First National Bank of Botswana : FNB BOTSWANA INTEGRATED REPORT 2023

FNB Botswana

Integrated Report 2023

Introduction to FNB Botswana

OUR

PURPOSE

is to be a trusted partner committed to

NAVIGATING OUR REPORT

This report has been designed for an enhanced digital experience and navigation to ease readability on computer screens and mobile devices for your convenience.

Welcome to our 2023 integrated report

This integrated report (IR or report) reviews achievements for the financial year 1 July 2022 to 30 June 2023. It outlines our performance, emphasising key factors for First National Bank of Botswana Limited's (FNB Botswana or the Bank) commercial success and attractiveness as a secure investment, a reliable place for deposits, a reliable provider of integrated financial services and a model corporate citizen.

Our integrated report, financial results, accounting policies and press releases are available online at www.fnbbotswana.co.bw. Please share your feedback and opinions on our report by emailing [e-mail].

building a shared future of prosperity

2020 -2025

FNB Botswana's 2025 strategy was launched in 2020 to deliver sustainable growth over five years. Our strategy responds to a dynamic operating environment and ensures that we continue to focus on those matters that enable us to create value. The successful implementation of our strategy will bring our purpose to life: to be a trusted partner committed to building a shared future of prosperity.

Our strategic objectives are underpinned by digital transformation

OUR REPORTING SUITE FOR FY2023

Our reporting suite provides us with an opportunity to share our achievements for the year ended 30 June 2023. This suite is supplemented by various online publications, stakeholder communications and engagements, and additional information available on our website

www.fnbbotswana.co.bw

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PG

Read more in this report

King IV

Website information

refers to the King Code on

Corporate Governance

In this report

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Our capital inputs

We recognise the interconnectivity between the capital we use, which informs our decision making and strategic choices. We adapt to changes in the availability, quality, and affordability of our inputs, to remain a successful and sustainable business.

Financial	Manufactured	Human
Intellectual	Social and	Natural
	relationship

Stakeholders

Clients	Shareholders	Suppliers		Media	Regulators
Communities	Government	Organised labour	Employees

CONTENTS

1	Inside front cover/ introduction	ii
	Navigating our report	ii
2	2023 Performance at a glance	2
3	About this report	4
4	About FNB Botswana	6
	Who we are	6
	What we do	7
	Operating corporate structure	7
	Where we operate	8
	Why we exist	10
	FNB Botswana's value proposition
	Who we serve	11
	How we serve our clients	12
	Why invest in FNB Botswana?	13
5	What drives our business	18
	Material matters	18
	Material matters matrix	20
6	Leadership reports	30
	Chairperson's review	30
	Chief Executive Officer's review	34
7	How we create value	40
	Our business model	40
	Our strategy	42
	Strategy development, approval and
	monitoring	43
	Strategic objectives and focus areas in
	FY2023	44
	Segment review	54
	Our stakeholders	58
	Risk and opportunity management	64

8			Financial Performance	68
					Chief Financial Officer's review	68
9			Sustainability	74
					Approach to sustainability	74
					Enviromental stewardship	79
					How we contribute to economic and social
					development	85
10		Shared value	86
11		Governance and remuneration	106
					Governance	106
					Board committees	123
					Remuneration	132
12		Annual Financial Statements	140
13		Glossary	246
					Shareholder information	248
14
					Notice of Annual General Meeting	250
					Form of proxy	253
					We provide a full glossary for the terms and abbreviations
PG			used in this report on page 246.

Feedback

Your feedback is important to us, and we welcome your input to enhance the quality of our reporting.

Please send your comments or suggestions to [e-mail]

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First National Bank of Botswana Limited 2023 Integrated Report

Introduction to FNB Botswana

2023 performance at a glance

FNB Botswana remains committed to delivering value to our stakeholders through innovation, service excellence and adherence to the highest standards of corporate governance and capital management.

