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Reporting changes 2012 and 2011 restatement document
Absa Group Limited
Authorised financial services and registered credit provider (NCRCP7)
Registration number: 1986/003934/06
Incorporated in the Republic of South Africa
JSE share code: ASA
Issuer code: AMAGB
ISIN: ZAE000067237
For more information on our results refer to our website:
www.absa.co.za
Reporting changes
2012 and 2011 restatement document
Overview of reporting changes
This document provides users of the Groups financial statements with information regarding
financial reporting changes that will impact the results of the comparative reporting periods to
be disclosed alongside the Groups results for the interim reporting period ended 30 June 2013.
These financial reporting changes are driven by:
1. The implementation of new International Financial Reporting Standards (IFRS), specifically
IFRS 10 Consolidated Financial Statements (IFRS 10) and IAS 19 Employee Benefits (amended 2011)
(IAS 19R). All other amendments to IFRS effective for the current reporting period have had no
significant impact on the Groups reported results.
2. A change in the Groups internal accounting policy for the classification of collection
costs.
3. Inter-segmental operational changes including allocation of elements of the Head office
segment to business segments and portfolio changes between operating segments.
Only the implementation of new IFRS impacts the net financial results of the Group. The change in
the Groups internal accounting policy for the classification of collection costs impacts the
individual lines on which these costs are accounted for but not the net results of the Group. The
inter-segmental changes for Head office allocations and portfolio changes affect the reported
results of the individual businesses in the segment report, but they have no impact on the Groups
primary statements.
Note that this document provides information regarding the impact of these reporting changes on
selected key elements of the financial statements only.
Accounting policy changes due to new IFRS
IFRS 10 and IAS 19R became effective for annual periods beginning on or after 1 January 2013 and
result in restatement of the Groups results for the reporting period ended 31 December 2011 and
2012, as well as the interim reporting period ended 30 June 2012. The 2012 restatements reflect
the application of both IFRS 10 and IAS 19R. No restatement has been effected for IFRS 10 in the
2011 reporting period, in line with the transitional provisions of the standard.
IFRS 10
IFRS 10 replaces the requirements of IAS 27 Consolidated and Separate Financial Statements and SIC
12 Consolidation - Special Purpose Entities. The standard introduces new criteria to determine
whether entities in which the Group has interests should be consolidated. Implementation of this new
standard results in the Group consolidating a small number of entities that were previously not consolidated
and deconsolidating a small number of entities that were previously consolidated.
IAS 19R
IAS 19R amends the requirements of IAS 19 Employee Benefits. The standard introduces a number of
changes relating to defined benefit plans, including the elimination of the corridor approach and
the removal of the recognition of expected returns on plan assets within profit or loss in favour of
interest income on plan assets being recognised in profit or loss at the rate used to discount the
pension fund obligation. The difference between net interest income recognised in profit or loss and
expected return on plan assets is recognised in other comprehensive income. Furthermore, the
revised standard stipulates that the interest cost on reserves owing to members of the plan is to be
included in profit or loss. The revised standard also introduces enhanced disclosures relating to
defined benefit plans, clarifies the accounting for termination benefits and modifies the
classification of items between short-term and long-term employee benefits.
For the Absa Group, the main impacts of implementing IAS 19R were the removal of the recognition
of expected returns on plan assets within profit or loss in favour of interest income on plan assets
being recognised in profit or loss at the rate used to discount the pension fund obligation and the
recognition of interest cost on reserves owing to members in profit or loss. In addition some
benefits previously classified as short-term benefits are reclassified as long-term benefits.
Internal accounting policy changes
Collection costs
From 1 January 2013 the Group elected to change its accounting policy for certain collection
costs to better align with Barclays PLC internal accounting policies.
Costs incurred in the follow up and collection of outstanding and overdue balances, previously
recognised as part of operating expenses and fee expenses, within net fee and commission income,
have been reclassified to recoveries within the impairment losses on loans and advances line
in the statement of comprehensive income.
To ensure comparability, the comparative reporting periods have been restated.
Impact of accounting policy changes on the Groups results
The financial impact of the changes in the Groups accounting policies for IFRS 10, IAS 19R and
the revised policy for the classification of collection costs on the financial performance of the
Group in comparative financial reporting periods is indicated in the tables to follow.
