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CANCELLATION OF S341463 Audited condensed consolidated financial results
for the reporting period ended 31 December 2013.
Barclays Africa Group Limited
(formerly Absa Group Limited)
Authorised financial services and
registered credit provider (NCRCP7)
Registration number: 1986/003934/06
Incorporated in the Republic of South Africa
JSE share code: BGA
ISIN: ZAE000174124
(Barclays Africa Group, BAGL or the Group)
Audited condensed consolidated financial results
for the reporting period ended 31 December 2013.
A full set of audited annual consolidated financial statements is available from 11 February 2014 on request at the
registered address of the Group.
These audited condensed consolidated financial results were prepared by Barclays Africa Group Financial
Control under the direction and supervision of the Financial Director, D W P Hodnett CA(SA).
Date of publication: 11 February 2014
Consolidated salient features
2013 2012(1) Change %
Statement of comprehensive income (Rm)
Revenue 59 406 54 976 8
Operating expenses 33 420 30 329 10
Profit attributable to ordinary equity holders 11 981 9 999 20
Headline earnings(2) 11 843 10 419 14
Statement of financial position
Loans and advances to customers (Rm) 605 337 566 262 7
Total assets (Rm) 959 599 898 371 7
Deposits due to customers (Rm) 588 011 543 101 8
Loans-to-deposits ratio (%) 88,3 87,1
Financial performance (%) (3)
Return on average equity 15,5 14,1
Return on average assets 1,29 1,17
Pro forma return on average risk-weighted assets(4) 2,18 2,09
Operating performance (%)
Net interest margin on average interest-bearing assets(3) 4,48 4,28
Impairment losses on loans and advances as % of average loans
and advances to customers(3) 1,20 1,60
Non-performing loans as % of gross loans and advances to
customers(3) 4,7 5,9
Non-interest income as % of revenue 45,5 46,7
Cost-to-income ratio 56,3 55,2
JAWS (2,1) 0,0
Effective tax rate, excluding indirect taxation 28,9 29,2
Share statistics (million)(5)
Pro forma number of ordinary shares in issue 847,8 847,8
Pro forma number of ordinary shares in issue (excluding
treasury shares) 847,3 847,2
Pro forma weighted average number of ordinary shares in issue
(excluding treasury shares) 847,3 847,1
Pro forma diluted weighted average number of ordinary shares in
issue (excluding treasury shares) 848,0 848,7
Share statistics (cents)(5)
Pro forma headline earnings per ordinary share 1 397,7 1 229,9 14
Pro forma diluted headline earnings per ordinary share 1 396,6 1 227,6 14
Pro forma basic earnings per ordinary share 1 414,0 1 180,4 20
Pro forma diluted earnings per ordinary share 1 412,9 1 178,2 20
Dividend per ordinary share relating to income for the
reporting period 820 684 20
Dividend cover (times) 1,7 1,8
Special dividend per ordinary share 708 - 100
Pro forma net asset value per ordinary share 9 125 9 100 -
Pro forma tangible net asset value per ordinary share 8 745 8 740 -
Capital adequacy (%)(3)
Barclays Africa Group(6) 15,6 17,4
Absa Bank Limited 15,6 17,5
Off-statement of financial position (Rm)
Assets under management and administration 263 775 246 950 7
Financial Services 183 491 197 682 (7)
Money market 57 093 57 824 (1)
Non-money market 126 398 139 858 (10)
Corporate, Investment Bank and Wealth (CIBW) 80 284 49 268 63
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)After allowing for R294 million (2012: R295 million) profit attributable to preference equity holders of Absa Bank
Limited.
(3)These ratios are unaudited.
(4)The pro forma historical risk-weighted assets (“RWAs”) of the Group are restated for purpose of RoRWA and include
the RWAs of Barclays Africa Limited as if they had always been a part of the Group’s RWAs. This does not alter any
submissions made to the South African Reserve Bank (“SARB”).
(5)The pro forma per ordinary share metrics provided above include the ordinary shares issued on 31 July 2013 in consideration
for the acquisition of Barclays Africa Limited as if the ordinary shares had always been in issue. The provision of
these metrics in no way impacts the legal effective date of the ordinary share issue.
(6)This ratio has not been restated for the Barclays Africa Limited acquisition.
Condensed consolidated statement of financial position
as at 31 December
2013 2012(1) 2011(1)
(Audited) (Audited) Change (Audited)
Note Rm Rm % Rm
Assets
Cash, cash balances and balances with central banks 50 130 44 770 12 44 779
Statutory liquid asset portfolio 62 055 63 020 (2) 57 473
Loans and advances to banks 79 971 62 511 28 75 782
Trading portfolio assets 87 034 87 324 - 84 742
Hedging portfolio assets 3 357 5 456 (38) 4 313
Other assets 15 829 17 579 (10) 18 124
Current tax assets 529 376 41 344
Non-current assets held for sale 1 4 814 4 052 19 35
Loans and advances to customers 2 605 337 566 262 7 542 127
Reinsurance assets 870 1 003 (13) 1 009
Investment securities 33 083 30 913 7 28 082
Investments in associates and joint ventures 694 569 22 420
Investment properties 1 089 1 220 (11) 2 839
Property and equipment 10 679 9 624 11 9 642
Goodwill and intangible assets 3 141 3 048 3 2 282
Deferred tax assets 987 644 53 669
Total assets 959 599 898 371 7 872 662
Liabilities
Deposits from banks 69 064 41 424 67 44 636
Trading portfolio liabilities 51 477 51 734 - 55 997
Hedging portfolio liabilities 2 391 3 855 (38) 2 456
Other liabilities 19 775 20 410 (3) 17 298
Provisions 2 460 2 280 8 2 258
Current tax liabilities 173 29 >100 301
Non-current liabilities held for sale 1 1 651 1 480 12 -
Deposits due to customers 5 588 011 543 101 8 503 408
Debt securities in issue 6 97 829 106 804 (8) 128 883
Liabilities under investment contracts 19 773 18 768 5 19 922
Policyholder liabilities under insurance contracts 3 958 3 550 11 3 183
Borrowed funds 7 16 525 18 777 (12) 14 999
Deferred tax liabilities 1 311 1 714 (24) 1 283
Total liabilities 874 398 813 926 7 794 624
Equity
Capital and reserves
Attributable to ordinary equity holders:
Share capital 1 695 1 694 - 1 693
Share premium 4 474 5 336 (16) 5 151
Retained earnings 64 701 64 898 - 60 244
Other reserves 6 447 5 168 25 3 486
77 317 77 096 - 70 574
Non-controlling interest - ordinary shares 3 240 2 705 20 2 820
Non-controlling interest - preference shares 4 644 4 644 - 4 644
Total equity 85 201 84 445 1 78 038
Total liabilities and equity 959 599 898 371 7 872 662
Note
(1)Restated, refer to note 23 for reporting changes.
Condensed consolidated statement of comprehensive income
for the reporting period ended 31 December
2013 2012(1)
(Audited) (Audited) Change
Note Rm Rm %
Net interest income 32 351 29 302 10
Interest and similar income 8.1 60 232 57 297 5
Interest expense and similar charges 8.2 (27 881) (27 995) -
Impairment losses on loans and advances 3.1 (6 987) (8 855) 21
Net interest income after impairment losses on loans and advances 25 364 20 447 24
Non-interest income 27 055 25 674 5
Net fee and commission income 18 554 17 383 7
Fee and commission income 9.1 21 348 20 096 6
Fee and commission expense 9.2 (2 794) (2 713) (3)
Net insurance premium income 5 686 5 618 1
Net insurance claims and benefits paid (2 819) (2 719) (4)
Changes in investment and insurance contract liabilities (2 457) (1 707) (44)
Gains and losses from banking and trading activities 9.3 4 361 4 535 (4)
Gains and losses from investment activities 9.4 2 831 1 735 63
Other operating income 899 829 8
Operating income before operating expenditure 52 419 46 121 14
Operating expenditure (34 453) (31 185) (10)
Operating expenses 10.1 (33 420) (30 329) (10)
Other impairments 10.2 (33) (132) 75
Indirect taxation (1 000) (724) (38)
Share of post-tax results of associates and joint ventures 130 249 (48)
Operating profit before income tax 18 096 15 185 19
Taxation expense (5 222) (4 439) (18)
Profit for the reporting period 12 874 10 746 20
Profit attributable to:
Ordinary equity holders 11 981 9 999 20
Non-controlling interest - ordinary shares 599 452 33
Non-controlling interest - preference shares 294 295 -
12 874 10 746 20
Earnings per share:
Pro forma basic earnings per share (cents per share) 1 414,0 1 180,4 20
Pro forma diluted earnings per share (cents per share) 1 412,9 1 178,2 20
Note
(1)Restated, refer to note 23 for reporting changes.
