Abridged Annual Report 2017/2018 Contents

ABRIDGED ANNUAL REPORT 2017/2018 CONTENTS

Who we are 5 Chairman’s Report 14 Managing Director’s Report 17 Financial Director’s Report 21 Integrated Operations Overview 33 Risk Report 47 Our People 67 Corporate Social Investment 85 Six-Year Review 92 Statistics, Returns & Capital Adequacy 94 Governance Report 97 Directors’ Responsibilities and Approval 114 Audit Committee Report 117 Independent Auditors Report 119 Directors’ Report 121 Summarised Consolidated and Separate Statement of Comprehensive Income 124 Summarised Consolidated and Separate Statement of Financial Position 125 Summarised Consolidated and Separate Statement of Cash Flows 126 Summarised Consolidated and Separate Statement of Changes in Equity 127 Accounting Policies 131 Selected explanatory notes to the Summarised Consolidated and Separate Annual Financial Statements 132 4 01 WHO WE ARE 4 Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration David AllanCoe that willstand thetest oftime. construction ofthefoundation you shouldlook at;it’s the It’s notthebeautyofabuilding WHO WE ARE

A wholly-owned subsidiary of The Bidvest Group Limited, Bidvest Bank is an entrepreneurially-minded bank that strives to change the way people and organisations do business with their bank. We’re a bank dedicated to change. A bank that constantly evolves to better suit today’s everchanging world. A bank that embraces ideas and innovative thinking. Above all, we’re a bank that always seeks new and better ways to improve our customers’ lives. We are the bank that chooses to partner in our customers’ successes, rather than inhibit them. Whether it is business banking, personal banking, fleet solutions or treasury, our boutique range of offers, helps our customers and their businesses to thrive.

Together, let’s get it done.

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 Bidvest Bank Limited 5 01 WHO WE ARE 6 1998 Heritage achievement. their inhibiting than rather successes, in building our customers’ to partner strive we importantly, Most their to lives. improve ways and better for new constantlylooking by our and retain customers, toWe serve exist our customers. satisfying from us restrict systems or resources processes, letting ever without legislation abide by We always values. and our upon things culture done, in aunique manner that isconstructed getting is about all it For us, our customers. after and look service we in which in our the competitors way from We differentiate ourselves foundation wedo. of everything Our vision and mission are at the Bidvest Bank Limited Foreign Exchange business. Exchange Foreign Rennies the includes which Group, Rennies The of 100% acquires Group Bidvest The VISION AND MISSION AND VISION Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration 2000 transfers via MoneyGram. via transfers launches international money Exchange Foreign Rennies business. Exchange Foreign Rennies the including Bank, Rennies as licence a banking granted is Group Bidvest The 2007 expertise. banking with talent retain and attract to drive Focused Bank. Bidvest as Bank Rennies rebrands and brand Bidvest the of equity the leverages Group Bidvest The 2008 launched. platform trading international Online™ Payments Global launched. Card™, Currency World product, exchange foreign Flagship 2009 and Management Services. Finance Fleet offers and Group McCarthy the from Solutions Fleet McCarthy acquires Bank Bidvest market. to launched accounts investment and Savings 2010 join the bank. the join lending expertise and Credit 2011 banking banking launched. transactional Personal 2015 banking banking launched. transactional Business 2016 to market. to communicated done’ it get ‘Let’s Business philosophy 2017 merchant merchant services. launches business Bank Bidvest 2018 1998 Foreign Exchange business. Exchange Foreign Rennies the includes which Group, Rennies The of 100% acquires Group Bidvest The 2000 transfers via MoneyGram. via transfers launches international money Exchange Foreign Rennies business. Exchange Foreign Rennies the including Bank, Rennies as licence a banking granted is Group Bidvest The 2007 expertise. banking with talent retain and attract to drive Focused Bank. Bidvest as Bank Rennies rebrands and brand Bidvest the of equity the leverages Group Bidvest The 2008 launched. platform trading international Online™ Payments Global launched. Card™, Currency World product, exchange foreign Flagship 2009 and Management Services. Finance Fleet offers and Group McCarthy the from Solutions Fleet McCarthy acquires Bank Bidvest market. to launched accounts investment and Savings (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Let’ Let’ Let’ Let’ Let’ Let’ Let’ Let’ Let’ s believethaterychall s li s beaccount s think,que s seethebarrier s ne s t s doitt s l OUR BRANDMANTRA ook f ak 2010 t v en, t e theriskst er accept‘no’asstartingpoint join the bank. the join lending expertise and Credit or theopportunities oday, nott alk andunder LET’S GET LET’S GET IT DONE abl IT DONE tion, thenact e f s asspeedhumps ogether omorr or ourdecisions 2011 s o t banking banking launched. transactional Personal enge c and w an besol 2015 banking banking launched. transactional Business v ed 2016 Let’ Let’ Let’ Let’ Let’ Let’ Let’ in ourheartsandbounc to market. to communicated done’ it get ‘Let’s Business philosophy s t s ne s t s giv s seizethebullbyhorns s helpother s getitdone! ackl ak v e itourall e thehighr er turnfr e eachchall 2017 s gettheirthingsdone om thetruth merchant merchant services. launches business Bank Bidvest oad enge withasmil e inourstep Bidvest Bank Limited e 2018 7

01 WHO WE ARE 01 WHO WE ARE 8 Bidvest Bank Limited t m u s s a ‘ o O r h m a b W T n am u o a n n s W a h r e w n o h y thi t l i e l g acl ’ i d t l s i e s w , t e n t i n h i t n s t o u e f h s e t t n e r t e c o a‘ u r i r t e q s i o ‘br n o g r t e h g n o Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration n m t g t s t n t y i e c n t a h u a THE MORALCOMPASSTHATDRIVESOURBEHAVIOUR t r y u h e t s w h a i o LISTEN o l e e n i i o h r c a l n i . I s n r i e r t s a g i t e ’ a n p n g h y o t u s a e p t ’ s don a k i e s s o est t o o am r n r o t h t t n f o s d ‘ o r s u s b , g n t n t m . o e u u ’ m e o . n l s a r e n r w e i p o g o o e o a . i r s u leh t f t w y s i p o e b ’

r f a h r s e s i r e k l . ’ t l , VALUES W a s e n i a o e r o n ﬁnd v d t don n u W l s e u d e r c e p r e b h W t s y s i t i i r e c e s o g o n u p e a v e n g n e s e e o i s u tua s t t l o m c r u e o i p y p n t a e t r b e m p a s a h t v w t R r r l e i h a n i e y h e i u t o t w b ESPE i d v e r n r n s n n c u s a s r a d o i g o a . T n t o i a n s don y i l n m e o o n n l l g s t e h u u s n t n d f d p s CT i r c s e d s i s e o s t . a t h y t t thi a a r l e s w k a s i i o n e . e v e o t e t v r e t

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y (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration HONESTY QUALITY informed. customers Keeping C andmanner. courteous a credible in promises our on Delivering C HOW WESERVICEOURCUSTOMERSTO‘GETITDONE’ SERVICE STANDARDS LISTEN A in all we do. we all in Approachable, RESPECT E putting them ﬁrst. them putting and needs customers’ our Understanding INNOVATE ENERGY S services and solutions. services seamless to deliver enough Flexible R to help, promptly.to help, willing Always Bidvest Bank Limited 9 9

01 WHO WE ARE 01 WHO WE ARE 10 MERCHANT SERVICES SERVICES LENDING Bidvest Bank Limited

Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration INTERNATIONAL TRANSACTIONAL PAYMENTS BANKING OUT OF BUSINESS OF OUT BORN BANK THE SERVICES BANKING BUSINESS

FULL MAINTENANCE INVESTMENTS SAVINGS AND LEASING

EXCHANGE FOREIGN SERVICES TRADE

TRANSACTIONAL BANKING SERVICES BANKING PERSONAL BANKING CONVENIENT SIMPLE & INVESTMENTS OFFSHORE OFFSHORE

INVESTMENTS SAVINGS AND

INTERNATIONAL PAYMENTS Bidvest Bank Limited EXCHANGE FOREIGN

01 WHO WE ARE 01 WHO WE ARE 12 VALUE-ADDED SERVICES: VEHICLE SOURCING MOTOR INSURANCE VEHICLE TRACKING Bidvest Bank Limited MAINTENANCE MANAGED

Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration FULL MAINTENANCE MAINTENANCE CONTRACT LEASING SOLUTION MANAGEMENT FINANCE AND ALL-IN-ONE FLEET MANAGEMENT FINANCE AND FLEET

FLEXIBLE RENTALS SHORT-TERM OPERATING RENTALS

INSTALMENT SALES AND FINANCIAL LEASEBACK SALE AND LEASING

01 WHO WE ARE CHAIRMAN’S REPORT CHAIRMAN’S REPORT CHAIRMAN’S

On behalf of the Board, I am privileged to report to our shareholder, regulators, our people, customers, business partners and all our other stakeholders that Bidvest Bank is in good shape, having made significant progress on a number of strategic initiatives during the year, and with the prospect of more to follow. We are grateful to our shareholder for your ongoing support, for challenging our strategic thinking and implementation, and for allowing us to proudly share NIGEL GEORGE PAYNE the Bidvest brand.

The integrated report contains a wealth of information about our human capital, our values, our vision, our strategies to get there and the related risks we are embracing and mitigating. Risk taking and mitigation, as well as compliance with an increasing range of regulations are an integral part of banking. We have appropriately robust and arm’s-length relationships with our regulators and have benefitted from these interactions during the year. We take our regulatory and societal licences to operate very seriously at Bidvest Bank, and view all our actions from the perspective of a fair deal for our customers and our business partners. If there is anyone who believes we have not lived up to these high standards, I invite you to contact me personally and in confidence.

We have an excellent and committed executive team in place, a clearly defined strategy; are deploying the capital and other resources required in order to get there, and are approaching the future with confidence. I encourage you to read the reports prepared by our CEO Japie van Niekerk and CFO Thinus Liebenberg. We are not entirely satisfied with our financial performance, but have taken the actions required to improve thereon.

We are pleased with the progress we have made on transformation within Bidvest Bank. Whilst we recognise the increasing use of technology in banking, and have invested a significant amount of capital in our own technology roadmap, we believe steadfastly that our people remain our biggest competitive advantage.

Our governance report details various aspects of the performance of the board and board committees, all of which I believe were appropriately executed. The board comprises largely of independent non-executives, with an appropriate mix of skills and experience. Board meetings are characterised by their strategic focus, robust discussion and effective decision-making. I thank my fellow Board members for their wise counsel and ongoing commitment during the year. We are in the process of a Board refresh and look forward to the contribution to be made by some new colleagues we will soon be welcoming to our Board.

Nigel George Payne Chairman

14 Bidvest Bank Limited (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 Jill Murtagh, DiCrawley, Russell Fogg, Alexia Shuenyane, JodiRaviv,Japievan Niekerk (Front row) Mkhuseli Setuse,ThinusLiebenberg, NeilCapazorio,Frikkie Hanekom (Back row) Executive Committee (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Bidvest Bank Limited 15

02 CHAIRMAN’S REPORT 16 03 MANAGING DIRECTOR’S REPORT

16 Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Larina Kase create it. unless you take itoutand inside you. Itwillstay there The blueprintfor success is (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration next financial year and we expect this to reflect an improvement in the Fleet numbers. numbers. Fleet the in improvement an reflect to this expect we and year financial next the in materialising contracts fleet large of anumber see We should results. the impacted contracts fleet their for (SOE) Enterprises State-Owned the by making decision in delays the contracts, smaller of anumber secure did team the Although year-end. at 1% down being Balances Assets Leased despite country, the in largest third the remains division Fleet Our in 2019.reinvigorated it see will that Banking Personal for plan asolid have we and growing, are Treasury and Banking Business – place in firmly are growth future Bank’s the for blocks building The billion. to R3.6 27%, by position, cash our in increase the and sheet balance strengthening our in reflected is growth The 2018. in Growth Sector Total the Banking double than more been has growth Our Total on Assets. based Africa South in banks fastest-growing the of one as Bank Bidvest indicating Bank Reserve African South the is this of Proof off. paying is approach this and things, do we which in ways the in innovate and disrupt us seen has done” it get “Let’s of philosophy Our rise. the on always is competition innovation for demands consumer of increase the and technology by Driven to change. continues that landscape banking African aSouth amidst growth organic good delivered has Bank Bidvest CONTINUED SOLID BALANCE SHEET GROWTH SHEET BALANCE SOLID CONTINUED MANAGING DIRECTOR’SMANAGING REPORT 27% DEPOSITS R3.6 billion R3.6 27% CASH ADVANCES & 7% LEASES JAPIE VAN NIEKERK Bidvest Bank Limited 17

03 MANAGING DIRECTOR’S REPORT 03 MANAGING DIRECTOR’S REPORT 18 of Business Banking growth by being a good introduction tool for additional new business. new additional for tool introduction agood being by growth Banking Business of driver akey to be proving is it and year last the over exponentially grow business the seen have we Services, Merchant Bidvest rebranded Now market. abroader to service streams revenue its diversifying of strategy bank’s the with line in was FDRSA of acquisition The transactions. annual in trillion $2.2 totalling day, every of second every transactions payment 2800 than more powers also It world. the around countries 100 than more in institutions financial 4000 and locations business six-million approximately serves Corporation Data First technology. commerce-enabling in leader aglobal Corporation, Data First of business acquiring African South the (FDRSA), Africa South Resources Data First of 100% 2017, acquired August In we Mutual. Old with partnership growing and astrong We maintain their funds. externalise to wishing Africans to South service high-quality and ahigh-touch provides FinGlobal team. the with relationship closer a much to build Bank the enabled has and formalised been 2017 has November in Services Financial Bidvest by FinGlobal of acquisition The division. to the FinGlobal and Managers Asset Cannon Services), Merchant Bidvest (renamed Data First of addition the with opportunities cross-sell robust delivered have acquisitions strategic afew Services, Financial Bidvest and Bank, the both For Services. Financial Bidvest of division akey as and stable banking our within both partnerships, to build continues Bank Bidvest Partnerships Building Aa2. as rating our reconfirmed has which Moody’s by recognised again once was approach This conditions. market the challenging amidst risks take on unreasonable don’t we that cautious remain also we opportunities, new the of prospect the about excited are we Although prudent. remains risk for appetite our strategy, acquisitive to our parallel In pipeline. business new expanding an of advantage to take headroom adequate provides which strong, are reserves cash year. Our last the over results pleasing yielded has strategy diversification Our • • • • areas: priority are drivers revenue following The streams. revenue and products of diversification through Bank the building on remains focus strategic The our corporate contract volume. contract our corporate grow and year) this contract large one (win SOEs with contracts grow and –retain Fleet and cash; on yield our improve and to retain and generator arevenue to become business, to the provider aservice just being beyond –shift Treasury launching; products retail –new Banking Personal banking; and transactional deposits acquiring, lending, via – growth Banking Business Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Managing Director Japie Niekerk van years. few last the over built have we that foundation solid the on to capitalise well Bank the positions innovation and business new of 2019 pipeline Our innovation. retail significant and important an be will which Account, Grow our launch us sees year financial next the portfolio, Banking Personal our In book. Banking Business our into business better-quality significantly attracting are we Services Merchant Bidvest of addition the With division. Fleet our in –specifically contracts large of number a securing be will we that year, positive Iam and coming the about excited We are growth. delivering continue to knowledge the and people of team strong a have we that confident I am Ahead Looking codes. new the on Empowerdex by verified 4rating Level (B-BBEE) Empowerment Economic Black Broad-Based a has now and scores equity its improved year,Bank the financial last the During transformation. improved our in to show continues leadership and talent of development This programme. e-learning our for award an with internationally recognised been have efforts our year. fact, In financial last the during initiatives learning into R11 over million invested –having levels all at development and education on focus strong our maintain and proposition value employee competitive our of benefits the to reap We continue Bank. the within placed being candidates of 100% in resulted have 2015, in established were which Programmes, Graduate and Learnership Our creation. value long-term and growth Bank’s to the fundamental are people our that We believe business. do we way the in innovation cultivates this turn, In our among people. spirit an entrepreneurial that and culture encourage environment an to create strive continuously we entrepreneurs, by founded originally aBank As level. national and aregional on communities well-resourced of growth sustained toward of Our spend and eGAMA. Academy Roedean The Care, Orphans Simamisa Bathebile, Leadership, Columba including initiatives and programmes several We support economy. the of growing to the contribute can that areas important most the are these that We believe creation. job and development business education, in to invest continues (CSI) Investment Social Corporate Our operate. we which in communities the and customers employees, our by possible made been has growth Our us. around businesses and people communities, the into to invest continue we citizen, African South acommitted As People of A Foundation hoped that this would have shown up better in the income statement. statement. income the in better up shown have would this that hoped had but growth, sheet balance continued our with satisfied are we perspective, this From have. always we as customers, our after to look continued have we yet and profile, risk correct the with businesses high-quality find to difficult more business; new land to difficult more it made have challenges Market past. recent the in year any than year this harder to work needed has team our conditions, market current of aresult As R2.25 million R2.25 on CSI, and and CSI, on

R2.1 million on social-economic development, respectively, contribute contribute respectively, development, on social-economic

Bidvest Bank Limited 19

03 MANAGING DIRECTOR’S REPORT 04 FINANCIAL DIRECTOR’S REPORT 20 Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Unknown is always better. but theview from thetop The climbmaybetough, FINANCIAL DIRECTOR’S REPORT

We continued to focus on our long-term strategy to diversify the Bank’s Balance Sheet as well as income streams and to continue to invest in people, products and IT solutions. Throughout the past few years we have continued to be well capitalised, generating healthy returns compared to our peers. Our ROE has

come down somewhat as we increase our advances book, but it should be taken FINANCIAL REPORT DIRECTOR’S into account that our total CAR of 29.9% is well above regulatory requirements. 04

Our diversification strategy resulted in our net interest income growing by 15.2% CAGR and we continue to maintain a strong focus on cost management, with cost THINUS LIEBENBERG increasing by less than inflation.

Our Business Banking strategy is starting to make a positive contribution bolstered by our acquisition of First Data South Africa renamed Bidvest Merchant Services. Our strategic focuses going forward also include to grow our Corporate Fleet Business, grow our Treasury FX solutions and to optimise our Physical Branch infrastructure.

PROFIT BEFORE TAX TIGHTENED COST MANAGEMENT WITH COSTS ONLY INCREASING BY R419 Million * *Operating expenses 10% 1.6% and indirect taxes

TOTAL ASSETS INCREASED TO Strong balance sheet maintained and well capitalised. R9.2 Billion 18%

DEPOSITS INCREASED TO CASH BALANCES INCREASED TO

R5.7 Billion R3.6 Billion 27% 27%

Diversiﬁcation of Income streams MAINTAINED A LEVEL continued across the Bank with new products launched to B-BBEE RATING support our strategy. (NEW CODES)

HEALTHY CAPITAL ADEQUACY RETURN ON EQUITY MAINTAINED AT RATIO INCREASED TO 29.9% 11.3%

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 Bidvest Bank Limited 21 04 FINANCIAL DIRECTOR’S REPORT 22 for the year ended 30 June 2018 June 30 ended year the for KEY FINANCIAL STATISTICS FINANCIAL KEY CONTRIBUTION TO REVENUE 2018 Liquidity coverage ratio coverage Liquidity Capital Adequacy Ratio (qualifying) Adequacy Capital Net stable funding ratio funding stable Net Total CAR Return on equity equity on Return assets on Return Equity Deposits Leased Assets and Advances Loans Cash and Equivalents Cash Cash Assets Total ratio loss Credit income to Cost taxation direct before Profit taxes) indirect (incl. expenditure Operating Operating income Operating activities leasing from income Net Net fee and commission income commission and fee Net Net interest income interest Net Bidvest Bank Limited 2017 24% 36% 26% 38% Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration 0% 0% 22% 14% 25% 15% Percentage Percentage Percentage Percentage Percentage Percentage Percentage Percentage R million R million R million R million R million R million R billion R billion R billion R billion R billion R billion NET INTERESTINCOME NET FEEANDCOMMISSIONINCOME NET INCOMEFROMLEASINGACTIVITES NET TRADINGINCOME OTHER INCOME 153.2% 162.9% 1,186.8 (773.7) 64.9% 20.6% 2018 29.9% 11.3% 0.15% 430.0 301.2 177.0 419.3 3.3% 2.4 3.6 2.7 5.7 9.2 1.7 101.0% 1,234.1 151.0% (762.6) 28.5% 62.0% 13.3% 2017 0.13% 20.1% 466.6 265.6 475.3 167.0 4.3% 4.5 2.8 2.5 2.1 7.8 1.7 % Change -10.1% 52.2% 0.02% 13.3% 18.0% 26.6% 13.4% 27.0% -3.8% -2.0% 11.9% -9.5% -1.2% -1.0% 2.8% 6.0% 0.5% 5.7% 1.4% 1.6% Financial Overview The Bank continues to grow its balance sheet and to diversify its Income streams. Total Assets have grown by 18.0% to over R9.2 billion. Deposits have grown 26.6% to R5.7 billion and Loans and Advances 13.3% to R2.4 billion. Leased assets are slightly down (1.2%), mainly due to no large Full Maintenance Leasing contracts signed up during the year.

Bidvest Bank revenue decreased by 3.8% to R1.19 billion FINANCIAL REPORT DIRECTOR’S 04 (2017: R1.23 billion), with the decrease mainly attributable to the reduction in Net Income from Leasing activities. Net Interest Income and Net Fee and Commission Income increased with R45.7 million (10.6%) year on year.

Operating expenses (including indirect taxes) increased by 1.6% resulting from continued, strong focus on cost containment.

The negative JAWS of -5.4% vs prior year -4.7 indicating costs growing slightly by 1.6% with revenue declining by 3.8%.

The Bank continues to maintain strong Returns on Equity, Return on Assets and Capital Adequacy Ratios of 11.3%, 3.3% and 29.9%, respectively.

Economic Environment South Africa experienced a particularly challenging economic environment in the 2017/18 financial year, having slipped into a technical recession in the quarter ended June 2018. Initially, an uncertain political environment in the run-up to the ANC’s elective conference in December 2017 exerted a drag on investment activity, with business confidence in particular taking a knock. Whilst there was a brief recovery in business confidence amidst President Ramaphosa’s rise to power, this proved short-lived as the markets came to grips with the severity of the structural economic decline that has unfolded in recent years. Policy uncertainty remains entrenched given lingering concerns related to land reform plans as well as a new national health insurance structure.

Trade dynamics Against this backdrop, South Africa has continued running a positive balance on its trade account on a 12-month rolling basis, albeit that the surplus has shrunk in recent months. Despite aggregate domestic demand being constrained by lacklustre investment and subdued household credit growth, imports have surged higher. This has been a function of a significant increase in the price of Brent crude, with topside pressure compounded by a weaker ZAR. In an environment where an import-orientated economy is running a trade surplus, FX activity related to import financing is likely to be relatively more constraint, especially if the higher value of imports has been mainly a function of price fluctuations of a major imported commodity such as oil.

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 Bidvest Bank Limited 23 Exports, meanwhile, have remained relatively strong in recent months as the global economy has continued to experience an upswing. However, evidence is mounting that global growth momentum is starting to slow and the medium- term outlook has deteriorated. China is under pressure, while the broader economic fallout from rising protectionism in the US remains unknown. The rally in the oil price also presents a risk to growth activity, as does the ongoing policy tightening in the US as this is bound to create headwinds in the US in due FINANCIAL REPORT DIRECTOR’S

04 course. These dynamics suggest that South Africa’s export demand could come under strain in months to come.

ZAR Outlook Finally, taking stock of the rand performance in recent months and it has been a choppy ride for the local currency. In the April-August period, emerging markets in general were subject to heightened volatility and the ZAR was unable to weather the storm. Domestic political machinations also contributed to this volatility. However, underlying fundamentals suggest that the extent to which the ZAR in particular sold off over this period is not necessarily entirely justified. The view is that as global market conditions normalise, the ZAR might be able to stage a recovery against the USD. This as the currency remains relatively resilient when assessing underlying fundamentals, whilst the significant adjustment in markets in recent months has seen the currency shift to a rather extreme level of undervaluation. Finally, the ZAR is enticing from a carry attractiveness point of view and hence it seems there is room for the ZAR to strengthen in the short to medium term.

