Absa Group Limited (ABG) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the 36th Annual General Meeting of ordinary shareholders of Absa Group Limited. Before I make my opening remarks, may I request that should any shareholders have questions around the Annual General Meeting notice, the 2021 integrated report, the 2021 annual financial statements, the 2021 report of the social sustainability and Ethics Committee or any other matter which is tabled at this meeting, please send your messages now via the shared platform by selecting the Q&A icon at the top of the screen and then typing in your message within the chat box at the bottom of the messaging screen and then thereafter press send. Shareholders require an invitation call to access the shareholder platform, and this will have been provided in advance upon online registration through the Computershare virtual meeting services shareholder platform. This is at https://meetnow.global/za. So you access this by clicking on the Absa logo. I shall either respond or direct the question to the appropriate respondent. We will try and group the questions by themes. All questions will be visible but maybe answered as a collective where the questions are similar. Shareholders are also referred to the virtual shareholders user guide, which is available in the documents folder once the meeting has been accessed from the Absa AGM 2022 shareholder portal to participate to shareholders. The user guide would have been e-mailed to shareholders after they have received their access credentials. Ladies and gentlemen, it is my pleasure to address you as Chairman for the first time at an Absa Group AGM. I joined the Absa Board on the 1st of December as a Nonexecutive Director and Chairman Designate. And I must say I have spent a significant amount of time then getting to know Absa's leaders, its people and its operations in South Africa and also on the continent better. I have since done my first country visit, and I'm looking forward to our Chairman's conference in Kenya in July. The engagements over the past 6 months have confirmed my belief that Absa is a group with significant potential. As I've come to interface with the business, I have been excited by the caliber of people that work at Absa. I have been immensely impressed by the business acumen, passion and conviction not only amongst the ExCo members, but also the next level of leadership in the group. I also have admiration for the collective leadership that has steered this flagship through the [indiscernible] roughest in recent years. While the COVID pandemic persisted for second year in 2021, global economic recovery momentum and sub-Saharan growth was more robust than expected. This was buoyed by our commodity policies, higher commodity prices and multilateral support. In South Africa, which remains Absa's largest market, the economy grew by 4.9%. But incidents of looting and rioting in parts of the country in July last year highlighted the deep-rooted vulnerabilities and emphasized the agency of structural reforms. The likelihood of further significant incidents of civil unrest has been commented on by others. There remains much to be done to address the significant impediments to faster growth in South Africa. To this end, we are encouraged by the government party recent policy papers that suggest that the private sector play a greater role in the economy, particularly as you all see and feel the great effect of any sector constraints. This is not only true in South Africa but for sub-Saharan Africa. In commenting on the economic outlook short brought about by the Russia-Ukraine conflict last month, the Director of the IMF's African department recently said that looking beyond the current set of crisis, decisive policy is needed to enable economic diversification, promote regional integration and unleash the private sector's potential in the region. Banks play a key role in the economies of any region and I'm optimistic that Absa is taking its rightful place as a role player in the economic growth and development of our various markets across the continent. The crises of another sort also hit South Africa with the Easter floods in KwaZulu-Natal. Not only does this remind us of the risks posed by climate change and the precarious position we are all in, it also gives us an opportunity to think more deeply about those issues in trying to balance the need for environmental sensitivity and carbon neutrality with the importance of extractive industries to the economies and social fabric of our African societies. The crisis in KZN has allowed us to come together with our communities to show that we are an active force for good. Absa [indiscernible] its resources to assist with immediate needs such as water supply, and we've also waived excesses or excess fees on insurance claims. We also allocated ZAR 10 million, which will go towards longer-term efforts to restore and rebuild social and other infrastructure. Looking at Absa's performance, the last couple of years have been testing and many challenges will remain. However, Absa proved to be resilient, not by default but through deliberate and decisive action. The group delivered a strong financial and operational performance in 2021 as earnings were 14% higher than the pre-COVID levels and our return on equity more than doubled to comfortably above our cost of equity. We entered 2022 with strong momentum in our balance sheet and pre-provision profit. Absa [indiscernible] total shareholder return, the highest since 2014, was comfortably ahead of the JSE/FTSE All Shares Index. Lastly, the common -- the group's common equity Tier 1 ratio strengthened to 12.8%, which is above our broad target range. Strong capital levels enabled the group to resume dividend payments with a 40% payout ratio for our final dividend. This robust performance is a testament to the strength of the leadership team of ours led by Jason Quinn as Interim Chief Executive Officer; with Punki Modise as Interim Financial Director. They were supported by a committed executive committee, who remain focused on the task at hand to ensure a robust delivery of our strategy. Employees across the organization have demonstrated an exceptional ability to respond and adjust to change with speed. We are very grateful to our staff. We refreshed our strategy last year, reentering it to our 2018 game plan. We have 5 priorities, priorities, which include being a diversified franchise with deliberate market-leading growth, being the primary partner for our clients, being a digitally powered business, being a winning, talented and diverse team, and being an active force for good in everything that we do. While pursuing our growth strategy, we remain mindful of the economic operating context and the need to hold capital at the upper end of the Board's target ranges. We announced that we will implement a new product-based transaction as a further demonstration of our commitment to transformation. However, geopolitical risks and share price volatility resulted in the revision of our implementation time table. We look forward to picking this up and implementing a broad-based structure. Essentially, this will include our employees, enabling them to share in the benefits of the company's growth potential. We are pleased that Absa retained to Level 1 status last year, even in the absence of an ownership transaction with significant traction in areas such as use development, preferential procurement, socioeconomic development and prominent financing and access to financial services. This despite the challenging operating context. Within Absa, we have made progress at several levels in the organization, but there is work to be done in terms of race and gender transformation. We have engaged with important stakeholders, including several black business organizations explaining our transformation imperative, how important it is to the Board and the executive and our approach at ensuring that we achieve this particular imperative. In our engagement, we indicated our commitment to be able to demonstrate significant progress at senior levels within the next 18 to 24 months. As part of our strategy refresh last year, we elevated ESG [ para ] as a priority from our 2018 plans. We prioritized the 6 UN sustainable development goals for our group. Given its importance, we included sustainability in short- and long-term management incentives in 2021. We feel that environment pillar, managing climate change risk and opportunities are a key focus. We aim to firstly become Africa's leader in sustainable finance. We were the first South African bank to publish an ESG-related financing target, and we are South Africa's leader in financing renewable energy to date. Secondly, we are proactively incorporating climate change into our business. We established sustainability as a key risk and are rolling out an environmental and social management system in our approval process. We also measure physical risk in our agri and real estate lending, which account for approximately 40% of our total loans. As we work towards 2050 net zero carbon emission target, we recently announced the target for fossil fuel lending over the short, medium and long term. We also started measuring our absolute indirect or finance initiatives, initially in the agri and real estate. Within our social pillar, inclusive finance is a key focus area and we are championing inclusion and being there to support our customers where they need us most. As part of our intent to be an active force for good in every conduct that we do, we continue to build on numerous skill development activities that Absa support across our various operations in Africa. Last year, our citizenship disbursements totaled ZAR 195 million, comprising 65% community investments, 30% charitable donations and 5% commercial initiatives. In South Africa, 86% of our ZAR 16 billion of local procurement was with broad-based BEE suppliers. Let me now turn to Board and executive matters. Now being fairly new to the Board, it is clear to me that lessons learnt during the past year have not been taken lightly. The need for alignment between management and the Board despite our -- in every aspect. And I can give you the assurance that we are fully aligned on the group's refreshed strategy and the priorities, as I have mentioned that. In November of 2021, the Board welcomed John Cummins as an independent non-executive director. John brings a wealth of banking, risk and treasury experience. Mark Merson stepped down from the Board on the 31st of January 2022. I understand that Mark's insights into banking, risk and financial matters were invaluable and that he exhibited the highest levels of skill and diligence. We wish Mark well, all the best in his future endeavors, and we thank him for remaining on as Chairman of our Absa Securities U.K. Board. On the 31st of March this year, Ms. Wendy Lucas-Bull stepped down from the Board as Chairman, having completed a sub -- maximum 9-year tenure. Wendy's role in Absa's separation from Barclays to become a standalone financial services provider cannot be understated. Of course, a near-decade long chairmanship would have required managing many challenges as she led the Board during an increasingly difficult and volatile economic and policy environment. Wendy left Absa on solid footing and I look forward to building on the work that Wendy [indiscernible]. The appointment of Arrie Rautenbach on the 29th of March will provide the continuity and stability necessary to consolidate our purpose and strategy. Our track record in business performance and its ability to deliver on group objectives positioning ideally for the task. Jason has resumed his position as Group Financial Director, while Punki was named Interim Chief Executive of RBB, and she will remain on the Group Executive Committee. Arrie and the Board are fully aligned on the principle of delivering financial results and driving transformation, diversity and inclusion across all levels within the group. In conclusion, while the operating environment is challenging and uncertain in many cases and may worsen as the many and varied effects of the Russia-Ukraine conflict ripples through the world, I'm optimistic about the prospects for Absa given its potential momentum, clear alignment on strategy, a committed leadership team and focus on our people, our customers and our communities. We are well positioned for growth and would like to continue on this journey with you, our shareholders, our stakeholders. I would like to thank you for your attention. At this point, we will now move on to the formal agenda.