Condensed consolidated statement of comprehensive income
for the reporting period ended 31 December
2013 2012(1)
(Audited) (Audited) Change
Note Rm Rm %
Profit for the reporting period 12 874 10 746 20
Other comprehensive income
Items that will not be reclassified to the profit or loss
component of the statement of comprehensive income
Movement in retirement benefit fund assets and liabilities (324) (88) >(100)
Decrease in retirement benefit surplus (92) (71) (30)
Increase in retirement benefit deficit (229) (59) >(100)
Deferred tax (3) 42 >(100)
Total items that will not be reclassified to the profit or loss
component of the statement of comprehensive income (324) (88) >(100)
Items that are or may be subsequently reclassified to the profit or loss component
of the statement of comprehensive income
Foreign exchange differences on translation of foreign operations 2 986 338 100
Movement in cash flow hedging reserve (1 822) 405 >(100)
Fair value (losses)/gains arising during the reporting period (903) 2 650 >(100)
Amount removed from other comprehensive income and recognised in the profit or loss
component of the statement of comprehensive income (1 629) (2 088) 22
Deferred tax 710 (157) >100
Movement in available-for-sale reserve 107 1 318 (92)
Fair value gains arising during the reporting period 131 1 739 (92)
Amortisation of government bonds - release to the profit or loss component of the
statement of comprehensive income 10 10 -
Deferred tax (34) (431) 92
Total items that are or may be subsequently reclassified to the profit or loss
component of the statement of comprehensive income 1 271 2 061 (38)
Total comprehensive income for the reporting period 13 821 12 719 9
Total comprehensive income attributable to:
Ordinary equity holders 12 610 11 848 6
Non-controlling interest - ordinary shares 917 576 59
Non-controlling interest - preference shares 294 295 -
13 821 12 719 9
Note
(1)Restated, refer to note 23 for reporting changes.
Condensed consolidated statement of changes in equity
for the reporting period ended 31 December
2013
(Audited)
Capital and
reserves Non- Non-
attributable controlling controlling
to ordinary interest - interest -
equity ordinary preference Total
holders shares shares equity
Rm Rm Rm Rm
Balance at the beginning of the reporting period 77 096 2 705 4 644 84 445
Total comprehensive income for the reporting period 12 610 917 294 13 821
Profit for the reporting period 11 981 599 294 12 874
Other comprehensive income 629 318 - 947
Dividends paid during the reporting period (11 602) (346) (294) (12 242)
Accounting adjustments related to business combinations under
common control(1) (443) - - (443)
Purchase of Group shares in respect of equity-settled share-based
payment schemes (76) - - (76)
Elimination of the movement in treasury shares held by Group entities (279) - - (279)
Movement in share-based payment reserve 11 - - 11
Transfer from share-based payment reserve (38) - - (38)
Transfer to share capital and share premium 38 - - 38
Value of employee services 11 - - 11
Movement in general credit risk reserve - - - -
Transfer from retained earnings (220) - - (220)
Transfer to credit risk reserve 220 - - 220
Movement in foreign insurance subsidiary regulatory reserve - - - -
Transfer from retained earnings (3) - - (3)
Transfer to foreign insurance subsidiary regulatory reserve 3 - - 3
Share of post-tax results of associates and joint ventures - - - -
Transfer from retained earnings (130) - - (130)
Transfer to associates’ and joint ventures’ reserve 130 - - 130
Acquisition of non-controlling interest and related-transaction costs(2) 101 (36) - 65
Transaction costs related to shares issued on the acquisition of
Barclays Africa Limited (101) - - (101)
Balance at the end of the reporting period 77 317 3 240 4 644 85 201
Notes
(1)The excess of the purchase price over BAGL’s share of the net assets of Barclays Africa Limited, acquired on 31
July 2013, is accounted for as a deduction against share premium. The purchase price was applied retrospectively, resulting
in the deemed excess of the purchase price over the historical carrying values of the underlying net assets of Barclays
Africa Limited being similarly included within share premium. This application results in a net movement recognised in
share premium for each retrospective reporting period to date of acquisition.
(2)During the current reporting period, the Group increased its shareholding in National Bank of Commerce Limited
(Tanzania) (“NBC”) from 55% to 66%. This increased shareholding was driven by a rights issue made by NBC. The Group
exercised its rights, together with a portion of the rights relating to non-controlling shareholders. The shareholders that
did not take up their portion of the rights issue were granted a one-year option to acquire such shares from Barclays
Africa Group Limited.
(3) All movements are reflected net of taxation.
Condensed consolidated statement of changes in equity
for the reporting period ended 31 December
2012(1)
(Audited)
Capital and
reserves Non- Non-
attributable controlling controlling
to ordinary interest - interest -
equity ordinary preference Total
holders shares shares equity
Rm Rm Rm Rm
Balance at the beginning of the reporting period as previously reported 62 308 1 453 4 644 68 405
Restatements(1) 8 266 1 367 - 9 633
Restated balance at the beginning of the reporting period 70 574 2 820 4 644 78 038
Total comprehensive income for the reporting period 11 848 576 295 12 719
Profit for the reporting period 9 999 452 295 10 746
Other comprehensive income 1 849 124 - 1 973
Dividends paid during the reporting period (5 069) (597) (295) (5 961)
Accounting adjustments related to business combinations under
common control(2) (89) - - (89)
Transfer from retained earnings (346) - - (346)
Transfer to share premium 257 - - 257
Purchase of Group shares in respect of equity-settled share-based
payment schemes (211) - - (211)
Elimination of the movement in treasury shares held by Group entities 30 - - 30
Movement in share-based payment reserve 13 - - 13
Transfer from share-based payment reserve (110) - - (110)
Transfer to share capital and share premium 110 - - 110
Value of employee services 13 - - 13
Zambia regulatory requirements transfer - - - -
Transfer to retained earnings 150 - - 150
Transfer from general credit risk reserve (150) - - (150)
Movement in general credit risk reserve - - - -
Transfer from retained earnings (54) - - (54)
Transfer to general credit risk reserve 54 - - 54
Movement in insurance contingency reserve(3) - - - -
Transfer to retained earnings 324 - - 324
Transfer from insurance contingency reserve (324) - - (324)
Movement in foreign insurance subsidiary regulatory reserve - - - -
Transfer from retained earnings (13) - - (13)
Transfer to foreign insurance subsidiary regulatory reserve 13 - - 13
Share of post-tax results of associates and joint ventures - - - -
Transfer from retained earnings (249) - - (249)
Transfer to associates’ and joint ventures’ reserve 249 - - 249
Increase in the interest of non-controlling equity holders - 35 - 35
Disposal of interest in subsidiary without loss of control - (129) - (129)
Restated balance at the end of the reporting period 77 096 2 705 4 644 84 445
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)The excess of the purchase price over BAGL’s share of the net assets of Barclays Africa Limited, acquired on 31
July 2013, is accounted for as a deduction against share premium. The purchase price was applied retrospectively resulting
in the deemed excess of the purchase price over the historical carrying values of the underlying net assets of Barclays
Africa Limited being similarly included within share premium. This application results in a net movement recognised in
share premium for each retrospective reporting period to date of acquisition.
(3)This reserve is no longer required due to a change in the Financial Services Board regulations.
(4)All movements are reflected net of taxation.
Condensed consolidated statement of cash flows
for the reporting period ended 31 December
2013 2012(1)
(Audited) (Audited) Change
Note Rm Rm %
Net cash generated from operating activities 18 035 5 199 >100
Net cash utilised in investing activities (1 841) (1 672) (20)
Net cash utilised in financing activities (14 616) (2 045) >(100)
Net increase in cash and cash equivalents 1 578 1 482 6
Cash and cash equivalents at the beginning of the reporting period 13 985 12 163 15
Effect of exchange rate movements on cash and cash equivalents 291 340 (14)
Cash and cash equivalents at the end of the reporting period 15 854 13 985 13
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 banks(2) 11 085 9 989 11
Loans and advances to banks(3) 2 900 2 174 35
13 985 12 163 15
2. Cash and cash equivalents at the end of the
reporting period
Cash, cash balances and balances with central banks(2) 12 653 11 085 14
Loans and advances to banks(3) 3 201 2 900 10
15 854 13 985 13
Notes
(1)Restated, 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 Group and are a component of other advances
within loans and advances to banks on the statement of financial position.
Condensed notes to the consolidated financial results
for the reporting period ended 31 December
1. Non-current assets and non-current liabilities held for sale
During the reporting period, the Group effected the following transfers to non-current assets and non-current
liabilities held for sale:
- Through the Retail and Business Banking (“RBB”) segment
-In the Commercial Property Finance Equity (“CPF Equity”) division, investment properties in two of its
wholly-owned subsidiaries, with a total carrying value of R212 million, were transferred to non-current
assets held for sale. The disposal of these properties is expected to take place during the 2014 reporting period.
