First National Bank

1 First National bank of botswana Limited Integrated Repor t 2020 FNB botswana Integrated Repor t 2020 First National bank of botswana LimitedTable of contentsWELCOME TO THE 2020 INTEGRATED REPORT02 INTRODUCTION TO FNB BO T S WA N A04 About FNB Botswana05 Operating context10 Business model 14 Our stakeholders16 WHAT DRIVES OUR BUSINESS18 Material matters19 Strategy24 LEADERSHIP REPORTS28 Chairperson s review31 Chief Executive Officer s review35 Chief Financial Officer s review41 SEGMENT PERFORMANCE48 Human Resources58 GOVERNANCE AND REMUNERATION62 Governance63 Remuneration90 annual FINANCIAL STATEMENTS96 report of the Audit Committee98 Directors Responsibilities Statement99 Directors Report100 Independent Auditor s Report102 Significant Accounting Policies108 Income Statements139 Statements of Comprehensive Income14 0 Statements of Financial Position141 Statements of Changes in Equity142 Statements of Cash Flows14 4 Notes to the Consolidated and Separate Financial Statements145 OTHER INFORMATION232 Value Added Statement233 Ten-Year Financial Summary234 SHAREHOLDER INFORMATION238 Notice of annual General Meeting24 0 Form of proxyAttachedIntegrated Repor t 202001 Key terminolog yACAudit CommitteeA M L- C F TAnti-Money Laundering and combating the financing of terrorismBAOAB otswana Accountancy Oversight AuthorityBCBS239 Basel Committee on banking Super vision Regulation 239 BCMB usiness Continuity Management BCPB usiness Continuity PlanBCRCB oard Credit Risk Committee BFAB otswana Football AssociationBIAB usiness Impact AnalysisBIRAB usiness Impact Risk AssessmentBOTESSAB otswana Ter tiar y Student Spor ts AssociationBPRMFB usiness

2 Performance and Risk Management FrameworkBSEB otswana Stock ExchangeBSE Listings Requirements/ listing requirementsBSE Equity Listings Requirements, version , NBFIRA-approved, effective date 1 Januar y 2019 BURSB otswana Unified Revenue Ser vice CAFC ombined Assurance ForumCAGRC ompound annual growth rateCEOC hief Executive Of ficer CLRC redit loss ratioCompanies ActBotswana Companies Act of 2007 as amended Cap 42:02 CPFC ommercial property finance CSIC orporate social investmentCTIC ost-to-incomeCVMC ustomer Value ManagementDAGCD irectors Affairs and Governance CommitteeEAPE mployee Assistance ProgrammeECLE xpected credit lossECSIE xternal Customer Satisfaction IndexeGRCE lectronic group risk and compliance ESGE nvironmental, Social and GovernanceEVPE mployee Value Propositions FAT FFinancial Action Task Force FNBB/FNB botswana /the BankFirst National bank of botswana LimitedFNBIBFNB Insurance Brokerage (Pty) LtdFNIAF irst National Insurance Agency (Pty)

3 LtdFoundationFNBB FoundationGESG roup Engagement SurveyGIAG roup Internal AuditGroupFirstRandHRHuman resourcesHQL AHigh-quality liquid assetsICAAPI nternal capital adequacy assessment processICTI nformation communication technologyIFRSI nternational Financial Reporting StandardsIIRCI nternational Integrated Reporting CouncilIMFI nternational Monetary FundIRIntegrated ReportITInformation technologyKing IVKing report on Corporate Governance for South Africa, 2016*KPIsKey performance indicatorsKRIsKey risk indicatorsKYCKnow your customerLCRL iquidity coverage ratioMYSCM inistr y of Youth Empowerment, Spor t and CultureNIINet interest incomeNIRNon-interest revenueNPLsNon-performing loansPATP rofit af ter taxPOPIAP rotection of Personal Information ActPOSP oint-of-salePPEP ersonal Protective EquipmentPRCIAP rocess Risk Control Identification and AssessmentRCCCRisk, Capital Management and Compliance CommitteeRDARRRisk Data Aggregation and Risk Repor ting REMCOR emuneration CommitteeRMBRand Merchant BankROER eturn on equitySADCS outhern African Development CommunitySARBThe South African Reser ve bank SLAsService Level Agreements SMMES mall, Medium and Micro-enterpriseSSASub-Saharan AfricaSTIPShor t Term Incentive PackageTGPT otal Gross Packagethe/this reportIntegrated report 2020the/this year1 July 2019 to 30 June 2020 (2020)

4 Y/yYear-on-year* Copyright and trademarks are owned by the Institute of Directors in South Africa NPC and all of its rights are National bank of botswana Limited02 Welcome to the 2020 Integrated Repor tIntegrated Repor t 202003 First National bank of botswana report to Society | 2019In line with botswana Stock Exchange (BSE) guidelines on Environmental, Social and Governance (ESG) Reporting, the bank published a report to society on ESG matters in December 2019. Download a copy here: As the bank embarks on its integrated reporting journey, future ESG information will be presented in its annual Integrated and purposeThis report demonstrates how our dedication to customer centricity, innovation and service excellence, and our commitment to the highest standards of corporate governance and capital management enrich our customers banking experience.

