2015 Sustainability report - Standard Bank · – Introduction 16 ... Going forward, the sustainability report ... framework and the GRI’s Financial Services Sector Supplement as

STANDARD BANK

reportSustainability 2015

D

SUSTAINABILITY REPORT (this report)

Covers the material focus areas in relation to our strategy.

SD

CORPORATE SOCIAL INVESTMENT REPORT

Sets out our corporate social investment initiatives for 2015.

CSI

About this report 1About Standard Bank 2

Joint statement from the chairman and chief executive 10

Statement from the group company secretary 14Our material focus areas 15

– Introduction 16 – Manage the risks and opportunities

of our strategy 18 – Deliver sustainable long-term financial performance 22

– Keep abreast of the pace, volume and scale of regulatory change 24

– Put the client at the centre of everything we do 26 – Establish and maintain IT system stability 30

– Recruit, retain and motivate our employees 32 – Advance Standard Bank’s reputation 37

– Embrace innovation 49Governance and ethics 50

Global Reporting Index G4 55Contact details ibc

Topic index Brand management 39

Our commitment to transformation 40Banking small and medium enterprises 41

Our corporate social investment initiatives 44Procuring from local suppliers 46

Environmental impact 47

Contents

Our reports can be accessed online at www.standardbank.com.na/namibia/about-us.

Our suite of reports

ANNUAL REPORT

Our primary report to stakeholders which provides an assessment of our ability to create value over time.

AR

We are proud to present the inaugural Standard Bank Namibia Holdings Limited (Standard Bank) Sustainability Report. The report provides insight into our sustainability performance for the year ended 31 December 2015.

This report is intended primarily for those stakeholders with whom we have direct relationships and regularly communicate, including our shareholders, customers and clients, employees, government and regulatory authorities, industry bodies and service providers. More broadly, our stakeholders include those with whom we engage from time-to-time on particular issues or projects, as well as those who we have an indirect impact on and who may be impacted by our business activities.

Going forward, the sustainability report will be published annually.

Scope and boundaryThis report covers the sustainability performance of Standard Bank’s operations which is presented in relation to material focus areas strategically significant to Standard Bank in Namibia. We consider an issue to be material if it has the potential to impact on our commercial viability and our social relevance. These include issues which may impact on the

economic growth and the political and social stability of the Namibian market, as well as factors which may impact on our stakeholders’ perceptions and decisions in relation to Standard Bank specifically.

Our key performance indicators are aligned to our material focus areas. As this is our first year of reporting, historical data is not available for certain indicators. Where possible, we have reported a two-year comparison and going forward will work to provide our readers with a best practice three-year view of our performance. Our indicator tables are presented at the beginning of each material focus area. Our environmental data is not sourced centrally, creating challenges in terms of accurate and comprehensive reporting. We are investigating ways to improve the collection of this information to establish a baseline of environmental metrics and ensure accurate reporting going forward.

Internal targets have been set to measure progress against our key performance indicators however these are not reported publically.

When considering our social and environmental impacts, we look beyond our direct impacts to the indirect impacts of the services we offer and the

finance we provide. Our supply chain is not considered an area of material environmental risk and therefore is not extensively covered in this report.

Frameworks appliedWhile this report is not in accordance with either of the GRI’s application levels, we have used the GRI G4 framework and the GRI’s Financial Services Sector Supplement as guidelines to inform the report. Our reporting in relation to the general standard disclosures and the financial services sector disclosures can be found on page 55.

OversightThe board corporate social investment sub-committee is responsible for providing oversight of the sustainability reporting process. The committee recommended the report for approval to the Standard Bank Namibia (SBN) Holdings board of directors, which was obtained on 17 March 2016.

FeedbackWe welcome the views of our stakeholders on this report. Please contact Sigrid Tjijorokisa: Group Company Secretary at [email protected] with your feedback.

1

About this report

2 SBN Holdings Limited Sustainability report 2015

About Standard Bank

Standard Bank opened its first commercial branch in Lüderitz, Namibia, in August 1915, making it one of Namibia’s oldest companies today.

Over the years, our customers and clients have come to rely on us to understand their needs, to apply our people’s deep knowledge of local business conditions to address these needs, and to connect borrowers with lenders. We are proud to be part of Standard Bank Group, a large financial services organisation rooted in Africa and with operations in 22 countries.

Standard Bank operates a distribution network of 53 branches and 220 ATMs across Namibia. Our workforce has grown to over 1 500 employees and our roots have extended deep into the fabric of Namibian society.

We are committed to making banking available to all Namibians. To this end we have evolved and adapted together with our customers and clients, developing a rich heritage while nurturing and protecting our reputation. We uphold high standards of corporate governance, are committed to advancing the principles and practices of sustainable development and are inspired to

advance national development objectives.

Our success and growth over the long term is built on making a difference in the communities in which we operate. We are commercially and morally bound to serve Namibia and her people, in return for the long-term profitable growth we envisage as a leading financial services group in the country.

Namibia is our home, we drive her growth.

Our shareholdersHeadquartered in Windhoek, SBN Holdings Limited is 90% owned by Standard Bank Group and 10% owned by Purros Investments Trust, our staff empowerment scheme.

ABOUT STANDARD BANK

SDInformation on our empowerment equity scheme can be found on page 41.

STANDARD BANK GROUP

Purros Investments Trust

Stanfin (Namibia) (Pty)

SBN Holdings Limited

Standard Insurance Brokers(Namibia) (Pty)

Standard Bank Namibia Limited

Standard Bank NamibiaNominees (Pty)

90%

10%

OUR COMPANY STRUCTURE

100%

100%

3

“The Standard Bank of today is substantially better equipped to innovate and to consider and embrace new and better ways of doing things. This is rooted in greater collaboration, accountability and effectiveness that can counter the complexity that so easily hampers large organisations. Our industry is changing faster than ever before and we must be able to respond effectively to this change to stay relevant to the economies and societies we serve. It is this, ultimately, that underpins sustainable profitability and value creation”. – Herbert Maier: Chairman

Celebrating 100 years of moving Namibia forward

Standard Bank lives up to its promise of bringing banking to the nation by maintaining a wide network of automatic teller machines (ATMs) in Namibia.

In 2015 we commissioned the 100th AutoBank at Okuryangava Shell in the north of Namibia. This is the first drop-down ATM in the country – meaning the machine can be conveniently set up or translocated to where there is a data line and source of

1974 1978 1980 1983 1998 2002 2003 2015

Ausspannplatz(reopened new

premises in 2000)

Oshakati Katutura Gustav Voigts Centre

Ondangwa RehobothRosh Pinah

Rundu Service Centres

• Aussenkehr• Frans Indongo Mall• Omuthiya

100 years in Namibia

1915 1919 1920 1927 1928 1929 1935 1954

LüderitzWindhoek

Swakopmund

OkahandjaOmaruru

GrootfonteinOtjiwarongo

TsumebWalvis Bay

KeetmanshoopOutjo

Mariental Gobabis Otavi(now agency to Tsumeb)

Aranos

Our points of representation

53branches

220ATMs

electricity. We also upgraded our Outjo branch (originally opened in 1927) in the Kunene region. Outjo is central to all tourist attractions in northern Namibia and business activities in the small town have increased particularly with regards to livestock farming, charcoal production, tourism and hunting. Our investment will contribute to economic development in the area.


Our strategy represents our commitment to Namibia and to the shared future that we intend to create for our customers and clients, our people and all our stakeholders.

Our strategy

Namibia is our home, we drive her growth

Our legitimacy is premised on what makes us unique, and is the basis for our credibility.

Our more than 100-year heritage and brandCommitment to our customers and clients and the trust they have in usPioneering spiritPresence in Namibia, Africa and beyondCommercial pragmatism

Brave long-term decisions

Our passion for Namibia and AfricaOur great people

LegitimacyPurpose

Vision

To be Namibia’s agile provider of innovative financial solutions

Our values support our legitimacy, and are the basis on which we earn the trust of our stakeholders.

Values

Serving our customers

Growing our people

Delivering to our shareholders

Being proactive

Working in teams

Constantly raising the bar

Respecting each other

Upholding the highest levels of integrity

Integrated pillars

Our purpose and vision, supported by our legitimacy and values, guide strategic execution through our integrated pillars, all of which are being strategically realigned to focus on our customers.

Our guiding principles

provide the basis for how our businesses execute our strategy.

BUSINESS UNITS STRATEGIC ENABLERS

Personal & Business Banking (PBB)

Corporate & Investment Banking (CIB)

Risk Marketing

Finance

Compliance

Human capital

IT

LegalOperations

THE PROMISES

WE MAKE TO OUR

CLIENTS

THE WAY WE EXECUTE

THE CULTURE WE WISH TO BUILD FOR OUR

PEOPLE

1 2

3

ABOUT STANDARD BANK

5

Strategic objectives

During 2015 the Standard Bank leadership team commenced with the implementation of our 2015 – 2017 strategy, founded on a strong sense of team work and common purpose as evidenced by the collaboration and coordination of activities and plans across the bank.

The 2015 – 2017 strategic plan is underpinned by our values and the following themes:

Client centricityThis strategic objective aims to provide an excellent customer experience to everyone that engages with us. In doing this, we aim to employ a culture of continuous improvements to our systems, processes, products and people, as well as commit to a deep understanding of our customers’ needs and requirements to customise our propositions.

The state-of-the-art systems and technologies that the bank has invested in and implemented over the last three years provide a foundation for system optimisation, efficiencies and cutting edge innovation in the years ahead.

Technology optimisation

We want to position the bank as the employer of choice in Namibia. To this end, we have reviewed our staff engagement and recognition programmes, and have strengthened our training programmes given business requirements. We cannot achieve the change and progress we are planning without a strong, motivated, skilled and engaged workforce.

Employer of choice

Given the journey that the bank has travelled in the implementation of the new core banking system, it is imperative that we prioritise the need to review and update our processes, products and services to optimise the new core banking system. To make this possible, we are creating an enabling environment for harvesting new ideas and looking for opportunities for change and continuous improvement.

Continuous innovation

This pillar of our strategy is aimed at making the bank the preferred bank in our chosen market segments, supported by products and services that are solution driven, in line with our customers’ needs. The refreshing of our value propositions to our customers for our key products and focus segments will ensure ongoing relevance and preference.

Trusted and preferred bank

All the above initiatives are geared toward the bank realising accelerated growth over the coming years. The management team has set itself ambitious but achievable targets for growth over the next three years to 2017.

Accelerated growth


ABOUT STANDARD BANK

Our integrated pillars of operation

PBB

Mortgage lending

Card products

Transactional products

Instalment sale and finance leases

Lending products

Bancassurance

WHAT WE OFFER

CIB

WHAT WE OFFER

SBN Holdings Limited

Our integrated pillars encompass our business units and enabling functions, which is where our strategy is executed. Clear strategies for each of our business units and enabling functions ensure that we deliver on our purpose.

Global markets

Investment banking

Transactional products and services

7

PBB provides banking and other financial services to individual customers and small- to medium-sized enterprises.

2015 2014

Return on equity 22.76% 16.99%

Cost-to-income ratio 59.61% 62.46%

Credit loss ratio 0.67% 0.98%

CIB offers corporate and investment banking services to its clients, which include governments, parastatals, larger corporates, financial institutions and international counterparties.

Other business operations include centralised support functions (back office), including those functions that were previously embedded in the business segments. The direct costs of these support functions are recharged to the business segments.

2015 2014

Return on equity 25.89% 19.71%

Cost-to-income ratio 54.00% 60.00%

Credit loss ratio 0.05% 0.05%

N$171 millionProfit after tax33% contribution to SBN Holdings’ PAT

2014: N$121 million

“We continue our journey to reposition Standard Bank in relation to the forces that are reshaping our industry. The extent to which we are changing the bank in ensuring it remains relevant and

responsive to its customers within Namibia cannot be underestimated. This all-encompassing transformation, and the significant levels of investment we are allocating to it, is necessary to

create an organisation that will be innovative, competitive and effective long into the future”. – Vetumbuavi Mungunda: Chief Executive

N$356 millionProfit after tax68% contribution to SBN Holdings’ profit after tax (PAT)

2014: N$242 million

N$2 millionLoss after tax(1)% contribution to SBN Holdings’ PAT

2014: N$(1) million


ABOUT STANDARD BANK

Our footprint

Lüderitz

Rosh Pinah

Keetmanshoop

Maltahohe Mariental

Aranos

Rehoboth

WindhoekWalvis Bay

SwakopmundArandis

OmaruruOkahandja

Gobabis

Otjinene

OtjiwarongoKhorixas

Outjo

Tsumeb

RunduOndangwaOngwediva

Eenhana

OpuwoOkahao

OkalongoOshikango

Outapi

Nkurenkuru

Katima Mulilo

Grootfontein

Standard Bank was the first commercial

bank to open its doors in Lüderitz in 1915.

The credo of the bank is simple, the approach direct, and the

results positive. We offer a complete range of financial

services, be it corporate, commercial, personal or

business banking. We have an extensive branch network

and ATMs across Namibia, with specialist support divisions

such as Standard Insurance Brokers, Vehicle and Asset

Finance and Home Loans.

Omuthiya

Bethanie

Aussenkehr

Otavi

Hentie’s Bay

Oshakati

9

Measuring our sustainability progress

N$525 million Profit after tax

2014: N$362 million

N$1 331 million Wealth created

2014: N$1 044 million

11.50% Employee turnover rate

2014: 13.47%

23.56% Return on equity

2014: 17.67%

Ranked fourth Out of nine companies in the large company category of the 2015 Deloitte Best Company to Work For survey.

59% Women employees as a percentage of the workforce2014: 56%

64% Union membership

2014: 67%

118 177 Retail banking customers

2014: 91 494

N$4 million Corporate social investment spend

2014: N$4 million

N$23.9 billion Total assets

2014: N$21.8 billion

35% Of total procurement spend spent with local broad-based black economic empowerment suppliers

N$5.8 million Training spend

2014: N$2.5 million

17.4 Net Promoter Score

ranking 3rd in the industry

Progress has been made or Standard Bank is satisfied with its performance.

Areas for further improvement.

196 Number of critical and high IT incidents

26% Market share by assets

2014: 25%

0.51% Credit loss ratio

2014: 0.76%

75% Financial Sector Charter compliance

2014: 47%

58.34% Cost-to-income ratio

2014: 62.04%

10 SBN Holdings Limited Sustainability report 201510 SBN Holdings Limited Sustainability report 2015

JOINT STATEMENT FROM THE CHAIRMAN AND CHIEF EXECUTIVE

Jointstatement

HERBERT MAIER/VETUMBUAVI MUNGUNDA

The decision taken by the SBN Holdings board of directors to publish a sustainability report for

stakeholders is based on the belief that our ongoing sustainability is linked directly to our being a valuable

member of our communities and of broader society, now and into the future.

N$525 millionProfit after tax

2014: N$362 million

23.56%Return on equity

2014: 17.67%

from the chairman and

chief executive

1111

It is with great excitement that we introduce the SBN Holdings Limited (Standard Bank) inaugural sustainability report, coinciding with our 100-year anniversary. At the board training session held in March 2015, the board of directors agreed to introduce sustainability reporting into Standard Bank's suite of reports to stakeholders. This is based on the belief that our ongoing sustainability is linked directly to our being a valuable member of our communities and of broader society, now and into the future. We recognise that social issues have material costs and impacts, and could directly impact our long-term viability.

