NMBZ Holdings Annual Report 2023

Plain-text annual report

1 NMBZ Holdings Limited ANNUAL REPORT 2023 Tribe28ANNUAL REPORT 20232 CONTENTS ABOUT US OUR HISTORY PRODUCTS & SERVICES NMB BANK BRANCHES & AGENCY NETWORK CHAIRMAN’S STATEMENT CHIEF EXECUTIVE OFFICER’S STATEMENT CORPORATE GOVERNANCE STATEMENT FINANCIAL SUMMARY INDEPENDENT AUDITOR’S REPORT CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS HISTORICAL FIVE YEAR FINANCIAL SUMMARY NOTICE TO MEMBERS 1 2 4 5 6 8 10 19 20 26 27 29 31 33 94 97 1 ABOUT US Who We Are NMBZ Holdings Limited (NMBZ) is a Zimbabwe based investment holding company involved in Banking, Microfinance, Real Estate, Customised Technology Services and Bancassurance. The holding company is listed on the Zimbabwe Stock Exchange. Our Vision • Excellence: Our Excellence is intentional and reflects our unyielding passion and unfaltering commitment to strive to provide outstanding products and unsurpassed service that delivers premium value to our customers. • Loyal and Dedicated Staff: We value, recognise, celebrate and reward our teams’ passion and commitment to the NMB vision. To be the leading financial services group in our chosen markets. • Our Mission To provide premium financial services to high net worth individuals and businesses, and uniquely branded technology enabled products to SMEs and the broader market. Our Values • Professionalism: We believe in being accountable to an exceptional standard of excellence and performance, exhibiting expertise and flair in our work. • Integrity: We are a people defined by integrity, uprightness, principles, ethics, virtue, decency, fairness, sincerity, truthfulness and trustworthiness. Innovation: We strive to understand our customers’ needs, embrace constant change in our industry, challenge the status quo, adapt and meet those needs through creativity and new technology. • Shareholder Value: When we leverage all our core values we drive revenue and profit generation. • Partnerships: Our Employees are partners in building NMB to be the most respected financial services provider across all customer segments. We relate to our Customers as partners. We develop strong relationships based on mutual trust and respect as we take care of their finances. We actively solicit their input into our financial solutions, products and services. SUBSIDIARIES N M B B A N K L I M I T E D P R O P ER T I E S NMB Bank Limited NMB Properties Limited XPlug Solutions Limited NMB Bank Limited is a registered commercial bank and the principal subsidiary of NMBZ, established in October 1992. NMB Properties Limited is a property development and services company established in 2023. custom made Xplug Solutions Limited is a provider technology of solutions across financial services sector and beyond. the Tribe28ANNUAL REPORT 2023 2 OUR HISTORY Established in October 1992 as the National Merchant Bank of Zimbabwe, NMB Bank Limited is a registered commercial bank and a subsidiary of NMBZ Holdings. Opening its doors on the 1st of June 1993, NMB Bank was founded by a group of Zimbabwean entrepreneurs who had previously held senior positions in reputable international financial institutions such as the World Bank and the International Finance Corporation. 1993 National Merchant Bank of Zimbabwe is born with key differentiators being innovation and customer service excellence differentiating NMB from competitors. Became the largest merchant bank in Zimbabwe within the first 18 months of operating. 1997 The Group had a dual listing on the Zimbabwe Stock Exchange and the London Stock Exchange. In Zimbabwe, shares were oversubscribed 4.5 times whilst in London the over-subscription was 2.5 times. 2000 The Bank underwent its first domain transition to become a Commercial Bank concentrating on the high-net worth niche market. 2010 African Century Financial Services Investments, an investment partnership based in the United Kingdom, becomes a shareholder in the bank holding 19% shareholding. 2013 In 2013 ARISE (Norfund, FMO, Rabobank) became investors into NMBZ Holdings acquiring an 18% stake. 2015 The Bank evolved to capture SME’s and the broader market through digitally enabled platforms. 2020 Transition into a Digital Bank NMBConnect NMBConnect Online *241# Virtual Branch Services Self Services Portal Loan Automation • • • • • • • 2023 • • • • Partnered with ZimPost to become the widest agency banking distribution in Zimbabwe accessible across more than 100 branches. Launched XPlug Solutions Limited Launched NMB Properties Limited Launched NMB Microfinance Division Tribe28ANNUAL REPORT 20233 OUR AWARDS DIGITAL INNOVATION AWARD Banks and Banking Survey Awards, 2023 OUTSTANDING CONTRIBUTION TO CHILDREN EDUCATION SUPPORT & COMMUNITY EMPOWEREMENT Zimbabwe National ESG & CSR Achievement Awards, 2023 OVERALL BEST PERFORMING 2ND RUNNER-UP OVERALL BANK BANK OF THE YEAR Banks and Banking Survey AMH Banks and Banking Survey Awards, 2022 Awards, 2019 BEST INNOVATION OF THE YEAR PEOPLE’S CHOICE AWARD MAZ Exceptional Marketing AMH Banks and Banking Survey Awards, 2019 Awards, 2018 BEST BANKING CORPORATE FINANCIAL INSTITUTION OF THE GOVERNANCE 2018 YEAR NCC Awards, 2015 BEST BANK SUPPORTING SMES 2014 BEST BANKING CORPORATE GOVERNANCE 2014 BEST BANK IN ZIMBABWE Financial Times Banker Magazine, 2002 & 2001 WON EURO MONEY BEST BANK IN ZIMBABWE 1999 & 1998 4 PRODUCTS & SERVICES NMBZ Holdings Limited through its subsidiaries, offers a wide array of products to individuals, companies, non-governmental organisations and other institutional clients. Customised Technology Services • Software Development • Cybersecurity Services • Robotic Process Automations • Training & Consulting Treasury and International Banking • Money Market Investments • • Exchange control services. • Offshore trade finance Letters of Credit Microfinance • Working capital loans • Order Financing Business Banking • Overdrafts • Acceptance Credits • Short-Term Loans • Commodity Financing • Bank Guarantees • Trade Finance • • Project Finance • Order Finance • Bill Discounting • Structured Finance. Leasing Products Consumer Banking • Personal Current Accounts • Personal Savings Accounts • Business Current Accounts • Business Savings Accounts • Safe Custody • DSTV payments • Staff loan schemes • Equity Release Loans • MTA Services Bancassurance • Home insurance • Travel Insurance • Funeral Cover • Business Insurance • Buildings Insurance • Plant, Machinery and Content Insurance • Stock Insurance • Money insurance • All Risk Insurance • Business Interruption Insurance • Accounts Receivable Insurance • Glass insurance • Electronic equipment Insurance • Fidelity Insurance • Personal Accident Insurance • Goods in transit Insurance • Crop Insurance • Motor Traders Insurance Real Estate Services • Valuation Services • Land Development • Property Construction • Property Management • Facilities Management Tribe28ANNUAL REPORT 20235 NMB BANK BRANCHES & AGENCY NETWORK NMB Bank Limited has branches in Harare, Bulawayo, Masvingo, Kwekwe, Mutare, Gweru, Bindura, Chitungwiza, Victoria Falls and Chinhoyi. The Bank’s branch network is constantly growing to service customers and meet demands in suitable and convenient locations. Set out below are the Bank’s branch locations: Avondale - 20 King George Road, Avondale, Harare Bindura – Mwatuka Complex, Bindura Borrowdale - Shops 37 & 38, Sam Levy’s Village, Borrowdale, Harare Borrowdale Excellence Centre – NMB Head Office, 19207 Liberation Legacy Way (formerly known as Borrowdale Road), Borrowdale, Harare Bulawayo - NMB Centre, Corner George Silundika Street/Leopold Takawira Street, Bulawayo Chinhoyi – 469 Magamba Way, Chinhoyi Gweru - 36 Robert Mugabe Road, Gweru Head Office - NMB Head Office, 19207 Borrowdale Road, Borrowdale, Harare Joina City - Shop 105A, First floor, Joina City Corner Jason Moyo / Innez Terrace, Harare Kwekwe - Shop 5 First Mutual Centre, Robert Mugabe way, Kwekwe Masvingo - Stand no. 377 Robert Mugabe Way, Masvingo Msasa -77 Amby Drive, Harare Mutare - Embassy Building, Corner Aerodrome Road/Second Street, Mutare Southerton - 7 - 9 Plymouth Road, Harare Victoria Falls - 1865 Sawanga Shopping Mall, Victoria Falls The Bank’s Automated Teller Machine (ATM) network, covers the following locations: - Avondale - Harare - Borrowdale - Harare - Bulawayo - Card Centre - Harare - Chinhoyi - Eastgate - Harare - Kwekwe - Gweru - Joina City - Harare - Masvingo - Msasa - Harare - Mutare - Southerton – Harare - Victoria Falls At the beginning of 2023, the Bank entered into an agency relationship with Zimpost where customers can access selected services across over 100 branches countrywide. NMB Bank Branches FMC Finance Branches ZIMPOST Branches Tribe28ANNUAL REPORT 20236 CHAIRMAN’S STATEMENT INTRODUCTION The year 2023 saw the country hold its harmonized elections in August. There was also a number of significant policy changes as the authorities pushed to stabilise the local currency. The multi-currency regime was extended by another five years to 2030. During the period under review, the economy recorded positive growth with export earnings increasing by 10% to USD 7.2 billion. Month-on-month blended inflation closed the year at 4.7% compared to 0.1% in January 2023. On the commodities market, prices of selected minerals notably the platinum group of metals (PGMs) and diamonds plummeted resulting in export receipts declining by 9% as of Q3 2023 on account of global uncertainty and reduced aggregate demand. The Group however continued to pursue its growth strategy despite the challenges within the operating environment. Local Operating Environment The year 2023 commenced with the review of the interest rates by the monetary authorities aimed at aligning positive inflation developments to consolidate and sustain price stability and resilience of the domestic economy. The bank policy rate was reduced from 200% to 130% to align with the inflation outlook. Lending to the productive sectors including individuals was also reviewed from 100% to 70% per annum. However, in June 2023, month-on-month blended inflation peaked to a high of 74.5% compared to 0.1% in January largely on account of a huge preference for United States dollars, an increase in money supply growth and market indiscipline. In response to the adverse movements in the exchange rate and inflation, the authorities announced a cocktail of measures namely scrapping of import duty on basic commodities, removal of the 15% foreign currency surrender requirement on domestic sales, interest review to curb speculative borrowing and the foreign auction market fine-tuning. Despite the signs of resilience and recovery, the economy remained vulnerable to exchange rate pressures due to the softening of commodity prices. Global Economic Developments The global economy is forecasted to further recover from the impact of the COVID-19 pandemic, uncertainty, and low aggregate demand. However, the tightening of financial conditions in response to high levels of inflation and high debt overhang in many economies is likely to slow down global growth prospects to 2.7% in 2024. Economic Outlook The operating environment is likely to remain challenging on account of exchange rate volatility, high inflation and the El Nino-induced effects as well as softening commodity prices. Notwithstanding these challenges, the economy is expected to record growth in accommodation services, diaspora remittances and construction sectors. Group Results Financial Performance Operating income increased from ZWL 201.5 billion to ZWL 613.3 billion for the year ended 31 December 2023. This was largely driven by a significant increase in fees and commission income which increased from ZWL 73.7 billion in 2022 to ZWL 228.9 billion in 2023. The Group achieved profit after tax amounting to ZWL 275.6 billion compared to ZWL 57.7 billion for the previous year representing a growth of 378%. Basic earnings per share amounted to ZWL 67 073 cents (Dec 2022 – ZWL 14 484 cents). The macro economic challenges led to a significant increase in operating costs from ZWL 91.3 billion to ZWL 216.8 billion which was largely in response to the deteriorating exchange rate and inflation pressures. The Group continues to exploit its strength in the digitization and automation area to find ways of providing service in a cost effective manner. Financial Position The impact of inflation and exchange rate deterioration on the foreign exchange based assets saw a significant increase in assets in ZWL terms, closing the year at ZWL 1.50 trillion when compared to ZWL 650.1 billion for the previous period. The banking subsidiary accessed a line of credit from Trade and Development Bank (TDB) in 2023 which contributed to the increase in borrowings from ZWL 102 billion to ZWL 263.3 billion. Loans and advances stood at ZWL 494.5 billion as at 31 December 2023, growing by 122.3% on the back of credit line drawdowns. The NPL ratio stood at 1.11% reflecting the banking subsidiary’s prudent lending processes. The Bank maintained a sound liquidity position throughout the year and was consistently above the statutory minimum of 30%. Capital and leverage The capital adequacy ratio of the banking subsidiary remained strong at 35% compared to a regulatory minimum of 12%. The banking subsidiary was adequately capitalised to cover all risks and was compliant with the minimum capital requirement of USD 30 million. Subsequent to year end, the Group received approval for a USD 15 million guarantee facility from the African Development Bank. This facility will assist our clients who need international trade financing. SUSTAINABILITY NMBZ Holdings considers sustainability as a core element of its business strategy. In the year under review, we consolidated our sustainability practices and strengthened our reporting capabilities. The Board undertook deliberate actions to provide guidance on the emerging sustainability issues. We embarked on a company-wide Environmental, Social and Governance (ESG) training and capacity building programme aimed at equipping all employees on the implementation of ESG in line with International Finance Corporation Performance Standards (IFC PS). A total of 338 members of staff were trained on ESG. The Board and Executive management also participated in the training. Further, our Board and Executive Management received training under the Oxford Leading Sustainable Corporations (OLSC) initiative. Our people remain a priority in all activities that we undertake. In the year 2023, we continued to provide fair remuneration, medical support through a medical aid scheme and other measures aimed at motivating our staff. Our renewed focus on wellness transcends beyond the mere absence of injury and disease, but is inclusive of all elements of human well-being including the facet of mental health. Looking ahead, the Board is committed to mainstreaming ESG in all aspects of the Group’s operations and continually improving sustainability practices. We shall continue to prioritise compliance and meeting regulatory requirements in addition to stakeholder requirements. We will continue to uphold ethics and governance at all levels of the organisation. Tribe28ANNUAL REPORT 20237 DIVIDEND An interim dividend of ZWL 556 cents a share was declared as at 30 June 2023 and paid out subsequent to that date. As at the end of the year, the Group declared a final dividend of ZWL 4 101 cents per share on 20 March 2024. In light of the current macroeconomic environment this dividend will be paid in United States Dollars as USD 0.21 cents per share. A detailed notice to shareholders was issued on 3 April 2024. DIRECTORATE Mr. Ben Chikwanha retired as at 31 December 2023 and I took over from him as Chairman while Mrs. Emilia Chisango was appointed deputy Chairperson of the Board. We thank Mr. Chikwanha for his sterling leadership of the Board since 2013 and wish him well in his future endeavours. I look forward to a fruitful and successful tenure as Board Chairman for NMBZ Holdings Limited. OUTLOOK The Group will focus on disciplined execution of its strategy which is anchored on broadening the Group structure and diversifying sources of income. The Group will leverage on technology to deliver robust digital platforms and effectively deliver convenient financial solutions to its customers. Raising of credit lines remains a key focus area as we continue to fund export oriented productive sectors of the economy as part of our drive to support the growth of the Zimbabwean economy. The Group is considering the acquisition of a complementary business and processes are underway. Stakeholders will be updated on the progress of this strategic initiative which if concluded, may have a material effect on the company’s securities. APPRECIATION On behalf of the Board, I wish to thank our valued clients, funding partners, shareholders, regulatory authorities and other key stakeholders for their continued support. My gratitude also goes to my fellow board members, management and staff for their continued diligence, dedication and resilience in the face of a challenging operating environment. MR. P. GOWERO CHAIRMAN 20 March 2024 Tribe28ANNUAL REPORT 20238 CHIEF EXECUTIVE OFFICER’S STATEMENT INTRODUCTION In the year 2023, the Group’s diversification thrust gathered momentum as we setup new verticals and strengthened the banking business. The Group established two new subsidiaries, namely NMB Properties Limited, a property company and XPlug Solutions Limited, a technology company during the year under review. The Banking subsidiary, on the other side diversified its revenue by setting up a MicroFinance Division. We intensified our focus on the core banking business and support for the productive sectors of the economy. We accessed two additional lines of credit to complement our support to the productive sector of the economy. Riding on our robust digital platforms, we managed to offer seamless transacting capabilities to our customers which is further supported by our Agency Network. Over 91% of accounts are now being opened via our Digital Platforms with no human intervention. The other strategic focus areas in 2023 included digitalisation, partnerships, sustainability, value chain, customer experience and shareholder value. On the macro-economic front, the year started off well with stable interest rates until about April when some turbulence started to set in. Towards the end of the half year period, the exchange rate deteriorated rapidly, breaching the ZWL 7,000 mark to the USD. However, timely interventions by the authorities including tightening money supply saw the exchange rate retreating to levels below ZWL 5,000 and remaining relatively stable until the end of the year. According to the World Bank, economic growth is projected to slow down to 2.7% in 2024, a decrease from 4.5% in 2023 due to depressed global growth and low agricultural output as a result of the predicted erratic and below-average rainfall caused by the El Niño weather pattern. PERFORMANCE REVIEW The Group achieved total comprehensive income of ZWL 327.6 billion, which was a 444% increase compared to ZWL 60.3 billion for the previous year. Fees and commission income grew by 210% and was largely earned through our various digital platforms. Cost to income ratio was 35%, down from 45% the previous period. The deterioration in the exchange rate as well as inflationary pressures continue to push the cost of doing business upwards and we continue to mitigate this through continued focus on digitalisation, automation of processes and improved efficiencies. Given the macroeconomic environment, the Group continued to forge ahead with value preservation strategies and focus on hard currency income streams. BUSINESS REVIEW NMB BANK LIMITED The banking subsidiary continued to make inroads into new markets and cementing relationships with existing clients through the following main business units: Digital Banking The Bank continues to pursue a digital bank model with digitalisation of both front-end and back-end processes. The digital banking platforms now account for the bulk of the bank’s non-funded income. We progressed well in building the foundation for a strong digital ecosystem, an activity which will remain a focus area for the foreseeable future. In the year 2023, ZWL 1.3 trillion worth of transactions were realised on our mobile banking platform compared to ZWL 19.9 billion in the previous year. Internet banking and card transactions achieved similar growth in values. We on-boarded and integrated 7 new billers in 2023, bringing the total number of billers to 14. These are for service providers from Telecommunications, Councils, Universities, Financial Brokers to Medical Aid sectors. Consumer Banking The Bank continues to make strides in providing unparalleled convenience to customers through our virtual banking platform. In 2023 we expanded the platform to include DSTV payments. Through the Consumer Banking and Value-Added Services (CBVAS) department, the Bank continues to focus on delighting and serving customers by providing simple, convenient and affordable banking, insurance, remittances and payments services. CBVAS also utilises the digital banking services offered through the use of our USSD (*241#) and NMBConnect platform. CBVAS contributed income amounting to ZWL 137.5 billion for the year ended 31 December 2023. Geographical Representation During the year under review, we increased our geographical representation through partnerships under Agency Banking. The Agency Banking services ride on our digital banking platforms and we offer the same customer experiences through 136 agents across the country. Through these partnerships, we have physical touch points in all the 10 provinces of the country, bringing us close to our customers. In November 2023, we re-established presence in the resort town of Victoria Falls, as we reopened our branch. This brought the total number of branches to 14 and these also act as hubs in support of our agency network. Business Banking Despite the highs and lows in the macroeconomic environment, our Business Banking division remained a reliable partner to businesses. The Bank focused on enhancing its financial intermediation role as we secured medium to long-term funding for key sectors of the economy through offshore lines of credit. The Bank partnered with Rabobank, one of the world’s leading Food & Agriculture Bank on a three-year Food and Agriculture support program. This should assist NMB Bank grow the Agribusiness Unit as we contribute significantly to this key economic sector. Furthermore, NMB Bank partnered with the Government of Zimbabwe through the National Enhanced Agriculture Productivity Scheme (NEAPS) and financed 7,100 hectares of maize and soya beans in the 2023 summer cropping season through primary producers, agro- dealers and seed houses. Loan book quality remains strong on the back of proactive monitoring and maintaining of close relationships with all customers. Tribe28ANNUAL REPORT 2023 9 XPLUG SOLUTIONS LIMITED The subsidiary was officially launched in July 2023. It was established from the Bank’s ICT department under which a number of digital banking solutions and operational efficiency systems were developed for NMB Bank Limited. The company now has a full product suite encompassing transacting platforms, (mobile and internet banking solutions) as well as operational efficiency systems (Robotic Process Automation and Workflow Solutions). XPlug Solution is positioning itself to be a preferred partner on the current digitalisation drive within Africa as companies embrace technology to improve efficiencies and reallocate resources towards increased productivity. The technology company has received a number of mandates from local and regional institutions in banking as well as insurance sectors. The company is set to increase its contribution to group performance in 2024. NMB PROPERTIES LIMITED Established in May 2023, NMB Properties Limited has been mainly focused on projects within the investment property portfolio of NMB Bank Limited. This is over and above the 26 cluster housing project at Reoville Homes which the company completed in 2023. NMB Properties, working with a number of partners has a project pipeline for 2024 that includes cluster housing developments, residential stands and a shopping centre. The establishment of NMB Properties has positioned the Group for sustained growth in the real estate sector. STRATEGIC PRIORITIES The Group is pursuing a growth strategy and group diversification remains a focus area as we pursue new markets. The Group is set to leverage on technology to drive business growth and offer unique customer experience across all its subsidiaries. The Bank made a strategic decision to change its Core Banking System (CBS) in 2023. This is in line with our focus on providing seamless services to our clients in a cost effective and efficient manner. We expect to go live on the new CBS at the beginning of the second quarter of 2024. The environment which the Group is operating in necessitates that it prioritises value preservation. NMB Properties Limited will be a key anchor in this strategic priority. The banking division is also pursuing foreign currency revenue generation opportunities in line with the market dynamics. XPlug Solutions Limited on the other side is establishing a regional clientele base and will be a key foreign currency contributor to the Group. CORPORATE SOCIAL INVESTMENTS AND SUSTAINABILITY Our Corporate Social Investment (CSI) continued to soar high as we played our part for the betterment of our society. We assisted a number of stakeholders such as Kuchengetana Trust, Society for the Destitute Aged (SODA), Horticultural Development Council (HDC) Investment Forum and Friends of Dzikwa Trust. The Bank supported societal causes such as cleft lip surgery, breast cancer awareness, blood donations and National Tree Planting Day. With our business growth, we are taking up more responsibility and contributing to different societal groups. OUTLOOK The operating environment is expected to remain challenging but also with some pockets of growth opportunities. Running an efficient and cost effective business will be key in this environment and agility to move and close in on the opportunities remains key. The Group has capabilities to take advantage of the opportunities presented by the environment and manage the related risks. The Bank was successful in raising lines of credit in the previous year and we are looking forward to accessing more funding. The Group diversification drive will gather momentum in the coming year as we fully operationalize the new subsidiaries. APPRECIATION I thank the NMBZ Holdings team, board and shareholders for their immense support during 2023. I am sincerely grateful to our valued clients, funding partners, shareholders, stakeholders and regulatory authorities for their various contributions in our pursuit of delivering on our vision. MR. G. GORE CHIEF EXECUTIVE OFFICER 20 March 2024 Tribe28ANNUAL REPORT 202310 CORPORATE GOVERNANCE STATEMENT We have pleasure in presenting to shareholders our report and the audited financial statements of the Group for the year ended 31 December 2023. 1. SHARE CAPITAL The authorised and issued share capital of the Company are as follows:- • Authorised: 600 000 000 ordinary shares of ZWL0,00028 each. • Issued and fully paid: 435 126 312 ordinary shares of ZWL0,00028 each. 43 720 share options were exercised during the year. 2. GROUP ACTIVITIES AND RESULTS The Group’s total comprehensive income was ZWL 328 billion for the year ended 31 December 2023 (2022 – ZWL 60 billion). 3. CAPITAL ADEQUACY As at 31 December 2023, the Bank’s regulatory capital adequacy ratio was 37.25% (Historical – 35.39%) (2022 – 25.86% in inflation adjusted terms). 4. DIRECTORATE Board of Directors As at 31 December 2023, the following were the Directors of the Company. Mr. P. Gowero Mr. G.Gore* Mrs. M. Chipunza* Mr. J. de la Fargue Ms. C. Glover Mr. J. Tichelaar Ms. J. Maguranyanga Mr. G. Taputaira Mrs. E. Chisango Mr. D. Matenga * Executive Independent Non-Executive Director (Chairman) Chief Executive Officer Chief Finance Officer Non-Executive Director (representing African Century) Non-Executive Director (representing Arise) Non-Executive Director (representing AfricInvest) Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director • In accordance with Article 83 of the Company’s Articles of Association, one third of the Directors will retire by rotation at the forthcoming Annual General Meeting (AGM). Messrs J. Maguranyanga, and J. de la Fargue retire by rotation. The retiring Directors, being eligible, offer themselves for re-election. • Mr P. Gowero retires in terms of Article 91.2 of the Company’s Articles of Association having been appointed during the course of the year. Being eligible, he offers himself for re-election. Tribe28ANNUAL REPORT 202311 Directors’ Interests As at 31 December 2023, the Directors of the Group (NMBZ Holdings Limited and the Bank) held the following direct and indirect beneficial interests in the shares of the Company:- Mr. P. Gowero Ms. J. Maguranyanga Mr. G. Gore Mrs. M. Chipunza Mr. J. de la Fargue* Ms. C. Glover* Mr. J. Tichelaar* Ms. J. Maguranyanga Mr. G. Taputaira Mrs. E. Chisango Mr. D. Matenga 31/12/2023 Shares 31/12/2022 Shares - 600 5 577 - - - - - - 600 5 415 - - - - - 4 586 4 540 - - - - 10 763 10 555 *Mr. J. de la Fargue represents African Century Financial Investments Limited which holds (84,767,523 shares), Ms. C. Glover represents Arise which holds (79,449,374 shares) and Mr J. Tichelaar represents AfricInvest which holds (40,707,918 shares) in NMBZ Holdings Limited. 5. CORPORATE GOVERNANCE APPROACH The Board of NMBZ Holdings Limited continues to align its internal governance practices to local and international best practice including the National Code of Corporate Governance in Zimbabwe (ZIMCODE) and the King IV Report. The Board has adopted the National Code of Corporate Governance in Zimbabwe as its primary code of governance. The Board is committed to the principles of accountability, integrity, transparency, sound ethical practices and professionalism. As such the Board continues to actively work towards balancing the interests of all its stakeholders, including its shareholders, customers, employees, regulators, suppliers and the communities in which we work in. Our management approach remains that of ensuring prudence, compliance with international best practice and sustainability are key considerations for management as they work to deliver value to our shareholders and all other stakeholders. 5.1. Stakeholder Communication The Board of Directors and Executive Management of the Group communicate with the Company’s stakeholders through various platforms including the Annual General Meeting, press announcements of interim and final results as well as of key developments within to shareholders, investor and analyst briefings were possible and Annual Reports. Through online platforms including the Company website, the Group disseminatesfinancial and operational information to its stakeholders. 5.2. Share Dealings The Company has a share dealing policy which precludes directors and staff from dealing in the shares of the Company, whether directly or indirectly, during the closed period being the period one month before the half year or financial year end up to the publication of the half year or full year financial year end results. Directors and staff are also precluded from dealing in the shares of the Company whenever they are aware of negotiations, discussions or information which may have a bearing on the share price. In line with the ZSE Listing rules, share dealings by Directors and Executive / Senior Management are declared to the Zimbabwe Stock Exchange. 5.3. Declarations of Interest All Directors are required to declare any actual, potential or perceived conflict of interest that may compromise their judgment, decision or actions. Declaration of interests is a standing agenda item at all board meetings. It is also a requirement of the Banking Act that Directors complete and file with the Company a Declaration of Interest form. During the year under review all Directors submitted their Conflict of Interest Declaration forms in line with the Banking Act. Directors shareholding interests in NMBZ Holdings Limited are disclosed in the Report of Directors on page 7. 5.4. Directors’ Remuneration The remuneration packages for Executive Directors are determined by the Human Resources, Remuneration & Nominations Committee. The salary packages primarily consist of a basic salary, performance based bonus and share options which are meant to be a retention mechanism. The remuneration of Non-Executive Directors is subject to the approval of shareholders. The non-executive directors’ remuneration for the year under review will be presented to the shareholders for their approval. 5.5. Governance Framework The board has developed a Corporate Governance Manual which forms the backbone of the group’s governance structures. The manual provides the guidance for promoting the very highest standards of corporate governance within the group. It sets out our practices for implementing the corporate governance provisions required by law, regulation and best practice. As part of its corporate governance structures, the group has board committees including the Audit, Risk Management & Compliance, Credit, Loans Review, Asset & Liability, Information Technology and Human Capital, Remuneration & Nominations Committees, which are standing committees that assist the board in the discharge of its duties. The board also has a Board Charter details of which are discussed below. The Corporate Governance Manual also Tribe28ANNUAL REPORT 202312 clearly defines the roles andresponsibilities of the Board Chairman, the Board of Directors and those of the Chief Executive Officer, creating a balance of power and authority and ensuring that no one individual or group of individuals has unfettered decision making powers. 5.6. The Board’s role The Board is responsible to all its stakeholders for creating and delivering sustainable value through the management of the group’s business. It is responsible for determining the strategic direction of the group and for approving the relevant policies to deliver such long-term value. The board provides overall strategic direction within a framework of rewards, incentives and controls. The Board ensures that management strikes an appropriate balance between promoting long-term growth and delivering short-term objectives. The Board demonstrates ethical leadership and promotes the company’s collective vision of the company’s purpose, values, culture and behaviours. The Directors lead by example and ensure that good standards of behaviour permeate throughout all levels of the group. 5.7. The Board’s Key focus areas The Board meets quarterly to monitor the performance of the group and its management as well as to discuss the strategic direction of the group. The Board retains the responsibility to ensure good governance practices are applied throughout the group. It retains some matters for its determination and has delegated specific responsibilities to Board Committees which operate within well-defined terms of reference as summarised below. The Board of Directors is responsible for setting the strategic direction of the Company. Further, the Board is responsible for proactively engaging with the Company’s Executive Management to test, challenge, improve and monitor the implementation of the Company’s strategy, to oversee the performance of Executive Management, to provide challenge, counsel and support to Executive Management, to receive reports from Executive Management on the performance of the Company and to provide challenge to action taken by Executive Management. The board is also responsible for the implementation of enterprise risk management through ensuring the implementation of adequate controls, processes and policies which enable risk to be appropriately identified and managed. 