Chair, it's Nadine. I just got a message from a couple of shareholders saying that they were backing to ask questions through the system. So if I could just ask that we pause for a few minutes, and I just want to double check, obviously, they need to be given an opportunity to do that. So if we could just take a leg stretch for a couple of minutes and just if Computershare could just put the holding screen on perhaps and then we'll revert in 5 or 6 minutes.

I'll get the queue from you, Nadine. That's fine. [Technical Difficulty] Ladies and gentlemen, we are just experiencing some technological challenges with the questions portal with Computershare. Whilst Computershare fixes the portal, we -- my suggestion is that we continue with the resolutions. And then we will -- in the meantime, also the questions can be sent by e-mail to Nadine Drutman, who is our company secretary and also to Alan Hartdegen, who is the Investor Relations. So I think the same questions can be sent on the portal and just to ensure that the questions also, if you can send them to either Nadine or Alan, we will make sure that we answer the questions. Hopefully, by the time we get to the end of the resolutions, the Computershare system will be back live to be able -- to enable us to be able to deal with the questions. My apologies for that. Yes. So let's move on to the formal AGM agenda. Ladies and gentlemen, kindly note that the proceedings of this meeting are being recorded and broadcast by live webcast. With me in attendance are: the Chairman of the Social, Sustainability and Ethics Committee, Francis Okomo-Okello via webcast; the Chairman of the Group Audit and Compliance Committee, Tasneem Abdool-Samad here with me; the Chairman of the Group Risk and Capital Management Committee and Group Credit Risk Committee, Rene van Wyk via webcast; we also have the Chairman of the Group Remuneration Committee, Rose Keanly via website -- webcast; we also have the Lead Independent Director Nonhlanhla Mjoli-Mncube via webcast; we have with me next to me here, the Chief Executive Officer of Absa Group, Arrie Rautenbach; also accompanying me here in Johannesburg is the Group Financial Director, Jason Quinn; and also we have the Company Secretary Nadine Drutman with me. Tasneem is available to answer any questions on the report of the Group Audit Committee. Francis is available to answer any questions on matters pertaining to the Social, Sustainability and Ethics Committee as required in terms of the Companies Act. Rose is available to answer any questions on matters pertaining to the Remuneration Committee. Representatives of the external auditors are attending the AGM via the live webcast and will respond to questions relating specifically to the 2021 audit, Ramesh Hariprasad and [ Victor Vega ] represent Ernst & Young Incorporated, Heather Berrange and Riaz Muradmia represent KPMG Inc. At this point, I would like to acknowledge and thank Ernst & Young who retire as the group's auditors after many years of providing safe assurance of the group in a highly professional manner. So thank you to Ernst & Young. Members of the media will be attending the AGM via the live webcast. They will be attending as in a guest capacity as opposed to a shareholder capacity and will therefore not be able to post questions during the course of the AGM. The Absa Group media relations team will facilitate the responses to their questions following the conclusion of the formal proceedings. It is important to allow us to finalize the voting and have the results audited before the outcomes are communicated. Shareholders will have received the integrated report, the notice of the Annual General Meeting and our audited condensed consolidated financial results. These were all available on the website from the 7th of April 2022. In addition, a [ SENS ] was issued on the 24th of May, reminding shareholders of the details as to how to join the meeting using the virtual channel. We understand from other AGMs held recently about the medium of posting questions rather than being able to ask them, whereby there was an issue that had come, we plan to move back to the physical AGM as soon as possible or at the very least a hybrid format. For now, however, we have selected this virtual format, which will enable shareholders to ask questions through the chat or by e-mail as suggested earlier, we assure you that all the questions that are received will be read out by the company secretary and answered to the best of our ability as the Board and executive. We have 11 resolutions to be voted on before shareholders at this meeting today, namely 6 ordinary resolutions requiring support of more than 50% of the voting rights exercised, 2 nonbinding advisory vote on the company's remuneration policy and remuneration implementation report, 3 special resolutions which require 75% support. I now turn to the meeting agenda. And the business of the meeting is to consider the resolutions that I have mentioned. The notice of the Annual General Meeting was sent to shareholders within the prescribed period by the Companies Act. I will take the notice of this meeting as having been read. So once again, shareholders a reminder to please send their questions via the platform by selecting the Q&A icon at the top of the screen. At the same time, also questions can be sent to either Nadine or Alan. As mentioned also previously, the external auditors are in attendance to respond to questions relating to the audit. Now we vote you on all...

