ABSA BANK BOTSWANA : INTEGRATED ANNUAL REPORT 2022

Annual financial statements

Shareholder information

Absa Bank Botswana Limited

Integrated Report 2022

Report 2022	i

Readingi thisthisreportreport AbsaAbsa--brave,brave, passionate andreadyready EEmpowering Africa'sfrica'stomorrowtomo row--ourourstrategicstrategicintentintentTogetherTogether...one...onestorystoryat aattimea time-delivering-delveringvaluevalue

	Protecting value through strong governance		Annual financial	statements		Shareholder information

Our 2022 Integrated Report

Absa - brave, passionate and ready

Absa at a glance	6
Ways to do banking	8
Structure, products and services	10
Absa bank in the Botswana banking context	12

Empowering Africa's tomorrow

Board Chairman's report	16
Our purpose	18
Strategic overview	19
Our business model	24
Our external environment	27
Our stakeholders' needs and expectations	30
Material matters	36

Together...one story at a time - delivering value

Managing Director's report	50
Finance Director's report	54
Diversify revenue streams	58
A primary partner for our clients	60
A digitally powered business	62
A winning, talented and diverse team	64
An active force for good in everything we do	67
Outlook	70

Protecting value through strong governance

Our leadership
Board profiles	76
Country management committee profiles	81
Board role, structure and composition	88
Board objectives	90
Board independence and tenure	90
Board changes	90
Board meetings	90
King IV application	92
Board evaluation and effectiveness	96
Board skills and training	96
Board Governance Outlook	97
Board committees' reports	98
Remuneration report	102
Management committees and code of ethics	105

Annual financial statements

Directors' responsibilities and approval	110
Corporate governance report	111
Director's report	112
Independent auditor's report	114
Statements of comprehensive income	120
Statements of financial position	121
Statements of changes in equity	122
Statements of cash flows	124
Summary of accounting policies	125
Notes to the annual financial statements	142
Shareholder information
Notice to shareholders	218
Annexure to notice	219
Proxy	221

Integrated reporting purpose, scope and audience

Absa Bank Botswana Limited ("the Bank") is a public company listed on the Botswana Stock Exchange ("BSE") and domiciled in Botswana. The Bank strives to incorporate the principle of integrated thinking into our business and reporting. This Integrated Report is aimed at various key stakeholders, including our investors.

Integrated thinking requires integrating considerations around prosperity, people and the planet into our core business activities considering our external environment, and taking a holistic view of factors that create or erode enterprise value. Considering the Bank's reliance on a wide range of tangible and intangible resources, integrated thinking is critical to ensure cohesive decision- making and responsible capital allocation. Ultimately, integrated thinking helps us balance short- and long-term outcomes, which is fundamental to our ability to create value sustainably over time.

This Integrated Report thus aims to provide our stakeholders with a concise and informed view of the Bank's strategy, business model, corporate governance, performance and prospects in the context of our operating environment, reporting on how we create and preserve value throughout our business over the short, medium and long term.

The financial information reporting boundary is defined by control and significant influence in the operating environment. All other reporting boundaries, including risks, strategy, governance, social and environmental are as per their ability to significantly impact value creation, as determined by the Bank's management and Board.

Frameworks, assurance and reporting suite

Our report is based on the Integrated Reporting () Framework 2021*. 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 ("AFS") published in the report are prepared in accordance with the recognition and measurement requirements of IFRS interpretations issued by the IFRS Interpretations Committee ("IFRS-IC"), Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council. The AFS are also in compliance with the Botswana Stock Exchange Listings Requirements, the Botswana Companies Act of 2007 as amended (Cap 42:02), the Financial Reporting Act of 2020 through the Botswana Accountancy Oversight Authority, the Non-Banking Financial Institutions Regulatory Authority Act (Cap 46:08), and the Banking Act (Cap 46:04).

• https://www.ifrs.org/issued-standards/ir-framework/
  1 Less than 12 months.
  2 One to three years.
  3 Longer than three years.

Reporting period and forward- looking statements

This report covers the period from 1 January 2022 to 31 December 2022. Notable and/or material events after this date and until the approval of this report on 5 June 2023 are included. Statements relating to future operations and the performance of the Bank are not guarantees of future operating, financial or other results and involve uncertainty as they are based on assumptions of future developments, some of which are beyond our control. Therefore, the results and outcomes may differ. Given continued levels of uncertainty. Our approaches, planning, and stress testing exhibit a higher than usual level of uncertainty as to the outlook statement.

Process disclosure, materiality and assurance approach

This Integrated Report uses dynamic materiality to scope which matters are significant for reporting and servicing the informational needs of capital markets. A matter is material if it can significantly affect our ability to create or preserve value or lead to value erosion (i.e., enterprise value) over the short1 , medium2 and long term3 . Our material matters as determined through our materiality determination process are:

Our Integrated Report process commenced with the review of the material matters for reporting. The materiality determination process for the purpose of preparing and presenting an integrated report involves:

• Identifying relevant matters based on their ability to affect value creation
• Evaluating the importance of relevant matters based on either the magnitude of their effect on value creation or the likelihood of occurrence
• Prioritising the matters based on magnitude
• Determining the information to disclose about material matters.

