Standard Chartered Bank Botswana Annual Report 2014 · to P1 073.4m from P1007.2m in 2013 to P406.5m from P405.7m in 2013 to 71.42 thebe from 67.04 thebe in 2013 in 2014 from 57.4%

Standard Chartered Bank Botswana

Annual Report 2014

Driving investment, trade and the creation of wealth across Asia, Africa and the Middle East

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Company overview

Business, People and Sustainabilityreview

Corporate Governance

Financial Statements and notes

Supplementary information

02 Performance highlights 04 Our Strategy 05 Our Business Model 06 Chairman’s statement 08 Chief Executive Officer’s review

10 Retail Clients 12 Commercial Clients 14 Corporate & Institutional Clients 16 People 20 Sustainability

24 Corporate governance 26 Board of Directors 28 Senior Management

32 Director’s Report 33 Board’s approval 34 Independent auditor’s report 35 Statements of Profit and Loss and other comprehensive income 36 Statements of financial position 37 Statements of changes in equity 38 Statements of cash flows 41 Notes to the financial statements

93 Notice to members 94 Proxy form

1

toP1073.4mfrom P1007.2m in 2013

toP406.5mfrom P405.7m in 2013

to71.42thebefrom 67.04 thebe in 2013

in2014from 57.4% in 2013

toP1.4mfrom P23.7m

Net Revenue up by

Profit before taxation up by

Dividend per share up by

Cost to income ratio up to

Net impairment loss on financial assets down by

6.6%

0.2%

6.5%

62.0%

93.9%

Performancehighlights

2 Standard Chartered Bank Botswana Annual Report 2014

TOTALEQUITYvsCAPITALADEQUACYRATIO

1,250 25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

1,150

1,050

1,200

1,100

2013 2014

TOTAL EQUITY

CAPITAL ADEQUACY RATIO

RETAILBANKING

800.0

600.0

400.0

200.0

700.0

500.0

300.0

100.0.0

(100.0Total Income Total Cost Net Bad Debt

2013 2014

CORPORATEANDINsTITUTIONALBANKING

400.0

300.0

200.0

100.0

350.0

250.0

150.0

50.0.0

(50.0Total Income Total Cost Net Bad Debt

2013 2014

COMMERCIALBANKING

90.0

70.0

50.0

30.0

80.0

60.0

40.0

20.010.0

.0Total Income Total Cost Net Bad Debt

2013 2014

CONsOLIDATEDBANK

14,000

10,000

6,000

12,000

8,000

4,000

2,000

.0Total Assets Loans & advances

to customersDeposits from

customers

2013 2014

CONsOLIDATEDBANK

1200.0

1000.0

800.0

600.0

400.0

200.0

0.0Revenue Operating

ExpensesImpairmentmovement

Profit After Taxation

2013 2014

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3

Ourstrategy

Ourambition The world’s best international bank

Ourstrategy We bank the people and companies driving investment, trade and the creation of wealth across Asia, Africa and the Middle East.

Ourbrandpromise Here for good

Ouraspirations

Ourvalues

Ourcommitments

RelationshipsBuild trusted relationships with the people, companies and institutions shaping our markets’ future

Investment Play a leading role in facilitating investment and deepening financial markets

Trade Become the undisputed leader in commercial payments and financing for and in Asia, Africa and the Middle East

Wealth Be recognised as a leader in growing and protecting our clients’ wealth

Relevant scale Establish sufficient scale and balance sheet and franchise strength to be relevant and influential in our key markets

Courageous

We take measured risks and stand up for what is right

ResponsiveWe deliver relevant, timely solutions for clients and customers

InternationalWe value diversity and work as One Bank

CreativeWe innovate and adapt, continuously improving the way we work

TrustworthyWe are reliable, open and honest

Colleagues A great place to work, enabling individuals to grow and teams to win

Society A force for good, promoting sustainable economic and social development

Investors A distinctive investment, delivering consistently superior performance via disciplined growth

Regulators A responsible partner with exemplary governance and ethics


Ourbusinessmodel

Our business model is focused on suitable value creation

We build deep relationships with our clients

• Retail Clients

- Individuals and small business

• Commercial Clients

- mid-sized companies

• Corporate & institutional Clients

- Large companies and financial institutions

And provide solutions that meet their evolving needs

• Retail Products - deposits, savings, mortgages, credit cards and personal loans, and other retail banking products

• Wealth Management - investment, portfolio management, and advice and planning services

• Transaction Banking - cash management, transactions, securities holdings and trade finance products

• Corporate Finance - financing, strategic advice, mergers and acquisitions, and equity and principal financing

• Financial markets - investment, risk management and debt capital services

Through these activities, we generate income, profits and return on equity

• Income

Net interest income,

fee income and trading income

• Profits

Income gained from providing

our products and services minus expenses,

impairment and taxes

• Returnonequity

Profit generated relative to the equity invested

We add Value for our clients by using our distinctive strengths

• Brand - we have 150 year history in some of the

world’s most dynamic markets and our here for good brand promise captures what we stand for

• Capital - we are strongly capitalized and highly

liquid, allowing us to support our clients for the long term

• Local depth - We draw upon deep local knowledge and experience in the markets in which we operate

• Network - we collaborate to support clients across our clients segments, products groups and geographies

• People - our diverse and inclusive workforce is committed to the highest standards of conduct and integrity

We ensure that the value is sustainable by focusing on the three key priorities

• Being a responsible company - Managing our operations to deliver long term value of our stakeholders

• Contributing to sustainable economic growth - Ensuring that our core business of banking supports sustainable growth and job creation

• Investingincommunities - working with local communities to promote social and

economic development

And create long term value for a broad range of stakeholders

• Clients-enabling individuals to grow and protect their wealth and helping businesses

to invest, trade and expand

• Shareholders- delivering long term

sustainable value for investors

• Employees- providing a great place to work

• Society- supporting growth and job creation, delivering financial innovation and helping to address the most pressing challenges facing the communities in which we work.

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5

Chairman’sstatement

Key Financial highlightsThe outlook for the domestic economy remains positive. Real GDP is estimated to grow at a rate of 4.9% in 2015,

driven in part by the non mining sector, compared to the

4.4% growth rate recorded in 2014. The reduction in fuel

prices seen in December 2014 and February 2015 put

downward pressure on inflation, resulting in a breach of

the lower end (3%) of the target band. Inflation for February

was reported at 2.8%. The positive domestic economic

outlook as well as the inflation forecast provided scope for

monetary easing, and as such Bank of Botswana reduced

the bank rate by 100basis points taking it to 6.5% from

7.5% in February 2015.

Downside risk to the forecasted numbers emanates from theslowlyrecoveringexternaldiamonddemand,recurringdroughtsandaconstrainedmarketoutlet forAgriculturalSector.Despitethesechallenges,Botswana’seconomicgrowthisinlinewiththeSADCregiongrowth forecastandcontinues tosurpass thatoftheword.

Business and Financial Position ReviewThe Bank delivered a strong set of results for 2014 despitepersistentchallengesinthemacroeconomicenvironmentandinparticular,thebankingindustry.Theinterestrateenvironmentandintensemarket competitioncauseda rapiddecline inmargins.Howeverthebankcontinuestodemonstrateresilience,showingstrongbalancesheetgrowthandincreasingdiversityofincomestreams.TheBankregisteredsignificantachievementsacrossallthesegmentsandfunctionsin2014.Incomegrewby7%whileloans and advances to customers increased by 29% and thedepositsgrewby27%toP10billion,demonstratingthestrengthofourpropositionandcapabilities.

g Totalincomeis7%above2013drivenbythegrowthintheRetailClientsandCorporateandInstitutionalClientssegments.

g Thebalancesheetgrewby28%withtheloanstocustomersincreasingby29%to8.1billionanddepositsrisingby27%toP10billion.

g Thequalityoftheloanbookisgoodandimpairmentwaswellmanaged,decreasingby94%yearonyear.

g StrongsupporttoourCorporateandInstitutionalClientswitha75%increaseinloansandadvancestothissegment.

g Operatingexpensesincreasedby15%largelyduetooneoffstaffrelatedcosts

g TheBankcontinuestodeliverstrongshareholdervaluewithreturnonequityat27.7%

g Thebankremainswellcapitalisedandliquid.

Duringthecourseoftheyear,thebankcontinuedtoimplementthe revised strategy and organisational structure and addedanothersegment,CommercialClients(CC)toitsportfolio.

We remain focused on our strategy to support our clients and customers by combining our global expertise and local knowledge with robust management of risk. Our fundamentals continue to be strong and we are well positioned for further growth

Professor Bojosi OtlhogileChairman of the Board

Normalised earnings per share

P106.98thebe2013: P107.78 thebe

Declared Dividend

P213million2013: P200million


Iwould like to thankourcustomersonceagain for their loyaltythroughout the year, our staff, for their hardwork andongoingcommitment to Standard Chartered. I wish to also extend ourappreciationtotheshareholdersfortheirsupportduring2014.