Responsible finance is core to our contribution to sustainability. As a financier we work with individuals who are improving their quality of life and enhancing their financial security, with businesses growing and creating employment, and with governments building infrastructure and securing a better future for their citizens. We also play a fundamental part in addressing global and local challenges through financing developments in key sectors that contribute to resolving issues such as energy security, resource depletion and poverty. The nature of our business positions us to help our customers and other stakeholders manage social challenges and invest for the future, which in turn contributes to the viability and sustainable growth of the Namibian economy. The success of our customers, clients and stakeholders guarantees future business, which underpins our sustainability.

Our material focus areasOur three-year strategy to 2017, under the theme ‘Tuyende’ meaning “lets move” in most local languages, is focused on increasing the bank’s profits and market share, currently at 26% of the local banking sector in terms of

assets. Six key priorities have been identified to move us towards meeting our strategic objective of accelerated growth. To measure our progress, we have identified eight material focus areas which we must effectively manage to address the challenges we face and realise the medium-term opportunities these challenges represent. The diagram on page 12 links our material focus areas to our key priorities.

Financial performanceNamibia’s gross domestic product (GDP) slowed to 5.7% in 2015 compared to 6.4% in 2014. The annual inflation average for 2015 was 3.4% compared to 5.35% in 2014.

Namibia’s public debt as a percentage of GDP remains well within its limit of 35%, estimated to have reached 23.6% in the first quarter of 2015. Of this amount, external debt accounts for 7.9% with the remainder being domestic debt. Following the government’s issuance of its second Eurobond in October 2015, external debt is set to rise to 14% of GDP. As a percentage of GDP, domestic debt has increased 0.1% monthly, to 16.4% at October 2015.

The Namibian economy remains resilient, notwithstanding the headwinds facing the global economy. Overcoming Namibia’s reliance on South Africa’s deteriorating economy is a challenge, together with high youth unemployment. However, growth prospects remain positive anchored by growth opportunities in key sectors such as mining, power and infrastructure development.

In this market which is showing relatively positive trends, Standard Bank produced a strong performance in 2015, increasing profit after tax by

45% and loans and advances by 11%. Return on equity improved to 23.56% from 17.67% in 2014. Total income grew by 20% and expenses by 13%, reflecting the delicate balance between cost management and the need for continued investment in our systems and infrastructure to remain relevant to our customers and innovative in our service offering. Our capital position remains strong, with a total capital adequacy ratio of 15.60%.

Critical factors to ensure we deliver sustainable long-term financial performance remain the successful management of credit impairment charges and operational losses. Our credit loss ratio reduced to 0.5% from 0.8% in 2014, partly due to the continued growth in the economy, but also related to our robust and stringent application process which protects both the customer and our bank. A tight control has been maintained on costs while investing in long-term growth.

Regulatory developmentKeeping abreast of the pace, volume and scale of regulatory change, which continues to increase, can be challenging in terms of the impact on our systems, processes and people. However, complying with all applicable legislation is integral to our culture as regulatory frameworks are developed to protect the consumer which aligns to our objective to act in the best interests of our customers. Three IT systems were implemented during the year to ensure our compliance with upcoming legislation. Where possible, we contribute actively and constructively to the development of national policy, legislation and regulation through formal submissions and regular engagement with policymakers, law-makers and regulatory authorities.


JOINT STATEMENT FROM THE CHAIRMAN AND CHIEF EXECUTIVE

Continuous innovation

Accelerated growth

Our key priorities

To provide our customers with

an excellent experience

Stable systems provide for system

optimisation, efficiencies and cutting edge

innovation

Position the bank as an

employer of choice in Namibia

Become the preferred bank

in our chosen segments supported by solution-

driven products and services

Create an enabling

environment for harvesting new ideas

and opportunities to make continuous

improvements

Gear the bank towards realising

accelerated growth to

2017

1

6

5

4

3

2

Technology optim

isation

Em

plo

yer

of c

hoic

e

Trusted

and

preferred bank

Customer centricity

Our eight material focus areas

Manage the risks and opportunities of our strategy

Deliver sustainable long-term financial performance

Keep abreast of the pace, volume and scale of regulatory change

Put the client at the centre of everything we do

Establish and maintain IT system stability

Recruit, retain and motivate our employees

Advance Standard Bank’s reputation

Embrace innovation

Linking our material focus areas to our key priorities

13

Customer experience To support our objective of delivering an excellent customer experience to everyone that engages with us, we aim to employ a culture of continuous improvements to our systems, processes, products and people.

We are also committed to developing a deep understanding of the needs of our customers, to put our customers at the centre of everything we do. During the reporting year, we introduced customer forums which will help our customer engagement efforts, driving change and improving overall customer service. We are also re-categorising our CIB portfolios to be sector specific, facilitating a more proactive engagement approach which provides us with a deep understanding of our clients’ sectors and the realities they face in conducting their business. In PBB, our customer value propositions are being reviewed for all our key product and focus segments to ensure ongoing relevance. In 2015, we launched new propositions for the Prestige segment. Pleasingly our retail customer base has grown by 29% compared to 2014.

IT system stabilityThe implications of the digital revolution for the financial services industry has been a complex item for the board to manage, and has required a comprehensive overhaul of our information technology (IT) governance structure. During the latter part of 2015, we established the board IT sub-committee which is responsible for ensuring the implementation of the IT governance framework across the bank.

We are working hard to establish and maintain IT system stability and our objective for 2015 was to reduce the number of high and critical IT incidents. We are taking corrective action following a review of our network lines and pleasingly our efforts have resulted in a reduction in critical technology incidents compared to 2014.

Our peopleTo improve our ability to recruit, retain and motivate our employees we have reviewed our staff engagement and recognition programmes and are strengthening our training programmes. A bankwide recognition event was held in January 2015 to reward the exceptional contribution of individuals. We are also finalising IT systems that will streamline human capital-related interactions with our people. Scheduled for implementation in 2016 are a mentorship programme for 25 senior managers and new graduate development programmes, as well as a learning academy for entry-level employees. Standard Bank participated in the Deloitte Best Company to Work For survey in 2015, ranking fourth out of nine companies in the large company category. Areas highlighted for improvement are being prioritised.

Corporate reputationOur efforts to advance Standard Bank’s reputation help us to earn the trust of our stakeholders and demonstrate our social relevance in communities. For the reporting year, we achieved a 28% increase in compliance with the Namibian Financial Sector Charter (FSC), scoring 75%. The increase is attributable to increased scores in the ownership and procurement pillars. We believe that a commitment to the charter from all main players in the financial sector will contribute to a stronger financial and economic system as a whole. We completed the first broad-based employment equity (BBEE) allocation to 1 237 employee beneficiaries, as part of the transfer of 10% of the bank’s shareholding from Standard Bank Group to Purros Investments Trust, our staff empowerment scheme. The second tranche of the share allocation will be finalised in the second quarter of 2016.

Our preferential procurement target was to achieve 30% BBEE spend, as required by the FSC, by December 2015. Our BBEE procurement spend was estimated at N$127 million, which at 35% of our total procurement spend exceeded this target.

Our corporate social investment (CSI) spend for the year amounted to N$4 million (2014: N$4 million), of which 47% was spent on initiatives that support education. Following the revision of our CSI strategy, we launched the Buy-a-Brick project to mobilise the private sector and members of the public to raise funds to address the country’s housing shortage. Finally, we are pleased to have been invited to participate in Standard Bank Group’s pilot programme to improve its environmental reporting for Africa. This will help us achieve our objective of including environmental data in our reporting going forward.

InnovationTo gain competitive advantage and attract top talent, we must create an environment that embraces innovation. An innovation forum was introduced during the year providing a diverse group of employees from across Standard Bank with an opportunity to bring a collaborative approach to the development of new products and processes. Eight projects were prioritised and are being developed.

Looking ahead The board has committed to publishing a sustainability report annually. Going forward, our focus will be on strengthening our metrics and implementing action plans with measurable targets to accelerate our growth and bring our ‘Tuyende’ strategy to fruition.

Mr H Maier Mr VJ MungundaChairman Chief executive


STATEMENT FROM THE GROUP COMPANY SECRETARY

Statement from the group company secretaryIt is a great privilege to have assumed the responsibility for sustainability management within Standard Bank. The bank is committed to making a meaningful contribution to sustainable development in Namibia through upholding ethical and responsible financing and business practices. By doing so, we strive to unlock value for all stakeholders, particularly our customers, employees and shareholders.

As a financial services provider, our sustainability depends on our effectiveness in assisting individuals, businesses and institutions to fulfil their economic potential by facilitating payments, managing risk and creating and preserving wealth. Our core business activities – if managed correctly and in the best interests of our stakeholders – have the potential to create these positive social outcomes.

We intend to be relevant in the communities in which we operate. We consider it a business imperative to understand and effectively respond to the national, regional and global pressures influencing our customers, our communities, our business development and ultimately shareholder value.

We understand our obligation to manage the direct and indirect environmental and social impacts that our activities, products and services have on the Namibian society.

Managing the risks that environmental and social pressures place on our ability to create sustainable value for our stakeholders is something we take seriously and aim to respond to strategically.

Environmental risk management strategies will be integrated into our daily business processes on a continuous improvement basis and we will proactively find market-based solutions, such as renewable energy financing, to create solutions that will translate into sustainable development outcomes.

To reduce our environmental impact and to continually improve our own environmental and social performance, we will introduce measures in 2016 to benchmark our environmental footprint and will look for ways to reduce energy usage, greenhouse gas emissions, water consumption and pollution. We will further introduce an integrated waste management plan based on waste minimisation as well as the Reduce, Reuse, Recycle hierarchy.

These examples speak to our resolve to embed sustainability best practice throughout our business. Going forward, we will continue to improve our sustainability management, measurement and reporting, and we welcome feedback on our efforts to drive continuous improvement.

Sigrid TjijorokisaGroup company secretary

15

materialareas

focusOur


OUR MATERIAL FOCUS AREAS

Introduction

Effectively managing our material focus areas is critical to achieving our strategy and supports our intention of creating a shared future for all our stakeholders.

We define materiality as being the medium-term issues that are strategically significant to Standard Bank Namibia Holdings Limited (Standard Bank) and fundamental to maintaining our commercial viability and social relevance. By understanding what our material focus areas are, we are able to:

• Ensure that our strategy accounts for significant social, environmental and ethical aspects.

• Identify potential impacts on our ability to create value in the long-term.

• Prioritise our resources.

• Better understand the expectations of our stakeholders and the drivers of our legitimacy and licence to operate.

At the board training session held in March 2015, Standard Bank adopted eight material issues and will continue to refine these where required to ensure ongoing relevancy. It was further agreed that building Standard Bank's reputation in Namibia is fundamental to the bank achieving its strategy. Through this process we identified the eight focus areas listed in the table alongside as being material to our sustainability.

Stakeholder engagement Our relevance depends on continued and meaningful engagement with all stakeholders. Building and maintaining good relationships positively impacts

our business activities and reputation.

We proactively engage with

stakeholders to inform our business

strategy and operations, shape our

products and services, manage and

respond to social expectations,

minimise reputational risk and form

strong partnerships. The ways in which

we engage with our stakeholders, and

the frequency with which we do so, vary

according to each stakeholder group.

SD

Engagement with our stakeholders is reported throughout the material focus area section from pages 18 to 49.

We work to ensure we meet our

stakeholders’ reasonable expectations.

Where misalignments or conflicts are

identified, we aim to resolve these at

the business unit or, where required, at

executive level. Mechanisms are in

place for stakeholders to communicate

grievances.

OUR STAKEHOLDER GROUPS

Direct relationships with regular communicationGovernment and

regulatory authorities

Shareholders, rating agencies, financial analysts and the business community

Service providers and suppliers

Communities we operate in including bursary and scholarship recipients and institutions of higher learning

Civil society groups

Community development non-governmental organisations

Indirect relationships where engagement takes place from time to time on specific issues

Media

Business associations

Research organisations

Employees and trade unions

Customers and clients

Industry bodies

17

Recruit, retain and motivate our employees

Finding, keeping and developing empowered and motivated people is core to our success and strengthens our competitive advantage. How our people think and feel about work directly correlates with client satisfaction levels. We believe in harnessing the full potential of our people as a critical driver of our success in delivering a superior customer and client experience.

6

Advance Standard Bank’s reputation

Our good reputation is one of our greatest assets and helps us earn the trust of our stakeholders and demonstrate our social relevance in communities.7

Embrace innovation

We provide similar products and services to similar customers in the same market as other financial institutions. To be competitive, we need to innovate which also allows the bank to meet its strategic objectives, be relevant to its markets and attract and retain top and critical talent.

8

Establish and maintain information technology (IT) system stability

IT directly impacts how we interact with and service our customers. We, therefore, view IT as a strategic asset that creates sustainable value by enabling our growth and our ability to achieve operational excellence. 5

To sustain our business performance, we must remain responsive to the market in which we operate. Our focus is to know who we are doing business with and how we are doing business with them while constantly being guided by our values. It is essential that we maintain our reputation for absolute integrity, for complying with our regulatory obligations and for doing the right business the right way.

Put the client at the centre of everything we do

4

The volume of regulatory change is being driven by several factors including international reform of the financial sector following the global financial crisis. New regulation has extensive bearing on day-to-day operations, impacting processes such as pricing decisions and product design, as well as decisions around our ethics and culture.

Keep abreast of the pace, volume and scale of regulatory change

3

Remaining financially sustainable means we are able to:• Access the capital required to invest in our infrastructure, projects and businesses;

in turn enhancing our ability to service our customers. • Deliver dividends and grow the investment of our shareholders, who provide our

financial capital.• Create and sustain employment.• Significantly contribute to the national treasury through taxes.

Deliver sustainable long-term financial performance

2

FOCUS AREAS:

Our strategy and future business plans must protect our competitive position and shareholder returns, within both the Namibian context and that of Standard Bank Group.

Manage the risks and opportunities of our strategy

1



Manage the risks and opportunities of our strategy1

OUR INTENT

We are committed to the ‘Tuyende’ journey and the factors that underpin our legitimacy and the trust our

stakeholders have in us. Our 2015 results are testimony to the progress we have made however work is still

required to ensure that we are in a position to fully realise the potential inherent in what the market offers and the

Standard Bank brand. To realise our strategy, we need to be proactive in how we plan for and manage risks, in a way that

allows us to leverage the opportunities they present.

FOCUS AREA

comprehensive and independent reporting. The governance committees are a key component of the risk management framework and assist the board in its evaluation of the risks faced by the bank and how effectively these risks are being managed. The board risk committee is responsible for reviewing and recommending the risk philosophy, strategy and policies for approval and adoption by the board of directors. Other board committees responsible for effective risk management are the board audit committee and the board credit committee.

We are focused on building a resilient and risk-aware culture, essential for effective risk management and which promotes a cohesive and flexible response when dealing with new risks that arise.

Our approachThe board is responsible for the bank’s strategic direction. The board ensures the strategy is aligned with the bank’s values, performance and sustainability objectives, and addresses the associated risks. Board meetings are held quarterly, with ad hoc meetings when required.

