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NEDBANK LIMITED1 - Reviewed Condensed Consolidated Interim Financial Results for the six months ended 30 June 2013

Release Date: 06/08/2013 08:01
Code(s): NBKP     PDF:  
Wrap Text
Reviewed Condensed Consolidated Interim Financial Results for the six months ended 30 June 2013

NEDBANK LIMITED: Registration No 1951/000009/06
Incorporated in the Republic of South Africa
JSE share code: NBKP
ISIN: ZAE000043667

NEDBANK LIMITED
REVIEWED CONDENSED FINANCIAL RESULTS
for the period ended 30 June 2013

Reviewed condensed consolidated interim financial results for the six
months ended 30 June 2013

Overview
Nedbank Limited ('Nedbank') is a wholly owned subsidiary of Nedbank Group
Limited, which is listed on JSE Limited. These condensed consolidated interim
financial results are published to provide information to holders of Nedbank's
listed non-redeemable non-cumulative preference shares.

Commentary relating to the Nedbank condensed consolidated interim financial
results is included in the Nedbank Group Limited group results, as presented
to shareholders on 6 August 2013. Further information is provided on the
website at www.nedbankgroup.co.za.

Board and executive changes during the period
Mr Don Hope resigned as a non-executive director of Nedbank Group and
Nedbank Limited with effect from 30 June 2013 following his retirement from
Old Mutual plc at the end of June 2013.

Accounting policies¹
Nedbank is a company domiciled in South Africa. The condensed
consolidated interim financial results at and for the six months ended 30 June
2013 comprise the company and its subsidiaries (the 'group') and the group's
interests in associates and jointly controlled entities.

Nedbank's condensed consolidated interim financial results have been
prepared in accordance with the measurement and recognition criteria of
International Financial Reporting Standards (IFRS) and are presented in
accordance with the disclosures prescribed by International Accounting
Standards (IAS) 34: Interim Financial Reporting, South African Institute of
Chartered Accountants (SAICA) Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncement as issued by
Financial Reporting Standards Council and the provisions of the Companies
Act of SA.

Nedbank's principal accounting policies have been prepared in terms of the
International Financial Reporting Standards (IFRS) of the International
Accounting Standards Board and have been applied consistently over the
current and prior financial years, with the exception of changes mentioned
below.

The following standards in particular have been newly adopted or amended
with effect from 1 January 2013:
-   IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements
    and IFRS 12 Disclosure of Interests in Other Entities, as well as the
    consequential amendments to IAS 27 Separate Financial Statements
    (2011) and IAS 28 Investments in Associates and Joint Ventures (2011).

As a result of adopting IFRS 10 the group has changed its accounting policy
with respect to determining whether it has control over and consequently
whether it is required to consolidate an investee. IFRS 10 introduces a new
set of criteria for assessing control by referring to the investor's exposure or
rights to variable returns from its involvement with the investee and the ability
to affect those returns through its power over the investee.

IFRS 11 requires that the group classifies its interests in joint arrangements as
either joint operations or joint ventures depending on the group's rights to
assets and obligations for the liabilities of the arrangements. There has been
no change to the method of accounting for joint arrangements.

These standards have been applied retrospectively and have not required any
material restatement in the groups' financial report.

-   IFRS 13 Fair-value Measurement

    IFRS 13 provides a revised definition of fair value and establishes a single
    source of guidance for the measurement of fair value, which had
    previously been contained in various standards. The adoption of this
    standard did not have a material impact on the measurement of the
    group's assets and liabilities. The group has an established control
    framework with respect to the measurement of fair value, which includes
    an ongoing review of the valuation methodologies applied.

-   Disclosures  Offsetting Financial Assets and Financial Liabilities
    (amendments to IFRS 7)
    The group has adopted the amendments to IFRS 7, which requires
    extensive disclosures in respect of offsetting. The adoption had no impact
    on the measurement of the group's assets and liabilities.

-   IAS 19 Employee Benefits (2011)
    The group has adopted IAS 19 Employee Benefits (2011). The
    amendments include revised requirements for pensions and other
    postemployment benefits, termination benefits and certain other changes.
    The key amendments include:

-   requiring the recognition of changes in net defined-benefit
    liabilities/assets due to changes in determined expense/income in
    'other comprehensive income' (eliminating the 'corridor approach'
    previously permitted in IAS 19);

-   modifying the accounting for termination benefits; and

-   clarifying various miscellaneous issues.

The amendments have been applied retrospectively and required certain
restatements that are not material.