ProfessorBojosiOtlhogileChairman of the Board

CCwillfocusspecificallyongrowingthemediumsizedenterprisesleveraging our product capabilities to add value to our clients.Sinceitslaunch,CCcontributedpositivelytoperformance.

The business has also made good progress in growing otherrevenue streams resulting in a well diversified asset book.Significant investments were made in the Retail Segment toimprovethebanksdigitalcapabilities,enhancingconveniencetoclients.

Our refreshed strategy has placed us in a better position torespond to the changing environment and the evolving needsof our customers. The Bank will continue to leverage the Onebankstrategytoaddvaluetocustomersandclients.Ourbrandpromise: Here for good, our values and commitment remainunchanged.Wehaveredesignedourstrategicintenttocapturetheessenceofwhatwestandfor,whatourstrategyfocusesonandwhatweaspiretoaccomplish.

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7

ChiefExecutiveOfficer’sreview

The Bank delivered a good performance in 2014. During

the second quarter, the business launched its refreshed

strategy and re-organised its structure, to create three

customer segments, supported by five product groups,

allowing the business to better align itself with client

requirements and opportunities in the market. We expect

to continue to realise the benefits of this approach in

the medium to long term. This ongoing commitment to

enhancing our support to our clients enabled the business

to continue to show resilience during a difficult trading

environment, characterised by heightened competition

and reduced margins, to deliver 7% growth in income and

29% growth in loans and advances to customers.

Business Performance

OurRetailClientssegmentperformedwellduringtheyearunderreview,consideringthechallengingtradingenvironment.Incomegrew8%over2013,on thebackofstrongyearonyearassetgrowth of 16%, demonstrating the strength of our offering.Furthermore,thesegmentcontinuedtomakestridesingrowingassetsinotherproductlines,resultinginabiggercontributionfromMortgageLendingandBancassurancetooverallperformance.

TheimpactoftherevisedstrategyontheRetailClientssegmenthas meant greater collaboration and integration in our clientengagementapproach,toallowustoserveourcustomersbetteracross the value chain. It has also resulted in the creation oftheBusinessClientssub-segment,whichservesthesmalleroftheSMEclients,offeringtailoredsolutionsandmorepersonalisedservice.

Duringtheyearunderreview,wecontinuedtomakeinvestmentsinour infrastructureanddigitalcapabilities, launchingadditionalonline solutions and introducing new products for the middlemarket.

Aspartofthenewstrategy,ourWholesaleBankingbusinesswasorganised into the Corporate and Institutional Clients segment(C&IC), serving our Global Corporates, Local Corporates andCommodityTradersandAgricultureclients,withbetteralignmentof the structure and portfolio to client requirements. C&ICdelivered a strong performance in 2014, with Total Revenueincreasingby12%,drivenbygoodmomentumfromTransactionBankingandFinancialMarkets.Thesegmentcontinuedtofocuson delivering value adding solutions to clients, leveraging ourcapabilitiesandsolidunderstandingofthemarket.Onceagain,C&ICclosedanumberofsignificanttransactionsduringtheyear,supportingkeyclientsinstrategicsectorsoftheeconomy.

OurCommercialClientssegment,whichwaslaunchedlatelastyear and focuses on Medium Enterprises, has been off to agoodstart,deliveringsatisfactoryresultsonthebackofaclearpropositionandstrongclientportfolio.Thesegmentwillbenefitfromproductpartnercapabilities,allowingtheBanktofullyengagemediumsizedclientsacrosstheirspectrumofrequirements.

We have refined our strategy and

re-organised the business to

strengthen capacity and enable

greater focus on our customers

Moatlhodi LekaukauChief Executive Officer

Net Revenue

P1073.4million2013: P1007.2 m

Net impairment on financial assets

93.9%to P1.4m from P23.7m

Key Financial highlights


Our staff continue to provide assistance to less privilegedmembers of their communities through various initiatives. TheBank also continues to encourage staff members to use theirvolunteeringdaystomakeadifferenceinthecommunity.

Outlook

Thetradingenvironmentin2014waschallenging,withheightenedcompetitionplacingimmensepressureonmarginsandultimatelyimpactingourprofits.Weanticipatethatthesemarketconditionswillpersistin2015.Thebusinessistakingthenecessarystepstorespondtothesepressuressothatwecancontinuetosupportour clients and deliver value to our shareholders. We believethat our re-freshed strategy and changes in our organisationalstructurepositionuswell tomeetourclients’needsbetteranddeliverlongtermgrowth.

We remain encouraged by the stable outlook in the economyand the commitment by government stakeholders to continueto support sustainable development through various initiatives.Askeyparticipants in thisprocess, theBankwill endeavour tocontinue to support its clients through the right solutions andsustainablelendingpractices.

Conclusion

Oursuccesswouldnotbepossiblewithout thesupportofourloyalcustomers.Iwouldliketothankallourclientsforchoosingto work with us during 2014 and I look forward to a fruitfulpartnership in the coming year and beyond. I would also liketoextendmygratitude toour regulators and investors for theirsupportandcollaboration.Lastly,IwouldliketothankourBoardof Directors, Management, and Staff for their hard work andcommitmenttowardsthesuccessoftheBank.

MoatlhodiLekaukauChief Executive Officer

Our Staff

In2014,wecontinuedtofocusonstaffdevelopmenttoensurethat we have the competencies required to meet our targetson an ongoing basis. This year, we made three ExecutiveManagement appointments, being the Head of RC, Head ofTransaction Banking and Head of Commercial Clients frominternalcandidates,demonstratingourcommitmenttodevelopingtheskillsofourpeople.WealsosawthreeofourstaffmemberssecurelongtermassignmentsinLondonandKenya,whichwillhelpenhancetheirtechnicalcompetenciesandleadershipskills.

Inadditiontosupportingonthejobtraininginitiatives,thebusinessalsocontinuestoofferformaltrainingprogrammestostaffthroughthe local Learning Academy as well as other programmes runfromvariouscentresacrosstheGroup.

Risk and Compliance

Risk and Compliance continues to be an important priorityand is integral to how we conduct our business. We remaincommittedtoenhancingourcontrolenvironmentonasustainedbasis,conductingregularreviewstomeasureprogressandaidimprovement.

We have also worked closely with our regulators as changesare effected in the regulatory environment to ensure ongoingcomplianceandcontinue towork towardscomplete readinessforfullimplementationofBaselII/III.

Sustainability

TheBankcontinuedto invest incommunity initiativesalongourmain areas of focus, being Health, Education and Youth. Oneof thehighlightsofoursustainability initiatives in2014wasourpartnership with Women’s Finance House Botswana (ThusangBasadi).ThusangBasadiisanonprofitorganisationthathelpswomenentrepreneursgrowtheirbusinessesthroughtheprovisionof small loansand technical assistance.Our collaborationwithThusangBasadiincludesadonationofP1millionoverthreeyearsfortheorganisationtousetoextendcredittosmallbusinessesownedbywomenandemployeevolunteeringtoimpartbusinessrelatedskillsandknowledge.Preventionofblindnesscontinues tobean important theme inoursustainabilityagenda,andin2014,therewereanumberofinitiativesthattheBankundertookinthisarea.KeyamongthemisongoingworkbyAddenbrookesAbroadaspartoftheSeeingisBelievingPhaseVproject. This year, a lot of progresswasmadeintrainingnursestoprovidediabeticretinopathyscreeningfordiabeticpatients.

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RetailClients2014Review

Our Strategy

We have refreshed our strategy to accelerate our shift to

Priority and Business Clients as we improve our efficiency,

risk management and further strengthening staff conduct.

Our refreshed approach is based on three pillars:

g Building segment-driven momentumg Sharpening our geographical focusg Leveraging on our global scale

Transformation

Faced with a rapidly changing environment, we transformedour business from the Consumer Banking business to theRetailClients segmentaspartof theOneBankStrategy.Withthis transformation, we are now focusing on Business Clients,PriorityClientsandPersonalClients.Wehavetransferredagoodnumber of medium businesses which we supported to growovertheyearsundertheerstwhileSMEbusinesstotherecentlyestablishedCommercialClients.

2014 Overview

Itwasundoubtedlyanexcitingyetchallengingyearthatsawthemarketencounteringashortageinliquidityresultinginanincreaseinthecostoffunding.Wecontinuouslyworkedtoenhanceourclient value propositions across our segments, intensifying ourfocusondelivering thebest solutions.Weofferedour flagshipTemasavingsaccountwithinterestupto5%,whichishighestinthemarketonsimilarproducts.WeincreasedthemaximumloanamountsonMortgagesandextendedloantenoronAutoLoans.Forconvenienceandinresponsetoourclientsneeds,wealso

startedfinancingnewcarsboughtinSouthAfrica.Forpeaceofmind,we launched various life insurance solutions to cater forthedifferentneedsofourclientsacrossallsegments,includingBusinessClients.