During 2015, we commenced the implementation of our 2015 – 2017 strategy, founded on a strong sense of team work and common purpose as evidenced by the collaboration and coordination of activities and plans across the bank.

Our risk governance process relies on individual responsibility at senior executive level and collective oversight at group level, supported by

OUR STRATEGY

To realise accelerated growth in Standard Bank’s profits and market share in Namibia.

Statistics released by the Bank of Namibia at September 2015 indicate that Standard Bank ranks third in terms of total assets held in the local banking sector. The leading bank holds 31% of total banking assets.

SD

Our key strategic objectives are set out on page 5.

• Work to grow transactional and processing revenue for Corporate & Investment Banking (CIB) by attracting new clients and servicing the needs of existing clients with relevant and reliable

technology systems. • Grow Personal & Business Banking’s (PBB) transactional revenue by attracting new customers

and servicing the needs of existing customer through the delivery of new payment technologies and enhanced customer experience.

Looking ahead

we will:

KEY PERFORMANCE INDICATOR

2015 2014

Market share: assets1 % 26 25

1 Bank of Namibia at September 2015.

19

We face a number of challenges in executing our strategy, ranging from increasing competition and customer expectation to difficult macroeconomic trends. To realise the opportunities inherent in these challenges, we work to understand the realities our customers face as a result of these changing market dynamics and adapt our business accordingly to provide the services and solutions they require to achieve their goals.

SD

The challenges faced in executing our strategy are set out on pages 20 and 21.

Our opportunities The repositioning of Standard Bank is aimed at ensuring we remain relevant in relation to the forces that are reshaping our industry and responsive to our customers. This all-encompassing transformation, and the investment we are allocating to it, are necessary to create an organisation that is innovative, competitive and effective long into the future.

We are investing in our product offering and systems, as well as expanding our internal capacity by providing our people with what they need to deliver exceptional client experiences. Finacle, our core banking system is a universal banking solution that allows us to deliver new products to market faster, while providing improved automation and reduced risk of fraud. Given the stability that we achieved in our technology systems in 2015, the bank is now poised to transition to an innovation phase which commenced towards the end of 2015 with the launch of our first wallet product which has seen impressive uptake.

Macroeconomic and domestic challenges, ranging from depressed commodity markets to rising interest

rates, reduces demand for our products and services. We are actively engaging with our clients to address these pressures on their businesses, assisting them to minimise any potential losses that might arise.

Supporting the public sector not only provides us with the opportunity to fund large capital projects and develop public private partnerships, it also enables us to assist the Namibian Government in achieving its objectives outlined in Vision 2030 and the National Development Plan. We offer the public sector a global banking experience from transactional banking services to complex structured finance. In 2015, we partnered with the Namibian Government on its second Eurobond issuance in the international capital markets, acting as joint lead manager and book runner on the USD750 million, ten-year transaction. We also facilitated a N$670 million bridge facility for the Development Bank of Namibia to finance the National Energy Fund’s fuel storage facilities at Walvis Bay. This will increase the national fuel supply by 30 days. In total we arranged and funded more than N$2.7 billion for projects within the public sector in 2015.

Our cross-border capabilities and our relationships with development finance institutions, export credit agencies and development banks (Namibia and Southern Africa) position us to carry out major infrastructure transactions. Infrastructure enables industries, and industry contributes to employment and supports economic growth. In 2015, we were selected as a co-financer of the N$210 million ‘77 On Independence’ retail complex project in Windhoek which includes 11 floors of apartments, a gym and swimming pool for residents and a retail mall, as well as two underground parking areas.

Energy (N$770 806)

Oil and gas (N$250 304)

Telecommunications (N$78 473)

Transportation (roads, rail, ports)

(N$1 063 262)

Water (N$212 726)

Mining and metals (N$550 579)

Other incl. real estate (N$943 676)

INFRASTRUCTURE FINANCING

Trading revenue from global markets grew 18% and we achieved 17% growth in the volume of CIB’s transactional products and services.

Notably we supported Namibia Water Corporation Limited’s (NamWater) debut corporate bonds issuance, together with IJG Securities, on the Namibian Stock Exchange in April 2015. Bids totalled. N$468 million with N$200 million allocated and issued to successful investors. The bond contributes to growing the existing domestic capital market in line with the Namibian Financial Sector Charter (FSC).



Challenges in executing our strategy

ChallengesThe following challenges provide a forward-looking view of what we need to manage as we execute our strategy over the medium term, and are reflective of the issues deliberated on by management across our businesses. To realise our vision, we need to be proactive in how we plan for and manage these challenges, in a way that allows us to leverage the associated opportunities.

Maintaining awareness of these challenges in our deliberations ensures that the way we do things is informed by robust decision-making and ultimately results in improved service to our customers, in balance with our obligations to our other stakeholders.

Increasing competition in Namibia and Africa

Global and regional banks are expanding their presence in Namibia, and the increase in non-traditional competitors is

being driven by advances in technology and, in some cases, their ability to operate outside the ambit of financial services

regulation. In this context, we need to defend and grow our position by providing the best customer experience at the lowest

possible cost. Our legacy and our position as an integrated financial services group differentiates us in an industry increasingly

characterised by growing fragmentation and disintermediation.

Changing regulatory landscape

The volume of new financial services regulations continues to grow. To continue participating in global markets, we must adhere to international

regulations. Ensuring an efficient customer experience while adhering to regulatory demand is an ongoing consideration. Our client focus aligns to the

spirit of these regulations, which is ultimately to protect consumers.

Operational challenges

Maintaining business resilience in an environment characterised by power and water supply constraints and heightened potential for adverse socio-political events due to

economic challenges, requires a constant forward-looking approach. In addition, the industry-wide trend to outsource material business activities requires greater oversight of

third parties to prevent potential negative impacts on our operational activities and to ensure client information utilised by third parties is secure.

AROur risk and capital management disclosure is set out in Annexure C of the 2015 SBN Holdings Limited Annual Report.

In a turbulent global and regional economic environment, Namibia continued to offer opportunities for growth. The unique risks faced in Africa require a forward-looking approach, to enable us to identify and realise the opportunities they present.

21

Managing associated

risks

Aligning risk management to our

client focusUnderstanding our customers forms

a key part of managing risk in the bank and will further benefit from our client

focus. A key initiative in this regard is bringing risk management closer to the

functions where risks arise, identifying risks early and, in our client-facing functions, gain

deeper insight into our clients.

Other projects include aligning the collection of financial and risk data to improve our view of the

size and potential consequences of exposures and implementing measures to better understand the

complex interrelationships between different risk types.

These initiatives are supported by our investments in technology, and together will allow us to tailor our

products and services in a way that better manages our risk exposures and reduces related capital requirements.

Building a risk-aware cultureBuilding a resilient and consistent risk-aware culture is essential

for effectively managing the challenges that may arise in executing our strategy. Our three lines of defence model supports building a

risk-aware culture by ensuring accountability, responsibility and sufficient coverage of the risk landscape.

Acting ethically and fairly in everything we doConduct risk is the risk that the group itself poses to our clients, and to the

effective functioning of financial markets, through behaviour that is not ethical or fair. The way we execute our day-to-day activities – including how we

design and market products, how we communicate with clients and how we meet their expectations – prescribes the culture we wish to build and therefore

determines our ability to keep the promises we make to our clients and put them at the centre of everything we do.

Technological development

The constant development of new technologies presents us with both challenges and opportunities. Building a digital bank that responds to competition and changing customer expectations needs to be managed in a way that does not compromise system stability and customer experience. The value of information as an asset makes it a potential target for cyber-attacks, in addition to theft of funds. Globally, cyber-attacks are increasing in number and sophistication, as is the exploitation of systems and people. In addition, criminal activity can be heightened by the introduction of new channels.

Customer expectation

The capabilities of new technologies – and the speed with which they are being adopted – mean that consumers increasingly expect highly tailored yet affordable products and services that are available whenever they choose. The emergence of new services from non-traditional competitors, the ease with which customers can change to a different bank and the speed at which negative experiences can be shared through social media require a greater focus on customer experience.

People and culture

Achieving our objective of putting our clients at the centre of everything we do ultimately depends on our people’s ability to provide great customer experiences, whether directly through their interactions with clients, through the products and services we develop or through the management of compliance processes that could impact on the perceived quality of service. Building a digital bank requires us to employ and develop new skills, and for our people to adapt to new ways of working. In light of the challenges in executing our strategy, and to maintain trust, we need to ensure a culture that values customer fairness and market integrity in everything we do.



Deliver sustainable long-term financial performance2

OUR INTENTFOCUS AREA

Our initiatives to enhance financial performance are geared towards realising accelerated growth from 2015

through to 2017. We will continue to manage the group for long-term profitability by investing appropriately in our

diverse portfolio of businesses and in the capability and wellbeing of our people, while applying a disciplined and

prudent approach to risk. We understand that our primary aim to improve the returns we deliver to our shareholders requires

that we create lasting value for all our stakeholders.

Our approachOur financial statements presented in the SBN Holdings Limited Annual Report are prepared in accordance with International Financial Reporting Standards and include amounts based on judgements and estimates made by management. The financial statements have been audited by the independent auditors, PricewaterhouseCoopers.

2015 HIGHLIGHTS

Standard Bank produced a strong performance in 2015, increasing profit after tax by 45% and loans and advances by 11%.

The group maintained a well-capitalised position based on total capital adequacy (15.60%), tier I capital adequacy (13.16%) and tier I leverage (9.47%) ratios. The liquidity position remains strong with appropriate liquidity buffers in excess of regulatory requirements.

KEY PERFORMANCE INDICATORS

2015 2014

Profit after tax 524 531 362 090

% growth in profit after tax for:

– PBB % 45.39 21.03

– CIB % 41.37 10.78

Return on equity % 23.56 17.67

Cost-to-income ratio % 58.34 62.04

IT spend as a % of operating costs % 23.21 24.24

Staff costs as a % of operating costs % 49.56 50.10

Total capital adequacy ratio % 15.60 13.17

Liquidity buffer N$ 2.1 billion 1.9 billion

Non-performing loan ratio % 2.73 2.06

23

Our performance in 2015Return on equity improved to 23.56% from 17.67% in 2014 and total income grew by 20% and expenses by 13%. This reflects an appropriate balance between cost management, long-term investment and revenue enhancing activities. The cost-to-income ratio improved to 58.34% from 62.04% in 2014. Profit after tax for PBB and CIB was up from 2014 by 45% and 41% respectively.

Credit impairments were 24% lower than 2014 at N$85.3 million and the credit loss ratio improved to 0.51% (2014: 0.76%). Non-performing loans as a percentage of gross loans and advances increased from 2.06% in 2014 to 2.73% in 2015 with improvement seen in most of the portfolios.

The group continues to invest in both staff and infrastructure to provide excellent customer service and deliver on our strategic priorities. We maintained a tight control on costs while investing for long-term growth.

Staff costs grew 11% due to annual salary and other benefit increases offset by reduced temporary headcount. Other operating expenses increased by 14% largely as a result of increased IT expenditure, and branch expansion and revamps.

ARFull disclosure of our financial performance can be found in the 2015 SBN Holdings Limited Annual Report.

Shareholders are encouraged to attend the annual general meeting where the chairmen of the board audit committee and board human capital sub-committee are available to respond to questions.

In 2015, engagement with investors and analysts centred on our risk management framework and cost management.

Engaging with our shareholders

and analystsOngoing engagement with

our shareholders and analysts is facilitated

through the finance team.



Keep abreast of the pace, volume and scale of regulatory change 3

OUR INTENT

In ensuring that we comply with new legislation, we remain mindful that the ultimate objective of many of

the regulations pertaining to banks is to protect consumers. Embedding regulatory compliance and best

practice in our operations requires that we balance the interests of various stakeholders, and supports the long-term

stability and growth of the Namibian financial market and our ability to achieve our own growth aspirations.

FOCUS AREA

Our approachThe volume, scope and complexity of new regulations being introduced into the Namibian financial sector requires an approach that is forward looking, pragmatic and well-coordinated. Compliance failures can result in substantial financial penalties and reputational damage, as well as loss of market share. We anticipate that the increasing demand and complexity of regulatory developments, at global, regional and national levels, will remain a feature of our operating context going forward.

Continuous and constructive engagement is a key focus area for managing regulatory change, not only to understand policy imperatives that drive regulatory changes, but to proactively communicate potential challenges in implementing the processes required for compliance. Proactive engagement with regulators also facilitates solutions that benefit all stakeholders, particularly where regulatory change impacts on our day-to-day business procedures and therefore client experience.

Our memberships in industry associations provide the opportunity to interact on a range of issues, enabling us to contribute our views on emerging regulatory matters through industry-wide submissions to regulators.

The compliance unit manages the bank’s relationship with its primary regulators, the Bank of Namibia and the Financial Intelligence Centre. All communication with regulators and regulatory supervisors takes place within a disciplined framework and by designated employees.

escalated to the board risk committee and board directors are regularly appraised of new legislation that may impact the bank.

Compliance training is mandatory and delivered to our employees online and face-to-face. Modules cover our code of ethics, conflicts of interest and outside business interests, personal account trading, market abuse (for CIB only), data privacy, treating customers fairly and receiving gifts and entertainment. Refresher training takes place every two years. Anti-money laundering compliance training, however, must be completed annually.

Compliance is integral to Standard Bank’s culture. The board delegates responsibility for compliance to management, which is monitored through the compliance unit. Oversight of compliance risk management is delegated to the board audit committee. The compliance unit reports quarterly to the board audit committee on areas of non-compliance, and provides feedback on interactions with regulators. The compliance unit, as well as our compliance policy and governance standards, are subject to review and audit by the internal audit team. Material regulatory issues are

Engaging with our regulators

Our engagement with regulators takes place at both a bank and industry

level. Our approach is guided by our aim to promote regulatory

frameworks that are unambiguous, cohesive and practical, and that

minimise unintended consequences.

25

How we are preparing We have aligned our controls and processes to meet the new requirements and have updated our training material accordingly. We are also implementing a system to ensure our reporting obligations are fulfilled within the required timelines.

Our performance in 2015As the volume of new regulation increases and regulators become stricter, effectively managing our ability to remain compliant places pressure on our systems, processes and people, and increases the amount of time spent on compliance activities. However, regulatory change can also provide the opportunity to improve our services and be first to market with new and innovative products and services and risk mitigation strategies, which could potentially translate into competitive advantage.

No significant fines or sanctions were incurred by Standard Bank in 2015. During the year, we continued to strengthen compliance awareness in the bank through training interventions and at December 2015, 86% of our workforce had completed their compliance training. Face-to-face training is provided to non-clerical employees, some of whom do not have access to the online training platform. In addition to training, we conduct general compliance awareness programmes for employees.

Several new regulatory enactments were introduced during the reporting year, requiring investment in three infrastructure projects which will help us make better compliance decisions. The most significant regulatory changes in terms of impact on the bank are disclosed below, along with the action taken to respond to these changes.

How we are preparing We have reviewed and amended our human capital procedures to ensure compliance with the Act.