-   IAS 1 Presentation of Financial Statements
    Amendments to IAS 1 require identification of items that may be
    reclassified from 'other comprehensive income' to 'profit or loss', and those
    that may not be so reclassified. As a consequence of adopting the
    amendments to IAS 1, items that may be reclassified from 'other
    comprehensive income to 'profit or loss' have been denoted as such in the
    statement of comprehensive income.

Events after the reporting period¹
A total of R1,8bn of new-style, fully loss-absorbent, Basel III-compliant, Tier 2
subordinated-debt capital was successfully issued during July 2013 to replace
the R1,8bn Basel II Tier 2 capital that matures in September 2013.
Furthermore, R3,2bn of three-year senior unsecured debt was also
successfully issued.

Reviewed results  auditors' opinion
KPMG Inc and Deloitte & Touche, Nedbank Limited's independent auditors,
have reviewed the condensed consolidated interim financial results of
Nedbank Limited. The review was conducted in accordance with International
Standards on Review Engagements 2410: Review of Interim Financial
Information by the Independent Auditor. They have expressed an unmodified
review conclusion on the results. The condensed consolidated interim
financial results comprise the consolidated statement of financial position at
30 June 2013, consolidated statement of comprehensive income, condensed
consolidated statement of changes in equity and condensed consolidated
statement of cashflows for the six months then ended and selected
explanatory notes. The related notes are marked with(1). The review report is
available for inspection at Nedbank's registered office.

Nedbank non-redeemable non-cumulative preference shares - declaration of dividend no 21
Notice is hereby given that preference dividend no 21 of 35,12556 cents per
share has been declared for the period from 1 July 2013 to 31 December
2013, payable on Monday, 2 September 2013, to shareholders of the
Nedbank non-redeemable non-cumulative preference shares recognised in
the accounting records of the company at the close of business on Friday,
30 August 2013. The dividend has been declared out of income reserves.

The dividend will be subject to a dividend withholding tax rate of 15%
(applicable in South Africa), which will result in a net dividend to those
shareholders who are not exempt from paying dividend tax of 29,85673 cents
per share. Nedbank Limited's tax reference number is 9250/083/71/5 and the
number of preference shares in issue at the date of declaration is
358 277 491.

In accordance with the provisions of Strate, the electronic settlement and
custody system used by JSE Limited, the relevant dates for the payment of
the dividend are as follows:

Last day to trade cum dividend                       Friday, 23 August 2013
Shares trade ex dividend                             Monday, 26 August 2013
Record date                                          Friday, 30 August 2013
Payment date                                         Monday, 2 September 2013

Share certificates may not be dematerialised or rematerialised between
Monday, 26 August 2013, and Friday, 30 August 2013, both days inclusive.

Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders' bank accounts on payment date. In
the absence of specific mandates, dividend cheques will be posted to
shareholders. Shareholders who have dematerialised their share certificates
will have their accounts, at their participant or broker, credited on Monday,
2 September 2013.

For and on behalf of the board

RJ Khoza                   MWT Brown
Chairman                   Chief Executive

6 August 2013

Consolidated statement of comprehensive income
for the period ended                                                                                                                              30 June       30 June      31 December
                                                                                                                                                     2013          2012             2012
                                                                                                                                                (Reviewed)    (Reviewed)        (Audited)                                                                                                                                                                                                                                              Rm            Rm               Rm
Interest and similar income                                                                                                                        21 358        21 520           42 900
Interest expense and similar charges                                                                                                               11 506        12 298           24 102
Net interest income                                                                                                                                 9 852         9 222           18 798
Impairments charge on loans and advances                                                                                                            3 299         2 741            5 239
Income from lending activities                                                                                                                      6 553         6 481           13 559
Non-interest revenue                                                                                                                                7 583         6 764           14 151
Operating income                                                                                                                                   14 136        13 245           27 710
Total operating expenses                                                                                                                            9 703         8 980           18 601
 Operating expenses**                                                                                                                               9 683         8 948           18 539
 Black economic empowerment (BEE) transaction expenses                                                                                                 20            32               62
Indirect taxation                                                                                                                                     244           197              460
Profit from operations before non-trading and capital items                                                                                         4 189         4 068            8 649
Non-trading and capital items                                                                                                                         (8)             4             (48)
 Net (loss)/profit on sale of subsidiaries, investments, and property and equipment                                                                     5           (1)                3
 Net impairment of investments, property and equipment, and capitalised development costs                                                            (13)            5              (51)
Fair-value adjustments of investment properties                                                                                                         4                            (1)
Profit from operations before direct taxation                                                                                                       4 185         4 072            8 600
Total direct taxation                                                                                                                               1 031         1 085            2 159
 Direct taxation**                                                                                                                                  1 031         1 084            2 158
 Taxation on non-trading and capital items                                                                                                            (1)             1                1
 Taxation on revaluation of investment properties                                                                                                       1                              *

