Annual Report 2007

Annual Report 2007

A n n u a l R e p o r t 2 0 0 7
Key Figures
USD ’000 2007 2006 Change
Balance Sheet Data
Total Assets 34,605 16,841 105.5%
Gross Loan Portfolio 25,110 13,465 86.5%
Business Loan Portfolio 15,858 8,501 86.5%
USD < 10,000 11,174 7,377 51.5%
USD > 10,000 < 50,000 3,649 1,074 239.8%
USD > 50,000 < 150,000 1,035 50 1,970.0%
USD > 150,000 0 0 –
Agricultural Loan Portfolio 1,166 0 –
Housing Improvement Loan Portfolio 6,056 4,009 51.1%
Other 2,030 955 112.6%
Allowance for Impairment on Loans 655 242 170.7%
Net Loan Portfolio 24,455 13,223 84.9%
Liabilities to Customers 15,797 8,050 96.2%
Liabilities to Banks and Financial Institutions 7,918 3,434 130.6%
Shareholders’ Equity 7,797 3,984 95.7%
Income Statement
Operating Income 10,712 6,338 69.0%
Operating Expenses 9,095 4,612 97.2%
Operating Profit Before Tax 1,617 1,726 -6.3%
Net Profit 1,269 1,448 -12.4%
Key Ratios
Cost/Income Ratio 77.3% 67.7%
ROE* 20.9% 44.4%
Capital Ratio 26.5% 26.0%
Operational Statistics
Number of Loans Outstanding 26,738 21,293 25.6%
Number of Loans Disbursed within the Year 29,604 24,806 19.3%
Number of Business and Agricultural Loans Outstanding 16,219 13,245 22.5%
Number of Deposit Accounts 72,966 64,347 13.4%
Number of Staff 537 297 80.8%
Number of Branches and Outlets 12 9 33.3%
* The ROE figure for 2006 differs from that shown in last
year’s annual report because the method of calculating
this indicator has been modified.

Mission Statement 4
Letter from the Board of Directors 5
The Bank and its Shareholders 6
The ProCredit Group – Neighbourhood Banks for Ordinary People 8
ProCredit in Africa 11
Highlights in 2007 14
Management Business Review 16
Special Feature 24
Risk Management 26
Branch Network 28
Organisation, Staff and Staff Development 30
Business Ethics and Environmental Standards 33
Our Clients 34
Financial Statements 38
Contact Addresses 47
C o n t e n t s

M i s s i o n S tat e m e n t
Mission Statement
Banco ProCredit Mozambique is a development-oriented full-service bank. We offer ex-
cellent customer service and a wide range of banking products. In our credit operations,
we focus on lending to very small, small and medium-sized enterprises, as we are con-
vinced that these businesses create the largest number of jobs and make a vital contri-
bution to the economies in which they operate.
Unlike other banks, our bank does not promote consumer loans. Instead we focus on
responsible banking, by building a savings culture and long-term partnerships with our
customers.
Our shareholders expect a sustainable return on investment, but are not primarily inter-
ested in short-term profit maximisation. We invest extensively in the training of our staff
in order to create an enjoyable and efficient working atmosphere, and to provide the
friendliest and most competent service possible for our customers.

Letter from the Board of Directors
When it changed its name at the beginning of 2007, Banco ProCredit Mozambique adopted the same
corporate image as all of the other ProCredit banks in the group. In the context of this rebranding, it expanded
its range of products and repositioned itself in the Mozambican financial services market as an
attractive provider of banking services. The neighbourhood banking concept is striking a chord with large
numbers of customers, and some of the people we are attracting have never done business with a bank
before. Following the introduction of cards and ATMs and the launch of SWIFT transfers, Banco ProCredit
is today in a position to offer a full range of modern banking services.
By enlarging our branch network, renovating our existing branches, and introducing ProCredit’s corporate
design features, we have made the bank more attractive, and this is clearly reflected in its encouraging
results. We achieved a significant increase in the number of credit and deposit customers and almost
doubled the size of our portfolios in 2007. With growth rates of 87% in the loan portfolio and 96% in deposit
volume, ProCredit Bank far outperformed the sector as whole, which reported 13% and 37% growth,
respectively.
With its loans for agricultural enterprises, the bank has found a highly innovative way of serving the
sector which is the largest provider of employment in the country but which until now had no access to
external finance. The one thousand agricultural loans outstanding at year-end mark only the beginning
of a long-term project which we consider to be of vital importance in terms of its impact on economic development
and employment.
For the first time, the bank saw a particularly strong increase in its staff numbers, and recruitment and
training were a major focus in 2007. The bank’s 240 new employees had to be integrated into the organisation
and prepared for their duties. A broad programme of training and skills development opportunities
was built up for the entire staff, whose numbers swelled to 537. For all new employees the first step was a
bank-specific induction course conducted on-site. For the four banks in Africa, ProCredit Holding has set
up a regional academy where current and potential middle managers can undergo training together. The
ProCredit Academy in Fürth, Germany, is the training centre for the future management personnel of the
ProCredit banks, and to date six Mozambicans have enrolled in its three-year part-time course.
I would like to take this opportunity to express my thanks to all of our staff members, without whose commitment
the successes of 2007 would not have been possible. We are convinced that the start of construction
work on our new headquarters in Maputo and the regional expansion of our branch network during
the coming year will help to strengthen the confidence that both our customers and our staff have shown
in Banco ProCredit so far. I wish our staff, customers and management every success for the new year.
Gabriele Heber
Chairperson of the Board of Directors
L e t t e r f r o m t h e B o a r d o f D i r e c t o r s
Members of the
Board of Directors as at
December 31, 2007:
Gabriele Heber
Sandrine Massiani
Jasper Snoek
Members of the
Management Board as at
December 31, 2007:
Yann Groeger
Carla Abrantes de Figueiredo

A n n u a l R e p o r t 2 0 0 7
The Bank and its Shareholders
Banco ProCredit Mozambique is a member of the
ProCredit group, which is led by its Frankfurtbased
parent company, ProCredit Holding. With
over 85% of the shares, ProCredit Holding is the
majority owner of Banco ProCredit.
Banco ProCredit was founded at the end of 2000
by an alliance of international developmentoriented
investors. Their goal was to establish a
new kind of financial institution that would serve
the demand of small and very small businesses in
a socially responsible way. The primary aim was
not short-term profit maximisation, but rather to
deepen the financial sector and contribute to longterm
economic development while also achieving
a sustainable return on the investment.
Shareholder
(as of Dec. 31, 2007)
ProCredit Holding
DOEN
FFH
Total Capital
Sector
Investment
Investment
Government
ProCredit Holding is the
parent company of a global
group of 22 ProCredit banks. ProCredit Holding
was founded as Internationale Micro Investitionen
AG (IMI) in 1998 by the pioneering development
finance consultancy company IPC.
ProCredit Holding is committed to expanding
access to financial services in developing countries
and transition economies by building a
group of banks that are the leading providers of
fair, transparent financial services for very small,
small and medium-sized businesses as well as
the general population in their countries of operation.
In addition to meeting the equity needs of its
subsidiaries, ProCredit Holding guides the development
of the ProCredit banks, provides their
senior management, and supports the banks in
all key areas of activity, including banking operations,
human resources and risk management. It
ensures that ProCredit corporate values, bestpractice
banking operations and Basle II risk
management principles are implemented groupwide.
The founding shareholders of Banco ProCredit
were Banco Internacional de Moçambique (BIM),
InternationaleMicroInvestitonenAG(IMI),International
Finance Corporation (IFC), the Netherlands
Development Finance Company (FMO), Stichting
DOEN – Postcode Loterij/Sponsor Loterij/Bank-
Giro Loterij, and Fundo para o Fomento da Habitação
(FFH). The management of the bank was
provided by Internationale Projekt Consult (IPC).
Over the years, ProCredit Holding, working closely
with IPC, has consolidated the ownership and
management structure of all the ProCredit banks
and financial institutions to create a truly global
group with a clear shareholder structure and to
bring to each ProCredit institution all the synergies
and benefits that this implies. Today’s
shareholder structure of Banco ProCredit is outlined
below. The bank’s current share capital is
USD 5.4 million.
Headquarters
Germany
The Netherlands
Mozambique
Share
85.54%
12.13%
2.33%
100%
Paid-in Capital
(in USD ’000)
4,633
657
126
5,416
IPC is the leading shareholder and strategic
investor in ProCredit Holding. IPC has been
the driving entrepreneurial force behind the
ProCredit group since the foundation of the
banks. Historically, IPC provided the senior managers
of the ProCredit banks. At the end of 2007,
IPC staff were integrated into ProCredit Holding,
significantly strengthening the company’s ability
to support the ProCredit group.
ProCredit Holding is a public-private partnership.
In addition to IPC and IPC Invest (the
investment vehicle of the staff of IPC and
ProCredit), the other private shareholders of
ProCredit Holding include the Dutch DOEN Foundation,
the US pension fund TIAA-CREF, the US
Omidyar-Tufts Microfinance Fund, the Swiss investment
fund responsAbility and the Salvadoran
company Fundasal. The public shareholders
of ProCredit Holding include KfW (the AAA-rated
German promotional bank), IFC (the AAA-rated
private sector arm of the World Bank), FMO (the
Dutch development bank) and BIO (the Belgian
development fund).

ProCredit Holding has an investment grade rating
(BBB-) from Fitch Ratings Agency. As of the end
of 2007, the equity base of the ProCredit group
is EUR 333.2 million. The total assets of the
ProCredit group are EUR 4.1 billion.
Stichting DOEN – Postcode
Loterij/Sponsor Loterij/Bank-
Giro Loterij was set up in 1991 to promote a liveable
world in which everyone can play a part. To
that end DOEN invests in and subsidises initiatives
in the fields of sustainable development,
culture, welfare and social cohesion. DOEN funds
its activities from annual contributions received
under long-term contracts from its founder, the
Nationale Postcode Loterij, and two other Dutch
charity lotteries, the BankGiro Lottery and the
Sponsor Bingo Lottery.
Th e B a n k a n d i t s S h a r e h o l d e r s
Since 1994 DOEN Foundation finances entrepreneurial
and sustainable initiatives that improve
access to the financial sector in countries in
transition and developing countries. DOEN has a
preference for long-term strategic partnerships.
In 1998 it started working with ProCredit Holding
and has since been a strategic investor.
Fundo para o Fomento da Habi-
tação (FFH) was selected by the Mozambican
Government as the institution
through which it holds its 2.33% stake in
Banco ProCredit. FFH was founded in 1995 as a
governmental institution with financial and administrative
autonomy. Its mission is to provide
support to those sections of the economically active
population that lack the resources to improve
their housing. The instruments at its disposal include
technical assistance and credit, both for
the construction of new dwellings and for the improvement
of existing housing.