Sure. I just wanted to indicate, we do have some questions that have started coming through. So when you're ready for those?

Yes. I think we just decided that we're going to [indiscernible] on the resolutions, Nadine, and then we'll deal with the questions at the end.

Sure.

So voting on all resolutions will open at the start of the meeting on the shareholder platform. Once the voting has opened, click on the vote icon that is displayed at the top of the screen. From here on, the resolutions and voting choices will be displayed. To vote, simply select the voting direction from the options that -- as shown on the screen. A confirmation message will appear to show you that your vote has been received. So to change your vote at any point in the meeting, just click on the change vote link and simply select another direction. So the voting can be performed at any time during the meeting until I have declared at the end of the meeting that the voting on all resolutions has closed. So at this point -- at that point, your last choice would have been already submitted. So shareholders are encouraged to capture their votes for resolutions and this opportunity of voting to ensure that these have been recorded in the event of a technical interruption or a breach in your connectivity. So voting results for each resolution will be displayed after the voting has closed. So for the purpose of the virtual voting process, I appoint scrutineers who are representatives of Computershare Investor Services, Pty Ltd. So these are our company's transfer secretaries. So we shall now proceed with the business of the meeting and voting on the resolutions. The full audited annual financial statement and the summarized form of the Absa Group Limited, including the reports of the directors, the external auditors, the Group Audit and Compliance Committee for the year ended 31st of December 2021 have been published to shareholders and are available on the company's website at www.absa.africa. I hereby present, as said, audited financial statements and the reports aforementioned to this AGM as required by Section 33D of -- Section 33D of the Companies Act. Are there any questions on the shareholder platform regarding the annual financial statements?

I'm just having a look to see the specific questions on the annual financial statements. Give me one second. Chair, there is nothing specific at this stage on the annual financial statements.

Thank you. In the absence of specific questions from shareholders, I declare that the meeting has noted the annual financial statements, together with the reports aforementioned. We now move to present the report of the Social, Sustainability and Ethics Committee. The Companies Act requires the Social, Sustainability and Ethics Committee to report through one of its members to the shareholders at the AGM on matters within the committee's mandate. The report is included in the 2021 environmental, social and governance report on Pages 1 to 2 and is accessible on the company's website. Francis Okomo-Okello as the Chairman of the Social, Sustainability and Ethics Committee is available to take any questions that you may have on the report. Are there any questions on the shareholder platform regarding the Social, Sustainability and Ethics Committee report.

Chair, there is a question. It's a combination question. So I'm just going to read it out. I'd like to ask questions, raise issues on proposed resolutions around the self-captive insurance business of Absa as it relates to investigations. Question one, do the directors and shareholders confirm that self-captive's policyholders be treated fair as per the 2013 review document issued by the FSB, the further development of the regulatory framework that is currently in draft form as a code of conduct? Second question, do self-captive beneficiaries like the Exxaro employees in the fund-based policy have the same protection under policyholder protection rules as the other policyholders in normal insurance products? Three, could the social and ethics chairperson engage with me to resolve some of the issues in the investigation into the 1.6% disabled people that resulted in a 12% termination in Exxaro, please? It seems not aligned. And then -- yes, I'm just questioning whether there's a [indiscernible] on Exxaro. So I'm just wondering whether there is a question that was actually intended for Exxaro rather than ourselves. It does talk about Absa being the self-captive insurance for underwriter in Exxaro, but quite specific to Exxaro, disability self-captive insurance Exxaro Resources, it was found that Absa is the self-captive insurer, especially underwriting the Exxaro group disability income protection fund base. So policy in the environment, social and governance report of Exxaro just reported that only 1.6% of Exxaro's employees are classified as disabled, yet 12% employee terminations are reported due to disability. This ratio seems to indicate an intolerable reputation, litigation and commercial risk. Talks about the fund rules from 2013 indicates that a certain number of people in receipt of benefits under the policy deemed as being employed can't count towards the 1.6%, extremely high 12% termination of disabled people excludes those in receipt of disability benefit. Refers to the product of Absa clearly seems not to address the needs of employees while on the other hand, the employees are not provided protection under the consumer -- I presume that would be consumer protection legislation. Chair, so that's quite a long one around the same theme around our self-captive insurance products and specifically for Exxaro and related to disability protection.

Yes. I think given the detailed nature of the questions, maybe I can just ask Jason to give it a first shot. And then Francis can then -- I suppose that matters specifically to Exxaro. And then Francis can kind of deal with how we deal with our self-captive matters.

