SBN Holdings Limited SBN Holdings REPORT TO TO REPORT 2020 SOCIETY

SBN Holdings Limited REPORT TO SOCIETY 2020 The unique nature of Namibia

Namibia is a rugged country, a country of contrasts. From prehistoric geological formations to unique game parks like the Etosha Pan, and the desolate Skeleton coast – a graveyard for errant ships – it offers international travellers unique experiences found nowhere else on the globe.

Tourism is therefore a significant contributor to Namibia’s gross tourism revival initiative was introduced in September 2020 domestic product (GDP). During 2019, around 1.6 million people to provide some relief to the sector going forward. visited Namibia, helping the tourism sector contribute 10.9% of the country’s income (N$21.9 billion). In 2020, however, the The equally essential logistics industry recorded average annual prosperity of this industry, which offers employment to more sector growth of 15% since 2007, contributing about N$17 billion than 47 000 people and indirectly supports about 120 000 annually to GDP. The busiest areas are the three corridors others, experienced a significant Covid-19 related setback. connecting Walvis Bay with other Southern African Development Community (SADC) countries, namely the Walvis Bay-Ndola- Hotels and restaurants, a key component of the tourist Lubumbashi-Development Corridor; the Trans-Cunene and Trans- industry, GDP contribution declined by -51.4% in real value Kalahari corridors. Walvis Bay, the country’s major commercial added during the second quarter of 2020. port, handled 93.1% of total cargo tonnage transitioning to and As an active participant in all sectors of the local economy, from neighbouring countries in 2017. Standard Bank Namibia (SBN) supported the industry through SBN supported customers in the logistics industry by advising on several interventions, including capital and interest repayment the reconfiguration of supply chains, thereby conserving capital, relief of up to 12 months to its clients in the tourism sector. mitigating risks and stabilising the supply chain. In addition, As travel restrictions eased towards the end of 2020, many bespoke solutions were created for major customers to enable tourism operators reported that bookings cancelled during 2020 them to survive the loss of business and mandatory lockdowns had been reinstated for the upcoming year. A government-led that were part of the global response to the Covid-19 pandemic. SBN HOLDINGS LIMITED Report to society 2020 1

Introduction IFC The unique nature of Namibia Contents

2 About us 3 Our reporting suite 4 Me ssage from the Chairman and Chief Executive

Who we are 8 About us 10 Namibia’s economy at a glance 12 Driving Africa’s growth 14 Our integrated approach to value creation 16 Building the future 20 Our integrated pillars of operation

Creating value 24 Measuring our progress 26 Leadership review 32 The economic impact of Covid-19 36 Putting our customers first 40 Supporting new ways of work 48 Compliance and regulatory affairs 56 Embracing a culture of innovation 60 Always on, always secure 64 Delivering financial sustainability Our SEE impact 68 Managing our SEE activities 70 Our social impact 74 Our economic impact 78 Our environmental impact 80 Namibian Financial Sector Charter 84 Governance and ethics Additional information 88 Reference details IBC Contact information 2 INTRODUCTION

About this report

Reporting to our stakeholders SBN Holdings Limited (SBN Holdings or the group) has been an essential part of Namibia’s financial landscape for 105 years and, during 2019, listed on the Namibian Stock Exchange, embedding the group as a truly Namibian institution.

Listing in 2019 On listing, 81 million SBN Holdings shares, in the form of 22 471 910 subscription shares and 58 668 539 public shares, were offered to the market. This initial public offering raised N$722.2 million.

Scope Although the listing, the largest yet on the Namibian Stock Exchange, has broadened the relationship between the group and Namibians, enabling many to be both customers and investors in their local financial service provider, several guiding principals have not changed.

The long-term growth and success of SBN Holdings is linked to the wellbeing and economic development of the communities in which we operate. We believe that all Namibians have a right to understand our business and know how we conduct our operations across the country.

Ultimately, we draw our success from the people we serve. With their support, and the value-added services and solutions we offer, we are committed to moving Namibia forward. We will continue to contribute to the growth of the country and be a financial services group that serves the interests of our diverse society.

As a leading multifaceted contributor to Namibia’s economy, our material focus areas take into account the issues that have the potential to impact the local economy and its ability to grow. By their very nature, these focus areas include events that impact on the political and economic stability of the nation and include the decisions taken and implemented at a policy, regulatory, and statutory level.

Our material focus areas include issues that cover the interests of SBN Holdings and its stakeholders. They are linked to the value drivers that help the group to measure strategic progress and to identify and develop appropriate management and strategic priorities.

Our key performance indicators (KPIs) are aligned to our material focus areas. Where it is feasible, historical data is used to broaden the reporting of indicators by showing trends. KPI tables are presented at the The listing achieved several objectives for the group, including: beginning of each material focus area. However, • Broadening the ownership of SBN Holdings by offering local people and internal targets measuring progress against the KPIs institutional investors the opportunity for direct participation in the are excluded from this report. equity growth and income streams of the group. • Extending the broad-based economic empowerment (B-BEE) Reliable environmental data is crucial to our success ownership of SBN Holdings by inviting broader participation in the and that of our clients. We continue to improve our future of the group. information gathering process, with significant effort being invested in centralising, understanding and • Creating liquidity to further open opportunities for the Purros Staff interpreting data to ensure the integrity and accuracy Investment Scheme to benefit through the prosperity of the group and of our reporting. help build wealth for our people. • Increasing the capital base of the group to take advantage of strategic Our supply chain is not considered to have material expansion and diversification opportunities as they arise, allowing the environmental risks and is, therefore, not covered in group to make targeted acquisitions to enlarge our offerings. this report. SBN HOLDINGS LIMITED Report to society 2020 3

AR Annual report.

The annual report The SBN Holdings Limited annual report is the group’s primary report to stakeholders. It is a comprehensive document that Our reporting provides information on our integrated pillars of operation and the main achievements within each operational area. suite It also extensively reports on the implementation of the group strategy and Our stakeholders represent related material focus areas, complemented by insights into our financial challenges and the diversity of Namibian accomplishments, corporate governance society. It is natural that these activities and other core activities during the year to ensure that a comprehensive stakeholders have various overview of the group and its activities for interests and require different the year are presented to stakeholders. information from the group. To engage with all interested parties as effectively as RTS Report to Society. possible, we produce two reports annually. The report to society (this report) This, our fourth report to society, provides insights into how the group created value in 2020. It includes an overview of our corporate social investment (CSI) and environmental programmes and also discusses our support for the small, micro and medium-sized businesses (SMMEs) in Namibia. This report expands on how we worked in an integrated manner during 2020 to fulfil our purpose and help create a sustainable future for our business, our employees, our stakeholders and Namibia as a whole.

Navigational icons The following icons are used throughout this report to improve usability and demonstrate the integration of information across our reporting suite

RTS Read more in All our reports and latest financial results this report. information is available online. We urge our stakeholders to make use of our reporting site at https://www.standardbank.com.na/ to assist in AR Read more in our the reduction of our carbon footprint. annual report.

Feedback We encourage our stakeholders to share their views with us. If there is something you would like to know or feedback that you would like to share, please contact [email protected] 4 INTRODUCTION

Message from the Chairman and the Chief Executive

The Covid-19 pandemic has not found Namibians wanting.

HERBERT MAIER (CHAIRMAN) AND VETUMBUAVI MUNGUNDA (CHIEF EXECUTIVE)

Official statistics about the Covid-19 government, the public and private Yes, many things have changed. We have pandemic that swept across the globe sectors and indeed all levels of society had to adapt the way we live, socialise, can be deceptive where Namibia is have proven that they have the and even how we do business. Many of considered. At first glance, the fact that determination and strength to survive the effects of 2020 can be expected to by mid-November 2020 there had been and prosper. linger on for some years to come. The 13 170 cases reported and 134 deaths, result will be socioeconomic challenges would indicate that Namibia escaped Namibians, because that must be mitigated through unique somewhat lightly from the devastation solutions and the development of created globally by the pandemic. they are hardy people, services and products that meet the needs of this changed approach to The reality, however, is that for a country will rise above the business. with a small population of almost 2.5 million spread across an area of extraordinary events We believe that all sectors of the 824 292 square kilometres, the pandemic that blighted their economy and society have contributions has had significant socioeconomic to make towards building a sustainable implications that will linger long after country for most of future and must be encouraged to do so the virus is nothing more than an as ‘business as usual’ replaces the unpalatable memory. 2020. ‘business unusual’ that has been the norm to date. Although the group lost no staff to The group, like other large local Covid-19 during the pandemic, it has institutions, has adapted the way it What Namibians can count on going always been an integral part of Namibian operates and introduced practices to forward is that Standard Bank Namibia, society. We, therefore, deeply regret the support people who were impacted by a as a leading financial institution and a loss of life caused by the virus and extend loss of income or business closures. corporate member of Namibian society, our condolences to those who lost family can be relied upon to play its part in members or friends to the pandemic. Keeping our people and customers safe helping build a prosperous future. We also acknowledge the economic during the pandemic required new hardships that will remain with many precautions that included the provision of families for some time to come. sanitisers at our branches and SBN buildings. Protocols were developed for The Covid-19 pandemic may have hit deep-cleaning high impact areas and suddenly, had unexpected consequences more frequent replenishment cycles for and tested the mettle of our people. consumables were introduced. But, on the positive side, Namibians in SBN HOLDINGS LIMITED Report to society 2020 5 6 WHO WE ARE

8 10 12 14 16 20 About us Namibia’s economy Driving Africa’s Our integrated Building Our integrated at a glance growth approach to the future pillars of operation value creation SBN HOLDINGS LIMITED Report to society 2020 7

WHO WE ARE 8 WHO WE ARE

About us A proud history of growing and building Namibia

1915 - 1980’s - Humble beginnings The emergence of The first branch of the then Standard Bank of South Africa computers (SBSA) opened in Lüderitz in 1915 to provide financial During the 1980s, Standard Bank South services to the miners who descended on the area in 1908 West Africa purchased the Windhoek in search of riches after a railway worker, Zacharias Lewala, branch of the French Bank of Southern picked up a diamond in the desert sands. Africa. This decade also ushered in the Within four years, the bank’s footprint expanded with conversion of operations from manual branches opening in Grootfontein and Okahandja and processes to stand-alone micro-computers, Omaruru (1919). increasing the group’s capacity and ability to handle large transaction volumes. 1910 1970 1950 1920 1930 1980 1940 1960 1990 2010 1900 2000

1960’s and 1970’s - Into the 21st The decades of expansion century The 1960s and 1970s were decades of growth for SBSA, In July 2006, SBN Holdings marked by the introduction of specialised banking services was incorporated as a and a much-improved range of financial offerings to company, enabling the bank customers. The bank began to offer merchant banking to become more closely facilities, acquired the National Industrial Credit Corporation associated with Namibia’s to form the renamed Stannic, SBSA’s asset and vehicle development. Standard Bank finance division. South West Africa became Standard Bank Namibia and Credit card facilities were offered through Diners Club and a wholly owned subsidiary of financial service product offerings grew to include mutual SBN Holdings. This transition schemes, the PlusPlan savings scheme, factoring services completed the circle, taking and Stannic leasing operations. the bank from its small In 1978, Standard Bank South West Africa became a wholly beginnings to the nation’s owned subsidiary of the then Standard Bank Investment largest employers with a staff Corporation (now the Standard Bank Group). This was of 1 700 combining skills and followed by the new company assuming the Namibian assets technology to serve and liabilities of SBSA when it ceased its direct operations individuals, business and the in Namibia. public sector. SBN HOLDINGS LIMITED Report to society 2020 9

Moving forward:

Namibian Stock Highlights of the listing included: Exchange listing • The 81 million • Of the 81 million • Institutional • A single The incorporation of SBN share offering shares, 22 471 910 investors, including international Holdings provided Standard attracted were subscription pension funds and investor applied Bank Namibia with the benefits 12 500 applications shares and investment for N$70 million of having a dedicated holding and was 58 668 539 companies, lodged shares but only company, strengthening the oversubscribed were offered 45 applications received 20% of operational oversight, with requests for to the public. totalling the shares leadership, governance and shares N$1.4 billion N$1.1 billion. requested. regulatory compliance of the (160 million shares) group. On 15 November 2019, being received. SBN Holdings Limited had its N$722.2 million debut listing on the Namibian was raised. Stock Exchange.

OUR COMPANY Stanfin (Pty) Limited STRUCTURE

Standard Insurance Brokers Namibia (Pty) Standard Bank Limited 74.9% Group 100% Arleo Investments Sixteen (Pty) Limited

2020 MobiCash Payments SBN Solutions (Pty) Limited HOLDINGS (50.9%) General Public, LIMITED including staff 25.1% share scheme Standard Bank (8.5%) Namibia Limited

100% Standard Bank Namibia Nominees (Pty) Limited

SBN Holdings is majority-owned by the Standard Bank Group (SBG), the largest financial services group by assets in Africa. Founded in 1862, SBG operates in 20 African SBN Holdings operates through: countries, including Namibia, and in selected markets • Standard Bank Namibia outside Africa. • Stanfin, a wealth and investment services provider Their vision is to be the leading financial services organisation in, for and • SIB (Standard Insurance Brokers), across Africa by delivering exceptional customer services and superior value. which offers insurance broking services SBG concluded a strategic partnership agreement with the Industrial and • Standard Bank Namibia Nominees Commercial Bank of China Limited (ICBC), the world’s largest bank by assets. (SBNN), delivering safe ICBC then became a supportive, non-controlling 20% minority shareholder custodianship services in SBG. • Arleo, which holds the investment For SBN Holdings, the integrated financial services organisational focus of in the new Windhoek head office SBG is a crucial differentiator as it enables the group to take advantage of building Africa’s longer-term structural trends. It also provides access to several • MobiCash, the mobile banking additional geographies and clients to which competing Namibian financial service provider of MobiPay in services providers do not have access. which a 50.91% stake was acquired. 10 WHO WE ARE

Namibia’s economy at a glance

The state of the nation In March 2020, when the Covid-19 pandemic began spreading across Namibia, the economy was already depressed. Four years of drought and economic recession had already exacted a toll on a country then subjected to lockdowns, restricted business trading hours and other measures adopted to contain the spread of the virus.

Because of the prevailing economic conditions, the government Education and healthcare have absorbed the largest share of the had few fiscal buffers available to implement and mitigate the national budget in this fiscal year due to their socioeconomic impact of the additional, unexpected external shocks. importance. Overall, greater focus is on improving efficiency and achieving national priorities by using the resources of the private As a result, for the 2020/21 fiscal year, total government revenue sector through public-private partnerships or direct investments. is expected to be N$55.2 billion, representing 30.0% of GDP, a An Economic Revival Plan will be released in early 2021 to provide decrease of 11.7% and around N$9 billion less than the projected further detail about government development priorities. revenue announced during the year's mid-year budget review. In the medium term, revenue is now expected to grow at an average Recent events have largely constrained the government's fiscal of 4.2%, to reach an estimated N$57.5 billion in the 2022/23 consolidation efforts, originally introduced in the 2015/16 fiscal fiscal year and N$62.9 billion by 2023/24. year. These efforts were seen to be effective as expenditure and the budget deficit as a percentage of GDP has been reducing. The single-year budget tabled by the Minister of Finance during However, the pandemic will result in public debt rising to at least May 2020 reflected the urgency needed to meet the elevated, 68.8% of GDP, compared to 56.1% in 2019/20. Public debt as a once-off needs arising from the impact of Covid-19. percentage of GDP is set to increase to 73.2% in 2021/22 and Total government expenditure, including interest, for 2020/21 is around 76.9% by 2023/24. expected to be N$72.8 billion, 8.4% higher than the amount Despite these setbacks, the government remains dedicated to tabled during the 2019 mid-year budget review and significantly containing the high debt and budget deficit. It has, therefore, above the estimated revenue of N$55.2 billion (or 30% of GDP). committed itself to a single expenditure hike during 2020/21 Overall, total spending has increased by 9.3% year-on-year and is in an attempt to protect livelihoods and save lives. Reducing the expected to rise to 42.5% of GDP. The depressed revenue and growth of government expenditure will have an overall positive increase in expenditure for the 2020/21 fiscal year will result in impact on medium- to long-term fiscal metrics. the budget deficit increasing from 4.7 % of GDP in 2019/20 to 10.1% in 2020/21, above the previous high of 8.4% in 2015/16. SBN HOLDINGS LIMITED Report to society 2020 11

Namibian trade Imports and exports in 2019 According to the annual trade statistics bulletin compiled by the Namibian statistics agency, total exports in 2019 were an estimated N$91.7 billion and a total value of imports an estimated N$111.2 billion, resulting in a trade deficit of N$19.5 billion or 2.3% of GDP.

Exports Namibia's top export products in 2019 China remained Namibia’s top export market were copper, precious stones and metals, taking up 25.9% of the nation’s outputs. ores, fish and boats. South Africa accounted for 17.2%, Botswana 10.1%, Belgium 7.5% and Spain 4.9%.

Imports South Africa was the leading supplier of goods and Namibia's top imported commodities for 2019 services to Namibia and accounted for 45.3% of were oils and mineral fuels; motor vehicles and the nation's imports. Zambia followed them with parts, industrial machinery and metal ores. 15.5% and China with 4.0% of the market, Bulgaria with 3.2% and India with 2.9 %.

Imports and exports in 2020 During the lockdown, all economic activities, including investments and demand, nearly came to a halt. This slowdown had severe implications on Namibia's production capacity and demand for products. Exports in 2020 are expected to decline by about 11.9% and imports by 14.9%. 12 WHO WE ARE

Driving Africa’s growth

Africa is a vibrant continent where the availability of a young, mobile workforce and rapid urbanisation are changing the circumstances and societal structures in which Africans live.

The introduction of technology and a SBN Holdings is well-placed to benefit new outlook on inter-African trade, from the long-term trends that are characterised by trade agreements that shaping the economies of sub-Saharan are erasing previous barriers to regional countries, supported by its strategic economic prosperity, promise to unlock positioning in Namibia and, as part of wealth across the entire continent. SBG, being connected to operations in 20 countries across Africa.

We are ready to play a leading role in a continent where: • Traditional trade barriers are • Sub-Saharan Africa remains the • The World Bank estimates that by crumbling as Africa moves to fastest-growing region for mobile 2030 more than 50% of Africa’s encourage inter-country trade on phone users globally, with an population will be urbanised. a continent where most national additional 167 million subscribers This flow of people to the cities will outputs are exported to countries expected to sign on for services by enable better delivery of services outside the continent. 2025. This will increase the total and technology and infrastructure • The African Continental Free Trade subscriber base to over 600 million, access. Agreement (AfCFTA), signed by about 50% of the region’s 54 of Africa’s 55 countries, is the population. The majority of users largest global free trade area will be young people. and has the potential to drive • The mobile economy in sub- US$450 billion in potential Saharan Africa is predicted to income gains. generate almost US$185 billion • By 2034, Africa will be home to the annually by 2023. world’s largest working-age population of 1.1 billion people. SBN HOLDINGS LIMITED Report to society 2020 13

Our strengths include that we are: • Able to offer our customers various • Positioned to weather the economic • As part of SBG’s African banking products and services, from banking climate that has negatively impacted operations, able to leverage the facilities and finance for individuals the commodity prices that are strength of a business that has to facilities for corporations and essential components of the served Africa for more than 155 years finance for significant infrastructure Namibian and other African and is the largest financial services developments. economies during the past four group by assets on the African • Able to rely on diversified operations years. We have ensured that SBN continent. and income streams that assist us in Holdings can continue to offer • Able to meet the demands and withstanding cyclical economic products and services during the challenges posed by the changing, changes. 2020 Covid-19 pandemic, increasingly regulated financial and beyond services industry that has evolved rapidly since the 2007 – 2008 global financial crisis.

We contribute to the future of Africa by:

• Promoting Africa’s growth by assisting our customers in taking advantage of opportunities while also being given the support they need to navigate economic challenges.

• Driving inclusive growth by providing the financial services and products that support entrepreneurs and the development of Namibian small to medium-sized businesses (SMEs) which, in turn, create employment opportunities.

• Encouraging policy reform that supports economic diversification and development.

• Creating opportunities for the development and employment of local talent within the financial services sector. 14 WHO WE ARE

Our integrated approach to value creation

Risk appetite Our strategy is achieved within the constraints of policies based on conscious risk-taking. Our risk appetite is based on establishing a risk aware culture throughout the group and continuously enhancing our risk management Our capabilities. purpose Namibia is our home, we drive her growth Operating context Our strategic responses are flexible and enable us to respond to the structural shifts in our industry and cyclical pressures in our markets effectively. We identify pockets of opportunity for revenue generation and employ well- developed risk models to anticipate and Our clients are Our group manage the impact of heightened risks during strategy times of economic stress. at the centre Our strategy is centred on our customers. We are of everything committed to meeting all their needs with our broad Our values we do. offerings of products and This central organising principle guides services and backing their Our values serve as beacons for the behaviour us as we work to build a digital group, requirements by deploying and qualities that define us at our best as we redesign our operating models, resources that achieve execute our strategy. Our values are: develop our people and change our sustainable value for our • Being proactive. culture. As all these elements combine, shareholders and other • Continually raising the bar. they will create a create long-term stakeholders. • Working in teams. sustainable competitive advantages. • Delivering to our stakeholders. • Respecting each other. • Serving our clients. • Upholding the highest levels of integrity. • Growing our people. Our vision What if we place the client at the centre of who Integrated pillars of operation we are and what Our business units and corporate functions we do? have aligned their operating strategies to the group strategy to ensure effective and coordinated execution within and across our integrated pillars of operations to benefit our clients.

RTS Read more on page 20.

