Standard Chartered Bank Plc 2018 Annual Report

We have extracted below the Chairman’s Statement from the 2018 annual report of Standard Charted Bank Plc (, listed on Lusaka Securities Exchange:

Last year, in my inaugural statement as Chairman of Standard Chartered Bank Zambia Plc, I highlighted our core responsibility to uphold the strength of our franchise and engage deeply and frequently with both our internal and external stakeholders so that we continuously sharpen the execution of our strategy and meet our set corporate objectives. This is key to securing long term resilience and remaining true to our brand promise ‘Here for good.’

As Board Chairman, I will continue to interact with my fellow Board members and the Executive Management Team in pursuit of our growth aspirations anchored on sound corporate governance principles. We are optimistic about the opportunities in the market and we will be vigilant and proactive in managing the associated risks. We remain a truly global bank firmly committed to the Zambian market. We will continue to leverage our formidable global network, uniquely diverse talent pool and world class solutions to consistently deliver value to our internal and external stakeholders. Financial Highlights Standard Chartered Bank Zambia Plc continued to be a major key player, as demonstrated by the profitability in the year and the continued growth of our balance sheet. Returns on shareholders’ investments closed off at 38 per cent in 2018, compared to 33 per cent in 2017. This was attributable to growth in revenue. Costs increased by 9 per cent owing to the redundancy provisions booked in 2018, in as a result of the Delivery Channel Optimisation Plan announced in November 2017. The Bank is in the process of rationalising our Retail branch network, and merging the Global Banking and Commercial Banking units and related processing functions. Impairments increased by 36 per cent due to the adoption of IFRS 9 in 2018.

Risk Governance

Risk Management is a core part of the financial and operational management of the Bank. Therefore, Risk Management is essential to consistent and sustainable performance for all of our stakeholders. In 2018, we introduced our new Enterprise Risk Management Framework (ERMF). The new ERMF significantly enhanced our Risk Management approach; in particular, around risk culture, control framework, strategic risk management and Principal Risk Types (PRTs). All risk types, both financial and non-financial, inherent in our business model and strategy are managed and reported in accordance with the ERMF. Through our well-established risk governance structure and risk management framework, it is imperative that we closely manage our risks with the objective of maximising risk adjusted returns, whilst remaining in compliance with the Risk Appetite Statement and regulations. As a Bank, we manage uncertainties through a framework that provides a forward-looking view of the economic, business and credit conditions across the Bank’s products and client segments, enabling us to pro-actively manage our portfolio. The Bank’s portfolio is well diversified across industry sectors, client segments and product offerings. We remain well capitalised and open for business.

Economic Outlook

In 2018, Gross Domestic Product (GDP) growth continued on a positive trajectory, with preliminary data indicating a growth rate of 4 per cent. This was driven largely by positive performance in mining, manufacturing and construction, as well as a stable supply of electricity. Meanwhile, headwinds included under-performance of the agriculture sector, weak credit growth in the private sector, and continued elevation in non-performing loans. Preliminary numbers show that the fiscaldeficit was at 7 per cent of GDP, whilst the trade deficit from January to November 2018 widened to ZMW11.3 billion, from ZMW6.3 billion in the same period in 2017. Average inflation was contained within the 6 per cent to 8 per cent target range for the year, closing at 7.9 per cent in December 2018. Inflation in October was above the target at 8.3 per cent, triggered by depreciation of the Kwacha against tradable currencies, and the pass- through effect of the domestic fuel price adjustment. The Kwacha was relatively stable in 2018, against major tradable currencies most part of the year. The Kwacha traded at an average of ZMW10.47 per United States Dollar (USD) during 2018, from an average of ZMW9.55 per USD during 2017. The relatively high global copper price averaging US$ 6,598 per tonne coupled with demand provided impetus for copper production. Coppe