Thank you, Chair, and thanks for the question. At the first instance, we do operate an insurance business that does provide life and disability protection to our customers. The standards that we apply there are global best practice with respect to conduct and ensuring that our customers understand the risks that are protected and those that are not. We constantly evaluate that both through internal and external evaluations and, of course, considerable regulatory oversight. That part of our business that provides such cover has paid out significant claims over the last 2 years, especially in light of the stress that COVID created. And we built significant actuarial liabilities to cover the payment of such claims. In fact, our approach over that period has to be very proactive and rather go and look for claims and ensure that customers are aware of the protection that they had. We received very few complaints in that regard. The matter of self-captive is an interesting one. The self-captive that we operate to my knowledge is for our self-insurance purposes. I'm not aware of the matter related to Exxaro and its conduct with its employees. And I would suggest that such questions will be better directed towards Exxaro.

Francis, do you want to comment maybe just broadly on our adherence to standards as regards -- as self-captive?

Chair, we do look at conduct risk in most of our most of our meetings, both in the banking space as well as the insurance space. We receive detailed reports on conduct risk and how that is being managed. We have formally adopted the conduct standards as is required for instance by the banking legislation. As a committee, we are satisfied that our systems of governance around conduct are satisfactory and that the issues affecting customers, whether they are have [ plenty ] customers or insurance customers adequately that way. Thank you, Chair.

Thank you. Thank you, Francis, for that. Nadine, are there any further questions on this?

Yes, Chair. There's actually a similar one from the same shareholder, Mr. [indiscernible]. So I think I will read out sort of part of it, but I think it's the same -- similar concerns that refers to the product of Absa clearly seems not to address the needs of employees and on the other hand, the employees are not provided protection under the consumer protection rules, does not exist proper oversight by Absa. And it talks about policyholder protection rules. It talks about guard risk pioneering the self-captive concept in South Africa. But that this is a dangerous and risky insurance business not yet fully regulated. Talks about the registrar relying on the integrity of directors under the Long-Term Protection Act, and various specific provisions. And again, back to the employees of Exxaro, so being quite specific in that regard. So Chair, I would suggest that possibly we move on to the next question on the basis that we can take this offline with the shareholder concerned, having regard to the similar nature of this question.

Yes, I think it's a matter of that we would ask management to take offline, specifically to deal with Exxaro. And because we've not -- we are, I think, as Jason indicated, he's on site at -- or the company's on site at as far as that is concerned. Maybe the next question, Nadine? Is Nadine still there?

I am, Chair. Two seconds, we're just loading it.

Are you loading the question, Nadine?

Mr. Chair, I've got it. I'm just releasing it so it's visible. So everyone, this relates to -- yes. So this relates to oil and gas, it's going now. You should see it in a second, right? Can you see it now?

Not yet.

Okay. Hold on. Okay. So this is from [ Lorena Heskini ], I'm hoping you can all see it now, Chair?

Unfortunately, it's not coming through on to the screen here. Maybe you can read it out.

Yes, I will do. I think it should be there now. Okay. So the question is, Absa has set targets for its exposure to the oil, gas and coal sectors as a percentage of total group loans over the short, medium and long term, stating that it views this as an important first step in setting a net zero carbon target for the group. No doubt, the bank is aware that a net zero carbon target requires absolute carbon emissions to be decreased on a time line aligned with the goals of the Paris Agreement. We note also that the bank has calculated and disclosed its exposure to emissions from its lending to the real estate and agriculture sectors, but has set no strategy or targets for decreasing these emissions. When does the bank plan to, firstly calculate and disclose GHG emissions for their entire loan book? Secondly, set a strategy and short, medium and long-term absolute contraction targets for its financed GHG emissions from its exposure to coal, oil and gas as well as the remaining sectors of your their loan book, particularly those that account for the greatest exposure to GHG emissions. Chair, that's the end of the question. I'm hoping it's visible to you there.

No, it's quite a lengthy question and kind of very difficult to follow, but I suppose Francis should -- will you take this one or I think we'll also try to answer it on our side. And I think it's quite a substantial piece of work to calculate financed emissions in our group lending activities. And also, we find that data is a bit of a challenge. So we took the first step in the process of calculating our overall Scope 3 greenhouse emissions last year. This, we did in partnership with one of our engineering consultants. And we did calculate our indirect emissions from our agri and real estate lending, using the PCAF methodology. So we will continue to add additional sectors. So in the meantime, we set our targets to reduce our exposure to fossil fuels in the short, medium and long term. These -- our targets are [indiscernible] more ambitious than that of our government's integrated resource plan. So we -- certainly, I think, well in the fullness of time, be able to do further with in integrating other sectors to give further science to our competition. But I guess, maybe also Francis can come in here from the Social and Ethics Committee.

Yes, Chair, thank you very much, and thanks for the question. We -- as we work towards a 2050 net zero carbon emission, we recently announced targets for our fossil foil lending over the short, medium and long term. And as the Chairman has mentioned in his remarks, the targets that we are setting in the short, medium and long term are fairly ambitious, actually more ambitious than the targets that are set in the countries, South Africa's integrated resource plan. Our approach here basically is to engage with our customers and help them manage the transition that is expected into green energy. We work together in a supportive manner with them just to ensure that they're getting all the support that is required. Chair, we recently published oil and gas, mining and updated core financing standard as we also set targets for our lending on fossil fuel. We recognize that this is work in progress, and that we would be reviewing our targets [indiscernible]. But we are satisfied that directionally, we are moving in the correct trajectory. Thank you, Chair.

Thanks, Francis. Nadine, any more questions?

Yes, Chair. We've got one on coal. I'm just reading that one out.

One on coal?

Coal. So the coal standard. So this is from [ Robin Hugo ]. We'll note from the bank's recently updated coal standards that it has now excluded funding of new coal-fired power plants, but that it remains open to financing new coal mines. We also note that you justify this decision on the basis that you believe coal continues to drive economic and social development by providing reliable, safe and affordable energy, which is fundamental to socioeconomic and industrial development. Coal is the most intensive fossil fuel and the biggest contributor to global climate change. Climate science is absolutely clear that coal must be urgently phased out if there is to be any change of limiting -- I think if there is any chance of limiting global average temperature increase to 1.5 degrees Celsius. Please explain how you arrive at the assessment that coal is reliable, given regular load shedding, safe given high levels of pollution and the recent deadly air court decision and affordable given the continual increases in electricity tariffs and the legal requirement for major expenditure to comply with emission standards. So effectively, the question is, please explain how you arrive at the assessment that coal is reliable, safe and affordable given all these challenges. Chair?

