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ASA - Absa Group Limited - Profit and dividend announcement - unaudited
interim financial results for the six months ended 30 June 2011
ABSA GROUP LIMITED
Registration number: 1986/003934/06
Authorised financial services and registered credit provider (NCRCP7)
Incorporated in the Republic of South Africa
ISIN: ZAE000067237
JSE share code: ASA
Issuer code: AMAGB
(Absa, Absa Group, the Group or the Company)
PROFIT AND DIVIDEND ANNOUNCEMENT - UNAUDITED INTERIM FINANCIAL RESULTS FOR
THE SIX MONTHS ENDED 30 JUNE 2011
CONSOLIDATED SALIENT FEATURES
30 June 31
December
2011 2010(1) Chang 2010(1)
e
(Unaudite (Unaudite % (Audited)
d) d)
Statement of comprehensive
income(Rm)
Headline earnings(2) 4 595 3 862 19 8 041
Profit attributable to ordinary 4 581 3 842 19 8 118
equity holders of the Group
Statement of financial position
Total assets (Rm) 715 918 718 204 (0) 716 470
Loans and advances to customers 495 460 499 976 (1) 499 293
(Rm)
Deposits due to customers (Rm) 398 330 359 943 11 378 111
Loans-to-deposits ratio (%) 90,6 95,5 92,0
Off-statement of financial
position(Rm)
Assets under management and 205 309 178 268 15 194 949
administration(3)
Financial Services(4) 170 873 146 568 17 163 415
Money market 71 330 57 168 25 66 256
Non-money market 99 543 89 400 11 97 159
Financial performance (%)
Return on average equity 16,2 15,0 15,1
Return on average assets 1,31 1,08 1,12
Return on average risk-weighted 2,23 2,00 1,99
assets(5)
Operating performance (%)
Net interest margin on average
interest-bearing assets
Total Group 4,05 3,89 4,01
Retail and Commercial 3,61 3,53 3,38
Impairment losses on loans and 1,18 1,50 1,20
advances as % of average loans
and advances to customers
Non-performing advances as % of 7,7 7,6 7,7
loans and advances to
customers(5)
Non-interest income as % of 47,9 46,2 45,5
total
operating income
Cost-to-income ratio 54,8 53,6 56,2
Effective tax rate, excluding 27,6 26,8 27,5
indirect taxation
Share statistics (million)
Number of ordinary shares in 718,2 718,2 718,2
issue
Weighted average number of 716,5 716,1 716,3
ordinary shares in issue
Weighted average diluted number 719,7 720,7 720,7
of
ordinary shares in issue
Share statistics (cents)
Headline earnings per share 641,3 539,3 19 1 122,6
Diluted headline earnings per 638,5 535,9 19 1 115,7
share
Basic earnings per share 639,4 536,5 19 1 133,3
Diluted earnings per share 636,5 533,1 19 1 126,4
Dividends per ordinary share 292 225 30 455
relating to income for the
period/year
Dividend cover (times) 2,2 2,4 2,5
Net asset value per share 8 116 7 420 9 7 838
Tangible net asset value per 7 856 7 236 9 7 588
share
Capital adequacy (%)(5)
Absa Group 16,7 15,8 15,5
Absa Bank 16,0 14,9 14,8
Notes
(1)Comparatives have been reclassified. These reclassifications have not
been audited. Refer to the "Reclassifications" section.
(2)After allowing for R143 million (30 June 2010: R162 million; 31
December 2010: R320 million) profit attributable to preference equity
holders of the Group.
(3)Comparatives have been restated for the inclusion of assets managed
by Absa Capital on behalf of clients, exchange traded funds and
alternative asset management funds, in order to align assets under
management and administration to current market practice. These
restatements have not been audited.
(4)The segmentation of assets under management and administration is
unaudited.
(5)These ratios have not been audited.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 31
December
2011 2010(1) 2010(1)
(Unaudited (Unaudite Change (Audited)
) d)
Rm Rm % Rm
Assets
Cash, cash balances and balances 25 814 15 24 361
with central banks 22 380
Statutory liquid asset portfolio 50 999 35 846 42 48 215
Loans and advances to banks 30 911 43 131 (28) 27 495
Trading portfolio assets 57 607 56 140 3 62 047
Hedging portfolio assets 3 564 3 515 1 4 662
Other assets 16 449 16 769 (2) 12 855
Current tax assets 191 326 (41) 196
Non-current assets held for sale 369 - 100 -
1
Loans and advances to customers 495 460 499 976 (1) 499 293
2
Reinsurance assets 773 443 74 860
Investment securities 21 100 28 159 (25) 23 826
Investments in associates and 407 (10) 416
joint ventures 454
Goodwill and intangible assets 1 864 1 323 41 1 794
Investment properties 2 695 2 255 20 2 523
Property and equipment 7 363 7 164 3 7 493
Deferred tax assets 352 323 9 434
Total assets 715 918 718 204 (0) 716 470
Liabilities
Deposits from banks 17 365 38 713 (55) 15 406
Trading portfolio liabilities 35 930 46 516 (23) 47 454
Hedging portfolio liabilities 1 351 1 286 5 1 881
Other liabilities 15 885 15 309 4 11 239
Provisions 1 343 978 37 1 808
Current tax liabilities 486 10 >100 965
Deposits due to customers 398 330 359 943 11 378 111
Debt securities in issue 148 468 163 697 (9) 164 545
Liabilities under investment 14 478 13 836 5 13 964
contracts
Policyholder liabilities under 2 807 0 3 001
insurance contracts 2 799
Borrowed funds 13 786 13 359 3 13 649
3
Deferred tax liabilities 1 456 2 461 (41) 2 298
Total liabilities 651 685 658 907 (1) 654 321
Equity
Capital and reserves
Attributable to ordinary equity
holders of the Group:
Share capital 1 434 1 433 0 1 433
Share premium 4 562 4 805 (5) 4 590
Other reserves 1 416 1 694 (16) 2 309
Retained earnings 50 876 45 362 12 47 958
58 288 53 294 9 56 290
Non-controlling interest - 1 301 (4) 1 215
ordinary shares 1 359
Non-controlling interest - 4 644 - 4 644
preference shares
4 644
Total equity 64 233 59 297 8 62 149
Total equity and liabilities 715 918 718 204 (0) 716 470
Note
(1)Comparatives have been reclassified. These reclassifications have not
been audited. Refer to "Reclassifications" section.
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
1. NON-CURRENT ASSETS HELD FOR SALE
The Group has transferred certain investment securities designated at
fair value through profit or loss, held by Absa Capital, as well as
investments in associates, held by Absa Capital and Absa Business Bank,
to non-current assets held for sale. This is because the carrying values
of these investments, amounting to R369 million, will be recovered
principally through the disposal thereof. Firm agreements are in place
for the disposal of these investments at the reporting date, with it
being highly probable that the outstanding conditions of these sale
agreements will be met after the reporting date, resulting in the
disposal of these investments.
2. NON-PERFORMING ADVANCES
30 June 2011
Expected
recoveri
es and Total
Outstanding fair Net identifie
balance value of exposur d
collater e impairmen
al t
Rm Rm Rm Rm
Cheque accounts 236 72 164 164
Credit cards 2 558 729 1 829 1 829
Instalment credit agreements 3 061 1 731 1 330 1 330
Microloans 378 76 302 302
Mortgages 25 308 20 542 4 766 4 766
Personal loans 1 450 573 877 877
Retail Banking 32 991 23 723 9 268 9 268
Cheque accounts 835 462 373 373
Commercial Asset Finance 943 346 597 597
Commercial Property Finance 2 631 2 124 507 507
Term loans 1 136 883 253 253
Absa Business Bank 5 545 3 815 1 730 1 730
Absa Capital 722 341 381 381
Non-performing advances 39 258 27 879 11 379 11 379
Non-performing advances ratio 7,7
(%)
30 June 2010
Expected
recoveri
es and Total
Outstandi fair Net identifie
ng value of exposur d
balance collater e impairmen
al t
Rm Rm Rm Rm
NON-PERFORMING ADVANCES
(continued)
Cheque accounts 172 93 79 79
Credit cards(1) 3 113 627 2 486 2 486
Instalment credit agreements(2) 2 709 1 623 1 086 1 086
Microloans(3) 341 64 277 277
Mortgages 25 717 20 868 4 849 4 849
Personal loans(4) 1 149 413 736 736
Retail Banking 33 201 23 688 9 513 9 513
Cheque accounts 1 022 521 501 501
Commercial Asset Finance 1 112 473 639 639
Commercial Property Finance 2 138 1 831 307 307
Term loans 1 011 718 293 293
Absa Business Bank(3)(5) 5 283 3 543 1 740 1 740
Absa Capital(5) 419 83 336 336
Non-performing advances 38 903 27 314 11 589 11 589
Non-performing advances ratio 7,6
(%)
Notes
Comparatives have been reclassified for the following structure changes
made during the period under review:
(1)Debit Card was moved within Retail Banking from Retail Bank to Card.
(2)Absa Technology Finance Solutions was moved from Vehicle and Asset
Finance within Retail Banking to Absa Business Bank.
(3)Absa Development Company Holdings Proprietary Limited and Absa
Development Company division were moved from Absa Business Bank to Retail
Bank within Retail Banking.
(4)Personal loan centres were moved within Retail Banking from Personal
Loans to Retail Bank.
(5)The Group`s corporate client base was transferred from Absa Business
Bank to Absa Capital following an initiative to optimise product delivery
to its corporate clients.