Profit for the period                                                                                                                               3 154         2 987            6 441
Other comprehensive income net of taxation                                                                                                           (31)            24               42
 Exchange differences on translating foreign operations***                                                                                             37            11               35
 Fair-value adjustments on available-for-sale assets***                                                                                              (57)            60               39
 Remeasurements on long-term employee benefit assets**                                                                                                             (36)             (71)
 (Losses)/Gains on property revaluations***                                                                                                          (11)          (11)               39

Total comprehensive income for the period                                                                                                           3 123         3 011            6 483

Profit attributable to:
Ordinary and preference equity holders**                                                                                                            3 155         2 976            6 410
Non-controlling interest  ordinary shareholders**                                                                                                     (1)            11               31

Profit for the period                                                                                                                               3 154         2 987            6 441
Total comprehensive income attributable to:
Ordinary and preference equity holders**                                                                                                            3 124         3 003            6 456
Non-controlling interest  ordinary shareholders**                                                                                                     (1)             8               27
Total comprehensive income for the period                                                                                                           3 123         3 011            6 483

*  Represents amounts less than R1m.
** 2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).
***These items are or may be reclassified to profit or loss.

Headline earnings reconciliation
for the period ended                                                                            30 June            30 June        30 June            30 June   31 December       31 December
                                                                                                   2013               2013           2012               2012          2012              2012
                                                                                              (Reviewed)         (Reviewed)     (Reviewed)         (Reviewed)     (Audited)         (Audited)
                                                                                                     Rm                 Rm             Rm                 Rm            Rm                Rm
                                                                                                  Gross    Net of taxation          Gross    Net of taxation         Gross   Net of taxation


Profit attributable to ordinary and preference equity holders*                                                       3 155                            2 976                            6 410
Less: Non-headline earnings items                                                                   (4)                (4)             4                  3           (49)              (50)
 Net profit/(loss) on sale of subsidiaries, investments, and property and equipment                  5                  6             (1)                (2)             3                 2
 Net impairment of investments, property and equipment, and capitalised development costs          (13)               (13)             5                  5           (51)              (51)
 Fair-value adjustments of investment properties                                                     4                  3                                              (1)               (1)

Headline earnings attributable to ordinary and preference equity holders                                            3 159                             2 973                            6 460

* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).

Consolidated statement of financial position at
                                                                                                                                                        30 June                           30 June                        31 December
                                                                                                                                                           2013                              2012                               2012
                                                                                                                                                       Reviewed)                        (Reviewed)                          (Audited)
                                                                                                                                                             Rm                                Rm                                 Rm

ASSETS
Cash and cash equivalents                                                                                                                                14 618                            10 038                             12 587
Other short-term securities                                                                                                                              38 567                            35 974                             37 575
Derivative financial instruments                                                                                                                         13 616                            15 792                             14 660
Government and other securities                                                                                                                          24 508                            26 473                             26 194
Loans and advances**                                                                                                                                    541 298                           509 217                            520 116
Other assets                                                                                                                                              5 290                             5 290                              4 528
Current taxation receivable                                                                                                                                 404                               940                                241
Investment securities                                                                                                                                     3 144                             3 722                              3 196
Non-current assets held for sale                                                                                                                             13                                22                                508
Investments in associate companies and joint ventures                                                                                                       523                               596                                665
Deferred taxation assets*                                                                                                                                   176                               154                                362
Investment property                                                                                                                                          87                               488                                 84
Property and equipment                                                                                                                                    6 175                             6 037                              6 171
Long-term employee benefit assets*                                                                                                                        2 022                             2 007                              1 992
Mandatory reserve deposits with central banks                                                                                                            11 439                            12 365                             12 641
Intangible assets                                                                                                                                         3 915                             3 678                              3 830
Total assets                                                                                                                                            665 795                           632 793                            645 350