6. BOARD STRUCTURE *NMBZ HOLDINGS LIMITED NMB BANK LIMITED BOARD AUDIT COMMITTEE LOANS REVIEW COMMITTEE CREDIT COMMITTEE CHIEF EXECUTIVE OFFICER ASSET AND LIABILITY MANAGEMENT (ALCO) , FINANCE & STRATEGY COMMITTEE RISK & COMPLIANCE COMMITTEE HUMAN CAPITAL REMUNERATION & NOMINATIONS COMMITTEE ICT & DIGITAL BANKING EXECUTIVE COMMITTEE *The Group set up two subsidiaries during the year 2023, NMB Properties Limited and XPlug Solutions Limited. It obtained regulatory approval to have one Board for the entities as they stabilise their operations. The Group is currently governed by a board made up of 10 board members and seven standing board committees, whose terms of reference are well defined and are reviewed at least once each year. Directorship Gender Distribution 20% 30% 50% 60% 40% Independent Non-Executive Executive Male Female Diversity The NMBZ Holdings Board endeavors to maintain an appropriate balance of diversity in terms of race, gender, age, geographical location, educational knowledge, skills and experience to ensure robust input, governance and decision making. The NMBZ Holdings board is diverse being comprised of five independent non-executive directors, three non-executive directors and two executive directors. Female directors make up 40% of the Board. The board is chaired by an independent non-executive director. The directors’ ages range from 41 to 71 years of Tribe28ANNUAL REPORT 202313 age. Three of the directors are based outside Zimbabwe while seven of the directors are locally based. The directors’ educational background, skills and experience include banking, law, accounting, information technology, risk management, marketing, corporate finance, real estate and project management among other areas. It is the Board’s view that the board size and the skills mix is appropriate for the size and nature of business the Company is involved in. There were no changes at executive management level during the course of the year under review. The then Board Chairman Mr B. A. Chikwanha retired with effect from 31 December 2023, having served ten years on the board. He was succeeded by Mr. P. Gowero following the implementation of the Board Chairperson Succession Plan. The Board Chairman is deputised by Mrs. E. Chisango. Board Chairman The Board Chairman provides leadership to the Board and manages the business of the Board through setting its agenda and taking full account of issues and concerns of the Board. He actively works to establish and develop an effective working relationship with the Chief Executive Officer and Executive directors and to drive improvements in the performance of the Board and its committees through feedback derived from the annual board evaluation process which is communicated to directors and is used to develop an action plan to improve board performance. The Chairman’s other roles include to assist in the identification and recruitment of talent to the Board and to proactively manage regulatory relationships in conjunction with Executive Management where appropriate. Deputy Board Chairperson In the absence of the Board Chairman, the Deputy Board Chairperson performs the role of the Board Chair as detailed above. Chief Executive Officer The Chief Executive Officer is responsible for providing strategic and operational leadership in all areas of the Company. His responsibilities include but are not limited to driving the transformation agenda of the group to reach its strategic aspirations, providing credible and agile leadership to the Executive and Senior Management team, setting long term and short-term business goals and holding individual executive and senior management team members to account. The Chief Executive officer is also responsible for ensuring high employee engagement levels and a culture which enables customer focus and optimum performance, ensuring delivery of effective people processes including talent management, succession planning, performance management and reward, ensuring that the Board is fully informed on all relevant matters, ensuring the Group maintains good relationships with regulatory and government agencies and effective relationships with its customers and ensuring that the Group maintains sound and adequate risk management structures and adequate internal controls and is compliant with all relevant regulator and internal compliance requirements. Board Charter The Board Charter sets out the roles and responsibilities of the Board, its scope of authority, and the structures through which the Board operates. The Board Charter is reviewed on an annual basis to ensure that the Board remains aligned to its requirements and to allow Directors an opportunity to refresh their memories on its provisions. The Board is responsible for providing entrepreneurial leadership, to set strategy, to ensure that human and financial resources are available to achieve set objectives, to review management performance, to set the company’s values and standards and to ensure that obligations to shareholders and other stakeholders are understood and met. The Board Charter clearly defines the role of the Board Chairman which is separate and distinct from that of the Chief Executive Officer as well as the responsibilities of Directors. Board Committees Committee Audit Committee Members E. Chisango (Chairperson) J. Maguranyanga G. Taputaira ALCO & Finance D. Matenga (Chairperson) J. de la Fargue C. Glover J. Tichelaar E. Chisango P. Gowero G. Gore M. Chipunza Summary Roles & Responsibilities The committee oversees the Group’s financial reporting process, monitoring the integrity and appropriateness of the Group’s financial statements; evaluating the adequacy of the Group’s financial and operational processes, compliance, internal controls and risk management processes. The Committee is responsible for the selection, compensation, and performance review of the Group’s external and internal auditors. The committee also provides independent oversight of the effectiveness of the Group’s assurance functions and services, with particular focus on combined assurance arrangements. The committee meets at least four times a year. The committee meets regularly with the internal and external auditors. Both the internal and external auditors have unrestricted access to the audit committee to ensure their independence and objectivity. The external auditors, Chief Finance Officer and Internal Auditor are invitees and resource persons at every meeting. The Committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference for the reporting period. The ALCO & Finance Committee is responsible for deriving the most appropriate strategy for the Group in terms of the mix of assets and liabilities given its expectations of the future and the potential consequences of interest-rate movements, liquidity constraints, foreign exchange exposure and capital adequacy. In addition, the Committee monitors the business and financial strategies of the Company and keeps track of financial performance vis a vis the budget. The Chief Risk Officer and Head of Treasury are invitees and resource persons at every meeting. The Committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference for the reporting period. Tribe28ANNUAL REPORT 202314 Committee Loans Review Human Capital, Remuneration & Nominations Committee Risk & Compliance Committee ICT & Digital Banking Committee Members Summary Roles & Responsibilities J. Maguranyanga (Chairperson) G. Taputaira D. Matenga J. Tichelaar P. Gowero J. Maguranyanga (Chairperson) E. Chisango P. Gowero J. de la Fargue J. Tichelaar C. Glover D. Matenga (Chairperson) G. Taputaira J. de la Fargue C. Glover J. Maguranyanga P. Gowero G. Taputaira (Chairperson) D. Matenga C. Glover J. Tichelaar G. Gore The Loans Review Committee assesses compliance of the loan book with the lending policy and the Banking Regulations. The Committee conducts loan reviews independent of any person or committee responsible for sanctioning credit. The Chief Banking Officer and Chief Risk Officer are invitees and resource persons at every meeting. The Committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference for the reporting period. is responsible The committee for setting the Group’s remuneration philosophy and reviews the overall remuneration structures of the Group, including all material remuneration proposals and packages for Executive Directors and senior personnel. The committee is also responsible for the nomination, election and appointment of board members. The group’s remuneration policy is to provide remuneration packages that attract and retain high performing individuals. The group’s remuneration package is primarily made up of basic salaries, share options and performance related bonuses. The Chief Executive Officer and Head of Human Capital are invitees and resource persons at every meeting. The Committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference for the reporting period. The Risk and Compliance Management Committee oversees the quality, integrity and reliability of the Group’s enterprise risk management systems and reviews all group-wide risks. The Chief Executive Officer, Chief Risk Officer and Head of Compliance are invitees and resource persons at every meeting. The Committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference for the reporting period. the technology-related The IT & Digital Banking Committee provides governance investments, and oversight on operations and strategies and their alignment with the Bank’s overall strategy. It also oversees the Bank’s technology risk management and security framework and its effectiveness (in conjunction with the Risk & Compliance Committee). The Chief Technology Officer, Chief Risk Officer and Head Digital Banking are invitees and resource persons at every meeting. The Committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference for the reporting period. Executive Committee Executive & Heads of Departments Directors Attendance Register NAME OF DIRECTOR No. of Meetings Held B. A. Chikwanha D. Matenga E. Chisango G. Taputaira J. Maguranyanga C. Glover J. Tichelaar J. de la Fargue P. Gowero* G. Gore M. Chipunza INED INED INED INED INED NED NED NED INED E E * P. Gowero - Appointed 26 April 2023 MAIN BOARD 6 6 6 6 4 5 6 5 6 5 6 6 AUDIT 6 N N 6 6 6 N N N N N N The role of the Executive Committee is to assist the Chief Executive Officer in the performance of his duties and in dealing with the day to day activities of the Group’s business including development and implementation of the strategy, business plans and annual budget as approved by the Board, development, implementation and monitoring of policies and procedures as approved by the Board, assessment and management of risk, prioritisation and allocation of resources and management and development of talent. CREDIT ALCO & FINANCE 4 4 N 4 N N N N 3 N 4 N 4 N 4 4 N N 4 3 4 3 4 4 Tribe28ANNUAL REPORT 202315 NAME OF DIRECTOR LOANS REVIEW HUMAN CAPITAL, REMUNERATION & NOMINATIONS RISK & COMPLIANCE ICT & DIGITAL No. of Meetings Held B. A. Chikwanha D. Matenga E. Chisango G. Taputaira J. Maguranyanga C. Glover J. Tichelaar J. de la Fargue P. Gowero* G. Gore M. Chipunza 4 N 4 N 3 4 N 3 N 3 N N 5 5 N 5 N 5 5 4 5 4 N N 4 N 4 N 3 3 4 N 4 3 N N *B A Chikwanha retired from the Board with effect from 31 December 2023. * P. Gowero joined the Board with effect from 26 April 2023. 7 7 6 N 5 N 6 6 N N 7 N KEY - INED = Independent Non-Executive Director - NED = Non-Executive Director - E = Executive Director - N = Not a member Continuous Professional Development Continuous professional development remains a key focus area for the Board, meant to support Directors to meet the continually evolving demands of our regulatory, economic and business environment and to ensure that the Directors are equipped with the relevant knowledge and skills to oversee the implementation of the Company’s strategic objectives. During the year under review, one director attended an Audit Committee training which provides Audit Committee and Board Members with practical insights, resources and peer exchange opportunities focused on strengthening oversight of financial reporting, audit quality, IT security matters and how to address the array of challenges facing boards and businesses today. Five directors were trained on AML/CFT by the Reserve Bank of Zimbabwe and the full board attended a training on board dynamics, board archetypes and what makes for a high performing board which was facilitated by an external consultant. Board Meetings The Board holds meetings on a quarterly basis and as and when necessary to do so. The Board Meetings Calendar is set and approved in advance. During the year under review the Board held 6 meetings, four set meetings in each quarter and two strategy review meetings. The meetings were held physically and where directors could not attend the meetings in person they had the option to attend the meetings virtually. The focus areas for the Board during the year included strategy review, business continuity, financial performance, risk management and governance. The board held two strategy review sessions offsite during the course of the year. The Board Chair aims to ensure that adequate time is allocated to each agenda item to allow for thorough debate and challenge during meetings. It is a tenet of the Board that all Directors be allowed to independently exercise their judgment and to actively participate during meetings. To assist the Board in the discharge of its duties, management prepare comprehensive reports for Board and Committee meetings which are circulated in advance of the meetings to allow Directors to have timely and up to date information which they use in their decision making. Further, Executive and Senior management attend meetings by invitation and attest to the adequacy and accuracy of information submitted to the Board. Annual Board Evaluation Board and Director evaluations are useful in that they assist the Board and Senior management to identify potential opportunities and areas for improvement, provide a platform to remind Directors of their role and responsibilities, provide Directors an opportunity to confidentially raise any concerns or feedback they may have and provide the Chairperson with an opportunity to address any performance shortfalls / weaknesses in the board or any of its committees. In line with the RBZ Corporate Governance Guideline the Board undertakes an annual performance evaluation. The assessment involves a review of the performance of the Board, the Board Chairperson and Individual Director Performance. A report summarising the evaluation process, the outcome and the action plan arising out of the evaluation is submitted to the Reserve Bank of Zimbabwe by the 31st of March each year. The Board conducted its evaluation during the year under review and the evaluation concluded that Board performance was strong. Company Secretary The Directors have access to the Company Secretary whose role includes the provision of professional guidance and advice to individual directors and to the Board as a whole. In addition, the Company Secretary is responsible for ensuring that the Board adheres to applicable rules, regulations and procedures and ensures the effective functioning of the Board through a seamless flow of information between the Board and Management. The Company Secretary also reminds the Board of their roles and responsibility to the Company and all its stakeholders. Access to Information by Directors The Board is entitled to seek information concerning the Company from any Group employee or from any other source. Directors have the right to attend any meeting of any Board Committee, provided that they first seek the permission of the Chairperson of the Committee concerned (which permission shall not be unreasonably withheld) and that the board member so concerned, not being a member of the Committee shall not have a right to vote during such meeting. A board member who attends a Committee meeting of which they are not a member is not entitled to a fee for such attendance. Information periodically availed to the board includes strategic and operating plans and budgets, strategic plans, budgets and financial performance reports are reviewed every quarter by the board. The board also reviews and approves capital expenditure budgets and receives quarterly updates on capital expenditure from management. The operating subsidiaries report to the board on a quarterly basis. The board Tribe28ANNUAL REPORT 202316 also receives information pertaining to asset and liability management, enterprise risk management, significant credit facilities and material defaults, major Information Technology projects, dividend payments proposals, significant litigation involving the Group, key reputational matters, key compliance matters, any proposals on joint ventures, mergers and acquisitions and any significant human capital matters. Professional Advice In the discharge of their duties, the Group’s Directors are entitled to have access to independent professional advice at the Group’s expense where necessary. 7. Auditors At the forthcoming Annual General Meeting, the shareholders will be asked to authorise the Directors to approve the auditors’ remuneration for the year ended 31 December 2023. The Group’s external auditors, Ernst & Young served their 5-year term and a further 2 years following the granting of an extension by the regulatory authorities and the shareholders during the 2022 Annual General Meeting. The extended term expires at the conclusion of the 2024 Annual General Meeting. The Board therefore proposes the appointment of KPMG as the auditors of the Group for the ensuing year until the conclusion of the next Annual General Meeting. 8. Statement of Compliance The Group continues to review and align its governance practices in line with the Companies and Other Business Entities Act [Chapter 24:31] and the Zimbabwe Stock Exchange Listing Requirements Rules SI 34 of 2019 which were both enacted in 2019 and whose implementation is ongoing. In addition to the above, the Group also ensured it complied with the Banking Act [Chapter 24:20], the Banking Regulations SI 205 of 2000, the National Payment Systems Act [Chapter 24:23], the Money Laundering and Proceeds of Crime Act [Chapter 9:24] and the Exchange Control Act [Chapter 22:05] as its key regulations. The Board advises that it complied with all relevant regulatory provisions throughout the year ended 31 December 2023. BY ORDER OF THE BOARD MRS. V. T. MUTANDWA COMPANY SECRETARY 20 March 2024 Tribe28ANNUAL REPORT 202317 Board of Directors A summary profile of each of the Directors is stated below: Pearson Gowero– Independent Non-Executive Director (Chairman) Pearson Gowero is a seasoned business leader with extensive experience working in consumer facing businesses. He is a holder of a Bachelor of Science Degree in Economics from the University of Zimbabwe and a Masters in Business Leadership from the University of South Africa. He served for SAB Miller Africa as the Country Managing Director for Zambia and Malawi from September 2006 to June 2011. He has held several leadership and management positions during his career at Delta Corporation Limited in Marketing, Sales and Distribution and General Management. He served as Chief Executive Officer of Delta Corporation Limited, (an associate of ABInBev) from June 2012 until his retirement in June 2021. He has sat on various boards of listed companies, subsidiaries and associates of the Delta Group. He has also served as a member of the National Council of the Confederation of Zimbabwe Industries. Currently, Pearson is the Board Chairman of SeedCo Limited. Additionally, he is a director of Zambeef Products PLC Zambia and Marksbury Investments Private Limited. Gerald Gore – Chief Executive Officer Gerald Gore has over 18 years banking experience that spans over digital transformation, risk management, corporate banking, treasury and retail banking. Prior to his appointment as Chief Executive Officer on 1 January 2022, Gerald served as the Deputy CEO since September 2019 as well as Chief Operating Officer since 2015 supporting the CEO in strategy execution and responsible for the Bank’s digital transformation. He also served as Chief Risk Officer of NMB Bank. Prior to joining NMB in 2008, he worked for a number of financial institutions in corporate banking, treasury & risk management. Gerald holds a Master in Business Leadership (MBL) from Unisa, MSc in Finance & Investments from NUST, BComm Banking from NUST and an Executive Development Program from Wits Business School. He is also an Alumnus of the USA International Leadership Development Program (IVLP) under emerging African leaders. Margret Chipunza – Chief Finance Officer Margret is a Chartered Accountant having trained with Deloitte. She is a holder of a Bachelor of Accounting Science degree from the University of South Africa, and a Certified Microfinance Expert with Frankfurt School of Finance and Management. She has over 20 years of experience in the financial services sector, having held senior positions in various financial institutions. She is an alumnus of the Boulder Institute of Microfinance, the School of African Microfinance and the HBS Accion program on Strategic Leadership in Inclusive Finance which is offered by Harvard Business School – Executive Education. Prior to joining NMB Bank, Margret was the Chief Finance Officer of African Century Limited. Emilia Chisango – Independent Non-Executive Director Emilia is a Chartered Accountant with 28 years working experience, 21 of which were with KPMG where she left at Partner level. She spent a further 6 years working as the Chief Finance Officer and Finance Director at Econet Wireless Zimbabwe Limited and Ecocash Holdings respectively. On 1 March 2021, Emilia left Ecocash Holdings to concentrate on consolidating the Hempac Trading (Private) Limited operations. She is the founder and current Group Chairperson of Hempac. Emilia has recorded several firsts in her career, having been the first black female partner in any accounting firmin Zimbabwe. She also became the first female and youngest president of the Institute of Chartered Accountants in Zimbabwe (ICAZ) in its 90-year-old history then. Testament to her achievements, she was selected to represent Zimbabwe in the Fortune /US State Department Global Women’s Mentoring Partnership in 2016, a rigorous process where only one female executive is selected in any year. Givemore Taputaira – Independent Non-Executive Director Givemore Taputaira is an independent non-executive director who was appointed to the NMBZ Holdings Limited and NMB Bank Limited boards on 2 January 2020. Givemore holds a Bachelor of Science General degree and a Masters in Business Administration degree from the University of Zimbabwe. He is both a Certified International Professional Leader (CIPL) and Certified International Professional Strategist (CIPS). Certification is obtained from Cambridge Global Learning in the United Kingdom. Givemore has over 18 years’ experience in ICT and Business Development in 7 different countries within Africa. He previously was a board member of CBZ Holdings Limited, wherein he had the opportunity to chair the Risk and Compliance Committee, as well as the Strategy and Innovation Committee at different times during his tenure on that Board. Givemore is currently the Managing Director at Digital Edge Solutions. Tribe28ANNUAL REPORT 202318 James de la Fargue – Non-Executive Director James de la Fargue represents African Century on the Board. He was appointed to the Board on 4 May 2016. He is a holder of a BA Business Organisation(Herrit-Watt University), ACCA, Diplomas in Marketing & Marketing Research and a Certificate in General Agriculture. James worked for a number of international organizations including Deloitte & Touché Management Consultants, Unilever PLC and Chargeurs SA. He is a former president of the Zimbabwe Tobacco Association and worked at MBCA as a senior executive in charge of Corporate Finance. James was involved in business consultancy work and management of an integrated farm in Centenary from 1998 to 2008. Since 2009, James has been with African Century Limited where he initially consulted for the group and later took up a position as Business Development Director of African Century Financial Holdings and as Executive Chairman of Frango King. He currently is the Chief Executive Officer of Lake Harvest, the largest tilapia farming operation in Africa. Christine Glover – Non-Executive Director Christine Glover represents Arise B.V. on the Board, having been appointed as a director on 26 June 2019. She has over thirty years of strategic and operational experience in financial services, with a strong focus on low-cost housing and development finance. She recently retired from Old Mutual Investment Group (South Africa), where she was employed as Head of Development Impact Funds for ten years. She has also held several international consulting and executive management roles throughout her career, where she has made an immense contribution to the development of financial services for low-income households. Christine is a qualified town planner and holds a Master’s degree in City and Regional Planning as well as an Honours degree in Architectural History. Jean Maguranyanga – Independent Non-Executive Director Jean Maguranyanga is a lawyer by profession with over 25 years’ experience. She was appointed to the Board on 10 July 2015. Jean commenced her career as a Prosecutor in the Ministry of Justice Legal and Parliamentary affairs and moved after one year to Parliamen tof Zimbabwe. She worked as a Legal Advisor at the Parliament of Zimbabwe for three years after which she left to study for her Master’s Degree in Corporate and Commercial Law. Following the completion of her Master’s degree Jean took up a lectureship post with the University of Zimbabwe a position she held for two years. Thereafter, Jean joined the Reserve Bank of Zimbabwe where she served as Legal Counsel and later as Division Chief Corporate Affairs / Bank Secretary for a total period of seventeen years. Currently Jean is a partner at Chinamasa Mudimu and Maguranyanga Legal Practitioners. Dzingira Matenga – Independent Non-Executive Director Dzingira Matenga is an independent non-executive director who was appointed to the board on 19 July 2022. Dzingira is the founder of Zamlim Investments, a pan-African company with interests in Intelligent Automation and Artificial Intelligence (via its partnership with New York based Workfusion Inc.) as well as a focus on management consulting for clients in South Africa. He is a Managing Director in Accenture SA’s Strategy & Consulting Division and is a former Executive Director of Ernst & Young’s Africa Consulting practice. Dzingira is a Chartered Management Accountant, a Prince2 Certified Project Management practitioner and holds a BA (Hons) in Accounting and Finance. He has worked extensively across the globe, including 12 years spent working in Europe (UK, Spain, Greece, France, Germany), Asia (Kazakhstan, China) and North America and has spent the past 13 years working across sub-Saharan Africa on mining, power, logistics and financial services engagements. Dzingira was a special advisor to the Rwandan Development Board (2017 – 2018) and has worked closely with many of Africa’s Development Finance Institutions as well as major State Owned Enterprises. Julius Tim Tichelaar – Non Executive Director Julius Tichelaar is a Partner at AfricInvest and represents AfricInvest on the Board. He was appointed to the Board on 31 October 2016. Julius leads investments across Africa in disruptors and traditional financial institutions, with a focus on strategic expansion and digital transformation. Julius has 12 years’ experience in private equity with sourcing, structuring and execution of transactions in Africa. Previously, he worked on a predecessor fund for financial services at AfricInvest and on a wide range of transactions in other industries. Julius serves as board member for institutions across East and Southern Africa.Julius holds a Master in Science of Management (Msc) with a specialization in Finance from the Erasmus University in Rotterdam, the Netherlands, and graduated with honors. Tribe28ANNUAL REPORT 202319 FINANCIAL SUMMARY Inflation Adjusted Historical Cost 31 Dec 2023 ZWL ‘000 31 Dec 2022 ZWL ‘000 31 Dec 2023 ZWL ‘000 31 Dec 2022 ZWL ‘000 Operating profit before impairment charge and loss on net monetary position 396 553 900 110 175 693 450 015 864 30 169 029 Total comprehensive income Basic earnings per share (cents) Diluted earnings per share (cents) Deposits from customers Total gross loans and advances 327 597 809 60 258 826 467 959 674 31 302 191 67 073 66 393 14 484 14 125 93 824 92 872 6 396 6 237 528 530 915 255 718 976 528 530 915 53 215 217 494 536 518 222 417 933 494 536 518 46 285 257 Total shareholders’ funds and shareholders’ liabilities 538 627 404 209 462 226 512 648 441 39 155 092 ENQUIRIES: NMBZ HOLDINGS LIMITED Gerald Gore, Chief Executive Officer, NMBZ Holdings Limited Margret Chipunza, Chief Finance Officer, NMBZ Holdings Limited geraldg@nmbz.co.zw margretc@nmbz.co.zw Website: Email: enquiries@nmbz.co.zw Telephone: +263 8688003347 http://www.nmbz.co.zw Tribe28ANNUAL REPORT 2023 20 INDEPENDENT AUDITOR’S REPORT Ernst & Young Chartered Accountants (Zimbabwe) Registered Public Auditors Angwa City Cnr Julius Nyerere Way / Kwame Nkrumah Avenue P O Box 62 or 702 Harare Zimbabwe Tel: +263 24 2750905-14 or 2750979-83 Fax: +263 24 2750707 or 2773842 Email: admin@zw.ey.com www.ey.com Independent Auditor’s Report To the Shareholders of NMBZ Holdings Limited Report on the Audit of the inflation adjusted Consolidated Financial Statements Qualified Opinion We have audited the accompanying inflation adjusted consolidated financial statements of NMBZ Holdings Limited and its subsidiaries (the Group)’, as set out on pages 26 to 96, which comprise the inflation adjusted consolidated statement of financial position as at 31 December 2023 and the related inflation adjusted consolidated statement of comprehensive income, the inflation adjusted consolidated statement of changes in equity and the inflation adjusted consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information. In our opinion, except for the effects of the matters described in the Basis for qualified opinion section, the accompanying financial statements present fairly, in all material respects the financial position of the Group as at 31 December 2023, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs), and the manner required by the Companies and Business Entities Act (Chapter 24:31) and the Banking Act (Chapter 24:20). Basis for qualified opinion Matter 1: Non-compliance with International Financial Reporting Standards IAS 21- The Effects of Changes in Foreign Exchange Rates, IFRS 13 - Fair Valuation Measurement and IAS 8 - Accounting Polices, Changes in Accounting Estimates and Errors. Impact of the prior year modification on the current year audit report and opening balances. i) Valuation of investment properties, freehold land and buildings In the prior years up to financial year ended 31 December 2021, the Group valued Investment property and freehold land and buildings using USD denominated inputs and converting these to ZWL at the closing auction rate. We believed that applying conversion rate to a USD valuation to calculate ZWL property values did not accurately reflect market dynamics, as risks associated with currency trading do not reflect the risks associated with the properties and therefore did not meet IFRS 13 requirements. Management has not restated the prior year amounts in line with the requirements of IAS8, consequently, corresponding amounts, that is, the revaluation gain, other income and tax expense on the inflation adjusted consolidated statement of profit or loss and other comprehensive income remain misstated. Our audit report on the current period’s inflation adjusted consolidated financial statements is therefore modified because of the possible effect of this matter on the comparability of the current period’s figures. ii) Inappropriate accounting for blocked funds In prior year, the group included in other assets local balances denominated in the group’s functional currency, this related to a legacy debt balance held with the central bank which had been treated as a foreign currency denominated asset and translated at the foreign auction exchange rate as at 31 December 2022 in contravention of IAS 21 which defines ‘foreign currency’ as a currency other than the functional currency of the entity resulting in an overstatement of the balance. A member firm of Ernst & Young Global Limited 21 Independent Auditor’s report (continued) NMBZ Holdings Limited Management has not restated the prior year amounts in line with the requirements of IAS8, consequently, corresponding amounts for other assets on the inflation adjusted consolidated statement of financial position and Net foreign exchange gains on the inflation adjusted consolidated statement of profit or loss and other comprehensive income remain misstated. Our audit report on the current period’s inflation adjusted consolidated financial statements is therefore modified because of the possible effect of this matter on the comparability of the current period’s figures. Matter 2: Inappropriate valuation of treasury bills Included in Investment securities are treasury bills received from the central bank in lieu of the Reserve Bank of Zimbabwe (RBZ) Deposit made in 2019 of ZWL63 127 959 650,98 (2022: ZWL6 599 867 282,51) with maturity dates ranging from three years to twenty years. These have not been discounted to take into account the time value of money which is in contravention of IFRS 9 that requires financial assets measured at amortized cost to be discounted using effective interest method. Had the treasury bills been recognized at fair value that is the discounted future value balance would have been reduced by ZWL25 851 316 805,02 (2022: ZWL3 260 789 866). Consequently, the foreign exchange gains of ZWL68 337 098 567,18 and retained earnings of ZWL84 173 485 180,76 (2022: ZWL96 589 483 350) relating to the treasury bills are also overstated. Our prior year audit opinion was modified due to this matter. Matter 3: Consequential impact on IAS29 - Financial Reporting in Hyperinflationary Economies Furthermore, notwithstanding that IAS 29 has been applied correctly, it is noted that its application was based on prior and current periods’ financial statements which were not in compliance with IFRS 9, and IAS 8 as described above. Had the correct base numbers been used, the above stated accounts would have been materially different. Consequently, monetary loss of ZWL65 818 336 892 (2022: ZWL31 352 720 000) is impacted as a result of misstatements above. The effects of the above departures from IFRS are material but not pervasive to the consolidated inflation adjusted financial statements. We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the consolidated Inflation adjusted financial statements section of our report of the Group. We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements of the group in Zimbabwe, and we have fulfilled our ethical responsibilities in accordance with these requirements and IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. In addition to the matter(s) described in the Basis for Qualified Opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements. 22 Independent Auditor’s report (continued) NMBZ Holdings Limited Key audit matter Issue 1: Expected credit losses on financial assets 33% of the Group’s total assets comprise of “Total Loans and Advances” which are disclosed on Note 20 to the financial statements. The loans are significant to the Group in value and comprise of a large volume of balances of varying magnitude. A significant amount of to audit effort independently verify the existence of the loans. therefore required is The Group is exposed to credit risk on its portfolio. Significant judgement is exercised by Management in assessing the impairment of loans and advances as disclosed on note 20.3 to the financial statements. Due to the size of the Group’s loan book and the significant degree of estimation in determining the impairment of loans and advances, the issue was considered to be a key audit matter. Management applied judgment on: • Amount and timing of cash flows • Evaluation of the borrower’s financial situation and the net realisable value of collateral. is in involved subjectivity the There determination of the amounts of advances deemed uncollectable and requiring impairment by Management. The determination of uncollectible amounts is based on a client-by- client basis. applied We refer to Note 2.5 which details the methods, judgments and assumptions by management in estimating the impairment of loans and advances. The matter required significant interactions between the auditor and Management. Issue 2: Presumed risk in revenue recognition The bank’s income which comprises of Interest Income and Fees & Commission Income was an area of most significance for the audit in the current year due to Interest income being a significant component of the bank's financial statements, both streams of income are highly automated therefore completeness & accuracy is an area of audit focus and that the bank's operations are largely dependent on interest income generation. How our audit addressed the matter In evaluating the adequacy of impairment of loans and advances we performed the following procedures: • We obtained an understanding of the credit approval and loan on-boarding process to confirm appropriateness of the loan information in the IT system which is used as basis for the impairment loss allowance calculation. followed • We obtained an understanding of the process the impairment allowance for the various the financial controls around the process. in calculating instruments including • We performed tests on the accuracy and completeness of inputs in the ECL model, and special emphasis was put on days past due as a key input to the impairment loss allowance calculation. • We reviewed the staging of the loans by analysing the staging, such as payment behaviour, financial ratios, and industry of the clients with the loans. factors affecting the • We reviewed lawyers’ letters and identified all loans under litigations and verified if those were allocated to the correct stage per the credit policy. All loans being handled by the lawyers were appropriately to stage 3 as per our allocated expectations. In validating the recognition of revenue, we performed the following procedures: • We updated our understanding of the revenue recognition process, performed walkthroughs our understanding and evaluated the design effectiveness of controls related to the significant risk identified. confirm to • We compared results with those of prior periods and those expected for the current period and discussed significant variations with management for reasonability. • Our Technology Risk team confirmed the automated aspects of the interest, fees and commission calculations are configured correctly and have been income 23 Independent Auditor’s report (continued) NMBZ Holdings Limited operating effectively throughout the audit period and performed recalculations on most automated revenue lines. • We performed year end cut off procedures on the revenue transactions. • We reviewed the treatment of income on impaired financial instruments. • Our Technology also recalculated the income for suspended interest. team Risk • We performed tests of details on non- automated revenue lines. We also obtained and inspected supporting documentation for manual fully automated accounts to confirm accuracy of these transactions. journals made in • We selected manual journal entries processed to all revenue accounts to confirm validity and business rationale as well as the appropriateness of manual adjustments processed. • We reviewed the process followed by the independent confirm valuators appropriateness of methodology and valuation assumptions purposes in the determination of fair value adjustments. for property to • We also reviewed the compliance of the banking operations to the transaction fees in issued by the regulator. line with directives • We assessed the appropriateness of the Revenue recognition criteria used by management as per IFRS 15 requirements. the • We reviewed the relevant disclosures on the annual report in accordance with IFRS 15 through our financial statement review process. Issue 3: Suspense accounts with long outstanding reconciling items In prior years the Bank has experienced significant increase in volumes of transactions processed in its accounting systems arising from the extensive use of its digital platforms like mobile banking, POS and Zimswitch. in to Accordingly, transactions, there have been some delays in reconciling all accounts. increase due the Long outstanding and unreconciled balances create an opportunity fraud and manipulation which may not be detected and corrected in material misstatements of the financial statements for both suspense and bank accounts. resulting timely for In validating the suspense accounts, we performed the following procedures: • We updated our understanding of how the bank’s suspense accounts operate. • We obtained an understanding of the system of internal control with regards to the review and approval thereof and evaluate the precision and sensitivity of thresholds applied by management in the review process. • We compared the prior year and current year balance of suspense accounts to identify any significant increases in the balance at year end. tested account reconciliations at year end to confirm that suspense • We the 24 Independent Auditor’s report (continued) NMBZ Holdings Limited these have been appropriately performed and we followed up on reconciling items. Other information The directors are responsible for the other information. The other information comprises of the Chairman’s Statement, Directors’ Profiles and the Report of the Directors but does not include the inflation adjusted consolidated financial statements and our auditor’s report thereon. Our opinion on the inflation adjusted consolidated financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the inflation adjusted financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the inflation adjusted consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. As described in the Basis for Qualified Opinion section above, the Group did not comply with the requirements of IAS 8 Accounting Policies, IFRS 13 Fair value measurement, Changes in Accounting Estimates and Errors, we disagree with treatment of blocked funds as foreign currency in contravention with IAS 21 and we disagree with the valuation of treasury bills in lieu of blocked funds as well as the application of IAS 29 - Financial Reporting in Hyperinflationary Economies on incorrect base numbers. We have concluded that the other information is materially misstated for the same reasons. Responsibilities of the Directors for the Inflation adjusted Consolidated Financial Statements The directors are responsible for the preparation and fair presentation of the inflation adjusted consolidated financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies and Other Business Entities Act (Chapter 24:31) and the Banking Act (Chapter24;20), and for such internal control as the directors determine is necessary to enable the preparation of inflation adjusted financial statements that are free from material misstatement, whether due to fraud or error. In preparing the inflation adjusted consolidated financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Inflation adjusted Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the inflation adjusted consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken based on these inflation adjusted consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the inflation adjusted consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is enough and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 25 Independent Auditor’s report (continued) NMBZ Holdings Limited • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the inflation adjusted consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the