Recent regulatory changes Regulations of the Financial Intelligence Act

Regulations of the Financial Intelligence Act 2012, outlining the recognition and handling of suspected money laundering or financing of terrorism transactions by accountable institutions, was promulgated on 28 January 2015. The regulations require that institutions take reasonable steps to establish the identity of an existing client or prospective client, and to report to the Financial Intelligence Centre, matters relating to the combating of money laundering and the financing of terrorism.

Employment Services ActCommencement of Part 3 of the Employment Services Act which requires all employers with 25 or more employees to report job vacancies or new positions to the Employment Service Bureau in the Ministry of Labour, Industrial Relations and Employment Creation. This is intended to promote inclusivity and non-discrimination in job appointments.

At 31 December 2015, 1 504 employees received compliance training, of which 86% had successfully completed the minimum requirement of nine mandatory courses. In total 10 405 courses were completed.

Compliance training relating specifically to treating customers fairly was completed by 1 301 employees.



Put the client at the centre of everything we do 4

FOCUS AREAOUR INTENT

We aim to be the preferred bank in our chosen market segments, supported by products and services that are

solution-driven and meet the needs of our customers. We will achieve this by earning the trust of our customers,

which requires that we develop the necessary technical competencies and innovation capabilities to offer products

and services aligned to their banking behaviour and serve their changing needs. We will also develop new business models

beyond those of traditional banking.

2015 HIGHLIGHTS

We achieved growth in our retail customer base of 29%. PBB’s success in 2015 is largely attributed to strategic adjustments such as refining our customer acquisition strategy to target profitable customers in high-value personal and business banking segments.

Six customer forums were held to identify where we can improve customer experience.

Our value proposition for the Prestige segment was launched and value propositions for other segments and key products will be finalised in the first quarter of 2016.

We launched the Standard Bank Blue-Wallet, a money transfer mechanism, and delivered the Standard Bank banking application (app) for tablet devices.

The Outjo branch in the Kunene region was revamped, offering an improved customer experience.

Electronic banking revenue increased due to higher business online banking activity.

Our approachThe ‘trusted and preferred bank’ pillar of our strategy focuses our ambition to re-orientate what we do and how we operate around our customers. We are refreshing the customer value proposition for our key products and segments including business banking, small and medium enterprises, private banking, power and energy, and mining and infrastructure.

We have implemented the key principles of the Bank of Namibia’s Consumer Protection Guidelines which outline the principles for the treatment of and interaction with customers.

Given the nature of our business, we have access to the personal information of our customers and keeping this information private and confidential is a key aspect of good market conduct. Our data privacy policy, available to all employees on our intranet, governs the privacy of all customer information. In addition, every employee is required to sign a confidentiality agreement, adherence to which is reviewed regularly. Our compliance policy also covers transparent pricing. New customers and existing customers opening a new account are provided with printed material on the general fees and costs associated with the product. Charges are also verbally explained by our frontline staff.

Posters in banking halls and at service points inform customers on the mechanisms available for lodging a

complaint. Customers are able to lodge grievances and seek solutions to their complaints through our customer care centre, which is accessed using a toll free number. Complaint mail boxes are available in branches for customers to discreetly provide feedback on the service received and an SMS facility (0819286) is also available for the reporting of complaints and compliments.

Reference numbers are provided for every query or complaint logged with the customer care centre, together with an expected timeframe for feedback. Our complaints management process allows for the escalation of complaints that are unsatisfactorily resolved, and findings gathered from the complaints process are reported to the executive team together with root cause analyses to enable the implementation of corrective measures.

Financial crime continuously evolves and criminals are using more sophisticated technology and approaches. We aim firstly to prevent financial crime and secondly to minimise the impact of financial crime on customers where instances occur. We are intolerant of all forms of financial crime, including fraud, theft, bribery and corruption, terrorist financing and money laundering. We have a dedicated financial crime control function and our efforts are further supported by a number of policies that cover financial crime, anti-bribery and corruption, whistle blowing and gifts and entertainment.

27


2015 2014

Number of retail customers

PBB silver 90 366 71 073

Prestige Achiever 17 070 11 336

Private banking 4 935 6 064

Small and medium enterprise (SME) tier 1 5 806 3 021

Total number of PBB customers 118 177 91 494

Number of branches

Branches including service centres 53 48

Automatic teller machine (ATM)

Standard Bank-owned ATMs 220 169

Number of transactions 13 592 806 12 673 377

Internet banking

Registered subscribers Not available Not available

Active subscribers Not available Not available

Number of transactions 1 491 984 1 107 451

Mobile banking

Registered subscribers Not available Not available

Active subscribers Not available Not available

Number of transactions Not available 6 689

SMS alert subscribers 193 375 143 975

Customer experience

Number of customer complaints 959 1 192

Net Promoter Score (NPS) for the retail bank 17.41 Not available

1 Ranking 3rd in the industry.

• Work to provide our business banking customers with a better internet banking experience through increased payment functionality and the ability to open accounts.

• Deliver real-time note accepting machines that immediately reflect cash deposits in a customer’s account.

• Launch a mobile phone version of the Standard Bank app.

• Expand or upgrade our branch network to add impetus to our accelerated growth aspirations and improve customer experience.

• Pilot a query management tool, currently only available in the customer care centre, in certain business areas to improve our ability to track and monitor queries and complaints.

• Introduce fraud monitoring tools to proactively monitor and track customer transactions.

Looking ahead

we will:



Our performance in 2015

In 2015, six well-received customer forums were held targeting different banking segments including estate agents, top CIB clients and private banking customers.

CIB’s focus for 2015 was to drive the execution of the client engagement model which is aimed at gaining a deeper understanding of our clients’ businesses and the sectors they operate in. CIB is enhancing its operational structure to better serve its top 20 clients. All CIB clients have a dedicated relationship manager who undertakes client site visits.

We have also introduced expert sessions facilitated by a social media manager who chats live to customers on certain topics and products. These sessions take place every two months and our customers appreciate the instant feedback.

PBB uses the globally accepted NPS to gauge customer perception as a key measure of customer experience. This methodology measures loyalty by asking customers whether they would recommend Standard Bank to their family and friends. For 2015 our NPS was 17.4 against an industry average of 31.8, ranking Standard Bank third in the financial services industry. The benchmark is measured across commercial, SME and private banking, as well as gold and silver banking.

The top concern raised by retail customers is turnaround time on key products such as home loans and vehicle and asset finance. Our initiatives have reduced home loan turnaround time from an average of 150 days in 2014 to 70 days. The trend for vehicle and asset finance is reducing however this is still a key focus for further improvement. The nature of complaints is shifting from significant service issues to more IT-related issues such as internet banking and one-time password delays, and slow systems at various branches. We are pleased to note that complaints decreased by 20% compared to 2014.

SDHow we are addressing the stability of our IT systems is discussed on page 30.

CIB undertakes an annual client satisfaction survey through external consultant, TMS Research. This helps us to analyse client needs and implement corrective actions where required. The surveys are conducted either telephonically or by email. Overall the 2015 results were satisfactory and we were identified as the leading corporate and investment bank in Namibia by the majority of respondents. Feedback indicates that our clients would like more frequent interaction and that we could improve the way we address clients at risk. We are restructuring our portfolios to be sector specific and facilitate proactive engagement on a knowledge basis. In addition, team meetings including transactional products and services, investment banking, global markets and credit will take place prior to client visits, ensuring that we offer a holistic solution that meets clients’ needs across a range of products. CIB is also implementing an active complaints management process aligned to that of PBB. For our clients at risk, a plan of action has been put in place for each client and covers the product house concerned and the credit unit.

Branches and call centresWe are expanding and modernising our branches to enhance the customer experience. New branches were opened in Mondesa (Swakopmund), Okahandja and a new business banking branch in Maerua Mall. We refurbished our branches in Lüderitz and Otavi, and relocated our branch in Henties Bay to new premises. We also upgraded our Outjo branch (originally opened in 1927) in the Kunene region, contributing to economic development in the area. All new banking premises are designed, and older premises changed where feasible, to accommodate people with disabilities. Our expansion and refurbishment efforts will continue in 2016.

Self-service channelsOur self-service channels are key enablers of our strategy to become the preferred bank in Namibia. They offer customers the ability to transact in a simpler, faster and often cheaper manner without having to visit a branch. To be competitive, we must deliver a self-service experience timeously, securely and reliably, as well as continually develop new functionality across these channels.

In 2015, we focused on improving our ATM uptime (discussed further on page 31) and expanded our ATM reach. A total of 51 Standard Bank-owned ATMs were added to our network, as well as a further 46 merchant-funded ATMs to rapidly expand our ATM fleet into selected areas. All our ATMs are Europay, MasterCard and Visa (EMV) certified and certain ATMs in our network are installed at a lower height to cater for people in wheelchairs.

Smart mobile devices are rapidly becoming a crucial interface for customers to engage with us. In 2015, we launched the Standard Bank banking app for Apple (iOS) and Android tablets.

Customer engagement and satisfaction surveysKey learnings from our newly introduced customer forums are being used to drive change and improve overall customer service, enabling us to provide a differentiating customer experience.

29

The Standard Bank Blue-Wallet, a new money transfer mechanism, was launched at the end of 2015. Customers can access Blue-Wallet vouchers through internet and mobile banking, and use these to remit money to a local cellphone number. Recipients receive an SMS with the voucher details and can redeem the cash at a Standard Bank ATM. Phase 2 of the service, which will launch in 2016, will provide further enhancements.

Customers who do not have smartphones are able to do basic banking through the Unstructured Supplementary Service Data (USSD) cellphone banking platform. The demand for this platform is still growing and value added services such as Blue-Wallet are available to these customers.

Credit In 2015, we strengthened PBB’s credit risk management practices leveraging off lessons learnt in unsecured lending in prior years. The adjustments aim to ensure that all levels of customers and potential customers are able to gain access to credit while still ensuring that the bank remains a safe-haven for depositors.

Ensuring that customers are able to afford and repay their debt, and assisting them to make prudent debt choices, is key to ensuring the quality of our lending book. An electronic behaviour scoring system is used to monitor how a customer is managing their accounts and as a base for our credit granting decisions, ensuring that we do not advance loans and overdrafts to customers who cannot afford them. The system has resulted in our ability to maintain a non-performing loan ratio of less than 5%. In addition, it allows us to proactively detect the early warning signs of customers in financial difficulty so that we can take action and avoid

further over-indebtedness. Assistance depends on each customer’s unique circumstances and ranges from negotiating short to medium-term payment arrangements, extended tenures or loan restructures.

Secure banking Employee fraud, internet fraud and fraud awareness are our top financial crime focus areas.

Employee fraud refers to cases where anyone working for the bank, whether a permanent or temporary employee or contractor, is dishonest or conducts themselves in a fraudulent manner. This includes involvement in illegal banking transactions, stealing customer or bank funds or information (and inappropriately disclosing such information to third parties) or inadequately adhering to vendor management procedures. Employees found to be committing fraud face disciplinary action and criminal prosecution. In addition, our Dismissal Broadcast System publishes the high-level details of staff dismissed as a result of dishonesty and serious misconduct. Where a staff member is convicted in a court of law, their name, position, offence and sanction are published. The system serves as a deterrent to reduce employee fraud. In 2015, consultant and teller roles were identified as high-risk positions.

Financial crime control awareness is delivered to employees through online training and regular communication. In addition, the FraudStop Programme is designed to motivate our people to report all fraud regardless of value. Employees who report fraud through the programme stand to win N$1 million, after tax, in an annual draw with a number of smaller financial rewards as incentives on a monthly basis and for runners up.

Procedures are in place to confirm customer requests received on the internet banking platform. The authentication process helps to prevent fraudsters from gaining access to a customer’s profile and transacting on it without the customer’s knowledge. We use the internet banking platform and our blog page to deliver financial crime information and prevention tips to customers.

We support global efforts to combat money laundering and terrorist financing. We have a dedicated money laundering control officer responsible for ensuring that we meet regulatory requirements, as well as the minimum standards set by Standard Bank. The anti-money laundering and suspicious activity monitoring programmes introduced in 2015 have enhanced our ability to detect and report suspicious activity. Basic anti-money laundering and terrorist financing control training is mandatory for all employees, with specialised training in place for those staff members in higher-risk positions.

During 2015, 40 (2014: 11) potential fraudulent activities were reported through FraudStop preventing a total potential fraud loss of N$5.8 million (2014: N$1.4 million).


• Continue to focus on improving the stability of our systems, for example implementing an ATM monitoring and management tool to enhance ATM uptime.

• Start to migrate our corporate clients to a more modern state-of-the art payment system and enhance our internet banking platform.

• Build a high performance culture and an environment where innovation is encouraged to help attract top local IT talent. Our plans include the introduction of an IT internship programme.


Our approachIn 2015, we established the board IT sub-committee, responsible for reviewing, monitoring and providing guidance on matters related to our IT strategy, operations, policies and controls. The committee is chaired by an independent non-executive director and will be supported by subject matter experts who will provide technical support given the considerable scale and complexity of our change programme and its importance to our competitiveness long into the future. In 2015, the board received specific training on IT strategy and IT risk management.


2015 2014

Number of critical and high IT incidents¹ 196 Not available

ATM average downtime % 3.14 Not available

Point-of-sale average uptime % 96.3 95.5

International link² average uptime % 99.7 100

Domestic link³ average uptime % 92.6 Not available

Number of Finacle calls logged 10 593 Not available

1 Critical and high incidents are defined as those having a customer impact, with critical incidents having a severe customer impact.

2 The link that connects Standard Bank to the internet and South Africa. 3 The network that connects Standard Bank’s branches and ATMs across Namibia.

2015 HIGHLIGHTS

Finacle version 2.5 was successfully implemented, providing a more stable core banking platform and the opportunity for further innovation.

Our investments in stabilising our IT systems have resulted in a reduction in critical incidents.

In response to the increasing threat of cybercrime, we appointed a head of IT risk and security to provide oversight of cyber security.

A number of projects were implemented to improve the uptime of our network domestically and to strengthen our international links.

Looking ahead

we will:

Establish and maintain IT system stability5

OUR INTENT

We are committed to updating and improving the efficiency of our IT infrastructure across our business to

provide a consistent, efficient and valuable banking experience for our customers. This will also ensure that

we are agile in our response to regulatory change and in developing innovative products and services.

FOCUS AREA

31

Our performance in 2015We made good progress during the reporting period in advancing our IT operating model. The IT division’s team structure was bedded down, and we implemented an IT Project Management Office which has improved project delivery and gives us a better view of the inter-dependency of bankwide IT projects. Using this more structured approach, the office has prioritised 11 projects for 2016 which will add to our system stability and regulatory compliance requirements.

System stabilityOverall our system stability for 2015 improved, however network stability remains the biggest contributor to an increasing number of high level and critical incidents. A number of remediation and optimisation projects are in place to address this risk.

We updated our Postilion hardware and software systems which operate our ATM and point-of-sale networks. While ATM uptime improved satisfactorily through the year, power cuts are still the main cause of ATM disruptions. Our remediation project covers uninterruptible power supplies (UPS) at ATMs to negate the impact of power fluctuations.

While the average uptime of point-of-sale devices has increased, network instability and complexity impacts device availability and slows down the turnaround times to resolve issues. A project is underway to simplify and optimise our point-of-sale architecture to enhance the transaction process. The project addresses wireless connectivity for around 2 000 devices and provides us with better control over monitoring and service functionality. The cost saving associated with the project, including depreciation of the hardware, is estimated at around 74% of our current monthly cost. A pilot was undertaken towards the end of 2015 and rollout to all customers is scheduled to commence in early 2016.