Condensed consolidated statement of comprehensive income for the interim reporting period ended 30 June 2012
As Change in
previously accounting
reported policy IFRS 10 IAS 19R Restated
Rm Rm Rm Rm Rm
Net interest income 11 909 - (56) - 11 853
Interest and similar income 25 807 - (82) - 25 725
Interest expense and similar charges (13 898) - 26 - (13 872)
Impairment losses on loans and advances (4 020) (87) - - (4 107)
Net interest income after impairment losses
on loans and advances 7 889 (87) (56) - 7 746
Non-interest income 11 174 47 47 - 11 268
Net fee and commission income 7 542 47 (8) - 7 581
Fee and commission income 8 785 - - - 8 785
Fee and commission expense (1 243) 47 (8) - (1 204)
Net insurance premium income 2 757 - - - 2 757
Net insurance claims and benefits paid (1 360) - - - (1 360)
Changes in investment and insurance
contract liabilities (618) - (257) - (875)
Gains and losses from banking and
trading activities 1 868 - 49 - 1 917
Gains and losses from investment activities 641 - 267 - 908
Other operating income 344 - (4) - 340
Operating income before operating expenditure 19 063 (40) (9) - 19 014
Operating expenditure (13 011) 40 (2) (15) (12 988)
Operating expenses (12 666) 40 (2) (15) (12 643)
Other impairments (11) - - - (11)
Indirect taxation (334) - - - (334)
Share of post-tax results of associates and
joint ventures 35 - - - 35
Operating profit before income tax 6 087 - (11) (15) 6 061
Taxation expense (1 767) - 3 4 (1 760)
Profit for the reporting period 4 320 - (8) (11) 4 301
Profit attributable to:
Ordinary equity holders 4 189 - (8) (11) 4 170
Non-controlling interest - ordinary shares (9) - - - (9)
Non-controlling interest - preference shares 140 - - - 140
4 320 - (8) (11) 4 301
Profit for the reporting period 4 320 - (8) (11) 4 301
Other comprehensive income
Items that will not be reclassified to profit
and/or loss
Movement in retirement benefit fund asset
and liabilities 27 - - (39) (12)
Increase/(decrease) in retirement benefit surplus 46 - - (63) (17)
Increase in retirement benefit deficit - - - - -
Deferred tax (19) - - 24 5
Total items that will not be reclassified to
profit or loss 27 - - (39) (12)
Items that are or may be reclassified subsequently
to profit and/or loss
Foreign exchange differences on translation of
foreign operations 32 - - - 32
Movement in cash flow hedging reserve 286 - - - 286
Fair value gains arising during the reporting
period 1 409 - - - 1 409
Amount removed from other comprehensive income
and recognised in the profit and loss component
of the statement of comprehensive income (1 012) - - - (1 012)
Deferred tax (111) - - - (111)
Movement in available-for-sale reserve 370 - - - 370
Fair value gains arising during the reporting
period 510 - - - 510
Amortisation of government bonds - release to
the profit and loss component of the statement
of comprehensive income 5 - - - 5
Deferred tax (145) - - - (145)
Total items that are or may be reclassified
subsequently to profit and/or loss 688 - - - 688
Total comprehensive income for the reporting period 5 035 - (8) (50) 4 977
Total comprehensive income attributable to:
Ordinary equity holders 4 909 - (8) (50) 4 851
Non-controlling interest - ordinary shares (14) - - - (14)
Non-controlling interest - preference shares 140 - - - 140
5 035 - (8) (50) 4 977
Salient features - operating performance
As previously
reported Restatements Restated
% % %
Net interest margin on average
interest-bearing assets 3,89(1) (0,01) 3,88
Impairment losses on loans and
advances as % of average
loans and advances to customers 1,59 0,03 1,62
Non-interest income as % of total
operating income 48,4 0,3 48,7
Note
(1) The Group reassessed its criteria applied to determine the balance of interest-bearing assets in
line with best practice. This resulted in a restatement of the net interest margin on average
interest-bearing assets for the comparative reporting periods.
Condensed consolidated statement of financial position as at 30 June 2012
As Change in
previously accounting
reported policy IFRS 10 IAS 19R Restated
Rm Rm Rm Rm Rm
Assets
Cash, cash balances and balances with central banks 25 620 - 412 - 26 032
Statutory liquid asset portfolio 60 061 - - - 60 061
Loans and advances to banks 58 044 - - - 58 044
Trading portfolio assets 96 768 - 99 - 96 867
Hedging portfolio assets 4 868 - - - 4 868
Other assets 20 112 - 34 (216) 19 930
Current tax assets 703 - (1) - 702
Non-current assets held for sale 6 - - - 6
Loans and advances to customers 506 661 - (931) - 505 730
Reinsurance assets 1 010 - - - 1 010
Investment securities 21 530 - 4 444 - 25 974
Investments in associates and joint ventures 373 - - - 373
Investment properties 2 699 - - - 2 699
Property and equipment 7 781 - - - 7 781
Goodwill and intangible assets 2 115 - - - 2 115
Deferred tax assets 455 - - - 455
Total assets 808 806 - 4 057 (216) 812 647
Liabilities
Deposits from banks 25 827 - 90 - 25 917
Trading portfolio liabilities 60 446 - - - 60 446
Hedging portfolio liabilities 3 251 - - - 3 251
Other liabilities 30 071 - 68 - 30 139
