NEDBANK (SWAZILAND) LIMITED
ANNUAL REPORTfor the year ended 31 December 2013
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
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OVERVIEW AND REPORT
OPERATIONALREVIEW
ANNUAL FINANCIALSTATEMENTS
nedbank (Swaziland) limited
prides itself on supplying
stakeholders with updated
information on a regular basis.
this information can be found
at: www.nedbank.co.sz
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OVERVIEW AND REPORT
OPERATIONALREVIEW
ANNUAL FINANCIALSTATEMENTS
Sales Report 22 - 23treasury Report 24 - 25Credit and Risk Management Report 26 - 28Human Capital Report 30 - 33Central operations and technology & Support 34 - 35Internal Audit Report 36 - 37Governance, Compliance and legal Report 38 - 40Corporate Social Investment Report 42 - 49
Annual Financial Statements 50 –116notice of Annual General Meeting 2013 117Definitions 118 – 121Contact Details Inside Back Cover
operational Footprint 4Profile and Structure 5Financial Highlights 6 Financial Highlights at a Glance 7nedbank Strategy 8economic Review 9Chairman’s Statement 10 - 11Board of Directors 12 - 13Management Commitee 14Managing Director’s Report 15 - 17Chief Financial Officer’s Report 18 - 21
Nedbank Branch(es)
Nedbank ATM(s)
Nedbank Agent
Big Bend
Pigg’s Peak
Nhlangano
Mankayane
Hlatikhulu
Ezulwini
MalkernsMatsapha
MBABANE
MANZINI
SimunyeNgwenya
Morocco
CANADA
UAE
USA
UNITEDKINGDOM
London
Dubai
NigerChad
Mali
BeninNigeria
Uganda
Ethopia
Kenya
Seychelles
Mauritius
Malawi
Tanzania
ZambiaAngola
DRCRwanda
ZimbabweNamibia
LesothoSouth Africa
Botswana
CentralAfrican Republic
Burundi
Swaziland
Burundi
Madagascar
Moz
ambi
que
BurkinaFaso
Ghana
Cape Verde
SenegalGambia
Guinea Bissau
Sierra Leone
Equitorial GuineaCameroon
Congo
Luanda
(Brazaville)
São Toméand Principe
Côte d’Ivoire
Gabon
Liberia Togo
Guinea
ecobank footprint
nedbank footprint
nedbank andecobank footprint
nedbankrepresentativeoffices
ecobankrepresentativeoffices
Deals concludedin Africa
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
OPeRatiONal FOOtPRiNt
4
7
7
2
34
2
1
1
1
2
Siteki
1
21
2
1
1
1
1
1
e2.8 bntOtal aSSetS
e76.1 mHeadliNe eaRNiNGS
89 ktOtal ClieNtS
10bRaNCHeS aNdalteRNate OUtletS
31atmS
239emPlOYeeS
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PROFile aNd StRUCtURe
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nedbank (Swaziland) limited prides itself on supplying stakeholders with up-to-date
information on a regular basis. this information can be found at: www.nedbank.co.sz
Our ordinary shares are listed in the Swaziland Stock Exchange and we have a market capitalisation of E147 840 804 at 31 December 2013.
HOW WE ARE STRUCTURED
Nedbank Corporate and Business
Banking
Nedbank Retail
Central management functions in
support of frontline businesses
WHERE WE ARE BASED
HeadOfficeatSwaziPlaza,Mbabane Swaziland.
Branch network throughout Swaziland,nineintotal.
Continued focus on people development.X-selling skills training conducted.Franchiseforfinanciers
training conducted.
Total clients over 89 000.Continued to invest in point of representation countrywide.Over875,000innewloans paid out in the year. Enhanced Retail Banking loan offering.Introduced a Nedbank Visa debit card.
Participated in stakeholders review of the proposed Consumer Credit Bill.Stress testing framework introduced on risk-based supervision methodology.Regulatory issued satisfactory status by compliance thereto.
Introduced more entry level banking products in our strive to be a bank for all.Contributedsignificantlyto socio-economic development through our Corporate Social Investment policy.
Final dividend increased to100centspershare,a5.3% increase from prior financialyear.
2009 2010 2011 2012 2013
179.0
203.3218.0
232.0
260.1
tOtal iNCOme (em)
2009 2010 2011 2012 2013
eaRNiNGS PeR SHaRe (cents)
206
248262
303309
SHaReHOldeR’S FUNdS (em)
2009 2010 2011 2012 2013
213.7
254.4
299.6
335.7
401.6
2009 2010 2011 2012 2013
COSt tO iNCOme (%)
56.5
52.4
56.7
50.6
53.6
17%
83%
81%
19%
MARKET SHARE
Assets Liabilities
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NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
2013FiNaNCial HiGHliGHtS
FiNaNCial HiGHliGHtS at a GlaNCe
2013 2012
E’000 E’000
key balance Sheet items Shareholder’s funds 401 570 335 654 Amounts owed to depositors 1 971 466 2 010 879 Cash and cash equivalents 192 133 342 993 Government and public sector securities 272 029 342 197 Loans and advances to customers 2 294 973 1 792 671 Group companies 1 641 50 910
key income Statement items Total income 260 090 231 773 Expenses 139 533 106 041 Profitbeforetax 110 385 118 473 Taxation 34 240 29 669 Profitaftertax 76 145 88 805
Other income Statement items Earnings per share (cents) 309,0 360,0Headline earnings per share (cents) 309,0 360,0Dividend per share (cents) 100,0 95,0
Selected Ratios Return on average shareholders’ funds 19,0% 21,3%Return on average assets 2,7% 3,0%Expenses to total income 53,6% 50,6%Non-interest revenue to total income 50,3% 48,2%Effective tax rate 31,0% 30,3%
EconomicProfit 32 510 29 455
Dividend Cover 3,09 3,22
Capital Adequacy 18,5% 21,0%
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FiNaNCial HiGHliGHtSAt A GlAnCe
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NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
neDBAnK (SWAZIlAnD) lIMIteD StRAteGY
nedbank (Swaziland) limited’s vision of building Swaziland’s most admired bank by our staff, clients, shareholders, regulators and communities continues to be supported by its long-term objectives which are referred to, internally, as Deep Green Aspirations.
OUR VISIONBuilding Swaziland’s most admired bankbyourstaff,clients,
shareholders,regulatorsand communities.
TO BE SWAZILAND’S MOST ADMIRED BANK
OURVALUES
IntegrityRespectAccountabilityPushing beyond boundaries People-centred
WHAt MAKeSuS DIFFeRent?
Greatatlistening,understandingclients’ needs and delivering
A GReAt plACeto WoRKA GReAt plACe to BAnK
OURMISSION
To be a great bank
at providing customised solutions to sustainable and
profitablehighvaluesegmentsinwholesale,businessbanking
and retail banking.
ouR eIGHt StRAteGIC FoCuS AReASPrimary client and cross-sellManage for valueClient-centred Leading
Risk enabler
TransformationGreen and caring bank
Unique and innovative culture
Productivity and execution
DEEP GREENASPIRATIONS
Great atcollaboration
Great placeto invest
Most respected andaspirational brand
Leadingtransformation
Communityof leaders
Livingour values
World class atmanaging risk
Highly involved in the community
and environment
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eCONOmiC RePORtNON- DOMESTIC In2013,advancedeconomypolicymakerssuccessfullydefused two of the biggest short-term threats to the globalrecovery,thethreatofaeuroareabreak-upandasharpfiscalcontractionintheUnitedStatescausedbyaplungeoffthe“fiscalcliff.”Inresponse,financialmarkets have rallied on a broad front. Moreover,financialstabilityhasimproved,asunderscoredintheGlobal Financial Stability Report (GFSR).
TheUnitedStatesexperiencedgrowthinGDPin2013,led by robust exports and strong household spending. The Federal Reserve cut its monthly bond purchases without making any changes to its longer-term plan to keep interest rates low for some time to come. The Eurozone turned the corner from recession to recovery and growth is projected to strengthen to over 1% in 2014. Chinese economic growth has been focused to surpass that of advanced economies and has been projected at 7.5%.
DOMESTIC Domesticeconomicgrowthremainedsubdued,trackinginternational and regional trends, though signs ofrecovery from the 2011 slump gradually emerged. The Swazi economy has been recovering at a steady pace with inflation contained below 6% in 2013. Sectorsthat showed remarkable growth included construction whichgrewbyover9.5%,wholesaleandretailby4%and communications by 8.5%. The higher SACU receipts alleviatedandreducedthecurrentfiscalbudgetdeficit.
The sustained weakness of the Rand/Lilangeni against major trading currencies continues to pose an upside risk
inthe2014medium-terminflationoutlook.Inflationarypressures from the neighbouring South Africa where Swaziland sources nearly 90 percent of its imports will filterthroughtoSwaziland.
OUTlOOK Global economic activity is expected to improve further in 2014-15, largely on account of recovery in theadvanced economies. Global growth is now projected to beslightlyhigherin2014,ataround3.7percent,risingto3.9 percent in 2015 and the growth will positively impact on local exports.
This marks a remarkable period as we adopt the theme presented in the 2014 National budget: “to invigorate economic growth, create employment opportunities,andacceleratepublic sector reforms,”with thegradualrecovery of the global economy.
South Africa has raised concerns about drought in some parts of the maize producing areas which would lead to a surgeinfoodprices.Inaddition,fuelpricesinSouthAfricahavebeenhikedconsecutively in thefirst twomonthsof2014andareexpectedtostayontheupwardtrend,reflectingeffectsoftheweakRand.
South Africa’s growth forecast in 2014 has been revised in the latest IMF World Economic Outlook Report which downgraded South Africa’s growth forecast from 2.8% to 2.3% in January 2014. The expected slow down in SouthAfrican growth was impacted, in part, by strikeactionswhichaffectedtheexchangerateofthecurrency,resultinginanincreaseoninflationandinterestrates.Thiswill have an adverse impact on regional growth.
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
6.54
6.71 6.62
5.58 5.586.05 5.85 5.68
4.424.68
4.39
5.49
SWAZIlAND INFlATION RATES
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IntroductionThe year 2013 marked the second elections to be held under the new constitution. The elections process was completed in a peaceful manner. The business sector is looking forward to the government to introduce robust economic and social policies and programmes that will re-energise the growth of the economy at an accelerated level.
Theturnaroundinthefiscalchallengeshasbroughtalevelof stability in the economic environment. Although growth prospects remain at low levels, there are signs that it istracking the global trends in the recovery mode. The rate of growth in 2013 has been revised slightly upwards to more than 2%, compared to previous projections of 1.9%.Theexpectedthrusthas,however,notyetboostedoureconomicgrowth to the desired levels.
The suppressed economic growth in Swaziland largely tracked the trends elsewhere in the world. Projections of global economic growth are positioned between 3.6% and 3.7%,largely being influenced by trends in the large economiessuchastheUSA,UnitedKingdomandChina.ItexpectedthatChina will outperform the developing economies as has been the trend in the past few years. Whilst the Eurozone economy has stabilised from the effects of the debt crisis experienced at the turn of the decade, the effects of the impendingUkraine – Russia crises remains to be seen. Russia is the major supplier of gas to Europe and any disruption to the gas and oil supply will negatively impact the region.
The SADC’s largest economy, South Africa, also facedsubdued economic growth and the forecasted growth rate for 2013 has been pegged at 2.3%. The outlook for 2014 does not present an overly optimistic prospect either. Also noteworthy is that 2014 is an election year for South Africa and the business environment waits in anticipation of the outcome of these elections.
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
CHaiRmaN’SStatemeNt
The inflation trends in 2013 were comparatively favourable to the economy, closing the year at 4.4% compared to 8.3% the previous year. It was encouraging that the inflation rate was maintained within the targeted range and we are looking forward to positive policies and programmes that will create a favourable environment to stimulate economic growth.
mr. b.C.F. mhlongo Chairman
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ECONOMY AND BANKING ENVIRONMENTThe demand for credit by the private sector picked up in the year as the signs of positive trends in the economic environment became visible. The economy was looking at the banking sector to play a meaningful role in supporting the economic recovery process.
Nedbank has continued to offer products that support the needs of both the business sector and households. Some of the products were revised to ensure that they aligned with the demands of the environment as the economy was emerging from a dip in credit extension. Thegrowth inassetsbymorethan28%reflectsthebank’s support to stimulate economic activity. The bankwas,however,cautiousthatcreditwasadvancedin a responsible manner, in line with the ConsumerCredit Bill.
With the mention of the Consumer Credit Bill, oneneeds tohighlight thatasabank,weareexcitedbythe planned process to regulate the credit industry. We urge government to expedite the process of bringing the Bill into law. It is also exciting that the Financial Services Regulatory Authority has substantially embedded its operations and we are pleasedwiththesedevelopments,astheystrengthenthecountry’sfinancial sector regulatory regime.Alsopleasing are the developments with regard to the communications industry with the promulgation of the Communications Act and the imminent setting up of the Communication Authority.
The Central Bank of Swaziland opted to keep interest rates unchanged throughout the year and this
positively impacted on the demand for credit. Growth in credit demand resulted in a 21% growth in credit extension to the private sector.
The inflation trends in 2013 were comparativelyfavourable to the economy, closing the year at 4.4%compared to 8.3% the previous year. It was encouraging that the inflation rate was maintained within thetargeted range and we are looking forward to positive policies and programmes that will create a favourable environment to stimulate economic growth.
BOARD OF DIRECTORSWhilst the board remained unchanged in 2013, thereare imminent changes that will take place in 2014. Mr. E. Davidson has since been recalled to Nedbank Rest of AfricaOfficetoassumeanewroleandhasadvisedofhisintention to relinquish his board position. We wish him well in his new challenge and appreciate the positive role he has played on the board in the past 11 years.
APPRECIATIONThecompanydemonstratedresilienceovertheperiod,as growth was achieved in key areas despite the muted economic environment. The management team and staff need to be recognised for their efforts in ensuring that the business remains vibrant and presents an attractive business proposition.
mr. b.C.F. mhlongo Chairman
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nedbank has continued to offer products that supported the needs of both the business sector and households. Some of the products were revised to ensure that they align with the demands of the environment that was emerging from a dip in credit extension.
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bOaRd OF diReCtORS
21
7
5
8 9
3
6
4
Barnabas C.F. MhlongoChairman
Stanley Herbert BeyersNon-Executive Director
Ernest Michael DavidsonExecutive Director
Nomsa R. HlatshwayoNon-Executive Director
Hendrik BritsIndependent Non-Executive Director
Muhawu MaziyaIndependent Non-Executive Director
Panuel GwebuCompany Secretary
Rory CupidoExecutive Director
Fikile NkosiManaging Director
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1. Barnabas C.F. Mhlongo (67)Chairman
Qualifications: ACIS – Southern Africa Institute of Chartered Secretaries and Admi-nistrators, FICBM – Chartered Institute of Business Management, Diploma in CriminalJustice and Forensic Investigations – Uni-versityofJohannesburg,DiplomainBusinessStudies – University of Boleswa.
Barnabas is the present Executive Director of theSwazilandInstituteofAccountants(SIA),a statutory body created to regulate the profession of Accountants. He has previously worked as Company Secretary and later Head of Procurement for Johannesburg Fresh ProduceMarket, andCompany Secretary atSwaziland United Bakeries (Pty) Ltd.Barnabas has been involved, at executivelevel, in various professional bodies, includ-ing the Federation of Swaziland Employers/ChamberofCommerce(BoardMember),and Swaziland Competition Commission (Director).
Committees: Directors Affairs &Remuneration Committee
2. Fikile Nkosi (45)Managing Director
Qualifications: Dip Acc Bus Admin (Uniswa),BCom(Uniswa)BCompt(Hons)(Unisa),MAP(Wits) SMP (GIBS)
Fikile is the Managing Director for Nedbank (Swaziland) Limited. Prior to her appointment asManagingDirector, she held the positionofChiefFinancialOfficer.Shehasalsoservedin the organisation as the Head of Internal Audit. She joined Nedbank (Swaziland) Limitedin2001,havingworkedforaninter-nationalauditfirm.OutsideNedbank,shesitson the Board of AON Swaziland (Pty) Ltd as a non-executive director.She is the Vice-President of the FSE/CC and represents the Bank in various boards.
3. Stanley Herbert Beyers (60)Non-Executive Director
Qualifications: FIBSA,HigherDiplomaAdvanced Banking.Stanley has worked for Nedbank Limited for over 30 years in various Divisions.
Committees: Audit Committee, RiskCompliance&LoanReview,DirectorsAffairsand Remunerations Committee.
4. Nomsa R Hlatshwayo (58)Non-Executive Director
Qualifications: MA Finance & Management(BallStateUniversity,USA),Bcom (UBLS)Diploma in Business Studies (UBLS)
Currently operating her own business as a business consultant. She is a former Director ofOperations Department, CentralBank of Swaziland; Manager Internal Finance,Central Bank of Swaziland; Pensionand Loans Accountant Central Bank. She has held other various positions within Central Bank of Swaziland including Snr. Examinations Applications officer, Purcha-singofficer Snr. SupervisorBankingandSnr.Supervisor Budget Accounts.
Committees: Risk Compliance & Loan Review,DirectorsAffairsandRemuneration.
5. Rory Mark Cupido (51)Executive Director
Qualifications:BA(Law)1,(UniversityofWesternCape),BProc1(WITS),MDP(UniversityofStellenbosch),EDP (GIBS – University of Pretoria)
Rory is Executive Head of Human Resources – Nedbank Rest Africa. He is the current chairman of Nedbank Group Retirement Fund. He is also a board member in Nedbank Malawi,andamemberofvariousinstitutions,including; Corporate Employment Equity Forum and Corporate Engagement Forum. Prior to his appointment with Nedbank,he worked for Old Mutual and Drum Reconditioning Company. Within Nedbank,he has been serving in various managerial personnel positions since 1995 and holds several portfolios in various representative committees.
Committees: Directors Affairs andRemunerations Committee.
6. Ernest Michael Davidson (59)Executive Director
Qualifications: MDP (Stellenbosch University),MDP(Unisa),AEP(Unisa)
Ernest is with the Nedbank Rest of Africa Business cluster and is currently the Executive Head of Flexicube. Ernest has worked in various branches/divisions within Nedbank and has held the following positions: Chief Operating Officer Nedbank (Swaziland) Limited, CreditManager, Branch Manager, CommercialManager,SeniorManagerHomeLoans,AssetBased Finance Assistant General Manager Branch Operations KwaZulu-Natal, GeneralManager Branch Operations East Gauteng,DivisionalDirectorBranchOperations,GeneralManagerATM’s/SST’s/POS,GeneralManagerShared Services.
Committees: Audit Committee and
Risk Compliance & Loan Review
7. Muhawu Maziya (49)Independent Non-Executive Director
Qualifications: LLM,LLB,BALaw,Dip.Journalism,Dip.IndustrialRelations,Advocate
Advocate Muhawu Maziya, a FulbrightAlumnus.He is the General Manager – Commercial at the Royal Swaziland Sugar Corporation (RSSC). Before joining RSSC,he was Head of Law, Faculty of SocialSciences,attheUniversityofSwazilandandsubsequently, Deputy Executive Directorof the Swaziland Federation of Employers/Chamber of Commerce.He has also served as chairman of the Swaziland Financial Services RegulatoryAuthority Board,Non Executive Chairman of Newera Partners Limited Board, Non Executive Chairman ofNational Maize Corporation Board and Non Executive Chairman of the Swaziland Insurance and Retirement Funds Board. He has also served in the Labour Advisory Board and was Deputy Chairman of the Industrial Relations Act 2000 drafting Committee.
Committees: AuditCommittee,DirectorsAffairs and Remunerations Committee.
8. Hendrik Brits (72)Independent Non-Executive Director
Henry is currently the General Manager,Zimswitch Technologies (Private) Limited - a company which operates an electronic funds transfer switch on behalf of Zimbabwean Financial Institutions. Henry is a career banker, having joined MBCABank in Zimbabwe as a Bank Clerk shortly after its inception and performed various banking tasks, including: trade finance,credit and advances and treasury, beforebeing appointed as General Manager and executive director responsible for general banking. Henry was also appointed to the Board of Directors of the various subsidiary companiesofMBCA.Afterretirement,Henrywas appointed into the Board of bancABC Zimbabwe; MBCA Bank Limited Zimbabwe; Nedbank Malawi Limited and Nedbank (Swaziland) Limited.
Committees: Audit Committee (Chairperson)Risk,Compliance&LoanReview
9. Panuel Gwebu (39)Company Secretary
Qualifications:BALaw,LLB(Uniswa),Post Graduate Diploma in Compliance Management,MDP(GIBS).
Panuel Gwebu holds the position of Company Secretary/ChiefComplianceOfficer atNed-bank Swaziland. He was admitted as an Attorney of the High Court of Swaziland in 2001. Panuel practised as a litigation attorneywith S.A. Nkosi & Company. He later took employment with P.M. Shilubane & Asso-ciates also as a litigation attorney prior to his appointment to Nedbank Swaziland as a complianceofficer.Mr. Gwebu has also been engaged by the Institute of Distance Education in the University of Swaziland as a part time tutor in the Faculty of Law.
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maNaGemeNt COmmittee
Isabel Made 34
Head: Internal Audit(2 years’ service)Qualifications: Bcom(UNISWA),CA (Swaziland)
Fikile Nkosi 45
Managing Director(14 years’ service)Qualifications:DipAccBusAdmin(Uniswa),BCom(Uniswa),BCompt(Hons)(Unisa),MAP(Wits)SMP (GIBS)
Phesheya Nkambule 35
Chief Financial Officer(3 years’ service)Qualifications:BCom (Uniswa)CA (Swaziland)
Edward Sithole 45
Head: Human Resources(8 years’ service)Qualifications: BA Soc Science(Uniswa)MBA (UKZN)
Mike Gibbs 60
Head: Sales(2 years’ service)Qualifications:BCom(Wits),MBA(Wits)Fellow of Institute of Bankers
Mbali Sibanyoni 45
Head: Credit and Acting Chief Risk Officer(24 years’ service)Qualifications: BA Social Sciences (UNISWA)Post-Graduate Diploma in Management (University of Natal)MBA (University of KwaZulu-Natal)Senior Management Programme (GIBBS)
Panuel Gwebu 39
Chief Compliance Officer, Company Secretary & Legal Advisor(9 years’ service)Qualifications: BALaw,LLB(Uniswa),MDP (GIBS) PostGrad - Compliance (UJ)
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INTRODUCTIONSwaziland’s domestic performance in 2013 has seen a marked improvement,withnumerousinterventionsandinitiativestostimulatetheeconomy,resultingineconomicgrowthof1.9%.The contribution to this increase was a huge improvement inSACUreceiptsinthe2012/2013fiscalyear.Impactedbya high level of expenditure and government’s limitations to raisenewdebt,thecountrycontinuedtodemonstratelowergrowth in relation to regional performance. This remains a concern for the country.
Wecontinued to focusonour strategic initiatives in2013,and realising our vision of building Swaziland’s most admired bank remained unaltered. As we moved closer to realising this vision we continued in our aspirations to deliver sustainability toallourstakeholders,andembracedourjourneyaswebuiltthe franchise and moved from good to great. The global economy continued to face challenges in 2013,affected by slow economic growth amongst the World’s largesteconomies,namely,theUS,andEuropeaneconomieswhich have adversely impacted the global economy.
My report, therefore, presents the key milestones, andachievements in the context of the local environment and evaluating of our progress against key strategic initiatives embarked on in 2013.
maNaGiNG diReCtOR’SRePORt
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We continued to increase our footprint with the addition of seven (7) new AtMs giving our clients greater access to our products and making our services more tailored to the needs of our clients. one of our key success areas has been the introduction of the debit card. this has resulted in increased efficiencies, and it also enabled us to give our clients added value in our product range.
ms. Fikile NkosiManaging Director
maNaGemeNt COmmittee
MANAGING DIRECTOR’S REPORT (ContInueD)
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INFlATION
HeadlineinflationinDecember2013,remainedthesameas November 2013 at 4.4%.The annual inflation ratedeclined to5.6% in2013, incomparisonwith8.3% in2012.Thisdecreaseininflationrateswasattributedtoanumberoffactors, includingthedecreasingannualratechangesreflectedonfood,nonalcoholicbeveragesandtobacco in the month of November 2013. The public sectorwageincreaseremainedbelowprevailinginflationresultinginmoderateinflationarypressures.
FINANCIAl RESUlTS Headline earnings grew by 1% to E76.1 million (2012: E75.4 million), while earnings per share reached 309 cents (2012: 303 cents).
Credit extension to the private sector grew by 21%, a rise thatwasmainly drivenbynewbusinessopportunities in Asset-Based Financing and on account of an increase in personal loans. Our retail division embarked on a product campaign that effectively created favourable conditions for our clients and saw us maximising value in the personal loans division. Due tolowratesandtheeconomystabilising,householdcredit increased in 2013.
Despite prevailing low economic growth trends in the market, our business continued to grow. Loans andadvances performance indicated an increase of 28%. Netinterestincome(NII)growthwaspositive,withanoverall increase of 8%. In line with our goal to increase non interest revenue (NIR), the bank was able toincreaseNIRby17%in2013,resultinginpositivegains.The Rand on the other hand was affected by a number of factors, including mining sector labour disputes.Asubduedandvulnerablelocaleconomybenefitedfromthe positive impact on the foreign exchange rates.
Expense management continues to be a priority in the short-term and long-term, with consistent expenseanalysis that allows the Bank to allocate and monitor expenditure. One of the success factors in 2013 was that we were able to maximise economies of scale where possible.
Our vision as Nedbank, Swaziland is to buildSwaziland’s most admired bank. This has enabled us to continuedelivering toour clients, shareholders, staff,regulators and community. To assist us in maximising growth and key value proposition differentiators in the market,weembarkedontargeted initiativesthroughProject Genesis. As a direct result of the Project Genesis initiative,growthoccurredinallretailassetlinesandthe debit card rollout that commenced in October 2013 has gained momentum. This has allowed us to improve value propositions and take advantage of the opportunities presented to us; thus we have been able to leverage our capabilities and delivering maximum value and service to our customers.
ClIENTS We continued to increase our footprint with the addition of seven (7) new ATMs giving our clients greater access to our products and making our services more tailored to the needs of our clients. One of our key success areas has been the introduction of the debit card. This has resultedinincreasedefficiencies,andalsoenabledustogive our clients added value in our product range.
InadditiontotheinceptionofProjectGenesis,customerfocus remained a key driver in our business growth. We remain committed to promoting a client-centred approach to relationship management with our clients. In2013,ourteamsconsistentlydeliveredaprofessionaland exciting customer experience to our clients.
PEOPlE Some key changes happened in the executive of the bank, with Leonard Dlamini retiring after 42 years ofservice.The Head of Marketing andTreasury, NoziphoZwane,leftNedbankattheendofAugust,andGoodmanChakanyuka, the Chief Risk officer left the bank inOctober.
APPRECIATION I continue to appreciate the expertise, guidance anddirection provided to me by the board and chairman
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of the board Mr. Barnabas Mhlongo. I would like to thank the chairman and the board of directors whose contribution have been invaluable. Their sharedcommitmenttotheoversight,governanceandperformance of the bank has positively contributed to our success and growth. The constant support and feedback allowed us to effectively deliver on our strategic focus areas.