EQUITY AND LIABILITIES
Ordinary share capital                                                                                                                                       27                                27                                 27
Ordinary share premium                                                                                                                                   17 422                            17 422                             17 422
Reserves                                                                                                                                                 26 801                            23 813                             26 140
Total equity attributable to equity holders of the parent                                                                                                44 250                            41 262                             43 589
Preference share capital and premium                                                                                                                      3 471                             3 561                              3 561
Non-controlling interest attributable to ordinary shareholders                                                                                              124                               118                                136
Total equity                                                                                                                                             47 845                            44 941                             47 286
Derivative financial instruments                                                                                                                         16 770                            15 250                             13 475
Amounts owed to depositors**                                                                                                                            563 175                           530 245                            542 671
Provisions and other liabilities                                                                                                                          9 263                             9 734                              9 273
Current taxation liabilities                                                                                                                                 20                                28                                 67
Other liabilities held fior sale                                                                                                                                                                                                  36
Deferred taxation liabilities*                                                                                                                              256                               699                                367
Long-term employee benefit liabilities*                                                                                                                   1 990                             1 842                              1 880
Long-term debt instruments                                                                                                                               26 476                            30 054                             30 295
Total liabilities                                                                                                                                       617 950                           587 852                            598 064
Total equity and liabilities                                                                                                                            665 795                           632 793                            645 350

*  2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).
** As communicated in the group's 2012 integrated report, clients indebtedness for acceptances and liabilities for acceptances have been reclassified to loans and advances and amounts owed to depositors respectively for the purpose of achieving improved comparability with the majority of
   the groups SA banking peers. These items were previously separately disclosed in the groups statement of financial position. June 2012 comparatives have been reclassified accordingly.

Condensed consolidated statement of changes in equity
                                                                                                        Non-controlling
                                                                        Total equity                           interest
                                                                     attributable to       Preference   attributable to
                                                                      equity holders    share capital          ordinary
                                                                       of the parent      and premium      shareholders   Total equity
                                                                                  Rm               Rm                Rm             Rm
Balance at 31 December 2011                                                   39 305            3 561               121         42 987
Adoption of IAS 19 amendments                                                   (228)                               (4)          (232)
Restated balance at 31 December 2011                                          39 077            3 561               117         42 755
Shares issued                                                                  3 000                                             3 000
Preference share dividend                                                       (142)                                            (142)
Dividend to ordinary shareholders                                             (3 900)                               (7)        (3 907)
Total comprehensive income for the period*                                     3 003                                  8          3 011
Share-based payment reserve movement                                             221                                               221
Regulatory risk reserve provision                                                  2                                                 2
Other movements                                                                    1                                                 1
Balance at 30 June 2012                                                       41 262            3 561               118         44 941
Preference share dividend                                                       (151)                                            (151)
Dividend to ordinary shareholders                                             (1 200)                               (1)        (1 201)
Dividend in respect of BEE transaction                                            (6)                                              (6)
Total comprehensive income for the period*                                     3 453                                 19          3 472
Share-based payment reserve movement                                             230                                               230
Other movements                                                                    1                                                 1
Balance at 31 December 2012                                                   43 589            3 561               136         47 286
Preference share dividend                                                       (132)                                             (132)
Dividend to ordinary shareholders                                             (2 100)                                (8)        (2 108)
Total comprehensive income for the period                                      3 124                                 (1)         3 123
Share-based payment reserve movement                                            (229)                                             (229)
Preference shares held by group entities                                                         (90)                              (90)
Disposal of subsidiary                                                                                               (3)            (3)
Other movements                                                                   (2)                                               (2)
Balance at 30 June 2013                                                       44 250            3 471               124         47 845

* Restated to reflect the adoption of IAS 19 Employee Benefits (2011).

Condensed consolidated statement of cashflows
for the period ended                                                                                      30 June       30 June    31 December
                                                                                                             2013          2012           2012
                                                                                                        (Reviewed)    (Reviewed)      (Audited)
                                                                                                               Rm            Rm             Rm

Cash generated by operations                                                                                8 834         8 057         16 521
Change in funds for operating activities                                                                     (339)       (5 996)        (7 984)
Net cash from operating activities before taxation                                                          8 495         2 061          8 537
Taxation paid                                                                                              (1 449)       (1 865)        (3 108)
Cashflows from operating activities                                                                         7 046           196          5 429
Cashflows utilised by investing activities                                                                   (166)         (742)        (2 034)
Cashflows utilised by financing activities                                                                 (6 051)         (427)        (1 543)
Effects of exchange rate changes on opening cash and cash equivalents (excluding foreign borrowings)            *             *              *
Net increase/(decrease) in cash and cash equivalents                                                          829          (973)         1 852
Cash and cash equivalents at the beginning of the period**                                                 25 228        23 376         23 376
Cash and cash equivalents at the end of the period**                                                       26 057        22 403         25 228


* Represents amounts less than R1m.