- Through the Head office and Other segment
-A number of assets classified as property and equipment within Corporate Real Estate Services have been
identified as held for sale. These assets have a total carrying value of R209 million. The disposal of the
property and equipment is due to take place during 2014.
2. Loans and advances to customers
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
Cheque accounts 34 768 34 282 1
Corporate overdrafts and specialised finance loans 5 729 5 121 12
Credit cards 37 500 33 504 12
Foreign currency loans 22 760 13 143 73
Instalment credit agreements 66 764 61 321 9
Gross advances 81 248 74 049 10
Unearned finance charges (14 484) (12 728) (14)
Reverse repurchase agreements 3 893 4 698 (17)
Loans to associates and joint ventures 12 039 10 094 19
Microloans 2 192 2 002 9
Mortgages 276 253 282 778 (2)
Other advances(2) 20 742 17 348 20
Overnight finance 14 083 18 862 (25)
Personal and term loans 67 954 58 456 16
Preference shares 8 945 6 342 41
Wholesale overdrafts 47 764 34 088 40
Gross loans and advances to customers 621 386 582 039 7
Impairment losses on loans and advances (refer to note 3) (16 049) (15 777) (2)
605 337 566 262 7
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)Includes customer liabilities under acceptances working capital solutions and collateralised loans.
Condensed notes to the consolidated financial results
for the reporting period ended 31 December
3. Impairment losses on loans and advances
2013
(Audited)
Retail Business
Banking Banking RBB CIBW CIBW
South South Rest of South Rest of
Reconciliation of allowance for impairment Africa Africa Africa Africa Africa Other(1) Total
losses on loans and advances to customers Rm Rm Rm Rm Rm Rm Rm
Balance at the beginning of the reporting period(2) 10 157 2 667 1 967 650 192 144 15 777
Net present value unwind on non-performing book
(refer to note 8.1) (697) (153) - (3) - 2 (851)
Exchange differences - - 422 - - - 422
Amounts written off (5 197) (1 171) (725) (108) (157) (46) (7 404)
Impairment raised - identified 5 962 939 645 49 149 10 7 754
Impairment raised - unidentified 87 107 56 95 6 - 351
Balance at the end of the reporting period 10 312 2 389 2 365 683 190 110 16 049
2012(2)
(Audited)
Retail Business
Banking Banking RBB CIBW CIBW
South South Rest of South Rest of
Reconciliation of allowance for impairment Africa Africa Africa Africa Africa Other(1) Total
losses on loans and advances to customers Rm Rm Rm Rm Rm Rm Rm
Balance at the beginning of the reporting period 9 327 1 923 2 167 566 163 125 14 271
Net present value unwind on non-performing book
(refer to note 8.1) (956) (60) - (5) - 3 (1 018)
Exchange differences - - (64) - 2 - (62)
Amounts written off (5 456) (849) (831) (33) 8 (3) (7 164)
Impairment raised - identified 7 068 1 688 651 108 19 19 9 553
Impairment raised - unidentified 174 (35) 44 14 - - 197
Balance at the end of the reporting period 10 157 2 667 1 967 650 192 144 15 777
Notes
(1)Includes Financial Services and Head office and Other.
(2)Restated, refer to note 23 for reporting changes.
3.1 Statement of comprehensive income charge
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
Impairments raised during the reporting period 8 105 9 750 (17)
Identified impairments 7 754 9 553 (19)
Unidentified impairments 351 197 78
Recoveries of loans and advances previously written off (1 118) (895) (25)
6 987 8 855 (21)
Notes
(1) Restated, refer to note 23 for reporting changes.
Condensed notes to the consolidated financial results
for the reporting period ended 31 December
4. Performing and non-performing loans
2013
(Unaudited)
Performing loans Non-performing loans
Coverage Coverage Net total
Loans and advances to Exposure Impairment ratio Exposure Impairment ratio exposure
customers Rm Rm % Rm Rm % Rm
RBB 439 283 3 431 0,78 28 110 11 635 41,4 452 327
Retail Banking South Africa 343 500 2 726 0,79 19 576 7 586 38,8 352 764
Cheque accounts 2 006 31 1,54 96 56 58,3 2 015
Credit cards 25 147 402 1,60 1 931 1 272 65,9 25 404
Edcon portfolio 8 753 297 3,39 1 103 893 81,0 8 666
Instalment credit agreements 63 156 286 0,45 1 359 629 46,2 63 600
Loans to associates and joint ventures 10 287 - - - - - 10 287
Mortgages 218 256 1 327 0,61 13 541 3 763 27,8 226 707
Personal and term loans 15 895 383 2,41 1 546 973 63,0 16 085
Business Banking South Africa 59 088 378 0,64 4 980 2 011 40,4 61 679
Cheque accounts 16 710 137 0,82 863 361 41,8 17 075
Commercial property finance 29 906 125 0,42 2 844 1 235 43,4 31 390
Instalment credit agreements 975 4 0,41 115 102 88,7 984
Loans to associates and joint ventures 559 - - - - - 559
Term loans 10 938 112 1,02 1 158 313 27,0 11 671
RBB Rest of Africa 36 695 327 0,89 3 554 2 038 57,3 37 884
CIBW 152 574 270 0,18 1 190 603 50,7 152 891
CIBW South Africa 131 417 230 0,18 787 453 57,6 131 521
CIBW Rest of Africa 21 157 40 0,19 403 150 37,2 21 370
Head office, inter-segment eliminations
and Other 229 110 48,03 - - - 119
592 086 3 811 0,64 29 300 12 238 41,8 605 337
2012(1)
(Unaudited)
Performing loans Non-performing loans
Coverage Coverage Net total
Loans and advances to Exposure Impairment ratio Exposure Impairment ratio exposure
customers Rm Rm % Rm Rm % Rm
RBB 421 685 2 501 0,59 32 535 12 289 37,8 439 429
Retail Banking South Africa 331 779 1 610 0,49 24 076 8 547 35,5 345 698
Cheque accounts 1 868 4 0,21 96 68 70,8 1 892
Credit cards 21 362 324 1,52 1 839 1 231 66,9 21 646
Edcon portfolio 9 806 102 0,04 - - - 9 704
Instalment credit agreements 56 715 293 0,52 1 790 895 50,0 57 317
Loans to associates and joint ventures 8 393 - - - - - 8 393
Mortgages 218 275 821 0,38 18 798 5 353 28,5 230 899
Personal and term loans 15 360 66 0,43 1 553 1 000 64,4 15 847
Business Banking South Africa 60 476 422 0,70 5 600 2 245 40,1 63 409
Cheque accounts 17 571 96 0,55 859 337 39,2 17 997
Commercial property finance 30 382 229 0,75 3 222 1 340 41,6 32 035
Instalment credit agreements 1 307 12 0,92 443 298 67,3 1 440
Loans to associates and joint ventures 627 - - - - - 627
Term loans 10 589 85 0,80 1 076 270 25,1 11 310
RBB Rest of Africa 29 430 469 1,60 2 859 1 497 52,4 30 323
CIBW 125 536 204 0,16 1 499 638 42,6 126 193
CIBW South Africa 111 917 154 0,14 879 496 56,4 112 146
CIBW Rest of Africa 13 619 50 0,37 620 142 22,9 14 047
Head office, inter-segment eliminations
and Other 764 125 16,23 20 20 100,0 640
547 985 2 830 0,52 34 054 12 947 38,0 566 262
Note
(1)Restated, refer to note 23 for reporting changes.
Condensed notes to the consolidated financial results
for the reporting period ended 31 December
5. Deposits due to customers
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
Call deposits 52 843 56 667 (7)
Cheque account deposits 174 686 170 915 2
Credit card deposits 1 914 1 938 (1)
Fixed deposits 168 054 147 686 14
Foreign currency deposits 17 456 12 253 42
Notice deposits 56 349 55 728 1
Other deposits(2) 11 139 8 434 32
Repurchase agreements with non-banks 1 208 1 503 (20)
Savings and transmission deposits 104 362 87 977 19
588 011 543 101 8
Notes
(1)Restated, 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
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
Credit linked notes 8 155 9 800 (17)
Floating rate notes 44 719 52 639 (15)
Liabilities arising from securitised
structured entities 495 2 391 (79)
Negotiable certificates of deposit 20 494 17 575 17
Other debt securities in issue 11 7 57
Promissory notes 935 1 378 (32)
Structured notes and bonds 1 487 1 122 33
Senior notes 21 533 21 892 (2)
97 829 106 804 (8)
Notes
(1)Restated, refer to note 23 for reporting changes.