Underpinned by our governance Performance linked to value approach to create and protect value creation Our governance approach promotes strategic We are embedding a high-performance decision-making that combines long-term and shorter- culture across our business to create an term outcomes to reconcile the group and society's environment in which our people are interests in our pursuit of sustainable value. empowered and motivated to deliver exceptional client experiences and are rewarded for their contribution towards realising our purpose and vision. SBN HOLDINGS LIMITED Report to society 2020 15

Client centricity requires that our people and processes are focused on our customers as their needs and expectations change. Therefore, we align CLIENT the way we plan, deliver and execute work, doing Our strategic CENTRICITY the basics brilliantly and consistently to provide what our clients value. value drivers WE ARE WORKING TO: help us focus our efforts and measure • See clients as real people, not numbers. the progress towards delivering on • Provide our clients with relevant solutions. our group strategy and vision. • Be a trustworthy partner in our clients’ growth journeys. • Do the basics brilliantly and deliver on our promises quickly, efficiently, reliably and respectfully. CULTURE OF CONTINUOUS IMPROVE- Creating MENT value for

Digitisation means enhancing our products and The group processes to continuously improve how we meet Our group strategy is focused our clients’ and employees’ needs. It is more than on creating shared value and DIGITISATION just technology; it is about delivering the full range embodies our commitment to CLIENT of financial services through secure, personalised, FOCUS the shared future we intend relevant and digitally enhanced experiences to our to make for our clients, our clients and employees in real-time, all the time. people and our other stakeholders. Our key WE ARE WORKING TO: focus • Ensure that the services our clients and employees need are consistently available, Society areas anywhere, anytime – irrespective of channel. Social relevance is • Use data proactively to guide our decisions, fundamental to our survival work together to EMPLOYEE ENGAGEMENT and success and is implied in ensure that we discover valuable insights and deliver our purpose and vision. offer customers personalised experiences. everything they • Remove friction, paper-based processes and We are moving towards need in the most waste to ensure intuitive, easy to use, reliable measuring our social, effective way interfaces for our clients and employees. economic and environmental possible. • Create a workplace that encourages curiosity, (SEE) impact and digital thinking and continuous improvement understanding our broader for quick and frequent refinement of ideas and value outcomes by identifying brilliant delivery. RISK AND CONDUCT the SEE risks and opportunities that Namibia presents and how our business activities respond to these. Our integrated financial services offering delivers holistic solutions which are relevant to our clients. Driving Namibia’s Offering a complete range of financial services is longer-term growth FINANCIAL INTEGRATION inseparable from our commitment to client OUTCOME Our multi-generational centricity and reinforces the competitive purpose recognises the advantages of our scale, scope and expertise. This interdependency of Namibia’s means that our business units, legal entities and wellbeing and that of the corporate functions must work as an integrated group. It is the ultimate whole to service our clients’ financial needs in a expression of our commitment to Namibian unified way. SEE IMPACT growth that is inclusive and WE ARE WORKING TO: sustainable, and in turn, • Seamlessly and efficiently deliver an integrated secures viable markets for our financial services group, so our clients have long-term profitability and access to and experience all our propositions value creation. relevant to their needs.

Remuneration that drives Ethical and effective leadership Corporate citizenship value over time Ethical and effective leadership connects Corporate citizenship relates to the Our reward philosophy is evolving to to uniting purpose and performance. fundamental role we play in the reflect the group strategy. We combine Embedding an ethical culture recognises socioeconomic wellbeing of Namibia. It reward elements that link directly to that our stakeholders’ trust is the basis commits us to use our resources strategic and financial performance on which we compete and win. responsibly as inputs to our business criteria and thresholds. These awards are model and balances our needs with made on a discretionary basis to avoid society. penalising executives for factors outside their control. 16 WHO WE ARE

Our business strategy centres on the six material focus areas that are linked to our overall strategy. Our strategic priorities in each of these six areas are transformed into tangible opportunities when they are turned into corporate action. Building the future Our strategic objectives

ONE TWO THREE

Our clients are the Our employees Namibia is our home, reason we are in support our ability to and we are committed business. meet our objectives, to the expansion and provide a positive deepening of our How we design our products, deliver our services, conduct client experience, business across the ourselves, and make strategic comply with our country. decisions should be in our regulatory obligations clients' best interests. We will work with our clients to and create support economic growth and WE: shareholder value. diversification, and • Instil a culture that values counterbalance the economy's excellent client experiences, We are committed to slowdown and the decline in ethical and fair conduct and embedding a culture that commodity prices. market integrity among all our encourages and rewards people. excellence and ensures WE: • Continually leverage new adherence to our values. • Maintain profitability within our technologies to meet changing risk appetite while navigating client expectations and enter WE: challenging economic and partnerships for innovation. • Ensure we have the right skills regulatory environments, and capabilities to successfully • Ensure appropriate technical meeting client expectations execute our strategy, manage capability and skill to prevent and competing effectively. differing expectations of a our clients from being • Invest in innovative products multi-generational workforce exploited. and services. and comply with local • Keep client information private • Ensure robust monitoring of transformation legislation. and ensure the integrity of strategy implementation and • Build an ethical and risk-aware client data. harmonise strategies across culture that mitigates the risk the business. of internal fraud, client • Maintain a forward-looking exploitation and unethical view of a potential socio- conduct. political landscape and put • Capacitate our people to appropriate business continuity perform in a technology-led measures in place. environment

Related material focus areas

Put the client at the Recruit, retain Deliver sustainable centre of everything and motivate financial services we do our employees SBN HOLDINGS LIMITED Report to society 2020 17

RTS Read more about related material focus areas on page 18 and from page36.

FOUR FIVE SIX

Drive a culture At a national and Our IT systems and of continuous global level, the functionality are innovation. regulatory essential to our ability frameworks to provide our clients We will continue to innovate to continually improve the value governing financial with uninterrupted and experience we provide for services providers are access to safe, secure our clients and stay ahead of continuously evolving and reliable products our competitors. while certain and services and WE: regulatory bodies' mitigate risk. • Deliver new products and supervisory powers services to market, speedily We will strive to improve and without compromising have significantly the stability and technical system stability. increased. sophistication of our IT • Develop a culture that systems and their functionality encourages innovation and We will continue to work to enhance the services we challenges established closely with all our regulators provide to our clients. processes to deliver excellent to ensure that we manage client experiences that regulatory developments WE: differentiate us in a effectively while minimising, • Balance client expectations for commoditised and low-cost as far as possible, negative innovation while maintaining competitive environment. impacts on clients, employees system stability. • Develop the capacity of our and areas of business. • Continuously monitor and people to ensure they are anticipate criminal exploitation WE: resilient and supportive of of our systems and cyber- • When processing data is business changes. attacks on our services and shared across third-party deploy prevention and • Ensure third parties maintain networks, adhere to mitigation measures. the security of client associated regulations and information. • Ensure that our systems monitor service providers to maintain client information • Address social challenges ensure compliance with privacy and put additional through innovation. privacy controls. measures in place to protect • Maintain and enhance our our data stores. ability to comply with changing regulations and with capital requirements at all times, in a way that does not compromise the client experience. • Instil a compliance mindset across the group.

Related material focus areas

Keep abreast of Establish Embrace the pace, volume and maintain innovation and scale of IT system stability regulatory change 18 WHO WE ARE BUILDING THE FUTURE CONTINUED

We use external and internal sources of information to identify statements, concerns and perceptions raised by our stakeholders to update our material focus areas. We use the information to identify the themes and issues that appear to be of most significant interest or concern.

Our material focus areas

Material matters cover a broad spectrum of subjects, from traditional banking concerns to social, environmental and regulatory issues. All impact on the way we operate and conduct our business, and how we allocate our resources. We identified and prioritised the six most crucial material matters in our operations during 2020. Deliver sustainable financial services WHY IS IT MATERIAL? Remaining financially sustainable means, we can: • Access the capital required to invest in our Direct relationships with infrastructure, projects and businesses, which regular communication in turn enhances our ability to serve our clients. • Deliver dividends and grow the investment of • Clients our shareholders, who provide our financial • Employees and trade unions capital. • Industry bodies • Create and sustain employment. • Service providers • Significantly contribute to the national treasury ENGAGING • Media through taxes. WITH OUR • Shareholders, rating agencies, financial analysts RTS Read more about our STAKEHOLDERS and the business community achievements from page 64. Positively building and • Government and regulatory maintaining good relationships authorities impact our business activities and reputation and are a primary focus.

We engage with stakeholders to appraise our business strategy and operations, shape our products and services, Indirect relationships where an manage and respond to social engagement takes place from expectations, minimise time to time on specific issues reputational risk and form strong partnerships. How we • Community development engage with our stakeholders, organisations and the frequency with which • Non-governmental Keep abreast of the pace, we do so varies according to organisations volume and scale of each stakeholder group. • Communities we operate in, regulatory change including bursary and scholarship recipients and WHY IS IT MATERIAL? institutions of higher learning The volume of regulatory change is due to several • Research organisations factors, including international reform of the financial sector following the global financial crisis • Civil society groups of 2008. New regulation has a direct bearing on • Business associations day-to-day operations and processes, such as pricing decisions and product design, as well as decisions about our ethics and culture.

• The group completed the migration of all corporate and business banking clients to Finacle. • Continued to engage with regulators on new regulations and their impacts.

RTS Read more about our achievements from page 48. SBN HOLDINGS LIMITED Report to society 2020 19

Put the client at the centre Recruit, retain and motivate of everything we do our employees WHY IS IT MATERIAL? WHY IS IT MATERIAL? To sustain our business performance, we must remain Finding, keeping and developing empowered and motivated responsive to the market in which we operate. We must know people is at the core of our success and strengthens our who we are doing business with and how we are doing competitive advantage. How our people think and feel about business with them while continually being guided by our work correlates with client satisfaction levels. We believe that values. It is essential to maintain our reputation for absolute harnessing the full potential of our people is essential for integrity, to comply with our regulatory obligations and to do superior client experiences. the right business, the right way. • The group continued to focus on talent management, • This requires people and processes to be focused on clients including training, coaching and career progression. as their needs and expectations change. A detailed review • Feedback from surveys like the Deloitte Best Company to of processes, structure, operating model and products Work for and the annual SBG ‘Are you a Fan’ is used to began in 2018 and was completed during 2019. develop actions and measures to improve employees’ experience. RTS Read more about our achievements from page 36. RTS Read more about our achievements from page 40.

Embrace innovation Establish and maintain WHY IS IT MATERIAL? IT system stability We provide clients with similar products and services to those WHY IS IT MATERIAL? offered by other financial institutions in the same market. IT directly impacts how we interact with and serve our clients. Innovation enables us to be competitive, meet our strategic Therefore, we view IT as a strategic asset that creates objectives, be relevant in our markets and attract and retain sustainable value by enabling our growth and ability to achieve critical talent. operational excellence.

• We continue to improve PayPulse; a payment application is • Improved monitoring capability ensures system availability, available to our clients and non-SBN clients in Namibia. better capacity management and increasing awareness of • Third-party ATM real-time deposits allow clients to deposit cybersecurity. cash outside of banking hours. • We reviewed and simplified the hardware, software and • BlueFuel provides a comprehensive and innovative fleet architectural design, further improving stability and the management solution to businesses and individuals. production environment.

RTS Read more about our RTS Read more about our achievements from page 56. achievements from page 60. 20 WHO WE ARE

Our integrated pillars of operation

The integrated components of our services ensure that the financial needs of individuals and businesses are met. Both these customer pillars are supported by a centralised corporate function that provides the administrative and specialist services that the client-facing operations require.

Our clients Client service teams Business lines Universal capabilities Integrated pillars • Personal & Business Banking (PBB) • Corporate & Investment Banking (CIB)

Corporate functions

We have begun assessing whether the way we currently do business is the most appropriate model for a rapidly changing financial services sector. This process is expected to be completed and any necessary operating model changes introduced by April 2021. SBN HOLDINGS LIMITED Report to society 2020 21

Personal & Business Banking

PBB provides banking and We offer: Profit for the year other financial services to • Transactional products individual customers and • Mortgage lending N$203 to SMEs. • Vehicle and asset finance • Lending products million • Wealth management 2019: N$367 million

48% Contribution to SBN Holdings profit after tax

Corporate & Investment Banking

CIB offers corporate and We offer Profit for the year investment banking • Client coverage services to its clients, • Global markets N$170 which include • Transactional products and governments, parastatals, services million larger corporates, financial • Investment banking 2019: N$269 million institutions and international counterparties. 41% Contribution to SBN Holdings profit after tax

Other & enablers

Our third business area Profit for the year includes the results of centralised support N$48 functions (back office), including those functions million that were previously 2019: (N$23 million) embedded in the business segments. The direct costs of support functions are recharged to the business segments. 11% Contribution to SBN Holdings profit after tax 22 CREATING VALUE

24 26 32 36 40 48 Measuring our Leadership The economic Putting our Supporting new Compliance and progress review impact of Covid-19 customers first ways of work regulatory affairs

SBN HOLDINGS LIMITED Report to society 2020 23

CREATING VALUE

56 60 64 Embracing a Always on, Delivering financial culture of always secure sustainability innovation 24 CREATING VALUE

Measuring our progress

As we are committed to transparency across our operations, we provide extensive information on aspects of our operations that, we believe, have significant bearing on our sustainability as a leading supplier of financial services in Namibia.

Here we provide our stakeholders with highlights of our financial, organisational, and client information that we consider to be of value when measuring our organisation’s achievements and sustainability.

Profit after tax Employee turnover Return on equity N$421 rate (voluntary) (ROE) million 2.73% 10.16% 2019: N$613 million 2019: 4.41% 2019: 17.3%

Women in leadership Gross loans and 57% of our advances to executive customers team are Decreased by women 2.3% to N$22.9 billion

We spent 84.58% with local suppliers in, 2020, of this expenditure PBB 42.46% clients was paid to BEE companies 343 700 in 2020. SBN HOLDINGS LIMITED Report to society 2020 25

Number of Cost-to-income women employees (CTI) ratio 60.3% 64% 2019: 60.2% 2019: 57%

Credit loss ratio (CLR) Union membership 1.01% 76% 2019: 0.91%

Total assets 2020: Financial sector N$33.1 charter compliance billion 66%

Net loans CSI spend and advances 2020: Net promoter N$24.3 score (NPS®) N$7.9 billion +8 million 2019: N$25.6 billion 26 CREATING VALUE

Leadership review

Financial results The group reported solid results in the face of challenges arising from the Covid-19 pandemic, delivering profit after tax of N$421 million for 2020, a decline of 31.3% from the N$613 million at the end of 2019. The impact of the restrictions, imposed to stem the spread of Covid-19, on economic activities is reflected in GDP, now estimated to have contracted 8.0% in 2020.

A 11.9% decline in non-interest income (NII), on account of the An impact analysis was undertaken to assess the expected reduction in the prime interest rate by 275 basis points, was the impact on the group, our people and our customers. Plans were largest driver in the reduction of profits for the year. Despite the then put in place to deal with these specific issues and protect lockdown restrictions NIR reduced by only 5.6%. our communities and clients. Subsequently, the group became the first bank in Namibia to enter the market and announce debt Total operating expenses only increased by 1%, while staff costs relief measures. decreased by 7.3% driven by good resource planning and natural attrition. Key concerns were the ongoing capability and security of the group’s systems and IT structure which form the backbone of our Despite the very challenging environment, non-performing loans, operations and ability to develop and release services and as a percentage of total loans, increased to 7.8%, and only 5.3% products. when excluding one large client exposure. RTS Read more on page 60. Our balance sheet remains robust with a capital adequacy ratio on 14.7%. Our liquidity position has remained strong and within Within days of the Covid-19 lockdown being announced, the approved risk appetite and tolerance limits. majority of our employees – who were restricted to their homes due to regulations – were working at full capacity through digital Risk and trust links to their workplaces. Despite a virtual private network (VPN) Risk and trust are fundamentals of financial services and require being in place that allowed many employees to work off-site, continuous attention as they are vital to ensuring the financial cyber readiness and diligence exercises continued across the stability and prosperity of the group. Trust is instrumental in business to safeguard the integrity of data. building relationships between the group and its various Although the pandemic encouraged more customers to adopt stakeholders and an aspect of our operations that assumed new digital services and products, it also created an opportunity for significance during 2020. unscrupulous people to attempt to fraudulently obtain As any risk includes an element of reputational risk for the group information from unwary customers. To create awareness of the and the potential for the group to be negatively impacted by the risk these operators posed to our customers, we proactively failure of our IT and operational systems, we have specialised, issued media statements urging people to be cautious when cross-discipline crisis management teams in place to anticipate, dealing with personal and email messages requesting account prevent and reduce the impact of incidents that could arise. information. These announcements were reinforced with Various scenarios ranging from system failure to cyber-attacks messages on our sites. are examined. Strategies are then devised for effective Steps were also taken at our branches to ensure that services management of potential events that may occur. remained available and that Covid-19 protocols were observed. A significant part of risk management’s portfolio is operational Strict, physical separation ensured that front-office and back-end non-financial risk. The Covid pandemic fell under the business support functions were isolated from one another, and staff resilience pillar of our activities. Preparations for the Covid-19 numbers in each branch were reduced. This precaution ensured pandemic began in January 2020 when it became apparent that that if an incident occurred, there were trained staff members the virus was spreading. Our business resilience and recovery ready to step in while their colleagues were isolated and tested strategy was actioned, and protocols to respond and deal with for the virus. the crisis were developed and successfully implemented.

We are proud that despite the Covid-19 regulations imposed on Namibians, we were able to offer seamless services supported by fully operational systems throughout the year. This performance was achieved by activating internal emergency plans designed to cope with suddenly occurring social and economic scenarios. SBN HOLDINGS LIMITED Report to society 2020 27

Business unit performance

Personal & Business Banking Corporate & Investment Banking

Personal and Business Banking is the largest CIB is composed of teams of specialists in contributor to the after-tax profits of the bank. various areas in which the division is active.

During 2020 this contribution was 41% (2019: 60%). The largest of the segments that we serve are the power and As the bank’s public face, PBB operates from 63 branches across infrastructure sectors, which are vital sectors in a developing Namibia, providing individual customers with personal banking country where energy and infrastructure development are needs ranging from transactional needs and mortgage loans to essential to support national growth. Real estate, including the instalment sales products, card services, and wealth and provision of housing, and commercial facilities form another focus, investment opportunities. It also provides bespoke products to as do mining and minerals, telecommunications and media, and the SME business sector. the public sector. Increasingly, day to day services have steadily migrated to digital CIBs loan book contracted due to the influence of the ongoing offerings, which offer our customers the ability to access the recession and the Covid-19 pandemic. During the last three services they require and transact business at any time of day or months of 2020, significant deals worth about N$1 billion were night. Our investment in digitisation and electronic delivery approved. These are still to take effect because of delays caused systems enabled us to continue providing high service levels to by Covid-induced issues. Of these new projects, N$500 million is our broad customer base during a Covid-disrupted year. for a single client.

We also rose to the challenge of having many employees engaged During the year, work continued with NamPower, the national in providing customer-facing and back-office support services power supplier, and on the development of renewable energy being forced to operate from home during the lockdowns that projects. Unfortunately, work on these projects and others within became a part of the national response to containing and sectors in which CIB operates were impacted on by the Covid defeating the virus. pandemic. In many cases, Covid resulted in project delays and postponements caused by a lack of logistical support and an We decontaminated the Walvis Bay branch when we discovered inability to source and move materials, and people required to that a client who had tested positive visited the branch. project sites. However, as restrictions eased later in the year, Decontamination was conducted after hours when the branch momentum on many projects was regained. Fortunately, although was closed. Our backup strategy, involved splitting branch projects were delayed, none were abandoned or closed. employees into two teams that were rotated every two weeks. As the lockdown status changed, employees increased to 75% The delays have also had an impact on CIB and required that we capacity. Regional backup teams were also created. take steps to mitigate our risk exposure. We worked closely with our clients to identify and mitigate risks identified when activity Naturally, the welfare of our customers was a significant concern. was adversely impacted on by circumstances surrounding the Many of our customers found themselves having to cope with pandemic. reduced incomes, the loss of jobs and their businesses losing The events of 2020 also encouraged us to examine our business significant portions of their revenues due to mandatory closures. from other perspectives. We have been preparing for our business Among those most impacted were people and businesses to cope with other unexpected shocks by understanding how operating within the tourism and hospitality sectors. these events could affect our relationships with clients. Our priority In response to their needs and assisted by government actions that in these discussions has been focused on how we can continue to included a significant reduction in the base lending rate, supply the solutions they require, with attention being directed to we introduced a range of measures designed to reduce the identified specific risks. Where needed, steps have been taken to pressures being experienced by thousands of our customers. alleviate these concerns. Our support included extending repayment terms on loans to We believe that digital solutions and IT will continue to play a offering ‘payment holidays’ to individuals and businesses in dire significant role in ensuring that we can deliver uninterrupted need. service to our clients and increasing our capabilities to offer The central bank’s response to adjusting the base lending on remote services will be a focus as we go forward. three occasions and in the process, reducing the rate to a historic What applies to us applies equally to our clients. Those clients who low will act as a spur to economic growth once the pandemic are not examining their businesses and are not considering new becomes a thing of the past. technologies, ways of increasing productivity and reducing costs could find the years ahead increasingly challenging. Our ongoing drive to introduce more of our customers to digital services was, ironically, boosted by the Covid-19 pandemic. As investment in projects resume, environment-friendly power Customers accustomed to conducting business on a cash basis generation projects will continue to be important to Namibia. turned to digital services as an alternative to handling cash that, Because of the CIB expertise, high level of local skills available and they feared, could have been contaminated by the virus. our ability to network more broadly within SBG to access complementary skills, we are well placed to maintain our market The pandemic did not slow the drive towards digitising products share in this niche activity. and services even though staff essential to the process were forced to work from home. The process had to continue as it is As a matter of course, we assess all proposed projects brought crucial to offering our customers competitive, quality value- to us for consideration against several criteria. These include the added services designed to improve and simplify their personal potential impact on the environment and the possible banking activities. consequences that any adverse factors could have on our reputation. Also considered is the national interest and whether The disrupted year’s impact on the small and medium business a project will be beneficial for the country. sectors will only become fully apparent as the economy begins the slow journey to recovery. There is no doubt that many small International interest in Namibian investments has been dampened businesses operating within niche markets will not survive. We by the prevailing conditions which have come on the back of several are, however, well positioned to support those requiring ongoing years of economic recession. There is, however, still interest in assistance with the help they need. sectors such as oil and gas and industry. 28 CREATING VALUE LEADERSHIP REVIEW CONTINUED

Performance overview Supporting our customers Digitisation The undoubted highlight for SBN Of equal importance to the safety and The drive towards digitising processes Holdings in 2019, was our listing on the health of our people, was the need to and services and offering digital products Namibian Stock Exchange and the ensure that our customers were continued during the year. The integrity opportunities it provided for Namibians protected. These concerns applied to and stability of our systems were and our employees to share in the customers whether they were individuals, maintained and enhanced where prosperity created by the group. However, SMEs and corporations. Our objective required. Even though many employees downwards pressure was exerted the on was to provide the assistance they worked from home, progress towards the Namibian Stock Exchange’s overall needed to overcome the difficulties creating the necessary platforms needed index through the continuing recession posed by what was undoubtedly the most for increased delivery of electronic and the Covid-19 pandemic. For the challenging period in our nation’s offerings continued. banking sector, this has translated into socioeconomic history. To this end, the Our priority of ensuring the delivery of an increase in the number of non- group made about N$1.7 billion available uninterrupted, seamless financial performing loans (NPLs) and a related in various forms to assist our customer, services and products to our diverse increase in impairments. through interventions that included customer base was achieved. As the delaying payments, as well as capital pandemic tightened its grip, and the As the difficult trading conditions and interest payment holidays. continued, some investors, including government curtailed the personal employees holding shares through our This assistance was vital to our freedoms of movement and association, incentive scheme, sold shares. A good customers from the tourism and more customers adopted our digital portion of these sales, we believe, was to hospitality sectors, importers and solutions. access ready cash to help supplement exporters, and the logistics sectors, who This provided a welcome boost to the household budgets impacted by the loss had to endure an almost total cessation volume of digital transactions undertaken of income caused by the lockdown, of activities during the nationally imposed and was especially significant, as many reduction in business hours and other hard lockdown period. Namibians have habitually been reluctant measures that were introduced to It is unfortunate, however, that despite to move away from using our branch combat the pandemic. the assistance of SBN, other commercial structure for their banking services. Keeping our people and banks in the financial services sector, and We do not doubt that having made the customers safe the swift interventions provided by the transition, most will continue using these government and central bank, many digital services to carry out personal Although there were numerous businesses were forced to close or be banking transactions and pay municipal challenges presented by the unique liquidated. service bills. operating environment of 2020, perhaps the most significant was the uncertainty Others, like the motor industry, will The adoption of digital processes, surrounding the virus and the need, as continue to face difficulties as consumers products and services has already one of Namibia’s largest employers, reduce spending while they are managing resulted in employees being impacted by to safeguard the wellbeing of both their loan obligations. In the case of new ways of working being offered our people and our customers using vehicle financing where payment terms opportunities to reskill themselves and our facilities. were extended, many buyers will defer move to other parts of the group. decisions to replace vehicles. This will There is little doubt that as the drive to Added to this were the operational increase the age of the car park and place new technologies gathers pace, the difficulties of providing a seamless, pressure on dealerships. For financial nature of skills required by financial productive service while up to 80% of our institutions that have finance offices on institutions will change. In future, the staff members were required to work showroom floors, this will also have sector could, for instance, be looking to from home. By December 2020, although repercussions. The knock-on effect will employ statisticians and data analysts conditions had eased, about 60% of our be felt in many other sectors, including while reducing the number of customer- people were still working from home. insurance companies and independent facing functions. operators offering services in the vehicle RTS Read more on page 40. aftermarket parts, mechanical services RTS Read more on page 56. and other areas.