I would also like to thank the management of the bank for the dedication and commitment to our work which hassignificantlytransformedourwayofdoingbusinessand enabled the business to continually deliver to our stakeholders.
In conclusion, I would like to thank our clients forallowing us to be their bank and to our staff - the drivingforcebehindthebusiness,fortheirdedicationand focus on constantly delivering superior service to our clients and consistently creating a customer experience that moves us towards building the most admired bank in Swaziland.
ms. Fikile Nkosi Managing Director
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OVERVIEW
Results
Headline earnings stood at E76.1 million (2012: E75.4 million), as both net interest income and non interestrevenue displayed strong growth year-on-year and interest rates remainedflat for the duration of the year. Loans andadvances increased by 28% to E2 295 million (2013) from E1 793 million (2012) as there was growth in demand within the sugar industry and commercial property development.
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CHieF FiNaNCialOFFiCeR’S ReView
Good performanceunderpinned by strongnIR growth and riskmanagement.
Phesheya Nkambule (35)Chief Financial Officer
Our Financial perFOrmance in 2013
2013
309
1,0%
76,145
2012
303
14.1%
75,368
2011
262
11.2%
66,043
2010
248
21.0%
59,398
2009
206
9.4%
49,108
Headline earnings
Earnings per share (cents)
Growth in headline earnings (%)
Headline earnings (E000)
19
Customer deposits declined year-on-year by 2% to E1 971 million (2012: E2 011 million). This is the outcome of the margin improvement measures implemented to improve the cost of funds as deposits priced at a premium were off-loaded and replaced with cheaper funds as the liquidity pressures observed in the previous year had eased. The Bank continues to pursue its strategic objective of growing deposits and increasing its market share.
ACCOUNTING POlICIESThe financial statements have been prepared inaccordance with the measurement and recognition requirements of the Swaziland and International Financial Reporting Standards (IFRS), and in themanner required by the Swaziland Companies Act 2009.
Exceptasnotedbelow,theaccountingpoliciesappliedin the preparation of the financial statements areconsistent with those applied in the previous years. ThefinancialstatementsarepresentedinEmalangeni,which is Nedbank (Swaziland) Limited functional and presentation currency. Certain comparative amounts in the Statement of Comprehensive Income and Statement of Financial Position have been re-presented as a result of a change in the accounting policy regarding the measurement of items of other comprehensive income.
MARKET SHARE Credit extension increased in comparison to the previousyear,emanatingfromtheimprovedeconomicactivity thus contributing to the growth in the bank’s market share ot assets to 19%, from 17% in thepreviousfinancialyear.Stronggrowthwasobservedinhome loans, asset-based finance and personal loans;the bank continues to focus on market share growth.
CAPITAl RISK MANAGEMENT Total capital improved to E401.6 million (2012: E335.7 million). The bank’s capital adequacy ratio is 18.5% and was maintained within the bank’s guidelines of 15% to 20%. It is also of note that it is above the Basel I regulatory requirement of 8%.
The Bank is reporting in line with Basel II using the standardised methodology adopted for all the Nedbank Group’s African subsidiaries. The Bank monitors its capital adequacy through its ALCO process.
The Board of Directors is satisfied that the Bank’scapital meets Regulatory Requirements.
FINANCIAl REVIEW
Balance Sheet Analysis
In pursuit of a portfolio tilt strategy in order to achieve therightmixofassetstoimprovemargins,theBank’stotal assets grew by 11% to E2 845 million (2012: E2 552million),mainly attributable to solid growthinhomeloans,termloans,asset-basedfinancingandpersonal loans. This has resulted in the Bank improving itsassetprofileratioto81%(2012:70%)inloansandadvances of total assets. Non-performing loans book increasedby5%toE29.1million(2012:E27.7million),reflectinganeffectivecreditmanagementsystemandthe credit loss ratio was recorded at 0.47%.
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E129.3 millionnet InteReSt InCoMe (nII)
7,8 %
E76.1 millionHeADlIneeARnInGS
1,0 %
19.0%ASSetS MARKetSHARe
19%81%
Assets
CHIEF FINANCIAl OFFICER’S REVIEW (ContInueD)
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20
2013
7,8%
2012
2.0%
2009
11.5%
NEt INtErEst INcomE
Net interest income (E’000) NII growth (%)
129,339
119,982
2011
7.2%
117,606
2010
15.9%
109,703
94,645
2013
17.0%
2012
11.4%
2009
16.2%
NoN- INtErEst rEvENuE
Non- Interest Revenue (E’000) NIR growth (%)
130,749
111,791
2011
7.2%
100,346
2010
11.3%
93,625
84,113
Cash and cash equivalents and Government securities are held for both profitability and compliance withregulatory liquidity requirements. These decreased by 32%year-on-year,inlinewiththereductionindeposits.Derivative assets, together with the correspondingderivative liabilities, represent an accounting baseddisaggregation of the Bank’s portfolio of client deal structuring activities. These positions are offsetting fromariskprofileperspective.
Deposits decreased by 2% to E1 971 million (2012: E2 011 million). The Bank continues with its deposit mobilisation strategies of growing free funds and lengtheningthematurityprofile.
Key financial performance indicators
2013 2012 Actual Actual Indicator % % Return on average shareholders’ funds 19.0 21.3Return on average assets 2.7 3.0 Expenses to total income 53.6 50.6 Non interest revenue to total income 50.3 48.2 Effective tax rate 31.0 30.3
Income Statement Analysis
Net Interest Income
In line with the growth in loans and advances and despiteratesbeingflat,netinterestincomeincreasedby 8% to E129.3 million (2012: E120.0 million). Home loansandassetbasedfinancinghadpositivegrowthof21%and35%respectively,comparedtothepreviousyear. The increased productivity in the sugar industry contributedsignificantlytothegrowth,asexposuretothe industry increased by 30% compared to previous year. Margin improvement was observed as measures to improve the cost of funds by off-loading deposits priced at a premium and replaced with cheaper funds bore fruit.
Non- Interest Revenue
As a result of the Bank’s focus on NIR and increasing its client base, non interest revenue increased by17% to E130.7 million (2012: E111.8 million). As the Lilangeni/Rand weakened against major currencies,foreign exchange transactions picked up during the year leading to an increase in foreign exchange income. The NIR to expenses ratio for the year was 93.7% (2012: 105.4% after restatement). The adverse movement in the ratio is mainly as a result of expenses increasingduetothereclassificationoftheemployeebenefitcostsasaresultoftheadoptionofIAS19(R).
17%nIR
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Expenses
Total expenses increased by 35% year-on-year to E140.0 million (2012: E103.8 million) due to the reclassification of the employee benefit costs asa result of the adoption of IAS 19 (R). Excluding the impact of adopting IAS 19 (R), expenses grewby 8%. The bank’s cost to income ratio is 53.7% (2012: 44.8%) and the Bank’s management remains committed to monitoring costs and aims to maintain them at acceptable levels. Staff related expenses constitute 47% of total expenses (2012: 42%). The increase is driven by the Bank’s funding of the shortfall inemployeepensionsreflectedintheIAS19valuation.
Taxation
Taxation increased by 15% to E34.2 million (2012: E29.7 million) as a result of a combination of the Bank’s profitsincreasingandachangeintaxrateduringtheyear which had an impact on deferred taxation. The effective tax rate increased to 31.0% (2012: 30.3 %.)
Shareholders’ funds
Capital and reserves increased by 20% to E401.6 million (2012: E335.7 million), resulting in a capitaladequacy ratio of 18.5% (2012: 21.0%).
DIVIDENDA dividend declaration of 100 cents per share has been approved by the board signifying a milestone for the BankasitreachestheE1.00mark,anincreaseof5.3%from the previous year. Dividend cover is 3.09 times in line with the Bank’s dividend policy of maintaining a dividend cover of not less than 2.5 times of headline earnings per share.
PROSPECTS The Bank continues to focus on both the corporate and retail sectors with its strategic objective being to grow the customer base. The Bank aims to leverage on its client relations and provide customised products to its clients. We expect the economy to grow at a higherratein2014andtheBanktobenefitfromtheimproved level of economic activity.
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2013
53.7%
2012
50.6%
2009
56.7%
ExpENsEs
Expenses (E’000)
Expenses to income ratio (%)
20112010
114,977
114,207117,271
139,533
101,362
52.4%56.5%
2013
19.0%
2012
26.5%
2009
23.0%
sHArEHoLDErs’ FuNDs
Shareholders’ Funds (E’000)
Return on Equity (%)
20112010
22.0%
20.2%
254,366
289,482335,654
401,570
213,720
100 CentSDIVIDenDpeR SHARe
2013 saw the introduction of a more focused and disciplined approach to serving customers and to meeting all their banking needs. This has ensured that the sales team’s strategicobjectivesfortheyearweremet,andthattheunitiswellpositionedtoleveragesignificantbusinessgrowthinthe year ahead.
PERSONAl BANKINGThe Personal Banking team achieved significant growthin assets which was mainly driven by the Premier loan product. Liabilities also grew year-on-year, due to thenewly launched Sivuno Plus Savings account and the other savings and investment accounts on offer.
Aggressive marketing campaigns were successfully under-taken to promote retail products, which included radioadverts, radio talk-shows and new product promotionssuch as retail ‘trolley dashes’; with groceries going to the top three winners. SMS messaging was also introduced where-in clients were kept abreast of new products and services from within the retail range. November saw the successful launch of the Nedbank VISA debit card that will be used to enhance the product offerings and attract new customers going forward.
The ABF book continued to grow with the ABF team re-enforcing relationships with car dealerships. A Dealer Recognition Award function was held in February 2013 with top dealers and salesmen being rewarded for increasing vehiclefinancingopportunities.Thefocusoncorporatesasamarket forABFgrowthwasalso intensifiedwithvisibleasset growth from this sector. Improved customer service and turn-around time gave a marketing edge against competitors.
SME AND INSTITUTIONAl BANKINGSME Banking continued to experience economic challenges in a small market where the majority of SMEs rely on banks forfinancewithmostofthemhavinglimitedalternatives.
SaleSRePORt
michael Gibbs (60)
Head of Sales
the personal Banking strategy for 2014 will be to intensify client focus through the ‘nedbank@Work’ concept and the introduction of other appropriate products and services.
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To those qualifying for lending, the bank usedcustomised solutions in addressing client needs. The SME value proposition was enhanced through pre-approvednon secured overdraft facilities, a re-engineered club savings account and access to the VISA debit card.
PRIVATE BANKINGThe Private Banking unit continued to offer top qualitypersonalisedfinancialandbankingservicestoclients via dedicated bankers spread across the two majorbranchesofMbabaneandManzini,aswellasthe Private Banking suite at the Gables in eZulwini. Throughthestrengthenedrelationshipapproach,theteam has been able to achieve satisfactory growth of this key sector of the market. The Private Banking unit has strategically positioned our business in delivering value and improved services to our clients. Future growth in this segment during 2014 is still anticipated as the unit aggressively targets new business opportunities.
CHANNEl MANAGEMENTOperational efficiencies, through‘ideas generation’,continuedtoimproveoperationalprocesses,aswellascustomerservice.Focuswasalsoonsales,whichresulted in positive results that strengthened the balancesheet,bothassetsandliabilities.TheSharedServices Model that was introduced in June 2012,withtheaimofcentralisingbackofficefunctionshasworked well and has given sales staff more time to focus on sales targets and collaborations that have yielded better fruits.
A key strategic initiative was to increase the ATM footprint countrywide in prime areas with high traffic. NewATM’swere installed at theCorporatePlace,MbabaneSuperSpar,KwaluseniSupermarket,and Gables at the Galleria, Siteki Shoprite andMalkerns Sentra Complex.
During2014,anumberofstrategicsiteshavebeenidentified for further expansion of the Nedbankfootprint. An Internet Banking kiosk will also be installed in the following branches: Mbabane Corporate Place,Gables, Matsapha, Riverstone andManzini. This will provide customers with the ability to access Internet Banking in a secure location.
CUSTOMER SERVICEInitiatives to improve customer service continued throughout the year. Overall performance was tracked using customer services devices and it stood at 92.6% against 94.2% for the previous year. During theyear,aCommentsBoxwasintroducedinthefourlarge branches. These interactive devices allowed customers to submit complaints, complimentsand suggestions. Valuable information was gleaned from these devices, in order to further streamlineprocesses and improve customer experiences.
CORPORATE AND BUSINESS BANKINGThe division continued to operate in an economic environment characterised by low GDP growth and decreased foreign direct investment. Non-financialinstitutions have become major money lenders,following the promulgation of the Retirement FundsActsof2008,bringinginoutsidecompetitionand Asset Managers are also proving to be serious competitors.
The retention of liabilities continues to be a challenge, asAsset Managers continue to mop upliquidity and drive up pricing by offering money market rates. There has been a concerted effort to grow the account base and use electronic products to attract ‘cash rich’ entities.
OUTlOOK The Personal Banking strategy for 2014 will be to intensify client focus through the ‘Nedbank@Work’ concept and the introduction of other appropriate productsand services. Inaddition, thehousingandABF market will also be a focal point. SME unit focus for2014will beonaccountgrowth,balancesheet growth and further partnering with external stakeholders to exploit business opportunities. The Corporate and business banking division will focusonbuildingvaluepropositionsforfranchising,agriculture and the Public Sector. Success will be spearheaded by close collaboration with other Divisions in the Group and maintaining a motivated and professional team.
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OVERVIEWThedepartmentcontinuedtofulfillitsfunctionofprovidingmarket funding, investment and meeting customerforeign exchange requirements.Treasury manages market,investment,interestrateandliquidityriskswithinthebank.Margin management is also a key deliverable. Customised solutions and client focus are the main strategic pillars within the department.
In order to deliver on itsmandate, theTreasury operationadheres to laiddownoperationalpolicies, as stipulatedbythegoverningauthority,theCentralBankofSwaziland,andorganisational policies and standards.
REVIEW OF THE YEARInspiteoftherecentglobalrecessionexperienced,Treasuryforeign exchange income increased by 34% to E18.3 million (2012:E13.7million).Thesignificantgrowth resulted fromcontinued strengthening of existing relationships with our clients, the broadening of our client base, and with theweakened Lilangeni/Rand against major currencies, andforeign exchange transactions that were favourable during the year leading to an increase in foreign exchange income.
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tReaSURY
With the improved market liquidity the Bank managed to keep its average cost of funds at lowest levels of 2.3% (2012: 2.7%).
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
Client acquisition and visitation remained a key focus area,asthreenewmajorclientswerebrought intothebooks. Leveraging on Group support has assisted in improving service delivery and processes and reviewing and streamlining proceses to provide more efficientservicetoourclients.Withtheimprovedmarketliquidity,the Bank managed to keep its average cost of funds at 2.3% (2012: 2.7%).
Average Cost of Funds
With the Rand and consequently the Lilangeni vulnerable for the largerpartof theyear, the currencty remainedunder pressure amidst general uncertainty for emerging
markets.Most notably, the decision by theUS FederalReserve to taper their quantitative easing programme saw the Rand weaken against the US Dollar to its lowest levelsinfiveyears.
lilangeni Against USD and Euro
OUTlOOKIncreased collaboration with stakeholders and customer focuswill remainamajordifferentiator, in the comingperiod. Building capacity through training and systems enhancement will be given priority as a means to improveefficiencies.
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4,0%
3,0%
2,0%
1,0%
0%Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
J F M A M J J A S O N D
15.0000
14.0000
13.0000
12.0000
11.0000
10.0000
9.0000
8.0000
2012
2013
EUR/SZL
USD/SZL
OVERVIEWEconomic conditions in Swaziland for the year 2013remainedsluggishfollowingthe2011fiscalchallenges. The country’s economy has struggled to recover and this has seen household budgets andthejobmarketremainingfragile,andcreditdemandremainedsoft.However,thistrendwasreversed in the second quarter of 2013.
Nedbank has a strong risk culture and follows world-class enterprise-wide risk management,whichaligns:strategy,policies,people,processes,technology and business intelligence in order to evaluate, manage, and optimise opportunities,threats and uncertainties. A culture of risk aware-ness and compliance is embedded in Nedbank’s day-to-day activities, ensuring sound businessdecisions that properly balance the diverse risks inherent in any transaction.
The Bank’s Enterprise-wide Risk Management Framework (ERMF) places emphasis on: account-ability, responsibility, independence, reporting,communications and transparency. It comprises seventeenkeyriskcategoriesthataremanaged,measured and reported on by all functions across the bank. The role of risk management is: identifying, assessing, measuring and managingthese risks thus ensuring adherence to policies and procedures.
REVIEW FOR THE YEARCredit Risk Nedbankdefinesclientcreditexposureasthe
amount representing the maximum potential loss arising from total facilities granted to a client. Effective credit risk management is fundamental to the sustainability of the Bank. In ensuring alignment to best practice, theBank continually reviews its credit policies,procedures and measures. The Credit and Risk DepartmentreportstotheRisk,Complianceand Loan Review Committee on a quarterly
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CRedit aNd RiSk maNaGemeNt
Nedbank has a strong risk culture and follows world-class enterprise-wideriskmanagement,whichalignsstrategy,policies,people,processes,technologyandbusiness intelligence in order to evaluate,manage,andoptimisetheopportunities,threatsanduncertainties.
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
mbali Sibanyoni (45)Head of Credit and Acting Chief RiskOfficer
basis, providing the Boardwith the assurance thatthe various risk categories are being effectively managed and controlled to ensure soundness and profitability.
2013 growth in the Bank’s total loans and advances extended to the private sector remained fairly subdued,inlinewiththeslowpaceofexpansionindomestic economic activity despite the lowest level of interest rates in three decades.
The Bank’s loans and advances grew by 28% to E2.29 billion (2012: E1.79billion). It is however imperative to mention that this growth was largely driven by a seasonal transaction in the sugar industry and the unsecured personal loans due to the marketing drive that was undertaken in the Retail space.
Growth in advances in Business Banking and Corporate was stagnant for the better part of the year andsignificantchangewasonlyseentowardstheendof the year. The stagnant growth was a result of the slow economic growth and businesses being cautious.
Impressive growth in gross advances in the Asset Based Finance portfolio of 35% (2012: 5%) was recorded. Other areas that showed impressive growth was the home loan portfolio showing growth at 21%. The overdraft portfolio recorded a decrease of 31% when compared to previous year as a result of major companies not making any major expansionsandremainingcashflushforthebetterpart of the year.
Credit Impairments and Credit losses
Non-Performing loans (NPL) as a percentage of total loans and advances improved to 1.23% (2012: 1.48%). Early cycle delinquencies improved as lower interest rates helped consumers to recover andthebenefitsofeffectivecollectionsandsoundcredit policy became evident. Write offs and other loan restructuring initiatives also contributed to the significantimprovementinimpairedadvances.
The Bank’s credit-loss ratio slightly deteriorated from 0.38% (2012) to 0.47% in the current year due to a conservative approach adopted in provisioning. However,thisremainedbelowtheBank’slimitof2%.
Operational RiskTheaimofanoperationalriskframeworkistoidentify,assess, control and mitigate operational risk and tochampion effective reporting of risk and emerging risk issues. Operational risk is defined as the risk of lossresulting from inadequate or failed internal processes,people and systems or from external events. Successful operationalriskmanagementiskeyindiversifiedfinancialservicesmainlybecauseofthevolumes,complexityandthe nature our business. Operational risk is not typically takeninpursuitofanexpectedreturn,butexistsaspartof normal course of business at all levels.
Risk Control Self Assessment (RCSA) is the primary operational risk measurement tool used by the Bank and forms an integral element of the overall operational risk framework, as it provides anexcellentopportunityfor the bank to integrate and co-ordinate its risk identificationandriskmanagementeffortsandgenerallyto improvetheunderstanding,controlandoversightofits operational risks. Quality assurance for RCSA has been a major focus in the year and will continue to be so for the coming year. The RCSA is a forward-looking process through which business unit management identifiesrisks that could threaten the achievability of business objectives and offers a set of controls and actions to mitigate risk tolerance.
The internal loss data collection process and tracking is backward-looking and enables the monitoring of trends and the analysing of root causes of loss events. Operational risk losses are reported in the Nedbank Internal Loss Data Collection System.
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29.5
29.0
28.5
28.0
27.5
27.0
26.6
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.002011
Credit Loss Ratio NPL Ratio
NPL Value
2012 2013
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Gross losses by event type 2010-2013Nedbank’soperationalriskprofile,frominternallossdata,overthefouryearperiodisdominatedbyinternalfraud,execution delivery and process management (EDPM),business disruption and systems failure (BDSF) and external fraud. EDPM and BDSF losses have become more significant in 2012with internal fraud (IF) contributingless in 2012.
Market Risk Market risk emanates from changes in market variables such as interest rate changes, foreign exchange ratesand commodity prices and cause uncertainties in security’s price.
To ensure implementation of risk management strategies regardingmarketrisk,Nedbankcreatesamutualcheckingsystemwheredecisionmaking,execution,andmonitoringfunctions are systematically separated and organised into different units. The bank’s main market risk objective is to understand and control market risk by robust measurement,limitsetting,reportingandoversight.
OUTlOOK FOR 2014The country’s growth outlook still remains uncertain in the region. While interest rates have remained at their lowest levelforthepastfiveyears,economistshavepredictedanincrease in the third quarter of 2014. This will put pressure on the household lending due to over commitment.
Strategic focus areas in 2014 include the following:
Primary clients and cross-sell:- sound risk principles willbemaintained,focusingonnon-interestrevenue(NIR) and primary client growth, usingClientValue
Propositions in the areas of agriculture, franchising,and small business sector as well as the retail banking sector;
Portfolio tilt- Strategic portfolio management to optimise allocation and use of scarce resources (e.g. funding, liquidity and marketing spend) and riskappetite. Effective risk management within desired risk appetite;
Risk as an enabler- continues to ensure risk versus reward optimisation with emphasis on pricing for risk. Focus will be on facilitating client solutions (being solution-orientated) and of course within set risk parameters. The Bank will continue to focus on growing a quality loan book rather than chase market share at any cost. There will be a strong focus on loan portfolio administration at different levels within the organisation. The Bank will continue to be aggressive and conservative in providing for bad loans and defaults. Embedding world-class risk and balance sheet management will continue;
Productivity and execution- simplifying policies and procedures,streamlininginternalapprovalprocesses,thereby improving on turnaround time, reducingvolumes of paper and creating efficiency throughconsistency; and
Unique and innovative culture- re-engineering processes to demonstrate consistent and proactive responses to business needs and offer relevant risk management guidelines. Agility and proportionate responsetoregulation,riskmanagementandstrategywill continue.
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crEDIt AND rIsK mANAGEmENt (ContInueD)
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ouR StRAteGIC FoCuS AReAS The people management strategy enables us to differentiate and compete through shaping the business workforce profile to ensure that we have the requisiteskills and competencies to meet current business and future growth requirements. The planning for the next three-year phase had been completed and the focus of our human resources strategy is:
2013 HIGHlIGHtS
The future success of any organisation is directly related to the capabilities, motivation andcontribution of all its employees and the calibre of itsleadersatalllevels.Indeed,theonlyconstantintoday’s challenging and changing business landscape is people. To attract and retain good employees,business organisations need to build a dynamic HR infrastructure that supports growth. It needs to nurture knowledge, skills, attitudes and valuesthat make it possible for people to do their jobs competently with commitment.
In keeping with our belief that ‘Great things begin with Great people’ 2013 was a year in which we continued the strong focus on our people, theirdevelopmentandretention,thecultureandclimateinwhich theyoperate.Thehighlightsbelow reflectsome of the achievements for the period under review:
Cultural entropy level of 10% at worldclass levels.
Continued high levels of staff morale. Introduced recognition of Top Bankers and
Top Tellers. Empowered staff through targeted training and
coaching 46 managers went through Dynamic
Leadership in a Project Environment training. 45 managers went through Managing
Complex Business Relationships training. 40 managers went through Performance
Management training. 220 staff members participated in Winning Teams
Product Knowledge training.
our belief is that true cultural sustainability can only be achieved when employees are encouraged and enabled to achieve their goals through the alignment of their personal and career growth objectives and values.
HUmaN CaPital RePORt
edward Sithole (45)
Head of Human Resources
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Leadership/management effectiveness; Informed stakeholders; Building a unique culture for competitive
advantage; Effective management of our talent; Product knowledge.
THE 2013 BARRETT SURVEY The bank remunerates non-managerial staff on the basis of basic salary, “remuneration” plus add-onbenefitsandremuneratesmanagerialstaffonatotal-cost-to-company basis (the guaranteed package),whichincludesabasicsalary,13thcheque(ifselected),andcontributionstothebenefitsfunds.
Annual remuneration increases are performance-and-market-related, based on the local rate ofinflation, increases awarded by the relevant peergroup, individual performance and affordability.Non-managerial staff members are covered under a collective bargaining agreement with the Swaziland Union of Financial and Allied Workers.
SHORT TERM INCENTIVE (STI)The short term incentive scheme is intended to encourage particular behaviours and obtain desired results within the agreed risk appetite framework.
There is one scheme in place for all permanent employeesofNedbankSwaziland,includingexecutivecommittee members, managerial staff and non-managerial staff. It excludes South African expatriate personnel who participate in a similar scheme in South Africa.
Distribution of the incentive pool is done on the basis of individual performance against criteria set out in annual performance agreements. The Remuneration Committee reviews and approves the STI Pool on an annual basis.
SINAKEKElWE EMPlOYEE SHARE SCHEMES NedbankSwazilandhastwoschemesforthebenefitof qualifying employees, namely the Broad-basedScheme and Management Scheme. In addition,a long-term Incentive Plan (LTIP) is in place for the benefit of qualifying employees. These schemeshave trustees appointed by the board to manage the scheme on behalf of employees. In 2013 the broad-based and the management schemes had 135 and 36 participants respectively. In 2013 there were no share allocations.
RETIREMENT FUNDAll permanent staffmembers are members of the NedbankSwazilandDefinedBenefitPensionFundwith222activemembers,85pensionersand12deferredpensioners as at 31 December 2013. The Pension Fund Actuarial Valuation report as at 31 March 2012 revealedthattheFundhadadeficitofE18.1millioncorresponding to a funding level of 77.7% as at the valuation date. The Fund Trustees made changes in the pensionfuturebenefitsaimedatcurbingthedeficit.
Based on the defined benefit structure of the Fund,the following amendments were made to the Fund structure:
A unIque AnD InnoVAtIVe CultuRe Our belief is that true cultural sustainability can only be achieved when employees are encouraged and enabled to achieve their goals through the alignment of their personal and career growth objectivesandvalues.Asignificantcomponentofour vision of becoming the most admired bank in Swaziland by all stakeholders is a focus on effective two-way staff engagement. The annual Barrett Survey and Nedbank Staff Survey (NSS) have become integral tools in terms of understanding the organisational culture and the overall corporate climate and working environment. By analysing the results of these surveys,wenot only ensure thatwe constantly measure our cultural sustainability progress, but we are also able to implementpractical, staff-driven initiatives supporting ourcultural sustainability journey.