Thinus Liebenberg Financial Director

24 Bidvest Bank Limited (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Unknown the future isto create it. The best wayto predict Bidvest Bank Limited 25

04 FINANCIAL DIRECTOR’S REPORT 04 FINANCIAL DIRECTOR’S REPORT 26 LIABILITIES Bidvest Bank Limited Business Account Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration 3% 2018 12% 2% 2017 13% Savings Deposit 29% Call Depositsby32.0%year onyear. our DepositTenure. Fixed depositsgrew by53.7%and year asaresult ofcontinued sales focus andlengthening Deposits continued to grow andended26.6%higheronprior Deposits increasedby26.6%(CAGR:27.7%) R’000 R’000 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 28% - - Deposit Composition 2014 2014 Call Deposit Liabilities Deposits 10% 2015 2015 15% 2016 2016 Notice Deposit 2017 2017 CAGR: 27.7% CAGR: 25.3% 2018 28% 2018 34% Fixed Deposit 2017 14% 2018 12% CFCs &FCAs growth over thepast few years. being higherthanadvances andleased asset have beenreducing, dueto depositgrowth Our loans andleased assets to depositsratio R’000 opportunities. reserves available for growth, acquisitionsandpipeline This conservatism resulted inholdingofexcess cash ratio of162.9%.Theliquiditypolicyremains conservative. currently complies withtheLCR requirement witha rise 27.0%to R3.6billion(2017:R2.8billion).TheBank Solid cash generation sawcash andcash equivalents Continued solidgrowth inCash. Cash andcashequivalentsgrewby27.0%(CAGR:14.2%) R’000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 2,200,000 2,400,000 500,000 Cash andEquivalents - - Corporate Advances 2014 2014 Growing theAdvances bookandleveraging ourFleet stronghold. Total Advances have increased by6.8% on prioryear withCorporate Advances increasing by13.3%yoy. LeasedAssets are slightly down (1.2%), 2015 2015 mainly dueto nobigFull Maintenance Leasingcontract signedupduring theyear. 2016 2016 Total Advances (includingLeasedAssets) grew by6.8%(CAGR: 17.2%) 2017 2017 CAGR: 14.2% CAGR: 19.6% 100% 120% 140% 2018 2018 20% 40% 60% 80% 0% Loans andLeasedAssetstoDeposits(%) 115% 2013 Loans andLeasedAssetstoDeposits(%) 2014 101% 2015 by 13.3% Cash Growing by27.0%andCorporate Advances grew by thefollowing: Total Assets grew by18.0%predominantly inﬂuenced Total Assetsgrewby18.0%(CAGR:18.7%) 109% R’000 R’000 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 2016 82% 200,000 400,000 600,000 800,000 - - 2017 85% Leased Assets 2014 2014 TotalAssets 2018 71% 2015 2015 2016 2016 2017 2017 CAGR: 18.7% CAGR: 14.1% 2018 2018 Business Account 3% 2018 12% 2% 2017 13% Savings Deposit 29% Call Depositsby32.0%year onyear. our DepositTenure. Fixed depositsgrew by53.7%and year asaresult ofcontinued sales focus andlengthening Deposits continued to grow andended26.6%higheronprior Deposits increasedby26.6%(CAGR:27.7%) R’000 R’000 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 28% - - Deposit Composition 2014 2014 Call Deposit Liabilities Deposits 10% 2015 2015 15% 2016 2016 Notice Deposit 2017 2017 CAGR: 27.7% CAGR: 25.3% 2018 28% 2018 34% Fixed Deposit 2017 14% 2018 12% CFCs &FCAs (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration growth over thepast few years. being higherthanadvances andleased asset have beenreducing, dueto depositgrowth Our loans andleased assets to depositsratio ASSETS R’000 opportunities. reserves available for growth, acquisitionsandpipeline This conservatism resulted inholdingofexcess cash ratio of162.9%.Theliquiditypolicyremains conservative. currently complies withtheLCR requirement witha rise 27.0%to R3.6billion(2017:R2.8billion).TheBank Solid cash generation sawcash andcash equivalents Continued solidgrowth inCash. Cash andcashequivalentsgrewby27.0%(CAGR:14.2%) R’000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 2,200,000 2,400,000 500,000 Cash andEquivalents - - Corporate Advances 2014 2014 Growing theAdvances bookandleveraging ourFleet stronghold. Total Advances have increased by6.8% on prioryear withCorporate Advances increasing by13.3%yoy. LeasedAssets are slightly down (1.2%), 2015 2015 mainly dueto nobigFull Maintenance Leasingcontract signedupduring theyear. 2016 2016 Total Advances (includingLeasedAssets) grew by6.8%(CAGR: 17.2%) 2017 2017 CAGR: 14.2% CAGR: 19.6% 100% 120% 140% 2018 2018 20% 40% 60% 80% 0% Loans andLeasedAssetstoDeposits(%) 115% 2013 Loans andLeasedAssetstoDeposits(%) 2014 101% 2015 by 13.3% Cash Growing by27.0%andCorporate Advances grew by thefollowing: Total Assets grew by18.0%predominantly inﬂuenced Total Assetsgrewby18.0%(CAGR:18.7%) 109% R’000 R’000 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 2016 82% 200,000 400,000 600,000 800,000 - - 2017 85% Leased Assets 2014 2014 TotalAssets 2018 71% 2015 2015 2016 2016 2017 2017 CAGR: 18.7% CAGR: 14.1% Bidvest Bank Limited 2018 2018 27

04 FINANCIAL DIRECTOR’S REPORT 04 FINANCIAL DIRECTOR’S REPORT 28 2018 2017 Net TradingIncome Bidvest Bank Limited Operating IncomeComposition signed upduringtheyear. Activities hasbeengrowing14.5% CAGR,butdecreasedduring2018duetononewbigFullMaintenance Leasingcontracts Our NetInterestIncomehasbeen growingat15.2%CAGRinlinewithourdiversificationstrategy.Net IncomefromLeasing R’000 R’000 100,000 150,000 200,000 250,000 300,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 50,000 - - Net InterestIncome 22% 26% 2014 2014 Leasing Activities 24% Net Incomefrom 25% Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Net IncomefromLeasingActivities 14% 2015 2015 38% 2016 2016 15% 36% 2017 2017 CAGR: 14.5% CAGR: 15.2% 2018 2018 Net InterestIncome R’000 R’000 200,000 250,000 300,000 350,000 100,000 150,000 200,000 50,000 R’000 1,000,000 1,200,000 1,400,000 Fee andCommissionIncomeincreasedyoyby10.6%. Activities down9.5%yoy.NetInterestIncomeand reason forthedecreaseisNetIncomefromLeasing 3 strongyearsofgrowthwithintheBank.Themain Income hasdecreasedslightlyby3.8%yoy.Thisfollows Despite thetougheconomicconditionsBankOperating Operating Incomedecreasedby3.8%(CAGR:8.3%) 200,000 400,000 600,000 800,000 - - Net FeeCommissionIncome Net TradingIncome - 2014 2014 Operating Income Net FeeCommissionIncome 2014 2015 2015 2015 2016 2016 2016 2017 2017 2017 CAGR: 0.5% CAGR: 1.3% CAGR: 8.3% 2018 2018 2018 58.00 59.00 60.00 61.00 62.00 63.00 64.00 65.00 66.00 R’000 200,000 250,000 300,000 350,000 400,000 450,000 Employment costs 2014 Cost toIncomeRatio(%) Employment Costs 2014 2015 2015 2016 2016 R’000 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 2017 Number ofemployees 2017 - Operating Expenditure 2018 (incl. IndirectTax) 2014 CAGR: 13.0% 2018 2015 700 800 900 1,000 1,100 1,200 2016 1,179 to1,199. staff numbersrosefrom increasing by9.1%.Overall Financial Yearwithcosts controlled duringthe2018 Overall staffcostswerewell by 9.1%(CAGR:13.0%) Employment costsincreased 2017 CAGR: 10.9% 2018 in thefuture. growth strategyofinvesting in linewiththeBank’s year. TheseIncreaseswhere increase inthe2017financial 1.6%, comparedtothe12.5% Operating costsincreasedby (CAGR: 10.9%) increased by1.6% Operating Expenditure 2018 2017 Net TradingIncome Operating IncomeComposition signed upduringtheyear. Activities hasbeengrowing14.5% CAGR,butdecreasedduring2018duetononewbigFullMaintenance Leasingcontracts Our NetInterestIncomehasbeen growingat15.2%CAGRinlinewithourdiversificationstrategy.Net IncomefromLeasing R’000 R’000 100,000 150,000 200,000 250,000 300,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 50,000 - - Net InterestIncome 22% 26% 2014 2014 Leasing Activities 24% Net Incomefrom 25% Net IncomefromLeasingActivities 14% 2015 2015 38% 2016 2016 15% 36% 2017 2017 CAGR: 14.5% CAGR: 15.2% 2018 2018 Net InterestIncome R’000 R’000 200,000 250,000 300,000 350,000 100,000 150,000 200,000 50,000 R’000 1,000,000 1,200,000 1,400,000 Fee andCommissionIncomeincreasedyoyby10.6%. Activities down9.5%yoy.NetInterestIncomeand reason forthedecreaseisNetIncomefromLeasing 3 strongyearsofgrowthwithintheBank.Themain Income hasdecreasedslightlyby3.8%yoy.Thisfollows Despite thetougheconomicconditionsBankOperating Operating Incomedecreasedby3.8%(CAGR:8.3%) 200,000 400,000 600,000 800,000 - - Net FeeCommissionIncome Net TradingIncome - 2014 2014 Operating Income Net FeeCommissionIncome 2014 2015 2015 2015 2016 2016 2016 2017 2017 2017 CAGR: 0.5% CAGR: 1.3% CAGR: 8.3% 2018 2018 2018 (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration 58.00 59.00 60.00 61.00 62.00 63.00 64.00 65.00 66.00 R’000 200,000 250,000 300,000 350,000 400,000 450,000 Employment costs 2014 Cost toIncomeRatio(%) Employment Costs 2014 2015 2015 2016 2016 R’000 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 2017 Number ofemployees 2017 - Operating Expenditure 2018 (incl. IndirectTax) 2014 CAGR: 13.0% 2018 2015 700 800 900 1,000 1,100 1,200 2016 1,179 to1,199. staff numbersrosefrom increasing by9.1%.Overall Financial Yearwithcosts controlled duringthe2018 Overall staffcostswerewell by 9.1%(CAGR:13.0%) Employment costsincreased 2017 CAGR: 10.9% 2018 in thefuture. growth strategyofinvesting in linewiththeBank’s year. TheseIncreaseswhere increase inthe2017financial 1.6%, comparedtothe12.5% Operating costsincreasedby (CAGR: 10.9%) increased by1.6% Operating Expenditure Bidvest Bank Limited 29

04 FINANCIAL DIRECTOR’S REPORT R’000 Total Assets CAGR: 18.7 % Return on Assets (ROA) (%)

9,000,000 6.0% 8,000,000 5.0% 7,000,000 4.0% 6,000,000 3.0% 5,000,000 2.0% 4,000,000 1.0% 3,000,000 0.0% Capital, Liquidity and Proﬁtability 2,000,000 2014 2015 2016 2017 2018 The Capital and Liquidity positions of Bidvest Bank remain

FINANCIAL REPORT DIRECTOR’S 1,000,000 strong, with both capital and liquidity ratios well above the

04 regulatory and Basel III minimum requirements. - 2014 2015 2016 2017 2018 The Bank’s Required Capital and Capital Adequacy Return on Assets (ROA) and Return on Risk Weighted maintained well above regulatory requirements. Assets (RORWA) have decreased over the past few years as we grow our loans and advances book as part of our R’000 Risk Weighted Assets CAGR: 16.5% diversiﬁcation strategy. Both ratios are still high to industry benchmarks. Financial Leverage (TIMES) 9,000,000

8,000,000 Return on Risk Weighted Assets (RORWA) (%) 3.50 7,000,000 3.00 6,000,000 6.0% 2.50 5,000,000 5.0% 2.00 4,000,000 4.0% 1.50 3,000,000 R’000 Proﬁt for the Year (PAT) CAGR: 4.8% 3.0% 1.00 2,000,000 2.0% 0.50 1,000,000 350,000 1.0% 0.00 - 2014 2015 2016 2017 2018 300,000 0.0% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 250,000 200,000 Risk Rating (difference between Total Assets and Risk Weighted Assets) Capital Adequacy Ratio (CAR) (%) 150,000 The Bank follows the standardised approach under Basel III 100,000 and calculates requirements for market risk in its banking 50,000 portfolios based on the Bank’s market risk models and uses 40.0% both external and internal grading as the basis for risk - 35.0% weightings for credit risk. 2014 2015 2016 2017 2018 30.0% 25.0%

R’000 Qualifying Capital CAGR: 18.2% 20.0% Return on Equity (ROE) (%) 15.0% Risk Weighted Assets 10.0% 2,000,000 14.0% 5.0% R’000 Equity CAGR: 7.7% 1,800,000 12.0% 0.0% 1,600,000 10.0% 2014 2015 2016 2017 2018 1,400,000 8.0% 3,000,000 Capital Adequacy Ratio (CAR) – Qualifying 1,200,000 2,500,000 Capital Adequacy Ratio (CAR) – Unappropriated 6.0% 1,000,000 retained earnings 4.0%

2,000,000 Qualifying Capital 800,000 1,500,000 2.0% 600,000 Capital Adequacy Ratio increased to 29.9% 1,000,000 0.0% 2014 2015 2016 2017 2018 400,000 The Bank is adequately capitalised and holds sufﬁcient 500,000 and stable capital against its risk-weighted assets. The 200,000 - Bank’s Qualifying Capital Adequacy Ratio (qualifying 2014 2015 2016 2017 2018 - capital and reserve funds as percentage of risk-weighted Return on Equity has come down somewhat as we 2014 2015 2016 2017 2018 assets) is 20.6%, while the Bank’s total Capital Adequacy increase our Advances book. But it should be taken Ratio (total capital and reserve funds as percentage of into account that our total CAR of 29.9% is well above Equity increased by 5.7% (CAGR: 7.7%) risk-weighted assets) is 29.9%. regulatory requirement.

The Bank’s total equity has increased yoy by 5.7% mainly due Qualifying Capital (Regulatory Capital) The increase in CAR from 2016 to 2018 is attributed to to Proﬁt After Tax of R302.3m. Total dividends of R142.5m the appropriation of retained earnings to qualifying capital Tier I capital, which includes ordinary share capital, were paid during the year. and reserve funds during the year. There have been no share premium and appropriated retained earnings. material changes in the Bank’s management of capital Total Qualifying Capital (Tier 1) increased by 3.5% yoy. during the period.

30 Bidvest Bank Limited (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 R’000 Total Assets CAGR: 18.7 % Return on Assets (ROA) (%)

1,000,000 FINANCIAL REPORT DIRECTOR’S strong, with both capital and liquidity ratios well above the regulatory and Basel III minimum requirements. - 04 2014 2015 2016 2017 2018 The Bank’s Required Capital and Capital Adequacy Return on Assets (ROA) and Return on Risk Weighted maintained well above regulatory requirements. Assets (RORWA) have decreased over the past few years as we grow our loans and advances book as part of our R’000 Risk Weighted Assets CAGR: 16.5% diversiﬁcation strategy. Both ratios are still high to industry benchmarks. Financial Leverage (TIMES) 9,000,000

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 Bidvest Bank Limited 31 05 INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED 30 JUNE 2018 32 32

MANAGING DIRECTOR JAPIE VAN NIEKERK

Bidvest Bank Limited 33

05 INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED 30 JUNE 2018 HIGHLIGHTS

Bidvest Bank is an entrepreneurial bank born to change the way banks do business with their customers. Over the past 20 years it has evolved to provide customers with a diverse range of banking products and services. A banking licence was obtained in 2000 and in 2007 Rennies Bank was rebranded Bidvest Bank. Since then, the Bank has built itself up from a bureau de change business into a fully-fledged bank focusing on business and personal banking, fleet and asset finance, and treasury solutions.

In a highly competitive market, Bidvest Bank has delivered a solid performance over the last year, achieving proﬁt before tax of INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED30 JUNE2018 05

(2017: R466.6 Million)

Operating income decreased by

(2017: R1.23 Billion) The bank remains strongly capitalised and highly cash generative.

34 BidvestBidvest Bank Bank Limited Limited (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 Proﬁt before tax reduced by

(2017: R466.6 Million)

Moody’s rating remained at Aa2.za

In a highly competitive market, Bidvest Bank has delivered a solid performance ROE of decreased over the last year, achieving proﬁt before tax of INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED30 JUNE2018

05 (2017: 13.3%) (2017: R466.6 Million)

Operating income decreased by Solid cash generation with cash and cash equivalents rising

(2017: R1.23 Billion) (2017: R2.8 Billion) The bank remains strongly capitalised and highly cash generative.

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 Bidvest Bank Limited 35 deposits were

(2017: R4.5 Billion)

Continued to build the Bank’s portfolio with a focus on Business Banking, Personal Banking, Fleet Management, Corporate Lending and Treasury Solutions INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED30 JUNE2018

05 Strategic acquisition of First Data Resourced South Africa (FDRSA), which has been rebranded as Bidvest Merchant Services

Exciting new retail transactional banking product to launch in 2019

Corporate Advances increased by to (2017: R2.1 Billion)

36 BidvestBidvest Bank Bank Limited Limited (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 Architecture is not about space but about time.

Evolve INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED30 JUNE2018

(Registration(Registration number number 2000/006478/06) 2000/006478/06) Summarised Consolidated Consolidated Annual Financial and Separate Statements Annual for Financial the year Statements ended 30 June for the 2018 year ended 30 June 2018 Bidvest Bank Limited 3737 05 INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED 30 JUNE 2018 38 MATERIAL ISSUES expectations citizenship corporate Exceed performance consistent financial Maintain issue Material Bidvest Bank Limited and practices. policies governance corporate approved toAdherence Board- Method advantage. competitive of a source is Reputation employees. good and customers good attract citizens corporate Good unimpeachable. be must ethical standards where industry an in essential are credentials citizenship corporate good as commitment, our demonstrate to important is It regulations. contravene not do businesses banking ensure to and implementation Compliance monitoring regulations. new with To pace keep Objective and control. structures Robust govenance Management. Financial robust and planning Strategic Method: business. of base a strong secure to streams income robust of range broad a create to important is It volatile. be can and highly competitive are markets Financial profitability. To maintain Objective: objectives strategic and important is it Why Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration : : • • • KPIs • • • Revenue KPIs: KPIs andKPIs targets Cost-to-income standards (King III) (King standards Governance standards CDP performance standards performance SRI JSE Growth in profits in Growth ratio diversification : • • Actions and actions goingand forward actions targets against Performance alliances with new and existing partners. and new existing with alliances and offerings product andenhanced expanded through streams revenue of Diversification Actions: • • • Performance: – – – – – – – Anti-money laundering controls also received received also controls laundering Anti-money teams been have and forensics Compliance measures, the Bank: the measures, heightened attention this year. the Among strengthened. to R419.3 million (2017: R466.6 million). (2017: R466.6 R419.3to million 10% with decreased tax before profit aresult, As 1179 1199. to from rose numbers staff overall and 2018 in up stepped was people quality of Recruitment future. the in investment and strategy growth Bank’s the with line in costs, employment increased to due year, largely prior the on up 5% were Costs R1.2 billion). (2017: billion R1.2 at remained income Operating

and employee reward and employee management ofcomponent performance a is compliance regulatory and area, this in accountability and resources Increased partners; alliance over controls and processes Enhanced companies; and persons exposed politically for controls identification Improved screening; sanction over Implemented controls enhanced efficiency; and effectiveness as well as legislation, with compliance for processes its Reviewed customer view; single its improving warehouse, data Bank’s to including enhancements the onboarding, customer new for processes its Enhanced monitoring; and transactional for profile customer system automated anew Implemented : . (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration MATERIAL ISSUES (CONTINUED)MATERIALISSUES Material issue Material retention and attraction Enhance talent satisfaction and health employee Promote objectives strategic and important is it Why and culture. leadership development, career performance, benefits, employee and namely: remuneration areas, focus key five with Proposition (EVP) Value Employee an of Formulation Method organisation. the in skills required the have to and and retention attraction talent To improve Objective of employees. and mental wellbeing physical the support to providers healthcare with Partnering employees. all of the health and wellbeing improve to approaches To innovative use Method organisation. the in skills required the have to and and retention attraction talent To improve workplace. productive a is workplace A healthy andhealthy happy. be to aright have People Objective : : : : KPIs andKPIs targets • • KPIs Absentee rates Absentee rates Resignation : and actions goingand forward actions targets against Performance • • • Actions • • Performance In addition, the Bank subscribes to online health health online to subscribes Bank the addition, In confidential a24-hour provides Bank The regular on based is employees of Remuneration this 2.5%, was rate 2017,In absenteeism the 2017 in 12.4% from increased rate Attrition The and lifestyle. health their managing in employees support to stress. Bidvest Bank has wellness programmes to lead that changes lifestyle to due mainly is increase this reports, wellness employee to According 6%. and 3.5% between of arate have overall who companies African South most below still is This 2.04%. to 2018 in decreased progression. internalpromote career and support to continues Bank Bidvest levels. all at promotions internal 87 were there year financial 2017/2018 the In talent. key retaining to committed are we blood’ ‘new through ideas fresh gaining and progression career encourages Bank Bidvest 2018. in 15.7% to their families. and employees for programmes wellness and lives. work and personal their impact that may problems personal themhelp deal with to families immediate their and employees to Organisation) Services and Advisory Counselling (Independent ICAS through service support resignations. for reasons stipulated clearly identify to interviews exit on placed been also has Focus growth. sustainable achieve to Bank the support to them motivating and employees, quality superior retaining and rewarding conditions, market prevailing and guidelines industry by informed is and reviews performance : : Bidvest Bank Limited 39

05 INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED 30 JUNE 2018 05 INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED 30 JUNE 2018 40 MATERIAL ISSUES (CONTINUED)MATERIALISSUES Development Skills Promote Proposition Value Employee issue Material Bidvest Bank Limited training/development. Internal and external Method • • staff: of Development Objective Bidvest Bank. at employees retain and attract to value proposition employee an To create Objective: satisfaction. and relationship employee To improve Why: objectives strategic and important is it Why Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Personal Personal enable service Skills in talent retention. assist opportunities development growth. sustained of drivers –key innovation excellence and : :

