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PROFIT AND DIVIDEND ANNOUNCEMENT UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS
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)
ABSA GROUP LIMITED: PROFIT AND DIVIDEND ANNOUNCEMENT
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE SIX
MONTHS ENDED 30 JUNE 2012
CONSOLIDATED SALIENT FEATURES
30 June 31 December
2012 2011(1) Change 2011(1)
(Unaudited) (Unaudited) % (Audited)
Statement of comprehensive income(Rm)
Headline earnings (2) 4 332 4 595 (6) 9 719
Profit attributable to ordinary
equity holders of the Group 4 189 4 581 (9) 9 674
Statement of financial position
Total assets (Rm) 808 806 723 261 12 786 719
Loans and advances to customers (Rm) 506 661 504 199 0 504 924
Deposits due to customers (Rm) 457 880 405 673 13 440 960
Loans-to-deposits ratio (%)(3) 86,9 91,0 88,4
Off-statement of financial position (Rm)
Assets under management and
administration 223 247 205 309 9 213 186
Financial services (4) 171 179 170 873 0 167 669
Money market 58 182 71 330 (18) 57 798
Non-money market 112 997 99 543 14 109 871
Financial performance (%)
Return on average equity (3) 13,8 16,2 16,4
Return on average assets (5) 1,11 1,29 1,32
Return on average risk-weighted assets
(5) 2,08 2,23 2,35
Operating performance (%)
Net interest margin on average
interest-bearing assets (5) 3,94 3,99 4,11
Impairment losses on loans and
advances as % of average loans and
advances to customers (5) 1,59 1,16 1,01
Non-performing loans as a % of loans and
advances to customers(5) 6,4 7,6 6,9
Non-interest income as % of total
operating income (3) 48,4 47.9 46,7
Cost-to-income ratio (3) 54,9 54,8 55,5
Effective tax rate, excluding indirect
taxation 29,0 27,6 28,3
Share statistics (million)
Number of ordinary shares in issue 718,2 718,2 718,2
Weighted average number of ordinary
shares in issue 717,5 716,5 716,8
Diluted weighted average number of
ordinary shares in issue 719,3 719,7 719,9
Share statistics (cents)
Headline earnings per share 603,8 641,3 (6) 1 355,9
Diluted headline earnings per share 602,3 638,5 (6) 1 350,0
Basic earnings per share 583,8 639,4 (9) 1 349,6
Diluted earnings per share 582,4 636,5 (9) 1 343,8
Dividends per ordinary share
relating to income for the period/year 315 292 8 684
Dividend cover (times) (3) 1,9 2,2 2,0
Net asset value per share (3) 8 950 8 116 10 8 690
Tangible net asset value per share (3) 8 655 7 856 10 8 392
Capital adequacy (%)(5)
Absa Group 16,9 16,7 16,7
Absa Bank 16,6 16,0 16,2
Notes
(1) Comparatives have been reclassified. These reclassifications are unaudited.
Refer to the reclassification note 21.
(2) After allowing for R140 million (30 June 2011: R143 million; 31 December 2011:
R284 million) profit attributable to preference equity holders of the Group.
(3) These ratios have been calculated by management based on extracted audited
information contained in the audited annual financial statements for 31 December
2011.
(4) The segmentation of assets under management and administration is unaudited.
(5) These ratios are unaudited for 31 December 2011.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 31 December
2012 2011(1) 2011(1)
(Unaudited) (Unaudited) Change (Audited)
Note Rm Rm % Rm
Assets
Cash, cash balances and balances with
central banks 25 620 24 616 4 26 997
Statutory liquid asset portfolio 60 061 50 999 18 57 473
Loans and advances to banks 58 044 31 086 87 57 499
Trading portfolio assets 96 768 57 607 68 84 623
Hedging portfolio assets 4 868 3 564 37 4 299
Other assets 20 112 14 878 35 14 731
Current tax assets 703 191 >100 288
Non-current assets held for sale 1 6 369 (98) 35
Loans and advances to customers 2,3,4 506 661 504 199 0 504 924
Reinsurance assets 1 010 773 31 1 009
Investment securities 21 530 22 298 (3) 21 182
Investments in associates and joint
ventures 373 407 (8) 420
Goodwill and intangible assets 2 115 1 864 13 2 135
Investment properties 2 699 2 695 0 2 839
Property and equipment 7 781 7 363 6 7 996
Deferred tax assets 455 352 29 269
Total assets 808 806 723 261 12 786 719
Liabilities
Deposits from banks 25 827 17 365 49 38 339
Trading portfolio liabilities 60 446 35 930 68 55 960
Hedging portfolio liabilities 3 251 1 351 >100 2 456
Other liabilities 30 071 15 885 89 14 695
Provisions 1 136 1 343 (15) 1 710
Current tax liabilities 247 486 (49) 267
Deposits due to customers 5 457 880 405 673 13 440 960
Debt securities in issue 6 125 127 148 468 (16) 130 262
Liabilities under investment contracts 15 427 14 478 7 15 233
Policyholder liabilities under
insurance contracts 3 239 2 807 15 3 183
Borrowed funds 7 14 268 13 786 3 14 051
Deferred tax liabilities 1 619 1 456 11 1 198
Total liabilities 738 538 659 028 12 718 314
Equity
Capital and reserves
Attributable to ordinary equity
holders of the Group:
Share capital 1 434 1 434 0 1 434
Share premium 4 572 4 562 0 4 676
Retained earnings 55 502 50 876 9 53 813
Other reserves 2 725 1 416 92 2 385
64 233 58 288 10 62 308
Non-controlling interest – ordinary
shares 1 391 1 301 7 1 453
Non-controlling interest – preference
shares -
4 644 4 644 4 644
Total equity 70 268 64 233 9 68 405
Total liabilities and equity 808 806 723 261 12 786 719
Note
(1)Comparatives have been reclassified. These reclassifications are unaudited. Refer to
the reclassification note 21.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Note Rm Rm % Rm
Net interest income 11 909 11 622 2 24 429
Interest and similar income 8.1 25 807 24 682 5 51 221
Interest expense and similar charge 8.2 (13 898) (13 060) (6) (26 792)
Impairment losses on loans and advances3 (4 020) (2 902) (39) (5 081)
Net interest income after impairment
losses on loans and advances 7 889 8 720 (10) 19 348
Non-interest income 11 174 10 680 5 21 403
Net fee and commission income 7 542 7 519 0 15 293
Fee and commission income 9.1 8 785 8 500 3 17 422
Fee and commission expense 9.2 (1 243) (981) (27) (2 129)
Net insurance premium income 2 757 2 481 11 5 209
Net insurance claims and benefits
paid (1 360) (1 263) (8) (2 517)
Changes in investment contract and
insurance contract liabilities (618) (186) >(100) (914)
Gains and losses from banking and
trading activities 9.3 1 868 1 510 24 2 594
Gains and losses from investment
activities 9.4 641 264 >100 966
Other operating income 344 355 (3) 772
Operating profit before operating
expenditure 19 063 19 400 (2) 40 751
Operating expenditure (13 011) (12 761) (2) (26 581)
Operating expenses 10.1 (12 666) (12 218) (4) (25 458)
Other impairments 10.2 (11) (37) 70 (52)
Indirect taxation (334) (506) 34 (1 071)
Share of post-tax results of associates
and joint ventures 35 28 25 40
Operating profit before income tax 6 087 6 667 (9) 14 210
Taxation expense (1 767) (1 841) 4 (4 026)
Profit for the period/year 4 320 4 826 (10) 10 184
Other comprehensive income
Foreign exchange differences on
translation of foreign operations 32 75 (57) 522
Movement in cash flow hedging reserve 286 (855) >100 (237)
Fair value gains/(losses) arising
during the period/year 1 409 (76) >100 1 972
Amount removed from other
comprehensive income and recognised in
the profit and loss component of the
statement of comprehensive income (1 012) (1 111) 9 (2 300)
Deferred tax (111) 332 >(100) 91
Movement in available-for-sale reserve 370 (30) >100 (17)
Fair value gains/(losses) arising
during the period/year 510 (60) >100 (58)
Amortisation of government bonds -
release to the profit and loss
component of the statement of
comprehensive income 5 18 (72) 20
Deferred tax (145) 12 >(100) 21
Movement in retirement benefit asset and
liabilities 27 12 >100 (51)
Increase/(decrease) in retirement
benefit surplus 46 17 >100 (66)
Increase in retirement benefit deficit - - - (5)
Deferred tax (19) (5) >(100) 20
Total comprehensive income for the
period/year 5 035 4 028 25 10 401
Profit attributable to:
Ordinary equity holders of the Group 4 189 4 581 (9) 9 674
Non-controlling interest – ordinary
shares (9) 102 >(100) 226
Non-controlling interest – preference
shares 140 143 (2) 284
4 320 4 826 (10) 10 184
Total comprehensive income attributable
to:
Ordinary equity holders of the Group 4 909 3 771 30 9 791
Non-controlling interest – ordinary
shares (14) 114 >(100) 326
Non-controlling interest – preference
shares 140 143 (2) 284
5 035 4 028 25 10 401
Earnings per share:
Basic earnings per share(cents) 583,8 639,4 (9) 1 349,6
Diluted earnings per share(cents) 582,4 636,5 (9) 1 343,8
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended
30 June 2012
(Unaudited)
Capital and
reserves
attributable Non- Non-
to ordinary controlling controlling
equity interest- interest-
holders of ordinary preference Total
the Group shares shares equity
Rm Rm Rm Rm
Balance at the beginning of the
year 62 308 1 453 4 644 68 405
Total comprehensive income for the
period 4 909 (14) 140 5 035
Profit for the period 4 189 (9) 140 4 320
Other comprehensive income 720 (5) - 715
Dividends paid during the period (2 810) (103) (140) (3 053)
Share buy-back in respect of
equity-settled share-based payment
schemes (192) - - (192)
Elimination of the movement in
treasury shares held by Absa Group
Limited Share Incentive Trust 8 - - 8
Elimination of the movement in
treasury shares held by Group
subsidiaries (18) - - (18)
Movement in share-based payment
reserve 28 - - 28
Transfer from share-based payment
reserve (98) - - (98)
Transfer to share capital, share
premium and retained earnings 98 - - 98
Value of employee services 28 - - 28
Movement in general credit risk
reserve - - - -
Transfer from general credit risk
reserve (2) - - (2)
Transfer to retained earnings 2 - - 2
Movement in insurance contingency
reserve (1) - - - -
Transfer from insurance
contingency reserve 324 - - 324
Transfer to retained earnings (324) - - (324)
Share of post-tax results of
associates and joint ventures - - - -
Transfer to associates and joint
ventures reserve 35 - - 35
Transfer from retained earnings (35) - - (35)
Movement in foreign insurance
subsidiary regulatory reserve (2) - - - -
Transfer to insurance subsidiary
regulatory reserve 8 - - 8
Transfer from retained earnings (8) - - (8)
Increase in the interest of the
non-controlling equity holders - 55 - 55
Balance at the end of the period 64 233 1 391 4 644 70 268
Notes
(1) This reserve is no longer required due to a change in the Financial Services
Board (FSB) regulations.