While the average uptime of the international link to the internet and South Africa was 99.7% for 2015, high usage has resulted in slower response times. The average uptime of the domestic link which connects all our branches and ATMs in Namibia was unacceptably low for the year.

The network redundancy project addresses the uptime of links by providing backup mechanisms for quickly swapping network operations onto alternate infrastructure in the event that the primary links become unavailable. Following successful testing, wireless configurations were implemented in 11 branches ensuring an alternative solution in the event of an unplanned network outage. The completion of this domestic link rollout is scheduled for March 2016. Eight data links have been migrated onto new technology which provides the advantage of scalability at lower cost. We have also added further redundancy to the international link between Namibia and South Africa through the West African Cable System. This will improve customer-facing service stability, particularly for services supplied through South Africa.

A number of disaster recovery projects were also undertaken during the reporting year including the replication of the Finacle database, as well as disaster recovery testing to ensure our ability to transact from disaster recovery sites. Testing was completed for ATM and debit card acquiring systems, Finacle core banking, internet and mobile banking, pricing, payments and 13 key peripheral systems. Testing was successful for the most part and where problems were found, the root causes have been identified and solutions put in place.

All critical systems residing in the Town Square Data Centre were successfully moved during 2015 to the Prosperita Data Centre. The Town Square Data Centre now only houses the systems pertaining to the Town Square branch

providing better stability and higher availability in our infrastructure environment.

Finacle upgradeOur core banking system, Finacle, was successfully upgraded to version 2.5 in August 2015. To minimise the potential disruption associated with the upgrade, employees received training and customers were notified of the impending changes through marketing media, including social media. While the number of Finacle calls logged by employees peaked in September following the upgrade, by December the number of calls had declined to acceptable levels. Our IT department is working closely with our learning and development and national service teams to ensure that training issues are addressed.

IT skillsThe risk of shortages in the capabilities and skills required to operate a complex IT environment requires that we attract experienced people with the right technology skills, which is challenging given the relatively small size of Namibia’s market for IT professionals. In addition, the war for talent means that the turnover of trained IT professionals can be high. We are addressing these challenges through strategic training initiatives which provide us with the opportunity to build a skills set specific to Standard Bank.

Our IT training programmes and learnerships offer our people exposure to world-class technology systems and our exchange programmes provide the opportunity to work in other African countries to advance technology skills, and in turn bring new skills back into Namibia.



2015 HIGHLIGHTS

Our newly developed employee engagement action plan covers all our people and includes participation in the Deloitte Best Company to Work For survey. Over 95% of the sampled workforce responded to the survey and we ranked fourth out of nine companies in the large company category.

Leadership changes have resulted in all executive committee members being Namibian except one who is domiciled in Namibia.

We undertook a talent mapping exercise and introduced a framework to attract and develop graduates. We also approved the implementation of a learning academy with entry-level positions within the bank offered upon successful completion. In addition, we assisted 23 employees financially with their tertiary studies.

To recognise the exceptional contributions made by our people, we introduced the Beyond Excellence Recognition programme, as well as a number of reward initiatives.

We started implementing a more robust occupational health and safety (OHS) framework to ensure a safe working environment for our people.

Recruit, retain and motivate our employees 6

OUR INTENT

We aim to position the bank as the employer of choice in Namibia as our people play a fundamental role in ensuring

our sustainable growth. Our people are the custodians of the customer experience and the overall strength of our

brand, and are therefore the ultimate determinant of success and competitive advantage. We must create a great place to

work where our people feel deeply connected with our strategy and our clients, and are empowered to make the most of every

opportunity and recognised for their achievements.

FOCUS AREA


Staff attrition level % 11.50 13.47Number of employees 1 574 1 488Number of women employees 925 835Training spend N$m 5.8 2.5Training spend as a percentage of staff payroll % 1.0 0.5Number of leadership development participants 85 Not availableUnion membership

• BAWON 642 544 • NAFINU 362 459

BAWON: Bank Workers Union of Namibia. NAFINU: Namibian Financial Institutions Union.Note: Going forward, our key performance indicators will include the graduate development participants.

Our approachThe board human capital sub-committee provides oversight on our people management practices and compensation structures. Our human capital practices are aimed at creating a caring and fair work environment for all our people, and enhancing our employee value proposition.

Career developmentWe are committed to developing the leadership skills, technical ability and product knowledge of our people. We aim to do this by creating a culture of ongoing learning and adaptability.

Our talent management philosophy and approach enables succession planning across key levels of leadership, supported by focused development propositions and engagement strategies for identified talent. Talented individuals are identified based on a strong track record of performance, the potential to take on significantly greater levels of responsibility or complexity and demonstrate the ability to drive the business forward to achieve its strategic aspirations.

2015 2014

33

We aim to further embed a high performance culture where our people are motivated to deliver exceptional client experiences and are rewarded for their meaningful contribution towards realising our strategy. All employees have performance contracts in place against which they are reviewed annually. The performance management process also enables us to identify and address individual development needs.

Our remuneration philosophy aligns with the Standard Bank core values and our approved business strategy and objectives. It aims to maintain an appropriate balance between employee and shareholder interests.

AR

Our remuneration report can be found in the 2015 SBN Holdings Limited Annual Report.

Diversity and inclusionThe diversity of our people brings richness in perspective, skills and experience. We embrace diversity as an advantage in serving an equally diverse client base. We seek to build an organisational culture in which every employee can perform to their full potential. Our approach to diversity covers employment equity, gender equity and disability management. Our employment equity efforts are driven by our commitment to creating a workforce that reflects Namibia’s demographics in terms of race and gender and we measure our progress in terms of the FSC.

Women account for 59% of the workforce and are well-represented at all levels of the organisation.

SDOur employment equity progress can be found on page 41.

BenefitsWe provide a range of market competitive benefits to assist in the attraction, motivation and retention of employees. Over 71% of our permanent employees are members of Liberty Health Blue Medical Insurance, with the

remainder being dependents on other registered medical schemes. The medical aid provides in-hospital and out-patient benefits, including over-the-counter medicine, as well as an HIV programme at no additional cost. The HIV programme assists members living with HIV/Aids to access quality care and enables access to information and advice on treatment, counselling, anti-retroviral therapy and treatment for mother-to-child transmission if pregnant.

Employees are provided with fully paid maternity leave of 60 working days, consisting of one month prior to and two months after birth, in line with statutory requirements. For parental leave, five working days of fully paid parental leave is available to women and men per annum. These benefits also apply to parents legally adopting children up to the age of 17. To further improve work life balance for parents, we have introduced the option of flexible working arrangements, where feasible.

Health and wellnessOur investment in health and wellness initiatives empower our people to look after their own health and wellbeing. We undertake employee health screening to identify employees with high-risk conditions and provide assistance by enrolling these employees on appropriate health management programmes. Screenings include cholesterol, glucose and blood pressure tests, as well as voluntary HIV counselling and testing. Our wellness efforts include a total and temporary incapacity programme for employees unable to perform their duties for an extended period due to ill health, but are expected to recover. We have started measuring absenteeism and at this stage are generating high-level reports.

Independent Counselling and Advisory Services (ICAS), a free and confidential support service, is available to our employees and their immediate families. ICAS counsellors can be contacted by phone 24 hours a day, seven days a week.

ALIGNING OUR CULTURE AND PEOPLE PRACTICES

TO OUR PURPOSE, VISION AND VALUES

REQUIRES OUR CONTINUAL FOCUS ON:

Innovative work practices and processes that put the client at the centre of everything we do.

An employee value proposition that resonates with our people and creates an emotional connection with the work they do.

A safe, fair and inclusive work environment particularly during times of increased global and local socioeconomic uncertainty.

Talented people ready to take up more senior and critical roles when required.

A diverse leadership base, passionate about helping our people reach their full potential and able to lead in times of uncertainty.

Development programmes that support an agile workforce able to adapt to an ever-changing world.

Technology platforms that simplify our human capital practices.


• Enrol the first intake of graduates on our development programmes in 2016.

• Implement a bursary scheme for critical and scarce skills.

• Aim to rank in the top quarter of the 2016 Deloitte Best Company to Work For survey.

• Set quantitative OHS targets and provide OHS training to all employees through e-learning. We will also develop strategic partnerships to deliver our OHS commitment.

• Finalise IT systems that will streamline human capital-related interactions with our people.

Occupational health and safetyWe are committed to ensuring that our people work in a safe environment governed by a health and safety management framework that delivers high OHS standards that go beyond minimum requirements. This also applies to any customer or contractor who enters our buildings. We are developing an OHS policy aligned to all applicable national statutory and regulatory obligations, and where relevant, to international safety, health and environmental standards. The policy covers risk assessments and regular audits to monitor adherence to OHS procedures, as well as emergency preparedness and evacuation of buildings. Once formally approved, the policy will be communicated bankwide.

The chief executive is responsible for ensuring, as far as is reasonably possible, that our OHS duties as an employer set out in the Labour Act are properly discharged. An occupational health committee assists the chief executive in this regard. The committee oversees the OHS management system, supports business units and promotes a culture of health and safety

Looking ahead

we will:

in the workplace. A health and safety manager was appointed in 2015 to oversee OHS compliance.

Health and safety working committees, attended by employer representatives, are responsible for OHS in their work areas. These committees appoint and monitor our first aiders, fire fighters, employee safety representatives and evacuation officers, and ensure that these OHS officials are appropriately trained.

Our service level agreements with contractors, which include health and safety requirements, are being reviewed to further promote safe working practices.

Banking is regarded as a low-risk sector for injury severity. The nature of our OHS incidents mainly include slips and trips on floors and stairs, motor vehicle accidents and back injuries as result of carrying heavy objects. A total of seven incidents were reported for 2015 (2014: three) with no event over the past two years resulting in a fatality. One incident has resulted in a wheelchair-bound employee not being able to continue working.

Employee relations We respect the individual and collective rights of our people in the workplace and adhere to local and international labour regulations and legislation. We actively engage with recognised trade unions in Namibia and did not experience any incidents of strike action in 2015.

Our disciplinary and grievance policy outlines the staff discipline, grievance and dispute process. Employees can choose to be accompanied by trade union representatives at disciplinary, grievance and appeal hearings. If no resolution can be found, employees are able to refer the case to the Labour Commission for conciliation or arbitration. The human capital department provides training to employees on the disciplinary and grievance policy procedures and to line managers to assist them in managing the resolution of grievances.


35

Our performance in 2015A level of turnover is healthy in any organisation as it creates opportunities to attract new talent and provides career advancement for those within the organisation. Against a local banking sector turnover rate of around 12%, our turnover rate of 11% is within industry norms. Given our intention to increase our points of representation across Namibia, our staff complement is expected to grow over the medium term. No retrenchments took place during 2015.

Our human capital efforts in 2015 centred on responding to top employee concerns and improving the employee value proposition, as our effective response presents the opportunity to offer our people a differentiated employee experience.

Talent management We work in a fast-paced, highly competitive industry with ever-changing demands. As such we need to consistently attract and retain smart, independent thinkers who are focused, tenacious and energetic, and who will

We engage with our people on our strategy, developments and employee value proposition, as well as with a view to understanding their views and concerns. The leadership conference and innovation forum, both held annually, are additional platforms for employee engagement, as are various fun days and employee functions held on an ad hoc basis. The engagement plan covers the whole workforce.

A sampled population of the workforce was selected to take part in the Deloitte Best Company to Work For survey. Over 80% responded to the survey and we achieved an overall employee engagement score of 3.55 out of five, marginally missing the Deloitte ‘seal of excellence’ of 3.7 by 0.15. We are pleased with this outcome and during the reporting year our executive members provided feedback on the survey results to our employees and engaged with them on what needs to be done to improve employee engagement and experience.

The top issues raised in the survey were career development, remuneration, and performance and recognition. A team of human capital representatives has been assigned to each issue and following an investigation (in addition to the progress made in 2015), will present further recommendations for improvement to the executive committee in early 2016.

Engaging with our people

During 2015, we developed an employee engagement action plan

including leadership engagement forums, electronic platforms and

engagement surveys.

keep our business agile and innovative. In addition, our people must be equipped with the ability to drive a client-focused approach now and into the future. To deliver this strategic objective, we must ensure that we have the right people in the right roles with the required skills and capabilities. This is a complex undertaking in a highly competitive environment where skills remain scarce.

‘Tuyende’ emphasises the importance of empowering our people and developing great leaders. During 2015, we completed a talent mapping process together with supporting development programmes. We also introduced leadership and talent engagement sessions, stretch assignments for talented individuals and financial assistance for employees wanting to study but who are unable to do so due to affordability.

Effective succession planning is fundamental to mitigating the loss of knowledge, filling capability gaps and continuing innovation for sustained growth. The board is satisfied that our current talent pool, and the work being


done to strengthen talent, provide adequate succession depth over the short and long term. Our succession plans cover building a strong talent pool for key roles and building capability in core areas to enable business strategy and ensure regulatory compliance.

Talent resourcing To enhance our talent resourcing ability, we introduced a graduate development programme framework in 2015 with our first intake of participants scheduled for 2016. Our graduate programmes cover areas such as IT, credit, corporate and investment banking, finance, and retail and commercial banking. The programmes will run over 36 months and offer on-the-job experience where participants are exposed to different areas of the bank. Graduates will also have the opportunity to travel where relevant.

Five graduates have been selected to participate in a graduate development programme in 2016. Of these participants three are women.

We invest in developing and employing young people who have scarce or specialised skills and have the potential to become future leaders. During 2015, 23 employees were financially assisted with their tertiary studies.

Inspirational leadershipWe focus on equipping team leaders and management with the right skills to be great people managers. Our leadership programmes develop the skills required to inspire and lead

others, supporting a high performance culture. We have leadership programmes that specifically target senior managers, team leaders and women in middle management roles. Executive and senior management coaching and mentoring is also available.

During 2015, 85 employees participated in a leadership development programme, of which 48 are women. A total of 25 senior managers are scheduled to take part in a mentoring programme in 2016.

Learning and developmentDuring 2015, we approved a policy and framework for a learning academy which will provide targeted training for prioritised capabilities. Upon successful completion, learners have the opportunity to apply for entry-level positions within the bank.

Our focus is on strengthening our training and development programmes, from leadership programmes through to interventions for entry-level employees. Our training spend increased 132%, from N$2.5 million in 2014 to N$5.8 million. A large contributor to this increase is the full year of the Namibian Training Authority’s training levy implemented in April 2014.

Recognition Our recognition programmes support the culture we wish to build for our people, where success is celebrated and our people feel valued for the effort they put in. In response to feedback from employees on our recognition

initiatives, we reviewed our programmes in 2015 and introduced the following:

• Beyond Excellence, which rewards individuals and teams.

• Mark of Excellence, which rewards individuals.

• Chief executive award, for individuals recognised by the chief executive.

• Deal of the year awards for both PBB and CIB teams.

• Individual awards for long service and retirement.

• Performance bonuses for general staff not at management level.

Improving employee experienceIn 2015, we redefined our bonus framework, improved the employee housing allowance and introduced a transport allowance for general staff. In addition, our medical aid offering has been put out to tender. Our core benefits for permanent employees are set out in the table below.

