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Unaudited condensed consolidated financial results for the interim reporting period ended 30 June 2013
Absa Bank Limited
Unaudited condensed consolidated financial results for the interim reporting period ended 30 June 2013
Authorised financial services and registered credit provider (NCRCP7)
Registration number: 1986/004794/06
Incorporated in the Republic of South Africa
JSE share code: ABSP and ABMN
ISIN: ZAE000079810
(Absa, Absa Bank, the Bank or the Company)
These unaudited condensed consolidated financial results were prepared by Absa Group Financial Reporting under the
direction and supervision of the Group Financial Director, D W P Hodnett CA(SA).
Date of publication: 30 July 2013
Consolidated salient features
30 June Change 31 December
2013 2012 1 % 2012 1
Statement of comprehensive income (Rm)
Headline earnings2 3 970 3 680 8 7 356
Profit attributable to ordinary equity holder 4 025 3 691 9 7 203
Statement of financial position
Total assets (Rm) 788 169 764 267 3 763 969
Loans and advances to customers (Rm) 519 592 488 991 6 510 316
Deposits due to customers (Rm) 478 521 449 441 6 467 744
Loans-to-deposits ratio (%) 89,2 85,7 89,1
Financial performance (%)
Return on average equity 14,2 13,8 13,5
Return on average assets 1,04 0,99 0,96
Return on average risk-weighted assets 1,93 1,99 1,90
Operating performance (%)
Net interest margin on average interest-bearing assets 3,64 3,63 3,54
Impairment losses on loans and advances as a % of average loans and advances 1,31 1,58 1,60
to customers
Non-performing loans as a % of gross loans and advances to customers 5,3 6,3 5,7
Non-interest income as % of total operating income 43,1 44,9 45,2
Cost-to-income ratio 54,0 52,9 53,0
Effective tax rate, excluding indirect taxation 26,5 26,6 26,1
Share statistics (million)
(including A ordinary shares)
Number of ordinary shares in issue 378,8 374,1 378,8
Weighted average number of ordinary shares in issue 378,8 374,1 375,3
Diluted weighted average number of ordinary shares in issue 378,8 374,1 375,3
Share statistics (cents)
Headline earnings per share 1 048,0 983,7 7 1 960,0
Diluted headline earnings per share 1 048,0 983,7 7 1 960,0
Basic earnings per share 1 062,6 986,6 8 1 919,3
Diluted earnings per share 1 062,6 986,6 8 1 919,3
Dividends per ordinary share relating to income for the reporting period 2 233,4 695,5 >100 1 568,3
Dividend cover (times) 0,5 1,4 1,2
Net asset value per share 14 905 14 530 3 14 842
Tangible net asset value per share 14 588 14 346 2 14 535
Capital adequacy (%)3
Absa Bank 16,8 16,6 17,5
Off-statement of financial position (Rm)
Assets under management and administration 28 904 23 074 25 27 158
Notes
1 Refer to note 23 for reporting changes.
2 After allowing for R146 million (30 June 2012: R140 million; 31 December 2012: R295 million) profit attributable to
preference equity holders.
3 This ratio has been impacted by the implementation of Basel III. Refer to pages 103 to 118 of the Groups interim
financial results booklet for further information.
Condensed consolidated statement of financial position
as at
30 June 31 December
2013 2012 1 Change 2012 1
Note Rm Rm % Rm
Assets
Cash, cash balances and balances with central banks 18 823 18 348 3 20 435
Statutory liquid asset portfolio 66 902 60 061 11 63 020
Loans and advances to banks 54 323 57 018 (5) 42 407
Trading portfolio assets 79 445 91 476 (13) 82 416
Hedging portfolio assets 3 567 4 868 (27) 5 439
Other assets 13 834 16 761 (17) 11 362
Current tax assets 6 379 (98) 34
Non-current assets held for sale 1 1 655 6 >100 1 438
Loans and advances to customers 2 519 592 488 991 6 510 316
Loans to Absa Group companies 13 699 8 240 66 10 777
Investment securities 6 345 8 136 (22) 6 589
Investments in associates and joint ventures 642 361 78 562
Investment properties 229 1 871 (88) 331
Property and equipment 7 886 7 020 12 7 653
Goodwill and intangible assets 1 201 689 74 1 160
Deferred tax assets 20 42 (52) 30
Total assets 788 169 764 267 3 763 969
Liabilities
Deposits from banks 50 197 32 418 55 43 085
Trading portfolio liabilities 51 903 49 127 6 47 889
Hedging portfolio liabilities 2 505 3 251 (23) 3 855
Other liabilities 22 041 26 797 (18) 14 618
Provisions 606 965 (37) 1 394
Current tax liabilities 312 30 >100 58
Non-current liabilities held-for-sale 1 185 - 100 177
Deposits due to customers 5 478 521 449 441 6 467 744
Debt securities in issue 6 104 197 121 386 (14) 104 923
Loans from Absa Group companies - 6 092 (100) -
Borrowed funds 7 15 657 14 268 10 17 907
Deferred tax liabilities 891 1 404 (37) 1 407
Total liabilities 727 015 705 179 3 703 057
Equity
Capital and reserves
Attributable to equity holders:
Ordinary share capital 303 303 - 303
Ordinary share premium 12 465 11 465 9 12 465
Preference share capital 1 1 - 1
Preference share premium 4 643 4 643 - 4 643
Retained earnings 39 625 38 347 3 38 011
Other reserves 4 067 4 244 (4) 5 441
61 104 59 003 3 60 864
Non-controlling interest 50 85 (41) 48
Total equity 61 154 59 088 3 60 912
Total liabilities and equity 788 169 764 267 3 763 969
Note
1 Refer to note 23 for reporting changes.
Condensed consolidated statement of comprehensive income
for the reporting period ended
30 June 31 December
2013 2012 1 Change 2012 1
Note Rm Rm % Rm
Net interest income 11 496 10 874 6 21 876
Interest and similar income 8.1 24 600 24 817 (1) 48 515
Interest expense and similar charges 8.2 (13 104) (13 943) 6 (26 639)
Impairment losses on loans and advances 3.1 (3 307) (3 864) 14 (8 022)
Net interest income after impairment losses on loans and advances 8 189 7 010 17 13 854
Non-interest income 8 703 8 870 (2) 18 079
Net fee and commission income 6 874 6 732 2 13 863
Fee and commission income 9.1 7 315 7 278 1 14 890
Fee and commission expense 9.2 (441) (546) 19 (1 027)
Gains and losses from banking and trading activities 9.3 1 569 1 856 (15) 3 651
Gains and losses from investment activities 9.4 1 19 (95) 20
Other operating income 259 263 (2) 545
Operating income before operating expenditure 16 892 15 880 6 31 933
Operating expenditure (11 293) (10 690) (6) (22 048)
Operating expenses 10.1 (10 912) (10 436) (5) (21 169)
Other impairments 10.2 (1) (2) 50 (344)
Indirect taxation (380) (252) (51) (535)
Share of post-tax results of associates and joint ventures 81 31 >100 240
Operating profit before income tax 5 680 5 221 9 10 125
Taxation expense (1 507) (1 388) (9) (2 643)
Profit for the reporting period 4 173 3 833 9 7 482
Other comprehensive income
Items that will not be reclassified to the profit and loss component
of the statement of comprehensive income:
Movement in retirement benefit fund assets and liabilities 2 (12) >100 (43)
Increase/(decrease) in retirement benefit deficit 3 (17) >100 (61)
Deferred tax (1) 5 >(100) 18
Total items that will not be reclassified to the profit and loss
component of the statement of comprehensive income 2 (12) >100 (43)
Items that are or may be reclassified subsequently to the profit and
loss component of the statement of comprehensive income:
Foreign exchange differences on translation of foreign operations 200 39 >100 183
Movement in cash flow hedging reserve (1 712) 286 >(100) 405
Fair value (losses)/gains arising during the reporting period (1 472) 1 409 >(100) 2 650
Amount removed from other comprehensive income and recognised in the
profit and loss component of the statement of comprehensive income (906) (1 012) 10 (2 088)
Deferred tax 666 (111) >100 (157)
Movement in available-for-sale reserve 87 359 (76) 1 101
Fair value gains arising during the reporting period 117 493 (76) 1 524
Amortisation of government bonds - release to the profit and loss component
of the statement of comprehensive income 4 5 (20) 10
Deferred tax (34) (139) 76 (433)
Total items that are or may be reclassified subsequently to the profit (1 425) 684 >(100) 1 689
and loss component of the statement of comprehensive income
Total comprehensive income for the reporting period 2 750 4 505 (39) 9 128
Profit attributable to:
Ordinary equity holder 4 025 3 691 9 7 203
Preference equity holders 146 140 4 295
Non-controlling interest 2 2 0 (16)
4 173 3 833 9 7 482
Total comprehensive income attributable to:
Ordinary equity holder 2 602 4 363 (40) 8 849
Preference equity holders 146 140 4 295
Non-controlling interest 2 2 0 (16)
2 750 4 505 (39) 9 128
Earnings per share:
Basic earnings per share (cents) 1 062,6 986,6 8 1 919,3
Diluted earnings per share (cents) 1 062,6 986,6 8 1 919,3
Note
1 Refer to note 23 for reporting changes.
Condensed consolidated statement of changes in equity
for the reporting period ended
30 June 2013
Capital and
reserves
attributable Non-
to equity controlling Total
holders interest equity
Rm Rm Rm
Balance at the beginning of the reporting period 60 864 48 60 912
Total comprehensive income for the reporting period 2 748 2 2 750
Profit for the reporting period 4 171 2 4 173
Other comprehensive income (1 423) - (1 423)
Dividends paid during the reporting period (2 439) - (2 439)
Purchase of Absa Group Limited shares in respect of
equity-settled share-based payment schemes (71) - (71)
Movement in share-based payment reserve 2 - 2
Transfer from share-based payment reserve (32) - (32)
Transfer to share capital and share premium 32 - 32
Value of employee services 2 - 2
Share of post-tax results of associates and joint ventures - - -
Transfer from retained earnings (81) - (81)
Transfer to associates and joint ventures reserve 81 - 81
Balance at the end of the reporting period 61 104 50 61 154
30 June 2012 1
Capital and
reserves
attributable Non-
to equity controlling Total
holders interest equity
Rm Rm Rm
Balance at the beginning of the reporting period as
previously reported 57 234 158 57 392
Restatements (103) - (103)
Restated balance at the beginning of the reporting period 57 131 158 57 289
Total comprehensive income for the reporting period 4 503 2 4 505
Profit for the reporting period 3 831 2 3 833
Other comprehensive income 672 - 672
Dividends paid during the reporting period (2 460) - (2 460)
Purchase of Absa Group Limited shares in respect of
equity-settled share-based payment schemes (192) - (192)
Movement in share-based payment reserve 21 - 21
Transfer from share-based payment reserve (98) - (98)
Transfer to share capital and share premium 98 - 98
Value of employee services 21 - 21
Share of post-tax results of associates and joint ventures - - -
Transfer from retained earnings (32) - (32)
Transfer to associates and joint ventures reserve 32 - 32
Increase in the interest of non-controlling equity holders - 55 55
Release of non-controlling interest arising from disposal of
business - (130) (130)
Restated balance at the end of the reporting period 59 003 85 59 088
Note
1 Refer to note 23 for reporting changes.
Condensed consolidated statement of changes in equity
for the reporting period ended
31 December 2012 1
Capital and
reserves
attributable Non-
to equity controlling Total
holders interest equity
Rm Rm Rm
Balance at the beginning of the reporting period as previously
reported 57 234 158 57 392
Restatements (103) - (103)
Restated balance at the beginning of the reporting period 57 131 158 57 289
Total comprehensive income for the reporting period 9 144 (16) 9 128
Profit for the reporting period 7 498 (16) 7 482
Other comprehensive income 1 646 - 1 646
Dividends paid during the reporting period (6 217) - (6 217)
Shares issued 1 000 - 1 000
Purchase of Absa Group Limited shares in respect of
equity-settled share-based payment schemes (211) - (211)
Movement in share-based payment reserve 17 - 17
Transfer from share-based payment reserve (110) - (110)
Transfer to share capital and share premium 110 - 110
Value of employee services 17 - 17
Share of post-tax results of associates and joint ventures - - -
Transfer from retained earnings (240) - (240)
Transfer to associates and joint ventures reserve 240 - 240
Increase in the interest of non-controlling equity holders - 35 35
Release of non-controlling interest arising from disposal of
business - (129) (129)
Restated balance at the end of the reporting period 60 864 48 60 912
Note
1 Refer to note 23 for reporting changes.
Condensed consolidated statement of cash flows
for the reporting period ended
30 June 31 December
2013 2012 1 Change 2012 1
Note Rm Rm % Rm
Net cash generated/(utilised) from operating activities 3 543 (976) >100 1 784
Net cash (utilised)/generated in investing activities (714) 337 >(100) 1 132
Net cash utilised in financing activities (4 396) (2 654) (66) (1 928)
Net (decrease)/increase in cash and cash equivalents (1 567) (3 293) 52 988
Cash and cash equivalents at the beginning of the reporting period 1 8 786 7 798 13 7 798
Effect of exchange rate movements on cash and cash equivalents - 2 (100) -
Cash and cash equivalents at the end of the reporting period 2 7 219 4 507 60 8 786
Notes to the condensed consolidated statement of cash flows
1. Cash and cash equivalents at the beginning of the reporting period
Cash, cash balances and balances with central banks2 8 094 7 226 12 7 226
Loans and advances to banks3 692 572 21 572
8 786 7 798 13 7 798
2. Cash and cash equivalents at the end of the
reporting period
Cash, cash balances and balances with central banks2 5 527 4 254 30 8 094
Loans and advances to banks 3 1 692 253 >100 692
7 219 4 507 60 8 786
Notes
1 Refer to note 23 for reporting changes.
2 Includes coins and bank notes which are part of cash, cash balances and balances with central banks on the statement
of financial position.