(2) Under the terms of the foreign insurance subsidiary’s legislation, the foreign
insurance subsidiary regulatory reserve is calculated on the basis of the
following minimum percentages of profit recorded in each period/year for that
subsidiary:
- 20% until the value of reserves represents half the minimum capital required
under the foreign insurance subsidiary’s legislation.
- 10% from the time the amount specified in the preceding paragraph, has been
attained.
Six months ended
30 June 2011
(Unaudited)
Capital and
reserves
attributable Non- Non-
to ordinary controlling controlling
equity interest- interest-
holders of ordinary preference Total
the Group shares shares equity
Rm Rm Rm Rm
Balance at the beginning of the
year 56 290 1 215 4 644 62 149
Total comprehensive income for the
period 3 771 114 143 4 028
Profit for the period 4 581 102 143 4 826
Other comprehensive income (810) 12 - (798)
Dividends paid during the period (1 650) (95) (143) (1 888)
Share buy-back in respect of
equity-settled share-based payment
schemes (247) - - (247)
Elimination of the movement in
treasury shares held by Absa Group
Limited Share Incentive Trust 18 - - 18
Elimination of the movement in
treasury shares held by Group
subsidiaries 71 - - 71
Share-based payments for the
period 35 - - 35
Transfer from share based payment (131) - - (131)
Transfer to share premium
reserve 131 131
Value of employees 35 - - 35
Movement in general credit risk
reserve - - - -
Transfer from general credit risk
reserve (14) - - (14)
Transfer to retained earnings 14 - - 14
Movement in insurance contingency
reserve - - - -
Transfer to insurance
contingency reserve 2 - - 2
Transfer from retained earnings (2) - - (2)
Share of post-tax results of
associates and joint ventures - - - -
Transfer to associates’ and
joint ventures’ reserve 28 - - 28
Transfer from retained earnings (28) - - (28)
Disposal of associates and joint
ventures - release of reserves - - - -
Transfer to associates’ and
joint ventures’ reserve 13 - - 13
Transfer from retained earnings (13) - - (13)
Non-controlling interest arising
from business combinations - 67 - 67
Balance at the end of the period 58 288 1 301 4 644 64 233
Year ended
31 December 2011
(Audited)
Capital and
reserves
attributable Non- Non-
to ordinary controlling controlling
equity interest- interest-
holders of ordinary preference Total
the Group shares shares equity
Rm Rm Rm Rm
Balance at the beginning of the year 56 290 1 215 4 644 62 149
Total comprehensive income for the
year 9 791 326 284 10 401
Profit for the year 9 674 226 284 10 184
Other comprehensive income 117 100 - 217
Dividends paid during the year (3 744) (173) (284) (4 201)
Share buy-back in respect of equity-
settled share-based payment schemes (281) - - (281)
Elimination of the movement in
treasury shares held by Absa Group
Limited Share Incentive Trust 28 - - 28
Elimination of the movement in
treasury shares held by Group
subsidiaries 166 - - 166
Movement in the share-based payment
reserve 58 - - 58
Transfer from share based-payment
reserve (174) - - (174)
Transfer to share capital and share
premium 174 - - 174
Value of employee services 58 - - 58
Movement in general credit risk
reserve - - - -
Transfer from general credit risk
reserve (48) - - (48)
Transfer to retained earnings 48 - - 48
Movement in insurance contingency
reserve - - - -
Transfer to insurance contingency
reserve 19 - - 19
Transfer from retained earnings (19) - - (19)
Share of post-tax results of
associates and joint ventures - - - -
Transfer to associates’ and joint
ventures’ reserve 40 - - 40
Transfer from retained earnings (40) - - (40)
Disposal of associates and joint
ventures - release of reserves - - - -
Transfer to associates’ and joint
ventures’ reserve 13 - - 13
Transfer from retained earnings (13) - - (13)
Increase in the interest of non-
controlling equity holders - 21 - 21
Non-controlling interest arising
from business combinations - 64 - 64
Balance at the end of the year 62 308 1 453 4 644 68 405
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Year ended
30 June 31 December
2012 2011(1) 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Net cash (utilised)/generated from
operating activities (2 550) 2 210 >(100) 8 305
Net cash generated/(utilised)from
investing activities 1 721 151 >100 (511)
Net cash utilised in financing
activities (3 160) (2 022) (56) (4 143)
Net (decrease)/increase in cash and
cash equivalents (3 989) 339 >(100) 3 651
Cash and cash equivalents at the
beginning of the year 1 10 068 6 417 57 6 417
Effect of exchange rate movements on
cash and cash equivalents 1 1 0 0
Cash and cash equivalents at the end
of the period/year 2 6 080 6 757 (10) 10 068
NOTES
1. Cash and cash equivalents at the
beginning of the year
Cash, cash balances and balances
with central banks 7 893 4 939 60 4 939
Loans and advances to banks 2 175 1 478 47 1 478
10 068 6 417 57 6 417
2. Cash and cash equivalents at the
end of the period/year
Cash, cash balances and balances
with central banks 4 776 5 234 (9) 7 893
Loans and advances to banks 1 304 1 523 (14) 2 175
6 080 6 757 (10) 10 068
Note
(1) Comparatives have been reclassified. These reclassifications are unaudited. Refer
to the reclassification note 21.
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. NON-CURRENT ASSETS HELD FOR SALE
The Bank, through its Corporate Real Estate business segment, concluded contracts for
the sale of several properties during 2011, with transfer of the properties due to take
place in the second half of 2012. Two of the properties situated in Klerksdorp and
Amanzimtoti, classified as non-current assets held for sale as at 31 December 2011,
remain in this category at the reporting date, pending transfer.
On 30 June 2011, the Group, through its Corporate, Investment Banking and Wealth (CIBW)
and Retail and Business Banking (RBB) segments, transferred its investment in Sekunjalo
Investments Limited, with a carrying value of R43 million, to non-current assets held
for sale. A portion of this investment was subsequently sold in July 2011 and the
remaining portion transferred to investment securities.
The Group, through its CIBW segment, also transferred certain investments designated at
fair value through profit or loss with a carrying value of R326 million to non-current
assets held for sale on 30 June 2011. These investments were subsequently sold in
August 2011.
2. LOANS AND ADVANCES TO CUSTOMERS
30 June 31 December
2012 2011(1) 2011(1)
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Cheque accounts 36 576 34 823 5 33 398
Corporate overdrafts and specialised
finance loans 8 126 8 252 (2) 10 681
Credit cards 22 686 21 408 6 21 579
Foreign currency loans 9 591 5 981 60 9 628
Instalment credit agreements 58 509 56 698 3 57 385
Gross advances 70 157 67 000 5 68 540
Unearned finance charges (11 648) (10 302) (13) (11 155)
Reverse repurchase agreements 2 045 1 616 27 1 613
Loans to associates and joint ventures 8 718 6 190 41 7 909
Microloans 1 876 2 075 (10) 1 922
Mortgages 287 572 300 558 (4) 292 463
Other advances(2) 3 802 4 715 (19) 4 618
Overnight finance 14 360 8 646 66 12 320
Personal and term loans 29 863 30 364 (2) 29 925
Preference shares 6 873 6 975 (1) 6 958
Wholesale overdrafts 29 093 29 400 (1) 26 656
Gross loans and advances to customers 519 690 517 701 0 517 055
Impairment losses on loans and advances
(Refer to note 3) (13 029) (13 502) 4 (12 131)
506 661 504 199 0 504 924
Notes
(1) Comparatives have been reclassified. These reclassifications are unaudited. Refer to
the reclassification note 21.
(2) Include customer liabilities under acceptances, working capital solutions and
collateralised loans.