• • KPIs • KPIs andKPIs targets Training hours Training hours spend Training What does does What per employee per employee companies don’t? other that offer to have Bank Bidvest : • E-learning platform – Bidlearn for Award Development and Learning International receives Bank Bidvest • • • Programmes and Graduate Leadership • • Performance and actions goingand forward actions targets against Performance 5. Organisational Culture 5. Organisational Leadership Inspirational 4. and Development 3. Career Management and Reward 2. Performance 1. Benefits and Employee Remuneration EVP: our drive that pillars important five in resulted employees, our with Engagement (EVP). Proposition Value Employee an defining and employees our engaging on placed been has Focus Best International Learning Journey Award. Journey International Learning Best the awarded was Bank Bidvest Netherlands. held in ceremony Rotterdam, awards Journey’ Learning Inspiring ‘Most a NewSpring annual the attend to invited was Bank Bidvest Administration – Business learners 8 Disabled Banking in Certificate –Advanced 12 Graduates Bankingin – National Certificate learners 30 to offered was funding Bursary External 2017/2018 for spend training Annual level 3 – (1 November 2017 – 31 October 2018). –31 October 2017 3–(1 November level 2018). –31 October 2017 6–(1 November level 2018). –31 October 2017 4–(1 November level employees. to permanent 82 R1.3m at 2016/2017 in to compared R1.5m at 2017/2018 in employees 74 permanent trained. employees –1199 R8.6m – 2016/2017 from R11.2m increased : (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration MATERIAL ISSUES (CONTINUED)MATERIALISSUES Material issue Material development socio-economic in Invest • • • • • spend focusing on: CSI of management and Contribution Method communities. well-resourced in achieved be only can growth Sustained levels. regional national and at Africa South of development socio-economic the to To contribute Objective objectives strategic and important is it Why Charity Charity of Development prevention Crime Conservation Education the youth : : • Targets • • KPIs KPIs andKPIs targets 1% of net profit profit 1% net of %of as spend CSI spend CSI after tax tax after profit net : : and actions goingand forward actions targets against Performance • • include: collections Charity organisations Charity workforce. future our of the to their potential development increase towards contribute We employees. future our are Children Children unemployment. high exceedingly curb to effort national the impedes investment foreign attract to inability This investment. foreign attract to efforts undermining crime, of rates alarming from suffers country Our Prevention Crime recovery. economic and stimulating unemployment inrole reducing amajor play will industry tourism the in Growth destination. eco-tourism global and asuperior as Africa South establish to help can we wildlife and environment our of preservation the in investing By Conservation employees. and clients future our of development the to contribute can we believe we communities, disadvantaged of education the in assisting By Education are: areas focus Our • • • Performance On World AIDS Awareness Day, there is a sale of of asale is there Day, Awareness AIDS World On a for worn is wear casual Day, Spring On annual our exceed to continue contributions Our decreased tax after profit net a%of as spend CSI (2017: R2.7m). R2.25m spend CSI Life. for Friends of support in Ribbons Red Disabled. for the Physically Association the to given then is which donation, communities. disadvantaged with andinvolvement interaction sustainable its on focus to continues business the and tax, after profit 1% net of targeted 0.74% to 2017 in 2018. in 0.8% from slightly :

Bidvest Bank Limited 41

05 INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED 30 JUNE 2018 05 INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED 30 JUNE 2018 42 STAKEHOLDER ENGAGEMENT STAKEHOLDER (CONTINUED)MATERIALISSUES and contract) (full-time Employees Stakeholders Material issue Material impacts environmental Reduce Bidvest Bank Limited

• • • Method satisfaction. and relationship employee Improve Objective: (and frequency) engagement method and Objective management structures. management via Active Method • • theirs. reduce them help to solutions customeroffering and suppliers with working and employees, educating impact, our reducing by To contribute Objective objectives strategic and important is it Why Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Newsletters feedback Anonymous surveys Employee Society’s response to to response Society’s Reducing forms (ongoing)forms (annual) rental industry. rental vehicle the on impact asignificant have may change climate efficiency. business for but society for good only not is waste and impacts environmental : : : and retention. development skills wellness, Employee material: considered Issues issues. relationship employer/employee development, specific economic local wellness, employee development, skills employee strategy, about corporate informed being benefits, and Remuneration issues: Key Key identified issues • • • KPIs: KPIs andKPIs targets Gasoline (petrol) used Electricity purchased Paper used

• • • necessary. the and market, where adjusted against benchmarked been have structures Salary Key taken actions and planned and actions goingand forward actions targets against Performance • • • Performance: Focus has been placed on robust talent talent robust on placed been has Focus the on informed been have Employees our engaging on placed been has Focus All paper shredded, gets recycled. consistent was usage gasoline and Electricity 2018. in decreased purchased paper of Volume for resignations. reasons stipulated clearly with interviews, exit employee and strategies acquisition strategy. corporate proposition. value employee an defining and employees with the prior year. prior the with

delivered. or produced be will and services products our which in manner the affect may scrutiny heightened regulatory and change Regulatory issues: Key requirements. regulatory with Compliance issues: Key Key identified issues • • • issues: Key saving cost and structure Pricing of interest potential conflict and transaction party Related B-BBEE compliance Key taken actions and planned representative organisations. representative services financial with interaction Continued function. appraisal as an independent Internal audit acts strengthened. been have teams forensics and compliance The conduct. of code own its and III) (King Africa South for Governance Corporate on Code and Report King the Act, Companies the Act, Banks the statutes, its in with accordance itself and conducts governance, corporate good of principles the of importance the recognises Board The governance Corporate the procurement processes are compliant. are processes the procurement ensure to place in are reviews audit Regular Policy. toadherence the Procurement ensure engagements stakeholder Regular Suppliers. our with engagements for regular allows This the Bank’s objectives. meets that procurement ensures process Your Supplier’ ‘Know A robust Committee. Procurement the and Committee Audit Bank’s the by formally reviewed and tabled are disclosures basis, On by management. a quarterly regularly monitored and circulated is and Declarations, Directors includes which maintained, is A register function. the procurement within key stakeholders and Committees, Executive and Risk Audit, the of members management, by disclosed are interest of and potential conflicts transactions Related-party risks. address to adequate and designed well is and environment control process procurement The Bidvest Bank Limited 43

05 INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED 30 JUNE 2018 05 INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED 30 JUNE 2018 44 STAKEHOLDER ENGAGEMENT (C0NTINUED)ENGAGEMENT STAKEHOLDER potential partners and Partners Customers Stakeholders Bidvest Bank Limited • • • Method: to “get things done”. lookingbusinesses and individuals to and services products of range a diverse offers and Bank niche leading Africa’s South currently is Bank Bidvest Objective: partners. alliance with work to opportunities indentifying and development Continuous new product Method: markets. niche new of penetration and the accelerate base business the Diversify Objective: (and frequency) engagement method and Objective Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Understand issues, issues, Understand good Maintain product Diversified innovation. product needs-driven for opportunities together and examine them resolve relations. offering. and service

streams. revenue and expand grow to order in interaction customer of points defining and customers/offerings understanding of acommon Developing issues: Key products and services. products complement current that solutions new of development and growth future of areas of identification Early issues: Key Key identified issues Key taken actions and planned advances in technology. in advances competitive harness to Bank the of strategies technology information the on focus Continued finance. trade including structured the period, during developed further been have solutions Trade doors. customers’ our to delivery with ordering online exchange foreign including developed, been have solutions payment Competitive interaction. customer of points defining and offerings developing a common understanding of customers/ and processes partners’ travel with integrating by implemented been have solutions travel New services. custody safe and methods payment options, account of arange with applications, emigration formal complex for including established been have alliances external New and new travel solutions implemented. solutions and travel new established been have alliances external Several (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Unknown I’m always busy. I’m buildingabrand, Bidvest Bank Limited 45 45

05 INTEGRATED OPERATIONAL REVIEW FOR THE YEAR ENDED 30 JUNE 2018 06 RISK REPORT 46 46

Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Unknown build endupbuildingus. Whatever goodthingswe (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration management framework. framework. management risk Bank’s the of oversight and establishment the for responsibility overall has Board The the by Bank. experienced volatility the manage and losses, unexpected for potential the reduce Bank, the strengthen implemented been have that activities mitigation risk operational and financial, strategic, resulting The units. business the within activities mitigation risk various produces programme ERM The technology. and communication, reporting, procedures, and policies committees, active Bank, the within roles formalising by enhanced is It objectives. strategic and profile Bank’s the with aligned is that approach aformal around constructed is programme ERM The risk. of categories accepted commonly under categorised are activities These organisation. the impact that risks external and internal the for structure formal a provides and prioritises, assesses, identifies, programme ERM The Bank. the across applied are that processes management risk consistent and structured of agroup is ERM staff. and management by activities daily in demonstrated is and programmes, training procedures, operating directives, management and Board statements, policy in captured is It operations. Bank’s the guides and culture Bank’s the influences values, Bank’s the reflects approach management risk This objectives. strategic and mission Bank’s the of achievement to the critical is activities in risk on report and monitor respond, measure, assess, identify, to effectively ability The activities. Bank’s the of component inherent an is Risk this. supports Statement Appetite Risk a including Policy Management Risk defined Aclearly Bank. the of levels all at management risk for responsibility ashared and awareness increased to have and culture, arisk to building committed to be Bank the of management executive expects Board The Appetite. Risk and ERM Bank’s the of content the articulates policy management risk Bank’s The risk. of aspects many the to coordinate framework and policy ERM an maintains Bank Bidvest Board. the of asub-committee is which Committee, Management Capital and Risk to the matters Policy Management Risk for responsibility delegated has Board The imperative. is Bank the of levels all at risk residual of management the waivers; or contracts policies, insurance through parties to third transferred be can risk all not that fact the and services, and products units, business Bank’s the of nature diverse to the Due risk. of element an has activities Bank’s the of each that acknowledges also Board The programme. ERM the of implementation full to ensure resources other and personnel enough to providing commits further Board The (ERM). Management Risk Enterprise for programme a to establish need the to reinforce policy management arisk adopted has Board The condition. reputational and financial sound Bank’s the maintain and to build order in risk of management and identification ongoing of importance the recognises Board The RISK MANAGEMENT RISK RISK REPORT RISK

Bidvest Bank Limited 47

06 RISK REPORT 06 RISK REPORT 48 RISK GOVERNANCE Bidvest Bank Limited Chaired byanindependent status oftheprogrammes. programmes, shocktests, non-executive director, to investments, andprovide direction ofrisksandthe policies andprocedures, setslimits,monitors key risk indicators, develop and prioritise activitiesand procedures, setlimits, of theprogrammes, includingmatters relating to the indicators, prioritisesactivitiesandinvestments, and management andthe Board regarding thedirection ofrisksandthestatus programmes, assessments; develops andagrees on oversee liquidityand Board regarding the ASSET &LIABILITY Chaired byanindependentnon-executive director, activities andinvestments, andprovides inputto seniormanagement andtheBoard regarding thedirection ofrisks provides inputto theseniormanagementand agree policiesand assessments; develops and agrees onpoliciesandprocedures, setslimits,monitors key riskindicators, prioritises RISK ANDCAPITALMANAGEMENTCOMMITTEE interest rate risk monitor key risk Responsible forapprovingnewandchangestoallpolicies;participatingincommitteeswithmanagers, and overseas compliance andoperational risk Chaired byanindependentnon-executive director, andoversees compliance andoperational riskprogrammes, input to senior COMMITTEE reviewing status;providingguidanceonstrategiesandriskappetite;stayingapprisedofsignificant and thestatus oftheprogrammes, includingmatters relating to theBank’s capital adequacylevels. Bank’s capital adequacylevels. Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration risk exposures;andensuringthatrisksaremanagedwithintolerance. and agrees onpoliciesand Chaired byanindependent non-executive director and activities andinvestments, and stress tests; develops senior managementand the Board regarding the procedures, setslimits, activities, assessments direction ofcredit risks indicators, prioritises and provides inputto and thestatus ofthe oversees credit risk monitors key risk RISK ANDCAPITALMANAGEMENTCOMMITTEE programmes. COMMITTEE CREDIT BOARD OFDIRECTORS EXCO Terms of Reference, monitoring andmanaging The RiskandGovernance (Risk Exco) isconstituted of riskinthebusiness of risk tolerances, andrisk the Bank,inaccordance in accordance withthe management policies. quality andeffective administration ofthecontrols and Executive Committee to assist EXCO inthe referred to as‘it’andhere as‘their’.Responsibilityto the shareholders andinvestment community related assistance to the Board ofDirectors infulfillingtheir procedures ofallthesystems andwork processes. need for consistency –insomeplaces theBoard is with theapproved A Board-level committee responsible for providing RISK EXECUTIVE risk appetite and to corporate accounting, reporting practices, the quality andintegrity offinancialreports, andthe COMMITTEE AUDIT COMMITTEE credit, market andliquidity indirect loss arisingfrom a external factors otherthan associated withtheBank’s risk relating from direct or The committee’s objective is to manageoperational regulatory requirements projects, technology and Infrastructure, and from and generally accepted standards ofcorporate arising from legal and processes, personnel, wide variety ofcauses OPERATIONAL RISK risks, suchasthose COMMITTEE behaviour. (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration The Bank adopts the four lines of defence model: defence of lines four the adopts Bank The and accountable FOUR LINES OF DEFENCE OF LINES FOUR – FUNCTIONS MANAGEMENT RISK OF INTERRELATIONSHIP Business Units: management Responsible for ongoing 1 of risks st Line Board ofDirectorsandGoverningBodies business linerisk activities through monitoring and Complements Compliance oversight: reporting 2 Risk & nd Line internal control the qualityand Internal Audit assurance on of theBank’s effectiveness Independent independent Assurance: review and 3 objective system rd Line

Bidvest Bank Limited External Auditors and Regulatory 4 bodies th Line 49

06 RISK REPORT 06 RISK REPORT 50 The management of reputational risk is a function of the management of all risks. all of management the of afunction is risk reputational of management The reputation. Bank’s the affect negatively could Bank the by taken action or activity any that risk the is risk Reputation diagram. below the in illustrated as activities daily and tactical strategic, in risk of forms to various exposed is it future, its constructs and builds Bank the As REPUTATIONAL RISK UNIVERSE RISK REGULATORY RISK Bidvest Bank Limited CREDIT OTHER RISKS RISK Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration BUSINESS RISK BUSINESS MANAGEMENT RISK

REPUTATIONAL RISK OPERATIONAL LIQUIDITY RISK RISK MARKET RISK (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration • • means. several annually through appetite levels risk general and sets management approves, Board The • • • • to: it permit that risks those tolerate only will Bank The to undertake. risk of levels acceptable determining in approach abalanced use Bank the of management and Board The profitability/feasibility. to determine thereof implementation of cost the against measured is initiatives strategic new/planned from derived Income level. sub-committee and Board at monitoring and oversight ongoing necessary the receive initiatives strategic All Bank. the of success long-term to the vital remains objectives strategic of success the and formalised, is strategy business Bank’s The medium- and long-term and profitability. business growth affect may which return, required or desired the yield not may initiatives strategic implemented and/or planned that risk The RISK APPETITE RISK BUSINESS also responsible for implementing risk mitigation strategies of retention, control, avoidance and transfer. transfer. and avoidance control, retention, of strategies mitigation risk implementing for responsible also are Managers of risk. levels acceptable make regarding decisions unit managers business and procedures, policies, plans, business in established guidelines and authority their of scope the Within policies. and plan strategic the in expressed and annually set are levels appetite risk non-financial and financial their and objectives business strategic Key process. planning strategic the with conjunction in considered are environments risk external and internal overall The manner. sound and asafe in business its Conduct and regulations; and laws applicable all with Comply expectations; exceeds or meets that areturn Provide objectives; business strategic stated its Achieve The Bank’sThe appetite risk overall is relatively low. annually and is adjusted to take cognisance of target values and market prospects. appetite,risk such as acceptable limits appetite of risk The credit losses. is reviewed Bank’srisk appetite risk of appetite,part specifies, as risk also tolerances around its inequity, profitability,revenueand growth year-on-year The diversification. growth appetite is linked to short- its and longer-term focusing strategy on higher return on including and liquidity credit risk reputational risk, risk, strategy Bank’s The risk. risk relationship within the management of to the risks which various the Bank is exposed, measures. Financial operations are managed to obtain areasonable /return risk appetiterisk and focuses on capital, liquidity, profitability, as primary and growth BankBidvest considers both qualitative and quantitative of its measures as part RISK APPETITE STATEMENTRISK APPETITE Bidvest Bank Limited 51

06 RISK REPORT 06 RISK REPORT 52 52 capitalisation for the Bank. capitalisation adequate to ensure uncertainties for held to be buffer the to determine requirement capital regulatory to the compared then is requirement capital economic The formula. regulatory aprescribed by implicated of instead management by assessed as risks for held be to capital the reflects ICAAP the through determined level capital economic final The account. into capital on returns risk-adjusted taking loss, worst-case the reflects capital economic quantifiable, statistically are that types risk from arising losses potential For nature. in extreme are that conditions under solvent to remain required capital the i.e. capital, economic of level suitable most the determines ICAAP The risk. of assessment internal its reflects ICAAP Bank’s The position. capital asound by afforded security and advantages the and gearing greater with possible be might that returns higher the between abalance to maintain need the recognises Bank the and recognised also is return shareholders’ on capital of level the of impact The business. the of development future sustain to and confidence market and credit investor, to maintain base capital astrong to maintain is policy Bank’s The Board. the by approved and formalised is (ICAAP) Process Assessment Adequacy Capital Internal Bank’s The exposures. position financial of off-statement and to assets attached risk of levels varying the reflect to seek that requirements to specified according determined are assets risk-weighted and book, banking or book trading either as categorised are operations Banking • • categories: two into analysed is capital regulatory Bank’s The risk. credit for weightings risk for basis the as grading internal and external both uses and models, risk market Bank’s the upon based portfolios banking its in risk market for requirements calculates and III Basel under approach Standardised the follows Bank The exposure. risk operational and exposure risk market assets, risk-weighted to total capital total of ratio aprescribed to maintain Bank the requires SARB the requirements, capital current implementing In awhole. as Bank the for requirements capital monitors and sets (“SARB”) Bank Reserve African South The Tier II capital: which includes collective impairment allowances. impairment collective includes which capital: II Tier and earnings; retained and appropriated premium share capital, share ordinary includes which I capital: Tier Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration are highlighted: are items related capital below the and capitalised, adequately was Bank the 2018 June 30 at As composition Capital Internal board approved CAR CAR approved board Internal minimum CAR Regulatory (total and reserves) Ratio (CAR) capital Adequacy Capital and reserves) capital (qualifying Ratio (CAR) Adequacy Capital assets Total risk-weighted Total required capital amount of qualifying II Tier which: Of I Tier which: Of and reserves capital Qualifying Total and Reserves Capital Description R’000/% 8,944,308 2,670,381 1,839,706 1,835,961 1,017,415 20.57% 14.00% 29.85% 11.12% 3,745 Bidvest Bank Limited 53 53

06 RISK REPORT RISK REPORT RISK

06 CAPITAL GROWTH (R’000)

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

Jun 2013Jun 2014Jun 2015Jun 2016Jun 2017Jun 2018

Total Equity

Of which qualifying capital and reserve funds

54 BidvestBidvest Bank Bank Limited Limited (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 RISK REPORT RISK

REQUIRED CAPITAL 06 QUALIFYING CAPITAL (R’000)

2,000,000

1,800,000

1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

Jun 2013Jun 2014Jun 2015Jun 2016Jun 2017Jun 2018

Total Required Capital Qualifying Capital and Reserve Funds

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 BidvestBidvest Bank Bank Limited Limited 5555 RISK REPORT RISK

06 CAPITAL ADEQUACY RATIOS

Jun 2013 Jun 2014 Jun 2015 Jun 2016 Jun 2017 Jun 2018

Total Capital Adequacy Ratio (based on total capital and reserve funds)

Capital Adequacy Ratio (based on qualifying capital and reserve funds)

Required Capital Adequacy Ratio

56 Bidvest Bank Limited (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 RISK REPORT RISK

BREAKDOWN OF CAPITAL REQUIREMENT 06

THE RISK WEIGHTED EXPOSURE FOR EACH OF THE BANK’S RISK CATEGORIES ARE INDICATED BELOW:

CREDIT RISK 4,015,087

MARKET RISK 8,788

COUNTERPARTY CREDIT RISK 19,268

EQUITY RISK 14,046

OPERATIONAL RISK 2,731,114

OTHER RISKS 2,156,006

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 Bidvest Bank Limited 57 06 RISK REPORT 58 of the Bank’s lending book. lending Bank’s the of managing and granting analysing, by Credit of granting the in part integral an forms Credit process granting Credit obligor. relevant the of situation distressed financial to a owing is, that condition, financial obligor’s the in to adeterioration owing obligor to the aconcession granted Bank the which of respect in facility or advance loan, any includes Banks to relating Regulations the of 67 by Regulation defined as exposure credit Restructured necessary. is plan repayment arevised and deteriorated, has condition financial aborrower’s when restructured to be considered is Debt exposure Restructured exposure. entire the back to pay enough be not will collateral from proceeds that or obligation, the pay longer no can borrower the that such position financial borrower’s the in changes significant as such information considering after reached is determination This uncollectible. is loan the that determines Committee Credit the when losses) impairment for allowance related any (and loans off writes Bank The policy Impairment borrower. the to allocated Rating Credit Internal the to determine order in ratios to certain changes and ratios financial certain calculating by borrower of a condition financial the determines Bank the case, latter the In applied. been has process rating risk-based internal an not, If applied. been has rating that agency, rating arecognised by issued arating has acompany Where ratings External exposures. credit to its to Banks relating Regulations the of 24 and 23 Regulation of requirements the applies and risk to credit exposure its of measurement the for approach standardised the adopted Bank The approach Credit risk risk. credit of management the regarding responsibilities and duties its fulfilling in Board the support is to Charter, Committee Credit the in specified as Committee, Credit the of responsibilities and role The director. anon-executive by chaired is which Committee, Credit to its risk credit of management the for responsibility delegated has Board The Bank. the of functions management risk credit and granting credit the overseeing in role acritical plays Board the responsibilities, its discharging In Bank. the in management risk effective of maintenance the for responsible ultimately is Board The responsibility Board to customers. advances and loans Bank’s the from principally arises It obligations. contractual its to meet fails instrument financial to a counterparty or customer if a Bank the to loss financial of risk the is risk Credit CREDIT RISK CREDIT Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration NON-PERFORMING LOANSANDADVANCESVSTOTAL–JUNE2018(R’000) Agreementdrawn Approved within issued byCredit Legal, FICAand Sanction Letter Daily Management upandsigned Activation and of thebook Mandate Payout Sales Specific impairmentagainstproblematicloans(R'000) Credit Analyst 0,00% 0,50% 1,00% 1,50% 2,00% 2,50% 2,380,787 CREDIT RISK-ASSETTYPES JUNE2018(R’000) NON-PERFORMING LOANS ANDADVANCES AS %OF TOTALLOANS ANDADVANCES 10,000 15,000 20,000 25,000 30,000 35,000 40,000 and advances Non-performing loans 10,000 15,000 20,000 25,000 Credit Manager 5,000 5,000 Online Credit Application Submitted. 5,653,368 June 1,126,430 2013 - - positive/negative leg Largest aggregate Problem Loans Market Risk(R’000) June of (abs.val) 2014 research into theindustry andbusiness entity. Analyse theFinancialsandundertake in-depth 21,028 27,343 June 2015 affordability andwithintheBank’s policy. whether theapplicant meetstheCredit Rule 101– Assess theinformation provided andestablish With Mandate Outside of June Mandate 2016 Approval Capital requirement Specific Impairment and advances Total loans for Marketrisk June 2017 credit risk Counterparty Off-balance sheet Balance sheet 27,643 7,019 June 2018 Credit Committee Approval from Board Approved within Mandate Out ofMandate Senior Credit Committee Bidvest Bank Limited Board Submission 59

06 RISK REPORT NON-PERFORMING LOANSANDADVANCESVSTOTAL–JUNE2018(R’000) NON-PERFORMING LOANSANDADVANCESVSTOTAL–JUNE2018(R’000)