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NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
Increasing the averaging period for the “Final PensionableSalary”fromoneyeartothreeyears;
Increasing the Normal Retirement Age from 60 to 65; and
Removing spouse’s pension payable on death of a member before retirement and replacing it with an enhanced lump sum payment which is fivetimes the member’s pensionable salary.
An application to amend the rules of the Fund was been submitted to the office of the Registrar ofInsurance and Retirement to incorporate the changes.
A snapshot actuarial valuation as at 31 March 2013 was conducted to determine the impact of the changes on the funding level of the Scheme. The snapshot valuation revealed that if the proposed changes to the Fund Rules are approved by the Registrar of Insurance and Retirement Funds, the Fund’s financial positionwould improve significantly to reflect a surplus of E3million,correspondingtoafundinglevelof104%.
DEVElOPING OUR PEOPlEWeunderstandthat, ratherthanmerelydoinga job,our employees have unique career aspirations and place a priority on continuous personal development. Providing them with the support they need to reach their full potential is key to our ability to create a great place to work. Empowering employees to perform optimally also enables higher engagement levels and increases the ability of staff members to push beyond theirboundaries,bothfortheirownbenefitandthatof the organisation.
The training and development programmes and initiatives available to our people include: Business education programmes (BEPs). Executive development programmes (EDPs). Internal study loans through the Education Policy. Coaching. Graduate Development Programme
EMPlOYEE WEllBEING PROGRAMMEIn 2013 we continued to offer our employees a compre-hensive Employee Wellbeing Programme (EWP), facilitated through Independent Counselling and Advisory Services (ICAS). The EWP is integral to our
overall employee wellness strategy, which aims tocreate a culture of physical and emotional health that, in turn, fosters personal commitment tohealthy lifestyles and the reduction of health risks by employees themselves.
MANAGING HIV/AIDS AND lIFESTYlE DISEASESWe remain proactively committed to addressing HIV/Aidsinapositive,supportiveandnon-discriminatorymanner. We offer treatment to HIV-positive staffmembers through the Swaziland Medical Aid Scheme Aid for AIDS programme. Employees and their dependants who are registered on the programme qualify for an additional unlimited benefit perregisteredbeneficiary.
DIRECTORS AFFAIRS’ AND REMUNERATIONS COMMITTEE (REMCO) [INCORPORATING NOMINATIONS]
Composition of the committeeIn 2013 the committee comprised of B. Mhlongo,(Chairman), M.Maziya, N. Hlatshwayo, S. Beyers, R.Cupido. The Managing Director and Head of Human Resources are permanent invitees to the meetings and recuse themselves from discussions on their own remuneration. The committee met four times in 2013.
Functioning of Directors Affairs and Remunerations CommitteeThe Directors Affairs’ and Remunerations Committee is delegated by the board to discharge its corporate governance duties related to remuneration strategy,policy and practices. The board ensures that the Directors Affairs and Remco is:
o constituted in a way that enables it to exercise competent and independent judgement on remuneration policy and practices, while alsoconsidering the management of related risk;
o functioning in compliance with statutory requirements,codesofrelevantbestremunerationpractice as well as applicable regulatory requirements; and remuneration practices.
HUMAN CAPITAl REPORT (ContInueD)
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The committee operates according to a charter approved by the board. The board delegates responsibility to the committee for the investigation andbenchmarkingofremunerationpracticesand,allproposals made on remuneration practices that have a directorindirectfinancialimpactinthebank.
The committee’s responsibilities which are set out in theDirectorsAffairsandRemcocharter,areto:
• Approveo the annual performance scorecard of the
Managing Director;o the annual short-term incentive (STI) pool; ando the overall guaranteed remuneration increase
budget or mandate for all staff; ando the remuneration levels for executives and
senior management;
• Recommend and Reporto to the board after each meeting and more
frequently if required. o to the board for approval all elements of
remuneration on an individual basis for the Managing Director; and
o to the board the remuneration remuneration of Chairman, non-executive directors andexecutive directors;
o to the board on the appointment of new executive and non-executive directors;
o to the board on its composition generally and on the balance between executive and non-executive directors and independent non-executive directors; and
o to the board on the continuation (or not) in services of any non-executive director who has reached the age of 70 and of directors who are retiring by rotation to be put forward (or not) for re-election;
• Reviewo remuneration proposals and practices for the
bank to ensure alignment with best practice and the latest governance principles; the overall financial liability related to all elements ofremuneration for the bank;
o the material terms and conditions of service of all the bank staff (where appropriate) to ensure that they are fair and competitive;
o the proposals for non-executive directors’ fees;o the allocation of guaranteed variable remune-
ration awards; o the use of independent external advice where
necessary;o regularly the composition of board and
committees and monitor the attendance of directors at Board and Committee meetings; and
o remuneration policy and strategy; ando plansforsuccession,andensuretheiradequacy,for the Chairperson, Managing Director andExecutives.
• Assist o the board in its determination and evaluation oftheadequacy,efficiencyandappropriatenessof the corporate governance structure and practices of the Bank;
o the board on any issues of a fundamental strategic importance to the bank that are beyond the scope of the specific authoritiesmandated to the other board committees;
o the board in determining whether the employ-ment of any director should be terminated;
o the board in ensuring that the Bank is at all times in compliance with all applicable laws,regulations and codes of conduct and practices; and
o the board in ensuring that the right calibre of executiveandseniormanagementisattracted,retained,motivatedandrewarded;
Thecommitteesatisfieditsobjectivesfortheyearinaccordance with its charter.
opeRAtIonAl ReVIeW
CeNtRal OPeRatiONS &teCHNOlOGY aNdSUPPORt SeRViCeS
CENTRAl OPERATIONS OVERVIEWFor the year under review the bank remained focused on improving operational efficiencies, improving turn-around times, reducing costs and improving customerservice and product offerings. With a view to also improving productivity and to create a sales focus/culturewithinthebranches,duringApril2013theBankrolled out Project Genesis. Within this project a number ofbusiness initiativeswere identifiedwhichcutacrossthefivebusinessstreamsofthebank.ProjectGenesisisalso aimed at assisting the bank to meet and sustain its financialcommitmentsoverthenextthreeyears.
ACHIEVEMENTS The implementation of Project Genesis resulted in successes within the business in particular within the retail division where our teams were more focused,target driven and results oriented. Within the risk area the Introduction of parameters enabled us to track turnaround times resulting in improvements in overall delivery times and the collaboration among staff in retaining costs enabled effective revenue leakage management.
With a view to streamlining and improving real time settlements within the SADC region and to also improve securityand reducecheque fraud, theCentralBankofSwaziland working in conjunction with the other SADC members introduced SIRESS – SADC Interbank Regional Electronic Settlement System. This system went live on 22July2013,andalsoreplacedtheissuanceofallcrossborder cheques.
Oursystems improved,allowingus tostoptheuseoftravellersandcrossbordercheques,resultinginimprovedefficienciesandenablingourclients tohaveaccess toelectronic banking channels such as Webbank. The Debit card roll out enabled us to improve our delivery and value proposition to Nedbank Swaziland Clients.
We migrated from Nedinform to netbank business for cross border rand transactions with additional security features on the users and business side that have allowed ustominimisefileduplicationsandimproveefficiencies.
CONTROlS We rolled out a conformance tool for DIP in Matsapha which is a self assessment based on daily functions performed by users. This is completed by every staff member including the branch manager and measures efficiencies, how aligned staff are to processes andproceduresandoveranabovethesebenefitsenabledusto identify training and development requirements.
leonard dlamini (60)
Head of Operations
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NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
TSS OVERVIEWTechnology and Support Services is a support function. TSS is responsible for the maintenance and support of all IT systemswithinNedbank Swaziland, namelyGlobus, Banking Platform, NTE, UNIX, Windows,Exchange, Track IT, SWIFT, PSiberWorks, NetBoltz,technology infrastructure i.e. servers, routers, ATMs,POS, printers, UPSs, etc, software development anduser support on a daily basis. TSS also manages the physicalaccess intoheadoffice,creditandMbabanebranch. This support is done in liaison with Group Technology by ensuring that the bank’s strategy is supported through enhanced IT Initiatives and user friendly systems. TSS is also responsible for the network availability.
TOP PROjECTS IN 2013
Card Project: the TSS team worked hard to ensure that the long awaited Nedbank debit card is delivered in 2013. The card was launched to customers on the 29th October 2013.
webbank Release 2: The internet banking site was once again upgraded with the highlight additional functionality being verification of all SwazilandRevenueAuthority(SRA)paymentsusingthespecifi-cations provided by SRA to all banks.
POS dial-Up Solution: With a view to improving speed of transactions on POS and enable our clients to phonealocalnumber,asopposedtoaSouthAfricannumber,thisinitiativewasbornanddeliveredinApril2013.
Video Conferencing: The video conferencing facility was implemented successfully last year and is now fully functional.
Mbabane branch relocation: this branch was moved from the Nedcentre building to the Corporate place in May 2013. The network connection used for this branchfromHeadofficeenabledthebanktomakeacost saving of over E150 000.
Revenue leakage Phase 1: A project to identify the gaps where the business could be losing revenue was initiated and delivered in 2013. The bank is currently making over E350 000 monthly from this initiative.
atm Projects: Seven ATMs were delivered in the year 2013andtheseareatKwaluseniSupermarket,GablestheGalleria,MalkernsSentraComplex,SitekiShopriteand the relocation of the Mbabane ATM to Mbabane SuperSpar,andtwoattheCorporatePlace.
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Internal Audit (IA) is an independent assurance function,whosepurpose,authorityandresponsibilityare formally defined in a charter approved by theBoard Audit Committee (BAC) annually. The Head of Internal Audit reports functionally to the BAC Chairman, and administratively, to the ManagingDirector. The IA function forms part of the Enterprise-wide Risk Management Framework (ERMF) as a third lineofdefence,andengageswiththefirstandsecondline of defence to facilitate the escalation of key control breakdowns. IA is responsible for developing a 12-month flexible audit plan using a risk-basedmethodology, includingsignificantstructuralchangesinthebusiness,newsignificantentitiessuchasthirdparty relationships, joint ventures, etc, significantchangeactivities, emerging risks and increasing risks.This plan is approved by the BAC on an annual and quaterly basis.
The purpose of IA is to provide independent and objective assurance to the Nedbank (Swaziland) Limited Board of Directors via the BAC. This is to ensure that the governance processes, management of riskand systems of internal control are adequate and effective to mitigate the most significant risks, thatare both current and emerging, which threaten theachievement of the Bank and Group’s objectives. In so doing IA helps improve the control culture of the Bank. The scope of IA’s work is determined by the key risks facingtheBankandtherequirementsoftheBAC,theGroup and Nedbank Swaziland Executive Committees.
36
iNteRNalaUdit
Theemphasisisonflexibility,adaptabilityandcreativity,whilstadhering to a core set of rules.
isabel made(34)
Head of Internal Audit
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
Theemphasisisonflexibility,adaptabilityandcreativity,whilst adhering to a core set of rules. The methodology usedisalignedto,andcompliantwiththeStandardsforthe Professional Practice of Internal Auditing as published by the Institute of Internal Auditors.
In adopting the COSO II elements, IA leverages onmanagement’s identification and assessment of risk.IA’s focus is on those risks that have a material impact on the achievement of strategic and business objectives. A critical component of our IA process is that we adopt a 3+9 planning approach with regard to our annual audit plan. IA have implemented this process during 2013,andthisallowedIAtoprovideinputandchallengefor each quarter’s plan to ensure that appropriate flexibilityisbuiltintotheplantoaddressandrespondtoemergingrisksandchangingriskprofileswithintheBank,forthesubsequentninemonths.
IA has responsibility to: develop a twelve month rolling audit plan using a risk-basedmethodology, taking into considerationspecific regulatory requirements pertaining tointernal audit, as well as including any risks orcontrolconcernsidentifiedbymanagementandtheboard;
submit the twelve month rolling audit plan to BAC for review and approval prior to the commencement of a calendar year;
deliveronthecalendaryearauditplanasapproved,includinganyspecialtasksorprojects,asappropriateand requested by the BAC; and
The methodology used ensures that IA under-stands and can comfortably implement the meth-odologyinday-to-dayactivities,therebyremoving“grey” areas,whichwere subject to interpretationby auditors and improving the quality of work performed and evidenced in TeamMate (audit software).
Review of internal audit activities performedIA completed its tasks as set out in the approved audit plan for 2013. There has been an overall improvement in audit outcomes. Out of the seven audits that were plannedforandcompletedin2013,86%(75%:2012)
received an acceptable rating, which is improvementrequired. There were no unsatisfactory audit opinions issued in the year (Refer to graph below). The audit results gathered during the year indicated that the controls put in place by management remain adequate andeffective,withsomecontrolissuesidentifiedwhichmanagement committed to rectifying.
Monitoring audit IssuesThe IA monitored the implementation of agreed management actions on all issues raised, includingissuesraisedbyexternalauditors.Materialorsignificantcontrol weaknesses and management remedial actions are reported to the BAC. These issues are tracked to ensure timely implementation of agreed management action to enhance the control environment. Overdue issues are reported to the Group Audit Committee on a quarterly basis.
Quality of AuditsIn2013,IAwassubjectedtoaqualityassessmentbytheGroup’sQualityAssurancedepartment,andtheresultsdemonstrated general compliance with standards in all material aspects.
Audit Outcomes Over Four Years
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unsatisfactory
Improvement Required
Satisfactory
2010
12
10
8
6
4
2
02011 2012 2013
75%
12.5%
100%75%
25%
86%
12.5% 14%
The bank continuously reviews and evaluates its compliance framework to ensure that the framework is adequate to support the carrying on of business in a responsible manner.
Compliance Risk and Regulatory Risk We seek to achieve compliance with all pre-set legislative and regulatory requirement. The policies and frameworks underpinning the compliance practices of the bank prescribe zero tolerance to non compliance. The bank understands that compliance can only be achieved by embedding the compliance standards into the operations of the Bank.
King IIIThe Bank has aligned itself with the principles of governance set in the King Code Governance Principles (King III). We strive to apply those principles in so far as it is practicable for the business, and relevant tothe Swaziland environment. Where application of the principlesisnotpracticable,thereasonsfornotapplyingareexplained.Fortheyear2013,theboardwassatisfiedby the extent of application of the principles set out in the code. The principles that have been determined to be currently not in application are that: • The chairman is a non executive director but not
independent director. The chairman is appointed to board in accordance with the shareholder’s agreement;
38
GOVeRNaNCe aNd COmPliaNCe
Panuel Gwebu (39)
Chief Compliance Officer,
Company Secretary & Legal
Nedbank has a strong risk culture and follows world-class enterprise-wideriskmanagement,whichalignsstrategy,policies,people,processes,technologyandbusiness intelligence in order to evaluate,manage,andoptimizetheopportunities,threatsanduncertainties.
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
• NotallmembersoftheDirectorsAffairsandRemuneration Committee are independent non- executive directors; and
• ThechairmanoftheDirectorsAffairsandRemuneration Committee is non-executive director.
Board of Directors Theboardconsideredthestructureoftheboard,andissatisfiedwith theunitary structurecomprisedofninedirectors. There were no changes on the composition and structure of the board in 2013. As at 31 December 2013,theboardwasmadeupofthefollowingmembers:1. Barnabas Mhlongo2. Fikile Nkosi3. Muhawu Maziya4. Hendrik Brits5. Nomsa Hlatshwayo6. Stanley Beyers7. Ernest Davidson8. Rory Cupido9. Panuel Gwebu
The constitution of the board has taken into account the prescription of the shareholders’ agreement,Financial InstitutionsAct,2005andrecommendationsof King III. The role of the chairman is distinct from that of the managing director.
Board Appointments The board has approved a policy for board appointments that provides for a programme that addresses skills,experience and ancillary qualities necessary for an effectively functioning board.
The Directors Affairs Committee assists the board in the appointment of directors where necessary. The process for appointment is transparent and is supported by the applicable charters, policies and relevant governancedocuments.
International best practice requires that the role of the Chairman and the Managing Director should be separate. This has been further pronounced in Swaziland through the Financial InstitutionsAct, 2005 and hasalso been recommended in King III. The bank adheres to all these standards and has kept the roles separate to ensure a balance of power and authority. The separation however, does not prohibit ongoing inter-action to ensure the enhancement and implementation of strategic goals.
Board Evaluation The board carried board evaluation in 2013, andthe evaluation covered various aspects including role of directors, effectiveness of board meetings,accountability, skills, communications and othermatters. Whilst the evaluation indicated that the overall level of effectiveness was satisfactory, therewere aspects that were highlighted as requiring further attentionbytheboard, includingsuccessionplanning,stakeholder communication and frequency of meetings for non executive directors. These issues remain on the agenda of the board for 2014 to ensure that they receive appropriate attention.
Board Committees The board is assisted in the discharge of its obligations by three board committee. The terms of reference for all three committees which are approved by the board, were reviewed in 2013 and determined to beadequate for the objectives for which the committees are established. The board committees are comprised of the following: • AuditCommittee;• DirectorsAffairsandRemunerationsCommittee;and• Risk,ComplianceandLoanReviewCommittee.
Management Committees There are in place, technical committees that existwithin the executive committee structure that are mandated to implement the corporate strategy in a responsible manner. The committees include: • TheAssetandLiabilityCommittee;• EnterpriseRiskCommittee;• InformationTechnologySteeringCommittee;• CreditCommittee;and• StrategyCommittee.
Company Secretary and Director Development Ongoing director development has been incorporated into the board agenda. The ongoing development takes the format of both formal and informal interventions. The ongoing development also incorporate directors being regularly updated with regard to industry developments and relevant technical spheres. All directors attend a compulsory formal director develop-ment with the University of Pretoria’s Gordon Institute of Business Science (GIBS) Board leadership programme.
New directors are also required to attend an induction programme that is aimed at assisting the new directors appreciate the business and the roles and responsibilities they have to play. Various heads of divisions conduct presentations on their functions and particular subjects suchastechnology,riskandcompliance.
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The responsibility for the coordination of board activities and meetings rests with the company secretary, including the collation and circulation ofboard packs to directors. Directors interact liberally with the company secretary and other management executives of specialised functions such as internal audit,riskandcompliance.
Board Meetings Therewere fivemeetings held in the year, and thenumber of meetings met the prescription of all the key governance documents, including the boardcharter, Articles and Memorandum of Associationas well as the Financial Institutions Act. The record of attendance to all the meetings is included in this report. All directors are required to attend meetings at all times. Each of the three board committees also met separately on four occasions to consider and discharge their business.
Outsideformalmeetings,directorsareabletointeractfreelyamongstthemselvesandwithmanagement,inpursuit of their duties and obligations as directors.
These interactions enhance the process of decision making and assist the business in pursuing its objectives with agility.
Code of Ethics The code of ethics sets the minimum standards of ethics that all employees and directors are required to adhere to. The code also sets out the bank’s commitment to its stakeholders.On an annual basis,all the bank employees are required to commit to the code through signing individual declarations. In addition tocommittingtothecode,allemployeesin2013werefor the first time, required to sign an anti-corruptionpledge, wherein they committed to abiding by all laws,nottoacceptbribesandtoreportcorruptpractices.
The board of directors reviewed and signed the board ethics statement. The board undertook to be bound by the ethics’ statement on an individual and collective basis.
Attendance at Nedbank (Swaziland) Limited board and board committee meetings:
* Executive Director
# Non-executive Director
¤IndependentNon-executiveDirector
Attendance at Nedbank (Swaziland) Limited Board and Board Committee meetings:
Board Audit committee
risk compliance & Loan review
committee
Directors Affairs & remuneration
committee
Number of meetings
Directors Status
S Beyers # 5/5 3/4 3/4 3/4
H Brits ¤ 5/5 4/4 4/4
R Cupido * 5/5 4/4
eM Davidson * 5/5 4/4 4/4
nR Hlatshwayo # 3/5 3/4 3/4
MI Maziya ¤ 3/5 3/4 3/4
BCF Mhlongo # 5/5 4/4
F nkosi * 5/5
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
GovErNANcE AND compLIANcE (CONtiNUed)
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EMPOWERING OUR PEOPLE...
42
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
CORPORate SOCial iNVeStmeNt
...AND REWARDING OUR STAKEHOLDERS
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NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
CORPORate SOCial iNVeStmeNt (ContInueD)
STaKeHOlDer OVerVieW
We continue to lead as a corporate citizen to ensure that we
remainSwaziland’sleading‘greenandcaring’bank,thereby
building a sustainable and highly relevant business in the
communities we serve. Our Corporate Social Investment
(CSI) programme continues to play a central role in enabling
us to fulfil our ‘Deep Green’ aspiration of being highly
involved in the community and the environment. We do
this by supporting community enlistment and development
programmes that are empowering in the short-term, and
sustainable in the long-term, with a particular focus on
thesixkeyfocusareaswhichare:economicdevelopment,
education, health and HIV/AIDS initiatives, community
development,sport&arts,andtheenvironment.
Staffvolunteerism,throughtheNedbankcharity,isanother
channel through which our staff members are encouraged
to support our social sustainability objectives.
ByfocusingourCSIspendingontheseprimaryfocusareas,
weavoidtheriskofdilutingourfinancialsupport,andensure
that we remain an effective enabler of transformation,
enlistment and development in Swaziland.
We remain committed to promoting a client centred approach to relationship management with our clients. In 2013, our teams consistently delivered a professional and exciting customer experience to our clients.
We strive to make a sustainable difference to deserving individuals and communities, through supporting various organisations and projects focused on the following main areas:
Economic Development, which includes concerted support initiatives that seek to promote the standard of living and economic health of Swazis.
Health and HIV/AIDS Initiatives, which include interventions for people withdisabilities,diseaseslikeHIV/AIDS,cancer,diabetesandTB,aswellas providing training and infrastructure development in communities.
Community Development,withaparticular focus on initiatives that support and care for communities in need and vulnerable groups.
Education, which includes school-basededucationalprojects,rural-schoolrefurbishment,tertiaryeducationandothergovernment-identifiedpriorities.
Sports and Arts,whichincludesoccer,road-running,golf,swimming,etc.Sportsand Arts appeal to a wide segment of our economicpopulation,andisthereforeideal to use as a vehicle to engage the mass market.
The Environment, when selecting all of our CSI projects due consideration is also given to environmental impact and related issues.
BUIlDING SWAZIlAND’S MOST ADMIRED BANK
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1. ECONOMIC DEVElOPMENT Our Economic Development portfolio has enabled
numerous beneficiaries to actively participate in the
economy. We understand that economic sustainability
requires significant investment of time, money and
effort. Given the moral imperative for transformation
and the clear strategic and business opportunities it
presentsourbusinesswith,theseareinvestmentsthat
we are more than happy to make.
Examples of Economic Development initiatives supported
in 2013 include:
business woman of the Year awards (bwtYa)
We have sponsored and supported the Business Woman
of theYear Award (BWTYA), in partnership with the
RegionalExcellenceandDevelopmentInitiatives(REDI),
for the past nine years. The Award has grown in stature
over the past years, and now plays a pivotal role in
gender transformation within the Swazi Community.
The Award serves a number of purposes: it recognises
excellence amongst women in business, and honours
them for their achievements and outstanding work. The
Awardfinalistsandwinnershavebecomerolemodels
for future generations of Swazi business women. In
2013, we invested E300 000 towards the success of
this event. Ms.NelisiweMabuza, theCEOatAfrican
Alliance Swaziland Limited, was crowned the 2013
Business Woman of the Year Winner.
enactus
Enactus is an international non-profit making organi-
sation that brings together students, academics and
business leaders who are committed to using the power
of entrepreneurial action to improve quality of life and
standard of living for people in need. Guided by academic
advisorsandbusinessexperts,thestudent-leaderscreate
and implement community projects. The experience
does not only transform their lives; it also helps students
develop the kind of talent and perspective that are essential
for leadership. In 2013, we continued with our long-
standing support of Enactus with a sponsorship amount
of E128 000. Southern Africa Nazarene University were
crowned National Champions. They represented the
country in the World Cup that was held in Mexico on
29 September to 1 October 2013.
2. EDUCATION Education is the fuel that drives success and prosperity
forallSwazis,andpowerscompetitivenessintheglobal
struggle for trade, employment and investment for
the country. At Nedbank, we believe that the future
of our nation is inextricably linked to the future of the
learners currently in our education system. World-class
qualityeducation,clearly,isaprerequisitetocontinued
economic growth and poverty alleviation, yet inade-
quate resources such as furniture and equipment still
remain a major challenge for most schools in our
CORPORate SOCial iNVeStmeNt (ContInueD)
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NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
country- especially those in rural areas. Our intervention
strategy,therefore, istoprovidesuchresourceswhere
possible.In2013,wedistributedatotalof34desksand
53 chairs to both primary and high schools across the
country. Our total investment to educational support
amounted to over E30 000.
3. COMMUNITY DEVElOPMENT Wherever possible, the social and economic develop-
ment initiatives we support are integrated sustainably to
meet the living,financial and transformationalneedsof
communities. A large number of our interventions address
the immediate needs of the most vulnerable members of
society–children,women, theelderlyand thedisabled.
Through our community development initiatives, we
have provided funding to various welfare organisations.
Examples of community development initiatives under-
taken or supported in 2013 are as follows:
imvelo Spring water Project
One of the most important aims of the Nedbank
Swaziland’s Imvelo Mountain Bike Classic, staged at
MlilwaneWildlifeSanctuary in Juneeachyear,wasto
raise funds for community and conservation projects.
The Hlabazonkhe community bordering Mlilwane North
in the Siphocosini district has benefited from such
funds since 2008. Assistance provided has included:
the painting of the school, instalation of gutters to
capture rain water and the donation of water tanks and
officeequipment.In2013,weofficiallycompletedand
handedovertheImveloSpringWaterProject,ensuring
that clean water is provided to the community of
Hlabazonke.
CORPORATE SOCIAl INVESTMENT (ContInueD)
AlWAYS READY TO lEND HElPWHERE IT IS NEEDED MOST
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4. HEAlTH & HIV/AIDS INITIATIVESWefirmlyofthebelievethatthesustainablesuccessof
any community is inextricably linked to the health and
wellbeingofitspeople.Forthisreason,wecontinueto
partner with organisations committed to driving long-
term and sustainable health initiatives. Investment
takes the formof both financial aid and sponsorship.
Examples of health and HIV/AIDS initiatives supported
by Nedbank in 2013 include:
esicojeni Foundation
The Esicojeni Foundation is a charity founded and
patronised by His Majesty King Mswati III. The foundation
brings together eminent individuals and businesses
dedicated to eradicating hunger in Swaziland. The
foundation’sworkincludes,constructingneighbourhood
carepointsandschoolkitchens,establishingboreholes,
initiating gardening projects – all in an effort to end
hunger, malnutrition, provide the basic needs of
vulnerable Swazi children. In 2013, we contributed
E5 000 to the End Hunger- Walk the World. This event is
organised to raise funds and awareness of the plight of
orphaned and vulnerable children in Swaziland.
brave the breast Challenge
Forthethirdyearrunning,wecontributedanamount
of E22 000 to the Swaziland Breast Cancer Network
(SBCCN). This sponsorship went towards the prepa-
rations for the 2013 Brave the Breast Challenge, an
annual fundraising campaign staged to support the
SBCCN in their sterling efforts to raise awareness of
Breast and Cervical Cancer across Swaziland.
imbali Foundation
The Imbali Foundation is a non-profit making
organisation founded and patronised by Her Royal
Highness,PrincessSikhanyiso.Thefoundationaddresses
five areas of engagement pertaining to the girl child:
Leadership, Voice and Rights, Social Opportunities,
EconomicOpportunities,Education,HealthandSecurity.