5 As a commercially successful organisation, a sound investment and an exemplar y corporate citizen, FNB botswana (FNBB) will continue to grow in stature as the countr y s leading report informs our customers, shareholders and other stakeholders how the bank s strategy, governance, performance and prospects lead to the creation of shared value over the short, medium and long your viewsThe question How can we help you? represents the essence of why we exist. We will continue to innovate, excel, and deliver on our promise by offering our customers solutions to their unique has adopted an integrated approach to reporting, in accordance with the King report on Corporate GovernanceTM for South Africa, 2016 (King IV), and this is our First Integrated report . Please share your feedback and opinions on our report by emailing and boundar yOur 2020 Integrated report covers the financial year 1 July 2019 to 30 June 2020 (2020) and all material risks and opportunities identified within our value , assurance and repor ting suiteOur report is based on the International Integrated Reporting Council s (IIRC) Integrated Reporting (<IR>) Framework.

6 The contents of this report include extracts of financial information based on International Financial Reporting Standards (IFRS) and non-financial information reviewed by management. The annual Financial Statements published in the report are prepared in accordance with IFRS and in compliance with the botswana Companies Act of 2007 as amended Cap 42:02, the Non- banking Financial Institutions Regulator y Authority Act (Cap 46:08), and the banking Act (Cap 46:04).Forward-looking statementsThis report contains certain forward-looking statements about the bank s anticipated performance, results, operations and prospects. Although these statements represent our future expectations and judgements, the opinions are subject to known and unknown risks and uncertainties that could adversely impact our business and financial performance.

7 Undue reliance should not be placed on such opinions, forecasts or data. Forward-looking statements apply to the date on which they are made. The bank does not undertake any obligation to publicly update or revise any of its opinions or forward-looking statements, whether to reflect new data, future events or circumstances. The financial information on which the forward-looking statements are based has not been audited or reported on by FNBB s independent external of the Integrated Repor tThe Board is responsible for ensuring the integrity and completeness of this report . With the support of the Audit Committee, the Board collectively assessed the report s content and believes that it provides a fair and balanced representation of the bank s performance and prospects in accordance with the <IR> Framework. The Board approved the report on 16 September Mohumi Bonyongo Steven Lefentse BogatsuChairperson Chief Executive Officer (CEO)

8 Welcome to the 2020 Integrated Repor tFirst National bank of botswana Limited04 Our purpose is to be a trusted partner committed to building a SHARED FUTURE of to FNB BotswanaIntegrated Repor t 202005 About FNB BotswanaVision We are the world-class financial solutionist of choice, consistently delivering unmatched customer Our empowered people provide vibrant spaces and use cutting-edge platforms to create sustainable shared value for performance FNBB s leading position in innovative customer solutions, digital banking , risk management and corporate social responsibility continues to underpin our customer-centric balance sheet market share69 ATMs with Deposit+550k customers across BotswanaP57 million invested in communities15t dividend per share169 AT Ms1 513 employeesP6 million invested in employee training2 0.

9 1% return on equity144 Cash Plus agents24 branches75% employee cost to income ratio245 Cash@Till customers use digital channels million Committed to First COVID-19 relief programme for creative artists 2 Premium suitesFirst National bank of botswana Limited06 FNBB Values Our parent company, FirstRand, relaunched its philosophy in 2019. The FirstRand philosophy guides how the Group s people need to behave to deliver the best results for customers, society, shareholders and each other. This philosophy is captured in a set of Repor t 202007 Largest company on the botswana Stock Exchange by capitalisationBalance sheet of P30 billion in total assetsGross advances book at P16 billionOur business activities FNBB previously operated with four customer segments being Retail, Commercial, RMB and WesBank. Following an alignment to its customer centric strategy, FNBB incorporated the WesBank product offering into the three remaining segments (Retail, Commercial and RMB) and dissolved the WesBank segment during the second half of the financial banking , a segment of FNBB, provides the full range of investment; transactional banking ; saving; borrowing; vehicle and asset finance (WesBank); insurance financial services and solutions to individual customers Consumer (Youth, Smart and Gold) and Premium (Premier and Private Clients).

10 Providing solutions to dynamic and ever-evolving customer needs Diversif ying customers offshore investment portfolios Serving the ever yday needs of Batswana, enabling them to transfer money across the countr yCommercial banking provides a full range of financial services, including vehicle and asset finance (WesBank), through a customer segmentation strategy that improves turnaround times by optimising process efficiency. The segment comprises Upper Commercial, Lower Commercial, SMME and Public Sector customer segments. Further, it hosts the Agriculture and Tourism, Commercial Property Finance, WesBank and Islamic banking product As FNBB s Corporate and Investment banking segment, Rand Merchant bank (RMB) offers customers access to a comprehensive suite of investment banking products and services, including: Advisor y Corporate finance Trade solutions Infrastructure and project finance Structured trade and commodity finance Fixed income Currency and commodity services Investment opportunitiesFNBB established the FNBB Foundation in 2001 to implement the bank s corporate social responsibility policy and has to date committed P57 million to uplifting the lives of many less privileged members of our society.