31 December 2010
Expected
recoveri
es and Total
Outstandi fair Net identifie
ng value of exposur d
balance collater e impairmen
al t
Rm Rm Rm Rm
2. NON-PERFORMING ADVANCES
(continued)
Cheque accounts 220 110 110 110
Credit cards(1) 2 822 797 2 025 2 025
Instalment credit agreements(2) 3 058 1 776 1 282 1 282
Microloans(3) 445 84 361 361
Mortgages 25 642 20 740 4 902 4 902
Personal loans(4) 1 413 442 971 971
Retail Banking 33 600 23 949 9 651 9 651
Cheque accounts 880 448 432 432
Commercial Asset Finance 1 082 429 653 653
Commercial Property Finance 2 483 2 032 451 451
Term loans 1 047 760 287 287
Absa Business Bank(3)(5) 5 492 3 669 1 823 1 823
Absa Capital(5) 549 208 341 341
Non-performing advances 39 641 27 826 11 815 11 815
Non-performing advances ratio 7,7
(%)
Notes
Comparatives have been reclassified for the following structure changes
made during the period under review:
(1)Debit Card was moved within Retail Banking from Retail Bank to Card.
(2)Absa Technology Finance Solutions was moved from Vehicle and Asset
Finance within Retail Banking to Absa Business Bank.
(3)Absa Development Company Holdings Proprietary Limited and Absa
Development Company division were moved from Absa Business Bank to
Retail Bank within Retail Banking.
(4)Personal loan centres were moved within Retail Banking from Personal
Loans to Retail Bank.
(5)The Group`s corporate client base was transferred from Absa Business
Bank to Absa Capital following an initiative to optimise product
delivery to its corporate clients.
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
3. BORROWED FUNDS
Subordinated callable notes
The subordinated debt instruments listed below qualify as secondary
capital in terms of the Banks Act, No 94 of 1990 (as amended).
Interest rate Final maturity
date
8,75% 1 September 2017 1 500 1 500 - 1 500
8,80% 7 March 2019 1 725 1 725 - 1 725
8,10% 27 March 2020 2 000 2 000 - 2 000
10,28% 3 May 2022 600 600 - 600
Three-month 3 May 2022 400 - 400
JIBAR + 2,10% 400
CPI-linked notes, fixed at the
following coupon rates:
6,25% 31 March 2018 1 886 1 886 - 1 886
6,00% 20 September 3 000 3 000 - 3 000
2019
5,50% 7 December 1 500 1 500 - 1 500
2028
Accrued interest 1 007 745 35 826
Fair value adjustment 168 3 >100 212
13 786 13 359 3 13 649
Portfolio analysis
Financial liabilities designated 750 731 3 739
at fair value through profit or
loss
Financial liabilities held at 7 623 7 699 (1) 7 440
amortised cost
Amortised cost financial 5 413 10 5 470
liabilities held in a fair value
hedging relationship 4 929
13 786 13 359 3 13 649
30 June 31
December
2011 2010 2010
(Unaudited (Unaudited Change (Audited)
) )
Rm Rm % Rm
4. Assets under management
and administration(3)
Alternative asset
management and exchange 28 886 24 799 16 25 904
traded funds
Deceased estates 2 230 2 339 (5) 2 153
Participation bond schemes 2 335 2 089 12 2 315
Portfolio management 25 837 18 119 43 21 145
Private equity 701 - 100 732
Trusts 6 592 5 955 11 6 482
Unit trusts 128 795 114 611 12 125 320
Other 9 933 10 356 (4) 10 898
205 309 178 268 15 194 949
5. FINANCIAL GUARANTEE
CONTRACTS
Financial guarantee 384 614 (37) 599
contracts
6. COMMITMENTS
Authorised capital
expenditure
Contracted but not provided 798 1 055 (24) 1 061
for(1)
Operating lease payments
due(2)
No later than one year 1 054 1 126 (6) 1 066
Later than one year and no 2 064 (3) 2 059
later than five years 2 135
Later than five years 489 351 39 482
3 607 3 612 (0) 3 607
Notes
(1)The Group has capital commitments in respect of computer equipment
and property development. Management is confident that future net
revenue and funding will be sufficient to cover these commitments.
(2)The operating lease commitments comprise a number of separate
operating leases in relation to properties and equipment, none of which
is individually significant to the Group. Leases are negotiated for an
average term of three to five years and rentals are renegotiated
annually.
(3)Comparatives have been restated for the inclusion of assets managed
by Absa Capital on behalf of clients, exchange traded funds and
alternative asset management funds, in order to align assets under
management and administration to current market practice. These
restatements have not been audited.
7. CONTINGENCIES
Guarantees(1) 12 198 11 637 5 11 051
Irrevocable debt 23 106 40 586 (43) 46 495
facilities(2)
Irrevocable equity
facilities(2) 679 821 (17) 750
Letters of credit 4 189 5 307 (21) 4 979
Other 11 5 >100 44
40 183 58 356 (31) 63 319
Notes
(1)Guarantees include performance guarantee and payment guarantee
contracts.
(2)Irrevocable facilities are commitments to extend credit where the
Group does not have the right to terminate the facilities by written
notice. Commitments generally have fixed expiry dates. Since
commitments may expire without being drawn upon, the total contract
amounts do not necessarily represent future cash requirements.
8. ACQUISITIONS AND DISPOSALS OF BUSINESSES
8.1 Acquisition of business during the current period under review
8.1.1 On 1 June 2011, the Group acquired 76% of the units in Absa
Property Equity Fund (APEF) and, as a result, has taken on a majority
share of the risks and rewards of the fund. APEF operates as a special
purpose entity specifically for the investment in community upliftment
projects and is consolidated in terms of SIC 12. The fund was
previously consolidated under SIC 12 when the Group held between 75%
and 93% of the units (depending on the total units in issue at a
specific point in time).
Group
June 2011
Fair value
recognised
Details of the net assets acquired and gain on bargain on
purchase are as follows: acquisition
Rm
Cash, cash balances and balances with central banks 0
Other assets 1
Investments 277
Other liabilities 0
Non-controlling interest (67)
Net assets acquired 211
Satisfied by:
Cash outflow on acquisition 211
Fair value of net assets acquired (211)
Gain on bargain purchase -
Net cash outflow due to acquisition 211
Total cash and cash equivalents acquired 0
8. ACQUISITIONS AND DISPOSALS OF BUSINESSES (continued)
8.2 Acquisitions of businesses during the previous period/year
8.2.1 On 30 June 2010, the Virgin Money South Africa Proprietary
Limited (VMSA) joint venture arrangement was terminated. This was based
on a contractually agreed arrangement whereby, depending on the
financial performance of the joint venture, its future existence will
be determined. Due to the underperformance of the joint venture the
arrangement was terminated and the Group acquired the underlying
business. The termination resulted in the Group selling its 50%
interest in VMSA for R1, while acquiring VMSA`s credit card and home
loan business for R1. VMSA`s credit card and home loan business
contributed a net profit before tax of R40 million and revenue of R57
million to the Group for the period from 30 June 2010 to 31 December
2010. If the acquisition occurred on 1 January 2010, the Group`s
revenue would have been R116 million higher and the net profit before
tax for the year would have been R21 million higher.
Details of the net assets acquired and gain on bargain Group
purchase are as follows: December
2010
Fair value
recognised
on
acquisitio
n
Rm
Intangible assets 3
Other liabilities (1)
Deferred tax liabilities (1)
Net assets acquired 1
Satisfied by:
Fair value of net assets acquired (1)
Gain on bargain purchase (1)
This bargain purchase gain arose primarily due to the underperformance
of the underlying VMSA credit card and home loan portfolio. Any
transaction costs associated with the transaction were expensed when
incurred. No contingent liabilities were recognised as a result of the
acquisition and no contingent consideration is payable. No identifiable
assets were identified of which the fair values could not be reliably
measured. No material receivables were acquired as part of the
transaction.
8. ACQUISITIONS AND DISPOSALS OF BUSINESSES (continued)
8.2 Acquisitions of businesses during the previous period/year
(continued)
8.2.2 The Group previously had a 50% share in the preference shares of
Sanlam Home Loans Proprietary Limited (SHL), the holding company of three
securitisation vehicles. The investment in SHL had previously been equity
accounted as the Group and Sanlam Life Insurance Limited (Sanlam) had
joint control over SHL. On 1 August 2010, the Group acquired the
remaining 50% preference shares in SHL, which resulted in the Group
controlling and consolidating SHL. SHL contributed a net profit before
tax of R39 million and revenue of R12 million to the Group for the period
from 1 August 2010 to 31 December 2010. If the acquisition occurred on 1
January 2010, the Group`s revenue would have been R84 million higher and
the net profit before tax for the year would have been R70 million
higher.
Details of the net assets acquired and gain on bargain Group
purchase are as follows: December
2010
Fair value
recognised
on
acquisition
Rm
Cash, cash balance and balances with central banks 409
Other assets 11
Loans and advances to customers 4 621
Other liabilities (9)
Debt securities in issue (3 687)
Shareholders` loans (1 325)
Previously held interest (10)
Net assets acquired 10
Satisfied by:
Cash inflow on acquisition (61)
Fair value of net assets acquired (10)
Gain on bargain purchase (71)
The consideration paid was less than fair value of the asset and
liabilities acquired.
No goodwill resulted from the transaction and the excess of R71 million,
together with the gain of R10 million recognised as a result of
remeasuring the previously held interest to fair value was realised in
the statement of comprehensive income in "Other operating income". Any
transaction costs associated with the acquisition have been expensed when
incurred. No contingent liabilities were recognised as a result of the
acquisition and no contingent consideration is payable. No identifiable
assets were identified of which the fair values could not be reliably
measured.
8. ACQUISITIONS AND DISPOSALS OF BUSINESSES (continued)
8.2 Acquisitions of businesses during the previous period/year
(continued)
8.2.2 (continued)
Subsequent to the acquisition the debt securities in issue were
redeemed in full.
Mortgage loans with a fair value of R4 621 million were acquired as a
result of the acquisition. The gross contractual capital amounts
receivable were R4 685 million on acquisition date and an impairment
provision of R64 million was carried against these loans on acquisition
date.