3 Includes call advances which are used as working capital of the Bank and are a component of other advances to banks
within loans and advances to banks on the statement of financial position.
Condensed notes to the consolidated financial results
as at
1. Non-current assets and non-current liabilities held for sale
During the previous reporting period, the Bank effected the following transfers to non-current assets and non-current
liabilities held for sale, which remain within this category during the current reporting period:
Retail and Business Banking (RBB) segment:
- In the CPF Equity division, net assets in one of its subsidiaries, totalling R294 million, as well as one of its
property equity investments with a carrying value of R25 million. Legal transfer is expected to take place during the
fourth quarter of 2013.
- In the CPF Equity division, property and equipment with a carrying value of R22 million and a contract for the sale
of The Pivot Office Park, with a carrying value of R66 million, was also concluded with legal transfer expected to take
place before the fourth quarter of 2013 (previously classified as investment property).
During the current reporting period, the Bank effected the following disposal from non-current assets held for sale:
RBB segment:
- The investment in Sekunjalo Investments Limited, with a carrying value of R20 million. The investment was
subsequently sold in January 2013.
During the current reporting period, the Bank effected the following transfers to non-current assets and non-current
liabilities held for sale:
RBB segment:
- In the Commercial Property Finance Equity (CPF Equity) division, an investment property in one of its
subsidiaries, with a carrying value of R190 million. Legal transfer is expected to take place during the fourth quarter of 2013.
Head office, inter-segment eliminations and Other segment:
- Two properties with a carrying value of R16 million in the Corporate Real Estate division, currently in the process
of being auctioned, with legal transfer expected to take place on conclusion of the transaction. Legal transfer is
expected to take place during the second quarter of 2014.
2. Loans and advances to customers
30 June 31 December
2013 2012 1 Change 2012 1
Rm Rm % Rm
Cheque accounts 31 849 34 456 (8) 31 619
Corporate overdrafts and specialised finance loans 4 997 8 126 (39) 5 121
Credit cards 28 416 17 081 66 27 051
Foreign currency loans 16 384 8 455 94 12 152
Instalment credit agreements 63 043 58 276 8 60 364
Gross advances 76 150 69 924 9 72 999
Unearned finance charges (13 107) (11 648) (13) (12 635)
Reverse repurchase agreements 6 309 2 045 >100 4 698
Loans to associates and joint ventures 10 719 8 718 23 10 094
Microloans 1 897 1 694 12 1 846
Mortgages 275 053 282 835 (3) 278 200
Other loans and advances2 3 140 3 789 (17) 3 231
Overnight finance 17 355 14 360 21 18 862
Personal and term loans 28 184 26 290 7 29 638
Preference shares 6 613 6 889 (4) 6 352
Wholesale overdrafts 38 816 28 157 38 34 086
Gross loans and advances to customers 532 775 501 171 6 523 314
Impairment losses on loans and advances (refer to note 3) (13 183) (12 180) (8) (12 998)
519 592 488 991 6 510 316
3. Impairment losses on loans and advances
30 June 31 December
Reconciliation of total impairment losses on loans 2013 2012 1 Change 20121
and advances to customers Rm Rm % Rm
Balance at the beginning of the reporting period 12 998 11 388 14 11 388
Amounts written off during the reporting period (3 043) (2 846) (7) (6 084)
Exchange differences 1 3 (67) 3
Interest on impaired financial assets (refer to note 8.1) (450) (549) 18 (1 020)
9 506 7 996 19 4 287
Impairments raised during the reporting period 3 677 4 184 (12) 8 711
Balance at the end of the reporting period 13 183 12 180 8 12 998
Comprising:
Identified impairments 12 188 11 490 6 12 089
Unidentified impairments 995 690 44 909
13 183 12 180 8 12 998
30 June 31 December
2013 2012 1 Change 2012 1
Rm Rm % Rm
3.1 Statement of comprehensive income charge
Impairments raised during the reporting period 3 677 4 184 (12) 8 711
Identified impairments 3 587 4 245 (16) 8 560
Unidentified impairments 90 (61) >100 151
Recoveries of loans and advances previously written off 2 (370) (320) (16) (689)
3 307 3 864 (14) 8 022
Notes
1 Refer to note 23 for reporting changes.
2 Includes collection costs of R59 million (30 June 2012: R46 million; 31 December 2012: R104 million).
4. Non-performing loans
30 June 2013
Expected
recoveries
and fair Total
Outstanding value of Net identified Coverage
balance collateral exposure impairment ratio
Rm Rm Rm Rm %
RBB 27 924 17 469 10 455 10 455 37,4
Retail Banking 22 528 14 086 8 442 8 442 37,5
Cheque accounts 102 28 74 74 72,5
Credit cards 1 409 427 982 982 69,7
Edcon portfolio 309 53 256 256 82,8
Instalment credit agreements 1 661 852 809 809 48,7
Microloans 406 113 293 293 72,2
Mortgages 17 384 12 138 5 246 5 246 30,2
Personal loans 1 257 475 782 782 62,2
Business Banking 5 396 3 383 2 013 2 013 37,3
Cheque accounts 951 595 356 356 37,4
Commercial asset finance 351 88 263 263 74,9
Commercial property finance 2 893 1 829 1 064 1 064 36,8
Term loans 1 201 871 330 330 27,5
CIBW 565 158 407 407 72,0
Non-performing loans 28 489 17 627 10 862 10 862 38,1
Non-performing loans ratio (%) 5,3
30 June 2012 1
Expected
recoveries
and fair Total
Outstanding value of Net identified Coverage
balance collateral exposure impairment ratio
Rm Rm Rm Rm %
RBB 30 928 21 331 9 597 9 597 31,0
Retail Banking 27 236 19 040 8 196 8 196 30,1
Cheque accounts 140 48 92 92 65,7
Credit cards 1 414 512 902 902 63,8
Instalment credit agreements 2 441 1 114 1 327 1 327 54,4
Microloans 339 113 226 226 66,7
Mortgages 21 729 16 811 4 918 4 918 22,6
Personal loans 1 173 442 731 731 62,3
Business Banking 3 692 2 291 1 401 1 401 37,9
Cheque accounts 672 379 293 293 43,6
Commercial asset finance 496 150 346 346 69,8
Commercial property finance 1 865 1 272 593 593 31,8
Term loans 659 490 169 169 25,6
CIBW 800 360 440 440 55,0
Non-performing loans 31 728 21 691 10 037 10 037 31,6
Non-performing loans ratio (%) 6,3
Note
1 Refer to note 23 for reporting changes.
31 December 20121
Expected
recoveries
and fair Total
Outstanding value of Net identified Coverage
balance collateral exposure impairment ratio
Rm Rm Rm Rm %
RBB 28 930 18 633 10 297 10 297 35,6
Retail Banking 23 330 15 278 8 052 8 052 34,5
Cheque accounts 96 29 67 67 69,8
Credit cards 1 310 430 880 880 67,2
Instalment credit agreements 1 789 894 895 895 50,0
Microloans 337 115 222 222 65,9
Mortgages 18 750 13 408 5 342 5 342 28,5
Personal loans 1 048 402 646 646 61,6
Business Banking 5 600 3 355 2 245 2 245 40,1
Cheque accounts 859 522 337 337 39,2
Commercial asset finance 443 146 297 297 67,2
Commercial property finance 3 222 1 883 1 339 1 339 41,6
Term loans 1 076 804 272 272 25,3
CIBW 880 384 496 496 56,4
Non-performing loans 29 810 19 017 10 793 10 793 36,2
Non-performing loans ratio (%) 5,7
Note
1 Refer to note 23 for reporting changes.
5. Deposits due to customers
30 June 31 December
2013 2012 1 Change 2012 1
Rm Rm % Rm
Call deposits 51 711 47 524 9 56 648
Cheque account deposits 147 132 136 123 8 139 857
Credit card deposits 1 807 1 823 (1) 1 938
Fixed deposits 128 557 121 682 6 124 832
Foreign currency deposits 9 780 7 404 32 9 723
Notice deposits 55 406 47 083 18 55 728
Other deposits2 2 142 2 546 (16) 1 983
Repurchase agreements with non-banks 3 813 12 432 (69) 1 503
Savings and transmission deposits 78 173 72 824 7 75 532
478 521 449 441 6 467 744
Notes
1 Refer to note 23 for reporting changes.
2 Includes partnership 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
2013 2012 1 Change 2012 1
Rm Rm % Rm
Credit linked notes 9 451 10 169 (7) 9 800
Floating rate notes 49 113 64 494 (24) 52 639
Negotiable certificates of deposit 23 374 21 519 9 17 926
Other 7 - 100 7
Promissory notes 833 2 474 (66) 1 561
Structured notes and bonds 543 1 253 (57) 1 098
Senior notes 20 876 21 477 (3) 21 892
104 197 121 386 (14) 104 923
Note
1 Refer to note 23 for reporting changes.
7. Borrowed funds
30 June 31 December
2013 2012 Change 2012
Rm Rm % Rm
Subordinated callable notes
The subordinated debt instruments listed below qualify as
secondary capital in terms of the Banks Act, No 94 of 1990
(as amended).
Interest rate Final maturity date
8,75% 1 September 2017 - 1 500 (100) -
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
8,295% 21 November 2023 1 188 - 100 1 188
Three-month JIBAR + 2,10% 3 May 2022 400 400 - 400
Three-month JIBAR + 1,95% 21 November 2022 1 805 - 100 1 805
Three-month JIBAR + 2,05% 21 November 2023 2 007 - 100 2 007
CPI-linked notes, fixed at the following coupon rates:
6,25% 31 March 2018 - 1 886 (100) 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 1 358 1 339 1 1 462
Fair value adjustment 74 318 (77) 334
15 657 14 268 10 17 907
8. Net interest income
30 June 31 December
2013 2012 1 Change 2012 1
Rm Rm % Rm
8.1 Interest and similar income
Interest and similar income is earned from:
Cash, cash balances and balances with central banks 6 13 (54) 19
Fair value adjustments on hedging instruments 521 660 (21) (185)
Investment securities 24 73 (67) 117
Loans and advances to banks 426 375 14 836
Other loans and advances to banks 335 348 (4) 742
Reverse repurchase agreements 91 27 >100 94
Loans and advances to customers 20 663 21 152 (3) 41 126
Cheque accounts 1 331 1 306 2 2 677
Corporate overdrafts and specialised finance loans 136 357 >(100) 484
Credit cards 2 238 1 129 98 2 660
Foreign currency loans 154 91 69 218
Instalment credit agreements 2 847 2 780 2 5 536
Interest on impaired financial assets (refer to note 3) 450 549 (18) 1 020
Loans to associates and joint ventures 304 232 31 494
Microloans 234 232 1 477
Mortgages 9 628 10 489 (8) 20 611
Other loans and advances to customers2 101 633 (84) 220
Overnight finance 400 397 1 814
Personal and term loans 1 517 1 657 (8) 3 228
Preference shares 229 259 (12) 485
Wholesale overdrafts 1 094 1 041 5 2 202
Other interest income3 761 489 6 1 018
Statutory liquid asset portfolio 2 199 2 689 >(100) 5 584
24 600 24 817 (1) 48 515
Notes
1 Refer to note 23 for the reporting changes.
2 Includes items such as interest on factored debtors books.
3 Includes items such as inter-segment eliminations between interest and similar income,
interest expense and similar charges and gains and losses from banking and trading activities.
