, operational, market/price and other riskswithin the Group; defining acceptable risks andrisk acceptance criteria ;

� Sets and reviews credit approval limits formanagement ;

� Reviews and ratifies operational and creditpolicy changes initiated by management ;

� Ensures compliance with the bank's credit policiesand statutory requirements prescribed by theregulatory or supervisory authorities ;

� Reviews periodic credit portfolio reports andassesses portfolio performance ;

� Reviews all other risks i.e. technology, market,insurance, reputation, regulations, etc.

Country Boards of Directors

Ecobank subsidiaries operate as separate legal entitiesin their respective countries. The Company is themajority shareholder in all the subsidiaries but hostcountry citizens and institutions are typically investorsin the local subsidiaries. Each subsidiary has a board ofdirectors, the majority of whom are non- executivedirectors.

The Group Governance Charter requires that countryboards be guided by same governance principles as theCompany. As a rule, but subject to local regulations andthe size of the board, the boards of directors ofsubsidiaries have the same number of committees asthe Company.

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2006 Annual Report

Corporate Governance (continued)

The boards of directors of the subsidiaries areaccountable to the subsidiaries' shareholders for theproper and effective administration of the subsidiary inline with the overall Group direction and strategy.These boards also have statutory obligations based oncompany and banking laws in the respective countries. In the event of any conflict between the Company andlocal laws, the local legislation prevails.

Group Executive Management Committee

The Group Executive Management Committee iscomprised of the Group Chief Executive Officer, theregional and Group business heads and Groupfunctional heads, currently a total of thirteenmembers. They are responsible for the operationalmanagement of the Group and its subsidiaries.

The Group Executive Management Committee isresponsible to the board and plays an important rolein the Company’s corporate governance structure.The Committee manages the broad strategic andpolicy direction of the Group, submits them to theboard for approval where necessary, and overseestheir implementation. The Committee has decision-making powers in specific areas of Groupmanagement. In particular, the committee workswith and assists the Chief Executive Officer to:

� Define and develop Group strategy ;� Confirm alignment of individual subsidiaries'

plans with overall Group strategy ;� Track and manage strategic and business

performance against plan ;� Implement Group policy and decisions ;� Make recommendations on various issues

relating to staff ;� Track and monitor progress and accomplishments

on major Group initiatives and projects at affiliatelevel ;

� Recommend opening or closing of subsidiaries ;� Articulate appropriate response to

environmental factors, regulations, governmentpolicies competition and other such issuesacross the Group ;

� Articulate policies for advancing Group objectives ;� Make important decisions in areas where

delegation of authority is granted to the committee.

Country Executive Management

The Country Executive Management Committeeconsists of the country head, and other seniorexecutive members of each subsidiary. In addition tothe day-to-day management of the subsidiary’soperations, the role of a country's ExecutiveManagement Committee includes the following:

� Managing the strategic objectives of thecountry's operation in line with Group strategy ;

� Defining overall business goals and objectivesfor the country’s operation ;

� Ensuring alignment of operating plans withoverall Group strategy ;

� Approving business unit direction and strategies ;� Making decisions on operating plans and budgets ;� Reviewing the financial reporting and control

framework ;� Tracking and managing country strategic and

business performance against plan ;� Tracking and monitoring progress and

accomplishments on major initiatives andprojects at country level ;

� Articulating appropriate response to environmentalfactors, regulation, government policies,competition and other such issues in the country ;

� Articulating policies for advancing businessobjectives in the country ;

� Advising the Company on adaptation of overallstrategy to the specificities of the local environment ;

� Advising on local laws and regulation impactingon Group policies.

Annual Country Heads Meeting

The Annual Country Heads Meeting is an annualmeeting of all Managing Directors and GroupFunctional Heads across the Group, to review andreflect on Group strategy and policies. The meetingplays a key role in facilitating the harmonization andintegration of the Group strategy. Its role includes:

� Sharing and disseminating information,experiences and best practices across the Group ;

� Initiating policies that encourage integration andpromote the 'One-bank concept' ;

� Promoting integration and standardization ofGroup policies and procedures ;

� Promoting and monitoring compliance withGroup operational standards ;

� Contributing to the formulation of Group policies.

19


Introduction

The main purpose of this section is to illustrate thediversity and wide range of corporate socialresponsibility and sustainability policies and projectslaunched and supported by Ecobank

Corporate social responsibility refers to thecontribution by businesses to sustainabledevelopment. It covers a company’s participation infields such as human rights, human resources,relations with clients, suppliers and otherstakeholders, corporate governance, environmentand contribution to the community and the society ingeneral. It is increasingly viewed as a strategic issueto ensure the development of a sustainable world andto enhance business competitiveness. It is high onthe priority list of a number of internationalorganizations and investors who seek to increasebusiness awareness and involvement .

Ecobank’s Commitment

We are committed to ensuring that we remain a Groupthat cares about the impact it has on society. Ecobankhas a long history of commitment to the communitiesin which it operates. Contributing to the improvementof living conditions through financing individuals andbusinesses, supporting local communities and localeconomic development, building greater social andhuman capital are all an integral part of ourfoundation and identity.

Economic Performance

Revenues generated in 2006 were over US$348 million.In generating these revenues, we made loans andprovided assistance of over US$1.8 billion togovernments and government agencies, companies,small and medium scale enterprises, microfinanceinstitutions and individuals of over US$128 million.

We collectively paid over US$42 million in taxes togovernments in West and Central Africa, making us oneof the largest tax payers and thus contributing toeconomic development and social welfare.

Ecobank Foundation

Ecobank Foundation a social responsibility initiativestarted operations in 2005. It is through theFoundation that Ecobank drives its corporate socialresponsibility to support community and socialdevelopment in a sustainable manner.

Up to one percent of the Group’s profit after tax may bedonated to Ecobank Foundation for funding projectsand supporting communities in countries whereEcobank is present.

Ecobank Foundation has thus far made donationsamounting to over US$650 thousand and hassupported twelve (12) projects in three (3) countries.

The Foundation focuses on projects in the areas of:Education, Health, Culture and Research.

In addition to funding from Ecobank, the Foundationmay also seek funding from third parties to support itsactivities.

Human Capital

Ecobank employs over 5,860 people across 305branches, offices and kiosks. We estimate that wedirectly support up to 5 times our number ofemployees or over 29,000 people. Through ourcontractors, suppliers and distributors, we believewe directly and indirectly provide employment to amuch larger number of people across West andCentral Africa.

Ecobank also gives training opportunities to about200 University undergraduates and high schoolleavers across the Group.

Our human development programmes are alsotraining an increasing number of professionals notonly in the banking sector but also in related areassuch as technology, telecommunications andtechnology-enabled processes.

Corporate Social Responsibility & Sustainability

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2006 Annual Report

Corporate Social Responsibility & Sustainability (continued)

Environment and Safety

As a banking Group, Ecobank finances projectsacross many sectors. In financing projects, Ecobankadheres to the IFC environmental Code. Accordingly,projects that we finance are screened to ensure thatthey do not unduly damage the environment and donot pose a safety hazard. Ecobank is currentlyreviewing the Equator Principles to fully evaluate itsapplicability to its activities.

Ecobank as a matter of policy does not financeprojects involving arms and gambling or projectswhose impact on the individual or the environmentare generally considered to be unacceptable.

As a bank, Ecobank’s internal activities do nottypically have an adverse impact on the environmentwhen compared with other industries. Nonetheless,we are actively considering ways to improve ourenvironmental responsibility and minimize adverseimpact on the environment. These include ways inwhich we can reduce energy usage, paper usage andcarbon dioxide emissions. We anticipate that furtherinvestments in technology and the increasingadoption of remote contact technology such as videoconferencing will reduce the need for road and airtravel and their adverse environmental effects whilesaving the Group significantly in transportation costs.

Microfinance and Poverty Alleviation

Ecobank has partnered with Accion International,one of the leading microfinance institutions in theworld to establish microfinance institutions incountries where Ecobank operates. Under thisarrangement, the parties are working to launchmicrofinance banks in Ghana and Nigeria in 2007.These institutions will target loans to the poorersegment of the society.

Ecobank also finances existing microfinanceinstitutions through providing lines of credit. Theserelations are evolving into alliances where they alsodistribute simple banking products such as savingsaccounts and money transfer products.

Ecobank’s strategy in the microfinance sector is notto actively compete with microfinance institutions butrather to support them and partner with them toreach those customers that would typically not comeinto an Ecobank branch.

Education, Employment and Health

Through the Ecobank Foundation, we providedcomputers and learning aids to communities in Chadand in Mali. Through our internal and externaltraining and development programmes, we areincreasing the banking talent pool in West andCentral Africa.

In Nigeria, Ecobank partnered with the National AidsAwareness Campaign to open centres in universitiesto educate the youths on Aids. Currently the bankoperates 7 centres across Nigeria.

Diversity

Ecobank, by virtue of its spread, is one of the mostdiversified groups in Africa in terms of its people.Ecobank also has a policy of ensuring diversity in itsemployee talent pool without compromising thequality of its staff. Regular reports are presented andmonitored to ensure adherence to policy. Employeescome from over 16 nationalities and communicate inEnglish and French which are the official languagesof the institution.

In terms of gender diversity, 40 per cent of theemployees are female and the balance male. Interms of representation at the management level, 75out of 257 management staff are female. 3 out of 16country managing directors are female and one outof five of our executive directors is also female. TheGroup has employees with physical disability acrossits network. 2.2 per cent of the staff are over 50 yearsold and 86 per cent of staff are under 40 years.

21


Application of Technology

Ecobank has been at the forefront of the adoption oftechnology. The Group has a policy of “One Person,One PC” whereby all employees across the Group areentitled to a PC or a laptop for undertaking their job.

In addition, Ecobank operates a regionaltelecommunications network that provides most of itstelecommunications and technology needs, includingtelecommunications linkages, shared gateways,internet and email services. The widespread adoption oftechnology and telecommunications has been critical tothe successful development and expansion of the Group.

The Group is currently implementing the first sharedservices centre in West Africa that would consolidateand centralize many of the activities and servicescurrently being carried out across the manysubsidiaries of the Group.

Sports

Ecobank supports sports in many ways. Through ourvarious subsidiaries we donate to sporting activitiesin the communities in which we operate. In addition,some of our subsidiaries have sports teams thatcompete an participate in local sporting activities.

In 2006, Ecobank was one of the largest contributorsto the African world cup teams. We acted as officialbankers and co-sponsored the Ghanaian andTogolese teams to the world cup

Indicator 2006 2005 %Change

Revenues (US$‘000) 348,464 236,351 47Corporate Tax (US$‘000) 42,934 22,790 88Return on Average Equity (%) 23 23.8 (3)Efficiency Ratio (%) 59 63 (6)Earnings per share (cents) 13 11 18Return on Average Assets (%) 3.0 2.5 20Capital Adequacy (%) 19.0 21.7 (12)

Employees 5,860 2,602 125

% female staff 40 38 5% female staff at executive level 25 22 14

Investment in training and development (US$‘000) 2,921 2,165 20Corporate social respons. Expenditure (US$‘000) 654 710 (8)

Key Sustainability Indicators

22

2006 Annual Report

Ecobank Group has codified policies on corporateethics which applies to directors and employeesacross the Group. These policies are regularlyreviewed to ensure that they are in line withinternational practice.

Code of Conduct for Directors

Directors across the Group are required to sign acode of conduct that enjoins them to adhere tocertain principles of the Group. This is in addition toany local rules or codes governing directors’ conduct.

The code of conduct covers issues such as ;

Fiduciary responsibility:Directors are required to act in the best interest ofthe Company and in protection of shareholderinterests, to act to preserve the assets of theCompany and further its business interests; and torecognize the interest of other stakeholders such asemployees, customers and the communities in whichwe operate.

Conflict of interest:To avoid of conflict of interest in dealing with theCompany, Directors may not utilize their position onthe board to their advantage. A director must obtainthe approval and consent of the board where there isa potential area of conflict of interest and mustdisclose all material facts related thereto. Directorsmust also disclose any direct or indirect interest inany loans, contracts or credit facilities granted by anyCompany in the Group.

Confidentiality:Directors are required to observe the utmostconfidentiality with respect to information relating tothe Company including information relating topersonnel, transactions and other matters relatingto the operations of the Company.

Attendance at Meetings:Directors are required to endeavour to attend allboard meetings and to conduct themselves in amanner that will foster the smooth running of theboard of directors.

Non Interference:Directors may not interfere in the day to day runningof the Company and to maintain the utmost dignity intheir dealings with management and employees ofthe Company. Directors are enjoined to exerciseindependent judgment in evaluating managementand their actions.

Disclosure of any information that may affect thedirector’s relationship with the Group.

Insider Dealings:A director may not utilize information obtained in hiscapacity as director to enrich himself throughadvantageous acquisition of shares or othersecurities issued or to be issued by the Company.

Rules of Business Ethics

All employees of the Group are required to sign andadhere to the Group rules on doing business. Theserules require all employees to conduct themselves ina manner that is in the overall interest of the Group.Violation of the rules of business ethics may result insanctions, including dismissal.

Compliance:All employees must comply with local laws andregulations in the conduct of their duties as well asthe Company’s internal policies and procedures.They must also endeavour to promote a culture ofcompliance.

Confidentiality:All employees must avoid intentional or unintentionaldisclosure of sensitive or confidential information tounauthorized persons. Sensitive information includeinformation relating to customers of the Group, tradesecrets, non-public information, information arisingfrom our dealing with governments, regulators orvendors/suppliers and any information that ispotentially prejudicial to the Group.

Conflict of Interest:Employees must avoid circumstances in which theirpersonal interest conflicts or may appear to conflictwith the interest of Ecobank or its customers.

Corporate Ethics & Transparency

23


Reporting of Violations:An employee who suspects a possible violation of alaw, regulation or our rules of business ethics isencouraged to report such violations to his/hersupervisor. Employees are expected to beresponsible in reporting such possible violations.Ecobank also has in place a whistleblower policywhere employees may anonymously report incidentsor situations that are damaging or potentiallydamaging to the institution. This facility is maintainedthrough an independent international third party toensure its effectiveness and to protect the identity ofany whistleblower.

Know-Your Customer:The Ecobank Group Anti-Money Laundering and Anti-Terrorism Policy requires all staff to know thecustomers who do business with bank. Detailinformation requirements are provided which shouldbe updated regularly to reflect the changing status ofthe customer. Reports of suspicious transactions arerequired to be made and followed up. Ecobankcooperates with regulatory and security authoritiesto fight against illegal financial transactions.

Transparency

We are implementing our policy on transparency byincreasing the level of disclosure in our annualreports and accounts. This is designed to ensure thatour stakeholders, employees, shareholders,regulators, customers and the market at large areadequately informed on developments in Ecobank.

Accordingly, we have provided supplementalinformation on our directors and seniormanagement, information relating to theremuneration of our directors, information ondirector related loans, disclosure on other aspects ofthe bank’s activities relating to corporate governanceand corporate social responsibility and sustainability.

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2006 Annual Report

Chief Executive Officer’s Review

We had a very good year in 2006 but we have the potentialto do much better.

We grew assets by 59 per cent to US$3.5 billion, increasedrevenues by 47 per cent to US$348 million and pre-taxprofits rose by 75 per cent to US$129 million. We increasedmarket share in many of our markets and extended ourmarket reach in West and Central Africa.

We are addressing our weak position in the Nigerianmarket, one of the largest, most competitive andfastest growing markets in Africa. We are investing inour people to improve customer service and sales.We are investing in technology to enhance efficiencyand reduce costs. And we are rolling out newproducts to sustain market competitiveness andcreate new market opportunities. The benefits ofthese actions are already becoming evident in thisyear’s results.

We recognize that our future success will come notonly from playing to our strength as the leadingindependent regional bank brand but also inaddressing our areas of weakness.

Financial Results

In 2006, we increased revenues by 47 per cent toUS$348 million. This was as a result of significantgrowth in business volumes, a positive exchange ratemovement, an acquisition in Nigeria and a growth infees and commissions.

Our business in UEMOA and CEMAC regions benefitedfrom a positive exchange rate fluctuation. The 11 percent increase in the Euro to US dollar rate improvedreported revenues by US$7 million. On the other hand,a weak local currency in Guinea depressed revenuesby US$5 million.

Overall, profit before tax grew by 75 per cent toUS$129 million. This was a respectable performancecompared to the previous year and given theincreased competition in all our markets.

Operating margins improved even as we have beeninvesting heavily in expanding our distributionchannels and in technology. We added 143 newbranches and offices during the year and investedover US$9 million in upgrading our technology. Atthe same time, we invested over US$30 million inproviding additional capital to our existingsubsidiaries and in acquiring a bank in Chad.

Despite these, our value added rose by 61 per cent toUS$142 million.

Review of 2006

The major development in 2006 was the listing ofEcobank Transnational Incorporated on the threestock exchanges in the sub-region namely theBourse Régionale des valeurs Mobilières in Abidjan,the Ghana Stock exchange in Accra and the NigeriaStock Exchange in Lagos. This landmark event wasthe first ever triple listing in Africa.

In addition, two of our major subsidiaries, namelyEcobank Nigeria and Ecobank Ghana were listed in2006. Again, this is designed to enhance shareholdervalue by providing a market-related and efficientbasis for valuing the Ecobank Group and minimizingany discount due to our holding Company structure.

We also took a number of steps to deepen and growthe Ecobank franchise through organic growth andby acquisitions. We extended our reach in WestAfrica by opening a new subsidiary in Sierra Leoneand later in Guinea Bissau early in 2007.

25


We grew our Nigerian business by the acquisition ofthe branches and deposit liabilities of All StatesTrust Bank, one of the banks that did not survive theconsolidation of the industry. In Central Africa , weincreased our network to three countries by theacquisition of majority interests in BIAT, the secondlargest bank in Chad and early in 2007 in BICA, thelargest bank in Central Africa Republic of whichregulatory approval is pending.

