Annual Report 2012

for the year ended 31 December 2012

2012 ANNUAL REPORTFINANCIAL STATEMENTS

i

2012Strength in Relationships

Annual Report

ThinkingAhead

Drivers

Success Through:

Tanzania

Technology Cust

omerDelight

- Synergy

- Commitment

- Values

HumanCapital

StrategicPartners

hips

ComorosDjibouti

...!!!

ii

2012 FINANCIAL HIGHLIGHTS (TZS Bn)

Assets

DepositsLoans & Advances

Shareholders Funds

1CORPORATE INFORMATION

Mission and Vision 2

Company Profile 3

Board of Directors Profile 8

Chairmans Statement 10

Managing Directors Statement 14

Company Information 18

Corporate Social Responsibility 25

FINANCIAL STATEMENT

Report of Directors 33

Statement of Directors Responsibility 41

Report of Independent Auditor 43

Profit and Loss Account 45

Balance Sheet 46

Statements of Changes in Equity 48

Cash Flow Statements 50

Notes 52

Key Personnel 138

Location and Contacts 141

Table ofContents

2012Strength in Relationships

Annual Report

22012 ANNUAL REPORTVISIONMISSION &VALUES

Flexibility

Reliability

Integrity

Professionalism

A drive for customer satisfaction

Our Mission:

Our Vision:

Our Values:

We are committed to remain an

innovative Tanzanian Bank offering

services of International Standards

To be the bank of choice

3profusion of footprints in 13 regions with 24 branches and

52 ATMs. In 2012, the Bank entered Kigoma region (Kigoma

Branch) opening up Lake Tanganyika and the landlocked

countries of Central Africa. The Bank also added yet another

branch in Kilimanjaro region (Kilimanjaro Branch) a gateway

to one of the major tourist destinations in the world.

Building on being the most innovative bank in Tanzania, the

Bank has rapidly expanded. Exim Bank ranks as the sixth

largest bank in Tanzania in terms of total assets and deposits.

During the year Exim Bank Group financial indicators

depicted a significant performance;

Profit after tax of TZS 13,667 million up from TZS 12,529 million in 2011.

Groups total deposits grew significantly to TZS 809 billion (2011: TZS 699 billion).

Groups loan portfolio increased to TZS 455 billion (2011: TZS 442 billion); and

Total assets increased to TZS 967 billion (2011: TZS 841 billion).

GLOBAL STRATEGIC PARTNETSHIPS AND ALLIANCES

2012 ANNUAL REPORTCOMPANYPROFILE

Exim Bank Limited was founded in the year 1997 in the wake of the new liberalization policy by local entrepreneurs with a track record of impeccable success in their diversified businesses. The Bank made a humble beginning with one branch at Samora Avenue, in the heart of Dar es Salaam city, posting a steady and robust growth in its customer base and visibility. Today Exim is ranked amongst the largest banks in the country.

GROWTH AND CAPITAL POSITION

Exim Banks impressive upward trajectory motivated and led to it stretching across boundaries in the year 2007 establishing footprints overseas in The Union of Comoros. The Bank has two operational branches in the islands of Moroni and Anjouan. Inspired by this success, Exim Bank spread its wings further into Djibouti to establish yet another subsidiary in March 2011, affording a strategic link

to landlocked countries in the Horn of Africa.

The Banks understanding of the customer needs coupled

with a unique customer experience given to each client

has created a strong brand in these markets. Our domestic

prowess and visibility continues to be seen and felt in the

Mr. Yogesh M. Manek, Chairman, Exim Bank and Mr. Ruurd Brouwer, Director Financial Institutions, FMO at the signing ceremony of a USD 10 millions (TZS 16 billions) loan secured by Exim Bank from FMO.

From left: His Exellency, President of The Union of Comoros Mr. Ikililou Dhoinine shaking hands with Exim Banks Director, Mr. Hanif Jaffer, during a courtesy call made to the Presidents office. Looking on is Managing Director, Anthony Grant and Chief Executive Officer, Mr. Dinesh Arora.

4Exim Banks laudable reputation has brought valued

international partnerships and financial co-operation. These

include strong relations with leading international financial

institutions such as International Finance Corporation

(IFC), Netherlands Development Finance Company (FMO),

Norwegian Trust Fund (NORFUND), PROPARCO and

correspondent banks such as Deutsche Bank, CitiBank,

HSBC, Commerz Bank and Axis Bank.

Exim remains the only local bank to be a member of the

Global Banking Alliance for Women, representing Tanzania.

This alliance brings together financial institutions around the

world to promote women entrepreneurship. It also helps

develop existing micro enterprises managed by women

and encourage new ventures with a potential to grow their

businesses.

The Banks strategic collaborations with MasterCard and

Visa offer customers a window to the global electronic

payment networks. These relationships have allowed us to

provide relevant solutions that respond to ever evolving

customer needs, extending the services of electronic

payments to those who would otherwise not be able to

benefit from their convenience, ease of use and security.

FIRST MOVER INITIATIVES


The Bank has had significant breakthrough innovations that

positively impact our customers. Through deployment of

world class technology and customer focused products, the

Bank has led in pioneering efforts adding the following to

its credit;

Bank in Tanzania to launch Credit Cards in association with MasterCard.

Tanzanian Bank to establish an overseas banking subsidiary.

Bank in Tanzania to launch Mobile ATM facility.

Bank in Tanzania to launch an exclusive financing scheme for women.

Bank in Tanzania to launch TANAPA Cards.*

Bank in Tanzania to launch International Debit MasterCard.

Bank in Tanzania to launch Visa Platinum Cards.

Bank to launch Visa Cards in The Union of Comoros.Launch of innovative Faida Savings Account in 2009.

Launch of MasterCard in 2005.

5AWARDS AND RECOGNITIONS

The Bank has been awarded recognition by National

Board of Accountants and Auditors (NBAA) for the Best

Presented Financial Statements in the Banking Category

for two years running 2008 and 2009. Exim Bank was also

selected the overall winner for Best Presented Financial

Statements in 2009.


* TANAPA / Exim Cards These are Debit Cards issued by the Bank to

tourists who are visiting national parks in Tanzania. The card facilitates

payment of park fees charged by Tanzania National Parks(TANAPA) at

the gates.

Exim Bank continues to build an innovative culture where it

formally encourages and supports innovation, empowering

business units through leadership buy-in and advocacy.

HUMAN CAPITAL

Over the years, the Bank has grown deliberately, carefully

and steadily. It has progressively grown in staff numbers.

The group had 512 employees as at the end of 2010, 614

in 2011 and 680 as of the year ended December 2012.

With a total of 329 female staff, the Bank clearly exhibits

its sensitivity to gender equality. The Bank takes pride in

having established a state of the art training academy at Dar

es Salaam, with an aim to continually upgrade the skills of

the human resources.

Director Mr. Shaffin Jamal presenting long service recognition award to Mrs. Maria Mwangomola, Assistant Branch Manager, Ubungo branch during the 15th Anniversary Staff Celebrations.

The Chairman of the Bank and Branch Heads during the 15th Anniversary Staff Celebrations.

The NBAA Award which the Bank received during year 2008 & 2009.

6MAKING OF A STRONG REGIONAL BANK

The Bank has placed major thrust and focus on building strong foundation, through cadre and skill building, adopting the best in technology, establishing international practices in risk based supervision and governance to be a sustainable and strong Regional Bank.

The entire Eastern Africa region continues a path of strong growth and Exim Bank intends to be a financial

contributor.

The Bank is proud to have been nominated for various financial awards notably for the prestigious Sustainable Bank of the Year 2008 Award by Financial Times / International Financial Corporation, Best Workplace Practices for Training and Development in the East Africa CSR Awards 2011. We continue to build our reputation and redefine what banking can do.


...and still growing

7BuildingExcellence!

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

88

BOARD OFDIRECTORSPROFILE

Mr. Yogesh Manek is an accomplished executive, investor, and entrepreneur with over 35 years of experience in managing corporations in industries that include FMCG manufacturing and distribution, banking, insurance, agribusiness, mining, real estate, and logistics. By capitalizing on his sharp business acumen, technical expertise, interpersonal skills, and strategic mindset, among other attributes, Mr. Manek was instrumental in achieving unprecedented growth and penetrating new markets for the companies he had previously founded and managed. In addition to having successfully implemented growth-oriented strategies. Mr. Manek has instituted significant qualitative and quantitative improvements in organizations including the streamlining of operational processes, the re-organization of capital resources and strategic assets, and the implementation of systems that boosted productivity and dramatically enhanced customer satisfaction.Mr. Manek presently sits on many boards as director and also sits on two advisory boards, which comprise of a media related company and an association of CEOs Round Table. He is also a trustee for three non-profit organizations and is a Chairman of three Social and Community Service humanitarian organizations.