Strategic and shared value created

Value protection

Strong risk focus

Shared value

P3.8 billion

Financial value created

P17.3 billion

Gross loans and advances

(FY2022: P16.1 billion)

P24.2 billion

Client deposits

(FY2022: P22.2 billion)

P1.4 billion

Profit before tax

(FY2022: P1.2 billion)

32t

Ordinary dividend per share

(FY2022: 26t)

32%

Return on equity

(FY2022: 26%)

49%

Cost-to-income ratio

(FY2022: 51%)

Strategic and shared value created

Operational efficiencies

P14 million

Cost reduction through efficiencies

(FY2022: P14 million)

PGRead more about efficiencies realised on pages 46 to 47.

99%

Process mapping, documentation and governance

(FY2022: 98%)

56%

Business process optimisation

(FY2022: 55%)

2.7%

Process automation, digitalisation and robotics

(FY2022: 1.5%)

towards effective risk management

					Further reading on pages 50 and 51.
PG
					Solutionist people
			80%
					Culture Risk Assessment dipstick survey
					(FY2022: 73%)
			3.6%
					Average organisational performance
					rating
					(FY2022: 3.8%)

P726 million

paid in employee benefits

(FY2022: P628 million)

PGFurther reading on pages 44 and 45.

transactional value through CashPlus

(FY2022: P2.0 billion)

P375 million

procurement through local companies

(FY2022: P336 million)

P304 million

taxes paid to Government

(FY2022: P272 million)

P9.3 million

total corporate social investment (CSI)

(FY2022: P6.8 million)

P7.5 million

invested in employee training and skills development

(FY2022: P4.7 million)

PGFurther reading on pages 52 and 53.

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FNB Botswana Limited 2023 Integrated Report

About this report

About this report

We embrace integrated thinking to enhance decision making and deliver on our purpose to be a trusted partner committed to building a shared future of prosperity for all our stakeholders.

Scope and boundary

The report's content is derived from the regulatory universe listed below, the information needs of our financial capital providers, and matters considered significant for value creation. For further details on our materiality process, please refer to page 18.

	Integrated	Annual
	financial
Key reporting frameworks applied	report	statements

International Integrated Reporting Framework

King Report on Corporate Governance for South Africa, 2016 (King IV)1

International Financial Reporting Standards (IFRS)

Botswana Companies Act of 2007, as amended (Cap 42:01) (Companies Act) through the

Registrar of Companies

Non-Bank Financial Institutions Regulatory Authority Act of 2016 (Cap 46:08) through the

Non-Bank Financial Institutions Regulatory Authority

Banking Act of 1995 (Cap 46:04) (Banking Act) through the Bank of Botswana

Corporate Governance Principles for Banks through the Basel Committee on Banking

Supervision

Financial Reporting Act of 2020 through the Botswana Accountancy Oversight Authority

Botswana Stock Exchange Equity Listings Requirements, version 3.4, NBFIRA-approved with effect from 1 January 2019 (Botswana Stock Exchange Listing Requirements)

Board Governance Framework

Guidelines on Corporate Governance for Banks/ Financial Institutions Licensed and

Supervised by the Bank of Botswana on 22 November 2022

1 Copyright and trademarks are owned by the Institute of Directors in South Africa NPC and all of its rights are reserved.

The consolidated and separate annual financial statements (AFS) have been audited by the independent auditors, Deloitte and Touche PG(Botswana). See their report on page 140.

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Materiality

							Our material matters, detailed on pages 18 to 29 shape our strategy and guide the content of this report.
PG

The Board believes that the matters presented in this report provide a well-balanced mix of information, enabling readers to evaluate FNB Botswana's performance and prospects. This report concentrates on material issues, opportunities and challenges that significantly affect FNB Botswana's sustainability and our ability to provide consistent value to stakeholders.

Both the Board and management affirm that all reliable information has been disclosed to the best of their knowledge, and there are no legal barriers to disclosing material information.