06 RISK REPORT 60 Credit risk portfolio Credit risk advances and loans total of % as advances and loans Non-performing to banks. relating Regulations the of 23 Regulation in out set as mitigation risk credit for approach comprehensive the applies Bank The regularly. updated are and borrowing of time the at assessed security of value the on based are value fair of Estimates guarantees. and assets, over securities registered other and financed, assets property, over bonds mortgage of form the in to customers advances and loans against security other and collateral financial holds Bank The held Security Specific impairmentagainstproblematicloans(R'000) Specific impairmentagainstproblematicloans(R'000) 0,00% 0,50% 1,00% 1,50% 2,00% 2,50% 0,00% 0,50% 1,00% 1,50% 2,00% 2,50% 2,380,787 2,380,787 CREDIT RISK-ASSETTYPESJUNE2018(R’000) CREDIT RISK-ASSETTYPESJUNE2018(R’000) NON-PERFORMING LOANSANDADVANCES NON-PERFORMING LOANSANDADVANCES AS %OFTOTALLOANSANDADVANCES AS %OFTOTALLOANSANDADVANCES Bidvest Bank Limited 10,000 15,000 20,000 25,000 30,000 35,000 40,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 and advances Non-performing loans and advances Non-performing loans 10,000 15,000 10,000 20,000 15,000 25,000 20,000 25,000 5,000 5,000 5,000 5,000 5,653,368 5,653,368 June June 1,126,430 1,126,430 2013 2013 - - - - positive/negative leg positive/negative leg Largest aggregate Largest aggregate Problem Loans Problem Loans Market Risk(R’000) Market Risk(R’000) June June of (abs.val) of (abs.val) 2014 2014 21,028 21,028 27,343 27,343 June June Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration 2015 2015 June June 2016 2016 Capital requirement Capital requirement Specific Impairment Specific Impairment and advances Total loans and advances Total loans for Marketrisk for Marketrisk June June 2017 2017 credit risk Counterparty Balance sheet Off-balance sheet Balance sheet credit risk Counterparty Off-balance sheet 27,643 27,643 7,019 7,019 June June 2018 2018

CCF and impairment. and CCF to CRM, prior balances average gross on Based Credit risk asset classes (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration 1,949,124 Securities Firms SME Retail SME Corporate Sovereign Banks ASSET CLASSESJUNE2018 R’000 426,782 CREDIT RISKEXPOSURE 2,124,470 87,363 Corporates and Municipalities Local Government Public Sectorentities Retail 1,272,506 44,391 53,646 8,739 840,120 sectoral distribution sectoral – risk Credit concentration

3,917,399 retail trade Wholesale and Business services and insurance Financial intermediation forestry andfishing Agriculture, hunting, Real Estate personal services Community, socialand JUNE 2018(R’000)

479,921 920,920

Construction water supply Electricity, gasand and communication Transport, storage Manufacturing Mining andquarrying Business services Private households Bidvest Bank Limited

134,084 409,401 48,210 108,232 533,430 244,523 2,079 2,646 14.296 61

06 RISK REPORT 06 RISK REPORT 62 the frequency and quality of communications. communications. of quality and frequency the to improving given be should consideration to arisk, exposure caused information critical of ‘miscommunication’ if example, For event. arisk of impact and likelihood potential the to reduce controls enhancing or process abusiness modifying involves generally This issue. the to address how on be should focus the arisk, of root the at is issue internal an When • • • • • • • • include: causes risk operational of examples Some approach. management or control system, aprocess, amending by example, for risk, to the exposure against to mitigate appropriate be might action what to understand and losses other from element loss operational the to isolate helps event arisk of cause(s) root the Identifying events. external from or systems and people processes, internal failed or inadequate of because arose it if event risk operational an considered be will event Aloss cause. primary its is event arisk of categorisation the determining when issue key The charge. the capital for calculating used risk, Operational for Approach Standardised the per as factor, beta aprescribed carry lines business The income. of type the on depending lines business to certain allocated is which income, gross average athree-year on based is risk operational for requirement capital The calculation. capital of purposes for approach standardised the uses Bank The errors. processing and issues control statement financial failures, or outages vendor failures, IT outages, business fraud, – loss to financial lead can that exposures rate non-interest and non-credit of types the are These risk. legal includes This events. external from systems and people processes, internal failed or inadequate from resulting loss of risk the is risk Operational OPERATIONAL RISK OPERATIONAL external events. events. external and controls; physical inadequate errors; processing information analyses; inadequate review; management of lack management; activity inadequate duties; of segregation inadequate procedures; and policies of lack Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Value of Equity (EVE) are addressed at the Bank’s ALCO monthly. monthly. ALCO Bank’s the at addressed are (EVE) Equity of Value Economic (NII) and Income Interest Net Bank’s the on rates interest in changes of impact The liabilities. and assets of gap repricing the establishing by risk rate interest measures Bank The risk rate interest of Management relationship. rate interest other any in or curve, yield the of shape the in rates, two between spread the in rates, interest of level absolute the in to achange due change will value investment’s an that risk the is risk rate interest The risk rate Interest risk. on return the optimising while parameters, acceptable within exposure risk market control and manage is to management risk market of objective The instruments. financial of holdings its of value the or income Bank’s the affect which spreads, credit and rates exchange foreign prices, equity rates, interest as such prices, market the in changes of aresult as risk is risk Market MARKET RISK MARKET (2,000,000) (1,000,000) 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 100,000 150,000 200,000 50,000 - - Up to1 month Jun 2013 Assets

Market Risk(R’000) REPRICING GAP-JUNE2018(R’000) 1 monthto More than 3 months NET OPENPOSITION(NOP)R’000 Internal ALCOapprovedlimit Regulatory limit NOP (R’000)absolutevalue Jun 2014 Liabilities 3 monthsto More than 6 months Jun 2015

6 monthsto 12 months More than Net staticgap Jun 2016 12 monthsto More than 3 years Jun 2017 More than 3 yearsto 5 years More than 5 yearsto Jun 2018 10 years 187,841 60,000 3,113

Bidvest Bank Limited 63

06 RISK REPORT 06 RISK REPORT 64 available under stress scenarios. under stress available are sources liquidity available adequate to ensure stressed are mismatches Liquidity basis. behavioural and acontractual both on mismatches liquidity its manages Bank The liquidity behavioural and Contractual value. in loss minimal with and quickly assets to liquidate ability the affect that conditions market in changes address or to recognise failure from arises also risk Liquidity sources. funding in changes or decreases unplanned to manage inability the includes risk Liquidity losses. unacceptable incurring from arising capital or to earnings risk prospective and current the is risk Liquidity funds. reserve and capital qualifying Bank’s the of to 10 percent equal is and Regulator the by imposed alimit is currency foreign in (NOP) Position Open Net The denominated. are liabilities and assets which in currencies foreign other and Rand the between rates exchange in changes by affected negatively be will profitability Bank’s the that risk the is This risk Currency LIQUIDITY RISK LIQUIDITY (2,000,000) (1,000,000) 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 100,000 150,000 200,000 50,000 Bidvest Bank Limited - - Up to 1 month Jun 2013 Assets Market Risk(R’000) REPRICING GAP-JUNE2018(R’000) 1 month to More than 3 months NET OPENPOSITION(NOP)R’000 Internal ALCOapprovedlimit Regulatory limit NOP (R’000)absolutevalue Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Jun 2014 Liabilities 3 months to More than 6 months Jun 2015 6 months to 12 months More than Net static gap Jun 2016 12 months to More than 3 years Jun 2017 More than 3 years to 5 years More than 5 years to Jun 2018 10 years

187,841 60,000 3,113 (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration III. Basel by prescribed is 2018 by more or 100% of year. Aratio to one extends which NSFR, the by considered horizon time the over reliable to be expected liabilities and capital of portion the as defined is ASF The (RSF). funding stable required of amount the to relative (ASF) Funding Stable Available of amount the as defined is NSFR The (NSFR) Funding Ratio Stable Net 100%. of LCR aminimum to have Bank the requires III Basel disruptions. liquidity short-term out to ride hand on assets necessary the has Bank the that to ensure designed is It obligations. short-term its to meet Bank the by held (HQLA) Assets Liquid Quality to High refers (LCR) Ratio Coverage Liquidity The Ratio (LCR) Coverage Liquidity Net outflow (R’000) outflow Net HQLA (R’000) ASF (R’000) RSF (R’000) % NSFR NSFR % LCR LCR Contractual Mismatch (1,000,000) 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 (500,000) 500,000 - Next day LIQUIDITY MISMATCH-JUNE2018(R’000) BaU Mismatch 2 to7days Stress Mismatch 8 daysto 1 month 1 monthto 2 months Total AvailabilityLiquidity 7,092,883 4,630,267 663,771 407,428 153% 163% 2 monthsto 2018 2018 3 months Bidvest Bank Limited 4,856,276 4,807,141 605,638 460,791 101% 151% 2017 2017 65

06 RISK REPORT 07 OUR PEOPLE 66 66

Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Henry Kravis the buildingwon’t crumble. and theexperience foundation, then as well asthebusiness foundation, the moral andtheethical foundation, If you buildthatfoundation, both

OUR PEOPLE OUR key account management, strategic alliances and frontline execution. frontline and alliances strategic management, account key management, growth revenue of areas crucial the in capabilities internal our strengthen and strategy our to execute talent our developing are we addition, In competencies. and skills right the with talent acquiring by capabilities business our building continuously We are Strengthening Capabilities the values. living through business our for culture right the driving and vision Bank’s the executing in teams their for directions strategic to provide leaders our to develop strive We continuously Leadership Inspirational at the senior levels of our organisation. our of levels senior the at diversity racial and gender on focus astrong We have to diversity. committed is Bank The and Transformation Diversity retained. and developed rewarded, are people valuable our ensures and Bank the across talent managing in taken to be measures proactive enable sessions Talent Our Review thinking. of way innovative and entrepreneurial an embodies that talent to attract seeks actively Bank The Talent Development and Retention Attraction, • • • • our scorecard. on score equity employment our on Improved and initiatives; learning in R11 374.00 328 Invested journey; e-learning for award International proposition; value employee Competitive Key highlights

• • Strengthening capabilities at leadership levels. at leadership capabilities Strengthening and Talent retention;

Challenges

Bidvest Bank Limited 67

07 OUR PEOPLE 07 OUR PEOPLE 68 68 qualified team. team. qualified highly adiverse, to build aim and employees to all opportunities equal to providing committed We are opportunities. to new leads and innovation supports which thinking, of ways different stimulate help inclusion and Diversity customers. our all for choice of partner strategic the remaining to essential is diversity that reflecting aworkforce fostering in We believe Transformation and Diversity talent. key for option attractive an as Bank the positioning and employees, motivating and engaging brand, employer a strong creating towards contribute components various The rewards. and benefits perks, of a variety with team our provides Proposition Value Employee our team, capital human the by Driven Retention and Development Talent Attraction, 11%. by complement staff our grew we 2018, During 1 173. to 1044 from team our grown have we 3years, last the Over success. for up them setting and capacity talent optimising fully by choice of employer an to be strives Bank Bidvest People our Building

RACE AND GENDER ANALYSIS AGE CATEGORY ANALYSIS

African Mature (1922 -1945) Coloured Baby Boomers (1945 -1964) Indian Generation X (1965 -1980) White Generation Y (1981 -1995) Foreign National Generation Z (1996 -)

GRAND TOTAL 1 199 11%

503 34.3%

FEMALE 737 MALE 462

200 347 156 6

122 64 54% 136 5 56 1 66 368

181 187

0.8%

HEADCOUNT RACE COMPOSITION FEMALE vs. MALE (JUNE-18) African Female White Male Indian Coloured Foreign National

Average age of employees: 37 Generation X and Y: 88% Average Service years: 6

42%

1 199 61% 30.7%

39% 16.7%

10.2%

0.5%

70 BidvestBidvest Bank Bank Limited Limited (Registration(Registration number number 2000/006478/06) 2000/006478/06) Summarised Summarised Consolidated Consolidated and andSeparate Separate Annual Annual Financial Financial Statements Statements for the for yearthe year ended ended 30 June 30 June 2018 2018 BIDVEST BANK EMPLOYMENT EQUITY JUNE 18 OUR PEOPLE OUR

07 SERVICE YEARS ANALYSIS

9.6%

5.3%

21.7% 8.2%

14%

11%

18.3%

6.6% 0.5%

1.2% 3.8%

SERVICE YEARS CATEGORIES

1 Year 4 Years 11 - 15 Years 26 - 30 Years 2 Years 5 Years 16 - 20 Years 31 - 35 Years 3 Years 6 - 10 Years 21 - 25 Years

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 BidvestBidvest Bank Bank Limited Limited 7171 07 OUR PEOPLE EMPLOYEE CLIMATESURVEY 72 engagement in the workplace and the questions were asked on a five-point scale. scale. afive-point on asked were questions the and workplace the in engagement employee measured survey The participating. workplace the of 50% nearly of rate response agood had we year This annually. survey climate employee an conducts Bank The Survey Climate Employee health. employees’ assesses which nationally, year every employees its for Day aWellness hosts Bank The families. their and employees for programmes wellness and health to online subscribes Bank the addition, In lives. work and personal their on impacting problems personal with to deal them to assist families immediate their and to employees Organisation Services Advisory and Counselling Independent through service support confidential a24-hour provides Bank The wellbeing Employee Limited. Group Bidvest The of scheme incentive share the in participate executives but scheme, incentive ashare offer not does Bank The Committee. Remuneration the by approved is remuneration management senior and Director growth. sustained to achieve Bank the to equip them motivate and employees, quality superior retain and to reward conditions, market prevailing and guidelines industry by informed is and ayear twice occur that reviews performance on based is employees of Remuneration • • which: and observed established are and practices policies that remuneration to ensure is mandate REMCO The management. senior and Executives for allocations bonus and schemes incentive reviews philosophy, remuneration the of governance the oversees Committee The directors. non-executive three of composed is Committee Remuneration The Remuneration workplace and the questions were asked on a ﬁve-point scale. asked aﬁve-point on were and the questions workplace engagement employee in the measured survey The participating. 50% of nearly rate response agood had we annually. year This climate an employee survey conducts Bank The as well as how they have progressed. have they how as well as at and develop the bank to learn felt have the had opportunity they that have they at whether looks This Bank. and development at The learning the employees on focused climate of in One the the key employee survey areas focus forward. the to Bank innovation move drive to and generally the Bank connection 75% Address remuneration risks inherent in environment. the banking risks remuneration Address and value; sustainable to create able individuals retain and Attract Of the Bank’s employees are engaged, whereby employees feel a strong feel astrong employees whereby engaged, are the Bank’s employees Of Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration

PARTICIPATION EMPLOYEES WORKPLACE ENGAGED of the workplace of the workplace EMPLOYEE CLIMATESURVEY as well as how they have progressed. have they how as well as at and develop the bank to learn felt have the had opportunity they that have they at whether looks This Bank. and development at The learning the employees on focused climate of in One the the key employee survey areas focus forward. the to Bank innovation move drive to and generally the Bank connection 75% scale. asked aﬁve-point on were and the questions workplace engagement employee in the measured survey The participating. 50% of nearly rate response agood had we annually. year This climate an employee survey conducts Bank The 55 graduated in AET, National Certificate in banking Levels 4 and 5. and 4 Levels banking in Certificate National AET, in graduated 55 participants, the Of initiatives. training in participated employees 1395 2018, During performance. work improve and employees, all of levels skill the to raise us allows This workplace. the in learning of application practical providing in itself prides Bank Bidvest & Capabilities Skills Building progressed. have they how as well as develop, and to learn opportunity the had have they that felt they whether at looks This Bank. The at development and learning employees’ the on focused survey climate employee the in areas focus key the of One forward. Bank the to move innovation drive generally and Bank to the connection astrong feel employees whereby engaged, are employees Bank’s the of 75% that shows image above The (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Of the Bank’s employees are engaged, whereby employees feel a strong feel astrong employees whereby engaged, are the Bank’s employees Of BUILDING SKILLSCAPABILITIES

EMPLOYEES GRADUATED IN AET, IN GRADUATED EMPLOYEES

NATIONAL CERTIFICATE IN CERTIFICATE NATIONAL BANKING LEVELS 4 AND 5 AND 4 LEVELS BANKING

PARTICIPATION EMPLOYEES WORKPLACE ENGAGED of the workplace of the workplace Bidvest Bank Limited 73

07 OUR PEOPLE 07 OUR PEOPLE 74 74

classroom-only training through to the implementation of e-learning as a blended approach. ablended as e-learning of implementation to the through training classroom-only from journey our showcased Bank The Award”. Journey Learning International “Best the win to first the is and event prestigious the to invited be to company African-based first the is Bank Bidvest Netherlands. the in Award” Journey Learning International Best “The awarded were we when recognition international received year, efforts our last the During Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration programme positions our people well in the growth trajectory. growth the in well people our positions programme this development, career individuals’ of part As customers. our with dealing in competent more them making bankers our of upskilling to the contributes programme This branches. and units business various from employees Bank Bidvest for programme aone-year is This Level inBanking 5 National Certificate Framework. Qualifications National the on registered is which programme, learning structured a through aqualification to gain opportunity an learners gave and learning further for alaunchpad provided It 2018. 31 October on ended 2017 and 1 November on commenced 2017/2018 4 Learnership, Level Banking in Certificate National The Level inBanking Learnership 4 National Certificate employment. to gain learners the for opportunities creates which 3qualification, Level Administration a Business with learners disabled provides programme The Consultants. Training LFP with in partnership learnership a on disability funding embarked has Bank Bidvest Level 3 Administration – Business Learnership Disability programmes: training of anumber offers Academy Our 6. Level Banking in Certificate Advanced and 5) and 4 Levels (NQF Banking Certificate: National the for Bankseta the by Delivery and Assessment for provider aservice as accredited been has Academy Bank Bidvest The

Bidvest Bank Limited 75

07 OUR PEOPLE 07 OUR PEOPLE 76 an in-depth understanding of environment. our banking understanding an in-depth Graduates the gives that qualification 6 Level is a which Banking, in Certificate Advanced an to complete graduates the requires programme Graduate The culture. Bank Bidvest the into immersion and experience work on-the-job first-hand to experience opportunity agreat with graduates the provides programme development graduate Bank’s The Development Programme Graduate Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration

Bidvest Bank Limited 77 77

07 OUR PEOPLE 07 OUR PEOPLE 78 78 and transfer those learnings to others in the Bank. the in to others learnings those transfer and programme the to in exposed are they elements the taking by business to our value further add will they time, In HIPOs. our of development ongoing to the contribute programmes These strategy. business into feed that skills management related other and creation business new of promotion leadership, business, in skills fundamental with participants provides programme This Programme. Development Executive International and Programme Development Leadership our including interventions various through this We do Bank. the for area focus akey is capabilities leadership our Building Development Programme Leadership Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration

Bidvest Bank Limited 79

07 OUR PEOPLE 07 OUR PEOPLE 80 and is open to all managers, supervisors and leaders within the Bank to attend. to attend. Bank the within leaders and supervisors managers, to all open is and nationally run is Curriculum, Leadership the of part forms which course, The mindfulness. and self-mastery to road the on confidence and knowledge awareness, necessary the with them –to supply key are relationships interpersonal which in those –particularly employees and managers for course Management EQ atwo-day hosted Academy Bidvest The Emotional Intelligence Management Training fulfilment. customer better to provide us enable ultimately and gaps, knowledge are there where employees upskill and services and products of knowledge existing to evaluate able are we tests, weekly these Through platform. Bidlearn the on tests these to complete required are staff customer-facing All members. team our among knowledge product to increase intended tests knowledge product weekly implemented has Academy Bank Bidvest The Tests Knowledge Product Bidlearn procedures. customer all with C²ARES integrate and service with strategy Bank’s Bidvest incorporating by achieved is This customers. external and internal for experiences service exceptional to create is course this of outcome overall The customers. our for DONE’ THINGS ‘GETTING of philosophy brand our with in tied is it and staff non-management all for programme skills acore offers Academy The ExcellenceLet’s Done Service Customer Get this. in role their unpack and problems to customer solutions innovative develop to actively have Supervisors and Management our where Management, Service Customer on modules training implemented has Academy Bank Bidvest The touchpoints. customer all across Standards Service C²ARES the through customers our to serving committed We are values. company to our aligned are standards service Our Standards: C²ARES Service Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration

Bidvest Bank Limited 81

07 OUR PEOPLE 07 OUR PEOPLE 82 academic record. This scheme serves not only the employees but their children as well. as children their but employees the only not serves scheme This record. academic agood have children their that condition on fees school children’s their with employees top-performing to assist aims scheme the tool, retention and attraction atalent as Positioned Scheme. Bursary Child Employee an introduced Bank year, Bidvest financial last the During Scheme Bursary Child Employee Bank. the within opportunities career for candidates internal of supply the enhance is to aim The qualification. atertiary to obtain wish who employees for programme assistance study internal an has Bank the this, To support development. own their of ownership to take opportunity the employees our afforded has course, internal an with supplemented learning, Self-study R1 518 FY17/18 for was 020.92. bursaries on spend Our Bursaries bursaries). (including R11 340.00 was 260 spend training total our 2018, June ended year financial the For communities. stronger builds but team our within knowledge builds only not education in investment that believe we Bank Bidvest At Knowledge Building Bidvest Bank Limited

Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Kevin Roberts can move theworld. inspiring love, business By buildingrespect and

Bidvest Bank Limited 83 83

07 OUR PEOPLE 08 CORPORATE SOCIAL INVESTMENT 84 84

Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Unknown in aday. time andempires aren’t built Be patient.Great things take CORPORATE SOCIAL INVESTMENT CORPORATE SOCIAL INVESTMENT

08 CORPORATE SOCIAL INVESTMENT STRATEGY

Education

Business Job Development Creation

Through our Corporate Social Investment (CSI) strategy, Bidvest Bank is committed to the development and wellbeing of the communities that we serve. Our socio-economic investments remain focused on education, business development and job creation in the Small to Medium-sized Enterprise (SME) space.

We believe in building robust relationships and working in partnership with organisations that make a measurable difference to people’s lives. In addition to providing financial support, we also encourage our people to play an active part in community affairs and programmes – whether this is by way of business development support, marketing or promotion.

During the last year, Bidvest Bank supported a number of key interventions, some of which will continue into the next financial year.