Provisions 1 136 - - - 1 136
Current tax liabilities 247 - (1) - 246
Deposits due to customers 457 880 - 464 - 458 344
Debt securities in issue 125 127 - (1 341) - 123 786
Liabilities under investment contracts 15 427 - 4 792 - 20 219
Policyholder liabilities under insurance contracts 3 239 - - - 3 239
Borrowed funds 14 268 - - - 14 268
Deferred tax liabilities 1 619 - (3) (67) 1 549
Total liabilities 738 538 - 4 069 (67) 742 540
Equity
Capital and reserves
Attributable to ordinary equity holders:
Share capital 1 434 - - - 1 434
Share premium 4 572 - - - 4 572
Retained earnings 55 502 - (12) (149) 55 341
Other reserves 2 725 - - - 2 725
64 233 - (12) (149) 64 072
Non-controlling interest - ordinary shares 1 391 - - - 1 391
Non-controlling interest - preference shares 4 644 - - - 4 644
Total equity 70 268 - (12) (149) 70 107
Total liabilities and equity 808 806 - 4 057 (216) 812 647
Salient features - financial performance
As previously
reported Restatements Restated
% % %
Return on average equity (RoE) 13,8 (0,1) 13,7
Return on average assets (RoA) 1,11 (0,01) 1,10
Condensed consolidated statement of comprehensive income for the reporting period ended 31 December 2012
As Change in
previously accounting
reported policy IFRS 10 IAS 19R Restated
Rm Rm Rm Rm Rm
Net interest income 24 111 - (119) - 23 992
Interest and similar income 50 766 - (167) - 50 599
Interest expense and similar charges (26 655) - 48 - (26 607)
Impairment losses on loans and advances (8 290) (188) - - (8 478)
Net interest income after impairment losses
on loans and advances 15 821 (188) (119) - 15 514
Non-interest income 22 741 104 119 - 22 964
Net fee and commission income 15 435 104 (32) - 15 507
Fee and commission income 17 936 - - - 17 936
Fee and commission expense (2 501) 104 (32) - (2 429)
Net insurance premium income 5 618 - - - 5 618
Net insurance claims and benefits paid (2 719) - - - (2 719)
Changes in investment and insurance contract liabilities (980) - (727) - (1 707)
Gains and losses from banking and trading activities 3 670 - 108 - 3 778
Gains and losses from investment activities 963 - 773 - 1 736
Other operating income 754 - (3) - 751
Operating income before operating expenditure 38 562 (84) - - 38 478
Operating expenditure (26 693) 84 (10) (81) (26 700)
Operating expenses (25 874) 84 (10) (81) (25 881)
Other impairments (113) - - - (113)
Indirect taxation (706) - - - (706)
Share of post-tax results of associates and joint ventures 249 - - - 249
Operating profit before income tax 12 118 - (10) (81) 12 027
Taxation expense (3 377) - - 22 (3 355)
Profit for the reporting period 8 741 - (10) (59) 8 672
Profit attributable to:
Ordinary equity holders 8 393 - (10) (59) 8 324
Non-controlling interest - ordinary shares 53 - - - 53
Non-controlling interest - preference shares 295 - - - 295
8 741 - (10) (59) 8 672
Profit for the reporting period 8 741 - (10) (59) 8 672
Other comprehensive income
Items that will not be reclassified to profit and/or loss
Movement in retirement benefit fund asset and liabilities (242) - - 158 (84)
Decrease in retirement benefit surplus (279) - - 218 (61)
Increase in retirement benefit deficit (59) - - - (59)
Deferred tax 96 - - (60) 36
Total items that will not be reclassified to profit
or loss (242) - - 158 (84)
Items that are or may be reclassified subsequently
to profit and/or loss
Foreign exchange differences on translation of foreign
operations 140 - - - 140
Movement in cash flow hedging reserve 405 - - - 405
Fair value gains arising during the reporting period 2 650 - - - 2 650
Amount removed from other comprehensive income and
recognised in the profit and loss component of the
statement of comprehensive income (2 088) - - - (2 088)
Deferred tax (157) - - - (157)
Movement in available-for-sale reserve 1 109 - - - 1 109
Fair value gains arising during the reporting period 1 532 - - - 1 532
Amortisation of government bonds - release to the
profit and loss component of the statement of
comprehensive income 10 - - - 10
Deferred tax (433) - - - (433)
Total items that are or may be reclassified subsequently
to profit and/or loss 1 654 - - - 1 654
Total comprehensive income for the reporting period 10 153 - (10) 99 10 242
Total comprehensive income attributable to:
Ordinary equity holders 9 812 - (10) 99 9 901
Non-controlling interest - ordinary shares 46 - - - 46
Non-controlling interest - preference shares 295 - - - 295
10 153 - (10) 99 10 242
Salient features - operating performance
As previously
reported Restatements Restated
% % %
Net interest margin on average
interest-bearing assets 3,80(1) (0,01) 3,79
Impairment losses on loans
and advances as % of average
loans and advances to customers 1,59 0,04 1,63
Non-interest income as % of
total operating income 48,5 0,4 48,9
Note
(1) The Group reassessed its criteria applied to determine the balance of interest-bearing assets in
line with best practice. This resulted in a restatement of the net interest margin on average
interest-bearing assets for the comparative reporting periods.