Yes. Look, I mean, I think once in last year, I mean, before I hand over the question to Jason, is that our exposure to coal has reduced quite significantly by 72%. Obviously -- maybe before I can come back to give you my perspective on [indiscernible] allow Jason to give context here.

Thanks, Chair, and thanks for the question. Yes, absolutely. Our coal exposure reduced significantly last year by 72% to a very low level in the context of our balance sheet. Although it may increase this year, it remains half our 2020 peak and a lot lower than our competitors' targets that they've set for 2030. We also aim to reduce our coal financing to significantly lower levels than our peers. We also think it's important to help clients transition rather than just execute companies with high emission sectors. And lastly, you would have seen in our coal financing standards under which we'll no longer finance any coal-fired power stations, which is a change from our 2020 standard. So the [ rest of the ] question, yes, look, I think coal-fired power stations are heavy CO2 emitters. But then South Africa's existing power system is very carbon intensive. Over 80% of Westcon's power comes from coal. So coal power is necessary to keep the [indiscernible], so to speak. The other side of the equation is, of course, related to the risk of load shedding, we see significant headwinds in our economy, as we know. So to counter all of this risk, we are financing renewable energy at a significant scale. We're the largest funder of government's renewable power programs, and we funded 5 gigawatts of capacity cumulatively to date. And in the last round, round 5, we were -- our clients were successful with 21 out of 25 initiatives. I'd also remind you also that we do have that partnership with AREP which is -- we think will be the largest black-owned renewable power fund, which brings the dimensions of transformation into this equation as well. So significant efforts from our side to offset the risk of coal but ensure continuity of power supply.

Sure. Thank you for that, yes. Yes, some of the questions as to why we have been load shedding are quite difficult for us to be able to answer competently. So it's probably an area that we would want to kind of stay clear of. Are there any further questions, Nadine? Now we can see the questions. I think the questions are coming on to the screen now.

That's the one we just answered.

Yes, we just answered this one. Okay. If there are no specific questions from shareholders on this one, I declare that the meeting...

Chair, sorry, I'm interrupting. There is one, sorry that's come through regarding clients and NPS. So I'm just going to call that one up now.

Clients and NPS.

Yes. So net promoter score and measures of client health. So it's a shorter question. This is from Stefan Swanepoel of M&G. The question is as follows: I think it also relates to the report of the Social and Ethics Committee. Measures of client health, such as the Net Promoter Score and the SA Client Satisfaction Index have deteriorated and are now the worst in the sector. This requires urgent attention. What commitments will the Board make in terms of time lines to ensure that it is fixed. Thanks, Chair. That's the end of that question.

Okay. Maybe Arrie, do you want to deal with that one?

Thank you very much. And also thank you for that question. Let me start by saying that customer experience and customer satisfaction is a key focus for us as a management committee as well as the Board. What you would see, if you look at that, the trend and performance has continued to improve over a number of years. Apart from this, we've also got a number of other metrics that we measure as stronger sort of leading indicators. This measurement, together with other measurements is clearly articulated in all our scorecards, and we are looking for improvements in this regard. So we've agreed targets with our management teams as well as our Board to look for a continuous improvement as we go into the horizon 2 of our -- execution of our strategy. So this will stay a priority measurement for us. It is linked to our scorecards, is also linked to our incentives, and we expect to see a continuous improvement as far as the customer experience is concerned.

Yes. Look, I mean, it's an important consideration overall in looking also at the organizational health. So it's something that's pretty much on our sights, and it's something that we will ensure we attend to in the shortest possible time. So that commitment we're comfortable to make because of this [indiscernible] attention. Anything else, Nadine? Any other further questions?

Yes, Chair, we've got a couple more on this broader social ethics topics. We've got one here that is about race and gender representation. So we're saying we commend Absa for its progress made in terms of its race and gender representation at Board level since last year. However, we note with concern that neither the race nor gender targets have been reviewed and updated despite already having been met and still being way below a fair representation of the country's demographics. Will the Board consider increasing its ambition in relation to its own race and gender targets? Thanks, Chair. That's the end of that question.

Yes. The issue of transformation is an ongoing matter. And the issue of diversity and inclusion is something that we are serious about coming from Board level all the way down inside the organization. We do realize that, obviously, with the departure of our former chairman and also with Punki coming off the Board that we [indiscernible] as we refresh the Board, but we will continue to address. So it's something that we continue to address and look at and make sure that we remain properly represented both at Board level and also within the business. It is an important imperative. Okay. Is there any more questions, Nadine?

Chair, we've got a couple more, but I think we can deal with them a little bit later in the session.

Okay. So we do that -- okay, so we'll deal with more questions relating to this particular area later in the question session. But given where we are at, I would like to declare that the meeting has noted the report of the Social Sustainability and Ethics Committee. Now when it comes to ordinary resolutions, please note that the percentage of voting required to pass effective resolutions is 50% plus one vote. So let's go on to ordinary resolution number one, which is the ordinary resolution to reappoint KPMG SA as the joint company's external auditors. The group Audit and Compliance Committee recommends and the Directors endorse the proposed reappointment of KPMG, with Heather Berrange as the designated auditor as the company's external auditors. I shall now put the motion that the reappointment of KPMG as the company's joint auditors to hold office until the conclusion of the next AGM be approved. Will you kindly indicate your vote in respect of resolution #1 on your device? [Voting]

Ordinary resolution number #2 deals with the appointment of PricewaterhouseCoopers, PwC, as the company's joint external auditors. The group Audit and Compliance Committee to recommend and the Directors endorse the proposed appointment of PwC with John Bennett as the designated auditor as the company's joint external auditors. I shall now put the motion for the proposed appointment of PwC as the company's joint auditors to hold office until the conclusion of the next AGM be approved. Will you kindly indicate your vote in respect of resolution #2 on your device? [Voting]

