Stanbic Uganda : FAQS 2023

1. What are we doing to enhance ESG practices in our company?

Effective ESG risk management is critical in achieving our Social, Economic and Environmental (SEE) priorities. In 2022, the business took the significant step to embed the Economic & Social (E&S) risk assessments within our credit processes in line with the Environmental and Social risk policy and standard. Therefore, we introduced the digital E&S risk assessment tool utilised by the business teams to conduct environmental and social due diligence as part of our credit approval processes.

Theassessmentsenablethebusinesstounderstand the risk level arising from potential clients we finance and, therefore, guide our approach to financing to ensure E&S risks are minimised to reduce indirect impacts. In these assessments, we screen the client for labour issues, negative media and NGO/ activist attention, community issues and the client's ability to manage E&S risks. We also screen the risks associated with the transaction due to sector, activities to be done, nature of finance and risks associated with security over assets such as land contamination. For transactions that turn out to be medium or high risk, we carry out enhanced due diligence (EDD) with support from GESR.

2. The EACOP project is projected to

release 34 million tonnes of CO2/year; following Stanbic Uganda's continued involvement in the project, how do you plan to offset these financed emissions?

Our group climate policy sets out our ambition to a net zero portfolio by 2050 in line with the Paris Agreement and the principle of common but differentiated responsibility for reducing greenhouse gas emissions. Our climate policy is built on the principle of a Just Energy Transition for Africa that recognises that while Africa did not contribute to climate change,it is disproportionately impacted by climate change.

Our approach to climate targets and commitments is informed by materiality, and we have taken a phased approach to setting sector-based targets. Our climate ambition is being pursued through the following:

o Targets to reduce the financing of carbon- intensive assets and activities

1. Targets to increase sustainable finance, including renewable energy

1. Exclusions and restrictions on financing specific activities

1. Introduction of new products and services o Client engagement
   o Advocacy for a Just Energy Transition for Africa

The Group aims to bank Africa's energy transition and be the market leader in sustainable finance across the continent. Stanbic Uganda Holdings Limited is aligned with the Group Climate policy and approach to a just energy transition.

3. Given the concern about sustainability and environmental conservation in the Albertine region and the hesitance of other investors to participate in the region's oil and gas projects, what is Stanbic's take on the withdrawal of major participants in the exploration and extraction of oil?

SUHL's participation in funding the EACOP project remains subject to its credit approval process, which includes considering the findings of the Economic & Social due diligence assessments and meeting the Equator Principles requirements. It is also subject to a full assessment of the EACOP sponsors' climate change strategies and targets. Project Finance deals are subject to a full suite of due diligence assessments to inform decision- making processes, covering legal, technical, security, Market, reserves, environmental & social (E&S) and other considerations and concerns.

Standard Bank Group is committed to maximising opportunities for sustainable and inclusive growth across the continent and managing the risks posed by climate change.

4. Why is Stanbic taking more money from loan repayment than the agreed amount and more than 50% of one's salary?

Our personal loans are priced based on the existing prime rate, the usual prime + a certain number. Whenever there are changes to the prime rate, this also affects the running interest rate for loans which can either go upwards or downwards. In the event of changes to the prime rate, we notify our customers of the changes duly.

5. After one has finished loan repayment, the money is deducted as insurance. Is it remitted back when one has not defaulted?

The money paid as insurance is not remitted back to the borrower because insurance premiums are for any eventualities concerning the covered risks, e.g., death, permanent disability, fire, job losses, etcetera. The charges levied are usually small amounts concerning the outstanding principal balances; if these risks materialise, the costs involved are enormous and are covered under the principle of numbers. Thus, if one completes their obligation without suffering any impact or loss, they cannot be refunded as the premiums paid are already utilised under the Group belonging principle for the continued insurance cover.

6. Is Stanbic Bank considering reviewing the interest rates to make it affordable to borrowers, especially agricultural loans?

Stanbic Bank frequently reviews interest rates to ensure they align with market forces. Regarding Agriculture credit facilities, Stanbic is priced lowest in the Market, as shown below.

o The agriculture facilities under the Agriculture Credit Fund (ACF) are priced as low as 12%

1. 70% of the agriculture portfolio is priced at the Prime lending rate and below.

We encourage you to contact the Bank should you require to negotiate interest rates or for any other financial guidance/assistance.

7. Can we use our dividend as a security to get loans?

Currently, the Bank does not offer credit facilities against future/undeclared dividends. However, we would be considerate to lend against cash proceeds from dividends once these cash proceeds have been paid. Please visit any Stanbic Bank branch near you for guidance on our clients' other numerous credit facility offerings.