A n n u a l R e p o r t 2 0 0 7
The ProCredit Group – Neighbourhood Banks for Ordinary People
The ProCredit group currently comprises 22 target
group-oriented banks operating in as many
countries. We focus on developing countries and
transition economies in three regions: Eastern Europe,
Latin America and Africa. The group has 622
branches staffed by 16,800 employees. Currently,
ProCredit banks disburse more than 75,000
loans totalling more than EUR 236 million every
month. By the end of 2007, the number of loans
outstanding had grown to 926,000 (amounting
to EUR 2.8 billion, an increase of 34% over the
year). The average loan amount outstanding is
EUR 3,045, and the loan portfolio quality remains
excellent, with a ratio of loans in arrears (>30 days)
to total loan portfolio of only 1.4%. Over 2007,
the group’s deposit base increased from EUR 1.8
billion to EUR 2.5 billion, an increase of 37%. The
number of accounts increased by 900,000.
But what do these facts and figures mean and
what is ProCredit trying to achieve? ProCredit is
building a global group of neighbourhood banks.
But what is a neighbourhood bank? Wherever we
are, we aim to be the accessible, trusted, socially
responsible bank for local small businesses and
“ordinary” people who live and work in the area.
In our lending business, we focus on very small,
small and medium-sized enterprises. At the same
time ProCredit provides retail banking services
to ordinary people, with a focus on low-income
families. In this way we aim to be the long-term
banking partner for target groups which most
conventional commercial banks neglect. By providing
socially responsible products, we aim to
contribute to the economic development of the
countries in which we work.
In the developing countries and transition economies
in which the ProCredit group operates,
conventional commercial banks tend to neglect
small and very small businesses because they
are thought to keep inadequate records, have
insufficient collateral and generate high administrative
costs. However, these businesses are
the main engine of economic growth and job creation.
Over the years, the ProCredit group and
IPC, which developed the lending methodology
used by the ProCredit group, have gained a profound
understanding of both the problems faced
by small businesses and the opportunities available
to them, and have tailored the credit technology
to reflect the realities of their operating envi-
ronment. Thanks to this credit technology, which
combines careful analysis of all credit risks with
a high degree of standardisation and efficiency,
ProCredit institutions are able to reach a large
number of small borrowers.
In contrast to ProCredit, other commercial banks
give priority in their lending operations to corporate
finance and consumer lending, especially
the latter. Consumer finance is attractive to those
banks because it usually does not require skilled
staff or much financial analysis of the client,
allowing banks focussed on market share to grow
quickly. However, this quest for market share can
lead to irresponsible lending and over-indebtedness
on the part of the client. ProCredit never forgets
that a loan is also a debt. The recent events
around the US subprime mortgage crisis are an
important reminder of the social and economic
consequences of inappropriate lending behaviour.
In contrast, we place great emphasis on the
careful evaluation of a borrower’s debt capacity
and on building lasting relationships. In this way,
ProCredit is characterised by a responsible, longterm
attitude towards business development and
client relationships.
Furthermore, ProCredit institutions strive to foster
a savings culture. We aim to build public confidence
in banks by setting new standards in customer
service, transparency and business ethics.
ProCredit deposit facilities are appropriate for a
broad range of customers, especially low-income
groups. We offer simple savings products with no
minimum deposit requirement. Eighty percent of
all deposit accounts have a balance of less than
EUR 100. This illustrates our target-group orientation
and highlights the challenge of serving
this target group of small savers who account for
only 1% of our total deposit volume. In the spirit
of a neighbourhood bank, ProCredit banks place
great emphasis on children’s savings products
and education campaigns as well as on sponsoring
local community events. In addition to deposit
facilities, clients are offered a full range of
standard non-credit banking services.
The shareholders of the group aim to strike the
right balance between their prime developmental
goals: reaching as many small enterprises and
small savers as possible, and achieving commercial
success. For 2007, the return on equity for

the group as a whole, expressed in hard currency
after deduction of profit taxes, is 12.6%.
And who are the shareholders behind the
ProCredit group? The ProCredit group is led by the
Frankfurt-basedProCreditHoldingAG,foundedby
the consulting firm IPC in 1998. In Eastern Europe,
EBRD and Commerzbank, and in Latin America,
the IDB, also participate as minority shareholders.
ProCredit Holding is a public-private partnership,
led by IPC and by IPC Invest, the investment
vehicle of the staff of IPC and ProCredit. The other
private shareholders of ProCredit Holding include
the Dutch DOEN Foundation, the US pension fund
TIAA-CREF, the US Omidyar-Tufts Microfinance
Fund and the Swiss investment fund respons-
Ability. The public shareholders include KfW, IFC,
FMO and BIO.
ProCredit
Mexico
Banco ProCredit
Honduras
Banco ProCredit
El Salvador
Banco ProCredit
Nicaragua
ProCredit Services
Colombia
Banco ProCredit
Ecuador
Banco Los Andes
ProCredit Bolivia
Th e P r o C r e d i t G r o u p – N e i g h b o u r h o o d B a n k s f o r O r d i n a r y P e o p l e
ProCredit Holding not only provides equity to its
subsidiaries, but also guides the development of
the ProCredit banks, provides their senior management,
and supports the banks in all key areas
of activity. Historically, IPC staff managed the
ProCredit institutions, building them to what they
are today. At the end of 2007, IPC staff were integrated
into ProCredit Holding, greatly strengthening
its ability to support the group. The holding
company ensures that ProCredit corporate values,
best-practice banking operations and Basle
II risk management principles are implemented
group-wide. Plans are underway to bring the
ProCredit group under the supervision of the
German federal banking supervisory authority
(BaFin) in 2008.
ProCredit Bank Serbia
ProCredit Bank
Bosnia and Herzegovina
ProCredit Bank Kosovo
ProCredit Bank Albania
ProCredit Bank Macedonia
ProCredit Bank
Sierra Leone
ProCredit
Savings and Loans Ghana
ProCredit Bank
Democratic Republic of Congo
Banco ProCredit Mozambique
The international group
of ProCredit institutions;
see also
www.procredit-holding.com
ProCredit Bank Ukraine
ProCredit Moldova
ProCredit Bank Romania
ProCredit Bank Kyrgyzstan
(planned)
ProCredit Bank Georgia
ProCredit Bank Armenia
ProCredit Bank Bulgaria

10
A n n u a l R e p o r t 2 0 0 7
ProCredit Holding is deeply involved in human
resource management. The neighbourhood bank
concept is not limited to our target customers
and how we reach them, it is also about our staff:
how we work with one another and how we work
with our customers. The neighbourhood bank
approach requires a high degree of decentralised
decision-making and therefore judgement and
creativity from all staff, especially our branch
managers. Our corporate values embed principles
such as honest communication, transparency
and professionalism into our day-to-day
business. Key to our success is therefore the right
selection and training of staff. We maintain a corporate
culture that harnesses the creativity and
entrepreneurial spirit of our staff, while fostering
their deep sense of personal and social responsibility.
This entails not only intensive training in
technical and management skills, but also a continuous
exchange of personnel among our member
institutions in order to take full advantage
of the opportunities for staff development that
are created by their participation in a truly international
group.
A central plank in our approach to training is the
group’sProCreditAcademyinGermany,whichprovides
a three-year, part-time “ProCredit Banker”
training programme for high-potential personnel
from each of the ProCredit institutions. The programme
includes intensive technical training and
also exposes participants to a very multicultural
learning environment and to subjects such as
anthropologyandthehumanities.Theprogramme
provides an opportunity for our future leaders to
develop their views of the world, as well as their
communication and staff management skills. The
professional development of local middle managers
is further supported by three regional academies
in Latin America, Africa and Eastern Europe,
which provide similar off-site training for a larger
number of people.
The group’s strategy is to continue its very rapid
growth in order to meet the large unmet demand
for financial services from its target groups. The
continued success of ProCredit relies on a selfconfident
team of people who share a personal
commitment to the target group, to fast growth
and to the neighbourhood way of doing things.

ProCredit in Africa
ProCredit is present in four countries in Africa:
Mozambique, Ghana, Congo and Sierra Leone.
ProCredit Bank Sierra Leone began operations in
August 2007. Africa is for ProCredit a continent
with immense opportunities, but also significant
challenges.
The need and opportunities for ProCredit are
great. There is a thriving informal business sector
in most African countries. The demand for
credit is strong, and at present almost none of
this demand is being met by the formal financial
systems. At the same time there is a great willingness
on the part of ordinary people to entrust
their savings to a sound and professional financial
institution. In most countries less than 5%
of the population currently has access to a bank.
Therefore our potential development impact is
very significant. In many countries we are unique
in providing modern, transparent and reliable
banking services for everyone, i.e. we have no
minimum deposit balance and we provide loans
to very small businesses. Moreover, we offer
both housing improvement loans and agricultural
loans – products which are needed in particular
in the post-conflict economies in which our banks
typically operate.
In 2007, the number and volume of loans and deposit
accounts of the ProCredit banks in Africa
grew by over 50% and 100% respectively, making
it the fastest-growing region in the ProCredit
group. However, in absolute terms the scale of
our operations remains small. It will take longer
to establish large, stable banks in Africa than it
has in Latin America or Eastern Europe. Some of
the reasons for this are obvious, others are more
subtle.
Undoubtedly, the lower average loan amount at
some of our African banks is responsible for the
slower growth of the loan portfolio in this region.
There is no lack of deposit customers, but
deposit amounts are small as well. Both sides of
the balance sheet are affected by the combination
of labour-intensive processes and small individual
amounts that characterises our banks’
operations. Infrastructure is weak, and suitable
premises are scarce, particularly in the postconflict
countries on which we focus – making
branch network expansion a slow and expensive
process. Transport and communication costs are
high. Political and economic instability also take
their toll.
Among the more subtle factors that impede the
rapid spread of commercial credit facilities for
small and very small enterprises are the shortsighted
behaviour of some donors and the policies
of many African governments, which do little
to promote small business. In Africa, the formal
sector, particularly the formal small business
sector, tends to be underdeveloped. It struggles
under the bureaucratic burdens created in colonial
times and perpetuated by local authorities as
well as the standards demanded by international
organisations today. Businesses are stifled and
forced to find informal ways to get around formal
requirements. Indeed ProCredit decided to exit
its participation in NovoBanco Angola in 2007
because the level of demand from enterprises
was suppressed, and there was no commitment
from local authorities to support MSMEs or a
bank focussed on this target group.
Donors’ short-sighted approach and local governments’
lack of commitment to small business
development perpetuates informal structures
within the financial sector itself. We would like
to expand the ProCredit business model to other
African countries, but it is not always easy.
Numerous African countries have interest-rate
ceilings, notably those in the CFA zone. Microfinance,
which is necessarily cost-intensive and
expensive, must then be carried out de facto on
a subsidised, informal or illegal basis. This is one
of the reasons why NGOs rather than banks dominate
microfinance in Africa. Many donors subsidise
these NGOs so heavily that local savings
P r o C r e d i t i n A f r i c a 11