Digital by design

Weprogressedwellin“digitisation”,havingmigratedthebulkofourtransactionstoourvariousdigitalplatforms.Furthermore,welaunchedOnlineAccountOpening,Local&InternationalTransferAutomationandthecapabilitytoviewloansonOnlineBanking.ThisisinadditiontoourworldclassStraighttoBankplatformforourBusinessClients.Allthesetranslateintoaddedflexibilityandconvenienceforourclientsasmostof thetransactionscanbeperformedwithouttheneedtovisitthebranch.

Recognition

Ourclientscontinuedtorecogniseoureffortsingivingthemqualityservice.WewereonceagainratedthemarketleaderinBranchBanking,RelationshipManagementandtheCallCentreacrossoursegmentsbytheMarketProbeAnnualReportfor2014.Thisis attributed to our 24 hour Call Centre; a dedicated team tohandleBusinessClientsqueries toensurequick resolutionsofissues;extendedbankinghoursinourGameCityBranchandourremarkableuptimeonATMs.

We continuously worked to enhance our client value propositions across our segments, intensifying our focus on delivering the best solutions.

Pedzani TafaHead of Retail Clients

Operating income - Retail Clients

P666.7million2013: P615.6 million

Loans and advances to customers

P5112.6million2013: P4 412.5 million



Employee Volunteering

We embarked on various Employee Volunteering initiatives,focusedmainlyonFinancialLiteracy,Seeing isBelieving,Livingwith HIV/AIDS, Education, Health and the Environment. Theseactivities were spread across the country where we have afootprint.ThiswasindeedinthespiritofbeingHereforthePeople.

Outlook

Goinginto2015wewillfullyleverageontheefficienciescreatedby the reorganisation of our business. Our acquisition andrelationshipteamshavebeenstrengthenedtoensureweadapttothecompetitiveenvironment.Wewillfocusondeepeningtherelationshipswithourclients, launchingexcitingdigitalsolutionsthatwill improveourclients’experience,andsustainingoptimallevelsofproductivityinordertogivethebestservice.

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CommercialClients2014Review

Commercial Clients (CC) was established in October 2014

and consists of erstwhile Small Medium Enterprises clients

(SME) clients and some clients from our Middle Markets

(MM) part of the Corporate & Institutional Clients segment

(CIC). CC was initiated in line with our ‘One Bank’ strategic

intent of ‘Banking The People and Companies, Driving

Investment, Trade and Creating Of Wealth across Asia, Africa

& The Middle’

ThedivisionisbrokenupintothreemainclientsegmentsbeingMiddle Markets, Medium Enterprises (ME) and High ValueSmallBusiness(HVSB)clientswithaturnovercapstartingfromUSD10M toUSD30M.Clients thatarebelowUSD10Mwillbeassisted in the Retail Clients (RC) division under a unit calledBusiness Clients (BC) This realignment of the businesses hasseenusbeingabletoaddressaclientsegmentwhichwasinthepasteither too largeforSMEor toosmall forCIC.Policiesandprocedureshavebeenalignedaccordinglytoensurethatweareservicingtheseclientsandgivingthemawidearrayofproductsthroughourproductpartners.

In thepast twoyearswebuiltaverygoodSMEstoryandwewereable toassistasignificantnumberofclients in theHVSBpartofthebusiness.WearestillcommittedtoassistingtheSMEsector which will be serviced fully in the CC under the HVSBsectorandalsounderBCintheRCspace.Webelievethatthesegmentationwilladdvaluetoourclientsintermsofthebelowmentioned;

g Sharpeningourfocusonservingourclientsacrossallsectorsandbeingabletoidentifytheirneedsatanearlystage

g Leveraging our Global network in order to give our clientsaccesstomarketsinAfrica,AsiaandtheMiddleEast

g SuperiordeliveryofproductsuitesthataretargetedtowardsclientswithinthedifferentsectorsthatweBank

Ourbusinessmodelisrefreshedandreadytoaddvaluetoourclientsandweareexcited togivesuperiorservice throughourexperienced team. We pride ourselves as being the marketleaderintermsoftrainingandourteamiswellequippedtoassistclientseffectivelyandefficiently.WeareagrowingbusinessandweseeanopportunitywithinthemarketinviewofthecontributionthatthesectorthatweassisthastooverallGDP.AsaBankthathasfocusinAsiaAfrica&theMiddleEastwearefullyalignedtotheexportcorridorofourclientsandareabletoalignourservicestotheirbusinessrequirements.Withourstrongofferingintradefinancesolutionswebelievewewillhaveacompetitiveedgeinthisarea.

Ourclientsplayanintegralpartintheeconomyastheysupportallmajor sectorsandspan fromsmall entrepreneurs tomiddlemarket companies. With our new model we intend to providestableand trustworthyservice inorder toenableourclients tohaveasmoothtransitionthroughthelife-cyclefrombeingasmallcompanytoamiddlemarketcompany.

Our competitive edges; well trained team, global network andaccesstofastgrowingmarketswhichstrengthensoursegmentconnectivityacrossmajortradeandinvestmentcorridors,allowingustoserveourclientswellanddeliveringouraspirations.

Liability base

P2172.3millionLoan advances

P352.0million

As a Bank that has focus in Asia Africa & the Middle East we are fully aligned to the export corridor of our clients and are able to align our services to their business requirements.

Kesego MokgetseHead of Commercial Clients



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CorporateandInstitutionalClients

Corporate & Institutional Clients continues to add value to

our corporate clients through our deep and intrinsic

knowledge of our clients. This has been achieved through

tailor made solutions to our clients on the back of deepened

client relations, world class systems, and leveraging on

our local and international expertise in fostering and

maintaining long term relationships with our clients.

Business update

Revenuegrowthwasmodestat12%growthYearonYear.Theloanbookhadstronggrowthof75%YearonYearonthebackofstrongpipelineconversion.

Our custody business revenue growth was 24% Year onYear. Transaction Banking contribution was 17% Year on Yearattributabletoourfocusonnonfundedincomeandtailormadetrade products. Financial Markets continued their consistentstrongperformanceat15%YearonYearonthebackofincreasevolumesandcloseclientrelationships.

Straight2Bank continues to be a key source of competitiveadvantagethroughthefacilitationofefficientandcost-effectiveprocessingofelectronicpayments,tradeandforeignexchangetransactionstoourclients.

2015

Our Strategy going into 2015 will be to increase our clients’access to our broad and unique solution offerings across allsegments in thebank, increasedefficiencyonourworldclasssystemsandleveragingonourinternationalcapabilitiestoaccesstoothermarketsthroughonecentralpoint.

Maintenanceofoursoundandliquidbalancesheetwillbecriticaltosupportingexistingandprospectiveclients.

Our focus is to continue to build and deepen key clientrelationshipsby increasingcrosssellopportunities forFinancialMarketsandTransactionBankingproducts.

Strong investment and support for our talent remain key tobuildingthenextgenerationofleaders.

AboveallwecontinuetoliveandrecommitourbrandpromisetobeHereforgood.

Operating income - Corporate &Institutional Clients

P360.0million2013: P320.0 million

Loans and advances to customers

P2663.2million2013: P1 523.2 million

Deepening business relationships by enhancing and broadening our client offering, leveraging our local and network expertise in order to create and maintain long-term client relationships.

Benson MadisaActing Head of Corporate & Institutional Clients



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15

People

Highlights for 2014g Launched My Voice, a new employee engagement survey,

to identify and benchmark the engagement drivers of our diverse, multi-generational workforce

g Deepened the focus on employee conduct and risk and control processes, in relation to performance and pay

g Strengthened and refreshed the senior leadership team and localised 90% of the executive management positions.

Becoming One Bank

On 1st April 2014, we rolled out our new One Bank strategywith a refined organisational structure that concentrates on 2maincustomersegmentgroups -RetailClientsandCorporateandInstitutionalClients.ThisallowsStandardCharteredtobringmorefocustothespecificclientsegmentsandservetheirneedsfrom end to end in a seamless manner. The reorganisation inthefirsthalfof2014wasacriticalstepinrealigningourprioritiestodeepenourorganisationalcultureandstrengths inconduct,values, leadership and diversity and inclusion. We changedour organisational structure to drive operational efficiencies,collaboration and long term employee engagement which willleadtoregainingourperformancemomentumandensuringthatweremainontracktoachieveouraspirations.

Initiativestobuildasustainableskillsecosystemforthebank-

Here for AmbitionThebankcontinuestobuildthenextgenerationofleaderswhilstreinforcing learningandcareergrowth toensurea richpipelineof talent for Botswana through Special Talent ManagementProgrammes.