For the group, these additional operational responsibilities had to be provided for while ongoing attention was being placed on the traditional disciplines of ensuring liquidity and the capital adequacy of the group in an environment where low interest rates have placed pressure on margins. SBN HOLDINGS LIMITED Report to society 2020 29

The regulatory climate Government’s role in Changing office Financial services are a highly regulated promoting growth environments industry subject to the introduction of The Namibian government is a significant One of the most often discussed impact controls through local and international driver of the Namibian economy through of the Covid-19 pandemic has been its regulatory bodies which increased in the direct and indirect roles it plays as an potential to change working habits and volume following the sub-prime employer, owner of state-owned alter the future use of corporate offices economic crisis of 2008. enterprises (SOEs), a collector of revenue and facilities. As in all organisations, there and catalyst for development in will always be people who thrive in a Internationally, this led to the Bank for partnership with the private sector. corporate environment, enjoy International Settlements (BIS) collaborating with others and are inspired introducing banking regulations to The government, therefore, plays a by interaction with colleagues while promote stability in the international strategic role in determining the others prefer working alone and cite the financial system and regulating banks in socioeconomic future of our society. Its lack of corporate office distractions as the sector that take on excess risk. These decisions regarding the development of helping to enhance their productivity. The Basel III regulations require banks to hold infrastructure that assist with the creation 2020 working year has brought these two more capital against their assets, thereby of jobs and income streams are pivotal in facets of our operations into sharp focus. decreasing the size of their balance helping to build the future of the nation. sheets and their ability to leverage themselves.

These new capital and liquidity requirements can become onerous to Our priority of ensuring the delivery of uninterrupted, financial institutions operating in Africa, seamless financial services and products to our where the banking environment is markedly different and subject to diverse customer base was achieved. conditions that do not apply to European or American institutions. The constraints on our trading environment caused by the Covid-19 virus have added to the difficulties we are currently experiencing. There are advantages to both scenarios. Other vital matters are the examination We are, however, committed to meeting The primary benefits of being able to of SOEs and their intended and actual the Basel III requirements and are one of make better use of available office contributions to the economy. The role of only three countries in Africa that are facilities, and therefore save costs, are privatisation and public-private compliant with its demands. always worth considering. An partnerships in accelerating performance examination of potential advantages and and improving efficiency in the SOE At the same time, we acknowledge that their implications for service delivery and sector also require serious consideration. regulators have essential roles to play in productivity will still need to be the financial sector. We understand that The turnaround from surviving in a undertaken before any decisions are their objectives are to ensure that recessionary climate through to recovery made. financial institutions operate in a and a growing economy will require sustainable, disciplined manner that government introspection and action. Meeting customer needs safeguards the interests of all Key areas that must be examined are We have begun assessing whether the stakeholders – goals that we support and policy frameworks, a commitment to way we presently do business is the most are willing to discuss with authorities. building performing infrastructure and appropriate model for a rapidly changing During 2020, we met with the Namibian getting money into the national coffers. financial services sector. We will be regulators, discussed upcoming considering whether the ‘silo effect’ that regulations and pointed out where we sees certain functions performed in believed that some requirements could defined fields of operations is the most have unintended consequences. efficient. We will also be debating whether a new product agnostic approach, one RTS Read more on page 48. that will allow us to use technology to market a wider range of products, is more appropriate for the future.

The main focus driving these deliberations is to enhance the customer centric face of Standard Bank Namibia.

At this stage, it is hoped that this process will be completed and that any necessary changes made to our operating model will be introduced by April 2021. 30 CREATING VALUE LEADERSHIP REVIEW CONTINUED

Economic Corporate citizenship Appreciation and outlook Update 2020 We have a proud history of involvement The events of 2020 have been Following the 0.6 percent decline in with the communities within which we extraordinary. Everything about our lives economic performance in 2019, operate. One of our primary, long- has changed. The way we were Namibia’s economic prospects standing flagship projects is the accustomed to living, working and weakened substantially, due to the Buy-a-Brick programme, which we have playing were destroyed to be replaced by negative impact of the COVID-19 supported for many years. Lately, this rules that have been continually evolving pandemic. The measures imposed to programme has developed into a search as new scenarios and threats emerged contain the spread of the virus caused for alternative building materials that will around us. all economic activities, including suit the extremes of Namibia’s climate. For our people and our business, the investments and demand to essentially We will continue to support this, and change was dramatic. The routine of came to a halt. This had severe other community-driven programmes reporting to work, meeting with implications on Namibia’s production that are playing a part in enhancing the colleagues and working together as capacity and demand. Preliminary data lives of needy Namibians. teams were replaced by isolation and from the Namibian statistics agency working from home. Learning to become indicates Real GDP contracted by RTS Read more on page 70. self-reliant, work alone and becoming 8.0 percent in 2020. Economic accustomed to using technology while performance is expected to recover ‘filling the gaps’ and maintaining slightly in 2021 with a growth of Leadership appointments productivity has become everyday issues. 2.7 percent and a much better growth It was with regret that the board of 3.3 percent in 2022, respectively. accepted the resignation of our CEO, But, as we expected, and as we now Primary industries are estimated to Vetumbuavi Mungunda, who has led the know, our people responded have contracted by 6.1 percent. This group with distinction for more than magnificently by working around was mainly driven by 14.9 percent 6.5 years. Throughout his time with us, problems. They devised ways of staying contraction in the mining and quarrying he has guided the group through many in touch and working together to ensure sector due to subdued global challenges and helped steer us towards that the quality of our customer service commodity prices and reduced its destiny – a listing on the Namibian and product delivery across all functions demand for Namibian minerals from Stock Exchange, a highlight in his career, was not compromised. international trading partners. Losses in and a significant stepping stone for the Our heartfelt thanks go to you all. The the primary sector were marginally group as it moved towards the dedication, determination and the loyalty offset by recoveries in the Agriculture ‘Namibianisation’ of its operations. We you have displayed over many difficult sector which saw 5.9 percent growth on wish him well and all the success that he months was inspiring. the back of improved rainfall across the deserves as he moves into a new phase county. of his life in May 2021 when his We acknowledge the confidence and resignation takes effect. trust that our clients, shareholders and In comparison to the primary sector, other stakeholders displayed in our the secondary industry experienced a We are pleased that, due to our internal business and the future of Namibia. more significant contraction of 14.4 succession planning process, that we are Thank you for your support and percent in 2020. The Industry had able to announce that Mr Mungunda’s willingness to adapt to the changes that previously been in a recovery phase for role will be assumed by Mercia Geises. took place during the year. the last two years as witnessed by Ms Geises is presently Head of PBB, growth in 2018 and 2019, on the back which she has led for several years. To the board go our thanks for their of strong performance in the Ms Geises has considerable experience in support and sage advice. You all played a manufacturing sub-sector. However due all facets of the bank’s operations and key role in keeping our group focused and to decreased demand and various has been a member of the executive ready to meet the challenges that came restrictions imposed, manufacturing committee (exco) since 2016. our way. suffered a severe shock, declining by We look forward to 2021, knowing that whatever lies ahead will be dealt with in the spirit that sustained us through 2020. SBN HOLDINGS LIMITED Report to society 2020 31

SECTOR CONTRIBUTION 2020 (%)

Taxes on products Manufacturing

11.0 6.5

Real estate Education Mining and Financial services activities 10.9 quarrying activity 10.1 6.6 5.7

Construction Transport and Health

storage 1.8 Agriculture,

Forestry and 3.7

Fishing 2.6

9.0

Wholesale and Retail Trade Information Hotels and and Restau- Electricity and communica- rants 9.6 water tions Public Admin 3.6 1.4 1.6 11.6

Source: NSA Annual National Accounts.

19.6 percent. The estimated contraction closure of borders, the tourism sector tourism contracted by an estimated in 2020 came on the back of declines in suffered the most, resulting in the 33.1 percent in 2020. Under the sub-sectors such as, diamond closure of tourist accommodation lockdown, social distancing rules and processing, beverages, meat processing, establishments, job losses and global travel bans also limited activity in basic non-ferrous metals, and fabricated subsequent income and revenue loses. the transport and storage; and wholesale metals. However, the tourism revival initiative and retail trade sectors, impacting that became effective as of the 1st of negatively growth prospects. The overall Due to the enactment of the State of September 2020, provided some relief to tertiary industry is estimated to have Emergency beginning 2020 that led to the sector in the later stages of the year. declined by 5.6 percent. local lockdowns for six months and Hotels and restaurants , a proxy for 32 CREATING VALUE

Expectations of 1.5% economic growth and improved institutional profitability for 2020 were derailed by the sudden descent of the Covid-19 virus on Namibia - a country that was already experiencing its fourth year in recession and challenges within all sectors of its markets. This amplified existing constraints to economic growth and the expected recovery turned into an 8.0% contraction.

The economic impact of Covid-19

Financial services sector Agricultural growth

Overall, the financial services sector significant portion of their incomes Good rainfall led to better than declined by 11.2% in the second quarter. servicing debt reduces overall expected harvests and the The impact of the pandemic on the consumer demand. sector posted a positive 66.5% Namibian financial services sector resulted increase in the second quarter Also impacted has been the real estate in the group delivering profit after tax of of 2020, a vast improvement sector. Due to reduced levels of economic N$421 million, a decline of 31%. over the 31.8% recorded in the activity from the second quarter of 2020, corresponding period in 2019. Due to the slump in domestic economic average housing prices fell in response to activity in 2020, the sector is forecast to declining demand and affordability issues. contract by 2.6% in 2020. In comparison, It is unlikely in the short term that the the financial and insurance activities sector housing market will see an influx of grew by 6.0% in 2019, after a 0.2% new buyers. contraction of 0.2% in 2018. The cancellation of insurance policies Demand for credit across the sector hampered the insurance sector as reduced, and businesses operating under consumers struggled to pay premiums difficult lockdown conditions looked to due to the economic climate. reduce corporate debt. Household debt to Credit relief provided by banks totaled disposable income increased to 97.7% N$9.2 billion by the end of September in 2019 from 92.9% in 2018 as credit 2020, with individuals accounting for the extended to individuals continued to rise. highest relief of N$3.9 billion; the tourist During 2019, the debt service to disposable sector N$2.2 billion and the transport and income ratio increased to 20.1% (2018: construction sectors the lowest at 18.8%). Growth in total debt service cost N$554 million. rose to 8.8% in 2019 from 8.4% in 2018, around N$23.0 billion. The key cause of the RTS Read more on page 36. increase in debt servicing costs was other loans and advances, which grew to 24.5% The entire banking industry had by the in 2019 from 23.0% in 2018. end of September 2020 approved about The increase in the ratio of household 23 000 client requests for repayment indebtedness to disposable income was holidays involving N$11 billion. caused mainly by a slowdown in employee During the entire Covid-19 crisis, the group’s compensation, which grew by only by 1.9% banking services remained available, and in 2019, down from 5.9% in 2018. The ratio customers were able to access digital of NPLs within the sector rose to about 6% products and services, and no staff of the book to nearly N$6 billion. As is to be retrenchments occurred. expected, households spending a SBN HOLDINGS LIMITED Report to society 2020 33

Healthcare boosted Mining Manufacturing

Besides the risk of lives being lost, The Covid-19 lockdown severely limited Measured on real value-added, the the Covid-19 pandemic had severe mining activities. Decreased production manufacturing sector declined by consequences for all Namibians as the volumes resulted in the sector 30.3% in the second quarter of 2020 pandemic delivered several blows to the experiencing real value-added when compared to growth of 12.9% in economy. Healthcare was one of the contraction of 2.9% and 5.1% in the the same period during 2019. This was few sectors that was spared. In 2020, first two quarters of 2020. Despite the attributed to the declines in the increased investment in the healthcare overall decline, diamond mining beverages, basic metals, and diamond sector to manage the Covid-19 outbreak recorded a 4.7% increase in real processing sub-sectors, which will see the sector growing by an value-added as production volumes contracted by 51.1%, 30.4% and 53.9% expected 3.7%. In contrast, healthcare increased during the second quarter. respectively in the second quarter. contracted by 4.8% in 2019, and by Volumes of uranium produced were 8.9% in 2018. 18.4% lower during the first half of Increased investment in testing 2020 than the corresponding period facilities in various laboratories, during 2019. including the state-owned Namibia Institute of Pathology, has propelled Namibia to have one of the highest testing capacities on the African continent. 34 CREATING VALUE THE ECONOMIC IMPACT OF COVID-19 CONTINUED

Interventions by the Government relief measures Namibian central bank The Bank of Namibia (BoN) responded to the crisis by introducing measures The total stimulus and relief • A six to 24 months capital designed to bring relief to the commercial package introduced by the repayment moratorium to government for business Development Bank of banking sector. The most significant of and households was Namibia and AgriBank these measures was a cut in the base N$8.1 billion. Of this total, borrowers interest rates by 275 basis points to N$5.9 billion was designated • A tax-back loan scheme 3.75%, the lowest yet recorded. The prime for direct assistance and for non-mining corporates N$2.4 billion was allocated equal to 1/12th of their lending rate is now 7.5%. to off-balance sheet previous tax payment Liquidity relief measures and credit restructuring, as well government liabilities. • A temporary 20% as capital and interest payment holidays for up to two This equalled 4.7% of GDP reduction in salaries, years, were introduced in association with commercial and was substantially lower rising to 40% for the banks. The period within which legal proceedings or than that of many other worst-hit industries. write-off could occur when an account became an NPL countries, whose relief • The relief package for was extended from one year to three years. packages varied between households incorporated: 10% and 15% of GDP. – An emergency income During 2020, changes to the repo rate were: Comprehensive measures grant in the form of a once-off payment of introduced for the business sector included: N$750 to people who 25 basis points lost their employment. • A N$400 million wage reduction in February to 6.25% The total cost of this subsidy for the hardest-hit measure was employment sectors N$772 million. • Accelerated repayment – A tax-back loan scheme 100 basis points of overdue VAT refunds for taxpayers who lost reduction in March to 5.25% of N$3.8 billion their incomes. This • Faster payment of scheme allowed N$800 million due individual taxpayers to by the government borrow an amount 100 basis points for services reduction in April to 4.25% equal to 1/12th of their • The introduction of a previous tax payment N$500 million loan for a year. Repayment scheme for small of loans was at prime businesses 25 basis points less one percent, on the reduction in June to 4.00% • A N$200 million loan back of a government scheme for farmers and guarantee which was agri-businesses through capped at N$1.1 billion. AgriBank. – Granting of a water 25 basis points subsidy during reduction in August to 3.75% lockdowns through NamWater and local authorities, totalling around N$10.0 million. SBN HOLDINGS LIMITED Report to society 2020 35

Job losses The outlook

Two surveys conducted For the first nine months The future of the Namibian economy is intertwined by the Namibia Statistics of the year, The Ministry of with the progression of the Covid-19 pandemic. Agency (NSA) of Labour, Industrial Relations 609 businesses (to which and Employment Creation If, as is feared in some quarters, a second outbreak 362 responded) showed reported that: occurs, then 2021 could bring more challenges than that: • Primary government 2020. Nevertheless, if economic recovery gets • 23.7% had received assistance was through underway, a growth rate of about 2.7% could be government support the Vocational Education expected in 2021. • 76.3% did not get any and Training levy (12.3%) government support and Subsidy on the Early post lowdown signs of recovery seem to be emerging as • 48% said they were able compensation of reflected in vehicle sales. Sales of 874 new vehicles occurred in to trade only partially employees (7.5%) September 2020. These sales reflected a 46.9% month-on-month • 31% said they remained • About 11 009 people lost increase on August 2020 and an 8.4% year-on-year increase. fully operational their jobs • 20% were forced to close • Only 2 726 were attributed It would be premature to try and quantify the full extent of the local temporarily to the direct impact of and global economic damage caused by the pandemic. Based on available data and information, however, it could take between • I% closed their businesses Covid-19 permanently. • Retrenchments occurred two to three years for the Namibian economy to return to levels across 795 employers. recorded in 2019. The surveys revealed that Economic performance is expected to recover slightly in 2021, with a Of the reported losses, one Covid-19 had impacted on: growth of 2.7%. Stronger growth of around 3% is predicted for 2022. of the hardest hit was the • 318 out of the Interest rates are predicted to remain unchanged until the end of the tourism sector where 362 responding second half of 2021. 3 782 people working businesses directly within the industry The most significant challenge as we advance is to reverse the • Hotels and restaurants or tourism-related positions negative growth of 8.0% that the country is presently experiencing. were worst affected with lost their employment. Moving into a growth phase during 2021 and beyond will only provide 65 reporting operational opportunities for real GDP growth once the gains offset the economic difficulties ground lost through years of recession and the pandemic. • 43 companies in the administrative and There will be numerous challenges faced by the banking sector. support services sector As interest rates declined to promote renewed economic activity, so • 41 manufacturing revenues in banks decreased, and operating margins were brought companies. under pressure. With the prospect of interest rates remaining at current levels for the foreseeable future, we will have to assess costs aggressively to manage costs prudently.

Moving the economy into a growth phase as quickly as possible will inevitably be tied to the tourism and other sectors that would be the first to benefit from a resumption of everyday activities. 36 CREATING VALUE

Putting our customers first

Our intent In a competitive financial services sector, the most effective differentiator is consistent, quality service. We strive to be the preferred bank in our chosen market segments by offering solutions and services that meet our growing client Our approach base’s changing needs and banking preferences.

Earning and retaining our Placing our clients at the centre of who we processes available to all clients who wish clients’ trust means are and what we do required a change in to make queries or lodge complaints. continuously reviewing and our people’s mindset and the processes Our easily accessible reporting structures enhancing our technical they followed to deliver banking services. abilities and innovating where are essential to adding value to our required. Developing new Essentially, this meant a shift from an services. They are available to help resolve business models that move inwardly focused organisation to an issues, regardless of whether they involve with the digital times is outward-focused institution. The change service complaints, product charges or essential to moving beyond drivers involved a review of the service product enquiries. traditional banking status quo and ongoing tailoring of A marketing maxim states it is ‘easier to boundaries. Quality service services offered by our business segments. keep a client than find a new one’. By and support we provide to These segments included business solving problems as quickly as possible, we our clients are two of these banking, small and medium business aim to keep our clients satisfied and retain defining activities. banking, private banking, power and them for years to come. energy, and mining and infrastructure. Financial crime is an unfortunate reality The process has sharpened both our that takes many forms. We continually external and internal focus, adding clarity inform our clients about the safe use of to delivering value for our customers. The banking services and keeping PIN and ongoing review of our processes, structure, other financial information private. practices and operating model has transformed our service delivery. As new methods of committing fraud are identified, we notify our clients of the A critical component of our service is the practices being adopted by fraudsters and safeguarding of clients’ confidential the best ways to avoid becoming victims. personal information. We enforce strict Our financial crime control function tracks confidentiality guidelines across all group and deters criminal acts. levels and insist that all employees sign confidentiality agreements. This action is Allegations against the staff of misconduct, underpinned by a data privacy policy fraud and theft are meticulously available to all employees on the group’s investigated. A dedicated whistle-blowing intranet. line operated by an external supplier offers informants an opportunity to report Our compliance policy incorporates our criminal acts while remaining anonymous. solutions offerings’ transparent pricing – an essential factor to ensure that our Where allegations of bribery and the clients understand and accept our pricing acceptance of gifts and entertainment are structure. levelled against staff, investigations are conducted, and remedial action is taken New and existing clients who open with penalties matching the seriousness of accounts are notified in writing of fees and the policy infraction. In a broader context, the costs they can expect. In branches, the group adheres to local and cost structures are explained by frontline staff. international protocols regarding money laundering, fraud, theft and questionable Closing the service circle and delivering a deposits linked to organised crime or 360-degree service means having simple terrorism. SBN HOLDINGS LIMITED Report to society 2020 37

Our performance in 2020 Client centricity requires that our clients are consulted and that their comments and observations are used by the group to improve service and review processes. Ultimately, by providing insights into their requirements, client input can also be used to develop new products. We monitor our clients’ views and needs by: • Holding twice-yearly client engagement forums with clients who 2020 make use of different service options within the products we offer. Client engagement teams lead these meetings and use the highlights information they glean to improve the overall client experience. • Leading customer feedback sessions that take place every Our dedication to delivering client-centric two months. service was achieved despite the operating • Having our social media manager host these sessions and lead discussions on our products and other selected topics. The challenges posed by Covid-19. Our client popularity of these sessions is attributable mainly to the instant service teams were operating from home responses that clients receive to their questions. and supported our customers remotely. • Using the internationally accepted NPS® system to measure our clients’ perceptions about their retail experience with SBN The move towards digitally delivered services and products Holdings. The score reflects customer loyalty towards brands continued. Our new and enhanced services attracted using customer experience metrics to measure perception significant numbers of clients to our online and mobile based on answering the question: “How likely is it that you banking platforms. The growth in digitally based products would recommend an organisation, product or service to a was supported by merchants adopting them for customer colleague.” payments to bypass Covid-19 restrictions on personal movement. Respondents give a rating of zero (not at all likely) and ten (very likely). These responses are then collated into three We also made around N$1.7 billion available categories: in various forms to assist our customers, • People who score a nine or ten are promoters – your most through interventions including payment loyal customers holidays for capital and interest. • Passives respond with a score of seven or eight. They are happy, but not likely to recommend the company to others. • Detractors, those with scores between zero and six, are unhappy and are unlikely to use the service again, impeding the company’s growth.