1
A n n u a l R e p o r t 2 0 0 7
Morocco
Western
Sahara
Mauritania
Senegal Senegal
Gambia
Guinea-Bissau
Guinea
Sierra
Leone
Liberia
Cote
d’Ivoire
Mali
Burkina Faso
Algeria
Togo
Ghana
Benin
Nigeria
Tunisia
Niger
Equatorial
Guinea
Gabon
deposits are not mobilised or used – a strategy
which undermines the development of local financial
sectors and serious commercial providers of
financial services.
In many African countries there is also a shortage
of qualified individuals. Our staff are the
key to our success in Africa as elsewhere in the
ProCredit group. We have a great need for loan
officers and client advisers, co-ordinators, branch
managers, and qualified head office staff, but it
is hard to find suitable personnel. Furthermore,
companies compete strongly for the few skilled
members of the local workforce, often driving up
the “price” of such individuals to unaffordable
levels. In this context, we have chosen to develop
and train our professional staff ourselves and are
investing a great deal in the training process by
establishing training programme and encourag-
Libya
Central African Republic
Cameroon
Congo
Chad
Democratic
Republic
of Congo
Sudan
Uganda
Rwanda
Burundi
Ethiopia
Kenya
Angola Malawi Mozambique
Zambia
Namibia Botswana
South Africa
Egypt
Swaziland
Lesotho
Tanzania
ing seminars and workshops within the ProCredit
group. Even though such training takes a great
deal of time, we are proud of the results and are
convinced that it is the right strategy.
At the end of 2007, we had more than 1,300 dedicated
staff members managing 239,000 deposit
accounts and disbursing 5,000 loans per month.
We have a good team in Africa and a strong platform
on which we can build. We will continue to
invest heavily in training and expansion. In 2007,
we established a regional training academy in
Africa that provides three months of intensive
training for middle managers. Our plans going forwardareambitious,andAfricawillremainthefastest-growing
region in the group. We look forward
to steadily expanding the branch network and our
outreach to clients, bringing much-needed access
to financial services to people across the region.
Madagascar

Name
ProCredit Bank
Democratic Republic of Congo
ProCredit
Savings and Loans Company
Ghana
Banco ProCredit
Mozambique
ProCredit Bank
Sierra Leone
Highlights*
Founded in 2004
(open to the public since August 2005)
3 branches
4,917 loans / USD 12.3 million in loans
44,581 deposit accounts / USD 49.8 million
183 employees
Founded in July 2002 (initially named
“Sikaman Savings and Loans Company Ltd.”)
11 branches and 1 savings mobilisation unit
15,694 loans / USD 23.3 million in loans
116,721 deposit accounts / USD 24.2 million
505 employees
Founded in December 2000
12 branches
26,740 loans / USD 24.9 million in loans
72,966 deposit accounts / USD 16.0 million
537 employees
Founded in September 2006
(open to the public since August 2007)
2 branches
1,210 loans / USD 2.6 million in loans
4,415 deposit accounts / USD 0.9 million
101 employees
Contact
P r o C r e d i t i n A f r i c a 1
Avenue des Aviateurs 4B
Kinshasa/Gombe
Tel.: +243 89 8996600
Fax: +49 69 25577042
info@procreditbank.cd
www.procreditbank.cd
Property No. B28A, Airport City
P.O. Box NT 328, New Town
Accra
Tel.: +233 21 775 830/46
Fax: +233 21 775 809
info@procredit.com.gh
www.procredit.com.gh
Av. Zedequias Manganhela, No. 267
JAT IV, 6th floor right, Maputo
Tel.: +258 21 313344
Fax: +258 21 313345
info@bancoprocredit.co.mz
www.bancoprocredit.co.mz
11, Rawdon Street
P.O. Box 1288 – Freetown
Tel.: + 232 76 957 376
info@procreditbank-sl.com
* The figures in this section have been compiled on the basis of the financial and operational reporting performed in accordance with groupwide
standards; they may differ from the figures reported in the bank’s local GAAP statements.

14
A n n u a l R e p o r t 2 0 0 7
Highlights in 2007
• On February 26, Novo Banco SARL changed its
name to Banco ProCredit S.A. The new name
and branding enhanced the bank’s image as
a member of the international ProCredit
group. At the same time, the bank launched
debit cards, marking its transition from a provider
of basic services to a full-service financial
institution.
• In March, Banco ProCredit introduced automated
teller machines (ATMs). Each of the
bank’s 12 branches has an ATM, where customers
can make cash withdrawals and check
their account balances free of charge 24 hours
a day.
• In March, Banco ProCredit launched its agricultural
loan product. It was introduced at
the Chimoio branch and then rolled out to
three other branches in southern Mozambique.
The agriculture sector is of particular
importance for the country’s economy; roughly
78% of the population depends on agriculture
for a living.
• In response to the strong demand for banking
services, Banco ProCredit opened three

anches during 2007, one in Xai-Xai, in Gaza
province, and two in Maputo. The new branches
are equipped with customer service areas de
signed to ensure that clients’ requirements
are met quickly and efficiently.
• Banco ProCredit celebrated International
Children’s Day by organising events for
schools and children’s centres located near
its branches. Various activities were conducted,
such as singing contests, art exhibitions
and educational activties focusing on
the importance of saving. The children were
invited to take a tour of the branches to learn
about how banks work and about career
opportunities in the financial sector.
• Throughout August, Banco ProCredit ran a
country-wide savings campaign. The objective
was to explain to both clients and the
general public the importance of saving for
future investments and unexpected expenses.
During this campaign educational events
were held in schools and at the branches to
make clients and the general public more
aware of the advantages of saving.
H i g h l i g h t s i n 2 0 0 7 1

1
A n n u a l R e p o r t 2 0 0 7
Management Business Review
Extended Management
from left to right:
Carla Abrantes de Figueiredo
Deputy General Manager
Yann Groeger
General Manager
Verginya Petrova
Operations Manager
Carlos Jorge Nhamahango
Finance Manager

Political and Economic Environment
Mozambique’s economic performance in 2007
was very encouraging. The economy grew by an
estimated 7%, slowing down only slightly from
the 9% achieved in 2006. Following years of
depreciation, the local currency started to gain
against the US dollar and the South African rand.
By September, the metical had appreciated by
1% against the dollar and by 2% against the rand.
Annual inflation was stable at around 12%. In December,
Standard & Poor’s raised Mozambique’s
country rating from B- to B+.
Despite these very promising macroeconomic indicators,
Mozambique remains one of the poorest
countries in the world, ranking 172nd out of 177
in the UNDP Human Development Index. Tax income
remains relatively low, leaving the Mozambican
budget still heavily dependent on donor
funding. Public expenditure in 2008 is projected
to reach about USD 3.6 billion, but revenues from
taxation and other domestic sources are forecast
to cover only 44% of that total. The deficit of just
over USD 2 billion will have to be bridged almost
entirely with foreign aid.
Direct budget support will constitute 49% of total
foreign aid in 2008, and 51% will be earmarked
for specific programmes and projects. To avoid
incurring unsustainable debt, the government
has ensured that over two thirds of this foreign
aid consists of grants, with less than one third
being provided in the form of loans.
Mozambique suffers from a growing trade deficit,
and over three quarters of its export earnings
come from just three products – the aluminium
ingots produced at the MOZAL smelter on the outskirts
of Maputo, the natural gas piped from Inhambane
province to South Africa, and electricity,
mostly produced at the Cahora Bassa dam on the
Zambezi and sold to South Africa and Zimbabwe.
Agriculture is still the predominant sector of the
economy, employing roughly 78% of the population.
This sector has considerable growth potential,
but Mozambique’s farmers will probably face
increasing competition when trade is liberalised
within southern Africa in 2008 under the South
African Development Community (SADC) treaties.
Exploration of titanium-bearing heavy sands be-
gan this year at the Moma Mines near Nampula.
Further large-scale mineral extraction projects
are due to be launched soon in Chibuto, in Gaza
province.
2008 is set to be a momentous year for the region
with the official launch of the SADC Free
Trade Area slated for August. In some African
countries, including Mozambique, there are not
enough qualified people or resources to provide
the momentum required to make decisive progress
towards regional integration. South Africa
accounts for about 72% of the combined GDP of
the SADC countries, whereas Mozambique contributes
only 2%. Government leaders and analysts
have appealed to the Mozambican industrial
sector to prepare for the challenges presented
by free trade. The sector must become more competitive
in order to ensure that the country is not
swamped with imports.
Financial Sector Developments
M a n a g e m e n t B u s i n e s s R e v i e w 1
Developments in the financial sector reflected
the overall economic situation. The total assets
of the banking sector grew by 30%, reaching
USD 3.4 billion. About 89% of total assets were
concentrated in four of the country’s 12 supervised
financial institutions. Asset growth was
driven by a rise in deposits of 37%. Credit to
the economy rose much less rapidly than deposits,
increasing by 13%. The banking sector
was highly liquid, with a deposit-to-loan ratio of
192% as of December 2007, compared to 162%
in 2006. Banks invested their excess liquidity
in treasury bills and government bonds. The
average return on equity in 2006 was 31.3%
for the banking sector as a whole, including
commercial banks, the central bank and
microfinance banks.
The Government of Mozambique views the financial
system as essential for promoting the country’s
economic development. In 2007 the Bank of
Mozambique (BM) promoted increased access to
financial services throughout the country, especially
in the areas that are less well developed but
have great potential for growth and business.
The banks have responded to this initiative, expanding
their networks and financial services to