8. Why did bank forex loans decrease in 2022 in comparison with 2021?

The drop in forex credit facilities utilisation from 41% in 2021 to 37% in 2022 is due to various economic reasons, including the Russia & Ukraine war that negatively impacted the trade of Oil & Gas and Commodity prices, specifically wheat.

9. Can the shareholder get loans against the shares they hold

Currently, the Bank does not offer credit facilities against shares held. The Bank would be considerate to lend against cash proceeds from dividends once the same has been paid. Please visit the nearest Stanbic Bank branch for guidance on our clients' numerous credit facility offerings.

10. Can SBU give loans to non-Ugandans, and what kind of loans and conditions are attached to issuing the same?

Yes, the Bank offers various types of credit facilities to non-Ugandans; the Bank assesses their creditworthiness and extends credit facilities guided by the local regulation and the Bank Credit Policies. Non-Ugandans can access Mortgages, Salary loans and structured business credit facilities. The conditions attached to these facilities vary according to the type of Credit Facility extended. It is key to note that facilities offered have been tested over a long period and have been proven to have a low probability of default.

11. Are the Loan interest rates for Ordinary customers different from those of shareholders? Any difference in treatment? Thanks.

The Bank offers competitive interest rates to all customers (shareholders / non-shareholders) tagged on market forces and industry risk.

12. How would you improve the group business now and the next level of business?

The company's strategy is based on four pillars: Firstly, continuously improving our client experience through digitisation of our services and understanding our clients better by having more engagements with them; secondly, investing in our employees to ensure they are sufficiently equipped to serve our clients; thirdly, operational efficiency through process automation, and doing business the right way by being regulatorily compliant, and putting the right controls in place to mitigate financial fraud,and lastly,ensuring the sustainability of our business by supporting the communities in which we operate. For more information, refer to the sustainability section of our annual report on page 64.

13. What are the steps the Board is taking to improve the value of our shares and, subsequently, the dividends thereof?

The company's strategy is based on four pillars: Firstly, continuously improving our client experience through digitisation of our services and understanding our clients better by having more engagements with them; secondly, investing in our employees to ensure they are sufficiently equipped to serve our clients; thirdly, operational efficiency through process automation, and doing business the right way by being regulatorily compliant, and putting the right controls in place to mitigate financial fraud,and lastly,ensuring the sustainability of our business by supporting the communities in which we operate. For more information on our sustainability initiatives, refer to the sustainability section of our annual report on page 64.

14. There is a lot of writing in the reports; how does one have to understand all the information in there very quickly? Some tips, please

We recommend that you read the section by section of the report or start by reading the part that interests you the most.

15. What are the projected returns for members in the next three years?

Our target is a Return on Equity of 20% and a 40- 50% dividend payout ratio of the profit after tax.

16. Why is SUHL stock still listed as SBU on the Uganda stock exchange?

SBU is a stock code but represents the Company Stanbic Uganda Holdings Limited.

17. Why has the price continued to drop, despite reporting better performance? And profits?

Due to the residual impact of the COVID-19 Pandemic and, most critically, the geopolitical tensions, the global stock exchange market saw a drop in the value of shares. However, with SUHL's dividend payment policy and strategy, the company stock has risen to UGX 26 (as of May 2023), and the stock exchange market is expected to recover.

18. Why do only two subsidiaries have website links on the holding company's website?

There are three active websites, i.e., Stanbic Bank, SBG Securities Uganda Limited and Flyhub Uganda Limited. Flyhub Uganda Limited's website (https:// flyhub.co.ug/) has also been linked to the company

website. The websites of Stanbic Properties Limited and Stanbic Business Incubator are still in production and will be linked to the company website after that.

19. Hi, I cannot access my stockbroker after they closed shop in Uganda. Kindly assist

For assistance, please visit Uganda Stock Exchange at Plot 3-5 New Port-Bell Road, UAP Nakawa Business Park, Block A, 4th Floor, P.O. Box 23552, Kampala, Uganda or contact +256-312-370815/7/8 or email info@use.or.ug

20. When will online AGMS stop because some of us are left out?

This year's AGM was held via physical attendance and electronic means on Friday, June 2, 2023.

21. What are holdings?

A holding company is a business entity that owns and controls other companies or assets. S UHL is a holding company with five subsidiaries: Stanbic Bank Uganda, Stanbic Business Incubator, SBG Securities Uganda, Flyhub Uganda Limited and Stanbic Properties Limited.

