Wrap Text
Condensed consolidated interim financial results for the six months ended 30 June 2016
NEDBANK LIMITED
Nedbank Limited Reg No 1951/000009/06
Incorporated in the Republic of South Africa
JSE share code: NBKP
ISIN: ZAE000043667
Condensed consolidated interim financial results for the six months ended 30 June 2016
Overview
Nedbank Limited ('Nedbank') is a wholly owned subsidiary of Nedbank Group Ltd ('Nedbank
Group'), which is listed on JSE Limited. These condensed consolidated interim financial
results are published to provide information to holders of Nedbank's listed non-redeemable
non-cumulative preference shares.
Commentary relating to the Nedbank condensed consolidated interim financial results is
included in the Nedbank Group Ltd ('Nedbank Group') results, as presented to shareholders
on 1 August 2016. Further information is provided on the website at nedbank.co.za.
Board and group executive changes
Paul Hanratty stepped down as a non-executive director of Nedbank Group and Nedbank on
12 March 2016. Errol Kruger was appointed as an independent non-executive director of
Nedbank Group and Nedbank with effect from 1 August 2016.
Ciko Thomas, who has been a part of the Retail and Business Banking (RBB) leadership
team and Group Executive Committee for the past six years, was appointed as Managing
Executive of Nedbank RBB with effect from 1 April 2016 following the retirement of Philip
Wessels, as was previously announced on 1 March 2016.
Accounting policies(1)
Nedbank Ltd is a company domiciled in SA. The reviewed condensed consolidated interim
financial results of the group at and for the period ended 30 June 2016 comprise the
company and its subsidiaries (the 'group') and the group's interests in associates and joint
arrangements.
The condensed consolidated interim financial results contained in the SENS announcement
have been extracted from the reviewed condensed consolidated interim financial statements,
which have been prepared in accordance with the provisions of the JSE Ltd Listings
Requirements for interim reports. The condensed consolidated interim financial statements
comprise the condensed consolidated statement of financial position at 30 June 2016,
condensed consolidated statement of comprehensive income, condensed consolidated
statement of changes in equity and condensed consolidated statement of cashflows for the
period then ended and selected explanatory notes, which are indicated by the following
symbol(1).
The JSE Ltd Listings Requirements require interim reports to be prepared in accordance
with and containing the information required by the International Financial Reporting
Standards, International Accounting Standard 34: Interim Financial Reporting, the South
African Institute of Chartered Accountants' Financial Reporting Guides as issued by the
Accounting Practices Committee, the Financial Pronouncements as issued by the Financial
Reporting Standards Council, and the requirements of the Companies Act of South Africa.
The accounting policies applied in the preparation of the reviewed condensed consolidated
interim financial statements are in terms of the International Financial Reporting Standards
and are consistent with the accounting policies that were applied in the preparation of the
previous consolidated financial statements.
The condensed consolidated interim financial results have been prepared under the
supervision of Raisibe Morathi CA(SA), the Chief Financial Officer. The directors take full
responsibility for the preparation of the condensed consolidated interim financial results and
for correctly extracting the financial information from those underlying reviewed condensed
consolidated interim financial statements for inclusion in the 2016 interim results booklet and
SENS announcement.
Events after the reporting period(1)
There are no material events after the reporting period to report on.
Reviewed condensed consolidated interim financial statements – independent
auditors' conclusion
The condensed consolidated interim financial statements for the period ended 30 June 2016
have been reviewed by KPMG Inc and Deloitte & Touche, who expressed an unmodified
review conclusion thereon.
A copy of the auditors' review report on the condensed consolidated interim financial
statements is available for inspection at the company's registered office, together with the
condensed consolidated interim financial statements identified in the auditors' review report.
The auditors' review report does not necessarily report on all of the information contained in
the condensed consolidated financial results. Shareholders are therefore advised that, in
order to obtain a full understanding of the nature of the auditors' engagement, they should
obtain a copy of the auditors' review report together with the accompanying financial
statements from Nedbank Group Limited's registered office.
Forward-looking statements
This announcement contains certain forward-looking statements with respect to the financial
condition and results of operations of Nedbank and its companies, which, by their nature,
involve risk and uncertainty because they relate to events and depend on circumstances that
may or may not occur in the future. Factors that could cause actual results to differ materially
from those in the forward-looking statements include global, national and regional economic
conditions; levels of securities markets; interest rates; credit or other risks of lending and
investment activities; as well as competitive and regulatory factors. By consequence, all
forward-looking statements have not been reviewed or reported on by the group's auditors.