** Including mandatory reserve deposits with central banks.

Condensed segmental reporting
for the period ended                                                                                            30 June                     30 June              31 December                  30 June                     30 June              31 December                 30 June                 30 June     31 December
                                                                                                                   2013                        2012                     2012                     2013                        2012                     2012                    2013                    2012            2012
                                                                                                              (Reviewed)                  (Reviewed)                (Audited)               (Reviewed)                  (Reviewed)                (Audited)              (Reviewed)              (Reviewed)       (Audited)
                                                                                                                     Rm                          Rm                       Rm                       Rm                          Rm                       Rm                      Rm                      Rm              Rm

                                                                                                                                 Total assets                                                               Operating income                                                          Headline earnings

Nedbank Capital                                                                                                 159 339                     157 069                  142 290                    2 102                       1 844                    4 044                     801                     685           1 431
Nedbank Corporate                                                                                               185 804                     168 732                  175 073                    2 486                       2 143                    4 410                   1 069                     864           1 817
Total Nedbank Retail and Nedbank Business Banking                                                               292 113                     283 495                  290 198                    9 201                       9 129                   18 989                   1 403                   1 627           3 496
Nedbank Retail                                                                                                  200 339                     193 889                  198 072                    7 196                       7 062                   14 693                   1 054                   1 194           2 552
Nedbank Business Banking                                                                                         91 774                      89 606                   92 126                    2 005                       2 067                    4 296                     349                     433             944
Nedbank Wealth                                                                                                   47 212                      40 953                   42 270                    1 695                       1 468                    2 993                     421                     357             718
Shared Services                                                                                                   6 758                       6 564                    6 048                       76                         (11)                       4                     156                      10              40
Central Management, including Rest of Africa                                                                     23 104                      13 239                   27 079                      959                         632                    1 365                      64                     (89)            (19)
Total for Nedbank Group                                                                                         714 330                     670 052                  682 958                   16 519                      15 205                   31 805                   3 914                   3 454           7 483
Fellow-subsidiary adjustments                                                                                   (48 535)                    (37 259)                 (37 608)                  (2 383)                     (1 960)                  (4 095)                   (755)                   (481)         (1 023)
Total                                                                                                           665 795                     632 793                  645 350                   14 136                      13 245                   27 710                   3 159                   2 973           6 460
                                                                                                                                                      .
The segmental results for 2012 have been restated to reflect the adoption of IAS 19 Employee Benefits (2011). The amendments to the standard include revised requirements for pensions and other postretirement benefits, termination benefits and certain other changes.

Condensed geographical segmental reporting
for the period ended                                                            30 June                30 June     31 December       30 June                 30 June    31 December
                                                                                   2013                   2012            2012          2013                    2012           2012
                                                                              (Reviewed)             (Reviewed)       (Audited)    (Reviewed)              (Reviewed)      (Audited)
                                                                                     Rm                     Rm              Rm            Rm                      Rm             Rm

                                                                                             Operating income                                     Headline earnings


SA                                                                               15 515                 14 217          29 748         3 742                   3 164          6 869
 Business operations*                                                            15 515                 14 217          29 748         3 893                   3 347          7 230
 BEE transaction expenses                                                                                                               (19)                    (41)           (68)
 Profit attributable to non-controlling interest  preference shareholders                                                              (132)                   (142)          (293)
Rest of Africa*                                                                     655                    584           1 259           124                     126            297
Rest of world  business operations*                                                 349                    404             798            48                     164            317
Total per Nedbank Group                                                          16 519                 15 205          31 805         3 914                   3 454          7 483
Fellow-subsidiary adjustments                                                    (2 383)                (1 960)         (4 095)         (755)                   (481)        (1 023)
Total                                                                            14 136                 13 245          27 710         3 159                   2 973          6 460

* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).

Fair-value hierarchy
FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE

The fair value of a financial instrument is the price that would be received for the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date. Underlying the definition of fair value is a presumption that an entity is a
going concern without any intention or need to liquidate, to curtail materially the scale of its operations or to undertake a transaction on adverse terms. Fair value is not, therefore, the amount that an entity would receive or pay in a forced transaction, involuntary liquidation or distressed
sale.

The existence of published price quotations in an active market is the best evidence of fair value and, where they exist, they are used to measure the financial asset or financial liability. A market is considered to be active if transactions occur with sufficient volume and frequency to provide
pricing information on an ongoing basis. These quoted prices would generally be classified as level 1 in terms of the fair-value hierarchy.