In2013,weextendedadonationofE10000insupport
of the foundation.
5. SPORTS AND ARTS Our Sports and Arts programmes continue to make a
significant contribution to social, environmental, and
economicsustainabilityinSwaziland,atthesametime,
helping to drive vital transformation across the country.
Projects and initiatives funded in 2013 are as follows:
Soccer
Forthepastsevenconsecutiveyears,wehavesponsored
the football team that represents our country in the
Orange CAF Champions League. In 2013, Mbabane
Swallows Football Club represented Swaziland and we
supporteditwithtwentythreetracksuits,thirtysports
bags and two sets of soccer kit jerseys all valued at
E50 000.
Golf
Golf has grown significantly in popularity, and now
enjoys a broad following across the full spectrum of
Swazi society. The sport offers sponsorship opportunities
at every level – from professional competitions to golf
development. Our current golf sponsorship portfolio
includes:
• Swaziland Golf Union – The Union is tasked with
the mammoth responsibility of managing golf
development in the country. In2013,wematched
our E25 000 donation of the previous year to the
Swaziland Golf Union. We hope this sponsorship
will enable the Union to deliver more effective golf
development initiatives.
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
CORPORATE SOCIAl INVESTMENT (ContInueD)
• The Nedbank Corporate Golf Day – In 2013, we
again hosted our Corporate Golf Day. This event has
become aflagship event on the SwazilandGolfing
Calendar. It attracts the attention of Swaziland’s
bestprofessionalgolfers,andisanexcellentwayfor
profilingtheNedbankbrandonthegolfingstage.
Running
AsoneofSwazi’smostaccessibleandpopularsports,
running affords Nedbank an excellent platform from
which to engage effectively with participants and
spectators across the country. We annually engage in
two major running events. These are the Golden Foot
Club Tuff One Run and the Trelawney Park KwaMagogo
Marathon. Both events continue to enjoy a strong and
steady increase in popularity and attract both local and
international participants. In 2013, we continued our
associationwiththeseevents,sponsoredanumberof
staff members and clients to participate in the races.
We also manned a Nedbank branded water station for
the runners and co-sponsored various prizes. During
2013,ourrunningsponsorshipamountedtoE40000.
Cycling
The Nedbank Swaziland’s Imvelo MTB Classic is the
country’s major mountain biking event that was
initiated in 2005. This event is hosted by Big Game
Parks, and it attracts over 500 cyclists locally and
internationally. Funds generated from this event are used
forcommunityandconservationprojects.In2013,we
invested E70 000 towards the success of this event.
Swimming
For the seventh year running, we sponsored the
Swaziland Swimming Association with an amount of
E25 000. The sponsorship went towards the purchase of
aswimmingkitforthenationalyouthteam,tobeworn
in both local and international competitions.
6. THE ENVIRONMENTWe have a well-established reputation for environmental
awareness, investment and action. While our green
credentials offer evidence of our commitment to caring
for the environment, we believe that effectiveness in
environmental sustainability requires an approach that
also delivers positive social and economic consequences
for Swaziland and her people.
48
49
AnnuAl FInAnCIAl StAteMentS
ContACt DetAIlS
oVeRVIeW AnD RepoRt
opeRAtIonAl ReVIeW
Sibebe walk
Nedbank’s longstanding support of the Sibebe Walk
began in 2004. The Sibebe Walk, organised by the
Mbabane/Mbuluzi RotaryClub, and it aims at raising
the awareness of the natural history of the Sibebe
Rockandsurroundingareas.In2013,wesupportedthis
event with a sponsorship amount of E122 000. Funds
generated from this walk were used to support the
Sibebe Community Trust projects and other project such
as:HIV/AIDShome-basedcare,water supplyprojects,
educational projects and provision of scholarships for
the Mbuluzi community OVCs.
Re-cycling bins
Being a financial services organisation certainly does
not excuse us from taking responsibility of looking
after the environment. As Swaziland’s ‘Green Bank’,
we embrace the role we have to play in conserving
our country’s natural beauty and protecting its diverse
flora and fauna for future generations to enjoy. As
such,wehaveprovided three recyclingbins inallour
retailbranchnetworks.Inaddition,wehaveintroduced
environmentally friendly paper towels in all our ablution
facilities.
wwF earth Hour
AsSwaziland’s‘GreenBank’,weknowthatwehavethe
opportunityandtheresponsibilitytouseourinfluence
to encourage others to maximise their positive impact.
We therefore work closely with selected partners and
interested stakeholders to build a more sustainable
business and society. We again participated in the WWF
Earth Hour campaign on Saturday, 23 March 2013,
from 8:30 to 9:30pm. The Earth Hour is the world’s
biggest mass action initiative aimed at addressing
climatechange. Inthespiritofgreencollaboration, in
addition to our own efforts to switch off as many lights
aspossibleinourbuildings,wealsoencourageourstaff
members to observe the WWF Earth Hour and show
their support for it in their various homes.
Staff Volunteerism
Nedbank volunteerism programmes form an integral
part of our CSI agenda and offer a tangible way for staff
members to become personally involved in tackling
the social, economic and environmental issues that
pertain to Swaziland. All employees are encouraged
to actively contribute to social upliftment, rather
than viewing CSI as purely a marketing responsibility.
Nedbank’s efforts at developing and growing workplace
volunteerism,throughourNedbankStaffCharity,area
logicalextensionof itsvision-led,values-drivenethos,
as well as its Deep Green aspiration of being highly
involved in the community and environment. 2013
sawasignificantincreaseinthevolunteerismactivities
acrossthebank,withmorestaffmembersparticipating
in employee-generated volunteerism events.
Nedbank brand ambassadors
Whileourpolicy istoneversponsor individuals,wedo
support a number of ‘brand ambassadors’ that represent
the Nedbank brand and promote the association of
the bank with various sports or sponsorship properties.
In2013,wecontinued to support twoNedbankbrand
ambassadors,GeorgeFalcomer(golf)andMorrisDlamini
(running),bothofwhomareexceptionalsportingtalents.
PUTTING THE ENVIRONMENT FIRST
FOR tHe YeaR eNded 31 deCembeR 2013
Contents Page
Directors’ Responsibility Statement 51
Independent Auditors’ Report 52
Report of the Directors 53 - 55
Statement of Comprehensive Income 56
Statement of Changes in Equity 57
Statement of Financial Position 58
Statement of Cash Flows 59
Notes to the Financial Statements 60 - 116
50
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
aNNUal FiNaNCialStatemeNtS
ThedirectorsareresponsibleforthepreparationandfairpresentationoftheannualfinancialstatementsofNedbank
(Swaziland)Limited,comprisingthestatementoffinancialpositionat31December2013,andthestatementsof
comprehensiveincome,changesinequityandcashflowsfortheyearthenended,andthenotestothefinancial
statements, which include a summary of significant accounting policies and other explanatory notes, and the
directors’report,inaccordancewithInternationalFinancialReportingStandards,andinthemannerrequiredbythe
Swaziland Companies Act.
The directors are also responsible for such internal control as the directors determine is necessary to enable the
preparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerrorandfor
maintaining adequate accounting records and an effective system of risk management.
The directors have made an assessment of the ability of the company to continue as a going concern and have no
reason to believe that the business will not be a going concern in the year ahead.
Theauditorisresponsibleforreportingonwhethertheannualfinancialstatementsarefairlypresentedinaccordance
withtheapplicablefinancialreportingframework.
Approval of annual financial statements
TheannualfinancialstatementsofNedbank(Swaziland)Limited,asidentifiedinthefirstparagraph,wereapproved
by the board of directors on 12 March 2014 and signed on its behalf by
……………………....……………… …………………..........…………….. b C F mhlongo F m Nkosi Chairman Managing Director
51
ContACt DetAIlS
oVeRVIeW AnD RepoRt
AnnuAl FInAnCIAl StAteMentS
opeRAtIonAl ReVIeW
DIrEctors’ rEspoNsIBILItY stAtEmENtFOR tHe aNNUal FiNaNCial StatemeNtS
for the year ended 31 December 2013
aNNUal FiNaNCialStatemeNtS
12 march 2014
iNdePeNdeNt aUditORS’ RePORttO tHe membeRS OF NedbaNk (SwazilaNd) limited
Report on the Financial Statements
We have audited the financial statements of Nedbank (Swaziland) Limited, which comprise the statement of
financialpositionat31December2013,andthestatementsofcomprehensiveincome,changesinequityandcash
flowsfortheyearthenended,andthenotestothefinancialstatementswhichincludeasummaryofsignificant
accountingpoliciesandotherexplanatorynotes,andthedirectors’report,assetoutonpages53to116.
Directors’ responsibility for the financial statements
Thedirectorsareresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordance
withInternationalFinancialReportingStandards,andinthemannerrequiredbytheSwazilandCompaniesAct,and
forsuchinternalcontrolasthedirectorsdetermineisnecessarytoenablethepreparationoffinancialstatements
thatarefreefrommaterialmisstatement,whetherduetofraudorerror.
Auditor’s responsibility
Ourresponsibility istoexpressanopiniononthesefinancialstatementsbasedonouraudit.Weconductedour
audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical
requirementsandplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialstatementsare
free from material misstatement.
Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancial
statements.Theproceduresselecteddependontheauditor’sjudgement,includingtheassessmentoftherisksof
materialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,
the auditor considers internal control relevant to the entity’s preparation and fair presentationof thefinancial
statementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurpose
of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,
aswellasevaluatingtheoverallpresentationofthefinancialstatements.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.
Opinion
Inouropinion,thesefinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionofNedbank
(Swaziland)Limitedat31December2013,anditsfinancialperformanceandcashflowsfortheyearthenended
in accordance with International Financial Reporting Standards, and in the manner required by the Swaziland
Companies Act.
kPmG Chartered accountants (Swaziland)
auditors
12 march 2014
mbabane
52
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
INDEpENDENt AuDItors’ rEportto the members of Nedbank (Swaziland) limited
TheDirectorshavepleasureinsubmittingtheirreporttogetherwiththeannualfinancialstatementsofthebankfor
thefinancialyearended31December2013.
State of affairs
Thecompany,whichis incorporatedintheKingdomofSwaziland, isabankoperatingcommercialbranchesand
agencies throughout the country.
The state of affairs of the bank at 31 December 2013 and the results of its operations for the year then ended are
fullysetoutintheannualfinancialstatements.
Share capital
The authorised and issued share capital is 26 650 000 (2012: 26 650 000) and 24 640 134 (2012: 24 640 134) ordinary
shares of 50c each respectively. The paid up value of the issued share capital remains unchanged at E 11 930 554.
IntermsofSection20(1)(a)(iii)oftheFinancialInstitutionsAct2005(“theAct”),whichcameintooperationon26
October2005, thesumofcapitalandreservesshallnotbe less thaneightpercentof thesumof thebank’s risk
weighted assets computed in the manner prescribed by the Central Bank of Swaziland from time to time by notice in
the Gazette. As at 31 December 2013 the bank’s risk weighted assets totalled E2 223 million (2012: E1 724 million)
requiring a minimum capital of E178.6 million (2012: E137.9 million). This requirement has been met as the bank’s
regulatory capital and reserves totalled E413.9 million (2012: E361.7 million) providing a capital adequacy ratio of
18.5 % (2012: 21.0%).
AfurtherrequirementunderSection20(1)(a)(i)oftheActisthatafinancialinstitutionisrequiredtomaintaincapital
ofat leastfivepercentof its liabilities to thepublic in termsof themost recent statementoffinancialposition
prepared in accordance with Section 35. As at 31 December 2013 the bank’s liabilities to the public totalled E2 447.5
million (2012: E2 192.6 million) requiring a minimum capital of E122.4 million (2012: E109.6 million). This requirement
has been met as the issued capital and reserves of E401.6 million (2012: E353.2 million) are enough to cover both the
Section 20 (1)(a)(iii) and the Section 20(1)(a)(i) requirements providing a ratio of 16.9% (2012: 16.5%).
Results of operations
The bank recognised a profit after tax for the year under review of E76 145 310 (2012: E75 367 615 before
restatements).
transfer to statutory reserve
IntermsofSection20(1)(a)(ii)oftheActthebank isrequiredtotransfernot lessthan10%of itsnetprofitto
a statutory reserve account until the balance in this reserve account is equal to its minimum required capital.
Accordingly an amount of E7 614 531 (2012: E7 536 762) is transferred to the Statutory Reserve.
53
ContACt DetAIlS
oVeRVIeW AnD RepoRt
AnnuAl FInAnCIAl StAteMentS
opeRAtIonAl ReVIeW
rEport oF tHE DIrEctorsfor the year ended 31 December 2013
54
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
rEport oF tHE DIrEctors (ContInueD)
for the year ended 31 December 2013 (continued)
board of directors
The directors who served during the year under review were:
Mr B C F Mhlongo (Chairman)
Mr E M Davidson
Mr S Beyers
Ms N R Hlatshwayo
Mr M I Maziya
Ms F Nkosi (Managing Director)
Mr R Cupido
Mr H Brits
Secretary
Mr P Gwebu
Committees of the Board:
Audit Committee
Mr H Brits (Chairman)
Mr E M Davidson
Mr S Beyers
Mr M I Maziya
Risk, Compliance and loan Review Committee
Mr S Beyers (Chairman)
Mr E M Davidson
Ms N R Hlatshwayo
Mr H Brits
Directors Affairs and Remuneration Committee(incorporating nominations)
Mr B C F Mhlongo (Chairman)
Mr S Beyers
Ms N R Hlatshwayo
Mr M I Maziya
Mr R Cupido
55
ContACt DetAIlS
oVeRVIeW AnD RepoRt
AnnuAl FInAnCIAl StAteMentS
opeRAtIonAl ReVIeW
Registered office
Third Floor
Nedbank Centre
SwaziPlaza,Mbabane
P O Box 68
Mbabane
Holding company
Thebank’simmediateholdingcompanyisNedbankLimited,registeredintheRepublicofSouthAfricaandawholly-
ownedsubsidiaryofNedbankGroupLimited.TheultimateholdingcompanyisOldMutualPlc.,registeredinthe
United Kingdom.
independent auditors
Attheannualgeneralmeeting,theshareholderswillbeaskedtodeterminetheremunerationoftheauditors,KPMG,
in respect of the past audit and to appoint auditors until the conclusion of the next annual general meeting.
dividends
Detailsofdividendsappearinnote4.2totheannualfinancialstatements.
events after the reporting date
No material events have occurred between the reporting date and the date of this report.
Note 2013 2012 2011 E e e
(Restated) (Restated)
Interest income 2.0 185 651 400 184 739 884 181 263 043
Interest expense 2.0 (56 311 449) (64 757 744) (63 657 094)
Net interest income 129 339 951 119 982 140 117 605 949
Impairment charge on loans and advances 2.1 (10 171 273) (7 258 601) (7 373 862)
income from lending activities 119 168 678 112 723 539 110 232 087
Fees and other commission income 2.2 106 508 909 96 276 425 90 088 743
Other income 5 950 347 1 835 842 1 751 721
Foreign exchange trading and dealing gains
and losses 18 290 564 13 678 484 8 505 335
income after impairment of advances and
interest expense 249 918 498 224 514 290 210 577 886
Operating expenses 2.3 (139 533 012) (106 040 842) (114 206 595)
Profit before taxation 110 385 486 118 473 448 96 371 291
Income tax expense 3.1 (34 240 176) (29 668 733) (30 327 903)
Profit for the year 76 145 310 88 804 715 66 043 388
Other Comprehensive income
Itemsthatwillnotbereclassifiedsubsequenlty
toprofitorloss
Re-measurementsofdefinedbenefitliability 18 276 000 (21 820 000) (14 435 000)
Related tax (5 096 850) 969 900 4 330 500
total other comprehensive income 13 179 150 (20 850 100) (10 104 500)
total comprehensive income 89 324 460 67 954 615 55 938 888
Basic and diluted earnings per share (cents) 4.1 309 360 268
56
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
stAtEmENt oF comprEHENsIvE INcomEfor the year ended 31 December 2013
ContACt DetAIlS
oVeRVIeW AnD RepoRt
AnnuAl FInAnCIAl StAteMentS
opeRAtIonAl ReVIeW
stAtEmENt oF cHANGEs IN EQuItYfor the year ended 31 December 2013
57
Sh
are
Shar
e R
eval
uati
on
Stat
uto
ry
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eral
ris
k R
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ned
ca
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e
bala
nce
at 3
1 d
ecem
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2011
res
tate
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930
554
7
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360
1 36
6 26
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324
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8
014
457
215
893
476
289
481
960
As
prev
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epor
ted
11 9
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0
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efine
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(1
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0)
Tota
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ve in
com
e fo
r the
yea
r
Profitfortheyear
--
--
-88804715
88804715
Remeasurementofdefinedbenefitliability
--
--
-(20850100)(20850100)
Regu
lato
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ompl
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e
Tran
sfer
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stat
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serv
e -
- -
8 88
0 47
2 -
(8 8
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-
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sury
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24 3
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- -
- -
- 24
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Reve
rsal
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- -
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- 43
7 17
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Tran
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ow
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and
reco
rded
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ctly
in e
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- -
- -
- (2
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9 94
1)
(22
219
941)
Reve
rsal
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es is
sued
to
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oyee
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st
(24
345)
-
- -
- -
(24
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Bala
nce
at 3
1 D
ecem
ber
2012
11
930
554
7
952
360
1 36
6 26
0 53
205
325
8
014
457
253
184
857
335
653
813
Tota
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ve in
com
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Profitfortheyear
--
--
-76145310
76145310
Remeasurementofdefinedbenefitliability
--
--
-13179150
13179150
Regu
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ry c
ompl
ianc
e
Tran
sfer
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stat
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- -
7 61
4 53
1 -
(7 6
14 5
31)
-
Tran
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ions
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h ow
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reco
rded
dire
ctly
in e
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24 3
45
- -
- -
- 24
345
Div
iden
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o sh
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rs
- -
- -
- (2
3 40
8 12
7)
(23
408
127)
Reve
rsal
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es is
sued
to
Empl
oyee
Tru
st
(24
345)
-
- -
- -
(24
345)
bala
nce
at 3
1 d
ecem
ber
2013
11
930
554
7
952
360
1 36
6 26
0 60
819
856
8
014
457
311
486
659
401
570
146
N
ote
20
13
2012
Div
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ds p
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pre
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profits(cents)
4.2
95.0
90.0
Div
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hare
pro
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resp
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of c
urre
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4.2
100.0
95.0
StatemeNt OF FiNaNCial POSitiONat 31 December 2013
Note 2013 2012 2011 E e e
(Restated) (Restated)
ASSETS
Cash and cash equivalents 5 192 132 645 342 992 936 380 926 288
Government and public sector securities 6 272 029 093 342 196 724 188 327 887
Amounts due from other banks 7 6 645 040 8 913 833 9 062 106
Derivative assets 25.8 18 072 725 11 956 856 15 376 911
Loans and advances to customers 8 2 294 973 340 1 792 670 604 1 941 542 087
Other receivables 10 22 259 820 15 797 426 8 088 161
Investments 11 2 491 011 2 045 742 1 689 293
Property and equipment 12 19 509 927 15 618 588 19 402 810
Deferred tax 13 14 389 222 19 460 490 17 314 766
Intangible assets 14 2 615 745 744 375 2 038 107
total assets 2 845 118 568 2 552 397 574 2 583 768 416
EQUITY AND lIABIlITIES
equity
Share capital 15 11 930 554 11 930 554 11 930 554
Share premium and reserves 389 639 592 323 723 259 277 551 406
Total equity attributable to equity holders of the bank 401 570 146 335 653 813 289 481 960
liabilities
Deposits from customers 16 1 971 465 700 2 010 879 472 1 684 241 188
Deposits from banks 17 5 215 585 2 254 467 135 840
Current tax liabilities 18 3 351 734 1 051 204 5 227 880
Trade and other payables 20.1 52 418 174 156 700 033 82 648 743
Payables for staff costs 20.2 9 429 170 9 477 472 9 111 576
Employeebenefitsobligations 24 8 766 000 25 025 000 21 792 000
Derivative liabilities 25.8 12 665 773 9 846 206 13 942 741
Funding from other banks 5 380 236 286 1 509 907 477 186 488
total equity and liabilities 2 845 118 568 2 552 397 574 2 583 768 416
Guaranteesonbehalfofcustomers,excludedfrom
liabilities 21 58 397 770 78 007 317 49 145 091
58
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
stAtEmENt oF FINANcIAL posItIoNat 31 December 2013
StatemeNt OF CaSH FlOwSfor the year ended 31 December 2013
Note 2013 2012
E E
Cash flows from operating activities
Cash received from customers 23.1 126 190 097 104 313 307
Cashpaidtocustomers,staffandsuppliers 23.2 (129 755 513) (109 426 851)
Interest received 2 185 651 400 184 739 884
Interest paid 2 (56 311 449) (64 757 744)
Cash generated by operating activities 23.3 125 774 535 114 868 596
Change in working funds
Increase in operating assets 23.4 (445 726 353) (12 957 251)
(Decrease)/increase in operating liabilities 23.5 (140 782 813) 395 817 096
Net (decrease)/increase in working funds (586 509 166) 382 859 845
Taxation paid 23.6 (32 329 424) (35 021 234)
Net cash (used in)/generated by operating activities (493 064 055) 462 707 207
Cash flows from investment activities
Purchase of property and equipment 12 (10 558 486) (2 766 037)
Purchase of computer software 14 (2 576 001) -
Proceeds from disposals of property and equipment 20 000 22 000
Net cash used in investment activities (13 114 487) (2 744 037)
Cash flows from financing activities
Dividends paid to shareholders 23.7 (23 408 128) (22 219 941)
Net cash used in financing activities (23 408 128) (22 219 941)
Net (decrease)/increase in cash and cash equivalents (529 586 670) 437 743 229
Cash and cash equivalents at beginning of year 341 483 029 (96 260 200)
Cash and cash equivalents at end of year 23.8 (188 103 641) 341 483 029
59
ContACt DetAIlS
oVeRVIeW AnD RepoRt
AnnuAl FInAnCIAl StAteMentS
opeRAtIonAl ReVIeW
stAtEmENt oF cAsH FLoWsfor the year ended 31 December 2013
Reporting entity
Nedbank (Swaziland)Limited (“thebank”) isacompanydomiciled inSwaziland.Thebank’sholdingcompany is
NedbankLimited,awholly-ownedsubsidiaryofNedbankGroupLimitedwhichisincorporatedinSouthAfrica.The
bankoperatesasacommercialbank,primarilyinvolvedinretailandcorporatebanking.
basis of preparation
i) Statement of compliance
The financial statements of Nedbank (Swaziland) Limited have been prepared in accordance with the
International Financial Reporting Standards (IFRS) and the requirements of the Swaziland Companies Act.
ThesefinancialstatementswereapprovedandauthorisedforissuebytheBoardofDirectorson12March2014.
ii) basis of measurement
Thefinancialstatementshavebeenpreparedonthehistoricalcostbasisexceptforthefollowing:
• Derivativefinancialinstrumentsaremeasuredatfairvalue.
• Financialinstrumentsatfairvaluethroughprofitorlossaremeasuredatfairvalue.
• Landandbuildingsaremeasuredatrevaluedamounts.
• Employeebenefitobligationsaremeasuredatfairvalueofplanassetslessthepresentvalueofthedefined
benefitobligation.
iii) Functional and presentation currency
Thesefinancial statementsarepresented inEmalangeni,which is thebank’s functional currency. Exceptas
otherwiseindicated,financialinformationpresentedinEmalangeniisroundedofftothenearestLilangeni.
iv) Use of estimates and judgement
ThepreparationoffinancialstatementsinconformitywithIFRSrequiresmanagementtomakejudgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets,liabilities,incomeandexpenses.Actualresultsmaydifferfromtheseestimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
Therewerenocriticalaccountingestimatesthathaveasignificantriskofcausingmaterialadjustmentstothe
carryingamountsofassetsandliabilitieswithinthenextfinancialyear.Accountingestimatesmostlywerein
relationtoemployeebenefitsobligationsanddepreciation.
.
60
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENtsfor the year ended 31 December 2013
v) Changes in accounting policies
(a) Overview
The bank has changed its accounting policies in the following areas:
• AccountingfordefinedbenefitliabilityasperIAS19REmployee Benefits.
(b) Accountingfordefinedbenefitliability
The bank has adopted the amendments to IAS 19R Employee Benefits which has a date of initial adoption of 1
January2013.Theamendmentisappliedretrospectively.Intermsoftheamendment,thebankhaschanged
itsaccountingpolicywithrespecttothebasisfordeterminingtheincomeorexpenserelatedtoitsdefined
benefitplansandthediscontinuingofthecorridorapproachindeterminingemployeebenefitsliabilities.
UnderIAS19(2011),thebankdeterminesthenetinterestexpense(income)onthenetdefinedbenefit
liability(asset)fortheperiodbyapplyingthediscountrateusedtomeasurethedefinedbenefitobligation
atthebeginningoftheannualperiodtothethen-netdefinedbenefitliability(asset),takingintoaccount
anychangesinthenetdefinedbenefitliability(asset)duringtheperiodasaresultofcontributionsand
benefitpayments.Consequently,thenetinterestonthenetdefinedbenefitliability(asset)nowcomprises:
• interestcostonthedefinedbenefitobligation;
• interestincomeonplanassets;and
• interestontheeffectontheassetceiling.
Previously,thebankdeterminedinterestincomeonplanassetsbasedontheirlong-termrateofexpectedreturn
andusedthecorridorapproachindeterminingemployeebenefitsliabilities.
Impactofchangeinaccountingpolicy
The effect on the bank is summarised below.
employee Share benefits Deferred premium obligation tax asset and reserves e e e
Balance as reported at 31 December 2011 7 357 000 12 984 266 287 655 906
Effect of change in accounting policy 14 435 000 4 330 500 (10 104 500)
Restated balance at 31 December 2011 21 792 000 17 314 766 277 551 406
Balance at January 2012 21 792 000 17 314 766 277 551 406
Other movements - - 67 021 953
Effect of change in accounting policy 3 233 000 2 145 724 (20 850 100)
Restated balance at 31 December 2012 25 025 000 19 460 490 323 723 259
(c) Fair value measurement
InaccordancewiththetransitionalprovisionsofIFRS13,thebankhasappliedthenewdefinitionoffair
valueprospectively.Thechangehadnosignificantimpactonthemeasurementsofthebank’sassetsand
liabilities,butthebankhasincludednewdisclosuresinthefinancialstatements,whicharerequiredunder
IFRS13.Thesenewdisclosurerequirementsarenotincludedinthecomparativeinformation.However,to
theextentthatdisclosureswererequiredbyotherstandardsbeforetheeffectivedateofIFRS13,thebank
has provided the relevant comparative disclosures under those standards. 61
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1. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these
financialstatements.