3. IMPAIRMENT LOSSES ON LOANS AND ADVANCES
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Balance at the beginning of the year 12 131 13 902 (13) 13 902
Amounts written off during the
period/year (2 898) (3 073) 6 (6 493)
Foreign exchange differences 3 6 (50) 1
Interest on impaired assets (refer to
note 8.1) (548) (589) 7 (1 173)
8 688 10 246 (15) 6 237
Impairments raised during the
period/year 4 341 3 256 33 5 894
Balance at the end of the period/year 13 029 13 502 (4) 12 131
Comprising:
Identified impairments 12 284 12 599 (3) 11 306
Unidentified impairments 745 903 (17) 825
13 029 13 502 (4) 12 131
Six months ended Year ended
30 June 31
December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
3.1 Statement of comprehensive income
charge for impairment losses on loans
and advances
Impairment raised during the period/year 4 341 3 256 33 5 894
Identified impairments 4 403 3 311 33 6 015
Unidentified impairments (62) (55) (13) (121)
Recoveries of loans and advances
previously written off (321) (354) 9 (813)
4 020 2 902 39 5 081
4. NON-PERFORMING LOANS
30 June 2012
Expected
recoveries
and fair Total
Outstanding value of Net identified
balance collateral exposure impairment
Rm Rm Rm Rm
Retail and Business Banking (RBB) 32 229 21 934 10 295 10 295
Retail Markets 27 742 19 169 8 573 8 573
Cheque accounts 206 72 134 134
Credit cards 1 937 700 1 237 1 237
Instalment credit agreements 2 110 953 1 157 1 157
Microloans 389 131 258 258
Mortgages 21 742 16 823 4 919 4 919
Personal loans 1 358 490 868 868
Business Markets 4 487 2 765 1 722 1 722
Cheque accounts 947 559 388 388
Commercial asset finance 829 312 517 517
Commercial property finance 1 865 1 273 592 592
Term loans 846 621 225 225
CIBW 800 360 440 440
Non-performing loans 33 029 22 294 10 735 10 735
Non-performing loans ratio (%) 6,4
30 June 2011
Expected
recoveries
and fair Total
Outstanding value of Net identified
balance collateral exposure impairment
Rm Rm Rm Rm
RBB 38 536 27 538 10 998 10 998
Retail Markets 32 991 23 723 9 268 9 268
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
Business Markets 5 545 3 815 1 730 1 730
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
CIBW 722 341 381 381
Non-performing loans 39 258 27 879 11 379 11 379
Non-performing loans ratio (%)(1) 7,6
Note
(1) Comparatives have been reclassified. These reclassifications are unaudited. Refer
to the reclassification note 21.
31 December 2011
Expected
recoveries
and fair Total
Outstanding value of Net identified
balance collateral exposure impairment
Rm Rm Rm Rm
RBB 34 692 25 254 9 438 9 438
Retail Markets 30 142 22 307 7 835 7 835
Cheque accounts 184 52 132 132
Credit cards 2 013 713 1 300 1 300
Instalment credit agreements 2 645 1 370 1 275 1 275
Microloans 348 76 272 272
Mortgages 23 590 19 558 4 032 4 032
Personal loans 1 362 538 824 824
Business Markets 4 550 2 947 1 603 1 603
Cheque accounts 749 432 317 317
Commercial asset finance 932 395 537 537
Commercial Property finance 1 894 1 354 540 540
Term loans 975 766 209 209
CIBW 844 405 439 439
Non-performing loans 35 536 25 659 9 877 9 877
Non-performing loans ratio (%) 6,9
5. DEPOSITS DUE TO CUSTOMERS
30 June 31 December
2012 2011(1) 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Call deposits 47 553 55 206 (14) 55 783
Cheque account deposits 139 671 124 667 12 134 505
Credit card deposits 1 823 1 800 1 1 884
Fixed deposits 122 755 120 620 2 125 273
Foreign currency deposits 9 305 8 549 9 8 947
Notice deposits 47 083 12 133 >100 28 500
Other deposits (2) 2 161 3 672 (41) 2 771
Repurchase agreements with non-banks 12 432 10 044 24 8 734
Savings and transmission deposits 75 097 68 982 9 74 563
457 880 405 673 13 440 960
Notes
(1)Comparatives have been reclassified. These reclassifications are unaudited. Refer
to the reclassification note 21.
(2)Include partnerships contributions received, deposits due on structured deals,
preference investments on behalf of customers and unclaimed deposits
6. DEBT SECURITIES IN ISSUE
30 June 31
December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Abacas – commercial paper issued and
floating rate notes - 1 553 (100) -
Credit-linked notes 10 169 10 952 (7) 8 976
Floating rate notes 65 322 69 551 (6) 69 553
Liabilities arising from securitised
special purpose entities(SPEs) 4 219 4 216 0 4 218
Negotiable certificates of deposit 21 372 45 583 (53) 30 214
Promissory notes 1 316 1 498 (12) 1 550
Structured notes and bonds 1 253 1 295 (3) 1 451
Senior notes 21 476 13 820 55 14 300
125 127 148 468 (16) 130 262
7. 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).
30 June 31
December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
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 JIBAR + 2,10% 3 May 2022 400 400 - 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 2019 3 000 3 000 - 3 000
5,50% 7 December 2028 1 500 1 500 - 1 500
Accrued interest 1 339 1 007 33 1 157
Fair value adjustment 318 168 89 283
14 268 13 786 3 14 051
8. NET-INTEREST INCOME
Six months ended Year ended
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
8.1 Interest and similar income
Interest and similar income is earned
from:
Cash, cash balances and balances with
central banks 81 71 14 159
Fair value adjustments on hedging
instruments 26 1 049 (98) 1 063
Investment securities 112 194 (42) 390
Loans and advances to banks 391 222 77 991
Loans and advances to customers 22 324 21 622 3 43 852
Cheque accounts 1 427 1 473 (3) 2 947
Corporate overdrafts and
specialised finance loans 357 181 97 664
Credit cards 1 592 1 468 8 2 991
Foreign currency loans 124 97 28 177
Instalment credit agreements 2 788 2 822 (1) 5 577
Interest on impaired financial
assets (refer to note 3) 548 589 (7) 1 173
Loans to associates and joint 232
ventures 207 12 417
Microloans 247 280 (12) 544
Mortgages 10 684 11 038 (3) 22 062
Other advances(1) 666 43 >100 412
Overnight finance 397 345 15 584
Personal and term loans 1 871 1 793 4 3 649
Preference shares 259 307 (16) 619
Wholesale overdrafts 1 132 979 16 2 036
Other interest 184 19 >100 484
Statutory liquid asset portfolio 2 689 1 505 79 4 282
25 807 24 682 5 51 221
Note
(1)Include items such as interest on factored debtors’ books.
Six month ended Year ended
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
8.2 Interest expense and similar
charges
Interest expense and similar charges
are paid on:
Borrowed funds 708 613 15 1 350
Debt securities in issue 4 295 5 009 (14) 9 602
Deposits due to customers 8 900 7 137 25 15 636
Call deposits 1 446 1 568 (8) 3 082
Cheque account deposits 1 610 1 384 16 2 761
Credit card deposits 5 5 0 10
Fixed deposits 3 481 3 439 29 6 315
Foreign currency deposits 40 44 (9) 102
Notice deposits 1 061 205 >100 777
Other deposit due to customers 140 (515) (39) 494
Savings and transmission deposits 1 117 1 007 11 2 095
Deposits from banks 229 178 29 411
Call deposits 164 160 3 309
Fixed deposits 45 25 80 98
Other 20 (7) >100 4
Fair value adjustments on hedging
instruments (337) 9 >(100) (472)
Interest incurred on finance leases 30 46 (35) 85
Other interest 73 68 7 180
13 898 13 060 6 26 792
9. NON-INTEREST INCOME Six months ended Year ended
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
9.1 Fee and commission income
Asset management and other related
fees 34 37 (8) 81
Consulting and administration fees 257 285 (10) 520
Credit-related fees and commissions 6 125 5 850 5 12 051
Cheque accounts 1 790 1 633 10 3 334
Credit cards (1)(2) 224 235 (5) 473
Electronic banking 1 996 1 966 2 4 095
Other credit-related fees and
commission (3) 892 870 3 1 762
Savings accounts 1 223 1 146 7 2 387
Insurance commission received 452 503 (10) 901
Merchant income (2) 948 838 13 1 806
Other fees and commission 80 128 (38) 256
Pension fund payment services (4) 122 239 (49) 484
Project finance fees 104 85 22 222
Trust and other fiduciary services 663 535 24 1 101
Portfolio and other management
fees(3) 546 414 32 849
Trust and estate income 117 121 (3) 252
8 785 8 500 3 17 422
9.2 Fee and commission expense
Cheque processing fees (81) (85) 5 (171)
Insurance commission paid (445) (438) (2) (877)
Other fee and commission expense(6) (393) (263) (49) (659)
Transaction-based legal fees (158) (100) (58) (229)
Trust and other fiduciary service
fees (6)(7) (108) (25) >(100) (51)
Valuation fees (58) (70) 17 (142)
(1 243) (981) (27) (2 129)
Net fee and commission income 7 542 7 519 0 15 293
Included above are net fees and commissions linked to financial instruments not at
fair value to the value of R3 830 million (30 June 2011: R3 562 million; 31 December
2011: R6 940 million).
Notes
(1) Includes acquiring and issuing fees.
(2) ‘Merchant income’ has been disclosed separately in order to achieve fair
presentation. This resulted in a reclassification of comparative information. These
reclassifications are unaudited.
(4) Includes service, credit-related fees and commissions on mortgage loans and
foreign exchange transactions.
(5) During the current reporting period, net fee and commission income in AllPay
reduced significantly. A review of this business will take place during the second
half of 2012.
(6) ‘Trust and other fiduciary service fees’ have been disclosed separately in order
to achieve fair presentation. This resulted in a reclassification of 30 June 2011
comparative information. These reclassifications are unaudited.
