FNS 0123312 MTB- ® ROGUEXD AUDITED FINANCIAL STATEMENTS For the year ended 31 December 2020 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME CHAIRMAN’S STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2020 Operating Environment The macroeconomic environment for the year ended 31 December 2020 was severely impacted by the debilitat- INFLATION ADJUSTED HISTORICAL ing effects of the Covid-19 pandemic, which caused major macroeconomic shocks not only in Zimbabwe, but Note 2020 2019 2020 2019 the world over. ZWL$ ZWL$ ZWL$ ZWL$ The Covid-19 pandemic slowed down trade across the world as supply chains were severely disrupted, while aggregate demand declined. Zimbabwe was not spared as both imports and exports slowed down to a record low level. The country’s trade deficit has remained negative since 2019, and purchasing power was eroded by Interest income 3 189 632 440 531 890 393 86 628 828 50 759 650 high inflation, regardless of the easing of annual inflation from 521.2% recorded in December 2019 to 348.6 Interest expense 3 ( 170 046 359) ( 426 957 244) ( 81 195 268) (44 610 648) % in December 2020. Net interest income 19 586 081 104 933 149 5 433 560 6 149 002 The economy declined by 4.1% in the midst of the aforementioned challenges. This was however above the Commission, fee income and other operating 4.1 256 793 515 453 171 233 160 211 855 36 280 602 forecast decline of 6.5% as a result of the economy’s response to policies instituted by fiscal and monetary income authorities to stabilize the economy. Profit on disposal of property and equipment 4.2 82 635 759 107 767 49 133 903 12 993 Non interest income 339 429 274 453 279 000 209 345 758 36 293 595 Despite the challenges related to Covid-19, the economy is projected to grow by 7.4% in 2021 on the back of an anticipated good agricultural season. According to the Central Bank, inflation is projected to close the year Operating income 359 015 355 558 212 149 214 779 318 42 442 597 below 10% as stability is expected to continue in response to fiscal and monetary measures. Operating expenditure 5 (303 368 386) ( 360 829 902) (195 756 675) (30 983 244) Business Overview Allowance for credit losses reversal/(ex- 9.6 38 460 170 193 215 014 (4 611 372) (2 307 935) The Bank reported a historical profit after tax of ZWL$7.2 billion for the year ended 31 December 2020, driven penses) by deliberate strategic initiatives undertaken by the Board and senior management. However, in restated hy- Operating profit 94 107 139 390 597 261 14 411 271 9 151 419 perinflation adjusted terms, the Bank recorded a loss of ZWL$2.7 billion. The Bank’s focus has been on growing value preserving assets and supporting the export sector, which not only provides a hedge against exchange Fair value adjustment of investment property 4.2 (5 848 030 529) 10 315 767 734 6 985 349 557 3 403 395 914 depreciation and inflation, but also results in sustainable profits going forward. (Loss)/profit before monetary gain and (5 753 923 390) 10 706 364 995 6 999 760 828 3 412 547 333 tax Capitalization Monetary gain 511 227 840 3 279 242 289 - - The Bank remained compliant with the revised regulatory minimum capital requirements of ZW$ equivalent (Loss) / profit before taxation (5 242 695 550) 13 985 607 284 6 999 760 828 3 412 547 333 of US$30 million. As at 31 December 2020, the Bank’s capital was equivalent to US$122.7 million using the prevailing interbank exchange rate. Tax Credit / (expense) 6.1 2 534 349 167 (2 975 724 360) 164 847 188 (684 391 840) Risk Management (Loss) / profit for the year after taxation (2 708 346 383) 11 009 882 925 7 164 608 016 2 728 155 493 Effective risk management policies and procedures will continue to be pursued through the Board Committees, which include the Risk, Compliance & Capital Management Committee, Loans Review Committee and Audit Other comprehensive income less tax 22 244 966 1 077 211 70 057 879 18 301 991 Committee, which are supported by management committees, which include the Asset and Liability Committee Note: 10 & 6.3 (ALCO), Management Credit Committee, Enterprise-Wide Risk Management Committee, Management Loans Review and Operational Efficiency Committee. The Bank has a comprehensive risk management framework sup- Total comprehensive income for the year (2 686 101 417) 11 010 960 136 7 234 665 895 2 746 457 484 ported by well-documented policies and procedures to assist in the management of the major risk exposures, faced by the Bank, including credit risk, market risk, liquidity risk, strategic risk, compliance risk, cyber-security risk and other types of risks. During the year under review, the Bank activated its Business Continuity Plans to ensure that normal service was offered to clients, whilst also safeguarding the health and safety of