Ordinary resolutions 3.1 to 3.5 relate to the reelection of directors, the profiles of whom are to be found on Page 13 to 17 of the shareholders' notice. You are required to reelect by separate and standalone resolutions. The following directors retire by rotation but being eligible and who have offered themselves for reelection: these are Rose Keanly, Swithin Munyantwali, Ihron Rensburg, Fulvio Tonelli and René van Wyk. Based on the outcome of the determinations by the Board as to skills, capacity, experience and independence, the Board recommends their reelection by shareholders. Voting on all these appointments will be dealt with on an individual basis. So ordinary resolution 3.1, I will now put the motion that the reelection of Rose Keanly be approved. Will you kindly indicate your vote for the reelection of Rose Keanly? [Voting]

Ordinary resolution #3.2. I will now put the motion that the reelection of Swithin Munyantwali be approved. Will you kindly indicate your vote for the reelection of Swithin Munyantwali? [Voting]

Ordinary resolution #3.3. I will put the motion that the reelection of Ihron Rensburg be approved. Will you kindly indicate your vote for the reelection of Ihron Rensburg? [Voting]

Ordinary resolution #3.4. I will now put the motion that the reelection of Fulvio Tonelli be approved. Will you kindly indicate your vote for the reelection of Fulvio Tonelli? [Voting]

Ordinary resolution 3.5. I will now put the motion the reelection of René van Wyk be approved. Will you kindly indicate your vote for the reelection of René van Wyk? [Voting]

All right. We shall move on to ordinary resolution #4. Ordinary resolution 4.1 to 4.3 seeks to confirm the appointment of directors appointed by separate and standalone resolutions subsequent to the last AGM. The profile of these directors can be found on Pages 13 to 17 of the shareholders' notice. So ordinary resolution 4.1. I'll put the motion that the appointment of John Cummins be confirmed. Will you indicate your vote for the confirmation of appointment of John Cummins? [Voting]

When it comes to ordinary resolution 4.2, I will hand over to our lead independent director Nonhlanhla Mjoli-Mncube to put the motion for ordinary resolution #4.2. Over to you, Nonhlanhla.

Thanks a lot, Sello. Ordinary resolution #4.2. I put the motion that the appointment of Sello Moloko be confirmed. Will you kindly indicate your vote for the confirmation of appointment of Sello Moloko? [Voting]

Thank you, Nonhlanhla. Ordinary resolution 4.3. I put the motion that the appointment of Arrie Rautenbach be confirmed. Will you kindly indicate your vote for the confirmation of appointment of Arrie Rautenbach? [Voting]

We shall now go to resolutions -- ordinary resolution #5. Ordinary resolutions 5.1 to 5.5 related to the reappointment of the group Audit and Compliance Committee members. The profile of the of the individuals concerned are to be found on Pages 13 to 17 of the shareholders' notice. You are required to reappoint by separate and standalone resolutions the following directors as members of the group Audit and Compliance Committee of the company. They have been nominated in terms of Section 94(2) of the Companies Act, namely Alex Darko, Daisy Naidoo, Tasneem Abdool-Samad, Swithin Munyantwali, subject to election as an independent nonexecutive director pursuant to ordinary resolution #3.2 and René van Wyk also subject to election as an independent nonexecutive director pursuant to ordinary resolution #3.5. The Board supports the reappointment of these directors, and the voting team on these reappointments will be dealt with on an individual basis. So ordinary resolution 5.1. I will now put the motion that the reappointment of Alex Darko as a member of the company's Audit and Compliance Committee be approved. Will you kindly indicate your vote for the reappointment of Alex Darko? [Voting]

Ordinary resolution 5.2. I'll now put the motion for the reappointment of Daisy Naidoo as a member of the company's Audit and Compliance Committee be approved. Will you kindly indicate your vote for the reappointment of Daisy Naidoo? [Voting]

Ordinary resolution 5.3. I will now put the motion that the appointment of Tasneem Abdool-Samad as a member of the company's Audit and Compliance Committee be approved. Will you kindly indicate your vote for the reappointment of Tasneem Abdool-Samad? [Voting]

Ordinary resolution 5.4. I will now put the motion for the appointment of Swithin Munyantwali as a member of the company's Audit and Compliance Committee be approved. Will you kindly indicate your vote for the appointment of Swithin Munyantwali? [Voting]

Ordinary resolution 5.5. I will now put that the appointment of Rene van Wyk as a member of the company's Audit and Compliance Committee be approved. Will you kindly indicate your vote for the appointment of Rene van Wyk? [Voting]

Ordinary resolution #6 is regarding the placing of the authorized but unissued share capital under the control of the directors. In terms of the company's memorandum of incorporation, shareholders of the company have to approve the placement of unissued ordinary shares under the control of directors. The existing authority granted by the shareholders at the previous annual general meeting expires at the end of this annual general meeting unless renewed. The directors wish to seek renewal of this authority at this annual general meeting. It should be noted that the directors have no current plans to make use of the authority, but are seeking this renewal to ensure that the company has maximum flexibility in managing the group's capital resources. I therefore propose that the resolution to place a maximum of 5% of the unissued ordinary shares or the maximum number of authorized but unissued ordinary shares from time to time under the control of the directors to be issued as and when suitable situations arise be passed and put to the meeting. Will you kindly indicate your vote in respect of ordinary resolution #6 on the device? [Voting]

And then with regard to nonbinding advisory votes. The Q4 report on corporate governance for South Africa 2016, widely known as King IV, recommends -- and the JSE Listings Requirements requires a listed company to table its remuneration policy and implementation report for separate nonbinding advisory votes by shareholders at the AGM. These votes enable shareholders to express their views on remuneration policies adopted on their implementation. These resolutions are of an advisory nature only and a failure of either one or both of them will not have legal consequences relating to existing arrangements. Even though these resolutions are nonbinding, if the remuneration policy or the implementation report, or both, are voted against by 25% or more of the voting rights exercised, the Board will, as recommended by King IV and as required by the JSE, implement certain measures, including an invitation to dissenting shareholders to engage with the company. So the company's remuneration policy and implementation report are included in the 2021 remuneration report and are accessible on the company's website. So we shall now go to the first nonbinding advisory vote, which is vote number one, the nonbinding advisory vote endorsement of the company's remuneration policy. I will now put the motion of nonbinding advisory vote number one to endorse the company's remuneration policy for vote. Will you kindly indicate your vote in respect of nonbinding advisory vote #1 on your device? [Voting]