(7) Management fees, which were previously included as ‘Debt collection fees’, have
been reclassified to ‘Trust and other fiduciary service fees’ in order to achieve
fair presentation. This resulted in a reclassification of 30 June 2011 comparative
information. These reclassifications are unaudited.
Six month ended Year ended
30 June 31 December
2012 2011(1) 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
9.3. Gains and losses from banking and
trading activities
Net gains on investments (2) 151 187 (19) 437
Debt instruments designated at fair
value through profit or loss 71 66 8 215
Equity instruments designated at
fair value through profit or loss 85 139 (39) 242
Available-for-sale unwind from
reserves (5) (18) 72 (20)
Net trading result (3)(4) 1 645 1 412 17 2 271
Net trading income excluding the
impact of hedge accounting (5)(6) 1 625 1 408 15 2 245
Ineffective portion of hedges 20 4 >100 26
Cash flow hedges 19 25 (24) 33
Fair value hedges 1 (21) >100 (7)
Other (7) 72 (89) >100 (114)
1 868 1 510 24 2 594
Notes
(1)During the second half of the prior year, the presentation of gains and losses
from banking and trading activities was amended to align with market practice and
improve the quality of disclosure to the market. This resulted in a reclassification
of 30 June 2011 comparatives information. These reclassifications are unaudited.
(2)In order to provide for improved disclosure, revaluations between debt and equity
instruments have reclassified and disclosed separately.
(3) Due to structure changes, Custody and Trustee income have been reclassified from
‘Markets’ to ‘Corporate Products’. This has resulted in a reclassification from ‘Net
trading results’ to ‘Net gains on investments’. These reclassifications are
unaudited.
(4)’Net trading result’ comprises gains and losses from instruments designated at
fair value through profit or loss as well as gains and losses from instruments
classified as held for trading.
(5)The net trading income of R1 625 million (30 June 2011: R1 408 million; 31
December 2011: R2 245 million), consist of the following:
- Losses on financial instruments designated at fair value through profit or loss
of R444 million (30 June 2011: gain of R45 million; 31 December 2011: loss of
R839 million).
- Gains on financial instruments held for trading of R2 069 million (30 June
2011: R1 363 million; 31 December 2011 R3 084 million).
(6)Net losses on financial instruments designated at fair value through profit or
loss consist of:
- Net gains of R310 million (30 June 2011: R245 million; 31 December 2011: R503
million) on financial assets designed at fair value through profit or loss.
- Net losses of R754 million (30 June 2011: R200 million; 31 December 2011: R1
342 million) relating to financial liabilities designated at fair value through
profit or loss.
(7)’Other’ includes gains and losses from instruments designated at fair value
through profit or loss as well as gains and losses from instruments classified as
held for trading:
- Losses on financial instruments designated at fair value through profit or loss
of R24 million (30 June 2011: R175 million; 31 December 2011: R33 million).
- Gains on financial instruments held for trading of R96 million (30 June 2011:
gains of R86 million; 31 December 2011: Losses of R81 million).
Six months ended Year ended
30 June 31 December
2012 2011(1) 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
9.4 Gains and losses from investment
activities
Available–for-sale unwind from 1
reserves 0 >100 1
Net gains on investments from
insurance activities (2)(3)(4) 601 227 >100 886
Policyholder - investment contracts 361 87 >100 511
Policyholder - insurance contracts 125 54 >100 173
Shareholder funds 115 86 34 202
Other (5) 39 37 5 79
641 264 >100 966
Notes
(1) During the second half of the prior year, the presentation of gains and losses
from investment activities was amended to align with market practice and improve the
quality of disclosure to the market. This resulted in a reclassification of 30 June
2011 comparative information. There reclassifications are unaudited.
(2)’Net gains on investments from insurance activities’ comprise cash, debt and
equity instruments designated at fair value through profit or loss as well as gains
or losses from instruments held for trading.
(3)’Net gains on investments from insurance activities’ of R601 million (30 June
2011: R227 Million; 31 December 2011: R886 million) consist of the following:
- Gains on financial instruments designated at fair value through profit or loss of
R601 million (30 June 2011: R221 million; 31 December 2011: R880 million).
- Gains on financial instruments held for trading of Rnil (30 June 2011: R6
million; 31 December 2011: R6 million).
(4)Includes treasury share held by Group subsidiaries, which are eliminated on
consolidation.
(5)’Other’ includes gains and losses from instruments designated at fair value
through profit or loss.
10. OPERATING EXPENDITURE
Six months ended Year ended
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
10.1 Operating expenses
Amortisation of intangible assets 132 150 (12) 289
Auditors’ remuneration 99 82 21 166
Cash transportation 377 380 (1) 726
Depreciation 683 598 14 1 261
Equipment costs 197 124 59 224
Information technology 1 154 1 121 3 2 241
Investment properties charges 154 - 100 41
Change in fair value 154 - 100 41
Other - - - 0
Marketing costs 355 335 6 1 036
Operating lease expenses on properties 545 514 6 1 018
Other operating expenses (1)(2) 928 827 12 1 562
Printing and stationery 110 121 (9) 253
Professional fees 273 414 (34) 1 076
Property costs (2) 703 520 35 1 120
Staff costs 6 522 6 623 (2) 13 642
Bonuses 425 534 (20) 1 285
Current service costs on post-
retirement benefits 348 397 (12) 772
Other (3) 255 221 15 487
Salaries 5 177 5 127 1 10 379
Share-based payments 221 224 (1) 467
Training costs 96 120 (20) 252
Telephone and postage 434 409 6 803
12 666 12 218 4 25 458
Notes
(1) Includes fraud losses, travel and entertainment costs and collection fees.
(2) Property costs were previously disclosed as part of ‘Other operating expenses’
and is now disclosed separately. This resulted in a reclassification of 30 June
2011 comparative information. These reclassifications are unaudited.
(3) Includes recruitment costs, membership fees to professional bodies, staff
parking, redundancy fees, study assistance, staff relocation and refreshment
costs.
Six months ended Year ended
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
10.2 Other impairments
Financial instruments 9 2 >100 5
Amortised cost 9 2 >100 5
Other 2 35 (94) 47
Goodwill 18 - 100 28
Investments in associates and joint
ventures - - - (2)
Repossessed properties (16) 35 >(100) 21
11 37 (70) 52
11. HEADLINE EARNINGS
Six months ended Year ended
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) (Audited)
Gross Net Gross Net Change Gross Net
Rm Rm Rm Rm % Rm Rm
Headline earnings (1) are
determined as follows:
Profit attributable to ordinary
equity holders of the Group 4 189 4 581 (9) 9 674
Total headline earnings
adjustments: 143 14 >100 45
IFRS 3 – Goodwill impairment 18 18 - - 100 28 28
IAS 16 – (Profit)/loss on
disposal of property and
equipment (40) (33) 2 1 >(100) (33) (30)
IAS 28 and 31 – Share of
post- tax results of
associates and joint ventures - - (0) (0) 100 (0) (0)
IAS 28 and 31 – Impairment
reversal of investments in
associates and joint ventures - - - - - (2) (1)
IAS 36 – Impairment of
subsidiary 1 1 - - 100 - -
IAS 38 – Loss on disposal of
intangible assets - - - - - 2 1
IAS 39 – Release of
available-for-sale reserves 5 3 18 13 (77) 20 14
IAS 40 – Change in fair value
of investment properties 154 154 - - 100 39 33
Headline earnings / diluted
headline earnings 4 332 4 595 (6) 9 719
Headline earnings per share
(cents) 603,8 641,3 (6) 1 355,9
Diluted headline earnings per
share (cents) 602,3 638,5 (6) 1 350,0
Note
(1)The net amount is reflected after taxation and non-controlling interest.
12. DIVIDENDS PER SHARE
Six months ended Year ended
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) Change Audited
Rm Rm % Rm
Dividends paid to ordinary equity
holder during the period/year
10 February 2012 final dividend number
51 of 392 cents per ordinary share (15
February 2011: 230 cents) 2 815 1 652 70 1 652
2 August 2011 interim dividend number
50 of 292 cents per ordinary share - - - 2 098
Dividends paid on treasury shares held
by Absa Group subsidiaries - (2) 100 (6)
2 815 1 650 71 3 744
Dividends paid to ordinary equity
holders relating to income for the
period/year
27 July 2012 interim dividend number
52 of 315 cents per ordinary share (2
August 2011: 292 cents) 2 265 2 098 8 2 098
10 February 2012 final dividend number
51 of 392 cents per ordinary share - - - 2 815
Dividends paid on treasury shares held
by Absa Group subsidiaries - - - (2)
2 265 2 098 8 4 911
Dividends paid to non-controlling
preference equity holders during the
period/year
10 February 2012 final dividend number
12 of 2 827,2 cents per preference
share (15 February 2011: 2 887,6
cents) 140 143 (2) 143
2 August 2011 interim dividend number
11 of 2 858,3 cents per preference
share - - - 141
140 143 (2) 284
Dividends paid to non-controlling
preference equity holders relating to
income for the period/year
27 July 2012 interim dividend number
13 of 3 134,7 cents per preference
share (2 August 2011: 2 858,3 cents) 155 141 10 141
10 February 2012 final dividend number
12 of 2 827,2 cents per preference
share - - - 140
155 141 10 281
Notes
(1) In 2007, the Minister of Finance announced a two-phase approach to STC reform,
which included the reduction of the STC tax rate to 10% and the replacement of
STC with a new dividend tax on shareholders (dividend tax). On 1 April 2012
dividend tax came into effect and the tax ceased to be levied at a company level,
and is now levied on the shareholders who receive the dividends.