1
A n n u a l R e p o r t 2 0 0 7
new regions and opening 40 service outlets. Two
new institutions were founded: Banco Terra and
MozBank; these banks are not yet operational
but have already received their licences.
The BM uses interbank money market operations
as the principal instrument of monetary policy to
contain inflation. Its benchmark interest rates,
namely, the Standing Lending Facility and the
Standing Deposit Facility, fell during the year to
16% and 11% respectively. The three-month treasury
bill rate decreased from 16% to 14.75%.
Lending Performance
Banco ProCredit’s portfolio of loans to very
small, small and medium-sized enterprises grew
strongly during 2007. The portfolio increased by
87% to USD 25.1 million, substantially exceeding
the growth rate of 62% achieved in 2006. At the
end of 2007, the bank had 26,738 outstanding
loans. About 29,600 loans were disbursed during
the year, all in local currency. On average, 2,467
loans were disbursed every month, representing
a total volume of USD 2.6 million.
This strong growth resulted from three innovations
that the bank carried out during the year.
First, it streamlined its procedures and made its
loan products more flexible to make them more
accessible to its target group. Banco ProCredit
bases its credit decisions on in-depth knowledge
of clients’ businesses, the stable relationship of
trust it has built with its clients, and borrowers’
repayment history.
Second, the bank introduced small and mediumsized
enterprise (SME) units in all branches to increase
lending to this segment, which is not well
served in Mozambique. SMEs play a very important
role in promoting employment and economic
growth but they often encounter difficulties in
obtaining financing. Procedures are typically
highly bureaucratic and lack transparency. In line
with its developmental mission, Banco ProCredit
is placing more emphasis on serving this business
segment.
As a consequence, the average loan amount at
disbursement increased from USD 800 to almost
USD 1,100, and the average outstanding balance
rose from USD 600 to USD 900. Still, the vast majority
of the loans outstanding were for amounts
less than USD 10,000.
Third, Banco ProCredit launched its agricultural
loan product in March. The agriculture sector is
particularly important for the country’s economy;
roughly 78% of the population depends on agriculture
for a living. The sector has been largely
ignored by formal financial institutions, however.
Our agricultural loan product was introduced at
the Chimoio branch and then rolled out to three

other branches in southern Mozambique. By the
end of the year, the bank had disbursed loans to
more than 1,000 rural clients, and the agricultural
loan portfolio stood at more than USD 1 million.
The bank’s outreach to farmers and rural producers
will increase when the two branches that will
open in Quelimane and Tete in 2008 begin offering
this product.
M a n a g e m e n t B u s i n e s s R e v i e w 1
The bank closely monitors the quality of its loan
portfolio. To minimise its credit risk, it invests
continuously in measures to train its loan officers
to be skilled analysts and good communicators.
Careful credit analysis prior to disbursement is
absolutely vital to ensure that risks are correctly
assessed. Lending staff are required to monitor
loan repayments on a daily basis, taking appropriate
steps in a timely manner whenever necessary.

0
A n n u a l R e p o r t 2 0 0 7
Customer Deposits
Volume (in USD million)
16
14
12
10
8
6
4
2
0
Term Savings Sight Total number
Number (in ’000)
Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec
03 04 05 06 07*
* As of 2007, the basis for calculating the number of deposits was changed
120
105
90
75
60
45
30
15
0

Other Banking Services
Banco ProCredit was very successful in expanding
its deposit base in 2007. The total deposit
portfolio grew by 96% from USD 8 million in 2006
to USD 15.8 million. The number of deposits
grew by more than 13% to 73,000. Term deposit
accounts made up 55% of the total volume of deposits,
current accounts were 43%, and savings
accounts were only 2%.
This very strong growth resulted from a repositioning
of Banco ProCredit as a fully-fledged
bank with a focus on low and middle-income
customers. This repositioning was supported by
our name change and the introduction of debit
cards, international money transfers and services
offered in the four major currencies in the local
economy, namely MZM, ZAR, USD and EUR.
The bank began issuing debit cards in March
2007. As of year-end, it had 9,000 active cardholders
and operated 12 ATMs distributed
throughout the branch network. Apart from making
cash withdrawals, clients can use their debit
cards to check their balances and pay for goods
and services from merchants with POS terminals.
In addition, the bank obtained a licence to issue
VISA cards, and this service is expected to be
made available to clients in 2008.
In October 2007, the bank started to offer international
money transfer facilities via SWIFT. The
Domestic Money Transfers
Volume (in USD ’000)
1,500
1,350
1,200
1,050
900
750
600
450
300
150
0
Jul– Jan– Jul– Jan– Jul–
Dec Jun Dec Jun Dec
05 06 07
Incoming Outgoing Number
Number
1,000
900
800
700
600
500
400
300
200
100
0
International Money Transfers*
Volume (in USD million)
6
5
4
3
2
1
0
Number (in ’000)
Jan– Jul– Jan– Jul– Jan– Jul– Jan– Jul–
Jun Dec Jun Dec Jun Dec Jun Dec
04 05 06 07
Incoming Outgoing Number
M a n a g e m e n t B u s i n e s s R e v i e w 21
service was introduced with competitive pricing
and an emphasis on rapid processing. The bank
also has its own international payment system,
ProPay, which clients can use to transfer money
to ProCredit institutions in Eastern Europe at very
competitive prices. The bank plans to extend this
service to include the African and Latin American
ProCredit banks.
The bank places strong emphasis on encouraging
clients to save for the future as a central component
of its developmental approach. Savings accounts
are not widely used in Mozambique, and
most ordinary people still save outside of the formal
financial system. In 2007, Banco ProCredit
organised campaigns and events to explain the
benefits of savings to the public. During the coming
year we will continue to expand our range of
retail banking services and will strive to make our
products even more attractive.
* This graph includes both incoming and outgoing international
transfers up until the end of 2006; until then, both had been provided
via Western Union.
12
10
8
6
4
2
0

A n n u a l R e p o r t 2 0 0 7
Financial Results
Banco ProCredit succeeded in meeting its financial
targets for 2007. Total assets increased
by 106% to USD 34.6 million. This growth was
driven by an 87% increase in the loan portfolio to
USD 25.1 million. Increased lending was funded
mostly with customer deposits, which grew by
96% to 15.8 million, and with loans from local
and international financial institutions.
The bank’s liquid assets increased in 2007 after
it restructured its treasury activities. The liquidity
ratio (liquid assets over total assets) was 14%,
and the ratio of liquid assets to customer deposits
was 30%. The bank carried out a USD 2 million
capital increase during the year to finance branch
network expansion and loan portfolio growth. Its
capital adequacy ratio was 26.5% at year-end.
Due to strong growth in lending and continuously
high margins, the bank achieved an increase in
interest income of 66%. Commission income
also rose substantially, increasing by 39%. The
bank’s cost-income ratio increased from 68% in
2006 to 77% in 2007, due to heavy investment in
branch expansion and staff. Net profit decreased
from USD 1.4 million to USD 1.2 million. The bank
achieved a return on equity of 21%.
The bank reports to ProCredit Holding based
on International Financial Reporting Standards
(IFRS) and will begin reporting to the Bank of
Mozambique in accordance with IFRS in 2008.
Outlook
In 2008, the bank will focus on continuing its
programme of branch network expansion and
new product development. Having built a strong
presence in urban centres, we will expand into
more remote parts of the country. Many areas of
Mozambique still suffer from a shortage of financial
service providers, and those financial institutions
that are present often focus on corporate
customers,ratherthanontheretailmarket.Inmost
areas, there is a large potential market for savings
and credit facilities. Our role in these areas will
be to operate as a retail bank for ordinary people.
In parallel with this geographical expansion,
the bank will continue to pursue its product development
strategy. Having successfully introduced
ATMs and international money transfers
via SWIFT in 2007, we will add international debit
cards, Internet banking and telephone banking
services in 2008. We expect these new technologies
to help us provide faster, cheaper and more
convenient service for our customers.
A key factor in the bank’s expansion will be our
staff. Growth on the envisaged scale cannot be
achieved if we compromise on the quality of our
employees and their commitment to our corporate
values and mission. With strong support
from ProCredit Holding, the bank will continue to
invest in training at the local, regional and international
level.