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 Bidvest Bank Limited 85 08 CORPORATE SOCIAL INVESTMENT 86 Cloetesville High School during the Awareness of Nature Academy session Academy Nature of Awareness the during School High Cloetesville backgrounds. their disadvantaged how of regardless Africans, South young of optimism and energy resilience, remarkable the into insight ahumbling gain and communities to reach hard in youth and schools with relationships build also but impact social meaningful to to contribute only not Africa South corporate for opportunity aunique provides programme The programme. its from graduate educators and learners 6700 on close seen has and provinces seven in 169 with schools worked has Columba establishment, its Since school. leaving of months six within volunteering or employment study, to further successfully transition graduates Columba’s of 75% that is impact programme’s the of measure Ameaningful sustained. be will purpose and character with leaders young to developing approach powerful this that knowing confidence with school the of out to transition able then is Columba culture. school’s the of part as engagement youth to institutionalise learners and educators both with working years, three least at over schools with partners Columba communication. and solving problem- creative thinking, critical collaboration, teamwork, as such skills 21st Century of ahost developing of aresult as school after life for equipped more become youth and strengthened, are schools twofold: is benefit This remarkable. of short nothing are achieve they results The initiatives. change leading in role ameaningful to play opportunity the have people young pregnancy, teenage and drugs performance, academic poor bullying, as such school the within challenges to addressing approach adult-supported ayouth-led, adopting By destiny. their of ownership to take people young allowing and schools of culture the transforming by youth of trajectory the to change aims which programme, leadership avalues-based offer They prospects. employment youth and performance school improving of objective the with leaders young engaged of movement anational to activate is mission Their provinces. six in areas disadvantaged economically in located schools at programmes to run Education of Department the with closely works organisation The organisation. leadership youth avalues-based as itself describes Leadership Columba Leadership Columba Bidvest Bank Limited Consolidated and Individual Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Individual and Consolidated Summarised 2000/006478/06) number (Registration (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration meets the various safety requirements as set out by the Department of Labour. of Department the by out set as requirements safety various the meets building their to ensure Bathebile with worked and security provided also has Bank Bidvest • • • • • with: assists Bank Bidvest Putfontein. in settlement informal Zanzele near Village Oliver in located is which Nomthandazo, is this for outlets main the of One children. educate and need in people support and to assist Bathebile with works Bank Bidvest sustainability. and self-reliance of to aculture contributing thereby to manage, community to the over handed are they self-sustaining are projects the Once projects. building skills- community-based of development the facilitating been has Bathebile 2009, Since Bathebile school leavers. leavers. school communities. It also provides a Christmas meal to the elderly in the Zanele community. Zanele the in elderly to the meal aChristmas provides also It communities. disadvantaged our of vulnerability and exclusion deprivation, of experience children’s of understanding adeep to deliver serves also garden The elderly. the and children including community, to the food provides now garden weather. The the from protection also but growth, vegetable better for shade provide trees the do only Not installed. been has system watering and energy independent an and vegetables own their grow to how taught being is community The trees. fruit and gardens vegetable maintain and Vegetable Garden: Community training computer basic Free year. previous the subjects certain failed have who 12 learners Grade to the provided also are assessments and exams Free lessons. extra afford cannot who communities Etwatwa and Daveyton the from 11 12 and Grade learners the for centre learning Centre: Learning Education food. serving for area kitchen of a fitting the and shade providing by area scheme feeding the for shade-netting of installation with assisted has Bank Bidvest Settlement. Informal Zenzele the from beneficiaries elderly 200 also Feeding Scheme: walkways. and areas play the for shade-netting of installation the and premises, creche of upgrading children; the of graduation and education the in assist teachers, 13the full-time support facilities, the improve and to maintain works Bank Bidvest epidemic. HIV/Aids to the due orphaned are children these of percent Twenty old. years six and one of ages the between Creche: Feeding at the Nomthandazo Children’s Care Centre that cares for 120 children 120 children for cares that Centre Care Children’s Nomthandazo the at Feeding The feeding scheme not only caters for the creche’s children but but children creche’s the for caters only not scheme feeding The Bidvest Bank has created a Maths, Science and Computer Computer and Science aMaths, created has Bank Bidvest is offered to a number of disadvantaged learners and and learners disadvantaged of to anumber offered is Bidvest Bank has worked with the community to establish to establish community the with worked has Bank Bidvest

Bidvest Bank Limited 87

08 CORPORATE SOCIAL INVESTMENT 08 CORPORATE SOCIAL INVESTMENT 88 Roedean’s facilities. facilities. Roedean’s using staff-members, Roedean dedicated by tutored learners, 20 of amaximum have Classes week. per afternoons various on programme the attend year, girls school the During to exist. able be not would Academy the sponsorship, such Without schools. under-resourced from to pupils education excellent providing of vision its to fund order in Academy Roedean the sponsoring been has Bank 2011,Since Bidvest 8 –12. Grade from to girls subjects core these in tuition to provide School High Barnato neighbouring with partnered has school The communities. under-resourced from girls among education Accounting and Science Physical Mathematics, English, Africa’s South on influence asignificant having is that programme training aworld-class spearheads (SA) School Roedean 2009, in Launched Academy Roedean The year. the throughout capacity personal their in toys and clothes donated also have staff Our groceries. monthly and teacher-funding with centre the to support continues Bank Bidvest 18 children. accommodate can that bedrooms three and area lounge classroom, small a facilities, bathroom kitchen, office, storeroom, bedroom, a main with house expanded an into shacks, metal two and house (RDP) Programme Development and Reconstruction asingle-room from grown has Simamisa 2005, in establishment its Since school. attend children older that ensures and children, smaller for support learning early basic provides also Simamisa environment. asafe and food providing by children vulnerable to support is project regeneration Simamisa the of mission The departments. welfare social of care the under those and children abused orphans, AIDS for refuge of aplace provides centre, care orphan aregistered Simamisa, Care Orphans Simamisa Bidvest Bank Limited Consolidated and Individual Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Individual and Consolidated Summarised 2000/006478/06) number (Registration (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration to changing the lives of these pupils, this would not have been possible. been have not would this pupils, these of lives the to changing and programme this of success to the contributed has which Bank, Bidvest from sponsorship the Without Accounting. of aBachelor studying year second her in is Motsweni Mbahlenhle and Engineering Industrial year, studying fourth her in is Mudima Chiezda Bank. Reserve The at working is and Science Actuarial in degree her completed has Themba Angella empliyed. is and honours BSc her completed now has Zwane, Sibongile recipient, first The year. each of student top to the bursaries offered has Bank Bidvest 2012, Since enormously. increase dedication and motivation pupil’s each that ensure interest and care Individual Accounting. and Science Physical Mathematics, English, in improvement measured the in seen be can success its and many, for life-changing been has programme This applications. learnership as well as funding and scholarships bursaries, for applications institutions, tertiary for applications with them help and opportunities tertiary with girls matric the assist they whereby Programme” Step Next “The called aprogramme runs also Academy The Action”. in “Science of part be can they that so labs the in experiments Science in participate also girls The skills. study and stress with dealing management, grief including topics covers and mornings Saturday on place takes training This term. each Training Skills Life introduced has and education a wider to girls the exposes Roedean tested. and screened eyes their have can and seminar training HIV/Aids an attend also can girls the addition, In used. is it much how to see encouraging is it and library School Roedean to the access full have Girls Academy Roedean The 11s. 10s and Grade for camps leadership introduced recently has and grades the all for year every excursion an to arrange tries also Roedean testing. psychometric careers undergo and Evening a Careers Grade 11s the attend and camp study afive-day attend 12s also Grade The learners. the all for provided are meal ahot and transport addition, In tablets. on and computers on Mathematics their practise can girls the that so introduced, been also has programme e-learning An Bidvest Bank Limited 89

08 CORPORATE SOCIAL INVESTMENT 08 CORPORATE SOCIAL INVESTMENT 90 • • • • schools: following to the products provided and projects implemented 2017/2018 eGAMA During attention. most the requiring areas the on to focus knowledge necessary the with teachers the equips and lie points weak learners’ where to understand teachers empower eGAMA’s algorithms diagnostic (CAPIS). Statements Policy Assessment Curriculum and (NCS) Statement Curriculum National to the aligned is which content, high-quality with teachers and learners provides platform e-learning world-class This application. learning adaptive Modlin the is company the of product flagship The alike. educators and learners both for improvement science and maths on focus products These implements. and trains delivers, it that services and products of array abroad offers eGAMA systems. feedback and tools assessment diagnostic software, curriculum interactive leading world- with Sector Educational Private and Public the supports and implements that company services and provider solution educational African aSouth is eGAMA 2015, in Established eGAMA These projects and the partnerships with these and other schools will continue into 2019. into continue will schools other and these with partnerships the and projects These Bank. Bidvest of behalf on training user with along dictionaries and banks and implemented question provided KwaZulu-Natal: School, Ndunkuhle Secondary achieved. results strong and implemented, application learning adaptive Cape: Western School, Secondary Groenvlei 10 11. and Grade in learners to the tutelage maths additional Gauteng: School, Secondary Olievenhoutbosch Bidvest Bank Limited Consolidated and Individual Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Individual and Consolidated Summarised 2000/006478/06) number (Registration (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration David Brinkley thrown athim. with thebricksothers have can layafirm foundation A successful manisonewho Bidvest Bank Limited 91 91

08 CORPORATE SOCIAL INVESTMENT 09 6-YEAR REVIEW 92 #Includes marketing, communication and other administration expenses. and marketing, communication expenses. other#Includes administration outstanding monthly the on calculated is It assets. rental operating for balance each asset. from capital income rental leasing in included is that interest of portion the is interest *Imputed FINANCIAL PERFORMANCE FOR THE YEAR ENDED ENDED 30 JUNE YEAR THE FOR PERFORMANCE FINANCIAL CONSOLIDATEDADJUSTED STATEMENT OF SIX-YEAR REVIEW Interest income Interest Imputed interest from rental income* rental from interest Imputed Fee and income commission income Net interest Interest expense Fee and expense commission Imputed interest reflected under net interest income* interest net under reflected interest Imputed income Leasing income commission and fee Net Risk control leases Operating Employment costs income Net trading leasing from income Net Information technology costs charges impairment credit Net income Operating Other income / (loss) Depreciation and amortisation Depreciation Operating income charges credit after Operating impairment Indirect taxation Indirect taxation indirect before Profit # expenditure operating Other Operating expenditure Operating Profit before direct taxation direct before Profit Profit for the year the for Profit taxation Direct Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration 1 186 838 1 186 1 192 975 1 192 (295 080) (777 179) (442 251) (442 (280 417) (280 (137 124) (137 (121 812) (121 (116 949) (116 (86 934) 302 329 302 444 542 429 983 429 (53 015) (53 R ‘000 (18 606) (18 277 768 277 301 249 301 (54 561) (54 177 025 177 472 105 472 567 107 567 137 124 137 419 278 419 415 796 415 2018 3 482 6 137 6 813

1 234 122 1 234 1 229 162 1 229 (405 432) (405 (210 793) (210 (128 937) (128 (130 606) (156 073) (156 (743 331) (743 (133 495) (133 335 956 335 (43 572) (43 323 084 323 (25 649) (25 488 324 342 905 342 485 831 485 466 562 466 608 826 608 265 607 265 (47 945) (47 (91 796) (91 R ‘000 475 331 475 133 495 133 (19 269) (19

167 011 167 (4 960) (4 2017 1 685

1 144 581 1 144 1 118 597 (146 456) (146 (130 863) (130 (125 939) (125 (658 117) (658 (361 031) (361 (116 156) (117 179) (117 323 485 323 (39 454) (39 (25 984) (25 (32 457) (32 440 664 440 (21 865) (21 460 480 460 (87 154) (87 231 845 231 572 060 572 327 357 327 R ‘000 289 108 158 245 158 446 121 446 125 939 125 211 328 211 (19 816) (19 2016 1 530

(531 162) (531 (295 541) (295 (23 646) (23 (80 655) (80 (91 345) (91 222 354 (76 453) (76 897 553 897 365 829 354 357 263 012 263 (80 201) (80 324 459 324 R ‘000 (91 198) (91 (24 716) (24 264 142 264 267 734 267 182 875 182 272 740 272 896 991 (51 719) (51 (30 151) (30 (11 472) (11 183 941 183 (9 737) 51 719 51 2015 (562)

(271 500) (271 (493 619) (493 (30 000) (30 (73 335) (73 250 798 (23 656) (23 248 489 364 873 862 603 862 346 549 263 557 263 (79 714) (79 (73 818) (73 250 265 250 188 806 188 858 492 858 R ‘000 (18 324) (18 (21 310) (21 173 708 173 (95 751)(95 (74 781) (74 312 239 312 171 066 171 (61 974) (61 61 974 61 (4 111) (4 2014 4 007

(244 935) (244 (475 633) (102 483) (102 (20 582) (20 (68 897) (68 260 379 260 (85 857) (75 733) (75 (29 592) (29 238 758 854 065 854 860 802 378 432 378 158 544 158 362 862 293 744 293 R ‘000 (23 751) (23 (70 916) (70 (71 717) 154 528 154 (15 570) (15 369 477 159 620 159 228 517 228 (6 737) (6 75 733 75 10 136 10 2013

2 846 484 5 285 935 5 285 2 526 030 2 526 1 707 427 1 707 2 100 468 2 100 1 985 796 1 985 7 811 965 4 502 591 4 502 7 811 965 248 284 254 868 254

377 454 377 525 709 525 R ‘000 150 035 150 152 424 152 416 092 416 161 727 161 98 375 98 49 585 49 12 455 12 26 181 26 2017 5 454 2 070 451 - -

6 902 690 6 902 2 342 566 2 342 3 862 609 3 862 1 660 359 1 660 1 800 351 1 800 6 902 690 6 902 2 522 371 2 522 4 560 124 4 560 1 489 961 1 489 334 258 334 327 442 327 378 830 378 109 448 109 525 709 525 R ‘000 150 032 150 255 061 151 087 151 112 726 112 14 436 14 46 047 47 405 47 14 282 14 2016 2 070 445 451 -

6 200 981 6 200 2 830 773 2 830 2 387 550 2 387 1 592 936 1 592 6 200 981 6 200 4 064 140 4 064 1 851 857 1 851 1 240 171 1 240 2 136 841 2 136 525 709 525 165 488 165 R ‘000 182 450 182 239 067 239 150 026 150 893 413 893 116 184 116 30 885 30 74 545 74 84 914 84 16 126 16 2015 9 844 2 070 6 996 6 482 476 -

4 642 601 4 642 1 442 556 1 442 1 982 645 1 982 2 659 936 2 659 4 642 601 4 642 1 163 780 1 163 2 128 203 2 128 2 141 298 Bidvest Bank Limited 525 709 525 R ‘000 122 504 122 995 188 995 190 429 190 196 862 196 112 559 112 46 977 46 29 099 29 95 286 95 62 713 62 12 310 12 2014 2 070 8 796 8 8 361 8 482 - - -

1 888 862 1 888 1 356 797 1 356 1 223 601 1 223 2 725 956 2 725 1 825 049 1 825 2 123 953 2 123 4 614 818 1 212 147 4 614 818 292 706 292 525 709 525 R ‘000 149 032 149 127 762 127 98 522 21 563 21 32 062 32 33 108 33 36 910 36 65 151 65 98 767 98 2013 4 286 2 070 441 - - -

09 6-YEAR REVIEW 10 STATISTICS, RETURNS AND CAPITAL ADEQUACY 94 *Reflected as *Reflected only. percentage ofa loans andadvances Non-interest income to assets (%) assets to income Non-interest (%) assets to income interest Net Statement of financialperformance Statistical review Statistical Operating expenses to assets (%) assets to expenses Operating USD exchange rates Average EUR Interest income to interest earning assets (%) assets earning interest to income Interest GBP GBP USD June 30 at rates Exchange (R’000) employee per taxation before Profit (%) assets on Return Statement of financialposition (%) tax indirect including tax Effective Credit loss ratio (%)* ratio loss Credit (%)* income to Cost Interest expense to funding liabilities (%) liabilities funding to expense Interest Average prime overdraft rate (%)Average prime overdraft EUR per (R’000) employee Expense (R’000) employee per Income (%) ratio funding stable Net (times)Financial leverage (%) deposits to assets leased and Loans (%) equity on Return (%) tax indirect excluding tax Effective Non-interest income to total income (%) income total to income Non-interest Number of branches of Number Number of employees information Statistical (%) ratio coverage Liquidity (%) assets risk-weighted to capital Regulatory STATISTICS, RETURNS AND CAPITAL ADEQUACY Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration 162.92 153.19 2018 64.85 20.57 74.23 12.85 15.32 71.38 16.05 10.21 27.29 13.77 1 199 1 28.13 11.32 17.29 18.11 8.43 3.45 3.28 3.27 4.79 0.15 7.41 9.61 648 350 990 76 101.00 151.00 2017 84.57 30.85 26.88 62.04 1 048 12.40 13.30 78.79 13.60 10.50 14.98 14.94 1 179 1 17.03 17.32 19.95 13.12 3.40 4.30 4.53 6.93 9.52 3.10 0.13 631 396 80 163.00 2016 83.43 25.45 60.60 13.82 21.40 16.85 16.32 13.52 15.07 81.56 14.70 87.00 29.75 16.92 1 171 1 19.71 5.54 3.06 0.82 3.65 4.69 2.95 9.53 9.94 977 562 376 85 104.00 109.23 2015 85.44 28.83 60.46 12.46 13.54 24.97 70.75 18.01 12.31 13.72 1 109 1 11.45 19.09 18.18 12.17 4.27 8.63 3.06 0.02 2.90 9.25 3.61 6.13 484 330 814 85 117.00 2014 80.20 94.00 10.38 14.55 14.09 10.63 100.8 10.60 1 022 31.30 14.90 27.60 59.60 16.90 1 061 1 18.18 5.40 0.40 2.30 3.50 3.70 8.70 5.70 12.6 19.4 428 627 95 123.00 114.70 2013 28.20 13.88 10.30 13.80 15.23 10.00 15.20 13.06 31.30 79.00 81.60 57.50 1 049 1 15.90 11.47 3.40 2.40 8.86 5.30 3.00 5.60 0.60 8.52 488 855 361 92 (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Jeff Bezos of mouthisvery powerful. each otheraboutit.Word experience, customers tell If you dobuildagreat Bidvest Bank Limited 95 95

09 6-YEAR REVIEW 11 GOVERNANCE REPORT 96 96

Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Ralph Waldo Emerson a stone. human beingbrought building ofwhichevery Language isacityto the (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Ethical, effective and responsible leadership leadership responsible and effective Ethical, Act. Banks 39(18) the of Regulation by mandated is review Governance Corporate This conduct. of code Bank’s the and banks, for principles governance corporate on Guidelines Supervision Banking on Committee Basel the Governance, Corporate on Code IV King the Act, 39, Companies the Regulation particularly and Act Banks the statutes, Bank’s the by informed are processes and practices governance corporate Bank’s) (the Limited’s Bank Bidvest employees on resignation) and an email account was closed because of its use in a419 in use its of scam. because closed was account email an and resignation) on employees disgruntled by complaints including cases, (in six complaints the to support evidence no was there because taken was action no cases); (three justified was complaint the because dismissed were employees case); (one service customer to improve provided was training employee further taken: were actions following The department. Security the by investigated were line anti-fraud to the 11 year the reports &Touche. During Deloitte by managed is which line, tip-off anti-fraud confidential Group Bidvest the in participates Bank The Whistle-blowing meeting. directors’ each at interest of declarations to make required are directors The Committee. Audit to the reported are and quarterly least at made to be required are transactions party related of Declarations disclosed. fully are transactions party related all and avoided, are interest of conflicts potential that to ensure conducted, be should parties related with dealings which in manner the regulates policy Interest of Conflicts The parties Related disciplinary processes. the with accordance in addressed and investigated are non-compliance of Instances the policies. contravene who employees against taken is action disciplinary and management, with lies policies ethics and Conduct of Code the executing and implementing for responsibility The harassment. and sexual discrimination crime, of proceeds laundering, money tolerance, zero discrimination, activity, criminal fraud, procurement, addressing policies in expressed is business its in conduct to ethical commitment Bank’s The Conduct. of Code to the adherence their on survey online an in 1199) of participated workforce atotal (of 861 employees year the During induction. at Conduct of Code the accept and to acknowledge required are and on training receive employees Bank and transparency. fairness accountability, and to responsibility, Conduct, of Code the in expressed as standards, ethical highest the with accordance in business the of conduct to the commitment Bank’s the endorses Board) (the Directors of Board The ethics Values and GOVERNANCE REPORT GOVERNANCE Bidvest Bank Limited 97

11 GOVERNANCE REPORT 11 GOVERNANCE REPORT 98 including strategic initiatives; such reports include any negative consequences of its activities. its of consequences negative any include reports such initiatives; strategic including performance, business on Board to the quarterly reports Management objectives. initial of realisation its and implementation initiative of effectiveness the measures unit management performance business the and process, approval the of part is stakeholders on strategy of impact The functions. support and revenue-generating the by implementation for approved to be services and products new all requires process approval product new The initiative. any on attendant risks the and goals, longer-term and medium- short-, includes Strategy effectiveness. its of assessment the and implementation its appetite, risk approved the with strategy the of alignment the for responsible is management and management, by proposed as strategy Bank’s the approves Board The organisation. the throughout governance corporate to good adherence the on dependent is objectives these of achievement The stakeholders. of for the all benefit requirements, regulatory applicable with in accordance business Bank’s the of growth sustainable and development the are objectives Board’s The are of all creation value elements sustainability and performance model, business opportunities, core risk, Strategy: purpose, building. certified 4-star Council Building aGreen in be will premises office head 2019 its from and possible, wherever transport public and water of use energy, manner. acceptable responsible of in an environmentally encourages Bank The disposed is paper waste that to ensure initiatives recycling paper in participates it and impact direct alow has business The responsibilities. environmental its of conscious is Bank The Environment 2018million). (2017: in R2.5 beneficiaries to these allocated was million R2.2 programmes. and affairs community in participate to employees encourages also Bank the level, organisational an at support financial to providing addition In communities. and to lives difference ameasurable make that organisations with works it and relationships robust to build seeks Bank The education. and youth initiatives, community-based on focus investments socio-economic its serves: it communities the of wellbeing and development to the committed is Bank The citizenship Corporate billion). (2017: R2.6 billion to R2.4 amounted spend B-BBEE Bank’s The procurement Preferential developed. being is improvement such to achieve aprogramme and identified, been have rating its improve can Bank the which in activity of areas and rating, the lower to anticipated is code rating sector financial new the of impact The 2018. June 30 at Agency Verification Empowerdex by verified 4rating level B-BBEE its retained has Bank The Transformation BankThe as aresponsible corporate citizen Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration concern Going and experience. gender, knowledge race, age, of diversity of importance the of mindful is but targets, race or gender set not does Board The Act. Banks the of requirements the with accordance in are non-executives, and executives of mix the and composition, committee and Board independence and experience skill, knowledge, of a balance composition:Board promotion of governance. sound corporate the on directive proposed Authority Prudential the with line in year the during amended was policy governance corporate The reference. of terms the with accordance in responsibilities its fulfilled has it that satisfied is Board The advice. professional independent to obtain directors for exists Amethod meetings. committee and board at attendance management’s by created is management executive with arelationship and documentation, and to management access unrestricted has Board The chairman. Board the of responsibilities the include and processes, and membership responsibilities, role, its set reference of terms Board The governance corporate of custodian and point focal the as Board The directors. to the reporting of purposes for Board the by determined is statements financial the in disclosure for level materiality The Committee. Audit the by review appropriate with Board, the by approved are Disclosure, Public III Pillar the and report integrated the statements, financial including Bank, the by issued Reports prospects and performance of assessment informed for Reporting as stable. outlook, and (Aa2.za) rating scale national (B(a1)) rating long-term the and issuer scale global currency local long-term Bank’s the confirmed Service Investors Moody’s 2018 6April On Service Moody’s Investors statements. financial the of preparation the in basis going-concern the adopts Board the reason this for and future, foreseeable the for existence operational in to continue available resources adequate has Bank the that itself satisfies Committee The Committee. Audit the by reviewed is status going-concern Bank’s the assessing for process The Training spend per employee (Rand) Number of employees trained Number of employees (R’000) spend Training (R'000) BEE procurement Profit before direct taxation (R’000) taxation direct before Profit Operating income (R’000) Operating information Statistical

1 186 838 1 186 2 465 671 2 465 419 278 419 8 204 9 837 1 199 1 2018 Group 1 234 122 1 234 2 609 241 2 609 466 562 466 8 685 7 366 1 179 1 2017 2 465 671 2 465 1 167 242 426 154 426 9 730 8 352 1 165 1 2018 Company Bidvest Bank Limited 1 234 120 1 234 2 609 241 2 609 466 560 8 685 7 366 1 179 1 2017 99