inflation adjusted consolidated financial statements, including the disclosures, and whether the inflation adjusted consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated inflation adjusted financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the inflation adjusted consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor’s report is Mr Walter Mupanguri (PAAB Number 367). Ernst & Young Chartered Accountants (Zimbabwe) Registered Public Auditors Harare 28 March 2024 26 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2023 GROUP Inflation Adjusted Historical Cost* Interest revenue calculated using the effective interest method Interest expense calculated using the effective interest method Net interest income Fee and commissions income Net foreign exchange gains Revenue Other income Operating income Operating expenditure Note 31 Dec 2023 ZWL’000 31 Dec 2022 ZWL’000 31 Dec 2023 ZWL’000 31 Dec 2022 ZWL’000 3 4 5.1 5.2 5.3 127 941 940 101 251 280 72 076 896 15 800 168 ( 29 724 126) ( 30 645 349) ( 14 651 080) ( 4 591 382) 98 217 814 70 605 931 57 425 816 228 862 632 73 731 203 137 756 521 11 208 786 10 705 516 128 137 119 18 351 775 136 315 649 4 048 384 455 217 565 162 688 909 331 497 986 25 962 686 158 115 100 38 803 578 249 250 716 17 940 335 613 332 665 201 492 487 580 748 702 43 903 021 6 ( 216 778 764) ( 91 316 794) ( 130 732 838) ( 13 733 992) Operating income before impairment charge and loss on net monetary position 396 553 901 110 175 693 450 015 864 30 169 029 Expected credit impairment losses on financial assets measured at amortised cost 20.3 ( 8 394 325) ( 1 596 336) ( 14 961 385) ( 1 191 393) Loss on net monetary position ( 65 818 337) ( 31 352 720) - - Profit before tax Taxation Profit for the period Other comprehensive income: 322 341 239 77 226 637 435 054 479 28 977 636 7.1 ( 46 710 860) ( 19 550 861) ( 49 494 612) ( 3 509 130) 275 630 379 57 675 776 385 559 867 25 468 506 Revaluation gains on land and buildings, net of tax** 5.4 51 967 431 2 583 050 82 399 807 5 833 685 Total comprehensive income for the period 327 597 810 60 258 826 467 959 674 31 302 191 Earnings per share (ZWL cents) - Basic - Diluted - Headline 8.3 8.3 8.3 67 073 66 393 39 203 14 484 14 125 6 996 93 824 92 872 49 422 6 396 6 237 2 952 * The Historical Cost information has been shown as supplementary information for the benefit of users. The Auditors have not expressed an opinion on the Historical Cost information. ** The revaluation gains on land and buildings will not be recycled into profit or loss in the subsequent reporting period. They will however be recycled through equity. COMPANY Inflation Adjusted Historical Cost* Note 31 Dec 2023 ZWL’000 31 Dec 2022 ZWL’000 31 Dec 2023 ZWL’000 31 Dec 2022 ZWL’000 Other income Operating expenditure - 1 453 688 - 302 410 ( 401 331) - ( 260 220) - Operating loss before impairment charge and loss on net monetary position Gain on net monetary position ( 401 331) 6 574 800 1 453 688 ( 260 220) 302 410 124 185 - - Profit/(Loss) before tax 6 173 469 1 577 873 ( 260 220) 302 410 Taxation 7.1 - 286 - 14 Profit/(Loss) for the period 6 173 469 1 578 159 ( 260 220) 302 424 * The Historical Cost information has been shown as supplementary information for the benefit of users. Tribe28ANNUAL REPORT 202327 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023 GROUP Inflation Adjusted Historical Cost* NOTE 31 Dec 2023 ZWL’000 31 Dec 2022 ZWL’000 31 Dec 2023 ZWL’000 31 Dec 2022 ZWL’000 SHAREHOLDERS’ FUNDS Share capital Share Premium Treasury shares reserve Functional currency translation reserve Revaluation reserve Share Option Reserve Retained earnings Total equity 9.2.1 95 172 95 149 124 10 10 10 10 10 26 793 275 20 906 488 3 174 723 ( 2 046) ( 2 046) 7 634 508 7 634 508 ( 394) 11 620 78 520 998 26 553 568 90 149 489 1 541 282 1 236 145 359 242 416 856 086 148 587 085 411 765 508 115 172 496 ( 394) 11 620 7 749 682 129 569 30 165 681 531 439 275 205 010 897 505 460 312 38 228 768 Subordinated term loan 11 7 188 128 4 451 329 7 188 128 926 323 - Total shareholders’ funds and shareholders’ liabilities 538 627 403 209 462 226 512 648 440 39 155 092 LIABILITIES Deposits Other liabilities Borrowings Current tax liabilities Deferred tax liabilities Total liabilities Total shareholders’ funds and liabilities ASSETS Cash and cash equivalents RBZ Digital Gold Tokens Investment securities Loans and advances Other assets Assets held for sale Trade and other investments Current tax assets Investment properties Intangible assets Property and equipment 13.1 14 16 7.3 18 19 17 20 21 22 23 7.3 25 26 27 528 530 915 255 718 976 528 530 915 99 339 523 56 665 849 97 909 352 53 215 217 11 792 185 263 289 317 102 240 322 263 289 317 21 276 250 4 107 692 - 4 107 692 - 68 350 958 26 049 115 58 121 957 3 964 776 963 618 406 440 674 262 951 959 233 90 248 428 1 502 245 809 650 136 488 1 464 607 673 129 403 519 352 383 289 103 502 091 352 383 289 21 538 825 19 567 202 - 19 567 202 - 148 655 609 80 510 025 148 655 609 16 754 166 494 536 518 222 417 933 494 536 518 46 285 257 54 416 951 42 492 142 51 698 828 8 504 329 - 1 829 062 - 2 566 889 - 1 225 641 211 665 2 566 889 - 380 629 255 056 44 048 268 101 729 108 688 700 268 101 729 22 618 160 3 374 834 4 760 955 17 052 23 147 158 642 788 84 498 274 127 080 556 12 999 902 - Total assets 1 502 245 809 650 136 488 1 464 607 673 129 403 519 * The Historical Cost information has been shown as supplementary information for the benefit of users. Tribe28ANNUAL REPORT 202328 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023 COMPANY Inflation Adjusted Historical Cost* NOTE 31 Dec 2023 ZWL’000 31 Dec 2022 ZWL’000 31 Dec 2023 ZWL’000 31 Dec 2022 ZWL’000 SHAREHOLDERS’ FUNDS Share capital Share Premium Treasury shares reserve Share Option Reserve Other Reserve Retained earnings Total equity LIABILITIES Other liabilities Total liabilities 9.2.1 95 172 95 149 124 115 26 793 279 20 906 488 3 178 672 172 496 ( 2 045) 1 462 962 - ( 2 046) 1 236 145 - ( 394) ( 394) 354 001 129 569 - - 5 921 466 13 453 599 ( 4 308 602) ( 88 343) 34 270 833 35 689 335 ( 776 199) 213 442 14 1 165 457 1 407 1 165 751 294 1 165 457 1 407 1 165 751 294 Total shareholders’ funds and liabilities 35 436 290 35 690 742 389 552 213 736 ASSETS Cash and cash equivalents Current tax assets Other assets Group companies Deferred tax assets Total assets 19 7.3 21 24 18 14 76 2 417 66 363 14 76 14 77 259 746 2 417 54 053 35 433 717 35 430 500 387 031 159 564 67 67 14 28 35 436 290 35 690 742 389 552 213 736 The NMB Way Disruption We dare to be different and question the status quo Tribe28ANNUAL REPORT 202329 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023 GROUP Inflation Adjusted Share Capital Share Premium Treasury Shares Functional Currency Translation Reserve Share Option Reserve Revaluation Reserve Retained Earnings Total ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Balance as at 1 January 2022 94 916 20 087 263 ( 139) 7 634 508 545 919 23 970 518 92 836 801 145 169 786 Profit for the year Revaluation of land and buildings, net of tax Share options exercised Share buy back Scrip dividends paid Dividend paid Redeemable ordinary shares Employee share schemes – value of employee services - - 1 - 11 - 221 - - - 43 212 - - - - ( 1 907) 668 061 - 107 952 - - - - - - - - - - - - - - - ( 11 287) - - - - 701 513 - 57 675 767 57 675 767 2 583 050 - - - - - - - - 2 583 050 31 926 ( 1 013 567) ( 1 015 474) ( 668 072) ( 0) ( 243 844) ( 243 844) - - 108 173 701 513 Balance at 31 December 2022 95 149 20 906 488 ( 2 046) 7 634 508 1 236 145 26 553 568 148 587 085 205 010 897 Profit for the year Revaluation of land and buildings, net of tax Share options exercised Share buy back Scrip dividends paid Dividend paid Employee share schemes – value of employee services - - 23 ( 0) - - - - - - ( 3 949) 5 890 736 - - - - - - - - - - - - - - - - - - ( 23) - - - 305 160 - 275 630 378 275 630 378 51 967 431 - - - - - - - 51 967 431 - ( 453 491) ( 457 440) ( 5 890 736) - ( 1 017 151) ( 1 017 151) - 305 160 Balance at 31 December 2023 95 172 26 793 275 ( 2 046) 7 634 508 1 541 282 78 520 998 416 856 086 531 439 275 GROUP Historical Cost* Share Capital Share Premium Treasury shares Functional Currency Translation Reserve Share Option Reserve Revaluation Reserve Retained Earnings Total ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Balance as at 1 January 2022 84 19 122 ( 7) 11 620 27 768 1 915 997 5 085 121 7 059 705 Profit for the year Revaluation of land and buildings, net of tax Share options exercised Share buy back Scrip dividends paid Dividend paid Redeemable ordinary shares Employee share schemes – value of employee services - - 0 - 2 - - - 5 727 - - - - ( 387) 133 341 - 29 14 306 - - - - - - - - - - - - - - - - ( 1 496) - - - - 103 297 - 25 468 506 25 468 506 5 833 685 - - - - - - - - 5 833 685 4 231 ( 205 933) ( 206 320) ( 133 343) - ( 48 670) ( 48 670) - - 14 335 103 297 Balance at 31 December 2022 115 172 496 ( 394) 11 620 129 569 7 749 682 30 165 681 38 228 769 Profit for the year Revaluation of land and buildings, net of tax Share options exercised Share buy back Scrip dividends paid Dividend paid Employee share schemes – value of employee services - - 9 - - - ( 0) ( 3 949) - - - 3 006 176 - - - - - - - - - - - - - - - - - - ( 9) - - - 229 682 - 385 559 866 385 559 866 82 399 807 - - - - - - - 82 399 807 - ( 453 491) ( 457 440) ( 3 006 176) - ( 500 372) ( 500 372) - 229 682 Balance at 31 December 2023 124 3 174 723 ( 394) 11 620 359 242 90 149 489 411 765 508 505 460 312 * The Historical Cost information has been shown as supplementary information for the benefit of users. Tribe28ANNUAL REPORT 202330 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023 COMPANY Share Capital Share Premium Inflation Adjusted Treasury shares reserve Currency Translation Reserve Share Option Reserve Revaluation Reserve Retained Earnings Total ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Balance as at 1 January 2022 94 916 20 087 263 ( 139) Profit for the period Share options exercised Share buy back Scrip dividends paid Dividend paid - 1 - 11 - - 43 212 - - - ( 1 906) 668 064 - Redeemable ordinary shares 221 107 953 Employee share schemes – value of employee services - - - - - - Balance at 31 December 2022 95 149 20 906 492 ( 2 045) Profit for the period Share buy back Scrip dividends paid Dividends paid Employee scheme - value of employee services - - ( 0) ( 3 949) 5 890 736 - - - 23 - - - - - - - - - - - - - - - - - - 545 919 - ( 11 287) - - - - 701 513 1 236 145 - - - - 226 817 Balance at 31 December 2023 95 172 26 793 279 ( 2 045) - 1 462 962 - - - - - - - - - - - - - 13 280 187 34 008 146 1 578 163 1 578 163 - 31 926 ( 1 013 566) ( 1 015 472) ( 668 075) - ( 243 844) ( 243 844) - 108 174 520 734 1 222 247 13 453 599 35 689 340 6 173 470 6 173 470 ( 453 491) ( 457 440) ( 5 890 736) - ( 7 361 377) ( 7 361 377) - 226 840 5 921 466 34 270 833 COMPANY Share Capital Share Premium Inflation Adjusted Treasury shares reserve Currency Translation Reserve Share Option Reserve Revaluation Reserve Retained Earnings Total ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Balance as at 1 January 2022 84 19 122 ( 7) Profit for the period Share options exercised Share buy back Scrip dividends paid Dividend paid Redeemable ordinary shares Employee share schemes – value of employee services - 0 - 2 - 29 - - 5 727 - - - ( 387) 133 341 - 14 306 - - - - - Balance at 31 December 2022 115 172 496 ( 394) Profit for the period Share buy back Scrip dividends paid Dividends paid Employee scheme - value of employee services - ( 0) - - 9 3 006 177 - - - - - - - - - Balance at 31 December 2023 124 3 178 672 ( 394) - - - - - - - - - - - - - - - 27 768 - ( 1 496) - - - - 103 297 129 569 - - - - 224 432 - - - - - - - - - - - - - ( 27 598) 19 369 302 424 302 424 - 4 231 ( 205 933) ( 206 320) ( 133 343) - ( 48 670) ( 48 670) - 14 335 24 777 128 073 ( 88 343) 213 442 ( 260 220) ( 260 220) ( 453 491) ( 453 491) ( 3 006 177) 9 ( 500 372) ( 500 372) - 224 432 354 001 - ( 4 308 602) ( 776 199) * The Historical Cost information has been shown as supplementary information for the benefit of users. These are not required in terms of International Accounting Standard (IAS) 29 “Financial Reporting in Hyperinflationary Economies”. Tribe28ANNUAL REPORT 202331 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023 GROUP Inflation Adjusted Historical Cost* Note 31 Dec 2023 ZWL’000 31 Dec 2022 ZWL’000 31 Dec 2023 ZWL’000 31 Dec 2022 ZWL’000 CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Non-cash items: - Net monetary Loss - Depreciation (excluding right of use assets) - Depreciation –Right of use assets - Amortisation of intangible assets 322 341 238 77 226 628 435 054 478 28 977 636 65 818 337 31 352 720 6 6 6 5 473 365 2 856 869 1 386 126 2 926 114 1 259 745 1 392 072 - 1 596 336 ( 5 716 912) ( 6 800) 164 113 ( 6 063 858) ( 283 695) - - ( 263 762) 81 046 ( 3 322 605) - 1 559 712 458 700 6 094 14 961 385 - - 222 437 71 926 4 395 1 191 393 ( 1 189 691) ( 2 311 833) ( 126 465) ( 254 724) - ( 3 322 605) ( 218 556) ( 1 803) ( 26 722) - ( 142 186 114) ( 32 823 582) ( 236 921 078) ( 16 380 731) - Impairment losses on financial assets measured at amortised costs 20.3 8 394 325 - Sundry income - non -cash - Investment properties fair value gains - Trade and other investments fair value gains adjustment - Profit on disposal of property and equipment - Loss/(profit) on disposal of investment properties - Profit in disposal of non-current assets held for sale - Unrealised foreign exchange gain 25 23 5.3 5.3 ( 158 229 037) ( 22 532 677) ( 158 229 037) ( 4 689 059) - Non-cash employee benefits expense – share-based payments 305 160 701 513 229 682 103 297 Operating cash flows before changes in operating assets and liabilities 96 591 090 55 255 575 51 104 309 8 064 521 Changes in operating assets and liabilities Increase in customer deposits Increase in other liabilities Increase in loans and advances Increase in other assets 272 811 939 42 673 674 83 493 295 475 315 699 42 789 270 11 223 592 86 117 167 9 041 268 ( 265 590 748) ( 91 199 645) ( 448 101 647) ( 11 924 809) ( 7 158 362) ( 43 194 500) ( 42 196 512) ( 7 793 984) - Net cash generated from operations 134 561 146 51 614 455 121 241 028 9 904 563 Corporate tax paid ( 20 287 014) ( 14 251 002) ( 15 566 380) ( 2 472 504) Net cash inflow from operations 114 274 132 37 363 453 105 674 648 7 432 059 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of intangible assets (note 26) Acquisition of investment securities Net acqusitions of RBZ digital gold tokens Proceeds on disposal of property and equipment Dividend income from trade and other investments Acquisition of trade and other investments Acquisition of property and equipment (note 27) Proceeds on disposal of investment properties Acquisition of investment properties (note 25) Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of lease liabilities Cash dividend paid Issue of shares Borrowings repaid Borrowings raised Share buyback 26 17 23 27 25 15 16 16 - ( 75 513) - ( 346 421 331) ( 79 500 160) ( 132 072 378) ( 4 319 410) 263 762 - - - 9 690 - - ( 4 319 410) 126 465 - - ( 14 133) ( 6 143 914) - 1 515 - - ( 8 927 055) ( 12 071 479) ( 4 197 432) ( 2 162 776) 3 881 320 748 884 2 611 986 134 369 ( 21 108 234) ( 18 493 384) ( 11 345 113) ( 2 764 347) ( 376 630 948) ( 109 381 962) ( 149 195 882) ( 10 949 286) ( 3 694 925) ( 1 017 151) - ( 318 454) ( 243 844) 31 925 ( 2 140 382) ( 500 372) - ( 28 795 014) ( 1 589 812) ( 16 684 703) 270 808 081 ( 457 440) 11 844 318 ( 1 015 612) 258 697 770 ( 457 440) ( 70 173) ( 48 670) 4 231 ( 322 394) 16 873 751 ( 206 320) Net cash inflow from financing activities 236 843 551 8 708 521 238 914 873 16 230 425 Net (decrease)/increase in cash and cash equivalents ( 25 513 265) ( 63 309 988) 195 393 639 Net foreign exchange and monetary adjustments on cash and cash equivalents 274 394 463 86 327 431 135 450 825 Cash and cash equivalents at beginning of the year 103 502 091 80 484 648 21 538 825 12 713 198 3 953 365 4 872 262 Cash and cash equivalents at the end of the year 19 352 383 289 103 502 091 352 383 289 21 538 825 ADDITIONAL INFORMATION ON OPERATING CASH FLOWS FROM INTEREST Interest received 129 182 666 101 251 280 188 199 343 15 395 364 Interest paid (including interest on lease liabilities) ( 24 751 971) ( 30 645 349) ( 9 678 924) ( 4 591 382) Tribe28ANNUAL REPORT 202332 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023 COMPANY Inflation Adjusted Historical Cost* Note 31 Dec 2023 ZWL’000 31 Dec 2022 ZWL’000 31 Dec 2023 ZWL’000 31 Dec 2022 ZWL’000 CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Non-cash items: - Net monetary Loss 6 173 469 1 577 873 ( 260 220) 302 410 ( 6 574 800) ( 124 185) - - Operating cash flows before changes in operating assets and liabilities ( 401 331) 1 453 688 ( 260 220) 302 410 Changes in operating assets and liabilities (Decrease)/increase in other liabilities Decrease/(increase) in other assets 1 164 050 ( 3 447) 1 165 457 - 257 329 ( 220 020) 51 637 ( 51 649) Net cash generated/(used) from operations 1 020 048 1 230 221 956 874 250 761 Net cash inflow/(outflow) from operations 1 020 048 1 230 221 956 874 250 761 CASH FLOWS FROM FINANCING ACTIVITIES Cash dividend paid Issue of shares Share buy-back - - ( 243 844) 31 925 - - ( 48 671) 4 231 ( 457 440) ( 1 015 472) ( 251 120) ( 206 320) Net cash outflow from financing activities ( 457 439) ( 1 227 390) ( 251 120) ( 250 760) Net (decrease)/increase in cash and cash equivalents 562 608 2 831 705 754 Net foreign exchange and monetary adjustments on cash and cash equivalents ( 562 660) ( 2 995) ( 705 754) Cash and cash equivalents at beginning of the year 66 229 Cash and cash equivalents at the end of the year 19 14 66 14 14 1 ( 1) 14 14 Tribe28ANNUAL REPORT 202333 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL INFORMATION The NMBZ Holdings Limited Group (the Group) comprises the company (NMBZ Holdings Limited) and wholly owned subsidiaries, NMB Bank Limited (the Bank), NMB Properties Limited and Xplug Solutions Limited. NMB Bank Limited was established in 1993 as a merchant bank incorporated under the Companies and Other Business Entities Act (Chapter 24:31) of Zimbabwe and is now registered as a commercial bank in terms of the Banking Act (Chapter 24:20) of Zimbabwe. It operates through a branch and agency network in Harare, Bulawayo, Masvingo, Kwekwe, Mutare, Gweru, Bindura, Chinhoyi and Victoria Falls. NMB Properties Limited is a property development and services company established in 2023. It was set up to broaden the NMBZ Holdings product offering suite and optimize a significant portfolio of properties and real estate opportunities within and beyond the Group. Xplug Solutions Limited services is a subsidiary of the NMBZ Holding Group whose main thrust is to use technology to transform any size of business into achieving business growth, agility and composability. The Holding Company is incorporated and domiciled in Zimbabwe and is an investment holding company. Its registered office address is 19207 Liberation Legacy Way, Borrowdale, Harare. The Bank is exposed to the following risks in its operations: liquidity risk, credit risk, market risk, operational risk, foreign currency exchange rate risk and interest rate risk. 2. SUMMARY SIGNIFICANT ACCOUNTING POLICIES 2.1. BASIS OF PREPARATION Compliance with local legislation The condensed consolidated financial statements have been prepared in the manner required by the Companies and Other Business Entities Act (Chapter 24:31) of Zimbabwe and the Banking Act (Chapter 24:20) of Zimbabwe and Zimbabwe Stock Exchange (ZSE) Listing Rules of 2019. In addition, the Group’s Banking subsidiary is generally compliant with the following statutes: • RBZ Banking Regulations, Statutory Instrument 205 of 2000; • Bank Use Promotion and Suppression of Money Laundering (Chapter 24:24); • Exchange Control Act (Chapter 22:05); • Deposit Protection Act (Chapter 24.29); • National Payments Systems Act (Chapter 24:23); • Capital Adequacy and prudential lending guidelines. Compliance with IFRS The condensed consolidated financial statements are prepared with the aim of complying fully with International Financial Reporting Standards (IFRSs) and have been able to achieve this with the exception of IAS 21 - The Effects of Changes in Foreign Exchange Rates, IFRS 9 – Financial Instruments, IFRS 13 - Fair Value Measurement, IAS 8 – Accounting Policies, Changes in accounting estimates and errors and the consequential impact on IAS 29 – Financial Reporting in Hyperinflationary Economies as indicated in the Independent Auditor’s Report. The consolidated financial statements including comparatives, have been prepared under the inflation adjusted accounting basis to account for changes in the general purchasing power of the ZWL. The restatement is based on the Consumer Price Index at the statement of financial position date. The indices are derived from the monthly inflation rates which are issued by the Zimbabwe National Statistics Agency (ZIMSTAT) until 31 January 2023. On the 3rd of March 2023, the Government issued SI 27 of 2023, which defined the term “rate of inflation” and introduced a new inflation rate measurement method. Consequently, ZIMSTAT stopped reporting ZWL inflation and CPI figures and only released blended CPI figures. There were further changes that introduced a geometric method of calculating inflation in September 2023. These changes have created a challenge for the Group, as it had been using the ZWL CPI for reporting hyperinflated historical figures. The use of indices issued by ZIMSTAT made comparability possible for business in Zimbabwe. While it is preferable for all companies using the ZWL functional currency to use the same index, the standard provides that each business may determine an index for the purpose of compliance with IFRS. The determination of the indices is a significant area of judgement. The timing of the resolution of the uncertainty regarding the CPI is unknown. Refer to the table below for the CPI sensitivity analysis ZIMSTAT publishes monthly statistics on the Total Consumption Poverty Line (TCPL) in ZWL , which measures the amount required to purchase both non-food and food items. By analysing the correlation between the movement in TCPL and the officially published CPI from January 2019 to January 2022, a very strong relationship with a coefficient correlation of 0.99 was observed and management consequently determined that from February 2023 going forward CPI can be estimated by adjusting the last published CPI based on the monthly movement of the TCPL. The conversion factors used to restate the financial statements as at 31 December 2023 are as follows: Dates 31 Dec 18 31 Dec 19 31 Dec 20 31 Dec 21 31 Dec 22 31 Dec 23 Indices 88.81 551.63 2474.52 3977.46 13672.91 65703.44 Conversion factor 739.8202 119.1078 26.5520 16.5189 4.8054 1.0000 The indices have been applied to the historical costs of transactions and balances as follows: Tribe28ANNUAL REPORT 202334 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • All comparative figures from 31 December 2018 to date have been restated by applying the change in the index to 31 December 2023; • Income statement transactions have been restated by applying the change in the index from the approximate date of the transactions to 31 December 2023; • Gains and losses arising from the monetary assets or liability positions have been included in the income statement; • Non-monetary assets and liabilities have been restated by applying the change in the index from the date of the transaction to 31 December 2023; • Property and equipment and accumulated depreciation have been restated by applying the change in the index from the date of their purchase or re-assessment to 31 December 2023; • Equity has been restated by applying the change in index from the date of issue to 31 December 2023; The net impact of applying the procedures above is shown in the statement of comprehensive income as the gain or loss on net monetary position. 2.1.1. CPI SENSITIVITY The Group considered various methodologies in determining the ZWL inflation indices to use for the purposes of preparation of consolidated inflation adjusted financial statements. The methodologies applied were consistent with those required by International Accounting Standard (IAS 29) – Financial Reporting in Hyperinflationary Economies. In determining the indices, the group settled on the movement in TCPL as the best estimate based on the analysis above. The analysis below seeks to demonstrate the sensitivity of the indices used in preparing hyperinflation accounts. If the CPI as determined by TCPL for the year increased by 10% and 20%, the effect of the movement on key financial metrics will be as follows Operating income decrease Profit for the year decrease Total assets increase Total equity and reserves increase Total liabilities increase Scenario 1: Increase by 10% ZWL ‘000 ( 5 346 196) ( 10 992 949) 3 763 814 2 597 896 1 165 917 Scenario 2: Increase by 20% ZWL ‘000 ( 10 692 393) ( 21 985 898) 7 527 627 5 195 793 2 331 835 IAS 29 discourages the publication of historical results as a supplement to the inflation adjusted results. However, historical results have been published as additional information for the users of the Group’s financial statements. The Auditors have not expressed an opinion on the historical results. Functional and presentation currency For the purposes of the consolidated financial statements, the results and financial position of the Group are expressed in Zimbabwe dollars which is the functional currency of the Group, and the presentation currency for the consolidated financial statements. The consolidated financial statements are rounded to the nearest dollar. Comparative financial information The Group financial statements comprise the consolidated and separate statements of financial position, comprehensive income, changes in equity and cash flows. The comparative information covers a period of twelve months. 2.2. BASIS OF CONSOLIDATION The consolidated and separate financial statements comprise of the financial statements of the Group and company. All companies in the Group have a December year end. Inter-group transactions, balances, income and expenses are eliminated on consolidation. 2.2.1. BUSINESS COMBINATIONS Business combinations are accounted for using the acquisition method as at the acquisition date – i.e. when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Subsidiaries Subsidiaries are those investees controlled by the Group. The Group controls an investee if it is exposed to, or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the subsidiary. The financial statements of subsidiaries are included in the consolidated financial statements, using the acquisition method, from the date that control effectively commences until the date that control effectively ceases. In the holding company’s separate financial statements, investment in subsidiaries are accounted for at cost. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if they are related to the issue of debt or equity securities. Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not re-measured and settlement is accounted for within equity. Otherwise subsequent changes in the fair value of the contingent consideration are recognised in profit or loss. Tribe28ANNUAL REPORT 202335 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. 2.3. FOREIGN CURRENCY TRANSACTIONS Transactions in foreign currencies are translated into Zimbabwe Dollars (ZWL), which is the respective functional currency of Group entities at the spot exchange rates at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the spot exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between the amortised cost in the functional currency at the beginning of the year, adjusted . for effective interest and payments during the year, and the amortised cost in the foreign currency translated at the spot exchange rate at the end of the year. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the spot exchange rate at the date on which the fair value is determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the spot exchange rate at the date of the transaction. Foreign currency differences arising on translation are generally recognised in profit or loss. 2.4. TAXATION Income tax Income tax expenses comprise current, capital gains and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income. Current tax Current tax comprises expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using rates enacted or substantively enacted at the reporting date in the country where the Group operates and generates taxable income and any adjustment to tax payable in respect of previous years. Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: • temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; • temporary differences related to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future; and • taxable temporary differences arising on the initial recognition of goodwill. Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. For this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through sale, and the Group has not rebutted this presumption. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. Additional taxes that arise from the distribution of dividends by the Bank are recognised at the same time as the liability to pay the related dividend is recognised. These amounts are generally recognised in profit or loss because they generally relate to income arising from transactions that were originally recognised in profit or loss. 2.5. FINANCIAL INSTRUMENTS Measurement Methods Amortised cost and effective interest rates The amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, an adjustment for any loss allowance. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset (i.e. its amortised cost before any impairment allowance) or to the amortised cost of a financial liability. The calculation does not consider expected credit losses and includes transaction costs, premiums or discounts and fees and points paid or received that are integral to the effective interest rate, such as origination fees. For purchased or originated credit-impaired (‘POCI’) financial assets – assets that are credit-impaired at initial recognition - the Bank calculates the credit-adjusted effective interest rate, which is calculated based on the amortised cost of the financial asset instead of its gross carrying amount and incorporates the impact of expected Tribe28ANNUAL REPORT 202336 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS credit losses in estimated future cash flows. When the Bank revises the estimates of future cash flows, the carrying amount of the respective financial assets or financial liability is adjusted to reflect the new estimate discounted using the original effective interest rate. Any changes are recognised in profit or loss. Interest Income Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except for: a) Purchased or originated credit-impaired (POCI) financial assets, for which the original credit-adjusted effective interest rate is applied to the amortised cost of the financial asset. b) Financial assets that are not ‘POCI’ but have subsequently become credit-impaired (or ‘stage 3’), for which interest revenue is calculated by applying the effective interest rate to their amortised cost (i.e net of the expected credit loss provision). Initial recognition and measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of the instrument. Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Bank commits to purchase or sell the asset. At initial recognition, the Bank measures a financial asset or financial liability at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss; transaction costs that are incremental and directly attributable to the acquisition or issuance of the financial asset or financial liability respectively, such as fees and commissions. Transaction costs of financial assets and financial liabilities carried at fair value through profit or loss are expensed in profit or loss. Immediately after initial recognition, an expected credit loss allowance (ECL) is recognised for financial assets measured at amortised cost and investments in debt instruments measured at FVOCI, which results in an accounting loss being recognised in profit or loss when an asset is newly originated. When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, the entity recognises the difference as follows: a) When the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or based on a valuation technique that uses only data from observable markets, the difference is recognised as a gain or loss. b) In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined individually. It is either amortised over the life of the instrument, deferred until the instrument’s fair value can be determined using market observable inputs, or realised through settlement. Financial Assets (i) Classification and subsequent measurement From 1 January 2018, the Group has applied IFRS 9 and classifies its financial assets in the measurement categories: • Fair value through profit or loss (FVPL); • Fair value through other comprehensive income (FVOCI); or • Amortised cost. The classification requirements for debt and equity instruments are described below: Debt instruments Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective, such as loans, government and corporate bonds and trade receivables purchased from clients in factoring arrangements without recourse. Classification and subsequent measurement of debt instruments depend on: • the Bank’s business model for managing the asset; and • the cash flow characteristics of the asset. Based on these factors, the Bank classifies its debt instruments into one of the following three measurement categories: • Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest (‘SPPI’), and that are not designated at FVPL, are measured at amortised cost. The carrying amount of these assets is adjusted by any expected credit loss allowance. Interest income from these financial assets is included in interest and similar income using the effective interest rate method. • Fair value through other comprehensive income (FVOCI): Financial assets that are held for collection of contractual cash flows and for selling the assets, where the assets’ cash flows represent solely payments of principle and interest and that are not designated at FVPL, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses on the instrument’s amortised cost which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in “Net Investment Income’. Interest income from these financial assets is included in ‘Interest Income’ using the effective interest rate method. • Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented in the profit or loss statement within ‘Net Trading Income” in the period in which it arises, unless it arises from debt instruments that were designated at fair value or which are not held for trading, in which case they are presented separately in ‘Net Investment Income’. Interest income from these financial assets is included in “Interest income” using the effective interest rate method. Business model: the business model reflects how the Bank manages the assets in order to generate cash flows. That is, whether the Bank’s Tribe28ANNUAL REPORT 202337 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS objective is solely to collect the contractual cash flows taking. These securities are classified in the ‘other’ business model and measured at FVPL. from the assets or is to collect both the contractual cash flows and cash flows arising from the sale of assets. If neither of these is applicable (e.g. financial assets are held for trading purposes), then the financial assets are classified as part of ‘other’ business model and measured at FVPL. Factors considered by the Bank in determining the business model for a group of assets include past experience on how the cash flows for these assets were collected, how the asset’s performance is evaluated and reported to key management personnel, how risks are assessed and managed and how managers are compensated. Securities held for trading are held principally for the purpose of selling in the near term or are part of a portfolio of financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. These securities are classified in the ‘other’ business model and measured at FVPL. Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and sell, the Bank assesses whether financial instruments’ cash flows represent solely payments of principal and interest (the “SPPI” test). In making this assessment, the Bank considers whether the contractual cash flows are consistent with a basic lending arrangement i.e. interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin that is consistent with a basic lending arrangement. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset is classified and measured at fair value through profit or loss. The Bank reclassifies debt investments when and only when its business model for managing those assets changes. The reclassification takes place from the start of the first reporting period following the change. Such changes are expected to be very infrequent and none occurred during the period. Equity instruments Equity instruments are instruments that meet the definition of equity from the issuer’s perspective; that is, instruments that do not contain a contractual obligation to pay and that evidence a residual interest in the issuer’s net assets. Examples of equity instruments include basic ordinary shares. The Bank subsequently measures all equity investments at fair value through profit or loss, except where the Bank’s management has elected, at initial recognition, to irrevocably designate an equity investment at fair value through other comprehensive income. The Bank policy is to designate equity investments as FVOCI when those investments are held for purposes other than to generate investment returns. When this election is used, fair value gains and losses are recognised in OCI and are not subsequently reclassified to profit or loss, including on disposal. Impairment losses (and reversal of impairment losses) are not reported separately from other changes in fair value. Dividends, when representing a return on such investments, continue to be recognised in profit or loss as other income when the Bank’s right to receive payments is established. Gains and losses on equity investments at FVPL are included in the ‘Other Income’ line in the statement of profit or loss. (ii) Impairment The Bank recognises loss allowances for Expected Credit Losses (ECLs) on the following financial instruments that are not measured at Fair Value through Profit or Loss (FVTPL): • loans and advances to banks; • loans and advances to customers; • debt investment securities; • lease receivables; • loan commitments issued; and • financial guarantee contracts issued. No impairment loss is recognised on equity investments. With the exception of POCI financial assets (which are considered separately below), ECLs are measured through a loss allowance at an amount equal to: • 12-month ECL, i.e. lifetime ECL that result from those default events on the financial instrument that are possible within 12 months after the reporting date, (referred to as Stage 1); or • Full lifetime ECL, i.e. lifetime ECL that result from all possible default events over the life of the financial instrument, (referred to as Stage 2 and Stage 3). A loss allowance for full lifetime ECL is required for a financial instrument if the credit risk on that financial instrument has increased significantly since initial recognition. Other Financial Assets The Bank holds other financial assets that are neither cash, debt nor equity instruments, namely ZiG Gold-Backed Digital Tokens (ZiG). These are a form of digital currency that was introduced by the Reserve Bank of Zimbabwe (RBZ) in October 2023 as a means to increase fungibility of the gold coins introduced in 2022 by the RBZ. The Bank holds both its own ZiG and on behalf of its customers as part of its custodial services. In relation to the ZiG held on behalf of customers, the Bank has made a determination that it does not hold control over the Zig in accordance with the guidance from the Conceptual Framework as it cannot obtain economic benefits flowing from holding the ZiG and has no right to deploy the ZiG held on behalf of customers in its activities. This therefore means that the ZiG held on behalf of customers does not qualify as either an asset or a liability in the Bank’s financial statements and it is not disclosed in the Bank’s financial statements. i. Recognition of ZiG purchased by the Bank In relation to the ZiG purchased by the Bank, as there is no specific IFRS that directly applies to its classification, recognition and measurement, according to IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors, management has elected to recognise it as a financial asset according to IAS 32: Financial Instruments - Presentation. This is because the Bank has a contractual right to receive cash from the RBZ after a 180 day redemption period. Tribe28ANNUAL REPORT 2023 38 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ii. Classification and measurement The ZiG purchased by the bank is classified and measured at Fair Value Through Profit or Loss (FVTPL) as the ZiG does not have an interest component. Expected Credit Losses ECLs are a probability-weighted estimate of the present value of credit losses. These are measured as the present value of the difference between the cash flows due to the Bank under the contract and the cash flows that the Bank expects to receive arising from the weighting of multiple future economic scenarios, discounted at the asset’s Effective Interest Rate (EIR). For undrawn loan commitments, the ECL is the difference between the present value of the difference between the contractual cash flows that are due to the Bank if the holder of the commitment draws down the loan and the cash flows that the Bank expects to receive if the loan is drawn down; and For financial guarantee contracts, the ECL is the difference between the expected payments to reimburse the holder of the guaranteed debt instrument less any amounts that the Bank expects to receive from the holder, the debtor or any other party. The Bank measures ECL on an individual basis, or on a collective basis for portfolios of loans that share similar economic risk characteristics. The measurement of the loss allowance is based on the present value of the asset’s expected cash flows using the asset’s original EIR, regardless of whether it is measured on an individual basis or a collective basis. Credit-impaired financial assets A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired include observable data about the following events: a) significant financial difficulty of the issuer or the borrower; b) a breach of contract, such as a default or past due event; c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider; d) it becoming probable that the borrower will enter bankruptcy or other financial reorganisation; e) the disappearance of an active market for that financial asset because of financial difficulties; or f) the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses. It may not be possible to identify a single discrete event—instead, the combined effect of several events may have caused financial assets to become credit-impaired. Purchased or originated credit-impaired (POCI) financial assets For POCI the Bank only recognises the cumulative changes in lifetime expected credit losses since initial recognition. At each reporting date, the Bank recognises in profit or loss the amount of the change in lifetime expected credit losses as an impairment gain or loss. The Bank recognises favourable changes in lifetime expected credit losses as an impairment gain, even if the lifetime expected credit losses are less than the amount of expected credit losses that were included in the estimated cash flows on initial recognition. The Bank assesses on a forward-looking basis the expected credit losses (‘ECL’) associated with its debt instrument assets carried at amortised cost and FVOCI and with the exposure arising from loan commitments and financial guarantee contracts. The Bank recognises a loss allowance for such losses at each reporting date. The measurement of ECL reflects: • An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; • The time value of money; and • Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions. For loan commitments and financial guarantee contracts, the loss allowance is recognised in other liabilities. The Bank keeps track of the changes in the loss allowance for financial assets separately from those for loan commitments and financial guarantee contracts. However, if a financial instrument includes both a loan (i.e. financial asset) and an undrawn commitment (i.e. loan commitment) component and the Bank does not separately identify the expected credit losses on the loan commitment component from those on the financial asset component, the expected credit losses on the loan commitment is recognised together with the loss allowance for the financial asset. To the extent that the combined expected credit losses exceed the gross carrying amount of the financial asset, the expected credit losses is recognised in other liabilities. Definition of default Critical to the determination of ECL is the definition of default. The definition of default is used in measuring the amount of ECL and in the determination of whether the loss allowance is based on 12-month or lifetime ECL, as default is a component of the probability of default (PD) which affects both the measurement of ECLs and the identification of a significant increase in credit risk. The Bank considers the following as constituting an event of default: • The borrower is past due more than 90 days on any material credit obligation to the Bank or; • The borrower is unlikely to pay its credit obligations to the Bank in full. The definition of default is appropriately tailored to reflect different characteristics of different types of assets. Overdrafts are considered as being past due once the customer has breached an advised limit or has been advised of a limit smaller than the current amount outstanding. Tribe28ANNUAL REPORT 202339 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS When assessing if the borrower is unlikely to pay its credit obligation, the Bank takes into account both qualitative and quantitative indicators. The information assessed depends on the type of the asset, for example in corporate lending a qualitative indicator used is the breach of covenants, which is not relevant for retail lending. Quantitative indicators, such as overdue status and non-payment on another obligation of the same counterparty are key inputs in this analysis. The Bank uses a variety of sources of information to assess default which are either developed internally or obtained from external sources. Significant increase in credit risk The Bank monitors all financial assets, undrawn loan commitments and financial guarantee contracts that are subject to the impairment requirements to assess whether there has been a significant increase in credit risk since initial recognition. If there has been a significant increase in credit risk the Bank will measure the loss allowance based on lifetime rather than 12-month ECL. The Bank’s accounting policy is not to use the practical expedient that financial assets with ‘low’ credit risk at the reporting date are deemed not to have had a significant increase in credit risk. As a result the Bank monitors all financial assets, undrawn loan commitments and financial guarantee contracts that are subject to impairment for significant increase in credit risk. In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Bank compares the risk of a default occurring on the financial instrument at the reporting date based on the remaining maturity of the instrument with the risk of a default occurring that was anticipated for the remaining maturity at the current reporting date when the financial instrument was first recognised. In making this assessment, the Bank considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort, based on the Bank’s historical experience and expert credit assessment including forward-looking information. Multiple economic scenarios form the basis of determining the probability of default at initial recognition and at subsequent reporting dates. Different economic scenarios will lead to a different probability of default. It is the weighting of these different scenarios that forms the basis of a weighted average probability of default that is used to determine whether credit risk has significantly increased. For corporate lending, forward-looking information includes the future prospects of the industries in which the Bank’s lenders operate, obtained from economic expert reports, financial analysts, governmental bodies and other similar organisations, as well as consideration of various internal and external sources of actual and forecast economic information. For the retail portfolio, forward looking information includes the same economic forecasts as the corporate portfolio with additional forecasts of local economic indicators, particularly for regions with a concentration to certain industries, as well as internally generated information of customer payment behaviour. The Bank allocates its counterparties to a relevant internal credit risk grade depending on their credit quality. The quantitative information is a primary indicator of significant increase in credit risk and is based on the change in lifetime PD by comparing: • the remaining lifetime PD at the reporting date; with • the remaining lifetime PD for this point in time that was estimated based on facts and circumstances at the time of initial recognition of the exposure. The PDs used are forward looking and the Bank uses the same methodologies and data used to measure the loss allowance for ECL. The qualitative factors that indicate significant increase in credit risk are reflected in PD models on a timely basis. However, the Bank still considers separately additional qualitative factors to assess if credit risk has increased significantly. For corporate lending there is particular focus on assets that are included on the Bank’s ‘watch list’ and for the retail portfolio the Bank considers the expectation of forbearance and payment holidays, credit scores and any other changes in the borrower’s circumstances which are likely to adversely affect one’s ability to meet contractual obligations. Given that a significant increase in credit risk since initial recognition is a relative measure, a given change, in absolute terms, in the PD will be more significant for a financial instrument with a lower initial PD than compared to a financial instrument with a higher PD. The Bank assumes that when an asset becomes 30 days past due, the Bank considers that a significant increase in credit risk has occurred and the asset is in stage 2 of the impairment model, i.e. the loss allowance is measured as the lifetime ECL. (iii) Modification of loans The Bank sometimes renegotiates or otherwise modifies the contractual cash flows of loans to customers. When this happens, the Bank assesses whether or not the new terms are substantially different to the original terms. The Bank does this by considering, among others, the following factors: • If the borrower is in financial difficulty, whether the modification merely reduces the contractual cash flows to amounts the borrower is expected to be able to pay. • Whether any substantial new terms are introduced, such as a profit share/equity-based return that substantially affects the risk profile of the loan. • Significant extension of the loan term when the borrower is not in financial difficulty. Significant change in the interest rate. • Change in the currency the loan is denominated in. • Insertion of collateral, other security or credit enhancements that significantly affect the credit risk associated with the loan. If the terms are substantially different, the Bank derecognises the original financial asset and recognises a ‘new’ asset at fair value and recalculates the new effective interest rate for the asset. The date of renegotiation is consequently considered to be the date of initial recognition for impairment calculation purposes, including for the purpose of determining whether a significant increase in credit risk has occurred. However, the Bank also assesses whether the new financial asset recognised is deemed to be credit-impaired at initial recognition, especially in circumstances where the renegotiation was driven by the debtor being unable to make the originally agreed payments. Differences in the carrying amount are also recognised in profit or loss as a gain or loss on derecognition. Tribe28ANNUAL REPORT 202340 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS If the terms are not substantially different, the renegotiation or modification does not result in derecognition, and the Bank recalculates the gross carrying amount based on the revised cash flows of the financial asset and recognises a modification gain or loss in profit or loss. The new gross carrying amount is recalculated by discounting the modified cash flows at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). (iv) Derecognition other than on a modification Financial assets, or a portion thereof, are derecognised when the contractual rights to receive the cash flows from the assets have expired, or when they have been transferred and either: • the Bank transfers substantially all the risks and rewards of ownership, or • the Bank neither transfers nor retains substantially all the risks and rewards of ownership and the Bank has not retained control. The Bank enters into transactions where it retains the contractual rights to receive cash flows to other entities and transfers substantially all of the risks and rewards. These transactions are accounted for as ‘pass through’ transfers that result in derecognition if the Bank: i) Has no obligation to make payments unless it collects equivalent amounts from the assets; ii) Is prohibited from selling or pledging the assets; and iii) Has an obligation to remit any cash it collects from the assets without material delay. Collateral (shares and bonds) furnished by the Bank under standard repurchase agreements and securities lending and borrowing transactions are not derecognised because the Bank retains substantially all the risks and rewards on the basis of the predetermined repurchase price, and the criteria for derecognition are therefore not met. This also applies to certain securitisation transactions in which the Bank retains a subordinated residual interest. Financial Liabilities Classification and subsequent measurement In both the current and prior period, financial liabilities are classified as subsequently measured at amortised cost, except for: Financial liabilities at fair value through profit or loss: this classification is applied to financial liabilities held for trading (e.g. short positions in the trading booking) and other financial liabilities designated as such at initial recognition. Gains or losses on financial liabilities designated at fair value through profit or loss are presented partially in other comprehensive income (the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability, which is determined as the amount that is not attributable to changes in market conditions that give rise to market risk) and partially profit or loss (the remaining amount of change in the fair value of the liability). This is unless such a presentation would create, or enlarge, an accounting mismatch, in which case the gains and losses attributable to changes in the credit risk of the liability are also presented in profit or loss; Financial liabilities arising from the transfer of financial assets which did not qualify for derecognition, whereby a financial liability is recognised for the consideration received for the transfer. In subsequent periods, the Bank recognises any expense incurred on the financial liability. Derecognition Financial liabilities are derecognised when they are extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires). The exchange between the Bank and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in covenants are also taken into consideration. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability. Financial guarantee contracts and loan commitments Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial guarantees are given to banks, financial institutions and others on behalf of customers to secure loans, overdrafts and other banking facilities. Financial guarantee contracts are initially measured at fair value and subsequently measured at the higher of: • The amount of the loss allowance; and • The premium received on initial recognition less income recognised in accordance with the principles of IFRS 15. Loan commitments provided by the Bank are measured as the amount of the loss allowance. The Bank has not provided any commitment to provide loans at below-market interest rate, or that can be settled net in cash or by delivering or issuing another financial instrument. For loan commitments and financial guarantee contracts, the loss allowance is recognised in other liabilities. However, for contracts that include both a loan and an undrawn commitment and the Bank cannot separately identify the expected credit losses on the undrawn commitment component from those on the loan component, the expected credit losses on the undrawn commitment are recognised together with the loss allowance for the loan. To the extent that the combined expected credit losses exceed the gross carrying amount of the loan, the Tribe28ANNUAL REPORT 202341 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS expected credit losses are recognised in other liabilities. Critical accounting estimates and judgements The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Bank’s accounting policies. Note 2.20 provides an overview of the areas that involve a higher degree of judgement or complexity, and major sources of estimation uncertainty that have a significant risk of resulting in a material adjustment within the next financial year. Detailed information about each of these estimates and judgements is included in the related notes together with information about the basis of calculation for each affected line item in the financial statements. Measurement of the expected credit loss allowance The measurement of the expected credit loss allowance for financial assets measured at amortised cost and FVOCI is an area that requires the use of complex models and significant assumptions about future economic conditions and credit behaviour (e.g. the likelihood of customers defaulting and the resulting losses). A number of significant judgements are also required in applying the accounting requirements for measuring ECL, such as: • Determining criteria for significant increase in credit risk; • Choosing appropriate models and assumptions for the measurement of ECL; • Establishing the number and relative weightings of forward-looking scenarios for each type of product/market and the associated ECL; and • Establishing groups of similar financial assets for the purposes of measuring ECL. The Bank evaluates ECLs for 7 portfolios of audited corporates with overdraft limits, audited corporates without overdraft limits, unaudited corporates with overdraft limits, unaudited corporates without overdraft limits, SMEs with limits, SMEs without limits and Retail loans. The guiding principle of the Expected Credit Loss evaluation is to reflect the general pattern of deterioration or improvement in the credit quality of financial instruments and allocate commensurate loss provisions. Under the general approach, there are two measurement bases: • 12-month ECLs (Stage 1 ECLs) that is evaluated for all financial instruments with no significant deterioration in credit quality since initial recognition. • Lifetime ECLs (Stages 2 and 3 ECLs) that is evaluated for financial instruments for which significant increase in credit risk or default has occurred on an individual or collective basis. Probability of Default (PD) The Bank defines Probability of Default as the likelihood that a borrower will fail to meet their contractual obligations in the future. The Bank’s PD models have been built using historical credit default experience, present credit information as well as forward looking factors which affect the capacity of borrowers to meet their contractual obligations. The Bank used the logistic regression approach to construct PD models for Corporate, SME, Retail and Treasury Bills portfolios while the Merton model was adopted for Interbank Placements. The PD models are used at entity level to evaluate 12 - month PDs for Day 1 losses and for financial instruments with no significant deterioration in credit risk since initial recognition, whilst lifetime PD is used for financial instruments for which significant increase in credit risk or default has occurred. 12 - month PDs are derived using borrower present risk characteristics while lifetime PDs are derived using a combination of 12 - month PDs, present borrower behaviour and forward looking macroeconomic factors. Exposure at Default (EAD) The Bank defines Exposure at Default as an estimation of the extent to which the Bank will be exposed to a counterparty in the event of a default. The Bank’s EAD models have been built using historical experience of debt instruments that defaulted. The Bank used the linear regression approach to construct EAD models for Corporate, SME and Retail portfolios. For TBs and Interbank Placements, the Bank took a conservative approach of considering the full outstanding balance as the EAD at any given point in the lifetime of an instrument. The Bank’s EAD models that use Credit Conversion Factors (CCFs) are applied on fully drawn down instruments while models that use Loan Equivalents (LEQs) are applied on partly drawn instruments. The EAD models are used at entity level to evaluate the proportion of the exposure that will be outstanding at the point of default. Loss Given Default (LGD) The Bank defines Loss Given Default as an estimate of the ultimate credit loss in the event of a default. The Bank’s LGD models were built using historical experience of defaulted debt instruments and observed recoveries. The Bank used the linear regression approach to construct LGD models for Corporate, SME and Retail portfolios. For Treasury Bills and Interbank Placements, the Bank took a conservative approach of taking a fixed 100% as the LGD at any given point in the lifetime of an instrument. The LGD models are used at portfolio level to evaluate 12 - month LGDs for financial instruments with no significant increase in credit risk since initial recognition and lifetime is applied LGDs for financial instruments for which significant increase in credit risk has occurred. 12-month LGDs were derived as historical loss rates while lifetime LGDs were derived using a combination of 12 - month LGDs and forward looking macroeconomic factors such as GDP and Inflation. The Bank’s ECL model combines the output of the PD, EAD and LGD and computes an Expected Credit Loss that takes into account the time value of money using the Effective Interest Rates (EIR) and time to maturity of the debt instruments. The final ECL is a probability-weighted amount that is determined by evaluating three (3) possible outcomes of Best Case ECL, Baseline Case ECL and Worst Case ECL. The Bank has modelled these three cases in such a way that the Best Case represents a scenario of lower than market average default rates, the Base Case represents scenarios of comparable market average default rates and the Worst Case represents scenarios of higher than market average default rates. Forward looking information Tribe28ANNUAL REPORT 202342 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS In its ECL models, NMB Bank relies on a broad range of forward looking information as macroeconomic inputs, such as: Inflation Rate This is the inflation of the country of Zimbabwe. The Bank approximates the impact of inflation on the future quality of the credit portfolio by measuring the variation between the inflation rate at reporting date and the highest forecasted inflation rate for the period 2020-2023. Current inflation data is collected from the Reserve Bank of Zimbabwe (RBZ) and Zimbabwe National Statistics Agency (ZIMSTAT) websites while inflation forecast data is collected from the World Bank websites. Unemployment Rates The Bank defines this as the unemployed proportion of the country’s population. The Bank approximates the impact of unemployment on the future quality of the credit portfolio by assessing the direction of the rate. Increasing unemployment rate tends to indicate economic downsizing in the future while an improving unemployment rate ordinarily indicates economic growth. Market Non-Performing Loans Rate The Bank assesses the variance between its non-performing loans rate and the market average NPL rate as at reporting date. The variance approximates the performance of the Bank against the market with respect to the ability of the Bank to underwrite low credit loans. Producer Price Index (PPI) The Bank assesses this as the cost of production for companies. The Bank approximates the impact of PPI on the future quality of the credit portfolio by assessing the direction of the index. Increasing PPI tend to indicate economic downsizing in the future while decreasing PPI ordinarily promotes economic growth in the future. PPI data is collected from the RBZ and ZIMSTAT websites. Renegotiated loans and advances Where possible, the Group seeks to restructure loans rather than to take possession of collateral. This may involve extending the payment arrangements and the agreement of new loan conditions. Once the terms have been re-negotiated, any impairment is measured using the original effective interest rate (EIR) as calculated before the modification of terms and the loan is no longer considered past due. Management continuously renews re-negotiated loans to ensure that all criteria are met and that future payments are likely to occur. The loans continue to be subject to an individual or collective impairment assessment, calculated using the loans original EIR. Collateral valuation The Group seeks to use collateral, where possible, to mitigate its credit risk on financial assets. The collateral comes in various forms such as cash, securities, letters of credit/guarantees, real estate, receivables, inventories, other non-financial assets and credit enhancements such as netting agreements. The fair value of collateral is generally assessed, at a minimum, at inception and based on the Group’s quarterly reporting schedule, however, some collateral, for example, cash or securities relating to margining requirements, is valued daily. To the extent possible, the Group uses active market data for valuing financial assets, held as collateral. Other financial assets which do not have a readily determinable market value are valued using models. Non-financial collateral, such as real estate, is valued based on data provided by third parties such as mortgage brokers, housing price indices, audited financial statements, and other independent sources. Collateral repossessed The Group’s policy is to determine whether a repossessed asset is best used for its internal operations or should be sold. Assets determined to be useful for the internal operations are transferred to their relevant asset category at the lower of their repossessed value or the carrying value of the original secured asset. Assets that are determined better to be sold, are immediately transferred to assets held for sale at their value at the repossession date in line with the Group’s policy. Offsetting financial instruments Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is not generally the case with master netting agreements, therefore, the related assets and liabilities are presented gross in the statement of financial position. Non-performing loans Interest on loans and advances is accrued as income until such time as reasonable doubt exists about its recoverability, thereafter and until all or part of the loan is written off, interest continues to accrue on customer’s accounts but is not included in income. The suspended interest is recognised as a provision in the statement of financial position. Such suspended interest is deducted from loans and advances in the statement of financial position. This policy meets the requirements of the Banking Regulations, Statutory Instrument, 205 of 2000. 2.6. CASH AND CASH EQUIVALENTS Cash and cash equivalents include notes and coins on hand, unrestricted balances held with central bank and highly liquid financial assets with original maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short term commitments. Cash and cash equivalents are carried at amortised cost in the statement of financial position. 2.7. PROPERTY AND EQUIPMENT Equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Such cost includes the cost of replacing part of the equipment when that cost is incurred, if the recognition criteria are met. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the equipment as a replacement if the recognition criteria are satisfied. The previous remaining carrying amount is derecognized. All other repair and maintenance costs are recognised in the profit or loss as incurred. Tribe28ANNUAL REPORT 202343 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Land and buildings are measured at revalued amount less accumulated depreciation on buildings and impairment losses recognised after the date of the revaluation. Revaluation of property is performed at the end of each reporting period, by a registered professional valuer. Any revaluation surplus is recognised in other comprehensive income and accumulated in the revaluation reserve included in the equity section of the statement of financial position, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset recognised in the asset revaluation reserve, the decrease in other comprehensive income reduces the amount accumulated in equity as the asset revaluation reserve, the decrease in other comprehensive income reduces the amount accumulated in equity as the asset revaluation reserve. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings. An annual transfer from the asset revaluation reserve to retained earnings is made for the difference between depreciation based on the revalued carrying amount of the assets and depreciation based on the assets original cost. Additionally, accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings. An item of property and plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. Residual values and the useful life of assets are reviewed at least at each financial year end. Where the residual value of an asset increases to an amount that is equal to or exceeds its carrying amount, then the depreciation of the asset ceases. Depreciation will resume only when the residual value decreases to an amount below the asset’s carrying amount. Owned assets The cost of self-constructed assets includes the cost of materials, direct labour and an appropriate proportion of attributable overheads which are directly attributable to the assets. Depreciation Depreciable amount is the cost of an asset or other amount substituted for cost less its residual value. Depreciation is provided to write off the depreciable amount of property and equipment over their estimated useful lives to their estimated residual values at the following rates per annum, on a straight-line basis. Computers Motor Vehicles Furniture and Equipment Buildings Land and capital work-in-progress are not depreciated. 2.8. NON-CURRENT ASSETS HELD FOR SALE 20% 25% 20% 2% The bank receives collateral from counter-parties in form of immovable property and other approved qualifying collateral as security against loan advances in the normal course of the business. It is not the intention of the bank to recover loans advanced through collateral disposal, as the bank will always consider all the options available to recover loans advanced to customers, by considering the borrowers’ changed circumstances and cash flows and to find out whether restructuring options will result in the customers settling their outstanding obligations to the bank. However, in the unlikely event that the bank is left with no option, except to dispose the loan collateral security, and all the formalities have been completed by the borrower to have the collateral transferred to the bank, such collateral will not become part of the bank’s asset portfolio. The Bank will initiate the process of disposal of the recovered collateral in order to clear the customer’s outstanding obligations with the bank. Such immovable properties and the other approved qualifying collateral will be accounted for under Non-current assets held for sale, given the timing differences between the dates the immovable asset is recovered by the bank and the time it will be finally disposed off. Initial measurement is the fair value less cost to sell of which the fair values are through a professional valuer. Subsequently the bank will measure the carrying amount subject to changes in fair value less cost to sale of these assets. 2.9. INTANGIBLE ASSETS Intangible assets are initially recognised at cost. Subsequently the assets are measured at cost less accumulated amortisation and any impairment loss. Amortisation of intangible assets The depreciable amount of an intangible asset with a finite useful life is allocated on a straight line basis over its useful life. The amortisation rate is as follows: Tribe28ANNUAL REPORT 202344 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Computer Software 2.10. LEASES 20% The determination of whether an arrangement is a lease, or it contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. As lessor Leases where the Group does not transfer substantially all the risks and rewards of ownership of the assets are classified as operating leases. Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. As lessee In terms of IFRS 16, the Group recognises lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS 17, Leases. These liabilities are measured at the present value of the remaining lease payments, discounted using the Group’s incremental borrowing rate. The Group has neither enjoyed nor extended any lease payment holidays in its capacity as either lessee or lessor respectively due to COVID-19. As such, there are no COVID-19 induced lease modifications applicable during the period under review. Measurement of right-of-use assets The associated right-of-use assets for property leases are measured on a prospective basis. The right-of-use assets are measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the consolidated statement of financial position. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. In circumstances where the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. The Group revalues its land and buildings that are presented within property and equipment and it has elected not to do so for the right-of-use buildings held by the Group. 2.11. IMPAIRMENT OF NON FINANCIAL ASSETS The carrying amounts of the Group’s non-financial assets other than consumables are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The recoverable amount of assets is the greater of their fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the functions of the impaired asset, except for property previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist, or may have decreased. If such an indication exists the bank estimates the assets or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assets recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceeds the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss. 2.12. INVESTMENT PROPERTIES Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met, and excludes the costs of day to day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Rental income from investment properties is recognised as revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise. Revaluation is done at the end of each year by a registered independent professional valuer. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal. Tribe28ANNUAL REPORT 202345 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property and equipment up to the date of change in use. 2.13. FINANCIAL GUARANTEES In the ordinary course of business, the banking subsidiary give financial guarantees, consisting of letters of credit, guarantees and acceptances. Financial guarantees are initially recognised in the financial statements at fair value, being the premium received. Subsequent to initial recognition, the Group’s liability under each guarantee is measured at the higher of the amount initially recognised less, where appropriate, cumulative amortisation recognised in profit or loss, and the best estimate of expenditure required to settle any financial obligation arising as a result of the guarantee. Any increase in the liability relating to financial guarantees is recognised in the profit or loss. The premium received is recognised in profit or loss on a straight line basis over the life of the guarantee, or in full, depending on the conditions attached to the guarantee. 2.14. WRITE-OFFS Financial assets are written off where the recovery efforts have been pursued actively over one year without success or when it is uneconomical and inefficient to keep carrying the debt in the books as the chances of recovery become slim. Such accounts become subjects of write- backs in the event of recovery. Partial write-offs may be possible in cases where collateral security held is inadequate to expunge the debt in full. 2.15. FEES AND COMMISSION INCOME Fees and commission income and expense that are integral to the effective interest rate on a financial asset or financial liability are included in the measurement of the EIR. Other fees and commission – including retail banking customer fees, corporate banking and credit related fees, fees from financial guarantee contracts, commission from international banking activities and fees from corporate finance – are recognised as the related services are performed. If a loan commitment is not expected to be drawn down of a loan, then the related commitment fees are recognised on a straight line basis over the commitment period. Other fees and commitment expense relate mainly to transaction and service fees, which are expensed as the services are received. The performance obligations, as well as the timing of their satisfaction, are identified, and determined, at the inception of the contract. 2.16. INTEREST INCOME For all financial instruments measured at amortised cost and financial instruments designated at fair value through profit or loss, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income includes income arising out of the banking activities of lending and investing. 2.17. INTEREST EXPENSE Interest expense arises from deposit taking and borrowings. The expense is recognised in profit or loss as it accrues, taking into account the effective interest cost of the liability. 2.18. EMPLOYEE BENEFITS Retirement benefits are provided for the Group’s employees through a defined contribution plan and the National Social Security Authority Scheme. Defined Contribution Plan Obligations for contribution to the defined contribution pension plan are recognised as an expense in profit or loss as they are incurred. The cost of retirement benefits applicable to the National Social Security Authority, which commenced operations on 1 October 1994 is determined by the systematic recognition of legislated contributions. Short term employee benefits/and share based payments Short term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group 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 payments The Group issues share options to certain employees in terms of the Employee Share Option Scheme which is an equity settled share-based payment scheme. Share options are measured at fair value of the equity instruments at the grant date. The fair value determined at the Tribe28ANNUAL REPORT 202346 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS grant date of the options is expensed over the vesting period, based on the Group’s estimate of shares that will eventually vest. Fair value is measured using the Black-Scholes option pricing model. The expected life used in the model is adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and other behavioural considerations. 