Condensed notes to the consolidated financial results
for the reporting period ended 31 December
7. Borrowed funds
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
Subordinated callable notes issued by Absa Bank Limited
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
8,80% 7 March 2019 1 725 1 725 -
8,10% 27 March 2020 2 000 2 000 -
10,28% 3 May 2022 600 600 -
8,295% 21 November 2023 1 188 1 188 -
Three-month JIBAR + 2,10% 3 May 2022 400 400 -
Three-month JIBAR + 1,95% 21 November 2022 1 805 1 805 -
Three-month JIBAR + 2,05% 21 November 2023 2 007 2 007 -
CPI-linked notes, fixed at the following coupon rates:
6,25% 31 March 2018 - 1 886 (100)
6,00% 20 September 2019 3 000 3 000 -
5,50% 7 December 2028 1 500 1 500 -
Subordinated callable notes issued by other subsidiaries
United States dollar three-month Libor 29 April 2013 - 136 (100)
Bank of Botswana certificate rate + 0,85% 30 October 2014 120 207 (42)
Ninety-one day Kenyan Government Treasury
Bill rate + 0,60% 19 November 2014 121 97 25
Ninety-one day Zambian Government Treasury
Bill rate + 2,00% 9 May 2015 96 82 17
One-hundred and eighty-two day Kenyan Government
Treasury Bill rate + 1,00% 14 July 2015 90 73 23
11,50% 14 July 2015 153 124 23
One-hundred and eighty-two day Zambian Government
Treasury Bill rate + 2,50%
(capped at 13,00% overall) 18 May 2016 96 82 17
United States dollar three-month
LIBOR + 1,00% 31 March 2018 69 56 23
Accrued interest 1 490 1 475 1
Fair value adjustment 65 334 (81)
16 525 18 777 (12)
Notes
(1)Restated, refer to note 23 for reporting changes.
8. Net-interest income
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
8.1 Interest and similar income
Interest and similar income is earned from:
Cash, cash balances and balances with central banks 245 166 48
Fair value adjustments on hedging instruments 3 803 (185) >100
Investment securities 2 072 1 742 19
Loans and advances to banks 1 292 1 251 30
Loans and advances to customers 50 697 48 161 5
Cheque accounts 3 143 3 022 4
Corporate overdrafts and specialised finance loans 123 484 (75)
Credit cards 5 697 3 593 59
Foreign currency loans 275 288 (5)
Instalment credit agreements 5 841 5 585 5
Interest on impaired financial assets (refer to note 3) 851 1 018 (16)
Reverse repurchase agreements 12 (41) >(100)
Loans to associates and joint ventures 657 494 33
Microloans 478 505 (5)
Mortgages 19 642 20 986 (6)
Other loans and advances(2) 927 479 93
Overnight finance 786 814 (3)
Personal and term loans 9 073 8 244 10
Preference shares 484 485 -
Wholesale overdrafts 2 708 2 205 23
Other interest income(3) 385 578 (33)
Statutory liquid asset portfolio 1 738 5 584 (69)
60 232 57 297 5
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)Includes items such as interest on factored debtors books.
(3)Includes items such as overnight interest on contracts for difference as well as inter-segment
eliminations between”interest and similar income", "interest and similar income", "interest
expense and similar charges", "gains and losses from banking and trading activities" and "gains and
losses from investment activities".
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
8.2 Interest expense and similar charges
Interest expense and similar charges are paid on:
Borrowed funds 1 358 1 400 (3)
Debt securities in issue 5 850 8 410 (30)
Deposits due to customers 21 568 19 207 12
Call deposits 2 813 2 881 (2)
Cheque account deposits 3 120 3 288 (5)
Credit card deposits 8 9 (11)
Fixed deposits 8 566 6 992 23
Foreign currency deposits 424 114 >100
Notice deposits 2 916 2 471 18
Other deposits due to customers 1 103 1 053 5
Savings and transmission deposits 2 618 2 399 9
Deposits from banks 590 656 (10)
Call deposits 315 528 (40)
Fixed deposits 274 103 >100
Other deposits from banks 1 25 (96)
Fair value adjustments on hedging instruments 500 (999) >100
Interest incurred on finance leases 19 51 (63)
Other interest expense(2) (2 004) (730) >(100)
27 881 27 995 -
Notes
(1)Restated, 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", "gains and losses from banking and trading activities" and "gains and
losses from investment activities".
9. Non-interest income
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
9.1 Fee and commission income
Asset management and other related fees 160 158 1
Consulting and administration fees 661 566 17
Credit-related fees and commissions 15 145 14 439 5
Cheque accounts 3 598 3 589 -
Credit cards(2) 1 226 655 87
Electronic banking 4 129 4 093 1
Other credit-related fees and commissions(3) 3 889 3 614 8
Savings accounts 2 303 2 488 (7)
Insurance commission received 1 315 1 147 15
Investment banking fees 255 252 1
Merchant income 2 197 2 034 8
Other fee and commission income 203 258 (21)
Pension fund payment services - 122 (100)
Trust and other fiduciary services 1 412 1 120 26
Portfolio and other management fees 1 144 870 32
Trust and estate income 268 250 7
21 348 20 096 6
9.2 Fee and commission expense
Cheque processing fees (150) (161) 7
Insurance commission paid (1 001) (945) (6)
Other fee and commission expenses (1 298) (1 198) (8)
Transaction-based legal fees (115) (209) 45
Trust and other fiduciary service fees (88) (73) (21)
Valuation fees (142) (127) (12)
(2 794) (2 713) (3)
Net fee and commission income 18 554 17 383 7
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)Includes acquiring and issuing fees.
(3)Includes service and credit-related fees and commissions on mortgage loans and foreign exchange
transactions”.
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
9.3 Gains and losses from banking and trading activities
Net gains on investments 312 93 >100
Debt instruments designated at fair value through profit or loss 181 179 1
Equity instruments designated at fair value through profit or loss 141 (76) >100
Available-for-sale unwind from reserves (10) (10) -
Net trading result 3 854 4 382 (12)
Net trading income excluding the impact of hedge accounting 4 092 4 360 (6)
Ineffective portion of hedges (238) 22 >(100)
Cash flow hedges (234) 45 >(100)
Fair value hedges (4) (23) 83
Other gains 195 60 >100
4 361 4 535 (4)
Net trading income excluding the impact of hedge accounting 4 092 4 360 (6)
Gains/(losses) on financial instruments designated at fair value
through profit or loss 1 126 (857) >100
Net gains on financial assets designated at fair value through
profit or loss 125 1 129 (89)
Net gains/(losses) on financial liabilities designated at fair
value through profit or loss 1 001 (1 986) >100
Gains on financial instruments held for trading 2 966 5 217 (43)
Other gains 195 60 >100
Gains/(losses) on financial instruments designated at fair value
through profit or loss 135 (3) >100
Gains on financial instruments held for trading 60 63 (5)
Note
(1)Restated, refer to note 23 for reporting changes.
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
9.4 Gains and losses from investment activities
Available-for-sale unwind from reserves 4 2 100
Net gains on investments from insurance activities 2 803 1 686 66
Policyholder - insurance contracts 337 329 3
Policyholder - investment contracts 2 181 1 086 >100
Shareholder funds 285 271 5
Other gains 24 47 (49)
2 831 1 735 63
Gains on investments from insurance activities 2 803 1 686 66
Gains on financial instruments designated at fair value through profit
or loss 2 805 1 687 66
Losses on financial instruments held for trading (2) (1) (100)
Note
(1)Restated, refer to note 23 for reporting changes.
10. Operating expenditure
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
10.1 Operating expenses
Amortisation of intangible assets 470 327 44
Auditors’ remuneration 259 203 28
Cash transportation 715 710 1
Depreciation 1 641 1 593 3
Equipment costs 391 382 2
Information technology(2) 2 078 2 201 (6)
Investment properties charges - change in fair value 33 408 (92)
Marketing costs 1 355 1 137 19
Operating lease expenses on properties 1 309 1 010 30
Other operating expenses(3) 2 913 2 404 21
Printing and stationery 310 280 11
Professional fees(2) 1 578 937 68
Property costs 1 692 1 950 (13)
Staff costs 17 593 15 787 11
Bonuses 1 679 1 210 39
Other staff costs(4) 1 203 844 43
Salaries and current service costs on post-retirement benefits 13 942 13 008 7
Share-based payments 428 469 (9)
Training costs 341 256 33
Telephone and postage 1 083 1 000 8
33 420 30 329 10
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)‘Information technology’ and ‘professional fees’ include research and development costs
totalling R246 million (2012: R113 million).
(3)Includes fraud losses, travel and entertainment costs as well as administration fees related to
the Edcon portfolio.
(4)Includes recruitment costs, membership fees to professional bodies, staff parking, redundancy
fees relating to rest of Africa, study assistance, staff relocation and refreshment costs.