Ambassador Juma V. Mwapachu has had a diversified career that spans the public and the private sectors in Tanzania. He has served as Tanzanias Ambassador to France and until 2011 he served as Secretary General of the East African Community for five years. A lawyer by training, Ambassador Mwapachu has been Chairman of the Tanzania Investment Bank, Tanzania Railways Corporation and Vice Chair of the University of Dar-es-Salaam Council. In the business sector, he has been Chair of Confederation of Tanzania Industries and the East African Business Council.He is presently Chair of the University of Dodoma Council and sits on a number of Corporate Boards of Directors, local and international. He holds two doctorate degrees (Honoris Causa) in literature and in Political Sciences from the University of Dar-es-Salaam and the National University of Rwanda respectively. President Mwai Kibaki of Kenya decorated Ambassador Mwapachu in December 2011 with one of Kenyas highest awards, The Moran of the Golden Heart (MGH).

Mr. Wescott is a career banker and currently Managing Director of Africa Finance and Capital Limited (AFC), a financial consulting, advisory services and investment company.Prior to establishing AFC, Mr. Wescott worked for more than 25 years as Senior Bank Executive with the HSBC Group where he focused on sub-Saharan Africa.

Tom Wescott

Hon. Juma Mwapachu

Yogesh Manek

99

2012 ANNUAL REPORT

Mr. Hanif Jaffer is a Qualified Certified Public Accountant, Tanzania and has over 20 years post qualification experience in Banking, management information systems and financial analysis.He is a Founder Member of Exim Bank, and has played a major and invaluable role in its formative years as a Resident Director. Socially active, Mr. Jaffer has been an involved Rotary for many years, having reached the apex position as its President and continuing to work tirelessly for the cause of humanity.With business growth strategizing competence as his stronghold, Mr. Jaffers position as the Director of Exim Bank Tanzania and Comoros has been influential and significant. As Executive Director of Intra Business Network (IBN), comprising a group of businessmen spanning 19 African countries, Mr. Hanif s networking skills come into play for best results.

A banker and economist, Mr. Kamuzora served the National Bank of Commerce (NBC) for approximately 25 years, rising to the level of General Manager, before being posted to Bank of Tanzania in 1992. With a grip on banking trends and evolving economic drifts, he is credited with establishing The Tanzania Institute of Bankers, where he served as the first Executive Director for 4 years.

Mr. Jamal is the Chairman of Union Trust Investments Limited, one of Tanzanias leading companies with interests in banking, insurance, real estate development, hospitality, mining, and agriculture.He is also the Chairman of Alliance Insurance Corporation and New Arusha Hotels. Such diversity lends great versatility and broad appeal to Mr. Jamals position as Director.

Hanif Jaffer

Pascal Kamuzora

Shaffin Jamal

10

Mwenda usiku amesifiwa kulipokucha (Toil hard for when success comes, you will be rewarded). This is the spirit that lifts us to the top of our game. Exim Bank has worked hard and has been able to succeed in strengthening our institution. Looking back at 2012, we are proud that as a bank we now better serve our customers, our communities and the country. We will continue to deliver our best!

On behalf of the Members of the Board of Directors and myself, I am delighted to present to you Exim Banks Annual Report for the year ended 31 December, 2012.

At Exim Bank, the year 2012 will fondly remain in our memories. It was the year that we celebrated our 15th Anniversary. The occasion was marked by memorable bank celebrations of staff and customers across Tanzania and indeed in the overseas banking subsidiaries of Comoros and Djibouti. Staff rededicated themselves to the future. Our ability to attract global talent is another indication of the faith which Exim Bank and Tanzania generate. In 2012 the Bank welcomed Mr. Anthony Grant as Managing Director to the Exim family. Mr. Grant had previously worked at Citibank on three continents and in Johannesburg with an HSBC joint-venture, in addition to serving as MD at various African financial institutions. Consequently, the year has been another wonderful opportunity to witness the Exim Bank family grow, innovate and continue to demonstrate unparalleled determination for service excellence and to be truly the best in class.

CHAIRMANSSTATEMENT

11

2012 ANNUAL REPORT

The year 2012 saw Exim Bank continue on a trajectory of strong growth. We have very nearly reached the exceptional milestone in Tanzanian banking of one trillion shillings in assets. This outstanding accomplishment has been achieved in Tanzania by only a handful of other banks. Exim Bank also operates the countrys fourth largest network of branches.

Headline numbers for 2012 were strong, including a 16% jump in total deposits to TZS 809 billion in 2012 from TZS 699 billion in 2011. The Group saw a 10% percent increase in after tax profits which rose to TZS 13.7 billion from TZS 12.4 billion in 2011 despite increased spending on investments for the future. The Group lending portfolio prudently increased to 436 billion from TZS 428 billion in 2011. All the performance indicators are to be found in the financial section to follow.

ECONOMIC LANDSCAPE TANZANIA

The economy of Tanzania in 2012 continued to position itself well. Relatively speaking, Tanzania stands out as a model of good economic performance. The national rate of growth has been over 6% percent for 2011 and 2012. The governments fiscal debt slowly came down in both years. Indeed, and very positively, we see signs of stability which are contributing to growth of real GDP, estimated to reach 7% GDP by 2013.

In the last quarter of 2012 the shilling steadied at a high of 1595 against the US dollar, down from about 1750 at the beginning of the year 2011. The Bank of Tanzanias cautious monetary and fiscal policy measures supported by Government is expected to drive inflation further down in the 2012/2013 budget year.

Exim Bank safely navigated the economic environment, strengthened operations as well as our human resources and ensured that the Bank was positioned to continue profitability into the future. The Bank is also committed to act as a responsible corporate citizen at a time when many citizens have been adversely affected by the financial crisis of the recent past, by subsequent economic downturns, drought and fluctuations in commodity prices.

Overall, the economy demonstrated in 2012 a good resilience to shocks and as already said, is expected to remain buoyant going forward into 2013.

AFFILIATES IN DJIBOUTI AND COMOROS

Our new affiliate Exim Bank in Djibouti was inaugurated by the President of Djibouti, Ismail Omar Guelleh, in December 2011. We saw Exim Bank identifying opportunities and positioning itself to contribute to an economy that was on a path for growth. The economy of Djbouti is derived in large part from its unique and strategic location on the Red Sea, where it serves as the only ocean outlet for its large landlocked neighbor, Ethiopia with 90 million people, a country itself growing at a 7% rate.

In the Union of Comoros, the Exim Bank affiliate in 2012 became the countrys fastest growing financial institution. We established ourselves on two of the three islands of the Union and prepared plans during the year to expand onto the remaining third island (Moheli). Exim Bank introduced a wide range of products to the country, including point of sale (POS) services at hotels, ATMs, funds transfer service such as Money Gram, gold-lending schemes, tailored lending and trade finance services.

CHAIRMANSSTATEMENT

12

2012 ANNUAL REPORTCHAIRMANSSTATEMENT

AMONG HIGHLIGHTS AND ACHIEVEMENTS IN 2012

In Tanzania, Exim Bank continued to expand its branch network; with new branches launched in Kigoma, along Lake Tanganyika, gateway to commerce with Burundi and DR Congo; and in Moshi named Kilimanjaro, the second branch in a town renown for agriculture and tourism; Exim Bank also added a second full service banking location at the agricultural town of Babati.

The income stream continued to be diversified, with targeted new products such as mortgage financing (Nyumba Yangu) and a hybrid savings and investment product (Haba na Haba).

We are proud of the launch of the Exim Academy in 2012, with multimedia delivery capacity and two theatres for instructing the banking participants; the Bank considers training and development to be an investment, and spent an excess of TZS 335 Million in 2012.

Relationships were strengthened with international development finance institutions; we closed a $15 million loan for on-lending to Tanzanian SMEs from the French Proparco.

ENABLING DELIVERY AND PERFORMANCE

The growth of the Bank in 2012 is evidenced in part from the increased net headcount of nearly 127 in Tanzania. This growth largely was to accommodate the expansion of our full service branches and for strengthening head office controls and for business expansion, bringing total numbers to nearly 650 people.

The Bank prides itself in an enlightened equal opportunity policy. The numbers of men and women staff in 2012, as in 2011, were almost 50% each. The Bank practices an internal recruitment policy that seeks talent first within the ranks of the Bank.

Exim Bank has a distinctive culture, one of the reasons why clients and customers choose to bank with us and why employees want to join and stay. The values service, reliability, professionalism and integrity are a compass, underpinning all our activities. The Bank in 2012 continued on its journey to create long-term value and to contribute to a positive social and economic impact on the communities we serve.