2.19. PROVISIONS Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in profit or loss net of any reimbursements. 2.20. SHAREHOLDERS’ FUNDS AND SHAREHOLDERS’ LIABILITIES Shareholders’ funds and shareholders’ liabilities refers to the total investment made by the shareholders in the Group and it consists of share capital, share premium, share options reserve, functional currency translation reserve, retained earnings, redeemable ordinary shares and subordinated loans. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity. Income tax relating to transaction costs of an equity transaction is accounted for in accordance with IAS 12. Treasury shares Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in the share premium. 2.21. USE OF ESTIMATES, JUDGEMENTS AND ASSUMPTIONS In preparation of the consolidated and separate financial statements, Directors have made judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending 31 December 2023 is included in the following notes. Land and buildings The properties were valued by an independent professional valuer. The determined fair value of land and buildings is most sensitive to significant unobservable inputs. The property market is currently not stable due to liquidity constraints. Refer to Note 27 for more information on the nature and carrying amounts of the Land and Buildings as well as the inputs used. Investment properties Investment properties were valued by an independent professional valuer. The properties market is currently not stable due to liquidity constraints. Refer to Note 25 for more information on the nature and carrying amounts of the Investment Property as well as the inputs used. Impairment losses on loans and advances The Group reviews its individually significant loans and advances at each reporting date to assess whether an impairment loss should be recorded in profit or loss. In particular, judgement by management is required in the estimation of the amount and timing of future cash flows when determining the impairment loss. In estimating these cash flows, the Group makes judgements about the borrower’s financial situation and the net realisable value of collateral. These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance. Loans and advances that have been assessed individually and found not to be impaired and all individually insignificant loans and advances are then assessed collectively, in groups of assets with similar risk characteristics, to determine whether provision should be made due to incurred loss events for which there is objective evidence but whose effects are not yet evident. Refer to Note 2 for more information on the nature and carrying amounts of the impairment losses on loans and advances as well as the inputs used. Going concern The Directors have assessed the ability of the Group and Company to continue operating as a going concern and believe that the preparation of these financial statements on a going concern basis is still appropriate. Determination of the functional currency In October 2018, the Monetary Authorities instructed financial institutions to separate bond notes and USD accounts and indicated that corporates and individuals could proceed to open Nostro Foreign Currency Accounts (FCA), for foreign currency holdings, which were now being exclusively distinguished from the existing RTGS based accounts. However, it should be noted that at the time of this policy pronouncement, the Monetary Authorities did not state that they had introduced a new currency for Zimbabwe, which actually meant that the USD remained as the currency of reference. By 31 December 2018, there had been no pronouncement by the Monetary Authorities to the effect that there had been a new currency introduced, which could be considered as the country’s functional currency On 22 February 2019, the Reserve Bank of Zimbabwe (RBZ) issued an Exchange Control Directive, RU 28 of 2019 which established an interbank foreign exchange market to formalise the buying and selling of foreign currency through the Banks and Bureaux de change. In order to establish an exchange rate between the current monetary balances and foreign currency, the Monetary Authorities denominated the existing RTGS balances in circulation as RTGS Dollars. Initial trades on 22 February 2019 were at USD1: RTGS$2.5. On the same date, Statutory Instrument 33 of 2019 was also issued and it specified that for accounting and other purposes, all assets and liabilities that were in USD immediately before the 22nd of February 2019 were deemed to have been valued in RTGS Dollars at a rate of 1:1 with the USD. On 24 June 2019, the Monetary Authorities announced that the multi-currency regime, which the country was operating in since February 2009 had been discontinued and the country had adopted a mono-currency regime meaning that the sole legal tender would be the Zimbabwe Dollar (ZWL ). On 26 March Tribe28ANNUAL REPORT 202347 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2020, the Reserve Bank of Zimbabwe in a press statement announced various interventions in response to the financial vulnerabilities caused by the COVID-19 pandemic. One of the measures announced therein was the authorization of the use of free-funds in paying for goods and services, in terms of Statutory Instrument (SI) 85 of 2020. On 24 July 2020, the Government of Zimbabwe issued Statutory Instrument (SI) 185 of 2020, which granted permission to display, quote or offer prices for all goods and services in both Zimbabwe dollars and foreign currency at the interbank exchange rate. On 23 June 2020, the Reserve Bank of Zimbabwe introduced the Foreign Exchange Auction System, effectively abandoning the fixed foreign currency exchange rate regime, which had been prevailing for the greater part of 2020. Significant trades have been recorded on the platform and significant movements in the exchange rate have been resultantly recorded. In light of the developments summarised above, the Directors concluded that the Group’s functional currency remains the Zimbabwe dollar (ZWL ) following its change from USD with effect from 22 February 2019. Lease arrangements The Directors have exercised significant judgement on determining whether the various contractual relationships which the Group is party to, contain lease arrangements which fall into the scope of IFRS 16. Significant judgement was also exercised in determining whether the Group is reasonably certain that it will exercise extension options present in lease contracts as well. 2.22. STANDARDS ISSUED AND EFFECTIVE a) New standards and amendments – applicable 1 January 2023 The following International Financial Reporting Standards and amendments are effective for the first time for the December 2023 year-end reporting period Standard IFRS 17 Insurance Contracts Effective Date 1 January 2023 (deferred from 1 January 2021) Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice “ Statement 2” 1 January 2023 Definition of Accounting Estimates – Amendments to IAS 8 1 January 2023 Executive Summary IFRS 17 was issued in May 2017 as replacement for IFRS 4 Insurance Contracts. It requires a current measurement model where estimates are remeasured in each reporting period. Contracts are measured using the building blocks of: - discounted probability-weighted cash flows - an explicit risk adjustment, and “- a contractual service margin the contract which is” recognised as revenue over the coverage period. the unearned profit of representing (CSM) The standard allows a choice between recognising changes in discount rates either in the statement of profit or loss or directly in other comprehensive income. The choice is likely to reflect how insurers account for their financial assets under IFRS 9. An optional, simplified premium allocation approach is permitted for the liability for the remaining coverage for short duration contracts, which are often written by non-life insurers. There is a modification of the general measurement model called the ‘variable fee approach’ for certain contracts written by life insurers where policyholders share in the returns from underlying items. When applying the variable fee approach, the entity’s share of the fair value changes of the underlying items is included in the CSM. The results of insurers using this model are therefore likely to be less volatile than under the general model. The new rules will affect the financial statements and key performance indicators of all entities that issue insurance contracts or investment contracts with discretionary participation features. Targeted amendments made in July 2020 aimed to ease the implementation of the standard by reducing implementation costs and making it easier for entities to explain the results from applying IFRS 17 to investors and others. The amendments also deferred the application date of IFRS 17 to 1 January 2023. Further amendments made in December 2021 added a transition option that permits an entity to apply an optional classification overlay in the comparative period(s) presented on initial application of IFRS 17. The classification overlay applies to all financial assets, including those held in respect of activities not connected to contracts within the scope of IFRS 17. It allows those assets to be classified in the comparative period(s) in a way that aligns with how the entity expects those assets to be classified on initial application of IFRS 9. The classification can be applied on an instrument-by-instrument basis. The group has not applied these amendments as they are not applicable The IASB amended IAS 1 to require entities to disclose their material rather than their significant accounting policies. The amendments define what is ‘material accounting policy information’ and explain how to identify when accounting policy information is material. They further clarify that immaterial accounting policy information does not need to be disclosed. If it is disclosed, it should not obscure material accounting information. To support this amendment, the IASB also amended IFRS Practice Statement 2 Making Materiality Judgements to provide guidance on how to apply the concept of materiality to accounting policy disclosures. No significant impact has resulted from these amendments. The amendment to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors clarifies how companies should distinguish changes in accounting policies from changes in accounting estimates. The distinction is important, because changes in accounting estimates are applied prospectively to future transactions and other future events, whereas changes in accounting policies are generally applied retrospectively to past transactions and other past events as well as the current period. No significant impact has resulted from these amendments. Tribe28ANNUAL REPORT 202348 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Standard Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12 Effective Date 1 January 2023 Executive Summary The amendments to IAS 12 Income Taxes require companies to recognise deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. They will typically apply to transactions such as leases of lessees and decommissioning obligations, and will require the recognition of additional deferred tax assets and liabilities. The amendment should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, entities should recognise deferred tax assets (to the extent that it is probable that they can be utilised) and deferred tax liabilities at the beginning of the earliest comparative period for all deductible and taxable temporary differences associated with: - right-of-use assets and lease liabilities, and - decommissioning, restoration and similar liabilities, and the corresponding amounts recognised as part of the cost of the related assets The cumulative effect of recognising these adjustments is recognised in retained earnings, or another component of equity, as appropriate. IAS 12 did not previously address how to account for the tax effects of on-balance sheet leases and similar transactions and various approaches were considered acceptable. Some entities may have already accounted for such transactions consistent with the new requirements. These entities will not be affected by the amendments. No significant impact has resulted from these amendments. Sale or contribution of assets between an investor and its associate or joint venture – Amendments to IFRS 10 and IAS 28 N/A The IASB has made limited scope amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures. The amendments clarify the accounting treatment for sales or contribution of assets between an investor and their associates or joint ventures. They confirm that the accounting treatment depends on whether the nonmonetary assets sold or contributed to an associate or joint venture constitute a ‘business’ (as defined in IFRS 3 Business Combinations). Where the non-monetary assets constitute a business, the investor will recognise the full gain or loss on the sale or contribution of assets. If the assets do not meet the definition of a business, the gain or loss is recognised by the investor only to the extent of the other investor’s interests in the associate or joint venture. The amendments apply prospectively. In December 2015, the IASB decided to defer the application date of this amendment until such time as the IASB has finalised its research project on the equity method. No significant impact has resulted from these amendments. b) Forthcoming requirements The following standards and interpretations had been issued but were not mandatory for the 2023 financial year-end reporting period Standard Effective Date Executive Summary Classification of Liabilities as Current or Non-current – Amendments to IAS 1 1 January 2024 (deferred from 1 January 2023 having been deferred again from 01 January 2022) Non-current liabilities with covenants – Amendments to IAS 1 01 Jan 24 Lease liability in sale and leaseback – amendments to IFRS 16 01 Jan 24 The narrow-scope amendments to IAS 1 Presentation of Financial Statements clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the entity’s expectations or events after the reporting date (e.g. the receipt of a waver or a breach of covenant). The amendments also clarify what IAS 1 means when it refers to the ‘settlement’ of a liability. The amendments could affect the classification of liabilities, particularly for entities that previously considered management’s intentions to determine classification and for some liabilities that can be converted into equity. They must be applied retrospectively in accordance with the normal requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Since issuing these amendments, the IASB issued an exposure draft proposing further changes and the deferral of the amendments until at least 1 January 2024. The Group plans to adopt the amendments when they become effective. No significant impact has resulted from these amendments in the current year. Amendments made to IAS 1 Presentation of Financial Statements in 2020 clarified that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the entity’s expectations or events after the reporting date (e.g. the receipt of a waiver or a breach of covenant). The amendments also clarified what IAS 1 means when it refers to the ‘settlement’ of a liability. The amendments were due to be applied from 1 January 2022. However, the effective date was subsequently deferred to 1 January 2023 and then further to 1 January 2024. In October 2022, the IASB made further amendments to IAS 1 in response to concerns raised about these changes to the classification of liabilities as current or non-current. The new amendments clarify that covenants of loan arrangements will not affect classification of a liability as current or non-current at the reporting date if the entity must only comply with the covenants after the reporting date. However, if the entity must comply with a covenant either before or at the reporting date, this will affect the classification as current or non-current, even if the covenant is only tested for compliance after the reporting date. The amendments require disclosures if an entity classifies a liability as noncurrent and that liability is subject to covenants that the entity must comply with within 12 months of the reporting date. The disclosures include: • the carrying amount of the liability • information about the covenants, and • facts and circumstances, if any, that indicate that the entity may have difficulty complying with the covenants. The amendments must be applied retrospectively in accordance with the normal requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Special transitional rules apply if an entity had early adopted the 2020 amendments regarding the classification of liabilities as current or noncurrent The Group plans to adopt the amendments when they become effective. No significant impact has resulted from these amendments in the current year. In September 2022, the IASB finalised narrow-scope amendments to the requirements for sale and leaseback transactions in IFRS 16 Leases which explain how an entity accounts for a sale and leaseback after the date of the transaction. The amendments specify that, in measuring the lease liability subsequent to the sale and leaseback, the seller-lessee determines ‘lease payments’ and ‘revised lease payments’ in a way that does not result in the seller-lessee recognising any amount of the gain or loss that relates to the right of use that it retains. This could particularly impact sale and leaseback transactions where the lease payments include variable payments that do not depend on an index or a rate. The Group plans to adopt the amendments when they become effective. No significant impact has resulted from these amendments in the current year. Tribe28ANNUAL REPORT 202349 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Standard Sale or contribution of assets between an investor and its associate or joint venture – Amendments to IFRS 10 and IAS 28 Effective Date N/A Executive Summary The IASB has made limited scope amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures. The amendments clarify the accounting treatment for sales or contribution of assets between an investor and their associates or joint ventures. They confirm that the accounting treatment depends on whether the non-monetary assets sold or contributed to an associate or joint venture constitute a ‘business’ (as defined in IFRS 3 Business Combinations). Where the non-monetary assets constitute a business, the investor will recognise the full gain or loss on the sale or contribution of assets. If the assets do not meet the definition of a business, the gain or loss is recognised by the investor only to the extent of the other investor’s interests in the associate or joint venture. The amendments apply prospectively. *** In December 2015, the IASB decided to defer the application date of this amendment until such time as the IASB has finalised its research project on the equity method. The Group plans to adopt the amendments when they become effective. No significant impact has resulted from these amendments in the current year. For management purposes, the Group is organised into six operating segments based on products and services as follows: Retail banking Corporate banking Treasury Microfinance Real Estate Digital Banking Individual customers deposits and consumer loans, overdrafts, credit card facilities and funds transfer facilities. Loans and other credit facilities and deposit and current accounts for corporate and institutional customers. Money market investment, securities trading, accepting and discounting of instruments and foreign currency trading. Handles the group's microlending business Development of investment properties for sale & rental purposes Handles the Bank’s Digital Banking products including Card and POS services. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects is measured differently from operating profit or loss in the consolidated financial statements. Income taxes are managed on a Group basis and are not allocated to operating segments. Interest income is reported net as management primarily relies on net interest revenue as a performance measure, not the gross income and expense. Transfer prices between operating segments are on arm’s length basis in a manner similar to transactions with third parties. No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Group’s total revenue in 2022 or 2023. 3. INTEREST REVENUE CALCULATED USING THE EFFECTIVE INTEREST METHOD Loans and advances to banks Loans and advances to customers Investment securities Inflation Adjusted Historical Cost* 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 6 996 811 4 961 860 113 263 276 83 882 979 7 681 853 12 406 441 4 269 319 63 917 891 3 889 686 959 558 13 085 358 1 755 252 127 941 940 101 251 280 72 076 896 15 800 168 Tribe28ANNUAL REPORT 202350 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 4. INTEREST EXPENSE CALCULATED USING THE EFFECTIVE INTEREST METHOD Due to banks Due to customers Other borrowed funds Lease liability finance costs* Inflation Adjusted Historical Cost* 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 12 411 109 4 716 906 11 388 705 28 516 720 22 761 602 6 364 664 591 987 5 086 846 3 578 448 2 761 455 6 170 785 742 178 157 325 29 718 253 14 019 086 4 477 951 1 207 406 927 096 631 994 29 724 126 30 645 349 14 651 080 113 431 4 591 382 * Finance costs related to the lease liability do not represent the cost of funding the loan book. 5. NON-INTEREST INCOME AND OTHER COMPREHENSIVE INCOME 5.1. Fees and commission income Retail banking customer fees Corporate banking credit related fees Financial guarantee fees International banking commissions Digital banking fees Timing of revenue recognition: - At a point in time - Over time 5.2. Net Foreign Exchange Gains Inflation Adjusted Historical Cost* 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 139 334 717 25 659 780 86 521 475 4 053 093 4 611 651 14 212 709 3 832 761 2 914 968 5 291 278 3 252 814 2 359 782 8 156 489 2 136 901 420 603 828 010 370 984 66 870 794 36 612 363 38 581 874 5 032 826 228 862 632 73 731 203 137 756 521 10 705 516 224 250 981 70 816 235 135 396 739 4 611 651 2 914 968 2 359 782 10 284 913 420 603 228 862 632 73 731 203 137 756 521 10 705 516 Inflation Adjusted Historical Cost* 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 Foreign exchange gains relating to revaluation of gold tokens 15 280 530 - 15 194 985 Net exchange gains on foreign currency denominated assets and liablities 112 856 589 18 351 775 121 120 664 128 137 119 18 351 775 136 315 649 - 4 048 384 4 048 384 5.3. Other Income GROUP Fair value gains on investment properties Profit on disposal of property and equipment (Loss)/ profit on disposal of investment properties Rental income Recoveries Auction proceeds Other operating income Inflation Adjusted Historical Cost 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 142 186 115 32 823 582 236 921 078 16 380 730 263 762 ( 81 046) 1 823 407 16 363 11 032 948 2 873 551 6 800 ( 164 113) 444 636 40 759 - 5 651 914 126 465 254 724 1 104 392 8 147 8 230 318 2 605 591 1 803 26 722 95 645 5 894 - 1 429 541 158 115 100 38 803 578 249 250 716 17 940 335 Tribe28ANNUAL REPORT 202351 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS COMPANY Inflation Adjusted Historical Cost Dividend income Other operating income 5.4. Other comprehensive income 2023 ZWL’000 - - - 2022 ZWL’000 1 441 612 12 075 1 453 687 2023 ZWL’000 - - - 2022 ZWL’000 300 000 2 410 302 410 Inflation Adjusted Historical Cost* 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 Revaluations of land and buildings Tax effect 71 020 585 3 431 256 110 945 505 7 749 051 ( 19 053 154) ( 848 206) ( 28 545 698) ( 1 915 366) 51 967 431 2 583 050 82 399 807 5 833 685 6. OPERATING EXPENDITURE The net operating income is after charging the following: Administration costs Audit fees: - Current year Amortisation of intangible assets Depreciation (excluding right of use assets) Depreciation – right of use assets Directors’ remuneration - Fees for services as directors - Expenses Inflation Adjusted Historical Cost* 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 102 318 273 32 493 180 67 124 614 4 826 405 1 686 863 1 386 126 5 473 365 2 856 869 2 764 568 2 579 870 184 698 764 669 1 392 072 2 926 114 1 259 745 845 344 793 175 52 170 893 858 6 094 1 559 712 458 700 1 622 313 1 524 283 98 030 114 704 4 395 222 437 71 926 129 973 122 188 7 785 Staff costs – salaries, allowances and related costs* 100 292 702 51 635 670 59 067 547 8 364 152 ** Included in Staff costs - salaries, allowances and related costs are employee benefit costs relating share based payments amounting to ZWL 229 681 525 (2022: ZWL1 222 247 843). 216 778 764 91 316 794 130 732 838 13 733 992 7. TAXATION 7.1. Income Tax Charge Current tax Deferred tax COMPANY Income Tax Charge Current tax Deferred tax Inflation Adjusted Historical Cost* 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 23 892 993 10 694 724 23 892 994 22 817 867 8 856 137 25 601 618 2 225 576 1 283 554 46 710 860 19 550 861 49 494 612 3 509 130 Inflation Adjusted Historical Cost* 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 - 0 0 - 286 286 - - - - 14 14 Tribe28ANNUAL REPORT 2023 52 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 7.2. Reconciliation of income tax charge/(credit) Based on results for the period at a rate of 24.72% (2022:24.72%) 79 682 754 19 090 423 107 545 467 7 163 272 Inflation Adjusted Historical Cost* 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 Tax effect of: - Income not subject to tax* - Non-deductible expenses** - Effect of exchange rate movements - Change in tax bases*** ( 375 334 477) ( 10 317 853) ( 115 736 184) 272 580 554 41 457 641 69 782 028 51 778 167 5 907 162 ( 979 237) 3 709 480 - ( 30 679 350) - ( 6 384 384) 46 710 860 19 550 861 49 494 612 3 509 130 COMPANY Inflation Adjusted Historical Cost* 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 Based on results for the period at a rate of 24.72% ( 99 209) 359 640 ( 64 326) 74 756 Tax effect of: - Other movements in temporary differences - Non-deductible expenses** - - - 14 99 209 ( 359 354) 64 326 ( 74 756) 0 286 - 14 * Income not subject to tax includes coupon interest from Treasury Bills and income from mortgages for the Group as well as non-deductible income attributable to the unwinding of share based payments for the company. ** Non-deductible expenses include provisions, disallowable pension deductions and depreciation. ***The change in tax bases arose from the legislative pronouncement in the Finance (No.2 ) Act of 2020 which resulted in the rebasing of unredeemed foreign currency capital balances on assets ranking for capital allowances using the USD /ZWL official exchange rate prevailing on 1 January 2020. 7.3. Current tax liabilities / (assets) At 1 January Monetary adjustment Effect of exchange rate movement Charge for the year Payments during the year Inflation Adjusted Historical Cost* 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 ( 211 665) 3 899 273 ( 44 049) 236 049 9 962 658 ( 1 390 901) - ( 9 249 281) 836 241 ( 4 174 873) 23 892 994 10 694 724 23 892 994 - ( 33 170) 2 225 576 ( 20 287 014) ( 14 251 002) ( 15 566 380) ( 2 472 504) 4 107 692 ( 211 665) 4 107 692 ( 44 049) COMPANY Inflation Adjusted Historical Cost* At 1 January Monetary adjustment 8. EARNINGS PER SHARE 2023 ZWL’000 ( 363) 287 2022 ZWL’000 ( 1 247) 884 2023 ZWL’000 2022 ZWL’000 ( 77) - ( 77) - ( 76) ( 363) ( 77) ( 77) Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of NMBZ Holdings Limited by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is calculated by dividing the profit attributable to ordinary equity holders of NMBZ Holdings Limited adjusted for the after tax effect of: a) any dividends or other items related to dilutive potential ordinary shares deducted in arriving at profit or loss attributable to ordinary equity holders of the parent entity; b) any interest recognised in the period related to dilutive potential ordinary shares; and c) any other changes in income or expense that would result from the conversion of the dilutive potential ordinary shares; by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. Tribe28ANNUAL REPORT 202353 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 8.1. Earnings Profit for the year Headline earnings for the period 275 630 378 57 675 767 385 559 866 25 468 506 163 890 250 28 567 343 205 178 372 12 055 490 Inflation Adjusted Historical Cost* 2023 ZWL’000 2022 ZWL’000 2023 ZWL’000 2022 ZWL’000 8.2. Number of shares 8.2.1. Basic earnings per share Weighted average number of ordinary shares for basic earnings per share Number of shares at beginning of period 398 195 181 404 157 689 398 195 181 404 157 689 Inflation Adjusted Historical Cost* 2023 2022 2023 2022 Share options exercised Shares issued - scrip dividend Share buy back 8.2.2. Diluted earnings per share Number of shares for basic earnings Effect of dilution: 3 643 13 529 471 176 402 1 999 625 3 643 13 529 471 176 402 1 999 625 ( 787 748) ( 8 138 536) ( 787 748) ( 8 138 536) 410 940 547 398 195 181 410 940 547 398 195 181 Inflation Adjusted Historical Cost* 2023 2022 2023 2022 410 940 547 398 195 181 410 940 547 398 195 181 Share options approved but not granted (ESOS) 4 211 471 10 141 568 4 211 471 10 141 568 8.2.3. Headline earnings Profit for the period Add/(deduct) non-recurring items Trade and other investments fair value gains Fair value gains on investment property Profit on disposal of property and equipment Non - recurring sundry income 415 152 018 408 336 749 415 152 018 408 336 749 Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 275 630 378 57 675 767 385 559 866 25 468 506 ( 6 063 858) ( 283 695) ( 2 311 833) ( 218 556) ( 142 186 115) ( 32 823 582) ( 236 921 078) ( 16 380 730) ( 263 762) ( 6 800) ( 126 465) - ( 5 716 912) - ( 1 803) ( 1 189 691) ( 26 722) Loss/(profit) on disposal of investment properties 81 046 164 113 ( 254 724) Tax effect thereon 36 692 561 9 558 452 59 232 605 4 404 487 Headline earnings is a non-IFRS performance measure and the Group has determined it in accordance with ZSE Listing Requirements. 163 890 250 28 567 343 205 178 372 12 055 490 8.3. Earnings per share (ZWL cents) Basic Diluted Headline Inflation Adjusted Historical Cost* 2023 ZWL 67 073 66 393 39 203 2022 ZWL 14 484 14 125 6 996 2023 ZWL 93 824 92 872 49 422 2022 ZWL 6 396 6 237 2 952 Tribe28ANNUAL REPORT 202354 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 9. SHARE CAPITAL 9.1. Authorised Ordinary shares of ZWL 0.00028 each 600 000 600 000 168 168 Inflation Adjusted Historical Cost* 31 Dec 2023 Shares thousands 31 Dec 2022 Shares thousands 31 Dec 2023 ZWL ‘000 31 Dec 2022 ZWL ‘000 9.2. Issues and fully paid 9.2.1. Ordinary shares Balance at 01 January Share options exercised Share buy back Redeemable ordinary shares Shares issued – scrip dividend Inflation Adjusted 31 Dec 2023 Shares thousands 31 Dec 2022 Shares thousands 31 Dec 2023 ZWL ‘000 31 Dec 2022 ZWL ‘000 404 315 300 000 95 149 94 916 44 31 891 - ( 846) 176 ( 8 000) 104 000 8 139 23 ( 0) - - 1 11 221 - Balance at 31 December 435 403 404 315 95 172 95 149 Historical Cost* 31 Dec 2023 Shares thousands 31 Dec 2022 Shares thousands 31 Dec 2023 ZWL ‘000 31 Dec 2022 ZWL ‘000 Balance at 01 January Share options exercised Share buy back Redeemable ordinary shares Shares issued – scrip dividend 404 315 300 000 44 31 891 - ( 846) 176 ( 8 000) 104 000 8 139 Balance at 31 December 435 403 404 315 115 9 ( 0) - - 124 84 0 2 29 - 115 Of the unissued ordinary shares of 165 million shares (2022 - 196 million), options which may be granted in terms of the 2024 ESOS amount to 13 684 418 (2022 – 10 141 568). Subject to the provisions of section 214 of the Companies and Other Business Entities Act (Chapter 24:31) of Zimbabwe, the unissued shares are under the control of the directors. 10. CAPITAL RESERVES GROUP Share premium Treasury shares Share option reserve Revaluation reserve Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 26 793 275 20 906 488 ( 2 046) 1 541 282 ( 2 046) 1 236 145 3 174 723 ( 394) 359 242 2022 ZWL ‘000 172 496 ( 394) 129 569 78 520 998 26 553 568 90 149 489 7 749 682 Functional currency translation reserve 106 853 509 48 694 155 93 683 060 7 634 508 7 634 508 11 620 8 051 352 11 620 Total capital reserve 114 488 017 56 328 663 93 694 680 8 062 972 10.1. Nature and purpose of reserves 10.2. Share premium This reserve represents the excess amount paid for the shares over and above the nominal value of the shares. Tribe28ANNUAL REPORT 202355 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 10.3. Share option reserve The share option reserve is used to recognise the value of equity settled share based payment transactions provided to employees, including key management personnel, as part of their remuneration. Refer to note 32.3 for further details of these plans. 10.4. Functional currency translation reserve The reserve arose out of translation gains on the Group’s land and buildings recorded on the change in the Group’s functional currency when the functional currency was changed in 2019. 10.5. Revaluation reserve The Reserve represent gains on the revaluation of land and buildings. 10.6. Treasury shares reserve This reserve records ordinary shares held by the holding company and its subsidiaries. The shares are recorded at the cost at which they were acquired. As at 31 December 2023 the Group held 8 152 534 (2022: 8 152 534) of its own shares. 11. SUBORDINATED LOAN At 1 January Monetary adjustment Exchange revaluation Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 4 451 329 3 685 623 926 323 ( 3 525 006) ( 5 371 200) - 223 115 - 6 261 805 6 136 907 6 261 805 703 208 7 188 128 4 451 329 7 188 128 926 323 In 2013, the Bank received a subordinated term loan amounting to USD1.4 million from a Development Financial Institution which currently attracts interest rate based on the Secured Overnight Accommodation Rate (SOFR). The loan had a maturity date of June 2020.The Group defaulted on principal repayments with respect to this subordinated loan during the year ended 31 December 2019 as a result of the prevailing nostro funding challenges affecting the economy. Consequently, the Group registered it as a legacy debt together with other offshore lines of credit and transferred the ZWL equivalent of these debts at a rate of USD /ZWL1:1 to the RBZ in terms of the RBZ directive. The Reserve Bank of Zimbabwe issued Treasury Bills worth USD 1 400 000 in settlement of this loan, which are in the custody of the bank. The Treasury Bills have a 0% coupon rate and a three-year maturity profile. The above liability would, in the event of the winding up of the issuer, be subordinated to the claims of depositors and all other creditors of the issuer. There was a breach on the Aggregate Unhedged Open Foreign Currency Positions Ratio covenant which stood at 19.05% (instead of a maximum 10%) between the Group and the Development Financial Institution at the reporting date of 31 December 2023. 12. TOTAL SHAREHOLDERS’ FUNDS AND SHAREHOLDERS’ LIABILITIES GROUP Inflation Adjusted 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 Shareholders’ funds and shareholders’ liabilities 538 627 403 209 462 226 512 648 439 39 155 092 COMPANY Inflation Adjusted 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 Shareholders’ funds and shareholders’ liabilities 34 270 828 35 689 331 ( 776 199) 213 442 Shareholders’ funds and shareholders’ liabilities refer to the total investments made by the shareholders into the Group and it consists of share capital (refer to Note 9), capital and reserves (refer to Note 10), functional currency translation reserve (refer to Note 10), retained earnings and the subordinated loan (refer to Note 11). Tribe28ANNUAL REPORT 202356 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 13. DEPOSITS 13.1. Deposits and current accounts from customers Current and deposit accounts from customers 528 530 915 255 718 976 528 530 915 53 215 217 Inflation Adjusted 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 13.2. Maturity analysis Less than 1 month 1 to 3 months 3 to 6 months 6 months to 1 year 1 to 5 years Over 5 years Inflation Adjusted Historical Cost 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 495 482 422 219 942 328 495 482 422 45 770 082 20 990 436 31 203 965 20 990 436 6 493 557 1 732 600 3 393 1 732 600 1 892 4 454 999 1 892 10 323 565 114 291 10 323 565 - - - 706 927 087 23 785 - 528 530 915 255 718 976 528 530 915 53 215 217 The maturity analysis covers the Group’s total deposits only and does not include other trade payables. 13.3. Sectoral analysis of deposits Agriculture Banks and other financial institutions Distribution Individuals Manufacturing Mining companies Municipalities and parastatals Services Transport and telecommunications 14. OTHER LIABILITIES Inflation Adjusted 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 70 094 255 33 913 680 70 094 255 44 069 266 26 436 401 44 069 266 93 929 202 54 395 906 93 929 202 43 055 920 20 831 735 43 055 920 55 870 725 18 498 582 70 733 934 27 031 918 55 870 725 - 18 498 582 29 108 801 70 733 934 82 951 542 40 134 423 82 951 542 49 327 490 23 866 112 49 327 490 7 057 450 5 501 425 11 319 809 4 335 092 5 625 352 - 6 057 553 8 351 989 4 966 546 528 530 915 255 718 976 528 530 915 53 215 217 Inflation Adjusted 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 Trade and other liabilities* 99 339 523 56 665 849 97 909 352 11 792 185 COMPANY Inflation Adjusted 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 Trade and other liabilities* 1 165 457 1 407 1 165 751 294 *The carrying amounts of current accounts and trade and other payables approximate the related fair values due to their short term nature. These relate to the Group and Company’s operational liabilities to suppliers, employees and regulators. Expense provisions and deferred income are also included. Included in trade and other payables are lease liabilities ranging from 1 to 5 years in respect of leased properties in which the Group is a lease. Also included in trade and other liabilities are ECL provisions in respect of guarantees and facilities approved but not drawn down. 1 165 457 1 407 1 165 751 294 Tribe28ANNUAL REPORT 202357 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 15. LEASE LIABILITIES At 1 January Monetary adjustment Remeasurements Finance costs accrual Payment of lease liabilities 16. BORROWINGS Banks and financial institutions Offshore borrowings Other institutions Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 1 761 246 1 601 064 366 516 96 923 - ( 3 764 255) - ( 520 335 655) 5 135 584 ( 521 890 197) 338 611 34 406 338 611 - 446 036 7 160 ( 3 694 925) ( 1 245 553) ( 2 140 382) ( 183 603) ( 521 930 723) 1 761 246 ( 523 325 453) 366 516 Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 27 694 383 2 883 224 27 694 383 600 000 235 594 934 91 668 598 235 594 934 19 076 270 - 7 688 500 - 263 289 317 102 240 322 263 289 317 1 599 980 21 276 250 Opening balances of borrowings 102 240 322 97 702 728 21 276 250 5 914 585 Loans raised Repayments made 270 808 081 75 408 345 258 697 770 15 684 059 ( 28 795 014) ( 1 589 812) ( 16 684 703) ( 322 394) Monetary effect of exchange rate ( 80 964 072) ( 69 280 939) - - Closing balance 263 289 317 102 240 322 263 289 317 21 276 250 *Included in Offshore borrowings are loan balances of ZWL 42 328 291 405 (2022 ZWL27 110 714 075), ZWL7 188 127 720 (2022 ZWL4 603 871 704) and ZWL 22 513 148 622 (2022 ZWL15 178 274 427) due to Nederlandse Financierings-Maatschappij Voor Ontiwikkelingslanden (FMO), Norfund and Swedfund respectively. These loans, together with the subordinated debt referred to in note 10, form the Group’s Blocked Funds which were registered with the Reserve Bank of Zimbabwe (RBZ) for an orderly expunging of the debts. In 2021, the Government of Zimbabwe assumed the obligation to settle these Blocked Funds in terms of Part XIII of the Finance Act No. 7 of 2021 under section 52. The Blocked funds are listed under Annex 1 of the Finance Act no 7 of 2021. The Bank holds, on behalf of the funders, USD11,640,413 (2022: USD11,640,413) worth of Treasury Bills with various tenors ranging from three years to twenty years. The Treasury bills have 0% coupon. The line of credit balances have been translated at 31 December 2023 at the closing rate of USD/ZWL of 6104.7226 There was a breach on the Aggregate Unhedged Open Foreign Currency Positions Ratio covenant which stood at 19.05% (instead of a maximum 10%) between the Group and the Development Financial Institution at the reporting date of 31 December 2023. 