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
10.2 Other impairments
Financial instruments 28 7 >100
Other 5 125 (96)
Computer software development costs - 95 (100)
Property and equipment - 11 (100)
Goodwill - 18 (100)
Investments in associates and joint ventures 2 - 100
Repossessed properties 3 1 >100
33 132 (75)
Note
(1)Restated, refer to note 23 for reporting changes.
Condensed notes to the consolidated financial results
for the reporting period ended 31 December
11. Headline earnings 2013 2012(1)
(Audited) (Audited)
Net(2)
Gross Net(2) Gross Net(2) change
Headline earnings Rm Rm Rm Rm %
Headline earnings is determined as follows:
Profit attributable to ordinary equity holders 11 981 9 999 20
Total headline earnings adjustment: (138) 420 >(100)
IFRS 3 - Goodwill impairment - - 18 18 >(100)
IFRS 5 - Gains and losses on disposal of non-current assets held for sale (171) (138) - - >(100)
IAS 16 and IAS 36 - loss/(profit) on disposal and impairment of property
and equipment 5 4 (79) (62) >100
IAS 27 - Loss on disposal of subsidiary 8 8 - - 100
IAS 28 and IFRS 11 - Headline earnings component of share of post-tax - - (1) (1) 100
results of associates and joint ventures
IAS 36 - Impairment of investments in associates and joint ventures 2 2 - - 100
IAS 36 and IAS 38 - Loss on disposal and impairment of intangible assets 1 - 98 70 (100)
IAS 39 - Release of available-for-sale reserves 10 7 10 7 -
IAS 39 - Disposal and impairment of available-for-sale assets 6 4 - - >100
IAS 40 - Change in fair value of investment properties (29) (25) 408 388 >(100)
11 843 10 419 14
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)The net amount is reflected after taxation and non-controlling interest.
12. Dividends per share
2013 2012
(Audited) (Audited) Change
Rm Rm %
Dividends declared to ordinary equity holders
Interim dividend (30 July 2013: 350 cents) (27 July 2012: 315 cents) 2 514 2 262 11
Dividend paid on treasury shares - interim(1) (2) (3) 33
Special dividend (30 July 2013: 708 cents) 5 085 - 100
Dividend paid on treasury shares - special (1) (10) - (100)
Final dividend (11 February 2014: 470 cents) (12 February 2013: 369 cents) 3 984 2 650 50
Dividend paid on treasury shares - final(1) - (5) 100
7 587 4 904 55
Dividends declared to non-controlling preference equity holders
Interim dividend (30 July 2013: 2 999,4521 cents) (27 July 2012: 3 134,6575 cents) 148 155 (5)
Final dividend (11 February 2014: 2 979,3151 cents) (12 February 2013: 2 950,5479 cents) 147 146 1
295 301 (2)
Dividends paid to ordinary equity holders
Final dividend (12 February 2013: 369 cents) (10 February 2012: 392 cents) 2 650 2 815 (6)
Dividend paid on treasury shares - final(1) (5) (5) -
Interim dividend (30 July 2013: 350 cents) (27 July 2013: 315 cents) 2 967 2 262 31
Dividend paid on treasury shares - interim(1) (2) (3) 33
Special dividend (30 July 2013: 708 cents)(2) 6 002 - 100
Dividend paid on treasury shares - special(1) (10) - (100)
11 602 5 069 >100
Dividends paid to non-controlling preference equity holders
Final dividend (12 February 2013: 2 950,5479 cents) (10 February 2012: 2 827,2329 cents) 146 140 4
Interim dividend (30 July 2013: 2 999,4521 cents) (27 July 2013: 3 134,6575 cents) 148 155 (5)
294 295 -
Notes
(1)The dividend paid on treasury shares are calculated on payment date.
(2)Dividend amount is calculated on the number of shares in issue, including the shares
issued on 31 July 2013 for consideration on the acquisition of Barclays Africa Limited.
Condensed notes to the consolidated financial results
for the reporting period ended 31 December
13. Acquisitions and disposals of businesses and other similar transactions
Acquisition during the current reporting period
In 2012, Absa Group Limited announced its intention to conclude the strategic combination of Barclays’ Africa operations
with the existing Absa Group operations.
Through the transaction, Absa Group Limited acquired 100% of the issued ordinary share capital of Barclays Africa Limited,
which was settled by the issuance of 129 540 636 Absa Group Limited ordinary shares. This increased Barclays Bank PLC’s
shareholding in the Group from 55,5% to 62,3%. This transaction concluded on 31 July 2013 and was accompanied by the name
change of Absa Group Limited to Barclays Africa Group Limited.
The transaction is a business combination of entities under common control as defined in International Financial Reporting
Standard 3: Business Combinations (“IFRS 3”). The Group elected, in accordance with IFRS 3 guidance and the Group’s and
Barclays Group’s accounting policies, to account for the transaction in terms of predecessor accounting principles.
Accordingly, the Group’s comparative financial results have been restated as if Barclays Africa Limited was always part of
the Group’s structure.
Disposals during the current reporting period
Barclays Africa Group through a wholly-owned subsidiary Absa Trading and Investment Solutions Proprietary Limited (“ATIS”)
disposed of its 73,37% limited partnership interest in Absa Capital Private Equity Fund I (“ACPE Fund I”) to a syndicate
led by HarbourVest Partners L.P. (“HarbourVest”), comprising funds managed by HarbourVest and Coller Capital Limited.
ACPE Fund I is a fully invested South African private equity fund established in 2008. The fund has exposure to the general
industrials sector in sub-Saharan Africa. As a consequence of the sale, two materially insignificant wholly-owned subsidiaries
of Barclays Africa Group, and the Investment Adviser, to the General Partner of ACPE Fund I, have been spun off to become a new
independent South African private equity fund manager, Rockwood Private Equity. As of 31 December 2012, the reported carrying
value of BAGL’s interest in ACPE Fund I was R2,3 billion.
During the current reporting period, the Group disposed of 100% of its investment in its wholly-owned subsidiary CMB Nominees
Proprietary Limited effective 2 December 2013. This occurred as part of the disposal of the Custody and Trustee business, a
division of Corporate, Investment Bank and Wealth. The total cash consideration received on disposal of the business was
R300 million.
Other similar transactions: additional interest in a subsidiary
During March 2013, the Group acquired additional shares in NBC for a purchase consideration of R368 million, after a rights issue
by NBC, whereby the non-controlling interest did not take up any shares in terms of the rights issue. This increased the Group’s
effective shareholding in NBC. The Group now holds 65,89% of the share equity in NBC. The carrying amount of the non-controlling
shareholders’ interest in NBC on the date of acquisition was R354 million. A clawback option for the period of 12 months was
granted to the non-controlling shareholders who were unable to subscribe for the shares at the date of the rights issue. The
option grants the non-controlling shareholders the right to purchase their pro-rata portion of the shares from the Group at the
original issue price plus interest at a market related rate.
14. Related parties
Barclays Bank PLC owns 62,3% (2012: 55,5%) of the ordinary shares in the Group. The remaining 37,7% (2012: 44,5%) of the shares
are widely held on the Johannesburg Stock Exchange Limited (“JSE”).
The following are defined as related parties of the Group:
- key management personnel (refer to note 14.1 and 14.2);
- the parent company (refer to note 14.3);
- fellow subsidiaries, associates and joint venture of the parent company (refer to note 14.4);
- subsidiaries and consolidated structured entities;
- associates, joint ventures and retirement benefit funds;
- an entity controlled/jointly controlled or significantly influenced by any individual referred to above;
- post-employment benefit plans for the benefit of employees or any entity that is a related party of the Group; and
- children and/or dependants and spouses or partners of the individuals referred to above.
14.1 Balances and transactions with key management personnel
Transactions with key management personnel
IAS 24 Related Party Disclosures (“IAS 24”), requires the identification of key management personnel, who are
individuals responsible for planning, directing and controlling the activities of the entity, including directors. Key
management personnel are defined as executive and non-executive directors and members of the Executive Committee (“Exco”).
Entities controlled by key management personnel are also considered to be related parties. A number of banking and insurance
transactions are entered into with key management personnel in the normal course of business, under terms that are no
more favourable than those arranged with third parties. These include loans, deposits and foreign currency transactions.
The related party transactions, outstanding balances at the reporting date, and related expenses and income with related
parties for the reporting period are as follows:
2013 2012
(Audited) (Audited) Change
Rm Rm %
Balances
Loans 45 455 >(100)
Deposits 12 15 (20)
Guarantees issued by the Group 84 103 (18)
Other investments 34 40 (15)
Transactions
Interest income 4 45 (91)
Interest expense 1 1 -
Insurance premiums paid 0,17 0,41 (59)
Insurance claims - 0,08 (100)
Loans include mortgages, asset finance transactions, overdraft and other credit facilities. Loans to key management personnel
are provided on the same terms and conditions as loans to employees of the Group, including interest rates and collateral
requirements.