(2) Unutilised STC credits at the end of December 2011 were utilised against the STC
payable on the final dividend declared in February 2012. Deferred tax assets
relating to unutilised STC credits up to 31 March 2012 have be utilised.
13. ACQUISITIONS AND DISPOSALS
The following interests were acquired of during the current period/year:
Subsidiaries
Absa Financial Services cluster obtained regulatory approval to start a new life
insurance business in Zambia through its subsidiary Absa Financial Services Africa
Holdings (Pty) Ltd. Absa Financial Services Africa Holding (Pty) Ltd paid R15 million
in ordinary share capital during May 2012 for the startup company, Barclays Life
Zambia (Pty) Ltd. Ten employees were engaged by the company to start up operations.
Trading operations are expected to commence in August 2012. No accounting entries
have been recorded in the books of Barclays Life Zambia (Pty) Ltd, a subsidiary of
Absa Financial Services Africa Holding (Pty) Ltd as at 30 June 2012. An accrual for
staff costs has been recognised in Absa Financial Services Africa Holding (Pty) Ltd’s
books for the work performed by the ten employees as at 30 June 2012.
Business combination
On 1 September 2011 Absa Financial Services Africa Holdings (Pty) Ltd (AFSAH)
acquired 100% of the share capital of Global Alliance Seguros S.A. (GA) for a
purchase price of R129 million. The purchase price was subject to a guaranteed net
asset value of $11 million and a due diligence investigation at the acquisition
date. The due diligence highlighted a shortfall in the actual net asset value and
AFSAH and the seller subsequently entered into negotiations and further investigation
to resolve the differences. The seller accepted the outcome of the due diligence and
consequently the final purchase price was settled at R129 million. The difference
between the initial purchase price paid of R156 million and the final purchase price
of R129 million was kept in an escrow account and refunded to Absa at the end of May
2012. The acquisition price of R129 million is represented by net assets of R54
million, goodwill of R24 million and other intangible assets net of deferred tax of
R51 million. No material adjustments were recognised in 2012 to the initial
accounting.
Transfer
Absa Bank Ltd through its Commercial Property Finance (CPF) division, sold all of its
Class C units (effectively 65,5%) in the Absa Property Equity Fund (APEF) to Absa
Financial Services (AFS) on 28 June 2012. At the Absa Bank level, there is a disposal
of a business, while AFS will recognise an acquisition of a business. From an Absa
Group consolidated perspective, there is no change in the accounting and presentation
with no impact on the Absa Group’s reported profits. The transfer resulted in net
assets of R340 million being transferred between the two segments.
Associates and joint ventures
There were no entities that were acquired or disposed of during the reporting period.
14. RELATED PARTIES
The Group’s ultimate parent company is Barclays Bank PLC, which owns 55,5% (June and
December 2011: 55,5%) of the ordinary shares in Absa Group Limited. The remaining
44,5% (30 June and 31 December 2011: 44,5%) of the shares are widely held on the JSE.
The following are defined as related parties of the Group:
- key management personnel;
- the ultimate parent company;
- the parent company;
- fellow subsidiaries;
- subsidiaries;
- associates, joint ventures and retirement benefit funds;
- an entity controlled/jointly controlled or significantly influenced by any
individual referred to above;
- post-employment benefit plans for the benefit of employees or any entity that is a
related party of the Group; and
- children and/or dependants and spouses or partners of the individuals referred to
above.
IAS 24 requires the identification of key management personnel, who are individuals
responsible for planning, directing and controlling the activities of the entity,
including directors. Key management personnel are defined as executive and non
executive directors and members of the Executive Committee (Exco).
Balances and transactions between the Group and its subsidiaries have been eliminated
on consolidation and are not disclosed in this note.
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
14.1 Balances and transactions with
the ultimate parent company
Balances
Loans and advances to banks 35 795 20 072 78 41 065
Derivative assets 12 685 7 155 77 10 255
Nominal value of derivative assets 694 589 389 430 78 637 611
Other assets 4 025 1 075 >100 338
Investment securities 584 435 34 499
Deposits from banks (8 391) (5 003) (68) (5 784)
Derivative liabilities (12 299) (5 739) >(100) (10 488)
Nominal value of derivative
liabilities (552 403) (320 593) (72) (462 870)
Other liabilities (3 510) (1 783) (97) (1 167)
Transactions
Interest and similar income (82) (82) (0) (111)
Interest and similar expense 51 32 59 67
Net fee and commission income (9) (10) 10 (17)
Gains and losses from banking and
trading activities (152) (68) >(100) (136)
Other operating income (23) (125) >100 (152)
Operating expenditure (28) (76) >100 (115)
Dividends paid 1 563 917 70 2 082
Trade balances must be settled in accordance with market conventions applicable to
the underlying transaction. Non-trade balances must be settled by the close of the
month immediately following the month in which the transaction occurred. Further,
settlement must be in the currency required by the ultimate parent company. In
exceptional cases it may be impractical or inefficient to settle balances monthly. In
such cases, the unsettled balances must be explicitly agreed monthly in writing, and
full settlement must be made at least quarterly.
There were no bad debt expenses and provisions for bad debts that related to balances
and transactions with the ultimate parent company.
Note
(1) Debit amounts are shown as positive; credit amounts are shown as negative.
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
14.2 Balances and transactions with
fellow subsidiaries, associates and
joint ventures of the ultimate parent
company (1)(2)
Balances
Loans and advances to banks 47 401 >(100) (188)
Derivative assets 195 52 >100 0
Nominal value of a derivative assets 4 375 368 >100 608
Other assets 83 0 100 1
Deposits from banks (764) (194) >(100) (559)
Derivative liabilities 7 (21) >100 (72)
Nominal value of derivative
liabilities 948 (3 092) >(100) (1 441)
Other liabilities (120) (13) >(100) (52)
Transactions
Interest and similar income - - - (2)
Net fee and commission income (4) - (100) (12)
Operating expenditure 72 51 41 152
Notes
(1) Debit amounts are shown as positive; credit amounts are shown as negative.
(2) Fellow subsidiaries, associates and joint ventures are those entities of Barclays
Bank PLC.
15. ASSETS UNDER MANAGEMENT AND ADMINISTRATION
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Alternative asset management and
exchange-traded funds 36 773 28 886 27 30 486
Deceased estates 2 258 2 230 1 2 166
Other 11 155 9 933 12 10 505
Participation bond schemes 2 533 2 335 8 2 544
Portfolio management 28 161 25 837 9 26 792
Private equity 762 701 9 728
Trusts 7 014 6 592 6 6 720
Unit trusts 134 591 128 795 5 133 245
223 247 205 309 9 213 186
16. FINANCIAL GUARANTEE CONTRACTS
Financial guarantee contracts(1) 157 384 (59) 356
17. COMMITMENTS
Authorised capital expenditure
Contracted but not provided for(2) 970 798 22 283
Operating lease payments due(3)
No later than one year 1 048 1 054 (1) 1 106
Later than one year and no later
than five years 1 899 2 064 (8) 2 136
Later than five years 382 489 (22) 585
3 329 3 607 (8) 3 827
18. CONTINGENCIES
Six months ended Year ended
30 June 31 December
2012 2011 2011
(Unaudited) (Unaudited) Change Audited
Rm Rm % Rm
Guarantees(4) 14 158 12 198 16 13 226
Irrevocable debt facilities(5) 44 842 23 106 94 46 189
Irrevocable equity facilities(5) 538 679 (21) 494
Letters of credit 5 513 4 189 32 5 190
Other contingencies 4 11 (64) 10
65 055 40 183 62 65 109
Notes
(1) Represents the maximum exposure, which is not necessarily the measurement
recognised on the statement of financial position in accordance with IFRS.
(2) 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.
(3) 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.
(4) Guarantees include performance and payment guarantee contracts.
(5) 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.
19. SEGMENT PERFORMANCE
Six months ended Year ended
30 June 31 December
2012 2011(1) 2011(1)
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
19.1 Condensed consolidated profit
contribution by segment
RBB 1 770 2 618 (32) 6 053
Retail Markets 1 368 1 787 (23) 4 243
Home Loans (623) 33 >(100) 516
Vehicle and Asset Finance 308 181 70 403
Card 904 811 11 1 758
Personal Loans 253 303 (17) 720
Retail Bank 459 291 59 505
AllPay 67 168 (61) 341
Business Markets 402 831 (52) 1 810
CIBW 1 352 1 190 14 2 231
Corporate centre and Chief Operating
Office 374 416 (10) (15)
Capital and funding centres 156 (144) >100 315
Non-controlling interest – preference
shares (2) (140) (143) 2 (283)
Total banking 3 512 3 937 (11) 8 301
Financial Services 677 644 5 1 373
Profit attributable to ordinary equity
holders of the Group(3) 4 189 4 581 (9) 9 674
Headline earnings adjustments 143 14 >100 45
Headline earnings 4 332 4 595 (6) 9 719
Notes
(1)Comparatives have been reclassified. These reclassifications are unaudited. Refer
to the reclassification note 21.
(2) Includes the elimination of non-controlling interest- preference shares of Retail
Markets.
(3)Calculated after the allocation of Corporate Centre and Chief Operating Office,
Capital and funding centres as well as non-controlling interest - preference shares.