Material matters reported on in this report thus cover those matters deemed to have a material impact on the business in the short1, medium2 and long term3. This was primarily determined via a joint in-depth strategy review, in which the Bank's Board of Directors ("the Board") was actively engaged, after which the Board approved the 2022 strategy on 8 December 2021. Thereafter, content gathering for these disclosures included engagements with and submissions from business units, including governance and enabling functions. In accordance with this materiality principle, each submission in this report was signed off by the accountable function executive, after which the holistic report was signed off by the Country Management Committee (CMC). The Bank applies a risk-based, combined assurance approach over operations. Our assurance model therefore, which comprises of internal controls, risk reviews, management assurance, compliance monitoring and conformance reviews, the internal audit function and the services of independent external assurance providers, support the accuracy of the disclosures within this report.

In line with their respective mandates, specific reports are reviewed and recommended to the Board for approval by various committees of the Board.

ii	Absa Bank Botswana Limited Integrated Report 2022

Absa Bank Botswana Limited Integrated Report 2022

1

Reading this report Absa - brave, passionate and ready Empowering Africa's tomorrow - our strategic intent Together...one story at a time-delivering value

Approval of the Integrated Report

Protecting value	through	strong governance		Annual financial statements		Shareholder information

Navigational icons used in this report

Hyperlinks are used throughout this report and is indicated through the use of red italic text

Supported by management and all the Board Committees, the Board acknowledges its responsibility for the integrity of the Bank's external reporting. This report provides material and relevant information to providers of financial capital to enable informed capital allocation decisions while also supplying information relevant to broader stakeholders.

This report is presented in accordance with the International Integrated Reporting Framework (2021). The Board believes it addresses all material matters influencing the Bank's ability to create, preserve, or erode value, in the short, medium, and long term. It is the Board's opinion that this Integrated Report presents a fair and balanced view of the Bank's performance and outlook.

The Board approved this report on 5 June 2023.

Daniel Neo Moroka	Cosmas Moapare	Kgotlayarona Ramaphane	Sari Helena Nikka
(Board Chairman)	(Lead Independent	(Independent Non-Executive	(Independent Non-

Integrated thinking principle We sign post where integrated thinking and decision making are at play to create the basis for long-term value creation.

King IV statement We sign post statements by those charged with governance in line with King IV disclosure practices.

King IV Report on Corporate Governance™ for South Africa, 2016 (King IV). Copyright and trademarks are owned by the Institute of Directors in South Africa NPC and all of its rights are reserved.

Six capitals We consider all six capitals in assessing value creation, preservation and erosion. These icons sign post the relevant capitals.

Description of Capitals

Human capital

Human capital

Human capital refers to the competencies and capabilities of our people and the contribution they make in aligning with our purpose and strategic direction. Our ambition is to create a thriving, future-fit organisation that attracts, develops, and retains the best people through a differentiated workplace experience that brings their possibilities to life and offers competitive compensation. Our culture journey is one of becoming customer- obsessed, acknowledging the strength of our people, and delivering results sustainably - with an African heartbeat. Under the banner #iamAbsa, our culture transformation initiatives enable organisation-wide shifts toward the desired mindsets and behaviours that entrench our purpose and nurture a culture of

Non-Executive Director)

Director)

Executive Director)

Benjamin Monaheng	Sethunya Makepe-Garebatho	Thabo Kagiso Matthews	Saviour Mwepu Chibiya
Kodisang	(Independent Non-Executive	(Independent Non-	(Non-Executive Director)
(Independent Non-	Director)	Executive Director)
Executive Director)

Keabetswe Agatha	Cynthia Morapedi
Pheko-Moshagane	(Finance Director)
(Managing Director)

Financial

capital

Intellectual

capital

Manufactured

capital

Financial capital

Financial capital refers to the pool of funds available to the Bank to enable our business activities. This capital can be obtained through various means, including financing, equity, or generated through operations or investments. We seek to use our financial stocks of value to enhance the outcomes on all our capitals in order to support our ability to create value over the short, medium and long term while preventing value erosion.

Intellectual capital

Intellectual capital refers to our intellectual property and organisational capital, including tacit knowledge, systems, procedures, and protocols. Our ability as a Bank to innovate in order to meet pressing and future needs is also considered part of our intellectual capital.

Manufactured capital

Our Group IT infrastructure is the most material part of our manufactured capital, taking our strategic direction and evolving business model into consideration. While our buildings and other manufactured capital provide necessary inputs,

Social and

Relationship

capital

Natural capital

ownership, belonging, participation and inclusion.

Social and relationship capital

Sound relationships with our stakeholders are vital to value creation and preservation. These serve as valuable capital in both good and challenging times. Social and relationship capital refers to the relationships we have with our stakeholders. These connections link the institutions and relationships within and between our communities, stakeholder groups and other networks.

These relationships form the lifeblood of our business, supporting sustainable value creation and preservation.

Natural capital

Natural capital refers to all renewable and non-renewable natural resources and processes that enable our business activities, thereby supporting our ability to create value in the short, medium, and long term. Included in our assessment of our natural capital is our aim to improve the manner in which we consume natural capital over time.