30 June 31 December
2013 2012 1 Change 2012 1
Rm Rm % Rm
8.2 Interest expense and similar charges
Interest expense and similar charges are paid on:
Borrowed funds 661 708 (7) 1 352
Debt securities in issue 2 856 4 155 (31) 8 234
Deposits due to customers 9 035 9 216 (2) 17 834
Call deposits 1 351 1 434 (6) 2 863
Cheque account deposits 1 547 1 766 (12) 3 171
Credit card deposits 4 139 (97) 9
Fixed deposits 3 452 3 425 1 6 884
Foreign currency deposits 52 22 >(100) 73
Notice deposits 1 458 1 194 22 2 469
Other deposits due to customers 132 134 (1) 220
Savings and transmission deposits 1 039 1 102 (6) 2 145
Deposits from banks 483 540 (11) 1 227
Call deposits loans to customers 188 291 (35) 677
Fixed deposits 291 226 29 517
Other deposits from banks 4 23 (83) 33
Fair value adjustments on hedging instruments 606 (337) >100 (998)
Interest incurred on finance leases 12 30 (60) 51
Other interest expense1 549 (369) (49) (1 061)
13 104 13 943 (6) 26 639
Notes
1 Refer to note 23 for reporting changes.
2 Includes items such as inter-segment eliminations between interest and similar income,
interest expense and similar charges, and gains and losses from banking and trading activities.
9. Non-interest income
30 June 31 December
2013 2012 1 Change 2012 1
Rm Rm % Rm
9.1 Fee and commission income
Asset management and other related fees 47 33 42 62
Consulting and administration fees 34 50 (32) 136
Credit-related fees and commissions 5 879 5 961 (1) 12 021
Cheque accounts 1 752 1 766 (1) 3 539
Credit cards2 234 212 10 428
Electronic banking 1 997 1 992 0 4 068
Other credit-related fees and commissions 3 746 775 (4) 1 516
Savings accounts 1 150 1 216 (5) 2 470
Insurance commission received 239 227 5 465
Investment banking fees 123 104 18 252
Merchant income 935 867 8 1 843
Other fee and commission income 40 26 54 81
Trust and other fiduciary services 18 10 80 30
Portfolio and other management fees 9 8 13 20
Trust and estate income 9 2 >100 10
7 315 7 278 1 14 890
9.2 Fee and commission expense
Cheque processing fees (75) (81) 7 (161)
Other fee and commission expenses (232) (268) 13 (480)
Transaction-based legal fees (63) (111) 44 (206)
Trust and other fiduciary service fees - (30) 100 (56)
Valuation fees (71) (56) (27) (124)
(441) (546) 19 (1 027)
Net fee and commission income 6 874 6 732 2 13 863
Notes
1 Refer to note 23 for reporting changes.
2 Includes acquiring and issuing fees.
3 Includes service, credit-related fees and commissions on mortgage
loans and foreign exchange transactions.
9. Non-interest income (continued)
30 June 31 December
2013 2012 1 Change 2012 1
Rm Rm % Rm
9.3 Gains and losses from banking and trading activities
Net (losses)/gains on investments (14) 265 >(100) 192
Debt instruments designated at fair value through profit or loss 58 71 (18) 179
Equity instruments designated at fair value through profit or loss (68) 199 >(100) 23
Available-for-sale unwind from reserves (4) (5) 20 (10)
Net trading result2 1 519 1 649 (8) 3 537
Net trading income excluding the impact of hedge accounting 1 598 1 629 (2) 3 515
Ineffective portion of hedges (79) 20 >(100) 22
Cash flow hedges (83) 19 >(100) 45
Fair value hedges 4 1 >100 (23)
Other gains/(losses)2 64 (58) >100 (78)
1 569 1 856 (15) 3 651
Net trading income excluding the impact of hedge accounting 1 598 1 629 (2) 3 515
Gains/(losses) on financial instruments designated at fair
value through 648 (465) >100 (750)
profit or loss
Net gains on financial assets designated at fair value through 336 365 (8) 1 292
profit or loss
Net gains/(losses) on financial liabilities designated at fair
value through profit or loss 312 (830) >100 (2 042)
Gains on financial instruments held for trading 950 2 094 (55) 4 265
Other gains/(losses) 64 (58) >100 (78)
Losses on financial instruments designatedat fair value through (6) (27) 65 (142)
profit or loss
Gains/(losses) on financial instrument held for trading 70 (31) >100 64
Notes
1 Refer to note 23 for reporting changes.
2 In order to provide for improved disclosure, certain revenue streams have been reclassified.
This resulted in a reclassification from other to net trading results.
30 June 31 December
2013 2012 1 Change 2012 1
Rm Rm % Rm
9.4 Gains and losses from investment activities
Available-for-sale unwind from reserves 1 1 - 2
Other gains - 18 (100) 18
1 19 (95) 20
Note
1 Refer to note 23 for reporting changes.
10. Operating expenditure
30 June 31 December
2013 2012 1 Change 2012 1
Rm Rm % Rm
10.1 Operating expenses
Amortisation of intangible assets 100 72 39 143
Auditors remuneration 81 82 (1) 148
Cash transportation 318 343 (7) 591
Depreciation 645 623 4 1 155
Equipment costs 86 89 (3) 177
Information technology 923 1 061 (13) 1 930
Investment property charges - change in fair value - - - 162
Marketing costs 440 311 41 958
Operating lease expenses on properties 484 475 2 916
Other operating costs2 630 532 19 1 114
Printing and stationery 93 91 2 185
Professional fees 499 205 >100 677
Property costs 541 601 (10) 1 186
Staff costs 5 756 5 591 3 11 190
Bonuses 362 362 - 824
Current service costs on post-retirement benefits 326 300 9 595
Other staff costs3 232 223 4 385
Salaries 4 516 4 416 2 8 772
Share-based payments 204 208 (2) 431
Training costs 116 82 41 183
Telephone and postage 316 360 (12) 637
10 912 10 436 5 21 169
Notes
1 Refer to note 23 for reporting changes.
2 Includes fraud losses, travel and entertainment costs.
3 Includes recruitment costs, membership fees to professional bodies, staff parking,
redundancy fees, study assistance, staff relocation and refreshment costs.
30 June 31 December
2013 2012 1 Change 20121
Rm Rm % Rm
10.2 Other impairments
Financial instruments - amortised cost instruments (2) - (100) 258
Other impairments 3 2 50 86
Computer software development costs - - - 68
Goodwill - 18 (100) 18
Repossessed properties 3 (16) >100 0
1 2 (50) 344
11. Headline earnings
30 June 31 December
2013 2012 1 Net 2 2012 1
Gross Net 2 Gross Net 2 change Gross Net 2
Rm Rm Rm Rm % Rm Rm
Headline earnings is determined as follows:
Profit attributable to ordinary equity holder 4 025 3 691 9 7 203
Total headline earnings adjustment: (55) (11) >(100) 153
IFRS 3 - Goodwill impairment - - 18 18 (100) 18 18
IAS 16 - Profit on disposal of property and equipment (5) (5) (40) (32) (84) (80) (62)
IAS 28 and IFRS 11 - Headline earnings component of share of
post-tax results of associates and joint ventures - - - - - (1) (1)
IAS 36 and 38 - Loss on disposal and Impairment of intangible assets 0 0 - - 100 68 49
IAS 39 - Release of available-for-sale reserves 4 3 5 3 0 10 7
IAS 40 - Change in fair value of investment properties (60) (53) - - (100) 162 142
Headline earnings 3 970 3 680 8 7 356
Diluted headline earnings 3 3 970 3 680 8 7 356
Headline earnings per share (cents) 1 048,0 983,7 7 1 960,0
Diluted headline earnings per share (cents) 1 048,0 983,7 7 1 960,0
Notes
1 Refer to note 23 for reporting changes.
2 The net amounts is reflected after taxation and non-controlling interest.
3 There are currently no instruments in issue that will have a dilutive impact on the profit attributable to the
ordinary equity holder.
12. Dividends per share
30 June 31 December
2013 2012 Change 2012
Rm Rm % Rm
Dividends declared to ordinary equity holder
Interim dividend (30 July 2013: 2 233,4 cents) (27 July 2012: 695,5 cents)1 8 459 2 602 >100 2 602
Special dividend (27 September 2012: 267,3 cents)1 - - - 1 000
Final dividend (12 February 2013: 605,5 cents)1 - - - 2 293
8 459 2 602 >100 5 895
Dividends declared to preference equity holders -
Interim dividend (30 July 2013: 2 999,4521 cents) (27 July 2012: 3 134,6575 cents)1 148 155 (5) 155
Final dividend (12 February 2013: 2 950,5479 cents)1 - - - 146
148 155 (5) 301
Note
1 Included in the statement of changes in equity is the final ordinary dividend of R2 293 million
and the final preference dividend of R146 million paid during the currrent reporting period
(30 June 2012: final ordinary dividend of R2 320 million and final preference dividend of R140 miillion,
31 December 2012: interim ordinary dividend of R2 602 million and final ordinary dividend of R2 320 million,
special dividend of R1 000 million, interim preference dividend of R155 million and final preference dividend
of R140 million).
13. Acquisitions and disposals of businesses
Acquisitions and disposals
There were no interests acquired/diposed of during the current reporting period.
14. Related parties
The following are defined as related parties of the Bank:
- the ultimate parent company;
- fellow subsidiaries, associates and joint venture of the ultimate parent company;
- the parent company;
- fellow subsidiaries, associates and joint ventures of the parent company;
- subsidiaries;
- associates, joint ventures and retirement benefit fund;
- 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 Bank; and
- children and/or dependants and spouses or partners of the individuals referred to above.
14.1 Balances and transactions with ultimate parent company (1, 2)
The Banks ultimate parent company is Barclays Bank PLC, which owns 55,5% (30 June 2012 and 31 December 2012: 55,5%)
of the ordinary shares in Absa Group Limited. The remaining 44,5% (30 June 2012 and 31 December 2012: 44,5%) of the
shares are widely held on the Johannesburg Stock Exchange (JSE).
30 June 31 December
2013 2012 Change 2012
Rm Rm % Rm
Balances
Loans and advances to banks 21 463 35 777 (40) 20 698
Derivative assets 19 491 12 685 54 14 310
Nominal value of derivative assets 1 096 263 694 589 58 1 399 103
Other assets 2 229 4 025 (45) 896
Investment securities 533 584 (9) 584
Deposits from banks (14 851) (8 387) (77) (8 963)
Derivative liabilities (17 461) (12 299) (42) (13 842)
Nominal value of derivative liabilities (829 843) (552 403) (50) (1 213 065)
Other liabilities (2 125) (3 510) 39 (59)
Transactions
Interest and similar income (141) (82) (72) (204)
Interest expense and similar charges 34 51 (33) 106
Net fee and commission income (9) (9) 0 (18)
Gains and losses from banking and trading activities 66 (152) \>100 (158)
Other operating income (7) (23) 70 (36)
Operating expenditure 43 (28) \>100 (12)
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 made 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 to on a monthly basis 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.
Notes
1 Debit amounts are shown as positive, credit amounts are shown as negative.
2 The Banks ultimate parent company is Barclays Bank PLC, which has a majority equity interest in Absa Group Limited.
Condensed notes to the consolidated financial results
14. Related parties (continued)
30 June 31 December
2013 2012 Change 2012
Rm Rm % Rm
14.2 Balances and transactions with
fellow subsidiaries, associates and joint ventures of the ultimate
parent company1, 2
Balances
Loans and advances to banks 190 47 \>100 221
Derivative assets 39 195 (80) 37
Nominal value of derivative assets 1 146 4 375 (74) 947
Other assets 183 83 \>100 74
Deposits from banks (905) (764) (18) (1 016)
Dervative liabilities 0 7 (99) 5
Nominal value of derivative liabilities (1 723) 948 \>(100) (521)
Other liabilities (131) (120) (9) (61)
Transactions
Net fee and commission income (3) (4) 25 (7)
Other operating income - - - (3)
Operating expenditure (110) 72 \>(100) 100
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 made in the currency required by the fellow subsidiary, associate or joint venture receiving the settlement. In exceptional cases it may be impractical or inefficient to settle balances monthly. In such cases, the unsettled
balances must be explicitly agreed to on a monthly basis 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 fellow
subsidiaries, associates and joint ventures of the ultimate parent company.
Notes
1Debit amounts are shown as positive, credit amounts are shown as negative.