The joint venture agreement was terminated due to the underperformance
of the mortgage loan portfolio and consequently the Group obtained full
control of SHL. The underperformance of the mortgage loan portfolio
gave rise to the gain on bargain purchase as the joint venture partner
was willing to sell its 50% stake at below fair value of the underlying
assets and liabilities.
Group
December
2010
Rm
Net cash outflow due to acquisitions 0
Total cash and cash equivalents acquired 470
8. ACQUISITIONS AND DISPOSALS OF BUSINESSES (continued)
8.3 Disposal of business during the current period under review
There were no disposals during the current period under review.
8.4 Disposal of businesses during the previous period/year
8.4.1 Absa Property Equity Fund (APEF) operated as a special purpose
entity specifically for the investment in community upliftment projects.
This fund was previously consolidated in terms of SIC 12 as the Group
held between 75% and 93% of the units (depending on the total units in
issue at a specific point in time) and was thereby exposed to the
majority of risks and rewards within the fund.
Between January 2010 and August 2010 the Group disposed of some of the
units it owned to the extent that its effective holding decreased to
below 50% of the units in issue, at which point the fund was
deconsolidated due to the Group not being exposed to the majority of the
risks and rewards of the fund anymore.
No gain or loss was recognised on deconsolidation of the fund due to the
underlying assets being measured at fair value.
The remainder of the investment retained after deconsolidation was
disposed of during September 2010 and October 2010.
Details of net assets disposed of are as follows: Group
December
2010
Fair value
on disposal
Rm
Cash, cash balances and balances with central banks 22
Other assets 0
Investment securities 136
Other liabilities 0
Net assets disposed 158
Satisfied by:
Non-controlling interest (78)
Fair value of interest retained (64)
Consideration received 16
Cash and cash equivalents disposed (22)
Net cash outflow on disposal (6)
9. ACQUISITIONS AND DISPOSALS OF INVESTMENTS IN ASSOCIATES AND JOINT
VENTURES
30 June 2011 30 June 2010 31 December 2010
(Unaudited) (Unaudited) (Audited)
Effectiv Movemen Effectiv Movemen Effectiv Moveme
e t e t e nt
holding Rm holding Rm holding Rm
(%) (%) (%)
9.1 Net movement resulting from acquisitions and disposals of investments
in associates and joint ventures
Acquisitions and disposals during the current period under review:
There were no acquisitions or disposals of associates and joint ventures
during the current period under review.
Transferred to non-current assets held for sale during the current period
under review:
Sekunjalo 26,4 (42) 26,4 - 26,4 -
Investments Limited
Acquired during the previous period/year, at cost:
One Commercial - - - - 49,0 0
Investment Holdings
Proprietary Limited
- Cell Captive
Pinnacle Point Group - - - 95 - 95
Limited
Disposed during the previous period/year:
Pinnacle Point Group - - - (95) - (95)
Limited
Virgin Money South - - - (0) - (0)
Africa Proprietary
Limited
Transferred to subsidiaries during the previous period/year:
Sanlam Home Loans - - 50,0 - 100,0 -
Proprietary Limited
Transferred to investment securities designated at fair value through
profit or loss during the previous period/year:
Blue Financial - - 20,2 - 6,7 (32)
Services Limited
9. ACQUISITIONS AND DISPOSALS OF INVESTMENTS IN ASSOCIATES AND JOINT
VENTURES (continued)
30 June 2011 30 June 2010 31 December
2010
(Unaudited) (Unaudited) (Audited)
Rm Rm Rm
9.2 Details of transfers and purchase consideration on net assets acquired
on the aforementioned acquisitions are as follows:
Cash paid - 95 95
Conversion of debt to equity - 0 0
- 95 95
9.3 Details of transfers and consideration received on net assets disposed
of on the aforementioned disposals are as follows:
Cash received - (95) (95)
Loss on disposal - (0) (0)
Transfer to investment - - (32)
securities
Transfer to non-current assets
held for sale (42) - -
(42) (95) (127)
10. RELATED PARTIES
30 June 31
December
2011 2010 2010
(Unaudited (Unaudited Change (Audited)
) )
Rm Rm % Rm
10.1 Balances and transactions
with parent company(1)(2)(3)
The following are balances with, and transactions entered into with the
parent company:
Balances
Loans and advances 20 473 12 704 61 15 673
Derivative assets 7 206 7 614 (5) 9 144
Nominal value of derivative 389 798 264 965 47 493 402
assets
Other assets 1 075 1 952 (45) 552
Investment securities 434 512 (15) 581
Deposits (5 197) (5 543) (6) (6 082)
Derivative liabilities (5 759) (10 847) (47) (9 006)
Nominal value of derivative (323 685) (323 774) (0) (375 467)
liabilities
Other liabilities (1 796) (224) >100 (267)
Transactions
Interest received (82) (36) >100 (80)
Interest paid 32 15 >100 36
Net fee and commission income (9) - 100 (15)
Gains and losses from banking (68) 2 548 >100 1 646
and trading activities
Other operating income (125) (22) >100 (42)
Operating expenditure (25) (169) (85) 27
Dividends paid 917 877 5 1 774
Notes
(1)Absa Group is a subsidiary of Barclays Bank PLC, which has a majority
equity interest in the Group.
(2)All transactions entered into are on the same commercial terms and
conditions as in the normal course of business.
(3)Debit amounts are shown as positive; credit amounts are shown as
negative.
10. RELATED PARTIES (continued)
10.2 Associates, joint ventures and retirement benefit fund
The Group provides certain banking and financial services to associates
and joint ventures. The Group also provides a number of current and
interest-bearing cash accounts to the Absa Group Pension Fund. These
transactions are conducted on the same terms as third-party transactions
and are not individually material.
In aggregate, the amounts included in the Group`s financial statements
are as follows:
30 June 2011
(Unaudited)
Associates Retirement Total
and joint benefit Rm
ventures fund
Rm Rm
Value of Absa Group Pension - 7 003 7 003
Fund investments managed by
the Group
Value of Absa shares held by - 120 120
the Absa Group Pension Fund(1)
Value of other Absa securities - 1 644 1 644
held by the Absa Group Pension
Fund
Statement of financial
position
Loans and advances 7 510 - 7 510
Other assets 56 - 56
Deposits (2) (73) (75)
Other liabilities (80) - (80)
Derivative transactions 2 - 2
Statement of comprehensive
income
Interest and similar income (250) - (250)
Interest expense and similar 68 0 68
charges
Fees received (46) (9) (55)
Fees paid 84 - 84
Current service costs(2) - 366 366
Notes
(1)Consists of Absa Group ordinary shares and Absa Bank Limited
preference shares.
(2)Include employee contributions.
10. RELATED PARTIES (continued)
10.3 Associates, joint ventures and retirement benefit fund (continued)
30 June 2010
(Unaudited)
Associates Retirement Total
and joint benefit Rm
ventures fund
Rm Rm
Value of Absa Group Pension - 6 716 6 716
Fund investments managed by
the Group
Value of Absa shares held by - 92 92
the Absa Group Pension Fund(1)
Value of other Absa securities - 1 964 1 964
held by the Absa Group Pension
Fund
Statement of financial
position
Loans and advances 7 394 - 7 394
Other assets 1 096 - 1 096
Deposits (345) (49) (394)
Other liabilities (50) - (50)
Statement of comprehensive
income
Interest and similar income (379) - (379)
Interest expense and similar 2 0 2
charges
Fees received (57) (9) (66)
Fees paid 87 - 87
Current service costs(2) - 335 335
Notes
(1)Consists of Absa Group ordinary shares and Absa Bank Limited
preference shares.
(2)Include employee contributions.
10. RELATED PARTIES (continued)
10.4 Associates, joint ventures and retirement benefit fund (continued)
31 December 2010
(Audited)
Associates Retirement Total
and joint benefit Rm
ventures fund
Rm Rm
Value of Absa Group Pension - 7 193 7 193
Fund investments managed by
the Group
Value of Absa shares held by - 116 116
the Absa Group Pension Fund(1)
Value of other Absa securities - 1 582 1 582
held by the Absa Group Pension
Fund
Statement of financial
position
Loans and advances 7 275 - 7 275
Other assets 17 - 17
Deposits (0) (30) (30)
Other liabilities (47) - (47)
Derivative transactions 4 - 4
Statement of comprehensive
income
Interest and similar income (617) - (617)
Interest expense and similar 8 1 9
charges
Fees received (106) (17) (123)
Fees paid 173 - 173
Current service costs(2) - 635 635
Notes
(1)Consists of Absa Group ordinary shares and Absa Bank Limited
preference shares.
