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Financial Year Ending 28 Febuary 2014

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Financial Year Ending 28 Febuary 2014 Finbond Group Limited & Finbond Mutual Bank Integrated Annual Report for the year ended 28 February 2014 TABLE OF CONTENTS Executive Summary Corporate Governance Financial Statements Additional Information Vision and Mission 4 Risk Management Audit Committee Report 54 Notice to shareholders 124 Core Values 4 Framework 40 Independent Auditors’ Report 57 Form of Proxy 131 About Us 5 Basel III and Regulatory Directors’ Report 58 Corporate Information 135 What is a Mutual Bank? 6 Capital 45 Company Secretary’s GRI Sustainability index 136 Our Branches 7 Economic Risk Capital 47 Certificate 61 Declaration 139 Key Performance Indicators 8 Corporate Governance 48 Remuneration Report 62 Materials Usage 140 Human Capital Development 9 Social and Ethics Committee Statement of Financial Service Standards 11 Report 51 Position 64 Internal Audit 12 Directors’ Responsibilities 52 Statement of Comprehensive Compliance 13 Approval of Financial Income 65 Regulation 14 Statements 52 Statement of Changes in Financial Highlights 15 Equity 66 Consumer Education 17 Statement of Cash Flow 68 Directorate 18 Accounting Policies 69 Product Offering 24 Notes to the Financial What’s in an icon? 26 Statements 79 Branding 27 Major Individual Holdings 122 CEO’s Review 28 Shareholders’ Diary 122 Social Responsibility 35 Chairman’s Review 36 Finbond Group Limited & Finbond Mutual Bank Integrated Annual Report 2014 1 The Victor If you think you are beaten, you are. If you think you dare not, you don’t. If you like to win but think you can’t, It’s almost a cinch you won’t. If you think you’ll lose, you’re lost. For out in the world we find Success begins with a fellow’s will. It’s all in the state of mind. If you think you are out classed, you are. You’ve got to think high to rise. You’ve got to be sure of yourself before You can ever win the prize. Life’s battles don’t always go To the stronger or faster man. But sooner or later, the man who wins Is the man who thinks he can. - C. W. Longenecker - 2 Finbond Group Limited & Finbond Mutual Bank Integrated Annual Report 2014 EXECUTIVE SUMMARY Savings Investments Credit Finbond Group Limited & Finbond Mutual Bank Integrated Annual Report 2014 3 VISION, MISSION & VALUES OUR VISION OUR MISSION To be the leading Mutual and Savings bank in South Africa improving the quality of To consistently satisfy the needs of our target market by offering innovative, superior, life of our clients, through their participation in saving together, growing together and inclusive investment, saving and credit solutions and better service that add value to ownership of their own community bank. our clients’ lives by empowering them and contributing towards their financial growth, independence and freedom. OUR PURPOSE We exist to improve and transform the lives and livelihoods of our clients by availing them of modern inclusive banking products and services that benefit and empower them. OUR CORE VALUES OUR BELIEFS • Integrity • We believe in challenging the status quo where large corporate banks have lost To maintain social and ethical norms in all activities. touch with what their clients really need. • Human Dignity • We believe that a bank should be owned by and managed exclusively for the To at all-times treat people with respect and consideration for their unique needs, benefit and in the best interest of its depositors and that all depositors should feelings and opinions. have an ownership stake in their own bank with the ability to vote at shareholders meetings. • Excellence To be excellent in everything at all levels at all times. • We believe that banking products and services should improve the quality of life of our clients and add real value to their lives and livelihood. • Accountability To accept responsibility for the work delegated and execute it with excellence. • We believe in savings and credit solutions tailored around depositor and borrower requirements rather than out-dated institutionalized policies and practices. • Teamwork To strive for the greater benefit of the organization through an appreciation of • We believe that savings should be encouraged through offering superior, high the role that each employee plays in achieving the overall goals. yield investment and saving solutions. “Nothing is impossible, the word itself says, “I’m possible!” - Audrey Hepburn - 4 4.8 Finbond Group Limited & Finbond Mutual Bank Integrated Annual Report 2014 ABOUT US Finbond Group Limited is a leading South African Financial Services institution that Micro Credit Products are offered nationally to the under-banked and underserved specializes in the design and delivery of unique value and solution based savings, credit market of more than 40% of the adult population in South Africa actively seeking credit and insurance solutions tailored around depositor and borrower requirements rather solutions but remaining largely unattended and underserviced due to the traditional than institutionalized policies and practices. banks’ concentration on the higher income brackets of the population. Finbond Micro Credit division operates nationally through 200 branches in South Africa and has 627 Finbond conducts its business through two divisions focused on: employees. For the twelve months ended 28 February 2014 Finbond granted loans of • Investment and Savings Products, and R539.3 million and received cash payments of R709.5 million from clients. 