2Fellow subsidiaries, associates and joint ventures are those entities of Barclays Bank PLC.
30 June 31 December
2013 2012 Change 2012
Rm Rm % Rm
14.3 Balances and transactions with the parent company1
Balances
Other assets - - - 64
Deposits from banks (480) (469) (2) (708)
Transactions
Dividend paid 2 293 2 320 (1) 5 921
Note
1Debit amounts are shown as positive, credit amounts are shown as negative.
Condensed notes to the consolidated financial results
14. Related parties (continued)
30 June 31 December
2013 2012 Change 2012
Rm Rm % Rm
14.4 Balances and transactions with fellow subsidiaries1, 2
Balances
Trading and hedging portfolio assets 905 (29) \>100 1 213
Loans to Absa Group companies 13 699 8 240 66 10 777
Deposits from banks (3 561) (4 523) 21 (3 455)
Debt securities in issue (43) - (100) (242)
Loans from Absa Group companies - (6 092) 100 -
Transactions
Interest and similar income (584) (272) \>(100) (476)
Interest and similar expense 335 341 (2) 615
Net fee and commision income (217) (241) 10 (418)
Gains and losses from banking and trading activities (336) (1 215) 72 1 870
Other operating income (12) (15) 20 (32)
Operating expenditure (192) (209) 8 (412)
Notes
1Debit amounts are shown as positive, credit amounts are shown as negative.
2Balances and transactions between the Bank and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.
Condensed notes to the consolidated financial results
as at
15. Assets under management and administration
30 June 31 December
2013 2012 Change 2012
Rm Rm % Rm
Alternative asset management and exchange-traded funds 22 100 17 051 30 20 665
Portfolio management 5 670 4 725 20 5 942
Private equity - 762 (100) -
Unit trusts 1 134 536 \>100 551
28 904 23 074 25 27 158
16. Financial guarantee contracts
30 June 31 December
2013 2012 Change 2012
Rm Rm % Rm
Financial guarantee contract1, 2 408 157 \>100 176
Notes
1 Financial guarantee contracts represent contracts where the Bank undertakes to make specified payments to a counterparty, should the counterparty suffer a loss as a result of a specified debtor defaulting on payment in accordance with the terms of the debt instrument.
2 Represents the maximum off-statement of financial position exposure, which is not necessarily the measurement recognised in the statement of financial position in accordance with International Financial Reporting Standards (IFRS).
17. Commitments
30 June 31 December
2013 2012 Change 2012
Rm Rm % Rm
Authorised capital expenditure
Contracted but not provided for1 437 514 (15) 208
Operating lease payments due2
No later than one year 988 1 033 (4) 893
Later than one year and no later than five years 1 445 1 891 (24) 1 816
Later than five years 193 382 (49) 303
2 626 3 306 (21) 3 012
Sponsorship payments due3
No later that one year 225 104 \>100 289
Later than one year and no later than five years 755 260 \>100 884
980 364 \>100 1 173
Notes
1 The Bank has capital commitments in respect of computer equipment and property development. Management
is confident that future net revenue and funding will be sufficient to cover these commitments.
2 The operating lease commitments comprise a number of separate operating leases in relation to property
and equipment, none of which is individually significant to the Bank. Leases are negotiated for an average
term of three to five years and rentals are renegotiated annually.
3 The Bank has sponsorship commitments in respect of sports, arts and culture. Certain sponsorship agreements
expire in 2013 and are under review by management for renewal in the foreseeable future.
18. Contingencies
30 June 31 December
2013 2012 Change 2012
Rm Rm % Rm
Guarantees1 16 196 13 346 21 15 540
Irrevocable debt facilities2 47 927 44 330 8 46 191
Irrevocable equity facilities2 510 538 (5) 543
Letters of credit 3 798 5 079 (25) 5 894
Other contingencies 6 4 50 5
68 437 63 297 8 68 173
Notes
1 Guarantees include performance and payment guarantee contracts.
2 Irrevocable facilities are commitments to extend credit where the Bank 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 reporting
30 June 31 December
2013 20121 Change 20121
Rm Rm % Rm
19.1 Headline earnings contribution by segment
RBB 3 073 2 082 48 4 313
Retail Banking 2 242 1 367 64 3 398
Home Loans 289 (673) \>100 (1 078)
Vehicle and Asset Finance 501 367 37 820
Card 804 738 9 1 733
Personal Loans 148 253 (42) 587
Retail Bank 500 682 (27) 1 336
Business Banking 831 715 16 915
CIBW 1 118 1 232 (9) 2 571
Head office, inter-segment eliminations and Other (178) 402 \>(100) 545
Enterprise Functions 29 152 (81) 443
Group Treasury (76) 61 \>(100) 91
Consolidation Centre (131) 189 \>(100) 11
Total banking 4 013 3 716 8 7 429
Financial Services 2 (43) (36) (19) (73)
Headline earnings 3 970 3 680 8 7 356
Notes
1 Refer to note 23 for reporting changes.
2 Shareholders expenses previously retained at bank level now charged to the business.
30 June 31 December
2013 20121 Change 20121
Rm Rm % Rm
19.2 Total revenue2 by segment
RBB 16 655 15 686 6 31 947
Retail Banking 12 612 11 606 9 23 997
Home Loans 2 081 1 984 5 4 080
Vehicle and Asset Finance 1 600 1 464 9 3 023
Card 2 728 1 841 48 4 102
Personal Loans 938 1 005 (7) 2 010
Retail Bank 5 265 5 312 (1) 10 782
Business Banking 4 043 4 080 (1) 7 950
CIBW 3 858 3 827 1 7 849
Head office, inter-segment eliminations and Other (314) 231 \>(100) 159
Enterprise Functions (120) 136 \>(100) 160
Group Treasury (107) 82 \>(100) 121
Consolidation Centre (87) 13 \>(100) (122)
Total revenue 20 199 19 744 2 39 955
Notes
1Refer to note 23 for reporting changes.
2Revenue includes net interest income and non-interest income.
30 June 31 December
2013 20121 Change 20121
Rm Rm % Rm
19.4 Total assets by segment
RBB 586 529 568 656 3 590 150
Retail Banking 501 829 480 772 4 504 202
Home Loans 219 456 224 278 (2) 222 419
Vehicle and Asset Finance 75 113 68 370 10 72 115
Card 36 644 24 392 50 36 842
Personal Loans 13 409 12 960 3 13 318
Retail Bank 157 207 150 772 4 159 508
Business Banking 84 700 87 884 (4) 85 948
CIBW 500 480 466 903 7 462 154
Head office, inter-segment eliminations and Other (298 840) (271 241) (10) (288 234)
Enterprise Functions 8 187 7 056 16 7 971
Group Treasury 92 652 96 441 (4) 93 461
Consolidation Centre (399 679) (374 738) (7) (389 666)
Total banking 788 169 764 318 3 764 070
Financial Services - (51) 100 (101)
Total assets 788 169 764 267 3 763 969
Note
1Refer to note 23 for reporting changes.
30 June 31 December
2013 20121 Change 2012(1)
Rm Rm % Rm
19.5 Total liabilities by segment
RBB 582 751 566 230 3 585 297
Retail Banking 499 046 479 265 4 500 320
Home Loans 219 111 224 886 (3) 223 432
Vehicle and Asset Finance 74 096 67 509 10 70 799
Card 35 841 23 984 49 35 109
Personal Loans 13 261 12 707 4 12 731
Retail Bank 156 737 150 179 4 158 249
Business Banking 83 705 86 965 (4) 84 977
CIBW 498 949 465 332 7 459 219
Head office, inter-segments eliminations and Other 354 728 362 369 9 341 431
Enterprise Functions 8 148 6 856 19 7 512
Group Treasury 37 488 42 601 (12) 41 377
Consolidation Centre 400 364 375 826 7 390 320
Total banking 726 972 705 193 3 703 085
Financial Services 43 (14) >100 (28)
Total liabilities 727 015 705 179 3 703 057
Note
1Refer to note 23 for reporting changes.
30 June 31 December
2013 20121 Change 20121
Rm Rm % Rm
19.5 Total liabilities by segment
RBB 582 751 566 230 3 585 297
Retail Banking 499 046 479 265 4 500 320
Home Loans 219 111 224 886 (3) 223 432
Vehicle and Asset Finance 74 096 67 509 10 70 799
Card 35 841 23 984 49 35 109
Personal Loans 13 261 12 707 4 12 731
Retail Bank 156 737 150 179 4 158 249
Business Banking 83 705 86 965 (4) 84 977
CIBW 498 949 465 332 7 459 219
Head office, inter-segments eliminations and Other 354 728 362 369 9 341 431
Enterprise Functions 8 148 6 856 19 7 512
Group Treasury 37 488 42 601 (12) 41 377
Consolidation Centre 400 364 375 826 7 390 320
Total banking 726 972 705 193 3 703 085
Financial Services 43 (14) >100 (28)
Total liabilities 727 015 705 179 3 703 057
Note
1Refer to note 23 for reporting changes.
20. Fair value of financial instruments
The table below summarises the carrying amounts and fair values of those financial instruments not held at fair value:
30 June
2013
Carrying Fair
value value
Rm Rm
Financial assets
Balances with the South African Reserve Bank (SARB) 13 290 13 290
Coins and bank notes 5 528 5 528
Money market assets 5 5
Cash, cash balances and balances with central banks 18 823 18 823
Loans and advances to banks 40 537 40 537
Other assets 12 446 12 446
Retail Banking 336 980 337 013
Cheque accounts 1 768 1 768
Credit cards 27 120 27 120
Instalment credit agreements 60 018 59 885
Loans to associates and joint ventures 8 801 8 801
Microloans 1 526 1 526
Mortgages 224 974 225 140
Other 305 305
Personal loans and term loans 12 468 12 468
Business Banking 61 852 61 980
Cheque accounts 16 730 16 730
Commercial asset finance 10 358 10 351
Commercial property finance 23 471 23 606
Term loans 11 293 11 293
CIBW 102 536 102 536
Other and inter-segment eliminations 92 92
Loans and advances to customers - net of impairment losses on loans and advances 501 460 501 621
Loans to Absa Group companies 13 699 13 699
Total 586 965 587 126
Financial liabilities
Deposits from banks 36 344 36 344
Other liabilities 19 934 19 934
Call deposits 51 711 51 711
Cheque account deposits 147 016 147 016
Credit card deposits 1 807 1 807
Fixed deposits 111 892 111 892
Foreign currency deposits 9 780 9 780
Notice deposits 55 406 55 406
Other deposits 1 722 1 722
Savings and transmission deposits 78 173 78 173
Deposits due to customers 457 507 457 507
Debt securities in issue 92 482 92 482
Borrowed funds 11 699 11 699
Total 617 966 617 966
21.1.1 Fair value measurement and valuation processes
The Bank has an established control framework with respect to the measurement of fair values. The
framework includes a valuation committee and an Independent Valuation Control (IVC) team, where IVC
are independent of front office management.
The valuation committee is responsible for overseeing the valuation control process and will
therefore consider the appropriateness of valuation techniques and inputs for fair value measurement.
IVC independently verifies the results of trading and investment operations and all significant
fair value measurements. IVC sources independent data from various external sources as well as
internal risk areas when performing independent price verification for all fair value positions. IVC
assesses and documents the inputs obtained from independent sources to measure fair value to support
conclusions that such valuations are in accordance with IFRS and internal valuation polices.
The valuation committee which comprises representatives from senior management will formally
approve valuation policies and any changes to valuation methodologies. Significant valuation issues are
reported to the Group Audit and Compliance Committee.
21.1.2 Significant transfers between the levels
During the reporting period debt securities in issue to the value of R225 million were transfered
from level 3 to level 2, refer to 21.4, as the maturity period of the underlying securities is less
than five years and as such all of the unobservable inputs have now become observable. Transfers
between the levels of this nature are only effected dependent on the observability of the unobsverable
inputs.
21.2 Valuations based on observable inputs
Level 1
Financial instruments valued with reference to unadjusted quoted prices for identical assets or
liabilities in active markets where the quoted price is readily available and the price represents
actual and regularly occurring market transactions on an arms length basis.
An active market is one in which transactions occur with sufficient volume and frequency to
provide pricing information on an ongoing basis.
This category includes highly liquid government and other bonds, active listed equities,
exchange-traded commodities and exchange-traded derivatives.
Level 2
Financial instruments valued using inputs other than quoted prices as described above for level 1
but which are observable for the asset or liability, either directly or indirectly, such as:
quoted price for similar assets or liabilities in an active market;
quoted price for identical or similar assets or liabilities in inactive markets;
valuation model using observable inputs; and
valuation model using inputs derived from/corroborated by observable market data.