Regularly surveying the results achieved using the NPS® system has enabled us to design client experience training in line with Tuyende principles to address low NPS® scores directly.

KEY PERFORMANCE INDICATORS

2020 2019 2018 2017

Number of PBB customers* 343 700 345 571 445 639 469 483 Number of branches Branches, including service centres 63 61 59 59 ATMs Standard Bank-owned 372 350 325 304 Number of transactions 13 106 718 16 575 386 18 818 648 13 652 975 Internet banking Registered subscribers 264 447 230 519 184 662 160 010 Active subscribers 47 176 31 218 27 767 25 269 Number of transactions 3 185 377 2 747 792 2 395 653 1 985 831 Mobile banking Registered subscribers 193 465 162 689 118 645 94 333 Active subscribers 32 088 17 712 13 947 10 945 Number of transactions 1 033 501 797 207 642 033 542 757 SMS alert subscribers 387 791 358 031 313 312 285 058

* Every year, accounts are abandoned by customers. Fees cannot be collected on these dormant accounts and they remain part of our statistics. During 2018/2019, an enhanced proxy solution was introduced to locate and automatically close these accounts. This has resulted in the reported total of customer accounts reducing on a year on year basis. 38 CREATING VALUE PUTTING OUR CUSTOMERS FIRST CONTINUED

Customer satisfaction management Clients are encouraged to submit complaints: Embracing low-cost fintech solutions SBN Holdings partners with fintech companies to introduce Telephonically through a secure digital solutions that help us meet our clients’ needs toll-free number service and aspirations, cost-effectively and sustainably.

Our digital wallets and apps enable our clients to transact Via SMS efficiently, safely and conveniently, while Business Online (081 9286) provides convenient digital banking for small businesses. In SBG’s African countries of operation (excluding South Africa), 91% of all transactions conducted in 2020 were digital. Face-to-face in branches at Digital transactions increased year-on-year by 35.9%, while the point where unsatisfactory in-person transactions (including those at branches) declined service was provided by 20% year-on-year.

Once the epitome of self-service banking, the ATM network now Complaint boxes in offers a more comprehensive range of personal banking services branches than ever before with new functions being added for both business and individual users.

Via email to branch managers

Directly to the client Responsible lending practices experience team. It is our duty as a responsible lender to see that our clients are prudent when they apply for loans and are granted facilities that they can afford to repay.

Reference numbers are used to track complaints received To this end, we make use of an electronic behavioural scoring by the Customer Care Centre, and customers are system that helps us make credit-granting decisions. It also provided with feedback. assists the process by:

Where a branch manager or call centre cannot resolve an • Monitoring how clients manage their accounts issue, it is referred to the client experience team. All • Providing early warnings when clients begin to experience complaints are tracked and monthly reports with findings financial difficulties and recommended corrective measures are referred to • Avoiding further indebtedness by financially stressed clients. the executive team for review. We also offer various forms of assistance to clients experiencing Self-service channels enable clients to make secure difficulties with meeting their obligations. transactions quickly, cheaply, and without using the branch structure. They are an indispensable part of our The structuring of the aid depends on the particular strategy to become the preferred supplier of financial circumstances of each client and can range from extended services to Namibians. tenures and payment holidays to the restructuring of loan facilities. Digitisation and the emergence of fintech – services offering products traditionally the preserve of financial During 2020, we continued to reap the benefits of our partially institutions – have led to rapid changes in the nature and decentralised credit function. It has improved decision-making delivery of financial services. The group’s challenge is to and reduced approval times for home loans, and was responsible develop a full range of products that can be personalised for increasing our share of the vehicle and asset finance market while offering secure access to services.

Digital solutions to More than 50% of Africa’s adult population However, innovative technological solutions are does not have access to the formal beginning to close the gap. The World Bank’s improve access financial system. 2018 Findex for sub-Saharan Africa showed and affordability that 34% of adults made or received digital Even among those with bank accounts, many payments in the past year, while 21% had a rely on family and friends, or informal mobile money account – accounting for almost micro-lenders when they need credit, and half the total active mobile money accounts in consider personal or business insurance an the world. unaffordable luxury. SBN HOLDINGS LIMITED Report to society 2020 39

FraudStop

Our internal FraudStop programme motivates our people to report all fraud, regardless of the monetary value involved. Employees who report fraud stand to win N$1 million (after tax) in an annual draw.

Smaller financial rewards are paid to runners-up and through monthly draws.

Zero tolerance for staff crime Employee fraud is defined as illegal acts committed by anyone working for the bank, whether they are permanent or temporary employees or are working as contractors. Unacceptable actions include: • Involvement in illegal banking transactions • Theft of group funds • Theft of client or bank information • Disclosure of information regarding group and client information to third parties • Insufficient adherence to vendor management procedures.

Secure banking We have no tolerance for employees who perpetrate criminal acts while working at the group. Once we become Ensuring the integrity of our many products, services, and aware of wrongdoing of any kind, we take several steps to processes is an ongoing process that requires vigilance, ensure that the sanctions match the misconduct’s severity. monitoring and investment in state-of-the-art systems that These include: can trace and track potential fraudulent transactions. • Disciplinary action. Our approach to lending covers origination and evaluation, • Criminal prosecution. account collateral management, rehabilitation and recoveries. Regular risk review procedures are essential to • Publication of the offender’s name, position within the ensure that minimum standards are maintained, and company, the offence committed, and the fact that the stipulated business risk appetite levels are adhered to. person concerned was dismissed for dishonesty and severe misconduct. This information is published in our The considerable investment we make in protecting our dismissal broadcast system. services bolsters client confidence in SBN Holdings by • If convicted of a criminal offence by a court, the staff showing that we do everything possible to offer secure and member’s name, position, the type of crime and the accessible financial services. judicial decision are published to deter others. On a national level, we: During 2020, 17 potentially fraudulent activities (2019: 34) • Support global drives to combat money laundering and were reported through our FraudStop service. terrorist funding. • Have a money laundering control officer who ensures As the demand for internet banking has increased, we have that regulatory requirements and internal control taken steps to introduce measures to ensure that these mechanisms are applied throughout the organisation. transactions’ integrity is safeguarded. When clients conduct transactions, an authentication process is triggered. This • Have monitoring programmes designed to enhance our procedure helps prevent unauthorised people from gaining ability to detect and report suspicious activities. access to clients’ profiles and undertaking transactions • Offer employees special anti-money laundering and without their knowledge. terrorist financing control training. This training is mandatory for staff members who are most likely to deal One of the benefits of the internet is that we can use our with high-value transactions that could be of platform and other avenues to alert our clients to new forms questionable origin. Awareness is maintained through of crime and the steps that should be taken to avoid online training and regular communication. Primary becoming victims of phishing schemes. Our credit card areas of financial crime include: monitoring system is designed to identify dubious • Employee fraud transactions and prevent fraud. • Internet fraud Immediate action taken prevented the group from suffering a • Card fraud (most often at merchants) potential loss of N$2.4 million in 2020 (2019: N$4.9 million). • Corruption • Conflicts of interest 40 CREATING VALUE

Supporting new ways of work

Our intent We operate in a highly regulated but competitive environment where there is a high demand for people who have the skills to ensure that constant market changes and customer expectations can be met.

People who can meet the challenges posed by the need to innovate and attract and retain clients continually are essential to ensuring the Our approach sustainability of our business. Our people are, therefore, our primary asset, as it is their efforts Our approach to employment embodies a strategy, overseen by that differentiate us from our competitors. the board’s human capital subcommittee, that takes account of Promoting shareholder value and embedding a local labour legislation, the Namibian Financial Services Charter service-led, customer-centric culture are the (NFSC), which guides Namibian financial services institutions, two essential elements that are common to all and all other regulations. At the same time, we work at providing parts of our business. We believe that by an environment where a professional environment encourages encouraging a commitment to our values and employees to use their skills and capabilities to maximum effect. building a reputation as an employer that We contribute to the delivery of employee outputs by actively rewards excellence and achievement, we will be managing the expectations that arise when people from different a Namibian employer of choice and attract generations and cultural backgrounds work together to achieve employees who wish to be identified as part of a common goals. We accomplish this by fostering a consultative forward-looking organisation that promotes corporate culture where our people enjoy the benefits provided personal development and career growth. by working for a leading financial institution.

We offer opportunities for career development in a diverse and inclusive environment where differences are valued and a wide range of employee benefits are offered. Health and wellness are valued, and safety is ensured through occupational health and safety (OHS) measures.

RTS Read about Covid-19 measures and employee safety alongside.

KEY PERFORMANCE INDICATORS

2020 2019 2018 2017

Number of employees 1 549 1 606 1 703 1 693 Number of women employees 934 967 1 011 994 Training spend (N$) 5 611 873 10 128 388.56 11 568 254.41 8 375 491.04 Training spend as % of payroll 0.74 1.29 1.45 1.27 Number of leadership development participants 73 135 73 115 Employee turnover rate (voluntary) (%) 2.73 4.41 3.68 10.49 Union membership – Bank Workers Union of Namibia 693 287 757 718 – Namibian Financial Institutions Union 491 484 515 374 SBN HOLDINGS LIMITED Report to society 2020 41

2020: A difficult year

Changing working habits The year, impacted by the Covid-19 pandemic, significantly To facilitate easy access, the ‘Kaizala’ dedicated platform, a altered how employees functioned, their workplaces and private version of commercial applications allowing their interaction with each another. As circumstances conversations and messaging, was introduced to make requiring that people should work from home rather than discussions and interactions between colleagues as secure at their regular workstations arose, the group’s business as possible. resilience plans – designed for just such a contingency – Overall, around 70% of our people worked from home was brought into play. during the pandemic. Our branch employees worked in a Each department head was required to identify which strictly controlled, well sanitised environment. At the end of functions could be performed off-site, and the appropriate December 2020, the group only had 103 confirmed cases people were identified for working from home. Where of employees with Covid-19, and lost none of its people to needed, people selected to work from home were assisted the pandemic. In the majority of the cases, contact tracing with allowances, airtime and devices to enable them to revealed that none of the infected employees had connect with the group’s portals. contracted the virus at work. In the majority of the cases, contact tracing revealed that none of the infected employees had contracted the virus at work.

Ensuring safe branches One of the main areas of concern was the branch network, where the possible opportunities for contracting the virus were probably the highest. The first case of Covid-19 transmission occurred at Walvis Bay, where a customer visiting the branch was subsequently found to have contracted the virus.

Working with a government medical team, a contact tracing process to track the source of infection was introduced. All branch staff were placed under self-quarantine and later tested. To ensure that service was not interrupted, a new branch team was put in place.

It is a tribute to our branch staff who implemented sanitising and safety measures as well as to our customers that no branches were forced to close their doors during the year.

Employment stability One of the most noticeable changes, influenced by the prevailing economic recession and the uncertainty When the process programme began, an undertaking was caused by the virus, was a reduction in the employee made that impacted people would not be retrenched. In attrition rate which decreased from 4.2% in 2019 to 0.51% honouring this agreement, employees were transferred to a in 2020. unit where they were offered opportunities to reskill or train Also contributing to the low attrition rate and need to for new positions. At present, there are 145 people available recruit new employees was the ‘pool’ of available skills for reallocation. These employees are considered for within the bank. This pool was created when the bank relocation before any new recruitment advertising is began reviewing and introducing new digital processes and undertaken. administrative tools, service and digitised product offerings Significantly, by the end of 2019, 198 employees who had across the business in 2018. been impacted on by process changes had been As this consolidation procedure continues, so it is reassigned to other areas in the group. Underlining the inevitable that more occupations, mainly in branches, will validity of the reskilling programme, some of the employees be changed or be rendered redundant. involved received promotions. 42 CREATING VALUE SUPPORTING NEW WAYS OF WORK CONTINUED

2020: A difficult year continued

Employee engagement

Wage negotiations The Covid-19 pandemic introduced a new dynamic to wage negotiations in 2020, as discussions would have taken place against the background of a continuing economic recession, margins that were under pressure and an environment in which Engaging with employees to create a more informed and many employees were working from home. involved staff remained a primary focus. Executives were Given these exceptional circumstances, employee assigned to various business clusters across Namibia and representatives decided not to enter negotiations with conducted open sessions with employees from all levels management and agreed with a proposal that an annual wage within the group, giving all an opportunity to discuss increase of 3.0%, in line with inflation, would be appropriate. This group matters with senior executives. position contrasted starkly with that of 2019 when negotiations Exco members attending these meetings, which are seen deadlocked, and the union threatened industrial action. When as central to the development and strengthening of our members were polled, however, they rejected the call to strike. unique Standard Bank culture, see to it that issues raised Since 2019, the relationship between the group and the union has during these meetings are addressed during follow-up become more cordial as an appreciation has formed about the feedback sessions. socioeconomic circumstances prevailing in Namibia.

SBN Holdings culture survey

The SBN Holdings culture survey is undertaken annually to ask employees across the business about their positive and negative perceptions of the company. A staff approval rating is then derived from the employee net promoter score (eNPS) survey. Our target is to achieve a positive eNPS score.

During 2019, the wage dispute resulted in an eNPS of -8 rating on the question of the group’s position as a preferred employer. This year, a -2 rating was awarded by employees, a positive move of six points.

It is our objective to place more emphasis on the gaps identified as areas of concern by employees and work steadily towards improving our rating until a positive score is achieved. SBN HOLDINGS LIMITED Report to society 2020 43

Our values-driven culture Our culture is ‘the way we do things’. Our human Our work to shift and improve our culture capital principles recognises how we do things is as important as the things we do. We recognise that our business in Namibia is conducted in a country that has a richly Our culture is determined by our purpose, vision, values and diverse population that has differing ethnic our approach to ethics. Our code of ethics guides us to be origins, and people that are drawn from a responsible and respectful in our dealings with all our variety of backgrounds. stakeholders as we work to become Namibia’s leading financial services organisation.

Our culture defines acceptable business conduct and is an • Promote an all- essential reference point for employees acting on behalf of We encompassing approach SBN Holdings. These clearly defined considerations empower to business that us to make faster, more confident decisions that have our recognises the worth of clients’ interests and the people of Namibia, at heart. We are all and acknowledges focused on three critical behaviours that will shift our culture their rights and make the most difference in supporting our strategic journey. These are: • Embrace diversity and regard it as a business • Connecting every team’s work to the group’s imperative that helps broader objective of serving our clients with guide investments in integrity. new markets and enables relationships with clients from around the world • Creating shared goals across different areas and following through urgently.

• Recognise and follow the Namibian Finance Sector Charter (NFSC), • Empowering people to take ownership of their work whose requirements and helping them to remove obstacles. have already been surpassed in many of our areas of operation. 44 CREATING VALUE SUPPORTING NEW WAYS OF WORK CONTINUED

Talent management A talent mapping process is used to identify talented individuals In a continuously changing financial services and evaluate their performance and ability to grow in crucial sector, our success depends on our ability to spheres of our operations. The employees involved are then evaluate events and trends, such as digitisation introduced to a process that exposes them to various facets of and the changing demands of customers for our operations. They attend board and executive management services, and on ensuring that talented, meetings, strategy formulation sessions and talent engagement energetic and innovative people are attracted gatherings. They are then allocated assignments designed to test to, and stay with, the group. and stretch their capabilities. In some instances, selected candidates are offered financial assistance to further their Several initiatives have been introduced to qualifications. underpin the process of identifying, recruiting and retaining the people who have the talent Although several programmes were put on hold during the first required to keep the group competitive and quarter of the year while the group implemented its responses to take it forward. the Covid-19 virus, normal activity resumed later in the year.

Authentic Women in Leadership An Authentic Women in Leadership workshop for women in senior positions took place in June 2020. This, unlike Talent development many other sessions during the year, was led by a programmes include: facilitator. The majority of the other sessions were online. Other leadership modules were designed to enhance leadership capabilities and address particular areas that had been flagged by employees as issues during the annual culture survey. The graduate development programme This comprehensive programme covers IT, credit, corporate, corporate and investment banking, finance and retail and commercial banking. The customised three-year programmes Leadership identification programme are designed to groom candidates for careers in financial This initiative is aimed at continuously assessing the services by exposing them to different work environments performance of 100 managers across the group. During within the group. Due to prevailing circumstances, no further the process, a manager has a conversation with his or her candidates were appointed during the year. direct line managers and is provided with personal An accepted part of the group for five years, the programme feedback on achievements and where improvements can involves graduate students from universities and other be made. institutions, many of them with Master’s degrees, who are An essential part of the group’s culture, these sessions recruited on campuses. They then work within the company, are valuable in identifying and resolving problems that moving through divisions and departments, learning about the can arise in an organisation that employs people of all structure and management of the group. Every quarter, each ages, from varying cultures, differing abilities and lengths graduate discusses their learnings with a committee. When an of service with the group. assignment within a specific discipline has been satisfactorily completed, the graduate then moves to the next step on their journey.

The new Direct Banking approach introduced this year has introduced customer, business and prestige consultants to branches.

The bank ‘swap’ programme This cooperative programme involves other banks operating within the SBG in Africa. Talented individuals within the group in Leadership development Namibia are offered positions in other regions where they can experience different banking cultures. A Namibian is currently In a rapidly evolving environment, the burden of on assignment in South Africa. managing falls squarely on the shoulders of senior managers, women in middle management and executives. Ensuring that this corps of managers is conversant with all change and is robust and resilient Branch manager development programme enough to guide the group requires ongoing Ongoing change within the financial sector is often first noticed at the development training. In 2020, due to the influence branch level where the introduction of new products, administrative of the pandemic on bank operations, our investment procedures and processes take place. in this level of management was curtailed with N$5.6 million being invested. Naturally, the branch manager, the team leader at these sites who assumes the responsibility for introducing and supervising all changes, During 2020, the Coach the Coach programme did not is the person who generally suffers the most stress at these times. The take place. Once the situation improves the process of branch manager development programme is, therefore, vital as it enabling selected employees to help further the culture enables managers to cope with an increasingly technical and of leadership training and learning within the group will demanding client-facing environment, building resilience. continue.

After an assessment process, branch managers are required to Since 2017, at least 174 people drawn from the ranks of complete a development programme and obtain certification so senior management, key talents and other functions that they can perform crucial tasks as needed. have attended training sessions. SBN HOLDINGS LIMITED Report to society 2020 45

Training and learning Training at all levels has always been a priority at the group. Traditional face-to-face training fell by the wayside during the year as employees began working from home. As the situation regarding the lockdown eased, online training was introduced to reach people. By the end of June, online training led by facilitators and through our new training platform, Degreed, was well underway.

This platform acts as a supplement to existing training platforms. Staff are encouraged to drive their development and identify where gaps in their banking knowledge exist. They are then encouraged to build their development programmes, discuss their ambitions with line managers at appraisal sessions and apply for the appropriate training modules. Resources available include a library of books, relevant media articles and the online training modules.

There was a positive response from staff who saw the programmes as a way of upskilling themselves and improving their career prospects. 46 CREATING VALUE SUPPORTING NEW WAYS OF WORK CONTINUED

Employee financial literacy programme The financial literacy programme assists employees who are Employee study assistance experiencing financial difficulties or cannot meet their commitments. As part of the assistance process, employees are Every year, a special subcommittee within human capital provided with coaching and templates on which to develop assesses requests from employees seeking financial support household budgets. Since the introduction of the programme, so they can continue their studies through external tertiary there have been many requests for copies of the templates. education and training institutions. These are provided on request through internal media. The level of assistance is decided after the value to the group of a proposed field of study has been examined. Also considered, are the future skills required by the group and the employees’ work records. Development schemes During 2020, for employees 91 employees: The Branch Manager Programme Africa Regions is a comprehensive leadership development programme for retail branch managers that consists of a series of workshops and structured post-learning 62 29 implementation modules.

The Coaching Programme offers employees opportunities to become coaches within the group and obtained study support. Eleven study help their peers acquire career-specific knowledge. bursaries were granted with seven women and four men getting assistance. The Bury My Heart Programme offers CIB employees an opportunity to associate themselves with the division’s performance standards and goals. Delegates identify their values and then translate them into business behaviours that will assist with achieving their career goals as well as those of their colleagues.

The Team Effectiveness CIB Namibia Programme equips teams with the tools to understand each other, the challenges they face, and how to improve team performance.