Themainobjectiveforthisapproachisto:

g Accelerate the readiness of African successors to take upSenior Leadership roles through enhanced engagement,visibilityandstructureddevelopmentinitiatives

g Retaintalenttoprovidecriticalleadershipbenchstrength

g ProducethefutureleadersoftheBankinAfrica

Success stories:

Emerging Leadership Programme (ELP)g The Emerging Leadership Programme is a home grown

development programme that aims to provide talentedindividuals across Africa with the skills, experience andexposure required to develop into successful leaders. Thisprogrammeistargetedatmiddlemanagementemployeeswhoarealreadyexcellingintheirportfoliosandhavedemonstratedpotentialtooperateathigher levels.Theprotégésaretakenthrough a leadership and personal development journeyand receivecoachingandexposure to senior leadership intheBank.Botswanaisproudtohavesix(6)talentedfuture


International Graduates (IG) programmeg This is a one (1) year programme which exposes top

selected graduates from all over the world to a variety ofcareerpathsintheBankbyJobrotationindifferentbusinessunits. Upon completion of the programme, graduates aredeployedinternationally.In2013,2Batswanagraduatesweresuccessfully deployed inNewYork andBeijing respectfully.In2014thebankproudlygraduatedfour(4)graduateandallhavebeenofferedpermanentpositions.

Fast Track Graduates programme, 2013 Intake

The programme is aimed at improving productivity, quality andcustomer service and as such the participants go through arigorous and intensive programme involving on the job training(OJT),jobrotationandtailoredandtargetedtraining.Fasttrackisatwelve(12)monthprogrammetargetedatentryleveluniversitygraduates.Three(3)graduateswereenrolledintheprogrammeandtodatetwo(2)graduateshavesuccessfullycompletedtheprogrammeandhavebeenabsorbedintodifferentdepartmentsofthebank.

Interns

The Bank is increasingly engaging interns through theGovernmentInternshipprogrammeforentrylevelpositions.Thisapproach provides valuable on the job experience for talentedyoungpersonswhoareexperiencingdifficultyinenteringthejobmarket.In2014thebankengagedtwelve(12)internstosupportalmostallfunctionsofthebankacrossourbranchnetworksandabsorbedallofthemattheendof2014intopermanentpositions.In2015thebankhasengagedthirtysix(36)interns.

Passing the Torch

TheBankhasarobustsuccessiondevelopmentandlocalisationplanaimedatincreasingbenchstrengthatbothexecutiveandnonexecutivelevelssothat ithassufficient“readynow”candidatestoreplaceplannedandunplannedlossesofkeyleaderssothatthefuturecontinuityandperformanceoftheBankisnotplacedat risk.TheBankhasbeenverysuccessful in thisarea in thatithasfilledvacanciesthroughinternalpromotionsfromthehighpotentialpool.Wehadalsosetourselvesatargettolocalize70%oftheExecutiveManagementpositionsby2016,andsofartheBanklookssettoexceedthistargetasithasalreadyachieved90%ofthetarget.

Service Recognition Programme - “Here for Good”

AspartoftheBank’soverallemployeeengagementstrategy,theBankrecognisesemployeesfortenureandcontinuousyearsofdedicatedservicetotheBank.RecognisingemployeesfortenureisanexcellentwayforustoshowourstaffthattheBankvaluesthe ongoing dedication and contributions of individuals. Thisseemsespeciallyimportantnowadaysgiventhatcurrentstatisticsshow that the averageemployeechanges jobsevery3 years.Andcompaniesthattouthighretentionhavebeenshowntohavehighersalesrevenueandhigherprofitmargins. It is inthisspiritthat in December the Chief Executive Officer recognised staffmemberswhohaveservedthebankforfive,ten,fifteen,twentyfive, thirty and thirty five years for their loyalty and dedicatedyears of service: to the success of Standard Chartered Bank,Botswana.Weparticularlywanttorecognisestaffmemberswhohaveachievedthetwentyfive(25),thirty(30)andthirtyfive(35)yearsservicemilestone.Theyare:

Service Name Milestone

Mr. Fox Gaebonwe Rammokolodi 25

Mr. Ratsie Kabelo Opaletswe Mokiri 25

Mr. Killy Molefe 25

Ms Tsogang Letty Sebinyane 25

Mr. Joseph Masego Radipata 25

Ms. Nkhana Molapisi 25

Mr. Onalenna Reuben Tshukudu 25

Ms. Tshadimme Nduna 25

Mr. Vincent Mbwe Sefo 25

Ms Pauline Tsolope 30

Mr. Tshambani Wire Gwakuba 30

Ms. Elizabeth Matenge 35

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People(continued)

Our priorities in 2015g Raise thebaronconduct toensureemployeesunderstand its criticality and are able to respond appropriately to the increasingly complex regulatory environment in which we operate

g Strengthen employee engagement and increase focus on delivering our network through even greater collaboration

g Continue to strengthen our leadership team so as to build capabilityandcreatecrediblesuccessionplans

g Supportourclient-centricstrategywithareviewofenablers such as performance management, coaching, and career planningprocesses

Talent Acquisition

In Talent Acquisition getting the basics right will be key to ourdelivery;wewillalsofocusonbuildingourTAcapabilityaswellasimprovingourhiringexperiencethroughtheimplementationoftheGroupEmployeeValuePropositionandinternationalmobility

Performance Rewards Benefits Delivery

We will review the benefits proposition and enhancements,supporttheimplementationoftheOperationalRiskFrameworkinTier1/2CountriesinAfrica,drivecontinuouscomplianceinHRand implement theMigrationof identifiedprocesses toHumanResourcesSharedCentre.

Learning

ForthisfirsttimewehaveaHeadofLearningforallofAfricaandthis will certainly shift the dial in capability development. Forthis year we will focus on building capabilities in the LearningAcademies,ensurehighqualityexecutionoflearninginterventions.

Employee Relations

We will rollout and embed Employee Relations products,processes and Risk Registers for Grievance Management,Disciplinary Management, Collective Consultation as well asPerformanceImprovementPlans,strengthenunionrelationshipsin order to improve negotiations, budget management andlitigationsaswellasstreamlinetheAfricaexitprocessesandalignthemtotheGroupapprovedexitprocesses.


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sustainability

Sustainability is integrated into how we do business. It guides everything we do, from the services we provide to our clients, to the way we run our bank and support the local communities in which we live and work.

Our approach focuses on three areas:

1. Contributing to sustainable economic growth - supporting our clients through our core business of banking.

2. Being a responsible company - managing our business and operations to deliver long-term value for our shareholders and society.

3. Investing in communities - working with our local communities to promote social and economic development.

Contributing to sustainable economic growth

Throughourbusinessofbanking,wefueleconomicactivityandjobcreationinourmarkets.Thecreditandfinancialservicesweprovidehelpbusinessestosetup, tradeandexpandandhelppeoplebuy theirownhomes,saveandprotect theirwealth forthefuture.Webelievethatbyprovidingtheseservicesefficientlyand responsibly, we can make a real impact on sustainabledevelopmentinourmarkets,contributingtoeconomicgrowthforthelongrun.

Ourfinancingsupportshouseholds,businessesandeconomies.The lending we provide to people and businesses helps tosupport jobcreation andeconomicdevelopment.Weare alsocommitted to extending access to finance for individuals andsmall businesses that have traditionally been underserved byfinancialinstitutions.

Thebank’seconomiccontributiontotheeconomyofBotswanahas been the culmination of significant support in key sectorssuchastheminingsector,trade,commoditiesandSMEs.Usingourwidenetwork,wealsolinkBotswanatoAsia,MiddleEastandtherestofAfrica.

Small and Medium Enterprises remain the foundation forsustainableeconomicgrowth.Theyarethedrivingforcebehindinnovation,regionaldevelopmentandjobcreation.

In recognition of this, we launched our Business Clients Sub-segmentinBotswanainAugustlastyear.WhilethiswasapartoftheformerSMEbusiness,wecreatedthissegmenttohelpcaterforthespecificneedsofsmallercompanieswhichrevolvearoundspeed,simplicityandtransactionbanking.

As part of the Bank’s governance approach of visiting markets to validate the refreshed strategy and gain an on-the-ground understanding of the opportunities and risks faced by the markets, Diana Layfield, Regional CEO, Africa, Standard Chartered visited Botswana in July. In this picture Diana is being taken through the processes at Botswana Meat Commission, a key client.

Contributing to sustainable economic growth; Through our business of banking, we fuel economic activity and job creation in Botswana


Our Clients within this category are those with annual salesturnover of less than $10 million engaged predominantly inManufacturing, Trading and Professional services. Our valueproposition isbuiltonstrong themesaroundProducts,ServiceandChannelswhichwillcatertotheneedsofSMEs.

Currentlyweserveover15,000SMEclients in thecountry,byplacingourexpertisegained fromacrossour footprintsat theirdisposal;helpingthemtodeveloptheircapacityandgrowtheirbusiness.AsatDecember2014,wehaddeliveredUSD27millionworthofcredittoSMEs.

We recognise that managing and protecting limited naturalresourcesisessential tomaintainingeconomicgrowthoverthelong term. Our Position Statements set out the environmentalandsocialstandardsthatweexpectofourselvesandencouragefromourCorporateand Institutional,CommercialandBusinessClients.OurrefreshedPositionStatements,whichare20intotal,cover renewable energy, infrastructure, agribusiness, fisheriesand chemicals and manufacturing. While our preference is toengagewithclientsandcustomers tomeetourstandards,wewill turndown transactionswherecertain environmental and/orsocialrisksandimpactscannotbesuccessfullymitigated.