Loans to key management personnel of Rnil (2012: Rnil) were written off as irrecoverable. Loans to entities controlled by key
management personnel of Rnil (2012: Rnil) were written off as irrecoverable.
2013 2012
(Audited) (Audited) Change
Rm Rm %
14.2 Key management personnel compensation
Directors
Post-employment benefit contributions 1 1 -
Salaries and other short-term benefits 41 30 37
Share-based payments 25 32 (22)
Termination benefits - 12 (100)
68 75 (9)
Other key management personnel
Post-employment benefit contributions 3 2 50
Salaries and other short-term benefits 77 65 18
Share-based payments 48 47 2
128 114 12
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
14.3 Balances and transactions with parent company(2)
Balances
Loans and advances to banks 39 223 35 537 10
Derivative assets 19 040 14 310 33
Nominal value of derivative assets 1 042 021 1 399 103 (26)
Other assets 1 556 668 >100
Investment securities 534 584 (9)
Deposits from banks (22 404) (12 244) (83)
Derivative liabilities (17 232) (13 846) (24)
Nominal value of derivative liabilities (1 183 511) (1 213 065) 2
Other liabilities (187) (15) >(100)
Borrowed funds (69) - (100)
Transactions
Interest and similar income (343) (204) (68)
Interest expense and similar charges 65 87 (26)
Net fee and commission income 6 (18) >100
Gains and losses from banking and trading activities 274 (158) >100
Other operating income (71) (37) (91)
Operating expenditure 48 55 >100
Dividends paid 7 469 2 819 >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 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 parent company.
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)Debit amounts are shown as positive, credit amounts are shown as negative.
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
14.4 Balances and transactions with fellow subsidiaries,
associates and joint ventures of the parent company(2),(3)
Balances
Loans and advances to banks 863 391 >100
Derivative assets - 10 (100)
Nominal value of derivative assets 2 650 426 >100
Other assets 284 87 >100
Deposits from banks (1 753) (539) >(100)
Derivative liabilities (18) - (100)
Nominal value of derivative liabilities (2 132) - (100)
Other liabilities (313) (86) (100)
Transactions
Interest and similar income (1) - (100)
Net fee and commission income (30) (7) >(100)
Other operating income (56) (126) (56)
Operating expenditure 2 3 >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 parent company.
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)Debit amounts are shown as positive, credit amounts are shown as negative.
(3)Fellow subsidiaries, associates and joint ventures are those entities of Barclays Bank PLC.
15. Assets under management and administration
2013 2012
(Audited) (Audited) Change
Rm Rm %
Alternative asset management and exchange-traded funds 72 840 41 957 74
Deceased estates(1) 2 559 2 012 27
Other assets under management and administration 14 383 12 995 11
Participation bond schemes - 2 184 (100)
Portfolio management 46 203 44 222 4
Private equity - 819 (100)
Trusts(1) 4 472 3 783 18
Unit trusts 123 318 138 978 (11)
263 775 246 950 7
Note
(1) Unaudited
16. Financial guarantee contracts
2013 2012
(Audited) (Audited) Change
Rm Rm %
Financial guarantee contracts(1) 243 146 66
Note
(1) Financial guarantee contracts represent contracts where the Group undertakes to make specified payments to a counterparty,
should the counterparty suffer a loss as a result of a specified debtor failing to make payment when due in accordance with the
terms of a debt instrument. This amount represents the maximum exposure, which is not necessarily the measurement recognised in
the statement of financial position in accordance with International Financial Reporting Standards (IFRS).
17. Commitments
2013 2012
(Audited) (Audited) Change
Rm Rm %
Authorised capital expenditure
Contracted but not provided for(1) 745 578 29
Operating lease payments due(2)
No later than one year 847 936 (10)
Later than one year and no later than five years 1 521 1 948 (22)
Later than five years 296 365 (19)
2 664 3 249 (18)
Sponsorship payments due(3)
No later than one year 272 289 (6)
Later than one year and no later than five years 541 884 (39)
813 1 173 (31)
Notes
(1) The Group has capital commitments in respect of computer equipment and property development. Management is confident that future
net revenue and funding will be sufficient to cover these commitments.
(2) The operating lease commitments comprise a number of separate operating leases in relation to property and equipment, none of
which is individually significant to the Group. Leases are negotiated for an average term of three to five years and rentals are
renegotiated annually.
(3) The Group has sponsorship commitments in respect of sports, arts and culture.
18. Contingencies
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
Guarantees(2) 21 215 19 348 10
Irrevocable debt facilities(3) 49 609 48 107 3
Irrevocable equity facilities(3) 400 543 (26)
Letters of credit 6 402 7 080 (10)
Other contingencies 5 674 4 328 31
83 300 79 406 5
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)Guarantees include performance and payment guarantee contracts.
(3)Irrevocable facilities are commitments to extend credit where the Group does not have the right to terminate the
facilities by written notice. Commitments generally have fixed expiry dates. Since commitments may expire without being
drawn upon, the total contract amounts do not necessarily represent future cash requirements.
19. Segment reporting
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
19.1 Headline earnings contribution by segment
RBB 7 999 5 668 41
Retail Banking South Africa 4 941 3 626 36
Home Loans 876 (992) >100
Vehicle and Asset Finance 1 127 847 33
Card 1 980 1 888 5
Personal Loans 385 587 (34)
Retail Bank 573 1 296 (56)
Business Banking South Africa 1 710 1 042 64
RBB Rest of Africa 1 348 1 000 35
CIBW 3 017 3 146 (4)
CIBW South Africa 2 561 2 682 (5)
CIBW Rest of Africa 456 464 (2)
Head office, inter-segments eliminations and Other (543) 340 >(100)
Total banking 10 473 9 154 14
Financial Services 1 370 1 265 8
Headline earnings 11 843 10 419 14
Note
(1)Restated, refer to note 23 for reporting changes.
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
19.2 Total revenue(2) by segment
RBB 43 968 40 205 9
Retail Banking South Africa 27 295 25 451 7
Home Loans 3 815 4 210 (9)
Vehicle and Asset Finance 3 206 3 055 5
Card 7 656 5 313 44
Personal Loans 1 892 2 010 (6)
Retail Bank 10 726 10 863 (1)
Business Banking South Africa 8 377 8 030 4
RBB Rest of Africa 8 296 6 724 23
CIBW 11 648 10 491 11
CIBW South Africa 8 759 8 043 9
CIBW Rest of Africa 2 889 2 448 18
Head office, inter-segments eliminations and Other (577) 249 >(100)
Total banking 55 035 50 945 8
Financial Services 4 367 4 031 8
Total revenue 59 402 54 976 8
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)Revenue includes net interest income and non-interest income.
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
19.3 Internal total revenue(2) by segment
RBB (8 536) (9 272) 8
Retail Banking South Africa (10 801) (10 778) -
Home Loans (11 482) (12 082) 5
Vehicle and Asset Finance (3 675) (3 453) (6)
Card (1 291) (860) (50)
Personal Loans (504) (523) 4
Retail Bank 6 151 6 140 -
Business Banking South Africa 1 776 1 406 26
RBB Rest of Africa 489 100 >100
CIBW 11 187 10 379 8
CIBW South Africa 11 223 10 453 7
CIBW Rest of Africa (36) (74) 51
Head office, inter-segments eliminations and Other (2 173) (669) >(100)
Total banking 478 438 9
Financial Services (478) (438) (9)
Total internal revenue - - -
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)Revenue includes net interest income and non-interest income.
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
19.4 Total assets by segment
RBB 742 110 668 793 11
Retail Banking South Africa 531 517 516 692 3
Home Loans 221 876 227 138 (2)
Vehicle and Asset Finance 80 590 72 391 11
Card 47 312 43 659 8
Personal Loans 13 436 13 318 1
Retail Bank 168 446 160 373 5
Business Banking South Africa 98 423 86 972 13
RBB Rest of Africa 112 170 65 129 72
CIBW 542 366 502 413 8
CIBW South Africa 492 369 469 616 5
CIBW Rest of Africa 49 997 32 797 52
Head office, inter-segments eliminations and Other (357 998) (303 755) (18)
Total banking 926 478 867 451 7
Financial Services 33 121 30 920 7
Total assets 959 599 898 371 7
Note
(1)Restated, refer to note 23 for reporting changes.
2013 2012(1)
(Audited) (Audited) Change
Rm Rm %
19.5 Total liabilities by segment
RBB 720 344 652 357 10
Retail Banking South Africa 524 116 510 884 3
Home Loans 220 712 227 919 (3)
Vehicle and Asset Finance 78 718 70 850 11
Card 44 499 41 099 8
Personal Loans 13 051 12 731 3
Retail Bank 167 136 158 285 6
Business Banking South Africa 96 558 85 976 12
RBB Rest of Africa 99 670 55 497 80
CIBW 534 559 494 656 8
CIBW South Africa 487 211 464 706 5
CIBW Rest of Africa 47 348 29 950 58
Head office, inter-segments eliminations and Other (408 743) (359 309) (14)
Total banking 846 161 787 704 7
Financial Services 28 238 26 222 8
Total liabilities 874 398 813 926 7
Note
(1)Restated, refer to note 23 for reporting changes.
