BANKSETA ANNUAL REPORT 2023

ANNUAL FINANCIAL STATEMENTS NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2023

20. FINANCIAL INSTRUMENTS (continued)

20.8 Market risk The SETA is exposed to fluctuations in the employment market, for example sudden changes in employment or salary rate may impact levy income. The banking sector is also exposed to general market conditions domestically as well as ratings from international agencies. This in turn impacts on the banking sector’s profitability and employment within the sector. The declaration of a National State of Disaster in response to the COVID-19 pandemic and the ensuing lockdowns in 2020/21 and 2021/22 led to negative impact on profitability for the major stakeholders in the sector for 2022. However, most of the banking sector stakeholders showed good results for 2021. There was no material reduction in employment within the sector. BANKSETA’s levy income is expected to be strong for the 2022/23 year. The SETA is also exposed to risk due to the expansion of financial technology (Fintech) companies within South Africa. These FinTech companies use technologies to compete with traditional banking institutions in the delivery of financial services. These FinTech companies are outside the banking sector. BANKSETA’s stakeholders may lose market share to Fintech companies leading to shrinkage in employment in the banking sector and therefore levies.

The new technologies may also allow financial services to be delivered with fewer employees leading to decline in banking sector employment levels, and in turn, levies.

20.9 Currency risk The SETA minimises its foreign currency transactions and purchases so as to manage its currency risk. Minimal goods and services are sought outside South Africa. 21. ACCOUNTING PRONOUNCEMENTS

21.1 Standards and interpretations effective and newly adopted in the current year

There were no new standards that became effective in the current year that are relevant to BANKSETA’s operations.

21.2 Standards and interpretations issued but not yet effective

At the date of authorisation of these financial statements, there are standards and interpretations in issue but not yet effective. These include the following standards and interpretations that are applicable to the SETA and may have an impact on future financial statements.

BANKSETA has not adopted any standards early.

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BANKSETA ANNUAL REPORT 2022/23