Standard Chartered Bank Limited Kenya Annual Report and Accounts 2020 Here[[ for good Head Office Social media: Twitter handle: @StanChartKE Standard Chartered Bank Kenya Limited Facebook page: Standard Chartered Kenya 48 Westlands Road Email: [email protected] P.O. Box 30003-00100 Nairobi Contact Centre Numbers begins by being Kenya For Priority customers +254 20 3293939 / 0703093939 / 0732143939 For Personal Banking +254 20 3293900 / 0703093900 / 0732143900 here for tomorrow]] Annual Report and Accounts 2020 Business review Established in 1911, Standard Chartered Bank is one of the review Business Standard Chartered is a leading Who we are oldest banks servicing this market. Our heritage and values are expressed in our brand promise; Here for good. Our operations international banking group reflect Our Purpose, which is to drive commerce and prosperity through our unique diversity. We offer banking services that help people and companies prosper, creating wealth and Our heritage and values are expressed in our growth across our market. We are committed to promoting brand promise, Here for good. Our operations economic and social development in Kenya by focusing reflect our purpose, which is to drive commerce on three sustainability pillars – contributing to sustainable and prosperity through our unique diversity. economic growth, being a responsible company and investing in communities. Contents Responding to COVID-19 Business review 1 Who we are 2 Delivering our strategy In 2020, we responded to the COVID-19 3 Group five year summary 4 What we do pandemic by aligning our support along 6 Business model the pillars of our staff, our clients and our 10 Our strategy 13 Client segment reviews communities. Find out more about our responses 16 Product groups to COVID-19, and how we have supported our 20 Risk management clients, colleagues and communities on pages 25 Stakeholders and responsibilities 32 Chairman’s statement 25-31. 36 Chief Executive Officer’s statement 41 Corporate Governance 79 Financial statements KShs 650 million Preferential loans to support Kenyan About this report manufacturers and distributors at the Our Annual Report and Financial Statements for the forefront of fighting the pandemic. year ended 31 December 2020 provides insights into our progress in realising our purpose; to drive See more details on page 29 commerce and prosperity through our unique Our Valued behaviours Our valued behaviours ensure that we do things the right way, diversity. It provides details on our business, our strategy, our risk management, our governance and in order for us to succeed. Only by living our values will we realise our financial performance. our potential and truly be Here for good. Sustainability reporting We adopt an integrated approach to corporate reporting, embedding non-financial information • Continuously improve and innovate throughout our Annual Report. KShs 145 million • Simplify This report is prepared in accordance with the requirements of the Kenyan Companies Act 2015, Donation towards COVID-19 pandemic relief. Never settle • Learn from your successes guidelines issued by the Capital Markets Authority and failures and the Central Bank of Kenya’s Prudential See more details on page 26 Guidelines. For more information please visit sc.com/ke • See more in others Better together • “How can I help?” KShs 964 million • Build for the long term • Live with integrity @StanChart Early payments to our supply partners. linkedin.com/company/standard-chartered-bank see more details on page 27 Do the right thing • Think client facebook.com/standardchartered • Be brave, be the change 4 Standard Chartered Bank Kenya Limited — Annual Report and Accounts 2020 Standard Chartered Bank Kenya Limited — Annual Report and Accounts 2020 1 Business review Business review Business Our purpose and progress Delivering We have continued to execute our strategic priorities, which Group five year we refreshed in August 2019 and we have made good progress our strategy in the year. We gauge our annual progress against a set of summary key performance indicators (KPIs), summarised below. Our KPIs include non-financial measures reflecting our continued 2020 2019 2018 2017 2016 Income statement KShs million KShs million KShs million KShs million KShs million commitment to being a responsible company and promoting Operating income 26,689 27,950 27,7 75 26,626 27,395 inclusive communities. Operating expenses (15,707) (15,542) (14,579) (12,785) (12,229) Impairment losses on financial instruments (3,586) (234) (1,349) (3,770) (1,878) Profit before tax 7, 396 12,174 11,847 10,071 13,288 Tax (1,955) (3,937) (3,748) (3,157) (4,239) Throughout this report, Financial KPIs Other financial measures we use these icons to Profit after tax 5,441 8,237 8,099 6,914 9,049 represent the different Return on capital employed stakeholder groups for Operating income Information per ordinary share whom we create value. Basic earnings per share 11.49% (KShs) (2019-2016 adjusted) 13.95 21.36 20.99 17.85 23.50 (2019: 19.06%) KShs 26,689m Dividend per share