We expanded our distribution by increasing thenumber of branches and offices from 162 to 305;introduced 109 ATMs; 58 kiosks and over 500 directsales agents.

We raised US$87 million in additional capital tostrengthen our capital base and to finance thegrowth of the Group.

We launched a major microfinance initiative andpartnered with ACCION to implement it across ournetwork.

Our Strategy

In 2006, we held a Group-wide retreat in which wedefined the strategic framework and targets to guidethe collective efforts of the Group for the next threeyears. These strategic objectives will form the basisof all balanced scorecards not only for the leadershipteam but for all employees in the Group. These targetand principles have been set out in a manifestowhich will be made available in all branches andpremises across the Group.

Our core strategic objectives are to build scalethrough acquisitions and organic growth; grow ourcustomer base, products , distribution and markets;achieve efficiency and reduce costs throughoperational and product excellence; and deliversuperior shareholder returns.

Our priorities for the plan period cover:

Building Financial Strength:Strengthening our capital base to support the growthof existing businesses, expansion into new marketsand the ability to withstand unexpected marketdevelopments. We intend to raise additional equityand long-term capital from the local, regional andinternational markets and to maintain a conservativecapital adequacy ratio.

Focusing on Operational Excellence:To improve efficiency and better manage costs, weare investing in improving our technology, processesand systems. Work has already commenced onsignificant upgrades or replacements of our existingoperating systems and an overhaul of our operatingprocesses. This will involve standardization andcentralization of our middle and back officeoperations in a shared services centre for the Groupwhich is currently under construction along withback up and disaster recovery sites.

Improving Our Business Mix:We are working to build a balanced businessfranchise that is diversified not only by geographybut by products, customers and markets. We havecommenced an aggressive push into the retailmarket and are investing in ATMs, POSs, kiosks anddirect sales agents.

Expanding Distribution:We will expand our distribution by expanding intonew markets and deepening our presence in existingmarkets. We are also expanding our contact pointsby opening new branches, increasing the number ofour sales people and entering into alliances toexpand our reach.

Building Capacity: With the increasing competitiveness in the bankingsector, there is increasing competition for talent. Weare investing in deepening our leadership poolthrough a combination of training, exposure todifferent operating environments and an attractivework environment along with a revampedrecruitment and compensation system. Of increasingimportance is the need to nurture a sales andcustomer service culture in our people to enhanceour market competitiveness.

26

2006 Annual Report

Chief Executive’s Review (continued)

Risk Management and Controls:As we grow our network, we are exposed toincreased risks. We are taking steps to address thisby investing in modern risk management tools thatwill enable us better manage and control the variousrisks we are exposed to.

Nigeria:Nigeria represents the second largest and one of thefastest growing markets in Sub-Sahara Africa.Greater success in Nigeria will significantly affectthe overall performance of the Group. Accordingly,we are taking steps to improve our competitivenessthrough organic growth and acquisitions. Weacquired the branches and the deposit liabilities ofone of the failed banks and are looking to acquiremore to increase our distribution and market share.Our discussions with FirstBank of Nigeria weredesigned to move Ecobank to a leadership position inthe Nigerian market

Our Markets

We operate in emerging African markets that offerexcellent growth opportunities for efficientbusinesses. There are several reasons why webelieve these markets are particularly attractive.

Firstly, they are grossly underbanked compared withother emerging markets with further room forgrowth not only in product offerings but also in newmarkets and new customers.

Secondly, some of these markets, especially thecountries of Central Africa are experiencingsignificant economic growth from the discovery andproduction of crude oil.

Thirdly, the reduction in civil and social unrest andthe liberalization of many of these economies haverekindled interest and attracted new investmentsfrom international investors.

Fourthly, there is a large untapped retail sector thatis poorly serviced. Empirical data from the mobiletelephone sector and the microfinance sectorssuggest that with the appropriate strategy, thereexists a large retail market to be tapped.

The key to success in these markets is not dissimilarto what obtains in other markets. There is the needto build scale in distribution, in capital and in talent.

We are addressing these challenges by raisingadditional capital, by opening new branches and officesand by recruiting, training and retaining talented people.

Our operations are currently grouped into 4 regionscovering West and Central Africa. These arediscussed in more detail in the Business andFinancial review section of this annual report.

Execution

In 2006, we further refined our business strategy andtook several initiatives to accelerate the execution ofthe strategy. Key performance indicators weredeveloped to track the key strategic goals of scale,growth, efficiency and shareholder value.

We successfully completed most of the goals weoutlined in the 2006 annual report and in some casessubstantially exceeded our targets.

Scale: We grew the size of the bank by over 59% to abalance sheet of US$3.5 billion. We ended the yearwith a market capitalisation of US$1.44 billionmaking us one of the top 10 banks in Sub-SaharaAfrica ( excluding the Republic of South Africa ) interms of size and market capitalisation. We alsoextended our geographical reach.

In many of these markets, we saw a significant gainin market share arising from a more aggressivecustomer and deposit acquisition strategy and theopening of new branches.

Growth: We grew gross revenues by 46% to US$419million. Deposits grew by 88% to US$2.5 billion andprofits grew by 75% to US$129 million. We grew ourcustomer base by over 65% to half a million customersand the number of branches increased by 83% to 305.Through alliances and alternative channels, thenumber of customer contact points increased from 197to 1,370. A significant part of this growth was due to theincreasing success of our retail strategy.

27


In terms of countries, we increased our countrypresence to 15 from 13 and to 18 early in 2007,further deepening our presence in West Africa andextending our network in Central Africa. We believethe full impact of our growth initiatives will begin toshow in the second half of 2007.

We also have identified professionals to drive ourinitiative to grow revenues in wholesale, retail,investment and transaction banking and havelaunched new products in cash management andtrade that leverage on our unique regional presence.

Our “Ecobank Everywhere” strategy has improvedaccessibility and reach, which together with a moreoutward focus, positions the Group to grow its corebusinesses. We not only offer our products throughour branches and sales force but also throughalliances, outsourcing and kiosks.

Efficiency: Even as we grew the Group, our operatingmetrics remained stable and in some cases showedconsiderable improvement during the year underreview. Operating losses measured as a percentageof profit before tax which improved to 3% from 4%.Our operating margin increased by 47% fromUS$236 million to US$348 million; the cost/incomeratio improved slightly to 59% from 63%; and non-performing loans as a percentage of total loansimproved from 13% to 8%.

Improving efficiency, building operational excellenceand improving customer service are prerequisites forachieving the strategic objectives of Ecobank. Acomplete review of our technology platform includingthe hardware, software and telecommunications wasundertaken. As a result, the Group is now implementinga shared services centre that will include a data centre,call centre, shared gateways and other value-addedservices that are designed to improve efficiency andcustomer service.

The Group is taking steps to centralize its middle andback office operations in a shared services centre. Workon this commenced in 2006 and when completed,should result in considerable costs savings andefficiency improvements. Service levels are beingdeveloped for all major operating processes in theGroup and these are currently being rolled out.

During 2006 we launched the ONEBANK project tofurther integrate our operations and activities acrossthe countries in which we operate. In addition to theshared services centre (the first of its kind by a bankin West and Central Africa), this will includereplacing our current technology platform (hardware and software) with more powerful andmore robust and scalable systems capable ofmeeting our growing needs in the medium term,upgrading and modernizing our processes andimproving and further standardizing our physical andoperating infrastructure such as our branches.

Shareholder Value: Measured in terms of totalshareholder returns ( capital gains plus income fromdividends and other payouts), 2006 was a record yearfor our shareholders. The share price moved from 80cents a share at the beginning of 2006 to 1 dollars ashare. Along with a 1 for 5 bonus issue and a dividendof 3 cents a share, this gave a total return toshareholders of 59% for the year. This will be verydifficult to match in the coming years.

A focus on shareholder value and a consequence ofour listing means that we will increasingly adopt astock market approach in running the Company andresponding to shareholder issues. In addition tochanges to our management information andreporting system, we have set up an investorrelations function that will focus on addressing theinformation and other needs of our shareholders in atimely and efficient manner.

Conclusion

We are confident we have the right strategy. Ourfocus going forward is on execution: building scale,growing the business, improving efficiency anddelivering superior shareholder returns

Arnold Ekpe Group Chief Executive Officer

28

… Manifesto

Building a world class African Banking Group

Non-negotiables

Key Measures

GROWTH

COMPLIANCE

RISK MANAGEMENT

Organic andby acquisitions

Zero tolerance for non-compliance

Effectively manage risksacross our businesses

PEOPLE STRENGTH

Committed and productive

work force

BUSINESS GROWTH

Grow revenues, customersand distribution

OPERATIONAL EXCELLENCE

To improve efficiency andreduce costs

CUSTOMER SERVICE

Efficient and convenient customer service

FINANCIAL PERFORMANCE

Superior financial performance

FINANCIAL STRENGTH

Adequate capital to support the business

BALANCED BUSINESS MIX

Across markets, customersand products

BRAND DEVELOPMENT

Position Ecobank as the leading bank brand

in Africa

PUTTING THE CUSTOMER FIRST

Meeting customer needs promptly and accurately

PERFORMANCE

Continuously striving to do better

PUTTING THE INSTITUTION FIRST

Ecobank before personal and other interests

SCALE

Leading Bank in Middle Africa

EFFICIENCY

Operational and product excellence

SHAREHOLDER VALUE

Superiorshareholder

returns+ + =

…The Pan African Bank

29


Business and Financial Review

Financial Summary

By all standards Ecobank delivered the strongestfinancial results in the history of the Group in 2006.Profit before tax increased by 75% to US$129.3 million.Profit after tax followed similar trend, growing by 70%to US$86.4 million. Profit attributable to equityshareholders also improved to US$69.4 million,representing growth rate of 67%. This offers improvedearnings per share of 13 cents (2005: 11 cents).

Recording a growth rate of 59% total assets of theGroup increased to US$3.5 billion.

Likewise almost all the ratios of the Group reportedsignificant improvements. Cost-to-income ratioimproved to 59% from previous year’s level of 63% asa result of strong growth in revenues. Despiteincreased capital and asset base, return on averageequity and return on average assets were 3% (2005:2.5%) and 23% (2005: 23.8%) respectively.

Fig 1: Profit before tax (PBT) - Profit after tax (PAT)2002 - 2006 (US$m)

Key Factors impacting the Results

Revenue Growth

Operating income grew by 47% to US$348 million asa result of strong growth in net interest income andfees and commissions. Net interest income was upby 66% to US$181 million resulting from stronggrowth in loans and advances.

Non interest revenue improved by 31% to US$167million strongly influenced by 26% increase in fees

and commissions and 22% increase in tradingincome. The ratio of non interest income to totalincome was 48% compared to 54% in 2005.

Impairment Losses

Despite significant increase in loans and advances, loanloss expense improved to US$13 million compared toUS$15 million recorded in 2005. Ecobank Benincontributed US$5 million to this due to deterioration inexposures in cotton and construction industries. Theimprovement in loan loss expense was as a result ofsignificant recoveries made in Ecobank Côte d’Ivoireand Ecobank Togo for credits which had earlier beenfully provided for, as well as better risk managementacross the Group. Recovery efforts have beenintensified and it is expected that substantial part of theprovisioned amounts will be recovered in 2007.

Operating Expenses

Operating expenses increased by 39% to US$206million compared to revenue growth of 47%, hencethe improvement in efficiency ratio.

Fig 2: Revenue and Operating Expenses 2002 - 2006 (US$m)

Staff cost increased by 43% as a result of increase instaff numbers to support the increasing businessvolumes. Ecobank Nigeria increased its staffstrength from under 1,000 to close to 3,000 tosupport extensive expansion in the branch network.

Other operating expenses increased by 37% in line withgrowing business volumes, technology improvement andcost relating to aggressive retail strategy of the Group.

30

2006 Annual Report

Balance Sheet Growth

Underlying the 59% growth in total assets was asignificant growth recorded in deposits which alsoenabled the Group to increase its credit portfolio.

Fig 3: Balance Sheet Growth 2002 - 2006 (US$b)

Liquidity

Customer deposits increased by 63% to US$2.5 billionrepresenting 83% of total liabilities (2005: 81%) with10.8% one month net liquidity gap (2005: 17.4%).Average deposits grew by 34.5% to US$2.0 billion. Thisstrong deposit growth was aided by the Group’saggressive retail strategy culminating into massiveincrease in branch network in all the bankingsubsidiaries, particularly Ecobank Nigeria.

Risk Assets

With increased product offerings in all our businesssegments, average loans and advances to customersgrew to US$1.5 billion, representing an increase of 51%over 2005. The Group’s net loan loss expenses amountedto 0.9% of average loans compared to 1.5% in 2005.

Capital

During the year the Company continued its capitalraising programme which began in 2005. Mainlyfrom private placements, a total of US$87 millionwas raised primarily from international investors.

This contributed strongly to increase in total equityfrom US$304 million to US$482 million, offering Tierone capital ratio of 19.0% (2005: 21.7%). This was thesame as total capital ratio, well above target of 12%.

Business Segments

The Group continued to pursue diverse strategies inenhancing the performance of all its businesssegments, reflecting positively on performance.

Retail Banking

The Group’s retail banking business was structuredto provide a range of products and services to meetthe needs of clients in small and medium scalebusinesses as well as the micro finance sector.

During the year, the Group launched a new retailstrategy to leapfrog its performance in the segment.We focused on organic investments and acquisitions,resulting in addition of 143 branches and offices,most of which were in Nigeria. Branches and officesgrew from 162 to 305.

The Group continued to develop mutually beneficialrelations with partners of common interest. Ecobanksigned a partnership agreement with ACCIONInternational to develop its micro finance business.

The Group’s card programme continued to make morein roads in the West African sub region. EcobankNigeria, yet again, led the way in the card business inNigeria. In addition to being the first bank to launchMasterCard in Nigeria, the subsidiary issued the firstlocal currency credit card in West Africa under thename, Ecobank Naira Credit Card. Ecobank Ghanacontinued to pioneer the Visa Card business in Ghana.In the UEMOA Region, Ecobank Card maintained themarket leader position. By close of the year over156,000 (2005: 90,000) cards had been issued and over100 (2005: 35) ATMs were in use.

The Group is aware of some specific risks associatedwith this segment of the market. Thereforeappropriate risks mitigation factors have beeninstituted to enable it enjoy the full benefits of theenormous potential the segment offers.

Business and Financial Review (continued)

31


Wholesale Banking

Ecobank specializes in serving the public sector,multinational institutions, financial institutions and othermajor players in the private sector which constitute thewholesale banking segment of the market.

Ecobank has particularly been competitive in servingthis niche despite increasing competition for the smallnumber of the clients.

Investment Banking

Our investment banking subsidiary, EcobankDevelopment Corporation (EDC) continued to offerits wholesale clients a range of investment bankingcapabilities in corporate and project finance,advisory services and asset management. EDC isrepresented in UEMOA, WAMZ and Nigeria. Plansare far advanced to create a similar vehicle inCEMAC Region to enable the subsidiary serve in allthe markets in which Ecobank operates.

Treasury

Treasury and money market activities represented asignificant part of the wholesale bank’s activities.Ecobank is a major player in the foreign exchange andmoney markets in the West African sub-region. TheGroup continued to leverage on its geographicalspread in West and Central Africa in assisting clients’cross-border transactions in the sub regions.

Technology and Operations

The Group continues to build a modern technologyplatform to facilitate speedy and cost effectiveservice to its clients. eProcess International SA, thetechnology arm of the Group has achievedtremendous success in providing a shared gatewayfor our payment system and for our regional ATMnetwork aimed at improving the efficiency of supportfor all our subsidiaries.

In 2006, our planned shared services centre commencedoperations in Accra, Ghana. By close of 2007 a number ofoperational activities across the Group will be centralizedand processed at the Shared Service Centre. The fullimpact of this service, in the form of cost reduction,efficiency and speed, will be realized in the coming years.

Regional Operations

The Group is organized along geographical region todrive performance of the various subsidiaries.Contributions of the various regions to the Group’sprofit before tax and assets are shown below:

Fig 4: Contribution of Regions to Profit Before Tax

Fig 5: Contribution of Regions to Assets

32

2006 Annual Report


UEMOA Region

With 10 countries, the Union Economique etMonétaire Ouest Africaine (UEMOA) Zone has apopulation of 80 million with Gross Domestic Product(GDP) of US$43 billion.

Ecobank increased its presence in the region byopening a new subsidiary in Guinea Bissau inJanuary 2007. The region, which has 8 of the 16banking subsidiaries, contributed 42% to the Group’sprofit before tax, and 46% to assets. The continuedturnaround of Ecobank Côte d’Ivoire’s business,despite continued political difficulties in the country,impacted positively on the region’s results.

There were significant recoveries of previouslyprovisioned loans in Ecobank Côte d’Ivoire andEcobank Togo. On the other hand, Ecobank Benincontributed 38% to the Group’s loan loss expensedue to deterioration in its exposures in cotton andconstruction industries. It is expected that greaterpart of this provision will be recovered in 2007.

New regional and local banks continued their influxinto UEMOA Region. However, Ecobank is wellpositioned to withstand the increasing competition.

US$’000

Revenues 146,378Profit Before Tax 57,855Deposits 1,145,498Shareholders' Funds 131,789Total Assets 1,687,577

WAMZ Region

The West Africa Monetary Zone (WAMZ) comprisessix countries with total population of 39 million and aGDP of US$14 billion.

In November 2006, Ecobank Sierra Leonecommenced banking operations, bringing the totalnumber of subsidiaries in the region to 4. Plans arefar advanced to open a subsidiary in the only countryin the region left to be covered, Gambia, in 2007.