11 GOVERNANCE REPORT 11 GOVERNANCE REPORT 100 Board-approved terms of terms reference. Board-approved and Act) Companies the and Act Bank’s (the legislation applicable with accordance in operate which committees, to board obligations supervisory its delegates Board The Board’s the of duties discharge effective the and judgement, independent promoting committees to board Delegation chairman. Board and director managing the by evaluated is secretary company the of performance the and approval, Regulator and to Board subject is secretary company the of appointment The responsibilities. legal and governance corporate its in Group Bidvest the of department secretarial the by and secretary company the by supported is Board The Conduct. of Code and Act Companies the with accordance in interests personal their to declare required are employees and Directors parties. third with those than favourable more no are that terms under basis, arm’s-length an on concluded to be required is adirector with transaction any and meeting, board every at made are interest of Declarations Bank. the of those and interests personal their between interest of conflict any of avoidance the of respect in Act Companies the of 75 Section and Conduct of Code the with comply to required are officers and Directors officers and directors of Interest operations. Bank’s to the applicable environment regulatory the in changes on meetings directors’ quarterly at provided are Updates operations. Bank’s to the applicable changes regulatory and legislative including issues, topical on experts matter subject external by provided are workshops training director Ongoing management. senior with interaction and environment, and business its Bank, the about information to background access materials, and information induction receive directors new Policy, Induction the with accordance In programmes development and training induction, Director dictate. circumstances as made are appointments place; in not are plans Succession age. of years 70 reach they once reference of terms Board the of terms in to review subject Act, Companies the and Act Banks the of requirements the meet they while serve directors and rotation, director for provide not does incorporation of memorandum Bank’s The individual. the of attributes personal the and diversity experience, knowledge, skill, for Board the of needs the by guided is approval for candidates of selection The Act. Banks the of terms in regulator the of approval to the subject are appointments All planning succession and appointments Board 2018. February in director independent lead the appointed was Mokate RD Dr responsibilities. its of achievement its and effectiveness Board’s to the contribute directors the of expertise and experience varied The individual. or group any by domination without decision-making unfettered to ensure aims composition Board and separate, are director managing and chairman the of roles The non-executives. independent being majority the directors, non-executive six and executive two of composed was Board the 2018, June 30 At Act. Banks the and Act Companies the of terms in required conduct directors’ of standard the of aware are directors The annually. Board the by assessed is more, or years nine for served has who director any of independence the that in governance, corporate on directive SARB 2018 the with complies independence director on policy Bank The Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration out in the schedule below: schedule the in out set are meetings sub-committee Board and Board at directors by attendance the of Details Meeting attendance purposes. information for directors to all distributed are meetings committee all for packs Meeting reference. of terms Board-approved with accordance in functions their performed have committees the that itself satisfies which Board, to the reported regularly are activities committees’ The • • • • are: The committees *Non-executive director @ Independent # Executive director i Attendance by invitation by iAttendance director #Executive @Independent director *Non-executive JJ Van Niekerk# LP Ralphs @* Payne NG RD Mokate@* RD NT Madisa* NT EK Diack@* Liebenberg# MJ Cunningham@* AD meetings Number of Remuneration Remuneration Management Risk and Capital Nominations incorporating and Ethics, Social Governance, Audit

Chairman Board 4 4 2 4 4 3 4 4 4 Chairman Audit 4i 4i 4i 4 4 2 4 - -

Management Risk and Capital Capital Chairman

4i 4i 1i 1i 4 4 1 4 - REMCO Chairman 3i 3i 3 3 3 2 - - -

Governance Corporate Corporate Chairman 2i 2i 2

2 2 1 - - -

Trilateral SARB SARB

1i 1i 1i 1 1 1 - - - Directors’ Directors’ Meetings SARB SARB

1 1 1 1 1 1 1 1 -

Bidvest Bank Limited Credit 12 12 12 12 - - - - - ALCO 12 12 12 12 - - - - - 101

11 GOVERNANCE REPORT 11 GOVERNANCE REPORT 102 by invitation. by meetings committee attend managers Senior duplication. and reduces collaboration promotes committee one than more on managers senior and directors by service The and information. to management access unfettered has Board The environment. operating and performance its activities, Bank’s the on materials briefing regular receive committees board and Board The areas. specified their in policies management risk and governance corporate the of effectiveness the reviewing and approving for responsible are committees Board directors. non-executive of remuneration the and increases salary employee approves management; senior for allocations bonus and schemes incentive reviews practices, and philosophy remuneration of development the oversees committee The chairman. the is who Mokate, Dr and Madisa Mrs Remuneration Committee The review. under year the in Act Companies the 43 to in Regulation specified matters ethics and social the Governance, and Social Committee Ethics The Act. Companies the by prescribed as committee, ethics and asocial of responsibilities the undertakes committee The positions. management to senior and Board to the candidates of nomination and identification its in committee the guides policy nominations The management. senior of planning succession and directors, of training and induction appointment, the including committee, nominations the of functions the undertakes also committee The management. senior and to committees authority of delegation the including Bank, the in governance corporate of process the enhance and to maintain Board the assists committee The chairman. Board the by chaired and Madisa, Mrs and Mokate Dr Payne, Mr directors, non-executive Governance, and Social and Ethics Nominations Committee The committee. management capital and risk to the reports (ALCO) committee liability and asset The invitation. by meetings attends audit internal Group Bidvest of Arepresentative chairman. Bank the and chairman its committee, to the access unrestricted have Risk Head: and Compliance Head: the and compliance, of work the reviews committee The activities. assurance management capital and risk to coordinate and policy, and strategy management risk the monitor and to review principally is function committee’s The Payne. and Diack (chairman), Cunningham Messrs Management Committee Risk and Capital The committee. audit to the reports committee credit The meetings. committee all attend Deloitte, auditors, external the of Representatives chairman. its and committee the to access unrestricted has Audit Internal Head: the and audit, internal of work the reviews committee The processes. and practices accounting controls, internal of effectiveness and adequacy the evaluate to and processes, reporting management and operational financial, the to monitor alia, inter is, committee the of function The Mokate. Dr and Cunningham, Mr Audit Committee The Bidvest Bank Limited is composed of three non-executive directors, Mr Diack (chairman), (chairman), Diack Mr directors, non-executive three of composed is Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration is composed of three non-executive directors, Mr Payne, Payne, Mr directors, non-executive three of composed is is composed of three non-executive directors, directors, non-executive three of composed is received no reports of failure to comply with with to comply failure of reports no received is composed of three three of composed is (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration process and is subject to the Board-approved levels of authority matrix. authority of levels Board-approved to the subject is and process aBoard-approved with accordance in mandates written by is to individuals Delegation Committee. Executive Governance and Risk and Committee, Risk Operational Committee, Steering Projects the instance for activities, specialised of governance and control the in management support committees specialised committees, to statutory addition In units. business of heads and managers senior to the successors likely to identify conducted was review atalent year the During Board. the for reserved areas those and authority committee’s the on limits specify reference of terms committee The strategy. Board-approved of implementation the for responsible is committee The functions. support and divisions, revenue-generating major Bank’s the of heads the and Committee Executive The MD. the of performance the evaluates shareholder, the with chairman, Board The invitee. an as meetings committee Board all attends MD The operations. Bank directing and managing in committee executive the of performance the for and strategy, Board-approved of implementation the for responsible is and Board to the accountable and by appointed is MD The responsibilities and of authority exercise effective the and delegation effectiveness: Management director. independent lead the by evaluated be will chairman Board the of performance the and conducted, be will appraisals director 2019 In individual committee. the by reviewed were assessments 2018 the of results The committee. the by approved policy the with accordance in 2018, in conducted was assessment an and committee, ethics and social governance, the by determined is process assessment performance director The improvement continued tosupport evaluation Performance is chaired by the MD and is composed of the financial director (FD), (FD), director financial the of composed is and MD the by chaired is

Bidvest Bank Limited 103

11 GOVERNANCE REPORT 11 GOVERNANCE REPORT 104 training programmes, and is demonstrated in daily activities by management and staff. and management by activities daily in demonstrated is and programmes, training procedures, operating directives, management and board statements, policy in captured is It operations. Bank’s the guides and culture Bank’s the influences values, Bank’s the reflects approach management risk This objectives. strategic and mission the of achievement to the critical is activities in risk on report and monitor respond, measure, assess, identify, to effectively ability The activities. Bank’s the of component inherent an is Risk this. supports statement appetite risk a including policy management risk defined Aclearly levels. all at management risk for responsibility ashared and awareness increased and culture arisk to building committed to be management executive expects Board The statement. appetite risk and ERM the of content the articulates policy management risk The risk. of aspects many the to coordinate framework and policy ERM an maintains Bank The imperative. is levels all at risk residual of management the waivers, or contracts policies, insurance through parties to third transferred be can risk all not that fact the and services, and products units, business the of nature diverse to the Due risk. of element an has activities Bank’s the of each that acknowledges Board The capability. (RDARR) reporting risk and aggregation data risk Bank’s the of achievement towards investment includes which programme, ERM the of implementation full ensure to resources other and personnel sufficient to providing commits further Board The (ERM). management risk enterprise for aprogramme to establish need the affirms policy management risk the and condition, reputational and financial asound maintain to risk of management and identification ongoing of importance the recognises Board The androles obligations. their understand employees all which in environment, control constructive and a disciplined to maintain aims procedures, and standards management and training its through Bank, The offered. services and products strategy, in changes to reflect regularly reviewed are policies management Risk to limits. adherence and risks to monitor and controls, and limits risk appropriate to set risks, analyse and to identify established are policies management risk The chairman. and its committee management capital and risk the to access unrestricted has (CRO) officer risk chief the and professionals qualified by staffed is function The policies. and controls limits, risk appropriate recommends and risks analyses and identifies function risk the defence, of line second the of part As obligations. and roles their understand employees all which in environment, control constructive and adisciplined to maintain aims Bank the procedures, and standards management and training its Through to limits. adherence and risks monitor to defence, of line first the management, line of responsibility the is It auditors. external the and audit internal functions; compliance and risk the management; operational are defence of lines The model. Defence’ of Lines ‘Four the supports and management risk effective of achievement the in to assist processes and structures established has Bank The objectives. Board’s the achieve processes Bank’s the whether assessment directors’ the on reports Review’ Management Capital and ‘Risk entitled document separate The risks. those to manage controls of monitoring the and business the in inherent risks of identification the in committee, management capital and risk the from assistance with management, risk of oversight and establishment the for responsibility overall has Board The objectives strategic of achievement tosupport risk of governance management: Risk Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration programme will commence in October 2018 and will be a significant focus area. focus asignificant be will and 2018 October in commence will programme payments of modernisation The Act. Amendment FIC the 9and IFRS of implementation costing, based activity transfer, money online Card, Currency World Global include year financial 2019 the during completion for scheduled Projects register. security online the 9) and (IFRS Instruments 9: Financial IFRS by required as (IFRS) Standards Reporting Financial International with compliant model acredit creating system), sale of (point Evolution online, payments global collections, authenticated included year financial 2018 the during completed Projects audit. internal Group Bidvest the by review independent to quarterly subject is risk IT of management The objectives. strategic of achievement the and management risk information, of security address policies IT appropriate. where Authority, Prudential the by issued 5principles Note Guidance the and exercise, diligence to adue subject is provider service outsourced any of use The improvement. required of area an as identified been has and considerations) to practical (due tested is continuity business of component asmall bi-annually; place takes testing recovery Disaster units. business all for place in are plans continuity business and recovery disaster documented Formally monitoring. to ongoing subject is requirements regulatory with compliance and universe, regulatory Bank’s the in included is legislation IT and framework, risk enterprise-wide the of part forms IT security. cyber including risks, IT and IT of governance the on reports regular receives which committee, management capital and risk the of review the under information and IT of use effective the for responsible is management and strategy, business Board-approved the by informed are requirements information and IT Bank’s The objectives strategic of achievement Technology supporting Information Information: and (IT) MD. to the reports and committee executive the of amember is CRO the independence: and status necessary the has function risk The identified. were risks such no review, under period the In risks. unusual or unexpected undue, material any against action adequate to take it enable and identify will processes the that satisfied further is Board The assurance. reasonable providing report, this of period the throughout operated and effective, are risks significant managing and evaluating identifying, for process and system management risk the that satisfied is Board The volatility. manage and losses, unexpected for potential the reduce Bank, the strengthen activities riskmitigation operational and financial, strategic, resulting The units. business the in activities mitigation risk various produces programme ERM The technology. and communication, reporting, procedures, and policies committees, active Bank, the in roles formalising by enhanced is It objectives. strategic and profile Bank’s the with aligned approach aformal by driven is programme ERM The under commonlycategorised accepted of categories risk. are activities These organisation. the impact that risks external and internal the for structure formal a provides and prioritises, assesses, identifies, programme ERM The Bank. the across applied are that processes management risk consistent and structured of agroup is ERM Bidvest Bank Limited 105

11 GOVERNANCE REPORT 11 GOVERNANCE REPORT 106 106 Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Arnold Palmer always underconstruction. The road to success is (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Compliance: supporting the Bank as an ethical corporate citizen corporate ethical an as Bank the supporting Compliance: training. and awareness security information and response incident security, information monitoring, security cyber project, RDARR compliance, (GDPR) regulation protection data general and (POPI) information personal of protection include will 2019 focus The deployed. been have tools monitoring security information and implemented, been have plans response and policies security Information committee. security cyber and Risk IT an and (ISMS) system management security information an include initiatives security cyber and Risk IT segregation. environment logical and improving capabilities; hardware improving Cloud; to the platforms and systems of migration networks; legacy replacing include 2019in continuing and year financial 2018 the during initiated programmes Infrastructure • • • • • • • include: initiatives function compliance Other Authority. Prudential the including industry, services for the financial the regulators with corresponds and committee, that of chairman to the access unfettered with committee, management capital and risk to the and MD CRO, to the reports Compliance Head: The committee. ethics and social to the relation in Act Companies the of 43 of Regulation requirements the meet to and banking, to specific requirements regulatory with compliance of levels the to assess conducted is monitoring compliance Continuous committee. and as ethics the Bank’s social functions which committee, governance corporate the of responsibility the are relations, consumer and labour environment, the development, economic and social citizenship, corporate good of areas the in practice good of codes and to legislation adherence Bank’s the of assessment for Act Companies the of requirements The requirements. regulatory high-risk of meeting the to prioritise used is methodology management risk and mature are (GACP) practice compliance accepted generally supporting Processes and standards. codes rules, laws, applicable with and complies identifies Bank the that ensuring for responsible ultimately is which Board, the of focus a core is Compliance management. executive and Board the of cooperation and support the enjoys and operations of independently functions defence, of line second the of part as Compliance, the Bank is exposed are identified and appropriately managed and controlled. and managed appropriately and identified are exposed is Bank the to which risks compliance the that Board to the assurance reasonable providing and thereof; implementation successful the overseeing and Bank the across legislation and requirements regulatory new any of impact the assessing appropriate; where action corrective monitoring and initiating parameters; to risk adherence compliance monitoring universe; regulatory Bank’s the identifying and standards; codes rules, laws, applicable with and complies risks, supervisory and regulatory its to manage action appropriate takes Bank the that monitoring culture; compliance Bank’s to the adherence driving and awareness creating custodian, the being Bidvest Bank Limited 107

11 GOVERNANCE REPORT 11 GOVERNANCE REPORT 108 accountability are accepted. are accountability and ownership that ensure and honesty, and openness promote decision-making, of quality the improve to remuneration, of details individual and specific the regarding confidentiality and discretion maintains Bank The to achieve. designed is remuneration what of statements clear with to these, changes ongoing of and programmes, remuneration its of design the about employees with communication to open committed is Bank The Transparent communication and strategy. vision Bank of achievement the reinforces and supports policy management compensation The objectives for strategic Support principles: following the by underpinned is philosophy The skills. critical and scarce with and those individuals, high-performance and retaining motivating attracting, in role acritical play practices and policies reward and remuneration Appropriate create. they value the in share and results great deliver people where environment an creating by market chosen its in choice of employer an to be strives Bank The philosophy Remuneration promoting strategic and objectives positive outcomes transparent, and fair,Remuneration: responsible and codes. regulations laws, and all other applicable frameworks the Basel with compliance through standards disclosure and strategies capital models, business systems, management risk structures, governance internal the of improvement and upgrading ongoing ensuring by awareness regulatory and processes regulatory its to improve strives continuously Bank The sector. banking resilient more a promote will they as environment regulatory financial the in improvement an as requirements these views Bank The Ratio. Coverage Liquidity and Ratio Funding Stable Net the with complies Bank The stress. economic and financial from arising shocks to absorb ability sector’s banking the to improve regulation to strengthen standards liquidity and leverage requires also It capital. high-quality adequate, to hold banks requires III Basel • • • • are: objectives These development. system in and procedures operating policies, of preparation the in considered are regulators the of objectives The relationship. this in factors key as regarded are transparency and communication and Authority, Prudential the of Authority Prudential the with relationship astrong maintains Bank The stability. economic overall and solvency its to safeguard assets its against capital adequate to hold required is Bank the environment, regulatory this Within framework. III Basel the of requirements the on based are which to banks, relating regulations the and Act Banks the by governed is Bank The compliance Regulatory Financial inclusion. and crime; financial of Combatting marketAppropriate conduct and treating customers fairly; stability; Financial Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration

Bidvest Bank Limited 109

11 GOVERNANCE REPORT 11 GOVERNANCE REPORT 110 both grade and role. and grade both to linked firmly be will levels Remuneration Bank. to the value external and internal their of assessment an as well as results grading the on based scale to aremuneration allocated be will roles All point. anchor akey as industry the for approach percentile) (50th median market the using scales pay current maintain will Bank year. the in The completed be will grades employee on education and communication transparent The role. or to agrade applicable are ranges salary which in scale apay of implementation the be 2019 will for area focus The 2019 areas focus • • • on: is based commission remuneration, a of component variable As met. targets on based quarterly or monthly paid is Commission system. management performance to the directly linked been have year this implemented schemes Commission managed. is risk ensure to year this reviewed been have skills Scarce market. services financial the in that against benchmarked and monitored constantly is roles critical of Remuneration custodians. family job the by approved been have grades All 101 workshops. remuneration the attending team, executive the including managers, line all with completed been has process management change The model. Grading Paterson the adopting be will Bank The outputs. expected and requirements complexity, content, their of in terms graded and profiled been have Bank the in roles All 2018 achievements Limited. Group Bidvest The of scheme incentive share the in participate executives and management senior but scheme, incentive ashare offer not does Bank The governance. good of principles with compliance ensures and remuneration management and senior director approves committee remuneration The Governance • • • following: the on based remuneration, variable of acomponent is incentive performance The review. performance the of results the on based annually paid is award any and system, management performance to the directly linked is scheme The scheme) (bonus incentive Performance achievement of realistic targets aligned with achievement of annual strategic goals. strategic annual of achievement with aligned targets realistic of achievement and principle; self-funding the effect; carry-through no with year each base a zero goals. ofachievement annual strategic and funds; of availability the of function adirect is year any in quantum effect; carry-through no with year each base a zero Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration and Bank Seta approved funding of R320 000 (2017: R1.2 million) payable in two tranches. two in (2017: payable R1.2 million) 000 R320 of funding approved Seta Bank and programme, 5 Level Banking in Certificate National the in participated 8 employees tranches. two in payable 000 R480 of funding approved 2017, Seta Bank 1 November and from programme Development Graduate Bankers the in participated 11 graduates period. this during (2017: employees to 68 82) granted were (2017: R1.3 R1.4 million) million totalling Bursaries tranches. two in (2017: R1.1R1.4 million payable million), of funding approved Seta Bank programme. 4 Level Banking in Certificate National Bank’s the in participated and communities disadvantaged previously from are learners the 2017 (2016: 35); 1November on programme learnership the commenced learners 35 education. further for assistance study from benefit employees selected and business, for building capacity provide Programmes Learnership and Development Graduate Bankers The 4). 5and Level (NQF Banking Certificate: National the of delivery and assessment for provider atraining as Seta) (Bank Authority Training and Education Sector Banking the by accredited been has Bank The Act. Levies Development Skills the of terms in monthly remuneration 1% total the of contributes Bank The development Skills retained. and developed rewarded, is talent critical that ensures process the talent Bank review management practices, remuneration transparent and to fair addition In employees. its is body stakeholder important most Bank’s The Employees management. executive of responsibility the is and of implementation policy the stakeholder relationships of management stakeholder The interests Bank’s the best with stakeholders material of expectations and interest needs, the balancing approach: A stakeholder-inclusive issues. material and risks significant addresses effectively model assurance The reports. external of quality the and decision-making, for information of integrity the supporting environment, control effective an promote services assurance that satisfied is Board The such as the shareholder, and public. stakeholders, regulators external by and Board the by both decision-making, informed facilitating statements, financial the of integrity the on assurance provide Deloitte, auditors, external the defence, of line fourth The applied. are function audit internal the of recognition and status independence, on guidelines IV King The basis. a regular on review to independent subject is department the and methods, practice best international adherence to specifies internal charter audit The governance. andmanagement corporate risk sound of objectives the of achievement the in defence of lines other the of effectiveness the of Board to the assurance independent providing defence, of line third the is audit Internal information of integrity the and environment control effective an enabling assurance: external and Internal (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration

Bidvest Bank Limited 111

11 GOVERNANCE REPORT 11 GOVERNANCE REPORT 112 address the Bank’s risk management, and its corporate governance obligations. governance corporate its and management, risk Bank’s the address appropriately and adequately listed processes and structures the that satisfied is Board The Conclusion suppliers. its and Bank the between dealings fair and transparent promoting Conduct, of Code the to accept required were suppliers all 2018 In Conduct. of Code to the suppliers by adherence requires policy procurement The Suppliers state tothe -contribution Government KwaZulu-Natal. in and Town Cape in academy own its launched has and materials, training online uses Bank The and compliance. to regulatory product, and system technical, from ranging training provides department Development and Learning The to succeed. business the for knowledge and skills competencies, necessary and plans development individual on based is employees of development and education The development andStaff retention training. numeracy and communication of phase second the in are and (AET) Training and Education Adult attending are receptionists and 10 housekeepers tranches. two in payable 000 R360 of funding approved Seta Bank and learnership, 3 Level Services Administration aBusiness in participating are learners 8 disabled Net income taxation paid taxation income Net Skills development levies development Skills Workman's compensation fund insurance Unemployment Rates and taxes and Rates Value added tax added Value Employees’ tax Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration

289 572 131 164 131 95 057 52 291 52 R 2018 4 022 3 569 3 3 213 3 ’000 256 Group

234 317 234 113 870 R’ 36 315 36 74 145 74 2017 3 499 3 3 394 3 2 819 2 000 275

287 121 131 164 131 92 789 92 52 291 52 R’0 2018 3 927 3 498 3 3 213 3 Company 239 00

234 571 234 114 124 114 R’000 36 315 36 74 145 74 2017 3 499 3 3 394 3 2 819 2 275

11 GOVERNANCE REPORT 12 DIRECTORS’ RESPONSIBILITIES AND APPROVAL STATEMENT 114 Chairman Nigel Payne George ofstatements financial Approval by: behalf its on signed were and 2018 12 on December Board the by approved were basis, going-concern the on prepared been have 124 that -146 pages on out set Statements Financial Annual Separate and Consolidated Summarised The 118 page on -119. presented is report their and auditors external Group’s by the examined been Financialhave Statements Annual Separate and Consolidated Summarised The statements. financial on the Group’s annual and separate consolidated for and auditing independently reporting responsible are auditors external The future. for the foreseeable existence operational in continue to resources adequate to access has Group the that satisfied are they position, financial current the and review this of light in and, AFS the signing after the months for 12 forecast flow cash Group’s the reviewed have directors The loss. or misstatement material against assurance absolute not and reasonable, only provide can control financial internal of system any However, Statements. Financial Annual Separate and Consolidated Summarised the of preparation the for on relied be may records financial the that assurance reasonable provides control internal of system the that management, by given explanations and information the on based opinion, the of are directors The constraints. and procedures predetermined within managed and applied are behaviour ethical and systems controls, infrastructure, appropriate that ensuring by it to minimise endeavours Group the eliminated, fully be cannot risk operating While Group. the across risk of forms known all monitoring and managing assessing, identifying, on is Group the in management risk of focus The reproach. above is circumstances reasonable all in that amanner in conducted is business Group’s the ensuring in standards ethical highest the to maintain required are employees all and Group the throughout monitored are controls These risk. of level acceptable an to ensure duties of segregation adequate and procedures accounting effective framework, defined aclearly within responsibilities of delegation proper the include standards manner. The acost-effective in loss or error of risk the reducing at aimed control internal for standards sets Board the responsibilities, these to meet directors To the enable environment. control astrong maintaining on importance considerable place and Group the by established control financial internal of system the for responsible ultimately are they that acknowledge directors The reasonable and prudent judgements and estimates. by and supported consistently applied accounting policies appropriate upon based and are Standards Reporting Financial International with in accordance prepared are Statements Financial Annual and Separate Consolidated Summarised The Statements. Financial Annual and Separate Consolidated Summarised these on opinion independent an to express engaged are auditors external The 71 2008. of Act Companies the and Standards Reporting Financial International with conformity in ended, then period the for flows cash and operations its of results the and year financial the of end the at as subsidiaries) its and Bank (Bidvest Group The of affairs of state the present fairly Statements Financial Annual Separate and Consolidated Summarised the that to ensure responsibility their is It report. this in included information financial related and Statements Financial Annual Separate and Consolidated Summarised the of integrity and content the for responsible are and records accounting adequate to maintain 71 2008 of Act Companies the of terms in required are directors The AND APPROVAL STATEMENT RESPONSIBILITIES DIRECTORS’ Bidvest Bank Limited