Condensed consolidated statement of financial position as at 31 December 2012
As Change in
previously accounting
reported policy IFRS 10 IAS 19R Restated
Rm Rm Rm Rm Rm
Assets
Cash, cash balances and balances with
central banks 26 221 - 326 - 26 547
Statutory liquid asset portfolio 63 020 - - - 63 020
Loans and advances to banks 44 649 - 2 - 44 651
Trading portfolio assets 87 203 - 114 - 87 317
Hedging portfolio assets 5 439 - - - 5 439
Other assets 14 189 - - - 14 189
Current tax assets 304 - (1) - 303
Non-current assets held for sale 4 052 - - - 4 052
Loans and advances to customers 528 191 - (863) - 527 328
Reinsurance assets 1 003 - - - 1 003
Investment securities 20 555 - 5 069 - 25 624
Investments in associates and
joint ventures 569 - - - 569
Investment properties 1 220 - - - 1 220
Property and equipment 8 397 - - - 8 397
Goodwill and intangible assets 2 561 - - - 2 561
Deferred tax assets 366 - - - 366
Total assets 807 939 - 4 647 - 812 586
Liabilities
Deposits from banks 36 035 - 149 - 36 184
Trading portfolio liabilities 51 684 - - - 51 684
Hedging portfolio liabilities 3 855 - - - 3 855
Other liabilities 18 215 - 197 - 18 412
Provisions 1 681 - - - 1 681
Current tax liabilities 59 - (1) - 58
Non-current liabilities held for sale 1 480 - - - 1 480
Deposits due to customers 477 427 - 426 - 477 853
Debt securities in issue 108 044 - (1 265) - 106 779
Liabilities under investment contracts 13 609 - 5 159 - 18 768
Policyholder liabilities under
insurance contracts 3 550 - - - 3 550
Borrowed funds 17 907 - - - 17 907
Deferred tax liabilities 1 599 - (4) - 1 595
Total liabilities 735 145 - 4 661 - 739 806
Equity
Capital and reserves
Attributable to ordinary equity holders:
Share capital 1 435 - - - 1 435
Share premium 4 604 - - - 4 604
Retained earnings 56 903 - (14) - 56 889
Other reserves 3 941 - - - 3 941
66 883 - (14) - 66 869
Non-controlling interest - ordinary shares 1 267 - - - 1 267
Non-controlling interest - preference shares 4 644 - - - 4 644
Total equity 72 794 - (14) - 72 780
Total liabilities and equity 807 939 - 4 647 - 812 586
Salient features - financial performance
As previously
reported Restatements Restated
% % %
Return on average equity (RoE) 13,6 (0,1) 13,5
Return on average assets (RoA) 1,09 (0,01) 1,08
Condensed consolidated statement of comprehensive income for the reporting period ended 31 December 2011
As Change in
previously accounting
reported policy IFRS 10 IAS 19R Restated
Rm Rm Rm Rm Rm
Net interest income 24 429 - - - 24 429
Interest and similar income 51 191 - - - 51 191
Interest expense and similar charges (26 762) - - - (26 762)
Impairment losses on loans and advances (5 081) (168) - - (5 249)
Net interest income after impairment losses
on loans and advances 19 348 (168) - - 19 180
Non-interest income 21 403 87 - - 21 490
Net fee and commission income 15 293 87 - - 15 380
Fee and commission income 17 422 - - - 17 422
Fee and commission expense (2 129) 87 - - (2 042)
Net insurance premium income 5 209 - - - 5 209
Net insurance claims and benefits paid (2 517) - - - (2 517)
Changes in investment and insurance
contract liabilities (914) - - - (914)
Gains and losses from banking and
trading activities 2 594 - - - 2 594
Gains and losses from investment activities 966 - - - 966
Other operating income 772 - - - 772
Operating income before operating expenditure 40 751 (81) - - 40 670
Operating expenditure (26 581) 81 - 17 (26 483)
Operating expenses (25 458) 81 - 17 (25 360)
Other impairments (52) - - - (52)
Indirect taxation (1 071) - - - (1 071)
Share of post-tax results of associates
and joint ventures 40 - - - 40
Operating profit before income tax 14 210 - - 17 14 227
Taxation expense (4 026) - - (5) (4 031)
Profit for the reporting period 10 184 - - 12 10 196
Profit attributable to:
Ordinary equity holders 9 674 - - 12 9 686
Non-controlling interest - ordinary shares 226 - - - 226
Non-controlling interest - preference shares 284 - - - 284
10 184 - - 12 10 196
Profit for the reporting period 10 184 - - 12 10 196
Other comprehensive income
Items that will not be reclassified to
profit and/or loss
Movement in retirement benefit plan asset
and liabilities (51) - - (111) (162)
Decrease in retirement benefit surplus (66) - - (155) (221)
Increase in retirement benefit deficit (5) - - - (5)
Deferred tax 20 - - 44 64
Total items that will not be reclassified to
profit or loss (51) - - (111) (162)
Items that are or may be reclassified subsequently
to profit and/or loss
Foreign exchange differences on translation of
foreign operations 522 - - - 522
Movement in cash flow hedging reserve (237) - - - (237)
Fair value gains arising during the
reporting period 1 972 - - - 1 972
Amount removed from other comprehensive income
and recognised in the profit and loss component
of the statement of comprehensive income (2 300) - - - (2 300)
Deferred tax 91 - - - 91
Movement in available-for-sale reserve (17) - - - (17)
Fair value losses arising during the
reporting period (58) - - - (58)
Amortisation of government bonds - release to
the profit and loss component of the statement
of comprehensive income 20 - - - 20
Deferred tax 21 - - - 21
Total items that are or may be reclassified
subsequently to profit and/or loss 268 - - - 268
Total comprehensive income for the reporting period 10 401 - - (99) 10 302
Total comprehensive income attributable to:
Ordinary equity holders 9 791 - - (99) 9 692
Non-controlling interest - ordinary shares 326 - - - 326
Non-controlling interest - preference shares 284 - - - 284
10 401 - - (99) 10 302
Salient features - operating performance
As previously
reported Restatements Restated
% % %
Net interest margin on average
interest-bearing assets 4,15(1) - 4,15
Impairment losses on loans and
advances as % of average loans
and advances to customers 1,01 0,03 1,04
Non-interest income as % of total
operating income 46,7 0,1 46,8
Note
(1) The Group reassessed its criteria applied to determine the balance of interest-bearing assets
in line with best practice. This resulted in a restatement of the net interest margin on average
interest-bearing assets for the comparative reporting periods.