Despite continued depreciation of the Guinean francagainst the US dollar, the WAMZ Region contributed

24% to the Group’s profit before tax with 17% of Groupassets. Ecobank Ghana continued to be the main driverin this region, contributing 75% of the region’s pre taxprofit. Ecobank Liberia is well positioned to takeadvantage of the restoration of democracy in Liberia andthe subsequent inflow of economic aid to revamp theeconomy. This is evidenced by the increase in thesubsidiary’s profit before tax from just US$10,000 in2005 to US$2.5 million in 2006.

US$’000

Revenues 71,426Profit Before Tax 33,945Deposits 457,856Shareholders' Funds 68,155Total Assets 618,596

CEMAC Region

The Communauté Economique et Monétaire de l’AfriqueCentrale (CEMAC) Region consists of six countries with apopulation of 38 million and a GDP of US$38 billion.

Until November 2006, Ecobank’s representatiion in theCEMAC Region was only Ecobank Cameroon. Theregion contributed 3% to the Group’s profit before tax.With 8% of the Group’s assets, the Group’s expansionin the region has been through acquisition.

In a bid to be an increasing beneficiary of the businessopportunities in this oil and gas rich region, the Companyacquired a 60% holding in Banque Internationale pourAfrique du Tchad (BIAT) in Chad in October 2006. Thebank has been renamed as Ecobank Chad. In January2007, the Company also acquired a 72% interest in BankInternationale pour la Centrafrique (BICA), in CentralAfrica. It is expected that the impact of these acquisitionswould be felt in the subsequent years by the regionmaking increased contribution to the Group’sperformance. A license was also obtained in February2007 to open a new subsidiary in Sao Tome & Principe.

US$’000

Revenues 15,326Profit Before Tax 4,070Deposits 238,683Shareholders' Funds 21,569Total Assets 285,916

33


Nigeria

With a population of over 130 million and a GDP ofUS$96 billion, Africa’s most populous country, Nigeria,consists of a region on its own.

Ecobank Nigeria recorded the strongest growth in theGroup by increasing its profit before tax by about three-fold to US$40 million. With this, the region contributed29% of the Group’s profit before tax and 28% of theGroup’s assets, making it the second highestcontributor. One of the influential factors is therecapitalization of the subsidiary by close of 2005, first tomeet the Central Bank minimum capital requirement,and second, to reposition the bank in the Nigerianmarket. Ecobank Nigeria combined acquisition andorganic growth in its expansion programme in 2006. Thesubsidiary acquired over 60 branches of All States TrustBank (ASTB) in Nigeria. In addition, Ecobank Nigeriaincreased its branch network across the country. Withthe full impact of the expansion programme the regionis expected to take commanding lead in contribution tothe Group’s performance.

US$’000

Revenues 116,620Profit Before Tax 40,296Deposits 656,931Shareholders' Funds 223,266Total Assets 1,034,960

Risk Management

Risk Management function in the Group covers allareas of risk including credit, price/market, interestrate, exchange rate, liquidity, operational risk and legalrisk. The primary objective of the risk managementfunction is to establish acceptable risk limits andthereafter to ensure that exposure to these risks stayswithin these limits. The operational, legal andregulatory risk management functions are intended toensure adequacy as well as proper functioning ofinternal policies and procedures as well as compliancewith prevailing laws and regulations. The ultimateresponsibility for the effective management of risk lieswith the Board of Directors both at the Group level andat the level of the operating subsidiaries.

The Risk Committee of the board reviews and approvesthe risk management policies for the Group, subject toany local regulatory amendments, and reviews andmonitors adherence to these policies.

The Group manages risks through the implementationand monitoring of a rigorous system of policies andprocedures, the enforcing of a detailed and timelyreporting system, and internal risk review programwhich systematically audits operations in all countries. Each operating unit is periodically reviewed by a teamof reviewers that includes representatives of allrelevant functional units and consolidated into an Auditand Risk Reviews team. This team covers all relevantrisks families, including strategic and franchise risk,legal and compliance risk, financial reporting risk,staffing and organizational risk, credit risk, market risk,operational risk, systems and technology risk, andcountry risk.

Strategy in using Financial Instruments

By its nature, the Group’s activities are principallyrelated to the use of financial instruments. The Groupaccepts deposits from customers at both fixed andfloating rates and for various periods and seeks toachieve interest margins commensurate with itsobjectives by investing these funds in higher yieldingassets. The Group seeks to increase these margins byconsolidating short-term funds and lending for variableperiods at higher rates whilst maintaining sufficientliquidity to meet all claims that might fall due.

The Group seeks to maintain interest margins that willenable to remain profitable after accounting for netprovisions, through lending to commercial and retailborrowers with a range of credit standings. Suchexposures involve not just on-balance sheet loans andadvances but also off-balance commitments such asguarantees, letters of credit and performance andbonds.

The Group also trades in financial instrumentswhere it takes positions in government securities,money market and foreign exchange instruments totake advantage of short-term market movements inthe financial markets, interest rate and commodityprices. The board places trading limits on the level ofexposure that can be taken in relation to bothovernight and intra day market positions. Foreignexchange and interest rate exposures associatedwith these instruments are normally offset byentering into counterbalancing positions, therebycontrolling the variability in the net cash amountsrequired to liquidate market positions.

34

2006 Annual Report


Credit Risk

Management of credit, operational, and market risk andother non-financial risks falls under the responsibility ofthe Risk Management department at the Group Office(“Group Risk Management”). The Risk Committee ofthe Board has overall supervisory oversight and isinformed regularly of the status of the risks that theGroup is facing. The Risk Committee, in turn, reports tothe Board for appropriate decisions.

Group Risk Management fulfills its mission at differentlevels: risk strategy formulation and execution, riskpolicy development, credit decision making, riskmonitoring, identification and follow-up of problemloans, assessment of risk asset portfolio and creditprocess in the subsidiaries, and training.

Group Risk Management is headed by a Group ChiefRisk Officer, who reports directly to the Group ChiefExecutive Officer. Within each subsidiary bank, GroupRisk Management is represented by a Country RiskManagement department which is completelyindependent of all the operating departments whichinitiate credit transactions. The Department is managedby a Country Risk Manager who reports administrativelyto the Managing Director of the subsidiary andfunctionally to the Group Chief Risk Officer.

Within each business region, Group RiskManagement is represented by a Regional RiskManager who reports administratively to theRegional Director and functionally to the Group ChiefRisk Officer. Regional Risk Managers assist RegionalDirectors in approving and managing risk in all thecountries under their supervision.

Group takes on exposure to credit risk which is therisk that a counterparty will be unable to meet theirobligations when due. The Group structures thelevels of credit risk it undertakes by placing limits onthe amount of risk acceptable in relation to anyoneborrower, or groups of borrowers, and togeographical and industrial segments. Such risk ismonitored on an ongoing basis and subject tofrequent review. Limits on the level of credit risk byproduct, industry sector and by country are approvedannually by the Group Risk Management.

Exposure to anyone borrower including financialinstitutions is further restricted by sub-limits coveringon and off-balance sheet exposures. Actual exposuresagainst limits are monitored daily and consolidatedmonthly for Group Risk Management review.

Exposure to credit risk is managed through regularanalysis of the ability of borrowers and potentialborrowers to meet interest and capital repaymentobligations and by changing these lending limits whereappropriate. Exposure to credit risk is also managed inpart by obtaining collateral and corporate and otherguarantees. A significant portion of lending tomultinational corporations and government is unsecured.

Market Risk

Market Risk is supervised by the Risk Committee ofthe board. Limits are proposed by the countries,approved and set for specific currencies andinstruments as appropriate, under the supervision ofthe respective Regional and Country Risk Managers,with the overview of the Group Treasurer.

A Group Market Risk Officer is expected to beappointed by the end of 1st quarter 2007, to overseethat function, to ensure proper regular monitoring ofexposures against approved limits.

Business Risk

Business Risk relates to the Risk of failing tocompete effectively in the market place, due toinappropriate strategies, inadequate resources orchanges in the economic or competitiveenvironment.The risk is managed through Group performancemanagement processes. Regular reviews are carriedout by the Group management covering financialperformance, capital allocation and returns, riskstatistics, human resource capability andappropriate actions are taken where necessary.

Legal and Compliance Risk

Compliance risks include the risk of loss, includingreputational loss, arising from non compliance withregulatory requirements in a country in which theGroup operates. Legal risks include the risk of lossarising from defective documentation or contracts orfrom defective transactions or contracts giving riseto claims or liability on the institution or theimpairment in the institution’s ability to enforce titleto assets, or risks arising from changes in law.

The risk Committee reviews and recommendsappropriate policies to manage legal and compliancerisks across the Group. The Audit and ComplianceCommittee of the Board through the Audit andCompliance function is responsible for monitoringadherence to the Group compliance policies andprocedures.

35


Operational Risk

Operational Risk refers to the risk of direct orindirect losses arising from the failure of technology,processes, infrastructure, personnel and othernoncredit and market/price risks that have anoperational impact. The Group seeks to ensure thatkey operational risks are identified and managed in atimely and effective manner through the appropriatepolicies, procedures and tools. To enhance itsoperational risk management capability, the Grouphas acquired OpRisk Manager, an automatedsoftware tools from HSBC, which it started rolling inearly 2007. Furthermore, a Group Operational RiskManager has been appointed to devote enoughresources to this risk aspect.

Group Risk Management function and the Regional /Country Risk Management function are responsiblefor supervising and directing the management ofoperational risks across the Group.

Compliance with operational risk policies is theresponsibility of all managers in the Group. Everycountry has responsibility for ensuring thatappropriate and effective operational riskmanagement frameworks are in place to manageand monitor operational risks.

Independent Monitoring

The Group Audit and Compliance function is anindependent function and reports directly to the GroupChief Executive Officer and the Board of Directorsthrough the Audit and Compliance Committee. TheGroup Audit and Compliance function providesindependent review and confirmation that Groupstandards, policies and procedures are being adhered to.

That independence has been further strengthened bythe fact that Group Risk Management is no longerinvolved in the close organization of the Audit Reviews.

A new Manager has been appointed as of January 1st,2007, with a Compliance Officer to be appointed by endof 1st quarter 2007.

Capital

The Group seeks to maintain adequate capital andreserves to meet foreseeable future developments andtargets a minimum total capital ratio of 12%.

The Group’s capital is principally invested in itsoperating subsidiaries. The Group doesn’t generallyhedge the value of its investments in subsidiaries.

Basle II

The Group is taking steps to comply with Basel II. TheGroup risk function has adopted a program to achievecompliance by 2008 or earlier, if so required by localregulations (which is not yet the case). This involves theimplementation of automated credit and operationalrisk management tools (such as Moody’s or OpRiskManager) that meet the Basel II requirements, whichtriggered significant changes in the way we manageand record our credit and operational risks.

Inflation and Exchange Rate Movements

The Group holds assets which are predominantlyfinancial in nature. The impact of inflation andexchange rate movements on the Group is significantlydifferent from that of a Company or Group that has ahigh proportion of its assets in property and equipment.During periods of inflation and/or currencydepreciation, monetary assets tend to lose value interms of purchasing power, while the value of fixedassets may remain unaffected.

Monetary gains and/or losses are reported in thefinancial statements in the manner required by IFRS.

International Financial Reporting Standards(IFRS)

The Group accounts for 2006 have been prepared inaccordance with IFRS. This has necessitated changesto our reporting and disclosure requirements which aredetailed in the accounts. IFRS does not change the netcash flows or the underlying economics of ourbusiness. However, it does have an impact on thereporting requirements at the holding Company level.

Laurence do RegoGroup Chief Financial Officer

36

2006 Annual Report

Responsibility for Annual FinancialStatements

The directors are responsible for the preparation ofthe financial statements for each financial year thatgive a true and fair view of the state of financialaffairs of the Company at the end of the year and ofits profit or loss. This responsibility includes:

(a) ensuring that the Company keeps proper accountingrecords that disclose, with reasonable accuracy,the financial position of the Company;

(b) designing, implementing and maintaininginternal controls relevant to the preparation andfair presentation of financial statements that arefree from material misstatement, whether due tofraud or error; and

(c) preparing the Company’s financial statementsusing suitable accounting policies supported byreasonable and prudent judgements and estimatesthat are consistently applied.

The directors accept responsibility for the annualfinancial statements, which have been preparedusing appropriate accounting policies supported byreasonable and prudent judgements and estimates,in conformity with International Financial Reporting Standards.

The directors are of the opinion that the financialstatements give a true and fair view of the state ofthe financial affairs of the Company and of its profitor loss. The directors further accept responsibilityfor the maintenance of accounting records that maybe relied upon in the preparation of financialstatements, as well as adequate systems of internalfinancial control.

Nothing has come to the attention of the directors toindicate that the Company will not remain a goingconcern for at least twelve months from the date ofthis statement.

Approval of Annual Financial Statements

The annual financial statements, presented on pages38 to 82 were approved by the board of directors on16 March 2007 and signed on its behalf by:

Directors' Responsibilities Statement

Mandé SidibéChairman

Arnold EkpeChief Executive Officer

37


Report of the Independent Auditors

To the Shareholders of EcobankTransnational Incorporated

We have audited the accompanying consolidatedfinancial statements of Ecobank TransnationalIncorporated (together, the Group) for the year ended31 December 2006 set out on pages 38 to 82.

Directors’ responsibility for the financial statements

The directors are responsible for the preparation andfair presentation of these financial statements inaccordance with International Financial Reporting.This responsibility includes: designing, implementingand maintaining internal control relevant to thepreparation and fair presentation of financialstatements that are free from materialmisstatement, whether due to fraud or error;selecting and applying appropriate accountingpolicies; and making accounting estimates that arereasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express an independentopinion on these financial statements based on ouraudit. We conducted our audit in accordance withInternational Standards on Auditing. Thosestandards require that we comply with ethicalrequirements and plan and perform the audit toobtain reasonable assurance that the financialstatements are free from material misstatement.

An audit involves performing procedures to obtainaudit evidence about the amounts and disclosures inthe financial statements. The procedures selecteddepend on the auditor’s judgment, including theassessment of the risks of material misstatement ofthe financial statements, whether due to fraud orerror. In making those risk assessments, the auditorconsiders internal control relevant to the entity’spreparation and fair presentation of the financialstatements in order to design audit procedures thatare appropriate in the circumstances, but not for thepurpose of expressing an opinion on theeffectiveness of the entity’s internal control. An auditalso includes evaluating the appropriateness ofaccounting policies used and the reasonableness ofaccounting estimates made by management, as wellas evaluating the overall presentation of the financialstatements.

We have obtained all the information andexplanations that to the best of our knowledge andbelief were necessary for the purposes of our auditand we believe that the audit evidence we obtained issufficient and appropriate to provide a basis for ouropinion.

Opinion

In our opinion, the accompanying consolidatedfinancial statements, give a true and fair view of thefinancial position of the Group at 31 December 2006and of its financial performance and cash flows forthe year then ended in accordance with InternationalFinancial Reporting Standards.

PricewaterhouseCoopersChartered AccountantsAbidjan, Côte d'Ivoire

PricewaterhouseCoopersChartered Accountants

Lagos, Nigeria

38

2006 Annual Report

Consolidated Income Statement

Note Year ended 31 December

2006 2005US$’000 US$’000

Interest income 2 249,586 155,423Interest expense 2 (68,183) (46,139)

Net interest income 181,403 109,284

Fee and commission income 3 110,302 89,280 Fee and commission expense 3 (2,381) (3,605)

Net fee and commission income 107,921 85,675

Operating lease rentals 5,022 3,911Dividend income 4 2,935 339Net trading income 5 41,619 33,981 Gains less losses from investment securities 17 8 9 Other operating income 9,556 3,152Impairment losses on loans and advances 8 (13,091) (14,898)Operating expenses 6 (206,074) (147,724)

Profit before income tax 129,299 73,729

Income tax expense 9 (42,934) (22,790)

Profit for the year 86,365 50,939

Attributable to:Equity holders of the parent Company 69,350 41,502

Minority interest 17,015 9,437

86,365 50,939

Earnings per share for profit attributable to the equityholders of the parent Company during the year(expressed in United States dollars per share):

� basic 10 0.13 0.11� diluted 10 0.13 0.11

The notes on pages 60 to 82 are an integral part of these consolidated financial statements

39


Consolidated Balance Sheet

Note As at 31 December

2006 2005US$’000 US$’000

ASSETSCash and balances with central banks 11 308,959 298,571 Treasury bills and other eligible bills 12 137,345 261,047 Loans and advances to banks 13 554,311 362,160 Trading securities 14 647 412 Derivative financial instruments 15 20 - Other financial instruments at fair valuethrough profit and loss 14 100 5,223 Loans and advances to customers 16 1,919,366 1,022,140 Investment securities:

- available-for-sale 17 349,728 10,902 - held-to-maturity 17 - 113,644

Pledged assets 29c 2,021 - Intangible assets 18 4,607 1,596 Property, plant and equipment 19 116,420 73,872 Deferred income tax assets 27 7,832 6,454 Other assets 20 102,383 43,209 Total assets 3,503,739 2,199,230

LIABILITIESDeposits from banks 21 118,617 121,236 Other deposits 22 5,027 18,564 Derivative financial instruments and other trading liabilities 15 - 22 Deposits from customers 23 2,500,178 1,532,478 Borrowed funds 24 50,660 25,977 Other liabilities 25 294,970 167,530 Current income tax liabilities 32,225 14,679 Deferred income tax liabilities 27 10,845 7,698 Retirement benefit obligations 28 8,902 7,167 Total liabilities 3,021,424 1,895,351

EQUITYCapital and reserves attributable to theCompany's equity holders Share capital 30 264,115 179,256 Retained earnings 31b 65,209 23,558 Other reserves 31a 52,764 18,733