100% of • Micro Credit and Insurance Products. customer payments are collected via advanced direct debit orders. Investment and Savings products, that offer a superior above average rate of return, Finbond commenced trading in 2003, was listed on the Johannesburg Stock Exchange are offered nationally to investors and pensioners looking for guaranteed higher fixed in 2007 and received its Mutual Banking license from the South African Reserve Bank income in the current environment of depressed yields. Finbond’s strategy is to stimulate in 2012. savings through offering superior investment and savings solutions by providing client shareholders with better interest rates, better products and better service. At 28 February Finbond’s management team have a long and succesful track record within the banking, 2014 Finbond Mutual bank held deposits of R695.9 million. All investment and savings micro finance and financial services sectors. This, combined with well-developed systems, products are marketed nationally in the print and radio media, and available nationally unique branded product offerings, advanced information technology and a well-trained through Finbond Mutual Bank’s head office call centre in Pretoria. staff compliment, provide Finbond with a sound platform for future growth. For more information refer to our website www.finbondlimited.co.za, www.finbond.co.za or our facebook page. “Limitations live only in our minds. But if we use our imaginations, our possibilities become limitless.” - Jamie Paolinetti - Finbond Group Limited & Finbond Mutual Bank Integrated Annual Report 2014 2.7, 2.8 5 WHAT IS A MUTUAL BANK? A “Mutual Bank” also known as a “Mutual Savings Bank” is a bank which is operated Mutual Bank in order to encourage his working class congregation to develop thrift. on a mutual bank model, with the specific goal of encouraging savings and providing These first Mutual Savings Banks were designed to uplift the poor and working classes to benefits to its depositors. When someone deposits funds in a “Mutual Bank”, she or he teach low income individuals the virtues of thrift, and self-reliance by encouraging them essentially buys an ownership stake in the bank and is entitled to vote at shareholder to save and allowing them the security to save their money. and member meetings. Mutual Banks have historically been characteristically conservative in their approach. A Mutual Savings Bank is set up specifically to be operated for the benefit of the This conservatism is what allowed Mutual Savings Banks to remain stable throughout depositors. The purpose of the Mutual Bank is to stimulate savings by creating a safe the turbulent period of the Great Depression, despite the failing of some Commercial place to deposit money and to offer benefits such as interest on deposits and dividends Banks. Because Mutual Savings Banks are run very conservatively, they tend to be on Mutual Bank shares, and to invest conservatively for the purpose of generating insulated from some of the volatility of the market. Unlike other banks, they weather profits. financial crises much better, and may continue to return a profit when other institutions are failing. The institution most frequently identified as the first modern mutual savings bank was the “Savings and Friendly Society” organized by the Reverend Henry Duncan (1774 – Some of the first Mutual Savings Banks still operate today, and numerous others have 1846), the local minister in 1810, in Ruthwell, Scotland. Rev. Duncan established the been established since. “Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with great talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence, determination alone is omnipotent.” - Ray Kroc [Founder: McDonalds] - 6 Finbond Group Limited & Finbond Mutual Bank Integrated Annual Report 2014 OUR BRANCHES RSA Population Density – Finbond Branch Locations Finbond has a distribution network of 200 branches nationwide. Finbond Branches per Region Finbond’s branch network includes access points in low populated areas in order to reach economically disadvantaged market segments. “Whatever the mind of man can conceive and believe, it can achieve.” - Napoleon Hill - Finbond Group Limited & Finbond Mutual Bank Integrated Annual Report 2014 2.5, FS 13 7 KEY PERFORMANCE INDICATORS Finbond’s Key Performance Indicators are: • to maintain social and ethical norms in all activities; • to always add value; • to supply solutions not just products; • to provide excellence of service; and • to ensure consistency and constancy of the first four. Finbond’s identity and culture is centered upon achieving results.
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