20. Fair value of assets and liabilities not held at fair value
The table below summarises the carrying amounts and fair values of those assets and liabilities not held at fair
value:
2013 2012(1)
Carrying Carrying
value Fair value value Fair value
Rm Rm Rm Rm
Financial assets
Balances with other central banks 7 350 7 350 6 061 6 061
Balances with the SARB 12 417 12 417 12 339 12 339
Coins and bank notes 12 652 12 652 11 085 11 085
Money market assets 1 939 1 939 36 36
Cash, cash balances and balances with central banks 34 358 34 358 29 521 29 521
Loans and advances to banks 73 831 73 831 52 846 52 864
Other assets 13 486 13 486 15 324 15 324
Retail Banking South Africa 352 764 352 602 346 698 353 021
Cheque accounts 2 015 2 015 1 907 1 907
Credit cards 34 071 34 071 31 350 31 350
Instalment credit agreements 63 600 63 297 57 305 58 758
Loans to associates and joint ventures 10 287 10 287 8 393 8 393
Mortgages 226 706 226 771 230 880 236 750
Personal and term loans 16 085 16 161 15 863 15 863
Business Banking South Africa 60 971 61 141 62 390 63 295
Cheque accounts 17 075 17 075 17 997 17 997
Commercial property finance 30 682 30 852 31 016 31 921
Instalment credit agreements 984 984 1 441 1 441
Loans to associates and joint ventures 559 559 627 627
Term loans 11 671 11 671 11 309 11 309
RBB Rest of Africa 37 884 37 884 30 322 30 322
CIBW 143 053 137 249 115 270 115 270
CIBW South Africa 121 683 115 879 101 223 101 223
CIBW Rest of Africa 21 370 21 370 14 047 14 047
Head office, inter-segment eliminations, 119 119 640 640
Financial Services and Other
Loans and advances to customers - net of impairment losses 594 791 588 995 554 320 562 548
Investment securities 726 726 471 471
Total assets 717 192 711 396 652 582 661 616
Financial liabilities
Deposits from banks 59 744 56 532 30 292 30 295
Other liabilities 15 765 15 297 16 935 16 935
Call deposits 52 843 52 843 56 667 56 667
Cheque account deposits 174 606 174 606 170 854 170 854
Credit card deposits 1 914 1 914 1 937 1 937
Fixed deposits 151 795 151 837 130 587 131 028
Foreign currency deposits 17 456 17 456 12 253 12 253
Notice deposits 56 348 56 350 55 728 55 935
Other deposits 10 822 10 822 8 008 8 008
Savings and transmission deposits 104 362 104 362 87 977 87 977
Deposits due to customers 570 146 570 190 524 011 524 659
Debt securities in issue 94 286 94 324 103 606 103 606
Borrowed funds 16 525 17 069 17 999 19 284
Total liabilities 756 466 753 412 692 843 694 779
Note
(1)Restated, refer to note 23 for reporting changes.
21. Fair value hierarchy disclosures
21.1 Valuation methodology
The table below shows the Group’s assets and liabilities that are recognised and subsequently measured at fair value
and are analysed by
valuation techniques. The classification of assets and liabilities is based on the lowest level input that is
significant to the fair value
measurement in its entirety.
2013
Valuations
with Valuations Valuations
reference to based on based on un-
observable observable observable
prices inputs inputs
Level 1(1) Level 2(1) Level 3(2) Total
Recurring fair value measurements Rm Rm Rm Rm
Financial assets
Cash, cash balances and balances with central banks 7 976 7 796 - 15 772
Statutory liquid asset portfolio 62 055 - - 62 055
Loans and advances to banks - 6 140 - 6 140
Trading and hedging portfolio assets 36 263 52 011 1 037 89 311
Debt instruments 24 049 530 873 25 452
Derivative assets - 46 796 164 46 960
Commodity derivatives - 253 - 253
Credit derivatives - 258 11 269
Equity derivatives - 760 - 760
Foreign exchange derivatives - 7 053 39 7 092
Interest rate derivatives - 38 472 114 38 586
Equity instruments 12 176 77 - 12 253
Money market assets 38 4 608 - 4 646
Other assets - 1 16 17
Loans and advances to customers - 4 069 6 477 10 546
Investment securities 21 232 7 156 3 969 32 357
Total financial assets 127 526 77 173 11 499 216 198
Financial liabilities
Deposits from banks - 9 320 - 9 320
Trading and hedging portfolio liabilities 3 741 49 578 549 53 868
Derivative liabilities - 49 578 549 50 127
Commodity derivatives - 161 - 161
Credit derivatives - 478 45 523
Equity derivatives - 1 607 306 1 913
Foreign exchange derivatives - 7 755 57 7 812
Interest rate derivatives - 39 577 141 39 718
Short positions 3 741 - - 3 741
Other liabilities - 36 - 36
Deposits due to customers - 10 725 7 138 17 863
Debt securities in issue - 3 508 35 3 543
Liabilities under investment contracts - 19 773 - 19 773
Borrowed funds - - - -
Total financial liabilities 3 741 92 940 7 722 104 403
Non-financial assets
Investment properties - - 1 089 1 089
Trading and hedging portfolio assets
Commodities 1 080 - - 1 080
Non-recurring fair value measurements
Non-current assets held for sale 2 424 1 297 1 093 4 814
Non-current liabilities held for sale 975 175 501 1 651
Notes
(1)The nature of the valuation techniques is summarised in note 21.2.
(2)The nature of the valuation techniques is summarised in note 21.3.
Group
2012(1)
Valuations
with Valuations Valuations
reference to based on based on un-
observable observable observable
prices inputs inputs
Level 1(2) Level 2(2) Level 3(3) Total
Recurring fair value measurements Rm Rm Rm Rm
Financial assets
Cash, cash balances and balances with central banks 7 391 7 123 - 14 514
Statutory liquid asset portfolio 63 017 3 - 63 020
Loans and advances to banks - 9 647 - 9 647
Trading and hedging portfolio assets 30 236 61 078 952 92 266
Debt instruments 23 742 - 873 24 615
Derivative assets 16 52 161 79 52 256
Commodity derivatives 1 604 - 605
Credit derivatives - 152 43 195
Equity derivatives 15 966 5 986
Foreign exchange derivatives - 5 823 1 5 824
Interest rate derivatives - 44 616 30 44 646
Equity instruments 6 473 141 - 6 614
Money market assets 5 8 776 - 8 781
Other assets - 1 16 17
Loans and advances to customers - 5 523 6 419 11 942
Investment securities 11 103 12 866 6 473 30 442
Total financial assets 111 747 96 241 13 860 221 848
Financial liabilities
Deposits from banks 82 11 050 - 11 132
Trading and hedging portfolio liabilities 4 965 50 550 74 55 589
Derivative liabilities 43 50 550 74 50 667
Commodity derivatives 5 169 - 174
Credit derivatives - 188 24 212
Equity derivatives - 1 756 26 1 782
Foreign exchange derivatives 38 5 591 - 5 629
Interest rate derivatives - 42 846 24 42 870
Short positions 4 922 - - 4 922
Other liabilities - 1 16 17
Deposits due to customers - 11 417 7 672 19 089
Debt securities in issue - 3 011 187 3 198
Liabilities under investment contracts - 18 768 - 18 768
Borrowed funds 778 - - 778
Total financial liabilities 5 825 94 797 7 933 108 572
Non-financial assets
Investment properties - - 1 220 1 220
Trading and hedging portfolio assets
Commodities 514 - - 514
Non-recurring fair value measurements
Non-current assets held for sale 2 226 379 1 447 4 052
Non-current liabilities held for sale - 1 274 206 1 480
Notes
(1)Restated, refer to note 23 for reporting changes.
(2)The nature of the valuation techniques is summarised in note 21.2.
(3)The nature of the valuation techniques is summarised in note 21.3.
21.1.1 Fair value measurement and valuation processes
Financial assets and financial liabilities
The Group 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, which is 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.
The IVC team independently verifies the results of trading and investment operations and all significant fair value
measurements. The team 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 policies.
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.
Investment properties
Where possible the fair value of the Group’s investment property has been determined on the basis of a valuation
carried out on the respective dates by independent valuators not related to the business. Where the Group’s internal
valuations are different to that of the external valuers, detailed procedures are performed to substantiate any differences. The
IVC team independently verifies the procedures performed by front office and considers the appropriateness of any
differences to external valuations. The fair value was determined based on the most appropriate methodology applicable to the
relevant investment property. Methodologies include the market comparable approach that reflects recent transaction
prices for similar properties, discounted cash flows and income capitalisation methodologies. In estimating the fair value
of the properties, the highest and best use of the properties is taken into account.