382,088 221,547

Minority interest 100,227 82,332

Total equity 482,315 303,879

Total liabilities and equity 3,503,739 2,199,230

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2006 Annual Report

Consolidated Statement of Changes in Equity

Note Attributable to equity holders of the Company

Share Others Retained Minority Totalcapital reserves earnings Interest

US$’000 US$’000 US$’000 US$’000 US$’000

At 1 January 2005 90,779 20,318 16,122 38,039 165,258

Deemed acquisition cost following arise in Group share in Ecobank Nigeria 31 - - (17,779) 17,779 -

Currency translation differences 31 - (13,350) - (2,585) (15,935)

Net gains not recognised in theincome statement - (13,350) (17,779) 15,194 (15,935)

Net profit - - 41,502 9,437 50,939

Total recognised income for 2005 - (13,350) 23,723 24,631 35,004

Dividend for 2004 32 - - (6,234) (2,231) (8,465)Reserves of previouslyunconsolidated subsidiaries 31 - - (121) (3) (124)Restatement of brought forwardreserves of subsidiaries 31 - - 1,833 - 1,833Transfer to general banking reserves 31 - 3,421 (3,421) - -Transfer to statutory reserve 31 - 8,344 (8,344) - -

Issue of shares 30 88,477 - - 21,896 110,373

At 31 December 2005 / 1 January 2006 179,256 18,733 23,558 82,332 303,879

Currency translation differences 31 - 15,142 - 3,263 18,405Net gains not recognised in theincome statement - 15,142 - 3,263 18,405

Net profit - - 69,350 17,015 86,365

Total recognised income for 2006 - 15,142 69,350 20,278 104,770

Dividend for 2005 32 - - (10,712) (2,314) (13,026)Reserves of previously unconsolidated subsidiaries 31 - - - (69) (69)Revaluation reserves - Available -for-sales 31 - 1,902 - - 1,902Transfer to general banking reserves 31 - 350 (350) - -Transfer to statutory reserve 31 - 16,637 (16,637) - -Proceeds from private placement 30 83,354 - - - 83,354Proceeds from public offer 30 3,927 - - - 3,927

Share issue transaction costs 30 (2,422) - - - (2,422)

At 31 December 2006 264,115 52,764 65,209 100,227 482,315

41


Note Year ended 31 December

2006 2005US$’000 US$’000

Cash flows from operating activitiesInterest and discount receipts 238,644 154,289 Interest payments (60,532) (42,558)Dividends received 2,935 339 Fee and commission received 110,302 89,280 Fee and commission paid (2,381) (3,605)Other income received 53,762 36,119 Cash payments to employees and suppliers (197,893) (140,905)Cash payments to retired employees (629) (267)Income taxes paid (24,021) (28,128)

Cash flows from operating profits before changesin operating assets and liabilities: 120,187 64,564

Changes in operating assets and liabilities - net (increase)/decrease in Mandatory reserve

deposits with central banks (51,502) 20,082 - net (increase)/ decrease in loans and advances to banks (126,438) 26,685 - net (increase)/ decrease in trading securities (235) 874 - net decrease in other financial assets at fair value 5,123 3,724 - net increase in derivative financial assets (20) - - net increase in loans and advances to customers (897,226) (98,479)- net (increase)/ decrease in sundry receivables and prepayments (45,882) 55,410 - net (decrease)/ increase in other deposits (13,537) 18,564 - net increase in deposits from customers 967,700 67,361 - net (decrease)/ increase in derivative liabilities (22) 22 - net increase in other liabilities 124,136 21,131

Net cash from / (used in) operating activities 82,284 179,938

Cash flows from investing activitiesAcquisition of subsidiary 35 17,929 - Purchase of software 18 (927) (1,159)Purchase of property and equipment 19 (72,767) (35,857)Proceeds from sale of property and equipment 7,216 6,109 Purchase of securities 17 (278,306) (62,685)Proceeds from sale and redemption of securities 59,141 3,312

Net cash used in investing activities (267,714) (90,282)

Cash flows from financing activitiesProceeds from borrowed funds 24,683 788 Issue of ordinary shares 30 84,859 88,477 Issue of shares (minority interest) - 21,896 Deposit for shares (4,347) 5,410 Purchase of treasury shares 30 - - Sale of treasury shares 30 - - Dividends paid to minority shareholders (2,314) (2,231)Dividends paid 31 (10,712) (6,234)

Net cash from financing activities 92,169 108,106

Net (increase) / decrease in cash and cash equivalents (93,261) 197,762

Cash and cash equivalents at beginning of year 33 509,980 309,087 Effects of exchange differences on cash andcash equivalents (3,223) 3,131

Cash and cash equivalents at end of year 33 413,496 509,980

Consolidated Cash Flow Statement

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2006 Annual Report

1. General Information

Ecobank Transnational Incorporated (ETI) and itssubsidiaries (together, the Group) provide retail,corporate banking and investment banking servicesin various parts of West and Central Africa. TheGroup has operations in over 17 countries andemploys over 5,860 people.

Ecobank Transnational Incorporated is a limitedliability Company and is incorporated and domiciledin the Republic of Togo. The address of its registeredoffice is as follows: 2 Avenue Sylvanus Olympio,Lome, Togo. The Company has a primary listing onthe Ghana stock exchange, Nigeria stock exchangeand the Bourse Regionale Des Valeurs Mobilieres(Abidjan) Cote D'Ivoire.

These consolidated financial statements have beenapproved for issue by the Board of Directors on 16th

March 2007.

2. Summary of Significant Accounting Policies

The principal accounting policies applied in thepreparation of these financial statements are set outbelow. These policies have been consistently appliedto all the years presented, unless otherwise stated.

2.1 Basis of Presentation

The financial statements have been prepared inaccordance with International Financial ReportingStandards (IFRS). The financial statements havebeen prepared under the historical cost convention,as modified by the revaluation of available for salefinancial assets, financial assets and financial liabilitiesheld at fair value through the profit or loss and allderivative contracts.

The application of amendments to publishedstandards and intepretations which became effectivefrom 1 January 2006 did not result in substantialchanges in the Group's accounting policies.

The preparation of financial statements inconformity with IFRS requires the use of certaincritical accounting estimates.

It also requires management to exercise itsjudgement in the process of applying the Company'saccounting policies. The areas involving a higherdegree of judgement or complexity, or areas whereassumptions and estimates are significant to theconsolidated financial statements, are disclosed insection 4 of the accounting policies.

2.2 Consolidation

a) Subsidiaries

Subsidiaries are all entities (including special purposeentities) over which the Group has the power to governthe financial and operating policies generallyaccompanying a shareholding of more than one half ofthe voting rights. The existence and effect of potentialvoting rights that are currently exercisable orconvertible are considered when assessing whether theGroup controls another entity. Subsidiaries are fullyconsolidated from the date on which control istransferred to the Group. They are de-consolidatedfrom the date on which control ceases.

The purchase method of accounting is used toaccount for the acquisition of subsidiaries by theGroup. The cost of an acquisition is measured as thefair value of the assets given, equity instrumentsissued and liabilities incurred or assumed at the dateof exchange, plus costs directly attributable to theacquisition. Identifiable assets acquired and liabilitiesand contingent liabilities assumed in a businesscombination are measured initially at their fairvalues at the acquisition date, irrespective of theextent of any minority interest. The excess of the costof acquisition over the fair value of the Group’s shareof the identifiable net assets acquired is recorded asgoodwill (Accounting Policies 2.12a). If the cost ofacquisition is less than the fair value of the netassets of the subsidiary acquired, the difference isrecognised directly in the income statement.

Inter-company transactions, balances and unrealisedgains on transactions between Group companies areeliminated. Unrealised losses are also eliminatedunless the transaction provides evidence of impairmentof the asset transferred.

The accounting policies of subsidiaries have beenchanged where necessary to ensure consistency withthe policies adopted by the Group.

Accounting Policies

43


b) Transactions and minority interests

The Group applies a policy of treating transactionswith minority interests as transactions with partiesexternal to the Group. Disposals to minority interestsresult in gains and losses for the Group that arerecorded in the income statement. Purchases fromminority interests result in goodwill, being thedifference between any consideration paid and therelevant share acquired of the carrying value of netassets of the subsidiary.

c) Associates

Associates are all entities over which the Group hassignificant influence but not control, generallyaccompanying a shareholding of between 20% and50% of the voting rights. Investments in associatesare accounted for by the equity method of accountingand are initially recognised at cost. The Group’sinvestment in associates includes goodwill (net ofany accumulated impairment loss) identified onacquisition.

The Group’s share of its associates’ post-acquisitionprofits or losses is recognised in the income statement;its share of post-acquisition movements in reservesis recognised in reserves. The cumulative post-acquisition movements are adjusted against thecarrying amount of the investment. When theGroup’s share of losses in an associate equals orexceeds its interest in the associate, including anyother unsecured receivables, the Group does notrecognise further losses, unless it has incurredobligations or made payments on behalf of theassociate.

Unrealised gains on transactions between the Groupand its associates are eliminated to the extent of theGroup’s interest in the associates. Unrealised lossesare also eliminated unless the transaction providesevidence of an impairment of the asset transferred.Accounting policies have been changed wherenecessary to ensure consistency with the policiesadopted by the Group.

2.3 Foreign Currency Translation

a) Functional and presentation currency

Items included in the financial statements of each ofthe subsidiaries are measured using the currency ofthe primary economic environment in which theentity operates ("the functional currency'). The financialstatements are presented in dollars, which is theCompany's functional and presentation currency.

b) Transactions and balances

Foreign currency transactions are translated into thefunctional currency using the exchange rates prevailingat the dates of the transactions. Foreign exchangegains and losses resulting from the settlement ofsuch transactions and from the translation at year-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised inthe income statement.

Changes in the fair value of monetary securitiesdenominated in foreign currency classified as availablefor sale are analysed between translation differencesresulting from changes in the amortised cost of thesecurity and other changes in the carrying amount ofthe security. Translation differences related to changesin the amortised cost are recognised in profit or loss,and other changes in the carrying amount arerecognised in equity.

Translation differences on non-monetary items,such as equities held at fair value through profit orloss, are reported as part of the fair value gain orloss.

44

2006 Annual Report

c) Group companies

The results and financial position of all Groupentities (none of which has the currency of ahyperinflationary economy) that have a functionalcurrency different from the presentation currency aretranslated into the presentation currency as follows:

(i) assets and liabilities for each balance sheetpresented are translated at the closing rate atthe date of that balance sheet;

(ii) income and expenses for each incomestatement are translated at average exchangerates (unless this average is not a reasonableapproximation of the cumulative effect of therates prevailing on the transactions, in whichcase income and expenses are translated at thedates of the transactions); and

(iii) all resulting exchange differences are recognisedas a separate component of equity

On consolidation, exchange differences arising fromthe translation of the investment in foreign entities,and of borrowings and other currency instrumentsdesignated as hedges of such investments, are takento shareholders' equity. When a foreign operation issold, such exchange differences are recognised inthe income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on theacquisition of a foreign entity are treated as assetsand liabilities of the foreign entity and translated atthe closing rate.

2.4 Interest Income and Expense

Interest income and expense for all interest-bearingfinancial instruments, except for those classified asheld for trading or designated at fair value throughprofit or loss, are recognised within ‘interest income’and ‘interest expense’ in the income statement usingthe effective interest method.

The effective interest method is a method of calculatingthe amortised cost of a financial asset or a financialliability and of allocating the interest income or interestexpense over the relevant period.

The effective interest rate is the rate that exactlydiscounts estimated future cash payments orreceipts through the expected life of the financialinstrument or, when appropriate, a shorter period tothe net carrying amount of the financial asset orfinancial liability. When calculating the effectiveinterest rate, the Group estimates cash flowsconsidering all contractual terms of the financialinstrument (for example, prepayment options) butdoes not consider future credit losses. Thecalculation includes all fees and points paid orreceived between parties to the contract that are anintegral part of the effective interest rate, transactioncosts and all other premiums or discounts.

Once a financial asset or a Group of similar financialassets has been written down as a result of animpairment loss, interest income is recognised usingthe rate of interest used to discount the future cashflows for the purpose of measuring the impairmentloss.

2.5 Fee and Commission Income

Fees and commissions are generally recognised onan accrual basis when the service has been provided.Loan commitment fees for loans that are likely to bedrawn down are deferred (together with relateddirect costs) and recognised as an adjustment to theeffective interest rate on the loan. Loan syndicationfees are recognised as revenue when the syndicationhas been completed and the Group has retained nopart of the loan package for itself or has retained apart at the same effective interest rate as the otherparticipants. Commission and fees arising fromnegotiating, or participating in the negotiation of, atransaction for a third party – such as the arrangementof the acquisition of shares or other securities or thepurchase or sale of businesses – are recognised oncompletion of the underlying transaction. Portfolioand other management advisory and service fees arerecognised based on the applicable service contracts,usually on a time-apportioned basis.

2.6 Dividend Income

Dividends are recognised in the income statement whenthe entity’s right to receive payment is established.

Accounting Policies (continued)

45


2.7 Financial Assets

The Group classifies its financial assets in thefollowing categories: financial assets at fair valuethrough profit or loss; loans and receivables; held-to-maturity investments; and available-for-salefinancial assets. Management determines theclassification of its investments at initial recognition.

a) Financial assets at fair value through profit or loss

This category has two sub-categories: financialassets held for trading, and those designated at fairvalue through profit or loss at inception.

A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose ofselling or repurchasing in the near term or if it is partof a portfolio of identified financial instruments thatare managed together and for which there is evidenceof a recent actual pattern of short-term profit-taking.Derivatives are also categorised as held for tradingunless they are designated as hedging instruments.

b) Loans and receivables

Loans and receivables are non-derivative financialassets with fixed or determinable payments that arenot quoted in an active market, other than: (a) thosethat the entity intends to sell immediately or in theshort term, which are classified as held for trading,and those that the entity upon initial recognitiondesignates as at fair value through profit or loss; (b)those that the entity upon initial recognitiondesignates as available for sale; or (c) those forwhich the holder may not recover substantially all ofits initial investment, other than because of creditdeterioration.

c) Held-to maturity

Held-to maturity investments are non-derivativefinancial assets with fixed or determinable paymentsand fixed maturities that the Group's managementhas the positive intention and ability to hold to maturity.If the Group were to sell other than an insignificantamount of held-to-maturity assets, the entire categorywould be tainted and reclassified as available for sale.

d) Available-for-sale

Available-for-sale investments are those intended tobe held for an indefinite period of time, which may besold in response to needs for liquidity or changes ininterest rates, exchange rates or equity prices.

Purchases and sales of financial assets at fair valuethrough profit or loss, held to maturity and availablefor sale are recognised on trade date- the date onwhich the Group commits to purchase or sell theasset. Loans are recognised when cash is advancedto the borrowers. Financial assets are initiallyrecognised at fair value plus transaction costs for allfinancial assets not carried at fair value through profitor loss. Financial assets are derecognised when therights to receive cash flows from the financial assetshave expired or where the Group has transferredsubstantially all risks and rewards of ownership.

Available-for-sale financial assets and financial assetsat fair value through profit or loss are subsequentlycarried at fair value. Loans and receivables and held-to-maturity investments are carried at amortisedcost using the effective interest method. Gains andlosses arising from changes in the fair value of thefinancial assets at fair value through profit or loss'category are included in the income statement in theperiod in which they arise. Gains and losses arisingfrom changes in the fair value of available-for-salefinancial assets are recognised directly in equity,until the financial asset is derecognised or impaired.At this time the cumulative gain or loss previouslyrecognised in equity is recognised in profit or loss.However, interest calculated using the effective interestmethod is recognised in the income statement.Dividends on available-for-sale equity instrumentsare recognised in the income statement when theentity's right to receive payment is established.

The fair values of quoted investments in active marketsare based on current bid prices. If the market for afinancial asset is not active (and for unlistedsecurities), the Group establishes fair value by usingvaluation techniques. These include the use of recentarm's length transactions, discounted cash flowanalysis, option pricing models and other valuationtechniques commonly used by market participants.

46

2006 Annual Report

2.8 Off Setting Financial Instruments

Financial assets and liabilities are offset and the netamount reported in the balance sheet when there isa legally enforceable right to offset the recognisedamounts and there is an intention to settle on a netbasis, or realise the asset and settle the liabilitysimultaneously.

2.9 Sale and Repurchase Agreement

Securities sold subject to repurchase agreements(‘repos’) are reclassified in the financial statementsas pledged assets when the transferee has the rightby contract or custom to sell or repledge the collateral;the counterparty liability is included in amounts dueto other banks, deposits from banks, other depositsor deposits due to customers, as appropriate.Securities purchased under agreements to resell(‘reverse repos’) are recorded as loans and advancesto other banks or customers, as appropriate. Thedifference between sale and repurchase price istreated as interest and accrued over the life of theagreements using the effective interest method.Securities lent to counterparties are also retained inthe financial statements.

2.10 Derivative Financial Instruments and Hedge Accounting

Derivatives are initially recognised at fair value onthe date on which a derivative contract is enteredinto and are subsequently remeasured at their fairvalue. Fair values are obtained from quoted marketprices in active markets, including recent markettransactions, and valuation techniques, includingdiscounted cash flow models and options pricingmodels, as appropriate. All derivatives are carried asassets when fair value is positive and as liabilitieswhen fair value is negative.

Certain derivatives embedded in other financialinstruments, such as the conversion option in aconvertible bond, are treated as separate derivativeswhen their economic characteristics and risks arenot closely related to those of the host contract andthe host contract is not carried at fair value throughprofit or loss.

These embedded derivatives are measured at fair valuewith changes in fair value recognised in the incomestatement unless the Group chooses to designate thehybrid contacts at fair value through profit or loss.