M a n a g e m e n t B u s i n e s s R e v i e w

A n n u a l R e p o r t 2 0 0 7
Special Feature
Agricultural Loans in Mozambique
Mozambique has vast agricultural potential;
of its 48 million hectares which are suitable for
farming, only about 10% is currently exploited.
The agricultural sector contributes 23% to GDP
and employs 78% of the population. Despite
their importance to the country’s economy, farmers
and rural enterprises face serious difficulties
in accessing finance. To address this acute shortage,
Banco ProCredit Mozambique introduced an
agricultural lending facility in March 2007. The
product enables farmers and other producers to
purchase seed, livestock, equipment and other
inputs, leading to improved working conditions,
better crops and higher yields.
To gain the requisite knowledge and skills to
implement this project, the bank obtained the
support of a colleague from Banco ProCredit
Nicaragua who shared his experience regarding
market research, the launch of the product, and
the recruitment and training of agricultural loan
officers and middle managers. We introduced
the product gradually, starting in towns where
the bank already has a branch and where there
is a proven market for agricultural loans. It was
launched at the Chimoio branch in Manica province,
in the central part of the country. The area
in the vicinity of the branch has many potential
clients, a relatively stable climate and fertile land
with a good water supply for irrigation.
In the first month, the Chimoio branch disbursed
nearly 47 agricultural loans, worth USD 70,100.
Based on this success, the bank expanded agricultural
lending to three other branches: the one
in Xai-Xai, covering the areas of Chokwé and

Manjacaze; the one in Matola, serving the population
of the Boane region; and the Benfica branch,
serving Vale do Infulene and Manhiça in the province
of Maputo. By the end of the year, the bank
had issued agricultural loans to more than 1,000
clients and had an outstanding portfolio of more
than USD 1 million in this segment of the market.
The bank expects its agricultural lending portfolio
to expand significantly in the coming years.
In 2008, it will begin offering the product in the
provinces of Nampula and Zambézia, where a
strong demand for agricultural credit has been
clearly identified.
S p e c i a l F e at u r e

A n n u a l R e p o r t 2 0 0 7
Risk Management
As a commercial bank that offers a broad range of
financial products, Banco ProCredit fully recognises
its exposure to the risks connected with
its activities. Given the bank’s rapid expansion,
it is imperative that we assess all aspects of our
operations for potential risks and strengthen our
risk management system.
Banco ProCredit’s Risk Management Department
monitors and measures the bank’s risk exposure
and identifies measures to mitigate those risks.
It reports directly to the management of Banco
ProCredit and ProCredit Holding.
Risk committee meetings are held regularly to assess
credit, performance and liquidity risks. The
Risk Department prepares monthly and quarterly
reports that include a summary of recommendations
on which the respective risk committees
base their decisions. General risk reports are pre-
pared on a quarterly basis, and operational risk
reports are prepared every six months.
The bank implemented a risk management policy
that encourages staff to anticipate and recognise
risks, establishes priorities and principles for
risk evaluation and control, and provides for a
complete record of risk-related activities. Central
to our risk management strategy is our simple
and transparent business model, a thorough understanding
of our customers, and a “risk awareness
culture” that encourages employees to take
personal responsibility for recognising and reacting
to risks.
Credit Risk
Credit risk, i.e. the possibility that borrowers will
not repay their debts to the bank, is a key risk aris-

ing from Banco ProCredit’s activities. The design
of our lending process minimises the risk associated
with individual loans. Our thorough credit
analysis examines each client’s cash flow, in addition
to his or her assets. Credit committees, following
the “four eyes” principle, ensure proper
assessment of loan applications by experienced
personnel. The loan portfolio is diversified across
many small borrowers, reducing exposure arising
from a particular industry or region.
Loan officers are responsible for ensuring that
their clients meet their payment obligations and
receive extensive training in portfolio monitoring.
On a monthly basis, the bank evaluates the
total loan portfolio in terms of maturity, arrears,
and diversification by sector. It also assesses
problem loans, loan loss provisioning ratios,
write-offs and recoveries.
As of December 2007, the portfolio at risk greater
than 30 days was 3.1%, and loan loss provisions
stood at USD 1.6 million.
Liquidity and Market Risk
The Assets and Liabilities Committee monitors
and controls the bank’s open currency position,
interest rate gaps, and liquidity and funding positions
to ensure that it maintains an optimal balance
sheet structure. Liquidity levels are defined
in relation to short-term loans (7-15 days) and act
as a safeguard against exchange rate fluctuations.
Throughout the year, Banco ProCedit maintained
acceptable cumulative gaps in the ratio of
liquidity and funding to the bank’s liabilities. The
adjusted maturity gap at December 2007 was
close to zero.
The local banks’ prime interest rates have tended
to follow the trends set by the Bank of Mozambique’s
Liquidity Support Operations (FPC)
and the freely negotiated rates in the interbank
money market. The average financial margin for
banks operating in Mozambique is similar to that
in other Sub-Saharan countries but higher than in
many of the more developed countries.
Operational Risk
Operational risk is a particular focus for the Risk
Management Department. It conducts rigorous
internal analyses of operational events that could
result in losses for the bank. Its operational risk
report serves as an effective instrument for monitoring
the bank’s activities and for defining rules
and procedures for ongoing risk management.
The bank’s extensive training efforts enable employees
to better identify potential risks in their
respective areas. We attach great importance to
fostering a culture of internal and external transparency
in compliance with the ProCredit Code of
Conduct. Our employees are expected to apply
the principles of mutual trust and respect not only
towards their colleagues but also, and especially,
in their dealings with customers. Procedures are
fully documented, and all transactions are carried
out in accordance with the “four-eyes’’ principle.
R i s k M a n a g e m e n t

A n n u a l R e p o r t 2 0 0 7
Branch Network
In 2007 Banco ProCredit expanded its branch
network from nine to 12 branches. The bank established
a presence in Gaza province by opening
a branch in Xai Xai. This city is located 210
kilometres north of Maputo and has an economy
based primarily on agriculture and fishing.
In Maputo the bank sought to strengthen its
presence in commercial districts and to expand
outreach to the substantial percentage of the
city’s population that still does not have a bank
in their neighbourhood. In June the institution
established a small branch in Baixa, the commercial
centre of Maputo. In September it opened
a branch on Avenida 24 de Julho, in a thriving
commercial district with shops, restaurants and
Zambia
Botswana
Zimbabwe
South Africa
Beira (2)
Chimoio (1)
Xai-Xai (1)
Maputo (6)
Matola (1)
other businesses which also has a sizeable middle-class
population. These two branches are expected
to attract large volumes of deposits and to
issue larger business loans and housing improvement
loans. Two more branches in Maputo are already
under construction and will open in early
2008. One will be in an area with many shops and
small markets at the point where traffic enters
the city centre. The other will be in the Benfica
district, close to one of the city’s major markets
on the north-western edge of the capital.
Banco ProCredit also took the first steps towards
constructing a new head office. This facility will
reduce the bank’s monthly rental costs and, most
importantly, it will enhance the bank’s image as
Mozambique
Nampula (1)
Indian Ocean

a reliable and sustainable institution. The bank
purchased the site in 2007. Construction work is
expected to start in the third quarter of 2008.
The bank often faces delays in expanding its
network of offices due to legal obstacles and the
failure of construction firms to comply with deadlines.
Mozambique’s industrial sector is under-
developed and lacks the capacity to satisfy the
demand for many products and raw materials. To
cope with these problems and to meet the proposed
objectives for the coming year, the bank
set up a Facilities Department with a staff consisting
of an architect, three engineers, and two
project co-ordinators.
B r a n c h N e t w o r k

0
A n n u a l R e p o r t 2 0 0 7
Organisation, Staff and Staff Development
In 2007, Banco ProCredit invested strongly in increasing
the size of its staff, strengthening its organisational
structures, and developing training
programmes for new and existing employees. The
bank established the Training Department, the
Security Department and a Budget and Control
Division to support institutional development.
The number of employees increased by 81%, and
stood at 537 as of December 2007. At the end of
the year, 43% of our employees were front office
staff. The bank plans to hire an additional 150 employees
in 2008, mainly for operational positions.
Since 2006, the bank has used staff performance
evaluations to improve the quality and efficiency
of its services. The assessment programme identifies
staff members who have the potential to
serve in management positions or who might perform
better in other positions. Staff also receive
direct feedback from their supervisors during annual
appraisal interviews. These discussions allow
managers and their employees to talk openly
about current issues, past performance, training
needs, and objectives for the coming year.
The bank promotes professional development
and staff motivation through its extensive training
programmes. To improve the organisation and
planning of these training courses, a dedicated
Training Department was set up in September
2007. The department is responsible for ensuring
that staff have the training to provide clients
with high quality services and that appropriately
qualified staff are available for the branches and
departments at the right time.
The bank prepares employees to assume middle
management positions through a special twoweek
training course covering technical, communication
and management skills as well as the
bank’s mission and corporate values. Few companies
offer such training in Mozambique, and the
course enhances the bank’s reputation as an attractive
employer.
In addition, middle managers receive intensive
professional development and leadership training
at the ProCredit group’s international and
regional academies. Six of Banco ProCredit’s
managers are participating in the three-year parttime
programme offered by the ProCredit Academy
in Germany, and four more staff will begin the
course in 2008. The Regional Academy for Africa,
which provides training to middle managers from
the ProCredit institutions in Africa, opened in July
2007. Eleven participants from Banco ProCredit
Mozambique are attending the course at the Regional
Academy, which is divided into four blockes

of instruction covering a total of 15 weeks during
2007 and 2008.
Since English is the common working language
of the ProCredit group, the bank offers intensive
English language courses to our staff. In 2007,
about 40 employees took three-month language
courses provided locally by the bank, and 28 staff
participated in two-month immersion courses offered
by the ProCredit group in Ghana and Germany.
In addition to improving their language skills,
participants in these courses had the opportunity
to share knowledge and experiences with
colleagues in similar positions from other banks.
O r g a n i s at i o n , S ta f f a n d S ta f f D e v e l o p m e n t 1
The creation of a commun, group-wide identitiy
based on ProCredit’s corporate values
is promoted through staff exchanges between
the group’s member institutions. Banco
ProCredit recognises outstanding employees by
rewarding them with an opportunity to spend time
at another bank in the ProCredit group. In 2007,
15 employees travelled to ProCredit institutions
in Bolivia, Bulgaria, Ecuador, and Ukraine, among
other countries. In addition, staff members from
Nicaragua, Ghana, Bulgaria and Kosovo visited
Mozambique to share their knowledge and experience
with our employees.