Condensed consolidated statement of financial position as at 31 December 2011
As Change in
previously accounting
reported policy IFRS 10 IAS 19R Restated
Rm Rm Rm Rm Rm
Assets
Cash, cash balances and balances
with central banks 26 997 - - - 26 997
Statutory liquid asset portfolio 57 473 - - - 57 473
Loans and advances to banks 57 499 - - - 57 499
Trading portfolio assets 84 623 - - - 84 623
Hedging portfolio assets 4 299 - - - 4 299
Other assets 14 730 - - (138) 14 592
Current tax assets 288 - - - 288
Non-current assets held for sale 35 - - - 35
Loans and advances to customers 504 925 - - - 504 925
Reinsurance assets 1 009 - - - 1 009
Investment securities 21 182 - - - 21 182
Investments in associates and
joint ventures 420 - - - 420
Investment properties 2 839 - - - 2 839
Property and equipment 7 996 - - - 7 996
Goodwill and intangible assets 2 135 - - - 2 135
Deferred tax assets 269 - - - 269
Total assets 786 719 - - (138) 786 581
Liabilities
Deposits from banks 38 339 - - - 38 339
Trading portfolio liabilities 55 960 - - - 55 960
Hedging portfolio liabilities 2 456 - - - 2 456
Other liabilities 14 695 - - - 14 695
Provisions 1 710 - - - 1 710
Current tax liabilities 267 - - - 267
Deposits due to customers 440 960 - - - 440 960
Debt securities in issue 130 262 - - - 130 262
Liabilities under investment
contracts 15 233 - - - 15 233
Policyholder liabilities under
insurance contracts 3 183 - - - 3 183
Borrowed funds 14 051 - - - 14 051
Deferred tax liabilities 1 198 - - (39) 1 159
Total liabilities 718 314 - - (39) 718 275
Equity
Capital and reserves
Attributable to ordinary
equity holders
Share capital 1 434 - - - 1 434
Share premium 4 676 - - - 4 676
Retained earnings 53 813 - - (99) 53 714
Other reserves 2 385 - - - 2 385
62 308 - - (99) 62 209
Non-controlling interest - ordinary shares 1 453 - - - 1 453
Non-controlling interest - preference shares 4 644 - - - 4 644
Total equity 68 405 - - (99) 68 306
Total liabilities and equity 786 719 - - (138) 786 581
Salient features - financial performance
As previously
reported Restatements Restated
% % %
Return on average equity (RoE) 16,4 - 16,4
Return on average assets (RoA) 1,32 - 1,32
Inter-segmental reclassifications
In accordance with IFRS 8 Operating Segments (IFRS 8), segmental reporting reflects how the
Groups businesses are managed and reported to the Chief Operating Decision Maker (CODM). From
1 January 2013, a number of changes were made to the way in which the Groups businesses are
managed and reported to the CODM.
Head office allocations
The Group elected to allocate additional Head office elements to the business segments so that the
aggregate of the business segment results is more closely aligned to the Groups total results.
For each income and expense item previously recorded under the Head office segment, consideration
was given to whether there is a logical basis for increased allocation of such items to other
business segments. The primary changes were:
*Intra-group allocation of funding costs and other Group Treasury items now includes all
income derived from the Groups liquid asset portfolio as well as allocation of the dividends paid
on the non-controlling preference shares, secondary tax on companies and an increased allocation of
intra-group interest. The allocation is based on the risk-weighted assets carried by each business
segment.
* Internal funding revenue generated by Money Markets desk in CIBW was moved from the Markets
business to Group Treasury (in the Head office segment) and was in turn allocated out to the business
segments.
* Head office operating cost items have been allocated to business segments wherever practicable
using the most appropriate driver of the cost.
* Fees recognised in Operating income before operating expenditure and Taxation expense, that
were payable and receivable between business lines within CIBW and between CIBW and Head office in
respect of Structured Capital Markets activities, have been eliminated. Both the allocation of
secondary tax on companies, referred to above, and this item impacts the relative tax rates of segments.
The Groups Head office segment will now represent a smaller proportion of the Groups earnings
and will primarily consist of: group consolidation entries; accounting mismatches (defined as IFRS
accounting adjustments not deemed relevant to business segment performance); timing items (items
allocated to business segments with a timing lag) and corporate items that cannot be meaningfully
allocated to business segments.
The impact of the changes in the allocation methodology on the headline earnings of the individual
business segments is as indicated in the table below:
Interim
30 June 31 December
2012 2012
Rm Rm
RBB (1) 52
Retail Banking (5) 34
Business Banking 4 18
CIBW (36) (55)
Financial Services (37) (73)
Head office, inter-segment
eliminations and Other 74 76
Portfolio changes
Operational changes, management changes and associated changes to the way in which the CODM views
the performance of each business segment have resulted in the reallocation of certain business
lines between operating segments. The primary changes are detailed below.
* Commercial property finance (CPF) debt - management responsibility for a number of large
advances were transferred from RBB to CIBW.
* Commercial Asset Finance (CAF) - this business line was previously included in Business
Banking. To take advantage of synergies with the existing Vehicle and Asset Finance (VAF) portfolio
in Retail Banking, the portfolio was moved to Retail Banking.