Benefit

Permanent employees

only

Retirement provision

Life cover

Disability cover

Medical cover

Maternity leave

Share ownership


37

2015 HIGHLIGHTS

2015 marked Standard Bank’s centennial anniversary. As part of these celebrations, special recognition was given to long-standing customers and corporate clients.

A networking event was hosted in Swakopmund to build relationships between Standard Bank and the Chinese business community.

We achieved a 28% increase in compliance with the Namibian FSC and completed our first broad-based employment equity (BBEE) allocation to 1 237 employee beneficiaries.

We participated in a working group established to investigate a Credit Guarantee Scheme aimed at providing assistance to start-up businesses.

Our CSI strategy was revised to align to Standard Bank’s strategic direction, and we launched the Buy-a-Brick initiative to help address the country’s housing shortages.

35% of our procurement spend was spent with BBEE suppliers, exceeding our target of 30%.

Advance Standard Bank’s reputation7

OUR INTENT

We aim to advance Standard Bank’s reputation by fulfilling our obligation to be a valuable member of

our communities and of society in general, now and into the future.

FOCUS AREA


2015 2014

Transformation FSC compliance % 75 47

Corporate social investment Corporate social investment (CSI) spend N$ million 4 4

As a % of profit after tax % 1 1

Environmental and social risk screeningNumber of projects financed using Equator Principles 0 0

Supply chain

Number of suppliers 536 Not available

Total procurement spend N$ million 364 Not availablePercentage of procurement spend spent with local suppliers % 82 Not availablePercentage of procurement spend spent with local BBEE suppliers % 35 Not available

Overview Building our brand and contributing to the long-term viability and success of the communities we operate in are critical factors in advancing our good reputation. This section of our report covers:

• Our economic contribution.

• Brand management.

• Our commitment to transformation.

• An overview of our CSI initiatives.

• Our procurement from local suppliers.

• Our environmental impact, including our intentions to advance our direct environmental reporting.


Our economic contributionBy maintaining a robust business we are able to pay dividends to our shareholders, salaries to our employees and tax to the government. As a buyer of goods and services we support local businesses and our CSI makes a measurable difference to recipients and communities that we depend on to remain sustainable. This direct economic contribution is reflected in our value added statement alongside.

Indirectly, our products and services support economic development by facilitating individuals, businesses and governments to advance and improve. For example, we make it possible for young people to invest in their future by accessing student loans and we enable the rising middle class to own income-enhancing assets such as cars and technology products. We also enable people to plan and provide for their retirement and we empower families to buy homes. In servicing our business and corporate clients, we contribute to industrialisation and job creation across the economy, from loans for SMEs to large-scale corporate deals.

• Launch an advertising campaign for PBB’s core banking segments to strengthen the retail bank’s brand offering.

• Further our localisation objectives through the selling down of a further 15% of Standard Bank Group’s shareholding in SBN Holdings Limited. This transaction is still to be approved by

the Standard Bank Group board.

• Launch the Standard Bank SME programme through which 25 SMEs from across the country will be provided with development support over 12 months of training, coaching and mentorship. This

will be an annual programme.

• Partner with a youth organisation, providing financial literacy training to its members countrywide.

• Continue to shift our procurement spend away from foreign vendors and increase our local sourcing, where feasible.

• Participate in Standard Bank Group’s pilot programme which will assist us to improve our environmental reporting going forward.

Looking ahead

we will:

VALUE ADDED STATEMENT

2015 2014

N$ ‘000 N$ ‘000

Interest, commission and other revenues 2 884 684 2 384 056

Interest paid to depositors (878 443) (708 644)

Other operating expenses (675 299) (631 272)

Wealth created 1 330 942 1 044 140

Employees (N$579 735)

Providers of capital (–)

Governments (N$226 676)

Retained wealth (N$524 531)

2015 DISTRIBUTION OF WEALTH

Employees (N$520 650)

Providers of capital (N$260 000)

Governments (N$161 400)

Retained wealth (N$102 090)

2014 DISTRIBUTION OF WEALTH


39

Our approachOur public relations and sponsorships policies guide our interaction with communities, employees and stakeholders. We use Africa Brand Tracker to monitor brand metrics including price premium, market penetration and customer loyalty. Reputation is measured through the Media Reputation Index and employee attraction and retention is measured using the Deloitte’s Best Company to Work For survey. Research results are reported to executive management and used to develop our annual marketing plans.

We leverage digital and social platforms to build our brand. Our Facebook likes have increased 43% compared to 2014. Our digital manager is responsible for ensuring that online engagement is undertaken responsibly and effectively to support the brand’s reputation. Topics raised on social media platforms vary from complaints to general product queries.

Our performance in 2015From a corporate and investment banking perspective, the Standard Bank brand has remained stable over the past two years across all key brand equity indicators that measure the commercial value derived from customer perception. Against multinationals, we perform well in relation to usage (continuing action of consumers to purchase and repurchase the brand) and customer consideration when making a decision. Our strong African market capability and ability to connect businesses to opportunities in and beyond Namibia are considered as strong differentiating factors.

Our key focus for CIB is to position Standard Bank as both a sector and product expert with local and international knowledge and experience. This will be achieved through sharing relevant market information with clients, participation in industry-specific publications and sponsorship of influential sector events. For example, in April 2015, we hosted a networking event in Swakopmund for the Chinese business community. Presentations delivered at the event covered Namibia-China trade and the 2015/2016 national budget. The event served to position our cross-border capabilities and relationships with Namibia’s growing Chinese business community. We also host, in partnership with PricewaterhouseCoopers, an

Brand management

annual panel event attended by the Minister of Finance and local economists to review and analyse the government’s annual budget. Client events were also held in Windhoek, Oshakati and Lüderitz.

For PBB, we rank second in most key brand equity measures excluding main usage where we rank third in the financial services industry. Given that customer experience is a competitive differentiator, our focus is on providing convenient and fast service to our customers. Our points of strength are our cross-selling ability and the products we provide.

During 2015, our brand was positively impacted by the upgrade of our core banking system, the USD750 million Eurobond raised on behalf of the Ministry of Finance and the countrywide centennial celebrations. Perceptions that Standard Bank is old-fashioned are being addressed through the launch of new services such as the Standard Bank banking app that appeal to our younger professionals.

Our marketing objectives for 2016 are to increase awareness and visibility of the Standard Bank brand, leverage on customer insights to drive growth, demonstrate world-class expertise and capabilities, and nurture sustainable relationships with the community, our employees and stakeholders.


Introduction The FSC, introduced by the Ministry of Finance in November 2008, sets a framework for transformation and establishes guiding principles for empowerment in the Namibian financial services industry. Adoption of the charter is voluntarily and its objectives are to bring about tangible benefits for Namibians and to diversify participation in the sector by empowering women, workers, youth, people with disabilities and people living in rural areas. The guiding principles of the charter are to:

• Achieve real broad-based transformation of the Namibian financial sector.

• Promote equal opportunity.

Our commitment to transformation

• Make provision for financial literacy and consumer education initiatives.

• Promote Namibianisation, defined as increasing local ownership and decision-making capacity in Namibian-based institutions, or the primary listing of a local subsidiary on the Namibian Stock Exchange.

• Ensure high standards of corporate governance.

• Be sustainable and measurable.

• Incorporate regional initiatives, specifically those of the Southern African Development Community (SADC).

The charter defines BBEE beneficiaries as natural persons who are Black Africans, Basters or Coloureds; and Namibian citizens by birth or naturalisation before 21 March 1990.

Our approachStandard Bank, through the Bankers Association of Namibia, is a signatory to the charter. We are committed to achieving full compliance with the minimum targets set by the FSC for 2014 and 2019. Performance against these targets is monitored quarterly by the board of directors. For 2015, our assessments found the bank to be at 75% compliance to the charter, an improvement from 2014 when compliance was assessed at 47%. Improved performance is mostly attributable to increased compliance under the ownership and procurement pillars.

FSC SCORECARDAt November 2015, which is the date of our last FSC quarterly report to the board.

Pillars BBEE elements Total weight 2015 score 2014 score

Ownership and controlOwnership 18 8 3

Control 8 8 8

Human resources developmentEmployment equity 15 15 6

Skills development 10 10 10

Preferential procurement and enterprise development

Preferential procurement 20 20 0

Enterprise development 8 2 8

Corporate social investmentCSI 4 4 4

Consumer education 2 2 2

Empowerment financing Banking institutions15 0 0

11 bonus points 6 6

Access and affordability of financial products 5 bonus points 0 0

Total 100 75 47


41

Our performance in 2015 Ownership and control

The SBN Holdings board consists of ten directors, eight of whom are Namibians and six of whom qualify as BBEE beneficiaries. The exercisable voting rights of BBEE and women BBEE board member beneficiaries were 66% and 60% respectively at November 2015.

We have committed to a 25% BBEE equity shareholding in line with the recommendation of the FSC. In December 2010, the board of directors approved the decision to sell 10% of SBN Holdings Limited to employee and community BBEE beneficiaries. We have started the transfer process and completed the arrangements, including the origination of the funding required, to transfer this 10% shareholding from

Standard Bank Group to Purros Investments Trust, our staff empowerment scheme. Of this 10% shareholding, 8% will be allocated to qualifying bank employees with the remainder being transferred to a community trust focused on the development of vulnerable communities. The trust will contribute to the education and health of these communities, as well as the development of small enterprises.

The first allocation to employee beneficiaries was completed in January 2015, benefitting 1 237 staff members. The shares are tradable after 31 December 2019 and vest in three tranches up to this date. Once vested the shares are not forfeitable. Town hall sessions and electronic communication were used to educate beneficiaries on

Elements where we do not meet full weighting for 2015Ownership

• Economic interest in the enterprise to which BBEE and women BBEE beneficiaries are entitled.

• Net equity value.

Enterprise development • Value of all enterprise

development contributions as a percentage of profit after tax.

Empowerment financing • BBEE transaction financing as

a percentage of business loans.

• Bonus points (11) for a commitment of 5% of the investment portfolio for investments in BBEE companies.

Access and affordability of financial products

• Bonus points (5) for meeting targets.

what it means to be a shareholder and the terms associated with their shareholding. The second share allocation will be finalised in the second quarter of 2016.

The overall level of compliance against the target set for the ownership and control pillar at November 2015 was 54%.

Human resource developmentAt October 2015, Standard Bank exceeded the FSC targets for employment equity at all levels of management as measured by the charter. Our BBEE representation is shown in the table below. Our investment in learning and development for the 2015 financial year totalled N$5.8 million, around 1% of the staff payroll (FSC target: 2%).

EMPLOYMENT EQUITYAt 31 October 2015, we employed 279 managerial staff.

CategoryFSC target Oct 2015

Executive management

BBEE representation % 25 60

Women BBEE representation % 10 40

Junior and middle management

BBEE representation % 30 75.42

Women BBEE representation % 10 40.67

Preferential procurement and enterprise developmentThe credit risk associated with lending to SMEs, particularly start-up businesses, is high given that they often do not have capital to borrow against and general business management skills are limited. Accessing growth finance and start-up capital is further hampered by the lack of reliable financial statements. We are committed to assisting the sustainability of these businesses by providing accessible and responsible lending products that address the unique requirements of SME customers.


At December 2015, our SME loan book amounted to N$359.5 million, 26% of business banking’s total lending book.

Customer value propositions are in place for small, micro and start-up businesses earning an annual turnover of N$250 000 to N$2 million (SME tier 2), and for SMEs with an annual turnover of N$2 million to N$5 million (SME tier 1). Qualifying enterprises are either sole proprietors or partnerships registered with the Registrar of Companies under the Ministry of Trade and Industry.

To support Namibia’s agricultural sector, we are looking at new ways of providing financing to our small-scale farmers. In addition to business, savings and investment accounts; as well as commodities trading, insurance and wealth creation services, we offer bull purchase financing that takes into account the strong cyclical trends associated with agriculture and de-bushing vehicle and asset financing to help manage bush encroachment, where grasslands become colonised by hardy tree-dominated ecosystems. Our partnership with John Deere assists with financing of tractors. Given the drought being experienced in southern Africa, we employ remedial strategies to help our farmers, including the restructuring of loan facilities.

Our SME customers require relationship managers with the right business expertise. Our SME-specific training programme for our relationship managers and business bankers covers sales, product knowledge and credit-granting. This ensures that we provide sound advice and products to our SME customers, and serves to build good relationships with this banking segment. Our offering includes customer visits to understand how the business operates and where we can meet its needs now and into the future.

With over 86% of SMEs in Namibia failing, it is evident that non-financial business development support is necessary to assist these businesses to manage the many challenges they face. Challenges include the inability to access information, poor infrastructure, inaccessible markets, lack of technology and limited exposure to business opportunities. As a member of the Namibia Chamber of Commerce and Industry (NCCI), we have provided funding of N$685 600 for 200 SME business toolkits. The business toolkits include information on how to run and grow a business, and provides SMEs with business templates, forms and links to further information. We plan to broaden our NCCI partnership to include SME coaching and mentoring, to be funded by Standard Bank.

For the past three years, we have partnered with the Katutura Youth Enterprise Centre (KAYEC) Trust by funding start-up toolkits to support the trust’s youth development programme. To date, N$240 000 has been provided for 614 start-up toolkits delivered to over 300 graduates. The toolkits are trade-specific and allow the development programme participants to start work immediately after their training by providing them with the required tools of their trade. The trust offers various fields of study including brick laying, metal work, welding, carpentry, plumbing and electrical engineering. The courses offered are set at an entry-level with a practical focus, teaching the skills required by specific industries. Business and entrepreneurial skills are integrated into the technical trade courses to help build the confidence required for trainees to start their own businesses.

KAYEC operates training centres in Windhoek and Ondangwa in the Oshana region. Beneficiaries of the trust are mostly youth between the ages of 15 and 25 from disadvantaged backgrounds. KAYEC is funded by the United States Agency for International Development (USAID).

SD

Our preferential procurement and CSI initiatives are discussed on pages 44 and 46 respectively.


43

Empowerment financing Empowerment financing is the provision of finance for, or investment in, BBEE transactions or BBEE companies, and involves the mobilisation of resources for such financing by the financial sector. We have provided financing to several BBEE groups, including:

• A preference share deal with Servo Investments Limited for N$10 million to purchase shares in Alexander Forbes.

• A N$9.7 million medium-term loan to Pamue Investments Corporation (Pty) Limited to purchase shares in Unitrans Namibia (Pty) Limited.

Access and affordability of financial productsWith effect from 31 March 2015, our individual customers and business clients with a turnover of less than N$1 million a year no longer pay a fee when depositing money into their accounts. This is in line with the Bank of Namibia’s directive under the Payment System Management Act aimed at increasing financial inclusion and encouraging savings.

To open an account, a customer is only required to submit the documents needed to satisfy “Know Your Customer” regulation which include an identity document, municipal bill, lease agreement, founding documents and company registration documents. Our electronic channels provide convenience and lower transactional charges. In addition, our customers in rural areas are able to do their banking without incurring extra costs such as travel costs to visit a branch. All current account holders can apply for overdrafts and business revolving credit plans without needing to provide suretyship or security.