Where a quoted price does not represent fair value at the measurement date or where the market for a financial instrument is not active, the group establishes fair value by using a valuation technique. These valuation techniques include reference to the current fair value of another
instrument that is substantially the same in nature (eg other short-term securities and government and other securities), reference to the value of the assets of underlying business (eg investment contract liabilities), earnings multiples (eg unlisted investments), discounted cashflow
analysis (eg unlisted investments, loans and advances, other short-term securities, government and other securities and amounts owed to depositors) and various option pricing models (eg other short-term securities and government and other securities and derivatives). Valuation
techniques applied by the group would generally be classified as level 2 or level 3 in terms of the fair-value hierarchy. The determination of whether an instrument is classified as level 2 or level 3 is dependent on the significance of observable inputs versus unobservable inputs in relation to
the fair value of the instrument. Inputs typically used in valuation techniques include discount rates, appropriate swap rates, volatility, servicing costs, equity prices, commodity prices, counterparty credit risk, and the group's own credit on financial liabilities.

The group has an established control framework for the measurement of fair value, which includes formalised review protocols for the independent review and validation of fair values separate from the business unit entering into the transaction. The valuation methodologies, techniques
and inputs applied to the fair-value measurement of the financial instruments have been applied in a manner consistent with that of the previous financial year (www.nedbankgroup.co.za).

FAIR-VALUE HIERARCHY

The financial instruments recognised at fair value have been categorised into the three input levels of the IFRS fair-value hierarchy as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2: Valuation techniques based on (directly or indirectly) market-observable inputs. Various factors influence the availability of observable inputs. These factors may vary from product to product and change over time. Factors include the depth of activity in the relevant market, the
type of product, whether the product is new and not widely traded in the market, the maturity of market modelling and the nature of the transaction (bespoke or generic).

Level 3: Valuation techniques based on significant inputs that are not observable. To the extent that a valuation is based on inputs that are not market-observable, the determination of the fair value can be more subjective, depending on the significance of the unobservable inputs to the
overall valuation. Unobservable inputs are determined on the basis of the best information available and may include reference to similar instruments, similar maturities, appropriate proxies or other analytical techniques.

There were no significant transfers between level 1 and 2 during the period under review.

FINANCIAL ASSETS
                                                                                                Total financial assets recognised at
                                                         Total financial assets                                                                 Total financial assets classified at level 1       Total financial assets classified at level 2      Total financial assets classified at level 3
                                                                                                          amortised cost

                                                           30 June              31 December             30 June              31 December                     30 June              31 December                  30 June              31 December                  30 June               31 December
                                                              2013                     2012                2013                     2012                        2013                     2012                     2013                     2012                     2013                      2012
                                                         (Reviewed)                (Audited)          (Reviewed)                (Audited)                  (Reviewed)                (Audited)               (Reviewed)                (Audited)               (Reviewed)                 (Audited)
                                                                Rm                       Rm                  Rm                       Rm                          Rm                       Rm                       Rm                       Rm                       Rm                        Rm
Cash and cash equivalents                                   26 057                   25 228              26 057                   25 228
Other short-term securities                                 38 567                   37 575              15 102                   16 425                         500                      479                   22 965                   20 671
Derivative financial instruments                            13 616                   14 660                                                                        1                        6                   13 615                   14 654
Government and other securities                             24 508                   26 194              10 091                   10 381                       9 678                    9 670                    4 739                    6 143
Loans and advances                                         541 298                  520 116             453 666                  438 255                           1                        1                   87 576                   81 743                        55                      117
Other assets                                                 5 290                    4 528               5 084                    4 227                         206                                                                        301
Investments in associate companies and joint ventures          485                      636                                                                                                                                                                           485                      636
Investment securities                                        3 144                    3 196                                                                      795                      884                      972                      967                     1 377                    1 345
                                                           652 965                  632 133             510 000                  494 516                      11 181                   11 040                  129 867                  124 479                     1 917                    2 098


FINANCIAL LIABILITIES
                                                                                               Total financial liabilities recognised at
                                                        Total financial liabilities                                                            Total financial liabilities classified at level 1 Total financial liabilities classified at level 2 Total financial liabilities classified at level 3
                                                                                                          amortised cost