A n n u a l R e p o r t 2 0 0 7

Business Ethics and Environmental Standards
Part of the overall mission of the ProCredit group
is to set standards in the financial sectors in
which we operate. We want to make a difference
not only in terms of the target groups we serve
and the quality of the financial services we provide,
but also with regard to business ethics. Our
strong corporate values play a key role in this
respect. We have established six essential principles
which guide the operations of ProCredit
institutions:
• Transparency: We adhere to the principle of
providing transparent information both to our
customers and the general public and to our
employees, and our conduct is straightforward
and open;
• A culture of open communication: We are open,
fair and constructive in our communication
with each other, and deal with conflicts at
work in a professional manner, working
together to find solutions;
• Social responsibility and tolerance: We give
our clients sound advice; their economic and
financial situation, their potential and their
capacities are assessed so that they can benefit
from appropriate “products”; promoting a
culture of savings is important to us; we are
committed to treating all customers and employees
respectfully and fairly, regardless of
their origin, colour, language, gender or religious
or political beliefs;
• Service orientation: Every client is served in
a friendly, competent and courteous manner.
Our employees are committed to providing
excellent service to all customers, regardless
of their background or the size of their business;
• High professional standards: Every employee
takes responsibility for the quality of his/her
work and strives to do his/her job even better;
• A high degree of personal commitment: This
goes hand-in-hand with personal integrity
and honesty – traits which are required of all
employees in all ProCredit institutions.
These ProCredit values represent the backbone
of our corporate culture and are discussed and
actively applied in our day-to-day operations.
Moreover, they are reflected in the Code of Conduct,
which transforms the ProCredit group’s
ethical principles into practical guidelines for all
ProCredit staff. To make sure that new staff fully
B u s i n e s s E t h i c s a n d E n v i r o n m e n ta l S ta n d a r d s
understand all of the principles that have been
defined, the induction training for new employees
includes dedicated sessions dealing exclusively
with the Code of Conduct and its significance
for all members of our team. And to ensure that
employees remain committed to our high ethical
standards and are made aware of new issues and
developments which have an ethical dimension
for our institution, refresher training sessions
– at which case studies are presented and grey
areas discussed – are regularly conducted for
existing staff.
Another aspect of ensuring that our institution
adheres to the highest ethical standards is our
consistent application of international bestpractice
methods and procedures to protect ourselves
from being used as a vehicle for money
laundering or other illegal activities such as the
financing of terrorist activities. The important
focus here is to “know your customer”, and, in
line with this principle, to carry out sound reporting
and comply with the applicable regulations.
We also set standards regarding the impact of our
lending operations on the environment. Banco
ProCredit Mozambique has implemented an environmental
management system
based on continuous assessment of
the loan portfolio according to environmental
criteria, an in-depth
analysis of all economic activities
which potentially involve environmental
risks, and the rejection
of loan applications from enterprises
engaged in activities
which are deemed environmentally
hazardous and appear on
our institution’s exclusion list.
By incorporating environmental
issues into the loan approval
process, Banco ProCredit
Mozambique is also able to
raise its clients’ overall level of
environmental awareness. We ensure that when
loan applications are evaluated, compliance with
ethical business practices is a key consideration.
No loans are issued to enterprises or individuals
if it is suspected that they are making use of unsafe
or morally objectionable forms of labour, in
particular child labour.

A n n u a l R e p o r t 2 0 0 7
Our Clients
In 2002, Maria de Fátima Fernando served as a
guarantor for her husband, Viriato Cumbana, for
a loan he received from Banco ProCredit. A year
later, she again was the guarantor for borrowers
from ProCredit, this time for her nephew and sonin-law.
All went well in these three cases, and in 2004 –
after looking carefully into the products and services
that Banco ProCredit offers – Ms. Fernando
decided to become a customer in her own right.
She opened two deposit accounts, one in dollars
and the other in meticais, which she earned in the
form of rent for properties that she owns in different
areas of Maputo.
Maria de Fátima
Fernando,
Savings Client
Ms. Fernando intends to use her savings when
she retires. In the meantime she makes monthly
deposits and watches her money grow. In addition
to providing a secure financial basis for her
retirement, she is saving to help her five children
to pay for their education and to build houses for
them and their families.

Aníbal Hilário Wate,
Potter
Aníbal Wate is married and has four children between
the ages of 3 and 22. For many years he
was employed in a pottery workshop where he
learned to mould clay. In 1991, he decided to go
into business for himself and opened a workshop
in his house. After a few years the demand for his
products began to increase, so his eldest daughter
started to work alongside him, together with
four other employees who were also members of
the family.
For a number of years, Mr. Wate faced constant difficulties
because he did not have sufficient funds
to purchase the materials he required to produce
his pieces. In 2003 he applied for, and received, a
loan for USD 600 from Banco ProCredit, which he
used to buy an electric potter’s wheel. The wheel
enabled him to double his output to 200 pieces a
day, and he was able to supply more costumers in
other provinces, and
even in neighbouring
South Africa.
To meet the steadily
growing demand for
products, Mr. Wate
took out another USD
600 loan from the
bank in 2006 to purchase
ceramic glaze
and a USD 1,600 loan in 2007 to buy clay and
pigments. He intends to hire three more workers
next year and to buy his own vehicle to transport
his pieces, a service that always created a significant
expense for the business. He plans to apply
for another loan from Banco ProCredit to finance
this project, which should enable him to serve an
even larger clientele.
O u r C l i e n t s

A n n u a l R e p o r t 2 0 0 76
Júlio Felizardo Chefe Cumbe learned to work with
wood at the School of Arts and Crafts in Maputo,
and in 1994 he opened his own sawmill. At first,
he and his two employees did most of the work
manually. With no vehicle of his own to transport
the wood, he had to rent vans, reducing his profits.
Mr. Cumbe had heard about Banco ProCredit and
decided in 2001 to apply for a loan of USD 800
to buy essential materials such as wood, glue
and nails. In 2004, he obtained another loan of
Júlio Felizardo
Chefe Cumbe,
Sawmill Owner
USD 1,200 to buy a wood router, which is used to
make door and window frames. This enabled him
to work faster and with greater precision.
Mr. Cumbe’s business started to grow, and he
became well known throughout his district in
Maputo. As orders picked up and the volume of
work increased, he gradually started hiring more
people. He now employs 15 staff, whom he taught
to handle the machines, since they had never had
any formal training in carpentry.
In 2007, Mr. Cumbe once again applied to Banco
ProCredit for a loan, this time for USD 2,400 to
buy a large carpenter’s plane. He also hopes
to obtain financing from ProCredit to purchase
materials in larger quantities, which will enable
him to better meet the growing demand for his
products.

Maria Simão had always wanted to have her own
business, and in 1974 she became an independent
farmer and livestock breeder in Manhiça.
Twice – in 1977 and again in 2000 – she saw
devastating floods destroy all the crops she had
cultivated with so much effort.
In 2004, she decided to plant sugar cane on a
portion of her land to diversify her crops. A year
later, hoping to develop the livestock side of the
farm, she applied to Banco ProCredit for a USD
600 loan to invest in her land and cattle.
Once she started making a profit on her sugar
cane, Ms. Simão decided to increase her output.
In 2006, she obtained a USD 4,000 loan from
ProCredit to plant more sugar cane. As time
passed and the business grew, she hired four
more workers. Ms. Simão now employs 10 peo-
ple, most of them women, to harvest the sugar
cane, which is then taken to a local sugar company
for processing.
In 2007, she established her own company, Inagre
Vale Sugar Ltd., in which she holds 55%
of the shares and her children 45%. Today Ms.
Simão employs a total of around 60 people. She
says that working hard herself and providing employment
for others is her way of fighting poverty.
She intends to continue investing in the cultivation
of sugar cane and recently obtained another
loan from Banco ProCredit for this purpose.
O u r C l i e n t s
Maria da
Conceição Judite Simão,
Farmer

A n n u a l R e p o r t 2 0 0 7
Financial Statements
For the year ended 31 December 2007

F i n a n c i a l S tat e m e n t s

0
A n n u a l R e p o r t 2 0 0 7
Balance Sheets
As at 31 December 2007 and 2006
in thousand Meticais
Assets
Notes 2007 2006
Cash and cash equivalents 3 111,920 44,351
Loans and advances to customers 4 582,524 343,413
Fixed assets 5 102,245 41,302
Other assets 6 27,597 8,286
Total assets 824,286 437,352
Liabilities
Loans 8 78,126 60 312
Deposits from customers 7 376,296 209,046
Other liabilities 9 166,186 53,842
Allowances for general credit risk 10 17,951 10,695
Total liabilities 638,559 333,895
Shareholders’ Equity
Share capital 11 129,020 77,000
Legal reserve 12 6,633 993
Retained earnings 19,824 (12,134)
Profit / (Loss) for the year 30,250 37,598
Total Shareholders’ Equity 185,727 103,457
Total Liabilities and Shareholders’ Equity 824,286 437,352
Ernesto Lisboa Yann Groeger
The Accounting Technician The General Manager

Income Statement
For the years ended as at 31 December 2007 and 2006
in thousand Meticais
Notes 2007 2006
Interest and similar income 13 284,744 171,240
Interest expense and similar charges 14 (36,648) (16,978)
Net interest income 248,096 154,262
Fee and commission income 17 13,056 9,362
Fee and commission charges (1,565) (493)
Net fee and commission income 11,491 8,869
Other income
Income from financial operations 16 3,815 3,611
Other operating income 18 16,777 10,090
Other costs
Administrative expenses 19 (201,800) (110,698)
Depreciation and amortization charge 20 (14,835) (9,085)
Impairment for losses on loans and other assets 15 (25,032) (12,226)
Extraordinary results – –
Profit / (loss) before tax 38,512 44,823
Income tax (8,262) (7,225)
Profit / (loss) for the year 30,250 37,598
Ernesto Lisboa Yann Groeger
The Accounting Technician The General Manager
F i n a n c i a l S tat e m e n t s 1