Reporting time frames

We use the following general classifications when making timeframe references in this report:

Short term: Less than one year

Medium term: One to three years

Long term: Three to 10 years

Forward-looking statements

This report contains certain forward-looking statements about the Bank's anticipated performance, results, operations, and prospects. Although these statements represent our future expectations and judgements, the opinions are subject to known and unknown risks and uncertainties that could adversely impact our business and financial performance. Undue reliance should not be placed on such opinions, forecasts, or data. Forward-looking statements apply to the date on which they are made. The Bank does not undertake any obligation to publicly update or revise any of its opinions or forward-looking statements, whether to reflect new data, future events, or circumstances. The financial information on which the forward-looking statements are based has not been audited or reported on by FNB Botswana's independent external auditors.

Approval of the integrated report

Several internal stakeholders actively engaged in the development, review and approval process of this integrated report. The Audit Committee submitted both the annual financial statements and integrated report to the Board for approval.

After careful assessment, the Board verified that this integrated report offers a fair and balanced representation of the Bank's performance and prospects. The Board officially approved the report on 12 October 2023.

Balisi Mohumi Bonyongo	John Kienzley Macaskill	Michael William Ward
Chairperson	Non-Executive Director	Independent Non-Executive Director
Doreen Ncube	Ephraim Dichopase Letebele	Jabulani Richard Khethe
Independent Non-Executive Director	Independent Non-Executive Director	Independent Non-Executive Director
Naseem Banu Lahri	Massimo Marinelli	Asad Petkar
Independent Non-Executive Director	Independent Non-Executive Director	Independent Non-Executive Director
Louis Frans Jordaan	Steven Lefentse Bogatsu	Mbako Mbo
Non-Executive Director	Executive Director (Chief Executive Officer)	Executive Director (Chief Financial Officer)

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First National Bank of Botswana Limited 2023 Integrated Report

About FNB Botswana

Who we are

FNB Botswana is one of nine licensed commercial banks in Botswana. The Bank provides individuals and businesses with a full range of integrated financial solutions. We operate in the retail, commercial and corporate segments. FNB Botswana is the largest company on the Botswana Stock Exchange (BSE) by market capitalisation and the largest bank in Botswana by balance sheet, profitability and client base.

Our Purpose	Our purpose is to be a trusted partner committed to building a shared future of prosperity.
Our Vision	We strive to be the world-class financial solutionist of choice, consistently delivering an unmatched
client experience.

Mission

Our empowered people provide vibrant spaces and use cutting-edge platforms to create sustainable shared value for all.

Creating shared value for our key stakeholders:

Clients

Employees

Shareholders

Regulators

Suppliers

Media

Communities

Organised labour

Government

Keeping our promises to our stakeholders

Deliver the best	Care for the	Build an	Create a culture	Speak your mind	Avoid intellectual	Fight for ethical
results for our	business as if it	environment	of sharing	and encourage	laziness and	conduct and
customers,	were your own	where everyone's		others to do the	question the	transparency
society and each		views are valued		same	status quo
other

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What we do

We offer a diverse range of banking and related services accessible through our branches, automated teller machines (ATMs), automated deposit teller machines (ADTs), point-of-sale (POS) devices, CashPlus agency banking and digital banking, including Cellphone Banking, Online Banking and the FNB App, providing extensive and comprehensive banking options. The Bank has a toll-free24-hour Contact Centre and offers personalised banking services.

Our innovative CashPlus agency model expands our reach to underserved areas, enabling FNB Botswana clients to conveniently deposit, withdraw cash, purchase airtime and electricity at any FNB CashPlus agent within their community, thus reducing the necessity to visit a branch or ATM.

Operating corporate structure

FirstRand Limited

(SA)

FirstRand

FirstRand

FirstRand

FirstRand

FirstRand

International

Investment Holdings

Insurance Holdings

Bank Limited (SA)

EMA Holdings Limited

Limited(Gurnesey)

(Pty)Ltd (SA)

(Pty) Ltd (SA) 100%

100%

(SA) 100%

100%

100%

First National Bank

Holdings (Botswana)

Limited 100%

First National		First National Bank		FNB
Insurance Brokers		of Botswana Limited		Nominees (Pty)
100%		70%		Limited 100%

First Funding (Pty)		Financial Services		First National
	Company (Pty)		Insurance Agency
Limited 100%
	Limited 100%		(Pty) Limited 100%

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First National Bank of Botswana Limited 2023 Integrated Report