Our brand promise, Innovation is life, captures our genuine commitment to do more for customers. It also reaches out - to our stakeholders and employees, with a simple yet compelling promise. It describes who we are, what we stand for and what makes the bank different.

SUSTAINABILITY

In the next few years, the Tanzanian market is set for rapid growth, which will open up important opportunities for individuals and businesses. At Exim Bank, we are determined to use our unique business model to deliver financial services with a value proposition. This year, we have continued to build our capacity and diversify our channels of delivery through investment in technology, infrastructure, training and by developing our employees. We have reengineered our operating procedures and strengthened systems of managing risk. Adopting the ethos of Kaizen, the Japanese philosophy of continuous improvement, we will enhance and further these efforts into 2013.

13

2012 ANNUAL REPORTFINANCIAL STATEMENTSCHAIRMANSSTATEMENT

We aim to have a positive impact on people and communities. This objective means making Exim the Bank of Choice, and a great place to work. We are confident, in the end, these attitudes and business model will further distinguish Exim Bank and continue our growth.

It is true as we say in Kiswahili Anayelala na mgonjwa ndiye anayejua miugulio (You cannot understand someone until you forge a relationship with them), we strive to position ourselves close to our customers and cast our net wide, for example, to the Kigoma and other less-banked towns of Tanzania.

ACKNOWLEDGEMENT

In conclusion, I would like to deeply thank the Members of the Board of Directors for their strong support, acumen and guidance provided to me. I would like to extend my warm appreciation to the Bank of Tanzania, Members of Government, our strategic partners (International Finance Corporation, FMO, Norwegian Trust Fund and PROPARCO), our correspondent banks PTA Bank, Deutsche Bank, HSBC, Citibank, customers and our legal advisers, consultants and auditors for their continuing trust and support for Exim Bank.

I also thank the Management and Staff of the Bank, who work hard to deliver excellent service to our customers and clients, and strive to make the Exim Bank experience unique. Their efforts will help to keep the trust of our key stakeholders.

Yogesh ManekChairman

Date: 04th April 2013

14

YEAR IN REVIEW

2012 was another year of growth and distinction at Exim Bank. Our position in our home Tanzanian market was strengthened. According to the Tanzania Banking Survey 2012 released this year, Exim Bank maintained its top tier position among Tanzanias ten largest banks in almost all major categories. In bank assets, as noted by the Chairman, Exim Bank approached the exceptional trillion shilling threshold. The branch network is the fourth largest in Tanzania. The East African subsidiaries of Djibouti and Comoros represented the biggest expansion outside the country of any indigenous Tanzanian bank. Exim Bank further built on a reputation for innovation and providing quality and unmatched services.

Exim Bank scored another distinctive milestone in 2012 with celebration of the 15th Anniversary across the organization. The many goodwill and brand building events held throughout the month of August provided opportunity for image building and to recognize and thank customers and stakeholders. The year saw continuing business expansion at the subsidiaries, with Exim Bank Comoros remaining the fastest growing bank in that country. Our expectation across the Exim Bank Group is to maintain a deliberate pace of growth so as to broaden and deepen Exim Banks relationships, to be a bank of choice.

BANK PERFORMANCE 2012

As noted in the Chairmans Statement, the bank continued on a trajectory of growth in 2012. Significant progress was achieved during the year, notably with regard to the process of change initiated during the prior year 2010-2011 with an aim to strengthen the banks foundation. Exim Bank ended the year 2012 on the doorstep of the coveted trillion shilling milestone, with total assets soaring by 15% to TZS 966.55 billion in 2012 over TZS 841 billion recorded during the year ended in December 2011. The audited financial results for the year show that basic earnings per share went up 9% to

MANAGING DIRECTORSSTATEMENT

15



TZS 1,059 in 2012 from TZS 972 in 2011, and total shareholder funds for the company rose 22.5% to TZS 109.427 billion in 2012 from TZS 89.313 in 2011.

Across the board, major indicators were up. Exim Bank Comoros achieved a growth of 87% in after tax profit compared to 2011. Exim Bank Djibouti, officially launched by the President of Djibouti in December 2011, recorded 158% growth in total assets for the year 2012, with total deposits growing 144% during the year 2012.

BANKING OPERATIONS

During the year, planned expansion at the bank included the opening of two strategic branches, at Kigoma on Lake Tanganyika (a gateway to Burundi, DR Congo and Zambia) as well as the opening of a second branch named Kilimanjaro at Moshi (an important base for commercial agriculture and tourism). The bank recruited sixty-five new employees, as head office and control functions were strengthened. The change process initiated in 2010-2011 allowed the bank in 2012 to deepen its utilization of advanced features of the new core banking system, allowing a more fully automated environment in terms of information, communications and controls.

The platform and the business creativity Exim Bank continued to launch or further refine exciting asset and liability retail products admired by the market. One such exciting product launched in January 2012 was Nyumba Yangu, a flexible home loan product available for purchase, construction or renovation. Another popular product was Haba na Haba, a recurring deposit scheme that encourages regular savings habit among lower income earners, salaried employees and corporates alike. Exim Bank continued to promote our other industry-leading products for savings like Nyota and Tumaini that caters to students and women.

The state-ofthe art multimedia Exim Academy was formally inaugurated in 2012. The Center has quickly earned a reputation as a superior bank training facility in Dar es Salaam, and is highly appreciated by Exim staff. The Academy disseminates the banks vision and values to the team across the network, with mentoring, coaching and counseling provided in both group and one-to-one settings.

2012 saw Exim Bank continue to strengthen our relationship with international development finance agency partners such as the Dutch FMO, the World Banks IFC, and with the French Proparco from whom Exim Bank agreed a USD$15 million loan for on-lending to SMEs.

VIEWING THE FUTURE

Since being appointed to the post of MD in the first quarter of 2012, I am extremely upbeat on the future of the bank in large measure because we are realizing the benefits and crafting new opportunities from the investments made in the banks human resources and IT platforms. Exim Bank has been one of the major players in the evolution of Tanzanias financial sector, and we are now prepared to make even more important contributions to the Tanzanian economy and those of our East African affiliates. We are recommitted to the core of Exim Bank values: innovation, reliability, integrity, professionalism, and customer satisfaction. Our corporate and individual customers will continue to enjoy world class products.

16

2012 ANNUAL REPORT

On behalf of the entire Management Team, the Chairmans devoted guidance and the commitment of the Members of the Board of Directors is deeply acknowledged. They have enabled the many accomplishments realized during the year by providing vision and oversight which has positioned the Bank for accelerated growth in 2013. We most importantly extend our indebtedness to Exim Banks loyal customers. Sincere appreciation is also offered to our Regulators for their crucial work, to our international Partners and correspondent banks for their support, and to the banks dedicated employees.

Anthony GrantManaging Director



17

The Right

Partnership

s!!

Bonding with partn

ers

and stakeholders:

* Value Creation

* Transparency

* Active Engagem

ent

18

Realising the demand for Housing in a developing nation, the Bank added yet another appealing product to its retail lending bouquet, the Nyumba Yangu loan meaning My Home loan. The loan facility aims to fund construction, procurement and renovation of an individuals residence with flexible terms and faster turnaround time. With facilitation of refinance from Tanzania Mortgage Refinance Company (TMRC), the Bank is able to provide a longer tenor of finance, facilitating access to a larger share of the market.

Mobile Banking

The mobile revolution provided a good platform for the Bank to launch its Mobile Banking services during the year. The product is a delight to the customers of the Bank. From as basic as balance enquiry to practically every possible utility payments, the service facilitates day to day transactional banking, besides offering Intra bank funds transfer. The usual transaction alerts provide added benefits to customers.

2012 ANNUAL REPORTFINANCIAL STATEMENTSCOMPANYINFORMATION

CORPORATE BANKING

The year 2012 saw the Bank increase its focus on corporate, small and medium enterprises having strengthened the Corporate Relationship Management Department (CRMD).

The CRMD provides a high level of personalized service to customers while acting as a one stop solution for banking facilities and advisory services. The department supports companies from various sectors including international trade, retail, manufacturing, transportation, construction, real estate and public utilities.

CRMDs emphasis remains on sustaining and building on existing relationships as well as providing new customers with a smooth on-boarding experience. CRMDs approach is to generate new business through the cross selling of products and establishing a loyal customer base. This involves working closely with and supporting the branches in Dar es Salaam and across the regions.

RETAIL BANKING

Exim Bank is continually designing and delivering need based retail products and services to enhance customer delight.