This category includes certain African government bills, private equity investments, loans and
advances, investments in debt instruments, commodity derivatives, credit derivatives, equity
derivatives, foreign exchange derivatives, interest rate derivatives, repurchase agreements, deposits and debt
securities.
21.3 Valuations based on unobservable inputs
Valuations based on unobservable inputs include:
Level 3
Financial instruments valued using inputs that are not based on observable market data
(unobservable data) such as an entitys own assumptions about assumptions of market participants in pricing the
asset or liability.
This category includes certain private equity investments, loans and advances, investments in debt
instruments, credit derivatives, equity derivatives, foreign exchange derivatives, interest rate
derivatives, repurchase agreements, deposits and debt securities.
In determining the value of level 3 financial instruments, the following are the principal inputs
that can require judgement:
(i) Volatility
Volatility is a key input in the valuation of options across all asset classes. For some asset
classes, volatility is unobservable.
(ii) Basis risk
Basis risk is a key input in the valuation of cross currency swaps. For some currency pairs or
maturities, basis risk is unobservable.
(iii) Credit spreads
Credit spreads are key inputs in the valuation of credit default swaps, credit linked notes and
debt instruments or liabilities. For some issuers or tenors, credit spreads are unobservable.
(iv) Yield curves
Yield curves are key inputs in the valuation of certain debt instruments. For some debt
instruments, yield curves are unobservable.
(v) Future earnings and marketability discounts
Future earnings and marketability discounts are key inputs in the valuation of certain private
equity investments. Forecast earnings and marketability discounts are unobservable for some
investments.
(vi) Comparator multiples
Comparator multiples and point of difference applied to chosen multiples are key inputs in the
valuation of certain private equity investments. Price earnings multiples and point of difference
applied to chosen multiples are unobservable for some investments.
(vii) Discount rates
Discount rates are key inputs in the valuation of certain private equity investments. Discount
rates are unobservable for some investments.
21.4 Movements on financial instruments subsequently measured at fair value using valuations based on unobservable inputs (Level 3)
A reconciliation of the opening balances to closing balances for all movements on level 3 financial instruments per IAS 39 Financial Instruments: Recognition and Measurement (IAS 39) classification is set out below:
30 June
2013
Financial
assets Total
Available- designated financial
for-sale at fair value Financial assets
financial through assets held excluding
assets profit or loss for trading derivatives
Financial assets Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 39 10 379 873 11 291
Movement in other comprehensive income - 114 - 114
Net interest income - 486 - 486
Gains and losses from banking and trading activities - (161) 13 (148)
Gains and losses from investment activities - (83) - (83)
Purchases - 244 - 244
Sales - (3) - (3)
Settlements - (62) - (62)
Transferred to assets 11 - - 11
Movement in/(out) of level 3 - - - -
Closing balance at the end of the reporting period 50 10 914 886 11 850
21.4 Movements on financial instruments
subsequently measured at fair value using valuations based on unobservable inputs (Level 3)
30 June
2013
Financial Financial Total
liabilities liabilities financial
designated held for liabilities
at fair value trading including
through net
profit derivatives
or loss
Financial liabilities Rm Rm Rm
Opening balance at the beginning of the reporting period 7 859 (5) 7 854
Net interest income - 26 26
Gains and losses from banking and trading activities (956) 170 (786)
Purchases - (1) (1)
Issues 65 - 65
Transferred to liabilities - 33 33
Movement out of level 3 (225) - (225)
Closing balance at the end of the reporting period 6 743 223 6 966
21.5 Unrealised gains and losses on level 3 positions
The total unrealised gains and losses for the reporting period on level 3 positions held at the reporting date per IAS 39
classification are set out below:
30 June
2013
Financial Financial Financial
assets liabilities liabilities
designated designated held for
at fair value at fair value trading
through through Rm
profit or loss profit
Rm or loss
Rm
Net interest income 55 - -
Gains and losses from banking and trading activities 210 (690) 24
21.6 Sensitivity analysis of valuations using unobservable inputs
As part of the Banks risk management processes, stress tests are applied on the significant unobservable
parameters to generate a range of potentially possible alternative valuations. The financial instruments that most impact this sensitivity analysis are those within the more illiquid
and/or structured portfolios. The stresses are applied independently and do not take account of any cross correlation between separate asset classes that would reduce the overall effect on the valuations.
A significant parameter has been deemed to be one which may result in a change in the fair value asset or liability of
more than 10%. This is demonstrated by the following sensitivity analysis, which includes a reasonable range of possible outcomes:
30 June
2013
Potential effect Potential effect
recorded in profit recorded directly
and loss in equity
Significant
unobservable Un- Un-
parameters(1) Favourable favourable Favourable favourable
Rm Rm Rm Rm
Loans and advances i, iii, iv, vii 60 88 - -
Net derivatives i, ii, iv, vii 325 284 - -
Structured notes and deposits vii 500 500 - -
885 872 - -
The following table reflects how the unobservable parameters were changed in order to evaluate the
sensitivities of Level 3 financial instruments:
Instrument Parameter Positive/(negative)
variance in
parameters
Credit derivatives Credit spreads 100/(100) bps
Equity derivatives Volatilities 10/(10)%
Foreign currency options Volatilities 10/(10)%
Foreign currency swaps and foreign interest rate products Basis risk and yield curve 100/(100) bps
Loans and advances designated at fair value through profit or loss Credit spreads 100/(100) bps
Private equity Future earnings and marketability discount 15/(15)%
Comparator multiples
Discount rates
Structured notes and deposits designated at fair value through profit or loss Yield curve 100/(100) bps
Note
1
Refer to note 21,3 for details of unobservable parameters.
21.7 Measurement of financial instruments at Level 2
The table below sets out information about the valuation
techniques used at the end of the reporting period in measuring financial instruments categorised as level 2
in the fair value hierarchy.
Category of asset/liability
Financial assets designated at fair value through profit or loss
Statutory liquid asset portfolio
Types of financial instruments included
Reverse repurchase agreements
Valuation techniques applied
Discounted cash flow
Significant unobservable inputs
Observable market related interest rates relating to the underlying instruments
Category of asset/liability
Financial assets designated at fair value through profit or loss
Loans and advances to banks
Types of financial instruments included
Loans and advances and repurchase agreements
Valuation techniques applied
Discounted cash flow
Significant unobservable inputs
Interest rate curves and money market curves
Category of asset/liability
Financial assets designated at fair value through profit or loss
Loans and advances to customers
Types of financial instruments included
Loans and advances and repurchase agreements
Valuation techniques applied
Discounted cash flow
Significant unobservable inputs
Interest rate curves and money market curves
Category of asset/liability
Financial assets held for trading
Trading and hedging portfolio assets1
Types of financial instruments included
Swaps, index linked swaps, exchange traded notes, exchange traded funds, options, futures, currency swaps, credit default swaps, contracts for difference, variance swaps, forward rate agreements, Caps & Floors, non-derivative money market assets, listed and unlisted equity and debt instruments
Valuation techniques applied
Discounted cash flows, net asset value models, asian arithmetic fix, price curve models, Black-Scholes models, hazard rate models, underlying spot models, synthetic underlying forward models, digital Black-Scholes skew models, forward start Black-Scholes models, PDE Local Volatility - Continuous Barrier, PDE Local Volatility - Discrete Trinomial Barrier, PDE Local Volatility - Window Trinomial Barrier, and the Black-Derman-Toy model
Significant unobservable inputs
- Swaps, index linked swaps, forward rate agreements: interest rate curves;
- Non-derivative money market assets: interest rate curves, money market curves;
- Currency swaps: interest rate curves, basis curves;
Exchange traded funds, exchange traded notes, futures, contracts for difference, listed and unlisted equity and debt instruments: Listed price on the exchange or interest rate curves and the underlying price of the market traded instrument;
- Options, variance swaps, Caps & Floors: interest rates, volatility, underlying prices (if applicable eg. stock of FX rates);
- Credit default swaps: interest rates, credit spreads
21.7 Measurement of financial instruments at Level 2
Category of asset/liability
Financial liabilities designated at fair value through profit or loss
Deposits from banks
Types of financial instruments included
Fixed deposits, foreign currency deposits and repurchase agreements
Valuation technique applied
Discounted cash flow
Significant unobservable inputs
Interest rate curves and money market curves
Category of asset/liability
Financial liabilities designated at fair value through profit or loss
Deposits due to customers
Types of financial instruments included
Bills, repurchase agreements with non-banks, BuySellBack agreements, floating rate notes, deposits,
certificates of deposit, commercial paper and other money market instruments
Valuation technique applied
Discounted cash flow
Significant unobservable inputs
Interest rate curves and money market curves
Category of asset/liability
Financial liabilities designated at fair value through profit or loss
Debt securities in issue
Types of financial instruments included
Bonds and index linked bonds
Valuation technique applied
Discounted cash flow
Significant unobservable inputs
The underlying price of the market traded instrument and interest curves
Category of asset/liability
Financial liabilities held for trading
Trading and hedging portfolio liabilities1
Types of financial instruments included
Swaps, index linked swaps, exchange traded funds, options, futures, currency swaps, credit default swaps,
contracts for difference, variance swaps, forward rate agreements, Caps & Floors
Valuation technique applied
Discounted cash flows, net asset value models, asian arithmetic fix, price curve models, Black-Scholes
models, hazard rate models, underlying spot models, synthetic underlying forward models, digital Black-Scholes skew
models, forward start Black- scholes models, PDE Local Volatility - Continuous Barrier, PDE Local Volatility
- Discrete Trinomial Barrier, PDE Local Volatility - Window Trinomial Barrier, and the Black-Derman-Toy model
Significant unobservable inputs
Swaps, index linked swaps, forward rate agreements: interest rate curves;
non-derivative money market assets: interest rate curves, money market curves;
Currency swaps: interest rate curves, basis curves;
Exchange traded funds, exchange traded notes, futures, contracts for difference, listed and unlisted equity
and debt instruments: listed price on the exchange or interest rate curves and the underlying price of the
market traded instrument.
Options, variance swaps, Caps & Floors: interest rates, volatility, underlying prices (if applicable eg.
stock of FX rates)
Credit default swaps: interest rates, credit spreads
21.8 Measurement of financial instruments at Level 3
The table below sets out information about significant
unobservable inputs used at end of the reporting period in measuring financial instruments categorised as
level 3 in the fair value hierarchy.