(2)Include employee contributions.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Net interest income 11 622 11 293 3 23 340
Interest and similar 24 682 27 590 (11) 54 241
income
Interest expense and (13 060) 20 (30 901)
similar charges (16 297)
Impairment losses on loans (2 902) 22 (6 005)
and advances (3 704)
Net interest income after 8 720 15 17 335
impairment losses on loans 7 589
and advances
Net fee and commission 7 519 7 059 7 14 391
income 1.1
Fee and commission 8 500 8 144 4 16 454
income
Fee and commission (981) (1 085) 10 (2 063)
expense
Net insurance premium 2 481 2 165 15 4 602
income
Net insurance claims and (1 263) (8) (2 405)
benefits paid (1 166)
Changes in investment and (186) 67 (1 059)
insurance liabilities (565)
Gains and losses from 1 510 10 2 349
banking and trading 1 378
activities 1.2
Gains and losses from 264 (44) 884
investment activities 469
1.3
Other operating income 355 373 (5) 712
Operating profit before 19 400 12 36 809
operating expenditure 17 302
Operating expenditure (12 761) (11 700) (9) (24 949)
Operating expenses (12 218) (11 264) (8) (24 070)
2.1
Other impairments (37) (83) 55 (108)
2.2
Indirect taxation (506) (353) (43) (771)
Share of post-tax results 28 87 (9)
of associates and joint 15
ventures
Operating profit before 6 667 5 617 19 11 851
income tax
Taxation expense (1 841) (1 506) (22) (3 262)
Profit for the period/year 4 826 4 111 17 8 589
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
Other comprehensive income
Exchange differences on 75 >100 (371)
translation of foreign (37)
operations
Movement in cash flow hedging (855) 646 >(100) 1 152
reserve
Fair value (losses)/gains (76) >(100) 3 421
arising during the period/year 1 794
Amount removed from other (1 111) (24) (1 820)
comprehensive income and
recognised in the profit and
loss component of the statement
of comprehensive income (897)
Deferred tax 332 (251) >100 (449)
Movement in available-for-sale (30) (98) 69 166
reserve
Fair value (losses)/gains (60) 66 146
arising during the period/year (179)
Amortisation of government 18 (61) 92
bonds -release to the profit
and loss component of the
statement of comprehensive 46
income
Deferred tax 12 35 (66) (72)
Movement in retirement benefit 12 >100 21
asset and liabilities (4)
Increase/(decrease) in 17 >100 27
retirement benefit surplus (6)
Decrease in retirement benefit - - 2
deficit -
Deferred tax (5) 2 >(100) (8)
Total comprehensive income for 4 028 (13) 9 557
the period/year 4 618
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
Profit attributable to:
Ordinary equity holders of the 4 581 3 842 19 8 118
Group
Non-controlling interest - 102 (5) 151
ordinary shares 107
Non-controlling interest - 143 (12) 320
preference shares 162
4 826 4 111 17 8 589
Total comprehensive income
attributable to:
Ordinary equity holders of the 3 771 4 322 (13) 9 138
Group
Non-controlling interest - 114 (15) 99
ordinary shares 134
Non-controlling interest - 143 (12) 320
preference shares 162
4 028 4 618 (13) 9 557
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
1. NON-INTEREST INCOME
1.1 Net fee and commission
income
Fee and commission income
Asset management and other 37 (33) 105
related fees 55
Consulting and administration 285 227 26 510
fees
Credit-related fees and 6 688 6 333 6 12 855
commissions
Cheque accounts 1 633 1 614 1 3 198
Credit cards(1) 1 073 939 14 1 938
Electronic banking 1 966 1 848 6 3 828
Other(2) 870 739 18 1 474
Savings accounts 1 146 1 193 (4) 2 417
Insurance commission received 503 482 4 950
Pension fund payment services 239 262 (9) 497
Other 128 75 71 299
Project finance fees 85 107 (21) 209
Trust and other fiduciary 535 603 (11) 1 029
services
Portfolio and other 414 484 (14) 783
management fees
Trust and estate income 121 119 2 246
8 500 8 144 4 16 454
Fee and commission expense
Cheque processing fees (85) (88) 3 (173)
Commission paid (438) (436) (1) (867)
Debt collecting fees (9) (112) 92 (85)
Other (279) (272) (3) (561)
Transaction-based legal (100) (88) (14) (192)
fees
Valuation fees (70) (89) 21 (185)
(981) (1 085) 10 (2 063)
Net fee and commission income 7 519 7 059 7 14 391
Notes
(1)Includes merchant, acquiring and issuing fees.
(2)Includes service, commission fees and credit-related fees on mortgage
loans and foreign exchange transactions.
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
1. NON-INTEREST INCOME
(continued)
1.1 Net fee and commission
income (continued)
Included above are net fees
and commissions linked to
financial instruments not at
fair value:
Fee and commission income
Cheque accounts 1 633 1 614 1 3 198
Credit cards 529 435 22 883
Electronic banking 1 966 1 848 6 3 828
Other 585 607 (4) 1 080
Savings accounts 1 146 1 193 (4) 2 417
5 859 5 697 3 11 406
Fee and commission expense (85) (88) (3) (173)
5 744 5 609 2 11 233
1.2 Gains and losses from
banking and trading activities
Associates and joint ventures - 42 (100) 87
Dividends received - - - 45
Profit realised on - 42 (100) 42
disposal
Available-for-sale unwind from
reserve
Statutory liquid asset (18) (46) 61 (92)
portfolio
Financial instruments 71 (502) >100 (316)
designated at fair value
through profit or loss
Debt securities in issue (5) 3 >(100) (28)
Deposits from banks and (299) (780) 62 (1 315)
due to customers
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
NON-INTEREST INCOME (continued)
1.2 Gains and losses from
banking and trading activities
(continued)
Investment securities 205 (88) >100 180
Debt instruments 26 16 63 26
Listed equity instruments 159 (38) >100 86
Unlisted equity and hybrid 20 (66) >100 68
instruments
Loans and advances to 174 (52) 840
banks and customers 360
Statutory liquid asset (4) 3 >(100) 7
portfolio
Financial instruments held for
trading
Derivatives and trading 1 453 1 849 (21) 2 570
instruments
Ineffective hedges 4 35 (89) 100
Cash flow hedges 25 43 (42) 115
Fair value hedges (21) (8) >(100) (15)
1 510 1 378 10 2 349
1.3 Gains and losses from
investment activities
Available-for-sale unwind from
reserves
Investment securities
Unlisted equity and hybrid 0 - 100 0
investments
Financial instruments 258 461 (44) 908
designated at fair value
through profit or loss
Cash, cash balances and 84 107 (21) 217
balances with central banks
Investment securities 87 84 4 477
Debt instruments 35 72 (51) 125
Listed equity instruments 50 6 >100 344
Unlisted equity and hybrid 2 6 (67) 8
instruments
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
NON-INTEREST INCOME
(continued)
1.3 Gains and losses from
investment activities
(continued)
Investments linked to 87 270 (68) 214
investment contracts
Cash, cash balances and 94 (80) (51)
balances with central banks 461
Debt instruments 0 113 (99) (24)
Listed equity instruments (7) (304) 98 289
Unlisted equity and hybrid 0 0 (0) 0
instruments
Financial instruments held for
trading
Investments linked to
investment contracts
Derivative instruments 6 8 (25) (24)
264 469 (44) 884
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
2. OPERATING EXPENDITURE
2.1 Operating expenses
Amortisation of intangible 150 76 97 165
assets
Auditors` remuneration 82 77 6 159
Cash transportation 380 335 13 729
Depreciation 598 601 (0) 1 147
Equipment costs 124 135 (8) 271
Information technology 1 121 1 054 6 2 085
Investment property charges - 0 (100) 4
Marketing costs 335 329 2 1 070
Operating lease expenses on 514 6 978
properties 486
Printing and stationery 121 132 (8) 272
Professional fees 414 470 (12) 1 096
Staff costs 6 623 5 875 13 12 537
Bonuses 534 378 41 1 101
Current service costs on post- 397 328 21 635
retirement benefits
Salaries 5 127 4 701 9 9 707
Share-based payments 224 69 >100 297
Training costs 120 136 (12) 269
Other staff costs(1) 221 263 (16) 528
Telephone and postage 409 417 (2) 820
Other operating costs(2) 1 347 1 277 5 2 737
12 218 11 264 8 24 070
Notes
(1)"Other staff costs" include recruitment costs, membership fees to
professional bodies, staff parking, redundancy fees, study assistance,
staff relocation and refreshment costs.
(2)"Other operating costs" include accommodation, travel and
entertainment costs.