                                                           30 June              31 December              30 June             31 December                     30 June              31 December                 30 June               31 December                  30 June              31 December
                                                              2013                     2012                 2013                    2012                        2013                     2012                    2013                      2012                     2013                     2012
                                                         (Reviewed)                (Audited)           (Reviewed)               (Audited)                  (Reviewed)                (Audited)              (Reviewed)                 (Audited)               (Reviewed)                (Audited)
                                                                Rm                       Rm                   Rm                      Rm                          Rm                       Rm                      Rm                        Rm                       Rm                       Rm
Derivative financial instruments                            16 770                   13 475                                                                                                 1                  16 769                    13 473                        1                        1
Amounts owed to depositors                                 563 175                  542 671              432 650                 408 490                                                                      130 525                   134 181
Provisions and other liabilities                             9 263                    9 273                6 592                   6 970                       2 547                    2 248                     124                        55
Long-term debt instruments                                  26 476                   30 295               20 964                  24 665                       5 289                    5 447                     223                       183
                                                           615 684                  595 714              460 206                 440 125                       7 836                    7 696                 147 641                   147 892                        1                        1


LEVEL 3 RECONCILIATION

                                                                                                                                                                          Gains/(Losses) in
                                                                                                                       Opening balance at         Gains/(Losses) in           comprehensive                Purchases and                Sales and                                Closing balance at
                                                                                                                                1 January       profit for the year     income for the year                       issues              settlements         Transfers in/(out)                30 June
2013 (Reviewed)                                                                                                                        Rm                        Rm                      Rm                           Rm                       Rm                        Rm                     Rm
FINANCIAL ASSETS
Loans and advances                                                                                                                    117                       (66)                      4                                                                                                     55
Investment securities                                                                                                               1 345                         19                      4                                                    (8)                       17                  1 377
Investments in associate companies and joint ventures                                                                                 636                      (289)                                                 269                     (131)                                             485
                                                                                                                                    2 098                      (336)                      8                          269                     (139)                       17                  1 917

FINANCIAL LIABILITIES
Derivative financial instruments                                                                                                        1                                                                                                                                                        1
                                                                                                                                        1                     -                           -                            -                        -                         -                      1

                                                                                                                                                                                      Gains/(Losses) in
                                                                                                                                     Opening balance at 1       Gains/(Losses) in         comprehensive                                   Sales and                              Closing balance at
                                                                                                                                                  January     profit for the year   income for the year   Purchases and issues          settlements      Transfers in/(out)             31 December
2012 (Audited)                                                                                                                                         Rm                      Rm                    Rm                     Rm                   Rm                     Rm                       Rm
FINANCIAL ASSETS
Derivative financial instruments                                                                                                                       29                                                                                       (29)                                              -
Loans and advances                                                                                                                                     91                      29                                                                (3)                                            117
Investment securities                                                                                                                               1 352                      74                     1                     49                 (131)                                          1 345
Investments in associate companies and joint ventures                                                                                                 545                    (106)                                         275                  (78)                                            636
                                                                                                                                                    2 017                      (3)                    1                    324                 (241)                     -                    2 098

FINANCIAL LIABILITIES
Derivative financial instruments                                                                                                                        5                      (8)                                                                4                                               1
                                                                                                                                                        5                      (8)                    -                      -                    4                      -                        1

Gains and losses include fair value gains or losses, translation gains or losses and, where applicable, dividends and interest income or expense.

EFFECT OF CHANGES IN SIGNIFICANT UNOBSERVABLE ASSUMPTIONS TO REASONABLE POSSIBLE ALTERNATIVES


As discussed above, the fair value of financial instruments is, under certain circumstances, measured by means of valuation techniques based on assumptions that are not market-observable. Where these scenarios apply, the group performs stress testing on the fair value of the relevant
instruments. In stress testing, appropriate levels are chosen for the unobservable input parameters so that they are consistent with prevailing market evidence and in line with the group's approach to valuation control.

The following information is intended to illustrate the potential impact of the relative uncertainty in the fair value of financial instruments, the valuation of which depends on unobservable input parameters. However, it is unlikely in practice that all unobservable parameters would
simultaneously be at the extremes of their ranges of reasonably possible alternatives. Furthermore, the disclosure is neither predictive nor indicative of future movements in fair value.


                                                                                                                                                                                                                                                                 Favourable change           Unfavourable
                                                                                                                                                                                                                                       Value per statement    in fair value due to   change in fair value
                                                                                                                                                                                                              Stress parameters      of financial position             stress test     due to stress test
June 2013 (Reviewed)                                                                                                                 Principal assumption stressed                                            %                                         Rm                      Rm                     Rm
FINANCIAL ASSETS

Loans and advances                                                                                                                   Confidence levels, income volatility and spot rates                      between (14) and 14
                                                                                                                                                                                                                                                        55                       5                     (6)
Investment securities                                                                                                                Valuation multiples, correlations, volatilities and credit spreads       between (25) and 25
                                                                                                                                                                                                                                                     1 377                     130                   (141)
Investments in associate companies and joint ventures                                                                                Valuation multiples                                                      between (12) and 12
                                                                                                                                                                                                                                                       485                      57                    (57)
Total financial assets classified at level 3                                                                                                                                                                                                         1 917                     192                   (204)