The method of recognising the resulting fair valuegain or loss depends on whether the derivative isdesignated as a hedging instrument, and if so, thenature of the item being hedged. The Group designatescertain derivatives as either:

(a) hedges of the fair value of recognised assetsor liabilities or firm commitments (fair valuehedge);

(b) hedges of highly probable future cash flowsattributable to a recognised asset or liability,or a forecasted transaction (cash flow hedge); or

(c) hedges of a net investment in a foreign operation(net investment hedge).

Hedge accounting is used for derivatives designatedin this way provided certain criteria are met.

The Group documents, at the inception of thetransaction, the relationship between hedged itemsand hedging instruments, as well as its riskmanagement objective and strategy for undertakingvarious hedge transactions. The Group alsodocuments its assessment, both at hedge inceptionand on an ongoing basis, of whether the derivativesthat are used in hedging transactions are highlyeffective in offsetting changes in fair values or cashflows of hedged items.

2.11 Impairment of Financial Assets

a) Assets carried at amortised cost

The Group assesses at each balance sheet date whetherthere is objective evidence that a financial asset orGroup of financial assets is impaired.


47


A financial asset or a Group of financial assets isimpaired and impairment losses are incurred only ifthere is objective evidence of impairment as a result ofone or more events that occurred after the initialrecognition of the asset (a ‘loss event’) and that lossevent (or events) has an impact on the estimated futurecash flows of the financial asset or Group of financialassets that can be reliably estimated.

The criteria that the Group uses to determine that thereis objective evidence of an impairment loss include:

� Delinquency in contractual payments of principalor interest;� Cash flow difficulties experienced by the borrower

(for example, equity ratio, net incomepercentage of sales);� Breach of loan covenants or conditions; � Initiation of bankruptcy proceedings;� Deterioration of the borrower’s competitive

position;� Deterioration in the value of collateral; and� Downgrading below investment grade level.

The estimated period between a loss occurring andits identification is determined by local managementfor each identified portfolio. In general, the periodsused vary between three months and 12 months; inexceptional cases, longer periods are warranted.

The Group first assesses whether objective evidenceof impairment exists individually for financial assetsthat are individually significant, and individually orcollectively for financial assets that are not individuallysignificant. If the Group determines that no objectiveevidence of impairment exists for an individuallyassessed financial asset, whether significant or not,it includes the asset in a Group of financial assetswith similar credit risk characteristics andcollectively assesses them for impairment. Assetsthat are individually assessed for impairment and forwhich an impairment loss is or continues to berecognised are not included in a collectiveassessment of impairment.

If there is objective evidence that an impairment losson loans and receivables or held-to-maturityinvestments carried at amortised cost has beenincurred, the amount of the loss is measured as thedifference between the asset's carrying amount and

the present value of estimated future cash flows(excluding future credit losses that have not beenincurred) discounted at the financial asset's originaleffective interest rate. The carrying amount of theasset is reduced through the use of an allowanceaccount and the amount of the loss is recognised inthe income statement. If a loan or held-to-maturityinvestment has a variable interest rate, the discountrate for measuring any impairment loss is the currenteffective interest rate determined under thecontract. As a practical expedient, the Group maymeasure impairment on the basis of an instrument'sfair value using an observable market price.

The calculation of the present value of the estimatedcash flows of a collateralised financial asset reflectsthe cash flows that may result from foreclosure lesscosts for obtaining and selling the collateral, whetheror not the foreclosure is probable.

For the purposes of a collective evaluation ofimpairment, financial assets are grouped on thebasis of similar credit risk characteristics (i.e., onthe basis of the groups grading process thatconsiders asset type, industry, geographicallocation, collateral type, past-due status and otherrelevant factors).

Those characteristics that are relevant to theestimation of future cash flows for groups of suchassets by being indicative of the debtors' ability topay all amounts due according to the contractualterms of the assets being evaluated.

Future cash flows in a Group of financial assets thatare collectively evaluated for impairment are estimatedon the basis of the contractual cash flows of theassets in the Group and historical loss experience forassets with credit risk characteristics similar tothose in the Group. Historical loss experience isadjusted on the basis of current observable data toreflect the effects of current conditions that did notaffect the period on which the historical lossexperience is based and to remove the effects ofconditions in the historical period that do notcurrently exist.

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2006 Annual Report

Estimates of changes in future cash flows for groupsof assets should reflect and be directionally consistentwith changes in related observable data from periodto period (for example, changes in unemploymentrates, property prices, payment status, or other factorsindicative of changes in the probability of losses inthe Group and their magnitude). The methodologyand assumptions used for estimating future cashflows are reviewed regularly by the Group to reduceany differences between loss estimates and actualloss experience.

When a loan is uncollectible, it is written off againstthe related provision for loan impairment. Such loansare written off after all the necessary procedureshave been completed and the amount of the loss hasbeen determined.

If, in a subsequent period, the amount of the impair-ment loss decreases and the decrease can be relatedobjectively to an event occurring after the impairmentwas recognised (such as an improvement in thedebtor's credit rating), the previously recognisedimpairment loss is reversed by adjusting theallowance account. The amount of the reversal isrecognised in the income statement in impairmentcharge for credit loss.

b) Assets classified as available for sale

The Group assesses at each balance sheet date whetherthere is objective evidence that a financial asset or aGroup of financial assets is impaired. In the case ofequity investments classified as available for sale, asignificant or prolonged decline in the fair value ofthe security below its cost is considered in determiningwhether the assets are impaired. If any such evi-dence exists for available-for-sale financial assets,the cumulative loss – measured as the differencebetween the acquisition cost and the current fairvalue, less any impairment loss on that financialasset previously recognised in profit or loss – isremoved from equity and recognised in the incomestatement. Impairment losses recognised in theincome statement on equity instruments are notreversed through the income statement.

If, in a subsequent period, the fair value of a debt ins-trument classified as available for sale increases andthe increase can be objectively related to an eventoccurring after the impairment loss was recognisedin profit or loss, the impairment loss is reversedthrough the income statement.

2.12 Intangible Assets

a) Goodwill

Goodwill represents the excess of the cost of acquisitionover the fair value of the Group's share of the netidentifiable assets of the acquired subsidiary/asso-ciate at the date of acquisition. Goodwill on acquisi-tion of subsidiaries is included in intangible assets.Goodwill on acquisitions of associates is included ininvestments in associates. Goodwill is testedannually for impairment and carried at cost lessaccumulated impairment losses. Gains and losseson the disposal of an entity include the carryingamount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for thepurpose of impairment testing. Each of those cash-generating units is represented by each primaryreporting segment (see Accounting Policies 2.2).

b) Computer software

Acquired computer software licences are capitalisedon the basis of the costs incurred to acquire andbring to use the specific software. These costs areamortised on the basis of the expected useful lives.

Costs associated with developing or maintaining com-puter software programs are recognised as an expenseincurred. Costs that are directly associated with theproduction of identifiable and unique software productscontrolled by the Group, and that will probably generateeconomic benefits exceeding costs beyond one year,are recognised as intangible assets. Direct costsinclude software development employee costs and anappropriate portion of relevant overheads.

Computer software development costs recognisedas assets are amortised using the straight-linemethod over their useful lives.


49


2.13 Property, Plant and Equipment

All property, plant and equipment is stated at historicalcost less depreciation. Historical cost includesexpenditure that is directly attributable to theacquisition of the items.

Subsequent costs are included in the asset'scarrying amount or are recognised as a separateasset, as appropriate, only when it is probable thatfuture economic benefits associated with the itemwill flow to the Group and the cost of the item can bemeasured reliably. All other repairs and maintenanceare charged to the income statement during thefinancial period in which they are incurred.

Land is not depreciated. Depreciation on otherassets is calculated using the straight-line methodto allocate their cost to their residual values overtheir estimated useful lives, as follows:� Building 20 - 40 years� Leasehold improvements 25 years, or over the

period of the lease if less than 25 years� Equipment and motor vehicles 3 - 8 years.

The assets' residual values and useful lives arereviewed, and adjusted if appropriate, at eachbalance sheet date.

Assets that are subject to amortisation are reviewedfor impairment whenever events or changes incircumstances indicate that the carrying amountmay not be recoverable. An asset's carrying amountis written down immediately to its recoverableamount if the asset's carrying amount is greaterthan its estimated recoverable amount. Therecoverable amount is the higher of the asset's fairvalue less costs to sell and value in use.

Gains and losses on disposal are determined bycomparing proceeds with carrying amount. Theseare included in the income statement.

2.14 Cash and Cash Equivalents

For the purposes of the cash flow statement, cashand cash equivalents comprise cash and non-restricted balances with central banks, treasury billsand other eligible bills, loans and advances to banks,amounts due from other banks and short-termgovernment securities.

2.15 Provisions

Provisions for restructuring costs and legal claimsare recognised when: The Group has a present legalor constructive obligation as a result of past events;it is more likely than not that an outflow of resourceswill be required to settle the obligation; and theamount has been reliably estimated.

Where there are a number of similar obligations, thelikelihood that an outflow will be required in settlementis determined by considering the class of obligationsas a whole. A provision is recognised even if thelikelihood of an outflow with respect to any one itemincluded in the same class of obligations may besmall.

Provisions are measured at the present value of theexpenditures expected to be required to settle theobligation using a pre-tax rate that reflects currentmarket assessments of the time value of money andthe risks specific to the obligation. The increase inthe provision due to passage of time is recognised asinterest expense.

2.16 Employee Benefits

a) Pension obligations

Group companies operate various pension schemes.The schemes are generally funded through paymentsto insurance companies or trustee-administeredfunds, determined by periodic actuarial calculations.

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2006 Annual Report

A defined benefit plan is a pension plan that definesan amount of pension benefit that an employee willreceive on retirement, usually dependent on one ormore factors, such as age, years of service andcompensation.

A defined contribution plan is a pension plan underwhich the Group pays fixed contributions into a separateentity. The Group has no legal or constructiveobligations to pay further contributions if the funddoes not hold sufficient assets to pay all employeesthe benefits relating to employee service in thecurrent and prior periods.

For defined contribution plans, the Group payscontributions to publicly or privately administeredpension insurance plans on a mandatory, contractualor voluntary basis. The Group has no further paymentobligations once the contributions have been paid.

The contributions are recognised as employee benefitexpense when they are due. Prepaid contributionsare recognised as an asset to the extent that a cashrefund or a reduction in the future payments isavailable.

b) Other post-retirement obligations

The Group also provides gratuity benefits to itsretirees. The entitlement to these benefits is usuallyconditional on the employee remaining in service upto retirement age and the completion of a minimumservice period. The expected costs of these benefitsare accrued over the period of employment using theaccounting methodology described below.

The liability recognised in the balance sheet in respectof the gratuity payments is the present value of thegratuity payment obligation at the balance sheet dateless the fair value of plan assets (if any), togetherwith adjustments for unrecognised actuarial gains orlosses and past service costs. The gratuity paymentobligation is calculated annually by independentactuaries using the projected unit credit method.

The present value of the gratuity payment obligationis determined by discounting the estimated futurecash outflows using interest rates of high-qualitycorporate bonds that are denominated in thecurrency in which the benefits will be paid, and thathave terms to maturity approximating to the terms ofthe related gratuity payment liability.

Actuarial gains and losses arising from experienceadjustments, and changes in actuarial assumptions,are charged or credited to income over the expectedaverage remaining working lives of the relatedemployees. These obligations are valued annually byindependent qualified actuaries.

c) Share-based compensation

The Group operates an equity-settled, share-basedcompensation plan. The fair value of the employeeservices received in exchange for the grant of theoptions is recognised as an expense.

The total amount to be expensed over the vestingperiod is determined by reference to the fair value ofthe options granted, excluding the impact of any non-market vesting conditions (for example, profitabilityand sales growth targets). Non-market vestingconditions are included in assumptions about thenumber of options that are expected to becomeexercisable. At each balance sheet date, the entityrevises its estimates of the number of options thatare expected to become exercisable. It recognisesthe impact of the revision of original estimates, ifany, in the income statement, and a correspondingadjustment to equity over the remaining vestingperiod.

The proceeds received net of any directly attributabletransaction costs are credited to share capital (nominalvalue) and share premium when the options areexercised.


51


2.17 Impairment of Non-financial Assets

Assets that have an indefinite useful life are not subjectto amortisation and are tested annually for impairment.Assets that are subject to amortisation are reviewedfor impairment whenever events or changes incircumstances indicate that the carrying amountmay not be recoverable. An impairment loss isrecognised for the amount by which the asset’scarrying amount exceeds its recoverable amount.The recoverable amount is the higher of an asset’sfair value less costs to sell and value in use. For thepurposes of assessing impairment, assets aregrouped at the lowest levels for which there areseparately identifiable cash flows (cash-generatingunits). Non-financial assets other than goodwill thatsuffered an impairment are reviewed for possiblereversal of the impairment at each reporting date.

2.18 Borrowings

Borrowings are recognised initially at fair value,being their issue proceeds (fair value of considerationreceived) net of transaction costs incurred.Borrowings are subsequently stated at amortisedcost; any difference between proceeds net oftransaction costs and the redemption value isrecognised in the income statement over the period ofthe borrowings using the effective interest method.

Preference shares, which carry a mandatory coupon,or are redeemable on a specific date or at the optionof the shareholder, are classified as financial liabilitiesand are presented in other borrowed funds. Thedividends on these preference shares are recognisedin the income statement as interest expense on anamortised cost basis using the effective interestmethod.

The fair value of the liability portion of a convertiblebond or convertible preference share is determinedusing a market interest rate for an equivalentnon-convertible bond or coupon for an equivalentredeemable preference share. This amount is recordedas a liability on an amortised cost basis untilextinguished on conversion or maturity. Theremainder of the proceeds is allocated to theconversion option. This is recognised and included inshareholders' equity, net of income tax effects.

If the Group purchases its own debt, it is removedfrom the balance sheet, and the difference betweenthe carrying amount of a liability and the considerationpaid is included in net trading income.

2.19 Share Capital

a) Share issue costs

Incremental costs directly attributable to the issue ofnew shares or options or to the acquisition of abusiness are shown in equity as a deduction, net oftax, from the proceeds.

b) Dividends on ordinary shares

Dividends on ordinary shares are recognised inequity in the period in which they are approved by theCompany's shareholders. Dividends for the year thatare declared after the balance sheet date are dealtwith in the subsequent events note.

c) Treasury shares

Where the Company purchases its equity sharecapital, the consideration paid is deducted from totalshareholders' equity as treasury shares until theyare cancelled. Where such shares are subsequentlysold or reissued, any consideration received isincluded in shareholders' equity.

2.20 Segment Reporting

A business segment is a Group of assets and operationsengaged in providing products or services that aresubject to risks and returns that are different from thoseof other business segments. A geographical segment isengaged in providing products or services within aparticular economic environment that are subject torisks and returns that are different from those ofsegments operating in other economic environments.

2.21 Comparatives

Where necessary, comparative figures have beenadjusted to conform with changes in presentation inthe current year.

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2006 Annual Report


3. Financial Risk Management

3.1 Geographical concentration of assets, liabilities and off-balance sheet itemsThe following note incorporates IAS 32 credit risk disclosures, IAS 30 geographical concentrations of assets, liabilitiesand off balance sheet items disclosures

Total Total Credit Gross Capitalassets liabilities commitments Revenues expenditure

US$‘000 US$‘000 US$‘000 US$‘000 US$‘000At 31 December 2006French West Africa(UEMOA) region 1,312,499 1,197,287 170,452 137,671 23,821Nigeria 1,108,446 996,825 571,164 162,216 38,053West African Monetary Zone 430,964 535,356 84,333 90,141 7,201Central Africa 257,402 258,592 91,151 21,954 4,619Other African countries 1,425 3,041 - 25 -Americas 48,900 20,116 1 657 -Asia 11 1 23 - -Europe 344,092 10,206 55,522 6,364 -

3,503,739 3,021,424 972,646 419,028 73,694

At 31 December 2005French West Africa(UEMOA) region 1,021,652 965,358 385,552 130,823 14,337Nigeria 484,140 328,668 257,621 73,989 12,871West African Monetary Zone 331,614 378,760 95,195 64,240 5,646Central Africa 109,917 129,098 30,494 16,378 1,526Other African countries 51,250 49,118 - 6,404 2,538Americas 24,500 15,578 1,185 255 -Asia 284 106 - - -Europe 175,873 28,665 14,376 3,435 -

2,199,230 1,895,351 784,423 295,524 36,918

Economic sector risk concentrations within the loan portfolio were:

2006 2006 2005 2005US$‘000 % US$‘000 %

Agricultural 16,022 1 25,330 2Coffee and cocoa trading 91,718 5 18,617 2Construction 95,868 5 42,541 4Cotton ginning 55,133 3 28,021 3Government and parastatal 111,680 6 25,907 2Manufacturing 267,347 13 161,167 14Mining 32,990 2 21,021 2Petroleum production and distribution 240,697 12 95,320 9Telecommunication 180,869 9 152,965 14Utilities 148,294 7 106,896 10Financial institutions 43,597 2 68,410 6Retail and wholesale trade 384,374 19 247,313 22Others 347,099 17 122,580 11

2,015,688 100 1,116,088 100

3.2 Market riskThe Group takes on exposure to market risks. Market risks arise from open positions in interest rate, currency andequity products, all of which are exposed to general and specific market movements.

53


3. Financial Risk Management (continued)

3.3 Currency riskThe Group takes on exposure to effects of fluctuations in the prevailing foreign currency exchange rates on its financialposition and cash flows. The Board sets limits on the level of exposure by currency and in total for both overnight andthe intra-day positions, which are monitored daily. The table below summarises the Group's exposure to foreign currency exchange rate risk as at 31 December.Included in the table are the Group's assets and liabilities at the carrying amounts, categorised by currency.