1.1 Financial instruments
Financial instrumentsas reflected in the statementoffinancialposition includeallfinancial assetsand
financial liabilities, including derivative instruments. Financial instruments are disclosed/accounted for
under IFRS 7 Financial Instruments: Disclosures, IAS 32: Financial Instruments: Presentation and IAS 39
Financial Instruments: Recognition and Measurement. The bank does not apply hedge accounting.
1.1.1 Recognition
Financial instruments are recognised in the statement of financial positionwhen the bank becomes a
partytothecontractualprovisionsofafinancialinstrument.Allpurchasesoffinancialassetsthatrequire
deliverywithinthetimeframeestablishedbyregulationormarketconvention(“regularway”purchases)
arerecognisedattradedate,whichisthedatethatthebankcommitstopurchasetheasset.Regularway
purchasesandsalesoffinancialassetsare recognisedonthetradedateatwhichthebankcommits to
purchase or sell the asset. Contracts that require or permit net settlement of the change in the value of the
contract are not considered ‘regular way’ and are treated as derivatives between the trade and settlement
of the contract.
1.1.2 Initial measurement
Financialinstrumentsareinitiallymeasuredatfairvalueplus,inthecaseofafinancialassetorfinancial
liability not at fair value through profit or loss, transaction costs that are directly attributable to the
acquisition or issue of the instrument.
1.1.3 Subsequent measurement
Subsequenttoinitialmeasurement,financialinstrumentsareeithermeasuredatfairvalueoramortised
cost,dependingontheirclassification.
Financial assets and financial liabilities at fair value through profit or loss
Financial instrumentsat fair value throughprofitor loss comprise trading instrumentsand instruments
wherethebankhaselected,oninitialrecognitiondate,todesignateasatfairvaluethroughprofitorloss.
Tradinginstrumentsarefinancialassetsorfinancialliabilitiesthatwereacquiredorincurredprincipallyfor
thepurposeofsaleorrepurchaseinthenearterm,formpartofaportfoliowitharecentactualpattern
ofshort-termprofit-takingorarederivatives.Thebank’sderivativetransactionsincludeforeignexchange
contracts.
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1. Significant accounting policies (continued)
1.1.3 Subsequent measurement (continued)
Financialassetsandfinancialliabilitiesthatthebankhaselected,oninitialrecognitiondate,todesignateas
atfairvaluethroughprofitorlossarethosethatmeetanyoneofthefollowingcriteria:
• Wherethefairvaluethroughprofitorlossdesignationeliminatesorsignificantlyreducesameasurement
or recognition inconsistency that would otherwise arise from using different bases to measure or
recognisethegainsandlossesonfinancialassetsandfinancialliabilities;or
• Theinstrumentformspartofagroupoffinancialinstrumentsthatismanaged,evaluatedandreported
usingafairvaluebasis,inaccordancewithadocumentedriskmanagementorinvestmentstrategyand
information is provided to key management personnel on this basis; or
• Thefinancialinstrumentcontainsanembeddedderivative,whichsignificantlymodifiesthecashflows
of the host contract or where the embedded derivative clearly requires separation.
Financialassetsandfinancialliabilitiesatfairvaluethroughprofitorlossaremeasuredatfairvalue,with
fair value gains and losses (excluding interest income and interest expense calculated on the amortised cost
basisrelatingtothoseinterest-bearinginstrumentsthathavebeendesignatedasfairvaluethroughprofitor
loss) reported in foreign exchange trading and dealing gains and losses in the statement of comprehensive
income as they arise.
Non-trading financial liabilities
Allfinancial liabilities,other thanthoseat fairvaluethroughprofitor loss,areclassifiedasnon-trading
financialliabilitiesandaremeasuredatamortisedcost,usingtheeffectiveinterestmethod.
Loans and receivables
Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenot
quotedinanactivemarket,otherthanthoseclassifiedbythebankasatfairvaluethroughprofitorlossor
available-for-sale.Financialassetsclassifiedasloansandreceivablesaremeasuredatamortisedcostusing
theeffectiveinterestmethod,withinterestincomerecognisedinprofitorloss.Thebank’sadvances,cash
and cash equivalents and amounts due to other banks are included in the loans and receivables category.
1.1.4 Measurementbasisoffinancialinstruments
Amortised cost
Theamortisedcostofafinancialassetandfinancial liability istheamountatwhichthefinancialasset
or financial liability is measured at initial recognition, minus principal repayments, plus or minus the
cumulative amortisation using the effective interest method of any difference between that initial amount
recognisedandthematurityamount,lessanycumulativeimpairmentlosses(inthecaseoffinancialassets).
If the bank is the lessor in a lease agreement that transfers substantially all of the risks and rewards incidental
totheownershipoftheassettothelease,thenthearrangementisclassifiedasafinanceleaseandareceivable
equal to the net investment in the lease is recognised and presented within loans and advances.
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1. Significant accounting policies (continued)
1.1.4 Measurementbasisoffinancialinstruments(continued)
Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
Direct and incremental transaction costs are included in the initial carrying amount and added to the initial
fairvalueoffinancialassetsandfinancialliabilities,otherthanthoseatfairvaluethroughprofitorloss.The
bestevidenceofthefairvalueofafinancialassetorfinancialliabilityatinitialrecognitionisthetransaction
price,unlessthefairvalueoftheinstrumentisevidencedbycomparisonwithothercurrentobservablemarket
transactions in the same instrument or based on a valuation technique whose variables include only market
observable data.
Wherequotedmarketpricesinanactivemarketareavailable,suchmarketdataisusedtodeterminethe
fairvalueoffinancialassetsandfinancialliabilitiesthataremeasuredatfairvalue.Thebidpriceisusedto
measurefinancialassetsheldandtheofferpriceisusedtomeasurethefairvalueoffinancialliabilities.Mid-
market prices are used to measure fair value only to the extent that the bank has assets and liabilities with
offsetting risk positions.
If quoted bid prices are unavailable, the fair value of financial assets and financial liabilities is estimated
usingpricingmodelsordiscountedcashflowtechniques.Wherediscountedcashflowtechniquesareused,
estimated future cash flows are based onmanagement’s best estimates and the discount rate used is a
market-related rate at the reporting date for an instrument with similar terms and conditions. Where pricing
modelsareused,inputsarebasedonmarket-relatedmeasuresatthereportingdate.
Thefairvalueofafinancialliabilitywithademandfeatureisnotlessthantheamountpayableondemand,
discountedfromthefirstdatethattheamountcouldberequiredtobepaid.
Investments in equity instruments that do not have a quoted market price in an active market and whose
fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of
such unquoted equity instruments are not measured at fair value but at cost. Fair value is considered reliably
measurable if:
• Thevariabilityintherangeofreasonablefairvalueestimatesisnotsignificantforthatinstrument;or
• The probabilities of the various estimateswithin the range can be reasonably assessed and used in
estimating fair value.
1.1.5 Derecognition
Thebankderecognisesafinancialasset(orgroupoffinancialassets)whenandonlywhen:
• Thecontractualrightstothecashflowsarisingfromthefinancialassetshaveexpired;or
• Ittransfersthefinancialassetinatransactioninwhichsubstantiallyalltherisksandrewardsofownership
ofthefinancialassetaretransferred;or
• Ittransfersthefinancialasset,neitherretainingnortransferringsubstantiallyalltherisksandrewardsof
ownershipoftheasset,butnolongerretainscontroloftheasset.64
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1. Significant accounting policies (continued)
1.1.5 Derecognition (continued)
A financial liability (or part of a financial liability) is derecognisedwhen and onlywhen the liability is
extinguished,thatis,whentheobligationspecifiedinthecontractisdischarged,cancelledorhasexpired.
Thedifferencebetweenthecarryingamountofafinancialassetorfinancialliability(orpartthereof)thatis
derecognisedandtheconsiderationpaidorreceived,includinganynon-cashassetstransferredorliabilities
assumed,isrecognisedinprofitorlossfortheperiod.
1.1.6 Impairmentoffinancialassets
Thebankassessesateachreportingdatewhetherthereisobjectiveevidencethatafinancialassetorgroup
offinancialassetsisimpaired.Afinancialassetoragroupoffinancialassetsisimpairedandimpairment
lossesareincurredif,andonlyif,thereisobjectiveevidenceofimpairmentasaresultofoneormoreevents
that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an
impactontheestimatedfuturecashflowsofthefinancialassetorgroupoffinancialassetsthatcanbe
reliablyestimated.Objectiveevidencethatafinancialassetorgroupoffinancialassetsisimpairedincludes
observable data that comes to the attention of the bank about the following loss events:
• Significantfinancialdifficultyoftheissuerorobligor;
• Abreachofcontract,suchasadefaultordelinquencyininterestorprincipalpayments;
• Thebank,foreconomicorlegalreasonsrelatingtotheborrower’sfinancialdifficulty,grantingtothe
borrower a concession that the bank would not otherwise consider;
• Itbecomingprobablethattheborrowerwillenterbankruptcyorotherfinancialreorganisation;
• Thedisappearanceofanactivemarketforthatfinancialassetbecauseoffinancialdifficulties;or
• Observabledataindicatingthatthereisameasurabledecreaseintheestimatedfuturecashflowsfrom
agroupoffinancialassetssincetheinitialrecognitionofthoseassets,althoughthedecreasecannot
yetbeidentifiedwiththeindividualfinancialassetsinthegroup,including:
• Adversechangesinthepaymentstatusofborrowersinthegroup;
• Nationalorlocaleconomicconditionsthatcorrelatewithdefaultsontheassetsinthegroup;
• Adverseprolongedchangesinthemarketvalueofafinancialasset.
Financial assets measured at amortised cost
If there is objective evidence that an impairment loss on loans and receivables measured at amortised
costhasbeenincurred,theamountofthelossismeasuredasthedifferencebetweentheasset’scarrying
amountandthepresentvalueofestimatedfuturecashflows(excludingfuturecreditlossesthathavenot
beenincurred)discountedatthefinancialasset’soriginaleffectiveinterestrate.Thecarryingamountof
the asset is reduced through the use of an allowance account and the amount of the loss is recognised in
profitorloss.
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1. Significant accounting policies (continued)
1.1.6 Impairmentoffinancialassets (continued)
Financial assets measured at amortised cost (continued)
Thebankfirstassesseswhetherobjectiveevidenceof impairmentexists individually forfinancialassets
thatareindividuallysignificant,andindividuallyorcollectivelyforfinancialassetsthatarenotindividually
significant. If thebankdetermines that noobjective evidenceof impairment exists for an individually
assessedfinancialasset,whethersignificantornot,itincludestheassetinagroupoffinancialassetswith
similar credit risk characteristics and collectively assesses them for impairment.
If,inasubsequentperiod,theamountoftheimpairmentlossdecreasesandthedecreasecanberelated
objectively to an event occurring after the impairment was recognised (such as an improvement in the
debtor’screditrating),thepreviouslyrecognised impairment loss is reversedbyadjustingtheallowance
account.Thereversaldoesnotresultinacarryingamountofthefinancialassetthatexceedswhatthe
amortised cost would have been had the impairment not been recognised at the date the impairment is
reversed.Theamountofthereversalisrecognisedinprofitorloss.
Statutory reserve requirements that exceed the allowance for impairment losses are recognised in the
reserves by a transfer directly from retained earnings to a separate category of equity.
Financial assets measured at cost
If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument
thatisnotcarriedatfairvaluebecauseitsfairvaluecannotbereliablymeasured,oronaderivativeasset
thatislinkedtoandmustbesettledbydeliveryofsuchanunquotedequityinstrument,theamountofthe
impairmentlossismeasuredasthedifferencebetweenthecarryingamountofthefinancialassetandthe
presentvalueofestimatedfuturecashflowsdiscountedatthecurrentmarketrateofreturnforasimilar
financialasset.Suchimpairmentlossesarenotreversed.
1.1.7 Offset
Financialassetsandfinancialliabilitiesareoffsetandthenetamountreportedinthestatementoffinancial
position only when there is a legally enforceable right to set off and there is an intention to settle on a
net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented
onanetbasisonlywhenpermittedunder IFRSs,or forgainsand lossesarising fromagroupofsimilar
transactions such as the bank’s trading activities.
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1. Significant accounting policies (continued)
1.2 Interest
Interestincomeandexpenseisrecognisedinprofitorlossusingtheeffectiveinterestmethodtakinginto
accounttheexpectedtimingandamountofcashflows.Theeffectiveinterestrateistheratethatexactly
discountstheestimatedfuturecashpaymentsandreceiptsthroughtheexpectedlifeofthefinancialasset
orfinancialliabilitytothecarryingamountofthefinancialassetorfinancialliability.
Theeffectiveinterestmethodisamethodofcalculatingtheamortisedcostofafinancialassetorfinancial
liability(orgroupoffinancialassetsorfinancialliabilities)andofallocatingtheinterestincomeorinterest
expense over the relevant period. Interest income and expense include the amortisation of any discount or
premium or other differences between the initial carrying amount of an interest-bearing instrument and its
amount at maturity calculated on an effective interest basis.
Interest income and interest expense are calculated on the amortised cost basis for interest bearing
instrumentsthathavebeendesignatedatfairvaluethroughprofitorlossandareincludedintheinterest
income and interest expense line items and not as part of non-interest income.
1.3 Non-interest income
Fees and other commission income and expense
The bank earns fees and commissions from a range of services it provides to customers.
Feesandcommissionincomeandexpensethatareintegraltotheeffectiveinterestrateonafinancialasset
or liability are included in the measurement of the effective interest rate.
Otherfeesandcommissionincome,includingaccountservicingfees,investmentmanagementfees,sales
commission,placement feesandsyndication fees,are recognisedas the related servicesareperformed.
When a loan commitment is not expected to result in the draw-down of a loan, the related loan
commitment fees are recognised on a straight-line basis over the commitment period.
Otherfeesandcommissionexpenserelatedmainlytotransactionandservicefees,whichareexpensedas
the services are received.
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1. Significant accounting policies (continued)
1.3 Non-interest income (continued)
Foreign exchange trading and dealing gains
Foreign exchange trading and dealing gains comprises all gains and losses from changes in the fair value of
financialassetsandfinancialliabilitiesheldfortrading,allrealisedgainsandlossesfortrading,togetherwith
therelatedinterest,expenseanddividend.
Other
Revenueotherthaninterest,feesandcommission,foreignexchangetradinganddealinggainsisrecognised
inprofitorlosswhentheamountofrevenuefromthetransactionorservicecanbemeasuredreliably,it
isprobablethattheeconomicbenefitsofthetransactionorservicewillflowtothebankandthecosts
associated with the transaction or service can be measured reliably.
Fairvaluegainsorlossesonfinancialinstrumentsdesignatedatfairvaluethroughprofitorloss,areincluded
inotherincome.Thesefairvaluegainsorlossesaredeterminedafterdeductingtheinterestcomponent,
which is recognised separately in interest income.
Gainsorlossesonderecognitionofanyfinancialassetsorfinancialliabilitiesareincludedinotherincome.
1.4 Cash and cash equivalents
Cashandcashequivalentscomprisenotesandcoinsonhand,unrestrictedandrestrictedbalancesheldwith
centralbanks,short-termfundsandcallandcurrentaccountbalanceswithgroupcompaniesandotherbanks.
Cashandcashequivalentsaremeasuredatamortisedcostinthestatementoffinancialposition.Funding
fromotherbankshasbeenoffsetforthepurposesofthestatementofcashflows.
1.5 leases
The bank as lessee – Operating leases
Leasesinrespectofwhichasignificantportionoftherisksandrewardsofownershipareretainedbythe
lessor are classifiedasoperating leases. Paymentsmadeunderoperating leases (netof any incentives
receivedfromthelessor)arerecognisedinprofitorlossonastraight-linebasisoverthetermofthelease.
Whenanothersystematicbasisismorerepresentativeofthetimepatternoftheuser’sbenefit,thenthat
method is used.
The bank as lessor – Finance leases
Whereassetsareleasedoutunderafinanceleasearrangement,thereceivabletoberecognisedequalsthe
“grossinvestment”intheleasediscountedattherateimplicit intheleasetoobtaina“netinvestment”
figure. The difference between the gross receivable and unearned finance income is presented in the
statementoffinancialposition.Financeleaseincomeisallocatedtoaccountingperiodssoastoreflecta
constant periodic rate of return on the bank’s net investment outstanding in respect of the leases.68
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1. Significant accounting policies (continued)
1.6 Provisions
Provisions are recognised when the bank has a present legal or constructive obligation as a result of past
events,forwhichitisprobablethatanoutflowofeconomicbenefitswilloccur,andwhereareliableestimate
canbemadeoftheamountoftheobligation.Wheretheeffectofdiscountingismaterial,provisionsare
discountedandthediscountrateused isapre-taxratethatreflectscurrentmarketassessmentsofthe
timevalueofmoneyand,whereappropriate,therisksspecifictotheliability.Theunwindingofdiscountis
recognisedasafinancecost.
1.7 Property and equipment
Items of property and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Items of property and equipment are initially recognised at cost if it is probable that any future economic
benefitsassociatedwiththeitemswillflowtothebankandithasacostthatcanbemeasuredreliably.
Subsequent expenditure is recognised in the carrying amount of items of property and equipment if it is
probablethatfutureeconomicbenefitsassociatedwiththeexpenditurewillflowtothebankanditscost
canbemeasuredreliably.Allotherexpensesarerecognisedinprofitorlossasanexpensewhenincurred.
Landandbuildings,whosefairvaluescanbereliablymeasured,aremeasuredatrevaluedamounts,beingthe
fair value at the date of revaluation less any subsequent accumulated depreciation and impairment losses.
Revaluation increases are credited directly to other comprehensive income and presented in equity under the
heading“revaluationreserve”.However,revaluationincreasesarerecognisedinprofitorlosstotheextent
thattheyreversearevaluationdecreaseofthesameassetpreviouslyrecognisedinprofitorloss.Revaluation
decreasesarerecognisedinprofitorloss.However,decreasesaredebiteddirectlytoothercomprehensive
income to the extent of any credit balances existing in the revaluation reserve in respect of the same asset.
Depreciation
Eachcomponentofpropertyandequipmentwithacostthatissignificantinrelationtothetotalcostof
the item,orhasadifferentuseful life isdepreciatedseparately. Itemsofpropertyandequipmentthat
areclassifiedasheldforsaleunderIFRS5arenotdepreciated.Thedepreciableamountsofpropertyand
equipmentarerecognised inprofitor lossonastraight-linebasisovertheestimateduseful livesofthe
itemsofpropertyandequipment,unlesstheyareincludedinthecarryingamountofanotherasset.Useful
lives,residualvaluesanddepreciationmethodsareassessedonanannualbasisateachreportingdate.Land
is not depreciated.
Onrevaluation,anyaccumulateddepreciationatthedateoftherevaluationiseliminatedagainstthegross
carrying amount of the item concerned and the net amount restated to the revalued amount. Subsequent
depreciation charges are adjusted based on the revalued amount.
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1. Significant accounting policies (continued)
1.7 Property and equipment (continued)
Depreciation (continued)
The estimated useful lives for the current and comparative periods are as follows:
• Computerequipment 3-6years
• Vehicles 4-6years
• Furnitureandotherequipment 4-10years
• Freeholdlandandbuildings 50years
Derecognition
Itemsofpropertyandequipmentarederecognisedondisposalorwhennofutureeconomicbenefitsare
expectedfromtheiruse.Thegainorlossonderecognitionisrecognisedinprofitorlossandisdetermined
as thedifferencebetween thenetdisposal proceeds, if any, and the carryingamountof the item. On
derecognition any surplus in the revaluation reserve in respect of individual items of property and equipment
is transferred directly to retained earnings. Compensation from third parties for items of property and
equipmentthatwereimpaired,lostorgivenupisincludedinprofitorlosswhenthecompensationbecomes
receivable.
1.8 taxation
Taxationexpensecomprisescurrentanddeferredtax.Currentanddeferredtaxisrecognisedinprofitor
lossexcepttotheextentthatitrelatestoabusinesscombinationoritemsrecogniseddirectlyinequity,or
other comprehensive income.
Current taxation
Current tax is the expected taxation payable on the taxable income for the year using the tax rates enacted or
substantivelyenactedatthereportingdate,andanyadjustmentoftaxpayableinrespectofpreviousyears.
Deferred taxation
Deferred taxation is recognised in respect of temporary differences between the carrying amounts of assets
andliabilitiesforfinancialreportingpurposesandtheamountsusedfortaxationpurposes.Theamount
of deferred taxation provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities and is measured at the taxation rates that are expected to be applied to
the temporary differences when they reverse based on the laws that have been enacted or substantively
enacted by the reporting date.
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1. Significant accounting policies (continued)
1.8 taxation (continued)
Deferred taxation (continued)
Theeffectondeferredtaxationofanychangesintaxratesisrecognisedinprofitorloss,excepttotheextent
that it relates to items previously recognised directly in other comprehensive income or equity. Deferred
taxationisnotrecognisedforthefollowingtemporarydifferences:theinitialrecognitionofgoodwill,the
initial recognition of assets or liabilities in a transaction that is not a business combination and that affects
neitheraccountingnor taxableprofit,and temporarydifferences relating to investments in subsidiaries,
associates and jointly controlled entities to the extent that it is probable that they will not reverse in the
foreseeable future.
A deferred tax asset is recognised to the extent that it is probable that future taxable income will be
available,againstwhichtheunutilisedtaxationlossesanddeductibletemporarydifferencescanbeutilised.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probablethattherelatedtaxationbenefitswillberealised.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets
andliabilities,andtheyrelatetoincometaxesleviedbythesametaxauthorityonthesametaxableentity,
or on different entities but they intend to settle on a net basis or their tax assets and liabilities will be
realised simultaneously.
1.9 Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency of the bank at the date of such
transactions by applying to the foreign currency the spot exchange rate ruling at the transaction date.
Monetary assets and liabilities denominated in foreign currencies at reporting date are translated into the
functional currency at the spot exchange rate on the reporting date. Non-monetary assets and liabilities
denominated in foreign currencies that are measured at fair value are translated into the functional currency
at the spot rate at the date that the fair value was determined. Non-monetary assets and liabilities in a
foreign currency that are measured in terms of historical cost are translated using the exchange rate at the
date of the transaction.
Exchange differences that arise on the settlement and translation of monetary items at rates different
fromthoseatwhichtheyweretranslatedoninitialrecognitionduringtheperiodorinpreviousfinancial
statementsarerecognisedinprofitorlossintheperiodtheyarise.
1. Significant accounting policies (continued)
1.10 associate companies
Anassociateisanentity, includinganunincorporatedentitysuchasapartnership,overwhichthebank
hastheabilitytoexercisesignificantinfluence,butnotcontrolorjointcontrol,throughparticipationinthe
financialandoperatingpolicydecisionsoftheinvestee(andthatisneitherasubsidiarynoraninvestment
in a joint venture).
Theinvestmentsinassociatesareincorporatedinthesefinancialstatementsatcost.Thecarryingamount
of such investments is reduced to recognise any impairment in the value of individual investments.
1.11 Employee benefits
Post employment defined benefit plans
Theliabilityrecognisedinthestatementoffinancialpositioninrespectofdefinedbenefitpensionplansis
thepresentvalueofthedefinedbenefitobligationatthereportingdatelessthefairvalueofplanassets.
Thedefinedbenefitobligation is calculatedannuallyby independentactuariesusing theprojectedunit
credit method. The present value of the defined benefit obligation is determined by discounting the
estimatedfuturecashoutflowsusingyieldsforgovernmentbondsthathavematuritydatesapproximating
the terms of the group’s obligations.
Gains or losses resulting from re-measurements are recognised immediately in other comprehensive
income.Re-measurementsincludeactuarialgainsandlosses,returnonplanassetsandtheassetceiling.
Current service costs are recognised immediately as an expense in profit or loss. Past service costs,
experienceadjustments,changesinactuarialassumptionsandplanamendmentsarerecognisedinprofitor
loss over the expected remaining working lives of employees. The costs are expensed immediately in the
case of retired employees.
Planassetsareonlyoffsetagainstplanliabilitieswheretheyareassetsheldbylong-termemployeebenefit
funds or qualifying insurance policies.
.
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1. Significant accounting policies (continued)
1.11 Employee benefits (continued)
Short-term benefits
Short-termemployeebenefitsareexpensedastherelatedserviceisprovided.Aliabilityisrecognisedforthe
amount expected to be paid if the bank has a present legal or constructive obligation to pay this amount as
a result of past service provided by the employee and the obligation can be estimated reliably.
Share based payment transactions
The grant-date fair value of share-based payment awards – i.e. stock options – granted to employees
is recognised as personnel expenses,with a corresponding increase in equity, over the period inwhich
the employees become unconditionally entitled to the awards. The amount recognised as an expense
isadjusted to reflect thenumberofawards forwhich the relatedserviceandnon-marketperformance
conditionsareexpectedtobemet,suchthattheamountultimatelyrecognisedasanexpense isbased
on the number of awards that meet the related service and non-market performance conditions at the
vestingdate.Forshare-basedpaymentawardswithnon-vestingconditions,thegrant-datefairvalueofthe
share-basedpaymentismeasuredtoreflectsuchconditionsandthereisnotrue-upfordifferencesbetween
expected and actual outcomes.
The fair value of the amount payable to employees in respect of share award that are settled in cash is
recognised as an expense with a corresponding increase in liabilities over the period in which the employees
become unconditionally entitled to payment. The liability is remeasured at each reporting date and at
settlement date based on the fair value of the share awards. Any changes in the liability are recognised as
personnelexpensesinprofitorloss.
Measurement of fair value of equity instruments granted
The equity instruments granted by Nedbank are measured at fair value at measurement date using
standard option pricing valuation models and the liability is re-measured annually to its fair value until
settlement,withanydifferencebeing recognised inprofitor loss.Thevaluation technique is consistent
withgenerallyacceptablevaluationmethodologies forpricingfinancial instrumentsand incorporatesall
factors and assumptions that knowledgeable,willingmarket participantswould consider in setting the
price of the equity instruments. Service and non-market performance conditions are not taken into account
in determining fair value. Vesting conditions are taken into account by adjusting the number of equity
instruments included in the measurement of the transaction amount.
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1. Significant accounting policies (continued)
1.12 Share capital
Sharecapitalissuedbythebankismeasuredattheproceedsreceived,netofdirectissuecost.Nogainor
lossisrecognisedinprofitorlossonthepurchase,sale,issueorcancellationofthebank’ssharecapitaland
preferencesharesthatareclassifiedasequity.
Ordinaryandpreference sharecapital is classifiedasequity if it isnon-redeemableby the shareholder,
dividends are discretionary and if it represents a residual interest in the assets of the bank after deducting
all of its liabilities.
Dividends are recognised as distributions within equity in the period in which they are approved by the
shareholders. Dividends for the year that are declared after the reporting date are disclosed in the notes.
1.13 intangible assets
Computer software and capitalised development costs
Software acquired by the bank is measured at cost less accumulated amortisation and any accumulated
impairment losses.