* Barclays Bank Mozambique S.A. (BBM) and National Bank of Commerce Limited (NBC) Treasury -
segmentation of treasury-related results between RBB, CIBW and Head office was reviewed and amended
to better align with changing management responsibility and the segmentation principles applied by
Barclays in the rest of Africa.
* Certain operations that were previously conducted from individual business segments were
transferred to Head office to become shared services. In turn, their costs were allocated out to
relevant business segments in line with the revised approach to head office allocations.
The impact of these changes on the headline earnings of the individual business segments is
reflected in the table below:
Interim
30 June 31 December
2012 2012
Rm Rm
RBB 22 (6)
Retail Banking 84 7
Business Banking (62) (13)
CIBW (7) (35)
Financial Services - -
Head office, inter-segment
eliminations and Other (15) 41
The impact of the change in accounting policies as well as the head office allocations and
portfolio changes on the performance of the business segments is indicated in the tables that follow.
Retail and Business Banking (RBB) for the interim reporting period ended 30 June 2012
As previously Change in
reported accounting Head office Portfolio
reported policy allocations restatements Restated
Rm Rm Rm Rm Rm
Statement of comprehensive income
Net interest income 9 623 - 366 (141) 9 848
Impairment losses on loans and advances (3 917) (87) - 42 (3 962)
Non-interest income 6 880 47 - (61) 6 866
Operating expenses (9 723) 40 (3) 173 (9 513)
Other (201) - - 8 (193)
Operating profit before income tax 2 662 - 363 21 3 046
Taxation expense (900) - (269) 8 (1 161)
Profit for the reporting period 1 762 - 94 29 1 885
Profit attributable to:
Ordinary equity holders 1 770 - (1) 22 1 791
Non-controlling interest - ordinary shares (8) - - 7 (1)
Non-controlling interest - preference shares - - 95 - 95
1 762 - 94 29 1 885
Headline earnings 1 933 - (1) 22 1 954
as at 30 June 2012
Statement of financial position
Loans and advances to customers 411 948 - - (6 985) 404 963
Investment securities 1 253 - - - 1 253
Other assets 176 038 - 258 4 570 180 866
Total assets 589 239 - 258 (2 415) 587 082
Deposits due to customers 205 982 - - (2 154) 203 828
Debt securities in issue 4 256 - - - 4 256
Other liabilities 374 623 - 258 21 374 902
Total liabilities 584 861 - 258 (2 133) 582 986
Salient features - operating and financial performance
As previously
reported Restatements Restated
% % %
Net interest margin on average
interest-bearing assets 3,68(1) 0,10 3,78
Impairment losses on loans and
advances as % of average loans
and advances to customers 1,92 0,06 1,98
Non-interest income as % of
total operating income 41,7 (0,6) 41,1
Return on average assets (RoA) 0,67 0,01 0,68
Note
(1) The Group reassessed its criteria applied to determine the balance of interest-bearing assets
in line with best practice. This resulted in a restatement of the net interest margin on average
interest-bearing assets for the comparative reporting periods.
Retail and Business Banking (RBB) for the reporting period ended 31 December 2012
As
previously Change in
reported accounting Head office Portfolio
Rm policy allocations restatements Restated
Rm Rm Rm Rm
Statement of comprehensive income
Net interest income 20 004 - 577 (311) 20 270
Impairment losses on loans and advances (8 153) (188) - 106 (8 235)
Non-interest income 13 849 104 - (74) 13 879
Operating expenses (19 535) 84 (6) 263 (19 194)
Other (397) - - 23 (374)
Operating profit before income tax 5 768 - 571 7 6 346
Taxation expense (1 765) - (319) 3 (2 081)
Profit for the reporting period 4 003 - 252 10 4 265
Profit attributable to:
Ordinary equity holders 3 961 - 52 (6) 4 007
Non-controlling interest - ordinary shares 42 - - 16 58
Non-controlling interest - preference shares - - 200 - 200
4 003 - 252 10 4 265
Headline earnings 4 346 - 52 (6) 4 392
as at 30 June 2012
Statement of financial position
Loans and advances to customers 419 644 - - (8 117) 411 527
Investment securities 1 042 - - - 1 042
Other assets 194 313 - 350 4 467 199 130
Total assets 614 999 - 350 (3 650) 611 699
Deposits due to customers 216 309 - - (3 826) 212 483
Debt securities in issue 3 636 - - - 3 636
Other liabilities 387 612 - 307 499 388 418
Total liabilities 607 557 - 307 (3 327) 604 537
Salient features - operating and financial performance
As previously
reported Restatements Restated
% % %
Net interest margin on average
interest-bearing assets 3,75(1) 0,07 3,82
Impairment losses on loans and
advances as % of average loans
and advances to customers 1,98 0,06 2,04
Non-interest income as % of
total operating income 40,9 (0,3) 40,6
Return on average assets (RoA) 0,74 0,01 0,75
Note
(1) The Group reassessed its criteria applied to determine the balance of interest-bearing assets
in line with best practice. This resulted in a restatement of the net interest margin on average
interest-bearing assets for the comparative reporting periods.