Being a responsible company

Ourcommitmenttosustainabilityisnotjustabouttheeconomicactivity we finance, but also about how we run our business.Ourfocusisoneffectivecorporategovernance,underpinnedbystrongprocessesand the rightvaluesandculture.Bycreatingagreatplace towork forourpeople, sellingourproductsandservices responsibly, tackling financial crime and mitigating theenvironmentalimpactofouroperations,webelievethatwecanmakeagreaterpositivecontributiontothecommunitiesinwhichweoperate.

Weaimtodeliverlong-termvalueforourshareholdersandsociety.Thismeanshavingtherightculture,structuresandprocessesinplace toensure thatwepracticestronggovernance,serveourclientsandcustomerswellandprovideagreatworkplaceforourpeople. In2014,StandardCharteredBankBotswanaachieved3rdplaceintheDeloitteBestCompanytoWorkforSurveyandwastheonlybankinthetopthree.

We are focused on building a culture that is based onresponsibilityandaccountabilityandalignedwithourvalues.Ourdiverse and collaborative workforce and deep commitment todoingthingsrightiswhatmakesourculturestandout.Ourbrandpromise,Hereforgood,helpsourpeopletoactwithconviction,nurturerelationshipswithourclientsandcustomersandupholdthe highest standards of conduct and integrity. For more than10years,ourperformancereviewshavetakenintoaccounttheextenttowhichouremployeesdemonstrateourvaluesthroughtheireverydayactions.

Diana Layfield, Moatlhodi Lekaukau, Dr Akolang Tombale, Managing Director of Botswana Meat Commission and his management team during Diana’s visit to BMC.

Access to financial services; Our financing supports households, businesses and economies. Francistown Branch Staff promoting offerings to clients.

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sustainability(continued)

HIV and AIDS

HIVandAIDS remainsa seriouschallenge impactingour staff,theirfamiliesandthebroadercommunity.Educationisthekeytoreducingnewinfectionsorbeatingthepandemicandeducationalsessionsarerunbyourstaffvolunteers,called‘HIVChampions’.2014 marked 15 years of the Bank’s ‘Living with HIV’ initiativeandaspart of thecommemoration thechampions ran severalawareness campaigns including the ’15 years of Living withHIVBikeRide’which sawstaff on a15kmbicycle ride acrossGaborone ending at the Main Mall where an information stallwassetupandHIVtestingwasconducted.Thechampionsalsoparticipated inthenationalcommemorationofWorldAIDSDay,asperthenorm.

Community Projects

In 2014, a number of projects were undertaken including thebuilding of a house for a disadvantaged youth in Sefophe.Spearheaded by the Selebi Phikwe branch in partnership withtheBroadhurstChoir, theprojectaimed toassist inhaving thehopesanddignityofthe23yearoldwhoisorphanedandlivingwithdisabilityrestored.

Leveraging theBank’s global sponsorshipof Liverpool FootballClub,wewereveryexcitedtohostLiverpoolFootballClub(LFC)Legend–JohnBarnesOBE inApril. Inaddition toshowcasingtheBank’sglobalsponsorshipofLFC,JohnledasoccerclinicattheSouthEastDistrictYouthEmpowermentAssociation(SEDYA)for over 30 young, ambitious footballers from Ramotswa. Thesoccerclinicfocusedonbasicfootballtechniquesandlifeskillsformaleandfemaleyouthaged11-15yearsoldwhoareunderthe SEDYA programme that seeks to channel the energy andenthusiasm of young people away from risky behaviors whicharethemainfactorsinhighincidenceofHIV/AIDSinthecountry.While at SEDYA, John also had the chance to impart skills toa forum for local youth coaches. He also met some of ourcustomers,providingaonce-in-a-lifetimeopportunity,especiallyforavidLiverpoolfans

Employee Volunteering

Our staff continues to provide assistance to less privilegedmembersof their communities through various initiativesunderthe Employee Volunteering programme. In 2014, our staff inBotswana donated 737 days of their time through EmployeeVolunteeringinthecommunitiestranslatingintoanachievementof 104% of the target in support of community investmentprogrammes. Areas of focus included Financial Literacy, EyeScreening, building homes for the underprivileged and HighSchool/Universitymentorshipsessions

Toguardagainst theriskoffinancialcrimewithinourbusiness,wefocusontrainingouremployees,strengtheningourscreeningsystems and ensuring that our policies and procedures areeffectiveanduptodate.Weendeavourtoensureourstaffsmeetcustomers’needsinlinewiththedictatesofBaselIIaccord,theCustomer Due Diligence (CDD) process and the Anti-MoneyLaundering (AML) law.Weprovidemandatory training toallouremployeesonfightingfinancialcrimeandbribery.

Investing in communities

Our sustainability as a business is closely intertwined with thehealthandprosperityofthecommunitieswhereweoperate.

Seeing is Believing

TheBank’ssupport for thepreventionofblindnessthroughour‘SeeingisBelieving’initiativehasbeenstrengthenedthroughourpartnershipwithAddenbrooke’sAbroadandMinistryofHealthfornewandimprovedeyeservicesinthepublicsectorfocusingondiabetics,childrenandthosewithrefractiveerror.InMarch2013,the bank committed P4million to this project which is ongoinguntil2016. In theyearunder review,more thanP100000wasraisedthroughvariousfund-raisinginitiativesundertakenbystafftobolsterthesupportthatisgiventothisproject.

Our participation during the national commemoration of WorldSight Day is a core event in our calendar. During World SightDay2014whichwasheldintheSouthernDistrictvillageofGoodHope,over350peoplehadtheireyestested.

Education

TheBankjoinedforceswiththeBotswanaEducationHub‘Adopt-a-School’ campaign, mainly aimed at Public (Government)Schools with a focus on long term sustainability. Branches/departmentsmakeaminimumone-yearpledgetotheschooloftheirchoice,tofacilitatefinancialliteracyworkshopsforstudentsusing the Financial Education for Youth Toolkit as well as offerassistancewithanyprojectstheschoolmayhavetohelpmakeadifferencetothelivesofthestudentsthere.

We currently have a Memorandum of Understanding with theUniversity of Botswana which includes conferring StandardChartered Bank Botswana awards to the best performingstudentsfromselectedfaculties.TheawardforthebestfinancestudentcomeswithitayearinternshipintheCEO’sofficetogivethestudentexperienceandexposure.


Mme Sethebe, Women’s Finance House Botswana client busy working in her shop

CEO Moatlhodi Lekaukau and Women’s Finance House of Botswana (Thusang Basadi) Chairperson, Emeldah Mathe sign on the dotted line to formalise the agreement

xxx

FINANCIAL INCLUSION: Thusang Basadi

To confirm our commitment to financial inclusion in

Botswana, in September 2014, Standard Chartered

Bank Botswana entered into a 3 year partnership with

Women’s Finance House Botswana (Thusang Basadi).

The Bank has made a financial contribution of

BWP1million to the organisation for them to effectively

execute their mandate. We have also undertaken to

share skills and expertise through financial education

via the Employee Volunteering programme.

ThusangBasadi is aNonGovernmentalOrganisationwhichwasformedin1989toalleviatepovertyandprovidefinancialservices to low – income business women, particularlythosewhodonothaveaccess to theservicesprovidedbyconventional financial institutions. In May 1993, it began itsoperationsasaMicrofinance InstitutionhavingacquiredanexemptionfromtheprovisionoftheFinancialInstitutionsActtomobilisesavingsbyBankofBotswana.

g WFHBischargedwiththemandateofpovertyreductionthroughprovisionoffinancialservices.

g Toachievethis,WFHBrunsaSavings&Creditprogrammeandprovidesbasicbusinessskillstrainingtoitsmembers.

g SpecificallythecreditprogrammeprovidesmicroloansrangingfromP750-20,000forworkingcapital,withrepaymentperiodsrangingbetween5to18months

g Thesavingsprogrammeisanintegralcomponentofcredit,intendedtoinstillfinancialdisciplineandprovidesecurityfortheclients’future

g Theservicesofferedareopentowomenwhohavebeenrunningamicrobusinessforaminimumof6months.

Legibilityformembership:

g Beawoman

g Agedbetween21to65years

g Beacitizen

g HaveabusinessinoperationwhichmakesaturnoverofatleastP1,000permonth

Governor Linah Mohohlo delivering the keynote speech at the signing ceremony for the Memorandum of Understanding between Standard Chartered Bank Botswana and Thusang Basadi

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CorporateGovernance

Our Approach

StandardCharteredBank Botswana is listed in theBotswanaStockExchange.