22. Some shareholders, like myself, did not get information about Stanbic Bank's additional shares [102 billion]. Could we explain verbally what this means to the shareholder? I see that shares are now 153bn, up from 51bn in 2021. Then the weighted ordinary shares of the Bank are 56bn, up from 51bn shares in 2021. These varied numbers confused me. Kindly provide a verbal explanation. For SUHL, I see the shares there are 51.1bn. This remains unchanged. I am a confused shareholder here.

The change in the Bank's share capital has no impact on you as the shareholder of Stanbic Uganda Holdings Limited. Stanbic Bank Uganda is a subsidiary of Stanbic Uganda Holdings Limited; this change only affected the Bank's capital structure as required by the Bank of Uganda and not the Holding Company.

23. I only saw the Bank, SBG securities annual reports, and the Group. Does each subsidiary submit its annual report? If yes, where are the ones for the different subsidiaries like Fly Hub and Stanbic Properties?

The SUHL Annual Report is a consolidated report for all the subsidiaries. (SUHL Annual Report 2022. pdf (stanbic.co.ug))

24. Please explain the relationship between the five subsidiaries. Is there inter trading between them? For example, does the bank arm rent from the real estate arm? How is the conflict of interest navigated?

Stanbic Bank Uganda, Stanbic Business Incubator, Flyhub Uganda Limited, Stanbic Properties Limited, and Sbg Securities Uganda Limited are all Stanbic Uganda Holdings Limited subsidiaries. Regarding your example, Stanbic Properties Limited manages all the properties owned by SUHL; therefore, any entities that use these properties are serviced by Stanbic Properties Limited; similarly, another subsidiary, such as Flyhub, which provides technological solutions, offers services to SUHL subsidiaries and other external entities. The regulatory framework of the separate legal entities governs all these activities.

25. Do you have plans to be listed at the Nairobi Securities Exchange (NSE) or any other bourse apart from the Uganda Securities Exchange (USE)?

There are currently no plans to roll out share trading on other stock exchanges in East African countries.

26. How does one get involved in this process to witness an audit of this stature?

The financial statements of listed companies are audited by certified public accountants licenced by the Institute of Certified Public Accountants of Uganda. The independent external auditors provide reasonable assurance that the company's financial statements provide a true and fair view of the affairs. This mechanism allows financial markets to operate transparently with the trust of all stakeholders. It is key to note that the external auditors are independent of the company.

27. Why do you keep changing auditors? It's like hiring and firing an employee every year. Isn't it less costly and for continuity to have one for at least three years?

The Bank of Uganda regulates SUHL's largest subsidiary Stanbic Bank Uganda.

The regulator requires the rotation of external auditors every four years in line with regulation (Financial Institutions Regulations 2010) and global corporate governance best practices. This rotation

is to mitigate against the familiarity risk that may arise when an external auditor remains in the office for a prolonged period.

The Bank of Uganda assesses and prequalifies providers of external auditor services to financial institutions annually, which list is published on their website. The approval/ prequalification may be withdrawn at their discretion, requiring a financial institution to change auditors.

28. In line with the Income Tax Act of Uganda, how are Stanbic Uganda Holdings Limited dividends affected by the taxation policies in that act?

A withholding tax is applied to the gross dividend with a rate stipulated in the Income Tax Act based on the nature and residence status of the shareholder. If applicable, the rate for non-residents will vary based on existing double taxation agreements with the respective country.

29. What is the outlook for dividend growth over the medium term?

As we execute our medium-term strategy, we project profitability to grow.Maximising shareholder value is among our core values; this is achieved by re-investing profits into projects that will generate higher future returns for the shareholder and paying out dividends.

30. From the Reserves, I can see that it's growing exponentially when perusing the financial report. Is there a way that the same can be used for bonus shares to the shareholder?

The Basel Standards require financial institutions to keep sufficient reserves to cover financial and non-financial risk exposures. The Central Bank recently raised the minimum capital requirement to UGX 150 Bn, and we were able to comply without making a capital call to the shareholders because of the presence of sufficient reserves. It is for purposes like these that we hold sufficient reserves.

31. What's your dividend policy? Do you have a dividend reinvestment plan?

Yes,we do have a dividend policy.Any surplus capital over and above the optimal capital position may be declared dividends. An optimal capital position is achieved after considering the Business growth prospects in the subsidiaries; Current and expected regulatory requirements; Market developments; and sufficient buffers to cover any anticipated business stress events that may adversely impact earnings hence the capital position.