The ‘Under the Hood’ Programme helps people identify and understand what an employee culture is, and how it can be positively applied to achieve Career development performance goals. Our ability to offer careers and the possibility of advancement in The Standard Bank Namibia Influencer Programme the financial services sector has long been a factor in attracting combines compelling videos and extensive class people to our business. By embracing a corporate culture in exercises to develop skills that assist delegates to: which ongoing learning, innovation and encouragement are • Identify crucial moments and high leverage offered, we ensure that our company can meet the changes behaviours that could lead to rapid growth required within a complex, ever-changing environment. Having • Apply strategies for changing prevailing thinking and employees that are confident in their abilities and are secure in actions the understanding that their efforts could be rewarded with advancement means having a stable workforce that is ready to • Use the model as a diagnostic tool to assess accept challenges. business, project challenges and determine their success Our management processes build on our approach to career • Implement ‘six sources of influence to make the development and ensure that we maintain a high-performance change inevitable and sustainable.’ culture. We select talented people by referencing their past performance and leadership potential and offering them The Platinum Academy is focused on the PBB space rewarding careers with future development opportunities. and specifically, Private Banking. The courses offered assist with developing portfolio management skills, the To go forward in a mutually beneficial manner, employees work principles of client engagement and principles of selling by following defined performance contracts. These contracts are value. reviewed annually and are essential tools that are critical in setting rewards and deciding future job opportunities. SBN HOLDINGS LIMITED Report to society 2020 47

Employee benefits The group offers comprehensive benefits designed to attract, motivate and retain the services of employees. In addition to industry-accepted benefits such as Employee recognition awards medical aid and pension funds, offerings include share ownership schemes, financial assistance plans, parental Employees who perform at a high level are considered for annual leave for family needs and emergencies, and awards that recognise their achievements. recognition programmes. These awards include: The medical aid fund offers cover for hospital and • Beyond Excellence, an award for individuals and teams outpatient treatment, medication requirements and • Mark of Excellence, an honour to individuals assistance for people who have contracted HIV/ • The Chief Executive’s Award for individuals Aids. The HIV programme offers: • Deal of the Year Award for PBB and CIB teams • Information and treatment advice • Long service and retirement awards • Counselling • Performance bonuses for employees’ below managerial level. • Quality healthcare • Antiretroviral therapy Communications regarding awards to be made in 2021 were • Mother-to-child transmission prevention for pregnant distributed during December 2020. Employees who consistently women reported to work in the early weeks of the pandemic were awarded ‘once-off’ bonuses for their diligence. Other benefits available to employees include: • Women being entitled to 90 days paid maternity leave • Men and women having access to five working days Occupational health and safety of parental leave annually During 2020, sanitising branches and offices, issuing of • Flexitime working hours to improve work and life personal protection equipment became everyday events. balance Also, customers visiting branches registered when entering • Access to an in-house doctor who serves our buildings so that they could be traced if the need arose. occupational health needs and certifies fitness for work and provides referrals for absences These precautions were added to the programmes routinely undertaken to provide a safe working environment for all • Life and disability insurance, funeral cover, and social employees. We have an impeccable OHS record and are security payments. known for meeting and often exceeding required local • Support from the Standard Bank We Care Fund, and international standards. which assists employees with unforeseen personal emergency costs. Maintaining high levels of awareness about safety regulations and making sure that the rules are followed involves holding Introduced in 2017, the We Care Fund is capitalised regular risk assessment audits and conducting emergency and jointly through employee contributions and matching safety drills. group payments. Although there were more requests for assistance with medical bills in 2020, the fund was Adherence to the OHS regulations is the ultimate responsibility able to meet all needs. The fund has also assisted of the chief executive. At the group, we have an active OHS non-clerical employees who cannot afford housing with committee that reviews the system and also helps business donations through the Shack Dwellers Association for units to promote health and safety in the workplace and the construction of homes in Lüderitz, Swakopmund implement measures that may be required. and Oshakati. During 2019, there were 1 075 requests Working committee meetings are attended by employee for assistance. This increased to 1 320 in 2020. representatives who are responsible for applying safety and Additional benefits were offered to assist with fighting health processes in their work units. Amongst their other duties, the transmission of Covid-19. Employees were given the committees also: minerals and vitamins to assist in building their • Appoint and monitor first aid officers immune systems. Telephonic consultations were • Supervise firefighters drawn from the ranks of employees available with a doctor, and webinar sessions were • Oversee employee safety representatives and evacuation created to encourage discussion about the pandemic. officers, and An additional site was offered to help employees • Ensure that all OHS officers are well-trained. coordinate appointments for Covid-19 tests where this • Independent contractors who may be required to be on our was necessary. premises are required to adhere to requirements. Periodic Wellness packages and food parcels were delivered to review and checks are made on their worksites to confirm the homes of employees who contracted the virus and that they are working to the OHS standards required. During were required to stay in quarantine. A Wellness Officer the year, only 11 minor ‘slips and fall’ incidents were reported, conducted weekly visits to check on patients’ progress. down from 16 in 2019. 48 CREATING VALUE

Compliance and regulatory affairs

Our intent The financial services sector is a highly regulated industry, subject to a host of local and international measures which cover issues ranging from the maintenance of liquidity, through to the administration of individual client affairs. Our approach The group supports the role of regulators whose intention is to Three of the primary drivers of the banking industry are technology, digitisation create an environment in which and the rapid development of services and products to meet market demands. clients, as well as financial To keep pace with change, regulatory frameworks, therefore continuously evolve institutions, are safeguarded. and become more complex. However, for regulations to be effective, they have to be well- It is the group’s duty to ensure that it complies with all requirements and that it drafted, applicable to the keeps pace with the increasing volume of regulatory requirements as they are environment and be relevant to the introduced into the Namibian financial sector. area in which they will be Compliance with regulations is not negotiable, and failure to act on them can result implemented. in the imposition of punitive fines as well as reputational loss and reduced As a leading Namibian financial market share. institution, we are committed to Responsibility for compliance rests with the board, that delegates the function to working closely with regulators to management who oversee measures as they are implemented. Typically, as a ensure that regulations, when they regulation is adopted, it moves from the compliance unit to the relevant areas are formed, do not have any within the group where policies or operations have to be adjusted to meet the unintended consequences or regulations involved. burdens that make their application difficult to sustain. We work to Oversight of compliance risk management is delegated to the board audit ensure that regulators understand committee, to which the compliance unit reports every quarter. the impact of their requirements on our clients, our employees and our All non-compliant areas are identified, and interactions with regulators are business. discussed. When required, material regulatory issues are referred to the board risk committee, which informs the board of new legislation that may affect the group.

Compliance training is mandatory. Employee conduct across three broad areas, namely, personal business and client conduct is facilitated through comprehensive modules that cover ethics, conflicts of interest and outside business interests, personal account trading, data privacy, treating customers fairly and the receipt of gifts are delivered online and through personal interaction across the group.

Because of the operating climate experienced in 2020, additional risk debt training specific to the Covid-19 pandemic that was compulsory was rolled out to all staff. This training covered protocols required within offices and set out who could work from home and bank expectations regarding all facets of operation during lockdown and quarantine periods.

A module covering market abuse is mandatory for CIB employees.

To keep current and informed, and aware of their group obligations, employees attend refresher courses every 24 months. Anti-money laundering compliance training is completed annually. Besides training on specific aspects of compliance requirements, general compliance awareness programmes for employees are also offered. SBN HOLDINGS LIMITED Report to society 2020 49

Advocating for effective regulatory frameworks We see our role as that of advocates that have a contribution to make regarding the development of fair national policy, legislation and regulations that have an impact on the financial services industry. We fulfil our obligations to the group by making formal submissions on pending and existing legislation and through regular contact with policymakers, lawmakers and regulatory authorities.

We support regulatory frameworks that are unambiguous, consistent and practical. Ongoing, constructive interactions with authorities about policy and potential changes not only isolate potential challenges that may arise on the introduction of regulations but also allow the group to manage changes as they occur.

Regular, constructive discussions allow solutions that benefit all stakeholders to be introduced. This is an essential outcome when it is considered that changes can impact day-to-day business procedures and the lives of clients.

Discussions with regulators take place at a group and industry level. Through our membership of industry associations, we participate in broad industry-related talks and, with other members of the association, contribute an industry-wide view on emerging regulatory matters to authorities.

Our relationship with primary regulators, the Bank of Namibia and the Financial Intelligence Centre are managed through the compliance unit. Communication with regulators and regulatory supervisors is undertaken by designated employees who operate within an ordered structure.

• Being able to help shape regulations that do not hinder business in the financial sector, but rather create improved opportunities The benefits of our consultative approach to regulators include: • The introduction of innovative products and improved services

• Reducing risk exposure

• The leveraging of opportunities to increase our competitive advantage in the sector

• The chance to streamline our processes and documentation 50 CREATING VALUE COMPLIANCE AND REGULATORY AFFAIRS CONTINUED

Our performance in 2020

During 2020, the regulator departed from the usual practice of providing a consultative period in which concerned parties could view and provide feedback on pending regulations. Instead, regulations were published without referring to the financial sector.

These events occurred in the latter part of the year, and contrasted sharply with the approach earlier in 2020 when there was ongoing consultation around the regulations proposed to Issues raised during 2020. provide relief to consumers who had lost jobs or seen their Some of the regulations of 2020 covered: earning power eroded by lockdown and mandatory business • The determination of fees and charges, which operating hours. set out what banks can charge and just how There is now, unfortunately, ‘a misalignment’ between the much they can charge for certain services. industry and the regulator about additional regulations that have One of the key elements is that a sender and to be implemented. There have been indications, however, that recipient cannot be charged for the same a review of the regulations will be undertaken. transaction through e-money services. • Measures to provide relief to hard-pressed Within the group’s legal subcommittee, there are two pieces of consumers through the Credit Agreement Act legislation causing concern. The first is the Administration of that extended repayment periods on leasing Estates Amendment Act, 22 of 2018, which despite concerns, periods from 54 to 72 months. is still in effect. • Still pending legislation that would allow the use The Act brings into effect provisions that profess to protect the of electronic signatures on contracts. This would interests of minors and persons under curatorship and further enable contracts to be signed digitally opening provides for the protection of estate monies and assets that the way for entire transactions (such as buying would fall within the ambit of the Master of the Supreme Court. a car) to be completed without the customer having to visit a branch. Following the implementation, the then Minister of Justice • Developing a framework for the use of Cloud scheduled several industry consultations during 2019, in technology. This would create efficiencies with response to an outcry from the industry, which objected to the the group and also impact on infrastructure sudden implementation of the Act without proper, prior requirements. consultation taking place. The authorities have given public assurances that the Act will not be strictly enforced until relevant amendments have been made. To date, the Act in its original form has not been repealed or amended by the relevant authorities.

The second issue is the Deeds Registries Amendment Bill. Looming for many years, this change will enable laypeople to register properties in the Deeds Registry without input from a qualified conveyancer. The proposed Amendment has been highly criticised from several quarters and has still to be implemented. SBN HOLDINGS LIMITED Report to society 2020 51

Several issues, including the integrity of the collateral system and the requirement for additional due diligence to be performed regarding the authenticity of transactions, are amongst the financial sector’s concerns.

The industry is also concerned about the proposed amendment of the Payment System Management Act. At issue is the interoperability of different systems and their ability to connect. The law is intended to make life simpler for consumers to make digital payments through e-wallets across banks who could use a single card to make payments and have the cash available through any bank.

The reality for banks is that they would have to integrate systems and physical infrastructure – a highly complicated and expensive operation.

The Financial Institutions and Markets (FIM) Bill regulates matters across the spectrum of financial services and any mooted changes, therefore, have implications for insurers, pension fund administrators and bankers. As a more risk-based approach is taken to the legislation, it has been proposed that a central depository for financial services is established.

SBN, like other commercial banks in the sector, is a depository which holds securities and financial instruments for clients in electronic form. In contrast, physical assets reside in bank vaults.

The emphasis now is on the dematerialisation of physical assets (such as conventional stock certificates) and storing them electronically. A working group is studying the implications of creating a central depository to be used by all institutions. It is proposed that control of this body would be invested in the Namibian Stock Exchange. The model for this change is South Africa, where the Johannesburg Stock Exchange fulfils the role.

The group adopts a conservative approach towards new regulations. This ensures that total compliance is achieved and that the SBN operates at the highest possible level where local and international regulations, such as Basel III, are concerned.

In this, we are aided by a regulator who is fair and would rather see negotiations about compliance taking place than create a system where levying fines for transgressions, whether overt or by omission, is commonplace. 52 CREATING VALUE COMPLIANCE AND REGULATORY AFFAIRS CONTINUED

Regulatory changes

Administration of Estates Amendment Act, 22 of 2018 This Act was promulgated on 31 December 2018 and came into The Insolvency Bill effect on the date of its publication. The Bill will repeal the Insolvency Act It brings into effect provisions that of 1936. purport to protect the interests of minors and persons under curatorship, and It will apply to any debtor whose main further provides for the protection of centre of interest is in Namibia or a estate monies and assets. debtor who has an establishment in Namibia. Following the implementation the then Minister of Justice scheduled several Of primary interest to the banking industry consultations during 2019, in industry are the amendments in the Bill response to an outcry from the industry, that surround ‘netting’ and ‘setting-off’ which objected to the sudden in terms of ISDA and market-related implementation of the Act without trading. A final round of consultation is proper, prior consultation taking place. anticipated before the Bill is tabled in Parliament. Some sections in the Bill also The authorities have given public depend on the FIM Bill being promulgated. assurances that the Act will not be strictly be enforced until relevant Namibia Deposit amendments have been made. Guarantee Act, 2018 To date, the Act in its original form has This Act was promulgated on not been repealed or amended by the 28 December 2018 and was enacted relevant authorities. 1 February 2020. Proposed Amendments It regulates the establishment of the Namibia Deposit Guarantee Authority to to the High Court and manage and to establish the Deposit Magistrates’ Courts Acts Guarantee Scheme and the Deposit The Ministry of Justice circulated Guarantee Fund for the payment of proposed amendments to these Acts compensation to depositors in the event concerning the Supreme Court of any deposits held by member Judgement on High Court Rule 108 institutions (financial services (dealing with the selling in execution of institutions) becoming unavailable. primary residences).

The Act effectively puts insurance for Although the Minister held consultative depositors in place if a bank should meetings, the amendments have not falter (as occurred with the SME Bank). been effected or come into force. SBN HOLDINGS LIMITED Report to society 2020 53

The Electronic Competition Bill BID 32 – Securitisation Transactions Act, 2019 The bill establishes a body to be schemes The Act was promulgated on 2 known as the Competition This determination came into effect October 2019. Adjudicative Panel (CAP) which will on 1 June 2020. take on the roles currently played by It came into force during March 2020. It the High Court and the Minister. The Determination regulates the use of regulates the different procedures and special purpose vehicles in relation to documents that can be legally and validly The bill omits the dominance test synthetic and traditional securitisation exchanged electronically. However, contained in the current Act and now list schemes. It exempts certain non-banking specific parts of the Act, most notably factors that can be taken into account in financial institutions from the schemes. It section 20 dealing with electronic determining whether a merger leads to further sets out the requirements of signatures have not yet come into the substantial lessening of competition when a banks need to apply to the BoN operation as regulations still need to be or not. The Bill includes additional public for making use of these schemes as well drafted and introduced in this regard. interest grounds that the commission as the reporting that needs to be done in may take into account when assessing a this regard. merger including the following: local The Deeds Registries procurement of goods and services, value Amendment Bill addition in downstream markets such as The Minister has proposed a draft the economic value of natural resources. amendment to the Deeds Registries Act, which will essentially enable Regulations relating to laypeople to register properties in the Deeds Registry without input from a unfair terms in qualified conveyancer. transactions or contracts

The proposed Amendment has been met between banking with criticism and resistance from several institutions and public and private bodies, and has not yet customers or general been implemented. public BoN published the regulations in Financial Institutions Bills December 2020. The FIM Bill, the NAMFISA Bill and the Financial Institutions Adjudicators Bill The regulations establishes norms and were tabled in Parliament. standards relating to unfair terms in transactions or contracts between The proposed legislation will bring an banking institutions and customers and overhaul of principles in the financial contains examples of terms regarded as institutions industry and purports to unfair terms. The regulations apply to a subscribe to international standards contract between a bank and its and trends. customer regardless of whether that contract is subject to the laws of a foreign Amendment of High Court State or not. A contractual term which Practice Directions has not been individually negotiated is considered to be unfair if, contrary to the The Amendment was published in requirement of good faith, it causes any December 2019 and came into effect imbalance in the rights and obligations of on 1 February 2020. the parties, arising under the contract to The purpose of the practice directions the disadvantage of the customer. contained in this Amendment is to create a voluntary fast-track procedure so that commercial disputes filed at the High Court can be resolved within six months.

It only applies to civil proceedings that relate to commercial disputes instituted by way of a combined summons. Among others, matters relating to immovable property and any civil dispute above N$2 million can be heard in this way. Both parties need to agree to this method for issues to be fast-tracked. 54 CREATING VALUE COMPLIANCE AND REGULATORY AFFAIRS CONTINUED

Regulatory changes continued

BID 23 – Determination on fit and proper test for substantial and prospective substantial shareholders of banking institutions and controlling companies The BID came into effect on 19 June 2020. BID 33 – Determination BoN issued a determination which sets out the framework for assessing whether on policy changes in a person is fit and proper to remain or response to economic and become a substantial shareholder of financial stability banking institutions and controlling companies. Briefly, substantial challenges, following the shareholders are persons that hold or fallout of the Covid-19 control at least five percent of the shares pandemic in a company directly or indirectly. The determination applies to prospective This Determination came into effect substantial shareholders and to existing on 3 April 2020. substantial shareholders. The prescribed The Determination introduces strategies information and documents required by to provide some relief to the banking BoN to do the assessment on existing institutions and their customers. substantial shareholders must be Therefore, BoN resolved to relax certain provided to BoN every three years and at regulatory requirements to provide relief least 90 days after each financial year. to banking institutions to deal with The onus is on the existing and impaired loans as well as to continue prospective substantial shareholders to lending to the real economy and demonstrate that they are fit and proper stimulate economic growth. It is valid for persons at all times in order to remain or a period of two (2) years, or until revoked become shareholders of banking in writing by BoN. institutions or controlling companies. SBN HOLDINGS LIMITED Report to society 2020 55

BID 1 – Determination on PSD-5 – Determination on the appointment, duties the standards for a basic and responsibilities of bank account and cash directors, principal deposit fees within the officers, and executive national payment system officers of banking The Directive was published in December 2019 and became effective institutions and six months from its publication. controlling companies The fundamental changes within the This BID came into effect on Directive relate to the eligibility criteria 23 September 2020. for a basic bank account (persons The purpose of the Determination is earning N$30 300 or less per annum). intended to set out guiding principles It included wide-ranging fees and a relating to corporate governance in charging structure, introduced consumer banking institutions and controlling protection requirements and an increase companies. of the cash deposit fee threshold for business accounts to N$1.3 million The Determination relates to the of earnings annually. appointment, duties and responsibilities of directors, principal officers, and executive officers of banking institutions PSD-10 – Determination and controlling companies. It aims to on standards for fees and ensure that only ‘fit and proper’ persons charges for payment are appointed to serve on the board and run the affairs of banking institutions and system services within controlling companies the national payment system BID 13 – Disclosure of This Determination was published on bank charges, fees and 10 August 2020 and comes into effect six months from the date of commissions publication. This BID was published on 1 December 2020, and will become The purpose of the Determination is to effective on 1 March 2021. provide for standards for fees and charges that payment instrument issuers This Determination outlines the must comply with in the issuance and principles to be applied by banks in provision of payment system services computing and disclosing bank charges. in Namibia. A well-established objective of consumer protection is to ensure that banks’ customers are provided quality services at competitive prices. In this respect, banking institutions must, in pricing banking services and products, be sensitive to the desirability of making charges for basic banking services as fair and as affordable as possible. 56 CREATING VALUE

Embracing a culture of innovation

Our intent As new technologies are introduced, opportunities are created for smaller, niche- focused suppliers of financial services, often referred to as fintech’s, to enter an already competitive sector.

If we are to maintain our position as a leading supplier of financial services to the people of Namibia, we must do more than just monitor Our approach changes in the environment. We are obliged to take the innovative steps required to deliver Digitisation is sweeping through the financial services sector value-added digital services that meet the bringing with it new competition and a requirement that we needs of our customers. respond strongly to the socio-economic forces that guide When developed and introduced, the digital how our customers live, and how they, and we, do business. products that are offered must ensure that the Within the group, the primary reality we face is that the services presented are simple to use, provide demand for digital innovation fundamentally alters the convenient solutions to everyday requirements processes and services that we rely on to support service and can always be accessed. delivery.

Innovation in a climate of perpetual change Inevitably, as we enter what has been called the Fourth consequently requires that as an organisation, Industrial Revolution, the way people work and what they do we must be agile enough to recognise and is altered and may even become unnecessary. Where this implement changes swiftly so that we stay occurs, we work to ensure that other opportunities are abreast of advances in the digital sphere. created, so that people can acquire the new skills needed to Within the group to achieve our objectives, we adapt to a continually changing banking reality. must support a culture of thought leadership and As increasing attention to digitisation has become the norm, responsiveness to change. This culture demands there has been a subtle change in direction from improving that our people are resilient and able to accept internal processes, to embracing a fully digital approach that change as it occurs so that they can initiate the does more than merely increase internal efficiencies. actions required to maintain and increase our market share and our relevance to customers. By identifying complicated, time-consuming tasks and then redesigning and simplifying them, we will empower customers to complete processes digitally and then submit them for processing.

We have proudly reached the point where a new Digital Transformation Unit has been established. The key focus for 2020 was for the unit to create a framework and methodology in driving digitisation for the group. SBN HOLDINGS LIMITED Report to society 2020 57

Introducing our new innovation approach Before Covid-19 became a national issue, a three-day workshop had been planned to onboard executives, senior management and teams to introduce this new approach. Before the workshop could be convened, strict lockdown measures were announced, bringing a halt to these plans.

By bringing in other resources, the group managed, over a period of five months, to kick-start a new strategy for the road ahead. Besides a framework and methodology being completed, prototypes for three new digital business programmes were created for release in 2021. It was the first time in the history of the group and that of the partner consultancy that a series of virtual events of this nature had been undertaken and completed.

The path to creating a fully integrated, highly skilled team is well underway and is ready to take the bank on its digital journey. We have also managed to create a digital launching point for the entire organisation. Part of initiating and popularising the digitisation process will involve investigating ways that our people can be made ‘digitally fluent’.

This will ensure that everyone understands the purposes and objectives behind the drive to digitise. Further, we hope that this will encourage our people to position themselves for a digital future and look within their areas of responsibility to identify areas of improvement so that they can become part of the change process.