12 DIRECTORS’ RESPONSIBILITIES AND APPROVAL STATEMENT 13 AUDIT COMMITTEE REPORT 116 Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Unknown every stage. highest qualityoutputat Great projects require the (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration On behalf of the Audit Committee: Audit the of behalf On responsibilities. its all discharged has it that satisfied is committee The Board. to the committee the of work the on quarterly reported committee the of chairman The Authority. Prudential the of representatives with meeting trilateral the year, the including during times five met committee The committee. credit Bank’s the of activities the reviewed committee The controls. such of functioning the in to weaknesses attributable were losses material no that and controls, financial internal of effectiveness the with itself satisfied committee The providers. assurance other and audit internal by provided assurance of quality the and Audit, Internal Head: the of effectiveness the arrangements, audit internal the with satisfied is committee The plan. audit internal the approved and reviewed 2017. 1July on committee The appointed was Vreden, Mvan Ms Audit, Internal Head: A new independence. auditor on guidelines committee’s the within was work the of extent and nature the that itself satisfied and auditors external the by provided services non-audit of details reviewed committee The committee. audit the of attention the to bring to findings material no were there that and misstated, materially not were income interest net and revenue non-interest that concluded auditors The controls. of override management of risk the and recognition revenue fraudulent of risk the 2018were June at auditors external the by identified risks year. Significant 2017financial the during changed partner audit year, the 2011 and the in financial appointed first &Touche were Deloitte work. audit the of quality the with and Group, the of independent are auditors external the that satisfied is committee The auditors. the of reappointment the shareholders and Board to the recommended and budget, and plan audit the &Touche, including Deloitte auditors, external the of work the reviewed committee The effective. is function finance the that and legislation, applicable all of terms in obligations his fulfil to experience and expertise appropriate the has director financial the that satisfied is committee The Statements. Financial Separate and Consolidated Summarised the of preparation the in accounting of basis going-concern the to adopt decision directors’ the and future, foreseeable the for existence operational in to continue available resources adequate has Group the that opinion directors’ the assessed committee The Group. the of position financial the represented accurately they whether and integrity their assessed Statements, Financial Annual Separate and Consolidated Summarised Bank’s the reviewed committee The Code. IV King the and 1990 Act, Banks the of provisions the charter, its by specified is committee the of work The directors. non-executive independent three of composed is Committee Audit The Audit Committee Chairman Eric Diack AUDIT COMMITTEE REPORT AUDIT COMMITTEE

Bidvest Bank Limited 117

13 AUDIT COMMITTEE REPORT 14 INDEPENDENT AUDITOR’S REPORT 118 Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Zig Ziglar people buildthebusiness. You buildpeople andthen You don’tbuildabusiness. (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration conducted in accordance with International Standard on Auditing 810 (Revised): 810 (Revised): Auditing on Standard International with accordance in conducted were which procedures, our on based Statements Financial Separate and Consolidated Audited the with respects, material all in consistent, are Statements Financial Summary the whether on opinion an to express is responsibility Our Auditor’s Responsibility error. or to fraud due whether misstatement, material from free are that Statements Financial Summary the of preparation the to enable necessary is determine directors the as control internal such for and Statements Financial to Summary applicable as Africa South of Act Companies the of requirements the and Standards Reporting Financial International the with accordance in Statements Financial Summary the of preparation the for responsible are directors The Statements Financial Summary the for Responsibility Directors’ 2018. October 30 dated report our in Statements Financial Separate and Consolidated Audited the on opinion audit unmodified an We expressed Thereon our and Report Financial Statements Separate and AuditedThe Consolidated Statements. Financial Annual Separate and Consolidated those on report our of date to the subsequent occurred that events of effects the reflect not do Statements Financial Separate and Consolidated Audited the and Statements Financial Summary The thereon. and Statements the auditor’s Financial report and Separate Consolidated Audited the reading for asubstitute not is therefore, thereon, report auditor’s the and Statements Financial Summary the Reading statements. to financial applicable as Africa South of Act Companies the of requirements the and Standards Reporting Financial International the by required disclosures the all contain not do Statements Financial Summary The Financial Statements Summary Statements. Financial to Summary applicable as Africa South of Act Companies the of requirements the and Standards Reporting Financial International the with accordance in Limited, Bank Bidvest of Statements Financial Separate and Consolidated Audited the with respects, material all in consistent, are Statements Financial Summary accompanying the opinion, our In 2018. June 30 ended year the for Limited Bank Bidvest of Statements Financial Separate and Consolidated Audited the from 124-146, derived are pages on Statements’) Financial Summary ‘the (together notes related and ended, then year the for Flows Cash and Equity in changes Income, Comprehensive of Statements Separate and Consolidated Summary the 2018, June 30 at as position Financial of Statement Separate and Consolidated Summary the comprise which Limited, Bank Bidvest of Statements Financial Separate and Consolidated Summary The Opinion STATEMENTS FINANCIAL SUMMARY THE ON REPORT AUDITOR’S INDEPENDENT LIMITED BANK BIDVEST OF SHAREHOLDER THE TO Financial Statements. Financial 12 December 2018 Partner Merwe der van Per: Claudette Auditor Registered Deloitte & Touche INDEPENDENT AUDITOR’S REPORT Engagements to Report on Summary Summary on Report to Engagements Bidvest Bank Limited 119

14 INDEPENDENT AUDITOR’S REPORT 15 DIRECTORS’ REPORT 120 Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Larina Kase create it. unless you take itoutand inside you. Itwillstay there The blueprintfor success is (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Statements of Bidvest Bank Limited and its subsidiaries for the year ended 30 June 2018. June 30 ended year the for subsidiaries its and Limited Bank Bidvest of Statements Financial Annual Separate and Consolidated Summarised the on report their submitting in pleasure have directors The Dr Mokate is a director of companies including Vukile Property Fund Ltd and The Bidvest Group Ltd Ltd Group Bidvest The and Ltd Fund Property Vukile including companies of adirector is Mokate Dr Renosi Mokate Denise Ltd. Insurance Bidvest and Ltd Holdings Bank Bidvest of adirector is Cunningham Mr 2015. 1June |Appointed AMP CA(SA), Dunsmore Cunningham |BComm Alastair Limited. Holdings Bidvest and Limited Group Bidvest The Ltd, Corporation Dowell McConnel and Plc, Resources Consolidated African Ltd, Aveng including companies, various of adirector is Diack Mr 2011. May 23 |Appointed AMF CA(SA), |BAcc Diack Kevin Eric directors Non-executive Johannes Liebenberg Marthinus Jacob Jozua Niekerk van directors Executive members: following the of consisted Board the report, this of date the up to and year financial the During Directorate parties. third with those than favourable more no are that terms under business, of course normal the in into entered are directors with Transactions Bank. the and directors executive between exist contracts service long-term No Committee. Remuneration the by determined are executives of services and emoluments The Bank. the of business the affected which and interest an had Bank the of officers or directors which in into entered were contracts No officers and directors of Interest 2018. June 30 ended year the for notes accompanying and Statements Financial Separate and Consolidated Summarised the in out set are results financial The Financial results bank. commercial is Bank a registered The business of Nature Africa. South in domiciled and incorporated are Group) (the Limited, Proprietary Leasing Bidvest and Limited Proprietary Solutions Fleet Viamax subsidiaries indirect its and Limited Retail Proprietary Finance McCarthy and Limited Proprietary Viamax Limited, Proprietary Axcess Cash Limited, Proprietary Services Merchant Bidvest subsidiaries, direct its and Bank The Exchange. Stock Johannesburg the on listed is which (Bidvest), Limited Group Bidvest The is company holding ultimate Bank’s The Limited. Holdings Bank Bidvest of subsidiary awholly-owned is Bank The information General DIRECTORS’ REPORT DIRECTORS’ (Lead Independent Director) | BA, MA, PHD | Appointed 1 July 2013. 1July |Appointed PHD MA, |BA, Director) Independent (Lead 2013. 1October appointed Director |Managing (UCT) MBA |BA, | BComp, B Compt Hons, CA(SA) | Financial Director appointed 1 January 2013. 1 January appointed Director |Financial CA(SA) Hons, BCompt |BComp, Bidvest Bank Limited 121

15 DIRECTORS’ REPORT 15 DIRECTORS’ REPORT 122 19 Ameshoff Street Street 19 Ameshoff House Floor, Rennie 9th Office Corporate 2000/006478/06 number Registration Africa South 2196 Johannesburg Arch Melrose Drive 18 Crescent House Bidvest Crawley DJ office registered and Secretary Company P-1.za. at same the remained rating issue short-term NSR The 2018. April of 6th the on Aa2.za at kept was and change not did (NSR) rating issuer national-scale Moody’s 153%. was Ratio Funding Stable Net the 162.9% and was Ratio Coverage Liquidity Bank’s The 20.57%. was ratio adequacy capital Bank’s The maintained. was times 3.45 of ratio leverage financial Alow 11.32% and respectively. 3.28% were equity on return and assets on return The 0.15% was (2017: ratio 0.13%). loss credit The managed. well were impairments and good remained quality Credit maintained. was appetite (2017: to R1.5 R1.1 billion Alow-risk billion). increased taxation and dividends before operations from generated (2017: Cash R7.8 to R9.2 billion billion). increased assets total Bank’s The million). (2017: R248 million to R392 58% by increased securities Negotiable billion). (2017: R3.81 R4.1 on billion ended assets leased and (2017: advances R1.7 at and Total R1.7 billion loans remained billion). assets leased and R2.1 billion) (2017: billion to 13% R2.4 by increased advances and Loans billion). (2017: R4.5 billion to R5.7 27% by grew Deposits million). to R567.1 (2017: R608.8 million decreased activities leasing from income net and million) (2017: R493.2 million R455.6 at lower was income other and trading commission, fee, Net (2017: R132 million). million to R164 increased income interest net while million) (2017: R335.9 million R302.3 to by 10% decreased tax after Profit performance financial Group (2017: 2018 14 on R150 March million). paid and 2018 18 on February declared was million R70.5 of dividend 2017. 2017, 15 on 18 September on Afurther paid August and declared was million R72 of A dividend declaration Dividend Ltd. Group Bidvest The of director executive an is Madisa Mrs Madisa Nompumelelo Themekile Ltd. Ingram Adcock and Ltd McCarthy of adirector and Ltd Group Bidvest The of Executive Chief the is Ralphs Mr PeterLindsay Ralphs Ltd. Fund Property Vukile and Ltd Steel BSI Ltd, Group Price Mr Ltd, JSE Ltd, Group Bidvest The Ltd, Bidcorp including companies, unlisted and listed various of adirector is Payne Mr Nigel Payne George Fund. Pension Employees Government the of chairperson the is and

Bidvest Bank Limited

| CA(SA) | Chairman, appointed 1 August 2009. 1August appointed |Chairman, |CA(SA) | BCom, BAcc, CA(SA) | Appointed 8 December 2016. 8December |Appointed CA(SA) BAcc, |BCom, Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration | BSc, B Comm Hon, Hon, MMFI | Appointed 8 December 2016. 8December |Appointed MMFI Hon, Hon, BComm |BSc, (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration 2000 Johannesburg 185 Box PO address Postal 2001 Johannesburg Braamfontein and up to date. up and correct true, are returns such all that and Act Companies the of terms in company apublic of required are as notices and returns such 2018,all June 30 ended year financial the for Companies, of Registrar the with lodged has Bank the belief, and knowledge my of best to the that, Icertify amended, as 71 2008, of Act, Companies (e) the of 88(2) Section of terms In Secretary Company the from Certificate 2018. 18 on September paid and 2018, August 24 on declared was million R80.5 of A dividend date reporting the after Events &Deloitte Touche Auditors www.bidvestbank.co.za Website +27 011 3322 407 Telefax 11 11+27 0860 77 Call Centre +27 011 3000 407 Office Corporate Telephone 26 October 2018 October 26 Secretary Company Crawley DJ

Bidvest Bank Limited 123

15 DIRECTORS’ REPORT 16 SUMMARISED CONSOLIDATED AND SEPARATE STATEMENT OF COMPREHENSIVE INCOME 124 STATEMENT INCOME COMPREHENSIVE OF SUMMARISED CONSOLIDATED AND SEPARATE Depreciation Leasing income income commission and fee Net Operating income Operating /(loss) income Other income trading Net leasing from income Net costs leasing Other expense commission and Fee Profit before direct taxation direct before Profit Indirect taxation taxation indirect income before Operating expenditure Operating expenditure operating Other and amortisation Depreciation costs Information technology losses non-operating Other income charges credit after Operating impairment /(charge) income impairment credit Net Fee and commission income Direct taxation leases Operating costs Employment income Net interest Interest expense Interest Interest income Profit for the year the for Profit Total comprehensive income for the year assets for available-for-sale Fair reserve value loss: or profit to reclassified be not will that Items Other comprehensive income: net of income tax Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Notes 2.2 1 186 838 1 186 1 192 975 (777 179) 1 090 814 1 090 (353 465) 465) (353 (295 080) (442 251) (170 242) (170 (280 417) (280 (121 812) (121 (116 949) 302 329 302 (86 934) (86 177 025 177 444 542 299 218 299 567 107 567 164 125 164 R ‘000 419 278 415 796 415 (53 015) (53 (18 606) (18 277 768 277 (54 561)(54 472 105 472 (3 111) (3 2018 3 482 3 482 6 137 6 813 Group

1 234 122 1 234 1 229 162 1 229 1 553 630 1 553 (743 331) (743 (405 432) (405 (748 529) (748 (210 793) (130 606) (128 937) (156 073) (156 (196 275) (196 466 562 466 337 993 337 335 956 335 485 831 485 608 826 (43 572) (43 323 084 323 324 488 324 (25 649) (25 342 905 342 R ‘000 (47 945) (47 (91 796) 132 112 132 167 011 167 (19 269) (19 (4 960) (4 2017 1 685 2 037

1 173 379 (750 864) (750 1 167 242 1 090 814 1 090 (353 455) (353 (208 857) (208 (426 026) (280 417) (280 (170 242) (170 (116 949) (116 (116 541) (116 309 205 306 094 306 426 154 426 157 489 157 164 055 164 422 515 422 366 346 366 (85 960) (85 R ‘000 444 472 (51 929) 567 117 567 (18 447) (18 277 768 277 (51 961) (3 111) (3 2018 3 639 6 137 6 Company 813

1 234 120 1 234 1 229 160 1 229 1 553 630 1 553 (743 331) (743 (405 432) (405 (748 529) (748 (210 793) (130 606) (128 937) (156 073) (156 (196 275) (196 466 560 466 485 829 485 335 954 335 608 826 337 991 337 (43 572) (43 323 084 323 324 488 324 342 903 342 (25 649) (25 R ‘000 (47 945) (47 (91 796) 132 110 132 167 011 167 (19 269) (19 (4 960) (4 2017 1 685 2 037

5 285 935 5 285 2 526 030 2 526 2 846 484 7 811 965 7 811 965 2 100 468 2 100 1 707 427 1 707 4 502 591 4 502 1 982 164 1 982 248 284 254 868 254 377 454 377 R ‘000 525 709 525 150 035 150 152 424 152 416 092 416 161 727 161 98 375 98 49 585 49 12 452 12 26 181 26 2017 5 454 3 635 2 070

451 - - -

9 244 624 9 244 9 244 624 9 244 2 668 863 2 668 6 575 7616 575 5 721 209 5 721 1 687 128 1 687 3 615 434 2 413 799 2 140 4742 140 Bidvest Bank Limited 437 803 437 R ‘000 326 204 326 525 709 525 391 722 391 155 977 376 702 376 179 521 179 214 740 214 58 968 58 14 755 14 94 078 94 80 074 80 45 513 45 2018 6 239 2 070 Company 524 519 86 -

7 868 524 7 868 7 868 524 7 868 5 350 889 5 350 2 846 484 2 517 635 2 100 468 2 100 1 707 427 1 707 4 502 591 4 502 1 973 769 1 973 248 284 254 868 254 377 454 377 R ‘000 525 709 525 214 686 214 152 424 152 416 092 416 161 727 161 56 387 56 98 375 98 49 585 49 12 452 12 26 181 26 2017 3 635 5 757 2 070 451 172 -

125

17 SUMMARISED CONSOLIDATED AND SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 18 SUMMARISED CONSOLIDATED AND SEPARATE STATEMENT OF CASH FLOWS 126 STATEMENT FLOWS CASH OF SUMMARISED CONSOLIDATED AND SEPARATE Net securities of acquisition investment Total cash at end of the year the of end at cash Total subsidiary of acquisition on cash Net subsidiaries in investment in Increase ofAcquisition intangible assets ofAcquisition equipment received Dividends from flows activities investing Cash Net activities from cash operating Cash at the beginning of the year the of beginning the at Cash year the for movement cash Total loans intergroup in /decrease (Increase) from flows activities Cash financing Net from cash activities investing assets leased of Acquisition assets leased of disposal on Proceeds interest after by generated operations Cash Tax paid Tax Dividends Interest paid received Interest Cash generated from operations from generated Cash activities from flows operating Cash Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Notes 5 4 1 1 039 734 1039 3614 479 1 463 341 1 463 2 846 484 (235 200) (142 500) (142 1 299 216 1 299 (254 077) (58 742) (58 (123 452) (280 417) (280 (131 164) (131 (24 846) (24 (48 929) (48 444 542 767 995 767 R ‘000 (17 409) (17 104 134 104 2018 1 639 Group

2 846 484 2 846 1 077 803 1 077 2 522 371 2 522 (133 751) (133 (210 793) (150 000) (622 069) (622 (113 870) (78 236) (78 342 905 342 R ‘000 457 416 457 324 113 324 265 552 265 945 691 945 (57 117)(57 2017 1 685

448 (83) - -

1 058 332 1 058 1 481 939 1 481 2 846 484 (230 640) (230 3 615 434 1 317 884 (254 077) (142 500) (142 (123 452) (280 417) (280 (131 164) (131 768 950 768 (23 785) (23 (58 742) (58 R ‘000 444 472 104 134 104 (37 691) (37 (47 351) (47 2018 1 639 Company -

2 846 484 2 846 1 077 803 1 077 2 522 371 2 522 (133 751) (133 (210 793) (150 000) (622 069) (622 (114 124) (114 457 162 457 (78 236) (78 342 903 342 R ‘000 324 113 324 265 552 265 945 693 945 (57 117)(57 2017 1 685 (83) 702 - -

R '000 Total Total (30 568) (30 (18 972) 15 543 15 16 087 16 (3 111) (3 10 229 10 14 674 14 (3 111) (3 2 528 6 705 3 528 2 528 610 54 - - - - - Bidvest Bank Limited Retained Retained 1 799 244 1 799 1 982 164 1 982 2 141 993 income (150 000) (142 500) (142 R '000 335 956 335 302 329 302 335 956 335 302 329 302 (3 036) (3 ------2 342 566 2 342 2 526 030 2 526 2 670 382 2 670 (142 500) (142 (150 000) equity R '000 338 484 338 (30 568) (30 299 218 299 335 956 335 302 329 302 (18 972) (18 Total Total (3 036) (3 10 229 10 14 674 14 (3 111) (3 3 528 6 705 2 528 54 127

19 SUMMARISED CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY 19 SUMMARISED CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY 128 Balance at 30 June 2018 June 30 at Balance Dividends directly in equity directly based payments recognised share- on tax Deferred year the for income Total comprehensive income comprehensive Other year the for Profit year the for income Total comprehensive income comprehensive Other year the for Profit Balance at 1 July 2016 1July at Balance Company share-based payments of Settlement expense paymentShare-based 2017 1July at Balance transferred insurance Tradeflow Dividends reserve share-payment of Intergroup transfer equity in directly recognised share-based payments on tax Deferred share-based payments of Settlement expense paymentShare-based STATEMENT (CONTINUED) EQUITY IN CHANGES OF SUMMARISED CONSOLIDATED AND SEPARATE Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration capital R '000 Share Share 2 070 2 070 2 070 ------premium R '000 Share Share 525 709 525 709 525 709 ------Total share capital R '000 527 779 527 527 779 527 527 779 527 ------Fair value reserve R '000 (3 111) (3 (3 111) (3 3 635 2 528 1 107 1 2 528 524 ------payment reserve Share- R '000 based (30 568) (30 (18 972) 14 436 14 12 452 12 10 229 10 14 674 14 6 705 3 528 86 54 ------reserves R '000 Total Total (30 568) (30 (18 972) 15 543 15 16 087 16 (3 111) (3 10 229 10 14 674 14 (3 111) (3 2 528 6 705 3 528 2 528 610 54 - - - - - Retained Retained 1 790 851 1 790 1 973 769 1 973 2 140 4742 140 income (150 000) (142 500) (142 R '000 335 954 335 309 205 335 954 309 205 (3 036) (3 ------2 668 863 2 668 2 334 173 2 334 2 517 635 (142 500) (142 (150 000) equity R '000 338 482 338 (30 568) (30 306 094 306 335 954 335 309 205 (18 972) (18 Total Total (3 036) (3 10 229 10 14 674 14 (3 111) (3 3 528 6 705 2 528 54 The door handle is the handshake of the building.

Juhani Pallasmaa

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 Bidvest Bank Limited 129 20 ACCOUNTING POLICIES 130 Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Jim Rohn build endupbuildingus. Whatever goodthingswe (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration in compliance with IAS 34: Interim Financial Reporting. Financial Interim 34: IAS with compliance in prepared been have Statements Financial and Separate Consolidated Summarised The consolidated and separate set. as Statements the complete Financial and Separate Consolidated Summarised the in followed are computation of methods and policies accounting same The Financial Statements Separate and Consolidated of Summarised Presentation ACCOUNTING POLICIES ACCOUNTING

Bidvest Bank Limited 131

20 ACCOUNTING POLICIES 21 SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS 132 2.1 2. basis over the period of the lease. the of period the over basis astraight-line on income as for accounted are leases, operating under received Rentals assets. leased these of ownership of benefits and risk the all retains Bank The term. afixed for to customers rented assets to moveable relate leases Operating 1.

Finance leases Finance to andLoans advances banks provision impairment Less: Finance leases and instalment finance and instalment leases Finance Mortgage loans Mortgage and loans Call term customers to advances and Loans Carrying value at the end of the year the of end the at value Carrying Cost Accumulated depreciation year the of end the at value Carrying Capital work in progress in work Capital Depreciation Disposals Additions year the for Movement Carrying value at the beginning of the year the of beginning the at value Carrying Accumulated depreciation Cost Bidvest Bank Limited Loans and advances and Loans Analysis of loans and advances and loans of Analysis Leased assets Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration R ‘000 R ‘000 2018 2018 2 380 787 2380 1 687 128 1687 1 687 128 1687 2 370 928 2 370 1 707 427 1 707 2 362 652 2 362 2 270 692 2 270 1 111 977 111 1 2 316 150 316 2 (629 022) (629 (563 265) (563 (170 242) (170 403 587 855 364 855 254 077 (92 010) (92 (12 124) (12 (8 276) (8 18 135 18

Group Group R ‘000 R ‘000 2017 2017 2 091 646 2 091 2 100 468 2 100 2 079 883 2 079 1 707 427 1 707 1 707 427 1 707 1 489 961 1 489 1 055 742 1 055 2 270 692 2 270 2 109 824 2 109 (208 328) (563 265) (563 (619 863) (619 (196 275) (196 318 002 318 717 902 717 (11 763) (11 613 270 613 20 585 20

8 799 R ‘000 R ‘000 2018 2018 2 403 940 2 403 2 395 664 2 395 1 707 427 1 707 2 413 799 1 687 128 1 687 1 687 128 1 687 2 270 692 2 270 1 111 977 111 1 2 316 150 316 2 (629 022) (629 (563 265) (563 (170 242) (170 403 587 888 376 254 077 (92 010) (92 (12 124) (12 (8 276) (8 18 135 18

Company Company R ‘000 R ‘000 2017 2017 2 091 646 2 091 2 100 468 2 100 2 079 883 2 079 1 707 427 1 707 1 707 427 1 707 1 489 961 1 489 1 055 742 1 055 2 270 692 2 270 2 109 824 2 109 (208 328) (563 265) (563 (619 863) (619 (196 275) (196 318 002 318 717 902 717 (11 763) (11 613 270 613 20 585 20

8 799 (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration 2.2 2.