Nedbank non-redeemable non-cumulative preference shares – declaration of dividend
no 27
Notice is hereby given that gross preference dividend no 27 of 42,75385 cents per share has
been declared for the period from 1 January 2016 to 30 June 2016, payable on Monday,
29 August 2016, to shareholders of the Nedbank non-redeemable non-cumulative
preference shares recognised in the accounting records of the company at the close of
business on Friday, 26 August 2016. The dividend has been declared out of income
reserves.
The dividend will be subject to a dividend withholding tax rate of 15% (applicable in SA),
resulting in a net dividend of 36,34077 cents per share to those shareholders who are not
exempt from paying dividend tax. Nedbank's tax reference number is 9250/083/71/5 and the
number of preference shares in issue at the date of declaration is 358 277 491.
In accordance with the provisions of Strate, the electronic settlement and custody system
used by JSE Ltd, the relevant dates for the payment of the dividend are as follows:
Last day to trade (cum dividend) Tuesday, 23 August 2016
Shares commence trading (ex dividend) Wednesday, 24 August 2016
Record date (date shareholders recorded in books) Friday, 26 August 2016
Payment date Monday, 29 August 2016
Share certificates may not be dematerialised or rematerialised between Wednesday,
24 August 2016, and Friday, 26 August 2016, both days inclusive.
Where applicable, dividends in respect of certificated shares will be transferred electronically
to shareholders' bank accounts on the payment date. In the absence of specific mandates,
dividend cheques will be posted to shareholders. Shareholders who have dematerialised
their share certificates will have their accounts, at their participant or broker, credited on
Monday, 29 August 2016.
For and on behalf of the board
Vassi Naidoo Mike Brown
Chairman Chief Executive
1 August 2016
Registered office: Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton,
2196; PO Box 1144, Johannesburg, 2000.
Transfer secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall Street,
Johannesburg, 2001; PO Box 61051, Marshalltown, 2107.
Directors:
V Naidoo (Chairman), MWT Brown* (Chief Executive), DKT Adomakoh (Ghanaian),
TA Boardman, BA Dames, ID Gladman (British), JB Hemphill, EM Kruger, PM Makwana,
Dr MA Matooane, NP Mnxasana, RK Morathi* (Chief Financial Officer), JK Netshitenzhe,
MC Nkuhlu* (Chief Operating Officer), S Subramoney, MI Wyman** (British).
*Executive **Lead independent director
Company Secretary: TSB Jali
Sponsors: Investec Bank Limited, Nedbank CIB
REVIEWED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2016
Condensed consolidated statement of comprehensive income
for the period ended
30 Jun 30 Jun 31 Dec
2016 2015 2015
Change (Reviewed) (Reviewed) (Audited)
% Rm Rm Rm
Interest and similar income 19,4 31 774 26 613 55 128
Interest expense and similar charges 25,8 19 663 15 632 32 724
Net interest income 10,3 12 111 10 981 22 404
Impairments charge on loans and advances (11,6) 1 967 2 226 4 608
Income from lending activities 15,9 10 144 8 755 17 796
Non-interest revenue 10,4 9 257 8 387 17 514
Operating income 13,2 19 401 17 142 35 310
Total operating expenses 7,2 12 157 11 345 23 459
Indirect taxation 45,1 402 277 668
Profit from operations before non-trading and capital items 23,9 6 842 5 520 11 183
Non-trading and capital items < (100) (143) 3 (144)
Net (loss)/profit on sale of investment securities and property and equipment (104) 3 (26)
Net impairment of intangible assets (39) (118)
Profit from operations 21,3 6 699 5 523 11 039
Share of (losses)/profits of associate companies and joint arrangements < (100) (12) 6 (1)
Profit from operations before direct taxation 20,9 6 687 5 529 11 038
Total direct taxation 9,9 1 634 1 487 2 828
Direct taxation 1 645 1 487 2 860
Taxation on non-headline earnings items (11) (32)
Profit for the period 25,0 5 053 4 042 8 210
Other comprehensive (losses)/income net of taxation < (100) (44) 73 578