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
2. OPERATING EXPENDITURE
(continued)
2.2 Other impairments
Financial instruments 2 22 (91) 37
Amortised cost 2 6 (67) 12
instruments
Available-for-sale - 16 (100) 25
instruments
Other 35 61 (43) 71
Computer software - (100) 4
development costs 4
Equipment 0 - 100 13
Investments in associates - (100) 29
and joint ventures 50
Repossessed properties 35 7 >100 25
37 83 (55) 108
Six months ended Year ended
30 June 31 December
2011 2010 2010
(Unaudited (Unaudited Net (Audited)
) )
Gros Net Gros Net chang Gross Net
s s e
Rm Rm Rm Rm % Rm Rm
3. HEADLINE EARNINGS
Headline earnings(1) is
determined as follows:
Profit attributable to 4 19 8 118
ordinary equity holders 581 3
of the Group 842
Adjustments for:
IFRS 3 gain on bargain - - - - (72) (72)
purchase -
IAS 16 loss/(profit) 2 1 (5) >100 (41) (37)
on disposal of property
and equipment (4)
IAS 28 and 31 (0) (0) 92 (1) (1)
headline earnings
component of share of post-
tax results of associates (1) (1)
and joint ventures
IAS 28 and 31 net - - 100 (42) (42)
profit on disposal of
investments in associates (42) (42)
and joint ventures
IAS 28 and 31 - - (100) 29 21
impairment of investments
in associates and joint 50 36
ventures
IAS 36 impairment of 0 0 100 13 9
equipment and leasehold
improvements - -
IAS 38 impairment of - - (100) 4 3
intangible assets 4 3
IAS 39 release of 18 13 (61) 92 66
available-for-sale 46 33
reserves
IAS 39 impairment of - - (100) 25 18
available-for-sale
instruments 16 12
IAS 40 change in fair - - 100 (50) (42)
value of investment (25) (17)
properties
Headline earnings 4 3 19 8 041
595 862
Note
(1)The net amount is reflected after taxation and non-controlling
interest.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 June
2011
(Unaudited)
Total
equity Non- Non-
attributab controlli controlli
le to ng ng
ordinary interest- interest- Total
equity ordinary preferenc equity
holders of shares e shares
the Group
Rm Rm Rm Rm
Balance at the beginning of 56 290 1 215 4 644 62 149
the year
Transfer from share-based 131 - - 131
payment reserve
Elimination of the movement in 18 - - 18
treasury shares held by Absa
Group Limited Share Incentive
Trust
Elimination of the movement in 71 - - 71
treasury shares held by Absa
Group subsidiaries
Share buy-back in respect of (247) - - (247)
equity-settled share-based
payment schemes
Other reserves (893) - - (893)
Transfer from share-based (131) - - (131)
payment reserve
Share-based payments for the 35 - - 35
period
Other comprehensive income (822) - - (822)
1
Movement in general credit (14) - - (14)
risk reserve
Movement in insurance (2) - - (2)
contingency reserve
Movement in associates` and 28 - - 28
joint ventures` retained
earnings reserve
Disposal of associates and 13 - - 13
joint ventures - release of
reserves
Six months ended 30 June
2011
(Unaudited)
Total
equity Non- Non-
attributab controllin controlli
le to g interest-ng
ordinary ordinary interest- Total
equity shares preferenc equity
holders of e shares
the Group
Rm Rm Rm Rm
Retained earnings 2 918 - - 2 918
Transfer from share-based 0 - - 0
payment reserve
Transfer to general credit 14 - - 14
risk reserve
Transfer to insurance 2 - - 2
contingency reserve
Transfer of profit to (28) - - (28)
associates` and joint
ventures` retained earnings
reserve
Disposal of associates and (13) - - (13)
joint ventures - release of
reserves
Profit attributable to 4 581 - - 4 581
ordinary equity holders of the
Group 1
Other comprehensive income - 12 - - 12
movement in retirement benefit
asset and liabilities 1
Dividends paid during the (1 650) - - (1
period 650)
Profit attributable to non- - 102 143 245
controlling equity holders of
the Group 1
Other comprehensive income - - 12 - 12
foreign currency translation
effects 1
Dividends paid during the - (95) (143) (238)
period
Acquisition of business - 67 - 67
Balance at the end of the 58 288 1 301 4 644 64 233
period
Note
Total comprehensive income
Profit attributable to equity 4 581 102 143 4 826
holders of the Group
Other comprehensive income (810) 12 - (798)
3 771 114 143 4 028
Six months ended 30 June
2010
(Unaudited)
Total
equity Non- Non-
attributab controlli controlli
le to ng ng
ordinary interest- interest- Total
equity ordinary preferenc equity
holders of shares e shares
the Group
Rm Rm Rm Rm
Balance at the beginning of
the year 50 547 1 299 4 644 56 490
Transfer from share-based
payment reserve 24 - - 24
Elimination of the movement in
treasury shares held by Absa
Group Limited Share Incentive 20 - - 20
Trust
Elimination of the movement in
treasury shares held by Absa
Group subsidiaries 27 - - 27
Share buy-back in respect of
equity-settled share-based
payment schemes (49) - - (49)
Other reserves 516 - - 516
Transfer from share-based
payment reserve (25) - - (25)
Share-based payments for the 5 - - 5
period
Other comprehensive income 484 - - 484
1
Movement in general credit
risk reserve (14) - - (14)
Movement in insurance
contingency reserve 5 - - 5
Movement in associates` and
joint ventures` retained 19 - - 19
earnings reserve
Disposal of associates and
joint ventures - release of 42 - - 42
reserves
Six months ended 30 June
2010
(Unaudited)
Total
equity Non- Non-
attributab controlli controlli
le to ng ng
ordinary interest- interest- Total
equity ordinary preferenc equity
holders of shares e shares
the Group
Rm Rm Rm Rm
Retained earnings 2 209 - - 2 209
Transfer from share-based
payment reserve 1 - - 1
Transfer to general credit
risk reserve 14 - - 14
Transfer to insurance
contingency reserve (5) - - (5)
Transfer of profit to
associates` and joint
ventures` retained earnings (19) - - (19)
reserve
Disposal of associates and
joint ventures - release of (42) - - (42)
reserves
Profit attributable to equity
holders of the Group 3 842 - - 3 842
1
Other comprehensive income -
movement in retirement benefit
asset and liabilities (4) - - (4)
1
Dividends paid during the (1 578) - - (1 578)
period
Profit attributable to non-
controlling equity holders of
the Group - 107 162 269
1
Dividends paid during the - (92) (162) (254)
period
Other comprehensive income -
foreign currency translation - 27 - 27
effects 1
Acquisition of businesses - 18 - 18
Balance at the end of the 53 294 1 359 4 644 59 297
period
Six months ended 30 June
2010
(Unaudited)
Total
equity Non- Non-
attributab controlli controlli
le to ng ng
ordinary interest- interest- Total
equity ordinary preferenc equity
holders of shares e shares
the Group
Rm Rm Rm Rm
Note
Total comprehensive income
Profit attributable to equity 3 842 107 162 4 111
holders of the Group
Other comprehensive income 480 27 - 507
4 322 134 162 4 618
Year ended 31 December
2010
(Audited)
Total
equity Non- Non-
attributab controlli controlli
le to ng ng
ordinary interest- interest- Total
equity ordinary preferenc equity
holders of shares e shares
the Group
Rm Rm Rm Rm
Balance at the beginning of 50 547 1 299 4 644 56 490
the year
Transfer from share-based 59 - - 59
payment reserve
Elimination of the movement in 31 - - 31
treasury shares held by Absa
Group Limited Share Incentive
Trust
Elimination of the movement in (49) - - (49)
treasury shares held by Absa
Group subsidiaries
Share buy-back in respect of (234) - - (234)
equity-settled share-based
payment schemes
Other reserves 1 131 - - 1 131
Transfer from share-based (61) - - (61)
payment reserve
Share-based payments for the 48 - - 48
year
Other comprehensive income 999 - - 999
1
Movement in general credit 39 - - 39
risk reserve
Movement in insurance 55 - - 55
contingency reserve
Movement in associates` and (9) - - (9)
joint ventures` retained
earnings reserve
Disposal of associates and 60 - - 60
joint ventures - release of
reserves
Retained earnings 4 805 - - 4 805
Transfer from share-based 2 - - 2
payment reserve
Year ended 31 December
2010
Audited
Total
equity Non- Non-
attributab controlli controlli
le to ng ng
ordinary interest- interest- Total
equity ordinary preferenc equity
holders of shares e shares
the Group
Rm Rm Rm Rm
Transfer to general credit (39) - - (39)
risk reserve
Transfer to insurance (55) - - (55)
contingency reserve
Transfer of loss to 9 - - 9
associates` and joint
ventures` retained earnings
reserve
Disposal of associates and - - (60)
joint ventures - release of (60)
reserves
Profit attributable to equity 8 118 - - 8 118
holders of the Group 1
Other comprehensive income - 21 - - 21
movement in retirement benefit
asset and liabilities 1
Dividends paid during the year (3 191) - - (3 191)
Profit attributable to non- - 151 320 471
controlling equity holders of
the Group 1
Other comprehensive income - - (52) - (52)
foreign currency translation
effects 1
Dividends paid during the year - (142) (320) (462)
Dilution of non-controlling 0 (0) - -
equity holders` interest
Increase in non-controlling - 37 - 37
equity holders` interest
Disposal of businesses - (78) - (78)
Balance at the end of the year 56 290 1 215 4 644 62 149
Year ended 31 December
2010
(Audited)
Total
equity Non- Non-
attributab controlli controlli
le to ng ng
ordinary interest- interest- Total
equity ordinary preferenc equity
holders of shares e shares
the Group
Rm Rm Rm Rm
Note
Total comprehensive income
Profit attributable to equity 8 118 151 320 8 589
holders of the Group
Other comprehensive income 1 020 (52) - 968
9 138 99 320 9 557
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
1. DIVIDENDS PER SHARE
Dividends paid to ordinary
equity holders during the
period/year
15 February 2011 final 1 652 5 1 580
dividend number 49 of 230
cents per ordinary share (16 1 580
February 2010: 220 cents)
4 August 2010 interim dividend - - - 1 616
number 48 of 225 cents per
ordinary share
Dividends paid on treasury (2) (2) - (5)
shares held by Absa Group
subsidiaries
1 650 1 578 5 3 191
Dividends paid to ordinary
equity holders relating to
income for the period/year
2 August 2011 interim dividend 2 097 30 1 616
number 50 of 292 cents per
ordinary share (4 August 1 616
2010: 225 cents)
15 February 2011 final - - 1 652
dividend number 49 of 230
cents per ordinary share -
Dividends paid on treasury - - (3)
shares held by Absa Group -
subsidiaries
2 097 1 616 30 3 265
Note
The Secondary Tax on Companies (STC) payable by the Group in respect of
the dividend approved and declared subsequent to the reporting date,
amounts to R210 million (30 June 2010: R162 million; 31 December 2010:
R165 million). No provision has been made for the dividend and the
related STC at the reporting date, in accordance with IFRS.