Released toReleased income statement balance Opening impairment Portfolio Released toReleased income statement Specific impairment year the of end the at value Carrying balance Opening impairment Specific Net bad debts written off written debts bad Net Portfolio impairment Portfolio Specific impairment income to /release against) (charge Net Portfolio impairment Portfolio Cardholder debit balances Cardholder Net bad debts recovered debts bad Net Impairment charge on securities negotiable charge Impairment Loans and advances (continued) advances and Loans Movement inimpairments Movement R ‘000 2018 (3 745) (3 (4 531) (4 (8 276) (8 (4 744) (4 (3 745) (3 (4 531) (4 (7 019) 6 137 6

2 488 2 488 3 487 2 650 999 999 Group - - - R ‘000 2017 (11 763) (11 (12 879) (4 744) (4 960) (4 (7 019) (7 (5 380) (7 045) (7 (4 744) (4 (7 019)

4 884 2 085 636 636 479 976 976 (6) R ‘000 2018 (3 745) (3 (4 531) (4 (8 276) (8 (4 744) (4 (3 745) (3 (4 531) (4 (7 019)

2 488 2 488 3 487 6 137 6 2 650 Company 999 999 Bidvest Bank Limited - - - R ‘000 2017 (11 763) (11 (12 879) (4 744) (4 960) (4 (7 019) (7 (5 380) (7 045) (7 (4 744) (4 (7 019)

4 884 2 085 636 636 479 976 976 (6) 133

21 SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS 21 SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS 134 These agreements relate to motor vehicles and equipment. and vehicles to motor relate agreements These payable. are rentals contingent no agreements, lease the of terms the Under 2.

Company -2017 Company -2017 Group More than five years five than More years five and one Between years five than More years five and one Between -2018 Group Between one and five years five and one Between year one within Due year one within Due -2018 Company years five and one Between year one within Due year one within Due ofMaturity finance leases Bidvest Bank Limited Loans and advances (continued) advances and Loans Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration R ‘000 R ‘000 R ‘000 R ‘000 Gross Gross Gross Gross 1 269 423 1269 423 1269 1197 524 1197 524 487 875 487 875 487 775 755 775 755 569 206 569 206 628 318 628 318 628 5 793 5 793 Unearned financeUnearned financeUnearned Unearned financeUnearned Unearned financeUnearned charges charges charges charges R ‘000 R ‘000 R ‘000 R ‘000 (121 197) (121 197) (139 311) (139 311) (139 (102 365) (102 365) (64 486) (64 486) (64 (74 664) (74 664) (74 (18 832) (18 832) (18 (161) (161) R ‘000 R ‘000 R ‘000 R ‘000 Net Net Net Net 1 076 327 1 076 327 1 130 1121 130 1121 130 609 486 609 486 423 389 423 389 423 466 841 466 841 466 701 091 701 091 701 5 632 5 632 (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration fair value. fair at acquired assets net the exceeded consideration, purchase the determining in account into taken were that flows cash future of value anticipated the as acquisition the on arose Goodwill resources. cash existing with funded been has acquisition The activities. related and deployment machine teller automated in engaged is CAX and facilities card debit and credit payment, in engages BMS BMS. of subsidiary awholly-owned is CAX (CAX). Ltd (Pty) Corporation Axcess Cash indirectly and Africa South Resources Data First formally (BMS), Ltd (Pty) Services Merchant Bidvest of capital share the of 100% acquired Bank The 4. 3. the amount of the bill on the due date. due the on bill the of amount the Bank the pay to undertakes customer The supplier. the settles and Tradeflow from bill the purchases Bank the which after customer, the with agreed charges and fees costs, interest all and amount invoice the containing bills the up draws Tradeflow (Tradeflow). Ltd (Pty) of behalf on Tradeflow Bank the by financed deals customer of consist exchange of bills The

Net amount paid amount Net Goodwill Trade and other payables equivalents andCash cash Trade and other receivables Deferred tax Intangible assets and plant equipment Property, Less: allowance for impairment allowance Less: Bills of exchange of Bills cost amortised at carried investments maturity to Held Acquisition of subsidiaries of Acquisition Negotiable securities Negotiable R ‘000 2018 391 722 402 009 402 (10 287) (10

Group R ‘000 2017 248 284 248 266 439 266 (18 155) (18

R ‘000 2018 Services (Pty) Ltd (Pty) Services Bidvest MerchantBidvest 391 722 402 009 402 (10 287) (10 Bidvest Bank Limited Company

R ‘000 R ‘000 2017 248 284 248 (41 056) (41 266 439 266 (18 155) (18 (3 536) (3 37 691 37 22 389 22 30 609 20 282 8 899

104 135

21 SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS 5. Cash and cash equivalents Cash and cash equivalents include cash on hand and cash in banks. The average interest rate is 5.03% (2017 3.84%).

Group Company 2018 2017 2018 2017 R ‘000 R ‘000 R ‘000 R ‘000

Cash on hand 215 865 183 013 215 865 183 013

Interbank investments:

Current accounts 653 065 1 032 297 654 020 1 032 297

Money on call 2 473 815 1 461 625 2 473 815 1 461 625

South African Reserve Bank 94 582 46 726 94 582 46 726

Preference shares purchased three months prior to redemption 19 092 - 19 092 -

Restricted cash held at South African Reserve Bank 158 060 122 823 158 060 122 823

3 614 479 2 846 484 3 615 434 2 846 484

6. Deposits

Deposits from customers

Fixed and notice 2 553 381 1 922 931 2 560 881 1 922 931

Call 3 145 564 2 579 660 3 160 328 2 579 660

5 698 945 4 502 591 5 721 209 4 502 591

The maturity analysis of deposits is based on the contractual period to maturity from the statement of financial position date. The average interest rate on deposits is 5.4% (2017: 5.5%). SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS FINANCIAL ANNUAL SEPARATE AND CONSOLIDATED SUMMARISED THE TO NOTES EXPLANATORY SELECTED

136 Bidvest Bank Limited (Registration number(Registration 2000/006478/06) number 2000/006478/06) Summarised ConsolidatedSummarised andConsolidated Separate Annual Financial Statements for the year ended 30 June 2018 7. Trade and other payables

Group Company 2018 2017 2018 2017 R ‘000 R ‘000 R ‘000 R ‘000

Provisions 131 124 87 814 131 124 87 814

Trade payables 346 967 312 964 290 388 312 964

Outstanding bank credits 9 345 7 052 9 345 7 052

Straight-lining of leases 6 968 8 262 6 946 8 262

494 404 416 092 437 803 416 092

Included in trade and other payables are the following provisions in both the Group and Company numbers:

Maintenance Profit share obligation provision provision Total R ‘000 R ‘000 R ‘000

Balance at 1 July 2017 69 135 18 679 87 814

Provision raised 46 201 5 561 51 762

Provision utilised (540) (6 933) (7 473)

Reversal (983) 4 (979)

Balance at 30 June 2018 113 813 17 311 131 124

The profit share provision represents a present obligation as a result of a profit-sharing arrangement arising within certain leasing contracts. The Bank and lessee will share a percentage:

• of the difference between the actual realised sale value of the leased asset and the estimated residual value used in the determination of the lease rental; and SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS FINANCIAL ANNUAL SEPARATE AND CONSOLIDATED SUMMARISED THE TO NOTES EXPLANATORY SELECTED

• the maintenance net profit or loss earned over the term of the contract. 21

A key assumption in the provision calculation is the estimated residual values of the leased assets.

The maintenance obligation provision represents a present obligation for expected economic outflows arising from the full maintenance leasing contracts. A key assumption in the provision calculation is the maintenance burn rate defined as maintenance expense as a percentage of maintenance income.

(Registration(Registration number number 2000/006478/06) 2000/006478/06) Summarised Summarised Consolidated Consolidated and Separate and Separate Annual Annual Financial Financial Statements Statements for the for year the yearended ended 30 June 30 June 2018 2018 Bidvest Bank Limited 137 8. Classification of assets and liabilities

2018 Non- Loans at Other financial Held for amortised Available- amortised assets / Group trading cost for-sale cost liabilities Total Assets R'000 R'000 R'000 R'000 R'000 R'000

Equipment - - - - 80 720 80 720 Intangible assets - - - - 218 526 218 526 Leased assets - - - - 1 687 128 1 687 128 Loans and advances - 2 380 787 - - - 2 380 787 Negotiable securities - 391 722 - - - 391 722 Derivative financial assets 14 755 - - - - 14 755 Investment securities - - 376 702 - - 376 702

Intergroup loans - 58 796 - - - 58 796

Current tax receivable - - - - 6 545 6 545 Other assets - 367 222 - - 21 983 389 205 Cash and cash equivalents - 3 614 479 - - - 3 614 479 14 755 6 813 006 376 702 - 2 014 902 9 219 365 Liabilities Intergroup loans - - - 150 089 - 150 089 Derivative financial liabilities 45 513 - - - - 45 513 Deposits - - - 5 698 945 - 5 698 945 Other liabilities - - - 494 404 - 494 404 Deferred tax - - - - 159 513 159 513 Defined benefit liability - - - - 519 519 45 513 - - 6 343 438 160 032 6 548 983 SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS FINANCIAL ANNUAL SEPARATE AND CONSOLIDATED SUMMARISED THE TO NOTES EXPLANATORY SELECTED

138 Bidvest Bank Limited (Registration number(Registration 2000/006478/06) number 2000/006478/06) Summarised ConsolidatedSummarised andConsolidated Separate Annual Financial Statements for the year ended 30 June 2018 8. Classification of assets and liabilities (continued)

2017 Non- Loans at Other financial Held for amortised Available- amortised assets / Group trading cost for-sale cost liabilities Total Assets R'000 R'000 R'000 R'000 R'000 R'000

Equipment - - - - 98 375 98 375 Intangible assets - - - - 152 424 152 424 Leased assets - - - - 1 707 427 1 707 427 Loans and advances - 2 100 468 - - - 2 100 468 Negotiable securities - 248 284 - - - 248 284 Derivative financial assets 26 181 - - - - 26 181 Investment securities - - 254 868 - - 254 868 Other assets - 356 068 - - 21 386 377 454 Cash and cash equivalents - 2 846 484 - - - 2 846 484 26 181 5 551 304 254 868 - 1 979 612 7 811 965 Liabilities Intergroup loans - - - 150 035 - 150 035 Derivative financial liabilities 49 585 - - - - 49 585 Deposits - - - 4 502 591 - 4 502 591 Other liabilities - - - 416 092 - 416 092 Deferred tax - - - - 161 727 161 727 Current tax - - - - 5 454 5 454 Defined benefit liability - - - - 451 451 49 585 - - 5 068 718 167 632 5 285 935 SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS FINANCIAL ANNUAL SEPARATE AND CONSOLIDATED SUMMARISED THE TO NOTES EXPLANATORY SELECTED

(Registration(Registration number number 2000/006478/06) 2000/006478/06) Summarised Summarised Consolidated Consolidated and Separate Annual Financial Annual Financial Statements Statements for the year for endedthe year 30 endedJune 2018 30 June 2018 Bidvest Bank Limited 139 8. Classification of assets and liabilities (continued)

2018 Non- Loans at Other financial Held for amortised Available- amortised assets / Company trading cost for-sale cost liabilities Total Assets R'000 R'000 R'000 R'000 R'000 R'000

Equipment - - - - 80 720 80 720

Intangible assets - - - - 179 521 179 521

Leased assets - - - - 1 687 128 1 687 128

Investment in subsidiaries - - - - 94 078 94 078

Loans and advances - 2 413 799 - - - 2 413 799

Negotiable securities - 391 722 - - - 391 722

Derivative financial assets 14 755 - - - - 14 755

Investment securities - - 376 702 - - 376 702

Intergroup loans - 58 968 - - - 58 968

Current tax receivable - - - - 6 239 6 239

Other assets - 304 221 - - 21 983 326 204

Cash and cash equivalents - 3 615 434 - - - 3 615 434

14 755 6 784 144 376 702 - 2 069 023 9 244 624

Liabilities

Intergroup loans - - - 214 740 - 214 740

Derivative financial liabilities 45 513 - - - - 45 513

Deposits - - - 5 721 209 - 5 721 209

Other liabilities - - - 437 803 - 437 803

Deferred tax - - - - 155 977 155 977

Defined benefit liability - - - - 519 519

45 513 - - 6 373 752 156 496 6 575 761 SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS FINANCIAL ANNUAL SEPARATE AND CONSOLIDATED SUMMARISED THE TO NOTES EXPLANATORY SELECTED

140 Bidvest Bank Limited (Registration number(Registration 2000/006478/06) number 2000/006478/06) Summarised ConsolidatedSummarised andConsolidated Separate Annual Financial Statements for the year ended 30 June 2018 8. Classification of assets and liabilities (continued)

2017 Non- Loans at Other financial Held for amortised Available- amortised assets / Company trading cost for-sale cost liabilities Total Assets R'000 R'000 R'000 R'000 R'000 R'000

Equipment - - - - 98 375 98 375

Intangible assets - - - - 152 424 152 424

Leased assets - - - - 1 707 427 1 707 427

Investment in subsidiaries - - - - 56 387 56 387

Loans and advances - 2 100 468 - - - 2 100 468

Negotiable securities - 248 284 - - - 248 284

Derivative financial assets 26 181 - - - - 26 181

Investment securities - - 254 868 - - 254 868

Intergroup loans - - - 172 - 172

Other assets - 356 068 - - 21 386 377 454

Cash and cash equivalents - 2 846 484 - - - 2 846 484

26 181 5 551 304 254 868 172 2 035 999 7 868 524

Liabilities

Intergroup loans - - - 214 686 - 214 686

Derivative financial liabilities 49 585 - - - - 49 585

Deposits - - - 4 502 591 - 4 502 591

Other liabilities - - - 416 092 - 416 092

Deferred tax - - - - 161 727 161 727

Current tax - - - - 5 757 5 757

Defined benefit liability - - - - 451 451

49 585 - - 5 133 369 167 935 5 350 889 SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS FINANCIAL ANNUAL SEPARATE AND CONSOLIDATED SUMMARISED THE TO NOTES EXPLANATORY SELECTED

8.1 Fair value estimation Fair value is the price that would be received to sell an asset or paid to transfer a liability in an 21 orderly transaction between market participants at the measurement date. The Bank adopted the amendment to IFRS 7: Financial instruments: Disclosures and IFRS 13: Fair value measurement regarding the fair value measurement of financial instruments in the statement of financial position on 1 July 2009 and July 2013 respectively. These statements require disclosure of fair value measurements by using the following fair value measurement hierarchy:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date (Level 1);

• Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2); and

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

2018 Level 1 Level 2 Level 3 Level 4 Assets R ‘000 R ‘000 R ‘000 R ‘000

Investment securities 376 686 - 16 376 702

Derivative financial assets - 14 755 - 14 755

376 686 14 755 16 391 457

Liabilities

Derivative financial liabilities - 45 513 - 45 513

2017 Level 1 Level 2 Level 3 Level 4 Assets R ‘000 R ‘000 R ‘000 R ‘000

Investment securities 245 852 - 16 254 868

Derivative financial assets - 26 181 - 26 181

245 852 26 181 16 281 049

Liabilities

Derivative financial liabilities - 49 585 - 49 585

The fair value of financial instruments traded in active markets is based on quoted market

NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS prices at the reporting date. A market is regarded as active if quoted prices are readily and

21 regularly available from an exchange, dealer, broker, or industry group, pricing market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Bank is the current bid price. These instruments are included in Level 1. Instruments included in Level 1 comprise primarily listed equity investments classified as available-for- sale securities.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

If one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3.

142 Bidvest Bank Limited (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration to or a reasonable approximation of fair value. fair of approximation areasonable to or equal is value carrying the instruments other all For position. financial of statement the on value fair at carried not instruments financial of values fair the represents following The 8.3 8. Consolidated Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Consolidated 2000/006478/06) number (Registration Assets 2017 Total advances at amortised cost Total at amortised advances cost Total at amortised advances Assets 2018

Classification of andassets liabilities (continued) Fair value of financial instruments financial of Fair value Carrying value Carrying value Carrying 2 380 787 2 380 2 100 468 2 100 R ‘000 R ‘000

Bidvest Bank Limited Fair value Fair value 2 099 528 2 099 2 327 216 2 327 R ‘000 R ‘000

143

21 SELECTED EXPLANATORY NOTES TO 21THE NOTES SUMMARISED TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS 21 SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS 144 or loss whenever the carrying amount exceeds the recoverable amount. recoverable the exceeds amount carrying the whenever loss or profit in recognised is loss impairment An judgement. significant requires estimation This established. is amount recoverable asset’s the exists, impairment of indication such any If impairment. of indication an is there whether to determine date reporting each at reviewed is assets financial than other assets Bank’s the of amount carrying The assets non-financial of Impairment periods. subsequent in adjusted are differences such recorded, initially amounts the from differs assessment of agreement upon outcome tax final the When Services. Revenue African South the by to determination subject is accounts to the charged tax The Income taxes book. loan the on held values security high the and quality credit high the of aresult as portfolio loan its on ratio loss credit alow to experience continues Bank The required. impairment the determining when account into taken are values security Estimated experience. loss actual and estimates loss between differences any to reduce regularly reviewed are flows cash future of timing and amount the both estimating for used assumptions and methodology The book. lending the for experience loss historical on based are loans impaired individually on flows cash future of estimates Management’s conditions. loan key of breaches account into taking basis acase-by-case on analysed are loans Corporate year-end. at unpaid and due are amounts the if impaired individually are Loans loans Non-performing period. emergence loss estimated to the scaled and portfolio the in balances to loan applied are ratios loss Annual conditions. economic for adjusted ratios, loss historical on based basis, aportfolio on calculated is loans performing for impairment The basis. individual an on loss of a identification the and event aloss of occurrence the between duration the of made are Estimates portfolio. that in loan individual an to allocated be can decrease the before loans of portfolio a from flows cash future estimated the in decrease ameasurable indicating data observable is there whether judgements makes Bank the loss, or profit in recorded be should loss impairment an whether determining In date. reporting each at impairment for portfolio loan its assesses Bank The loans Performing advances and loans on losses impairment Credit security. the in value of diminution permanent of indication an is there if considered be will security investment an of impairment An securities Investment circumstances. the under reasonable to be believed are that events future uncertain of estimates best current and experience historical as such factors on based are and evaluated continually are judgements and year. Estimates financial next the within liabilities and assets of amounts reported the affect could that made are assumptions and estimates Statements, Financial Summarised the preparing In 10. 2018. 18 on September paid and 2018, August 24 on declared was million R80.5 of A dividend 9.

Bidvest Bank Limited Key assumptions Events after the reporting period reporting the after Events

(Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration significant judgement. significant requires estimation This guides. valuation industry as well as assets leased on losses and profits resale recent most the of acombination on based is estimation value residual The estimate. in achange as for accounted are amounts depreciable to the changes Any assets. leased of amounts depreciable the determining of purposes for basis ayearly on assessed are assets leased of values Residual assets leased of value Residual immaterial impact on the Bank’s 1 July 2018 equity. 2018 1July Bank’s the on impact immaterial an have will onwards, 2018 1July from methodologies measurement (ECL) loss credit expected and policies accounting adopted newly the 9, applying hence IFRS and adopting By 2018. 1July on equity on impact material no had instruments financial other Bank’s the of certain of measurement and classification in Changes assets financial certain of measurement and inclassification Changes 2018. to 2018 1July June 30 from increase materially not did provisions impairment credit position financial of Total statement allowance impairment credit position financial of Statement 2018. 1July on Group Bidvest The for effective 9, became to IFRS which 39 IAS from standards accounting the in change the of impact the considered has Bank The permitted. adoption early with 2018 January 1 after or on beginning periods reporting financial for effective is and versions previous all supersedes 2014 in 9issued IFRS of version The accounting. hedge and general derecognition impairment, and measurement, for recognition requirements includes standard The 39). (IAS Measurement and Recognition Instruments: Financial 39: IAS of replacement IASB’s the is 2014 July 24 on 9) issued (IFRS Instruments 9: Financial IFRS Instruments 9: Financial IFRS below: stated as periods accounting Bank’s the for mandatory are and published been have which interpretations, and standards following the adopt to early not chosen has Bank The 11.1 effective yet not interpretations and Standards interpretations: and standards new these of impact the determining of process the in is Bank The 11. category. asset lease each for escalations income future estimated and ratios cost-to-income maintenance historical on based is obligation The basis. ayearly on assessed is obligation maintenance The – maintenance obligation assets Leased expenditure. and income maintenance actual on based are rates burn maintenance The assets. leased on losses and profit resale recent most the on based are values residual estimated The date. reporting each at reviewed are rates burn maintenance and values residual estimated The shareProfit maintenance and provision obligation

New standards and interpretations and standards New

Bidvest Bank Limited 145

21 SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS 21 SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS 146 financial results. financial Bank’s the on impact a material to have 15 expected not is IFRS of implementation The statements. annual financial separate and 2019consolidated the in time first the for standard the to adopt expects Bank The 2018. 1 January after or on beginning periods reporting financial for is standard the of date effective The requirements. disclosure new extensive includes 15 also IFRS • • • • • steps: following the applying by principle core that with accordance in revenue recognises entity An services. or goods those for exchange in entitled to be expects entity the which to consideration the reflects that amount an in to customers services or goods promised of transfer the to depict revenue recognises entity 15 an that is IFRS of principle core The Services. Advertising Involving Transactions Revenue - Barter 31: SIC and Customers from Assets of 18: Transfers IFRIC Estate; Real of construction the for 15: Agreements IFRIC Programmes; Loyalty 13: Customer IFRIC 18: Revenue; IAS contracts; 11: IAS Construction 15) supersedes (IFRS customers with contracts from 15: Revenue IFRS Customers with 15IFRS Contracts Revenue from 2019. 1January after or on beginning periods reporting to financial applies 2016 and January in 17. issued 16 IAS was IFRS predecessor, its from unchanged substantially accounting lessor to 16’sIFRS with approach finance, or operating as leases to classify continue Lessors value. alow has asset underlying the or less or 12 is months term lease the unless leases all for liabilities and assets to recognise lessees requiring model, accounting lessee asingle provides standard The leases. disclose and present measure, recognise, will entities how 16) specifies (IFRS 16: Leases IFRS IFRS 16: Leases Recognise revenue when (or as) the entity satisfies a performance obligation. performance a satisfies entity the as) (or when revenue Recognise contract. the in obligations performance to the price transaction the Allocate price. the transaction Determine contract. the in obligations performance the Identify acustomer. with contract(s) the Identify Bidvest Bank Limited Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018 June 30 ended year the for Statements Financial Annual Separate and Consolidated Summarised 2000/006478/06) number (Registration Angela Ahrendts your employees first. I thinkyou buildonewith with your customer. building arelationship Everyone talks about Bidvest Bank Limited 147

21 SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS BIDVEST BANK LIMITED (Registration number 2000/006478/06) Summarised Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018.

The preparation of these Summarised Consolidated and Separate Annual Financial Statements was supervised by:

G Oxford CA(SA) Head: Financial Control

These Summarised Consolidated and Separate Annual Financial Statements have been audited in compliance with the applicable requirements of the Companies Act 71 of 2008.

These financial statements represent the summary of the Consolidated and Separate Annual Financial Statements for the year ended 30 June 2018.

A copy of the full set of Consolidated and Separate Financial Statements can be obtained from the Company Secretary Di Crawley, by sending a request to [email protected]