Category of asset/liability
Available-for-sale financial assets
Investment securities
Types of financial instruments included
Unlisted equity investments
Valuation technique applied
Dividend yield
Significant unobservable input
Growth rates
Dividend cover ratio
Range of estimates utilised for the unobservable input
8% - 12%
4,0 - 4,4
Fair value measurement sensitivity to the unobservable input
Significant increases in any of the unobservable inputs in isolation would result in higher fair values
Category of asset/liability
Financial assets designated at fair value through profit or loss
Loans and advances to customers
Types of financial instruments included
Wholesale overdrafts, preference shares, foreign currency loans, commercial property financing loans
Valuation technique applied
Discounted cash flow, and dividend yield models
Significant unobservable input
Credit ratings
Range of estimates utilised for the unobservable input
Credit spreads vary between 1.35 and 7,5%
Fair value measurement sensitivity to the unobservable input
The sensitivity of the fair value measurement is dependent on the unobservable inputs. Significant
changes to the unobservable inputs in isolation will have either a positive or negative impact on the fair value
Category of asset/liability
Financial assets designated at fair value through profit or loss
Investment securities
Types of financial instruments included
Listed and unlisted equity and debt instruments
Valuation technique applied
Discounted cash flows, third party valuations, earnings before interest, tax, depreciation and
amortisation (EBITDA) multiples, income capitalisation valuations, net asset value models
Significant unobservable input
Weighted average cost of capital, EBITDA multiples, liquidity discounts, minority discounts,
capitalisation rates
Range of estimates utilised for the unobservable input
Discount rates between 9,7% and 18%, multiples between 5,5 and 6,1
Fair value measurement sensitivity to the unobservable input
The sensitivity of the fair value measurement is dependent on the unobservable inputs. Significant
changes to the unobservable inputs in isolation will have either a positive or negative impact on the fair value
Category of asset/liability
Financial assets held for trading
Trading and hedging portfolio assets1
Types of financial instruments included
Swaps, index linked swaps, options, currency swaps, credit default swaps, variance swaps
Valuation technique applied
Discounted cash flows, asian arithmetic fix, price curve models, Black-Scholes models, hazard rate models,
digital Black- scholes skew models, forward start Black- Scholes models and the Black-Derman-Toy model
Significant unobservable input
Various unobservable inputs are utilised dependent on the model and instrument valued, these include ZAR-SWAP
tenor spread curves, ZAR-REAL less than one year, single stock option volatilities, South African currency curves after two years, Credit spreads, quanto ratios, recovery rates,
underlying equity volatility for certain stocks
Range of estimates utilised for the unobservable input
ZAR-SWAP tenor spread curves: Range of spreads over ZAR-SWAP -0.49% to 0.1%
ZAR-REAL less than one year: 0 to 1.8%
Single stock option volatilities: 19.6% to 58.9%
Equity option volatilities: 14.5% to 43.5%
Some African currency basis curves after two years: -3.2% to 0.9%
Credit spreads (includes untested curves that are subject to other controls): 0,1% to 6%
Quanto ratios, recovery rates
Fair value measurement sensitivity to the unobservable input
The sensitivity of the fair value measurement is dependent on the unobservable inputs. Significant changes to
the unobservable inputs in isolation will have either a positive or negative impact on the fair value
21.8 Measurement of financial instruments at Level 3 (continued)
Category of asset/liability
Financial liabilities designated at fair value through profit or loss
Deposits due to customers
Types of financial instruments included
Bills, repurchase agreements with non-banks, BuySellBack agreements, floating rate notes, deposits,
certificates of deposit, commercial paper and other money market instruments
Valuation technique applied
Discounted cash flow
Significant unobservable input
ZAR MM funding spread greater than 5 years
Range of estimates utilised for the unobservable input
0,85% to 1,2%
Fair value measurement sensitivity to the unobservable input
The sensitivity of the fair value measurement is dependent on the unobservable inputs. Significant changes
to the unobservable inputs in isolation will have either a positive or negative impact on the fair value
Category of asset/liability
Financial liabilities designated at fair value through profit or loss
Debt securities
in issue
Types of financial instruments included
Bonds, index linked bonds and private equity debt
D Valuation technique applied
iscounted cash flow
Significant unobservable input
Credit spread
Range of estimates utilised for the unobservable input
10 to 20 basis points
Fair value measurement sensitivity to the unobservable input
The sensitivity of the fair value measurement is dependent on the unobservable inputs. Significant changes
to the unobservable inputs in isolation will have either a positive or negative impact on the fair value
Category of asset/liability
Financial liabilities held for trading
Trading and hedging portfolio liabilities1
Swaps, index linked swaps, options, futures, currency swaps, credit default swaps, variance swaps, forward
rate agreements, Caps & Floors
Discounted cash flows, asian arithmetic fix, Black-Scholes models, hazard rate models, forward start
Black-Scholes models, and the Black-Derman-Toy model
Significant unobservable input
ZAR-REAL less than 1 year, ZAR-SWAP tenor spread curves, some single stock option volatilities, South
African currency curves after 2 years, credit spreads, quanto ratios, recovery rates, underlying equity
volatilities for some stocks are unobservable
Range of estimates utilised for the unobservable input
ZAR-SWAP tenor spread curves: Range of spreads over ZAR-SWAP -0.49% to 0,1%
ZAR-REAL less than 1 year: 0 to 1,8%
Single stock option volatilities: 19,6% to 58,9%
Equity option volatilities: 14,5% to 43,5%
Some African currency basis curves after 2 years: -3,2% to 0.9%
Credit spreads (includes untested curves that are subject to other controls): 0,1% to 6%
Quanto ratios, recovery rates
Fair value measurement sensitivity to the unobservable input
The sensitivity of the fair value measurement is dependent on the unobservable inputs. Significant changes
to the unobservable inputs in isolation will have either a positive or negative impact on the fair value
21.9 Unrecognised gains/(losses) as a result of the use of valuation models using unobservable inputs
The amount that has yet to be recognised in the statement of comprehensive income that relates to the
difference between the transaction price (the fair value at initial recognition) and the amount that
would have arisen had valuation models using unobservable inputs been used on initial recognition,
less amounts subsequently recognised, is as follows:
30 June
2013
Rm
Opening balance at the beginning of the reporting period (93)
New transactions 11
Amounts recognised in the profit and loss component of
the statement of comprehensive income during the reporting period (7)
Closing balance at the end of the reporting period (89)
Note
1 Includes derivative liabilities.
22. Offsetting financial assets and financial liabilities
In accordance with IAS 32 Financial Instruments: Presentation (IAS 32), the Bank reports financial assets and
financial liabilities, on a net basis on the statement of financial position only if there is a legally enforceable right to set
off the recognised amounts and there is intention to settle on a net basis, or to realise the asset and settle the
liability simultaneously, The Bank reports derivative financial instruments and reverse repurchase and repurchase agreements
and other similar secured lending and borrowing agreements on a net basis.
The following table shows the impact of netting arrangements on the statement of financial position for recognised
financial assets and liabilities that are reported net on the statement of financial position and those derivative
financial instruments and reverse repurchase and repurchase agreements and other similar secured lending and borrowing
agreements that are subject to enforceable master netting arrangements or similar agreements which did not qualify for
presentation on a net basis. The table also shows potential netting not recognised on the statement of financial position that
results from arrangements that do not meet all the IAS 32 netting criteria, because there is no intention to net settle or
realise simultaneously, and related financial collateral that mitigates credit risk.
The net amounts presented are not intended to represent the Banks actual credit exposure as a variety of credit
mitigation strategies are employed in addition to netting and collateral arrangements.
30 June 2013
Amounts subject to enforceable netting arrangements
Effects of netting on Related amounts not set off
statement of financial position
Net amounts Amounts not
reported subject to Total
on the enforceable per
statement Offsetting netting statement
Gross Amounts of financial financial Financial Net arrange- of financial
amounts set off position 1 instruments collateral 2 amount ments 3 position 4
Rm Rm Rm Rm Rm Rm Rm Rm
Derivative financial assets 71 991 (23 230) 48 761 (40 818) (4 573) 3 370 2 787 51 548
Reverse repurchase agreements and other
similar secured lending 40 583 (11 425) 29 158 - (29 158) - - 29 158
Total assets 112 574 (34 655) 77 919 (40 818) (33 731) 3 370 2 787 80 706
Derivative financial liabilities (71 636) 23 230 (48 406) 40 818 1 619 (5 969) (3 698) (52 104)
Repurchase agreements and other similar (18 312) - (18 312) - 18 312 - - (18 312)
secured borrowing
Total liabilities (89 948) 23 230 (66 718) 40 818 19 931 (5 969) (3 698) (70 416)
30 June 2012
Amounts subject to enforceable netting arrangements
Effects of netting on Related amounts not set off
statement of financial position
Net amounts Amounts not
reported subject to Total
on the enforceable per
statement Offsetting netting statement
Gross Amounts of financial financial Financial Net arrange- of financial
amounts set off position 1 instruments collateral 2 amount ments 3 position 4
Rm Rm Rm Rm Rm Rm Rm Rm
Derivative financial assets 63 562 (19 507) 44 055 (38 522) (2 304) 3 229 10 220 54 275
Reverse repurchase agreements and other
similar secured lending 30 322 - 30 322 - (30 322) - - 30 322
Total assets 93 884 (19 507) 74 377 (38 522) (32 626) 3 229 10 220 84 597
Derivative financial liabilities (68 919) 19 507 (49 412) 38 522 755 (10 135) (2 138) (51 550)
Repurchase agreements and other similar
secured borrowing (22 384) 16 (22 368) - 22 368 - - (22 368)
Total liabilities (91 303) 19 523 (71 780) 38 522 23 123 (10 135) (2 138) (73 918)
31 December 2012
Amounts subject to enforceable netting arrangements
Effects of netting on Related amounts not set off
statement of financial position
Net amounts Amounts not
reported subject to Total
on the enforceable per
statement Offsetting netting statement
Gross Amounts of financial financial Financial Net arrange- of financial
amounts set off position 1 instruments collateral 2 amount ments 3 position 4
Rm Rm Rm Rm Rm Rm Rm Rm
Derivative financial assets 70 921 (20 956) 49 965 (43 818) (3 148) 2 999 2 280 52 245
Reverse repurchase agreements and other
similar secured lending 30 055 (11 424) 18 631 - (18 631) - - 18 631
Total assets 100 976 (32 380) 68 596 (43 818) (21 779) 2 999 2 280 70 876
Derivative financial liabilities (68 444) 20 956 (47 488) 43 818 784 (2 886) (3 125) (50 613)
Repurchase agreements and other similar
secured borrowing (15 207) - (15 207) - 15 207 - - (15 207)
Total liabilities (83 651) 20 956 (62 695) 43 818 15 991 (2 886) (3 125) (65 820)
Notes
1 Net amounts reported on the statement of financial position comprises exposure that has been netted on the statement
of financial position in compliance with IAS 32 (net exposure) and exposures that are subject to legally enforceable
netting arrangements but have not been netted on the statement of financial position.
2 Financial collateral excludes over-collateralisation and amounts, which are measured at fair value and have been
limited to the net statement of financial position exposure.
3 In certain jurisdictions a contractual right of set-off is subject to uncertainty under the laws of the
jurisdiction and therefore netting is not applied and the amounts are classed as not subject to legally enforceable netting
arrangements.
4 Total per statement of financial position is the sum of Net amounts reported on the statement of financial position
which are subject to enforceable netting arrangements and Amounts not subject to enforceable netting arrangements.
Offsetting and collateral arrangements
Derivative assets and liabilities
Credit risk is mitigated where possible through netting agreements, such as the International Swaps and Derivatives
Association (ISDA) Master Agreement or derivative exchange or clearing counterparty agreements, whereby all outstanding
transactions with the same counterparty can be offset and close-out netting applied across all outstanding transactions
covered by the agreements if an event of default or other predetermined events occur. Financial collateral (cash and
non-cash) is also obtained, often daily, for the net exposure between counterparties where possible to further mitigate
credit risk.
Repurchase and reverse repurchase agreements and other similar secured lending and borrowing
Credit risk is mitigated where possible through netting agreements such as global master repurchase agreements and
global master securities lending agreements whereby all outstanding transactions with the same counterparty can be offset
and close-out netting applied across all outstanding transactions covered by the agreements if an event of default or
other predetermined events occur. Financial collateral is obtained
and typically comprises highly liquid securities which are legally transferred and can be liquidated in the event of
counterparty default.
These offsetting and collateral arrangements and the credit risk mitigation strategies used by the Bank are further
explained in the Credit risk mitigation, collateral and other credit enhancements section (pages 125 to 142) of the Annual
consolidated and separate financial statements for 31 December 2012.
23. Reporting changes
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 Banks 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 Bank has interests should be consolidated. Implementation of this new
standard results in the Bank 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 Bank, 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.