Share your views

We remain committed to empowering Africa's tomorrow, together...one story at a time. The Bank has adopted an integrated approach to reporting, in accordance with various corporate governance rules and standards, and this is our second integrated report. Please share your feedback on our report by emailing [e-mail].

the detail of these aspects of our manufactured capital are not detailed in this report.

Sustainable Development Goals

(SDGs) Absa Group's prioritised SDGs.

2	Absa Bank Botswana Limited Integrated Report 2022

Absa Bank Botswana Limited Integrated Report 2022

3

Reading this report Absa - brave, passionate and ready Empowering Africa's tomorrow - our strategic intent Together...one story at a time-delivering value	Protecting value	through	strong governance Annual financial statements Shareholder information

Absa - brave, passionate and ready

Absa at a glance	6
Ways to do banking	8
Our structure, products and services	10
Absa bank in the Botswana banking
context	12

4	Absa Bank Botswana Limited Integrated Report 2022	Absa Bank Botswana Limited Integrated Report 2022	5

Reading this report Absa - brave, passionate and ready Empowering Africa's tomorrow - our strategic intent Together...one story at a time-delivering value

Protecting value	through	strong governance		Annual financial statements		Shareholder information

Absa at a glance

Absa Bank Botswana Limited applies integrated thinking and through this integrated report share our value creation story with our stakeholders.

Absa at a glance

Absa Bank Botswana Limited is listed on the Botswana Stock Exchange and is one of Botswana's leading financial institutions.

Abbreviations

ABB	Absa Bank Botswana Limited
AFS	Annual Financial Statements
AGM	Annual General Meeting
AI	Artificial Intelligence
AIS	Absa Insurance Services (Pty) Ltd

KYC	Know Your Customer
KPIs	Key Performance Indicators
LAR	Liquid Asset Ratio
mn	Million
NBFI	Non-bank financial institutions

Our purpose

Empowering Africa's tomorrow, together …one story at a time

Our values

We drive high performance to achieve sustainable results

Our employees are our strength We are obsessed with the customer We have an African heartbeat

Advancing our digitally-led

business strategy.

P22.7 billion	P17.0 billion
balance sheet size	deposits due to
(2021: P21.5 billion)	customers
	(2021: P16.4 billion)

22%

Capital adequacy ratio

(2021: 18%)

ARO	Absa Regional Operations
ATM	Automatic Teller Machine
ASB	Absa Securities Botswana (Pty) Ltd
BOB	Bank of Botswana
BWP	Botswana Pula
bn	Billion
CAF	Commercial Assets finance
CAR	Capital Adequacy Ratio
CASA	Current Accounts Savings Accounts
CET1	Common Equity Tier 1 Ratio
CIB	Corporate and Investment Banking
CMC	Country Management Committee
CSI	Corporate Social Investment
DR	Discount Rate
DVaR	Daily value at risk
ECL	Expected credit losses
EDs	Executive Directors
EFTs	Electronic Fund Transfers
ERMF	Enterprise Risk Management Framework
ERTP	Economic Recovery and Transformation Plan
ESG	Environmental, Social and Governance
ESD	Enterprise Supply Chain and Development
FATF	Financial Action Task Force
FIA	Financial Intelligence Agency

NBFIRA	Non-Bank Financial Institutions Regulatory
	Authority
NED	Non-Executive Director
NFI	Non funded Income
NII	Net Interest Income
NPS	Net Promoter Score
PoS	Point of Sale
PPE	Personal Protective Equipment
PPPs	Public-Private Partnerships
RBB	Retail and Business Banking
RWA	Risk Weighted Assets
SACU	Southern African Customs Union
SADC	Southern African Development Community
SDGs	Sustainable Development Goals
SME	Small Medium Enterprise
SOCE	Statement of Changes in Equity
SOCF	Statement of Cash Flows
SOCI	Statement of Comprehensive Income
SOFP	Statement of Financial Position
SPPI	Solely payments of principal and interest
STEM	Science, Technology, Engineering and Mathematics
TAG	Technical Accounting Group
TCFD	Task Force on Climate-related Financial Disclosures
UK	United Kingdom

Awards and notable achievements

32 branches

114 ATMs

1 027 employees

4 810 point-of- sale (PoS) devices

FX	Foreign Exchange
GACC	Group Audit and Compliance Committee
GBP	Great British Pound
GDP	Gross Domestic Product
IAS	International Accounting Standards
ICT	Information Communications Technology
IESBA	International Ethics Standards Board for
	Accountants' Code of Ethics for Professional
	Accountants
IFC	International Finance Corporation
IFRS	International Financial Reporting Standards
IMF	International Monetary Fund
INED	Independent Non Executive Director
IR	Integrated Reporting

UNESCO	The United Nations Educational Scientific and
	Cultural Organisation
USA	United States of America
USD	United States of America Dollar
VAT	Value-Added Tax
VRF	Value Reporting Foundation's
ZAR	South African Rand

6	Absa Bank Botswana Limited Integrated Report 2022

Absa Bank Botswana Limited Integrated Report 2022

7