Corporate, Investment Banking and Wealth (CIBW) for the interim reporting period ended 30 June 2012
As previously Accounting Head office Portfolio
reported restatements allocations restatements Restated
Rm Rm Rm Rm Rm
Statement of comprehensive income
Net interest income 1 520 (56) 119 143 1 726
Impairment losses on loans and advances (9) - - (42) (51)
Non-interest income 2 766 45 (402) (26) 2 383
Operating expenses (2 344) - 3 (98) (2 439)
Other (52) - - - (52)
Operating profit before income tax 1 881 (11) (280) (23) 1 567
Taxation expense (530) 3 289 3 (235)
Profit for the reporting period 1 351 (8) 9 (20) 1 332
Profit attributable to:
Ordinary equity holders 1 352 (8) (36) (7) 1 301
Non-controlling interest - ordinary shares (1) - - (13) (14)
Non-controlling interest - preference shares - - 45 - 45
1 351 (8) 9 (20) 1 332
Headline earnings 1 352 (8) (36) (7) 1 301
as at 30 June 2012
Statement of financial position
Loans and advances to customers 94 297 (931) - 6 985 100 351
Investment securities 7 315 54 - (485) 6 884
Other assets 378 197 (454) 86 (6 704) 371 125
Total assets 479 809 (1 331) 86 (204) 478 360
Deposits due to customers 252 142 464 - 2 149 254 755
Debt securities in issue 95 384 (1 341) - - 94 043
Other liabilities 128 020 (443) 123 (2 283) 125 417
Total liabilities 475 546 (1 320) 123 (134) 474 215
Salient features - operating and financial performance
As previously
reported Restatements Restated
% % %
Impairment losses on loans and
advances as % of average loans
and advances to customers 0,02 0,08 0,10
Non-interest income as % of
total operating income 64,5 (6,5) 58,0
Return on average assets (RoA) 0,50 (0,02) 0,48
Corporate, Investment Banking and Wealth (CIBW) for the reporting period ended 31 December 2012
As previously Accounting Head office Portfolio
reported restatement allocations restatements Restated
Rm Rm Rm Rm Rm
Statement of comprehensive income
Net interest income 2 964 (119) 162 314 3 321
Impairment losses on loans and advances (117) - - (106) (223)
Non-interest income 5 664 105 (516) (45) 5 208
Operating expenses (4 666) - 6 (246) (4 906)
Other 21 - - - 21
Operating profit before income tax 3 866 (14) (348) (83) 3 421
Taxation expense (1 027) 4 388 17 (618)
Profit for the reporting period 2 839 (10) 40 (66) 2 803
Profit attributable to:
Ordinary equity holders 2 810 (10) (55) (35) 2 710
Non-controlling interest - ordinary shares 29 - - (31) (2)
Non-controlling interest - preference shares - - 95 - 95
2 839 (10) 40 (66) 2 803
Headline earnings 2 810 (10) (55) (35) 2 710
as at 31 December 2012
Statement of financial position
Loans and advances to customers 107 907 (863) - 8 116 115 160
Investment securities 8 314 226 - (621) 7 919
Other assets 357 734 (460) 94 (6 994) 350 374
Total assets 473 955 (1 097) 94 501 473 453
Deposits due to customers 261 317 426 - 3 819 265 562
Debt securities in issue 84 252 (1 265) - - 82 987
Other liabilities 122 462 (246) 146 (3 076) 119 286
Total liabilities 468 031 (1 085) 146 743 467 835
Salient features - operating and financial performance
As previously
reported Restatements Restated
% % %
Impairment losses on loans and
advances as % of average loans
and advances to customers 0,12 0,9 0,21
Non-interest income as % of
total operating income 65,6 (4,5) 61,1
Return on average assets (RoA) 0,52 (0,02) 0,50
Financial Services for the interim reporting period ended 30 June 2012
As previously Accounting Head office Portfolio
reported restatements allocations restatements Restated
Rm Rm Rm Rm Rm
Statement of comprehensive income
Net interest income 2 - - - 2
Impairment losses on loans and advances (4) - - - (4)
Non-interest income 1 970 2 - - 1 972
Operating expenses (980) (2) (51) - (1 033)
Other (49) - - - (49)
Operating profit before income tax 939 - (51) - 888
Taxation expense (262) - 14 - (248)
Profit for the reporting period 677 - (37) - 640
Profit attributable to:
Ordinary equity holders 677 - (37) - 640
Non-controlling interest - ordinary shares - - - - -
Non-controlling interest - preference shares - - - - -
677 - (37) - 640
Headline earnings 678 - (37) - 641
as at 30 June 2012
Statement of financial position
Loans and advances to customers 185 - - - 185
Investment securities 17 777 4 390 - - 22 167
Other assets 8 508 444 (51) - 8 901
Total assets 26 470 4 834 (51) - 31 253
Deposits due to customers - - - - -
Debt securities in issue - - - - -
Other liabilities 21 608 4 834 (14) - 26 428
Total liabilities 21 608 4 834 (14) - 26 428
Salient features - operating and financial performance
As previously
reported Restatements Restated
% % %
Impairment losses on loans and
advances as % of average loans
and advances to customers 5,29 - 5,29
Non-interest income as % of
total operating income 99,9 - 99,9
Return on average assets (RoA) 5,22 (1,04) 4,18
Financial Services for the reporting period ended 31 December 2012
As previously Accounting Head office Portfolio
reported restatement allocations restatements Restated
Rm Rm Rm Rm Rm
Statement of comprehensive income
Net interest income 6 - - - 6
Impairment losses on loans and advances (24) - - - (24)
Non-interest income 4 010 14 - - 4 024
Operating expenses (2 027) (10) (101) - (2 138)