on each ordinary share (KShs) 10.50 12.50 19.00 17.00 20.00 (2019: KShs 27,950m) Statement of financial position Total capital* Profit before tax Loans and advances to customers (gross) 130,720 136,534 127,860 134,328 128,290 Clients Impairment losses on loans and advances to 18.47% customers (9,196) (7,844) (9,208) (8,034) (5,579) (2019: 17.73%) m KShs 7, 396 Government securities 99,779 99,611 98,705 110,542 86,489 (2019: KShs 12,174m) Other assets 104,302 73,837 68,047 48,888 41,282 Tier 1 capital* Regulators & Earnings per share Total assets 325,605 302,138 285,404 285,724 250,482 governments Deposits from customers 256,498 228,434 224,284 213,349 186,598 15.87% Other liabilities 18,216 25,943 14,480 26,710 19,280 (2019: 14.70%) KShs 13.95 (2019: KShs 21.36) Total liabilities 274,714 254,377 238,764 240,059 205,878 * Tier 1 capital and total capital are computed as a percentage of the Company’s risk weighted assets. Net assets 50,891 47,761 46,640 45,665 44,604 Investors Shareholders’ funds 50,891 47,761 46,640 45,665 44,604 Ratios Cost income ratio 59% 56% 52% 48% 45% Non-financial KPIs Return on capital employed 11% 19% 19% 16% 23% Suppliers Diversity and inclusion: Impairment charge/gross loans and advances 3% - 1% 3% 1% women in senior roles Gross loans and advances to deposits ratio 51% 60% 57% 63% 69% Gross non-performing loans and advances/total 43% gross loans and advances 15% 9% 11% 6% 8% Society Non-branch transactions Core capital/total deposit liabilities 15% 16% 16% 17% 19% Core capital/ total risk weighted assets 16% 15% 17% 16% 18% 90% Total capital/total risk weighted assets 18% 18% 20% 19% 21% Employees Since our last strategy refresh in 2019, we have focused on our leadership standard PA²CE - which centers on People, Accountability, Agility, Clients and Execution as clear building blocks for transforming the Company through building new skills and capabilities required today and into the future of banking. 2 Standard Chartered Bank Kenya Limited — Annual Report and Accounts 2020 Standard Chartered Bank Kenya Limited — Annual Report and Accounts 2020 3 Business review What we do Best Overall Bank, Digital Experience [[ Our purpose is to drive Best Tier 1 Bank, Digital Experience commerce and prosperity Customer Satisfaction Survey 2020 through our unique diversity. We offer banking services Awarded by that help people and companies prosper, creating wealth and growth across our market ]] Serving client segments with differentiated expertise: 2. Our business serves three client segments and is supported by nine support functions. How we are shaping our future 3. In January 2021, we streamlined Corporate & Commercial our organisation by integrating Institutional Banking Banking [[We have made digital banking our existing business units into Serving large corporations, financial Supporting local corporations and medium two new segments: Corporate, institutions, public sector and government. sized enterprises. award-winningly easy]] Commercial and Institutional Banking (CCIB) and Consumer, Operating income Operating income Private and Business Banking Voted Best Overall Bank, and Best Tier 1 Bank for Digital KShs 7,256m KShs 2, 329m (CPBB). Experience – Kenya Bankers Association Customer Survey The creation of the CCIB segment, bringing together the Corporate & Institutional Retail Central & Thank you to everyone who voted for us, leading to success in these two Banking and Commercial Banking other items prestigious awards, and thank you to all the staff that made it happen. Banking, simplifies the way Serving individuals and small businesses, with a focus on affluent and emerging Operating income we work globally, keeping the We have made the experience of banking through our SC Mobile app affluent. KShs 5,044m distinct local client focus, with and online banking quick and easy with an intuitive interface, less complex organisation on so that any task is stress-free. the ground and a single team Operating income to partner with our clients and KShs 12,060m other stakeholders. Our Retail unit is now CPBB. The change will help our retail Total operating income business deliver our services KShs 26,689m more effectively to our clients, having a more global approach while serving our clients locally. 4 Standard Chartered Bank Kenya Limited — Annual Report and Accounts 2020 Business review Business model Business review Business Our client-facing businesses are Business model supported by our functions, which work together to ensure the Group’s operations run smoothly and consistently with our legal and regulatory obligations, our purpose and risk appetite. What makes us different Our functions Our purpose is what sets us apart: We drive commerce and prosperity through our unique Human Resources Legal Technology and Innovation diversity - this is underpinned by our brand promise, Here for good Enables business performance Enables sustainable business and Responsible for the Group’s through recruiting, developing and protects the Group from legal- operations, systems development engaging colleagues.