our employees, as well as protecting STATEMENT OF CHANGES IN EQUITY the interests of shareholders. Above these objectives, preserving operational and financial resilience remained FOR THE YEAR ENDED 31 DECEMBER 2020 critical. Despite the unprecedented risks due to the coronavirus, the Bank’s employees have shown great fortitude and INFLATION ADJUSTED commitment as they have continued to support and service our customers. Share Retained Revaluation Non distributable capital earnings reserves reserves Total Corporate Governance ZWL$ ZWL$ ZWL$ ZWL$ ZWL$ Metbank Limited’s Board of Directors is committed to the principles of accountability, fairness, responsibility and transparency and believes that a sound governance structure engenders a successful company. The Board currently comprises of seven directors i.e.; an independent Non-Executive Chairman, 4 (four) Independent Year ended 31 December 2019 Non-Executive Directors and 2 (two) Executive Directors. In March 2020, Stella Mandimika was appointed to the Balance at beginning of the year 709 238 492 762 418 199 - 394 183 887 1 865 840 578 Board and subsequently, Mr. Chenjerai Daitai was appointed as an Independent Non-Executive Board member with effect from 30 November 2020. The Board and Management welcome Mrs. S. Mandimika, Mr. C. Daitai Total comprehensive income for the year - 11 009 882 925 1 077 211 - 11 010 960 136 and wish them well during their tenure. In May 2020 and October 2020 respectively, Advocate Hungwe retired from the board after serving for four years and Mr. E. Chawoneka retired as an Executive Director after serving Balance at end of the year 709 238 492 11 772 301 124 1 077 211 394 183 887 12 876 800 714 six years on the Board. We would like to thank them for their significant contribution to the Bank’s success. Year ended 31 December 2020 The Bank continues to pursue its strategic plan through focusing on financing property developments, mortgage financing and the traditional commercial banking. This strategy allows the Bank to satisfy its diverse customer Balance at beginning of the year 709 238 492 11 772 301 124 1 077 211 394 183 887 12 876 800 714 needs while increasing shareholder value. Settlement of preference shares ( 6 187 424) - - ( 6 187 424) Total comprehensive income for the period - (2 708 346 383) 22 244 966 - (2 686 101 417) Outlook While uncertainty remains on the projected economic recovery path, Metbank Limited is well-positioned with a Balance at end of the period 703 051 068 9 063 954 741 23 322 177 394 183 887 10 184 511 873 strong capital and liquidity position allowing it to continue to support its customers. The Bank plans to continue to improve service delivery through the upgrade of e-banking and financial inclusion products, in line with the “new normal”, driven by digital banking. HISTORICAL Acknowledgements On behalf of the Bank, I express our sincere appreciation to all our clients for their continued support to the Share Retained Revaluation Non distribut- business. I also take this opportunity to appreciate the effort and dedication of the Bank’s Board of Directors, able Executives, Management and Staff. Thank you and may you continue with your dedicated efforts to steer the capital earnings reserves reserves Total Bank to unparalleled success. ZWL$ ZWL$ ZWL$ ZWL$ ZWL$ Year ended 31 December 2019 D. MARANDURE Balance at beginning of the year 28 661 768 30 810 868 - 15 929 772 75 402 408 CHAIRMAN Total comprehensive income for the year - 2 728 155 493 18 301 991 - 2 746 457 484 Balance at end of the year 28 661 768 2 758 966 361 18 301 991 15 929 772 2 821 859 892 Year ended 31 December 2020 AUDITORS OPINION These financial results should be read in conjunction with the full set of financial statements for the year ended Balance at beginning of the year 28 661 768 2 758 966 361 18 301 991 15 929 772 2 821 859 892 31 December 2020, which have been audited by HLB Zimbabwe. A qualified opinion was issued thereon with Settlement of preference shares ( 250 046) - - ( 250 046) respect of incorrect date of application of International Accounting Standard 21 (The Effects of Foreign Currency Total comprehensive income for the year - 7 164 608 016 70 057 879 - 7 234 665 895 Exchange Rates) on comparative financial information. The auditor’s report on these financial statements in- cluded Key Audit Matters (KAMs) and it is available for inspection at the Bank’s registered office. Balance at end of the year 28 411 722 9 923 574 377 88 359 870 15 929 772 10 056 275 741 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 INFLATION ADJUSTED HISTORICAL Note 2020 2019 2020 2019 ZWL$ ZWL$ ZWL$ ZWL$ ASSETS Cash and cash equivalents 7 538 887 859 545 134 740 538 887 859 121 523 024 Financial assets held through profit or loss 8 9 673