Other (118) - - - (118)
Operating profit before income tax 1 847 4 (101) - 1 750
Taxation expense (526) (4) 28 - (502)
Profit for the reporting period 1 321 - (73) - 1 248
Profit attributable to:
Ordinary equity holders 1 321 - (73) - 1 248
Non-controlling interest - ordinary shares - - - - -
Non-controlling interest - preference shares - - - - -
1 321 - (73) - 1 248
Headline earnings 1 338 - (73) - 1 265
as at 31 December 2012
Statement of financial position
Loans and advances to customers 296 - - - 296
Investment securities 15 003 4 843 - - 19 846
Other assets 10 553 326 (101) - 10 778
Total assets 25 852 5 169 (101) - 30 920
Deposits due to customers - - - - -
Debt securities in issue - - - - -
Other liabilities 21 081 5 169 (28) - 26 222
Total liabilities 21 081 5 169 (28) - 26 222
Salient features - operating and financial performance
As previously
reported Restatements Restated
% % %
Impairment losses on loans and
advances as % of average loans
and advances to customers 12,37 - 12,37
Non-interest income as % of
total operating income 99,9 - 99,9
Return on average assets (RoA) 5,16 (1,03) 4,13
Head office, inter-segment eliminations and Other for the interim reporting period ended 30 June 2012
As previously Accounting Head office Portfolio
reported restatements allocations restatements Restated
Rm Rm Rm Rm
Statement of comprehensive income
Net interest income 764 - (485) (2) 277
Impairment losses on loans and advances (90) - - - (90)
Non-interest income (442) - 402 87 47
Operating expenses 381 (15) 51 (75) 342
Other (8) - - (8) (16)
Operating profit before income tax 605 (15) (32) 2 560
Taxation expense (75) 4 (34) (11) (116)
Profit for the reporting period 530 (11) (66) (9) 444
Profit attributable to:
Ordinary equity holders 390 (11) 74 (15) 438
Non-controlling interest - ordinary shares - - - 6 6
Non-controlling interest - preference shares 140 - (140) - -
530 (11) (66) (9) 444
Headline earnings 369 (11) 74 (15) 417
as at 30 June 2012
Statement of financial position
Loans and advances to customers 231 - - - 231
Investment securities (4 815) - - 485 (4 330)
Other assets (282 128) 338 (293) 2 134 (279 949)
Total assets (286 712) 338 (293) 2 619 (284 048)
Deposits due to customers (244) - - 5 (239)
Debt securities in issue 25 487 - - - 25 487
Other liabilities (368 720) 488 (367) 2 262 (366 337)
Total liabilities (343 477) 488 (367) 2 267 (341 089)
Head office, inter-segment and Other for the reporting period ended 31 December 2012
As previously Accounting Head office Portfolio
reported restatements allocations restatements Restated
Rm Rm Rm Rm Rm
Statement of comprehensive income
Net interest income 1 137 - (739) (3) 395
Impairment losses on loans and advances 4 - - - 4
Non-interest income (782) - 516 119 (147)
Operating expenses 354 (81) 101 (17) 357
Other (76) - - (23) (99)
Operating profit before income tax 637 (81) (122) 76 510
Taxation expense (59) 22 (97) (20) (154)
Profit for the reporting period 578 (59) (219) 56 356
Profit attributable to:
Ordinary equity holders 301 (59) 76 41 359
Non-controlling interest - ordinary shares (18) - - 15 (3)
Non-controlling interest - preference shares 295 - (295) - -
578 (59) (219) 56 356
Headline earnings 313 (59) 76 41 371
as at 31 December 2012
Statement of financial position
Loans and advances to customers 344 - - 1 345
Investment securities (3 804) - - 621 (3 183)
Other assets (303 407) 575 (343) 2 527 (300 648)
Total assets (306 867) 575 (343) 3 149 (303 486)
Deposits due to customers (199) - - 7 (192)
Debt securities in issue 20 156 - - - 20 156
Other liabilities (381 481) 577 (425) 2 577 (378 752)
Total liabilities (361 524) 577 (425) 2 583 (358 788)
The term Absa or Group refers to Absa Group Limited together with its subsidiaries.
18 July 2013
Sponsor: J.P. Morgan Equities Limited
Certain statements in this document are forward looking that relate to, among other things, the plans, objectives, goals,
strategies, future operations and performance of the Group. Words such as anticipates, estimates, expects, projects,
believes, intends, plans, may, will and should and similar expressions are typically indicative of a
forward-looking statement. These statements are not guarantees of Absas future operating, financial or other results and
involve certain risks, uncertainties and assumptions. Accordingly, actual results and outcomes may differ materially from
these expressed or implied by such statements. Absa makes no representation or warranty, express or implied, that the operating,
financial or other results anticipated by such forward-looking statements will be achieved and such forward-looking statements
represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario.
Absa undertakes no obligation to update the historical information or forward-looking statements in this document.
The information in this announcement does not comprise statutory accounts or interim financial statements within the meaning
of section 29 of the Companies Act, No 71 of 2008 (as amended) and IAS 34 respectively.
Date: 18/07/2013 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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