Nonbinding advisory vote #2 relates to the company's remuneration implementation report. I now put the motion of a nonbonding advisory vote #2 in respect of the company's remuneration implementation report for voting. Will you kindly indicate your vote in respect of nonbinding advisory vote #2 on your device? [Voting]

Thank you. We shall now come on to the special resolutions. Now please note that the percentage of voting rights required to pass these resolutions is 75%. So special resolution #1 that deals with the remuneration of the nonexecutive directors for their services payable from 1 June 2022. It is a requirement of the Companies Act that nonexecutive directors' remuneration be approved by way of a special resolution, full particulars of all remuneration and benefits paid to the directors during 2021 are included on Page 43 of the 2021 remuneration report. I shall now put that the proposed remuneration of the nonexecutive directors as reflected on Page 7 of the shareholders' notice payable from 1 June 2022 to, and including the last day of the month preceding the next AGM be approved accordingly. Will you kindly indicate your vote in respect of special resolution #1 on your device? [Voting]

Special resolution #2 is a special resolution to authorize the company to effect a general repurchase of shares in such a need requires. The special resolution is for a general authority to permit the company or any subsidiary of the company to buy back not more than 5% of the shares as at 31 December 2021. Please note that although the JSE permits share repurchases of up to 20%, the company limits the percentage of any possible general repurchase of shares to 5%. Note that this authority will only be used in circumstances as appropriate. I shall now put the motion that the special resolution be passed. So kindly indicate your vote in respect of special resolution #2 on your handset. [Voting]

Special resolution #3 is regarding financial assistance to a related or interrelated company or corporation in terms of Section 45 of the Companies Act. Section 45 of the Companies Act regulates the provision of loans or other financial assistance by the company to certain categories of persons, which include a related or interrelated company or corporation and/or a member of a related or interrelated corporation. The Companies Act stipulates that the company may provide such financial assistance provided by the shareholders of the company has passed a special resolution within the previous 2 years. So the effect of this resolution will be to allow the company to the extent permissible in terms of the Companies Act to provide financial assistance to decide categories of persons. I shall now put the motion to authorize the company to provide direct or indirect financial assistance as defined for purposes of Section 45 of the act. Will you kindly indicate your vote in respect of special resolution #3 on your handset? [Voting]

Ladies and gentlemen, that deals with the resolutions -- the 11 resolutions that I had indicated. As indicated earlier on, when we had [indiscernible] from Computershare, I did promise that we will do a Q&A here. So Nadine, if we can invite more questions from the shareholders.

We do have several questions, Chair. There's also a statement from the PIC that was sent through, that we've posted and should be available. I'm going to read it out, they did ask us to make sure it was read out, that the PIC appreciates the engagements it has had thus far with the Chairperson and CEO of Absa regarding the level of transformation and would like the AGM to note that we will continue to monitor the progress in this regard as it relates to the advancement of women and racial diversity at Board and executive levels. In addition to that, we look forward to getting the transformation targets and time lines, which must be integrated into the remuneration policy with dedicated weightings for transparent monitoring. So it was a statement, Chair, but you may want to comment on that.

Yes. Nadine, we note the statement from the PIC and appreciate their input. As we all know, they have engaged with us. And we've had a few constructive engagements with the PIC. And we certainly continue to be committed to our transformation journey. So we do note that and appreciate the challenge.

Thanks, Chair. So the next one is, if I can carry on, I think, is the question from [ Robin Hugo]. Your integrated report indicates that 5 Absa Board members have climate change and environmental expertise but fails to identify which directors these are. We are also unable to identify these skills from an examination of the biographies of these [indiscernible] executive members and on online search of their backgrounds. Please could you indicate which Board members have been identified as having these skills and how this expertise is evaluated? Chair, I do have -- if you don't mind, I've just got that -- I'd like to propose an answer to that question in terms of the 5 members.

[ We're fine with that, Nadine ].

Okay. So it was -- at the time, Wendy would have been one of the 5, [ Robin ], then we have Jason, we have John Cummins, Ihron Rensburg, Nonhlanhla Mjoli-Mncube. And that is the 5. In terms of process, there's quite a detailed process that we go through in terms of evaluation and I'll certainly take the point that we could possibly describe this in our disclosures. So obviously, we look at qualifications and professional designations, any certificates done, et cetera, et cetera. We look at experience of the types of roles and experience gained over the years, directors in particular roles, either executive or nonexecutive, which would be taken into account, involvement and participation, for example, in climate-related forums, and business forums for other categorizations, et cetera. And then obviously, command of the subject, keeping up their knowledge to date and attending training and continuous professional development, awareness of policy and the regulatory landscape related to climate issues and sustainability, et cetera. So Chair, that would be the answer to that particular question. If I may go on unless one of the Board members would like to add to that?

I think it's a very good answer and it is because I think a lot of it is based on the experience and how we interface and contribution from the said Board members. So we can give maybe more color at the next annual report in terms of how we assess.

Then another one from [ Robin ] is related to the oil and gas standard. So that one is available to the members to read and to the shareholders. It's quite lengthy. I'm going to go through it. Absa's newly released oil and gas standard states that Africa could become one of the largest growth regions for liquefied natural gas because of our vast natural gas resources, and this being seen as a transition fuel. It also claims that oil and gas are important for economic development, and that as a pan-African bank, involvement in oil and gas upstream and midstream activities within the African continent will remain strategically important. This position is not supported by climate science. On the other hand, you claim in your TCFD report that your strategy is aligned with the Paris Agreement. The Intergovernmental Panel on Climate Change and the International Energy Agency, both made clear that new oil and gas projects will be fatal to the goals of the Paris Agreement. In addition, multiple studies, including by the International Institute for Sustainable Development, Oil Change International, TransitionZero and the National Business Initiative, show that gas is not necessary for poverty alleviation, energy security or development in Africa. Why does Absa not acknowledge these studies? And what is your evidential basis for claiming that new oil and gas development is not only important for economic development, but aligned with the goals of the Paris Agreement?