A n n u a l R e p o r t 2 0 0 7
Notes to the Financial Statements
As at 31 December 2007
Amounts expressed in thousand Meticais
1. Significant accounting policies
Disclosure basis
The financial statements were prepared based on the books of account
kept in accordance with Mozambican generally accepted accounting
principles and in line with the Chart of Accounts applicable
for the banking sector established by Rule No. 13/GGBM/99 and other
laws and rules issued by the Mozambique Central Bank.
The financial statements have been prepared under the historical cost
convention and on the bases of going concern, substance over form
and materiality. The financial statements are shown in Meticais and
the main accounting and valuation policies used by the bank and presented
below are consistent with those applied in the previous year.
Significant accounting policies
The most significant accounting policies used in the preparation of
the financial statements were as follows:
(a) Income interest and expense recognition
Income and expenses are recognised in the period to which they
relate, regardless of the timing of receipt or payment, in accordance
with the accruals principle.
(b) Assets and liabilities in foreign currency
Assets and liabilities expressed in foreign currency are restated at
the end of each period, using the average exchange rate published
by the Bank of Mozambique. All transactions in foreign currency are
recorded at the exchange rate prevailing on the date of the transaction.
Gains or losses resulting from conversion are recognised in
the income statement as they occur.
(c) Provision for overdue loans and advances
This provision is based on an assessment of overdue loans and advances
including the outstanding principal associated with them,
and on loans with special arrangements for repayment, including
principal and overdue interest. This provision is calculated on the
basis of the following rates and arrears:
Loans in arrears for between 31 and 60 days
%
50
Loans in arrears for between 61 and 90 days 75
Loans in arrears for more than 90 days 100
The criteria followed by the Bank were approved by the Bank of
Mozambique and the amounts are in compliance with Regulation
No. 05/GGBM/99 of that entity, published on 24 March 1999.
(d) Provision for general credit risk
This provision, disclosed in Liabilities, is to enable the Bank to cover
the risk of potential losses existing in the loan portfolio which were
not identified in the provision for overdue loans and advances. This
is calculated in accordance with Rule No. 05/GGBM/99 issued by the
Bank of Mozambique, which establishes a minimum provision of 2%
of the total outstanding principal and the related accrued interest. The
internal policy of the Bank is to provide the equivalent of 3% of these
amounts. In accordance with a decision of the Board of Directors, this
provision is increased by a further provision of 0.2% against the outstanding
principal only, to cover the risk of bankruptcy of clients. This
policy is in conformity with Bank of Mozambique regulations.
(e) Intangible assets
The intangible assets acquired by the Bank are recorded at cost and
depreciated over periods from three to five years.
(f) Tangible fixed assets
Tangible fixed assets comprise buildings, installations and equipment
and are recorded at cost, net of accumulated depreciation.
High value repairs and maintenance are capitalized if they increase
the estimated useful life of the asset. Normal repairs and maintenance
are considered as costs for the year in which they occur.
Depreciation is calculated on a straight-line basis based on the expected
useful life of each asset. The rates applied correspond to
the following estimated useful lives:
Furniture and fixtures
Useful lives (years)
7 –10
Vehicles 4
IT equipment 3 –5
Leasehold improvements are depreciated over the period of the related
rental contract.
(g) Taxation
The Bank is subject to the Income Tax Law, and the annual profits
are subject to Corporate Tax. In accordance with the customs and
fiscal incentives set out in the code of fiscal benefits approved by
the Mozambique Government in Gazette No. 12/93 dated 21 July
1993, the Bank benefits from a reduction of 50% of the corporate
tax rate and the complementary tax levied on the profits distributed
to shareholders during the period of recovery of investment, limited
to a period of 10 years beginning from the start of operations.
(h) Cash and cash equivalents
Cash and cash equivalents comprise cash balances on hand, balances
held in banks and short-term highly liquid investments.
2. Rates of exchange for translation into Meticais
The exchange rates used to translate the assets and liabilities denominated
in foreign currency to Meticais, were the following:
2007 2006
EUR/MZM 35.00 34.22
ZAR/MZM 3.50 3.71
USD/MZM 23.82 25.97
3. Cash and cash equivalents
As at 31 December 2007 and 2006 cash and cash equivalents comprised:
2007 2006
Cash on hand 31,275 12,998
Deposits with commercial banks 38,031 6,725
69,036 19,750
Deposit with the Bank of Mozambique 42,614 24,601
111,920 44,351
The term deposit held with the Mozambique Central Bank is held
to comply with the legal obligation for constitution of minimum
reserves. The regulation in place as at 31 December 2007 is Regulation
Nr. 2/GBM/2007 from the Mozambique Central Bank, published
on the 28th February 2007. This notice compels banking
institutions to keep a term deposit in national currency with the
Central Bank and for it to have a month average balance of at least
10.15% of the total of client’s deposits at the end of the month.
These imposed term deposits do not pay any interest.

4. Loans and advances to customers
The loans and advances to customers were made up as follows:
2007 2006
Current loans and advances 556,500 328,767
Overdue loans and advances – capital 17,737 7,241
Interest receivable on current loans
574,237 336,008
and advances 21,125 12,653
Interest receivable on overdue loans
and advances 2,761 1,036
23,886 13,689
Total capital and interest receivable 598,123 349,697
Provision for overdue loans
and advances (15,599) (6,284)
582,524 343,413
The movements in the loan portfolio during 2007 and 2006 can be
analysed as follow:
2007 2006
Opening balance 336,008 196,023
Loans disbursed 950,744 518,556
Repayments (706,362) (374,853)
Write-offs (6,153) (3,718)
Closing balance 574,237 336,008
The maturity dates of the loans and advances were as follows:
2007 2006
Up to 1 month 14,489 8,478
From 1 to 3 months 34,687 23,395
From 3 months to 1 year 338,658 227,266
From 1 to 2 years 145,372 70,185
From 2 to 5 years 41,031 6,684
574,237 336,008
The movements in the provision for overdue loans and advances
were as follows:
2007 2006
Opening balance 6,284 3,626
Charge for the year 31,591 11,720
Reversal/write-down (14,473) (4,625)
Charged to income statement (Note 15) 17,118 7,095
Write-off (7,803) (4,437)
Closing balance 15,599 6,284
This provision was calculated in accordance with the criteria men-
tioned in Note 1, line c).
5. Fixed assets
The movements in the carrying value of the fixed assets were as
follows:
F i n a n c i a l S tat e m e n t s
Cost
Intangible assets
Opening balance Additions Disposals Closing balance
Deferred costs 347 – – 347
Software
Property, plant and equipment
6,691 3,653 – 10,344
Leasehold improvements 16,263 18,925 – 35,188
Furniture and fixtures 16,221 13,286 (871) 28,636
IT equipment & other 24,454 24,972 (4,022) 45,404
63,976 60,836 (4,893) 119,919
Work in progress 4,105 15,012 – 19,117
Gross fixed assets 68,081 75,848 (4,893) 139,036
Accumulated depreciation and amortization
Intangible assets
Opening balance Depreciation
Charge
Disposals Closing balance
Deferred costs 297 50 – 347
Software
Property, plant and equipment
2,991 2,269 – 5,260
Leasehold improvements 3,843 4,019 (596) 7,266
Furniture and fixtures 5,545 2,159 (643) 7,061
IT equipment & other 14,103 6,338 (3,584) 16,857
Cumulative depreciation 26,779 14,835 (4,823) 36,791
Net fixed assets 41,302 102,245

A n n u a l R e p o r t 2 0 0 7
6. Other assets
The breakdown of this account at the end of 2007 and 2006 was
as follows:
2007 2006
Sundry debtors 10,381 5,646
Deferred costs 4,023 2,049
Other assets 14,354 1,277
28,758 8,972
Provision for other risks (1,161) (686)
27,597 8,286
The amount recorded under Sundry Debtors consists of guarantees
or deposits made relating to services such as communications and
rentals and advances to staff.
Deferred costs comprise prepayments on account of rentals and insurance.
Other assets includes 445 thousand Meticais in respect to
the Western Union balance which represents the net amount due for
the money transfer operations performed by the Bank as a agent.
As at 31 December 2007 and 2006, this balance was composed of:
2007 2006
Bills and checks payable (1,421) (8,779)
Bills paid 1,866 7,024
445 (1,755)
The movements in the provision for other risks were as follows:
2007 2006
Opening balance 686 48
Charge for the year 651 640
Utilization (176) (2)
Closing balance 1,161 686
8. Loans
This account consists of loans received from:
Nederlandse Financierings Maatschappij
2007 2006
voor Ontwikkelingslanden NV. 4,104 12,312
USAID / Mozambican Government 24,000 48,000
Loans from Group companies: 50,022
ProCredit Holding 23,820 –
ProCredit Bank Congo 14,292 –
ProCredit Bank Bulgaria 11,910 –
78,126 60,312
The maturity dates of deposits can be analysed as follows:
2007 2006
Up to 1 month 11,910 –
From 1 to 3 months 38,292 4,104
From 3 months to 1 year 27,924 52,104
From 1 to 2 year – 4,104
78,126 60,312
The loan from FMO is unsecured and is denominated in Meticais.
The loan is repayable in eight half-yearly instalments of capital and
interest commencing April 2004 and ending April 2008. The loan
carries interest based on the 180-day lending rate set by the Mozambique
Central Bank. At the end of the year the interest rate was
11.5% (2006: 11.115%).
The Government of Mozambique together with USAID approved a
loan of USD 2,000,000 for a period of two years, repayable at maturity
date. The loan bears interest at a variable rate based on the
six-month lending rate set by the Mozambique Central Bank and a
spread of 2.77%. At the end of the year the interest rate was 15%
(2006: 10.28%). This loan was fully repaid in February 2008.
The amounts and conditions of the loans from Group Companies
are as follows:
Beginning date Ending date Entity Amount Interest rate
14.09.2007 13.12.2008 ProCredit Holding USD 1,000,000 6.50%
30.08.2007 26.02.2008 ProCredit Congo USD 600,000 6.00%
03.12.2007 03.01.2008 ProCredit Bulgaria USD 500,000 6.75%
7. Deposits from customers
The breakdown of deposits from customers is as follows:
2007 2006
Deposits on call 163,199 96,456
Term deposits 205,493 109,791
Other deposits – Thrift 7,604 2, 799
376,296 209,046
The maturity dates of deposits can be analysed as follows:
2007 2006
Up to 1 month 20,606 18,515
From 1 to 3 months 29,393 11,715
From 3 months to 1 year 155,494 79,561
205,493 109,791
9. Other liabilities
This balance is made up of:
2007 2006
Interest payable 14,775 7,231
Deferred income 62 215
Other accruals 6,473 1,766
State creditor 12,814 9,205
IPC 2,663 –
Western Union – 1,755
Short-term loans – overdrafts 110,469 28,871
Other liabilities 18,930 4,799
166,186 53,842
The amount of interest payable consists of: (i) interest payable on
the fixed-term deposits portfolio amounting to 3,740 thousand
Meticais; (ii) interest payable on loans amounting to 4,505 thousand
Meticais; (iii) arrangement fees for loans granted paid in advance
amounting to 6,257 thousand Meticais; and (iv) other inter-
ests amounting to 273 thousand Meticais.