Six months ended Year ended
30 June 31 December
2012 2011(1) 2011(1)
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
19.2 Condensed consolidated total
revenue (2) contribution by segment
RBB 16 503 16 417 1 33 514
Retail Markets 12 078 11 896 2 24 334
Home Loans 2 049 2 030 1 4 129
Vehicle and Asset Finance 1 101 1 121 (2) 2 224
Card 2 616 2 390 9 4 970
Personal Loans 991 1 053 (6) 2 108
Retail Bank 5 161 5 010 3 10 302
AllPay 160 292 (45) 601
Business Markets 4 425 4 521 (2) 9 180
CIBW 4 286 3 919 9 7 822
Corporate centre and Chief Operating
Office (238) 40 >(100) (198)
Capital and funding centres 560 12 >100 679
Total banking 21 111 20 388 4 41 817
Financial Services 1 972 1 914 3 4 015
Total revenue 23 083 22 302 4 45 832
Notes
(1) Comparatives have been reclassified. These reclassifications are unaudited. Refer
to the reclassifications note 21.
(2)Revenue includes net interest income and non-interest income.
30 June 31 December
2012 2011(1) 2011(1)
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
19.3 Condensed consolidated internal
revenue (2) contribution by segment
RBB (5 544) (6 096) 9 (11 727)
Retail Markets (5 337) (5 529) 3 (10 934)
Home Loans (6 285) (6 427) 2 (12 887)
Vehicle and Asset Finance (1 245) (1 211) (3) (2 435)
Card (377) (321) (17) (634)
Personal Loans (279) (284) 2 (569)
Retail Bank 2 838 2 697 5 5 554
AllPay 11 17 (35) 37
Business Markets (207) (567) 63 (793)
CIBW 5 587 6 495 (14) 12 691
Corporate centre and Chief Operating
Office 224 297 (25) 607
Capital and funding centres (59) (510) 88 (1 170)
Total banking 208 186 (33) 401
Financial Services (208) (186) (12) (401)
Internal revenue - - -
Notes
(1) Comparatives have been reclassified. These reclassifications are unaudited. Refer
to the reclassification note 21.
(2) Revenue includes net interest income and non-interest income.
Six months ended Year ended
31
30 June December
2012 2011(1) 2011(1)
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
19.4 Condensed consolidated total
assets by segment
RBB 589 239 564 097 4 579 965
Retail Markets 477 195 462 433 3 469 278
Home Loans 229 609 244 208 (6) 239 566
Vehicle and Asset Finance 48 637 45 332 7 46 500
Card 30 893 27 782 11 29 456
Personal Loans 12 960 13 585 (5) 13 494
Retail Bank 154 886 130 179 19 139 762
AllPay 210 1 347 (84) 500
Business Markets 112 044 101 664 10 110 687
CIBW 479 809 431 252 11 466 840
Corporate centre and Chief Operating
Office (381 889) (375 999) (2) (369 695)
Capital and funding centres 95 177 80 485 18 83 966
Total banking 782 336 699 835 12 761 076
Financial Services 26 470 23 426 13 25 643
Total assets 808 806 723 261 12 786 719
Note
(1) Comparatives have been reclassified. These reclassifications are unaudited. Refer
to the reclassification note 21.
20. FAIR VALUE HIERARCHY DISCLOSURES
20.1 Significant transfers of financial instruments between levels
No significant transfers between levels took place during the current reporting
period.
Six months ended
30 June 2011
Valuations with Valuations Valuations
reference to based on based on
observable observable unobservab
prices inputs le inputs
Level 1 Level 2 Level 3
Rm Rm Rm
Financial liabilities designated at fair
value through profit and loss - 655 (655)
Deposit due to customers - 655 (655)
Total financial liabilities - 655 (655)
Year ended
31 December 2011
Valuations with Valuations Valuations
reference to based on based on
observable observable unobservab
prices inputs le inputs
Level 1 Level 2 Level 3
Rm Rm Rm
Financial liabilities designated at fair
value through profit and loss - 655 (655)
Deposits due to customers - 655 (655)
Total financial liabilities - 655 (655)
21. RECLASSIFICATIONS
21.1 Statement of financial position reclassifications
Some items within the statement of financial position as at 30 June 2011 and 31
December 2011 were reclassified:
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2011
(Unaudited)
As
previously
reported Reclassifications Reclassified
Rm Rm Rm
Assets
Cash, cash balances and balances
with central banks (1) 25 814 (1 198) 24 616
Loans and advances to banks (2) 30 911 175 31 086
Other assets (2) 16 449 (1 571) 14 878
Loans and advances to customers (2)(3) 495 460 8 739 504 199
Investment securities (1) 21 100 1 198 22 298
Liabilities
Deposits due to customers (3) 398 330 7 343 405 673
Notes
(1) Money market instruments
During the second half of 2011, the Group reclassified certain money market
instruments linked to investment contracts, with longer-term maturities, from ‘Cash,
cash balances and balances with central banks’ to ‘Investment securities’, to reflect
the true nature of these instruments. ‘Cash, cash balances and balances with central
banks’ should comprise cash on hand and demand deposits which the Group expects to be
realised within 12 months after the reporting date. This has resulted in comparatives
being reclassified for 30 June 2011 as reflected in the table above.
(2) Initial margin
During the reporting period, the Group reclassified certain initial margins placed as
collateral which were previously disclosed as ‘Other assets’ to ‘Loans and advances to
banks’ and ‘Loans and advances to customers’ to reflect the true nature of these
balances as collateralised loans. This has resulted in comparatives being reclassified
for 30 June 2011 as reflected in the table above.
(3) Certain customers within the Group have agreements in place whereby interest
receivable or payable is calculated on the net balances of the cheque deposits and
cheque advances. During the second half of 2011, the Group identified that the related
cheque account balances owed or receivable were also being reported on a net basis.
All balances within this portfolio were reassessed for appropriate presentation in
terms of IAS 32 and the Group’s stated accounting policies, taking into account
contractual arrangements and current business practice applied to these accounts. As a
result, certain assets and liabilities relating to these cheque accounts were
reclassified so that these are presented on a gross basis. This has resulted in
comparatives being reclassified for 30 June 2011 as reflected in the table above.
31 December 2011
As previously
reported Reclassifications(1) Reclassified
(Audited) (Unaudited) (Unaudited)
Rm Rm Rm
Assets
Loans and advances to banks 57 432 67 57 499
Other assets 16 219 (1 488) 14 731
Loans and advances to customers 503 503 1 421 504 924
Note
(1) During the reporting period, the Group reclassified certain initial margins
placed as collateral which were previously disclosed as ‘Other assets’ to ‘Loans and
advances to banks’ and ‘Loans and advances to customers’ to reflect the true nature
of these balances as collateralised loans. This has resulted in comparatives being
reclassified for 31 December 2011 as reflected in the table above.
21.2 Segment reclassifications
Comparatives have been reclassified for the following structure changes made during
the reporting period.
- As part of the ‘One Absa’ strategy, the segments of Retail Markets (previously
known as Retail Banking) and Business Markets (previously known as Absa Business
Bank) were merged into the RBB segment.
- Absa Cash Solutions Group Processing Centre and Integrated Processing Services were
moved from Head office, inter-segment eliminations and Other to RBB.
- The Group’s corporate customers and products were transferred from Business Markets
to CIBW following an initiative to optimise product delivery to its corporate
customers.
- Foreign exchange operations and Group Payments were moved from Head office, inter-
segment eliminations and Other to CIBW.
Profit and dividend announcement
Salient features
- Diluted headline earnings per share (HEPS) declined 6% to 602,3 cents.
- Pre-provision profit increased 3% to R10,4 billion.
- Interim dividend of 315 cents per share, up 8%.
- Revenue grew 4% to R23,1 billion.
- Net interest margin on average interest-bearing assets narrowed to 3,94% from
3,99%.
- The cash flow hedging reserve increased to R2,3 billion as at 30 June 2012.
- Non-interest revenue grew 5% to R11,2 billion and accounted for 48,4% of total
revenue (June 2011: 47,9%).
- With operating expenses growth contained to 4%, Absa’s cost-to-income ratio was
largely unchanged at 54,9% (June 2011: 54,8%).
- Total loans and advances to banks and customers increased 5% to R564,7 billion.
- Credit impairments increased 39% to R4,0 billion, resulting in a 1,59% credit
loss ratio (June 2011: 1,16%).
- Return on average equity (RoE) decreased to 13,8% (June 2011: 16,2%).
- Return on average risk-weighted assets (RoRWA) declined to 2,08% and return on
average assets to 1,11% (June 2011: 2,23% and 1,29% respectively).
- Net asset value (NAV) per share grew 10% to 8 950 cents (June 2011: 8 116 cents).
- Absa Group’s Core Tier 1 capital adequacy ratio improved to 13,2% (June 2011:
12,8%), well above regulatory requirements.
Overview of results
Absa Group’s headline earnings decreased 6% to R4 332 million (June 2011: R4 595
million). Diluted HEPS declined 6% to 602,3 cents (June 2011: 638,5 cents). Absa’s RoE
decreased to 13,8% (June 2011: 16,2%), slightly above its 13,5% cost of equity (CoE). The
Group declared an interim dividend of 315 cents per share, up 8%, after considering
regulatory changes, its strong capital position, strategy and growth plans, and near-term
business objectives.
Higher credit impairments, particularly in mortgages, were the principal reason headline
earnings declined. Pre-provision profit increased 3% to R10,4 billion, largely due to
sustainable cost containment. Revenue growth remained subdued, despite solid non-interest
revenue growth in target areas, given a slightly lower net interest margin and limited
loan growth.
Retail and Business Banking’s (RBB) headline earnings reduced by 26%, due to increased
credit impairments and a higher cost-to-income ratio. Corporate, Investment Banking and
Wealth’s (CIBW) headline earnings increased 14% and Financial Services’ 5%, as both grew
revenue faster than costs.
Operating environment
Fears about the euro debt crisis and its potential impact on the global economy have been
the main driver of the volatility in global financial markets over the past six months.