Expenditure on internally developed software is recognised as an asset when the bank is able to demonstrate
its intention and ability to complete the development and use the software in a manner that will generate
futureeconomicbenefits,andcanreliablymeasurethecoststocompletethedevelopment.Thecapitalised
costs of internally developed software include all costs directly attributable to developing the software and
capitalisedborrowingcosts,andareamortisedoveritsusefullife.Internallydevelopedsoftwareisstatedat
capitalised cost less accumulated amortisation and impairment.
Subsequent expenditure on software assets is capitalised only when it increases the future economic
benefitsembodiedinthespecificassettowhichitrelates.Allotherexpenditureisexpensedasincurred.
Softwareisamortisedonastraight-linebasisinprofitorlossoveritsestimatedusefullife,fromthedateon
which it is available for use. The estimated useful life of software for the current and comparative periods is
three to six years.
Amortisationmethods,usefullivesandresidualvaluesarereviewedateachreportingdateandadjustedif
appropriate.
74
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
77
1. Significant accounting policies (continued)
1.14 Impairment of non-financial assets
Thebankassessesallnon-financialassets(excludingdeferredtaxassets)forindicationsofimpairmentor
the reversal of a previously recognised impairment at each reporting date. Should there be indications of
impairment; the assets’ recoverable amounts are estimated.
Intangible assets not yet available for use are tested annually for impairment and when there is an indication
of impairment, the impairment is recognised inprofitor losswhenever thecarryingamountofanasset
exceeds its recoverable amount.
The recoverable amount of an asset is the higher of its fair value less cost to sell and its value in use. The fair
value less cost to sell is determined by ascertaining the current market value of an asset and deducting any
costs related to the realisation of the asset.
Inassessingvalue-in-use,theexpectedfuturecashflowsfromtheassetarediscountedtotheirpresentvalue
usingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandthe
risksspecifictotheasset.Foranassetwhosecashflowsarelargelydependentonthoseofotherassets,the
recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment
loss is allocated pro–rata to all assets in a cash - generating unit.
A previously recognised impairment loss will be reversed if the recoverable amount increases as a result of a
changeintheestimatesusedpreviouslytodeterminetherecoverableamount,butnottoanamounthigher
thanthecarryingamountthatwouldhavebeendetermined,netofdepreciationoramortisation,hadno
impairment loss been recognised in prior periods.
1.15 earnings per share
The bank presents earnings per share for its ordinary shares, calculated by dividing the profit or loss
attributable to ordinary shareholders of the bank by the weighted average number of ordinary shares
outstanding during the period. Diluted earnings per share is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for
the effects of all dilutive potential ordinary shares.
1.16 Financial guarantees
Financialguaranteesarecontractsthatrequirethebanktomakespecificpaymentstoreimbursetheholder
foralossitincursbecauseaspecifieddebtorfailstomakepaymentwhendueinaccordancewiththeterms
ofadebtinstrument.Theliabilityarisingfromafinancialguaranteeisrecognisedinitiallyatthefairvalue,
andtheinitialfairvalueisamortisedoverthelifeofthefinancialguarantee.Theliabilityissubsequently
carried at the higher of this amortised amount and the present value of any expected payment when a
payment under the guarantee has become probable. Financial guarantees are included within trade and
other payables. 75
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1. Significant accounting policies (continued)
1.17 Standards and interpretations issued but not yet effective
Atthedateofauthorisationofthefinancialstatementsofthebankfortheyearended31December2013
the following Standards and Interpretations were in issue but not yet effective.
All Standards and Interpretations will be adopted at their effective date and these standards are not
expected to have any impact on the bank.
1.18 Segmental reporting
The bank only has a single reportable segment. The bank’s business activities are not organised on the
basis of differences in products and services or differences in geographic areas as all operations are based in
Swaziland. All of the bank’s revenue is obtained from external customers. The bank does not have a single
customer on which it derives 10% or more of its revenue.
Standard/interpretation effective date periods
beginning on or after
IFRS10,IFRS12and
IAS 27 amendment
Investment Entities 1 January 2014
IAS 32 Offsetting Financial Assets and Financial Liabilities 1 January 2014
IAS 36 Recoverable amount disclosures for Non-financial
Assets
1 January 2014
IFRIC 21 Levies 1 January 2014
IAS 39 Novation of Derivatives and Continuation of Hedge
Accounting
1 January 2014
IAS 19 Defined Benefit Plans: Employee Contributions 30 June 2015
IFRS 9 (2009) Financial Instruments To be decided
IFRS 9 (2010) Financial Instruments To be decided
76
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
2013 2012 E E 2. Income and expenses interest income Cash and cash equivalents 9 287 888 5 898 239 Loans and advances to customers 154 331 555 161 200 150 Government and public sector securities 22 031 957 17 641 495
185 651 400 184 739 884 interest expense Deposits from customers 52 016 354 63 872 205 Other 4 295 095 885 539
Interest expense 56 311 449 64 757 744 Net interest income 129 339 951 119 982 140 Included in interest income is a total of E905 785
(2012:E1590264)accruedon impairedfinancialassets.
Total interest income and expense calculated using the effective interest method reported above that relate to financial assets or financial liabilities notmeasured at fair value through profit or loss areE154 331 555 (2012: E161 200 150) and E52 016 354 (2012: E63 872 205) respectively.
2.1 impairment of advances Specificimpairmentsrecognised 7 419 956 7 158 601 Portfolio impairments recognised 2 751 317 100 000
10 171 273 7 258 601 2.2 Fees and other commission income Retail banking customer fees 43 092 145 36 963 770 Corporate banking customer fees 63 416 764 59 312 655
Fees and other commission 106 508 909 96 276 425
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E E
2. Income and expenses (continued) 2.3 Operating expenses
Auditors’ remuneration:
- Audit fees - fee for the audit 914 149 795 995
- other services 248 840 360 848
- expenses 28 487 19 921
Depreciation and amortisation
- Computer equipment 2 841 714 2 856 646
- Furniture and other equipment 3 675 066 3 552 507
- Vehicles 77 937 69 734
- Land and buildings 71 372 71 372
- Computer software 704 631 1 293 732
Staff costs 65 366 244 38 423 841
Operating lease expenses 8 210 786 8 032 122
Management fees 27 377 783 23 963 075
Other operating expenses 30 016 003 26 601 049
139 533 012 106 040 842
Directors’ emoluments are disclosed in note 26.
3. income tax expense 3.1 Charge for the year
Swazilandnormaltaxation:recognisedinprofitorloss;
Current year 34 629 954 30 844 558
Deferred
- charge for the year (1 478 739) (1 175 825)
- change in tax rate 1 088 961 -
total taxation on income 34 240 176 29 668 733
3.2 tax rate reconciliation % %
Standard rate of Swaziland normal taxation 30.00 30.00
The standard rate has been affected by:
Rate change 0.91 -
Non deductible expenses 0.11 0.28
Effective taxation rate 31.02 30.28
78
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
2013 2012 E E
4. Earnings per share and dividends
4.1 earnings per share
Profitfortheyear 76 145 310 88 804 715
Headline earnings 76 145 310 88 804 715
Weighted average number of shares for calculating basic
and diluted EPS 24 640 134 24 640 134
4.2 dividends
Subsequenttothereportingdate,thedirectorsproposedadividendof100cents(2012:95cents)pershare;
total E24 640 134 (2012: E23 408 127).
The dividend will have the following tax consequences:
- Local residents withholding tax amounting to 10% of dividend declared
- Non-resident withholding tax amounting to 15%
- Non-resident withholding tax amounting 12.5% if the shareholder is a company incorporated or
registeredassuchinBotswana,Lesotho,NamibiaortheRepublicofSouthAfricaandprovidedthatitis
neither a subsidiary nor a branch of a company incorporated or registered outside any of such countries.
5. Cash and cash equivalents
5.1 Analysis
Coins and bank notes 51 510 935 58 999 878
Money at call and short notice 8 581 328 30 265 728
Balance with Central Bank of Swaziland 127 594 650 175 517 028
Other short term deposits 3 837 965 77 602 535
Money market unit trust investments 607 767 607 767
Total cash and cash equivalents 192 132 645 342 992 936
Funding from other banks (380 236 286) (1 509 907)
Net cash and cash equivalents (188 103 641) 341 483 029
The balance with the Central Bank of Swaziland has a restriction arising from regulatory liquidity
requirements. The Financial Institutions Act, 2005 prescribes that financial institutions shall maintain
reserves equal to 6% of total liabilities to the public in Swaziland excluding any balances for which it is liable
toanyfinancialinstitutionandsuchreservesmaybemaintainedbywayofdepositswiththeCentralBank
of Swaziland which bear no interest. At 31 December 2013 E127 million (2012: E128 million) was under the
restricted account. 79
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5. Cash and cash equivalents (continued)
5.2 Currency analysis
Common Monetary Area currencies (197 577 021) 310 247 056
Customer deposits in foreign currencies 9 473 380 31 235 973
(188 103 641) 341 483 029
Included in cash and cash equivalents is an amount of
E12 944 096 (2012: E155 625 497) which is invested
with other banks and is interest bearing. The remainder
is invested with the Central Bank of Swaziland and is not
interest bearing.
6. Government and public sector securities
Treasurybillsatfairvalue(throughprofitorloss) 272 029 093 342 196 724
All these securities mature within one year.
7. Amounts due from other banks
Clearances with banks 6 645 040 8 784 400
Remittances in transit - 129 433
6 645 040 8 913 833
These are client cheques not yet cleared with other banks.
8. loans and advances to customers (at amortised cost)
8.1 Category analysis
Home loans 468 526 557 388 332 768
Other loans and overdrafts 1 511 382 267 1 171 959 624
Finance leases and instalment debtors 414 236 507 306 146 708
Less:Unearnedfinancechargesonfinancelease
and instalment debtors (72 613 018) (53 775 587)
2 321 532 313 1 812 663 513
Impairment of advances (refer note 9) (26 558 973) (19 992 909)
2 294 973 340 1 792 670 604
80
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
2013 2012
E E
8. loans and advances to customers (continued)
8.2 Sectoral analysis
Individuals:
Home loans 468 526 557 388 332 768
Personal loans 441 495 257 331 512 367
910 021 814 719 845 135 Manufacturing 603 585 243 468 760 627 Wholesale and trade 11 075 846 6 373 714 Retailers,cateringandaccommodation 115 369 255 91 967 106 Agriculture,hunting,forestryandfishing 19 280 437 16 891 011 Mining and quarrying 8 964 - Building and property development 210 817 553 103 994 771 Transport,storageandcommunication 178 132 640 198 820 002 Government and public sector 59 106 644 29 371 464 Other 214 133 917 176 639 683
2 321 532 313 1 812 663 513
8.3 maturity structure Call 624 241 637 490 626 158
Less than 3 months 45 400 999 15 237 906 Between 3 months and 1 year 26 862 482 36 387 778 Between 1 year and 5 years 593 534 069 455 206 342 Greater than 5 years 1 031 493 126 815 205 329
2 321 532 313 1 812 663 513
Outstanding Specific balance impairments 2013 Security 2013 E E E
8.4 Non-performing advances Sectoral analysis 2013
Individuals:
Other personal loans 16 676 659 6 189 389 2 217 357
16 676 659 6 189 389 2 217 357 Manufacturing 296 402 150 000 33 207 Retailers,cateringandaccommodation 3 323 806 2 311 114 308 752 Building and property development 2 027 339 10 950 645 174 418 Transport,storageandcommunication 861 474 267 000 182 368 Other 5 879 607 6 932 092 9 982 454
29 065 287 26 800 240 12 898 556
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8. loans and advances to customers (continued)
8.4 Non-performing advances (continued) Sectoral analysis 2012
Outstanding Specific balance impairments 2012 Security 2012 E E E
Individuals:
Other personal loans 17 301 115 11 280 953 1 695 146
17 301 115 11 280 953 1 695 146
Manufacturing 419 690 - 61 450
Retailers,cateringandaccommodation 1771410 2853248 342316
Building and property development 355 601 412 228 95 018
Transport,storageandcommunication 1518044 188190 206355
Other 6 284 470 4 454 628 7 720 318
27 650 330 19 189 247 10 120 603
8.5 Finance lease receivables
Loans and advances to customers include the following finance lease receivables for leases of certain
property and equipment where the bank is the lessor:
2013 2012 E E
Grossinvestmentinfinanceleasesreceivable:
Less than one year 133 971 818 10 688 537
Betweenoneandfiveyears 272 279 085 292 872 285
Morethanfiveyears 7 985 605 2 585 886
414 236 508 306 146 708
Unearnedfinanceincome (72 613 019) (53 775 587)
Netinvestmentinfinanceleases 341 623 489 252 371 121
Netinvestmentinfinanceleasesreceivable:
Less than one year 132 050 247 7 898 055
Betweenoneandfiveyears 209 440 418 244 232 694
Morethanfiveyears 132 824 240 372
341 623 489 252 371 121
82
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
2013 2012 E E
9. Allowance for impairment of advances
Specific- amortised cost
Balance at beginning of year 10 120 603 6 603 146
Applied in respect of debts written off (5 626 312) (3 912 722)
Interest suspended during the year - 323 370
Recoveries of previously recognised impairment losses 984 310 (51 793)
5 478 601 2 962 001
Impairment of advances charged 7 419 956 7 158 601
12 898 557 10 120 602
Portfolio- amortised cost
Balance at beginning of year 9 872 306 12 537 443
Applied in respect of debts written off - (100 787)
Amounts written off against impairments/other transfers 1 036 794 (2 664 350)
10 909 100 9 772 306
Impairment of advances charged 2 751 317 100 000
13 660 417 9 872 306
Comprising:-
Specificimpairmentsandinterestinsuspense 12 898 557 10 120 603
Portfolio impairment 13 660 417 9 872 306
26 558 974 19 992 909
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10. Other receivables
Sundry debtors and accrued interest earned on investments 22 259 820 15 797 426
The balance is made up as follows:
Prepayments and suspense accounts 5 987 992 9 440 422
Other receivables 16 271 828 6 357 004
22 259 820 15 797 426
11. investments
Unlisted investments at cost : Associate company* 20 20
: Other** - shares 375 000 375 000
African Alliance Lilangeni Fund*** 2 115 991 1 670 722
2 491 011 2 045 742
Directors’ valuation : Associate company* 20 20
: Other** - shares 375 000 375 000
African Alliance Lilangeni Fund*** 2 115 991 1 670 722
2 491 011 2 045 742
Percentage Percentage holding holding
* Swaziland Automated Electronic Clearing House
Limited (SAECH) – refer note 25.8.3 20% 20%
**Swaziland Industrial Development Company
Limited – refer note 25.8.3 1.6% 1.6%
*** This is a unit trust investment held by the
Employee Share Trust – refer 25.8.3
84
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
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12. Property and equipment
Freehold Furniture land and Computer and other buildings equipment equipment Vehicles total e e e e e
Cost/valuation
Balance at 1 January 2012 1 640 741 20 587 226 28 138 942 897 606 51 264 515
Additions - 341 401 2 424 636 - 2 766 037
Disposals - (4 975 924) - (122 107) (5 098 031)
Balance at 31 December 2012 1 640 741 15 952 703 30 563 578 775 499 48 932 521
Balance at 1 January 2013 1 640 741 15 952 703 30 563 578 775 499 48 932 521
Additions - 2 639 546 7 431 906 487 034 10 558 486
Disposals - - (179 062) (126 290) (305 352)
Balance at 31 December 2013 1 640 741 18 592 249 37 816 422 1 136 243 59 185 655
depreciation and impairment losses
Balance at 1 January 2012 (426 230) (14 770 148) (16 018 277) (647 050) (31 861 705)
Depreciation for the year (71 372) (2 856 645) (3 552 508) (69 734) (6 550 259)
Disposals - 4 975 924 - 122 107 5 098 031
Balance at 31 December 2012 (497 602) (12 650 869) (19 570 785) (594 677) (33 313 933)
Balance at 1 January 2013 (497 602) (12 650 869) (19 570 785) (594 677) (33 313 933)
Depreciation for the year (71 372) (2 841 714) (3 676 124) (77 937) (6 667 147)
Disposals - - 179 062 126 290 305 352
Balance at 31 December 2013 (568 974) (15 492 583) (23 067 847) (546 324) (39 675 728)
Carrying amounts
At 1 January 2012 1 214 511 5 817 078 12 120 665 250 556 19 402 810
At 31 December 2012 1 143 139 3 301 834 10 992 793 180 822 15 618 588
At 1 January 2013 1 143 139 3 301 834 10 992 793 180 822 15 618 588
At 31 December 2013 1 071 767 3 099 666 14 748 575 589 919 19 509 927
12. Property and equipment (continued)
FreeholdlandandbuildingswerevaluedbyMeldanePropertyandValuationServicesCC,on25September2012 on the basis of open market value in continuation of existing use at E1 100 000. Management has not adjusted for this valuation as they believe the revalued amount and the carrying amount are equal.
Detailsofpropertiesownedareavailableforinspectionattheregisteredofficeofthebank.Allpropertyandequipment is free of lien.
There were no capitalised borrowing costs relating to the acquisition of equipment during the year (2012: Nil). The initial cost of freehold land and buildings was E950 000 (2012: E950 000).
2013 2012
E E
13. deferred taxation
13.1 Recognised deferred tax assets
Property and equipment 2 835 872 2 909 931
Impairment of advances 7 303 718 5 997 873
Unrealised (losses)/gains on FECs (906 483) (202 944)
Operating leases 204 225 222 791
Employeebenefitsobligations 2 410 650 7 507 500
Payable for staff costs 2 593 022 2 843 241
Prepayments (51 782) 182 098
Deferred tax assets 14 389 222 19 460 490
13.2 deferred taxation movements:
(in statement of comprehensive income)
Deferred tax assets - beginning of year 19 460 490 17 314 766
Re-measurementofdefinedprovisionliability (363 697) -
Movements arising from:
- Property and equipment (74 058) 719 896
- Impairment of advances 1 305 845 255 696
- Unrealised gains on FECs (703 539) (91 634)
-Employeebenefitsobligations (5 097 350) 969 900
- Payable for staff costs (250 220) 109 769
- Prepayments 130 317 182 097
- Operating lease (18 566) -
Deferred tax assets - end of year 14 389 222 19 460 490
There are no unrecognised deferred tax assets and liabilities at year end (2012: Nil). There was no deferred
tax recognised directly in equity (2012: nil).
86
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for the year ended 31 December 2013
14. intangible assets
Computer
software
e
Cost
Balance at 1 January 2012 15 515 353
Additions -
Balance at 31 December 2012 15 515 353
Balance at 1 January 2013 15 515 353
Additions 2 576 001
Balance at 31 December 2013 18 091 354
amortisation and impairment losses
Balance at 1 January 2012 (13 477 246)
Amortisation for the year (1 293 732)
Balance at 31 December 2012 (14 770 978)
Balance at 1 January 2013 (14 770 978)
Amortisation for the year (704 631)
Balance at 31 December 2013 (15 475 609)
Carrying amounts
At 1 January 2012 2 038 107
At 31 December 2012 744 375
At 1 January 2013 744 375
At 31 December 2013 2 615 745
There were no capitalised borrowing costs related to the internal development of software during the year
(2012: Nil). The bank does not have restricted or pledged intangible assets and there were no contractual
commitments for acquisition of intangible assets at reporting date.
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15. Share capital and reserves
15.1 Share capital
15.1.1 authorised share capital
26 650 000 (2012: 26 650 000) ordinary shares of 50 cents each 13 325 000 13 325 000
15.1.2 issued and fully paid share capital
24 640 134 (2012 : 24 640 134) ordinary shares of 50 cents each 12 320 067 12 320 067
779 026 (2012 : 779 026) treasury shares of 50 cents each (389 513) (389 513)
11 930 554 11 930 554
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the bank. The unissued shares are under the control of the directors.
15.2 Share premium and reserves
15.2.1 Share premium
Share premium account 7 952 360 7 952 360
15.2.2 Revaluation reserve
Gains on revaluation of commercial premises and residential
properties 1 366 260 1 366 260
The property was last revalued in September 2012 in accordance
with the bank’s accounting policy, by Meldane Property and
ValuationServicesCC,independentpropertyvaluers.
15.2.3 Statutory reserve
IntermsofSection20(1)(a)(ii)oftheFinancialInstitutionsAct,
2005 60 819 856 53 205 325
15.2.4 General risk reserve
Thisisastatutorygeneralcreditriskreserve,beingthedifference
between credit reserves as required by the Central Bank of Swazi-
land and portfolio impairment losses on advances per the state-
mentoffinancialposition. 8 014 457 8 014 457
Movements on reserves are disclosed in the statement of changes in equity set out on page 57.
88
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for the year ended 31 December 2013
2013 2012
E E
16. amounts owed to depositors
16.1 analysis Current accounts 570 327 884 533 552 075 Savings deposits 179 785 288 146 912 621 Other customer deposits and loan accounts 1 216 346 547 1 301 714 080 Foreign currency deposits 5 005 981 28 700 696
1 971 465 700 2 010 879 472
16.2 Sectoral analysis Individuals 641 299 850 551 617 696 Corporates and other 1 330 165 850 1 459 261 776
1 971 465 700 2 010 879 472
At 31 December 2013: E750 233 (2012: E206 714) of deposits from customers are expected to mature more than 12 months after the reporting date.
17. deposits from banks Current accounts 5 215 585 2 254 467
The deposits are repayable on demand. These accounts do not earn interest.
18. Current taxation liabilities Balance at beginning of the year 1 051 204 5 227 880 Income tax expense in the year 34 629 954 30 844 558 Income tax paid during the year (32 329 424) (35 021 234)
3 351 734 1 051 204
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19. employee share ownership scheme
Share options over Nedbank (Swaziland) Limited shares and equity instruments in respect of Nedbank
(Swaziland) Limited shares are granted to employees as part of their remuneration package as services
are rendered as an incentive to retain business and develop growth within the bank.
As the bank cannot estimate reliably the fair value of services received nor the value of additional
businessreceived,thebankrebutsthepresumptionthatsuchservicesandbusinesscanbemeasured
reliably.Thebankthereforemeasurestheirfairvaluebyreferencetothefairvalueoftheshares,share
options or equity instruments granted, in line with the bank’s accounting policy. The fair value of
suchshares,shareoptionsandequityinstrumentsismeasuredatthegrantdateutilisingthedirectors
simplifiedfairvaluationmodel.Bothschemesarecashsettledastheshareswillultimatelybesettledby
the bank. The following are the share and share option schemes that have been in place during the year.
* The employee share trust scheme is treated as an agent of the bank.
90
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NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
Scheme trust/special- purpose vehicle(SPV)*
descriptiontraditional employee schemes
Vestingrequirements
maximumterm
Nedbank (Swaziland) Limited (2012) Share Option Scheme and restricted share scheme.
Nedbank Employee Share Trust (Sinakekelwe Management Scheme)
Share options and restricted shares were granted to key person-nel to motivate senior employees to remain with the group. The granting of share options was based onjoblevel,meritandperformance,andwasentirely at the discretion of the trustees acting on recommendations of executive management.
Share options granted on appointment are time-based,ofwhich 33% vest afterthreeyears,an additional 33% after the fourth year and the remaining 34% after the fifthyear.
5 years
Nedbank (Swaziland) Limited (2012) employee share scheme.
Nedbank Employee Share Trust (Sinakekelwe Broad-Based Scheme)
Restricted shares were granted to all other employees who do not qualify for any other share scheme within the bank.
Share options granted on appointment are time-based,ofwhich 33% vest afterthreeyears,an additional 33% after the fourth year and the remaining 34% after the fifthyear.
5 years
19. employee share ownership scheme (continued)
Effect on profit and financial position
Share-based payments
Share-based expense liability
2013 2012 2013 2012
E E E E Sinakekelwe broad-based scheme 938 534 229 221 2 139 128 1 200 594
Sinakekelwe Management scheme (options) 1 748 431 402 897 3 858 697 2 110 266 2 686 965 632 118 5 997 825 3 310 860
Fair value of share options and
assumptions 2013 2012 Fair value at grant date 4.25 4.25 Share price at grant date 4.25 4.25 Exercise price - - Expected volatility 96% 96% Option life 12 months 24 months
Risk free interest rate 5.5% 5.5%
weighted average
Number of instruments price per unit
2013 2012 2013 2012
E E
movement in number of instruments
Share options
Outstanding at the beginning of the year 465 882 472 941 - -
Granted - - 5.94 5.26
Forfeited (12 706) (7 059) 5.94 5.26
Outstanding at the end of the year 453 176 465 882 5.94 5.26
Exercisable at the end of the year 299 096 - - -
Restricted shares
Outstanding at the beginning of the year 378 075 391 132 - -
Granted - - 5.94 5.26
Forfeited (10 705) (13 057) 5.94 5.26
Outstanding at the end of the year 367 370 378 075 5.94 5.26
Exercisable at the end of the year 242 464 - - -
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E E
20. accounts payable
20.1 trade and other payables Trade payables 22 544 126 144 284 570 Accrual for service fee 4 841 143 8 485 865 Creditors and accruals 25 032 905 3 929 598
52 418 174 156 700 033
Trade payables relate to uncleared funds/cheques due to customers and other banks.
20.2 Payables for staff costs Share based payment liability 3 310 860 3 310 860 Leave accrual 2 587 748 2 610 675 Bonus accrual 3 175 714 3 512 937 Accrual for severance pay 354 848 43 000
9 429 170 9 477 472
21. Contingent liabilities Confirmedlettersofcreditanddiscountingtransactions - - Liabilities under guarantees 58 397 770 78 007 317 Other : Commitments to sell foreign currency under forward exchange contracts 225 166 411 415 987 933 Unutilised facilities 459 235 136 379 732 870
742 799 317 873 728 120
Letters of credit and liabilities under guarantee are those issued by the bank to its customers to present to third parties. These have been stated at nominal value of the guarantee given. 22. Commitments Operating lease commitments Less than one year 8 152 830 5 896 423 Betweenoneandfiveyears 18 654 199 6 454 662
26 807 029 12 351 085
The bank leases 26 (2012: 20) properties. The leases typically run for an initial period of a maximum of threeyears,withanoptiontorenewtheleaseafterthatdate.Leasepaymentsincreaseannuallybyafixedamounttoreflectmarketrentals.Therewerenocontractualcommitmentstoacquirepropertyandequipment (2012: Nil).