Progress has also been made on creating learning pathways and emphasising the future skills that will be required within the bank and emphasising what steps individuals can take to ensure that they remain relevant.

By campaigning and propagating these concepts within the bank, we are notifying our people that the opportunities, material and personal development opportunities are ready. All they have to do is decide how to get involved in innovation and take the steps required to meet the challenge. 58 CREATING VALUE EMBRACING A CULTURE OF INNOVATION CONTINUED

2020 highlights As the Covid pandemic spread across the country, lockdowns and adapted business hours increased the awareness of digital channels of many in Namibia who have been reluctant to move from cash-based transactions.

We experienced a significant increase in demand for digital products and services.

During the year, to keep services accessible, and encourage the use of digital channels, free and discounted value-added services were offered. They included:

Free payment of prepaid electricity, airtime and TV subscriptions across all digital offerings

Free ATM cash deposits for retail customers Free ATM balance enquiries

A 25% discount on electronic payments made through Enterprise Online, Internet banking, mobile banking and the Standard Bank app

Our digital PayPulse platform, the most A 10% reduction in comprehensive digital product of its type BlueVoucher pricing. in Namibia, was increasingly adopted by merchants, most notably pharmacies, PayPulse signed up for the service to avoid transactional handling cash. The uptake rose to record volumes more levels, eclipsing even the launch of than doubled in PayPulse in 2018, and were achieved 2020: 882 752 2019: 396 179 without the usual face-to-face promotions in shopping malls supporting sales. SBN HOLDINGS LIMITED Report to society 2020 59

Earlier in the year, the PayPulse platform was broadened to include merchant payments cashback solutions, buying airtime, making charitable donations, settling invoices and paying parking bills. Online and offline transactions were enabled, and users could link up to three bank accounts from any bank to transact through the platform.

A facility to accept payments for utilities to the City of Windhoek was also introduced.

Later, a ‘Covid-19’ registration facility was introduced to the cards. This enabled users to enter their personal details on devices and then use this when entering a branch, obviating the need to sign a manual register every time they wished to use these facilities.

• The group made its first foray into using a • The need to create additional operational celebrity to endorse a product. The local efficiencies through digitisation resulted in comedian’s appearance as a brand the establishment of a team dedicated to this ambassador on social media, as well as the function. During the year, several processes fact that he represented a market segment were earmarked for action using artificial traditionally preferring cash to digital intelligence (AI) to facilitate tasks. services, resulted in many fans making a These included: move to PayPulse. – Faster responses to customer requests for • Plans were made to take the onboarding statements. At present, customers email process for PayPulse and other digital requests through to the call centre. A platforms online, moving away from the customer service agent then processes manual, in-branch sign-on process that is still the request after observing the necessary required. protocols. Although an enhanced service is • The resistance from merchants to the yet to be introduced to customers, the aim PayPulse service because they could not is to enable customers to perform the reconcile transactions as no statements were function through a digital platform. available was addressed through the addition – The automation of the account of an enhancement enabling the printing of confirmation process. Until now, this statements. lengthy, complicated process required that • PayPulse prices were adapted to reduce the a service agent complete many steps cost of the service and have resulted in before a request could be fulfilled. This increased use. process is now entirely digitised, and • A development pipeline of new digital response time has reduced from 30 services and products is delivering results minutes to under two minutes. and schedules for the introduction of some new products are being planned. The first to • A process to deal more efficiently with be delivered will be unveiled in early 2021. customers who have defaulted on commitments has seen a complicated • Amongst the services to be launched is a reconciliation process, an essential element PayPulse ‘request for money’ facility. This when scheduling payments and allocating enables someone to request a payment from remittances to the appropriate department, a customer who receives a text message and reduced from an average of 60 minutes to can then use PayPulse to forward cash to the less than 15 minutes. recipient’s device. 60 CREATING VALUE

Always on, always secure

Our intent IT infrastructure forms the foundation of any financial services company that operates in a highly demanding sector where consistent, efficient delivery of customer services and products spell the difference between success and failure. Remaining competitive requires that we can respond swiftly to regulatory requirements while continuing to deliver innovative products and services. Our approach

IT strategy, operations, policies and controls are monitored, guided and reviewed by a board subcommittee which is chaired by an independent non-executive director leads who can call on experts when technical input is required. 2020 highlights The year produced many challenges that would not have occurred to anyone in 2019. For IT, our routines were disrupted when the first cases of Covid-19 were reported. As working habits changed and employees were required to work from home, it became our responsibility to make certain that they had the means to stay connected so that the group’s productivity would not be negatively impacted.

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Although prior investment Projects already underway, At branches, the major System and data security To emphasise the had been made to enable as well as those in the customer-facing service were primary concerns. importance of operating employees to work pipeline, had their points for the group, only To safeguard and secure safely off-site, a remotely, the scale of the continuity threatened by those required to interface system continuity, IT communications campaign demand for additional the regulations designed directly with customers implemented a VPN. was launched advising hardware was unexpected. to contain the Covid-19 remained at their posts. Although a VPN system people of the ‘do’s and However, we rose to the virus. As lockdown IT was instrumental in used by IT already existed don’ts’, protocols and test on our capabilities, procedures increased and making sure that back-end within the group, the policies surrounding and within two weeks, all national borders were support functions could requirement was for a secure use of equipment. staff requiring hardware closed, travelling became continue to be conducted more extensive system The comprehensive and connections to the impossible. Project plans by employees who were that incorporated all the education process was group’s system were had to be adjusted and required to work necessary security complemented by on-line operational. some planned, significant from. home measures. training which people used changes to our IT to learn more about the Most importantly, all were infrastructure, due to be Security was ensured by VPN and its workings. able to work safely without undertaken on-site, were all bank laptops having compromising the integrity completed remotely. built-in security features of the network or the that block the sharing of confidentiality that is a sensitive data via email base requirement of all and the insertion of financial service external devices such as organisations. Uniquely, USB sticks. A scanning all 63 employees within process ensures that as IT were also able to make each user logs onto the the transition to working network, the identity of his from home. or her machine is checked. SBN HOLDINGS LIMITED Report to society 2020 61

Providing for the unexpected Regular testing of systems and our disaster recovery plans are a feature of our operations. Despite the Covid pandemic and the pressures of operating with staff offsite, a crisis simulation was run and successfully completed over a week in September 2020. The entire operation was run online, indicating that we are well placed to manage any future emergencies.

The development of an enterprise backup solution to assist with the recovery of data in the event of a disruption, was interrupted in March when the Covid virus emerged in Namibia. By June, despite ongoing pressures, the process was satisfactorily completed.

Namibia, SBG, and IT security jointly participated in a simulated cyberattack exercise that was created to test our electronic defences. The attack was identified and repulsed by the defence systems.

The Cloud New technology was implemented at the network level. This saw all data networking infrastructure being replaced with application-centric infrastructure technology (ACI) which is superior to existing legacy networks.

The operation changed the heart of our system, but the transition was accomplished without incident.

5 6 7 8 9

The most positive learning Despite restrictions on Activities within the digital The Payment Card Industry Security on the group’s which emerged from a personal movement and products and service Data Security Standard external website was challenging year was that some slight delays, space included the (PCIDSS) organisation is an increased and existing problems that would have essential work on the introduction of ‘Tap and open global forum. Founded security features were been considered upgrading, ‘hardening’ of Go’ technology on card by American Express, upgraded. insurmountable a short security measures and products making physical Discover Financial Services, while ago could be improvement of the ATM contact with point-of-sale JCB International, conquered. IT projects that system continued during (POS) terminals MasterCard Worldwide and were central to the group’s the year. Most of the unnecessary. Services Visa Inc., PCIDSS sets strategy of moving steadily required projects were were added to the compliance standards, towards digitisation were completed, but some PayPulse app, and many policies and procedures in 10 completed. regulatory changes were retailers began signing on place to protect credit, delayed because of to the system. Customers debit, and cash card difficulties experienced in began taking advantage of transactions. In addition, At an application level, contacting some vendors the addition of the body also works to we introduced BlueFlow, during lockdowns. functionality that included prevent the misuse of which enabled us to the ability to pay utility bills cardholders’ personal streamline the onboarding Generally, hardware to the City of Windhoek. information. of new clients. Previously, became difficult to acquire a process that required a as supply chain from All card brands require day, the changes require factories through to compliance and less than two hours to be distributors were recertification is required on concluded. disrupted, and demand an annual basis. All outstripped supply. requirements for SBN have been fulfilled as IT has met all 12 of the required criteria. Final certification is expected before year-end. 62 CREATING VALUE ALWAYS ON, ALWAYS SECURE CONTINUED

ATM uptime 96.58%

POS average operational time 99.27%

International link1 Domestic link2 We offer seamless average average services supported by operational time operational time fully operational sustems 100.00% 100.00% throughout the year.

Number of service desk calls logged 2 752

Number of technology changes 5 835

2020 2019 2018 2017

ATM uptime (%) 96.71 94.48 90.06 91.11 POS average operational time (%) 99.27 98.88 98.98 98.88 International link1 average operational time (%) 100.00 97.66 99.95 98.32 Domestic link2 average operational time (%) 100.00 99.20 99.56 99.30 Number of service desk calls logged 2 752 5 077 4 195 7 165 Number of technology changes 5 835 2 057 1 438 12

1 The link that connects SBN to the internet and South Africa. 2 The network that connects SBN branches and ATMs across Namibia. SBN HOLDINGS LIMITED Report to society 2020 63

Working from home enabled IT to re-examine its office needs. There is a possibility that the leased Reiger Park facility can be closed and the POS monitoring team, Customer Contact Centre and OSS functions in the building can be rehoused in the new SBN head office building

The implementation of significant projects can require that core banking functions are taken offline. To avoid customer inconvenience, IT has introduced standby capabilities which enable cards and ATMs to continue functioning. Offline authorisations and transactions continue while core banking remains offline. The capability also enables a ‘stand-in’ function to be invoked. If a major incident occurs and the core system goes offline, transactions can continue until the problem is solved.

Controlling access to the network became an issue when people began working from home and made use of various facets of the network, with different functions being used to varying degrees. It was vital to protect network integrity that only compliant machines be allowed access to the network. Where people with non-compliant machines tried to log on, their machines were tested. Failing the test resulted in the connection being terminated. 64 CREATING VALUE

Delivering financial sustainability

Our approach

Our 2020 financial statements, presented in the SBN Holdings Limited annual report, are prepared in accordance with International Financial Reporting Standards (IFRS) and have been audited by the independent auditors, PricewaterhouseCoopers.

Our performance in 2020 The group reported solid results in the face of challenges PROFIT FOR THE YEAR arising from the Covid-19 pandemic, delivering profit after tax of N$421 million for 2020, a decline of 31.3% N$’m from the N$613 million at the end of 2019. 700 600 The impact of the restrictions, imposed to stem the spread of Covid-19, on economic activities is reflected 500 in GDP, now estimated to have contracted 7.3% in 2020. 400 300 A 11.9% decline in NII, on account of the reduction in the prime interest rate by 275 basis points, was the 200 largest driver in the reduction of profits for the year. 100 Despite the lockdown restrictions NIR reduced 0 by only 5.6%. 2015 2016 2017 2018 2019 2020 525 538 546 552 613 421 Total operating expenses only increased by 1%, while staff costs decreased by 7.3% driven by good resource planning and natural attrition.

Despite the very challenging environment, NPLs as a percentage of total loans, increased to 7.8%, and only 5.3% when excluding one large client exposure.

Our balance sheet remains robust with a capital adequacy ratio on 14.7%. Our liquidity position has remained strong and within approved risk appetite NET INTEREST INCOME and tolerance limits.

N$’m % 1 400 7 1 200 6 Engaging with our 1 000 5 shareholders 800 4 600 3 and analysts 400 2 200 1 0 0 2015 2016 2017 2018 2019 2020 1 148 1 205 1 236 1 220 1 333 1 174 Our finance team facilitates ongoing engagement with our 5.0 4.8 4.3 4.0 4.0 3.1 shareholders and analysts. Shareholders are encouraged to Net interest income attend the annual general meeting, where the board audit Net interest margin (excluding derivatives) (%) committee chair and other board members are available to respond to questions. In 2020, engagement with investors and analysts centred on our risk management framework and cost management. SBN HOLDINGS LIMITED Report to society 2020 65

INCOME STATEMENT

Change 2020 2019 % N$’000 N’000

Net interest income (11.9) 1 174 462 1 332 543 Non-interest revenue (5.6) 1 192 672 1 262 756 Total income (8.8) 2 367 134 2 595 299 Credit impairments 6.2 2530 91 (239 165) Income after credit impairments (10.3) 2 113 224 2 356 134 Operating expenses 1.0 1 503 291 (1 488 037) Net income before equity accounted earnings (29.7) 609 933 868 097 Loss on derecognition/share of profit from joint venture (140.8) 1 604 3 929 Net income before tax (30.2) 6089 32 872 026 Taxation (direct and indirect) (27.6 ) 1874 14 (258 528) Profit for the year (31.3) 421 185 613 498

NON-INTEREST REVENUE OPERATING EXPENSES

N$’m N$’m % 1 500 1 750 64 1 500 62 1 200 1 250 60 900 1 000 58

600 750 56 500 54 300 250 52 0 0 50 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 639 716 724 801 838 849 1 170 1 272 1 312 1 452 1 488 1 503 137 121 123 122 118 100 58 60 60 62 57 64 8 94 110 101 161 105 0 0 0 102 146 138 Operating expenses (N$’m) Cost-to-income ratio (%) Net fee and commission Other revenue Trading revenue Other gains and losses

CREDIT IMPAIRMENTS ROE

N$’m % % 300 1.4 25.50

250 1.2 21.25 1.0 200 17.0 0 0.8 12.75 150 0.6 8.50 100 0.4 4.25 50 0.2 0 0 0 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 23.56 18.82 18.56 17.79 17.30 10.53 85 91 97 96 239 0.51 0.50 0.48 0.47 1.0

Credit impairments Credit loss ratio (CLR) (%) 66 OUR SEE IMPACT

68 70 74 78 80 84 Managing our Our social Our economic Our environmental Namibian Financial Governance and SEE impact impact impact impact Sector Charter ethics

SBN HOLDINGS LIMITED Report to society 2020 67

OUR SEE IMPACT 68 OUR SEE IMPACT

Managing our SEE impact

Our intent We believe that our role as a leading Namibian financial institution is not restricted to the products and services we deliver. It also includes our contribution to the economic development, creation of employment opportunities and the prosperity of the country Our approach and its people. In reality, however, our role extends still deeper into the fabric of the We are committed to ensuring that our brand is society from which we derive our standing and identified and appreciated for its contributions the communities that we serve. to helping address socioeconomic inequality by We are, above all else, an active corporate helping to improve the lives of less fortunate citizen of Namibia, whose reputation as a Namibians. We support good causes and work as company that contributes to society is as partners with organisations that are dedicated important as our economic contribution. to bringing change to communities across the country.

We measure our broad contribution to the Namibian economy through: • our brand management VALUE ADDED BY SBN HOLDINGS • our ongoing commitment to transformation • our support of CSI initiatives 2020 2019 2018 2017 • actively promoting Namibian businesses by N$’000 N$’000 N$’000 N$’000 procuring services and products from local suppliers Interest, commission • monitoring the group’s environmental impact, and other revenues 3 449 996 4 095 800 3 717 612 3 410 064 assessing contracts that have the potential to Interest paid to impact on the environment and depositors (1 003 677) (1 451 939) (1 371 881) (1 216 853) comprehensively reporting on our Other operating environmental activities. expenses (698 452) (619 637) (659 269) (588 156) Wealth created 1 747 867 2 024 224 1 689 873 1 604 569

KEY PERFORMANCE INDICATORS

2020 2019 2018 2017 Our impact NFSC compliance (%) 66 74 75 71 CSI spend (N$ million) 7.9 6.2 7 4.6 As a leading supplier of financial CSI spend as percentage services, we assume several roles of profit after tax 1 1 1 1 within Namibian society. Our Number of projects multiple, value-adding roles include: financed using Equator • being one of the country’s largest Principles 0 0 0 0 Number of suppliers private-sector employers and (Jan to Dec) 716 880 800 435 providing employees with the Total procurement salaries and benefits expected of spend (Jan to Dec 2020) a leading financial institution. (N$ million) 607 685 536 757 • paying dividends to our shareholders Percentage of • being a major taxpayer and procurement spent contributor to the fiscus with local suppliers • supporting local businesses and (Jan to Dec 2020) (%) 84.58 81.75 75.21 82 providing financial services to assist Percentage of the creation of a small business procurement spent with sector local B-BEE suppliers • contributing to broader Namibian (Jan to Dec 2020) (%) 42.46 38.87 33.34 22 society by investing in CSI initiatives. SBN HOLDINGS LIMITED Report to society 2020 69

Our achievements for 2020 include: • Spending 1% of our corporate procurement budget with local suppliers and contributing to the transformation and sustainability of B-BEE by directing 42.5% of the budget to companies operating in this sector. • Contributing N$156.5 million to the fiscus in the form of direct taxes that are used to benefit all Namibians. • Paying our employees N$805 million in salaries and benefits which support businesses, purchase consumer goods and create local employment and prosperity. • Donating N$8 million on projects that contribute to improving the living standards of disadvantaged Namibians. We continue to invest in our flagship programme the Buy-a-Brick initiative, to create housing for our fellow citizens.

A new-look brand and corporate positioning

The essential elements of branding are to the prevailing mood caused by the the ‘three-Ps’; Promise, Positioning, and Covid-19 pandemic. ‘It Can Be’ told Performance, that combine to tell your Namibians that dreams could be actioned existing and potential customers what and that a partnership with the bank Getting the Namibian ‘It Can Be’ you offer, who it is for, how your products could make dreams a reality. campaign launched in Namibia involved and service will be delivered and what adopting a new approach to the creative It Can Be is about hope and peoples’ your market status is. process. This included: futures and emphasises that: • Briefing the creative team using a virtual When a brand is established the average • Dreams can become reality observer seeing your corporate visual boardroom. • By working together, anything can be branding will immediately make • Changing the emphasis from print to accomplished assumptions about your company digital and social media • We can find new ways of getting things based on the three-Ps. So, when a brand • Commissioning voice-over recordings done. like Standard Bank Namibia is already an through radio stations rather than established, household brand, deciding Before turning aspirations into reality, specialist studios to change positioning and your brand they must first be ‘caught’. A simple • Creating a link between broadcast promise is not something that is done design achieves this action. Called the advertisements and digital media by lightly. ‘dreamcatcher, it a line that encircles the urging people to see more on digital Add the complications caused by a global most important thought on the page or channels. pandemic, and the challenges of screen and creates a link between the • Using pop-up banners on digital media to repositioning a brand become even more dream, the Standard Bank identity and draw consumers' attention and get them complicated. Teams that would normally the ‘It Can Be’ slogan. to follow the brand on the Internet. work together are separated. Members work alone from home and agencies involved in originating media material, and the tasks involved with a major branding exercise are in lockdown. The creative face-to-face interaction necessary for a new campaign is lost.

Despite this, one of the year's most significant accomplishments was the launch of our ‘It Can Be’ positioning campaign. In fact, the timing was perfect as the launch provided an ideal contrast 70 OUR SEE IMPACT

Our social impact

Our approach Our corporate roots have been embedded in Namibia’s soil for over 100 years, making us a financial institution that is deeply intertwined with the country, its history, its people, and its future.

As a part of this society, we must contribute to the development of Namibians who, through no fault of their own, face socioeconomic challenges that impact the quality of their lives. Our commitment goes beyond statutory requirements and is a tangible demonstration of the confidence we have in Namibia and its future.

Through our CSI efforts, we can concentrate on social issues of major concern and, by adopting an investment strategy, identify projects deserving support.

Rather than indulge in ‘cheque-book philanthropy’, we identify opportunities and contribute towards transformation by developing customised, sustainable solutions. Where necessary, we use independent experts to assist so that our programmes achieve desired outcomes.

Measuring our contribution We commit 1% of our net profit after tax to CSI programmes, or N$5.9 million, in 2020, a voluntary allocation that is four times greater than that required by the NFSC. Funds are divided amongst projects that address educational, health and community wellness issues. SBN HOLDINGS LIMITED Report to society 2020 71

Developing our CSI strategy Our CSI strategy is overseen by the board’s CSI subcommittee, which reports to the board. Its functions include approving our CSI strategy, policy, guidelines and focus areas, making sure that CSI programmes align with the group’s business strategy. We support: • Government education programmes. The comprehensive CSI policy sets The CSI policy defines: out requirements for: • Learning programmes administered by • What constitutes CSI spend. non-governmental agencies. • The principles that guide our • Distinguishes between CSI and • Healthcare sector initiatives aimed at CSI investments. sponsorship spending. reducing the impacts of tuberculosis, • Governance structures. • How funds are allocated to all malaria, HIV/Aids and other diseases • Roles and responsibilities. Namibia’s regions. including cancer. • Reporting requirements. • Social change programmes that assist • The prevention and management orphans, vulnerable children and of conflicts of interest. disadvantaged youth.

The process of selecting partners for social initiative programmes includes: • Vetting projects to ensure that they deliver the promised socioeconomic development impacts, uplift communities, and offer opportunities Overseeing the that can be effectively monitored. CSI process • Making sure that funding is directed to disadvantaged communities. The CSI unit works with SBN Holdings’ core business units to identify • Selecting projects that, where possible, social issues that present obstacles to realising the group’s strategy. are aligned with the Namibian Once the research is completed, the results provide a base for identifying government’s priorities. These include programmes that offer positive contributions to both social and business- national development objectives that related issues. meet the spirit of the government’s Vision 2030 strategy. The emphasis is then placed on forming long-term funding partnerships • Identifying programmes that provide with the government and local and international non-governmental agencies, opportunities for the involvement of SBN which are chosen for their proven ability to deliver clearly defined Holdings employees so that they become programmes that provide real impact. part of transforming the society of which they are members. The six-step process involves: Assessing whether requests meet the group’s policies 1 and objectives. The due diligence involves on-site visits to programme sites.

Recommending projects that pass this initial 2 examination to the working CSI committee and CSI subcommittees.

Drawing up contracts between SBN Holdings and the 3 selected organisation and agreeing on a schedule of payments.

Drawing up all-inclusive beneficiary reports examining 4 how funds have been utilised and the impact that disbursements have had. Project integrity is safeguarded by carrying out these audits every six months.