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
1. DIVIDENDS PER SHARE
(continued)
Dividends paid to non-
controlling preference equity
holders during the period/year
15 February 2011 final 143 162 (12) 162
dividend number 10 of 2 887,6
cents per preference share (16
February 2010: 3 280,3 cents)
4 August 2010 interim dividend - - 158
number 9 of 3 197,5 cents per
preference share -
143 162 (12) 320
Dividends paid to non-
controlling preference equity
holders relating to income for
the period/year
2 August 2011 interim dividend 141 (11) 158
number 11 of 2 858,3 cents per
preference share (4 August 158
2010: 3 197,5 cents)
15 February 2011 final - - 143
dividend number 10 of 2 887,6
cents per preference share (16
February 2010: -
3 280,3)
141 158 (11) 301
Note
The STC payable by the Group in respect of the dividend approved and
declared subsequent to the reporting date amounts to R14 million (30
June 2010: R16 million; 31 December 2010: R14 million). No provision has
been made for the dividend and the related STC at the reporting date, in
accordance with IFRS.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
Net cash generated from 1 012 3 163 (68) 2 202
operating activities
Net cash 1 349 >100 1 500
generated/(utilised)from (246)
investing activities
Net cash utilised in financing (2 022) 13 (4 263)
activities (2 334)
Net increase/(decrease) in 339 (42) (561)
cash and cash equivalents 583
Cash and cash equivalents at 6 417 (8) 6 976
the 6 976
beginning of the year
1
Effect of exchange rate 1 (50) 2
movements on cash and cash 2
equivalents
Cash and cash equivalents at 6 757 (11) 6 417
the end of the period/year 7 561
2
NOTES
1. Cash and cash equivalents
at the beginning of the year
Cash, cash balances and 4 939 (5) 5 175
balances 5 175
with central banks
Loans and advances to banks 1 478 1 801 (18) 1 801
6 417 6 (8) 6 976
976
2. Cash and cash equivalents
at the end of the period/year
Cash, cash balances and 5 234 12 4 939
balances 4 685
with central banks
Loans and advances to banks 1 523 2 876 (47) 1 478
6 757 7 561 (11) 6 417
CONSOLIDATED PROFIT CONTRIBUTION BY SEGMENT
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
Banking operations
Retail Banking 1 735 1 035 68 3 258
Home Loans 33 (201) >100 196
Vehicle and Asset 181 35 >100 236
Finance(1)
Card(2) 811 587 38 1 483
Personal Loans(3) 303 170 78 515
Retail Bank(4) 407 444 (8) 828
Absa Business Bank(4)(5) 1 380 1 316 5 2 866
Absa Capital(5) 832 784 6 1 612
Corporate centre 277 271 2 (396)
Capital and funding centre (144) (8) >(100) (192)
Non-controlling interest - (143) (162) 12 (320)
preference shares
Total banking 3 937 3 236 22 6 828
Financial Services 644 606 6 1 290
Profit attributable to 4 581 19 8 118
ordinary equity holders of the 3 842
Group
Headline earnings adjustments 14 20 (30) (77)
Headline earnings 4 595 3 862 19 8 041
Notes
Comparatives have been reclassified for the following structure changes
made during the period under review:
(1)Absa Technology Finance Solutions was moved from Vehicle and Asset
Finance within Retail Banking to Absa Business Bank.
(2)Debit Card was moved within Retail Banking from Retail Bank to Card.
(3)Personal loan centres were moved within Retail Banking from Personal
Loans to Retail Bank.
(4)Absa Development Company Holdings Proprietary Limited and Absa
Development Company division were moved from Absa Business Bank to
Retail Bank within Retail Banking.
(5)The Group`s corporate client base was transferred from Absa Business
Bank to Absa Capital following an initiative to optimise product
delivery to its corporate clients.
CONSOLIDATED TOTAL REVENUE(1) CONTRIBUTION BY SEGMENT
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
Banking operations
Retail Banking 12 025 11 199 7 23 090
Home Loans 2 000 1 633 22 3 531
Vehicle and Asset 1 121 1 012 11 2 035
Finance(2)
Card(3) 2 390 2 207 8 4 601
Personal Loans(4) 1 053 921 14 1 960
Retail Bank(5) 5 461 5 426 1 10 963
Absa Business Bank(5)(6) 5 854 5 593 5 11 545
Absa Capital(6) 2 786 2 717 3 5 508
Corporate centre (289) (357) 19 (827)
Capital and funding centre 12 136 (91) (106)
Total banking 20 388 19 288 6 39 210
Financial Services 1 914 1 718 11 3 604
Total revenue 22 302 21 006 6 42 814
Notes
(1)Revenue includes net interest income and non-interest income.
Comparatives have been reclassified for the following structure changes
made during the period under review:
(2)Absa Technology Finance Solutions was moved from Vehicle and Asset
Finance within Retail Banking to Absa Business Bank.
(3)Debit Card was moved within Retail Banking from Retail Bank to Card.
(4)Personal loan centres were moved within Retail Banking from Personal
Loans to Retail Bank.
(5)Absa Development Company Holdings Proprietary Limited and Absa
Development Company division were moved from Absa Business Bank to
Retail Bank within Retail Banking.
(6)The Group`s corporate client base was transferred from Absa Business
Bank to Absa Capital following an initiative to optimise product
delivery to its corporate clients.
CONSOLIDATED INTERNAL REVENUE(1) CONTRIBUTION BY SEGMENT
Six months ended Year ended
30 June 31 December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
Banking operations
Retail Banking (5 424) (7 142) 24 (13 334)
Home Loans (6 429) (7 877) 18 (15 119)
Vehicle and Asset (1 211) (1 412) 14 (2 753)
Finance(2)
Card(3) (321) (396) 19 (738)
Personal Loans(4) (284) (314) 10 (611)
Retail Bank(5) 2 821 2 857 (1) 5 887
Absa Business Bank(5)(6) 1 269 612 >100 1 551
Absa Capital(6) 4 810 6 818 (29) 12 516
Corporate centre 41 248 (83) (423)
Capital and funding centre (510) (365) (40) (820)
Total banking 186 171 9 (510)
Financial Services (186) (171) (9) 510
Internal revenue - - - -
Notes
(1)Revenue includes net interest income and non-interest income.
Comparatives have been reclassified for the following structure
changes made during the period under review:
(2)Absa Technology Finance Solutions was moved from Vehicle and Asset
Finance within Retail Banking to Absa Business Bank.
(3)Debit Card was moved within Retail Banking from Retail Bank to
Card.
(4)Personal loan centres were moved within Retail Banking from
Personal Loans to Retail Bank.
(5)Absa Development Company Holdings Proprietary Limited and Absa
Development Company division were moved from Absa Business Bank to
Retail Bank within Retail Banking.
(6)The Group`s corporate client base was transferred from Absa
Business Bank to Absa Capital following an initiative to optimise
product delivery to its corporate clients.
CONSOLIDATED TOTAL ASSETS BY SEGMENT
Six months ended Year
ended
30 June 31
December
2011 2010 2010
(Unaudite (Unaudite Change (Audited)
d) d)
Rm Rm % Rm
Banking operations
Retail Banking 462 113 455 312 1 469 792
Home Loans 244 116 241 059 1 247 881
Vehicle and Asset 45 332 49 485 (8) 50 385
Finance(1)
Card(2) 27 782 24 934 11 26 746
Personal Loans(3) 13 582 11 507 18 12 887
Retail Bank(4) 131 301 128 327 2 131 893
Absa Business Bank(4)(5) 184 230 173 893 6 175 320
Absa Capital(5) 333 729 354 378 (6) 356 077
Corporate centre (368 065) (374 006) 2 (380 521)
Capital and funding centre 80 485 72 872 10 72 855
Total banking 692 492 682 449 1 693 523
Financial Services 23 426 35 755 (34) 22 947
Total assets 715 918 718 204 (0) 716 470
Notes
Comparatives have been reclassified for the following structure
changes made during the period under review:
(1)Absa Technology Finance Solutions was moved from Vehicle and Asset
Finance within Retail Banking to Absa Business Bank.
(2)Debit Card was moved within Retail Banking from Retail Bank to
Card.
(3)Personal loan centres were moved within Retail Banking from
Personal Loans to Retail Bank.
(4)Absa Development Company Holdings Proprietary Limited and Absa
Developments Company division were moved from Absa Business Bank to
Retail Bank within Retail Banking.
(5)The Group`s corporate client base was transferred from Absa
Business Bank to Absa Capital following an initiative to optimise
product delivery to its corporate clients.
RECLASSIFICATIONS
Some items within the statement of financial position as at 30 June 2010 and
31 December 2010 were reclassified:
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2010
(Unaudited)
As
previously
reported Reclassifications Reclassifi
(1) ed
Rm Rm Rm
Assets
Cash, cash balances and -
balances 22 380 22 380
with central banks
Statutory liquid asset 35 846 - 35 846
portfolio
Loans and advances to banks 37 226 5 905 43 131
Trading portfolio assets 56 140 - 56 140
Hedging portfolio assets 3 515 - 3 515
Other assets 22 674 (5 905) 16 769
Current tax assets 326 - 326
Loans and advances to 499 976 - 499 976
customers
Reinsurance assets 443 - 443
Investment securities 28 159 - 28 159
Investments in associates and -
joint ventures 454 454
Goodwill and intangible 1 323 - 1 323
assets
Investment properties 2 255 - 2 255
Property and equipment 7 164 - 7 164
Deferred tax assets 323 - 323
Total assets 718 204 - 718 204
Liabilities
Deposits from banks 38 713 - 38 713
Trading portfolio liabilities 46 516 - 46 516
Hedging portfolio liabilities 1 286 - 1 286
Other liabilities 15 309 - 15 309
Provisions 978 - 978
Current tax liabilities 10 - 10
Deposits due to customers 359 943 - 359 943
Debt securities in issue 163 697 - 163 697
Liabilities under investment 13 836 - 13 836
contracts
Policyholder liabilities
under 2 799 - 2 799
insurance contracts
Borrowed funds 13 359 - 13 359
Deferred tax liabilities 2 461 - 2 461
Total liabilities 658 907 - 658 907
Equity
Capital and reserves
Attributable to ordinary
equity
holders of the Group:
Share capital 1 433 - 1 433
Share premium 4 805 - 4 805
Other reserves 1 694 - 1 694
Retained earnings 45 362 - 45 362
53 294 - 53 294
Non-controlling interest -
ordinary shares 1 359 - 1 359
Non-controlling interest -
preference shares 4 644 - 4 644
Total equity 59 297 - 59 297
Total equity and liabilities 718 204 - 718 204
Note
(1)The Group has reclassified certain collaterals within Financial
Services to "Loans and advances to banks" to reflect the true nature of
these trades as collateralised loans.