Items that may subsequently be reclassified to profit or loss
Exchange differences on translating foreign operations (97) (15) 190
Fair-value adjustments on available-for-sale assets (5) (2) (9)
Items that may not subsequently be reclassified to profit or loss
Gains on property revaluations 118
Remeasurements on long-term employee benefit assets 58 90 279
Total comprehensive income for the period 21,7 5 009 4 115 8 788
Profit attributable to:
– Ordinary and preference equity holders 25,0 5 030 4 024 8 163
– Non-controlling interest – ordinary shareholders 27,8 23 18 47
Profit for the period 25,0 5 053 4 042 8 210
Total comprehensive income attributable to:
– Ordinary and preference equity holders 21,7 4 986 4 097 8 739
– Non-controlling interest – ordinary shareholders 27,8 23 18 49
Total comprehensive income for the period 21,7 5 009 4 115 8 788
Headline earnings reconciliation
for the period ended
30 Jun 30 Jun 31 Dec
30 Jun 2016 30 Jun 2015 31 Dec 2015
2016 (Reviewed) 2015 (Reviewed) 2015 (Audited)
Change (Reviewed) Rm (Reviewed) Rm (Audited) Rm
% Rm Net of Rm Net of Rm Net of
Gross taxation Gross taxation Gross taxation
Profit attributable to ordinary and preference
equity holders 25,0 5 030 4 024 8 163
Less: Non-headline earnings items (143) (132) 3 3 (144) (112)
Net (loss)/profit on sale of investment
securities and property and equipment (104) (104) 3 3 (26) (26)
Net impairment of intangible assets (39) (28) (118) (86)
Headline earnings attributable to ordinary
and preference equity holders 28,4 5 162 4 021 8 275
Condensed consolidated statement of financial position
at
30 Jun 30 Jun 31 Dec
2016 2015 2015
Change (Reviewed) (Reviewed) (Audited)
% Rm Rm Rm
Assets
Cash and cash equivalents (24,7) 18 407 24 451 18 151
Other short-term securities 20,0 65 813 54 835 60 078
Derivative financial instruments 33,5 19 906 14 911 30 948
Government and other securities 38,6 51 695 37 296 42 733
Loans and advances 7,2 677 672 632 016 666 807
Other assets 37,1 4 785 3 490 3 925
Current taxation assets > 100 1 083 342 904
Investment securities 4,9 1 744 1 662 1 648
Non-current assets held for sale (76,9) 3 13 2
Investments in private-equity associates, associate companies and joint
arrangements 31,1 1 667 1 272 1 400
Deferred taxation assets (65,7) 58 169 67
Property and equipment 14,8 8 265 7 201 8 114
Long-term employee benefit assets 13,0 5 151 4 560 4 885
Mandatory reserve deposits with central banks 9,3 16 732 15 302 16 190
Intangible assets 14,6 5 387 4 702 4 881
Total assets 9,5 878 368 802 222 860 733
Equity and liabilities
Ordinary share capital 28 28 28
Ordinary share premium 3,5 19 182 18 532 18 532
Reserves 14,4 39 898 34 862 37 610
Total equity attributable to equity holders of the parent 10,6 59 108 53 422 56 170
Preference share capital and premium 3 561 3 561 3 561
Non-controlling interest attributable to:
– Ordinary shareholders 22,4 235 192 223
– Additional tier 1 capital instruments 1 524
Total equity 12,7 64 428 57 175 59 954
Derivative financial instruments 30,5 19 611 15 032 33 996
Amounts owed to depositors 8,5 729 920 672 521 708 036
Provisions and other liabilities (8,1) 8 128 8 843 9 911
Current taxation liabilities (17,4) 109 132 87
Deferred taxation liabilities > 100 1 251 305 763
Long-term employee benefit liabilities 4,5 3 121 2 988 3 009
Long-term debt instruments 14,5 51 800 45 226 44 977
Total liabilities 9,2 813 940 745 047 800 779
Total equity and liabilities 9,5 878 368 802 222 860 733
Condensed consolidated statement of changes in equity
Non-controlling
Non-controlling interest
Total equity interest attributable to
attributable to Preference attributable to additional tier 1
equity holders share capital ordinary capital
of the parent and premium shareholders instruments Total equity
Rm Rm Rm Rm Rm
Audited balance at 31 December 2014 52 236 3 561 183 55 980
Preference share dividend (178) (178)
Dividend to ordinary shareholders (3 200) (9) (3 209)
Issues of shares net of expenses 1 111 1 111
Total comprehensive income for the period 4 097 18 4 115