An annual review by the group to confirm whether the 5 stated objectives for the investment have been achieved.

Conducting an in-depth ‘close-out’ process to evaluate 6 completed projects and the results achieved. 72 OUR SEE IMPACT OUR SOCIAL IMPACT CONTINUED

CSI in 2020

Although contributions are made to various causes, three major programmes are the mainstay of our investment activities. These are the Meanwhile, the campaign to encourage people to buy bricks continued with Buy-a-Brick programme, FAWENA marketing campaigns such as the ‘footprint sock’ and the Financial Literacy Initiative. and bag selling projects. These raised about N$600 000 for the charity. During the year the Buy-a-Brick campaign assumed new significance as the Covid-19 pandemic added to the privations experienced by Namibia’s shack dwellers.

Forced to live in cramped shacks that are crowded together in informal settlements, it is common for entire families to live in a one- roomed shanty. Effective sanitisation procedures cannot be introduced, and it becomes impossible for social distancing to be enforced in these conditions.

To counter the situation, and in a campaign separate from Buy-a-Brick, we worked with the Shack Dwellers Federation of Namibia to supply members with sanitisers and vitamins for boosting personal immune systems. Other The Buy-a-Brick project drives included providing food parcels and placing water tanks at convenient points in changing the face of Namibia settlements for communal use. The Buy-a-Brick Initiative runs an retailers around Namibia. The annual campaign to raise funds among partnership has also helped us add its own employees, other corporates more products to the brand.” and individuals. Despite the prevalence of Covid-19, At the end of 2020, close to 362 Standard Bank used the campaign to Buy-a-Brick houses were completed shine light on the plight of the shack and handed over to their owners in dwellers and homeless community by 13 towns across the country. raising funds through the selling of the Of special significance this year, the Footprint Socks. Buy-a-Brick Initiative raised funds to The Buy-a-Brick fundraising campaign build 20 houses for the victims of a also sold specially designed clothing fire that destroyed homes in an and shopping bags produced by local informal community at Walvis Bay. young business people, thus enabling In 2020, the Initiative launched Standard Bank to help grow the a flagship project, Buy-a-Brick entrepreneurship culture in Footprint Socks campaign, to mobilise the country. schools in a nationwide effort to raise The Buy-a-Brick Initiative is managed funds for the construction of in conjunction with the Shack Dwellers low-cost houses. Federation of Namibia, the lead welfare The Initiative entered into a local organisation focusing on constructing partnership with Gweri Vintage affordable houses for its members. Collection to produce specially The Initiative is exploring ways to build designed socks. houses with affordable materials and The socks feature several attractive will soon launch the BioHab project at designs with the Buy-a-Brick logo on Brakwater to test using indigenous them. The name “footprint socks” was “encroacher bush” that is choking chosen to encourage and motivate essential natural water aquifers, learners and the general Namibian wildlife and cattle grazing lands society to leave a footprint in the lives in the project. of families living in shacks by helping The bush will be used to create them to acquire affordable houses. substrate (food) for mushroom Owner of Gweri Vintage Collection, farming. Nutritious mushrooms will be Pinehas Shikulo, had this to say about grown and harvested, and the resulting the partnership with Standard Bank: material remaining will be compacted “The partnership helped us settle all into sustainable, ecologically-friendly our manufacturing debt with our building materials. If successful, the partners and has helped our business material will be used to construct grow to the point where we can now houses for the Buy-a-Brick Initiative. provide consignment stock to our SBN HOLDINGS LIMITED Report to society 2020 73

Some other CSI investments The USAID forum for African women educationalists in Namibia (FAWENA) Supporting Namibian women and girls’ advancement is regarded as a priority to help stimulate economic growth in Namibia.

Extensive programmes are offered within SBN Holdings for female staff. These educational opportunities are mirrored in external programmes, the most significant being FAWENA, which is geared toward providing educational opportunities for deserving and talented Namibian girls and women.

Supported by the bank since 2014, a total of N$5.8 million has been allocated to assist more than 500 girls in 14 regions across the country to 2022.

Our contributions have benefitted 480 female secondary school learners from disadvantaged backgrounds. The girls participating in the programme undergo a selection process which is led by specially trained teachers who also monitor each girl’s progress. To date, more than 900 children have benefited from the association. Testing alternative BioHab building materials The Financial Literacy Initiative The BioHab project complements the The Ministry of Finance has a national policy of educating Buy-a-Brick campaign by examining ways Namibians on financial matters. SBN Holdings regards this of producing cheap, readily available building programme as essential in empowering Namibians to take materials to be used to construct affordable control of their financial futures. We contributed N$25 000 in 2020. housing. In this case, the building material is RTS For more information, mycelium the invisible ‘roots’ found in see page 76. mushrooms.

Making the mycelium project viable in Namibia is the vast tracts of invader bush found on Namibian farms where unchecked growth is destroying cattle grazing lands. Being Supporting children with cleft lip and able to remove this bush and combine it with mycelium to palate deformities create bricks would provide benefits for farmers and the homeless at the same time. During 2020, SBN Holdings renewed its commitment to putting smiles on the faces of children who suffer from birth Reduced to woodchips and used as a base for mushrooms' deformities such as cleft lips and palates that can be surgically growth would add a product to the food chain while corrected. We supported the project with N$220 000 in 2020 allowing waste mycelium substrate within the surplus crop and have allocated another N$220 000 for 2021. to be used to create building material.

Experiments have been conducted for some time in association with the Massachusetts Institute of Technology (MIT). The point has now been reached where mushrooms have been successfully grown and harvested, and mycelium is available. Locally, a manufacturer has been engaged to develop a press that would condense the material and make about 120 bricks a day. A local team of architects and Academic engineers has been established to create the first mycelium Excellence Awards building in Namibia early in 2021 on a demonstration site near Windhoek. The SBN Academic Excellence Awards recognises the efforts Although there are practical issues still to be resolved, of high school learners across Namibia with the top three early indications are that the material has good insulation learners in the national Grade 10 and Grade 12 examinations in properties but may have to be sealed to make it water- each of the country’s 14 regions are rewarded. Due to changes resistant. in the education system, in 2020, the awards were restricted to the top Grade 12 performers. The top student in each region received N$5 000, while the first and second runners up received N$2 000 and N$3 000, respectively. 74 OUR SEE IMPACT

Our economic impact

Investing in sustainable development commits us to enhance the resources and relationships we rely on today for the future, ensuring that we use our resources responsibility and support the socioeconomic wellbeing of Namibia.

Financial inclusion Financial inclusion is described by the World Bank as a process that affords individuals and businesses access to useful and affordable financial products and services that meet their needs and are delivered responsibly and sustainably.

A transaction account is the first step towards inclusion as it allows people to store money and send and receive payments. A transaction account, in turn, serves as a gateway to other financial services. As new accountholders join the formal financial system, they are more likely to expand their use of services. They begin investing, saving, using other financial services and even start businesses. Overall, the quality of their lives and those of their families improve.

The power inherent in financial inclusion to be a driver of societal change is displayed by its being regarded as an essential enabling element for seven of the United Nations’ Sustainable Development Goals, including reducing inequalities within society (Goal 10).

In Namibia, we are dedicated to promoting financial inclusion across our society by:

• Improving access and affordability to financial services through the provision of digital products and services. We work to make as many of these services available to as broad a base as possible by making them simple to open by unbanked people who do not have bank accounts.

• Backing our efforts to attract people into the financial system by providing consumer education programmes and tips on handling personal finances responsibly. An essential part of this process is making potential, and existing customers aware of the most cost-effective and convenient transactional channels available.

• Helping people to save, transact, invest and plan for the future by enabling them to select and use appropriate savings products; mortgage solutions; remittance services; and pension, insurance and wealth management products. SBN HOLDINGS LIMITED Report to society 2020 75

Supporting The SMME sector in Namibia contributes about Besides adhering to the requirements of the NFSC, 12% of the nation’s GDP and employs and developing lending products specifically tailored SMEs approximately 20% of the national workforce. for the sector, we:

As many of these businesses work within • As required by statute, maintains and routinely communities and draw labour from the areas in exceed the 30% B-BEE spend with small which they operate, they have the potential to businesses required by the NFSC. alleviate poverty and contribute to economic growth. • The total procurement budget for 2020 was N$598 million for operating expenses and However, as is common in many countries, Namibian N$1 049 million for capital expenditure. small businesses struggle to access finance and Of this, procurement expenditure with SMEs markets, technology and infrastructure. In addition, was N$508.1 million, approximately 84% of total entrepreneurs are often hampered by a lack of procurement spend. business skills and knowledge. It is primarily these • Promote skills transfer through the factors that account for the high business failure establishment of joint ventures or sub- rate within the sector. contracting with B-BEE companies. Acknowledging the importance of SMEs and their • Where requested, implementing a short payment potential for playing a decisive role in economic cycle to assist vendors with cash flow. growth, SBN Holdings has developed several initiatives to assist entrepreneurs in overcoming the obstacles they face.

At December 2020: • The SME loan book totalled As cashflow and the N$177 million, ability to access finance with advances, at an average 1%, being are vital to the survival offered to sole proprietor or partnerships of small businesses, we registered with the Registrar of assist by providing suitable, Enterprise Companies. accessible lending development products that meet our SME customers’ regardless • We catered for of whether they operate within the micro, small, or tier I businesses’ needs (those with an annual turnover of medium-sized segments. N$3 million to N$10 million and tier II customers (with annual turnovers of between N$1 million and N$3 million).

Supporting agriculture Despite the deprivations that four years of We offer products and services to the sector that drought have imposed on agriculture, the are available across the entire agricultural value activity remains a primary contributor to GDP chain. These products and services include: and an employer that supports about 70% • Business, savings and investment accounts. of the population. • Commodities trading, insurance and wealth creation services. • Purchase financing services that take into consideration the cyclical nature of the sector. • Vehicle and asset financing for clearing grasslands of encroaching vegetation. This includes an ongoing partnership with John Deere to assist with funding tractors. • The financing of small-scale farmers. 76 OUR SEE IMPACT OUR ECONOMIC IMPACT CONTINUED

Helping SMEs to grow We adopt a holistic approach to assisting SMEs and offer support across the entire segment. This translates into help at a start-up level to the businesses we support and provides educational programmes to improve business skills and bespoke business solutions.

To keep abreast of SMEs’ developments, we participate in business associations and partner with them in sponsoring suitable events and business workshops across the country.

Education is essential if entrepreneurs are to acquire the skills they need to establish businesses that can prosper and become sustainable enterprises that offer employment opportunities to their fellow Namibians. Our educational support encompasses: The Financial Literacy Initiative The Financial Literacy Initiative is a Ministry of Finance project designed to create financially aware citizens and small business owners. We have supported the programme since 2013, and in total since then, have made N$600 000 in contributions to this worthy cause.

The objectives of this programme are to: Cr eate Namibians who are financially educated and 1 equipped to make informed financial decisions.

Impr ove Namibians’ awareness of financial products and 2 services and the steps they should take to ensure that they select the correct options.

3 E nable Namibians to understand and act upon their rights and responsibilities within the financial sector.

The University of Namibia’s Entrepreneurship Programme We continue to work with the University of Namibia on an entrepreneurship programme. The establishment of an entrepreneurship hub and incubator programme aims to promote the skills required by aspiring businessmen and women. Selected participants are provided with scholarship funding by the group.

Peer education Interacting and partnering with vocational and other educational institutions helps create long-term relationships with our SME customers and support our objective of becoming a financial services provider of choice to the market segment.

We add value by offering our customers opportunities to participate in discussion forums. At these gatherings, our customers hear from and interact with business experts and learn about our products designed to help them develop their enterprises.

Our contribution to education also extends into the formal business sector. Here, through our memberships with various Chambers of Commerce, we can remain up to date with events in many centres across the country, identify local requirements and assist our clients where appropriate.

At a national level, we are active members of the Namibia Chamber of Commerce and Industry (NCCI), which has about 2 500 members drawn from all Namibian business spheres. We attend regional and local NCCI meetings and remain aware of the national and regional concerns and challenges facing business. We can then act and build strategies surrounding business issues that include access to information and finance, lack of infrastructure, access to markets, technology, and development of business opportunities. SBN HOLDINGS LIMITED Report to society 2020 77

Promoting inclusivity As a financial institution whose business is built on treating customers fairly, we are dedicated to being transparent by supporting, when delivering products and services – an approach that educating and is essential if we are to develop and maintain trust between protecting our customers and the group. consumers We, therefore, are committed to: • Providing ongoing, up to date information about the fees and costs attached to our services • Providing all customers brochures that set out the benefits and fee structures attached to our products and services. • Supplementing written information with verbal input from employees who are product specialists. • Where requested, sending brochures by mail to customers.

We promote access to banking services through our range of financial offerings that are tailored to meeting customer needs. These offerings include: Providing access to • The Blue Cheque Account for customers whose incomes do not exceed affordable financial N$3 000 a month. • The Classic Cheque account for those whose incomes exceed N$3 000 a products month, but do not exceed N$6 999. A lending module is part of this account. • An electronic scoring system that assesses a customer’s overall financial position and helps decide eligibility for loans. All loans and overdrafts are subject to this automated ‘audit’ which has maintained the group’s credit loss ratio at less than 5%.

Protecting To ensure that customer information remains confidential, we: customer • Enforce a strict internal compliance policy that • Hold a monthly Customer Service Forum where sets out criteria for safeguarding confidential matters and complaints lodged by major information client information. customers are reviewed. During this process, • Require that employees sign a confidentiality representatives from PBB, CIB and Credit teams agreement that is updated annually. also consider client feedback and suggestions. • Publicise our Customer Care Centre number and They then take action to resolve concerns. email address to encourage our clients to lodge • Meet with Private, Prestige and Achiever clients their complaints. every three months. This initiative is invaluable in • Have client registers in branches so clients can obtaining feedback on our offers and enhancing record their complaints. products and services. Strengthened stakeholder relationships are a valuable by-product of these sessions, which provide feedback that is also useful to the Customer Service Forum. 78 OUR SEE IMPACT

Our environmental impact

Namibia’s name is derived from the Nama language which means ‘an area where there is nothing’- an apt description for a country where desert landscapes, dunes and the notorious skeleton coast that has claimed dozens of unwary ships rule supreme.

It is natural that in such harsh surroundings that careful shepherding of finite resources is vital to ensuring a sustainable future.

As a leading corporate citizen, we believe that we have to actively participate in preserving national resources. To this end, we take action at several levels to apply conservation methods across our operations.

Our efforts begin with a central data management system that is used to monitor and identify opportunities to reduce our impact. Primarily, although we adhere to sound environmental management practices across our operations, we believe that we can assist in achieving a balance between commercial and ecological demands. We, therefore, examine requests received for the development of industries and isolate for further consideration those that have the potential to impact Namibia’s finely balanced ecosystems negatively.

As lenders, we then negotiate with the management of projects that may have environmental and societal consequences to ensure that risks are mitigated where this is required. We also seek out and support the financing of green projects and renewable energy ventures that reduce the potential for ecological damage to occur.

We believe that by adopting this stance to our financing activities, we are also meeting the broader needs of Namibian society. Simultaneously, we believe we are taking into account the expectations of stakeholders who believe that financial institutions should publicly demonstrate that they support and value sustainable commercial practices.

In Namibia, we actively commit ourselves to • Identifying and connecting with partners that can help sustainable, environment- us make substantial contributions to the environment. friendly development by:

• Working with regulators on environmental legislation and policy development.

• Using our corporate standing to encourage associates, suppliers, landlords, tenants and clients to adopt sound social and environmental practices. SBN HOLDINGS LIMITED Report to society 2020 79

We utilise the internationally acknowledged Additional steps taken to safeguard the integrity Equator Principles, and a transaction- of our environmental policy include: specific environmental and social risk • Supplementing our screening processes with management process when assessing the criteria specified by the German Proactively clients’ compliance with biodiversity Investment and Development Corporation assessing requirements. (DEG) and International Finance Corporation environmental Besides biodiversity requirements, weight is (IFC). These criteria are applied to projects in also attached to social risk assessments that which specific contractual obligations are and social risk focus on human rights issues. These concerns required. include race and gender discrimination and the • Confirming at the pre-credit application use of child labour as well as forced or screening stage, that all CIB transactions with compulsory labour. exposures over N$10 million are evaluated for potential environmental and social risk. As a signatory to the Equator Principles, we: • Where a project requires additional • Acknowledge defined international examination, agreeing on a binding action standards for managing social and plan in consultation with the client. This plan environmental risk. may include necessary risk mitigation • Ensure that our clients evaluate and actively actions, timeframes for their achievement avoid, manage or mitigate impacts and the resources required for remediation associated with our financial projects. and evidence of completion. • Apply Equator Principles requirements to • Requiring that independent consultants an entire project. Monitoring begins with conduct a full diligence review for all high risk the origination of a deal and continues until (Category A) projects. Medium risk (Category a project is completed. B) projects are assessed where appropriate. • Use the Equator Principles to evaluate • Monitoring Category A and defined Category all new project finance loans valued at B ventures to confirm that commitments USD10 million or more. made during the loan granting process are • Apply the criteria of the Equator Principles adhered to. to corporate and bridging loans with a total, • Retaining, where appropriate, independent cumulative value of USD100 million or more. professionals to monitor the progress of Our commitment must be for at least remedial action. USD50 million and the tenure of the loan • Working with borrowers who do not comply at least two years. with environmental and social requirements to reach the desired outcomes. In the event of failure of this process, other options, which may include a re-evaluation of a loan, are introduced.

Supporting the drive towards clean energy

The energy sector has long been a prime sector in which we operate. We continued to support the government’s Renewable Energy Feed-in Tariff (REFIT) programme, which was launched in 2015, during the year.

Under the auspices of the Ministry of Mines and Energy, the programme has been implemented by NamPower, Namibia's power utility, in association with the Electricity Control Board. It aims to attract private investors to participate in the development of renewable energy projects in the country.

During the third quarter of 2019, NamPower announced that it plans to invest N$4.7 billion in renewable energy over the next five years and build four power plants that will produce electricity from biomass, sun and wind.

One of the main benefits will be an increase in the flow of foreign direct investment into Namibia. The projects will also reduce the present reliance on electricity imports. At the same time, the injection of new, transferable skills into the country will provide opportunities for local employment, personal development and the establishment of regional energy suppliers.

Primary beneficiaries will be rural areas, where connections are expected to rise from 34% to 50%.

Project developers will be awarded concessions that will allow them to sell their power into the grid for 25 years. During June 2019, the 45MW Mariental solar plant, the country's largest solar plant, was commissioned.

We are proud to record that we provided N$1 billion in medium-term loans for the plant. Expansion of our activities in this sector will continue as new projects are built, and participants require finance. 80 OUR SEE IMPACT

Namibian Financial Sector Charter

Principles of the Charter The guiding principles of the Charter are to: • Achieve real broad-based transformation of the Namibian financial sector. • Promote equal opportunity. Leading from the front • Make provision for financial literacy and consumer education initiatives split into four spheres, As a leading and active member of Namibia’s financial namely: services sector, SBN has always been conscious of the – Broad-based need to exercise and display ethical leadership. Therefore, we have worked diligently to supply Namibians’ services – Private and products and become an organisation that actively – Institutional and; creates and builds Namibians’ opportunities within our – Financial. business. Our other guiding principle has been that our • Promote ‘Namibanisation’ through local decision recruitment mirrors the makeup of our diversified society. making or primary listing of a local subsidiary on the Namibian Stock Exchange. In meeting our objectives to create a representative workforce, we have also made substantial investments, • Ensure high standards of corporate governance. described elsewhere in this report, to ensure that we • Be sustainable and measurable. provide our employees with occupational training and • Incorporate regional initiatives, specifically those educational opportunities. This investment supports our of the SADC. opinion that to be achieved, transformation should be meaningful and spread across all levels of the organisation. Our transformation actions have been focused on real achievements without compromising the bank’s delivery of quality, value-added services to our customers. Achieved: Governance achievements 55% Our board of directors consists of six independent, non-executive directors, three non-executive Target: directors, and two executive directors. Eight of the 8% directors are Namibians, and five qualified as B-BEE beneficiaries.

Real transformation B-BEE beneficiary board members’ exercisable voting We have avoided the traditional ‘lip-service’ approach to rights are 45%, while the exercisable voting rights of transformation, which would have seen us concentrating women B-BEE beneficiary board members is 55%, on numbers employed rather than building a company against an NFSC target of 8%. where all have opportunities to perform and develop their careers. This is being achieved by taking a disciplined approach to transformation processes within the group.

The Namibian Financial Services charter, which the Ministry of Finance introduced in November 2008, gave Achieved: statutory endorsement to the sector’s transformation. It Control 100% sought through its provisions to act as a mechanism to In relation to the subcategory of control, the NFC’s compliance encourage voluntary adoption of principles that assisted respective targets are 45% and 22%, respectively. with the transformation of banks and empowerment of The group has attained more than 40% in respect Namibians in the financial services industry and, thereby, of each of these subcategories and, therefore, has also bring tangible benefits to citizens. achieved 100% compliance against the NFCs control subcategory. SBN HOLDINGS LIMITED Report to society 2020 81

Achieved full compliance with targets Achievement of business and NFSC employment objectives As a willing signatory of the NFC, through the Namibian Bankers Association, the group is committed to achieving full compliance with the minimum targets recommended in the Charter. We are proud to record that on 31 December 2020, we had reached 66% compliance.

However, as we reflect on this achievement, we also believe that merely stating our compliance level does not tell the entire story, especially regarding important achievements at various levels with the bank. Some of our most significant accomplishments to date are:

At the executive management level, the highest level achievable by our employees who occupy positions requiring appointment by the board, we had 11 B-BEE- qualified people in key positions that involved developing and implementing the group’s strategy.

Significantly, and taking office during the first quarter of 2021, will be the group’s first female CEO. She will be joining five other women operating at this level in the country. To date, these women represent 46% of managers at this level-far exceeding the NFSC requirement of 10%).

At the middle management level, which consists of professionally qualified and experienced specialists who have interpretive decision-making power and can implement plans from executive management, SBN has 70% of all positions occupied by B-BEE people (NFSC target: 30%). Of this total, 54% are women (NFSC target: 10%).

At the junior management level, where people with technical or academic qualifications act in supervisory roles with limited authority and work as supervisors, forepersons and superintendents, fully 70% were B-BEE managers (NFSC target: 30%). Of this percentage, 54% (NFSC target: 10%) are women.