Collection costs
From 1 January 2013 the Bank 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 Banks results
As Change in
previously accounting
reported policy IFRS 10 IAS 19R Restated
Rm Rm Rm Rm Rm
Net interest income 10 930 - (56) - 10 874
Interest and similar income 24 899 - (82) - 24 817
Interest expense and similar charges (13 969) - 26 - (13 943)
Impairment losses on loans and receivables (3 818) (46) - - (3 864)
Net interest income after impairment losses on loans and advances 7 112 (46) (56) - 7 010
Non-interest income 8 778 47 45 - 8 870
Net fee and commission income 6 685 47 - - 6 732
Fee and commission income 7 278 - - - 7 278
Fee and commission expense (593) 47 - - (546)
Gains and losses from banking and trading activities 1 807 - 49 - 1 856
Gains and losses from investment activities 19 - - - 19
Other operating income 267 - (4) - 263
Operating income before operating expenditure 15 890 1 (11) - 15 880
Operating expenditure (10 674) (1) - (15) (10 690)
Operating expenses (10 420) (1) - (15) (10 436)
Other impairments (2) - - - (2)
Indirect taxation (252) - - - (252)
Share of post tax results of associates and joint ventures 31 - - - 31
Operating profit before income tax 5 247 - (11) (15) 5 221
Taxation expense (1 395) - 3 4 (1 388)
Profit for the reporting period 3 852 - (8) (11) 3 833
Profit attributable to: -
Ordinary equity holders 3 710 - (8) (11) 3 691
Non-controlling interest - ordinary shares 140 - - - 140
Non-controlling interest - preference shares 2 - - - 2
3 852 - (8) (11) 3 833
Condensed consolidated statement of comprehensive income for the interim reporting period ended
30 June 2012 (continued)
As Change in
previously accounting
reported policy IFRS 10 IAS 19R Restated
Rm Rm Rm Rm Rm
Profit for the reporting period 3 852 - (8) (11) 3 833
Other comprehensive income
Items that will not be reclassified to the profit
and loss component of the statement of comprehensive
income:
Movement in retirement benefit fund assets and liabilities 27 - - (39) (12)
Increase/(decrease) in retirement benefit surplus 46 - - (63) (17)
Deferred tax (19) - - 24 5
Total items that will not be reclassified to the profit and
loss component of the statement of comprehensive income 27 - - (39) (12)
Items that are or may be reclassified subsequently
to the profit and loss component of the statement of comprehensive income:
Foreign exchange differences on translation of foreign operations 39 - - - 39
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 359 - - - 359
Fair value gains arising during the reporting period 493 - - - 493
Amortisation of government bonds - release to the profit and 5 - - - 5
loss component of the statement of comprehensive income
Deferred tax (139) - - - (139)
Total items that are or may be reclassified subsequently 684 - - - 684
to the profit and loss component of the statement of comprehensive income
Total comprehensive income for the reporting period 4 563 - (8) (50) 4 505
Total comprehensive income attributable to:
Ordinary equity holders 4 421 - (8) (50) 4 363
Non-controlling interest - ordinary shares 140 - - - 140
Non-controlling interest - preference shares 2 - - - 2
4 563 - (8) (50) 4 505
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 18 348 - - - 18 348
Statutory liquid asset portfolio 60 061 - - - 60 061
Loans and advances to banks 57 018 - - - 57 018
Trading portfolio assets 91 377 - 99 - 91 476
Hedging portfolio assets 4 868 - - - 4 868
Other assets 16 975 - 2 (216) 16 761
Current tax assets 380 - (1) - 379
Non-current assets held for sale 6 - - - 6
Loans and advances to customers 489 922 - (931) - 488 991
Loans to Absa Group companies 8 240 - - - 8 240
Investment securities 8 082 - 54 - 8 136
Investment in associates and joint ventures 361 - - - 361
Goodwill and intangible assets 689 - - - 689
Investment properties 1 871 - - - 1 871
Property and equipment 7 020 - - - 7 020
Deferred tax assets 42 - - - 42
Total assets 765 260 - (777) (216) 764 267
Liabilities
Deposits from banks 32 328 - 90 - 32 418
Trading portfolio liabilities 49 127 - - - 49 127
Hedging portfolio liabilities 3 251 - - - 3 251
Other liabilities 26 771 - 26 - 26 797
Provisions 965 - - - 965
Current tax liabilities 31 - (1) - 30
Deposits due to customers 448 977 - 464 - 449 441
Debt securities in issue 122 727 - (1 341) - 121 386
Loans from Absa Group companies 6 092 - - - 6 092
Borrowed funds 14 268 - - - 14 268
Deferred tax liabilities 1 474 - (3) (67) 1 404
Total liabilities 706 011 - (765) (67) 705 179
Equity
Capital and reserves
Attributable to ordinary equity holders
Share capital 303 - - - 303
Share premium 11 465 - - - 11 465
Preference share capital 1 - - - 1
Preference share premium 4 643 - - - 4 643
Retained earnings 38 508 - (12) (149) 38 347
Other reserves 4 244 - - - 4 244
56 164 - (12) (149) 59 003
Non-controlling interest - ordinary shares 85 - - - 85
Total equity 59 249 - (12) (149) 59 088
Total liabilities and equity 765 260 - (777) (216) 764 267
Condensed consolidated statement of comprehensive income for the annual 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 21 995 - (119) - 21 876
Interest and similar income 48 682 - (167) - 48 515
Interest expense and similar charges (26 687) - 48 - (26 639)
Impairment losses on loans and receivables (7 918) (104) - - (8 022)
Net Interest income after impairment losses on loans and advances 14 077 (104) (119) - 13 854
Non-interest income 17 870 104 105 - 18 079
Net fee and commission income 13 759 104 - - 13 863
Fee and commission income 14 890 - - - 14 890
Fee and commission expense (1 131) 104 - - (1 027)
Gains and losses from banking and trading activities 3 543 - 108 - 3 651
Gains and losses from investment activities 20 - - - 20
Other operating income 548 - (3) - 545
Operating income before operating expenditure 31 947 - (14) - 31 933
Operating expenditure (21 967) - - (81) (22 048)
Operating expenses (21 088) - - (81) (21 169)
Other impairments (344) - - - (344)
Indirect taxation (535) - - - (535)
Share of post tax results of associates and joint ventures 240 - - - 240
Operating profit before income tax 10 220 - (14) (81) 10 125
Taxation expense (2 669) - 4 22 (2 643)
Profit for the reporting period 7 551 - (10) (59) 7 482
Profit attributable to:
Ordinary equity holders 7 272 - (10) (59) 7 203
Non-controlling interest -ordinary shares 295 - - - 295
Non-controlling interest -preference shares (16) - - - (16)
7 551 - (10) (59) 7 482
Profit for the reporting period 7 551 - (10) (59) 7 482
Other comprehensive income
Items that will not be reclassified to the profit and
loss component of the statement of comprehensive income:
Movement in retirement benefit fund assets and liabilities (201) - - 158 (43)
Decrease in retirement benefit surplus (279) - - 218 (61)
Increase in retirement benefit deficit - - - - -
Deferred tax 78 - - (60) 18
Total items that will not be reclassified to the profit
and loss component of the statement of comprehensive income (201) - - 158 (43)
Items that are or may be reclassified subsequently
to the profit and loss component of the statement of comprehensive income:
Foreign exchange differences on translation of foreign operations 183 - - - 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 (2 088) - - - (2 088)
of comprehensive income
Deferred tax (157) - - - (157)
Movement in available-for-sale reserve 1 101 - - - 1 109
Fair value gains arising during the reporting period 1 524 - - - 1 532
Amortisation of government bonds - release to the profit and 10 - - - 10
loss component of the statement of comprehensive income
Deferred tax (433) - - - (433)
Total items that are or may be reclassified subsequently 1 689 - - - 1 689
to the profit and loss component of the statement
of comprehensive income
Total comprehensive income for the reporting period 9 039 - (10) 99 9 128
Total comprehensive income attributable to:
Ordinary equity holders 8 760 - (10) 99 8 849
Non-controlling interest - ordinary shares 295 - - - 295
Non-controlling interest - preference shares (16) - - - (16)
9 039 - (10) 99 9 128
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
Statement of financial position
Assets
Cash, cash balances and balances with central banks 20 435 - - - 20 435
Statutory liquid asset portfolio 63 020 - - - 63 020
Loans and advances to banks 42 405 - 2 - 42 407
Trading portfolio assets 82 302 - 114 - 82 416
Hedging portfolio assets 5 439 - - - 5 439
Other assets 11 362 - - - 11 362
Current tax assets 35 - (1) - 34
Non-current assets held for sale 1 438 - - - 1 438
Loans and advances to customers 511 179 - (863) - 510 316
Loans to Absa Group Companies 10 777 - - - 10 777
Investment securities 6 363 - 226 - 6 589
Investment in associates and joint ventures 562 - - - 562
Goodwill and intangible assets 1 160 - - - 1 160
Investment properties 331 - - - 331
Property and equipment 7 653 - - - 7 653
Deferred tax assets 30 - - - 30
Total assets 764 491 - (522) - 763 969
Liabilities
Deposits from banks 42 936 - 149 - 43 085
Trading portfolio liabilities 47 889 - - - 47 889
Hedging portfolio liabilities 3 855 - - - 3 855
Other Liabilities 14 431 - 187 - 14 618
Provisions 1 394 - - - 1 394
Current tax liabilities 59 - (1) - 58
Non-current liabilities held for sale 177 - - - 177
Deposits due to customers 467 318 - 426 - 467 744
Debt securities in issue 106 188 - (1 265) - 104 923
Borrowed funds 17 907 - - - 17 907
Deferred tax liabilities 1 411 - (4) - 1 407
Total Liabilities 703 565 - (508) - 703 057
Equity
Capital and reserves
Attributable to ordinary equity holders
Share Capital 303 - - - 303
Share Premium 12 465 - - - 12 465
Preference Share Capital 1 - - - 1
Preference Share Premium 4 643 - - - 4 643
Retained Earnings 38 025 - (14) - 38 011
Other reserves 5 441 - - - 5 441
60 878 - (14) - 60 864
Non-controlling interest -ordinary shares 48 - - - 48
Total equity 60 926 - (14) - 60 912
Total liabilities and equity 764 491 - (522) - 763 969
Profit and dividend announcement
30 June 2013
Salient features
- Diluted headline earnings per share (diluted HEPS) increased 7% to 1 048,0 cents.
- Pre-provision profit increased 0,2% to R9,3 billion.
- Declared a cash dividend to preference shareholders of 2 999.45 cents per share.
- Revenue grew 2% to R20,2 billion.
- Net interest margin on average interest-bearing assets increased to 3,64% from 3,63%.
- Non-interest income decreased 2% to R8,7 billion and accounted for 43% of total revenue.
- Contained operating expenses growth to 5%, increasing our cost-to-income ratio to 54,0% from 52,9%.
- Loans and advances to customers grew 6% to R519,6 billion, while deposits due to customers
increased 6% to R478,5 billion.
- Credit impairments decreased 14% to R3,3 billion, resulting in a 1,31% credit loss ratio from
1,58%.
- Return on average equity (RoE) increased to 14,2% from 13,8%.
- Return on average risk-weighted assets (RoRWA) decreased to 1,93% and return on average assets
(RoA) increased to 1,04% from 1,99% and 0,99% respectively.
- Net asset value (NAV) per share grew 3% to 14 905 cents.
- Absa Banks Common Equity Tier 1 capital adequacy ratio was 12,2%, well above regulatory requirements
and our Board targets.
Overview of results
The Banks headline earnings increased 8% to R3 970 million from R3 680 million, and attributable
profit grew 9% to R4 025 million. Diluted HEPS also increased 7% to 1 048,0 cents from 983,7 cents.
The Banks RoE improved to 14,2% from 13,8%, slightly above its cost of equity. A cash dividend to
preference shareholders of 2,999.45 cents per share was declared after considering regulatory
changes, the Banks strong capital position, strategic plans and near-term business objectives.
Improved credit impairments, particularly in retail mortgages and commercial property finance, and
a lower effective tax rate were the main reasons for higher earnings. However, pre-provision profit
increased 0,2% to R9,3 billion, largely due to continued focus on operating costs while revenue
growth remained modest.
RBB headline earnings increased 48%, due to lower credit impairments and continued cost
containment. CIBW headline earnings decreased 9%, due to lower Private Equity valuations and
difficult second quarter trading conditions in Markets.
Operating environment
While global growth continued to recover, growth in emerging market economies was somewhat slower
than expected. Central banks provided support by cutting interest rates mostly in emerging markets
and also injecting liquidity into the financial system.
South Africas growth slowed sharply in the first quarter to 0,9% from 2,1% the previous quarter,
on the back of production stoppages in the manufacturing sectors and a generally weaker economic
environment. Growth in household consumption slowed further in the first half, reflecting deteriorating
household balance sheets, a lacklustre job market, subdued confidence, rising inflation and
moderating real wage growth. Consumers demand for credit continued to slow during the period. The rand
exchange rate weakened sharply due to domestic factors, such as industrial action, and global risk
aversion.
Bank performance
Statement of financial position
Total Bank assets increased 3% to R788 billion at 30 June 2013, largely due to 6% growth in loans
and advances to customers and 11% higher statutory liquid assets. Loans and advances to banks
decreased 5%.
Loans and advances to customers
Loans and advances to customers increased 6% to R519,6 billion. Retail Bankings loans increased
4%, given 69% growth in credit cards following the Edcon transaction, 10% higher vehicle asset
finance, offset by 2% lower home loans. Gross Business Banking loans decreased 8%, due to 12% lower
commercial property finance. CIBW loans grew 23%, due to strong growth in foreign currency loans, reverse
repurchase agreements and overnight finance.
The Bank maintained its strong liquidity position, growing deposits due to customers 6% or by R29
billion to R479 billion. Its funding tenor also remained robust with an average long-term funding
ratio of 28,2% for the period, up from 25,6% in 2012. Deposits due to customers contributed 75,6% to
total funding up from 74,5%, while the proportion of debt securities in issue dropped to 16,5% from
20,1%. Retail Bankings deposits increased 4% to R127 billion to maintain its leading market share.
Business Bankings deposits grew 4%, largely due to 20% growth in investment products. CIBWs
deposits increased 8%, due to growth in fixed deposits, cheque account and notice deposits. The Banks
loans-to-deposits ratio increased to 89,2% from 85,7%.