17. INVESTMENT SECURITIES Amortised cost – Gross Acquisitions Monetary adjustment Impairment allowance – Stage 1 Inflation Adjusted 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 80 510 025 66 248 154 16 754 166 346 421 331 111 214 749 132 072 378 ( 277 770 210) ( 96 952 878) - ( 505 537) - ( 170 935) 4 010 434 12 743 732 - - 148 655 609 80 510 025 148 655 609 16 754 166 The Group holds Treasury Bills and Government Bonds amounting to ZWL 157 401 307( 2022 - ZWL 80 510 027 000) with interest rates ranging from 0% to 18%. The Treasury Bills are measured at amortised cost in line with the Bank’s business model to collect contractual cashflows and the contractual terms are such that the financial assets give rise to cashflows that are solely payments of principal and interest. Of this amount a total of ZWL 71 701 240 139 (2022: ZWL 31 714 585 779) are with respect to blocked funds. Included in interest income is interest from Investment securities held by the Bank Interest income from investment securities 7 681 853 12 406 441 1 755 252 1 755 252 Inflation Adjusted 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 Tribe28ANNUAL REPORT 202358 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 17.1. Fair values of financial instruments The fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments, the Group determines fair values using other valuation techniques. For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument. The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date. Valuation models The Group measures fair values using the following fair value hierarchy, which reflects the significance of the inputs used in making the measurements. Level 1: Level 2: Level 3: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments; 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 all significant inputs are directly or indirectly observable from market data; and Inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments. The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date. During the reporting periods ended 31 December 2023 and 31 December 2022, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements. Financial instruments measured at fair value – fair value hierarchy Inflation Adjusted 2023 ZWL ‘000 Level 1 ZWL ‘000 Level 2 ZWL ‘000 Level 3 ZWL ‘000 Trade and other investments 2 566 889 - - 2 566 889 Inflation Adjusted 2022 ZWL ‘000 Level 1 ZWL ‘000 Level 2 ZWL ‘000 Level 3 ZWL ‘000 Trade and other investments 1 225 641 - - 1 225 641 Trade and other investments 2 566 889 - - 2 566 889 Historical Cost* 2023 ZWL ‘000 Level 1 ZWL ‘000 Level 2 ZWL ‘000 Level 3 ZWL ‘000 Trade and other investments 255 056 - - 255 056 Historical Cost* 2022 ZWL ‘000 Level 1 ZWL ‘000 Level 2 ZWL ‘000 Level 3 ZWL ‘000 Tribe28ANNUAL REPORT 2023 59 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Financial instruments not measured at fair value Below is a list of the Group’s financial investments not measured at fair value, but whose carrying amounts approximate fair value. Assets Cash and cash equivalents RBZ digital tokens Loans, advances and other accounts Investment securities Total Liabilities Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 352 383 289 103 502 091 352 383 289 21 538 825 19 567 202 - 19 567 202 - 494 536 518 222 417 933 494 536 518 46 285 257 148 655 609 80 510 025 148 655 609 16 754 166 1 015 142 618 406 430 049 1 015 142 618 84 578 248 Deposits and other liabilities 528 530 915 255 718 976 528 530 915 53 215 217 528 530 915 255 718 976 528 530 915 53 215 217 Cash and cash equivalents Cash and cash equivalents consists of balances with the Central Bank, other banks and cash on hand with original maturities of three months or less. These balances are subject to insignificant risk of change in their fair value. It is the Directors’ assessment that the carrying amount of these balances approximates their fair value at any given time. Loans, advances and other assets The estimated fair value of loans, advances and other assets is estimated to approximate the carrying amount due to non-availability of benchmark interest rates to discount the expected future cash flows thereof. The Directors believe that current interest rates are market related and would re-issue the loans at the same interest rate if needed. It is from this assessment that Directors believe that the carrying amount of these balances reasonably approximate fair value as discounting the future cash flow using the current interest rates would not result in significant differences from the carrying amount. Investment securities These financial assets consist of open market treasury bills and Non negotiable certificate of deposits with the Government (government bonds). There is currently no observable active market for these instruments; or a reliable proxy to discount the expected future cash flows. Treasury bills are denominated in both USD and ZWL, whilst the Non-negotiable certificate of deposits (NNCDs) are in ZWL only. Directors believe that the carrying amount approximates fair value on these instruments. In performing this assessment, Directors have determined that interest rates are consistent with the latest transactions that the Group entered into and the average tenor of the portfolio was short-term in nature. Trade and other investments These are equity investments held by the Group in a third part entity. There is currently no observable active market for these equities or a reliable proxy to discount the expected future cash flows. In performing this assessment, Directors have determined that interest rates are consistent with the latest transactions that the Group entered into. The issuer advises the Group of the equities’ value and this value is significantly unobservable as the equities are not traded on an active market. The fair value would therefore, increase or decrease depending on the movements in the issuer’s net carrying assets value. Deposits and other liabilities The estimated fair value of deposits with no stated maturity, which includes non-interest bearing deposits, is the amount repayable on demand. The estimated fair value of fixed interest-bearing deposits approximates the carrying amount as interest rates quoted are market related. It is the view of Directors that the carrying amounts of these assets and liabilities reasonably approximate fair values. Tribe28ANNUAL REPORT 202360 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 18. DEFERRED TAX The following table shows deferred tax (assets)/liabilities recorded in the statement of financial position and changes recorded in the statement of financial position and changes recorded in the income tax expense: GROUP Inflation Adjusted Historical Cost 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 Allowance for impairment losses on financial assets ( 4 264 452) ( 2 077 863) ( 4 264 452) ( 432 404) Prepayments and other assets Lease liabilities Right of use assets Intangible assets Staff loans IFRS 9 adjustments Quoted and other investments Investment properties Property and equipment Deferred income Staff loans IFRS 9 Fair value adjustment Provisions - - ( 1 106 874) ( 170 234) 699 917 ( 1 250 142) 1 354 333 869 020 108 025 128 344 ( 401 865) ( 818 038) 252 806 - 714 547 61 282 322 929 4 391 108 025 128 344 37 374 629 11 626 959 36 576 452 38 828 131 20 984 440 31 481 732 ( 573 967) ( 68 708) ( 72 773) ( 205 698) ( 655 028) ( 68 708) 52 609 - 148 698 12 753 2 419 575 2 827 202 ( 15 159) ( 136 312) ( 4 854 172) ( 3 517 956) ( 4 854 186) ( 732 088) Closing deferred tax liabilities/(assets) 68 350 958 26 096 511 58 121 956 3 974 639 Opening balance at 1 January 26 049 115 16 392 168 3 974 639 775 720 Current year charge/(credit) Relating to profit or loss Relating to other comprehensive income 42 301 843 22 817 867 19 053 154 9 704 343 8 856 137 848 206 54 147 317 25 601 618 28 545 698 3 198 919 1 283 553 1 915 366 COMPANY Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 Group Companies Assessed losses Provisions - ( 48) ( 19) - ( 48) ( 19) Closing deferred tax liabilities/(assets) ( 67) ( 67) Opening balance at 1 January ( 67) ( 221) Current year charge/(credit) Relating to profit or loss (note 8.1) Relating to other comprehensive income (note 5.3) 19. CASH AND CASH EQUIVALENTS ( 0) 0 - 154 286 ( 286) - ( 10) ( 4) ( 14) ( 14) - ( 14) - - ( 10) ( 4) ( 14) ( 14) - ( 14) - GROUP Inflation Adjusted Historical Cost Balances with the Central Bank** Current, nostro accounts* and cash 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 183 863 825 33 264 618 183 863 825 156 019 464 59 909 025 156 019 464 6 922 379 12 467 091 - Interbank placements 12 500 000 10 328 448 12 500 000 2 149 354 COMPANY Cash 352 383 289 103 502 091 352 383 289 21 538 825 Inflation Adjusted Historical Cost 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 14 14 66 66 14 14 14 14 Tribe28ANNUAL REPORT 202361 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS * Nostro accounts are foreign domiciled bank accounts operated by the Bank for the facilitation of offshore transactions on behalf of clients. ** Balances with the Central Bank, other banks and cash are used to facilitate customer and the Bank’s transactions which include payments and cash withdrawals. 20. TOTAL LOANS AND ADVANCES Fixed term loans – Corporate Fixed term loans – Retail Mortgages Overdrafts 20.1. Maturity analysis Less than 1 month 1 to 3 months 3 to 6 months 6 months to 1 year 1 to 5 years Over 5 years Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 354 661 582 175 275 689 354 661 582 36 474 938 137 700 082 44 533 867 137 700 082 2 023 457 2 554 699 2 023 457 151 397 53 678 151 397 9 267 515 531 634 11 170 494 536 518 222 417 933 494 536 518 46 285 257 Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 109 013 886 36 821 057 109 013 886 7 662 476 131 282 566 83 929 807 131 282 566 17 465 825 10 367 237 8 360 477 10 367 237 61 752 699 62 535 977 61 752 699 1 739 818 13 013 761 182 120 129 209 644 128 182 120 129 43 627 023 - - - - 494 536 518 401 291 446 494 536 518 83 508 903 Allowances for impairment losses on loans and advance ( 22 150 186) ( 7 705 906) ( 16 564 987) ( 1 603 602) ECL at 1 January Monetary adjustment ECL charged through profit or loss Bad debts written off ( 7 705 906) ( 6 809 262) ( 1 603 602) ( 412 209) ( 6 288 896) 4 828 444 - - ( 8 394 325) ( 7 321 424) ( 15 111 136) ( 1 523 591) 238 941 1 596 336 149 752 332 198 Suspended interest on credit impaired financial assets - - - - 472 386 332 393 585 540 477 971 531 81 905 301 Other assets 54 416 950 42 492 142 51 698 826 8 504 329 COMPANY Other assets 526 803 282 436 077 682 529 670 358 90 409 630 Inflation Adjusted Historical Cost 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 2 417 259 746 2 417 54 053 2 417 259 746 2 417 54 053 The Bank is continuing recovery efforts in respect of loans written off in the year under review amounting to ZWL 238 941 264 (2022: ZWL 5 011 864 901). Tribe28ANNUAL REPORT 202362 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 20.2. Sectoral analysis of utilisations GROUP Inflated Adjusted Agriculture Conglomerates Distribution Food & Beverages Individuals Manufacturing Mining Services and other Agriculture Conglomerates Distribution Food & Beverages Individuals Manufacturing Mining Services and other 2023 ZWL ‘000 155 402 077 13 207 093 62 710 392 11 117 068 82 222 045 59 406 635 31 950 646 78,520,561 % 31% 3% 13% 2% 17% 12% 6% 16% 2022 ZWL ‘000 58 842 011 - 45 975 312 - 39 068 155 8 166 016 4 772 187 65 594 252 % 26% 0% 21% 0% 18% 4% 2% 29% 494 536 518 100% 222 417 933 100% 2023 ZWL ‘000 155 402 077 13 207 093 62 710 392 11 117 068 82 222 045 59 406 635 31 950 646 78 520 561 Historical Cost* % 31% 3% 13% 2% 17% 12% 6% 16% 2022 ZWL ‘000 12 245 045 - 9 567 480 - 8 130 098 1 699 351 993 094 13 650 189 % 26% 0% 21% 0% 18% 4% 2% 29% 494 536 518 100% 46 285 257 100% The material concentration of loans and advances is with Agriculture at 30% (2022 - 26%). Tribe28ANNUAL REPORT 202363 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 20.3. Impairment analysis of financial assets measured at amortised cost Gross carrying amount at 1 January 2023 Monetary adjustment Transfers - to 12 months to ECL - to lifetime ECL not credit impaired - to lifetime ECL credit impaired Inflation Adjusted Stage 1 ZWL ‘000 Stage 2 ZWL ‘000 Stage 3 ZWL ‘000 Total ZWL ‘000 257 264 901 5 859 350 2 508 049 265 632 300 ( 203 727 977) ( 4 640 017) ( 1 986 123) ( 210 354 117) ( 1 745 461) 113 039 ( 1 205 043) ( 653 457) 1 131 696 ( 19 387) 1 205 333 ( 54 250) 613 765 ( 93 652) ( 289) 707 706 - - 1 ( 1) Net movement in financial assets 486 297 333 19 614 553 5 127 683 511 039 569 Balance as at 31 December 2023 538 088 796 21 965 582 6 263 374 566 317 752 Loss allowance analysis At 1 January 2022 - ECL – Loans, advances & guarantees - Guarantees and facilities approved not drawn down - ECL – Investment securities - ECL – Interbank placements Monetary adjustment Transfers - to 12 month ECL - to lifetime ECL not credit impaired - to lifetime ECL credit impaired Net increase/(decrease) in ECL Loans and advances Guarantees and facilities approved not drawn down Investment securities Interbank placements Bad debts written off Revaluation exchange on loans and advances ECL - ( 1) - 4 474 160 4 232 555 ( 51 593) 469 127 ( 175 929) 2 239 701 2 255 542 - 3 332 ( 19 173) 1 691 733 1 668 142 - 75 310 ( 51 719) - - - ( 27 900) 185 942 ( 150 287) ( 63 556) 5 270 612 5 122 491 130 420 17 700 - - 135 916 ( 11 091) 150 474 ( 3 466) 4 560 4 560 - - - - - ( 108 016) ( 174 851) ( 187) 67 022 3 119 153 2 880 212 - - - 8 405 594 8 156 239 ( 51 593) 547 769 ( 246 821) - 0 - 0 - 8 394 325 8 007 264 130 420 17 700 - 238 941 238 941 - - Balance as at 31 December 2023 9 716 871 2 380 178 4 463 929 16 560 978 Loans and advances Guarantees and facilities approved not …drawn down Investment securities Interbank placements 9 327 146 78 827 486 827 ( 175 929) 2 396 019 4 440 338 16 163 503 - 3 332 ( 19 173) - 75 310 ( 51 719) 78 827 565 469 ( 246 821) 9 716 871 2 380 178 4 463 929 16 560 978 Tribe28ANNUAL REPORT 202364 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Gross carrying amount at 1 January 2022 Monetary adjustment Transfers - to 12 months to ECL - to lifetime ECL not credit impaired - to lifetime ECL credit impaired Inflation Adjusted Stage 1 ZWL ‘000 Stage 2 ZWL ‘000 Stage 3 ZWL ‘000 Total ZWL ‘000 205 768 786 3 139 874 2 204 354 211 113 014 ( 139 706 783) ( 3 739) ( 1 530 689) ( 141 241 211) ( 2 611 211) 673 084 ( 2 982 479) ( 301 816) 2 211 486 ( 637 923) 2 990 975 ( 141 566) 399 725 ( 35 161) ( 8 496) 443 382 - - - - Net movement in financial assets 193 814 109 511 729 1 434 659 195 760 497 Balance as at 31 December 2022 257 264 901 5 859 350 2 508 049 265 632 300 Loss allowance analysis At 1 January 2021 - ECL – Loans, advances & guarantees - Guarantees and facilities approved not drawn down - ECL – Investment securities - ECL – Interbank placements Monetary adjustment Transfers - to 12 month ECL - to lifetime ECL not credit impaired - to lifetime ECL credit impaired Net increase/(decrease) in ECL Loans and advances Guarantees and facilities approved not drawn down Investment securities Interbank placements Bad debts written off 2 572 294 1 382 074 5 614 479 5 367 890 ( 124 747) 247 035 124 301 ( 77 452) 74 642 ( 148 303) ( 3 791) 319 207 324 192 73 152 222 093 ( 300 230) - 300 547 300 547 894 232 894 232 6 809 258 6 562 669 ( 124 747) 247 035 124 301 3 954 368 - - - - 1 596 336 1 593 571 73 152 300 735 ( 371 122) - ( 3 954 368) - - - - ( 8 339) ( 14 330) ( 5 200) 11 191 805 840 782 249 - 75 310 ( 51 719) - - - - - 85 791 ( 60 312) 153 503 ( 7 400) 471 289 487 130 - 3 332 ( 19 173) - - Revaluation exchange on loans and advances ECL ( 3 954 368) Balance as at 31 December 2022 4 474 160 2 239 701 1 691 733 8 405 594 Loans and advances Guarantees and facilities approved not drawn down Investment securities Interbank placements 20.4. Loans to officers and executive directors Included in advances and other accounts (note 20) are loans to officers:- At 1 January Monetary adjustment Net additions during the year Expected credit loss allowance on loans to officers 4 232 555 2 255 542 1 668 142 ( 51 593) 469 127 ( 175 929) - 3 332 ( 19 173) - 75 310 ( 51 719) 8 156 239 ( 51 593) 547 769 ( 246 821) 4 474 160 2 239 701 1 691 733 8 405 594 Inflation Adjusted Historical Cost 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 845 016 1 284 274 175 848 ( 828 386) ( 1 295 404) 257 321 273 951 - 856 146 845 016 - - 98 103 273 951 - 77 745 - 98 103 175 848 - 273 951 845 016 273 951 175 848 Tribe28ANNUAL REPORT 202365 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 20.5. The terms and conditions applicable to loans and advances are as follows: Product Overdraft Loan Tenure Payable on demand Interest Rate Penalty interest rate of eleven percentage points above loan rate up to a maximum penalty rate of 72% per annum. Loan payable over a maximum period of 120 months (includes mortgage loans) From 120% per annum up to a maximum of 215% per annum. Loans to employees and executive Directors are at an interest rate that considers the relevant risk of staff which is usually lower than the other markets for individual customers. Bankers Acceptances Loan payable over a minimum period of 30 days up to 90 days. From 50% pa to 205% per annum. 21. OTHER ASSETS Trade and other receivables Consumable stocks COMPANY Other assets 21.1. OTHER ASSETS Services deposits* Prepayments and stocks** Collateral repossessions*** Other receivables**** Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 53 483 684 42 131 692 50 869 763 8 403 647 933 266 360 450 829 063 100 682 54 416 950 42 492 142 51 698 826 8 504 329 Inflation Adjusted Historical Cost 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 2 417 259 746 2 417 54 053 2 417 259 746 2 417 54 053 Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 16 305 622 28 072 539 11 369 531 360 450 - 18 855 530 16 305 622 2 366 005 26 143 101 - 100 682 3 923 843 2 113 799 10 038 789 11 906 629 9 250 102 COMPANY Inflation Adjusted Historical Cost 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 54 416 950 42 492 140 51 698 825 8 504 329 Other receivables 2 417 259 746 2 417 54 053 2 417 259 746 2 417 54 053 * Service deposits relate to amounts pledged as collateral for VISA and the RTGS accounts. ** Prepayments and stocks are in respect of services, utilities and consumables for the Group. *** Collateral repossession assets are in relation to a commodity which the Group holds for sale as part of collateral exercise **** Included in other receivables are RBZ auction funds receivable as well as miscellaneous suspense accounts. Tribe28ANNUAL REPORT 202366 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 22. NON-CURRENT ASSETS HELD FOR SALE Balance at 1 January Additions during the year Monetary adjustment Disposals during the year Balance at 31 December Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 1 829 062 1 829 062 380 629 - ( 1 448 433) ( 380 629) - - - - - ( 380 629) 2022 ZWL ‘000 - 380 629 - - - 1 829 062 - 380 629 The non-current assets held for sale comprised movable property and other qualifying assets which the bank used to hold as part of collateral for loans and advances and have now been recovered from customers for borrowings from the bank. The Bank disposed of these assets during the year. 23. TRADE AND OTHER INVESTMENTS Balance at 1 January Additions Monetary adjustment (Loss)/gain recognised in profit or loss Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 1 225 641 602 935 255 056 36 500 - ( 4 722 610) 6 063 858 - 339 011 283 695 - - - - 2 311 833 218 556 2 566 889 1 225 641 2 566 889 255 056 The instruments are classified as financial assets at fair value through profit or loss as they are held in perpetuity and they represent equity holdings in another third party entity, Society for Worldwide Interbank Financial Telecommunication (SWIFT). The gain or losses relate to foreign exchange rate movements since the instruments are denominated in a foreign currency (Euro) and are recognised through profit or loss. 24. INVESTMENTS IN GROUP COMPANIES COMPANY Inflation Adjusted Historical Cost Investment in subsidiaries: NMB Bank Limited Investment in subsidiaries: Xplug Solutions Investment in subsidiaries: NMB Properties 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 35 430 628 35 430 628 386 381 159 564 475 2 609 - - 100 550 - - 35 433 713 35 430 628 387 031 159 564 The subsidiaries are registered in Zimbabwe, and the extent of the Group has 100% beneficial interest therein and their principal business activities are in Banking, technology transformation and property development, respectively. The consolidated financial statements include the financial information of the subsidiaries listed above. On 31 May 2023, Reoville Investments, a 100% owned subsidiary of NMB Bank Limited, was transferred to NMBZ Holdings Limited and incorporated as NMB Properties. All of its assets and liabilities were transferred from NMB Bank Limited to NMBZ Holdings Limited at a fair value of ZWL 6 772 626 955. NMB Bank Limited derecognised its investment in subsidiary on 31 May 2023 and NMBZ Holdings Limited recognised an investment in NMB Properties on the same date. In April 2023, the Group incorporated Xplug Solutions as a separate subsidiary that is focused on developing digital transformation and technology services Tribe28ANNUAL REPORT 202367 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 24.1. INTERCOMPANY TRANSACTIONS AND BALANCES 24.1.1. INTERCOMPANY TRANSACTIONS NMBZ Holdings Limited Revenue Shared Services Charge NMB Bank Limited Shared Services Charge NMB Properties Limited Revenue Xplug Solutions Limited Revenue 24.1.2. INTERCOMPANY BALANCES NMBZ Holdings Limited NMB Bank Limited NMB Properties Limited Xplug Solutions Limited 25. INVESTMENT PROPERTIES At 1 January Additions Disposals Fair value gains Reclassification from work in progress Reclassification from non-current assets held for sale Translation gains on change in functional currency NMBZ Holdings Limited 2023 ZWL ‘000 NMB Bank Limited 2023 ZWL ‘000 NMB Properties Limited Xplug Solutions Limited 2023 ZWL ‘000 2023 ZWL ‘000 - - - - - - - - 78 338 10 259 - - - - ( 18 919) ( 3) - - - - NMBZ Holdings Limited 2023 ZWL ‘000 NMB Bank Limited 2023 ZWL ‘000 NMB Properties Limited Xplug Solutions Limited 2023 ZWL ‘000 2023 ZWL ‘000 (Payable to)/ Receivable from (Payable to)/ Receivable from (Payable to)/ Receivable from (Payable to)/ Receivable from - 1 165 457 - - ( 1 165 457) ( 1 452 992) ( 1 345 607) - - 1 452 992 1 345 607 - - - - Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 108 688 700 58 115 866 19 598 846 18 493 385 22 618 160 11 345 113 ( 3 881 320) ( 744 134) ( 2 782 622) 3 518 133 2 764 347 ( 45 050) 143 695 504 32 823 583 236 921 078 16 380 730 - - - - - - - - - - - - At 31 December 268 101 729 108 688 700 268 101 729 22 618 160 Investment properties comprise commercial properties and residential properties that are leased out to third parties and land held for future development. No properties were encumbered. In the current year, the group took over properties valued at ZWL11 527 500 000 in pursuit of recoveries for loans defaulted Rental income amounting to ZWL 1 823 406 683 (2022: ZWL728 329 418) was received and no operating expenses were incurred on the leased investment properties in the current year due to the net leasing arrangement on the properties. The Group has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or develop the investment properties or for repairs, maintenance and enhancements. The Group has determined that the highest and best use of its properties held is its current use Measurement of fair value Fair value hierarchy The fair value of the Bank’s investment properties as at 31 December 2023 has been arrived at on the basis of valuations carried out by independent professional valuers, Integrated Properties Real Estate (Private) Limited. The valuation which conforms to International Valuation Standards, was in terms of the policy as set out in the accounting policies section and was derived with reference to market information close to the date of the valuation. Tribe28ANNUAL REPORT 202368 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Level 3 The fair value for investment properties of ZWL264 110 843 000 (2022: ZWL108 688 000) has been categorised under level 3 in the fair value hierarchy based on the inputs used for the valuation technique described below. 26. INTANGIBLE ASSETS Cost Balance 1 January 2022 Inflation adjustment Acquisitions Balance at 31 December 2022 Acquisitions Inflation Adjusted Historical Cost ZWL ‘000 2 307 395 8 780 499 75 517 Total ZWL ‘000 2 307 395 8 780 499 75 517 ZWL ‘000 Total ZWL ‘000 21 261 21 261 14 133 14 133 11 163 411 11 163 411 - - 35 394 - 35 394 - Balance at 31 December 2023 11 163 411 11 163 411 35 394 35 394 Accumulated amortisation Balance 1 January 2022 Amortisation for the year Balance at 31 December 2022 Amortisation for the year 5 010 380 1 392 072 6 402 452 1 386 125 5 010 380 1 392 072 6 402 452 1 386 125 7 853 4 395 12 248 6 094 7 853 4 395 12 248 6 094 Balance at 31 December 2023 7 788 577 7 788 577 18 342 18 342 Carrying amount At 31 December 2023 At 31 December 2022 3 374 834 3 374 834 17 052 17 052 4 760 960 4 760 960 23 147 23 147 * Included in the cost of the intangible assets are fully depreciated intangible assets with a cost of ZWL 5 373 404. Tribe28ANNUAL REPORT 202369 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 27. PROPERTY AND EQUIPMENT Cost/Revaluation amount At 1 January 2022 Additions Capitalisations Remeasurement – Right of use assets Revaluations Disposals At 31 December 2022 Additions Capitalisations Remeasurement – Right of use assets Revaluations Disposals Inflation Adjusted Capital Work in Progress Computers Motor Vehicles Furniture & Equipment Right of Use Assets** Freehold Land & Buildings* Total ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 11 959 166 12 702 692 1 135 985 6 512 660 3 558 139 47 413 820 83 282 462 5 075 834 4 702 648 1 685 309 607 688 - - - - - - - - - - ( 4 573) ( 82 280) - - - - - - 4 059 908 - - - 12 071 479 - 4 059 908 - - 3 431 256 3 431 256 - ( 86 853) 17 035 000 17 400 767 2 739 014 7 120 348 7 618 047 50 845 076 102 758 252 524 106 2 823 093 3 166 262 2 413 593 ( 699 278) - - - - - - - - - - ( 185 180) - - - - - - 3 238 584 - - - - - 8 927 055 ( 699 278) 3 238 584 71 020 585 71 020 585 - ( 185 180) At 31 December 2023 16 859 828 20 223 860 5 720 096 9 533 941 10 856 631 121 865 661 185 060 017 Accumulated depreciation At 1 January 2022 Charge for the year – Property and equipment Charge for period – Right of use assets Remeasurement – Right of use assets Disposals - - - - - 6 848 690 935 606 4 551 505 1 480 468 405 785 14 222 055 2 011 766 275 471 555 148 - 22 642 2 865 028 - - - - ( 4 573) ( 82 280) - - - 1 259 748 - - - - - 1 259 748 - ( 86 852) At 31 December 2022 - 8 855 883 1 128 797 5 106 653 2 740 216 428 427 18 259 979 Charge for the year – Property and equipment Charge for period – Right of use assets Remeasurement – Right of use assets Disposals At 31 December 2023 Carrying amount At 31 December 2023 - - - - 2 722 883 962 793 927 252 - 872 634 5 485 562 - - - - - ( 185 181) - - - 2 710 637 146 232 - - - - 2 710 637 146 232 ( 185 181) - 11 578 766 1 906 409 6 033 905 5 597 085 1 301 061 26 417 229 16 859 828 8 645 094 3 813 686 3 500 036 5 259 547 120 564 600 158 642 788 At 31 December 2022 17 035 000 8 544 884 1 610 217 2 013 695 4 877 831 50 416 649 84 498 273 * Assets measured using the revaluation model ** Right-of-Use Assets recognised in respect of leased properties in which the Group is a lessee. The Right-of-Use Assets are depreciated over the shorter of the lease term including extension options where the Group is certain to exercise such and the useful life of the underlying asset. **** Included in the cost of Property and Equipment are fully depreciated assets amounting to ZWL 17 877 713 Tribe28ANNUAL REPORT 2023 70 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 27.1. PROPERTY AND EQUIPMENT Cost/Revaluation amount At 1 January 2022 Additions Capitalisations Revaluations Remeasurement – Right of use assets Disposals At 31 December 2022 Additions Capitalisations Revaluations Remeasurement – Right of use assets Disposals Historical Cost* Capital Work in Progress Computers Motor Vehicles Furniture & Equipment Right of Use Assets** Freehold Land & Buildings* Total ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 34 182 137 793 3 329 62 975 95 141 2 890 149 3 223 569 1 056 283 740 557 263 968 101 967 - - - - - - - - - - ( 331) ( 76) - - - - - - - - - 2 162 776 277 945 7 749 051 - 277 945 - - - ( 407) 7 749 051 1 090 465 878 019 267 221 164 942 373 086 10 639 200 13 412 932 354 158 1 324 769 1 123 096 1 395 408 ( 489 321) - - - - - - - - - - ( 210) - - - - - - - - - 4 197 432 ( 489 321) 110 945 505 110 945 505 1 464 098 - - - 1 464 098 ( 210) At 31 December 2023 955 302 2 202 788 1 390 107 1 560 350 1 837 183 121 584 704 129 530 435 Accumulated depreciation At 1 January 2022 Charge for the year – Property and equipment Charge for period – Right of use assets Remeasurement – Right of use assets Disposals At 31 December 2022 Charge for the year – Property and equipment Charge for period – Right of use assets Remeasurement – Right of use assets Disposals At 31 December 2023 Carrying amount At 31 December 2023 - - - - - - - - - - 32 048 1 799 16 865 62 917 44 446 158 075 77 470 20 885 16 965 - 103 029 218 350 - - - - ( 44) ( 76) - - - 71 926 ( 35 200) - - - - 71 926 ( 35 200) ( 120) 109 475 22 608 33 830 99 643 147 475 413 030 295 249 233 980 151 757 - 872 634 1 553 619 - - - - - ( 210) - - - 458 700 24 741 - - - - 458 700 24 741 ( 210) - 404 723 256 377 185 586 583 083 1 020 109 2 449 879 955 302 1 798 065 1 133 729 1 374 764 1 254 100 120 564 595 127 080 556 At 31 December 2022 1 090 465 768 545 244 612 131 113 273 443 10 491 724 12 999 901 Fair value hierarchy Immovable properties were revalued as at 31 December 2023 on the basis of valuations carried out by independent professional valuers, Integrated Properties Real Estate (Private) Limited. The valuation which conforms to International Valuation Standards, was in terms of the policy as set out in the accounting policies section. All movable assets are measured at their carrying amounts which are arrived at by the application of a depreciation charge on their cost values over the useful lives of the assets. The valuation of land and buildings was arrived by applying yield rates of 10% on rental levels of between ZWL 18 000 and ZWL 93 000 per square metre. Level 3 The fair value of immovable properties of ZWL120 564 600 000 (2022: ZWL50 416 649 000) has been categorised under level 3 in the fair value hierarchy based on the inputs used for the valuation technique described below. The following shows reconciliation between the opening and closing balances for level 3 fair values: Tribe28ANNUAL REPORT 202371 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 1 January Transfers from work in progress Revaluation gain Depreciation Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 50 845 076 47 413 820 10 639 200 2 890 149 - - 110 945 505 71 020 585 3 431 256 - ( 1 301 061) ( 428 427) ( 1 020 109) - 7 749 051 ( 147 475) Balance at 31 December 120 564 600 50 416 649 120 564 595 10 491 724 Valuation technique and significant unobservable inputs The following table shows the valuation technique used in measuring the fair value of immovable properties, as well as the significant unobservable inputs used. Valuation technique Significant unobservable inputs The direct comparison method was applied on all residential properties. • Weighted average expected market rental growth (5%); • Average market yield of 10%. Inter-relationship between key unobservable inputs and fair value measurement The estimated fair value would increase /(decrease) if: • • expected market rental growth were higher/ (lower); and the risk adjusted discount rates were lower/ (higher). Change in rate Changes in fair value following changes in: Expected market rental growth Discount rates 5% 3% 1% -1% -3% -5% 131 035 78 621 26 207 ( 26 207) ( 78 621) ( 131 035) 460 995 276 597 92 199 ( 92 199) ( 276 597) ( 460 995) 28. INTEREST RATE REPRICING AND GAP ANALYSIS The table below analyses the Group’s interest rate risk exposure on assets and liabilities. The assets and liabilities are categorised by the earlier of contractual repricing or maturity dates. Tribe28ANNUAL REPORT 2023 72 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 28.1. Total position As at 31 December 2023 Assets Cash and cash equivalents RBZ Digital Tokens Current tax assets Investment securities Quoted and other investments Loans, advances Other assets Non-current assets held for sale Intangible assets Property and equipment Investment properties Liabilities and equity Deposits Other liabilities Borrowings Current tax liabilities Deferred tax liabilities Equity Subordinated loan Up to 1 month ZWL ‘000 1 month to 3 months ZWL ‘000 Inflation Adjusted 3 months to 1 year 1 year to 5 years ZWL ‘000 ZWL ‘000 Non interest bearing ZWL ‘000 Total ZWL ‘000 352 383 289 19 567 202 - - - - - - - 62 504 219 16 930 818 1 000 000 68 220 572 - - - 352 383 289 19 567 202 - 148 655 609 - - - - 2 566 889 2 566 889 109 013 886 131 282 566 72 119 937 182 120 129 - 494 536 518 - - - - - - - - - - - - - - - - - - - - 54 416 951 54 416 951 - - 3 374 834 3 374 834 158 642 788 158 642 788 268 101 729 268 101 729 543 468 595 148 213 384 73 119 937 250 340 702 487 103 190 1 502 245 809 495 482 422 20 990 436 1 734 492 10 323 565 - 528 530 915 - - - 7 188 128 - - - - - - - - 99 339 523 99 339 523 263 289 317 263 289 317 4 107 692 4 107 692 68 350 959 68 350 959 531 439 275 531 439 275 - 7 188 128 - - - - 502 670 550 20 990 436 1 734 492 10 323 565 966 526 769 1 502 245 809 Interest rate repricing gap 40 798 045 127 222 948 71 385 445 240 017 137 ( 479 423 574) Cumulative gap 40 798 045 168 020 993 239 406 438 479 423 575 - - - As at 31 December 2022 Assets Cash and cash equivalents Current tax assets Investment securities Quoted and other investments Loans, advances Other assets Non-current assets held for sale Intangible assets Property and equipment Investment properties Liabilities and equity Deposits Other liabilities Borrowings Current tax liabilities Deferred tax liabilities Equity Subordinated loan 103 502 091 - - - - - - - 31 277 619 3 363 761 16 375 323 33 185 773 - - - 103 502 091 - 84 202 476 - - - - 1 225 641 1 225 641 36 821 057 83 929 807 70 896 453 201 938 222 - 393 585 539 - - - - - - - - - - - - - - - - - - - - 42 492 142 42 492 142 1 829 062 1 829 062 4 760 955 4 760 955 84 498 274 84 498 274 108 688 700 108 688 700 171 600 767 87 293 568 87 271 775 235 123 996 243 494 774 824 784 880 226 078 385 31 203 965 4 458 392 114 291 - 261 855 033 - - - - - 4 451 329 - - - - - - - - - - - - - - - - - - 56 665 849 56 665 849 102 240 322 102 240 322 211 665 211 665 26 049 115 26 049 115 205 010 897 205 010 897 - 4 451 329 230 529 714 31 203 965 4 458 392 114 291 390 177 848 656 484 210 Interest rate repricing gap ( 58 928 947) 56 089 603 82 813 383 235 009 705 ( 146 683 074) 168 300 670 Cumulative gap ( 58 928 947) ( 2 839 344) 79 974 039 314 983 744 168 300 670 - Tribe28ANNUAL REPORT 202373 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at 31 December 2023 Assets Cash and cash equivalents RBZ Digital Tokens Current tax assets Investment securities Quoted and other investments Loans, advances and other assets Other assets Non current assets held for sale Intangible assets Property and equipment Investment properties Liabilities and equity Deposits Other liabilities Borrowings Current tax liabilities Deferred tax liabilities Equity Subordinated loan Historical Cost* Up to 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Non interest bearing ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Total ZWL ‘000 352 383 289 19 567 202 - - - - - - - - - - 62 504 219 16 930 818 1 000 000 68 220 572 - - - - 352 383 289 19 567 202 - 148 655 609 - - - - 2 566 889 2 566 889 109 013 886 131 282 566 72 119 937 182 120 129 - 494 536 518 - - - - - - - - - - - - - - - - - - - - 51 698 829 51 698 829 - - 17 052 17 052 127 080 556 127 080 556 268 101 729 268 101 729 543 468 595 148 213 384 73 119 937 250 340 702 449 465 056 1 464 607 673 495 482 422 20 990 436 1 734 492 10 323 565 - 528 530 915 - - - 7 188 128 - - - - 97 909 352 97 909 352 263 334 637 ( 45 320) 263 289 317 - - - - - - - - 4 107 692 4 107 692 58 121 958 58 121 958 505 460 311 505 460 311 - 7 188 128 502 670 550 20 990 436 1 734 492 273 658 202 665 553 993 1 464 607 673 Interest rate repricing gap 40 798 045 127 222 948 71 385 445 ( 23 317 499) ( 216 088 938) 40 798 045 168 020 993 239 406 438 216 088 937 - - - Cumulative gap As at 31 December 2022 Assets Cash and cash equivalents Current tax assets Investment securities Quoted and other investments Loans, advances and other assets Other assets Non current assets held for sale Intangible assets Property and equipment Investment properties Liabilities and equity Deposits Other liabilities Borrowings Current tax liabilities Deferred tax liabilities Equity Subordinated loan 21 538 825 - - - - - - - 6 508 884 700 000 3 407 711 6 137 571 - - - 21 538 825 - 16 754 166 - - - - 255 056 255 056 7 662 476 17 465 825 14 753 579 42 023 421 - 81 905 301 - - - - - - - - - - - 380 629 - - - - - - - - 8 504 329 8 504 329 - 380 629 23 147 23 147 12 999 902 12 999 902 22 618 160 22 618 160 35 710 185 18 165 825 18 541 919 48 160 993 44 400 594 164 979 514 47 046 998 6 493 557 927 793 23 784 - 54 492 132 - - - 926 323 - - - - - - - - 11 792 185 11 792 185 21 276 250 21 276 250 44 047 44 047 3 964 776 3 964 776 38 228 768 38 228 768 - 926 323 - - - - 47 973 322 6 493 557 927 793 23 784 75 306 025 130 724 482 Interest rate repricing gap ( 12 263 137) 11 672 268 17 614 126 48 137 209 ( 30 905 432) Cumulative gap ( 12 263 137) ( 590 869) 17 023 257 65 160 464 - - - Tribe28ANNUAL REPORT 202374 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 28.2. Zimbabwean dollars The table below analyses the Group’s interest rate risk exposure on assets and liabilities denominated in Zimbabwe Dollars only. The assets and liabilities are categorised by the earlier of contractual repricing or maturity dates. As at 31 December 2023 Assets Cash and cash equivalents Investment securities Quoted and other investments Loans, advances and other assets Other assets Non-current assets held for sale Intangible assets Property and equipment Investment properties Liabilities and equity Deposits Other Liabilities Current tax liabilities Deferred tax liabilities Equity Subordinated loan Inflation Adjusted Up to 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Non interest bearing ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Total ZWL ‘000 22 955 562 - - - 62 504 219 16 930 818 1 000 000 68 220 572 - - 22 955 562 148 655 609 - - - - 2 566 889 2 566 889 11 471 596 13 814 942 7 589 224 19 164 609 - 52 040 370 - - - - - - - - - - - - - - - - - - - - 45 912 622 45 912 622 - - 3 374 834 3 374 834 158 642 788 158 642 788 268 101 729 268 101 