Barclays Bank of Botswana Limited 2018 Annual Report Contents Barclays Bank of Botswana Limited Annual Report 2018 Chairman’s Statement 04 Our Goal To be the best Barclays Bank is a leading, financial services Managing Director’s financial services institution Report 08 provider that has been operating in Botswana focused on exceptional Country Management since 1950. Our listing on the Botswana Stock Committee 16 customer service in our Finance Director’s Exchange demonstrates our commitment to Report 20 chosen sectors Corporate and this country and its people. Investment Banking 24 Our Purpose Bringing Retail and your possibilities to life Business Banking 26 Barclays Bank of Botswana has 3 business units: Treasury and Balance Sheet Management 28 Our Values Risk Review 30 Respect Retail and We offer Retail Banking services such as transactional We respect and value those we work with, banking solutions, savings and investments, foreign People Function Business exchange and lending amongst others. Similar services Review 32 and the contribution that they make Banking are also offered to our Business Banking clients in the Citizenship Report 34 Integrity small to medium enterprises and commercial sectors. Board of Directors 38 We act fairly, ethically and openly in all we do Our Corporate and Investment Banking services Corporate Governance 42 Corporate clients in large corporations and companies, such Service and Investment as multinationals and public sector. The tailor made Annual We put our clients and customers at the Banking solutions we offer include asset financing, cash and liquidity management and trade finance. Financial centre of what we do Statements Excellence We use our energy, skills and resources to In addition to asset and liability management, capital, Directors’ deliver the best sustainable results funding and liquidity management for the Bank, our Responsibilities Treasury Treasury unit offers foreign exchange services to our and Approval 58 Stewardship clients. Corporate Governance We are passionate about leaving things Statement 59 better than we found them Directors’ Report 60 Independent Auditor’s Report 62 Statements of Comprehensive Income 66 Best Investment Bank Botswana: Statements of Financial Position 67 EMEA Finance African Banking Awards 2018 Statements of Changes in Equity 68 Statements of Cash Flows 70 Accounting Policies 71 Notes to the Annual Financial Statements 85 Shareholders Information 176 Value Added Statement 177 Notice to Shareholders 178 Proxy Form 180 Barclays Bank of Botswana Limited 2 Annual Report 2018 We are a Pan African Bank that Africa can be proud of. We will maintain our customer-centric approach and capitalise on our competitive strengths to reinforce our position as Botswana’s leading financial services provider. Barclays Bank of Botswana Limited Annual Report 2018 1 Barclays at a Glance Where we operate We have the largest branch network across Botswana. Kasane Shakawe Gumare Maun Nata Letlhakane Tutume Orapa Masunga Francistown Ghanzi Bobonong Selibe Phikwe Serowe Palapye Mahalapye Mochudi Molepolole Pilane Jwaneng Gaborone Kanye Lobatse Moshupa Tsabong Branch Network Barclays Bank of Botswana Limited 2 Annual Report 2018 113 ATMS across the country Geographic coverage 32 Airport Junction Galo Prestige Jwaneng Masunga Palapye Tsabong Plot 70665, Unit 63, Plot 1471/2, Galo Mall Plot 5477, Choppies Mall Lot 1107, Masunga Plot 47, Lotsane Ward Plot 545, Tsabong Mall Airport Junction Mall Francistown Jwaneng Complex Palapye Tsabong Gaborone Masunga Game City Kanye Personal Prestige Tutume Blue Jacket Prestige Shop No. F2/F11A, Plot 89, Mall Tribal Maun Plot 1188, Main Mall, Itachi Complex Plot 494/5, Game City Mall Kanye Old Mall Tsheko Tsheko Rd Debswana House Tutume Blue Jacket Street Gaborone Maun Gaborone Francistown Kasane Ghanzi Plot 2208, Shop 8,Spar Molepolole Phikwe Bobonong Plot 29, Spar Mall Mall Plot 39/ unit 33, Plot 2579, Main Mall Plot 430, Bobonong Mall Ghanzi Kasane Mafenyatlala Mall Selibe Phikwe Bobonong Molepolole Gaborone Industrial Letlhakane Pilane Broadhurst Plot 17952/3, Lithuli Road Plot 3577, Millenium Tower Moshupa Pilane crossing Mall, Plot 4748, Kubu Road Gaborone Building Lot 1016, Kgosing Ward Plot 439 Gaborone Letlhakane Moshupa Pilane Gaborone Mall Carbo Prestige Plot 1103, Main Mall Lobatse Nata Serowe Plot 54518, Riverwalk Mall Gaborone Plot 4649, Jacaranda Street Northgate Shopping Mall, Plots 40/5, Old Mall Gaborone Hillside Mall Plot 9, Kachikau Ward Serowe Gumare Lobatse Nata Francistown Plot 76, Delta Shopping Shakawe Plot 494/5, Complex Mahalapye Orapa Temporarily Closed Blue Jacket Street Gumare Shop no 9B, Moko Mall Plot 498, Sabie Street Francistown Mahalapye Orapa Barclays Bank of Botswana Limited Annual Report 2018 