South Africa’s GDP growth slowed to 2,7% in the first quarter from 3,2% in the fourth
quarter of 2011, due mainly to contraction in mining production (because of protracted
industrial action and electricity supply constraints). While consumer demand has been a
pillar of strength for South Africa’s economic recovery, there are signs that consumers
are starting to take strain. Household consumption slowed to 3,1% in the first quarter
from 4,6% the previous one, on the back of moderating real income growth, job losses and
higher inflation. Despite the prime interest rate being at its lowest level since 1974,
growth in private sector credit extension has been moderate, averaging 8% in the year to
May. Both households and corporates remain cautious about taking on significant amounts
of new debt given the uncertainty about the economic outlook. Since the start of the
year, inflation declined steadily from 6,3% in January to 5,7% in May 2012, driven by
petrol price reductions and moderating food inflation.
Group performance
Statement of financial position
The Group’s total assets increased 12% to R808,8 billion on 30 June 2012, reflecting
strong growth in loans and advances to banks, trading portfolio assets and statutory
liquid asset portfolio, particularly during the second half of 2011.
Loans and advances to customers
Absa’s loans and advances to customers grew marginally to R506,7 billion (June 2011:
R504,2 billion), despite retail mortgage loans and commercial property finance decreasing
3% and 9% respectively. Retail Markets’ loans and advances decreased 1%, as lower
mortgages outweighed 6% growth in credit cards and 4% in vehicle finance. Improving new
retail volumes, particularly mortgages, should become evident in the second half of 2012.
The acquisition of Edcon’s private label store card book of approximately R10 billion
should be completed in 2012, subject to Competition Commission approval. Business
Markets’ loans declined 2%, due to lower commercial property finance. CIBW loans grew
10%, as overnight finance and foreign currency loans rose 72% and 67% respectively.
Deposits due to customers
Absa maintained a strong liquidity position, growing customer deposits 13% to R457,9
billion and funding tenor also remained robust with an average long-term funding ratio
for Absa Bank of 25,6% for the 12 months ending 30 June 2012. The weighted average life
of wholesale funding as at 30 June 2012 was about 17 months. Deposits due to customers
contributed over 75% of total funding from 71% last year, while the proportion of debt
securities in issue dropped to 21% from 26%. With solid growth in most key categories,
Retail Markets’ deposits increased 8% to R127,5 billion to maintain its leading market
share. Business Markets’ deposits rose 7% due to 18% growth in cheque accounts. CIBW’s
deposits increased 18%, given 10% growth in cheque accounts and significant growth in
notice deposits. Absa’s loans-to-deposits ratio improved to 87% from 91% in June 2011.
Net asset value
The Group’s NAV increased 10% to R64,2 billion, as it generated retained earnings of R1,7
billion in the first half. Absa’s NAV per share grew 10% to 8 950 cents (June 2011: 8 116
cents).
Capital to risk-weighted assets
Following the implementation of Basel II.5 and the AIRB approach on our wholesale book,
the Group’s risk-weighted assets increased 4% to R426,5 billion (June 2011: R408,4
billion). Absa maintained its strong capital levels, which remain above board targets and
regulatory requirements. At 30 June 2012, Absa Group’s Core Tier 1 and Tier 1 capital
adequacy ratios were 13,2% (June 2011: 12,8%) and 14,3% (June 2011: 13,9%) respectively.
The Group’s total capital ratio improved to 16,9% (June 2011: 16,7%). Absa Bank’s Core
Tier 1 ratio increased to 12,5% (June 2011: 11,8%) and its total capital ratio was 16,6%
(June 2011: 16,0%). Our 8% higher interim dividend is well considered, based on our
strong capital position, internal capital generation, strategy and growth plans. With
strong free cash flow generation, our leverage remains low at 12,4 times.
Statement of comprehensive income
Net interest income
Net interest income increased 2% to R11 909 million (June 2011: R11 622 million),
reflecting 4% growth in interest earning assets. Absa’s net interest margin declined to
3,94% from 3,99% because of slightly lower deposit margins and reduced investment banking
margins. These items outweighed slightly wider lending margins due to re-pricing.
Credit losses
Credit impairments increased 39% to R4 020 million (June 2011: R2 902 million), which
resulted in a Group credit loss ratio of 1,59% from 1,16%. Retail Markets’, where credit
impairments grew 37% to R3,2 billion, accounted for most of the increase. The need to
significantly increase provisions in the mortgage legal book became evident in the second
quarter, as more legal accounts moved into write-offs than expected. In response,
management has thoroughly reviewed our mortgage provisioning and ensured that the
assumptions are more weighted to recent experience. In addition, we have improved our
collections processes and systems. Absa also reduced its loan to values on new mortgage
business in 2009, which is evident in the far better quality of business written.
Retail Markets’ credit loss ratio increased to 2,03% from 1,46%, largely because of
mortgages rising to 2,20% from 1,18%. Vehicle and Asset Finance’s credit loss ratio
improved to 1,04% from 2,08%, while as expected, Personal Loans increased to 5,91% from
4,83%. Early arrears improved across all portfolios. Business Markets’ credit loss ratio
increased to 1,55% from 1,13% due to higher commercial property finance provisions, due
to lower realisations on collateral.
Absa’s non-performing loan cover increased to 32,5% from 27,8% last December (June 2011:
29,0%), as its mortgage cover rose to 22,6% from 17,1% last December. Non-performing
loans as a percentage of loans and advances improved to 6,4% from 6,9% last December
(June 2011: 7,6%), as inflows slowed. Loans subject to debt counselling grew to R4,5
billion from R3,4 billion last December.
Non-interest income
Non-interest income increased 5% to R11 174 million (June 2011: R10 680 million). Net fee
and commission income rose 0,3%, as 27% higher fee and commission expenses offset 8%
growth in cheque and savings accounts fees and a 13% increase in merchant income. Retail
net fee and commission income grew 2%, dampened by lower electronic banking revenue and a
R95 million reduction in AllPay revenue following its loss of a government tender.
Business Markets’ net fee and commission income increased 12%. Its equities revaluations
were negative R150 million. Financial Services net revenue grew 3%, driven by 11% growth
in net insurance premium income, despite low loan volumes and higher agriculture claims.
CIBW’s non-interest income increased 19%, reflecting private equity revaluations, which
remain small in a group context, and 21% higher trading revenue.
Operating expenses
Operating expenses increased 4% to R12 666 million (June 2011: R12 218 million),
reflecting strong cost containment, while continuing to invest in target growth areas.
Staff costs decreased 2% to R6,5 billion, as a result of 15% lower incentive provisions
and continued focus on operational efficiencies. Non-staff expenses grew 10%, reflecting
35% higher property costs and a 12% rise in other operating expenses. Professional fees
declined 34%. Total IT-related spend, which declined 3% to R2,6 billion, still accounted
for 21% of Group costs. Amortisation decreased 12% to R132 million. Retail Markets’
expenses increased 0,4%, while CIBW and Financial Services grew 4% and 2% respectively.
Business Markets’ costs rose 14%, partly due to the change in fair value of investment
property. Absa’s cost-to-income ratio increased marginally to 54,9% from 54,8%.
Taxation
Absa’s taxation decreased 4% to R1 767 million, although its effective tax rate increased
to 29,0% from 27,6%. The higher rate was mainly due to an increase in secondary tax on
companies after paying a 70% larger final 2011 dividend.
Segment performance
Retail Markets
Headline earnings fell 24% to R1 368 million (June 2011: R1 789 million), due to 37%
higher credit impairments of R3,2 billion. However, pre-provision profits grew 3% to R5,4
billion, as 2% revenue growth exceeded flat costs. Retail Markets’ cost-to-income ratio
improved to 55,4% from 56,0%. Excluding AllPay’s lower contribution, non-interest revenue
grew 7%. A R2,4 billion credit impairment produced a R0,6 billion loss in Home Loans,
despite 10% lower costs and a wider margin. Vehicle and Asset Finance earnings grew 70%,
due to far lower credit impairments and flat costs. Card earnings increased 11% to R0,9
billion, a fifth of Group earnings. Personal Loans earnings declined 17%, reflecting
lower loans and revenue, plus an expected increase in credit impairments. Retail Markets’
return on regulatory capital (RoRC) decreased to 17,3% from 22,3%. Absa maintained its
leading share of retail deposits, customers, branches and ATMs.
Business Markets
Adjusting for the move of Corporate clients to CIBW, headline earnings dropped 32% to
R565 million (June 2011: R829 million). The decline reflects a R354 million downward
adjustment on our investment portfolio, lower commercial property finance advances and
higher credit impairments in commercial property and the rest of Africa. Excluding the
non-core investment losses, Business Markets’ profit before tax increased 3% in South
Africa. Core revenue increased 2% to R4,6 billion. Customer loans and advances declined
2%, largely due to lower commercial property finance, although new business volumes
improved during the period. Net fees and commissions increased 12% and deposits grew 7%,
in line with our strategy. Although underlying costs rose only 3%, Business Markets’
cost-to-income ratio increased to 68,6% from 58,8%. RoRC declined to 10,4% from 15,0%.
Financial Services
Headline earnings increased 5% to R678 million (June 2011: R644 million), due mainly to
an improved performance in short-term insurance and investment returns. Gross and net
premiums income grew 17% and 11% respectively, despite slow loan growth. Operating
expenses in the South African business declined 2%. Bancassurance operations outside
South Africa moved into profit from a small loss in the prior year. Operations will
commence in Zambia on 1 August 2012. Short-term insurance profits grew 13%, despite an
agriculture crop underwriting loss on weather-related claims. Life insurance profits
increased 2% to R333 million. The embedded value of new business declined 30%, due to
lower credit volumes. Investments’ assets under management remained unchanged at R171
billion from June 2011, but grew 2% during the half with new equity inflows and
institutional mandates offsetting the impact of closing the Dividend Income Fund.