729 96 931 375 30 745 760 8 589 224 87 385 181 478 598 864 702 250 405 85 669 857 3 629 287 299 897 1 784 964 - - - - - - - - - - - - - - - - - - - - - - 91 384 005 - 4 107 692 4 107 692 68 350 958 68 350 958 531 439 275 531 439 275 - - 85 669 857 3 629 287 299 897 1 784 964 603 897 925 695 281 930 Interest rate repricing gap 11 261 519 27 116 475 8 289 327 85 600 217 ( 125 299 062) 6 968 475 Cumulative gap 11 261 519 38 377 993 46 667 320 132 267 537 6 968 475 ( 0) As at 31 December 2022 Assets Cash and cash equivalents Investment securities Quoted and other investments Loans, advances and other assets Other assets Non-current assets held for sale Intangible assets Property and equipment Investment properties Liabilities and equity Deposits and other liabilities Current tax liabilities Deferred tax liabilities Equity Subordinated loan Inflation Adjusted Up to 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Non interest bearing ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Total ZWL ‘000 33 176 569 - - - 31 277 619 3 363 761 16 375 323 29 493 319 - - 33 176 569 80 510 022 - - - - 1 225 641 1 225 641 14 728 423 8 392 981 42 537 872 10 096 911 - 75 756 187 - - - - - - - - - - - - - - - - - - - - 10 005 812 10 005 812 1 829 062 1 829 062 4 760 955 4 760 955 84 498 274 84 498 274 108 688 700 108 688 700 79 182 611 11 756 742 58 913 195 39 590 230 211 008 444 400 451 222 100 169 999 29 650 797 4 458 392 114 291 - 134 393 479 - - - 4 451 329 - - - - - - - - - - - - 211 665 211 665 26 049 115 26 049 115 205 010 897 205 010 897 - 4 451 329 104 621 328 29 650 797 4 458 392 114 291 231 271 677 370 116 485 Interest rate repricing gap ( 25 438 717) ( 17 894 055) 54 454 803 39 475 939 ( 20 263 233) 30 334 737 Cumulative gap ( 25 438 717) ( 43 332 772) 11 122 031 50 597 970 30 334 737 - Tribe28ANNUAL REPORT 202375 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at 31 December 2023 Assets Cash and cash equivalents RBZ Digital Tokens Investment securities Loans and advances Other assets Non-current assets held for sale Intangible assets Property and equipment Investment properties Liabilities and equity Deposits Other liabilities Borrowings Current tax liabilities Deferred tax liabilities Equity Subordinated loan Historical Cost* Up to 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Non interest bearing ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Total ZWL ‘000 22 955 562 19 567 202 - - - - - - 62 504 219 16 930 818 1 000 000 68 220 572 11 471 596 13 814 942 7 589 224 19 164 609 - - - - 22 955 562 19 567 202 148 655 609 52 040 370 - - - - - - - - - - - - - - - - - - - - 27 124 911 27 124 911 - - 17 052 17 052 127 080 556 127 080 556 268 101 729 268 101 729 116 498 578 30 745 760 8 589 224 87 385 181 422 324 248 665 542 990 85 669 857 3 629 287 299 897 1 784 964 - 91 384 005 - - - - - - - - - - - - - - - - - - - - - - - - 97 909 352 97 909 352 - - 4 107 692 4 107 692 58 121 957 58 121 957 505 460 311 505 460 311 - - 85 669 857 3 629 287 299 897 1 784 964 665 599 313 756 983 317 Interest rate repricing gap 30 828 721 27 116 474 8 289 327 85 600 217 ( 243 275 064) ( 91 440 326) Cumulative gap 30 828 721 57 945 195 66 234 521 151 834 738 ( 91 440 326) - As at 31 December 2022 Assets Cash and cash equivalents Investment securities Loans and advances Other assets Non-current assets held for sale Intangible assets Property and equipment Investment properties Liabilities and equity Deposits Other liabilities Borrowings Current tax liabilities Deferred tax liabilities Equity Subordinated loan Historical Cost* Up to 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Non interest bearing ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Total ZWL ‘000 6 904 057 - - - ( 7 200 813) ( 296 756) 6 508 884 700 000 3 407 711 6 137 571 3 064 990 1 746 582 8 852 147 2 101 171 - - 16 754 166 15 764 891 - - - - - - - - - - - 380 629 - - - - - - - - 8 504 329 8 504 329 - 380 629 23 147 23 147 12 999 902 12 999 902 22 618 160 22 618 160 16 477 932 2 446 582 12 640 487 8 238 742 36 944 724 76 748 467 20 845 415 6 170 342 927 793 23 784 - 27 967 334 - - - - - 926 323 - - - - - - - - - - - - - - - - - - 6 760 418 6 760 418 - - 44 047 44 047 3 964 776 3 964 776 38 228 768 38 228 768 - 926 323 21 771 738 6 170 342 927 793 23 784 48 998 009 77 891 667 Interest rate repricing gap ( 5 293 807) ( 3 723 760) 11 712 694 8 214 958 ( 12 053 285) ( 1 143 199) Cumulative gap ( 5 293 807) ( 9 017 566) 2 695 128 10 910 086 ( 1 143 199) ( 0) Tribe28ANNUAL REPORT 202376 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 28.3. Other foreign currencies The table below analyses the Group’s interest rate risk exposure on assets and liabilities denominated in currencies other than Zimbabwe Dollars. The amounts are shown at the equivalent values in Zimbabwe Dollars, the presentation currency. The assets and liabilities are categorised by the earlier of contractual repricing or maturity dates. As at 31 December 2023 Assets Cash and cash equivalents Loans and advances Other assets Quoted investments Liabilities and equity Deposits Other liabilities Borrowings Subordinated loan Inflation Adjusted Up to 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Non interest bearing ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Total ZWL ‘000 329 427 727 - - - 97 542 290 117 467 624 64 530 713 162 955 520 - - 329 427 727 442 496 148 - - - - - - - - 24 573 916 24 573 916 2 566 889 2 566 889 426 970 016 117 467 624 64 530 713 162 955 520 27 140 806 799 064 680 409 812 565 17 361 150 1 434 595 8 538 601 - - 7 188 128 - - - - - - - 263 334 637 - 417 000 693 17 361 150 1 434 595 271 873 238 - - - - - 437 146 911 - 263 334 637 7 188 128 707 669 675 Interest rate repricing gap 9 969 323 100 106 475 63 096 118 ( 108 917 717) 27 140 806 91 395 005 Cumulative gap 9 969 323 110 075 798 173 171 917 64 254 199 91 395 005 - As at 31 December 2022 Assets Cash and cash equivalents Loans and advances Other assets Quoted investments Liabilities and equity Deposits Other liabilities Borrowings Subordinated loan Inflation Adjusted Up to 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Non interest bearing ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Total ZWL ‘000 70 325 522 - - - 34 602 594 104 928 116 22 092 634 75 536 826 28 358 581 191 841 311 - - - - - - - - - - 317 829 352 - 314 049 314 049 92 418 156 75 536 826 28 358 581 191 841 311 34 916 643 423 071 517 125 908 387 1 553 168 - - - - - - 125 908 387 1 553 168 - - - - - - - - - - 14 505 394 141 966 949 24 179 519 24 179 519 107 957 235 107 957 235 - - 146 642 148 274 103 703 Interest rate repricing gap ( 33 490 231) 73 983 658 28 358 581 191 841 311 ( 111 725 505) 148 967 814 Cumulative gap ( 33 490 231) 40 493 427 68 852 008 260 693 319 148 967 814 - Tribe28ANNUAL REPORT 202377 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at 31 December 2023 Assets Cash and cash equivalents Loans and advances Other assets Unquoted investments Liabilities and equity Deposits Other liabilities Borrowings Current tax liabilities Subordinated loan Historical Cost* Up to 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Non interest bearing ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Total ZWL ‘000 329 427 727 - - - 97 542 290 117 467 624 64 530 713 162 955 520 - - 329 427 727 442 496 148 - - - - - - - - 24 573 916 24 573 916 2 566 889 2 566 889 426 970 017 117 467 624 64 530 713 162 955 520 27 140 805 799 064 679 409 812 565 17 361 150 1 434 595 8 538 601 437 146 911 - - - 7 188 128 - - - - - - - - - 263 334 637 - - 417 000 693 17 361 150 1 434 595 271 873 238 - - - - - - 263 334 637 - 7 188 128 707 669 675 Interest rate repricing gap 9 969 324 100 106 474 63 096 118 ( 108 917 717) 27 140 805 91 395 004 Cumulative gap 9 969 324 110 075 798 173 171 917 64 254 199 91 395 004 - As at 31 December 2022 Assets Cash and cash equivalents Loans and advances Other assets Unquoted investments Liabilities and equity Deposits and other liabilities Other laibilities Borrowings Current tax liabilities Subordinated loan Historical Cost* Up to 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Non interest bearing ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 Total ZWL ‘000 14 634 768 - - - 7 200 813 21 835 581 4 597 486 15 719 242 5 901 432 39 922 250 - - - - - - - - - - 66 140 410 - 65 354 65 354 19 232 254 15 719 242 5 901 432 39 922 250 7 266 167 88 041 344 26 201 583 323 215 - - - - - - - - 26 201 583 323 215 - - - - - - - - - - - - 3 018 578 29 543 376 5 031 767 5 031 767 22 465 942 22 465 942 - - - - 30 516 287 57 041 085 Interest rate repricing gap ( 6 969 330) 15 396 028 5 901 432 39 922 250 ( 23 250 120) 31 000 259 Cumulative gap ( 6 969 330) 8 426 698 14 328 129 54 250 379 31 000 259 - Tribe28ANNUAL REPORT 202378 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 29. CONTINGENT LIABILITIES Guarantees Facilities approved but not drawn down Expected credit losses on facilities approved but not drawdown Expected credit losses on guarantees Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 19 041 517 3 569 172 19 041 517 742 746 - - - - - ( 73 152) - - - - - ( 15 223) Balance at 31 December 19 041 517 3 496 020 19 041 517 727 523 The Group enters into various irrevocable commitments and contingent liabilities in its normal course of business in order to meet financial needs of customers. These obligations are not recognised on the statement of financial position, but contain credit risk and are therefore part of the overall risk of the Group. Guarantees commit the Group to make payments on behalf of clients in the event of specified acts. Guarantees carry the same credit risk as loans and advances to customers. Facilities approved but not drawn down represent contractual commitments to advance loans and revolving credits. These have fixed expiry dates and may expire without being drawn upon, hence total contract amounts do not necessarily represent future cash requirements. 30. CAPITAL COMMITMENTS There were no capital commitments during the year under review. Capital commitments are financed from the Group’s own resources. 31. RELATED PARTIES As required by IAS 24 Related Party Disclosure, the Board’s view is that non-executive Directors, executive Directors and executive management constitute the key management of the Group. Accordingly, key management remuneration is disclosed below. 31.1. Compensation of key management personnel of the Group Short term employee benefits Post employment benefits Termination benefits 31.2. Balances of loans to Directors, officers and others Executive directors Officers Directors’ companies Officers companies Expected credit loss allowance – Stage 1 31.3. Borrowing powers Holding Company Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 79 780 106 37 625 616 48 579 305 6 352 080 2 976 557 1 446 854 2 063 763 2 870 290 1 165 419 666 373 313 170 309 181 84 203 518 42 559 669 50 411 098 6 974 431 Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 - 845 020 2022 ZWL ‘000 175 849 32 295 162 23 502 633 32 295 162 4 890 907 - - - - - - 32 295 162 24 347 653 32 295 162 ( 350 793) ( 264 467) ( 350 793) - - 5 066 756 ( 55 036) 31 944 369 24 083 186 31 944 369 5 011 720 In terms of the existing Articles of Association, Article 102, the Directors may from time to time, at their discretion, borrow or secure the payment of any sum or sums of money for the purposes of the Company without any limitation. Tribe28ANNUAL REPORT 202379 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 32. EMPLOYEE BENEFITS 32.1. Pension Fund All eligible employees of the Group contribute to the NMB Bank Pension Fund, which is a defined contribution plan. The assets of the Pension Fund are held separately from those of the Group in funds under the control of Trustees. The pension fund assets included 71 540 shares in NMBZ Holdings Limited as at 31 December 2023. 32.2. Expense recognised in profit or loss Defined Contribution Plan – NSSA Defined Contribution Plan – NMB Bank Limited Pension Fund Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2 143 869 425 462 468 474 1 595 289 2023 ZWL ‘000 691 646 121 122 2022 ZWL ‘000 72 845 240 325 2 569 331 2 063 763 812 767 313 170 The expense is recognised in profit or loss as part of staff costs under operating expenses (note 6). The Group does not have defined benefit plans. 32.3. Employee Share Option Scheme In 2012, the Company established a share option programme that entitles Executive Directors and Senior Managers to purchase shares in the Company (equity settled). The beneficiary has a right to acquire a certain number of the Company’s shares at any time during the Exercise Period at the Exercise Price. In terms of the Employee Share Option Scheme, up to a maximum of 10% of the issued share capital may be granted by the Directors to senior employees by way of options. Each set of options is exercisable at any time within a period of five years from the date the options are granted and the issue price is based on the higher of nominal value of the shares and the middle market price derived from the Zimbabwe Stock Exchange prices for the trading day immediately preceding the date of offer. The options vest immediately from date of issue and the fair value of the options is estimated at the grant date using the Black – Scholes option pricing model, taking into account the terms and conditions upon which the instruments were granted. 32.3.1. Measurement of fair value - share options The fair value of services received in return for share options granted is based on the fair value of share options granted, measured using the Black-Scholes formula. The service and non-market performance conditions attached to the arrangements were not taken into account in measuring fair value. The inputs used in measuring the fair values at grant date of the equity-settled share based payment plans were as follows: Underlying Price Reporting Date Historical Volatility Expiry Date RIsk Free Rate Dividend yield Days to exercise date Number of years left to exercise date Inflation Adjusted Historical Cost* 2023 ZWL 250 2022 ZWL 30 2023 ZWL 250 2022 ZWL 30 31/12/2023 31/12/2022 31/12/2023 31/12/2022 94.11% 30/06/2025 178.78% 3.88% 730 2 31.54% N/A 30% 1.53% 608 1.67 94.11% 30/06/2025 178.78% 3.88% 730 2 31.54% N/A 30% 1.53% 608 1.67 Average value of share options 248.40 28.00 248.40 28.00 Tribe28ANNUAL REPORT 202380 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 32.3.2. Reconciliation of outstanding share options Movements in the number of share options outstanding and their related exercise price are as follows Opening Balance Granted Exercised Closing Balance Inflation Adjusted Historical Cost* Execise price per option ZWL Options Execise price per option ZWL Options 13.65 28.00 (13.99) 10 141 568 5 247 719 ( 1 704 868) 13.65 28.00 (13.99) 5 614 215 10 141 568 ( 5 614 215) 13 684 419 10 141 568 32.3.3. Reconciliation of the share option Reserve Movements in the number of share options outstanding and their related exercise price are as follows Opening Balance Share-based payment expense Exercise of options Inflation Adjusted Historical Cost* 2023 ZWL ‘000 1 236 145 305 160 ( 23) 2022 ZWL ‘000 545 919 701 513 ( 11 287) 2023 ZWL ‘000 129 569 229 682 ( 9) 2022 ZWL ‘000 27 768 103 297 ( 1 496) Closing Balance 1 541 282 1 236 145 359 242 129 569 32.4. National Social Security Authority Scheme All employees of the Group are members of the National Social Security Authority Scheme, a defined contribution plan to which both the employer and the employees contribute. Inflation adjusted contributions by the employer are recognised in profit or loss account and during the period amounted to ZWL369 215 093 (2022 – restated ZWL 48 154 068). 33. EXCHANGE RATES The following exchange rates have been used to translate the foreign currency balances to ZWL dollars at year end: United States Dollar British Sterling South African Rand European Euro Botswana Pula USD GBP ZAR EUR BWP 31-Dec-23 Mid - rate ZWL 6104.7226 7783.6486 333.3333 6753.9757 455.5077 31-Dec-22 Mid - rate ZWL 684.3339 824.7971 40.3226 729.1627 53.6592 34. RISK MANAGEMENT The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board has established the Board Asset and Liability Management Committee (ALCO) and the Board Risk and Compliance Committee, which are responsible for defining the Group’s risk universe, developing policies and monitoring implementation. The Board also has the Board Credit Committee (BCC) which is responsible for sanctioning credits and the Board Loans Review Committee (LRC), which is responsible for monitoring asset quality and adherence to the credit risk management policy. Risk management is linked logically from the level of individual transactions to the Group level. Risk management activities broadly take place simultaneously at the following different hierarchy levels: Strategic Level: Macro Level: Micro Level: This involves risk management functions performed by senior management and the board of directors. It includes the definition of risk, ascertaining the Group’s risk appetite, formulating strategy and policy for managing risk and establishes adequate systems and controls to ensure overall risk remains within acceptable levels and is adequately compensated. It encompasses risk management within a business area or across business lines. These risk management functions are performed by middle management. This involves “On-the-line” risk management where risks are actually created. These are the risk management activities performed by individuals who assume risk on behalf of the organisation such as Treasury Front Office, Corporate Banking, Retail banking etc. The risk management in these areas is confined to operational procedures set by management. Tribe28ANNUAL REPORT 202381 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Risk management is premised on four (4) mutually reinforcing pillars, namely: a. adequate board and senior management oversight; b. adequate strategy, policies, procedures and limits; c. adequate risk identification, measurement, monitoring and information systems; and d. comprehensive internal controls and independent reviews. 34.1. Credit Risk Credit risk is the risk that a financial contract will not be honoured according to the original set of terms. The risk arises when borrowers or counterparties to a financial instrument fail to meet their contractual obligations. The Group’s general credit strategies centre on sound credit granting process, diligent credit monitoring and strong loan collection and recovery. There is a separation between loan collection and recovery. There is a separation between loan granting and credit monitoring to ensure independency and effective management of the loan portfolio. The Board has put in place sanctioning committees with specific credit approval limits. The Credit Management department does the initial review of all applications before recommending them to the Executive Credit Committee and finally the Board Credit Committee depending on the loan amount. The Group has in place a Board Loans Review Committee responsible for reviewing the quality of the loan book and adequacy of loan loss provisions. The Group has an automated credit processes from loan origination, appraisal, monitoring and collections. The system has a robust loan monitoring and reporting module which is critical in managing credit risk. In view of the group’s move into the mass market, retail credit has become a key area of focus. The group has put in place robust personal loan monitoring systems and structures to mitigate retail loan delinquencies. This includes a rigorous scheme assessment and a dedicated pre-delinquency team and a separate recoveries team. Credit Management • • • • • • • • Responsible for evaluating & approving credit proposals from the business units. Together with business units, has primary responsibility on the quality of the loan book. Reviewing credit policy for approval by the Board Credit Committee. Reviewing business unit level credit portfolios to ascertain changes in the credit quality of individual customers or other counterparties as well as the overall portfolio and detect unusual developments. Approve initial customer internal credit grades or recommend to the Credit Committees for approval. Setting the credit risk appetite parameters. Ensure the Group adheres to limits, mandates and its credit policy. Ensure adherence to facility covenants and conditions of sanction e.g. annual audits, gearing levels, management accounts. • Manage trends in asset and portfolio composition, quality and growth and non-performing loans. • Manage concentration risk both in terms of single borrowers or group as well as sector concentrations and the review of such limits. Credit Monitoring and Financial Modelling • • • Independent credit risk management. Independent on-going monitoring of individual credit and portfolios. Triggers remedial actions to protect the interests of the Group, if appropriate (e.g. in relation to deteriorated credits). • Monitors the on-going development and enhancement of credit risk management across the Group. • Reviews the Internal Credit Rating System. • On-going championing of the Basel II methodologies across the Group. • Ensures consistency in the rating processes and performs independent review of credit grades to ensure they conform to the rating standards. • Confirm the appropriateness of the credit risk strategy and policy or recommends necessary revisions in response to changes/trends identified. Credit Administration • • • • • Prepares and keeps custody of all facility letters. Security registration. Safe custody of security documents. Ensures all conditions of sanction are fulfilled before allowing drawdown or limit marking. Review of credit files for documentation compliance e.g. call reports, management accounts. Recoveries The recoveries unit is responsible for all collections and ensures that the Group maximises recoveries from Non-Performing Loans (NPLs) and loans and advances written off. Tribe28ANNUAL REPORT 202382 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 34.1.1. Maximum exposure to credit risk without taking account of any collateral Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 Cash and Cash equivalents (excluding cash on hand) 352 383 289 103 186 207 352 383 289 21 473 089 Investment securities Loans and advances Total Guarantees 148 655 609 80 510 025 148 655 609 494 536 518 393 585 539 494 536 518 16 754 166 81 905 301 995 575 417 577 281 771 995 575 417 120 132 557 19 041 517 3 569 172 19 041 517 742 746 Facilities approved but not drawn down - - - - 19 041 516 3 569 172 19 041 516 742 745 1 014 616 933 580 850 943 1 014 616 933 120 875 303 Where financial instruments are recorded at fair value the amounts shown above represent the current risk exposure but not the maximum risk exposure that could arise in the future as a result of changes in values. The effect of collateral and other risk mitigation techniques is shown in the Net Maximum Exposure column below. Where financial instruments are recorded at fair value the amounts shown above represent the current risk exposure but not the maximum risk exposure that could arise in the future as a result of changes in values. The effect of collateral and other risk mitigation techniques is shown in the Net Maximum Exposure column below. 34.1.2. Risk concentrations of maximum exposure to credit risk on lending activities Agriculture Conglomerates Distribution Food & Beverages Individuals Manufacturing Mining Services and other Inflation Adjusted Historical Cost* 2023 Gross Maximum Exposure 2022 Net Maximum Exposure 2023 Gross Maximum Exposure 2022 Net Maximum Exposure ZWL ‘000 ZWL ‘000 ZWL ‘000 ZWL ‘000 156 309 527 155 402 077 61 142 743 58 842 011 13 207 093 71 104 313 11 117 068 13 207 093 62 710 392 11 117 068 - - 67 257 079 45 975 312 - - 89 027 927 82 222 045 56 323 642 39 068 155 59 406 635 59 406 635 31 950 646 31 950 646 8 166 016 4 772 187 8 166 016 4 772 187 78 974 286 78 520 561 66 744 618 65 594 252 511 097 496 494 536 518 264 406 285 222 417 933 Expected credit loss on loans and advances ( 16 560 978) - ( 41 988 352) - Net exposure 494 536 518 494 536 518 222 417 933 222 417 933 34.1.3. Collateral and other credit enhancements The amount and type of collateral required depends on an assessment of credit risk of the counterparty. There are guidelines regarding the acceptability of types of collateral. The main types of collateral obtained are guarantees, cession of debtors, mortgages over properties, equities, subordination of shareholder loans and promissory notes. The fair value of all collateral held by the Group at the reporting date is ZWL13 739 159 961 (2022:ZWL9 756 840 671) Tribe28ANNUAL REPORT 202383 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 34.1.4. Credit quality per sector on lending activities At 31 December 2023 Agriculture and horticulture Conglomerates Distribution Food and beverages Individuals Manufacturing Mining Services Net exposure At 31 December 2022 Agriculture and horticulture Conglomerates Distribution Food and beverages Individuals Manufacturing Mining Services Net exposure Grade A Pass ZWL’000 Grade B Special Mention ZWL’000 Grade C Substandard ZWL’000 Grade D Doubtful ZWL’000 Grade E Loss ZWL’000 Total ZWL’000 142 367 566 12 736 654 297 658 13 207 093 - - 197 - 57 263 294 954 275 4 218 823 274 001 11 117 068 - - - - - - - 155 402 076 13 207 093 62 710 392 11 117 068 80 012 746 186 788 1 973 542 48 484 485 82 222 045 59 406 635 - 31 245 582 705 064 - - 68 680 938 9 722 334 117 290 - - - - - - 59 406 635 31 950 646 78 520 562 463 300 923 24 305 115 6 607 313 322 682 485 494 536 518 64 663 211 1 404 870 - - 45 869 133 389 - - - - - - 1 382 977 - 105 790 - - - - - 67 451 058 - 45 975 312 - 37 868 153 436 549 709 840 51 739 1 874 39 068 155 8 166 016 4 772 187 - - - - - - 51 405 081 5 299 077 134 930 146 117 - - - 8 166 016 4 772 187 56 985 205 212 743 781 7 140 885 844 770 1 686 623 1 874 222 417 933 34.1.5. Credit quality per sector on lending activities Pass Special Mention Substandard Doubtful Loss Refers to loans graded 1 to 3 Refers to loans graded 4 to 7 Refers to loans graded 8 Refers to loans graded 9 Refers to loans graded 10 34.1.6. Rating Scale mapping to IFRS 9 Stages NMB Bank Rating Scale Supervisory Rating Scale NMBR1 NMBR2 NMBR3 NMBR4 NMBR5 NMBR6 NMBR7 NMBR8 NMBR9 NMBR10 1 2 3 4 5 6 7 8 9 10 IFRS 9 Stage 1 Stage 2 Stage 3 34.2. Market risk This is the exposure of the Group’s on and off balance sheet positions to adverse movement in market prices resulting in a loss in earnings and capital. The market prices will range from money market (interest rate risk), foreign exchange and equity markets in which the bank operates. The Group has in place a Management Asset and Liability Committee (ALCO) which monitors market risk and recommends the appropriate levels to which the Group should be exposed at any time. Net Interest Margin is the primary measure of interest rate risk, supported by periodic stress tests to assess the Group’s ability to withstand stressed market conditions. On foreign exchange risk, the bank monitors currency mismatches and make adjustments depending on exchange rate movement forecast. The mismatches per currency are contained within 5% of the Group’s capital position. Management ALCO meets on a monthly basis and operates within the prudential guidelines and policies established by the Board ALCO. The Board ALCO is responsible for setting exposure thresholds and limits, and meets on a quarterly basis. The following table demonstrates the sensitivity to a reasonable change in interest rates, with all other variables held constant, of the Group’s statement of comprehensive income. The sensitivity of the statement of comprehensive income is the effect of the assumed changes in interest rates on the profit or loss for the year, based on the variable and fixed interest rate financial assets and liabilities held at 31 December 2023. Tribe28ANNUAL REPORT 202384 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 December 2023 ZWL ZWL ZWL ZWL ZWL ZWL At 31 December 2022 ZWL ZWL ZWL ZWL ZWL ZWL Sensitivity of net interest income change in interest rates % 0 to 1 month ZWL 1 to 3 months ZWL 3 months to 1 year ZWL 1 year to 5 years ZWL Total ZWL 5% 3% ( 110 186 271) ( 2 084 054) 30 877 803 29 759 809 ( 51 632 713) ( 66 111 762) ( 1 250 432) 18 526 682 17 855 885 ( 30 979 627) 1% ( 22 037 254) ( 416 811) 6 175 561 59 951 962 43 673 458 -1% -3% -5% 22 037 254 416 811 ( 6 175 561) ( 5 951 962) 10 326 542 66 111 762 1 250 432 ( 18 526 682) ( 17 855 885) 30 979 627 110 186 271 2 084 054 ( 30 877 803) ( 29 759 809) 51 632 713 5% ( 529 486 155) ( 10 014 657) 148 379 367 143 006 989 ( 248 114 456) 3% ( 317 691 690) ( 6 008 792) 89 027 621 85 804 191 ( 148 868 670) 1% ( 105 897 230) ( 2 002 932) 29 675 875 288 091 552 209 867 265 -1% 105 897 230 2 002 932 ( 29 675 875) ( 28 601 399) 49 622 888 -3% 317 691 690 6 008 792 ( 89 027 621) ( 85 804 191) 148 868 670 -5% 529 486 155 10 014 657 ( 148 379 367) ( 143 006 989) 248 114 456 34.3. Foreign currency exchange rate risk The table below calculates the effect of a reasonable possible movement of the significant currency rate against the United States Dollar, with all other variables held constant. A negative amount in the table reflects a potential net reduction in the statement of comprehensive income or equity while a positive amount reflects a net potential increase. At 31 December 2023 USD USD USD USD USD USD At 31 December 2022 USD USD USD USD USD USD 34.4. Liquidity risk change in interest rates % Effect on profit before tax ZWL Effect on equity ZWL 5% 3% 1% -1% -3% -5% change in interest rates % 5% 3% 1% -1% -3% -5% ( 1 733 132) ( 66 111 762) ( 22 037 254) 22 037 254 66 111 762 110 186 271 Effect on profit before tax ZWL ( 8 328 346) ( 317 691 690) ( 105 897 230) 105 897 230 317 691 690 529 486 155 ( 2 084 054) ( 1 250 432) ( 416 811) 416 811 1 250 432 2 084 054 Effect on equity ZWL ( 10 014 657) ( 6 008 792) ( 2 002 932) 2 002 932 6 008 792 10 014 657 Liquidity risk is the risk of financial loss arising from the inability of the Group to fund asset increases or meet obligations as they fall due without incurring unacceptable costs or losses. The Group identifies this risk through maturity profiling of assets and liabilities and assessment of expected cash flows and the availability of collateral which could be used if additional funding is required. 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 are subject to review and approval by the Board ALCO. The key measure used by the bank for managing liquidity risk is the ratio of net liquid assets to deposits to customers. The Group also actively monitors its loans to deposit ratio against a set threshold in a bid to monitor and limit funding risk. The group monitors funding concentration risk by reviewing the ratio of top 20 depositors to the total funding. Funding mix is also monitored by monitoring the contribution of wholesale and demand deposits to the total funding for the bank. Liquidity risk is monitored through a daily liquidity reports produced by the Risk Management department. This is augmented by a monthly management ALCO and a quarterly board ALCO meetings. The key measure used by the Group for managing liquidity risk is the ratio of net liquid assets to deposits from customers. The Group monitors its liquidity ratio in compliance with Banking Regulations to ensure that it is not less than 30% of the liabilities to the public. Liquid assets consist of cash and cash equivalents, short term bank deposits and liquid investment securities available for immediate sale. Tribe28ANNUAL REPORT 202385 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at 31 December 2023 Assets held for managing liquidity risk Cash and cash equivalents Current tax assets Investment securities Loans, advances Other assets Total assets Liabilities Deposits Other liabilities Borrowings Current tax liabilities Subordinated loan Inflation Adjusted Up to 1 month ZWL 1 month to 3 months ZWL 3 months to 1 year ZWL 1 year to 5 years ZWL Total ZWL 352 383 289 - - - - - - - 352 383 289 - 62 504 219 16 930 818 1 000 000 79 297 725 159 732 762 109 013 886 131 282 566 72 119 937 182 120 129 494 536 518 - 54 416 951 - - 54,416,951 523 901 394 202 630 335 73 119 937 261 417 854 1 061 069 520 495 482 422 20 990 436 1 734 492 10 323 565 528 530 915 - - 4 107 692 - 99 339 523 - - - - - - - - 99 339 523 263 289 317 263 289 317 - 4 107 692 7 188 128 7 188 128 Total liabilities (contractual maturity) 499 590 114 120 329 959 1 734 492 280 801 010 902 455 575 Liquidity gap Cumulative gap As at 31 December 2022 Assets held for managing liquidity risk Cash and cash equivalents Current tax assets Investment securities Loans, advances Other assets Total assets Liabilities Deposits Other liabilities Borrowings Current tax liabilities Subordinated loan 19 976 735 81 126 257 71 316 097 ( 24 882 296) 147 536 793 19 976 735 101 102 992 172 419 089 147 536 793 - Historical Cost* Up to 1 month ZWL 1 month to 3 months ZWL 3 months to 1 year ZWL 1 year to 5 years ZWL Total ZWL 103 502 091 - - - - - - - 103 502 091 - 31 277 619 3 363 761 16 375 323 33 185 773 84 202 476 36 821 057 83 929 807 70 896 453 201 938 222 393 585 539 42 492 142 - - - 42 492 142 214 092 909 87 293 568 87 271 776 235 123 995 623 782 248 226 078 385 31 203 965 4 458 392 114 291 261 855 033 - - - 4 451 329 56 665 849 - 211 665 - - - - - - 56 665 849 102 240 322 102 240 322 - - 211 665 4 451 329 Total liabilities (contractual maturity) 230 529 714 88 081 479 4 458 392 102 354 613 425 424 198 Liquidity gap Cumulative gap (16 436 805) (787 911) 82 813 384 132 769 382 198 358 050 (16 436 805) (17 224 716) 65 588 668 198 358 050 - Tribe28ANNUAL REPORT 202386 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Maturity profile for contingent liabilities The table below shows the contractual expiry by maturity of the Group’s contingent liabilities and facilities approved but not drawn down. As at 31 December 2023 Guarantees Commitments to lend Irrevocable letters of credit As at 31 December 2022 Guarantees Commitments to lend Irrevocable letters of credit Historical Cost* On Demand ZWL 0 to 1 month ZWL 1 to 3 months ZWL 3 months to 1 year ZWL 1 year to 5 years ZWL Total ZWL - - - - 122 094 394 746 18 524 676 - - - - - - - - - 19 041 517 - - 122 094 394 746 18 524 676 - 19 041 517 Historical Cost* On Demand ZWL 0 to 1 month ZWL 1 to 3 months ZWL 3 months to 1 year ZWL 1 year to 5 years ZWL Total ZWL - - - 71 515 203 19 379 349 425 291 665 - - - - - - - - - 516 186 217 - - - 71 515 203 19 379 349 425 291 665 - 516 186 217 The Group expects that not all of the contingent liabilities or facilities approved but not drawn down will be drawn before expiry. 34.5. Operational risk This risk is inherent in all business activities and is the risk of loss arising from inadequate or failed internal processes, people, systems or from external events. The Group utilises monthly Key Risk Indicators to monitor operational risk in all units. Further to this, the Group has an elaborate Operational Loss reporting system in which all incidents with a material impact on the well-being of the Group are reported to risk management. The risk department conducts periodic risk assessments on all the units within the Group aimed at identifying the top risks and ways to minimise their impact. There is a Board Risk and Compliance Committee whose function is to ensure that this risk is minimised. The Risk Committee with the assistance of the internal audit function and the Risk Management department assesses the adequacy of the internal controls and makes the necessary recommendations to the Board. 34.6. Legal and compliance risk Legal risk is the risk from uncertainty due to legal actions or uncertainty in the applicability or interpretation of contracts, laws or regulations. Legal risk may entail such issues as contract formation, capacity and contract frustration. Compliance risk is the risk arising from non – compliance with laws and regulations. To manage this risk, permanent relationships are maintained with firms of legal practitioners and access to legal advice is readily available to all departments. The Group has an independent compliance function which is responsible for identifying and monitoring all compliance issues and ensures the Group complies with all regulatory and statutory requirements. 34.7. Reputational risk Reputation risk is the risk of loss of business as a result of negative publicity or negative perceptions by the market with regards to the way the Group conducts its business. To manage this risk, the Group strictly monitors customers’ complaints, continuously train staff at all levels, conducts market surveys and periodic reviews of business practices through its Internal Audit department. The directors are satisfied with the risk management processes in the Group as these have contributed to the minimisation of losses arising from risky exposures. 34.8. Strategic risk This refers to current and prospective impact on a Group’s earnings and capital arising from adverse business decisions or implementing strategies that are not consistent with the internal and external environment. To manage this risk, the Group always has a strategic plan that is adopted by the Board of Directors. Further, attainment of strategic objectives by the various departments is monitored periodically at management level. 34.9. Environmental, Social & Governance (ESG) Risk Environment, Social and Governance (ESG) or sustainability risk is the consideration of non-financial risks arising from the environment (flora and fauna) as well as societal issues. The Group is not only concerned about making profits, but is also keen on assessing the impact it has on the planet and the people it interacts with. There is a growing number of frameworks and standards aimed at addressing global concerns on sustainability. Global risk reports show that environmental and societal risks have overtaken economic and geopolitical risks in terms of both likelihood and impact. 34.9.1. Reserve Bank of Zimbabwe Ratings The Reserve Bank of Zimbabwe conducted an on-site inspection on the Group’s banking subsidiary on 24 June 2021. Below are the final ratings from the on-site examination. Tribe28ANNUAL REPORT 202387 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CAMELS* Ratings CAMELS Component Capital Adequacy Asset Quality Management Earnings Liquidity Sensitivity to Market Risk Composite Rating Latest RBS** Ratings 30/06/2021 Previous RBS Ratings 24/11/2016 Previous RBS Ratings 30/06/2013 Previous RBS Ratings 31/01/2008 2 2 2 2 2 2 2 2 3 3 2 3 2 3 2 4 3 2 2 2 3 4 2 3 3 3 3 3 * CAMELS is an acronym for Capital Adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to Market Risk. CAMELS rating system uses a rating scale of 1-5, where ‘1’ is Strong, ‘2’ is Satisfactory, ‘3’ is Fair, ‘4’ is Weak and ‘5’ is Critical. ** RBS stands for Risk-Based Supervision. 