Share-based payment reserve movement (629) (629)
Regulatory risk reserve provision (15) (15)
Reviewed balance at 30 June 2015 53 422 3 561 192 – 57 175
Preference share dividend (193) (193)
Dividend to ordinary shareholders (2 000) (2 000)
Total comprehensive income for the period 4 642 31 4 673
Share-based payment reserve movement 286 286
Regulatory risk reserve provision 15 15
Other movements (2) (2)
Audited balance at 31 December 2015 56 170 3 561 223 – 59 954
Additional tier 1 capital instruments issued(1) 1 524 1 524
Preference share dividend (177) (177)
Dividend to ordinary shareholders (2 500) (11) (2 511)
Issues of shares net of expenses 650 650
Total comprehensive income for the period 4 986 23 5 009
Share-based payment reserve movement (20) (20)
Other movements (1) (1)
Reviewed balance at 30 June 2016 59 108 3 561 235 1 524 64 428
(1) The group issued a new style (Basel III compliant) additional tier 1 capital instrument of R1,5bn in May 2016 at JIBAR + 7%. In line with the bank regulations, subject to regulatory approval, the instruments are callable only at the option
of the issuer on 21 May 2021 and any interest payment date thereafter.
Condensed consolidated statement of cashflows
for the period ended
30 Jun 30 Jun 31 Dec
2016 2015 2015
(Reviewed) (Reviewed) (Audited)
Rm Rm Rm
Cash generated by operations 10 706 9 341 19 257
Change in funds for operating activities (12 479) (587) (9 508)
Net cash (utilised by)/from operating activities before taxation (1 773) 8 754 9 749
Taxation paid (2 067) (1 791) (3 771)
Cashflows (utilised by)/from operating activities (3 840) 6 963 5 978
Cashflows utilised by investing activities (2 117) (125) (2 070)
Cashflows from financing activities 6 320 7 326 4 884
Effects of exchange rate changes on opening cash and cash equivalents (excluding foreign
borrowings) 435 (11) (51)
Net increase in cash and cash equivalents 798 14 153 8 741
Cash and cash equivalents at the beginning of the period(2) 34 341 25 600 25 600
Cash and cash equivalents at the end of the period(2) 35 139 39 753 34 341
(2) Including mandatory reserve deposits with central banks.
Condensed segmental reporting
for the period ended
Total assets Total liabilities Operating income/(losses) Headline earnings/(losses)
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2016 2015 2015 2016 2015 2015 2016 2015 2015 2016 2015 2015
(Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited)
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
Nedbank Corporate and
Investment Banking 476 225 422 890 470 567 447 896 401 042 447 471 6 688 5 793 12 101 3 004 2 485 5 208
Nedbank Retail and Business
Banking 296 492 282 988 292 560 270 452 255 945 265 636 12 477 11 369 23 715 2 371 2 132 4 460
Nedbank Wealth 62 668 61 458 61 322 59 223 58 767 58 588 2 247 1 997 4 320 614 519 1 134
Rest of Africa 32 734 29 250 32 941 25 447 24 722 26 142 713 668 1 358 (550) 344 691
Centre 76 069 70 038 68 336 60 284 53 574 49 138 49 (9) (650) (12) (157) (662)
Total for Nedbank Group 944 188 866 624 925 726 863 302 794 050 846 975 22 174 19 818 40 844 5 427 5 323 10 831
Fellow-subsidiary adjustments (65 820) (64 402) (64 993) (49 362) (49 003) (46 196) (2 773) (2 676) (5 534) (265) (1 302) (2 556)
Total 878 368 802 222 860 733 813 940 745 047 800 779 19 401 17 142 35 310 5 162 4 021 8 275
During 2015 the Nedbank Corporate and Nedbank Capital clusters were merged to form the Nedbank Corporate and Investment Banking Cluster. Similarly,
the Nedbank Retail and Nedbank Business Banking clusters were merged to form the Nedbank Retail and Business Banking Cluster.
The comparative segment information previously presented for Nedbank Corporate, Nedbank Capital, Nedbank Retail and Nedbank Business Banking has
been represented based on the new merged clusters. This had the consequential effect that certain intergroup assets and liabilities and the related
eliminations between Nedbank Retail and Business Banking and the Centre have been restated.