As at 31 December 2010
(Audited)
As
previously
reported Reclassifications Reclassifi
(1) ed
Rm Rm Rm
Assets
Cash, cash balances and 24 361 - 24 361
balances
with central banks
Statutory liquid asset 48 215 - 48 215
portfolio
Loans and advances to banks 24 877 2 618 27 495
Trading portfolio assets 62 047 - 62 047
Hedging portfolio assets 4 662 - 4 662
Other assets 16 131 (3 276) 12 855
Current tax assets 196 - 196
Loans and advances to 498 635 658 499 293
customers
Reinsurance assets 860 - 860
Investment securities 23 826 - 23 826
Investments in associates and -
joint ventures 416 416
Goodwill and intangible assets 1 794 - 1 794
Investment properties 2 523 - 2 523
Property and equipment 7 493 - 7 493
Deferred tax assets 434 - 434
Total assets 716 470 - 716 470
Liabilities
Deposits from banks 15 406 - 15 406
Trading portfolio liabilities 47 454 - 47 454
Hedging portfolio liabilities 1 881 - 1 881
Other liabilities 11 239 - 11 239
Provisions 1 808 - 1 808
Current tax liabilities 965 - 965
Deposits due to customers 378 111 - 378 111
Debt securities in issue 164 545 - 164 545
Liabilities under investment
contracts 13 964 - 13 964
Policyholder liabilities
under 3 001 - 3 001
insurance contracts
Borrowed funds 13 649 - 13 649
Deferred tax liabilities 2 298 - 2 298
Total liabilities 654 321 - 654 321
Equity
Capital and reserves
Attributable to ordinary
equity
holders of the Group:
Share capital 1 433 - 1 433
Share premium 4 590 - 4 590
Other reserves 2 309 - 2 309
Retained earnings 47 958 - 47 958
56 290 - 56 290
Non-controlling interest - 1 215 1 215
ordinary shares -
Non-controlling interest - 4 644 4 644
preference shares -
Total equity 62 149 - 62 149
Total equity and liabilities 716 470 - 716 470
Note
(1)The Group has reclassified certain collaterals within Absa Capital to
"Loans and advances to banks" and "Loans and advances to customers" to
reflect the true nature of these trades as collateralised loans. These
reclassifications have not been audited.
Profit and dividend announcement
Salient features
Diluted headline earnings per share (HEPS) increased 19% year on year to
638,5 cents.
Interim dividend of 292 cents per share, up 30% year on year.
Net interest margin on average interest-bearing assets improved to 4,05% from
3,89%.
Non-interest revenue grew 10% year on year and represented 47,9% of total
revenue (June 2010: 46,2%).
With cost growth contained to 8% year on year, the Group`s cost-to-income
ratio improved to 54,8% (December 2010: 56,2%).
Loans and advances declined 1% year on year to R495 billion.
Credit losses decreased 22% to R2 902 million, resulting in a 1,18% credit
loss ratio.
Return on average equity (RoE) of 16,2% (June 2010: 15,0%).
Return on average risk-weighted assets of 2,23% and return on average assets
(RoA) of 1,31% (June 2010: 2,00% and 1,08% respectively).
Net asset value (NAV) per share grew 9% to 8 116 cents.
Core Tier 1 capital adequacy ratio rose to 12,8%, well above current
regulatory requirements.
Overview
The Group`s headline earnings increased 19% to R4 595 million (30 June 2010:
R3 862 million). HEPS also grew 19% to 641,3 cents (30 June 2010: 539,3
cents) and diluted HEPS increased by 19% to 638,5 cents (30 June 2010: 535,9
cents). The Group`s RoE improved to 16,2%, reflecting a higher RoA of 1,31%
(30 June 2010: 1,08%). An interim dividend of 292 cents per share was
declared, 30% higher than the prior period.
Improved non-interest revenue growth, lower credit losses, better cost
containment and a wider net interest margin were primary reasons for the
Group`s higher headline earnings. These drivers outweighed the impact of
lower loans and advances, and a slightly higher effective tax rate.
The 75% increase in Retail Banking`s headline earnings was the principal
driver of the Group`s growth, and Financial Services and Absa Business Bank
(ABB) both grew 6% while Absa Capital remained largely flat.
Operating environment
South Africa`s economy grew 4,8% in the first quarter of 2011 from 4,5% the
preceding quarter. Nonetheless, the recovery remains uneven. Household
expenditure growth accelerated to 5,2% quarter on quarter in the first
quarter, underpinned by strong real household income growth and interest
rates at three-decade lows. Fixed investments however, grew only 3,2% in the
first quarter from 1,5% the preceding quarter. Labour market conditions
remain challenging, with employment still below pre-crisis levels. Private
sector credit rose between 5% and 6,2% year on year during the period January
to May 2011. High levels of household indebtedness and challenging labour
market conditions are likely to leave the consumer vulnerable to rising
prices this year. Consumer price inflation rose from a cyclical low of 3,2%
year on year last September, to 5% in June this year. Critically, this
increase was driven by food and fuel price pressures, while core inflation
remained muted.
Group performance
Statement of financial position
The Group`s total assets of R716 billion at 30 June 2011 remained largely
unchanged from 30 June 2010. The substantial 42% growth in Absa`s statutory
liquid asset portfolio to R51 billion to strengthen liquidity offset lower
investments and loans and advances to banks.
Loans and advances to customers
Absa`s loans and advances to customers declined 1% year on year to R495
billion. Retail Banking`s loans and advances increased 1%, reflecting
sustained focus on risk appetite and pricing. Mortgages (including Commercial
Property Finance), which constituted 59% of total gross Group loans and
advances to customers, declined 1% year on year. Given Retail Banking`s
strategy to grow its proportion of unsecured loans, credit cards grew 6% year
on year and personal loans 15%. Restrained client demand also dampened ABB`s
loans and advances, which declined 1% year on year due to lower Commercial
Property Finance and instalment credit agreements. Although broadly unchanged
since 31 December 2010, Absa Capital`s loans and advances decreased 9% year
on year.
Deposits due to customers
Group deposits due to customers increased 11% to R398 billion from 30 June
2010, with sustained growth in targeted areas. Retail Banking`s deposits grew
5% year on year, with solid growth in cheque accounts, further entrenching
its leading market share in retail deposits. ABB and Absa Capital`s deposits
grew 10% and 17% year on year respectively and, in line with the Group`s
strategy to lengthen its funding, their fixed deposits increased by 19% and
20% respectively. The Group`s loans-to-deposits ratio declined to 90,6% from
95,5% at 30 June 2010.
Net asset value
NAV grew 9% year on year to R58 billion. The Group generated retained
earnings of R2,9 billion during the period. Absa`s NAV per share rose 9% year
on year to 8 116 cents (30 June 2010: 7 420 cents).
Capital to risk-weighted assets
The Group`s risk-weighted assets increased 3% year on year, largely due to
recalibrating its credit models in the second half of 2010. Risk-weighted
assets decreased 7% on an annualised basis from 31 December 2010, reflecting
flat assets and optimisation initiatives. Absa maintained its healthy capital
levels, which remain above regulatory requirements and board targets. At 30
June 2011, Absa Group`s Core Tier 1 and Tier 1 capital adequacy ratios were
12,8% (30 June 2010: 11,9%) and 13,9% (30 June 2010: 13,1%) respectively. The
Group`s total capital ratio increased to 16,7% (30 June 2010: 15,8%). Absa
Bank`s Core Tier 1 ratio improved to 11,8% (30 June 2010: 10,7%) and its
total ratio was 16,0% (30 June 2010: 14,9%). Given these strong capital
levels, the Group reduced its dividend cover to 2,2 times from 2,4 times (30
June 2010).
Statement of comprehensive income
Net interest income
Net interest income increased 3% to R11 622 million (30 June 2010: R11 293
million) despite loans declining year on year and a 1,2% lower average prime
interest rate during the period. The rise reflects Absa`s effective hedging
strategy, better new business pricing and a change in its deposit mix towards
higher margin products. These factors outweighed the negative endowment
effect on capital and deposits, competitive pricing pressures on deposits, as
well as the cost of lengthening funding and increasing Absa`s surplus liquid
assets position. Consequently, the Group`s net interest margin on average
interest-bearing assets widened to 4,05% from 3,89%.
Credit losses
Absa`s credit losses declined 22% to R2 902 million (30 June 2010: R3 704
million). Retail Banking, where credit losses also decreased 22% year on year
to R2 333 million, accounted for most of the improvement. Early cycle
delinquencies improved as lower interest rates helped consumers to recover,
and the benefits of effective collections management and sound credit policy
became evident. ABB`s credit losses declined 15% year on year to R533
million.
The Group`s credit loss ratio improved to 1,18% from 1,50% for the six months
ended 30 June 2010 and a peak of 1,86% two years ago. Retail Banking`s credit
loss ratio declined to 1,46% (30 June 2010: 1,90%), as all major categories
improved, particularly Card. ABB`s credit loss ratio fell to 0,95% from 1,12%
the previous year.
As management expected, however, the Group`s credit loss ratio rose from the
low 0,91% for the six months ended 31 December 2010. This increase reflects
seasonality, declining real property prices and some small book sales in the
base. Absa`s non-performing loan coverage remained stable at 29,0% from 31
December 2010.
Non-performing loans as a percentage of loans and advances was flat at 7,7%
(31 December 2010: 7,7%, 30 June 2010: 7,6%). They were also flat in absolute
terms, despite smaller inflows. Absa`s loans subject to debt counselling fell
to R4,4 billion from R7 billion at 31 December 2010, and R9,6 billion at 30
June 2010, due to strong collection efforts.
Non-interest income
Absa`s non-interest income increased 10% to R10 680 million (30 June 2010: R9
713 million), owing to growth in targeted areas. Net fee and commission
income, which constituted 70% of non-interest income, grew 7% to R7 519
million (30 June 2010: R7 059 million), due to price increases and volume
growth. Retail Banking`s net fee and commission income rose 4% year on year.