Several of these products were launched during the year 2012, as under:

Current Account for schools, Current Account for community traders / used car

dealers and transport operators; Haba na Haba, a Recurring Deposit Account to

inculcate the habit of thrift for future. The product generated a positive response particularly from the low income segment, thus serving the population.

Savings Account

The Exim Banks Managing Director, Mr. Anthony Grant discussing a point with Vice President of the United Republic of Tanzania, Dr. Mohammed Gharib Bilal during Tanzania Homes Expo Exhibition held at Mlimani City in Dar es Salaam. Looking on is the Banks Head of Retail Banking Department, Mr. Ramakrishna Rao.

19

WOMEN ENTREPRENEURS FINANCING (WEF) PROGRAMME

Since 2007 when the Bank pioneered the Women Entrepreneurs Finance Programme (WEF) in Tanzania, the International Financing Corporation (IFC) remains a strong partner. WEF is an ongoing endeavour whose main objectives are to promote development of women entrepreneurship in business through the enhancement of existing micro enterprises managed by women, and the encouragement of new ventures with a potential to grow. This program also promotes productive employment within the focus of poverty alleviation and sustainable livelihood.

The success of WEF is evident in its powerful impact on 2,846 women entrepreneurs and their families who have benefited from the program since its inception. It has contributed immensely to the empowerment of Tanzanian women and has been a source of employment and income distribution.

The Bank is encouraged by women who have been strategically building up assets (e.g. fixed deposit, equipment, etc), and very meticulously managing funds. WEF continues to support women to develop their businesses.


INTERNATIONAL BANKING DIVISION AND PAYMENTS

The International Banking Division caters to the needs of corporates and individuals. Providing all trade solutions in collaboration with some of the leading International banks, the Bank enjoys a repute of being quick in turnaround time and ease of service.

The division facilitates and undertakes all inward and outward remittances (domestic and international). The straight through processing facility provides automatic credit of inward remittances with an auto email alert to the beneficiary.

Remit 2 India is a new product launched by the division during the year to enable the expatriate community in Tanzania to send money to India at a very low rate. This product has generated great interest in the target customer segment. The division is equipped with an advanced technological platform to provide customer service of international standards at a minimal fee and faster turnaround.

CREDIT MANAGEMENT

Exim Bank maintains a sound credit portfolio accomplished through delivery of superior solutions and liquidity across a full range of products. In todays competitive environment, the demand for credit facilities and related services is ever growing. The Bank enjoys a niche in the Industry being one of the most market savvy and flexible to the needs of the Corporates and SMEs. The Bank takes pride in being regarded as synonym to fast decisions on credit.

In 2012, the Bank laid greater emphasis on the approach to credit monitoring, applying escalating degrees of attention to monitor, control and manage receivables. These are tackled using a measured approach and by selecting the most appropriate method suitable to the particular borrower while still maintaining a sound relationship.

Mrs. Felister Simba, at a training of women entrepreneurs.

20


In 2012, over 326 women entrepreneurs in different sectors of the economy have benefitted from the program where TZS 21.07 billion has been disbursed as of 31st December.

Exim Bank has provided training to more than 1,344 women from Dar es Salaam, Mwanza, Kilimanjaro, Arusha, Morogoro, Mtwara, Manyara and Mbeya. The program offers opportunities to women entrepreneurs develop their competencies in the areas of financial literacy, entrepreneurial skills, quality management, advertising, recruitment and retention of highly qualified employees to deliver the best service possible.

The women program (WEF) is now accessible from all Exim Branches across the country.

INFORMATION TECHNOLOGY

Exim Bank continues to stretch its reach to the unbanked population and is casting its net even wider. The year saw strengthening of its capacity to support the Banks other initiatives building on flexible, secure, scalable and reliable solutions to meet connectivity requirements.

With a vast and growing branch network, robust service coverage capability is required across the branches. One of our achievements in 2012 was our success in improving the

transaction times and efficiency of banking operations that has led to increased customer satisfaction and amplified employee productivity.

The department increased network reliability by investing in fiber connectivity as well as simultaneously implementing a two-tier backup network that ascertains there is no single point of snafu. We currently have a high level of scalability with the capacity to handle both geographic expansion and bandwidth growth.

With this infrastructural breakthrough, the Bank has readily aligned with Tanzania Revenue Authority to provide online payments facility (AsyBank) for collection of domestic custom duties. These services are now accessible online and the Bank is registered to accept the custom payment on behalf of TRA for their customers.

We continue to deploy and sustain solutions that give us colossal levels of security, scalability, network-wide visibility and access control. These will see the bank establish more value added products and services for our customers and make banking effortless.

HUMAN RESOURCES MANAGEMENT

Human Resources (HR) facilitate allocation and alignment of staff to provide greater consistency in the level of support made available to units. This has resulted in a full service HR organization with the capacity to provide strategic HR direction, guidance, and support to all administrative executions of the Bank. With the new branches across Tanzania during the year, we now have over 600 staff members.

HR department supports the core principles of the Bank to create and maintain a workplace that provides respect, dignity, and fairness to all employees. The department has a focused goal to help enhance employee careers by practicing staff rotations and providing relevant training to build on the quality of their professional lives through a fair benefits program and professional self-development.

21


The HR department works closely with Management to provide analytical and strategic human resource planning, and direct services for ever-increasing staff engagement. It continues to support management in all aspects and tactics to help supervisors support individual and organizational career development.

The Bank provides an attractive health cover plan for all active employees. This is supported by provisions of comprehensive life coverage for all personnel.

The year also saw a realigning of the administrative human resources procedures, business practices and processes in line with a changing and dynamic work environment. These procedures covered the areas of recruitment and selection and performance management. The new performance management system has been realigned on best practices.

TRAINING AND DEVELOPMENT:THE EXIM ACADEMY

The Training and Development department relocated to a state of the art premises in Ubungo, Dar es Salaam in March 2012. The Exim Academy was inaugurated on the 15th of October 2012. The Bank has implemented improvement

COMPANYINFORMATION

and additions to the staff development programs to better equip new staff and manage up-and-coming supervisory needs. The Academy has also had great success towards building loyalty and motivation amongst staff.

The Academy also trains staff from subsidiaries in Comoros and Djibouti. In total, 1171 trainees from different levels have been presented with the opportunity to acquire skills in enhancing their competencies during the year. In relation to this, the Bank is proud to say that nearly 95% of all supervisory level positions being held today are by people who have grown from within. In order to accomplish this, a total of 30,296 person hours and 3,786 person days were invested within the same period along with a hefty investment of TZS 335 million.

One of the biggest accomplishments is the Banks own Management and Leadership Development Program christened eMpower. This is a three year sustainable program majorly focused on strong leadership skills and offers 15 varied modules to support the commendable internal recruitment policy of the Bank and counter the demands and challenges of managing people.

The Permanent Secretary of the Ministry of Education & Vocational Training, Mr. Selestine Gesimba, cuts a ribbon at the launch of the Banks training hub dubbed The Exim Academy in Dar es Salaam. First from the right is the Exim Bank Board Chairman Yogesh Manek.

Director Mr. Hanif Jaffer presenting long service recognition award to Mrs. Melkiada Makongela at the 15th Anniversary staff celebrations.

22


Other successful initiatives include the Personal Development Program designed for corporate office staff, and the Professional Banker Program for branch staff. Both programs have been specifically tailored to provide the necessary skills and knowledge required to perform in a professional manner. Endorsing this act is feedback received from supervisors informing of improved motivation levels, high levels of morale, engagement and a better understanding of the procedures and values of the Bank. With high demand for each of these programs, The Academy is looking into expanding the agenda offerings for next year.

It is envisaged that blended learning will be introduced by way of launching an e-learning platform to encourage self-initiated and self-managed learning to complement classroom programs.

The Bank has been successful in implementing a unique business model and an effective learning and development framework that has all the key stakeholders actively involved. The Academy enjoys unparalleled support from all within the Bank which attributes to it success.

INTERNAL AUDIT

The Internal Audit function reports to and operates under a mandate from the Board Audit Committee (BAC) and has the authority to independently determine the scope and extent of work to be performed. Board Audit Committee (BAC) guides and monitors the quality of the internal audit function.

This work is accomplished by introducing a systematic, disciplined, risk-based approach to the evaluation and improvement of the effectiveness of risk management, controls and governance. Internal auditing enhances management controls by providing insight and recommendations based on analysis and assessments of data and business processes.