Contingent liabilities and commitments
Contingent liabilities and undrawn facilities
30 Jun 2016 30 Jun 2015 31 Dec 2015
(Reviewed) (Reviewed) (Audited)
Rm Rm Rm
Guarantees on behalf of clients 37 771 24 647 26 374
Letters of credit and discounting transactions 2 879 3 276 4 419
Irrevocable unutilised facilities and other 94 398 108 207 101 747
135 048 136 130 132 540
The group, in the normal course of business, enters into transactions that expose it to tax, legal and business risks. Provisions are made for known liabilities
that are expected to materialise. Possible obligations and known liabilities where no reliable estimate can be made or it is considered improbable that an
outflow would result are reported as contingent liabilities. This is in accordance with IAS 37: Provisions, Contingent Liabilities and Contingent Assets.
There are a number of legal or potential claims against Nedbank Ltd and its subsidiary companies, the outcome of which cannot be foreseen at present.
Commitments
Capital expenditure approved by directors
30 Jun 2016 30 Jun 2015 31 Dec 2015
(Reviewed) (Reviewed) (Audited)
Rm Rm Rm
Contracted 818 1 596 1 314
Not yet contracted 1 850 1 238 2 222
2 668 2 834 3 536
Funds to meet capital expenditure commitments will be provided from group resources. In addition, capital expenditure is incurred in the normal course
of business throughout the year.
Fair-value hierarchy
FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE
The fair value of a financial instrument is the price that would be received for the sale of an asset or paid for the transfer of a liability in an orderly
transaction between market participants at the measurement date. Underlying the definition of fair value is an assumption that an entity is a going concern
without any intention or need to liquidate, to curtail materially the scale of its operations or to undertake a transaction on adverse terms. Fair value is not,
therefore, the amount that an entity would receive or pay in a forced transaction, involuntary liquidation or distressed sale.
The existence of published price quotations in an active market is the most reliable evidence of fair value and, where they exist, they are used to measure
the financial asset or financial liability. A market is considered to be active if transactions occur with sufficient volumes and frequencies to provide pricing
information on an ongoing basis. These quoted prices would generally be classified as level 1 in terms of the fair-value hierarchy.
Where a quoted price does not represent fair value at the measurement date or where the market for a financial instrument is not active, the group
establishes fair value by using a valuation technique. These valuation techniques include, but are not limited to, reference to the current fair value of
another instrument that is substantially the same in nature, reference to the value of the assets of underlying business, earnings multiples, discounted-
cashflow analysis and various option pricing models. Valuation techniques applied by the group would generally be classified as level 2 or level 3 in terms
of the fair-value hierarchy. The determination of whether an instrument is classified as level 2 or level 3 is dependent on the significance of observable
inputs versus unobservable inputs in relation to the fair value of the instrument. Inputs typically used in valuation techniques include discount rates,
appropriate swap rates, volatility, servicing costs, equity prices, commodity prices, counterparty credit risk, and the group's own credit on financial
liabilities.
The group has an established control framework for the measurement of fair value, which includes formalised review protocols for the independent review
and validation of fair values separate from the business unit entering into the transaction. The valuation methodologies, techniques and inputs applied to
the fair-value measurement of the financial instruments have been applied in a manner consistent with that of the previous financial year.
FAIR-VALUE HIERARCHY
The financial instruments recognised at fair value have been categorised into the three input levels of the International Financial Reporting Standards
(IFRS) fair-value hierarchy as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.
Level 2: Valuation techniques based on (directly or indirectly) market-observable inputs. Various factors influence the availability of observable inputs.
These factors may vary from product to product and change over time. Factors include the depth of activity in the relevant market, the type of product,
whether the product is new and not widely traded in the market, the maturity of market modelling and the nature of the transaction (bespoke or generic).
Level 3: Valuation techniques based on significant inputs that are not observable. To the extent that a valuation is based on inputs that are not market-
observable the determination of the fair value can be more subjective, depending on the significance of the unobservable inputs to the overall valuation.
Unobservable inputs are determined on the basis of the best information available and may include reference to similar instruments, similar maturities,
appropriate proxies or other analytical techniques.
All fair values disclosed below are recurring in nature.