Financial Services’ RoE declined to 29,0% from 33,3%.
CIBW
Headline earnings grew 14% to R1 352 million (June 2011: R1 190 million). Revenue
increased 10% to R4,3 billion, with growth across all business units. Markets revenue
increased 8% to R1,8 billion due to 15% growth in foreign exchange and commodities, 38%
in Africa trading and 19% in equities and prime services. Fixed income and credit trading
revenue declined 4% off a high base. Corporate Products revenue increased 5% to R1,3
billion, a stable performance following integration into CIBW. Investment Banking revenue
also grew 7%, with 13% growth in the margin business offset by a 21% decline in the fee
business. Private Equity and Infrastructure revenue improved to R232 million, reflecting
revaluations on improved underlying earnings. Absa Wealth’s net revenue increased 15%
mainly as a result of strong non-interest revenue growth and lower impairments. Operating
expenses growth was contained to 4%, which improved CIBW’s cost-to-income ratio to 54,7%
from 57,4%. CIBW’s RoRC improved to 21,7% from 20,7%.
Prospects
The global economic environment remains volatile and uncertain on the back of concerns
about the euro debt crisis and its potential impact on global growth. We expect global
growth to slow somewhat to 3,4% from 3,8% in 2011. Data shows that the US recovery is
durable, but not robust as there are clear signs of a loss in momentum. The eurozone is
solidly in recession, with agreement on a lasting solution to its structural problems yet
to be reached. Developed countries are likely to grow 1,3% this year, in line with 2011.
Emerging markets are expected to remain the engine of global growth, although there will
be some moderation as both China and India slow. Sub-Saharan Africa’s GDP is expected to
grow 5,5% this year.
The weak and uncertain global environment is unlikely to support stronger growth in South
Africa. We expect 2012 growth of 2,6% from last year’s 3,1%. Slightly higher average
inflation is likely to erode real household income and conditions in the labour market
are expected to remain challenging, suggesting consumers will remain cautious about
taking on significant new debt.
Given ongoing significant downside risks to the world and domestic economy, the South
African Reserve Bank may follow up July's 50bp reduction in the policy rate with a
similar reduction at the September or November MPC meetings. Looking further out,
interest rates will ultimately need to increase again as the economy resumes its cyclical
recovery. Pinning down the exact timing of this eventual rate rise is very difficult
given the particularly uncertain outlook for the economic environment over the coming
quarters. As such, we believe that any eventual policy rate rise is only likely to be
delivered in late 2013 or beyond.
Against this backdrop, revenue growth is likely to remain subdued this year. Containing
costs remains a priority and Absa’s cost-to-income ratio is expected to remain similar to
last year’s. With moderate economic growth, Absa’s credit loss ratio is expected to be in
the region of 1,4% in 2012. Absa will continue to work closely with Barclays to capture
the opportunities that the combined franchises offer in the rest of Africa.
Basis of presentation
The Group’s condensed consolidated financial results have been prepared in accordance
with the recognition and measurement requirements of International Financial Reporting
Standards (IFRS). The disclosures comply with International Accounting Standard (IAS) 34.
The preparation of financial information requires the use of estimates and assumptions
about future conditions. The accounting policies that are deemed critical to the Group’s
results and financial position, in terms of the materiality of the items to which the
policy is applied, and which involve a high degree of judgement including the use of
assumptions and estimation, are impairment of loans and advances, goodwill impairment,
valuation of financial instruments, impairment of available-for-sale financial assets,
impairment of investments in associates and joint ventures, deferred tax assets,
consolidation of special purpose entities (SPEs), post-retirement benefits, provisions,
share-based payments, liabilities arising from claims made under short-term insurance
contracts, liabilities arising from claims made under life-term insurance contracts,
income taxes and offsetting of financial assets and liabilities.
Accounting policies
The accounting policies applied in preparing the financial results during the reporting
period are the same as the accounting policies in place for the year ended 31 December
2011. Amendments and changes to IFRS mandatory for 31 December 2011 financial year are
specified in the most recent audited annual consolidated financial statements. These
amendments resulted in some additional disclosures being presented but otherwise had a
minimal impact on the financial results during the reporting period.
Reclassifications
- During the second half of the prior year, the Group reclassified certain money market
assets linked to investment contracts, with longer-term maturities, from ‘Cash, cash
balances and balances with central banks’ to ‘Investment securities’, to reflect the true
nature of these assets. ‘Cash, cash balances and balances with central banks’ should
comprise cash on hand and demand deposits which the Group expects to be realised within
12 months after the reporting date. This has resulted in comparatives being reclassified
for 30 June 2011 (cash, cash balances and balances with central banks (R1 198 million)
and investment securities R1 198 million).
- During the reporting period, the Group reclassified certain initial margins placed as
collateral which was previously disclosed as ‘Other assets’ 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 30 June
2011 (loans and advances to banks R175 million, other assets (R1 571 million) and loans
and advances to customers R1 396 million) and 31 December 2011 (loans and advances to
banks R67 million, other assets (R1 488 million) and loans and advances to customers R1
421 million).
- Certain customers within the Group have agreements in place whereby interest receivable
or payable is calculated on the net balances of the cheque deposits and cheque advances.
During the second half of the prior year, the Group identified that the related cheque
account balances owed or receivable were also being reported on a net basis. All balances
within this portfolio were reassessed for appropriate presentation in terms of IAS 32 and
the Group’s stated accounting policies, taking into account contractual arrangements and
current business practice applied to these accounts. As a result, certain assets and
liabilities relating to these cheque accounts were reclassified so that these are
presented on a gross basis. This has resulted in comparatives being reclassified for 30
June 2011 (loans and advances to customers R7 343 million and deposits due to customers
(R7 343 million)).
Events after the reporting period
The directors are not aware of any events occurring between the reporting date of 30 June
2012 and the date of authorisation of these condensed consolidated financial results as
defined in IAS 10.
Declaration of interim ordinary dividend number 52
Shareholders are advised that an interim ordinary dividend of 315 cents per ordinary
share was declared today, Friday, 27 July 2012, for the six months ended 30 June 2012.
The interim ordinary dividend is payable to shareholders recorded in the register of
members of the Company at the close of business on Friday, 7 September 2012. The
directors of Absa Group confirm that the Group will satisfy the solvency and liquidity
test immediately after completion of the dividend distribution.
The dividend will be subject to the new dividends tax that was introduced with effect
from 1 April 2012. In accordance with paragraphs 11.17 (a) (i) to (x) and 11.17 (c) of
the JSE Listings Requirements, the following additional information is disclosed:
- The dividend has been declared out of income reserves.
- The local dividends tax rate is 15% (fifteen per centum).
- The gross local dividend amount is 315 cents per ordinary share for shareholders exempt
from the dividends tax.
- The net local dividend amount is 268 cents per ordinary share for shareholders liable to
pay the dividends tax;
- The local dividend withholding tax amount is 47 cents per ordinary share for shareholders
liable to pay the dividend withholding tax.
- Absa Group currently has 718 210 043 ordinary shares in issue (includes 988 870 treasury
shares).
- Absa Group’s income tax reference number is 9150116714.
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, 31 August 2012
Shares commence trading ex dividend Monday, 3 September 2012
Record date Friday, 7 September 2012
Payment date Monday, 10 September
2012
Share certificates may not be dematerialised or rematerialised between Monday, 3
September 2012 and Friday, 7 September 2012, both dates inclusive.
On Monday, 10 September 2012, 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 10 September 2012 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, 10 September 2012.
On behalf of the board
NR Drutman
Company Secretary
Johannesburg
27 July 2012
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.
Administrative information
Absa Group Limited
Registered office
7th Floor, Absa Towers West
15 Troye Street
Johannesburg, 2001
Postal address: PO Box 7735
Johannesburg, 2000
Telephone: (+27 11) 350 4000
E-mail: groupsec@absa.co.za
Board of directors
Group independent non-executive directors
C Beggs, YZ Cuba,
SA Fakie, G Griffin (Group Chairman),
MJ Husain, PB Matlare,
TM Mokgosi-Mwantembe,
TS Munday, SG Pretorius,
BJ Willemse
Group non-executive directors
AP Jenkins1, R Le Blanc1,
EC Mondlane Jr2, IR Ritossa3
Group executive directors
DWP Hodnett (Group Financial Director), M Ramos (Group Chief Executive),
LL von Zeuner (Deputy Group Chief Executive)
1
British 2Mozambican 3Australian
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
Lead Independent 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
Joint Sponsor
Absa Capital
15 Alice lane
Sandton, 2196
Postal address: Private Bag X10056
Sandton, 2146
Telephone: (+2711) 506 7951/(+2711) 895 6821
Telefax: (+2711) 895 7809
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 and Strategy, Africa)
Telephone: (+27 11) 350 2598
Telefax: (+27 11) 350 5924
E-mail: Investorrelations@absa.co.za
Company Secretary
NR Drutman
Telephone: (+27 11) 350 5347
E-mail: groupsec@absa.co.za
Other Contacts
Group Media Relations
M Pirikisi (General Manager Media Relations)
Telephone: (+27 11) 350 4787
E-mail: maxwellp@absa.co.za
Group Finance
JP Quinn (Group Financial Controller)
Telephone: (+27 11) 350 7565
Website address
www.absa.co.za
Date: 27/07/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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