Thebankhasadoptedastrictcomplianceapproachtocorporategovernance principles both locally and internationally. In theyearunder review, thebankhasstrived toachievesubstantivecompliancewith theBankofBotswanaCorporateGovernanceCode and the King III governance code, Botswana StockExchange Act Corporate Governance Code and the ListingRules.

The Principles

Consummate corporate governance principles are a keycontributortothelongtermsuccessofacompany,bysupportingdecisions and drives behaviors and cultures within the bank.Exemplarycorporategovernancecreatestrustandengagementbetweenthecompanyanditsstakeholders.WeStrivietodelivergovernance of best practice as a core aspect of the Bank’sstrategic intent. We have clear, well - understood governancepoliciesandprocedureswhichtranslatetoanunderlyingculturewith values and behaviours that support effective corporategovernance.

Werecognisethatthisaloneisnotsufficienttoensureeffectivegovernance. Effective governance is achieved through acombination of strong processes, underpinned by the rightvaluesandculture.ThesemustbeembeddedacrosstheBankthrough thebehavioursdisplayedbyouremployeeseveryday.Formanyyearswehavemeasuredandrewardedperformanceboth in termsofwhat employees achieve and the values theydisplay.WebelievethatthismakesadifferencetohowwellourcultureandvaluesareembeddedacrosstheBank.

Our Board

StandardCharteredBankhascommitteddynamicprofessionalswhoarediverse invariousareasofexpertiseon itsBoardandCommittees.TheBoardisresponsibleforcontinuouslyenhancingtheshapeanddynamiccultureofthebankbyprovidingstrategicdirectionandvaluetoshareholdersandstakeholdersinlinewithourlongtermaspirations.TheBoardisaccountableforensuringthat,asacollectivebody,ithasappropriateskills,knowledgeandexperiencetoperformitsroleeffectively.TheBoardisnotinvolvedintheday-to-dayoperationsoftheBank.Itdoeshoweverhaveaformalscheduleofmattersreservedforitsowndecisionmaking.Theboardprovidesstrategicdirectionandgovernancetoensurecontinuousdeliveryandvaluetoshareholders.

TheBoardcomprisesofExecutiveandNon-ExecutiveDirectorswhomeetatleast4timesayear.

Executive Director:MoatlhodiK.Lekaukau

Non-Executive Director:RichardEtemesi

Independent Non-Executive Directors:BojosiOtlhogileIshHandaKateSenyeJohnstevens

Secretary:ThatoMmile

Board Committees

TheBoardhasdelegatedabroader rangeof the issues to theboardcommittees.Asaresult,itisimportanttoensureeffectivelinkages exist between the Board and its committees whilstmindfuloftheneedtoguardagainstthedangerofunnecessarilyduplicatingeffort.

Audit Committee

TheroleoftheAuditCommitteeisfundamentaltoensuringthefinancialintegrityandaccuracyofStandardChartered’sfinancialreporting. Good, open relationships between the Committee,the Chief Financial Officer, our Internal Audit Function andKPMG, our statutory auditors, are essential to adding value tothe organisation. This is encouraged by holding managementtoaccountfortheimplementationofallauditrecommendations(internal and external); inviting appropriate business heads tomeetingstoexplainhowtheyaredeliveringtheiragreedactionsforwhich theyare responsible;andholdingseparatemeetingsbetweentheCommitteechairman,independentnon-executives,and internal andexternal auditors to help committeemembersestablishopenworkingrelationships.

Risk Committee

ItistheCommittee’sroletorecommendtotheBoardwhereriskappetiteshouldbeset. It alsosatisfies itself that theBankhasbeenandplanstooperatewithinthatriskappetite,withastrongcapitalandliquiditypositionthatcanbeshowntoberesilienttostress.Riskstofutureearningsaredemonstratedtobeheldwellwithincarefullydefinedlevelsoftolerance.


Operational RiskOperational risk is the risk of loss resulting from the failure ofpeople,processesortechnologyortheimpactofexternalevents.TheBankseekstoensurethatkeyoperationalrisksaremanagedinatimelyandeffectivemannerthroughaframeworkofpolicies,proceduresandtoolstoidentify,assess,mitigate,monitor,controland report such risks. The Country Chief Executive Officer isaccountablefortheeffectivemanagementofoperationalrisk.TheCountryOperationalRiskCommittee(CORC)istheCEO’sforumforensuringthatoperationalriskisbeingmanagedappropriately.

Country Operational Risk Committee (CORC)CORC provides a forum for the identification, assessment,mitigationandsubsequentmonitoringofcountrylevelOperational20Standard

Risktrendsandissues.Thisincludesensuringcompliancewithinternalpoliciesand relevant regulations,aswell as theBank’sOperational Risk Management Framework, promoting andsustaining a high level of operational risk management culturewithin the country, reviewing Country Operational Risk Profileand ensuring appropriate ownership, actions and progress forallrisksandreviewingoverdueitems.CORCmeetsmonthlyandcomprisesofCountryChiefExecutiveOfficer(Chairman),HeadsofRetailClients,Corporate& InstitutionalClients,Technology&Operations,GroupInternalAudit,LegalandCompliance,HumanResources, Finance, Corporate Affairs and Country Chief RiskOfficer.

Credit RiskCredit risk is the risk that a customer is unable to meet theirobligations in accordance with agreed terms. Creditexposures include both individual borrowers and groups ofconnected counterparties and portfolios in the banking andtradingbooks. InRetailClients,Credit risk ismanaged througha framework of policies and procedures. Credit originationuses standard application forms, which are processed incentral units using largely automated approval processes. Therepayment management process is automated to efficientlymanageexpected loan repaymentsonduedates.Anaccountis considered to be delinquent when payment is not receivedontheduedate.Accountsthatareoverdueon loanpaymentsare closely monitored and subject to a collections process. InCorporate & Institutional Clients, Credit risk is also managedthrough a framework which sets out policies and procedurescoveringthemeasurementandmanagementofcreditrisk.ThereisclearsegregationofdutiesbetweentransactionoriginatorsandtheapproversintheRiskfunction.AccountsareplacedonEarlyAlertwhentheydisplaysignsofweakness.Suchaccountsaresubject to a dedicated process with oversight involving seniorRisk Officers and Group Special Asset Management (GSAM).

Credit Issues CommitteeThis committee provides overall direction and management ofthecreditportfolioandmeetsmonthly.Membershipcomprisesof Country Chief Executive Officer (Chairman), Heads of RetailClients, Corporate & Institutional Clients, Country Chief RiskOfficerandvariouscreditstaff.

ComplianceThe strategic vision of Standard Chartered Bank BotswanaLimited Compliance function is to provide a world-classcompliance support through expert advice, legal guidanceand independent monitoring, to enable sustainable businessperformance. A robust Compliance framework is in place toallowandenabletheBanktoadequatelyrespondtotherapidlyevolvingcomplianceenvironment.

Compliance has a unique role in mitigating compliance risk,bothasatrustedadviserandindependentguardian,anddrivinga culture of compliance in the Bank to achieve and upholdour Here for Good brand promise. As a trusted adviser, thefunctionensuresenhanced ‘organisationalcompliance’ throughfocused, effective training for relevantBank staff andprovidingtechnical and expert advice to the businesses on applicablelawsandregulations.Asanindependentguardian,thefunctionconductscompliancemonitoringreviewsandfinancialcrimeriskassessment todetermineeffectivenessofcontrolsput inplacetomitigatethecompliancerisk.

Directors attendance register

Bojosi Otlhogile 4/4 N/A N/A

Moatlhodi Lekaukau 4/4 N/A 4/4

Richard Etemesi* 2/2 N/A N/A

Ish Kumar Handa 2/4 N/A N/A

Kate Senye 4/4 4/4 4/4

John Stevens 4/4 4/4 4/4

Ebenezer Essoka* 0/2 N/A N/A

* RichardEtemesiwasappointedinJune2014* EbenezerEssokaresignedinJune2014

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BoardofDirectors

1

2

5

3

6

4

7

Prof. Bojosi Otlhogile

Moatlhodi K. Lekaukau

Ish Handa Kumar

Richard Etemesi

Kate Senye

John Stevens

Thato Mmile


1.Prof.BojosiOtlhogile Board Chairman

Bojosi Otlhogile was appointed to the board of Standard Chartered Bank Botswana in September 2008. Otlhogile holds a law degree (LLB) from University of Botswana and an LLM and PHD in Law from the University of Cambridge. He has held various posts including Head of Law (1993-1999), Dean Faculty of Social Sciences (1999-2003) and Vice Chancellor (2003-2011). Until recently he was a member of the University of Botswana Council and Senate and was Councillor of the International Africa Institute, UK. He is Chairman of the boards of Southern Africa Media Development Fund (SAMDEF) (1997-208) and Botswana Housing Corporation (BHC), is a Director of Longman Botswana and also chairs Special Olympics Botswana. He is a Council member of the Universities of Zambia andSwaziland.