Concentrations of assets, liabilities and off balance sheet items

At 31 December 2006 Dollar Euro CFA Naira Cedis Others TotalASSETS US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000Cash and balances with central banks 41,245 14,657 164,602 36,469 30,208 21,778 308,959Treasury bills and other eligible bills - - 45,086 70,344 21,915 - 137,345Loans and advances to banks 206,425 83,888 63,871 183,915 9,506 6,706 554,311Trading securities - - 325 - 322 - 647Derivative financial instruments - - - - 20 - 20Other financial instruments at fairvalue through profit and loss 100 - - - - - 100Loans and advances to customers 116,179 77 1,262,727 408 339 108,779 23,265 1,919,366Investment securities:

- available-for-sale 84 - 124,124 109,286 101,897 14,337 349,728 - held-to-maturity - - - - - - -

Pledged assets - - 72 1,949 - - 2,021 Intangible assets - - 4,338 211 - 58 4,607 Property, plant and equipment 1,335 - 47,754 52,267 10,370 4,694 116,420Deferred income tax assets - - 1,270 5,094 1,376 92 7,832Other assets 6,786 25 41,959 32,137 19,177 2,299 102,383Total assets 372,154 98,647 1 756,128 900,011 303,570 73,229 3,503,739

LIABILITIESDeposits from banks 9,156 11,112 95,278 122 1,915 1,034 118,617Other deposits - - 703 4,324 - - 5,027Derivative financial instruments andother trading liabilities - - - - - - -Due to customers 379,376 47,382 1,365,362 471,343 194,280 42,435 2,500,178Borrowed funds 15,744 - 24,868 - 10,048 - 50,660Other liabilities 25,461 181 93,242 143,315 25,977 6,794 294,970Current income tax liabilities 556 - 12,916 14,849 2,472 1,432 32,225Deferred income tax liabilities 17 - 746 10,072 - 10 10,845Retirement benefit obligations - - 1,798 7,104 - - 8,902Total liabilities 430,310 58,675 1,594,913 651,129 234,692 51,705 3,021,424

Net on-balance sheet position (58,156) 39,972 161,215 248,882 68,878 21,524 482,315Credit commitments 221,207 70,149 175,463 372,914 16,885 116,028 972,646

163,051 110,121 336,678 621,796 85,763 137,552 1,454,961

Concentrations of assets, liabilities and off balance sheet itemsDollar Euro CFA Naira Cedis Others Total

At 31 December 2005 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000Total assets 272,897 79,621 1,130,195 455,890 194,793 65,834 2,199,230Total liabilities 299,871 42,211 1,089,184 241,960 168,896 53,229 1,895,351Net on-balance sheet position (26,974) 37,410 41,011 213,930 25,897 12,605 303,879Credit commitments 139,593 53,485 376,015 163,283 35,180 16,867 784,423

112,619 90,895 417,026 377,213 61,077 29,472 1,088,302

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2006 Annual Report



3.4 Cash flow and fair value interest rate risk

Interest sensitivity of assets, liabilities and off balance sheet items – repricing analysis

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of

changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will

fluctuate because of changes in market interest rates.

The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on both its

fair value and cash flow risks.

Interest margins may increase as a result of such changes but may reduce or create losses in the event that

unexpected movements arise. The Board sets limits on the level of mismatch of interest rate repricing that may be

undertaken.

The table below summarises the Group’s exposure to interest rate risks. Included in the table are the Group’s assets

and liabilities at carrying amounts, categorised by the earlier of contractual repricing or maturity dates.

Non-Up to 1 1 - 3 3 - 12 1 - 5 Over 5 interest Totalmonth month month years years bearing

At 31 December 2006 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

ASSETS

Cash and balances with central banks 159,368 - - - - 149,591 308,959

Treasury bills and other eligible bills 14,041 29,287 87,989 6,028 - - 137,345

Loans and advances to banks 400,909 30,537 27,843 25,792 - 69,230 554,311

Trading securities - 325 - 322 - - 647

Derivative financial instruments - - - 20 - - 20

Loans and advances to customers 853,842 210,621 230,761 511,412 97,947 14,783 1 919,366

Investment securities:

- available-for-sale 120,139 10,143 9,912 186,586 18,065 4,883 349,728

- held-to-maturity - - - - - - -

Other assets 5,753 6,928 3,675 449 - 85,578 102,383

Total assets 1,554,052 287,841 360,180 730,609 116,012 324,065 3,372,759

LIABILITIES

Deposits from banks 66,805 37,245 14,567 - - - 118,617

Other deposits 530 - - - - 4,497 5,027

Due to customers 1,399,934 86,787 143,635 313,233 15,506 541,083 2,500,178

Borrowed funds 201 - - 20,410 30,049 - 50,660

Other liabilities 33,287 17,973 16,934 1,006 - 225,770 294,970

Total liabilities 1,500,757 142,005 175,136 334,649 45,555 771,350 2,969,452

Total interest sensitivity gap 53,295 145,836 185,044 395,960 70,457

55



Non-Up to 1 1 - 3 3 - 12 1 - 5 Over 5 interest Totalmonth month month years years bearing

At 31 December 2005 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

ASSETS

Cash and balances with central banks - - - - - 298,571 298,571

Treasury bills and other eligible bills 12,916 102,326 108,069 37,736 - - 261,047

Loans and advances to banks 232,320 6,396 114,705 8,740 - - 362,160

Trading securities - 301 - - 111 - 412

Loans and advances to customers 408,862 182,952 198,216 201,013 31,096 - 1,022,140

Investment securities:

- available-for-sale - 4,778 - 162 406 5,556 10,902

- held-to-maturity 185 3,605 10,037 65,837 15,053 18,927 113,644

Other assets 4,609 - - - - 38,600 43,209

Total assets 658,892 300,358 431,027 313,488 46,666 361,654 2,112,085

LIABILITIES

Deposits from banks 82,452 22,247 10,228 6,309 - - 121,236

Other deposits - - - 1,000 - 17,564 18,564

Due to customers 690,987 96,236 139,122 75,574 1,046 529,512 1,532,478

Borrowed funds - 1,908 3,752 17,624 2,693 - 25,977

Other liabilities 9,242 - - - - 158,288 167,530

Total liabilities 782,681 120,391 153,102 100,507 3,739 705,364 1,865,785

Total interest sensitivity gap (123,788) 179,967 277,926 212,981 42,927

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2006 Annual Report



3.5 Liquidity riskThe Group is exposed to daily calls on its available cash resources from overnight deposits, current accounts,maturing deposits, loan draw downs, guarantees and from margin and other calls on cash settledinstruments. The Group does not maintain cash resources to meet all of these needs as experience shows thata minimum level of reinvestment of maturing funds can be predicted with a high level of certainty. The table below analyses assets and liabilities of the Group into relevant maturity groupings based on theremaining period at the balance sheet date to the contractual maturity date.

Maturities of assets and liabilities

0 - 30 days 1 - 6 months 6 - 12 months Over 1 year TotalUS$'000 US$'000 US$'000 US$'000 US$'000

At 31 December 2006ASSETSCash and balances with central banks 297,879 10,759 164 157 308,959 Treasury bills and other eligible bills 14,041 29,287 87,989 6,028 137,345 Loans and advances to banks 412,364 40,310 31,051 70,586 554,311 Trading securities - 325 - 322 647 Derivative financial instruments 20 - - - 20 Other financial instruments at fair value - - - 100 100

Loans and advances to customers 875,223 263,005 177,248 603,890 1,919,366 Investment securities:

- available-for-sale 122,439 15,425 512 211,352 349,728 - held-to-maturity - - - - -

Pledged assets 1,949 - - 72 2,021 Intangible assets 346 657 764 2,840 4,607 Property, plant and equipment 11,033 26 19 105,342 116,420 Deferred income tax assets 6,542 366 - 924 7,832 Other assets 37,522 48,663 8,093 8 105 102,383 Total assets 1,779,358 408,823 305,840 1,009,718 3,503,739

LIABILITIESDeposits from banks 66,805 37,245 14,567 - 118,617 Other deposits 1,130 3,897 - - 5,027 Derivative financial instruments and other trading liabilities - - - - - Due to customers 1,821,846 130,115 102,738 445,479 2,500,178 Borrowed funds 201 - - 50,459 50,660 Other liabilities 233,387 37,823 23,733 27 294,970 Current income tax liabilities 23,742 6,957 1,526 - 32,225 Deferred income tax liabilitie 10,171 - - 674 10,845 Retirement benefit obligations 631 367 - 7,904 8,902 Total liabilities 2,157,913 216,404 142,564 504,543 3,021,424

Net liquidity gap (378,913) 192,419 163,276 505,175 482,315

At 31 December 2005Total assets 1,031,057 530,968 219,519 417,686 2,199,230 Total liabilities 1,413,853 253,239 127,049 101,210 1,895,351 Net liquidity gap (382,796) 277,729 92,470 316,476 303,879

57


The matching and controlled mismatching of the maturities and interest rates of assets and liabilities isfundamental to the management of the Group. It is unusual for banks to be completely matched, as transactedbusiness is often of uncertain term and of different types. An unmatched position potentially enhancesprofitability but also increases the risk of losses.

The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearingliabilities as they mature are important factors in assessing the liquidity of the Group and its exposure tochanges in interest rates and exchange rates

Liquidity requirement to support calls under the guarantees and standby letters of credit are considerably less thanthe amount of the commitment because the Group does not generally expect the third party to draw funds underthe agreement. The total outstanding contractual amount of commitment to extend credit does not necessarilyrepresent future cash requirements, as many of these commitments will expire or terminate without being funded.

3.6 Fair value of financial assets and liabilities

The following table summarises the carrying amounts and fair values of those financials assets and liabilitiesnot presented on the Group's balance sheet at their fair value. Bid prices are used to estimate fair values ofassets, whereas offer prices are applied for liabilities.

Carrying value Fair Value

2006 2005 2006 2005 US$'000 US$'000 US$'000 US$'000

Financial AssetsTreasury bills and other eligible bills 137,345 261,047 137,345 261,047 Loans and advances to customers 1 919,366 1,022,140 1,919,366 1,017,790 Investment securities - Available-for-sale 349,728 10,902 349,728 10,902 Investment securities - held-to-maturity - 113,644 - 113,644

Financial LiabilitiesDeposits from banks 118,617 121,236 118,617 121,236 Other deposit 5,027 18,564 5,027 18,564 Deposits from customers 2,500,178 1,532,478 2,500,178 1,532,478 Other borrowed funds 50,660 25,977 50,660 25,977

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2006 Annual Report

a) Due from other banks

Due from other banks include inter-bankplacements and items in the course of collection.The fair value of floating rate placements andovernight deposits is their carrying amount. Theestimated fair value of fixed interest bearing depositsis based on discounted cash flows using theprevailing money-market interest rates for debtswith similar credit risk and remaining maturity.

b) Loans and advances to customers

Loans and advances are net of provisions forimpairment. The estimated fair value of loans andadvances represents the discounted amounts ofestimated future cash flows expected to be received.Expected cash flows are discounted at the currentmarket rates to determine fair value.

c) Investment securities

Investment securities include only interest-bearingassets held to maturity, as assets available-for-sale aremeasured at fair value. Fair value for held to maturityassets is based on market process. Where thisinformation is not available, fair value has beenestimated using discounted cash flow valuationtechniques.

d) Deposits and borrowings

The estimated fair value of deposits with no statedmaturity, which includes non-interest-bearing deposits,is the amount repayable on demand. The estimated fairvalue of fixed interest-bearing deposits and otherborrowings without quoted market prices is based ondiscounted cash flows using interest rates for new debtswith similar remaining maturity.

3.7 Fiduciary activities

The Group provides custody, trustee, corporate

administration, investment management and advisory

services to third parties, which involve the Group making

allocation and purchase and sale decisions in relation to

a wide range of financial instruments. Those assets that

are held in fiduciary capacity are not included in these

financial statements.

4. Critical Accounting Estimates, andJudgements in Applying AccountingPolicies

The Group makes estimates and assumptions thataffect the reported amounts of assets and liabilitieswithin the next financial year. Estimates andjudgements are continually evaluated and are basedon historical experience and other factors, includingexpectations of future events that are believed to bereasonable under the circumstances.

a) Impairment losses on loans and advances

The Group reviews its loan portfolio to assessimpairment at least on a quarterly basis. Indetermining whether an impairment loss should berecorded in the income statement, the Group makesjudgements as to whether there is any observabledata indicating that there is a measurable decreasein the estimated future cash flows from a portfolio ofloans before the decrease can be identified with anindividual loan in that porfolio. This evidence mayinclude observable data indicating that there hasbeen an adverse change in the payment status ofborrowers in a Group, or national or local economicconditions that correlate with defaults on assets inthe Group.

Management uses estimates based on historical lossexperience for assets with credit risk characteristicsand objective evidence of impairment similar tothose in the portfolio when scheduling its future cashflows. The methodology and assumptions used forestimating both the amount and timing of future cahflows are reviewed regularly to reduce anydifferences between loss estimates and actual lossexperience.

b) Fair value of derivatives

The fair value of financial instruments that are notquoted in active markets are determined by usingvaluation techniques.


59


c) Impairment of available for-sale equityinvestments

The Group determines that available-for-sale equityinvestments are impaired when there has been asignificant or prolonged decline in the fair value belowits cost. This determination of what is significant orprolonged requires judgement. In making thisjudgement, the Group evaluates among other factors,the normal volatility in share price. In addition,impairment may be appropriate when there isevidence of a deterioration in the financial health of theinvestee, industry and sector performance, changes intechnology, and operational and financing cash flows.

d) Held-to-maturity investments

The Group follows the guidance of IAS 39 onclassifying non-derivative financial assets with fixedor determinable. Payments and fixed maturity asheld-to maturity. This classification requiressignificant judgement. In making this judgement, theGroup evaluates its intention and ability to hold suchinvestments to maturity. If the Group fails to keepthese investments to maturity other than for thespecific circumstances- for example, selling aninsignificant amount close to maturity- it will berequired to reclassify the entire class as available-for-sale. The investments would therefore bemeasured at fair value not amortised cost.

e) Income taxes

The Group is subject to income taxes in numerousjurisdictions. Significant estimates are required indetermining the regional provision for income taxes.There are many transactions and calculations forwhich the ultimate tax determination is uncertainduring the ordinary course of business.

The Group recognises liabilities for anticipated taxissues based on estimates of whether additionaltaxes will be due. Where the final tax outcome ofthese matters is different from the amounts thatwere initially recorded, such differences will impactthe income tax and deferred tax provisions in theperiod in which such determination is made.

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2006 Annual Report

Notes to the Consolidated Financial Statements

1. Business segments

The Company organises its investments alonggeographical regions to reflect and manage the risksof doing business across diverse geographic regions.The segments are:

1 - Union Economique et Monétaire Ouest Africaine(UEMOA): This region comprises all subsidiariesand associated companies within the UEMOAmonetary zone. Countries in this zone share acommon currency. This region currentlyincludes subsidiaires in Benin, Burkina, Côted'Ivoire, Guinea Bissau, Mali, Niger, Senegal,Togo. For the purpose of regional segment,Cape Verde is also included in the UEMOAregion.

2 - West African Monetary Zone (WAMZ):This region comprises all subsidiaries andassociated companies in West African countriesnot included in the common monetary zonedescribed as UEMOA. This region currentlyincludes subsidiaires in Ghana, Guinea, Liberiaand Sierra Leone

3 - Communauté Economique et Monétaire d'AfriqueCentrale (CEMAC): This region comprises allsubsidiaries and associated companies withinthe CEMAC monetery zone. Countries in thiszone share a common currency. Cameroon andTchad are the countries currently included inthis segment.

4 - Nigeria. This region comprises all affiliates inNigeria.

Other Group operations comprise fund management,institutional finance and providing computer services,none of which constitutes a separately reportablesegment.

Transactions between the business segments are onnormal commercial terms and conditions.

Funds are ordinarily allocated between segments,resulting in funding cost transfers disclosed inoperating income. Interest charged for these funds isbased on the Group's cost of capital. There are noother material items of income or expense betweenthe business segments.

Segment assets and liabilities comprise operatingassets and liabilities, being the majority of thebalance sheet, but exclude items such as taxationand borrowings.

Internal changes and transfer pricing adjustmentshave been reflected in the performance of eachbusiness. Revenue sharing agreements are used toallocate external customer revenues to a businesssegment on a reasonable basis.

The following table shows the Group's performanceby business segments.

61


UEMOA WAMZ Nigeria CEMAC Other Eliminations Group US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

At 31 December 2006External revenues 146,378 71,426 116,620 15,326 6,811 (8,097) 348,464

Segment result 57,855 33,945 40,296 4,070 478 (7,344) 129,299 Income tax expense (18,180) (9,315) (12,779) (1,943) (717) - (42,934)Profit for the year 86,365

Segment assets 1,687,577 618,596 1,034,960 285,916 34,715 (158,025) 3,503,739

Total assets 3,503,739

Segment liabilities 1,234,577 535,356 997,013 288,592 34,684 (68 798) 3,021,424

Total liabilities 3,021,424

Other segments items:Capital expenditure 18,367 7,201 37,897 4,614 5,615 - 73,694 Depreciation 6,246 2,648 4,034 863 1,104 - 14,895 Impairment charge-loans 5,166 833 6,238 854 - - 13,091 Restructuring costs - - 19 - - - 19

At 31 December 2005External revenues 107,166 56,411 55,134 10,640 13,898 (6,898) 236,351

Segment result 36,950 24,202 13,611 3,082 5,287 (9,403) 73,729 Income tax expense (9,404) (7,290) (4,504) (1,255) (337) - (22,790)Profit for the year 50,939

Segment assets 1,145,473 463,412 522,282 129,978 243,178 (305,093) 2,199,230

Total assets 2,199,230

Segment liabilities 1,043,417 415,285 320,797 123,563 87,256 (94,967) 1,895,351

Total liabilities 1,895,351

Other segments items:Capital expenditure 14,337 5,646 12,871 1,526 2,538 - 36,918 Depreciation 5,011 2,337 5,025 602 968 - 13,943 Impairment charge-loans 7,667 2,554 3,801 876 - - 14,898 Restructuring costs 265 - - - - - 265

Capital expenditure comprises additions to property and equipment (Note 19), software (Note 18) includingadditions resulting from acquisitions through business combinations.