The department tracks material or significant control weaknesses identified by internal and external regulators as well as planned management remedial actions. To ensure that

COMPANYINFORMATION

agreed remedial actions have been implemented audit findings and overdue issues are reported to senior management and quarterly to Board Audit Committee (BAC). RISK AND COMPLIANCE

Banks and financial service organizations of all sizes are now more concerned than ever about managing risk and compliance. New banking products, increased government scrutiny and intense focus on standard operating procedures generate a larger set of rules and regulations.

For this year, the Bank has enhanced its risk management framework. Constant efforts are being made to ensure sound practices through effective compliance with policies and procedures. The departments value is maximized when it supports management to set strategy, objectives, and helps to balance growth, returns and related risks.

The Risk and Compliance departments merged during the year to effectively manage both aspects and bring about synergies in the related areas. SECURITY AND VIGILANCE

Lapses in security make an impact on all organizations and the economy at large. Exim Bank is meticulously devoted to providing security for our customers that guarantee safety and freedom from danger or anxiety. In the year, this was communicated to the entire organisation, and proactive strides taken to put in place protective and defensive measures specifically adopted to deter, detect and defeat culpable and criminal acts both covertly and overtly.The Bank installed anti skimming software on all ATMs nationwide, as a fraud preventive measure.

Our security department also works with partners within and outside the Bank to ensure fraud and other security threats against the Bank are detected, disrupted and prevented. Measures such as conducting a bank-wide awareness campaign addressing the issues of fraud and forgery were held earlier in the year.

23


Our employees have responded well to the new procedures introduced in 2012 which have in turn enhanced internal and external customer service and strengthened internal controls. These new measures have largely improved the execution of branch operations and thus the Banks performance. CUSTOMER SERVICE

Customer Service department plays a major role in liaising with other functions for faster execution and delivery of services. In 2012, the department strived to identify, explore and recommend common protocols of service delivery standards.

During the year, the department managed to engage itself in key areas that were formerly considered as challenges, bringing the Bank to a level of satisfaction as acknowledged by the customers. Some of the key areas where improvements in service levels have been made are;

Issuance of ATM cards, cheque books, Swift receipts and improving uptime for ATMs.

Implementing a full-fledged built-in Queue Management System.

Placement of customer services coordinators at branches with heavy client flow to improve turnaround time.

Introduction of a dedicated contact point for customers complaints and queries.

The Bank continues to pursue activities aimed at getting the voice of customer (VOC) into the heart of our business. The department has been able to bring in a substantial improvement in the service levels at various points.

COMPANYINFORMATION

CARDS DIVISION

The Bank offers both Credit Cards and Debit Cards. These cards are issued to our customers to facilitate their payments electronically. Exim Bank cards can be used for online shopping and POS machines displaying VISA and MASTERCARD logo.

HIGHLIGHTS FOR THE YEAR

Acquiring business has grown by 167% compared to last year.

Card profitability has increased by 200% compared to last year.

ATM Uptime has gone up from 91% to 93%.

Turnaround time of card delivery has reduced from 13 days to 5 days.

Our ATM security has been strengthened with Anti Skimming devices loaded on the ATMs.

Started acquiring retail business in Comoros.

Launched ATM operations in Djibouti.

24


Debit Cards

Cards offered to savings account customers titled FAIDA CARD. Both the Debit and Credit type cards can be used worldwide at ATM machines displaying VISA and MASTERCARD logo.

TANAPA Exim Cards

Exim Bank introduced TANAPA Exim Cards to allow electronic entry fee payments at the Tanzania National Parks gates. With the service, tourists are able to pay park fees electronically without any hassle and TANAPA has simplified its reconciliation process. These are proprietary debit and prepaid cards and are issued to both account holders and non account holders. These cards are issued in both TZS and USD.

Salary Cards

Salary Cards are debit cards issued by the Bank to employees of organizations for salary payments. The cards can be used to withdraw money through Exim Bank and other ATMs worldwide. In addition to this salary card customers are offered zero balance facility.

Point-Of-Sale (POS) Services

Exim Bank offers electronic payment collections system to merchants. Our POS services are spread across Tanzania covering merchant locations and facilitating merchants and customers to make payments electronically by using VISA and MasterCard on these machines.

25


Exim Bank integrates corporate social responsibility within the overall corporate strategy. Our stakeholders expect more transparency in relation to our interaction with the environment and society.

Exim Bank has a continuing commitment to be ethical. The Bank takes great pride in its contribution to the nations general economic development, improving the quality of life of the local community and society at large.

This section highlights details of our focused CSR endeavours in 2012.

KEY ACTIONS IN 2012

Fostering Talent

The extraordinary in everyday life!

The Safari International Marathon is an annual event that encourages local Tanzanian athletes to pursue their dreams and reach higher accomplishments. The event hosted in Arusha on 9th of September 2012 attracted a large number of tourists by way of invited international athletes. This is an ongoing event and has become one of the most popular event amongst young and old athletes.

CORPORATE SOCIALRESPONSIBILITY

Exim Bank contributed to the endeavour for the second year to support the initiative. The event brought together people from different parts of the world especially from East Africa and the Bank had an opportunity to make its presence felt with 32 staff members participating in the 5 KM Corporate Team Challenge.

Philanthropy

Through our patronage, we aim to provide a meaningful response to critical community challenges. During 2012, we provided financial support to address some of the most pressing issues in our communities including financing education and other critical needs. The Bank has developed significant partnerships with institutions such as Kilakala Primary School, Internal Auditors Tanzania and Tanzania Police who are engaged with the industry and community in different ways. These partnerships form the backbone of of the Banks philanthropic efforts and are often magnified through employee voluntary efforts in various initiatives.

Kilakala Primary School

Exim Bank is committed to supporting education and this initiative is aimed at assisting Kilakala Primary School.

The Exim Bank Managing Director, Mr. Anthony Grant (Right) talks to one of the Kilakala Primary School pupils. Looking on third left is the Exim Bank Assistant General Manager Mr. N.Seshagiri Rao.

26

2012 ANNUAL REPORTFINANCIAL STATEMENTSCORPORATE SOCIALRESPONSIBILITY

This is a government primary school located in Mbagala,

Temeke municipality serving 2,864 students from

disadvantaged families. Exim Bank adopted the school in

August 2012 and started by donating 100 desks as part of

the Banks unique corporate social responsibility that seeks

to improve the schools learning environment.

The Bank has further donated a well-stocked library facility

to the school. Exim Bank will continue supporting various

educational projects in a bid to contribute to uplifting the

education standards in the country.

Recognizing Brave Police Officers

On the Banks 15th Anniversary celebrated in August

2012, five police officers from Dar es Salaam, Mwanza and

Tanga regions were honoured for their dedicated work

and tremendous spirit of serving the nation. The police

officers were each awarded with a brand new motorcycle,

a certificate of recognition and a medal. Among those

recognized were; Inspector Abel. B. Swai, Sgt. Vincent C.

Chikupe, A/Inspector Dorina K. Poyo, D.C Banda. M. Mtani

and PC Mathias R. Mangombe.

Exim Bank Vein-to-Vein Blood Drive

Exim Bank hosted a blood donation drive in June 2012. The

event was a tremendous success with 80 units of blood

donated for expectant mothers and children under the age

of six.

The Bank honored five Police Officers from Dar es Salaam, Mwanza and Tanga regions for serving the nation.

The Inspector General of Police (IGP) Mr. Said Mwema (right) at the ceremony hosted by the Bank to honor the services of outstanding Police Officers. Looking on is the Exim Bank Board Chairman, Mr. Yogesh Manek (centre) and the Exim Bank Managing Director, Mr. Anthony Grant (left).

The Exim Bank management team takes part in the Banks Vein-to-Vein blood donation drive held at the Banks headquarters in Dar es Salaam.

27

Blue Hope Orphanage

Among other areas of interest, Exim Bank has also taken

under its wing an orphanage located in Mabibo, Dar es

Salaam. In December 2012, the Managing Director, Mr.

Anthony Grant paid a visit to the orphanage alongside

other staff to present the children with scholastic materials

to aid their educational growth.

2012 ANNUAL REPORTFINANCIAL STATEMENTSCORPORATE SOCIALRESPONSIBILITY

Exim Bank City Beautification Campaign

The Bank has pledged to support the beautification process

of the city of Dar es Salaam in a bid to improve its image.

In April 2012, the Banks employees volunteered for a green

environment weekend cleaning exercise of Clock Tower and

Ohio Gardens.

A cross section of volunteers who turned up to support the Exim Bank Vein-to-Vein blood donation drive held at the Banks headquarters in Dar es Salaam.

The Banks Assistsnt Marketing Manager Ms. Anita Goshashy poses for a photo with some of the children at Blue Hope Orphanage Centre in Mabibo, Dar es Salaam.