2. MoatlhodiK.Lekaukau Chief Executive Officer Moatlhodi Lekaukau assumed the role of Standard Chartered Bank Botswana Managing Director in February 2012. He holds a B.Comm and PGDip.Acc from the University of Cape Town and is a Chartered Accountant by profession. Prior to joining Standard Chartered Bank, Moatlhodi Lekaukau was a Partner at Deloitte and Touche Corporate Finance in South Africa where he headed up Mergers & Acquisitions for the Southern Africa region.

3. RichardEtemesi Non-Executive Director

Richard Etemesi was appointed to the board as a Non-Executive Director in June 2014. He holds a Masters of Science Degree in Corporate Finance from Strathclyde Business School, University of Strathclyde in UK and a Bachelor of Commerce Degree in Accounting from University of Nairobi. Prior to joining Standard Chartered Bank, Richard worked as a Financial Management consultant with Coopers & Lybrand Associates based in Kenya where he was involved in consultancy assignments. Richard joined the bank where he worked in various roles across the Group including CEO for Standard Chartered Bank Uganda and Kenya respectively. Richard is currently Chief Executive Officer and Area General Manager for Southern Africa, Standard Chartered Bank.

4. Johnstevens Independent Non-

Executive Director

John Stevens was appointed to the board as a Non-Executive Director in August 2013. He served Deloitte & Touche in South Africa and Botswana for over 33 years, 8 of those years as partner in charge of Delotte & Touche Botswana. John retired from Deloitte & Touche in 2007 and took up the challenge of private consultancy. He holds a B.Comm Degree from Rhodes University and is a fellow member of the Botswana Institute of Chartered Accountants. John is also a member of the Board for Cresta Marakanelo.

5. IshHandaKumar Independent Non-

Executive Director

Ish Kumar Handa was appointed to the board as a Non-Executive Director in November 2011. He holds a Bachelor of Arts Degree from Punjab University, India and a Degree in Textile Engineering from Reutliengen University Germany. He holds a Diploma in Textile Technology from Punjab Institution of Textile Technology and a Diploma in Business Management from International Correspondence School. He is the Managing Director of the Handa Group.

6. Katesenye Independent Non-

Executive Director

Kate Senye was appointed to the board as a Non-Executive Director in August 2013. She is currently the Managing Director of Inter File Botswana (Pty) Ltd. Kate holds an MA in Public Policy Majoring in Development Economics, Business and Finance (University of Wisconsin, Madison, USA – 1995) and a Bachelor of Social Science Majoring in Economics and Accounting (University of Botswana - 1992). She currently serves on the board of Botho University – Botswana, and is a trustee of Sponsor a Child.

7. ThatoMmile Secretary

Thato joined Standard Chartered bank as Head of Legal and Compliance and Company Secretary in January 2005. Prior to joining the bank she worked for Administration of Justice where she started out as trainee magistrate in December 2000. She has presided over criminal cases as well as civil cases. Her wealth of experience has earned her a highly developed expertise of legal risk management in a financial services and company secretariat context. She brings to the board exemplary governance and a deep understanding of the regulatory environment. She is as well a valued member of the Law society of Botswana. Thato graduated from University of Botswana in 1999, obtaining a degree in in Law (LLB).

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seniorManagement

1. Moatlhodi K Lekaukau ChiefExecutiveOfficer

2. Godwin Tanyongana CountryChiefRiskOfficer

3. Mpho C Masupe ChiefFinancialOfficer

4. Kesego Mokgetse HeadofCommercialClients

5. John Kimani ChiefInformationOfficer

6. Itumeleng Ramsden HeadofCorporateAffairs

7. Saone Balopi HeadofBrandandMarketing

8. Pedzani Tafa HeadofRetailClients

9. Esther K Mokgatlhe HeadofCompliance

10. Peggy Tsiane HeadofTransactionBanking

11. Marang Morakaladi ActingHeadofHumanResources

12. Ali Zayem HeadofWealthManagement

13. Benson Madisa ActingHeadofCorporateand InstitutionalClients

14. Botho F Leburu HeadofFinancialMarkets

11

14

13 12 5 8 37 4

10

96

1

2


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09

02 03 04

Moatlhodi K Lekaukau

Paul Sagnia Mpho C Masupe

11

Marina Khan

Ali Zayem

Pedzani Tafa

12

Esther K Mokgatlhe

13

Thato Mmile

05

06 07 08

Botho F Leburu

Benson Madisa

Peggy TsianeKesego Mokgetse

10

John Kimani

11 11 11 11

Saone BalopiGodwin Tanyongana Itumeleng RamsdenMarang Morakaladi

29

30 Standard Chartered Bank Botswana AnnualReport2014

Annualgroupandcompanyfinancialstatementsfor the year ended 31 December 2014

Contents Page

Director’s report 32

Directors’ responsibility statement 33

Independent auditor’s report 34

Statements of profit or loss and 35other comprehensive income

Statements of financial position 36

Statements of changes in equity 37

Statements of cash flows 40

Notes to the financial statements 41

supplementaryinformation

Notice to members 93

Proxy form 94

31

Directors’ reportThe directors have pleasure in submitting to the shareholders their report and the financial statements of the Group and Company for the year ended 31 December 2014.

ActivitiesThe Company continues to be engaged in the business of commercial banking and provides a wide range of financial services. The Company has three subsidiaries, namely an insurance agency company, an investment services company and a custodial services company. For the purposes of presenting group financial statements, only the results of the insurance agency subsidiary have been incorporated in the Group results, as the other two subsidiaries are dormant or immaterial subsidiaries for consolidation purposes.

ResultsThe Group’s results are disclosed in the statements of profit and loss and other comprehensive income on page 35 and reflect the following: Profit before taxation P406 million (an increase of 0.2% from

2013) Profit for the year P319 million (a decrease of 0.7% from 2013)

DividendsA dividend of P60 million (20.16 thebe per gross share) was declared and paid during 2014 and a further dividend of P30 million (10.10 thebe per gross share) was paid early in 2015. To maintain the capital resilience of the Bank and to manage the growth expectations in the near future the Board has decided to defer declaration of the 2014 final dividend until later in the year. Stated capitalThere has been no change to the Bank’s stated capital during the year (2013:Nil).

Events after reporting dateThe directors are not aware of any matters or circumstances arising since the end of the financial year, not dealt with in this report or these financial statements that would significantly affect the operations of the Group or the results of its operations.

Holding companyThe Group’s ultimate holding company is Standard Chartered PLC, a company registered in the United Kingdom. DirectorsThe following were directors of the Bank as at 31 December 2014:Executive Director: Non Executive Directors:Moatlhodi Lekaukau Bojosi Otlhogile (Chairman) Ebenezer Essoka (Resigned during the year) Ish Handa Kate Senye John Stevens Richard Etemesi (Appointed during the year)Company Secretary: Thato Mmile Auditors A resolution on the appointment of auditors will be proposed to the shareholders at the Annual General Meeting. By order of the Board

Thato MmileSecretary

Director’s report for the year ended 31 December 2014


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Director’s responsibility statements for the year ended 31 December 2014

The directors are responsible for the preparation and fair presentation of the group annual financial statements and annual financial statements of Standard Chartered Bank Botswana Limited, comprising the statements of financial position at 31 December 2014, and the statements of profit or loss and other comprehensive income, changes in equity and, cash flows for the year then ended and the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards and in the manner required by the Banking Act (Cap 46:04). In addition, the directors are responsible for preparing the directors’ report.

The directors are also responsible for such internal controls as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error and maintaining adequate accounting records and an effective system of risk management.

The directors, supported by the Audit Committee, are satisfied that management introduced and maintained adequate internal control to ensure that dependable records exist for the preparation of the Group annual financial statements and annual financial statements, to safeguard the assets of the Group and to ensure all transactions are duly authorised.

The directors have made an assessment of the Company and its subsidiaries’ ability to continue as going concerns and have no reason to believe that the businesses will not be going concerns in the year ahead.

The auditor is responsible for reporting on whether the group financial statements and financial statements are fairly presented in accordance with the applicable financial reporting framework.

Approval of the group annual financial statements and annual financial statements:

The group annual financial statements and annual financial statements of Standard Chartered Bank Botswana Limited, as identified in the first paragraph, were approved by the directors on 27 February 2015 and are signed on their behalf by:

Bojosi Otlhogile Moatlhodi LekaukauChairman Managing Director

33

Independent auditor’s reportTo the shareholders of Standard Chartered Bank Botswana Limited

We have audited the group financial statements and financial statements of Standard Chartered Bank Botswana Limited, which comprise the statements of financial position at 31 December 2014, and the statements of profit or loss and other comprehensive income, changes in equity and, cash flows for the year then ended and the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes as set out on pages 41 to 92.

Directors’ responsibility for the financial statementsThe company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Banking Act (Cap 46:04), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the

entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements give a true and fair view of the consolidated and separate financial position of Standard Chartered Bank Botswana Limited as at 31 December 2014, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Banking Act (Cap 46:04).