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2006 Annual Report

Year ended 31 December

2006 20052. Net Interest Income US$’000 US$’000

Interest incomePlacements and short term funds 24,242 10,998 Treasury bills and investment securities 34,381 31,133 Loans and advances 183,406 111,385 Other 7,557 1,907

249,586 155,243

Interest expense 6,043 5,196 Current accounts 9,126 6,939Savings deposits 45,060 26,231Time deposits 7,954 7,773Borrowed funds 68,183 46,139

3. Net Fee and Commission Income

Fee and commission incomeCredit related fees and commissions 44,308 40,237 Corporate finance fees 8,276 2,720 Portfolio and other management fees 33,864 2,802 Asset management and related fees 2,992 2,641 Other fees 20,862 40,880

110,302 89,280Fee and commission expenseBrokerage fees paid 268 92 Other fees paid 2,113 3,513

2,381 3,605

The Group provides custody, trustee, corporate administration, investment management and advisory servicesto third parties, which involve the Group making allocation and purchase and sale decisions in relation to awide range of financial instruments. Those assets that are held in a fiduciary capacity are not included in thesefinancial statements.

Notes to the Consolidated Financial Statements (continued)

63



2006 20054. Dividend Income US$’000 US$’000

Trading securities 9 7 Available-for-sale securities 2,926 332

2,935 339

5. Net Trading Income

Foreign exchange:- translation gains less losses (3,410) 5,365 - transaction gains less losses 45,029 28,616

41,619 33,981

6. Operating Expenses

Directors' emoluments 2,237 905 Staff costs (Note 7) 93,883 65,765

Administrative expenses:- Rent, rates and utilities 13,444 10,114 - Insurance 5,117 3,980 - Advertising and promotion 4,871 4,352 - Professional fees 8,030 3,362 - Operational losses and fines 4,054 2,819 - Communications 9,472 4,993 - Business travels 6,415 3,231 - Board activities 1,544 1,225 - Training 2,921 2,165 - Repairs and maintenance 9,835 7,796 - Supplies and other services 9,954 6,164 - Donations 654 710 - Other administrative expenses 18,047 14,034

Depreciation (Note 19) 14,895 13,943 (Profit)/loss on sale of property and equipment (85) (228)

Impairment charges:- doubtful receivables (139) 1,054

Software costs 906 1,075 Restructuring costs 19 265

206,074 147,724

64

2006 Annual Report


2006 20057. Staff Cost US$’000 US$’000

Wages and salaries 84,129 54,140 Social security costs 6,479 4,580 Pension costs:

- defined contribution plans 108 61 Other post retirement benefits (Note 28) 3,167 6,984

93,883 65,765

8. Impairment Losses on Loans and Advances

Amounts due from other banks (Note 13) 4 275 Loans and advances to customers 13,087 14,623

13,091 14,898

9. Income Tax Expense

Current tax 41,567 24,952 Deferred tax (Note 27) 1,367 (2,162)

42,934 22,790

Further information about deferred income tax is presented in Note 27.The tax on the Group's profit before tax differs from the theoretical amount that would arise using the basictax rate of the parent as follows

Profit before tax 129,299 73,729 Weighted average tax for the Group as parent Companyis not subject to tax 46,490 26,358 Effect of different tax rates in other countries - - Income not subject to tax (10,204) (5,772)Expenses not deductible for tax purposes 7,507 1,767 Utilisation of previously unrecognised tax losses (859) (1,143)Others - 1,580 Income tax expense 42,934 22,790


65


10. Earnings per Share

BasicBasic earnings per share is calculated by dividing the net profit attributable to equity holders of the Companyby the weighted average number of ordinary shares in issue during the year, excluding the average number ofordinary shares purchased by the Company and held as treasury shares.


2006 2005US$’000 US$’000

Profit attributable to equity holders of the Company 69,350 41,502

Weighted average number of ordinary shares in issue 518,963 373,545

Basic earnings per share (expressed in US$ per share) 0.13 0.11

DilutedThere were no potential dilutive shares in 2006 (2005: nil)

11. Cash and Balances with Central Banks

Cash in hand 101,543 68,947 Balances with central banks other than mandatory reserve deposits 74,782 148,492

Included in cash and cash equivalents (Note 33) 176,325 217,439 Mandatory reserve deposits with central banks 132,634 81,132

308,959 298,571

Mandatory reserve deposits are not available for use in the Group's day to day operations. Cash in hand and balances with central banks and mandatory reserve deposits are non-interest-bearing.

12. Treasury Bills and Other Eligible Bills

Treasury bills 133,338 254,789 Other eligible bills 4,007 6,258

137,345 261,047

Treasury bills and other eligible bills which are for a term of three months, six months or a year are debt securities issued by the various countries in which the Group operates.

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2006 Annual Report


2006 200513. Loans and Advances to Banks US$’000 US$’000

Items in course of collection from other banks 69,077 48,063 Deposits with other banks 218,443 152,730 Placements with other banks 233,360 146,204

520,880 346,997

Loans and advances to other banks 33,435 15,438 Less: allowance for impairment (Note 8) 4 275

554,311 362,160

14. Financial Assets at Fair Value through Profit or Loss (including trading)

Trading:Government bonds 157 124

Equity securities- listed 490 288

Total trading 647 412 Financial assets at fair value through profit and loss(designated at initial recognition) 100 5,223 Total 747 5,635


67


15. Derivative Financial Instruments and Trading Liabilities

The Group uses the following derivative instruments for non-hedging purposes.Currency forwards represents commitments to purchase foreign and domestic currency, including undeliveredspot transactions. Foreign currency and interest rate futures are contractual obligations to receive or pay a netamount based on changes in currency rates or interest rates or buy or sell foreign currency or financialinstitution on a future date at a specified price, established in an organised financial market. The credit risk isnegligible, as futures contracts are collateralised by cash or marketable securities, and changes in the futurescontract value are settled daily with the exchange.

Currency and interest rate swaps are commitments to exchange one set of cash flows for another. Swaps resultin an economic exchange of currencies or interest rate (for example, fixed rate for floating rate) or acombination of all these (i.e., cross-currency interest rate swaps). No exchange of principal takes place, exceptfor certain currency swaps. The Group's credit risk represents the potential cost to replace the swap contractsif counterparties fail to perform their obligation. This risk is monitored on an ongoing basis with reference tothe current fair value, a proportion of the notional amount of the contracts and the liquidity of the market. Tocontrol the level of credit risk taken, the Group assesses counterparties using the same techniques as for itslending activities.

Fair value

Derivatives Contract / notional amount Assets LiabilitiesUS$’000 US$’000

At 31 December 2006Interest rate swaps 20 20 -

Total derivatives assets 20 -

At 31 December 2005Interest rate swaps 22 - (22)

Total derivatives liabilities - (22)

The Group has not designated at initial recognition any financial liability as at fair value through profit

68

2006 Annual Report


2006 200516. Loans and Advances to Customers US$’000 US$’000

a) Analysis by type:

Overdrafts 687,557 394,325 Term loans 1,048,478 467,723Mortgage loans 9,396 7,178 Commercial loans 196,812 186,317 Other 73,445 60,545

2,015,688 1,116,088 Less: allowance for impairment (96,322) (93,948)Net 1,919,366 1,022,140

b) Analysis by security:

Secured against real estate 152,270 100,981 Otherwise secured 972,365 451,629 Unsecured 891,053 563,478

2,015,688 1,116,088

Current 584,405 591,814 Non current 1,431,283 524,274

2,015,688 1,116,088

c) Analysis by performance:

Performing 1,855,518 959,525 Non-performing 160,170 156,563

2,015,688 1,116,088


69



2006 200516. Loans and Advances to Customers (continued) US$’000 US$’000

d) Loan loss movement:

At 1 January 93,948 82,774 Reclassification 4,728 372 Provision for loan impairment 28,412 28,426 Amounts recovered during the year (11,082) (7,197)Loans written off during the year as uncollectible (17,850) (2,753)Exchange difference (1,834) (7,674)At 31 December 96,322 93,948

Loans and advances to customers include finance lease receivablesGross investment in finance leases, receivableNo later than 1 year 224,222 4,586 Later than 1 year and no other than 5 years 58,328 680 Later than 5 years 4,494 -

287,044 5,266 Unearned future finance income on finance leases (1,409) (3,956)Net investment in finance leases 285,635 1,310

The net investment in finance lease may be analysed as follows:No later than 1 year 223,793 746 Later than 1 year and no other than 5 years 57,352 564 Later than 5 years 4,490 -

285,635 1,310

70

2006 Annual Report


2006 200517. Investment Securities US$’000 US$’000

Securities available-for-saleDebt securities - at fair value:

- listed 76,227 1,262 - unlisted 261,453 192

Equity securities - at fair value:- listed 987 - - unlisted 11,162 9,448

349,829 10,902 Impairment loss (101) - Total securities available-for-sale 349,728 10,902

Securities held-to-maturityDebt securities - at amortised cost:

- listed - 26,212 - unlisted 82 87,539

Allowance for impairment (82) (107)Total securities held-to-maturity - 113,644

Total investment securities 349,728 124,546

All debt securities have fixed coupons. Equity securities do not bear interest.The Group has not reclassified any financial asset measured at amortised cost rather than fair value duringthe year (2005: nil).

Gains less losses from investment securities comprise:Derecognition of available-for-sale financial assets 8 9


71


17. Investment Securities (continued)

The movement in investment securities may be summarised as follows:

Available-for-sale Held-to-maturity TotalUS$’000 US$’000 US$’000

At 1 January 2006 10,902 113,644 124,546 Exchange differences on monetary assets 2,262 1,703 3,965 Additions 278,306 - 278,306 Reclassification 91,729 (91,729) - Gains from changes in fair value 2,145 - 2,145 Disposals (sale and redemption) (35,515) (23,618) (59,133)Impairment loss (101) - (101)At 31 December 2006 349,728 - 349,728


2006 200518. Intangible Assets US$’000 US$’000

GoodwillOpening net book amount - - Acquisition of a subsidiary (Note 35) 2,962 -

Closing net book amount 2,962 -

Goodwill is revised annually for impairment, or more frequently when there are indications that impairment mayhave occurred.

Software costsOpening net book amount 1,596 1,747 Purchase 927 1,158 Amortisation (906) (1,075)Exchange differences 28 (234)Closing net book amount 1,645 1,596

Total 4,607 1,596

72

2006 Annual Report


19. Property, plant and equipment

Motor Land & Furniture Installations Construction TotalVehicles Buildings Equipment in progressUS$'000 US$'000 US$'000 US$'000 US$'000 US$'000

At 1 January 2005Cost 10,759 12,314 53,844 19,561 13,151 109,629 Accumulated depreciation 6,441 2,147 29,256 8,552 - 46,396 Net book amount 4,318 10,167 24,588 11,009 13,151 63,233

Year ended 31 December 2005

Opening net book amount 4,318 10,167 24,588 11,009 13,151 63,233 Unconsolidated - prior years - 32 40 27 - 99 Additions 2,808 4,089 11,746 10,275 6,841 35,759 Disposals - cost (668) (40) (351) (4,979) (2,475) (8,513)Disposals - accu. depreciation 577 7 29 2,019 - 2,632 Reclassifications - cost 22 516 (7,210) 7,463 (798) (7)Reclassifications- accumulateddepreciation - - - - (3) (3)Depreciation charge (2,001) (777) (7,144) (4,021) - (13,943)Exchange rate adjustments (285) (1,313) (1,511) (1,376) (900) (5,385)

Closing net book amount 4,771 12,681 20,187 20,417 15,816 73,872

At 31 December 2005Cost 12,386 17,241 52,399 31,786 15,816 129,628 Accumulated depreciation 7,615 4,560 32,212 11,369 - 55,756 Net book amount 4,771 12,681 20,187 20,417 15,816 73,872

Year ended 31 December 2006Opening net book amount 4,771 12,681 20,187 20,417 15,816 73,872 Additions 7,476 26,178 20,378 2,824 15,911 72,767 Disposals - cost (1,075) (13) (860) (9,711) - (11,659)Disposals accumulated depreciation 652 12 365 3,499 - 4,528 Reclassifications - cost - 12,077 490 (127) (12,440) - Reclassifications - accumulateddepreciation 262 - (262) - Depreciation charge (2,361) (1,726) (9,010) (1,798) - (14,895)Exchange rate adjustments (1,694) 457 (2,416) (2,707) (1,833) (8,193)Closing net book amount 7,769 49,928 29,134 12,135 17,454 116,420

At 31 December 2006Cost/valuation 17,345 57,967 73,882 22,635 17,454 189,283 Accumulated depreciation 9,576 8,039 44,748 10,500 - 72,863 Net book amount 7,769 49,928 29,134 12,135 17,454 116,420

73


Property, plant and equipment include assets leased to customers under operating lease arrangements. Theoperating leases are non-cancellable and the future minimum lease payments analysed in aggregate asfollows:


2006 2005US$’000 US$’000

No later than 1 year 973 6,488 Later then 1 year and no other than 5 year 2,867 5,021 Later than 5 years 302 176

4,142 11,685

20. Other Assets

Interest and fees receivable 20,678 9,736 Accounts receivable 12,247 9,897 Prepayments 22,731 9,255 Sundry receivables 54,298 21,268

109,954 50,156 Impairment charges on receivable balances (7,571) (6,947)

102,383 43,209

21. Deposits from Banks

Items in course of collection 10,380 8,664 Deposits from other banks 108,237 112,572

118,617 121,236

22. Other Deposits

Other money-market deposits 5,027 16,826 Certificates of deposits - 1,738

5,027 18,564

23. Deposits from Customers

Wholesale- Current/settlement accounts 794,170 460,446 - Term deposits 458,313 187,584

Retail- Current/settlement accounts 768,460 538,056- Term deposits 146,837 134,383- Savings deposits 332,398 212,009

2,500,178 1,532,478

74

2006 Annual Report


2006 200524. Borrowed Funds US$’000 US$’000

European Investment Bank (EIB) 1,006 1,077 Ashanti Goldfields Company Employees Pension Fund 3,257 3,301 Netherlands Development Finance Company (FMO) - 914 African Development Bank (ADB) 7,143 8,574 Social Security and National Insurance Trust (SSNIT) 4,732 4,149BHK Bank 3,575 3,230OIKOCREDIT Ecumenical Development 3,001 - Export Development Investment Fund (EDIF) 1,683 976Ecowas Bank for Investment and Development (EBID) 10,046 - Bonds Issued 10,046 - Others 6,171 3,755

50,660 25,977

The EIB loan to Ecobank Ghana and Ecobank Benin are repayable in 2007 and 2009 respectively. The interestrates are 2% (fixed) in Ecobank Benin and average of 6-month Treasury bill rate and 6-month corporate ratein Ghana.

The Facility from ADB is repayable over 8 years after a one year period of moratorium. Interest rate is basedon the per annum 6 month EURIBOR rate plus a margin of 2%. Interest and principal is payable twice a year.

Amount due to Ashanti Goldfields Company (now Anglogold Ashanti) Employees Pension Fund is a 6-yearsubordinated non-redeemable deposit. The facility would mature on March 29 2008. It attracts interest at theGhanaian one-year treasury bond rate plus 4%.

The facility from SSNIT, Ghana is a 10-year loan expiring in 2015. It attracts interest at the Bank of GhanaPrime rate applicable at the date of drawdown.

The BHF Bank loan is one-year renewable loan with interest at EURIBOR rate plus 0.5% per anum.

OIKO Credit Ecumenical Development loan to Ecobank Ghana is a 5-year term loan with interest rate of 6months LIBOR plus 2.5% per annum.

The Export Development Finance loan is a facility to Ecobank Ghana. The facility is repayable in 2009 at a rateof 2.5% per anum.

The Ecowas Bank for Investment and Development is a facility to Ecobank Senegal and attracts interest at 7%per anum. The facility is repayable over five years expiring in 2011. The bonds issued by Ecobank Senegalbears interest at 7% and is fully payable on maturity in 2011.

The Group has not had any defaults of principal, interest or redemption amounts during the period on itsborrowed funds (2005: nil).


75



2006 200525. Other Liabilities US$’000 US$’000

Accrued interest and commission 17,605 9,954 Deposit for shares 1,404 5,751 Unclaimed dividend 3,705 1,241 Accruals 37,235 21,231 Other Provisions (Note 26) 6,464 5,778 Obligations under customers' letters of credit 101,286 55,570 Other liabilities 127,271 68,005

294,970 167,530

26. Other Provisions

At 1 January 5,778 7,379 Exchange differences 617 (989)Additional provisions charged to income statement 2,042 498 Utilised during year (1,973) (1,110)At 31 December 6,464 5,778

Other provisions represent amounts provided for in respect of various litigations pending in court. Based onprofessional advice, these amounts have been set aside to cover the expected losses to the Group on thedetermination of these litigations.

27. Deferred Income Taxes

Deferred income taxes are calculated on all temporary differences under the liability method using an effectivetax rate of each subsidiary as the parent Company is not subject to tax.The movement on the deferred income tax account is as follows:

At 1 January 1,244 3,265 Income statement charge 1,367 (2,162)Revaluation reserves - Available-for-sale securities (Note 31) 243 - Exchange differences 159 141 At 31 December 3,013 1,244

Deferred income tax assets and liabilities are attributable to the following items:Deferred income tax liabilitiesAccelerated tax depreciation 8,847 7,622 Other temporary differences 658 76 Available-for-sale securities 1,340 -

10,845 7,698

Deferred income tax assetsPensions and other post retirement benefits 1,951 1,539 Provisions for loan impairment 3,395 2,778 Other provisions 2,316 2,137 Tax loss carried forward 170 -

7,832 6,454

76

2006 Annual Report


2006 200527. Deferred Income Taxes (continued) US$’000 US$’000

The deferred tax charge in the income statement comprises the following temporary differences:

Accelerated tax depreciation (1,225) 2,487 Pensions and other post retirement benefits (961) (806)Allowances for loan losses 1,676 (1,748)Other provisions 1,207 (1,083)Other temporary differences 670 (1,012)

1,367 (2,162)

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current taxassets against current tax liabilities and when the deferred income taxes related to the same fiscal authority.