Can you take this one, Jason?

I'm happy to. Thanks, Chair. Thanks for the question, [ Lorena ]. So as a founding signatory to the UN's Principles for Responsible Banking, we've committed to align our operations with the Paris Climate Agreement. In our new ESG strategy, we've committed to set an ambitious net zero targets. Francis covered that earlier, and we are aware, of course, of the IEA and IPCC's recent reports. The comments should also be seen in the context of the targets we recently published in our TCFD reports for our fossil fuel exposures, including oil, gas and coal. We aim to reduce our exposure to fossil fuels materially over the medium term. Also, in our oil and gas financing standard, there are numerous exclusions. For example, greenfield projects, involving exploration for oil and gas reserves, where repayment of facilities is purely based on cash flows from the exploration assets. As mentioned earlier, we strongly support moving Africa's energy mix to renewables where we aim to be Africa's sustainable finance leader. And to date, we've been South Africa's largest funder of renewable energy, like I mentioned earlier, but a bit more color on that would be, for example, in our targets we see renewable financing being 5x more than fossil fuels by 2040. And currently, already renewables are 74% of our energy funding. I also mention that gas exposures peak at 0.6% only of our loans by 2030 and then decline materially by 2050.

Thank you, Jason. So, I'm trying [indiscernible] what progress was made in representation of disabled.

Yes. So that question from Mr. [indiscernible] is on transformation and on disability as well. What progress has been made in representation of disabled people on Board and executive level as per the Employment Equity Act? Can we adopt a level of representation? So I presume the question is about can we set targets for representation of disabled people on Board and at executive level.

I think across the business, we do set targets for disabled people. And obviously, to that -- to one of the things that often companies encourage people, and I think it's the same with Absa is to encourage some of the people that have disabilities to come out. But I think from the perspective of transformation, it is a measure that we continually would like to address when the opportunity arises.

Thank you, Chair. And then the next one is about the meeting format itself. I think you did address this upfront in your opening address, but obviously, we have had some difficulties. Computershare's virtual AGM platform has a functionality to allow shareholders to ask questions verbally, which allows more meaningful engagement with the Board and executives. However, Absa has chosen not to allow for this functionality instead of requiring shareholders to submit written questions and as has been demonstrated, this was not a smooth process. Please, can you explain why you don't want shareholders to ask verbal questions given that this functionality is available and used in other company AGMs? That's from [ Greer Blizzard ].

As I indicated earlier on, we do intend to move to an in-person or even a hybrid scenario where we can allow people to ask questions. In our view, it's probably based on previous experience. It's been more efficient and better organized to be able to read the questions and make sure that we understand the questions. And so we found that this functionality did allow us to be able to do it, but I think going forward, we will move to virtual media. Unfortunately, today, we had a few issues with Computershare, that's unfortunate, something we didn't anticipate.

Okay. We do have -- there's another question relating to self-captives linked to the original sort of Exxaro question. So again, we're going to take that offline with the shareholder concerned. It does go through similar questions that were posed earlier.

Definitely. I think Jason and Arrie will deal with that and we'll take it offline. Anything else Nadine?

Chair, I'm just checking the platform to make sure that we haven't left any out. If you could just bear with me for 2 minutes. Chair, I'm comfortable. We've covered the various questions raised by the shareholders.

Thank you, Nadine. So as indicated earlier, you are able to change your vote on any of the resolutions at any point. If you wish to do so, please do so now. The voting will close in the next 2 minutes. So we'll wait until the results of the vote on each of the resolutions are displayed or we're ready. So let's give you 2 minutes to finalize your voting. [Voting]

Chair, I think just for the sake of clarity, what we will do is we will share the additional questions raised by [ Mr. Detroy ] in the event that people are concerned, just to share that there are along similar lines as those indicated before. So I think if we can just ask [ Venen ] to reflect just before we go to the vote, if you can just put up those last couple of questions regarding the disability and the Exxaro and self-captive. Thanks, Chair.

I see we've got the results. Maybe we just go through the results, and then [ Venen ] can then put the questions [indiscernible] for the benefit of everyone before we close the meeting. The results on the votes on each of the resolutions has been displayed. So I'll read them out. I'll read votes for ordinary resolution #1.1 voted for 99.65%. Ordinal resolution 2.1 voted for 99.98%. Ordinary resolution 3.1 also passed, 92.7%. Then ordinary resolution 3.2 also passed 99.6%. Ordinary resolution 3.3, passed 94.98%. Ordinary resolution 3.4, also voted for 99.98%. Ordinary resolution 3.5, passed 94%. Ordinary resolution 4.1, passed 99.97%. Ordinary resolution 4.2, passed 97.86%. 4.3, passed 99.66%. 5.1, passed 96%. Ordinary resolution #5.2, passed 99.1%. Ordinary resolution 5.3, passed 98.88%. Ordinary resolution 5.4, passed 99.95%. Ordinary resolution 5.5 -- sorry, passed 67.56%. Ordinary resolution #6, passed 89.52%. And then the nonbinding advisory vote #1, passed 81.45%. And the voting for the nonbinding advisory Board #2 is 58.85%. The special resolution #1, passed 97.03%. Special resolution #2, also passed 99.8%. And then special resolution #3, passed 95.66%. So the resolutions passed. Obviously, there's a requirement in terms of nonbinding advisory vote #2. So we didn't make the 75% threshold. And so there's a process of engaging shareholders that we have to undertake, this relates to the implementation report. So -- but the results will -- after this be announced on SENS so that the public can also get the benefit of knowing the results of the AGM. But ladies and gentlemen, thank you for the engagement -- sorry, before we close the meeting, we did promise that we would post the questions that were asked relating to policyholder protections as they relate to self-captives, the questions are similar in nature, as Nadine had indicated. And as promised, the management team will engage with the shareholder to understand and be able to provide further clarity on this particular matter. Ladies and gentlemen, this concludes the Annual General Meeting. And I really thank you for attendance. It is Friday, I know some of you are driving out to beautiful locations, so please drive safely and enjoy your weekend. Thank you very much.