3 Chairman’s Statement 4 Treasury and Balance Sheet Management 28 Annual Financial Report 58-177 Managing Director’s Report 8 Risk Review 30 Country Management Committee 16 People Function Review 32 Financial Director’s Report 20 Citizenship Report 34 Corporate and Investment Banking 24 Board of Directors 38 Retail and Business Banking 26 Corporate Governance 42 Chairman’s Statement Oduetse A. Motshidisi Dear Shareholder, Chairman of the Board Reviewing the 2018 results of Barclays Bank of Botswana Limited gave me a sense of deep satisfaction and pride. In an environment characterised by economic uncertainty and increasingly stiff competition, as well as the significant changes taking place within our organisation, our Bank performed admirably. Barclays Bank of Botswana Limited 4 Annual Report 2018 We are also encouraged by the resilience of our people and systems in the face of these challenges; the confidence Return on equity remains strong of our major shareholder in our abilities; and the generally positive market response to the change on the name of our parent company, now renamed Absa Group Limited (Absa Group). The upward trajectory of our financial performance augurs well for the realisation of our business strategy – to create Our return on a future-fit and people-centric bank that will deliver % equity remains sustainable value to all our stakeholders, while having a strong at 23% lasting and beneficial impact on the communities in which 23 we operate and our country as a whole. Economic overview Botswana achieved impressive real GDP growth in 2018 of 4.5%, a satisfactory and welcome improvement on 2017’s Earning per share 2.9%. This rise was mainly supported by the recovery in the mining sector, which saw its growth turn around from 2017’s contraction of -11.1% to 7.4% in 2018. In addition, the relocation of the Diamond Trading Company from London to Gaborone continues to have a positive impact on the trade, hospitalities and restaurants sectors, including the wholesale sub-sector – an important market for the Bank. Our earnings per % share increased by Looking ahead, we expect that significant public and 5% year-on-year. private sector investment into infrastructure and the 5 relatively expansionary fiscal policy will drive growth in 2019 and beyond. However, there are downside risks to these favourable forecasts. These include the on-going global trade uncertainties that have potential to negatively impact diamond sales and the severe El niño weather patterns that are likely to affect agricultural production. Governance We are confident that with their wealth of experience and passion for the financial service sector, our Board members The Bank is unconditionally committed to the maintenance will continue to provide invaluable service to the Bank and of sound governance principles and practice. In line with this, inspire the ongoing delivery of our strategy, while delivering we appointed two additional Independent Non-Executive on their mandate. Directors, Kgotlayarona Ramaphane and Mohamed Osman, to the Board of Directors. Both these appointments took effect in August 2018, and increased our total number of Results Independent Non-Executive Directors to seven. The Bank’s 2018 financial results are testimony to the Their appointments were in line with our Board’s strategy resilience and dedication of our people and management. of strengthening its composition with experienced, highly Notwithstanding the challenging operating environment, the talented individuals with a wide range of skills, expertise and business responded commendably with growth in profitability, energy needed to move the business forward. discipline in containing costs and improved collections. Barclays Bank of Botswana Limited Annual Report 2018 5 Chairman’s Statement 4 Treasury and Balance Sheet Management 28 Annual Financial Report 58-177 Managing Director’s Report 8 Risk Review 30 Country Management Committee 16 People Function Review 32 Financial Director’s Report 20 Citizenship Report 34 Corporate and Investment Banking 24 Board of Directors 38 Retail and Business Banking 26 Corporate Governance 42 This latter achievement positively impacted credit This involves a combination of standard lift-and-drop impairments, an indication of the success of the Bank’s solutions as well as noteworthy systems refresh, along with strategic approach to appropriate lending. some substantial transformation. The Bank continues to deliver a solid performance, with strong liquidity and capital adequacy levels positioning it well Human capital for future growth. The Bank’s excellent performance in 2018 would not have been possible without the dedication and determination of Barclays Bank rebranding its people. This is most graphically illustrated