Financial assets
Total financial assets recognised Total financial assets Total financial assets Total financial assets
Total financial assets at amortised cost classified as level 1 classified as level 2 classified as level 3
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2016 2015 2015 2016 2015 2015 2016 2015 2015 2016 2015 2015 2016 2015 2015
(Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited)
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
Cash and cash equivalents 35 139 39 753 34 341 35 139 39 753 34 341
Other short-term securities 65 813 54 835 60 078 35 753 32 165 32 863 474 30 060 22 196 27 215
Derivative financial
instruments 19 906 14 911 30 948 132 1 86 19 755 14 910 30 844 19 18
Government and other
securities 51 695 37 296 42 733 20 369 15 826(1) 18 807 21 193 11 108(1) 11 239 10 133 10 362 12 687
Loans and advances 677 672 632 016 666 807 582 934 538 517 571 603 94 705 93 466 95 171 33 33 33
Other assets 4 785 3 490 3 925 4 776 3 084 3 913 9 406 12
Investments in private-
equity associates, associate
companies and joint
arrangements 1 433 1 020 1 154 1 433 1 020 1 154
Investment securities 1 744 1 662 1 648 35 39 432 1 049 824 526 660 799 690
858 187 784 983 841 634 678 971 629 345 661 527 21 369 12 028 11 769 155 702 141 758 166 443 2 145 1 852 1 895
Financial liabilities
Total financial liabilities recognised at Total financial liabilities Total financial liabilities Total financial liabilities
Total financial liabilities amortised cost classified as level 1 classified as level 2 classified as level 3
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2016 2015 2015 2016 2015 2015 2016 2015 2015 2016 2015 2015 2016 2015 2015
(Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited)(Reviewed) (Reviewed) (Audited)
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
Derivative financial
instruments 19 611 15 032 33 996 24 1 126 19 587 15 031 33 870
Amounts owed to
depositors 729 920 672 521 708 036 562 005 536 755 538 540 167 915 135 766 169 496
Provisions and other
liabilities 8 128 7 867 8 980 6 459 5 867(2) 6 020 1 459 1 667 2 744 210 333 216
Long-term debt instruments 51 800 45 226 44 977 51 367 43 772 44 576 168 156 265 1 454 245
809 459 740 646 795 989 619 831 586 394 589 136 1 651 1 668 3 026 187 977 152 584 203 827
(1) As reported at 31 December 2015, R1 030m previously reported as loans and receivables at 30 June 2015, have been reclassified to the available-for-sale category.
(2) As reported at 31 December 2015, R976m previously reported as financial liabilities at amortised cost at 30 June 2015, have been reclassified as non-financial liabilities.
Level 3 reconciliation
Gains/(Losses)
Gains/ in other Closing
Opening (Losses) comprehensive balance
balance at in profit for income for Purchases Sales and at
1 January the year the year and issues settlements 30 Jun
30 June 2016 (Reviewed) Rm Rm Rm Rm Rm Rm
Financial assets
Derivative financial instruments 18 1 19
Loans and advances 33 33
Investment securities 690 (36) 26 (20) 660
Investments in private-equity associates, associate companies and joint arrangements 1 154 188 145 (54) 1 433
1 895 153 – 171 (74) 2 145
Gains/(Losses)
Gains/ in other
Opening (Losses) comprehensive Closing
balance at in profit for income for Purchases Sales and balance at
1 January the year the year and issues settlements 30 Jun
30 June 2015 (Reviewed) Rm Rm Rm Rm Rm Rm
Financial assets
Loans and advances 33 33
Investment securities 800 4 1 (6) 799
Investments in private-equity associates, associate companies and joint arrangements 898 45 77 1 020
1 731 49 78 (6) - 1 852
Gains/(Losses)
Gains/ in other
Opening (Losses) comprehensive Closing
balance at in profit for income for Purchases Sales and balance at
1 January the year the year and issues settlements 31 Dec
31 December 2015 (Audited) Rm Rm Rm Rm Rm Rm
Financial assets
Derivative financial instruments 18 18
Loans and advances 33 33
Investment securities 800 (36) 1 (75) 690
Investments in private-equity associates, associate companies and joint arrangements 898 89 304 (137) 1 154
1 731 71 – 305 (212) 1 895
Effect of changes in significant unobservable assumptions on reasonable possible alternatives – level 3 instruments
The fair-value measurement of financial instruments are, in certain circumstances, measured using valuation techniques that include assumptions that are not market-observable. Where these scenarios apply, the group
performs stress testing on the fair value of the relevant instruments. In performing the stress testing, appropriate levels for the unobservable-input parameters are chosen so that they are consistent with prevailing
market evidence and in line with the group’s approach to valuation control. The following information is intended to illustrate the potential impact of the relative uncertainty in the fair value of financial instruments for
which valuation is dependent on unobservable-input parameters and which are classified as level 3 in the fair-value hierarchy. However, the disclosure is neither predictive nor indicative of future movements in fair value.