SBN Holdings is, therefore, fully compliant with NFSC targets at all level of management.

Real transformation requires real Broad public and employee investment participation in the group’s prosperity To accomplish real transformation requires that an institution During 2019, SBN achieved one of the NFC’s milestones, makes a substantial investment in ensuring that the people namely the listing of the company on the Namibian Stock across the organisation are equipped with the skills necessary Exchange. In the most successful listing yet to be undertaken to meet customers’ demands. This is especially the case in in the country, the 81 million shares on offer saw raised the financial services sector, which is becoming increasingly N$722.2 million being raised and Namibians taking up their technical and more reliant on digital innovation. full allocations.

In 2020, SBN set aside about N$12.6 million for The listing achieved several objectives. Among the most employee training and development. Due to lockdown and significant were the: other restrictions caused by the Covid-19 pandemic, only • The broadening of Nambian ownership of SBN Holdings N$5.6 million was spent during the year. so that citizens and institutional investors could participate in the group’s equity growth and income streams. • Extending the BEE ownership of SBN Holdings, and; • Creating liquidity to unlock value for the Purros Investment Scheme that was created for about 1 500 staff to participate in. • The allocation of 2% of the shares to a community trust that will help provide funding for education, health and housing for the disadvantaged.

Exceed allocation by four times

Corporate social investment The NFSC requires that 0.25% of an institution’s profits should be allocated to good causes designed to improve the lives of those Namibians who, through no fault of their own, are socially, economically and educationally disadvantaged.

The group has dedicated 1% of its profits (more than four times that required by the NFSC) on a variety of programmes across Namibia. Many of these programmes and initiatives to help build homes for Namibians, bolster their educations and assist with financial awareness are described elsewhere within this document.

SBN’s CSI programme’s strategic focus is presently on entrepreneurship development, education, health, wellness, and environmental and community upliftment issues for which N$5.9 million was allocated during 2020. 82 OUR SEE IMPACT NAMIBIAN FINANCIAL SECTOR CHARTER CONTINUED

partly met due to COVID-19 Enterprise development

Human resources development Employment equity As of 31 December 2020, SBN Holdings employed We are working with our small enterprise clients to 307 managerial staff, with 11 B-BEE executive develop financial and business support solutions to management (exco) members, or 85% of the entire executive structure (NFSC target: 25%). The meet their needs and support growth while minimising representation of B-BEE women beneficiaries in executive the bank’s risk. management is six, or 46%, of the total executive management, 36% above the NFSC target of 10%. Through our CSI activities, we are considering funding incubators to create an ecosystem and long-term relationships between companies, B-BEE beneficiaries in junior and middle management incubators and start-ups. We are working with the Deutsche Gesellschaft are 70% against the NFSC target of 30%. B-BEE women für Internationale Zusammenarbeit (GIZ) to build an incubator in in junior and middle management is 54% against the Windhoek. Another SME incubator is planned in Tsumeb with the NFSC target of 10%. collaboration of GIZ and Dundee Precious Metals. An agreement of This status also places the group in a favourable position understanding has been signed with Swakop Uranium to create an SME as it exceeded the NFSC target by 25%. incubation centre at the coast. SBN Holdings fully supports the Namibia financial sector strategy to have Skills development institutions in place that provide support to SMEs and offer products, During 2020, N$5.6 million was invested in employee services and knowledge to increase access to finance. To achieve this, the learning and development programmes. This investment NFSS directed that a study, among other strategies, be undertaken to was 0.74% of payroll. The target set by the NFSC is 2%. determine the viability of a credit guarantee scheme (CGS) in Namibia that will guarantee loans extended to SMEs.

The CGS is expected to provide partial guarantees to SME loans between N$10 000 and N$5 million for loans of up to five years. During 2019, SBN Holdings partnered with Red Bull to host the first-ever Amaphiko Connect. A two-day boot camp was held for 30 ‘ideastage’ social Achieved entrepreneurs to provide them with insights, inspiration and practical knowledge on bringing projects to life

We continued to sponsor the Namibia Agricultural Union (NAU) Agri Braai Competition. The group and the Okakarara Trade Fair hosted the Okakarara Trade Fair SME Workshop for entrepreneurs and local leaders.

Participants were offered an opportunity to attend business and farming coaching sessions to learn, discuss best practices and networking. This Preferential procurement and initiative resulted in attendees streamlining ideas to boost their enterprise development businesses, gaining new philosophies and being updated on the Preferential procurement market-related products and services by industry leaders for new innovative concepts to grow the region. The procurement department is committed to meet the procurement target of 60% of the total budget on B-BEE SBN Holdings sponsored the Red Bull Amaphiko Artist Workshop with suppliers. The total procurement budget for 2020 N$15 000 so that artists from many disciplines could learn how to turn was N$598 million for operating expenses and their art into business ventures, manage their money and market their N$1 049 million for capital expenditure. wares.

The procurement B-BEE spend for 2020 was about We also sponsored N$100 000 towards the Business Forum during the N$508.1 million, approximately 84% of the spend. Copper Festival in Tsumeb. This platform contributes to local economic growth, allows businesses to showcase products and services and Measures to meet the target of 60% set for spend promote tourism. with B-BEE local suppliers are: • Continuing alignment of the bank with the We have also: NSFC targets. • Contributed N$330 640 towards enterprise development. • Skills transfer through the establishment of joint • Allocated N$2 500 000 to the Credit Guarantee Scheme. ventures or sub-contracting with B-BEE companies. • Contributed towards projects, including the Hospitality Association of • Offering a short payment cycle to assist B-BEE Namibia (HAN), Okakarara SME Workshop, Nkurenkuru Business vendors with cash flow. Forum and the Oshipe Business Forum. • Exceeded our budget for enterprise development and contributed 159% of its annual budget against the target of N$207 000. SBN HOLDINGS LIMITED Report to society 2020 83

Corporate social investment SBN Holdings pledges 1% of net profit generated by its business Requirements for suppliers operations to CSI initiatives. This contribution is four times more Our requirements for being considered as a SBN Holdings’ than that required by the NSFC. The strategic focus of SBN supplier include: Holdings’ CSI programme is currently on entrepreneurship • Level 3 compliance with the NFSC if the supplies do not development, education, health, wellness, and environmental issues. meet this requirement, an explanation must be provided. The approved and planned budget for 2020 was N$5.9 million. • Suppliers being required to produce a valid Namibian Consumer education and protection Preferential Procurement Corporation certificate of SBN Holdings believes that honest, open relationships with ownership status when submitting tenders. customers are the basis for all communications. To this end, • Finding suitable B-BEE suppliers for various categories of we ensure that all customers have access to the information purchases remains a challenge. Still, internal controls they require when dealing with the group. ensure that B-BEE vendors retain their preferred suppliers’ We believe all customer information is confidential and take status. Application of these controls continued throughout vigorous steps to ensure that information is not compromised. 2020.

Further involvement and educational opportunities are identified We specify that: through involvement with business associations such as the • There are no conflicts of interest. All potential conflicts of Namibia Chamber of Commerce and Industry (NCCI). interest must be declared by the procurement team, the cross-functional sourcing team that oversees tenders and RTS Read more on page 75. tender board members. • All employees must annually declare any outside business Access and affordability of financial products interests they hold, or as they arise. • All our procurement contracts include terms and To enable people across all socioeconomic levels to access conditions of business that also define corrupt procedures banking, a range of products and services are available. that invalidate tenders or purchasing contracts. RTS Further details on these and our electronic scoring system • Set procedures for resolving disputes between the group can be found on page 77. and suppliers are itemised. • SBN Holdings retains the right to terminate supplier Procuring from local suppliers contracts where contract violations involve fraudulent behaviour. As a financial services institution, we believe that all employees and executive management must adhere to policies that ensure ethical standards of behaviour are maintained with colleagues, Engaging with suppliers suppliers, customers and stakeholders. A successful procurement policy requires that both sides agree to operate in a mutually beneficial manner, with each These ethical guidelines apply equally to suppliers who must delivering on the contract. We encourage healthy supplier adhere to our regulations regardless of the services or products relationships by: they supply. • Engaging with suppliers to build lasting, positive Contractors are selected on merit through a transparent, relationships that promote valid transactions. documented acquisition process designed to encourage local • Encouraging feedback on our procedures by suppliers. sourcing and reinforce national efforts at promoting • Regularly communicating with individual suppliers transformation through the development of local businesses. regarding service delivery contracts. Criteria have been established to ensure that black-owned • Resolving complaints and queries from suppliers. companies can participate in our supply chain. Where possible, • If a B-BEE supplier has cash flow problems, we consider goods and services are sourced locally rather than through the feasibility of making pre-payments to assist with foreign suppliers. stabilising the business.

To promote sound decision-making, a tender board composed 2020 performance of senior executives and specially trained employees implements The overall procurement budget for 2020 was N$598 million our procurement policy and issue purchase requisitions. The for operating expenses and N$1 049 million for capital environment, risk and social matters are assessed when buying expenditure. or requisition decisions are made. Purchasing is automated and is continuously monitored and measured. For 2020, the procurement B-BEE spend was N$508.1 million, about 84% of the total procurement spend for the year. This spending met the targets for 2020, which were set at 60% of total operational and capex budget to be allocated to local B-BEE suppliers.

Our success was achieved by: • Continuously aligning our spend with the targets required by the NFSC • Encouraging skills transfer through the establishment of joint ventures or sub-contracting with B-BEE companies. • Assisting with short payment cycles where this was necessary. 84 OUR SEE IMPACT

Governance and ethics

We regard sound governance practices as a business imperative necessary for creating and maintaining long-term stakeholder value.

Our approach

The chairman and the board are responsible for setting the ethical tone for the group.

The board, through its relevant committees, provides oversight of the group’s activities, assesses Committees that deal with adherence to our values and ethics, and monitors specific sustainability issues: compliance with regulatory and legislative requirements, based on reporting by executive SBN Holdings board management, internal auditors and external auditors The board monitors the implementation of our strategy, taking on measures implemented to ensure compliance with into account relevant economic, environmental and social regulatory and legislative requirements. issues, and international political and economic conditions and the related risk mitigation strategies implemented by The group’s governance framework also enables the management. This includes performance against the NFSC. board to balance its role of providing risk oversight and strategic counsel, and tolerance to the risks that Board risk committee are an integral part of a financial institution’s The board risk committee is responsible for reviewing and operating environment. recommending the risk philosophy, strategy and policies for The board is committed to upholding the approval and adoption by the board of directors. The committee fundamental tenets of governance, including assists the board in discharging its duties relating to the discipline, independence, responsibility, fairness, corporate accountability and associated risks in management, social responsibility, transparency and accountability assurance and reporting. of directors to all stakeholders.

The board’s approach to governance is to embrace relevant local and international best practices. The principles of the Corporate Governance Code for Namibia (NamCode) guide the governance framework and practices of the group and its subsidiaries.

Our ethics Our code of ethics guides us in our dealings with all stakeholders. We promote an ethical approach to Board audit committee business that begins with our employees’ acceptable This committee reviews the company’s financial position and conduct and extends across all our activities and makes recommendations to the board on financial matters, transactions with our clients. The board audit risks, internal financial controls, fraud, and IT risks relevant to committee oversees the implementation of the code financial reporting. Where risk and capital management are of ethics, and ethics reports are presented to the concerned, the committee plays a crucial role in ensuring that committee every quarter. the company’s internal financial controls are adequate to effectively and efficiently mitigate risks. Our governance framework Board HC committee Executive committee Ensures that our compensation structure is consistent with The board has delegated executive management the bank’s culture, objectives, strategy and control environment oversight for all risk types to exco, which helps the and that it complies with applicable laws, rules, policies and board fulfil its mandate. Exco considers and, to the regulations. extent required, recommends for approval by the relevant board committees: Board CSI committee • Risk appetite statements Ratifies our CSI strategy and has overall accountability • The approval of macroeconomic scenarios for for reputation management related to CSI initiatives. stress testing, stress testing results and scenario analyses Board IT committee • Risk governance standards for each risk type Invest in mobile banking and digitisation to support • Actions on the risk profile and risk tendency financial inclusion. • Risk strategy and key risk controls across the company Internal Capacity Adequacy Assessment Process (ICAAP). SBN HOLDINGS LIMITED Report to society 2020 85

Our board Structure and composition SBN Holdings has a unitary board structure. The roles of chairman and chief executive are separate, with respective responsibilities that are clearly defined. The chairman is an independent non-executive director.

Board members’ independence is evaluated by the board human capital subcommittee, which classifies independence according to the definitions in the NamCode.

Board membership, individual and collective, are regularly reviewed to ensure that the board remains strategically, demographically and operationally appropriate. This also applies to the committees of the board.

The retention of board members with considerable experience is prioritised to ensure that proper management oversight levels are maintained.

When appointing members, factors such as independence, skills, knowledge and experience are considered. Shareholders appoint directors at the annual general meeting, and interim board appointments are allowed between annual general meetings.

The balance of executive, non-executive and independent directors ensures a balance of power. No individual or group can dominate board processes or decision-making and ensures the appropriate level of challenge.

2020 2019

Number of board directors 11 9 Gender composition Women 5 4 Men 6 5

Independence Independent non-executive directors 6 6 Non-executive directors 3 2 Executive directors 2 1

Nationality Namibian 8 7 Other 3 2

Race diversity Black – Namibian 5 5 White – Namibian 3 2 Non-Namibian 3 2 86 OUR SEE IMPACT GOVERNANCE AND ETHICS CONTINUED

Skills, knowledge and experience The directors bring a balanced mix of attributes to the Managing sustainable development board, including: The board, acknowledging its duty and role of promoting responsible corporate citizenship within the group, has a • Domestic and international experience well-developed governance structure for maintaining sustainable • Operational experience development in the organisation. • Understanding of macro-and microeconomic factors affecting the group The governance structure allows for the delegation of responsibilities for specific aspects of managing sustainable • Financial, legal, entrepreneurial and banking skills development on a day-to-day basis. However, the board remains • Expertise in risk management and internal financial responsible for monitoring the implementation of board plans control. and strategies against the backdrop of economic, social and environmental issues relevant to the company. New board appointees attend induction programmes that cover training on their fiduciary duties and responsibilities. Building on the group’s previous non-financial disclosure in its Discussions with management across various parts of our annual reports, this year, the group has improved its reporting to business are included as part of the programme to include more information on issues that are material to facilitate their understanding of the group's operations. stakeholders and the group’s long-term sustainability. The performance of the board is evaluated annually, assisting the board to improve its effectiveness. Any areas The group company secretary’s office is responsible for matters of concern are addressed, and action points implemented involving sustainability and reports directly to the chief executive. The office is responsible for embedding a consistent approach to environmental and social risk management within the group.

It fulfils its obligations in this regard by:

Managing conflicts of interest Facilitating policy Monitoring and Board directors declare their interests and performance evaluating the annually and at every meeting. They must standards group’s sustainability recuse themselves from discussions in performance which they have or may be perceived to have a conflict of interest.

Other directorships of board members are disclosed in the corporate governance report in our annual report. Raising awareness of sustainability matters Supporting business through relevant areas throughout stakeholder the group engagement.

Relationship with stakeholders Regular, pertinent communication with stakeholders is part of the group’s fundamental responsibility to create shareholder value and improve stakeholder relationships. In addition to the company secretary’s scheduling of Our memberships of various ongoing engagement, the chairman encourages shareholders to attend the annual general meeting, professional and business where interaction is welcomed. organisations and associations help The chairman of the board audit committee and the chairman of the board human capital subcommittee are us to assess and contribute to available at the meeting to respond to questions from dialogues around social, environmental shareholders. The group proposes separate resolutions on each issue put forward to shareholders. and economic sustainability. SBN HOLDINGS LIMITED Report to society 2020 87

Embedding ethics in our business Effective and anonymous reporting are critical mechanisms for combating fraud. For this purpose, we have an ethics and fraud Our ethical culture is driven by the way we do things. hotline, human resources, risk and financial crime control As such, our code of ethics guides us to be responsible and departments, and an ethics officer. respectful in our dealings with all our stakeholders. It does so Incidents reported through these mechanisms mostly concern by outlining acceptable business conduct and is an essential fraud, harassment, ethical dilemmas in procurement and abuse reference point for employees acting on behalf of the group. of authority. All allegations reported are investigated, and We focus on shifting our culture so that it supports our strategic appropriate steps are taken in each case. journey and concentrates on: The ethics and fraud hotline is operated by KPMG Services and • Connecting every team’s work to the group’s larger purpose is available 24/7, 365 days a year. It enables confidential and of serving our clients with integrity. anonymous reporting of unethical behaviour, including alleged • Creating shared goals across different areas. bribery and corruption. • Enabling people to take ownership of their work, promote Even if the service provider becomes aware of the caller’s awareness of, and sensitivity to, ethical issues. identity, it is not permitted to divulge the caller's identity to • Serving as a reference for values that guide employees and the group. mitigate against inappropriate conduct that harms our clients, markets, or business. Our policy provides protection of whistle-blowers. This prohibits • Aligning ethics with our policies and procedures and any form of retaliation against an informant who has made an supporting relevant industry regulations and laws. honest disclosure. Accordingly, retaliation in any form is regarded as gross misconduct and dealt with accordingly. The board audit committee oversees the implementation of the code of ethics, and ethics reports are presented to the committee every quarter.

Our employees are required to read, understand and familiarise themselves with the code of ethics. The code and our values are included as part of our orientation programme for new employees. Regular communications on ethics are delivered to our people to maintain their awareness. Our ethics and fraud hotline is available to employees Our values also form part of our performance management and external parties. The hotline’s details are regularly process, where our people hold themselves and each other communicated through email and training interventions accountable for appropriate behaviour in their day-to-day on topics such as ethics and financial crime. New responsibilities. employees are informed of the whistle-blowing hotline during orientation. External stakeholders can access information about our ethics and fraud whistle-blowing Our code of ethics addresses hotline on www.standardbank.com.na. the following topics: • Promoting honesty • Respecting human dignity Protecting our physical • Treating customers fairly assets • Working together • Addressing conflicts of • Providing secure banking interests facilities • Combating unethical and Embedding an ethical culture • Evaluating performance criminal activities Board of directors objectively • Prohibiting the giving and Our board is tasked with providing effective leadership based • Creating sustainable value receiving of bribes on an ethical foundation. for shareholders • Prohibiting facilitation • Adhering to good payments corporate governance • Ensuring the responsible Formal custodians • Engaging in political giving and receiving of gifts activities responsibly Our chief executive and ethics officer are the official custodians • Rewarding innovation of the code of ethics and are responsible for its implementation. • Protecting intellectual • Reporting of unethical property behaviour. • Avoiding anti-competitive behaviour Employee training All our employees must complete ethics training through an e-learning programme. 88 ADDITIONAL INFORMATION

ADDITIONAL INFORMATION

References

External information sources have been used to supplement internal information in this report. References to this external information is shown below.

Inside front cover Message from the Our value creation story https://knoema.com/atlas/Namibia/ Chairman and Chief Foundation for Economic Research topics/Tourism/Travel-and-Tourism- Executive https//www. gsmaintelligence.research Total-Contribution-to-GDP/Contribution- https://www.cia.gov/library/ of-travel-and-tourism-to-GDP-percent-of- https//moguldom.com:sub-saharan publications//the-world-factbook/geos/ GDP mobile economy print_wa.html https://www.namibian.com.na/173740/ https://www.tralac.org/resources/ https://int.search.myway.com/search/ archive-read/Tourism-sector-largest- our-resources/6730-continental-free- GGmain.jhtml?p2=%5ECPX%5Echr999 earning-industry trade-a %5ETTAB03%5E&ptb=BEC0D0AB- https://economist.com.na/51940/ BD0C-4B49-AE53-CA6BC1CBDDA3&n=7 tourism/standard-bank-grants-loan- 866f04b&ln=en&si=&tpr=hps Our economic impact: relief-to-affected-tourism-sector/ https://en.wikipedia.org/wiki/ Supporting SMEs https://www.namibiansun.com/news/30- Demographics_of_Namibia (statement of http://www.ijrerd.com/papers/v3-i8/3- 000-tourism-jobs-in-jeopardy2020-04- UN estimates in 2018) IJRERD-C165.pdf

https://tradingeconomics.com/namibia/ http://www.mti.gov.na/downloads/ tourist-arrivals About SBN Holdings MSME%20policy%20final.pdf https://www.namibian.com.na/186261/ Limited – Humble archive-read/Drop-in-logistics-sectors- beginnings contribution-to-economy https://www.namdia.com/history/ http://www.wbcg.com.na/wp-content/ uploads/2019/03/2018-Namibia_of_ State_of_Logistics-Report.pdf Contact and other details

Standard Bank Group Limited Registration number: 2006/306 Country of incorporation: Republic of Namibia

Head office switchboard +26 461 294 2000

Registered address Chief financial officer Standard Bank Campus Letitea du Plessis No 1 Chasie Street, Tel: +26 461 294 2237 Kleine Kuppe, Windhoek

Postal address Head: Legal and Governance PO Box 3327, Windhoek, S Tjijorokisa Namibia Tel: +26 461 294 2036

Please direct all annual report queries and comments to: [email protected]

Please direct all customer-related queries and comments to: [email protected]

Please direct all investor relations queries and comments to: [email protected]

Disclaimer

This document contains certain statements that are ‘forward-looking’ with respect to certain of the group’s plans, goals and expectations relating to its future performance, results, strategies and objectives. Words such as “may”, “could”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “aim”, “outlook”, “believe”, “plan”, “seek”, “predict” or similar expressions typically identify forward-looking statements. These forward-looking statements are not statements of fact or guarantees of future performance, results, strategies and objectives, and by their nature, involve risk and uncertainty because they relate to future events and circumstances which are difficult to predict and are beyond the group’s control, including but not limited to, domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities (including changes related to capital and solvency requirements), the impact of competition, inflation, deflation, the timing impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of changes in domestic and global legislation and regulations in the jurisdictions in which the group and its affiliates operate. The group’s actual future performance, results, strategies and objectives may differ materially from the plans, goals and expectations expressed or implied in the forward-looking statements. The group makes no representations or warranty, express or implied, that these forward-looking statements will be achieved and undue reliance should not be placed on such statements. The group undertakes no obligation to update the historical information or forward-looking statements in this document and does not assume responsibility for any loss or damage arising as a result of the reliance by any party thereon.

www.standardbank.com.na SBN Holdings Limited REPORT TO SOCIETY 2020 standardbank.com.na