The state creditor balance includes 8,262 thousand Meticais in re-
spect of the estimated income tax charge for the year 2007.
Short-term loans include overdrafts in Meticais granted to the fol-
lowing institutions:
2007 2006
Millennium BIM 26,782 24,023
Barclays Bank 34,436 –
Standard Bank 28,176 –
BCI Fomento 21,075 4,848
110,469 28,871
Millennium BIM’s overdraft was renewed in November 2007 for a pe-
riod of 180 days. The maximum amount of the overdraft was 26,000
thousand Meticais. The overdraft carries interest based on the annual
variable Prime Lending Rate for the Metical and a spread of 3%.
BCI Fomento’s overdraft was also renewed in November 2007 for
a period of six months. The maximum limit of the overdraft was
25,750 thousand Meticais. The overdraft carries interest based on
the annual variable Prime Lending Rate for the Metical and a spread
of 2%. Barclays overdraft was started in August 2007 for a period
of eight months. The maximum limit of the overdraft was 35,000
thousand Meticais. The overdraft carries interest based on the FPC
rate and a spread of 2.5%.
Standard Bank’s overdraft was started in December 2007 for a period
of one year. The maximum limit of the overdraft was 48,000
thousand Meticais. The overdraft carries interest based on the BT’s
rate for 3 months and a spread of 4%.
10. Provisions
The amount recorded in this balance is related to the general provision
for possible loan losses, and is calculated in accordance with
the criteria mentioned in Note 1, line d). The movements during the
period were as follows:
2007 2006
Opening balance 10,695 6,206
Charge for the year 12,086 6,175
Reversal/write-down (4,823) (1,684)
Charged to income statement (Note 15) 7,263 4,491
Utilization (7) (2)
Closing balance 17,951 10,695
11. Share capital
The authorised share capital amounting to 129,020 thousand Met-
icais, representing 129,020 shares of one thousand Meticais each
is fully subscribed and paid up.
In May 2007, there was a change in the shareholding structure of
the Bank, as a result of an increase of USD 2,000,000 in ProCredit
Holding’s shares. The actual percentage was now 85.5% of the
share capital.
The shareholding structures as at 31 December 2007 and 31 December
2006 was as follows:
2007 % Amount
ProCredit Holding 85.5 110,370
Stichting DOEN –
Postcode Loterij/Sponsor Loterij/
BankGiro Loterij 12.1 15,650
Mozambican Government 2.4 3,000
129,020
2006 % Amount
ProCredit Holding 75.8 58,350
Stichting DOEN –
Postcode Loterij/Sponsor Loterij/
BankGiro Loterij 20.3 15,650
Mozambican Government 3.9 3,000
12. Legal reserve
77,000
In compliance with Nr. 63 from Regulation Nr. 15/99, published on
the 1st November 1999, which regulates the establishment and on
going activity of credit institutions, a percentage of no less than
15% of the net profit for the year must be used to create a legal
reserve, until it reaches a maximum amount equal to the share capital.
This reserve is not distributable. During 2007, the movements
under the Reserves account were as follows:
Opening Increase Utilisation Closing
balance balance
Legal reserve 993 5,640 _ 6,633
993 5,640 _ 6,633
13. Interest and similar income
This balance comprises:
2007 2006
Interest from loans and advances 282,934 171,172
Interest from deposits on call 1,810 68
14. Interest expense and similar charges
This balance is made up of:
284,744 171,240
2007 2006
Interest paid on term deposits 21,097 9,238
Interest paid on loans 15,551 7,740
15. Impairment for losses on loans and other assets
36,648 16,978
This represents the following amounts charged to the income statement
during the year:
Provisions for overdue loans
2007 2006
and advances (Note 4) 17,118 7,095
Provision for other risks (Note 6) 651 640
Provision for general credit risk
(Note 10) 7,263 4,491
16. Income from financial operations
This amount is made up as follows:
F i n a n c i a l S tat e m e n t s
25,032 12,226
2007 2006
Foreign exchange gains 8,868 5,002
Foreign exchange losses (5,053) (1,391)
3,815 3,611

F i n a n c i a l S tat e m e n t s
17. Fee and commission income
This balance consists of:
2007 2006
Fees for services rendered 12,888 9,206
Other income 168 156
13,056 9,362
The increase in fees for services rendered is due to the increase
in the Bank’s customer portfolio. This amount consists of amounts
charged to customers as service charges and for the maintenance
of customer accounts.
18. Other operating income
This balance is made up as follows:
2007 2006
Delay interest 8,853 4,434
Commissions – Western Union 1,227 2,480
Extraordinary income 1,545 1,405
Other income 5,152 1,771
16,777 10,090
19. Administrative expenses
This balance is composed of:
2007 2006
Staff costs 81,563 50,638
Third party services and supplies 92,211 46,252
Other costs 28,026 13,808
201,800 110,698
The variance in the staff costs was mainly explained by the increase
of the number of staff (from 297 at the end of 2006 to 537 at the end
of 2007) and the increase in the average salary by 10%, which is in
accordance with the Banking Union agreement.
The amount shown under third party services and supplies is made
up as follows:
2007 2006
Water, electricity and fuel 5,307 3,286
Consumables 11,519 6,936
Maintenance and repairs 4,261 2,302
Communications 11,403 7,140
Publicity 7,314 3,152
Accommodation and travel 8,921 3,673
Management fees 28,625 13,817
Other supplies and services 14,861 5,946
92,211 46,252
The increase in consumables is directly related to the increase in
the loan portfolio and customer deposits.
Management fees refers to the consultancy services provided by
ProCredit Holding for banking operations and transfer of know how
to the local staff.
The change in the communication costs is mainly due to the opening
of new branches during 2007.
The increase in publicity costs is due to the inclusion of costs related
to the change of the Bank’s name which has taken place in
February 2007.
Other costs consist of:
2007 2006
Rentals 17,468 8,890
Security 3,825 2,251
Insurance 1,924 1,569
Other 4,809 1,098
28,026 13,808
The increase in rentals was caused by the opening of three new
branches, two in Maputo and one at Xai Xai.
20. Depreciation and amortization charge
This balance comprises depreciation on property, plant and equip-
ment amounting to 12,516 thousand Meticais and the amortisation
of intangible assets amounting to 2,319 thousand Meticais, as analysed
in Note 5.
21. Related parties transactions
Related parties include shareholders and their affiliates, members
of the board of directors, key management personnel and any other
party that has the ability to control or exercise significant influence
over the company‘s financial and operating decisions. During
the year the Bank, in the ordinary course of business, entered
into various transactions with related parties. The effect of these
transactions is included in the financial performance and results
of the company. Terms and conditions are determined on an arm‘s
length basis. For balances outstanding with related parties as at
31 December 2007 and 2006, refer to Notes 8 and 9 above, namely:
ProCredit Holding (2007: 24,794 thousand Meticais; 2006: -) and
IPC (2007: 2,663 thousand Meticais; 2006: -).
22. Subsequent events
There were no facts or events subsequent to the balance sheet date
that could influence the reading and interpretation of these financial
statements as at 31 December 2007.
Exchange rate as of December 31, 2007: 1 USD = 23.82 MZM

Contact Addresses
Head Office
Av. Zedequias Manganhela
JAT IV, 6th floor rigth, No. 267 R/C
Maputo
Tel. +258 21 313344
Fax +258 21 313345
info@bancoprocredit.co.mz
www.bancoprocredit.co.mz
Branches
Baixa Branch
Maputo
Av. 25 de Setembro, No. 1705
Tel. +258 21 314592
Fax +258 21 314593
gnhantumbo@bancoprocredit.co.mz
Fajardo Branch
Maputo
Av. do Trabalho, No. 750
Tel. +258 21 407755
Fax +258 21 409809
jmonjane@bancoprocredit.co.mz
25 de Junho Branch
Maputo
Rua São Paulo, No. 554
Tel. +258 21 471676
Fax +258 21 471920
fmutemba@bancoprocredit.co.mz
JAT4 Branch
Maputo
Av. Zedequias Manganhela, No. 267 R/C
Tel. +258 21 313344
Fax +258 21 328870
lsardinha@bancoprocredit.co.mz
24 de Julho Branch
Maputo
Av. 24 de Julho, No. 189
Tel. +258 21 486279
Fax +258 21 486279
otiago@bancoprocredit.co.mz
Casa Fabião Branch
Maputo
Av. Eduardo Mondlane, No. 3103
Tel. +258 21 401447
Fax +258 21 401454
cmutumane@bancoprocredit.co.mz
Benfica Branch
Maputo
Av. de Moçambique, No. 125
Tel. +258 21 472816
Fax +258 21 472815
amabota@bancoprocredit.co.mz
Xipamanine Branch
Maputo
Rua dos Irmãos Roby, No. 9
Tel. +258 21 407753
Fax +258 21 409811
achelene@bancoprocredit.co.mz
Beira – Maquinino Branch
Beira
Av. Samora Machel, No. 2878
Tel. +258 23 320650
Fax +258 23 320651
jgove@bancoprocredit.co.mz
Beira – Chaimite Branch
Beira
Av. Governador Augusto Castilho, No. 192
Tel. +258 23 320660
Fax +258 23 320661
cvilanculos@bancoprocredit.co.mz
Chimoio Branch
Chimoio
Av. 25 de Setembro, No. 568 A
Tel. +258 251 22659
Fax +258 251 22662
cmutombene@bancoprocredit.co.mz
Matola Branch
Matola
Av. da Namaacha Talhão, No. 66A
Tel. +258 21 724092
Fax +258 21 724093
apacheco@bancoprocredit.co.mz
Nampula Branch
Nampula
Av. Francisco Manyanga, No. 6
Tel. +258 26 215715
Fax +258 26 215809
arodrigues@bancoprocredit.co.mz
Xai-Xai Branch
Xai-Xai
Av. Samora Machel, No. 1028
Tel. +258 28 222160
Fax +258 28 222161
cbatine@bancoprocredit.co.mz
Quelimane Branch
Quelimane
Rua dos Trabalhadores,
corner Av. 1º de Maio
Tel. +258 24 255086
Fax +258 24 217385
C o n ta c t A d d r e s s e s
Tete Branch
Tete
Av. da Independência Talhão, No. 328
(opening soon)