Financial assets
Value per
statement of Favourable Unfavourable
Variance in financial change in fair change in fair
Significant fair value position value value
30 June 2016 (Reviewed) Valuation technique unobservable input % Rm Rm Rm
Derivative financial instruments Discounted-cashflow model, Discount rates, risk-free rates,
Black-Scholes model and volatilities, credit spreads and
multiple valuation techniques valuation multiples Between (12) and 10 19 2 (2)
Loans and advances Discounted cashflows Credit spreads and discount
rates Between (12) and 10 33 3 (4)
Investment securities Discounted cashflows,
adjusted net asset value, Valuation multiples,
earnings multiples, third-party correlations, volatilities and
valuations, dividend yields credit spreads Between (12) and 10 660 64 (81)
Investments in private-equity associates, associate companies and Discounted cashflows,
joint arrangements earnings multiples Valuation multiples Between (7) and 7 1 433 117 (132)
Total financial assets classified as level 3 2 145 186 (219)
Financial assets
Value per
statement of Favourable Unfavourable
Variance in financial change in fair change in fair
Significant fair value position value value
30 June 2015 (Reviewed) Valuation technique unobservable input % Rm Rm Rm
Loans and advances Discounted-cashflow model Credit spreads Between (12) and 12 33 3 (4)
Investment securities Discounted cashflows, adjusted
net asset value, earnings Valuation multiples,
multiples, third-party valuations, correlations, volatilities and
dividend yields credit spreads Between (12) and 12 799 72 (91)
Investments in associate companies and joint arrangements Discounted cashflows, earnings
multiples Valuation multiples Between (9) and 9 1 020 85 (97)
Total financial assets classified as level 3 1 852 160 (192)
Financial assets
Value per
statement of Favourable Unfavourable
Variance in financial change in fair change in fair
Significant fair value position value value
31 December 2015 (Audited) Valuation technique unobservable input % Rm Rm Rm
Derivative financial instruments Discounted-cashflow model, Discount rates, risk-free rates,
Black-Scholes model and volatilities, credit spreads and
multiple valuation techniques valuation multiples Between (13) and 10 18 2 (2)
Loans and advances Discounted cashflows Credit spreads and discount
rates Between (13) and 10 33 3 (4)
Investment securities Discounted cashflows, adjusted
net asset value, earnings Valuation multiples,
multiples, third-party valuations, correlations, volatilities and
dividend yields credit spreads Between (13) and 10 690 62 (77)
Investments in private-equity associates, associate companies and Discounted cashflows, earnings
joint arrangements multiples Valuation multiples Between (7) and 8 1 154 96 (108)
Total financial assets classified as level 3 1 895 163 (191)
Unrealised gains or losses
The unrealised gains or losses arising on instruments classified as level 3 include the following:
30 Jun 30 Jun 31 Dec
2016 2015 2015
(Reviewed) (Reviewed) (Audited)
Rm Rm Rm
Private-equity gains 153 44 71
Summary of principal valuation techniques – level 2 instruments
The following table sets out the group's principal valuation techniques used in determining the fair value of financial assets and financial liabilities
classified as level 2 in the fair-value hierarchy:
Assets Valuation technique Key inputs
Other short-term securities Discounted-cashflow model Discount rates
Derivative financial instruments Discounted-cashflow model Discount rates
Black-Scholes model Risk-free rate and volatilities
Multiple valuation techniques Valuation multiples
Government and other securities Discounted-cashflow model Discount rates
Loans and advances Discounted-cashflow model Interest rate curves
Investment securities Discounted-cashflow model Money market rates and interest rates
Adjusted net asset value Underlying price of market–traded instruments
Dividend yield method Dividend growth rates
Liabilities
Derivative financial instruments Discounted-cashflow model Discount rates
Black-Scholes model Risk-free rate and volatilities
Multiple valuation techniques Valuation multiples
Amounts owed to depositors Discounted-cashflow model Discount rates
Provisions and other liabilities Discounted-cashflow model Discount rates
Long-term debt instruments Discounted-cashflow model Discount rates
Assets and liabilities not measured at fair value for which fair value is disclosed
Certain financial instruments of the group are not carried at fair value, including those categorised as held to maturity, loans and receivables, and financial
liabilities at amortised cost. The calculation of the fair value of these financial instruments incorporates the group’s best estimate of the value at which
these financial assets could be exchanged, or financial liabilities could be transferred, between market participants at the measurement date. The group’s
estimate of what fair value is does not necessarily represent the amount for which the group would be able to sell the asset for or transfer the respective
financial liability in an involuntary liquidation or distressed sale.