KPMG Certified auditors GaboronePracticing member: Gerard Devlin 27 March 2015Membership number: 19960060.23


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Statements of profit or loss and other comprehensive incomefor the year ended 31 December 2014

Group Company 2014 2013 2014 2013 Note P’000 P’000 P’000 P’000 Interest income 5 841 613 786 200 841 613 786 200Interest expense 6 (246 261 ) (172 946 ) (246 261 ) (172 946 ) Net interest income 595 352 613 254 595 352 613 254 Fee and commission income 7 297 986 225 773 223 982 163 933Fee and commission expense (27 089 ) (15 901 ) (27 089 ) (15 901 ) Net fee and commission income 270 897 209 872 196 893 148 032 Net trading income 8 207 183 179 668 207 183 179 668Dividend income – – 43 546 26 208Other income – 4 377 – 4 377 207 183 184 045 250 729 210 253

Revenue 1 073 432 1 007 171 1 042 974 971 539 Operating expenses Net impairment loss on financial assets 9 (1 443 ) (23 714 ) (1 443 ) (23 714 )Employee benefits 10 (249 100 ) (234 129 ) (249 100 ) (234 129 )Operating lease expenses (22 011 ) (20 623 ) (22 011 ) (20 623 )Depreciation and amortisation (24 277 ) (21 531 ) (24 277 ) (21 531 )Administration expenses 11 (370 110 ) (301 523 ) (362 597 ) (295 171 ) Total expenses (666 941 ) (601 520 ) (659 428 ) (595 168 ) Profit before taxation 406 491 405 651 383 546 376 371 Income taxation 12 (87 307 ) (84 087 ) (72 679 ) (72 145 )

Profit for the year 319 184 321 564 310 867 304 226 Other comprehensive income Items that are or may be reclassified to profit or loss Change in fair value of available for sale investments, net of tax (7 501 ) 18 032 (7 501 ) 18 032

Total comprehensive income for the year 311 683 339 596 303 366 322 258 Dividend per share (Thebe) 13 71.42 67.04 Basic and diluted earnings per share (Thebe) 14 106.98 107.78 The notes on pages 41 to 92 are an integral part of these financial statements

35

Statements of financial positionfor the year ended 31 December 2014

Group Company 2014 2013 2014 2013 Note P’000 P’000 P’000 P’000 Assets Cash and balances with central bank 15 1 005 148 945 452 1 005 148 945 452 Loans and advances to banks 16 2 526 133 1 160 491 2 526 133 1 160 491 Investment securities 17 884 624 1 370 017 884 624 1 370 017 Loans and advances to customers 18 8 128 305 6 288 284 8 128 305 6 288 284 Other assets 21 145 622 150 781 * 145 622 150 781 *Taxation refundable 25 8 333 – 6 356 – Property and equipment 19 39 918 47 969 * 39 918 47 969 *Intangible asset and goodwill 20 62 186 69 241 * 62 186 69 241 * Total assets 12 800 269 10 032 235 12 798 292 10 032 235 Liabilities Deposits from other banks 22 991 441 492 515 991 441 492 515 Deposits from customers 23 10 041 700 7 892 219 10 182 099 7 957 858 Other liabilities 27 258 331 227 735 167 818 205 737 Current taxation payable 25 – 6 338 – 6 243 Deferred taxation 26 11 941 15 169 11 941 15 169 Senior and subordinated debt 24 297 260 297 260 297 260 297 260 Total liabilities 11 600 673 8 931 236 11 650 559 8 974 782 Equity Stated capital 179 273 179 273 179 273 179 273 Reserves 1 020 323 921 726 968 460 878 180 Total equity 1 199 596 1 100 999 1 147 733 1 057 453 Total liabilities and equity 12 800 269 10 032 235 12 798 292 10 032 235 *Refer to note 36.

The notes on pages 41 to 92 are an integral part of these financial statements


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Statements of changes in equityfor the year ended 31 December 2014

Stated Revaluation Statutory Retained Proposed Capital Available capital reserve credit risk earnings dividends contribution for sale reserve TotalGroup P’000 P’000 P’000 P’000 P’000 P’000 P’000 P’000

Balance at 01 January 2013 179 273 6 327 8 223 707 132 20 000 28 213 12 235 961 403Total comprehensive income Profit for the year – – – 321 564 – – – 321 564Other comprehensive income Fair value adjustment: Available for sale securities – – – – – – 18 032 18 032Transactions with owners of the bank Dividends to equity holders – paid – – – (180 000 ) (20 000 ) - – (200 000 )Dividends to equity holders – proposed – – – (20 000 ) 20 000 – – -Total distributions to owners – – – (200 000 ) – – – (200 000 ) Balance at 31 December 2013 179 273 6 327 8 223 828 696 20 000 28 213 30 267 1 100 999 Total comprehensive income Profit for the year – – – 319 184 – – – 319 184Other comprehensive income Fair value adjustment: Available for sale securities – – – – – – (7 501 ) (7 501 )Transactions with owners of the bank Dividends to equity holders – proposed – – – (60 000 ) 60 000 – – –Dividends to equity holders – paid – – – (133 086 ) (80 000 ) – – (213 086 )Total distributions to owners – – – (193 086 ) (20 000 ) – – (213 086 )

Balance at 31 December 2014 179 273 6 327 8 223 954 794 – 28 213 22 766 1 199 596 The notes on pages 41 to 92 are an integral part of these financial statements.

37

Statements of changes in equity (continued)...for the year ended 31 December 2014

Stated Revaluation Statutory Retained Proposed Capital Available capital reserve credit risk earnings dividends contribution for sale reserve reserve TotalCompany P’000 P’000 P’000 P’000 P’000 P’000 P’000 P’000

Balance 01 January 2013 179 273 6 327 8 223 680 924 20 000 28 213 12 235 935 195 Total comprehensive income Profit for the year – – – 304 226 – – – 304 226Other comprehensive income Fair value adjustment: Available for sale securities – – – – – – 18 032 18 032Transactions with owners of the bank Dividends to equity holders – paid – – – (180 000 ) (20 000 ) – – (200 000 )Dividends to equity holders – proposed – – – (20 000 ) 20 000 – – –Total distributions to owners – – – (200 000 ) – – – (200 000 )

Balance at 31 December 2013 179 273 6 327 8 223 785 150 20 000 28 213 30 267 1 057 453 Total comprehensive income Profit for the year – – – 310 867 – – – 310 867Other comprehensive income Fair value adjustment: Available for sale securities – – – – – – (7 501 ) (7 501 )Transactions with owners of the bank Dividends to equity holders – proposed – – – (60 000 ) 60 000 – – –Dividends to equity holders – paid – – – (133 086 ) (80 000 ) – – (213 086 )Total distributions to owners – – – (193 086 ) (20 000 ) – – (213 086 )

Balance at 31 December 2014 179 273 6 327 8 223 902 931 – 28 213 22 766 1 147 733 The notes on pages 41 to 92 are an integral part of these financial statements.


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Stated capital

Issued ordinary shares298 350 611 ordinary shares of no par value (2013: 298 350 611).

Unissued ordinary sharesAs at 31 December 2014, un-issued shares totalled 101 649 389 (2013: 101 649 389).

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the entity. All shares rank equally with regard to the entity’s residual assets.

The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The impact of the level of capital on shareholders’ return is also recognised and the Group recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position.

The Group and its individually regulated operations have all complied with externally imposed capital requirements throughout the period.

Revaluation reserveThe revaluation reserve comprises the net cumulative increase in the fair value of property.

Statutory credit risk reserveThis reserve represents the excess of the 1.25% general provision against risk weighted assets as required by the Bank of Botswana in addition to the impairment provision required by International Financial Reporting Standards (IFRS) (Refer to note 9).

Proposed dividendsProposed dividends are disclosed as a separate component of equity. Dividends on ordinary shares are recognised as a liability in the period in which they are declared.

Capital contributionThis represents the part of the consideration for the acquisition of the custody business paid by Standard Chartered PLC, the ultimate parent company of Standard Chartered Bank Botswana Limited. The contribution is a non – distributable capital with no diluting effect on ordinary shareholders.

Available for sale reserveThis represents the cumulative movement in fair value of available for sale securities.

Statements of changes in equity (continued)...for the year ended 31 December 2014

39

Group Company 2014 2013 2014 2013 Note P’000 P’000 P’000 P’000 Cash flows from operating activities Profit for the year 319 184 321 564 310 867 304 226Adjustments for: - Taxation 87 307 84 087 72 679 72 145- Depreciation 19 8 613 7 811 8 613 7 811- Amortisation 20 15 664 13 720 15 664 13 720 - Impairment charge on loans and advances 9 1 443 23 714 1 443 23 714 - Movement in operating lease accrual 31 1 331 125 1 331 125 - Dividend income – –

Documents

Standard Chartered Bank Botswana Annual Report 2014 · to P1 073.4m from P1007.2m in 2013 to P406.5m from P405.7m in 2013 to 71.42 thebe from 67.04 thebe in 2013 in 2014 from 57.4%