A team of Exim Bank employees engage in a cleaning exercise of the Clock Tower gardens adjacent to the Exim Bank Clock Tower Branch in Dar es Salaam.

28



28



29

The Bank celebrated its 15th year of existence Bank wide in 2012. The celebration extended to include the multitude of milestones achieved along the way. The Banks capabilities support growth and progress for all its customers, key Stakeholders, Staff and the communities in the operational environment. With influence across Tanzania, Comoros and Djibouti, it is positioned to give individuals and institutions access to finance and enable them to play an important part in society.

30

However, the country anticipates a growing potential in Indian Ocean tourism and exploration of natural gas.

The Bank constructed and inaugurated a new building for transacting MoneyGram business at Moroni for

providing a more conducive banking environment and

focused attention to different sections of customers.

The economy is mainly cash based; the Bank continued its innovative initiatives and installed two POS terminals

at key locations. The outlets besides helping to create

the culture of credit and savings are bringing the nation

further closer to the outside world.

An off-site ATM was installed at Hotel Retaj Moroni.

Banking on Wheels, an initiative offering banking facilities at the door-steps of customers in a mobile

van, was launched.

MoneyGram business was expanded by appointing Sub Representatives.


2012 ANNUAL REPORTFINANCIAL STATEMENTSEXIM BANKCOMOROS SA

Exim Bank Tanzania is the first financial institution in Tanzania to venture establishing footprints outside the country. The Bank opened its first subsidiary in The Union of Comoros in the year 2007.

2012 PERFORMANCE HIGHLIGHTS

The fully owned subsidiary of Exim Bank (Tanzania) Ltd in Comoros, offers universal banking facilities to all customers in the islands of Moroni and Anjouan. In 2012, the subsidiary successfully completed five years of operations and continues to be the fastest growing bank in the country. During the year, the Bank has shown growth in all the parameters as under:

BUSINESS GROWTH(Amount in Comoros Francs)

Shareholders funds at KMF 1.998 billion (USD 5.41 Million); growth of 37.22%

Total Assets moved up by 11.08%, to KMF 11.88 billion (USD 32.19 Million)

Total Deposits moved up by 9.23%, to KMF 8.94 billion (USD 24.22 Million)

CASA stood at 71.46 % of the deposits portfolio.

Total Advances jumped by 15.77%, to KMF 5.57 billion (USD 15.09 Million)

PROFITABILITY

The Bank recorded Profit after Tax of KMF 542 million (USD 1.47 million) (2011: KMF 290 million (USD 0.79 million)) a growth of 86.72%.

The impact of the various initiatives taken by the Bank are significant when one takes into account the fact that 2012 estimated GDP of Comoros was around USD 1 Billion.

31


2012 ANNUAL REPORTFINANCIAL STATEMENTSEXIM BANKDJIBOUTI SA

Exim Bank Djibouti is another fully owned subsidiary of Exim Bank (Tanzania) Ltd. The subsidiary opened on 09th March 2011 and offers wholesale banking to customers. In less than two years, the Bank has positioned itself as a forward looking financial institution and leader in banking with innovative products and personalized service. Djibouti is the port to the world for landlocked Ethiopia (90 million people).

2012 PERFORMANCE HIGHLIGHTS

The highlights of performance in 2012 are as under:

BUSINESS GROWTH(Amount in Djibouti Francs)

Total Assets have grown by 158%, to DJF 1760 Million (USD 9.92 Million)

Total Deposits have grown from DJF 40 Million to DJF 743 Million (USD 9.06 Million)

Total Advances have grown from DJF 5.2 Million to DJF 179 Million (USD 1.02 Million)

Shareholders funds have grown by 39.00%, reached to DJF133 Million (USD 0.70 Million)

The following are significant achievements during 2012:

The Bank launched its first ATM machine accepting debit cards.

The Bank introduced the first electronic banking service in Djibouti (Smart statment).

The first Bank to introduce one day/overnight transfer worldwide Swift transfer.

MoneyGram Money transfer business was introduced. The Bank focuses on building human capital through

training and development to ensure par excellence customer service.

From left: Exim Banks Director, Mr. Hanif Jaffer, Chief Executive Officer, Mr. Dinesh Arora, Board Chairman Mr. Yogesh Manek, Director, Mr. Shaffin Jamal, Board member, Mr. Nalin Kothari, Exim Bank Djibouti and Director Mr. Tom Wescott during the official inauguration of Exim Bank Djibouti.

Seated: His Excellency, President of the Republic of Djibouti, Mr. Ismal Omar Guelleh during the official inauguration of Exim Bank Djibouti. Standing from left Mr. Ilyas Moussa, Exim Bank Djibouti Board member (Current Minister of Finance Djibouti), Board Chairman Mr. Yogesh Manek, Director, Mr. Shaffin Jamal and Chief Executive Officer, Mr. Dinesh Arora.

32

Exim The Bankof Choice

Our relationship with customers:

* Understanding & Empathy* Fairness* Innovative Solutions* Quick Turnaround

33

2012 ANNUAL REPORTFINANCIAL STATEMENTSREPORT OF THE DIRECTORS

1 The directors submit their report together with the audited financial statements for the year ended 31 December 2012, which disclose the state of affairs of the group and company.

2 INCORPORATION

The company is incorporated in Tanzania under Companies Act as a private company limited by shares.

3 OUR VISION To be the bank of choice.

4 OUR MISSION

We are committed to remain an innovative Tanzanian Bank offering services of international standards.

5 PRINCIPAL ACTIVITIES

The Company is engaged in the business of banking and the provision of related services. 6 BUSINESS DEVELOPMENTS In 2012, the Company completed its fifteen years of operations and continued to be amongst the top performing banks in the country on key parameters viz total assets and deposits.

The following achievements were recorded in the year:

The Bank continued to expand its nationwide network with the launch of two new branches opened during the year; in Kigoma town on Lake Tanganika and Kilimanjaro, a second branch in Moshi town in the heart of the agricultural and tourism area.

The Bank launched new products including Nyumba Yangu (Mortgage financing) and Haba na Haba(hybrid of savings and investment plan).

Additional modules were implemented during the year to leverage the technology platform enabled by the new Core BANKING SYSTEM, :- Locker Module, Fixed Asset Module, Standing Instructions module, Security Module and Mobile Banking / SMS alert Module. The expected results will include improved services and at lower costs.

Partnerships were strengthened with international institutions. A $15 million loan was concluded from Proparco, the French Development Financial Institution, for on-lending to the SME sector.

Progress continued at the overseas affiliates, including construction in Comoros of a new branch in Moheli completing Exim Banks footprint on all of the autonomous islands.

The Staff Training Centre, redesignated The Exim Academy, moved to highly refurbished premises in Ubungo a multi-media, multi-auditorium environment for learning. A comprehensive Training Needs Analysis of Corporate Departments and Branch Staff was conducted.

34


7 DIRECTORS

The directors of the Company at the date of this report and who have served since 1 January 2012, unless otherwise stated, are:

Name Position Nationality Qualifications

1 Mr. Yogesh Manek Chairman Tanzanian Bachelor of Arts

2 Mr. Hanif Jaffer Director Tanzanian Certified Public Accountant ( CPA-T)

3 Mr. Shaffin Jamal Director Tanzanian Masters of Business Administration

4 Mr. Pascal Kamuzora Director Tanzanian Master of Arts (Economics)

5 Mr. Thomas Wescott Director American Bachelor of Arts, Government and Economics

6 Hon. Juma Mwapachu Director Tanzanian Bachelor of Law and Post Graduate Diploma in International law

The Company Secretary as at 31 December 2012 was Adept Chambers, Tanzania.

8 CORPORATE GOVERNANCE

The Board of Directors consists of six members. No director held an executive position in the Bank during the year. The Board takes overall responsibility for the Bank, including that for identifying key risk areas, considering and monitoring credit and investment decisions, considering significant financial matters, and reviewing the performance of management business plans and budgets. The Board is also responsible for ensuring that a comprehensive system of internal control policies and procedures is operative, and for compliance with sound corporate governance principles.

The Board is required to meet at least four times a year and the Board met four times during the year 2012. The Board delegates the day to day management of the business to the Strategic Management comprising the Managing Director and the Chief Executive Officer, assisted by other senior management. The Management team is invited to attend board meetings and the meetings of various Sub-committees of the Board. The Management remains responsible for the effective control of all the Companys operational activities and acting as a medium of communication and coordination amongst the various business and operational units of the Bank.

The Group and Bank are committed to the principles of effective corporate governance .The directors also recognize the importance of integrity, transparency and accountability. The Board has the following committees to ensure a high standard of corporate governance. All committees report to the Board and apart from the Credit Committee which met 20 times, all other committees met four times each during the year.