Net asset value
The Banks NAV increased 3% to R61,1 billion as the Bank generated retained earnings of R1,3
billion in the first half. Absa Banks NAV per share grew 3% to 14 905 cents.
Capital to risk-weighted assets
The Banks risk-weighted assets increased 4% to R402,1 billion from R385,9 billion as at 30 June
2012 due to 6% growth in loans and advances to customers and implementing Basel III from 1 January
2013. The Bank maintained its strong capital levels, which remain above Board targets and regulatory
requirements. Absa Banks Common Equity Tier 1 and Tier 1 capital adequacy ratios (including
unappropriated profits) were slightly lower at 12,2% and 13,2% respectively (from 12,5% and 13,7%). The
Banks total capital ratio was 16,8% from 16,6%. The cash dividend to preference shareholders of
2,999.45 cents per share are well considered, based on the Banks strong capital position, internal capital
generation, strategy and growth plans. With solid free cash flow generation.
Statement of comprehensive income
Net interest income
Net interest income increased 6% to R11 496 million from R10 874 million, and average
interest-bearing assets grew 6%. The net interest margin increased to 3,64% from 3,63%, largely due to the
acquisition of the Edcon portfolio in November 2012. The Banks deposit margin decreased and the
contributions from the hedging and endowment were lower.
Impairment losses on loans and advances
Credit impairments declined 14% to R3 307 million from R3 864 million, resulting in a lower credit
loss ratio of 1,31% from 1,58%. Unidentified impairments and identified impairments for performing
loans increased 5% to R2,3 billion, which amounts to 0,46% of performing loans from 0,45% at 31
December 2012.
Retail Bankings credit impairments decreased 13% to R2,9 billion, improving its credit loss ratio
to 1,72% from 2,06%. As expected, the credit loss ratio for secured loans improved, while those of
unsecured loans increased off a low base.
Home Loans credit impairments decreased 53% to R1,1 billion from R2,4 billion following last
years elevated base. Mortgages non-performing loan (NPL) coverage increased to 30,2% from 22,6%. The
mortgage legal portfolio decreased 5% to R13,7 billion. Vehicle and Asset Finances (VAF) credit loss
ratio improved to 1,11% from 1,24%, reflecting reduced trade centre stock due to a focus on
collections.
With consumers under pressure, Personal Loans credit loss ratio increased to 7,17% from 6,14%.
Cards charge increased substantially to R711 million from R110 million, as the Edcon portfolio with a
credit loss ratio of 9,56% added R440 million. The credit impairment on the remaining Card book grew to
R271 million, which represents a 3,25% credit loss ratio from 1,44%.
Business Bankings credit impairments decreased 9% to R417 million improving its credit loss ratio
to 1,33% from 1,40%, largely due to lower impairments for commercial property finance.
Total non-performing loans (NPLs) improved 10%, or by R3,2 billion to R28,5 billion since 30 June
2012. Retail Bankings NPLs fell 17% to
R22,5 billion. The total NPL cover improved to 38.1% from 31,6%, with increases in mortgages and
personal loans in particular. NPLs as a percent of customer loans and advances improved to 5,3% from
6,3% at 30 June 2012 and 5,7% at 31 December 2012.
Non-interest income
Non-interest income decreased 2% to R8 703 million from R8 870 million. Net fee and commission
income rose 1%, as flat electronic banking fees and lower cheque and savings account fees dampened 10%
higher credit card fees due to acquiring the Edcon portfolio. 5% growth in insurance commission
received and 18% higher investment banking fees.
Retail Bankings non-interest income was slightly lower at R5,0 billion with 15% growth in Home
Loans and 18% in VAF. Retail Bankings net fee and commission income declined 1% to R4,9 billion,
reflecting changing customer behaviour, price changes and customer attrition.
Business Bankings net fee and commission income increased 1%, despite lower debit order fees and
cheque payment volumes. Electronic banking fees increased 8% on 2% higher electronic payment
volumes.
Operating expenses
Operating expenses increased 5% to R10 912 million (30 June 2012: R10 436 million). The Banks
cost-to-income ratio increased marginally to 54,0% from 52,9%.
Staff costs grew 3% to R5,8 billion, reflecting 2% higher salary costs and 41% growth in staff
training costs, together with a continued focus on operational efficiencies. Non-staff expenses grew
6%, due to 42% higher marketing costs and a 19% rise in other operating expenses. The former reflects
the renewal of certain sponsorship rights and timing of marketing costs and are expected to be
similar to 2012 levels. The Bank is making progress in optimising property costs, which fell 10% to R541
million. Telephone and postage costs also declined 12% to R316 million and cash transportation
costs decreased 7% to R318 million.
Total information technology spend has decreased with 13% to R923 million and accounted for 8% of
the Banks costs. Amortisation of intangible assets increased 39% to R100 million, reflecting prior
period spend on our digital and mobile platforms. Our professional fees more than doubled to R499
million, due to project delivery including our branch transformation and increased regulatory
requirements.
Retail Bankings operating expenses increased 7%, or 3% excluding Edcon. Business Bankings costs
fell 3% due to large declines in Equities. CIBWs operating expenses increased 2% while continuing
to invest in key growth areas.
Taxation
The taxation expense increased 9% to R1 507 million, although our effective tax rate decreased to
26,5% from 26,6%.
Prospects
Fiscal austerity measures across most advanced economies are the main drag facing the global
economy in 2013. Emerging markets are expected to perform better, supported by fiscal stimulus and
monetary easing. Global Gross Domestic Product (GDP) growth is expected to remain subdued at 3,0% in 2013
from around 3,1% last year. We expect sub-Saharan Africa to grow 5,1% this year.
Moderating consumer demand, weak business confidence, infrastructure constraints and continuing
labour market tensions (especially in the mining sector) all point to weak local growth. The current
account deficit will keep weighing on the rand, generating inflationary pressures. Overall, we expect
slower growth of around 2,3% in 2013 from last years 2,5%. The SARB will likely leave the rand to
find its own level and tolerate a temporary breach of Consumer Price Index (CPI) above the 3% - 6%
target band. Our base case for the next upward move in rates is in late 2014.
Against this backdrop, we expect mid-single digit loan growth this year and a broadly stable net
interest margin. We will continue to focus on operating costs, while investing for growth.Consequently,
our cost-to-income ratio is expected to be similar to last years. Our credit loss ratio is expected to
improve materially from last years 1,60%, but remains above our through the
cycle 1,25%. Our RoE is expected to improve from 2012s 13,5%.
Basis of presentation
The Banks interim financial results have been prepared in accordance with the recognition and
measurement requirements of International Financial Reporting Standards (IFRS), Interpretations issued
by the IFRS Interpretations Committee, the going concern principle and using the historical-cost
basis, except where specifically indicated otherwise in the accounting policies contained in the most
recent annual consolidated financial statements.
The Banks unaudited condensed consolidated interim financial statements comply with the
disclosure requirements of International Accounting Standard (IAS) 34 Interim Financial Reporting.
The preparation of financial information requires the use of estimates and assumptions about
future conditions. Use of available information and the application of judgement are inherent in the
formation of estimates. The accounting policies that are deemed critical to the Banks 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, post-retirement benefits, provisions, share-based payments, income taxes and offsetting of
financial assets and liabilities.
Accounting policies
The accounting policies applied in preparing the unaudited condensed consolidated interim
financial statements are the same as those in place for the reporting period ended 31 December 2012 except
for:
- new and amended standards that became effective for the first time during the reporting period
as specified in note 1.25 of the accounting policies contained in the most recent annual
consolidated financial statements;
- a change in the Banks internal accounting policy for the classification of collection costs;
and
- inter-segmental changes including allocation of elements of the Head office segment to business
segments and portfolio changes between operating segments.
Events after the reporting period
The directors are not aware of any events occurring between the reporting date of 30 June 2013 and
the date of authorisation of these condensed consolidated financial results as defined in IAS 10
Events after the reporting period.
On behalf of the Board
W E Lucas-Bull M Ramos
Group Chairman Group Chief Executive
Johannesburg
30 July 2013
Declaration of preference share dividend number 15:
Absa Bank non-cumulative, non-redeemable preference shares (Absa Bank preference shares):
The Absa Bank preference shares have an effective coupon rate of 70% of Absa Banks prevailing
prime overdraft lending rate (prime rate). Absa Banks current prime rate is 8,5%.
Notice is hereby given that preference dividend number 15, equal to 70% of the average prime rate
for 1 March 2013 to 31 August 2013, per Absa Bank preference share has been declared for the period
1 March 2013 to 31 August 2013. The dividend is payable on Monday, 16 September 2013, to
shareholders of the Absa Bank preference shares recorded in the register of members of the Company at the close
of business on Friday,
13 September 2013.
The directors of Absa Bank confirm that the Bank will satisfy the solvency and liquidity test
immediately after completion of the dividend distribution.
Based on the current prime rate, the preference dividend payable for the period 1 March 2013 to 31
August 2013 would indicatively be 2 999,45205 cents per Absa Bank preference share.
The dividend will be subject to the new dividend 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.
- Absa Bank has utilised R148 318 074,75 of STC credits (equivalent to 2 999,45205 cents per
preference share), so no dividend withholding tax is payable by preference shareholders.
- The local dividend tax rate is fifteen per centum (15%).
- The gross local dividend amount is 2 999,45205 cents per preference share for shareholders
exempt from the dividend tax.
- The net local dividend amount is 2 999,45205 cents per preference share for shareholders liable
to pay the dividend tax.
- Absa Bank currently has 4 944 839 preference shares in issue.
- Absa Banks income tax reference number is 9575117719.
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, 6 September 2013
Shares commence trading ex dividend Monday, 9 September 2013
Record date Friday, 13 September 2013
Payment date Monday, 16 September 2013
Share certificates may not be dematerialised or rematerialised between Monday, 9 September 2013
and Friday, 13 September 2013, both dates inclusive. On Monday, 16 September 2013, 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 16 September 2013 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, 16 September 2013.
On behalf of the Board
N R Drutman
Company Secretary
Johannesburg
30 July 2013
Absa Bank Limited is a company domiciled in South Africa. Its registered office is the 7th Floor,
Absa Towers West, 15 Troye Street, Johannesburg, 2001.
Administration and contact details
Absa Bank Limited
Authorised financial services and registered credit provider (NCRCP7)
Registration number: 1986/004794/06
Incorporated in the Republic of South Africa
JSE share code: ABSP and ABMN
ISIN: ZAE000079810
Registered office
7th Floor, Absa Towers West
15 Troye Street, Johannesburg, 2001
PO Box 7735, Johannesburg, 2000
Telephone: (+27 11) 350 4000
Email: groupsec@absa.co.za
Board of directors
Independent non-executive directors
C Beggs, Y Z Cuba, W E Lucas-Bull (Group Chairman),
M J Husain, P B Matlare, T S Munday, S G Pretorius
Non-executive directors
P A Clackson1, R Le Blanc1, A V Vaswani2
Executive directors
D W P Hodnett (Group Financial Director),
M Ramos (Group Chief Executive)
Notes
1 British
2 Singaporean
Transfer secretary
South Africa
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001
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
Auditors
PricewaterhouseCoopers Inc.
Ernst & Young Inc.
Sponsors
Lead independent sponsor
J. P. Morgan Equities South Africa Proprietary Limited
No 1 Fricker Road, Cnr. Hurlingham Road,
Illovo, Johannesburg, 2196
Private Bag X9936, Sandton, 2146
Telephone: (+27 11) 507 0300
Telefax: (+27 11) 507 0503
Joint sponsor
Absa Bank Limited (acting through its
Corporate and Investment Bank division)
15 Alice Lane, Sandton, 2196
Private Bag X10056, Sandton, 2146
Telephone (+27 11) 895 6843
Telefax: (+27 11) 895 7809
Shareholder contact information
Shareholder and investment queries about the
Absa Group should be directed to the following areas:
Group Investor Relations
A M Hartdegen (Head Investor Relations)
Telephone: (+27 11) 350 2598
Email: investorrelations@absa.co.za
Company Secretary
N R Drutman
Telephone: (+27 11) 350 5347
Email: groupsec@absa.co.za
Other contacts
Group Communications
M Wanendeya (Head Communications Africa)
Telephone: (+27 11) 350 7207
Email: mwambu.wanendeya@absa.co.za
Group Finance
R Stromsoe (Head: Group Finance)
Telephone: (+27 11) 895 6365
Head office switchboard
Telephone: (+27 11) 350 4000
Website address
www.absa.co.za
Date: 30/07/2013 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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