Deferred income tax liabilities have not been established for the withholding tax and other taxes that would bepayable on the unremitted earnings of certain subsidiaries, as such amounts are permanently reinvested.

28. Retirement Benefit Obligations

Amounts recognised in the balance sheet:Other post retirement benefits 8,902 7,167

Other post-retirement benefitsApart from the pension schemes, the Group operates a post employment gratuity payment scheme.The method of accounting and the frequency of valuations are as described in Accounting Policies 2.16.

The amounts recognised in the balance sheet are as follows:Present value of funded obligations 7,191 1,752

7,191 1,752 Present value of unfunded obligations 1,711 5,415 Liability in the balance sheet 8,902 7,167

The amounts recognised in the income statement are as follows:Current service cost 1,549 2,948 Net actuarial losses recognised in the year 1,618 4,036 Total included in staff costs 3,167 6,984

The movement in the liability recognised in the balance sheet is reconciled as follows:

At 1 January 7,167 467 Exchange differences (803) (17)Total expense - as above (Note: 7) 3,167 6,984 Contributions paid (629) (267)At 31 December 8,902 7,167


77



2006 200529. Contingent Liabilities and Commitments US$’000 US$’000

a) Legal proceedingsThere were a number of legal proceedings outstanding against the Group at 31 December 2006 with contingentliabilities of $14.12 million (2005: $8.667 million). No provision has been made as professional advice indicatesthat it is unlikely that any significant loss will arise.

b) Capital commitmentsAt 31 December 2006, the Group had capital commitments of $5.63 million (2005: $3.686 million) in respect ofbuildings and equipment purchases.

c) Credit commitmentsThe Group's management is confident that future net revenues and funding will be sufficient to cover this com-mitment. The contractual amounts of the Group's off-balance sheet financial instruments that commit it toextend credit to customers are as follows:

Bankers acceptances 75,027 21,386 Guaranteed commercial papers 202,720 84,702 Documentary and commercial letters of credit 174,794 208,851 Performance bond, guarantees and indemnities 452,639 181,902 Commitments to extend credit:

- Original term to maturity of one year or less 65,371 266,260 - Original term to maturity of more than one year 2,095 21,322

972,646 784,423

The fair value of loan commitments is $68 million (2005: $304 million)

d) Assets pledgedAssets are pledged as collateral under repurchase agreements with other banks and for security deposits.Mandatory reserve deposits are held with local central banks in accordance with statutory requirements.These deposits are not available to finance the Group’s day to day operations.

Balances with central banks 132,634 81,132Treasury Bills 2,021 -

134,655 81,132e) Operating lease commitmentsWhere a Group Company is the lessee, the future minimum lease payments under non-cancellable buildingoperating leases are as follows:No later than 1 year - 159 Later than 1 year and no later than 5 years - 445

- 604

78

2006 Annual Report


No of Ordinary Share Totalshares shares Premium

30. Share Capital 000 US$’000 US$’000 US$’000

At January 2005 283,036 70,759 20,020 90,779 Proceeds from shares issued 118,236 29,559 58,918 88,477

At 31 December 2005/ 1 January 2006 401,272 100,318 78,938 179,256

Bonus Issue 101,533 25,383 (25,383) - Proceeds from share issue - private placement 106,397 26,598 56,756 83,354- public offer 1,801 368 3,559 3,927 Share issue transaction costs - - (2,422) (2,422)

At 31 December 2006 611,003 152,667 111,448 264,115

2006 2005Numb. of shares (’000) Numb. of shares (’000)

Authorised shares with a par value of $0.25 per share 5,000,000 800,000

Issued shares 611,003 401,272

Paid-up shares 610,675 401,272

The public offer issue includes 328,035 shares issued yet to be paid for.The total authorised number of ordinary shares at year end was 5,000 million (2005: 800 million) with a parvalue of $0.25 per share (2005: $0.25 per share).

At the Annual General Meeting held in June 2006, the shareholders of the Company authorised the following:

- a bonus issues of one (1) ordinary shares for every five (5) ordinary share of the Company held as at 31st May 2006.

- an increase in the authorised capital of the Company from $200 million to $1.25 billion by the creationof 4.2 billion new ordinary shares of $0.25 each.

The Company issued 106.4 million ordinary shares in June 2006 to subscribers of the private placementcarried out. The ordinary shares were offered at $0.80 per share.

In September 2006, the Company listed on the Nigerian Stock Exchange, Ghana Stock Exchange and BourseRegional Des Valeurs Mobilieres of Cote d'Ivoire. 1.8 million ordinary shares were offered.

The Company is authorised to buy and sell its own shares. This is in accordance with the Company's Articlesof Association. These shares are treated as a deduction from the shareholders' equity. Gains and losses onsales or redemption of own shares are credited or charged to reserves. The total number of treasury sharesat the end of 2006 was nil (2005: nil).

79



2006 200531. Reserves and Retained Earnings US$’000 US$’000

a) Other ReservesGeneral banking risks 8,548 8,198Statutory reserve 55,771 39,134Revaluation reserve - Available-for-sale investments 1,902 - Translation reserve (13,457) (28,599)

52,764 18,733

Movements in the reserves were as follows:General banking reserveAt 1 January 8,198 4,777Transfer from retained profits 350 3,421At 31 December 8,548 8,198

The general banking reserve represents transfers from retained earnings for unforeseeable risks and future losses.General banking reserves can only be distributed following approval by the shareholders in general meeting.

- Statutory reserveAt 1 January 39,134 30,790 Transfer from retained profits 16,637 8,344 At 31 December 55,771 39,134

Statutory reserves represents accumulated transfers from retained earnings in accordance with relevant localbanking legislation. These reserves are not distributable

- Revaluation reserves - Available -for-salesAt 1 January - - Net gains from changes in fair value (Note 17) 2,145 - Deferred income taxes (243) - At 31 December 1,902 -

- Translation reservesAt 1 January (28,599) (15,249)Currency translation difference arising during the year 15,142 (13,350)At 31 December (13,457) (28,599)

b) Retained EarningsAt 1 January 23,558 17,955 Reserves of previously unconsolidated subsidiaries - (121)Net profit for year 69,350 41,502 Deemed cost of increasing shareholding arising from additional injection of capital in affiliates - (17,779)Dividend for prior year (10,712) (6,234)Transfer to general banking reserve (350) (3,421)Transfer to statutory reserve (16,637) (8,344)At 31 December 65,209 23,558

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2006 Annual Report



2006 200532. Dividends per Share US$’000 US$’000

Final dividends are not accounted for until they have been ratified at the Annual General Meeting. In January 2007,an extraordinary general meeting approved interim dividend of one (1) cent per share in respect of 2006. At theforthcoming annual general meeting, an additional dividend payout of two (2) cents per share is to be proposed onshares outstanding as at 31 December 2006, bringing the total dividend in respect of 2006 to three (3) cents pershare (2005: 3 cents per share). This amounts to a total of US$18.3 million (2005: US$10.7 million). The financialstatements for the year ended 31 December 2006 do not reflect these dividends, which will be accounted for in theshareholders’ equity as an appropriation of retained profits in the year ending 31 December 2007.

33. Cash and Cash Equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise cash and non-restrictedbalances with central banks, trasury bills and other eligible bills, loans and advances to banks, amounts duefrom other banks and short-term government securities.

Cash and balances with central banks (Note 11) 176,325 217,439 Treasury Bills and other eligible bills (Note 12) 137,345 261,047 Deposits with other banks (Note 13) 218,443 152,730 Deposits from banks (Note 21) (118,617) (121,236)

413,496 509,980

34. Related - Party Transactions

A number of banking transaction are entered into with related parties in the normal course of business. Thesetransactions include loans, deposits, and foreign currency transaction. The volumes of related partytransactions, outstanding balances at the year end, and relating expense and income for the year as follows:

Loans Directors and key Associated management personnel companies

2006 2005 2006 2005US$’000 US$’000 US$’000 US$’000

Loans outstanding at 1 January 495 7 10,362 1,500 Loans issued during the year 640 550 390 11,453 Loan repayments during the year (58) (62) (3,979) (2,591)Loans outstanding at 31 December 1,077 495 6,773 10,362

Interest income earned 44 7 107 523

No provisions have been recognized in respect of loans given to related parties (2005:nil). The loans issued to executive directors during the year of US$0.6 millions (2005:US$0.5 million) andassociated companies of US$0.4 million (2005:US$10.4 millions) are repayable within an average of 10 yearperiod and have interest rates of 3% (2005: 3%) for executive directors and 9% for associated companies.

81


34. Related - Party Transactions

Deposits Directors and key Associated management personnel companies

2006 2005 2006 2005US$’000 US$’000 US$’000 US$’000

Deposits at 1 January 1,193 21 1,766 141 Deposits received during the year 3,968 1,570 4,884 10,336 Deposits repaid during the year (5,001) (398) (6,241) (8,711)Deposits at 31 December 160 1,193 409 1,766

Interest expense on deposits 1 -


2006 2005US$’000 US$’000

Key management compensationSalaries and other short term benefits 2,237 1,398 Post employment benefits

2,237 1,398

Directors' remunerationIn 2006, the total remuneration of the directors was US$2.2 million (2005:US$0.9 million).

82

2006 Annual Report

35. Acquisition

On 31 October 2006, the Group acquired 60% of the share capital of Banque Internationale pour l’Afrique auTchad (BIAT) in Chad. The acquired bank contributed operating income and profit of $618,729 and $614,153respectively to the Group for the period from 1 November 2006 to 31 December 2006. If the acquisition hadoccurred on 1 January 2006, the contribution to the Group operating income and profit before allocationswould have been $21,128,780 and $2,524,144 respectively.

The details of the fair value of the assets and liabilities acquired and goodwillarising are as follows (in thousand US$) :

Cash and cash equivalent (acquiree's previous carrying value: $24,378) 24,297Loans and advances to customers (acquiree's previous carrying value: $37,866) 35,942Investment securities (acquiree's previous carrying value: $2,860) 2,819Property, plant and equipment (acquiree's previous carrying value: $2,969) 4,281Other assets (acquiree's previous carrying value: $1,193) 1,161Deposit from banks (acquiree's previous carrying value: $232) (232)Deposit from customers (acquiree's previous carrying value: $59,601) (59,601)Other borrowed funds (acquiree's previous carrying value: $385) (385)Other liabilities (acquiree's previous carrying value: $1,919) (2,606)Fair value of the net assets of the acquired bank 5,676 Cost of acquisition (discharged by cash) 6,368 Fair value of Net assets acquired (60% of share capital) 3,406 Goodwill (Note 18) 2,962 Cost of acquisition (discharged by cash) 6,368 Cash acquired 24,297 Net cash received 17,929

The goodwill is attributable to the significant synergies expected to arise. Fair value of assets and liabilitiesacquired are based on discounted cash flow models.

36. Events After the Balance Sheet Date

a) At an extra ordinary general meeting held on 26 January 2007: (i) the members resolved that nominal value of the ordinary shares of the Company should be reducedfrom from $0.25/share to $0.125/share by splitting each ordinary share into two equal parts.(ii) An interim dividend of 1 cent per share was approved ;

b) In January 2007, the parent obtained a licence from the Central Bank of Sao Tome to operate a bank in Sao Tome & Principe ;

c) On 30 January 2007, the parent acquired 72% interest in Bank Internationale pour la Centrafrique (BICA), inCentral Africa.


83


Five Year Financial Summary

2006 2005 2004 2003 2002US$’000 US$’000 US$’000 US$’000 US$’000

At the year endTotal Assets 3,503,739 2,199,230 1,910,433 1,523,091 1,142,911Loans and Advances 1,919,366 1,022,140 923,661 785,983 524,763Deposits from Customers 2,500,178 1,532,478 1,465,117 1,153,235 861,867Total Equity 482,315 303,879 165,258 135,853 100,305

Book Value per Share 58.2 46.7 35.9 28.6 26.9

For the yearRevenues 348,464 236,351 203,852 156,690 117,213Loan Loss Provision 13,091 14,898 18,136 5,672 5,722Profit Before Tax 129,299 73,729 60,315 48,462 30,275Profit After Tax 86,365 50,939 40,427 30,214 16,567Profit Attributable 69,350 41,502 31,431 22,197 11,636

RatiosEarnings Per Share (cents) 13 11 10 7 4

Dividend Per Share (cents US) 3.0 2.2 1.8 1.0 0.0

Return on Average Equity (%) 23.0 23.8 26,9 24.3 16Return on Average Assets (%) 3.0 2.5 2.4 2.3 1.0Efficiency ratio (%) 59% 63% 61% 63% 67%

Summary of Subsidiaries’ Financials% Total Total Profit Profit

Affiliate Shareholding Equity Assets Before Tax After TaxUS$'000 US$'000 US$'000 US$'000

Ecobank Benin 78% 30,512 320,448 5,188 4,125Ecobank Burkina 82% 22,184 211,813 8,964 5,946Ecobank Cameroon 79% 14,955 212,592 3,899 2,260Ecobank Cape Verde 98% (152) 690 (186) (186)Ecobank Côte d’Ivoire 97% 19,215 408,052 12,997 10,317Ecobank Ghana* 87% 50,413 471,144 25,404 16,824Ecobank Guinea 83% 9,355 78,534 6,504 4,155Ecobank Liberia 100% 5,708 64,096 2,478 1,602Ecobank Mali 92% 20,453 209,036 9,914 6,861Ecobank Niger 100% 7,170 96,126 4,096 2,506Ecobank Nigeria 71% 223,266 1,034,960 40,296 27,517Ecobank Senegal 80% 14,958 247,848 5,904 4,312Ecobank Togo 81% 17,449 193,563 10,979 7,905Ecobank Sierra Leone 100% 2,679 4,823 (441) (305)Ecobank Chad 60% 6,613 73,324 171 120Ecobank Dev Corp 100% 1,714 3,220 206 206EIC Bourse 88% 2,984 4,884 958 698ESL Nigeria 56% 2,178 14,847 1,136 679eProcess International SA 100% 3,669 11,763 (1,345) (1,345)

*Ecobank Stock Brokers (GH) Ltd is wholly owned by Ecobank Ghana

84

2006 Annual Report

Shareholder Information

1. Central Registrar

eProcess International SALocation:No. 556/4 Cola AvenueRing Road CentralKokomlemle, Accra, GhanaMail Box:P.O. Box AN 16746Accra North, AccraPhone: +233 (0)21 234 454

+233 (0)21 234 451 +233 (0)21 234 454

Fax: +233 (0)21 241 537Contact:Marilyn AwukuPhone: +233 (0)244 231 608Fax: +233 (0)21 251 734email: [email protected]

2. Local Registrars

Abidjan:Ecobank Investment Corporation Location:Immeuble Alliance, 4ème étageAvenue Terrasson de FougèresAbidjan - Côte d'IvoireMail Box:01 BP 4107 Abidjan 01Côte d'IvoirePhone: +225 20 21 10 44Fax: +225 20 21 10 46Contact:Jean-Christian KoudouPhone: +225 20 31 92 24Fax: +225 20 21 10 46email: [email protected]

Accra:Ecobank Development Corp Location:No.5 2nd Ridge LinkNorth Ridge, Accra, GhanaMail Box:P.O. Box AN 16746Accra North, AccraPhone: +233 (0)21 251 720

+233 (0)21 251 723Fax: +233 (0)21 251 734Contact:Marilyn AwukuPhone: +233 (0)244 231 608Fax: +233 (0)21 251 734email: [email protected]

Lagos:ESL Securities Limited Location:3rd Floor, Plot 161A, Raufu TaylorClose off Idejo St.Victoria Island, Lagos, NigeriaMail Box:P.M.B. 40013, IkoyiLagos, NigeriaPhone: +234 1 261 29 86

+234 1 261 29 83+234 1 461 03 47

Fax: +234 1 461 03 45Contact:Prisca EnwePhone: +234 1 26129 86Fax: +234 1 461 03 45email: [email protected]

3. Stock Exchanges

Bourse Régionale des Valeurs Mobilières

Location:18, Rue Joseph Anoma (Rue des Banques)Abidjan - Côte d'IvoireMail Box:01 BP 3802 Abidjan 01Côte d'IvoirePhone: +225 20 32 66 85

+225 20 32 66 86Fax: +225 20 32 66 84Contact:Le Directeur Géné[email protected]

Ghana Stock Exchange

Location:5th Floor, Cedi HouseAccra, GhanaMail Box:P.O. Box 1849 Accra, GhanaPhone: +233 (0)21 669 908

+233 (0)21 669 914+233 (0)21 669 935

Fax: +233 (0)21 669 913Contact:The Managing [email protected]

Nigeria Stock Exchange

Location:Stock Exchange House(8th, 9th, & 11th Floors)2/4 Customs Street,Lagos, NigeriaMail Box:P.O. Box 2457Lagos, NigeriaPhone: +234 1 266 02 87

+234 1 266 03 05+234 1 266 03 35

Fax: +234 1 266 87 24+234 1 266 82 81

Contact:The Managing [email protected]

For unclaimed dividends andall other information, pleasecontact your respective localregistrar or your broker.

Date post:	18-Nov-2014
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Ecobank annual report 2006

Economy & Finance