34.9.2. Summary RAS ratings RAS Component Overall Inherent Risk Overall Risk Management Systems Overall Composite Risk Direction of Overall Composite Risk *** RAS stands for Risk Assessment System. Latest RBS** Ratings 30/06/2021 Previous RBS Ratings 24/11/2016 Previous RBS Ratings 30/06/2013 Previous RBS Ratings 31/01/2008 Moderate High High High Acceptable Acceptable Acceptable Acceptable Moderate Stable Moderate Stable Moderate Stable Moderate Stable 34.9.2.1. Summary risk matrix – 30 June 2021 on - site examination Type of Risk Credit Liquidity Interest Rate Foreign Exchange Strategic Risk Operational Risk Legal & Compliance Reputation Overall KEY High Level of Inherent Risk Level of Inherent Risk Adequacy of Risk Management Systems Overall Composite Risk Direction of Overall Composite Risk Moderate Moderate Low Moderate Moderate Moderate Moderate Moderate Moderate Acceptable Acceptable Strong Strong Acceptable Acceptable Acceptable Acceptable Moderate Moderate Low Low Moderate Moderate Moderate Moderate Acceptable Moderate Stable Stable Stable Stable Stable Stable Stable Stable Stable Moderate/Acceptable Low Low – reflects a lower than average probability of an adverse impact on a banking institution’s capital and earnings. Losses in a functional area with low inherent risk would have little negative impact on the banking institution’s overall financial condition. Moderate – could reasonably be expected to result in a loss which could be absorbed by a banking institution in the normal course of business. High – reflects a higher than average probability of potential loss. High inherent risk could reasonably be expected to result in a significant and harmful loss to the banking institution. Adequacy of Risk Management Systems Weak – risk management systems are inadequate or inappropriate given the size, complexity and risk profile of the banking institution. Institution’s risk management systems are lacking in important ways and therefore a cause of more than normal supervisory attention. The internal control systems will be lacking in important aspects particularly as indicated by continued control exceptions or by the failure to adhere to written policies and procedures. Acceptable – management of risk is largely effective but lacking to some modest degree. While the institution might be having some minor risk management weaknesses, these have been recognised and are being addressed. Management information systems are generally adequate. Strong - management effectively identifies and controls all types of risk posed by the relevant functional areas or per inherent risk. The board and senior management are active participants in managing risk and ensure appropriate policies and limits are put in place. The policies comprehensively define the bank’s risk tolerance, responsibilities and accountabilities are effectively communicated. Tribe28ANNUAL REPORT 202388 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Overall Composite Risk Low – would be assigned to low inherent risk areas. Moderate risk areas may be assigned a low composite risk where internal controls and risk management systems are strong and effectively mitigate much of the risk. Moderate – risk management systems appropriately mitigates inherent risk. For a given low risk area, significant weaknesses in the risk management systems may result in a moderate composite risk assessment. On the other hand, a strong risk management system may reduce the risk so that any potential financial loss from the activity would have only a moderate negative impact on the financial condition of the organisation. High – risk management systems do not significantly mitigate the high inherent risk. Thus, the activity could potentially result in a financial loss that would have a significant impact on the bank’s overall condition. Direction of Overall Composite Risk • Increasing – based on the current information, risk is expected to increase in the next 12 months. • Decreasing – based on current information, risk is expected to decrease in the next 12 months. • Stable – based on the current information, risk is expected to be stable in the next 12 months. External Credit Ratings The external credit ratings were given by Global Credit Rating (GCR), a credit rating agency accredited with the Reserve Bank of Zimbabwe. Security Class Long Term 2023 BB+ 2022 BB+ 2021 BB+ 2020 - 2019 BB- The 2020 rating which was due to expire in August 2020 was withdrawn by GCR on 23 June 2020 following the Bank’s waiver of external ratings. The Bank waived the 2020/2021 external ratings in line with a general dispensation extended by the Reserve Bank of Zimbabwe due to the COVID-19 pandemic. The 2023 external ratings were obtained during the month of June 2023 with a long term rating of BB+. 34.10. Regulatory Compliance There was no significant regulatory breach resulting in penalties during the period under review. The Bank is committed to comply with and adhere to all regulatory requirements. 34.11. Capital management 34.11.1. Holding company The capital allocation to the subsidiary units is in accordance with the regulatory requirements of the business undertaken by the subsidiary. 34.11.2. Banking subsidiary The primary objective of the Bank’s capital management is to ensure that the Bank complies with the RBZ requirements. In implementing the current capital requirements, the RBZ requires the Banking subsidiary to maintain a prescribed ratio of total capital to total risk weighted assets. Regulatory capital consists of Tier 1 capital, which comprises share capital, share premium, retained earnings (including current year profit), statutory reserve and other equity reserves. The adequacy of the Bank’s capital is monitored using, among other measures, the rules and ratios established by the Basel Committee on Banking Supervision (BIS rules/ratios) and adopted by the RBZ in supervising the Bank The other component of regulatory capital is Tier 2 capital, which includes subordinated term debt, revaluation reserves and portfolio provisions. Tier 3 capital relates to an allocation of capital to market and operational risk. Various limits are applied to elements of the capital base. The core capital (Tier 1) shall comprise not less than 50% of the capital base and the regulatory reserves and portfolio provisions are limited to 1.25% of total risk weighted assets. Tribe28ANNUAL REPORT 202389 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The Bank’s regulatory capital position at 31 December was as follows: Share capital Share premium Retained earnings Inflation Adjusted Historical Cost* 2023 ZWL ‘000 2022 ZWL ‘000 2023 ZWL ‘000 2022 ZWL ‘000 19 284 19 284 34 189 096 34 189 096 17 31 475 17 31 475 396 664 339 133 510 115 400 020 626 30 254 039 Functional currency translation reserve 7 634 508 7 634 508 11 620 11 620 Less: capital allocated for market and operational risk ( 45 690 772) ( 24 678 018) ( 45 690 772) ( 5 135 505) Tier 1 capital 392 816 455 150 674 985 354 372 965 25 161 647 438 507 228 175 353 003 400 063 738 30 297 151 Tier 2 capital (subject to limit as per Banking Regulations) 96 352 280 16 298 476 107 983 109 Fair valuation gains on land and buildings 78 518 660 2 582 363 90 149 489 Subordinated debt 7 188 128 4 451 329 7 188 128 Stage 1 & 2 ECL provisions – (limited to 1,25% of risk weighted asset 10 645 492 9 264 784 10 645 492 8 688 013 5 833 685 926 323 1 928 005 Tier 1 & 2 capital 489 168 735 166 973 460 462 356 074 33 849 660 Tier 3 capital (sum of market and operational risk capital) 45 690 772 24 678 018 45 690 772 5 135 505 Total capital base 534 859 507 191 651 479 508 046 846 38 985 164 Total risk weighted assets 1 435 692 654 741 182 537 1 435 692 654 154 240 369 Tier 1 ratio Tier 2 ratio Tier 3 ratio Total capital adequacy ratio RBZ minimum required 27.36% 6.71% 3.18% 37.25% 12.00% 20.33% 2.20% 3.33% 25.86% 12.00% 24.68% 7.52% 3.18% 35.39% 12.00% 16.31% 5.63% 3.33% 25.28% 12.00% Tribe28ANNUAL REPORT 202390 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 35. FOREIGN EXCHANGE POSITIONS The table below indicates the currencies to which the Group had significant exposure at 31 December on all its assets and liabilities. The analysis reflects the mismatch by currency. The amounts are shown at the equivalent values in Zimbabwe Dollars, the presentation currency. As at 31 December 2023 Assets ZWL ZWL USD ZWL ZAR ZWL GBP ZWL EUR ZWL BWP ZWL CAD ZWL AUD ZWL CNY ZWL Total ZWL Inflation Adjusted Cash and cash equivalents ( 14 350 730) 343 433 887 15 411 490 2 533 179 2 166 579 2 043 742 2 025 612 344 530 772 352 383 289 Investment securities 57 828 963 90 826 645 Trade and other investments - - - - Loans and advances Other assets Non-current assets held for sale Intangible assets Property and equipment Investment properties Deferred tax Liabilities and equity Deposits Current tax liabilities Other liabilities Borrowings Deferred tax liabilities Subordinated term loan Redeemable ordinary shares Equity 105 764 881 388 767 130 4 393 9 975 576 44 441 345 30 - 3 374 834 158 642 788 268 101 729 - - - - - - - - - - - - - - - - - 2 566 889 - - 68 30 - - - - - - - - - - - - - - - - - 17 - - - - - - - - - - - 148 655 609 2 566 889 494 536 518 54 416 951 - 3 374 834 158 642 788 268 101 729 - 589 338 044 867 469 007 15 415 912 2 533 179 4 733 535 2 043 772 2 025 612 361 530 772 1 482 678 607 499 192 976 29 160 065 161 741 16 133 4 107 692 - 94 313 097 5 026 411 240 823 375 22 465 942 68 350 958 - - - 531 439 275 7 188 128 - - - - - - - - - - 15 - - - - - 1 438 227 374 63 840 546 161 741 16 148 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 528 530 915 4 107 692 99 339 523 263 289 317 68 350 958 7 188 128 - 531 439 275 - 1 502 245 808 Net foreign exchange position ( 848 889 330) 803 628 462 15 254 171 2 517 031 4 733 535 2 043 772 2 025 612 361 530 772 ( 19 567 201) As at 31 December 2022 Assets Cash and cash equivalents ( 1 426 026) 98 712 876 3 021 675 488 743 2 169 296 535 527 Investment securities Trade and other investments Loans and advances Other assets Non-current assets held for sale Intangible assets Property and equipment Investment properties Deferred tax Liabilities and equity Deposits Current tax liabilities Other liabilities Borrowings Deferred tax liabilities Subordinated term loan Redeemable ordinary shares Equity 80 510 025 911 592 - - - - 40 933 884 181 475 352 8 292 42 492 142 1 829 062 4 760 955 84 498 274 108 688 700 - - - - - - - - - - - - - - - 16 - - - - - - - 314 049 - - 76 313 - - - - - - - - - - - - 363 198 608 280 188 228 3 029 967 488 759 1 531 545 510 642 113 752 028 140 124 995 777 226 77 525 298 546 688 657 211 665 - 32 486 330 24 153 782 ( 5 716 914) 107 957 235 26 049 115 4 451 329 - 205 010 897 - - - - - - - - - - - - 71 - - - - - - - 19 635 6 031 - - - - - - - - - - 376 244 450 272 236 012 777 226 77 596 29 027 161 842 Net foreign exchange position ( 13 045 842) 7 952 216 2 252 741 411 163 1 502 518 348 800 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 103 502 091 80 510 025 1 225 641 222 417 933 42 492 142 1 829 062 4 760 955 84 498 274 108 688 700 - - 649 924 823 - - - - - - - - 255 718 977 211 665 56 665 849 102 240 321 26 049 115 4 451 329 - 205 010 897 - 650 348 153 - ( 423 330) Tribe28ANNUAL REPORT 202391 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at 31 December 2023 Assets Cash and cash equivalents Investment securities Trade and other investments Loans and advances Other assets Non-current assets held for sale Intangible assets Property and equipment Investment properties Deferred tax Liabilities and equity Deposits Current tax liabilities Other Liabilites Borrowings Deferred tax liabilities Subordinated term loan Equity ZWL ZWL USD ZWL ZAR ZWL GBP ZWL EUR ZWL BWP ZWL CAD ZWL AUD ZWL CNY ZWL Total ZWL Historical Cost* ( 14 350 730) 343 433 887 15 411 490 2 533 179 2 166 579 2 043 742 2 025 612 344 530 772 352 383 289 57 828 963 90 826 645 - - - - 105 764 881 388 767 130 4 393 7 257 355 44 441 345 30 - 17 052 127 080 556 268 101 729 - - - - - - - - - - - - - - - - - - - - - 2 566 889 68 96 - - - - - - - 30 0 - - - - - - - - - - - - - - - - 17 - - - - - - - - - - - - - - - 148 655 609 2 566 889 494 536 518 51 698 826 - 17 052 127 080 556 268 101 729 - 551 699 809 867 469 007 15 415 912 2 533 179 516 801 111 509 2 025 612 361 530 772 1 445 040 470 499 192 976 29 160 065 161 741 16 133 4 107 692 - 92 882 926 5 026 411 240 823 375 22 465 942 58 121 957 - - 7 188 128 505 460 311 - - - - - - - 15 - - - 1 400 589 237 63 840 546 161 741 16 148 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 528 530 915 4 107 692 97 909 352 263 289 317 58 121 957 7 188 128 505 460 311 - 1 464 607 672 Net foreign exchange position ( 848 889 428) 803 628 462 15 254 171 2 517 031 516 801 111 509 2 025 612 361 530 772 ( 19 567 202) As at 31 December 2022 Assets Cash and cash equivalents Investment securities Trade and other investments Advances and other assets Other assets Non-current assets held for sale Intangible assets Property and equipment Investment properties Deferred tax Liabilities and equity Deposits Current tax liabilities Other Liabilites Borrowings Deferred tax liabilities Subordinated term loan Equity ( 296 757) 20 542 187 628 812 101 708 451 431 111 443 16 754 166 189 703 - - - - 8 518 357 37 765 090 1 726 8 842 631 380 629 990 757 17 584 123 22 618 160 - - - - - - - - - - - - - - - 3 - - - - - - - 65 354 - - 16 65 - - - - - - - - - - - - 75 581 770 58 307 277 630 537 101 711 516 801 111 509 23 671 841 29 160 065 161 741 16 133 62 127 143 310 44 048 - 6 760 418 5 026 411 ( 1 189 692) 22 465 942 5 420 831 926 323 42 662 846 - - - - - - - - - 15 - - - - - 4 086 1 255 - - - - - - 78 296 614 56 652 418 161 741 16 148 66 214 144 565 Net foreign exchange position ( 2 714 844) 1 654 859 468 796 85 563 450 587 ( 33 056) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 21 538 825 16 754 166 255 056 46 285 257 8 842 631 380 629 990 757 17 584 123 22 618 160 - - 135 249 605 - - - - - - 53 215 217 44 048 11 792 185 21 276 250 5 420 831 926 323 42 662 846 - 135 337 700 - ( 88 094) Tribe28ANNUAL REPORT 202392 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 36. SEGMENT INFORMATION For management purposes, the Group is organised into six main operating segments based on products and services as follows: Retail banking Corporate banking Treasury International banking Digital Banking Real Estate Other Individual customers deposits and consumer loans, overdrafts, credit card facilities and funds transfer facilities. Loans and other credit facilities and deposit and current accounts for corporate and institutional customers. Money market investment, securities trading, accepting and discounting of instruments and foreign currency trading. Handles the Group’s foreign currency denominated banking business and manages relationships with correspondent banks. Handles the Bank’s Digital Banking products including Card and POS services. This is the property company in the Group. Includes other items like head office related transactions and developing business lines for the Group. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects is measured differently from operating profit or loss in the consolidated financial statements. Income taxes are managed on a company basis and are not allocated to operating segments. Interest income is reported net as management primarily relies on net interest revenue as a performance measure, not the gross income and expense. Transfer prices between operating segments are on arm’s length basis in a manner similar to transactions with third parties. No revenue from transactions with a single external customer or counter party amounted to 10% or more of the Group’s total revenue in 2023 or 2022. The following table presents income and profit and certain assets and liabilities information regarding the Group’s operating segments and service units: Consumer Banking & Value Added Services ZWL ‘000 Business Banking ZWL ‘000 Treasury Banking ZWL ‘000 Digital Banking ZWL ‘000 Real Estate ZWL ‘000 Microfinance ZWL ‘000 Other ZWL’000 Total ZWL’000 Inflation Adjusted For the year ended 31 December 2023 Income Third party income Inter-segment income Depreciation of property and equipment Depreciation of right of use assets Amortisation of intangible assets Segment profit/(loss) Income tax charge Revaluation of land and buildings, net of tax Interest and similar expense ( 10 249 208) ( 15 082 353) ( 4 392 566) 137 494 533 93 434 362 40 043 738 98 854 048 8 972 307 3 973 150 260 284 653 642 660 570 - - - - - 396 221 - - - - 396 221 ( 29 724 126) 127 245 325 78 352 009 35 651 172 98 854 048 9 368 528 3 973 150 260 284 653 613 332 664 Net operating income Other material non-cash items Impairment losses on financial assets measured at amortised cost ( 4 897 926) ( 3 239 757) ( 17 700) - - - - - - - - - - - - - ( 238 941) ( 8 394 325) ( 5 473 365) ( 5 473 365) ( 2 710 637) ( 2 710 637) ( 1 386 126) ( 1 386 126) 66 978 048 40 636 630 18 660 696 52 583 377 4 731 626 2 113 436 136 435 668 322 139 481 - - - - - - - - - - - - ( 46 710 860) ( 46 710 860) - 51 967 431 Total comprehensive income for the year 66 978 048 40 636 630 18 660 696 52 583 377 4 731 626 2 113 436 89 724 808 327 396 052 As at 31 December 2023 Total assets Total liabilities 239 325 417 378 121 683 217 439 428 73 677 584 7 999 176 397 196 352 281 153 516 180 507 195 26 588 116 - - - 585 682 521 1 502 245 809 78 173 227 963 618 406 Tribe28ANNUAL REPORT 202393 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The following table presents income and profit and certain assets and liabilities information regarding the Group’s operating segments and service units: Consumer Banking & Value Added Services ZWL ‘000 Business Banking ZWL ‘000 Treasury Banking ZWL ‘000 International Banking ZWL ‘000 Digital Banking ZWL ‘000 Microfinance ZWL ‘000 Other ZWL’000 Total ZWL’000 Inflation Adjusted For the year ended 31 December 2022 Income Third party income Inter-segment income Interest and similar expense Net operating income Other material non-cash items 46 056 102 73 783 488 15 371 963 3 044 596 34 981 800 - - - - ( 6 080 031) ( 9 740 423) ( 2 029 308) ( 401 928) - - 39 976 070 64 043 065 13 342 655 2 642 668 34 981 800 Impairment losses on financial assets measured at amortised cost ( 978 069) ( 617 116) Depreciation of property and equipment ( 377 423) ( 8 273) - - - - ( 1 150) ( 203) - - - - ( 1 686) ( 206 693) - - - - 15 321 431 24 545 470 5 113 774 1 098 331 13 407 302 - - - - - - - - - - Depreciation of right of use assets Amortisation of intangible assets Segment profit/(loss) Income tax charge Revaluation of land and buildings, net of tax - - - - - - - - - - - 58 899 877 232 137 826 - - ( 12 393 659) ( 30 645 349) 46 506 218 201 492 477 ( 0) ( 1 596 336) ( 2 270 749) ( 2 865 028) ( 345 627) ( 345 627) ( 1 392 072) ( 1 392 072) 17 740 321 77 226 628 ( 19 550 861) ( 19 550 861) - 2 583 050 Total comprehensive income for the year 15 321 431 24 545 470 5 113 774 1 098 331 13 407 302 - ( 5 818 988) 60 258 817 As at 31 December 2022 Total assets Total liabilities 103 574 386 163 642 130 94 102 647 31 885 917 3 461 854 181 642 661 128 574 878 82 548 108 12 159 065 - - - 253 469 557 650 136 492 35 749 555 440 674 266 Tribe28ANNUAL REPORT 202394 37. OTHER SUPPLEMENTAL INFORMATION HISTORICAL FIVE YEAR FINANCIAL SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Historical Cost* 2023 ZWL’000 2022 ZWL’000 2021 ZWL’000 2020 ZWL’000 2019 ZWL’000 Interest income Interest expense Net interest income Fee and commissions income Net foreign exchange gains Revenue Other income Operating income Operating expenditure 72 076 896 15 800 168 2 568 881 501 216 70 557 ( 14 651 080) ( 4 591 382) ( 751 921) ( 90 638) ( 16 894) 57 425 816 11 208 786 1 816 961 137 756 521 10 705 516 2 927 160 136 315 649 4 048 384 76 799 410 578 815 541 217 274 53 663 99 863 87 242 331 497 985 25 962 685 4 820 920 1 443 393 240 768 249 250 716 17 940 335 2 107 419 1 226 847 206 623 580 748 701 43 903 021 6 928 339 2 670 240 447 391 ( 130 732 838) ( 13 733 992) ( 2 825 609) ( 814 190) ( 105 938) Operating income before impairment charge and loss on net monetary position 450 015 863 30 169 030 4 102 730 1 856 050 341 453 Impairment losses on financial assets measured at amortised cost ( 14 961 385) ( 1 191 393) ( 248 107) ( 127 975) ( 11 049) Profit before tax Taxation Profit for the period Other comprehensive income 435 054 477 28 977 636 3 854 623 1 728 075 330 404 ( 49 494 612) ( 3 509 130) ( 912 597) 85 514 ( 44 505) 385 559 866 25 468 507 2 942 026 1 813 589 285 899 Revaluation gains on land and buildings, net of tax 82 399 807 5 833 685 848 731 891 186 175 943 Translation gain on change in functional currency, net of tax - - - - 11 620 Total comprehensive income for the period 467 959 672 31 302 191 3 790 757 2 704 775 473 462 Tribe28ANNUAL REPORT 202395 HISTORICAL FIVE YEAR FINANCIAL SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION Historical Cost* 2023 ZWL’000 2022 ZWL’000 2021 ZWL’000 2020 ZWL’000 2019 ZWL’000 SHAREHOLDERS’ FUNDS Share capital Share premium Treasury shares reserve Functional currency translation reserve Revaluation reserve Share Option Reserve Retained earnings Total equity 124 115 3 174 723 172 496 ( 394) 11 620 ( 394) 11 620 84 19 122 ( 7) 11 620 84 19 122 - 84 19 184 - 11 620 11 620 90 149 489 7 749 682 1 915 997 1 067 266 176 080 359 242 129 569 27 768 - - 411 765 508 30 165 681 5 085 120 2 143 096 329 506 505 460 310 38 228 767 7 059 704 3 241 188 536 474 Subordinated term loan 7 188 128 926 323 223 115 132 633 14 335 Total shareholders’ funds and shareholders’ liabilities 512 648 438 39 155 090 7 297 154 3 388 156 579 169 LIABILITIES Deposits Other liabilities Borrowings Current tax liabilities Deferred tax liabilities Total liabilities 528 530 915 53 215 217 10 425 947 6 413 943 1 267 778 97 909 352 11 792 185 2 750 917 263 289 317 21 276 250 5 914 585 4 107 692 - 236 049 58 121 957 3 964 776 741 544 57 205 174 728 98 021 625 951 959 233 90 248 428 20 069 042 6 645 876 1 366 424 Total shareholders’ funds and liabilities 1 464 607 671 129 403 518 27 366 196 10 034 032 1 945 593 ASSETS Cash and cash equivalents Investment securities Deferred tax assets Current tax assets Loans, advances Other assets Current assets held for sale Trade and other investments Current tax assets Investment properties Property and equipment Intangible assets 352 383 289 21 538 825 4 872 262 1 964 637 492 304 148 655 609 16 754 166 4 010 434 1 081 820 107 166 - - - - - - - - - - 494 536 518 46 285 257 9 584 609 3 730 887 817 960 51 698 826 8 504 329 2 265 354 - 380 629 - - - 2 566 889 255 056 36 500 10 878 - 44 047 - - - - 1 612 - 268 101 729 22 618 160 3 518 133 1 653 496 229 868 127 080 556 12 999 902 3 065 495 1 588 179 295 285 17 052 23 147 13 409 4 135 1 398 Total assets 1 464 607 671 129 403 518 27 366 196 10 034 032 1 945 593 Tribe28ANNUAL REPORT 202396 HISTORICAL FIVE YEAR FINANCIAL SUMMARY Share performances Historical Cost* 2023 ZWL’000 2022 ZWL’000 2021 ZWL’000 2020 ZWL’000 2019 ZWL’000 Net asset value per share (ZWL cents) 123000.84 9600.51 1746.71 724.70 136.28 Basic earnings per share (ZWL cents) 67073.05 6395.99 1591.59 448.72 71.56 Dividend per share (ZWL cents) Dividend cover (times) Price/earnings ratio - - 45.00 142.13 - - 1.01 1.25 0.63 Closing price per share (ZWL cents) 68000 3767 1001.25 - - 0.89 400 - - 0.57 41 Market capitalisation (ZWL) 279 439 571 928 15 000 012 481 4 046 769 036 1 616 686 756 165 710 392 Financial Performance Return on shareholders’ funds (%)¹ Return on assets (%) Total cost/net income total income (%)² Non-interest income/total income (%) Effective tax rate (%) Historical Cost* 2023 ZWL’000 2022 ZWL’000 2021 ZWL’000 2020 ZWL’000 2019 ZWL’000 60.82% 21.81% 33.71% 73.62% 14.49% 28.77% 9.27% 39.34% 47.63% 25.32% 24.91% 7.66% 44.91% 54.60% 32.34% 0.9234 0.2696 0.3528 0.8185 -0.0495 27.03 4.03 58.8 47.37 21.85 1. The return on shareholders’ funds is based on shareholders’ funds at the end of the year. Includes charge for impairment of losses on loans and advances. 2. At an Extraordinary General Meeting held on 19 February 2014, the Company approved a share consolidation exercise at a ratio of 10:1 and consolidated 3 500 000 000 (3.5 billion) shares with a nominal value of ZWL0.000028 per share to 350 000 000 (350 million) shares with a nominal value of ZWL0.00028 per share. The Company also approved an increase in the authorized share capital from 350 000 000 shares with a nominal value of ZWL0.00028 per share to 600 000 000 shares with a nominal value ZWL0.00028 per share. 38. EVENTS AFTER REPORTING DATE Subsequent to year end, the Group signed an agreement with the African Development Bank (AFDB) for a US$15 million guarantee facility. This is anticipated to unlock trade finance opportunities for the Group’s banking clients The Group has also entered into in negotiations for a potential acquisition of a complementary business and will continue providing updates to the investing public via Cautionary Announcements, the first of which was published on 06 March 2024. The Group anticipates that this acquisition will enable it to further its strategic objectives Tribe28ANNUAL REPORT 202397 NOTICE TO MEMBERS Notice is hereby given that the 29th Annual General Meeting of Members of NMBZ Holdings Limited will be held at the NMB Bank Limited Head Office, 19207 Liberation Legacy Way, Harare on Wednesday 15 May 2024 at 1500 hours for the following purposes: ORDINARY BUSINESS 1. To receive and adopt the Financial Statements for the year ended 31 December 2023, together with the reports of the Directors and Auditors thereon. 2. To re-appoint Directors • • • In accordance with Article 83 of the Company’s Articles of Association Ms. Jean Maguranyanga retires by rotation. Being eligible, the Director offers herself for re-election. In accordance with Article 83 of the Company’s Articles of Association Mr. James de la Fargue retires by rotation. Being eligible, the Director offers himself for re-election. In accordance with Article 91.2 of the Company’s Articles of Association Mr. Pearson Gowero who was appointed as a Director of the Company with effect from 26 April 2023 retires from office. Being eligible, the Director offers himself for re-election. 3. To approve Directors’ fees for the year ended 31 December 2023. 4. To approve Messrs Ernst & Young’s remuneration for the year ended 31 December 2023. 5. To appoint KPMG as the Company’s Auditors for the year ending 31 December 2024. Ernst & Young were appointed as the Company’s auditors in 2017. The company sought a 2-year extension of the Ernst & Young term which extension was granted by the Reserve Bank of Zimbabwe and by the shareholders. The term ends on conclusion of the 2024 Annual General Meeting. As such, the Directors propose the appointment of KPMG as the auditors of the Company until the conclusion of the next Annual General Meeting. SPECIAL BUSINESS SPECIAL RESOLUTION 1. Share Buy Back To consider, and if deemed fit, to pass, with or without modification, the resolution set out below: “That the Company, being duly authorised thereto by Article 10 of its Articles of Association, may undertake general repurchases by way of open market transactions on the Zimbabwe Stock Exchange (“ZSE”) of any of its own ordinary shares in such manner or on such terms as the directors may from time to time determine provided that: • • • the maximum number of shares authorised to be acquired is no more than 10% of the Company’s ordinary issued share capital. for each share, the minimum price shall not be lower than the nominal value of the Company’s shares and the maximum price that may be paid is 5% above the weighted average market price for the ordinary shares in the Company as derived from the Zimbabwe Stock Exchange (ZSE) Daily Price Sheet for the five business days immediately preceding the date on which such ordinary shares are contracted to be purchased. the authority in terms of this special resolution shall unless renewed prior to such time, expire on the first anniversary of this resolution or at the conclusion of the next Annual General Meeting of the Company, whichever is later, save that the Company, may before such expiry, enter into a contract or contracts to purchase its ordinary shares which would or might be completed wholly or partly after the expiry and may purchase its ordinary shares in pursuance of such contract or contracts.’’ Notes: 1. A member of the company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend, speak and vote in his/her stead. A proxy need not be a member of the company. 2. A Special Resolution is required to be passed by a majority of seventy-five per cent of those present and voting (including proxy votes), representing not less than twenty-five per cent of the total number of votes in the Company. 3. Please be advised that the 2023 Annual Report can be accessed on the company’s website: www.nmbz.co.zw. Electronic copies of the 2023 Annual Report (which includes the financial statements, Directors’ and Auditors’ Report) shall be emailed to those shareholders whose email addresses are on record. By Order of the Board V. T. MUTANDWA COMPANY SECRETARY 22 April 2024 Tribe28ANNUAL REPORT 202398 EXPLANATIONS REGARDING THE NOTICE OF THE ANNUAL GENERAL MEETING Resolution 1 The Directors of the Company are obliged to present their Report and Accounts to shareholders of the Company at an Annual General meeting. This is a standard form of resolution common to all Annual General Meetings. Resolution 2 The Company’s Articles of Association require one third of the Directors to stand down at each Annual General Meeting and if they are eligible, they may offer themselves for re-election. The Directors retiring are Ms. Jean Maguranyanga and Mr. James de la Fargue. They being eligible, the directors offer themselves for re-election. Mr. Pearson Gowero was appointed by the directors effective 26 April 2023. In accordance with Article 91.2 of the Articles of Association of the Company, he retires from the board. Being eligible he offers himself for re-election. The re- election of each Director will be voted on separately. The profiles of the retiring Directors are as below: Jean Maguranyanga – Independent Non-Executive Director Jean Maguranyanga is an independent non-executive director who was appointed to the Board on 10 July 2015. Jean is a lawyer by profession with over 25 years’ experience. She commenced her career as a Prosecutor in the Ministry of Justice Legal and Parliamentary affairs and moved after one year to the Parliament of Zimbabwe. She worked as a Legal Advisor at the Parliament of Zimbabwe for three years after which she left to study for her Master’s Degree in Corporate and Commercial Law. Following the completion of her Master’s degree Jean took up a lectureship post with the University of Zimbabwe a position she held for two years. Thereafter, Jean joined the Reserve Bank of Zimbabwe where she served as Legal Counsel and later as Division Chief Corporate Affairs / Bank Secretary for a total period of seventeen years. Currently Jean is a partner at Chinamasa Mudimu and Maguranyanga Legal Practitioners. James de la Fargue James de la Fargue represents African Century on the Board. He was appointed to the Board on 4 May 2016. He is a holder of a BA Business Organisation (Herrit-Watt University), ACCA, Diplomas in Marketing & Marketing Research and a Certificate in General Agriculture. James worked for a number of international organizations including Deloitte & Touché Management Consultants, Unilever PLC and Chargeurs SA. He is a former president of the Zimbabwe Tobacco Association and worked at MBCA as a senior executive in charge of Corporate Finance. James was involved in business consultancy work and management of an integrated farm in Centenary from 1998 to 2008. Since 2009, James has been with African Century Limited where he initially consulted for the group and later took up a position as Business Development Director of African Century Financial Holdings and as Executive Chairman of Frango King. He currently is the Chief Executive Officer of Lake Harvest, the largest tilapia farming operation in Africa. Pearson Gowero Pearson Gowero is a seasoned business leader with extensive experience working in consumer facing businesses. He is a holder of a Bachelor of Science Degree in Economics from the University of Zimbabwe and a Masters in Business Leadership from the University of South Africa. He served for SAB Miller Africa as the Country Managing Director for Zambia and Malawi from September 2006 to June 2011. He has held several leadership and management positions during his career at Delta Corporation Limited in Marketing, Sales and Distribution and General Management. He served as Chief Executive Officer of Delta Corporation Limited, (an associate of ABInBev) from June 2012 until his retirement in June 2021. He has sat on various boards of listed companies, subsidiaries and associates of the Delta Group. He has also served as a member of the National Council of the Confederation of Zimbabwe Industries. Currently, Pearson is the Board Chairman of SeedCo Limited. Additionally, he is a director of Zambeef Products PLC Zambia and Marksbury Investments Private Limited. Resolution 3 Shareholders are requested to approve Director’s fees. The Directors’ fees for 2023 amounted to ZWL 2 674 568 054 in inflation adjusted terms. Resolution 4 The Remuneration of the auditors is required to be fixed by the Company in a General meeting in terms of section 191 (6) of the Companies and Other Business Entities Act [Chapter 24:31]. Accordingly, Members will be requested to approve the remuneration paid to the external auditors Messrs Ernst & Young for the year ended 31 December 2023, which audit fee amounted to ZWL 1 686 863 190 in inflation adjusted terms. Resolution 5 All public companies are required to appoint Auditors at each Annual General Meeting at which Financial Statements are presented, to hold office until the next such meeting in terms of section 191 (2) of the Companies and Other Business Entities Act [Chapter 24:31]. This resolution therefore proposes the appointment of auditors. In accordance with the Banking Act [Chapter 24:20], the Company is required to rotate its auditors every 5 years. Messrs Enrst & Young served their 5-year term which expired after the 2021-year end audit. However due to capacity challenges in the market, the bank sought a 2-year extension of the Ernst & Young term which extension was granted by the Reserve Bank of Zimbabwe. The Ernst & Young term expires after the conclusion of the 2023-year end audit. The Directors propose the appointment of KPMG as the Company’s auditors until the next Annual General Meeting. The Engagement Partner is Temba Mudidi, a Registered Public Auditor, PAAB practice number 0437. Special Resolution 1 The directors are seeking authority to allow the use of the Company’s available cash resources to purchase its own shares in the market in terms of the Companies Act and the regulations of the ZSE. The directors will only exercise the authority if they believe that to do so would be in the best interests of shareholders generally. In exercising this authority, the directors will duly take into account following such repurchase for the next 12 months, the ability of the Company to pay its debts in the ordinary course of business, the maintenance of an excess of assets over liabilities, and for the Company and Group, the adequacy of ordinary capital and reserves as well as working capital. Tribe28ANNUAL REPORT 202399 NMBZ HOLDINGS LIMITED ANNUAL GENERAL MEETING PROXY FORM I / We ……………………………………………………………………………………………………………………………………….............…………………………………………………………………………………………………………………………………………………………… Of ………………………………………………………………………………………………………………………………………………….............………………………………………………………………………………………………………………………………………………………… Being a member of NMBZ HOLDINGS LIMITED and entitled to vote, hereby appoint …………………………………………………………………………………………………………………………………………………….............……………………………………………………………………………………………………………………………………….............………… Of ……………………………………………………………………………………………………………………………………………….............……………………………………………………………………………………………………………………………………….............……… Or failing him ……………………………………………………………………………………………………………………..............……………………………………………………………………………………………………………………………………….............………… Of ……………………………………………………………………………………………………………………………………………….............……………………………………………………………………………………………………………………………………….............……… As my/our proxy to vote on my / our behalf at the ANNUAL GENERAL MEETING of the Company to be held on Wednesday 15 May 2024 at 1500 hours and at any adjournment thereof. Signed this …………………………………………day of …………………………………..2024 Signature of member …………………………………………………………………………………………………............... Note: In terms of section 171 of the Companies and Other Business Entities Act [Chapter 24:31] a member of the Company is entitled to appoint one or more proxies to act in the alternative as his or her proxy and to attend, vote and speak in his / her stead. A proxy need not be a member of the Company. Tribe28ANNUAL REPORT 2023100 SHAREHOLDERS’ ANALYSIS Size of shareholding 0 – 10,000 10,001 - 100,000 100,001 - 1000,000 1,000,001 - 10,000,000 10,000,001 and above Total Size of shareholding 0 – 10,000 10,001 - 100,000 100,001 - 1000,000 1,000,001 - 10,000,000 10,000,001 and above Total 2023 Industry Local Companies Employees Estate Late External Companies Fund Managers Insurance Companies Investment Trusts And Property Local Residents Nominees Local Non Residents Non Resident Individuals Other Corporate Holdings Pension Funds Total 2022 Industry Local Companies Employees Estate Late External Companies Fund Managers Insurance Companies Investment Trusts And Property Local Residents Nominees Local Non Residents Non Resident Individuals Other Corporate Holdings Pension Funds Total 2023 Number of shareholders % of Holders 2023 Issued Shares % Shareholding 3,873 93.96% 169 56 14 10 4,122 4.10% 1.36% 0.34% 0.24% 100% 2,924,609 5,962,104 18,933,672 53,903,271 354,564,882 436,288,538 0.67% 1.37% 4.34% 12.35% 81.27% 100% 2022 Number of shareholders % of Holders 2022 Issued Shares % Shareholding 3,911 168 60 13 10 4,162 93.97% 4.04% 1.44% 0.31% 0.24% 100% 3, 001,688 5,839,499 20,086,238 45,521,721 329,948,187 401,395,645 0.74% 1.44% 4.97% 11.26% 81.59% 100% Shareholders % of shareholders Shares % of Shares 319 238 4 8 3 8 38 3,326 49 3 45 3 78 7.73 5.77 0.10 0.19 0.07 0.19 0.92 80.71 1.19 0.07 1.09 0.07 1.89 62,867,860 804,414 3,114 236,930,439 2,510 57,070,641 34,793,919 17,006,356 2,033,831 611,538 1,903,752 2,897 22,257,267 14.41 0.18 - 54.31 - 13.08 7.97 3.90 0.47 0.14 0.44 - 5.10 4,122 100.00 436,288,538 100.00 Shareholders % of shareholders Shares % of Shares 312 239 3 5 3 8 35 3,375 50 6 45 3 78 7.50 5.74 0.08 0.12 0.08 0.19 0.84 81.09 1.20 0.14 1.08 0.07 1.87 47,108,805 733,263 2,229 84,627,328 2,510 58,187,650 35,231,869 16,616,688 1,906,192 134,581,255 2,251,959 3,369 23,144,216 11.65 0.18 - 20.93 - 14.39 8.71 4.11 0.47 33.28 0.56 - 5.72 4,162 100.00 404,397,333 100.00 Tribe28ANNUAL REPORT 2023101 Rank 1 2 3 4 5 6 7 8 9 10 Rank 1 2 3 4 5 6 7 8 9 10 AFRICAN CENTURY FINANCIAL INVESTMENTS LTD NNR ARISE B V OLD MUTUAL LIFE ASSURANCE COMPANY OF ZIMBABWE LIMITED AFRICINVEST FINANCIAL SECTOR HOLDING LALIBELA LIMITED-NNR MAKOMO ENGINEERING PVT LTD ALSACE TRUST HIGHPERFORMANCE LUBES t/a CASTROL OLD MUTUAL ZIMBABWE LIMITED STANBIC NOMINEES (PRIVATE) LIMITED AFRICAN CENTURY FINANCIAL INVESTMENTS LTD NNR ARISE B V OLD MUTUAL LIFE ASSURANCE COMPANY OF ZIMBABWE LIMITED AFRICINVEST FINANCIAL SECTOR HOLDING LALIBELA LIMITED-NNR OLD MUTUAL ZIMBABWE LIMITED ALSACE TRUST MORGAN AND CO MULTI-SECTOR ETF CORNERSTONE TRUST STANBIC NOMINEES (PRIVATE) LIMITED Shareholder 2023 number of shares % of shareholding 84,767,523 79,449,374 40,809,943 40,707,918 25,625,968 20,909,903 18,392,446 15,976,345 15,624,175 12,257,453 19.43 18.21 9.35 9.33 5.87 4.79 4.22 3.66 3.58 2.81 354,521,048 81.25 Shareholder 2022 number of shares % of shareholding 78,247,632 73,338,528 40,637,936 37,576,870 23,654,947 17,518,688 16,885,381 16,288,544 15,381,382 12,511,967 332,041,875 19.35 18.14 10.05 9.29 5.85 4.33 4.18 4.03 3.8 3.09 82.11 Tribe28ANNUAL REPORT 2023102 MEMBERS’ DIARY Financial year end Reports:- - Announcement of annual results - Annual financial statements posted to shareholders - Annual General Meeting - Announcement of AGM results - Announcement of the 2024 half-year results SECRETARY AND REGISTERED OFFICE Company Secretary V. T. MUTANDWA Registered Offices NMB Head Office 31-Dec-23 March 2024 March 2024 15-May-24 16-May-24 Aug-24 NMB Centre 19207 Liberation Legacy Way, Borrowdale George Silundika Avenue/Leopold Takawira Street Harare Zimbabwe Bulawayo Zimbabwe Telephone: +263 08688003347 / 08677008565 - 6 / +(263) (2922) 701169 / +(263) (2922) 68535 Website: http://www.nmbz.co.zw Email: enquiries@nmbz.co.zw Auditors Ernst & Young Chartered Accountants (Zimbabwe) 1st floor, Angwa City Corner Angwa Street / Kwame Nkrumah Avenue Harare Zimbabwe Transfer Secretaries First Transfer Secretaries 1 Armagh Avenue Eastlea Harare Zimbabwe Legal Advisors Gill, Godlonton & Gerrans 7th Floor, Beverley Court 100 Nelson Mandela Avenue Harare Zimbabwe Tribe28ANNUAL REPORT 2023Address 19207, Liberation Legacy Way PO Box 2564, Harare, Zimbabwe Contact Phone: 086 8800 3347, 086 7700 8655, 086 7700 8656 Email: enquiries@nmbz.co.zw Web: www.nmbz.co.zw

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