The fair values of these respective financial instruments at the reporting date as detailed below, are estimated only for the purpose of IFRS disclosure:
Rm Carrying value Fair value Level 1 Level 2 Level 3
30 June 2016 (Reviewed)
Financial assets 639 056 627 066 19 850 35 707 571 509
Other short-term securities 35 753 35 707 35 707
Government and other securities 20 369 19 850 19 850
Loans and advances 582 934 571 509 571 509
Financial liabilities 51 367 51 072 25 774 25 298 –
Long-term debt instruments 51 367 51 072 25 774 25 298
Rm Carrying value Fair value Level 1 Level 2 Level 3
30 June 2015 (Reviewed)
Financial assets 586 508 583 516 15 616 32 127 535 773
Other short-term securities 32 165 32 127 32 127
Government and other securities 15 826 15 616 15 616
Loans and advances 538 517 535 773 535 773
Financial liabilities 43 772 43 186 18 566 24 620 –
Long-term debt instruments 43 772 43 186 18 566 24 620
Rm Carrying value Fair value Level 1 Level 2 Level 3
31 December 2015 (Audited)
Financial assets 623 273 618 012 17 415 32 709 567 888
Other short-term securities 32 863 32 709 32 709
Government and other securities 18 807 17 415 17 415
Loans and advances 571 603 567 888 567 888
Financial liabilities 44 576 42 933 24 269 18 664 –
Long-term debt instruments 44 576 42 933 24 269 18 664
There has been no significant changes in the methodology used to estimate the fair value of the above instruments.
Liquidity coverage ratio
Total Total
unweighted weighted
value(3) value(4)
Rm (Average) (Average)
High-quality liquid assets (HQLA)
Total HQLA 123 802
Cash outflows
Retail deposits and deposits from small-business clients 156 151 15 615
– Stable deposits – –
– Less stable deposits 156 151 15 615
Unsecured wholesale funding 207 840 107 109
– Operational deposits (all counterparties) and deposits in institutional networks of cooperative banks 106 397 30 589
– Non-operational deposits (all counterparties) 100 263 75 340
– Unsecured debt 1 180 1 180
Secured wholesale funding 24 765 59
Additional requirements 86 778 17 061
– Outflows related to derivative exposures and other collateral requirements 2 206 2 206
– Outflows related to loss of funding on debt products 1 295 1 295
– Credit and liquidity facilities 83 277 13 560
Other contractual funding obligations 910 910
Other contingent funding obligations 111 501 5 382
Total cash outflows 587 945 146 136
Cash inflows
Secured lending (eg reverse repurchase agreements) 18 171 1 428
Inflows from fully performing exposures 26 805 14 327
Other cash inflows 1 791 1 791
Total cash inflows 46 767 17 546
Total
adjusted
value(5)
Total HQLA 123 802
Total net cash outflows 128 590
Liquidity coverage ratio (%) 96,3%
(3) Unweighted values are calculated as outstanding balances maturing or callable within 30 days (for inflows and outflows).
(4) Weighted values are calculated after the application of respective haircuts (for HQLA) or inflow and outflow rates (for inflows and outflows).
(5) Note that total cash outflows less total cash inflows may not be equal to total net cash outflows to the extent that regulatory caps have been applied to cash inflows as specified by the regulations.
The figures above reflect the simple average of the month-end values at 30 April 2016, 31 May 2016 and 30 June 2016 based on regulatory submissions to
the South African Reserve Bank.
This section on the liquidity coverage ratio has not been reviewed by the group's auditors.
Date: 01/08/2016 08:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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