SOME OF OUR INITIATIVES THAT CONTRIBUTE TO THE SUSTAINABILITY OF SMES

BizDirect Centre

Our BizDirect Centre is a dedicated facility for SMEs that facilitates credit applications and account management and provides advice. SME customers have access to specialised consultants and credit originators trained to effectively profile SME businesses and their ability to afford finance. Applications are then considered by credit evaluation managers.

Virtual business centresOur virtual business centres, also launched in 2015, provide faster turnaround times as a result of being mostly paperless environments, using aspects such as eSignatures and biometrics to facilitate banking transactions.

Customer forums Topic experts are invited to our customer forums to share knowledge and assist SMEs with their concerns, as well as promote our SME offering.

Bundled accountsSince the launch at the beginning of 2015, we have opened 157 SME Bundle Option accounts. The account helps SMEs manage their bank charges and includes insurance, a funeral plan, internet banking and SMS alerts at a daily fee of N$17. All SME accounts are charged a minimum monthly default service fee of N$86.

Strategic partnerships We enter into partnerships with organisations such as NCCI and vocational institutions such as KAYEC to provide non-financial support to SMEs. Our partnerships that contribute to consumer education include the Youth Entrepreneurship Seminars (YES) Trust and the Financial Literacy Initiative (FLI), discussed under our CSI initiatives.


Our CSI initiatives

Our approachWe view CSI as an integral part of how we do business and we encourage and support the involvement of our employees in the communities they serve.

Our CSI strategy is overseen by the board corporate social investment sub-committee which reports directly to the SBN Holdings board. The sub-committee is ultimately accountable for ensuring that our CSI strategy and initiatives positively impact our reputation and the Standard Bank brand. It is mandated to:

• Approve our CSI strategy, policy, guidelines and focus areas.

• Ensure the alignment of the CSI strategy to Standard Bank’s business strategy.

Our CSI policy sets out our CSI principles, governance structures, roles and responsibilities, reporting requirements and the prevention and management of conflicts of interest. It also clearly defines what constitutes CSI spend and differentiates CSI expenditure from sponsorships. In addition, the policy requires that our CSI projects have impact across all regions in Namibia. We pledge 1% of our net profit after tax to CSI initiatives, four times that required by the FSC. CSI expenditure is signed off by the board corporate social investment sub-committee.

The CSI unit engages with core business to understand and assess the social issues that stand in the way of realising optimal value. This is used as the basis for proactively identifying programmes that provide opportunities for us to positively contribute to these social and business developmental issues. We aim to form long-term funding partnerships with government, local and non-governmental organisations that have clearly defined programmes that provide maximum impact in communities. The following criteria are considered when selecting social partners:

• Projects must result in meaningful socioeconomic development and community wellness or upliftment.

• Funding must be directed at historically disadvantaged communities or incumbents.

• Projects should align to the Namibian Government’s priorities and national development objectives, as far as possible.

• Programmes should preferably provide a platform for increased staff involvement.

Education

Health, wellness and poverty alleviation

Entrepreneurship development

Buy-a-Brick

CSI SPEND PER CATEGORY

We only consider registered charitable organisations. When a request is in line with our policy and objectives, we conduct a site visit and undertake due diligence before recommending the project to the working CSI committee and the board corporate social investment sub-committee. Where a project is approved, a contract is entered into with the beneficiary organisation and payments are made upon project implementation. The project is monitored through biannual beneficiary reports which include a

We revised our CSI strategy during 2015 to ensure that it aligns to Standard Bank’s strategic direction and contributes to the development of the communities in our target market. Our new strategic focus areas are entrepreneurship development, education, health, wellness and poverty alleviation, and environmental issues. Our CSI spend for the year amounted to N$4million (2014: N$4 million), of which 47% was spent on initiatives that support education.


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detailed breakdown of how funds have been spent and the impact achieved. All projects are reviewed annually by the bank to ensure that they are achieving the intended objectives. All projects are evaluated on completion.

Our performance in 2015We run two flagship programmes; the USAID Forum for African Women Educationalists in Namibia (FAWENA) and the Buy-a-Brick project. In 2015, we invested N$1.2 million in FAWENA, paying for the school fees of girls from disadvantaged backgrounds in Grades 8 to 12. The girls are selected for the programme by specially trained focal teachers who also monitor each girl’s progress. Our commitment to this programme extends to 2019.

In 2015, we launched the Buy-a-Brick project, a community upliftment initiative which addresses Namibia’s housing shortage for low income communities. The project supports the Shack Dwellers Federation of Namibia, a non-profit organisation, and its members. The organisation aims to improve the living conditions of poor people who generally live in shacks and rented rooms, or without any shelter at all. The project also has a particular focus on empowering women by providing them with housing.

Standard Bank sells token bricks, in the form of erasers, to corporates and

members of the public throughout Namibia at a minimal cost of N$5 per brick. The project is scheduled to take place annually from the beginning of October to the end of February the following year. All proceeds raised from the sale of the token bricks will be handed over to the Shack Dwellers Federation of Namibia in April 2016. Standard Bank Namibia will also provide financial management coaching and mentoring to the members of the Federation

Consumer educationIn 2015, we donated N$210 000 to the YES Trust’s Business Literacy Project which equips learners with basic business financial literacy by providing them with practical business experience delivered through simulation exercises. The project is aimed at engendering a sense of entrepreneurship and innovation. Business literate learners become business literate adults able to make sound financial decisions and provide for their families. They are also more likely to save for the future and less likely to fall into the debt trap. In addition, we commit 0.2% of our net profit after tax annually as financing for the Ministry of Finance’s FLI programme. In 2015, this amounted to N$250 000.

CSI

Our CSI initiatives are reported in our CSI report which can be accessed online at http://www.standardbank.com.na/namibia/about-us

In support of the government’s vision to grow the entrepreneurial sector in Namibia as an additional generator of employment, in 2016 we will launch the Standard Bank SME programme. A total of 25 SMEs from across the country have been selected and will be provided with 12 months of training, coaching and mentorship. The entrepreneurial programme will cover a number of topics required to manage a business sustainably, ranging from business ethics and how to register a business to business planning, budgeting, cash flow management and managing employees. Four round tables will be hosted during 2016 to provide further assistance to the participating SMEs.

Seven-year-old Grade 2 learner Nazneen Gaes of Orban Primary School in Windhoek with her Buy-a-Brick eraser. She is accompanied by her mother Elsarien Gaes (right) and Sigrid Tjijorokisa (left) the custodian of the Standard Bank’s CSI initiatives.


Procuring from local suppliers

Our approachOur procurement framework is centred on fair and transparent procurement practices, and encourages local sourcing in all instances. The tender board, attended by senior executives, is tasked with responsible procurement and the SAP purchase requisition project, implemented in 2015, facilitates automated purchasing and the monitoring and measurement of procurement spend. All our employees within the procurement department receive environmental and social risk training.

As a financial institution we have no production facilities. Our top four spending categories are staff costs, professional fees, IT and rentals. Together these categories represent 68% of our total procurement spend in Namibia. None of these categories represent a critical threat to our core business.

The terms and conditions of our procurement contracts, as well as service level agreements, set out our anti-corruption requirements. No contracts with suppliers were terminated or not renewed in 2015 due to violations related to fraud. Our supplier contracts also set out the dispute resolution procedure to be followed in the event that a grievance arises.

All employees of Standard Bank are required to declare their outside business interests annually.

Our performance in 2015Our preferential procurement target for 2015 was to achieve the 30% spend with BBEE suppliers required by the FSC. Our total procurement spend for 2015, including capital expenditure and operational expenses, was N$364 million. Of this, the estimated procurement spend with BBEE vendors was N$127 million, 35% of our total procurement spend and exceeding the FSC target. This was achieved without compromising quality and reliability of supply, and with no adverse impact on costs for the bank.

In 2015, we revised our procurement policy to include the principle of preferential procurement. Amendments include:

• The minimum 30% of eligible procurement spend to be procured from BBEE-compliant enterprises as per the FSC. By 2019, this will increase to 60%.

• Shorter payment terms to assist these BBEE-compliant suppliers with cash flow.

• Procurement from small BBEE suppliers, including providing them with support through skills transfer.

Our minimum requirement is for suppliers to meet level three compliance with the FSC. Where deviation occurs, the circumstances must be exceptional. To monitor this, potential suppliers are required to provide a valid Namibian Preferential Procurement Corporation certificate or BBEE ownership status during the tender process and internal scorecards monitor business unit spend with BBEE-compliant suppliers. Our biggest preferential procurement challenge is sourcing BBEE-compliant suppliers that have sufficient capacity to sustainably deliver to a large organisation. During 2015, we investigated how we could broaden our supplier base, with a particular focus on experienced BBEE suppliers. We have also started to segment our vendors into qualifying categories in our database, and we have finalised a shortlist of vendors for major procurement categories, favouring black contractors and third parties where possible.

Areas of concern raised by suppliers include timely payment and improving transparency in the procurement process. We are investigating how we can improve our vendor payment process and have agreed monthly payment schedules with suppliers. Where a BBEE-compliant supplier is experiencing cash flow problems, we look at the feasibility of pre-payment arrangements. The procurement department is also increasing its engagement with suppliers to communicate our procurement processes. In 2015, this included a workshop with key stakeholders on our revised procurement policy, aimed at gaining buy-in to and understanding of our preferential procurement objectives.

Engaging with our suppliers

The frequency of engagement with individual suppliers varies

according to pre-determined criteria for service delivery,

ranging from weekly to quarterly engagements.


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Our environmental impact

Our indirect impactOur greatest opportunity to meaningfully impact on environmental issues lies in our indirect impact as we are in a position to lend responsibly to our clients, ensuring that the environmental and social risk associated with their projects is mitigated. We also make a positive contribution by financing projects such as renewable energy projects.

Environmental and social risk assessmentA cornerstone of our approach is to conduct assessments of environmental and social risks when assessing financial transactions. We use two

approaches to screen and evaluate transactions: the Equator Principles and a transaction-specific environmental and social risk management process. The social and environmental lending restrictions defined by the German Investment and Development Corporation (DEG) and International Finance Corporation (IFC) Performance Standards are also considered for certain contractual obligations.

All CIB transactions with an exposure greater than N$10 million are subject to environmental and social risk screening as part of the pre-credit application process. This determines whether to proceed with a transaction or not, or

whether further assessment is required. Where a project requires additional environmental or social actions, a legally binding action plan is developed together with the client. The action plan includes risk mitigation actions, timeframes and resources to remedy the situation and evidence of completion.

A full due diligence process, utilising independent external consultants, is undertaken for all category A (high risk), and where appropriate, category B (medium risk) transactions. All category A and relevant category B projects are monitored to ensure that the social and environmental commitments set as part of the loan agreement are adhered to. If required, independent external professionals are used to monitor the implementation and progress of remedial action on a semi-annual or annual basis for the tenure of the loan.

The diagram below illustrates the key steps across the transaction process and where the environmental and social tools are applicable.

Know Your Customer

onboarding

Pre-credit committee

Credit Legal

documentationMonitoring

KEY STEPS ACROSS THE TRANSACTION PROCESS

Environmental and social risk assessment tools

Environmental and social risk consideration

Environmental and social covenating (as appropriate)

Monitoring of compliance

Our environmental and social policy applies bankwide and sets the standard for how we manage the environmental and social impacts of our activities, products and services on society and the environment. It also guides our approach to responding strategically to global environmental and social risks through partnerships that make a broader contribution. This includes working with regulators on environmental legislation and policy development and encouraging our associates, suppliers, landlords and tenants, customers and other stakeholders to follow good environmental and social practice. We are committed to embedding sustainability thinking into our daily business practices.


In cases where a borrower is not in compliance with environmental and social requirements, we will work with them over a period of time to achieve the necessary standards. Following this, should there be no progress towards meeting requirements, we would then consider a number of avenues including re-evaluation of the loan.

Human rights issues, including discrimination, child labour, forced or compulsory labour and the rights of indigenous people are included in the environmental and social appraisal, as are biodiversity considerations. We engage with all our project finance clients on environmental and social issues associated with their projects, as well as with clients requiring project-related corporate loans or loans for transactions that are considered high risk. Environmental and social risk training is available for transaction originators.

As a signatory to the Equator Principles, a set of international standards for managing social and environmental risk, we ensure that the customers we lend capital to or to whom we provide advisory services evaluate and actively avoid, manage or mitigate the social and environmental impacts associated with the projects being financed. This applies to deal origination and throughout the deal lifecycle.

The Equator Principles process is applied to all new project finance loans of USD10 million or more, and corporate and bridge loans, where the total aggregate loan amount is at least USD100 million, our individual commitment is at least USD50 million and the loan tenure is at least two years.

No Equator Principles projects were financed or advised on during 2015.

Financing clean energy We have committed to financing renewable power infrastructure projects under the government’s Renewable Energy Feed-In Tariff (REFIT) programme. The programme is promoted by the Ministry of Mines and Energy and implemented by NamPower, Namibia’s power utility, and the Electricity Control Board. Successful bidders for the 25-year concessions will receive licences from the board and sell their power into the NamPower grid. We are the first commercial bank to finance a solar power generation project in Namibia, providing a N$170-million term loan facility for HopSol Power Generation. We aim to leverage this relationship to establish meaningful investments in renewable energy.

Our direct impact The direct impact of the financial services industry on the environment is low. It arises out of our operational activities in which we consume natural

We have provided a N$500 million loan facility to the Zimbabwe Power Corporation (ZPC) for the 300 megawatt extension of the Kariba South Hydro Power Plant. Our loan facility accounts for 10% of the expansion’s engineering, procurement and construction costs. The project will increase power generation in southern and central Africa. ZPC has a long track record of delivering power to NamPower.

resources and generate waste. We recognise that there is opportunity for us to improve our direct environmental performance through establishing a central data management system to monitor our direct impact. This will not only enable us to identify where there are opportunities to reduce our impact but will also establish a base from which we are able to measure reductions achieved by efficiency programmes. Standard Bank Group has invited us to participate in a pilot programme to improve its environmental reporting for Africa. The pilot will start in January 2016 and we look forward to engaging with Standard Bank Group on this initiative.

In 2016, we hope to implement a recycling programme within the bank and will look at ways to reduce our paper, electricity and water consumption. Not only will these initiative impact positively on the environment, but they also make business sense as they assist in reducing operational costs.


49

2015 HIGHLIGHTS

We established an innovation forum to identify innovative ideas which are supported through testing and development by a dedicated investment fund.

The newly introduced innovation competition provides our people with a platform to put forward their product and service ideas.

Embrace innovation 8

OUR INTENT

We will continue to drive innovation to constantly improve the value we provide for our customers and

clients and to gain competitive advantage. We will do this by creating an enabling environment to harvest new ideas and

look for opportunities for change and continuous improvement.

FOCUS AREA

Our approachWe define innovation as an inspiring idea that is aligned to our business strategy and which once implemented supports business growth and performance. Our approach is centred on serving our customers better and we encourage our people who are closest to our customers to apply their creativity in identifying new products that respond to customer needs. Our efforts are aimed at helping existing employees embrace a more innovative mindset and attracting top and scarce talent, particularly the new generation entering the workforce, who are often more entrepreneurial and at the cutting edge of marketing and technology.