ABB`s net fees and commissions demonstrated good momentum growing 8% year on
year. Net revenue from Financial Services, excluding investment returns on
shareholder funds, increased 15% year on year. Absa Capital`s gains and
losses from banking and trading activities increased to R1 404 million (30
June 2010: R1 151 million), with a good performance from core client flow
business in Markets. The Group sold its stake in Visa Incorporated during the
period, recording a R30 million gain compared to a R116 million loss in the
comparative period.
Operating expenses
Absa`s operating expenses grew 8% to R12 218 million (30 June 2010: R11 264
million), reflecting firm cost containment while continuing to invest in
targeted growth opportunities.
Staff costs, which constituted 54% of total costs, increased 13% to R6 623
million (30 June 2010: R5 875 million), due to salary increases and higher
incentives from deferrals and the Group`s improved performance. Containing
discretionary spend was a priority during the period under review. The
Group`s cost-to-income ratio improved to 54,8% from 56,2% at 31 December
2010, although it increased slightly year on year.
Taxation
The Group`s taxation charge grew 22% year on year to R1 841 million, as the
effective tax rate increased slightly to 27,6% from 26,8%. The higher rate
was mainly due to a lower proportion of exempt income and secondary tax on
companies.
Segmental performance
Retail Banking
Headline earnings increased 75% to R1 737 million (2010: R993 million), due
to 7% revenue growth, 22% lower credit losses and cost growth being contained
to 6% year on year. Retail Banking`s credit loss ratio improved materially to
1,46% from 1,90%, as a result of lower early stage delinquencies and
successful collections strategies. Controlled operating expenses growth
improved Retail Banking`s cost-to-income ratio to 57,3% (30 June 2010:
58,2%). All the business segments within Retail Banking increased their
headline earnings year on year. Wider net interest margins and lower credit
losses produced a R380 million positive swing in earnings from secured
lending. Solid revenue and low cost growth, as well as 38% lower credit
losses, saw Personal Loans and Card`s combined earnings grow 47% year on
year. Retail Banking`s return on regulatory capital improved notably to 25,4%
from 13,4%.
Absa Business Bank
Headline earnings increased 6% to R1 378 million (30 June 2010: R1 296
million), despite loans declining 1% year on year and a lower contribution
from the listed equity property portfolio. Net interest income grew 5%,
reflecting 10% deposit growth and higher new loan pricing for risk, which
outweighed lower loans and deposit margin pressure from lower average
interest rates. ABB`s credit losses improved 15% year on year. Fee income
increased 8%, driven by ABB`s enhanced transactional capabilities and reduced
revenue leakage. Operating expenses grew 7% to R3 229 million (30 June 2010:
R3 010 million), as the business continued to invest in growth initiatives
while containing other costs. ABB`s return on regulatory capital decreased to
19,6% (30 June 2010: 22,4%).
Absa Capital
Absa Capital`s headline earnings were flat at R832 million (30 June 2010:
R831 million). Markets revenue increased by 3% despite a reduced African
trading contribution and decreased volatility reducing client balance sheet
management activities. Investment Banking revenue decreased 23% year on
year, with exceptional growth in fee business being offset by a substantial
decline of 33% in the margin business. Private Equity earnings continued to
improve, given positive realisations, stable valuations and lower funding
costs. Wealth`s net revenue increased by 46%, reflecting lower credit losses,
and growth in fee-driven customer balances. Costs grew 9% year on year. Absa
Capital`s return on regulatory capital increased to 18,8% (30 June 2010:
17,6%). Given regulatory capital changes in the near future, efficient
capital management remains a focus.
Financial Services
Net operating income increased 16% to R820 million (30 June 2010: R708
million). Financial Services continued to achieve strong topline growth with
Life and Insurance gross premiums growing 22% and 11% respectively. The
revenue in the non-insurance businesses increased by 16% during the period.
Assets under management increased 17% to R171 billion. However, a 32%
decrease in investment returns on shareholder funds due to low interest rates
and muted equity markets, dampened headline earnings growth to 6%. The RoE
achieved was 33,3%, slightly lower than the 35,6% for the six months ended 30
June 2010, due to capital retained in the business for the Africa expansion
programme.
Prospects
In our view, consumer vulnerability and the nature of the economic recovery
are important factors in considering the pace and magnitude of the interest
rate cycle. Given the indications of a still uneven economic recovery and a
vulnerable consumer, the South African Reserve Bank is only expected to raise
interest rates in the first quarter of 2012, to allow the recovery time to be
sustainable. As a baseline, the South African economy is likely to grow 3,5%
to 4% this year. However, recent strike action and global uncertainties may
reduce this forecast.
Despite some indications of an improving economy, the operating environment
is expected to remain challenging. Sector revenue growth is expected to
remain subdued, particularly given moderate credit growth. The Group`s One
Absa strategy is, however, already improving non-interest revenue growth in
target areas. Absa should also continue to benefit from its hedging strategy
into 2012. Credit losses should continue to improve year on year, although at
a far slower pace than in 2010. The focus remains on containing costs,
maintaining strong capital levels and working with Barclays to capture the
growth opportunities that the combined franchises offer in the rest of
Africa.
Basis of presentation and changes in accounting policies
The Group`s results have been prepared in accordance with International
Financial Reporting Standards (IFRS). The disclosures comply with
International Accounting Standard (IAS) 34.
The accounting policies applied in preparing the financial results for the
period under review are the same as the accounting policies in place for the
year ended 31 December 2010.
Reclassifications
The Group has reclassified certain collaterals to "Loans and advances to
banks" and "Loans and advances to customers" to reflect the true nature of
these trades as collateralised loans. This has resulted in comparatives being
reclassified for June 2010 and December 2010.
On behalf of the board
G Griffin M Ramos
Group Chairman Group Chief Executive
Johannesburg
2 August 2011
Declaration of interim ordinary dividend number 50
Shareholders are advised that an interim ordinary dividend of 292 cents per
ordinary share was declared today, Tuesday, 2 August 2011, for the six-month
period ended 30 June 2011. The interim ordinary dividend is payable to
shareholders recorded in the register of members of the Company at the close
of business on Friday, 26 August 2011. The directors of Absa Group confirm
that the Group will satisfy the solvency and liquidity test immediately after
completion of the dividend distribution.
In compliance with the requirements of Strate, the electronic settlement and
custody system used by the JSE Limited, the following salient dates for the
payment of the dividend are applicable:
Last day to trade cum dividend Friday, 19 August 2011
Shares commence trading ex dividend Monday, 22 August 2011
Record date Friday, 26 August 2011
Payment date Monday, 29 August 2011
Share certificates may not be dematerialised or rematerialised between
Monday, 22 August 2011 and Friday, 26 August 2011, both dates inclusive. On
Monday, 29 August 2011, the dividend will be electronically transferred to
the bank accounts of certificated shareholders who use this facility. In
respect of those who do not, cheques dated 29 August 2011 will be posted on
or about that date. The accounts of those shareholders who have
dematerialised their shares (which are held at their participant or broker)
will be credited on Monday, 29 August 2011.
On behalf of the board
S Martin
Group Secretary
Johannesburg
2 August 2011
Absa Group Limited is a company domiciled in South Africa. Its registered
office is the 7th floor, Absa Towers West, 15 Troye Street, Johannesburg,
2001.
Absa Group Limited
Administrative information
Absa Group Limited
Registration number: 1986/003934/06
Authorised financial services and
registered credit provider (NCRCP7)
Incorporated in the Republic of South Africa
ISIN: ZAE000067237
JSE share code: ASA
Issuer code: AMAGB
Registered office
7th Floor, Absa Towers West
15 Troye Street
Johannesburg, 2001
Postal address: PO Box 7735
Johannesburg, 2000
Telephone: (+27 11) 350 4000
Telefax: (+27 11) 350 4009
Email: groupsec@absa.co.za
Board of directors
Group independent non-executive directors
C Beggs, BP Connellan, SA Fakie, G Griffin (Chairman), MJ Husain, TM Mokgosi-
Mwantembe,
EC Mondlane Jr(1), TS Munday, SG Pretorius, BJ Willemse
Group non-executive directors
YZ Cuba, BCMM de Vitry d`Avaucourt(2), AP Jenkins3, R Le Blanc(3)
Group executive directors
DWP Hodnett (Financial Director), M Ramos (Chief Executive),
LL von Zeuner (Deputy Chief Executive)
(1)Mozambican (2)French (3)British
Transfer secretaries
South Africa
Computershare Investor Services
Proprietary Limited
70 Marshall Street
Johannesburg, 2001
Postal address: PO Box 61051
Marshalltown, 2107
Telephone: (+27 11) 370 5000
Telefax: (+27 11) 370 5271/2
ADR depositary
BNY Mellon
101 Barclay Street, 22W
New York, NY, 10286
Telephone: +1 212 815 2248
Sponsor
J.P. Morgan Equities Limited
No 1 Fricker Road, Cnr. Hurlingham Road,
Illovo, Johannesburg, 2196
Postal address: Private Bag X9936
Sandton, 2146
Telephone: (+27 11) 507 0300
Telefax: (+27 11) 507 0503
Auditors
PricewaterhouseCoopers Inc.
Ernst & Young Inc.
Shareholder contact information
Shareholder and investment queries about the
Absa Group should be directed to the following areas:
Group Investor Relations
AM Hartdegen (Head of Investor Relations)
Telephone: (+27 11) 350 5926
Telefax: (+27 11) 350 5924
E-mail: Investorrelations@absa.co.za
Group Secretary
S Martin
Email: sarita.martin@absa.co.za
Other Contacts
Group Media Relations
J Dludlu (Head: Group Communication)
Telephone: (+27 11) 350 3221
Group Finance
JP Quinn (Group Financial Controller)
Telephone: (+27 11) 350 7565
Website address
www.absa.co.za
Date: 02/08/2011 08:00:17 Supplied by www.sharenet.co.za
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