92
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
2013 2012
E E
23. Cash flow information
23.1 Cash received from customers
Commission and fees 106 508 909 96 276 425
Foreign exchange dealing gains 18 290 564 13 678 484
Netunrealisedprofitonforeigncurrencytransactions(Note25.8) (5 406 952) (2 110 650)
Foreign currency gains realised 2 110 650 1 434 171
Other income 5 950 347 1 835 842
Recoveries of debt previously written off (1 263 421) (6 800 965)
126 190 097 104 313 307
23.2 Cash paid to customers, staff and suppliers
Staff costs (63 349 244) (49 653 841)
Payments to customers and suppliers (66 406 269) (59 773 010)
(129 755 513) (109 426 851)
23.3 Cash generated by operating activities
Netprofitbeforetaxation 110 385 486 107 243 448
Adjustment for:
- Depreciation and amortisation 7 371 778 7 843 991
- Impairment of advances (net) 10 171 273 7 258 601
- Netunrealisedprofitonforeign
currency transactions (Note 25.8) (5 406 952) (2 110 650)
- Prior year’s net unrealised foreign currency
gain now realised 2 110 650 1 434 171
- Recoveries of impairment losses credited to allowance for
credit impairments and other movements 1 162 300 (6 778 965)
- Profitondisposalofpropertyandequipment (20 000) (22 000)
125 774 535 114 868 596
23.4 increase in operating assets
Advances and other accounts (515 893 984) 140 911 586
Government and public sector securities 70 167 631 (153 868 837)
(445 726 353) (12 957 251)
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E E
23. Cash flow information (continued)
23.5 (decrease)/increase in operating liabilities
Current and savings accounts 69 648 477 146 288 695
Other deposits and foreign currency liabilities (106 101 131) 182 468 215
Trade and other payables (104 330 159) 67 060 186
(140 782 813) 395 817 096
23.6 taxation paid
Amounts payable at beginning of year (1 051 204) (5 227 880)
Statement of comprehensive income charge (Note 3.1) (34 629 954) (30 844 558)
Amounts payable at end of year 3 351 734 1 051 204
(32 329 424) (35 021 234)
23.7 dividends paid to shareholders
Dividends declared and paid during the year (23 408 128) (22 219 941)
23.8 Cash and cash equivalents
Cash and short-term funds 179 105 585 234 516 906
Other short-term funds 11 385 874 57 566 400
Deposits with banks within the group (refer to note 26) 1 641 186 50 909 630
192 132 645 342 992 936
Funding from other banks (380 236 286) (1 509 907)
(188 103 641) 341 483 029
94
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
2013 2012 2011
E E E
24. Employee benefits obligations
24.1 Recognised liability of defined benefit obligation
Estimated present value of plan obligations (93 371 000) (93 186 000) (85 864 000)
Fair value of plan assets 84 605 000 68 161 000 64 072 000
Present value of future funded obligations (8 766 000) (25 025 000) (21 792 000)
Recognisedliabilityfordefinedbenefitobligations (8 766 000) (25 025 000) (21 792 000)
Thebankmakescontributionstoadefinedbenefitplan,theNedbankSwazilandPensionFund,whichprovidespensionbenefitsforemployeesuponretirement.Thedefinedbenefitplanexposestheentitytocreditriskdueto the investments in plan assets. All permanent employees are members of the fund. In accordance with the rulesofthefundthefinancialpositionofthefundisexaminedandreporteduponbytheactuaryatintervalsnot exceeding three years. The latest available actuarial valuation was at 31 December 2013. Plan assets comprisecollectiveinvestmentschemeswithAfricanAlliancemadeupofequities61.52%(2012:60%),debtinstruments 20.98% (2012: 30%) and cash at bank 17.5% (2012: 10%). The Bank’s fund administrators are AON Swaziland Limited and the actuarial valuator is Alexander Forbes.
A valuation of the fund for IAS 19 purposes was performed as at 31 December 2013 by independent external actuarieswhoestimateadeficitasreflectedabove.
2013 2012
E E
24.2 Expense recognised in the profit or loss
Service costs 4 376 000 2 983 000
Net interest cost 2 166 000 2 061 000
Past service cost - (19 571 000)
6 542 000 (14 527 000)
Recognised in other comprehensive income
Actuarial (gains)/losses (8 970 000) 19 692 000
Fair value adjustment on plan assets (9 306 000) 2 128 000
(18 276 000) 21 820 000
The expected return on plan assets is based on market yields on high quality corporate bonds at reporting date.
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E E
Restated
24. Employee benefits obligations (continued)
24.3 movement in plan assets
Fair value of plan assets at 1 January 68 161 000 64 072 000
Contribution paid into the plan 6 910 000 6 202 000
Benefitspaidbytheplan (3 387 000) (4 384 000)
Actuarial gains/(losses) 9 306 000 (2 128 000)
Expected return on plan assets 5 451 000 5 724 000
Risk and administration fees (1 836 000) (1 325 000)
Fair value of plan assets at year end 84 605 000 68 161 000
24.4 Movement in the present value of defined benefit obligation
Liabilityfordefinedbenefitobligationat1January 93 186 000 85 864 000
Actuarial (gains)/losses (8 970 000) 19 692 000
Benefitspaidbytheplan (3 387 000) (4 384 000)
Current service costs and interest 12 542 000 11 585 000
Pastservicecostduetochangeinbenefits - (19 571 000)
Liabilityfordefinedbenefitobligationsatyearend 93 371 000 93 186 000
24.5 Actuarial assumptions for defined benefit obligations
Principal actuarial assumption at the date of the last provisional
actuarial valuation (expressed as weighted averages):
Discount rate at 31 December 8.5% 7.9%
Expected return on plan assets at 31 December 8.5% 8.8%
Future pension increases 2.1% 2.2%
Inflation 6.0% 6.4%
Salary increases 7.0% 7.0%
Expected contributions by members and employer for 2014 are E7 394 000 (2013: E6 035 000).
96
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
25. Financial risk management
Thebank’sfinancialinstrumentsarisedirectlyfromitsoperationsandcomprisecoinandbanknotes,balances
with central and other banks, Government and public sector securities, investments, loans, overdrafts,
financeleasereceivables,savingsaccounts,depositandloanaccounts,accruedinterestandothercreditors,
remittancesintransit,andindebtednessbyandtotheholdingcompanyandfellowsubsidiaries.Themain
purposeofthesefinancialinstrumentsistoearnincomefrombankingoperations.Thebankalsoentersinto
derivative contracts principally forward foreign currency contracts on behalf of customers.
Thebankhasexposuretothefollowingrisksfromfinancialinstruments:
• Market risk
• Credit risk
• Liquidity risk
Risk management framework
The Board together withNedbankAfrica (a division of Nedbank Limited), theCreditCommittee and
the Assets and Liabilities Committee (ALCO) assess and monitor risks based on policies formulated in
conjunction with the holding company and approved by the Board of Directors.
Thebank’sriskmanagementpoliciesareestablishedtoidentifyandanalysetherisksfacedbythebank,to
setappropriateriskslimitsandcontrols,andtomonitorrisksandadherencetolimits.Riskmanagement
policiesandsystemsarereviewedregularlytoreflectchangesinmarketconditions,productsandservices
offered.
The Risk Committee is responsible for monitoring compliance with the bank’s risk management policies
andprocedures,andfor reviewingtheadequacyof theriskmanagement framework in relationtothe
risks faced by the bank. Internal Audit undertakes both regular and ad-hoc reviews of risk management
controls and procedures.
The methods for assessing and monitoring used in the current year are consistent with prior years. There
werenofinancialassetsandfinancialliabilitiesreclassifiedinthecurrentperiod(2012:Nil).
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25. Financial risk management (continued)
25.1 market risk
Market risk is the risk of a decrease in the value of a portfolio as a result of an adverse move in market variablesand futurecashflowsofafinancial instrumentwillfluctuatebecauseofchanges inmarketprices. This existswhere the bank has a trading position or financial instrument denoted in foreigncurrencies. The bank’smajor exposure from trading operations andfinancial instruments denoted inforeign currencies is undertaken in terms of general authority granted to ALCO by the Board of Directors and is controlled within the treasury operations. Trading limits are pre-determined and exposure to market risk is limited as counterparty positions are taken with the holding company for all material trades of forward foreign currency contracts. The bank’s market risk comprises of interest rate risk and currency risk. The principal tool used to measure and control market risk is back to back hedging for foreign currency risk and repricing and gap analysis for interest rate risk.
25.2 Credit risk
Creditriskistheriskoffinanciallosstothebankifacustomerorcounterpartytoafinancialinstrumentfails to meet its contractual obligations. Direct credit risk arises as a result of traditional lending and dealing with others. Indirect credit risk arises as a result of issuing guarantees and similar undertakings. Generally lending decisions are made in accordance with credit management parameters laid down by AFCRAM (Africa Credit Risk Management Committee). There are reporting requirements designed to identify unsatisfactory accounts at an early stage. Distinction is drawn between the fundamental credit characteristics of corporate customers and smaller individual advances. Policies are in place to ensure that the bank is not overexposed to particular concentrations of credit. Lending decisions are made by credit managers or in the case of large exposures by the appropriate Credit Committee. Any facility requests in excess of the Credit Committee’s lending limit are referred to the Africa Credit Risk Management Committee at Nedbank Limited. All facilities are risk rated against a standard rating scale and are reviewed at least annually.
exposure to credit risk
Note 2013 2012
E E
Loans and receivables at amortised cost Loans and advances 8 2 294 973 340 1 792 670 604 Cash and cash equivalents 5 192 132 645 342 992 936 Amounts due from banks 7 6 645 040 8 913 833
2 493 751 025 2 144 577 373
Held for to maturity at fair value through profit or loss Government and public sector securities* 6 272 029 093 342 196 724 Derivative assets held for risk management** 25.8 18 072 725 11 956 856 Investments – at cost 11 2 491 011 2 045 742
292 592 829 356 199 322
2 786 343 854 2 500 776 695
* Treasury bills with the Central Bank of Swaziland
** Derivative assets are with related counterparties
98
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
25. Financial risk management (continued)
25.2 Credit risk (continued)
impaired loans and advances
Forindividuallyassessedaccounts,loansaretreatedasimpairedassoonasthereisobjectiveevidence
that an impairment loss has been incurred. The criteria used by the bank to determine that there is such
objectiveevidenceincludes,interalia:
Knowncashflowdifficultiesexperiencedbytheborrower;
Overdue contractual payments of either principal or interest;
Breach of loan covenants or conditions;
Theprobabilitythattheborrowerwillenterbankruptcyorotherfinancialrealisation;and
Asignificantdowngradingincreditratingbyanexternalcreditratingagency.
The IAS 39 impairment allowance is calculated based on the difference between the outstanding advancesbalancesandthepresentvalueofexpectedfuturecashflows.
TheCentralBankofSwazilandimpairmentsaredividedintotwo;namelySpecificimpairmentswhicharebased on 100% of the loss position (Outstanding advances balance less the market value of collateral) and General impairments which are based on a certain percentage of performing advances book (based on the historical performance of the advances book).
The difference between IFRS impairments and Central Bank of Swaziland impairments is credited to the general risk reserve.
25.2.1 Credit commitments and guarantees
The bank has outstanding, at any time, a significant number of commitments to extend credit. To
accommodate major customers the bank also provides financial guarantees to third parties. These
arrangements are subject to strict credit assessments. Guarantees specify limits to the bank’s obligations
assetoutinnote21.Thebankhasenteredintocontracts(guarantees)thatrequireittomakespecified
payments to reimburse the holder for a loss it makes if a debtor fails to make payments when it falls due
in accordance with the debt instrument in place. Because most commitments and almost all guarantees
expirewithoutbeingfundedinwholeorinpart,thecontractamountsarenotestimatesoffuturecash
flows.Loancommitments,lettersofcreditandguaranteeshaveoffbalancesheetcreditriskamounts
equal to the contractual amounts.
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25. Financial risk management (continued)
25.2 Credit risk (continued)
25.2.2 Concentrations of credit risk
Concentrations of credit risk arising fromfinancial instruments exist in relation to certain groups ofcustomers. A group concentration arises when a number of counterparties have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by the changes in economic and other conditions. The bank has exposure to major concentrations of credit riskwhicharisebycustomertypeinrelationtoloansandcreditcommitmentstospecificindustries(refernote 8.2 for sectoral analysis).
Thebankmonitorsconcentrationsofcreditriskbysector.Ananalysisofsignificantconcentrationsofcredit risk from loans and advances at reporting date is as follows:-
- sugar manufacturing entity E47.2 million (2012: E65.9 million) - sugar wholesaling entity E512.5 million (2012: E363.4 million) - public sector entity E59.1 million (2012: E29.4 million) - construction company E210.8 million (2012: E104.0 million) - manufacturing company E556.4 million (2012: E402.8 million) - sugar packaging entity E5.3 million (2012: E15.8 million)
The facilities that are above 25% of the bank’s capital and reserves at the end of the previous year are subject to a risk participation agreement between the bank and Nedbank Limited. The effect of this agreement is to limit the bank’s exposure for each of these facilities to 25% of capital and reserves. The bank’s published capital and reserves at the end of the year were E401.6 million (2012: E335.7 million)
25.2.3 Collateral and other credit enhancements
Collateral and other credit enhancement held by the bank at year end are disclosed in note 8.4 for non-performing loans and advances. The value of all collateral that the bank is permitted to sell or re-pledge held at year end was E824 542 362 (2012: E695 497 596) all of which are readily convertible into cash.
The bank holds collateral against loans and advances to customers in the form of mortgage interest over property,otherregisteredsecuritiesandguarantees.Theamountandtypeofcollateralrequireddependson an assessment of the credit risk of the counterparty. The main types of collateral are as follows:
Forcommercial lending,chargesover realestateproperties, inventory,callandfixeddepositsand trade receivables;
Forretaillending,mortgagesoverresidentialpropertiesandlienovercallandfixeddeposits;and For non-performing advances, collateral consists of cash, funds on security realisation accounts,
intrinsicvalueofunderlyingasset,guaranteesbyCentralBankofSwazilandandmortgagebonds.
Atyearend,thefairvalueoffinancialassetsacceptedascollateralthathavebeensoldwasE8060425(2012: E8 426 734). These transactions are conducted under terms that are usual and customary to standard lending transactions.
100
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
25. Financial risk management (continued)
25.2 Credit risk (continued)
25.2.4 Financial assets that are either past due or impaired
Past due but not impaired loans and advances are those for which contractual interest or principal
paymentsarepastdue,butthebankbelievesthatimpairmentisnotappropriateonthebasisofthestage
of collection of amounts owed to the bank.
Financial assets of the bank which were neither past due nor impaired at year end amount to E2 287
million (2012: E1 769 million).
Financial assets of the bank which were past due and impaired at year end are disclosed in note 8.4 (for
those impaired) and those that are past due but not impaired are disclosed below. Factors considered in
deteriorating impairment are disclosed in note 25.2.
Financial assets of the bank which were past due but not impaired are as follows:
2013
Class total 0 – 30 days 30 – 60 days 60 – 90 days +90 days
e e e e e
Mortgage loans 1 287 750 1 061 822 215 626 10 302 -
Leases 1 958 534 1 504 266 364 610 89 658 -
Personal loans 1 362 321 1 142 449 170 553 40 808 8 511
Other loans 958 793 716 903 179 391 45 087 17 412
5 567 398 4 425 440 930 180 185 855 25 923
2012
Class total 0 – 30 days 30 – 60 days 60 – 90 days +90 days
e e e e e
Mortgage loans 2 805 244 2 446 073 346 687 12 484 -
Leases 4 298 812 3 950 820 312 430 32 725 2 837
Personal loans 1 170 800 1 034 630 104 291 25 405 6 474
Other loans 7 508 592 7 441 684 62 371 3 426 1 111
15 783 448 14 873 207 825 779 74 040 10 422
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25. Financial risk management (continued)
25.2.5 loans with re-negotiated terms Loans with re-negotiated terms are loans that have been restructured due to deterioration in the
borrower’sfinancial positionandwhere thebankhasmade concessions that itwouldnototherwiseconsider. Re-negotiated loans at year end are as follows:
Class 2013 2012
e E
Mortgage loans 1 142 422 1 423 210 Leases 411 021 422 153 Personal loans 19 700 140 035 Other loans 246 424 -
1 819 567 1 985 398
There were no properties in possession at year end (2012: E Nil).
25.2.6 write off policy
The bank writes off a loan and any related allowance for impairment losses when it is determined that the loan or security is uncollectible. This determination is made after consideration of information such as the occurrenceofsignificantchangesintheborrower’sfinancialpositionsuchthattheborrowercannolongerpaytheobligation,orthatproceedsfromcollateralwillnotbesufficienttopaybacktheentireexposure.
25.3 liquidity risk
Liquidityriskistheriskthatthebankwillencounterdifficultyinmeetingobligationsassociatedwithitsfinancialliabilitiesthataresettledbydeliveringcashoranotherfinancialasset.Thisriskarisesmainlyinthe treasury operations. ALCO is responsible for ensuring that the bank meets its planned commitments as they fall due.
The maturities of assets and liabilities are closely monitored and diversified to avoid any undueconcentration of funding requirements at any one time or from any one source.
The daily liquidity position is monitored and regular liquidity stress testing is conducted under a variety of
scenarios covering both normal and more severe market conditions. All liquidity policies and procedures aresubjecttoreviewandapprovalbyALCO.Asummaryreport,includinganyexceptionsandremedialactiontaken,issubmittedregularlytoALCO.
Thebankreliesondepositsfromcustomersandbanks,andfromgroupborrowingsasitsprimarysourcesoffunding.Whilethebank’sdebtsecuritiesandsubordinatedliabilitieshavematuritiesofoveroneyear,deposits from customers and banks generally have shorter maturities and a large proportion of them are repayable on demand. The short-term nature of these deposits increases the bank liquidity risk and the bank actively manages this risk through maintaining competitive pricing and constant monitoring of market trends.
exposure to liquidity risk The key measures used by the bank for managing liquidity risk include the ratio of loans and advances to
deposits; sources of quick liquidity to liabilities to the public; and checking of key sources of quick liquidity cover over the bank’s top ten depositors.
Disclosureofamaturityanalysisoffinancialliabilitiesisasfollows:
102
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
25.3
Fi
nanc
ial r
isk
man
agem
ent
(co
ntin
ued)
103
ContACt DetAIlS
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AnnuAl FInAnCIAl StAteMentS
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G
ross
m
ore
Car
ryin
g no
min
al
less
tha
n
3 m
ont
hs
th
an
No
te
amo
unt
out
flow
1
mo
nth
1-3
mo
nths
to
1 y
ear
1-5
year
s 5
year
s
e
e e
e e
e e
31 d
ecem
ber
2013
Non
-der
ivat
ive
liabi
litie
s
Trad
e pa
yabl
es
20
52 4
18 1
76
52 4
18 1
76
52 4
18 1
76
- -
- -
Dep
osit
s fr
om b
anks
17
5
215
585
5 21
5 58
5 5
215
585
- -
- -
Dep
osit
s fr
om c
usto
mer
s 16
1
971
465
700
1 97
9 96
3 23
6 1
563
523
995
218
890
190
196
781
938
767
114
-
Fund
ing
from
oth
er b
anks
5
380
236
286
380
236
286
3
80 2
36 2
86
- -
- -
2 40
9 33
5 74
7 2
417
833
283
2 00
1 39
4 04
2 21
8 89
0 19
0 19
6 78
1 93
8 76
7 11
4 -
Der
ivat
ive
liabi
litie
s
Forw
ard
exch
ange
con
trac
ts
25.8
12
665
773
12
665
773
12
665
773
-
- -
-
Fina
ncia
l gua
rant
ee c
ontr
acts
21
58
397
770
58
397
770
58
397
770
-
- -
-
31 D
ecem
ber
2012
Non
-der
ivat
ive
liabi
litie
s
Trad
e pa
yabl
es
20
156
700
033
156
700
033
156
700
033
- -
- -
Dep
osit
s fr
om b
anks
17
2
254
467
2 25
4 46
7 2
254
467
- -
- -
Dep
osit
s fr
om c
usto
mer
s 16
2
010
879
472
2 02
5 12
6 35
7 1
548
717
157
53 5
45 1
93
422
651
981
212
026
-
Fund
ing
from
oth
er b
anks
5
1 50
9 90
7 1
509
907
1 50
9 90
7 -
- -
-
2 17
1 34
3 87
9 2
185
590
764
1 70
9 18
1 56
4 53
545
193
42
2 65
1 98
1 21
2 02
6 -
Der
ivat
ive
liabi
litie
s
Forw
ard
exch
ange
con
trac
ts
25.8
9
846
206
9 84
6 20
6 9
846
206
Fina
ncia
l gua
rant
ee c
ontr
acts
21
78
007
317
78
007
317
78
007
317
25. Financial risk management (continued)
25.4 interest rate sensitivity analysis
Interestrateriskistheriskthatthefairvalueorfuturecashflowsofafinancialinstrumentwillfluctuate
because of changes in market interest rates.
Partofthebank’sreturnonfinancialinstrumentsisobtainedfromcontrolledmismatchingofthedates
onwhichinterestreceivableonassetsandinterestpayableonliabilitiesarenextresettomarketratesor,
ifearlier,thedatesonwhichtheinstrumentsmature.TheALCOisalsoresponsibleformanagementof
the interest rate sensitivity gap using the re-pricing analysis of assets and liabilities as disclosed in note
25.9. The concentration of interest rate risk is disclosed in note 25.9.
Tomeasureinterestraterisk,thebankmeasurestheresponsivenessofthedifferentportfoliostochanges
in interest rate. From the use of the Basel stress scenario based on a 1st and 99th percentile of observed
interestratechangesusingaoneyearholdingperiodandaminimumoffiveyearsofobservation,the
bank calculated 5% and 2.5% respectively. The bank uses this margin to shock its assets and liabilities to
ascertaintheimpactoftheinterestratechangesinprofitorloss.Theeffectofthesensitivityanalysison
profitorlossiscalculatedasfollows:
2013 2012
E’000 E’000
500 bp instantaneous parallel decline in interest rates (42 900) (48 497)
250 bp instantaneous parallel increase in interest rates 21 450 24 248
25.5 Operational risk
Operational risk is the risk of a loss arising from fraud, transactional or control error or systemflaw.
Exposures to operational risks are managed by an Operational Risk Committee (ORCO) which was
established in January2006, throughanon-going reviewof transactionaldataand reconciling items,
evaluation and adoption of international best practice and management of information technology
resources.
25.6 Commercial risk
This is the risk of the adverse effect of initiating or suffering change in the scope or extent of business
activities. The bank and the holding company constantly monitor trends and events and carry out
appropriate research with a view to anticipating and avoiding adverse effects.
104
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
25. Financial risk management (continued)
25.7 Currency risk
Currencyriskistheriskthatthefairvalueorfuturecashflowsofafinancial instrumentwillfluctuate
because of changes in foreign exchange rates.
The following net foreign exchange assets recognised in the statement of financial position are not
covered by forward exchange contracts:
2013 2013 2012 2012
Foreign Local Foreign Local
currency currency currency currency
000 E’000 000 E’000
British Pounds 208 3 630 7 107
United States Dollars 9 98 52 446
Canadian Dollars 7 66 10 86
Euros 24 346 140 1 577
Botswana Pula 45 54 72 78
Other 25 276 28 252
4 470 2 546
These assets make up less than 5% of the bank’s total assets. These funds are held by the bank on behalf
ofclientsandanyforeignexchangeriskisbornedirectlybytheclient.Assuch,asensitivityanalysisisnot
included.
ForwardforeignexchangecontractsaredenominatedmainlyinBritishPounds,UnitedStatesDollarsand
Eurosandconstituteoffullycoveredpositions.Whenenteringintoforwardforeignexchangecontracts,
credit risk is assessed with reference to customers’ available facilities.
105
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25.
Fina
ncia
l ris
k m
anag
emen
t (c
ont
inue
d)
25.8
D
eriv
ativ
e fi
nanc
ial i
nstr
umen
ts
Th
e fo
llow
ing
tabl
es s
umm
aris
e th
e ef
fect
of
trad
ing
forw
ard
exch
ange
con
trac
ts e
nter
ed in
to b
y th
e ba
nk a
t th
e re
port
ing
date
:-
a
fter
1
Net
Net
ye
ar b
ut
Fair
Fa
ir
cont
ract
/ N
et
Fair
Fair
cont
ract
/
w
ithi
n 1
wit
hin
5 a
fter
5
Net
fai
r va
lue
of
valu
e of
N
oti
ona
l fa
ir va
lue
valu
e of
no
tion
al
ye
ar
year
s ye
ars
valu
e as
sets
lia
bilit
ies
amo
unt
valu
e of
ass
ets
liabi
litie
s am
ount
2013
20
13
2013
20
13
2013
20
13
2013
20
12
2012
20
12
2012
e’00
0 e’
000
e’00
0 e’
000
e’00
0 e’
000
e’00
0 E’
000
E’00
0 E’
000
E’00
0
Maturityanalysisof
net f
air v
alue
Fore
ign
exch
ange
deriv
ativ
es
5 40
7 -
- 5
407
18 0
73
(12
666)
10
919
2
111
11 9
57
(9 8
46)
1 26
9
tota
l der
ivat
ive
asse
ts/
(lia
bilit
ies)
hel
d fo
r tr
adin
g 5
407
- -
5 40
7 18
073
(1
2 66
6)
10 9
19
2 11
1 11
957
(9
846
) 1
269
106
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
25. Financial risk management (continued)
25.8.1 Derivative financial instruments
These transactions have been entered into in the normal course of business and no material losses are
anticipated other than those forwhich provision has been recognised in profit or loss. There are no
commitmentsorcontingentcommitmentsunderderivativefinancialinstrumentsthataresettledother
than in cash.
25.8.2 Notional principal
Notional principal represents the gross value of all outstanding contracts as at 31 December 2013. This
gross notional value is the sum of the absolute value of all purchases and sales of derivative instruments.
Thisamountreflectstheamountreceivableorpayableunderaderivativecontract.Thenotionalamount
represents only the measure of involvement by the bank in derivative contracts and not its exposure to
market or credit risks arising from these contracts.
25.8.3 Fair value of financial instruments
The amounts disclosed represent the fair value of all derivative financial instruments held as at 31
December2013.Thefairvalueofafinancialinstrumentisthepricethatwouldbereceivedtosellanasset
or paid to transfer a liability in an orderly transaction between market participants at the measurement
date.The fair value of a derivative financial instrument represents themarket value if the rights and
obligations arising from that instrument were closed out by the bank in normal trading conditions as at
31December2013.Fairvaluesareobtainedfromquotedmarketprices,discountedcashflowmodels,and
market-acceptedpricingmodels.Allderivativefinancialinstrumentsmatureinlessthan12months.
At 31 December 2013 the carrying amount of unlisted assets approximated their fair values.
Management’s valuation of unlisted investments is equal to the carrying value. All unlisted investments
were valued at cost at 31 December 2013. Disclosure of fair value is not provided because their fair value
cannot be reliably measured. The SAECH investment is an investment in a mutual breakeven entity that
provides transaction processing and settlement services to all the banks in Swaziland. The bank does
nothaveasignificantinfluenceoverthisinvestmentasthisisasharedserviceentityunderthecontrol
oftheCentralBankofSwaziland,theadministrator. The investment inSIDCis inanentitythatplays
theroleofafacilitatorforprivatesectorinvestmentsinSwaziland,inlinewithgovernment’spolicyof
supporting private sector development as a key factor for economic growth and employment creation.
The bank is not considering disposing of these two investments due to their nature and the unavailability
of markets. The Lilangeni Fund is a unit trust investment through African Alliance. The bank does not hold
significantpercentagesnorhavecontrolofthisinvestment.Thebankdoesnotintendtodisposeofthese
investments.
There have been no changes in valuation techniques during the year under review.
107
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opeRAtIonAl ReVIeW
25. Financial risk management (continued)
25.8.3 Fair value of financial assets and liabilities (continued)
Fair Value Hierarchy of financial instruments measured at fair value
Thebankmeasuresfairvaluesusingthefollowingfairvaluehierarchy,whichreflectsthesignificanceof
the inputs used in making the measurements.
• Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments.
• Level 2: inputs other than quoted prices included within Level 1 that are observable either directly
(i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using:
quoted market prices in active markets for similar instruments; quoted prices for identical or similar
instruments in markets that are considered less than active; or other valuation techniques in which
allsignificantinputsaredirectlyorindirectlyobservablefrommarketdata.
• Level 3: inputs that are unobservable. This category includes all instruments for which the valuation
techniqueincludesinputsnotbasedonobservabledataandtheunobservableinputshaveasignificant
effect on the instrument’s valuation. This category includes instruments that are valued based on
quotedpricesforsimilarinstrumentsforwhichsignificantunobservableadjustmentsorassumptions
arerequiredtoreflectdifferencesbetweentheinstruments.
Fairvaluesoffinancialassetsandfinancialliabilitiesthataretradedinactivemarketsarebasedonquoted
marketpricesordealerpricequotations. Forallotherfinancial instruments thebankdetermines fair
values using valuation techniques.
Thetablebelowanalysesfinancialinstrumentsmeasuredatfairvalueattheendofthereportingperiod
by the level in the fair value hierarchy in to which the fair value measurement is categorised.
level 1 level 2 level 3 total e e e e
31 December 2013
Derivative assets held for risk management – foreign exchange - 18 072 725 - 18 072 725
Investment securities
Unlisted equities - - 375 000 375 000
Government securities - 272 029 093 - 272 029 093
African Alliance unit trust - 2 115 991 - 2 115 991
Hlomendlini unit trust - 607 787 - 607 787
- 292 825 596 375 000 293 200 596
Trading liabilities
Derivative liabilities held for risk
management- foreign exchange - 12 665 773 - 12 665 773
- 12 665 773 - 12 665 773
108
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
25. Financial risk management (continued)
25.8.3 Fair value of financial assets and liabilities (continued)
level 1 level 2 level 3 total e e e e
31 December 2012
Derivative assets held for risk management – foreign exchange - 11 956 856 - 11 956 856
Investment securities
Unlisted equities - - 375 000 375 000 Government securities - 342 196 724 - 342 196 724 African Alliance unit trust - 1 670 722 - 1 670 722 Hlomendlini unit trust - 607 787 - 607 787 - 356 432 089 375 000 356 807 089
Trading liabilities
Derivative liabilities held for risk management- foreign exchange - 9 846 206 - 9 846 206 - 9 846 206 - 9 846 206
There were no movements (transfers) in Level 3 and as such a reconciliation has not been included.
Financial instruments not measured at fair value
Thefollowingtablesetsoutthefairvaluesoffinancialinstrumentsnotmeasuredatfairvalueandanalyses
them by the level in the fair value hierarchy into which each fair value measurement is categorised.
total total carrying level 1 level 2 level 3 fair value amounts e’000 e’000 e’000 e’000 e’000
assets
Cash and cash equivalents - 233 785 - 233 785 192 133 Loan and advances to customers - 2 294 974 - 2 294 974 2 294 974 Amount due from other banks - 6 645 - 6 645 6 645 Other receivables - - 22 260 22 260 22 260 - 2 535 404 22 260 2 557 664 2 516 012
liabilities
Deposits from customers - 1 993 618 - 1 993 618 1 971 466 Deposits from banks - 5 216 - 5 216 5 216 Trade and other payables - 52 418 - 52 418 52 418 Funding from other banks - 380 236 - 380 236 380 236 - 2 431 488 - 2 431 488 2 409 336
Whereavailable, the fair valueof loansandadvancesandamountdue fromotherbanks, isbasedonobservablemarket transactions.Where observablemarket transactions are not available, fair value isestimatedusingvaluationmodelssuchasdiscountedcashflowtechniques.
Thefairvalueofdepositsfromcustomers,depositsfrombanksandfundingfromotherbanksisestimatedusingdiscountedcashflow techniques. The fair valueofdepositspayableondemand is theamountpayable at the reporting date.
109
ContACt DetAIlS
oVeRVIeW AnD RepoRt
AnnuAl FInAnCIAl StAteMentS
opeRAtIonAl ReVIeW
110
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
25. Financial risk management (continued)
25.8.4 Detailsofthebank’sriskmanagementstructure,policiesandmethodsaresetout innote25andthe
interest rate risk analysis is detailed in notes 25.4 and 25.9.
25.8.5 Capital management
The bank’s capital management policies have not changed from those of prior years. The bank reports
to the regulator which is the Central Bank of Swaziland (“CBS”) which monitor the banks’ capital
requirements.
In implementing current capital requirements the bank has to maintain prescribed ratios of capital to total
risk-weighted assets. The bank has complied with the externally imposed capital requirements as in prior years.
Capitalisclassifiedintotwotiersforregulatorypurposes:
TierIcapital,whichincludesordinarysharecapital,sharepremium,retainedearningsandother
regulatory adjustments.
TierIIcapital,whichincludesqualifyingsubordinatedliabilities.
The bank’s regulatory capital position at 31 December was as follows:
2013 2012
E’000 E’000
tier i Capital
Ordinary share capital 11 931 11 931
Share premium 7 952 7 952
Statutory reserves 60 820 53 205
Retained earnings 235 341 164 380
Profitfortheyear 76 145 88 805
392 189 326 273
tier ii Capital
General debt provision 21 041 17 253
Revaluation reserves 615 615
21 656 17 868
total regulatory capital 413 845 344 141
111
ContACt DetAIlS
oVeRVIeW AnD RepoRt
AnnuAl FInAnCIAl StAteMentS
opeRAtIonAl ReVIeW
25. Financial risk management (continued)
25.8.5 Capital management (continued)
2013 2012
E E
risk weighted assets
CBS calculated total 2 222 660 1 724 123
capital ratios
Total capital as % of total risk weighted assets
CBS 18.5% 21.0%
Total tier 1 as % of risk weighted assets
CBS 17.6% 19.8%
25
F
inan
cial
ris
k m
anag
emen
t (c
onti
nued
)
25.9
Re
pric
ing
anal
ysis
of
asse
ts a
nd li
abili
ties
Cal
l and
2
3 4
- 6
7 -
9 10
- 1
2 O
ver
12
No
n-ra
te
1 m
ont
h m
ont
hs
mo
nths
m
ont
hs
mo
nths
m
ont
hs
mo
nths
se
nsit
ive
tota
l
2013
e’
000
e’00
0 e’
000
e’00
0 e’
000
e’00
0 e’
000
e’00
0 e’
000
a
sset
s
Cas
h an
d sh
ort
term
fun
ds
25 7
88
- -
- -
- -
164
703
190
491
O
ther
sho
rt-t
erm
fun
ds
- -
- -
- -
- 43
294
43
294
G
over
nmen
t an
d pu
blic
sec
tor
secu
ritie
s 35
195
24
717
12
0 28
0 91
837
-
- -
- 27
2 02
9
Adv
ance
s an
d ot
her
acco
unts
- o
verd
raft
s 10
0 48
7 -
- -
- -
- -
100
487
-
mor
tgag
es
426
721
29
- -
17
- 41
760
-
468
527
-
oth
er
1 72
3 45
4 -
- -
- -
- 2
506
1 72
5 96
0
Gro
up c
ompa
nies
11
2 -
- -
- -
- 1
529
1 64
1
Inve
stm
ents
-
- -
- -
- -
2 49
1 2
491
Pr
oper
ty a
nd e
quip
men
t -
- -
- -
- -
22 1
26
22 1
26
Der
ivat
ive
asse
t -
- -
- -
- -
18 0
73
18 0
73
To
tal a
sset
s 2
311
757
24 7
46
120
280
91 8
37
17
- 41
760
25
4 72
2 2
845
119
li
abili
ties
and
sha
reho
lder
s’ f
unds
Cur
rent
acc
ount
s -
- -
- -
- -
570
328
570
328
C
all a
nd d
eman
d de
posi
t ac
coun
ts
755
908
- -
- -
- -
- 75
5 90
8
Savi
ngs
depo
sits
17
9 78
5 -
- -
- -
- -
179
785
G
roup
com
pani
es
380
203
- -
- -
- -
33
380
236
O
ther
dep
osit
s an
d lia
bilit
ies
225
830
15 2
99
26 1
08
21 9
05
42 7
23
127
824
750
84 1
87
544
626
D
eriv
ativ
e lia
bilit
ies
- -
- -
- -
- 1
2 66
6 12
666
Sh
areh
olde
rs’ f
unds
-
- -
- -
- -
401
570
401
570
To
tal l
iabi
litie
s an
d sh
areh
olde
rs’ f
unds
1
541
726
15 2
99
26 1
08
21 9
05
42 7
23
127
824
750
1 06
8 78
4 2
845
119
In
tere
st ra
te s
ensi
tivi
ty g
ap
770
031
9 44
7 94
172
69
932
(4
2 70
6)
(127
824
) 41
010
(8
14 0
65)
-
Cum
ulat
ive
gap
770
031
779
478
873
650
943
582
900
876
773
052
814
065
- -
112
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
Cal
l and
2
3 4
- 6
7 -
9 10
- 1
2 O
ver
12
No
n-ra
te
1 m
ont
h m
ont
hs
mo
nths
m
ont
hs
mo
nths
m
ont
hs
mo
nths
se
nsit
ive
tota
l20
12
e’00
0 e’
000
e’00
0 e’
000
e’00
0 e’
000
e’00
0 e’
000
e’00
0
ass
ets
Cas
h an
d sh
ort
term
fun
ds
104
708
- -
- -
- -
187
375
292
083
Oth
er s
hort
-ter
m f
unds
-
- -
- -
- -
44 1
72
44 1
72G
over
nmen
t an
d pu
blic
sec
tor
secu
ritie
s 34
956
10
7 73
9 19
9 50
2 -
- -
- -
342
197
Adv
ance
s an
d ot
her
acco
unts
-
ove
rdra
fts
100
823
- -
- -
- -
- 10
0 82
3-
mor
tgag
es
353
678
- -
- -
- 34
655
-
388
333
- o
ther
1
295
857
- -
- -
- -
7 65
7 1
303
514
Gro
up c
ompa
nies
49
377
-
- -
- -
- 1
533
50 9
10In
vest
men
ts
- -
- -
- -
- 2
046
2 04
6Pr
oper
ty a
nd e
quip
men
t -
- -
- -
- -
16 3
63
16 3
63D
eriv
ativ
e as
sets
-
- -
- -
- -
11 9
57
11 9
57
Tot
al a
sset
s 1
939
399
107
739
199
502
- -
- 34
655
27
1 10
3 2
552
398
lia
bilit
ies
and
shar
eho
lder
s’ f
unds
C
urre
nt a
ccou
nts
- -
- -
- -
- 53
3 55
2 53
3 55
2C
all a
nd d
eman
d de
posi
t ac
coun
ts
826
743
- -
- -
- -
- 82
6 74
3Sa
ving
s de
posi
ts
146
913
- -
- -
- -
- 14
6 91
3G
roup
com
pani
es
1 47
2 -
- -
- -
- 38
1
510
Oth
er d
epos
its
and
liabi
litie
s 42
559
10
408
9
740
215
072
40 7
61
156
224
207
223
209
698
180
Der
ivat
ive
liabi
litie
s -
- -
- -
- -
9 84
6 9
846
Shar
ehol
ders
’ fun
ds
- -
- -
- -
- 33
5 65
4 33
5 65
4
Tot
al li
abili
ties
and
sha
reho
lder
s’ f
unds
1
017
687
10 4
08
9 74
0 21
5 07
2 40
761
15
6 22
4 20
7 1
102
299
2 55
2 39
8
Inte
rest
rate
sen
siti
vity
gap
92
1 71
2 97
331
18
9 76
2 (2
15 0
72)
(40
761)
(15
6 22
4)
34 4
48
(831
196
) -
Cum
ulat
ive
gap
921
712
1 01
9 04
3 1
208
805
993
733
952
972
796
748
831
196
- -
25.
Fina
ncia
l ris
k m
anag
emen
t (c
onti
nued
)25
.9
Repr
icin
g an
alys
is o
f ass
ets
and
liabi
litie
s (c
onti
nued
)
113
ContACt DetAIlS
oVeRVIeW AnD RepoRt
AnnuAl FInAnCIAl StAteMentS
opeRAtIonAl ReVIeW
114
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
26. Related parties
Related parties comprise the Nedbank Group Limited group of companies.
2013 2012
E’000 E’000
26.1 amounts due to/by holding company and fellow subsidiaries
Amounts due by holding company and fellow subsidiaries
Nedbank Lesotho Limited (fellow subsidiary) 680 728
Nedbank Limited (parent - included in Note 5) 961 50 182
1 641 50 910
Amounts due to holding company and fellow subsidiaries
Nedbank London Limited (fellow subsidiary) 33 38
Nedbank Limited (parent) 380 203 1 472
380 236 1 510
Transactions with related companies are on an arm’s length basis
andthetermsandconditionsarereflectedintherelevantnote.
26.2 Related party transactions
Funds are invested with and by correspondent banks (within the
group) and interest at commercial rates has been (received)
and paid as follows:
Interest received – Nedbank Limited (parent) 3 118 4 659
Service charge – Nedbank Lesotho Limited (fellow subsidiary) 7 7
Interest paid – Nedbank Limited (parent) 173 15 172
Included in other operating expenses are the following amounts
paid to the parent company
Management fees paid 27 378 23 963
Computer support 657 1 038
Group insurance 1 382 985
Risk participating fee 2 284 1 946
No impairments have been recognised for loans granted to fellow related entities.
26. Related parties (continued)
transactions with key management personnel
Keymanagementpersonnelarethosewhohaveauthorityandresponsibilityforplanning,directingand
controllingtheactivitiesofthebank,directlyorindirectly,includingalldirectorsofthecompanyaswell
as close members of the family of any of these individuals.
Transactionswithkeymanagementpersonnelincludesalaries,bonusesandloans.
Compensationpaidtotheboardofdirectorsandcompensationpaidtootherkeymanagementpersonnel,
aswellasshared-basedpaymenttransactions,isshownbelow:
Compensation
key management directors personnel total e e e
2013
Directors’ fees 426 352 - 426 352
Remuneration 1 104 029 4 292 523 5 396 552
Shorttermemployeebenefits 958 430 3 726 425 4 684 855
Share based payments - - -
Postemploymentbenefits 145 599 566 098 711 697
1 530 381 4 292 523 5 822 904
key management directors personnel total e e e
2012
Directors’ fees 267 933 - 267 933
Remuneration 994 371 5 094 104 6 088 475
Shorttermemployeebenefits 840553 4195494 5036047
Share based payments 26 126 261 254 287 380
Postemploymentbenefits 127692 637356 765048
1 262 304 5 094 104 6 356 408
115
ContACt DetAIlS
oVeRVIeW AnD RepoRt
AnnuAl FInAnCIAl StAteMentS
opeRAtIonAl ReVIeW
2013 2012
E E
26. Related parties (continued)
26.3 transactions with key management personnel (continued)
Number of restricted shares and share options
Restricted Shares
Outstanding at the beginning of the year 41 177 41 177
Granted - -
Forfeited - -
Outstanding at year end 41 177 41 177
Share Options
Outstanding at the beginning of the year 164 706 164 706
Granted - -
Forfeited - -
Outstanding at year end 164 706 164 706
e’000 E’000
loans to key personnel
Mortgage lending and other secured loans 7 031 7 148
Other loans 843 1 401
7 874 8 549
No impairments has been recognised for loans granted to key management. These loans are repayable monthly over a period of 20 years for mortgages and these loans are collaterised by the properties that werefinanced.Interestischargedatanarm’slengthrate.
26.3 Related party contingent liabilities and commitments
There were no guarantees issued in favour of the holding company (2012: Nil). Forward foreign currency exchange contracts are entered into with the holding company – refer to note 25.8.
27. Operating segments Thedirectorsofthebankhavedeterminedthattheyoperatethebankandreportasonlyonesegment,
both in terms of business and geography after taking into consideration the internal organisational and management structure, the system of internal financial reporting, the services/products offered, themarketsandcustomers.Assuch,nosegmentreportingisnecessary.
Allrevenuesarefromnumerouscustomersthatarenotsignificantwhenconsideredindividuallyandwhoare based in Swaziland. All non-current assets of the bank are in Swaziland.
116
NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs to tHE FINANcIAL stAtEmENts (ContInueD)
for the year ended 31 December 2013
aNNUal GeNeRal meetiNG
NOtiCe tO SHaReHOldeRS
Notice is hereby given that the 39th Annual General Meeting of the members of Nedbank (Swaziland) Limited will
beheldonWednesday28May,2014intheLibandlaRoomatRoyalSwaziSun,OldMbabane/ManziniMainRoad,
Ezulwini at 14h15 hours to transact the following business:-
1. To approve the Minutes of the Annual General Meeting held on 22 May 2013.
2. To receive, considerandadopt theAnnualfinancialStatements for theyearended31December2013,
together with the Reports of the Directors and Auditors thereon.
3. InordertocomplywithSection20(1)oftheFinancialInstitutionsAct,2005SZL7614531tobetransferred
toaStatutoryReserveAccountbeinganamountnotlessthan10%ofthenetprofitfortheperiod.
4. To note and confirm thefinal dividendof 100 cents per share for the year ended31December 2013,
declaredon12March2014,paidtomemberson28May2014.
5. To appoint Independent Auditors for the ensuing year and to authorise directors to determine the
remunerationofthecompany’sauditorsandfixtheremunerationoftheAuditorsforthepastyear.
6. InaccordancewithArticle100oftheArticlesofAssociation,Messrs.M.HillieandA.duPlessisretireas
Directors and being willing and eligible offer themselves for re-election.
7. TonoteandconfirmtheremunerationpaidtoDirectorsforthepastfinancialyear.
by Order of the board
P. GwebU
Company Secretary
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ANNuAL GENErAL mEEtING
deFiNitiONS
atm
Automated tellermachine.Acashmachineor free-standingdevicedispensingcash,whichmayalsoprovide
otherinformationorservicestoclientswhohaveacardandapersonalidentificationnumber,passwordorother
personalidentification.
baSel CaPital aCCORd (baSel ii)
The new Basel Capital Accord (Basel II) of the Bank for International Settlements is an improved capital adequacy
framework accomplished by closely aligning banks’ capital requirements with improved modern risk management
practices and sophisticated risk assessment capabilities. It further ensures the risk sensitivity of the minimum
capital requirements by including supervisory reviews and market discipline through enhanced disclosure.
CaPital adeQUeCY RatiO (CaR)
The capital adequacy of South African banks is measured in terms of the South African Banks Act requirements.
Theratioiscalculatedbydividingtheprimary(Tier1),secondary(Tier2)andtertiary(Tier3)capitalbythe
risk-weighted assets.
CaPital RiSk
The risk that the group will become unable to absorb losses, maintain public confidence and support the
competitivegrowthofthebusiness.Thisentailsensuringthatopportunitiescanbeactedontimeously,while
solvency is never threatened.
CaSHFlOw
Financing activities
Activities that result in changes to the capital and liability structure of the bank.
investment activities
Activitiesrelatingtotheacquisition,holdinganddisposalofsubsidiaries,propertyandequipmentandlong-term
investments.
Operating activities
Activitiesthatarenotfinancingorinvestingactivitiesandthatarisefromtheoperationsconductedbythebank.
COmPliaNCe RiSk
Therisktoearningsandcapitalarisingfromviolationsofornon-compliancewithlaws,rulesandregulations,as
wellasinternalbankpoliciesandauthoritylevels,prescribedpracticesandethicalstandards.
CRedit RiSk
The risk to earnings and capital arising from the probability of borrowers and counterparties failing to meet their
repaymentcommitments,(includingaccruedinterest).Creditconcentrationriskarisesonaportfoliobasiswhere
thebankhassignificantaggregatedexposurestoparticularcreditsegments,
sectors of industry or other portfolio.
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DEFINItIoNs
deFeRRed taXatiON aSSetS
Deferred taxation assets are the amounts of income taxation recoverable in future years in respect of:
• Deductible temporary differences arising from differences between the taxation and accounting treatment
of transactions; and
• the carry-forward of unused taxation transactions.
deFeRRed taXatiON liabilitieS
Deferred taxation liabilities are the amounts of income taxation payable in future years as a result of differences
between the taxation and accounting treatment of transactions.
diVideNd deClaRed PeR SHaRe
Dividendpershareistheactualinterimdividendpaid/capitalisationawardissuedandthefinaldividend/
capitalisationawarddeclaredfortheyearunderconsideration,expressedincents.
eaRNiNGS PeR SHaRe (ePS)
Basic earnings basis
Income attributable to equity holders for the year divided by the weighted average number of ordinary shares in
issue (net of shares held by bank entities) during the year.
Headline earnings basis
Headline earnings divided by the weighted average number of shares in issue (net of shares held by bank entities)
during the year.
eFFiCieNCY RatiO (COSt-tO-iNCOme RatiO)
Total operating expenses (excluding indirect taxation) as a percentage of total income from normal operations
(net interest income plus non-interest revenue).
eNteRPRiSe-wide RiSk
Allrisktypesandcategoriesacrossallbusinesslines,functions,geographicallocationsandlegalentitiesofthe
bank collectively known as its ‘risk universe’.
eRCO
Enterprisewide Risk Committee.
eRmF
Enterprisewide Risk Management Framework.
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deFiNitiONS - continued
eXPeNSeS tO aVeRaGe aSSetS
Operating expenses for the year divided by average total assets.
GROSS dOmeStiC PROdUCt (GdP)
Thetotalmarketvalueofthegoodsandservicesproducedbyacountry’seconomyduringaspecificperiodof
time.
HeadliNe eaRNiNGS
Headlineearningsdonotmeasuremaintainableearnings.Forpurposesofdefinitionandcalculationtheguidance
givenonheadlineearnings,asissuedbytheSouthAfricanInstituteofCharteredAccountantsincircular07/02of
December2002,hasbeenused.Headlineearningsconsistoftheearningsattributabletoordinaryshareholders,
excluding non-trading and capital items.
HedGe
Ariskmanagementtechniqueusedtoinsulatefinancialresultsfrommarket,interestrateofforeigncurrency
exchange risk (exposure) arising from normal banking operations. The elimination or deduction of such exposure
isaccomplishedbyestablishingoffsettingpositions.Forexample,assetsdenominatedinforeigncurrenciescan
be offset against liabilities in the same currencies or through the use of foreign exchange hedging instruments
suchasfutures,optionsorforeignexchangecontracts.
iFRS
InternationalFinancialReportingStandards,asadoptedbytheInternationalAccountingStandardsBoard,(IASB),
and interpretations issued by the International Reporting Interpretations Committee (IFRIC) of the IASB. Nedbank
Group’sconsolidatedfinancialstatementsarepreparedinaccordancewith(IFRS).
imPaiRemeNt OF lOaNS aNd adVaNCeS
Impairment of loans and advances arises where there is objective evidence that the bannk will not be able
to collect an amount due. The impairment is the difference between the carrying amount and the estimated
recoverable amount.
iNteReSt Rate RiSk
Interest rate risk in the banking book is the risk that a bank’s earnings or economic value will decline as a result
ofchangesofbankassets,liabilitiesandoff-balance-sheetpositions;
• basisrisk-imperfectcorrelationintheadjustmentoftheratesearnedandpaidondifferentinstrumentswith
otherwise similar repricing characteristics;
• yieldcurveriskchangesintheshapeandslopeoftheyieldcurve;and
• embedded-optionsrisk–pertainingtointerest-relatedoptionsembeddedinbankproducts.
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DEFINItIoNs (ContInueD)
kiNG iii (tHe COde)
TheKingReportonCorporateGovernance2002,whichsetsoutprinciplesofgoodcorporategovernance for
companies and organisations.
maRket RiSk
Market risk is the potential impact on earnings of unfavourable changes in foreign exchange rates, interest
rates,prices,marketvolatilitiesandliquidity.Marketriskincludestradingriskand,intermsofthebankingbook,
derivativeinstrumentsusedforhedgingriskinnon-tradingportfolios,investmentrisk,translationriskandinterest
rate risk. Investment risk arises from changes in the fair value of investments and includes private equity and
property as well as strategic investments.
NON-iNteReSt ReVeNUe tO tOtal iNCOme
Incomefromnormaloperations,excludingnetinterest,asapercentageoftotalincomefromnormaloperations.
OPeRatiONal RiSk
Therisklossresultingfrominadequateorfailedinternalprocessesandsystems,incompetentpeopleorexternal
events.Thisdefinitionincludeslegalrisk.
ORdiNaRY SHaReHOldeRS’ FUNdS
Total equity attributable to equity holders of the parent.
PeRFORmiNG adVaNCeS
Loans and advances on which all instalments have been paid to date.
RetURN ON tOtal aSSetS
Headline earnings expressed as a percentage of average total assets.
RetURN ON ORdiNaRY SHaReHOldeRS’ eQUitY (ROe)
Headline earnings expressed as a percentage of average equity attributable to equity holders of the parent.
StRateGiC RiSk
Strategic risk relates to the consequences that arise when the environment in which decisions that are hard
to implement quickly and to reverse has an unattractive or adverse impact. Strategic risk ultimately has two
elements; doing the right thing at the right time; and doing it well.
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NedbaNk (SwazilaNd) limited AnnuAl RepoRt 2013
NotEs
Designed by Sibane Icons.
Head OFFiCeNedCentre Building
Cnr. Dr. Sishayi & Sozisa Roads
P.O.Box68,Mbabane
Tel: +268-2408 1000
Fax: +268-2404 4060
Website: www.nedbank.co.sz
MBABANE BRANCHCorporatePlace,SwaziPlaza
P.O.Box70,Mbabane
Tel: +268- 2408 1000
Fax: +268- 2404 3049
GWAMILE STREET BRANCH21 Gwamile Street
P.O.Box70,Mbabane
Tel: +268-2404 8249
Fax: +268-2404 9132
THE GABLESTheGablesShoppingCentre,Ezulwini
P.O.Box70,Mbabane
Tel: +268-2416 3458
Fax: +268-2416 3476
MATSAPHA BRANCHBig Tree Shopping Centre
P.O.Box325,Matsapha
Tel: +268-2518 5554
Fax:+268-2518 5727
MANZINI BRANCHCnr. Nkoseluhlaza & Louw Streets
P.O.Box11,Manzini
Tel: +268-2505 2441/3
Fax: +268-2505 2059
RIVERSTONE BRANCHRiverstone Mall
Shop No.1.1
P.O.Box11,Manzini
Tel: +268-2505 3166
Fax: +268-2505 3412
SIMUNYE BRANCHSimunyePlaza,Simunye
c/oP.O.Box325,Matsapha
Tel: +268-2383 8361/2
Fax:+268-2383 8361/2
MANKAYANE AGENCYThuthuka Shopping Centre
Mankayane
Tel: +268-2538 8209
NHLANGANO BRANCHSNPF Building
Skonkwane Street
P.O.Box1352,Nhlangano
Tel: +268-2207 7733/5
Fax: +268-2207 7758
BIG BEND BRANCHPlot1,SchiollaComplex
P.O.Box45,BigBend
Tel: +268-2363 6994/5
Fax: +268-2363 6993
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CONtaCt detailS
www.nedbank.co.sz