FINANCIAL LIABILITIES
Derivative financial instruments                                                                                                     Correlations, volatilities and credit spreads                            between (25) and 25
                                                                                                                                                                                                                                                         1                       *                     *

                                                                                                                                                                                                                                                                 Favourable change           Unfavourable
                                                                                                                                                                                                                                       Value per statement    in fair value due to   change in fair value
                                                                                                                                                                                                              Stress parameters      of financial position             stress test     due to stress test
December 2012 (Audited)                                                                                                              Principal assumption stressed                                            %                                         Rm                      Rm                     Rm
FINANCIAL ASSETS
Loans and advances                                                                                                                   Confidence levels, income volatility and spot rates                      between (14) and 14
                                                                                                                                                                                                                                                       117                      13                    (16)
Investment securities                                                                                                                Valuation multiples, correlations, volatilities and credit spreads       between (25) and 25
                                                                                                                                                                                                                                                     1 345                     127                   (156)
Investments in associate companies and joint ventures                                                                                Valuation multiples                                                      between (11) and 11
                                                                                                                                                                                                                                                       636                      70                    (70)
Total financial assets classified at level 3                                                                                                                                                                                                         2 098                     210                   (242)

FINANCIAL LIABILITIES
Derivative financial instruments                                                                                                     Correlations, volatilities and credit spreads                            between (25) and 25
                                                                                                                                                                                                                                                         1                       *                      *

* Represents amounts less than R1m.

Restatements
The group has adopted IAS 19 Employee Benefits (2011). The amendments include revised requirements for pensions and other postemployment benefits, termination benefits and certain other
changes. The amendments have been applied retrospectively and required the following restatements in the consolidated statement of comprehensive income, headline earnings reconciliation and
consolidated statement of financial position:

                                                                                  Reviewed                        Reviewed                          Audited                        Reviewed
                                                                                   30 June                         30 June                      30 December                     30 December
                                                                                      2012          IAS 19            2012                             2012          IAS 19            2012
                                                                              (As reported)    restatement       (Restated)                    (As reported)    restatement       (Restated)
Consolidated statement of comprehensive income
Total operating expenses                                                             8 962              18           8 980                           18 565              36          18 601
Direct taxation                                                                      1 089              (5)          1 084                            2 168             (10)          2 158
Other comprehensive income net of taxation:
 Remeasurements on long-term employee benefit assets                                                  (36)            (36)                                             (71)            (71)
Profit attributable to:
 Ordinary and preference equity holders                                             2 990             (14)          2 976                            6 438             (28)          6 410
 Non-controlling interest -ordinary shareholders                                       10               1              11                               29               2              31
Total comprehensive income attributable to:
 Equity holders of the parent                                                       3 051             (48)          3 003                            6 551             (95)          6 456
 Non-controlling interest  ordinary shareholders                                        9              (1)              8                               29              (2)             27

Headline earnings reconciliation
Headline earnings                                                                    2 987             (14)          2 973                            6 488             (28)          6 460

Consolidated statement of financial position
Deferred taxation assets                                                                39             115             154                              222             140             362
Long-term employee benefit assets                                                    2 092             (85)          2 007                            2 153            (161)          1 992
Total equity attributable to equity holders of the parent                           24 089            (276)         23 813                           26 463            (323)         26 140
Non-controlling interest attributable to ordinary shareholders                         123              (5)            118                              142              (6)            136
Deferred taxation liabilities                                                          693               6             699                              355              12             367
Long-term employee benefit liabilities                                               1 538             304           1 842                            1 584             296           1 880

Registered office: Nedbank 135 Rivonia Campus, 135 Rivonia Road,
Sandown, Sandton 2196; PO Box 1144, Johannesburg, 2000.

Transfer secretaries: Computershare Investor Services (Pty) Limited,
70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107.

Directors:
Dr RJ Khoza (Chairman), MWT Brown* (Chief Executive), TA Boardman, TCP
Chikane, GW Dempster* (Chief Operating Officer), MA Enus-Brey, ID
Gladman (British), PM Makwana, NP Mnxasana, RK Morathi* (Chief Financial
Officer), JK Netshitenzhe, JVF Roberts (British), GT Serobe, MI Wyman**
(British).
* Executive ** Senior independent non-executive director

Company Secretary: TSB Jali

Sponsors: Investec Bank Limited, Nedbank Capital

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