35


8 CORPORATE GOVERNANCE (continued)

(I) Asset and Liability Management Committee (ALCO)

Name Position

1 Mr. Thomas Wescott Chairman

2 Mr. Hanif Jaffer Member

3 Mr. Pascal Kamuzora Member

(ii) Credit Committee (BCC)

Name Position

1 Mr. Shaffin Jamal Chairman

2 Mr. Yogesh Manek Member


(iii) Risk Management Committee (BRMC)

Name Position




(iv) Audit Committee (BAC)

Name Position




(v) Investment Committee (BIC)

Name Position

1 Mr. Yogesh Manek Chairman

2 Mr. Shaffin Jamal Member


4 Mr. Thomas Wescott Member

36


8 CORPORATE GOVERNANCE (continued)

(vi) Executive Committee (EXCOM)

Name Position

1 Mr. Yogesh Manek Chairman

2 Mr. Shaffin Jamal Member


4 Hon. Juma Mwapachu Member

9 CAPITAL STRUCTURE The Banks capital structure for the year under review is shown in note 3.5 of the financial statements.

10 MANAGEMENT The responsibility for the management of the Bank rests with a team defined as Strategic Management comprising the Managing Director and the Chief Executive Officer. The Bank is organised in the following departments:

(i) Accounts and MIS(ii) Administration and Procurement (iii) Cards(iv) Centralised Cheque Issuance Cell(v) Compliance Cell(vi) Core Banking System(vii) Corporate Relationship Management(viii) Credit Management(ix) Customer Service(x) Exim Academy (The Learning and Development Centre) (xi) Finance(xii) Human Resources(xiii) Information Technology(xiv) Internal Audit(xv) Marketing and Publicity(xvi) Operations(xvii) Projects Management(xviii) Reconciliation(xix) Retail Banking(xx) Risk Management(xxi) Security and Vigilance(xxii) Trade Finance and Remittances(xxiii) Treasury Management

REPORT OF THE DIRECTORS

37


11 SHAREHOLDERS OF THE COMPANY

The total number of shareholders during the year was 7 (2011: 7 shareholders). The shares of the bank are held as follows:

Shareholder2012

Number ofordinary shares

2011Number of

ordinary shares

1 Mr. Yogesh Manek 2,580,000 2,580,000

2 Mr. Shaffin Jamal 2,580,000 2,580,000

3 Mr. Hanif Jaffer 2,580,000 2,580,000

4 Mr. Azim Virjee 1,935,000 1,935,000

5 Mr. Azim Kassam 2,580,000 2,580,000

6 Alawa Investments Limited 322,500 322,500

7 Kandasi Investments Limited 322,500 322,500

Total 12,900,000 12,900,000

Directors holding shares are listed below:

Name Nationality Number of Ordinary Shares

1 Mr. Yogesh Manek Tanzanian 2,580,000

2 Mr. Shaffin Jamal Tanzanian 2,580,000

3 Mr.Hanif Jaffer Tanzanian 2,580,000

12 FUTURE DEVELOPMENT PLANS

The Board intends to continue a thoughtful and business oriented expansion of the Banks Tanzania network and the footprint of affiliates. Delivery channels will be expanded and deepened, as the Bank rolls out its mobile banking, internet banking and agency banking services. Improvement in customer services and relationship management will be accelerated to secure one of the best turnaround times in the market. Accompanied with exceptional complaints handling systems, the Bank plans to proactively remain ahead of competition.

In an endeavor to build a strong foundation for future growth, the Bank has been implementing a number of transformation initiatives which include the following:

Core banking system migration from Flexicube to the new Core Banking Solution (CBS). Building a cadre of staff and implement retention policy to ensure availability of skilled and well motivated team to take

the Bank to the next level. Putting in place systems and processes to further strengthen transparency and good governance. The intent is to

ensure sustainability of strong growth.


38


13 RESULTS AND DIVIDEND

During the year, Exim Bank Group had a 9% increase in profit after tax of TZS 13,667 million (2011: TZS 12,445 million). The directors recommend payment of a 15% dividend for 2012 (2011: Nil).

14 PERFOMANCE FOR THE YEAR

The Group recorded a profit before tax of TZS 16,540 million (2011: TZS 17,487 million); The Groups deposits from customers increased by 17.2% to TZS 723 billion (2011: TZS 617 billion); Groups lending portfolio prudently increased to TZS 436 billion (2011: TZS 428 billion); and Total assets increased by 14.8% to TZS 967 billion (2011: TZS 842 billion). 15 RISK MANAGEMENT AND INTERNAL CONTROL The Board accepts final responsibility for the risk management and internal control systems of the Company. It is the task of management to ensure that adequate internal financial and operational control systems are developed and maintained on an ongoing basis in order to provide reasonable assurance regarding:

The effectiveness and efficiency of operations; The safeguarding of the Companys assets; Compliance with applicable laws and regulations; The reliability of accounting records; Business sustainability under normal as well as adverse conditions; and Responsible behaviors towards all stakeholders.

The Board assessed the internal control systems throughout the financial year ended 31 December 2012 and is of the opinion that they met accepted criteria. The Board carries out risk and internal control assessment through Risk Management Committee.

16 SOLVENCY

The Board of directors confirms that applicable accounting standards have been followed and that the financial statements have been prepared on a going concern basis. The Board of directors has reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future.

The Bank has met all the Bank of Tanzanias (BoT) liquidity and capital adequacy ratios and is considered solvent by the Board of Directors.

17 EMPLOYEES WELFARE

Management and Employees Relationship

The Bank is equal opportunity employer. It gives equal access to employment opportunities and ensures that the best available person is appointed to any given position free from discrimination of any kind and without regard to factors like gender, marital status, tribe, religion and disability which does not impair ability to discharge duties.


39


17 EMPLOYEES WELFARE (continued)

Training Facilities

For the year 2012, the Bank increased its spending for staff training by 16.7% to TZS 335 million for staff training in order to improve employee technical skills and hence effectiveness (2011:TZS 287 million. Training programs have been and are continually being developed to ensure employees are adequately trained at all levels. All employees have some form of annual training to upgrade skills and enhance development.

Medical Assistance

All confirmed members of staff with a maximum number of five beneficiaries (dependants including a spouse and four children) for each employee were availed medical insurance guaranteed by the Board. Currently these services are provided by Strategis Insurance Tanzania Limited. There is also a Group Life insurance cover for all confirmed staff.

Health and Safety

The Bank has a strong administration department which ensures that a strong culture of safety prevails at all times. A safe working environment is ensured for all employees and contractors by providing adequate and proper personal protective equipment, training and supervision as necessary.

Financial Assistance to Staff

Loans and advances under various schemes are available to all confirmed employees depending on the assessment of and the discretion of management as to the need and circumstances as per banks Human Resources (HR) policy approved by the Board of Directors. This is to assist in promoting the welfare of its employees.

Persons with Disabilities

Applications for employment by disabled persons are always considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the company continues and appropriate training is arranged. It is the policy of the company that training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Employees Benefit Plan

The Bank and all its employees contribute to the National Social Security Fund (NSSF), which is a defined contribution scheme. Employees contribute 10% and the Bank also contributes 10% to the scheme. The number of employees at the end of year was 680 (2011: 565 staff).

18 GENDER PARITY

Exim Bank Group had 680 employees, out of which 329 were female and 351 were male. (2011: 286 female 279 male staff).


40


19 RELATED PARTY TRANSACTIONS

All related party transactions and balances are disclosed in note 31 to these financial statements.

20 POLITICAL AND CHARITABLE DONATIONS

The company did not make any political donations during the year. Donations made to charitable organizations during the year amounted to TZS 53 million (2011: TZS 15 million).

21 CORPORATE SOCIAL RESPONSIBILITY

The Bank is committed to the community in which it operates and endeavors to support a variety of national initiatives. Among other contributions in 2012, the donations below were made to the community.

Donation to various social groups

The Bank donated to various non-governmental organisations (NGOs) which serve the community. Most of the donations were directed towards protecting the environment, supporting orphans and youth empowerment.

The Bank also contributed to help the needy society by donating to Tushikamane Pamoja Foundation, a non-governmental organisation (NGO) that was founded to address the lack of resources that is endemic within communities affected by poverty.

Contribution towards Education

The Bank contributed various items including desks, building of a library, text books and water tanks to the following schools; Yombo Kilakala Primary, Bahari Beach Primary and Aquinas Secondary. Further, in the efforts to ensure continuous support, the Bank decided to adopt Yombo Kilakala Primary School so as to create a big impact to the school in the long run.