KEY PERFORMANCE INDICATOR

2015

Number of projects selected by the innovation forum for further investigation 8

• Launch the Standard Bank SME training and mentoring programme in partnership with FABLabs and the Namibian Business Innovation Institute. The digital fabrication laboratories inspire people

and entrepreneurs to turn their ideas into tangible products. Additional opportunities made possible by this partnership are also being investigated.

Looking ahead

we will:

Our performance in 2015Innovation requires new and diversified skills sets, and empowered individuals with a broad understanding of business, strategy and risk appetite. A key challenge we face is creating an environment where innovation is nurtured and encouraged to drive simpler and better solutions, while adhering to risk and regulatory requirements.

We have established an innovation forum at which 17 innovative ideas were

tabled during the reporting year. Of these, eight projects were prioritised for further investigation. Executive committee members act as project sponsors and are responsible for transforming these ideas into viable projects able to yield tangible and competitive advantage for the bank. The nature of the projects submitted to the forum ranged from solutions for dealing with queues in branches and engagement platforms for staff and customers, to new product ideas. An innovation fund of N$5 million has been established to finance the

projects selected by the innovation forum for further assessment and development. The innovation forum will be held annually.

In addition, we have introduced an internal competition providing employees with the opportunity to put forward their product and service ideas. The top three ideas are selected for further investigation and the employees whose ideas are selected are rewarded for their achievement.


ANNUAL FINANCIAL STATEMENTS Corporate governance report Executive committee continued

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ethicsandGovernance

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Governance and ethics

The Standard Bank Namibia (SBN) Holdings board operates on the understanding that sound governance practices are fundamental to earning the trust of stakeholders, which is critical to sustaining performance and preserving shareholder value.

Our approach The board of directors is the bank’s highest decision-making body and is ultimately responsible for governance. The board embraces relevant local and international best practice governance standards and is committed to upholding the fundamental principles of governance, which include discipline, independence, responsibility, fairness, social responsibility, transparency and the accountability of directors to all stakeholders.

Our governance framework, which also applies to our subsidiaries, is informed by the Corporate Governance Code for

Namibia (NamCode) which came into effect for financial years commencing after 1 January 2014. Based on the third King Report on Corporate Governance (King III), the NamCode provides guidance on a number of governance-related aspects including ethical leadership, corporate citizenship and governing stakeholder relationships. The framework enables the board to balance its role of providing risk oversight and strategic counsel, and ensuring adherence to regulatory requirements and risk tolerance. All board committee mandates were reviewed and updated in 2015 to align to applicable regulatory changes and to the requirements set out in the NamCode.

OUR GOVERNANCE FRAMEWORK

Board audit committee

Board risk committee

Board credit committee

Board human capital sub-committee

Board corporate social investment sub-committee

Board information technology (IT) sub-committee

Executive committee (Exco)

Project Exco

Asset and liquidity management committee

Operational risk management and credit committee

Credit risk management committee

Credit committee

Internal financial control committee

New product approval committee

Tender board committee

SBN HOLDINGS

BOARD

Board committees

Management committees

Committees that deal with specific sustainability issues:• SBN Holdings board: Monitors the implementation of our strategy taking into account relevant economic, environmental and social

issues; as well as international political and economic conditions, and the related risk mitigation strategies set by management. This includes performance against the Namibian Financial Sector Charter (FSC).

• Board audit committee: Oversees compliance with all applicable regulatory requirements and the implementation of the code of ethics.

• Board risk committee: Monitors efforts to prevent and combat corruption; health, safety and environmental risks; and compliance with consumer protection laws.

• Board human capital sub-committee: Ensures that our compensation structure is consistent with the bank’s culture, objectives, strategy and control environment; and that it complies with applicable laws, rules, policies and regulations.

• Board corporate social investment (CSI) sub-committee: Ratifies our CSI strategy and has overall accountability for reputation management related to CSI initiatives.


GOVERNANCE AND ETHICS

Board structure and composition SBN Holdings Limited (Standard Bank) has a unitary board structure and the roles of chairman and chief executive are separate, with respective responsibilities clearly defined. The chairman is an independent non-executive director. The independence of board members is evaluated by the board human capital sub-committee, which classifies independence according to the definitions in the NamCode.

Board membership, both individually and collectively, is regularly reviewed to ensure that the board remains strategically, demographically and operationally appropriate. This also applies to the committees of the board. The retention of board members with considerable experience is sought to ensure that appropriate levels of management oversight are maintained. When appointing members, factors such as independence, skills, knowledge and experience are considered. Directors are appointed by the shareholders at the annual general meeting and interim board appointments are allowed between annual general meetings.

BOARD PROFILE

2015 2014

Number of board directors 10 9

Gender composition

Women 6 6

Men 4 3

Independence

Independent non-executive directors 6 6

Non-executive directors 2 1

Executive directors 2 2

Race composition

Black – Namibian 6 6

White – Namibian 2 2

Non-Namibian 2 1

Nationality

Namibian 8 8

Other 2 1

Note: Tenure and details of directorships are set out in the 2015 SBN Holdings Limited Annual Report.

The directors bring a balanced mix of attributes to the board, including: • Domestic and international experience;• Operational experience;• Understanding of macro and microeconomic factors affecting the group; • Financial, legal, entrepreneurial and banking skills; and• Expertise in risk management and internal financial control.

New board appointees attend appropriate induction programmes which cover training on their fiduciary duties and responsibilities. Discussions with management

across various parts of our business are included as part of the programme to facilitate the understanding of the bank’s operations.

Training sessions were held for the board and its committees during 2015. Topics covered included IT strategy, IT risk management and money laundering control.

The performance of the board is evaluated annually, assisting the board to improve its effectiveness. Any areas of concern are addressed and action points implemented.

Managing conflicts of interestBoard directors declare their interests annually and at every meeting. They are required to recuse themselves from discussions in which they have or may be perceived to have a conflict of interest. Cross-board memberships are disclosed in the governance report of the SBN Holdings Limited Annual Report.

Managing sustainable development

Standard Bank subscribes to the Namibia FSC, discussed on page 40, and is a signatory to the Equator Principles, discussed on page 48.

The board is ultimately accountable for sustainable development and it retains effective control through a well-developed governance structure that provides a framework for the delegation of responsibilities for specific areas. The office of the group company secretary is responsible for sustainability matters and reports directly to the chief executive. The office is mandated to create a consistent approach to environmental

53

and social risk management by facilitating policy and performance standards, as well as monitoring and evaluating Standard Bank’s sustainability performance. The office supports business areas throughout the bank and raises awareness through relevant stakeholder engagement.

Sustainability-related concerns debated by the board during 2015 included ‘Tuyende’ – our strategic plan to 2017, impairments and provisions, IT system stability and localisation.

Our memberships further assist us to learn from and contribute to dialogues around social, environmental and economic sustainability. We are members of:

• Financial Institutions Fraud and Security Committee (a sub-committee of the Payments Association of Namibia).

• Institute of Bankers Namibia.

• Namibian Bankers Association.

• Namibia Chamber of Commerce and Industry.

• Payment Association of Namibia.

AR

Our full corporate governance report can be found in the 2015 SBN Holdings Limited Annual Report.

Our ethics

Our code of ethics promotes awareness of, and sensitivity to, ethical issues and assists in the easy identification of ethical infringements.

Our code of ethics is designed to empower employees and enable them to make effective decisions aligned to defined ethical principles. Applicable at all levels of the business, the code aims to ensure that we adhere to the highest standards of responsible business practice. It defines Standard Bank’s values in greater detail and serves as a reference for values-based decision-making to guide conduct and mitigate against inappropriate conduct that

harms our clients, markets or our business.

The code of ethics is aligned to our policies and procedures, and supports relevant industry regulations and laws.

We ensure that the code of ethics is implemented and managed effectively across our operations, covering areas ranging from leadership commitment and custodianship through to monitoring and reporting. The board audit committee oversees the implementation of the code of ethics and ethics reports are presented to the committee on a quarterly basis. Our values also form part of our performance management process, where our people hold themselves and each other accountable for appropriate behaviour in their day-to-day responsibilities.

Our employees are required to read, understand and become familiar with the code of ethics. The code and our values are included as part of our orientation programme for new employees and regular communication on ethics is delivered to our people to maintain awareness. In 2015, our leadership team and senior managers

undertook a 360-degree values-based survey and in 2016, ethics will form part of our bankwide employee engagement sessions.

Reporting mechanismsEthics incidents are reported through the ethics and fraud hotline, human resources, risk and financial crime control departments, and the ethics officer. For 2015, incidents reported through these mechanisms mostly related to fraud, harassment, ethical dilemmas in procurement and abuse of authority. All allegations reported are investigated and we ensure that an appropriate resolution is reached in each case.

The ethics and fraud hotline facilitates confidential and anonymous reporting of unethical behaviour, including alleged bribery and corruption. The hotline is operated by KPMG Services Proprietary Limited and is available 24 hours a day and seven days a week, year round. In the event that the service provider becomes aware of the caller’s identity, contractually it is not permitted to divulge the identity of the caller to Standard Bank.

Board of directorsThe board of directors is mandated to provide effective leadership based on an ethical foundation.

Employee training Ethics training is mandatory for all employees and is delivered through an e-learning programme.

Formal custodians The chief executive and ethics officer are the formal custodians of the code of ethics and ultimately responsible for its implementation.

EMBEDDING AN ETHICAL CULTURE


GOVERNANCE AND ETHICS

The whistle blowing policy protects whistle blowers from being victimised. Any form of retaliation, directly or indirectly, threatened or taken against a whistle blower because they have made an honest disclosure in accordance with the policy is treated as gross misconduct and dealt with accordingly.

The ethics and fraud hotline is available to employees and external parties. The details pertaining to the hotline are communicated to our people through regular email communication and training interventions on topics such as

Topics addressed in the code of ethics

• Treating customers fairly.

• Providing secure banking facilities.

• Providing professional development opportunities.

• Evaluating performance objectively.

• Sustainable value creation for shareholders.

• Adhering to good corporate governance.

• Engaging in political activities responsibly.

• Protecting intellectual property.

• Avoiding anti-competitive behaviour.

• Rewarding innovation.

• Working in unity.

• Respecting human dignity.

• Protecting our physical assets.

• Honesty.

• Addressing conflicts of interest.

• Combating unethical and criminal activities.

• Prohibiting giving and receiving of bribes.

• Prohibiting facilitation payments.

• Responsibly giving and receiving gifts.

ethics and financial crime. New employees are informed of the whistle blowing hotline during orientation. External stakeholders are able to access information about our ethics and fraud whistle blowing reporting hotline on www.standardbank.com.

WHISTLE BLOWING HOTLINE

2015 2014

Number of incidents reported using the fraud and ethics hotline 3 2

Incidents investigated and closed¹ 1 1

Incidents relating to internal fraud or misconduct 1 1

1 The remainder of the incidents reported are still under investigation.

The contact details for our ethics and fraud hotline are as follows:Hotline: 0800 001 124.Hotmail: [email protected] Bank website: www.standardbank.com/Ethics.

55

Core indicators Pg ref

G4-1 and 2 Statement from the most senior decision-maker of the organisation, and key impacts, risks and opportunities 4, 10, 18

G4-3 Name of the organisation 1

G4-4 to 9 Primary brands, products, and services; location of headquarters; operations; nature of ownership and legal form, markets served and scale of the organisation 2 – 8

G4-10 to 11 Workforce and union membership 32

G4-12 Supply chain 37, 46

G4-13 Significant changes in size, structure, ownership or supply chain N/A

G4-14 Precautionary approach 47

G4-15 Externally developed economic, environmental and social charters, principles etc 40, 48, 52

G4-16 Memberships of associations 53

G4-17 to 21 Entities included in the organisation’s consolidated financial statements, report content, material issues and boundaries 2

G4-22 to 23 Restatements of information and significant changes in reporting N/A

G4-24 to 25 Stakeholder groups and identification 16

G4-26 to 27 Approach to stakeholder engagement and concerns raised 16, 23, 24, 28, 35, 46

G4-28 to 30 Reporting period 1

G4-31 Contact details IBC

G4-32 GRI content index 55

G4-33 Assurance Not assured

G4-34 Governance structure and non-core indicators: G4-35, 36, 38 to 49, 51 51 – 53

G4-56 Values and code of ethics and non-core indicator: G4-58 53 – 54

Core financial sector supplement indicators

G4-FS1 Environmental and social risk policy 47

G4-FS2 Assessment of environmental and social risk 47

G4-FS3 Monitoring client’s implementation of environmental and social requirements 47

G4-FS4 Environmental and social risk training 46, 48

G4-FS5 Engagement with clients on environmental and social risk 48

G4-FS6 Percentage of the portfolio for business lines Not disclosed

G4-FS7 to 8 Products or services that deliver a social or environmental benefit 42, 47

G4-FS9 Audit of environmental and social risk Not audited

G4-FS10 to 12 Active ownership N/A

G4-FS13 Access to financial services and products 42 – 43

G4-FS14 Accessibility for people with disadvantages 28

G4-FS15 Fair design or sale of products and services 26

G4-FS16 Consumer financial literacy 45

NA: Not applicable

Material issues indicators Pg ref

Risks and opportunities G4-EC7 (pg 19)

Financial performance G4-9 (pg 22)

Regulatory change G4-SO8 (pg 25)

Client centricity G4-PR5 (pg 28)

Human capital G4-LA1 (pg 32), LA2 (pg 36), LA6 (pg 34), LA10 (pg 32, 35, 36), LA11 (pg 33), LA12 (pg 32 and 52), SO3 to 5 (pg 29)

Reputation G4-EC1 and 8 (pg 38), EC9 (pg 37, 46), SO1 (pg 44)

Global Reporting Index G4


Group Company SecretaryAdv S Tjijorokisa Tel: +264 61 294 2036

Head office switchboard+26 461 294 2000

Registered address3rd Floor, Standard Bank Centre Corner of Werner List Street and Post Street Mall PO Box 3327 Windhoek Namibia

Website: www.standardbank.com.na

Contact details

DisclaimerThis document contains certain statements that are ’forward-looking’ with respect to certain of the group’s plans, goals and expectations relating to its future performance, results, strategies and objectives. Words such as “may”, “could”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “aim”, “outlook”, “believe”, “plan”, “seek”, “predict” or similar expressions typically identify forward-looking statements. These forward-looking statements are not statements of fact or guarantees of future performance, results, strategies and objectives, and by their nature, involve risk and uncertainty because they relate to future events and circumstances which are difficult to predict and are beyond the group’s control, including but not limited to, domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities (including changes related to capital and solvency requirements), the impact of competition, inflation, deflation, the timing impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of changes in domestic and global legislation and regulations in the jurisdictions in which the group and its affiliates operate. The group’s actual future performance, results, strategies and objectives may differ materially from the plans, goals and expectations expressed or implied in the forward-looking statements. The group makes no representations or warranty, express or implied, that these forward-looking statements will be achieved and undue reliance should not be placed on such statements. The group undertakes no obligation to update the historical information or forward-looking statements in this document and does not assume responsibility for any loss or damage arising as a result of the reliance by any party thereon.

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2015 Sustainability report - Standard Bank · – Introduction 16 ... Going forward, the sustainability report ... framework and the GRI’s Financial Services Sector Supplement as