22 AUDITOR

The auditor, PricewaterhouseCoopers, has expressed its willingness to continue in office and is eligible for re-appointment.

Approved by the board of directors on and signed on its behalf by:

_______________________ _____________________ Mr. Yogesh Manek DateCHairMaN


04th April 2013

41


The Directors are required by the Companies Act, CAP 212 Act No. 12 of 2002 to prepare financial statements for each financial period that give a true and fair view of the state of affairs of the Company and Group as at the end of the financial year and of their profit or loss for the year. The Directors are also obliged to ensure that the Company keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Company. They are also responsible for safeguarding the assets of the Company.

The Directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Financial Reporting Standards (IFRS) and the requirements of Companies Act, CAP 212 Act No. 12 of 2002. The Directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the Company and Group and of their profits in accordance with International Financial Reporting Standards (IFRS). The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement.

Nothing has come to the attention of the Directors to indicate that the Group or Company will not remain a going concern for at least twelve months from the date of this statement.

_______________________ _____________________ Mr. Yogesh Manek DateCHairMaN

STATEMENT OFDIRECTORSRESPONSIBILITIES

04th April 2013

42


STATEMENT OFDIRECTORSRESPONSIBILITIES

Report on the Financial Statements

We have audited the accompanying financial statements of Exim Bank (Tanzania) Limited (the Company) and its subsidiaries, Exim Bank Comores S.A and Exim Bank Djibouti S.A (together, the Group) which comprise the statements of financial position of the Group and Company as at 31 December 2012, and their statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Directors Responsibility for the Financial Statements

The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and with the requirements of the Companies Act, CAP 212 Act No. 12 of 2002 and for such internal control, as the directors determine necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditors responsibility

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

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

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

Opinion

In our opinion the accompanying financial statements give a true and fair view of the state of the Groups and Companys financial affairs at 31 December 2012 and of their profits and cash flows for the year then ended in accordance with International Financial Reporting Standards and the Companies Act, CAP 212 Act No. 12 of 2002.

43

2012 ANNUAL REPORTFINANCIAL STATEMENTSREPORT OF THEINDEPENDENT AUDITOR

Report on other Legal and Regulatory Requirements

This report, including the opinion, has been prepared for, and only for, the companys members as a body in accordance with the Companies Act, CAP 212 Act No. 12 of 2002 and for no other purposes.

As required by the Companies Act, CAP 212 Act No. 12 of 2002, we are also required to report to you if, in our opinion, the Directors Report is not consistent with the financial statements, if the company has not kept proper accounting records, if the financial statements are not in agreement with the accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors remuneration and transactions with the company is not disclosed. In respect of the foregoing requirements, we have no matter to report.

Leonard C Mususa, FCPA-PP For and on behalf of PriceWaterhouseCoopers Certified Public Accountants Dar es Salaam




44



44

Reaching

the unreache

d

Our relationships across borders:* Opportunities & Options* Linkages

* Leveraging Practices



45

STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

Note

Group2012

TZSMillions

RestatedGroup

2011TZSMillions

Company2012

TZSMillions

RestatedCompany

2011TZSMillions

Interest and similar income 5 84,192 65,864 81,805 63,396

Interest expense and similar charges 6 (39,214) (25,378) (38,644) (24,839)

Net interest income 44,978 40,486 43,161 38,557

Loans and advances impairment charge 15 (5,674) (6,232) (5,579) (6,003)

Net interest income after loan impairment charge 39,304 34,254 37,582 32,554

Fee and commission income 17,693 14,901 15,218 13,437

Fee and commission expense (193) (195) (168) (72)

Net fee and commission income 7 17,500 14,706 15,050 13,365

Foreign exchange income 3,968 5,384 3,043 4,589

Other income 8 1,104 786 1,104 786

Operating expenses 9 (45,336) (37,643) (40,970) (32,180)

Profit before income tax 16,540 17,487 15,809 19,114

Income tax expense 11 (2,873) (5,042) (2,873) (5,042)

Profit for the year 13,667 12,445 12,936 14,072

Exchange differences on translation of foreignoperations 244 8 - -

Gain on fair valuation of available for salefinancial asset

6,203 4,366 6,203 4,366

Total comprehensive income for the year 20,114 16,819 19,139 18,438



46

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012

Note

Group2012

TZS Million

RestatedGroup

2011TZS Million

RestatedGroup

2010TZS Million

ASSETSCash and balances with Central Banks 13 143,686 99,501 82,622Loans and advances to banks 14 132,202 121,686 93,210Derivative assets 24 108 - -Loans and advances to customers 15 435,598 428,032 342,758Government securities held-to-maturity 16 185,148 134,718 134,568Investment securities available-for-sale 17 26,933 20,730 15,764 held-to-maturity 17 3,587 3,669 3,638Other assets 18 11,938 11,719 16,136Property and equipment 19 20,274 17,403 17,479Intangible assets 20 642 760 570Investment in subsidiaries 21 - - -Current income tax 5,043 1,742 881Deferred income tax 22 1,391 1,050 676

Total assets 966,550 841,010 708,302

LIABILITIESDeposits from banks 86,008 81,887 44,233Deposits from customers 23 722,734 617,259 548,770Derivative liabilities 24 - 11Other liabilities 25 18,433 19,492 17,950Subordinated debts and senior loans 26 29,948 33,059 20,118

Total liabilities 857,123 751,697 631,082

SHAREHOLDERS EQUITYShare capital 27 12,900 12,900 12,900Retained earnings 64,833 57,544 51,244

Regulatory and other reserves 28

31,694 18,869 13,076

Total shareholders equity 109,427 89,313 77,220

Total equity and liabilities 966,550 841,010 708,302

The financial statements on pages 12 to 91 were approved for issue by the Board of Directors and signed on its behalf by:

__________________________ __________________

Yogesh Manek - (Chairman) Date

04th April 2013



47

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012

Note

Company2012

TZS Million

Restated Company

2011TZS Million

RestatedCompany

2010TZS Million

ASSETSCash and balances with Central Banks 13 116,157 84,447 68,404Loans and advances to banks 14 127,261 120,833 98,348Loans and advances to customers 15 410,600 408,269 326,029Government securities held-to-maturity 16 185,148 134,718 134,568Investment securities available-for-sale 17 26,933 20,730 15,764 held-to-maturity 17 3,587 3,669 3,638Other assets 18 10,918 10,311 15,486Property and equipment 19 17,709 15,420 15,855Intangible assets 20 461 644 289Investment in subsidiaries 21 7,498 5,287 5,287Current income tax 5,043 1,742 881Deferred income tax 22 1,391 1,050 676

Total assets 912,706 807,120 685,225

LIABILITIESDeposits from banks 76,133 83,724 47,869Deposits from customers 23 684,397 586,493 528,392Derivative liabilities 24 - 11Other liabilities 25 18,119 19,147 17,718Subordinated debts and senior loans 26 26,095 28,933 16,124

Total liabilities 804,744 718,297 610,114

SHAREHOLDERS EQUITYShare capital 27 12,900 12,900 12,900Retained earnings 64,697 57,706 49,619

Regulatory and other reserves 28 30,365 18,217 12,592

Total shareholders equity 107,962 88,823 75,111

Total equity and liabilities 912,706 807,120 685,225

The financial statements on pages 12 to 91 were approved for issue by the Board of Directors and signed on its behalf by:

__________________________ __________________Yogesh Manek - (Chairman) Date

04th April 2013



48

STATEMENT OF CHANGES IN EQUITY - GROUP

Year ended 31 December 2011Share capitalTZSMillions

Regulatoryand other

reservesTZSMillions

Retainedearnings

TZSMillionsTotal

TZSMillionsAt start of year as previously reported 12,900 13,076 51,842 77,818Prior year adjustment (Note 32) - - (598) (598)

At start of year as restated 12,900 13,076 51,244 77,220

Profit for the year - - 12,445 12,445Other comprehensive income:Gain on fair valuation of available for sale financial assets - 4,366 - 4,366Exchange differences on translation of foreign operations - 8 - 8

Total comprehensive income - 4,374 12,529 16,819

Transfer to regulatory reserve - 1,419 (1,419) -

Transaction with owners:Payment of dividend for 2010 (4,726) (4,726)

At end of year 12,900 18,869 57,544 89,313

Year ended 31 December 2012At start of year as previously reported 12,900 18,869 58,226 89,995Prior year adjustment (Note 32) - - (682) (682)

At start of year as restated 12,900 18,869 57,544 89,313Profit for the year - - 13,667 13,667Other comprehensive income:Gain on fair valuation of available for sale financial assets - 6,203

- 6,203

Exchange

Documents

Annual Report 2012