21.1.2 Significant transfers between levels
During the reporting period trading portfolio assets to the value of R237 million as well as trading portfolio
liabilities of R165 million were transferred from Level 2 to Level 3. The transfers relate to equity securities for which there
are no longer a quoted price in an active market and for which the significant inputs to determine the fair value have
become unobservable.
21.2 Valuation techniques using observable inputs
Level 1
Assets and liabilities 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 arm’s length basis.
Level 2
Assets and liabilities 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.
21.3 Valuation techniques using unobservable inputs
Level 3
Assets and liabilities valued using inputs that are not based on observable market data (unobservable data) such as an
entity’s own assumptions about assumptions of market participants in pricing the asset or liability.
21.4 Fair value adjustments
The main valuation adjustments required to arrive at a fair value are described below:
Bid-offer valuation adjustments
For assets and liabilities where the Group is not a market maker, mid prices are adjusted to bid and offer prices
respectively. Bid-offer adjustments reflect expected close out strategy and, for derivatives, the fact that they are managed
on a portfolio basis. The methodology for determining the bid-offer adjustment for a derivative portfolio will generally
involve netting between long and short positions and the bucketing of risk by strike and term in accordance with hedging strategy.
Bid-offer levels are derived from market sources, such as broker data. For those assets and liabilities where the Group is a market
maker and has the ability to transact at, or better than, mid-price (which is the case for certain equity, bond and vanilla
derivative markets), the mid-price is used, since the bid-offer spread does not represent a transaction cost.
Uncollateralised derivative adjustments
A fair value adjustement is incorporated into uncollateralised derivative valuations to reflect the impact on fair value of
counterparty credit risk, the Group's own credit quality, as well as the cost of funding across all asset classes.
Model valuation adjustments
Valuation models are reviewed under the Group’s model governance framework. This process identifies the assumptions
used and any model limitations (for example, if the model does not incorporate volatility skew). Where necessary, fair
value adjustments will be applied to take these factors into account. Model valuation adjustments are dependent on the size
of portfolio, complexity of the model, whether the model is market standard and to what extent it incorporates all
known risk factors. All models and model valuation adjustments are subject to review on at least an annual basis.
21.5 Third-party credit enhancements
There were no significant liabilities measured at fair value and issued with inseparable third-party credit
enhancements.
21.6 Movements on assets and liabilities 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 assets and liabilities is
set out below:
2013
Trading and
hedging Loans and
portfolio Other advances to Investment Investment Total assets
assets assets customers securities Properties at fair value
Rm Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 952 16 6 419 6 473 1 220 15 080
Movement in other comprehensive income - - - 20 - 20
Net interest income 55 - 346 (461) - (60)
Other income - - - - 58 58
Gains and losses from banking and trading activities (165) - 203 92 - 130
Gains and losses from investment activities - - (99) 8 21 (70)
Purchases 13 - 767 1 475 5 2 260
Sales - - (45) (3 165) (6) (3 216)
Issues - - - 5 - 5
Settlements - - (987) (579) - (1 566)
Transferred to/(from) assets (55) - (127) 48 (209) (343)
Movement in/(out) of Level 3(1) 237 - - 53 - 290
Closing balance at the end of the reporting period 1 037 16 6 477 3 969 1 089 12 589
2012(2)
Trading and
hedging Loans and
portfolio Other advances to Investment Investment Total assets
assets assets customers securities Properties at fair value
Rm Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 1 156 16 6 832 6 186 2 839 17 029
Movement in other comprehensive income - - - - - -
Net interest income - - 11 33 - 44
Gains and losses from banking and trading activities 54 - 742 471 - 1 267
Gains and losses from investment activities - - - (216) (400) (616)
Other comprehensive income - - - - - -
Purchases 30 - 632 117 202 981
Sales (40) - (869) (10) (43) (962)
Issues 37 - 154 - - 191
Settlements (108) - (1 083) (108) - (1 299)
Transferred to/(from) assets - - - - (1 378) (1 378)
Movement in/(out) of Level 3 (177) - - - - (177)
Closing balance at the end of the reporting period 952 16 6 419 6 473 1 220 15 080
Notes
(1) Refer to note 21.1.2.
(2) Restated, refer to note 23 for reporting changes.
21.6 Movements on assets and liabilities subsequently measured at fair value using valuations based on unobservable
inputs (Level 3) (continued)
2013
Trading and
hedging Debt Total
portfolio Other Deposits due securities liabilities
liabilities liabilities to customers in issue at fair value
Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 74 16 7 672 187 7 949
Movement in other comprehensive income - - - - -
Net interest income - - 9 - 9
Other income - - - -
Gains and losses from banking and trading activities 306 - 153 (152) 307
Gains and losses from investment activities - - (1) - (1)
Purchases 7 - 27 - 34
Sales (3) - 427 - 424
Issues - - - - -
Settlements - (16) (1 149) - (1 165)
Transferred to/(from) liabilities - - - - -
Movement in/(out) of Level 3 165 - - - 165
Closing balance at the end of the reporting period 549 - 7 138 35 7 722
2012(1)
Trading and
hedging Debt Total
portfolio Other Deposits due securities liabilities
liabilities liabilities to customers in issue at fair value
Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 184 16 7 612 209 8 021
Movement in other comprehensive income - - - - -
Net interest income - - - - -
Gains and losses from banking and trading activities - - 735 7 742
Gains and losses from investment activities - - - - -
Other comprehensive income - - - - -
Purchases 28 - - - 28
Sales - - 920 - 920
Issues 3 - (1 595) (29) (1 621)
Settlements (6) - - - (6)
Transferred to/(from) liabilities 15 - - - 15
Movement in/(out) of Level 3 (150) - - - (150)
Closing balance at the end of the reporting period 74 16 7 672 187 7 949
Note
(1)Restated, refer to note 23 for reporting changes.
21.7 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 are set
out below:
2013
(Audited)
Trading and
hedging Loans and Non-current
portfolio Other advances to Investment Investment assets held Total assets
assets assets customers securities Properties for sale at fair value
Rm Rm Rm Rm Rm Rm Rm
Gains and losses from banking and trading
activities 337 - (136) - - - 201
2012(1)
(Audited)
Trading and
hedging Loans and Non-current
portfolio Other advances to Investment Investment assets held Total assets
assets assets customers securities Properties for sale at fair value
Rm Rm Rm Rm Rm Rm Rm
Net interest income - - 29 7 - - 36
Gains and losses from banking and trading
activities 30 - 437 584 - - 1 051
Gains and losses from investment activities - - - (215) - - (215)
30 - 466 376 - - 872
2013
(Audited)
Trading and
hedging Debt Total
portfolio Other Deposits due securities liabilities at
liabilities liabilities to customers in issue fair value
Rm Rm Rm Rm Rm
Gains and losses from banking and trading
activities (311) - 1 - (310)
2012 (1)
(Audited)
Trading and
hedging Debt Total
portfolio Other Deposits due securities liabilities at
liabilities liabilities to customers in issue fair value
Rm Rm Rm Rm Rm
Gains and losses from banking and trading
activities (1) - (735) - (736)
Note
(1)Restated, refer to note 23 for reporting changes.
21.8 Unrecognised (losses)/gains 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:
2013 2012(1)
(Audited) (Audited)
Rm Rm
Opening balance at the beginning of the reporting period (93) (51)
New transactions 17 38
Amounts recognised in the profit or loss component of the statement
of comprehensive income during the reporting period (9) (80)
Closing balance at the end of the reporting period (85) (93)
21.9 Sensitivity analysis of valuations using unobservable inputs
As part of the Group’s risk management processes, stress tests are applied on the significant unobservable parameters
to generate a range of potentially possible alternative valuations. The assets and liabilities that most impact this
sensitivity analysis are those with 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 charge to the profit or loss section of the
statement of comprehensive income, or a change in the fair value asset or liability of more than 10% or the underlying
value of the affected item. This is demonstrated by the following sensitivity analysis which includes reasonable range of
possible outcomes:
2013
(Audited)
Potential effect recorded Potential effect recorded
in profit or loss directly in equity
Favourable Unfavourable Favourable Unfavourable
Rm Rm Rm Rm
Trading and hedging portfolio assets 43 43 - -
Other assets 2 2 - -
Loans and advances to customers 1 202 159 - -
Investment securities 355 355 - -
Investment properties 2 2 - -
Trading and hedging portfolio liabilities 13 5 - -
Other liabilities - - - -
Deposits due to customers 224 223 - -
Debt securities in issue - - - -
1 841 789 - -
2012(1)
(Audited)
Potential effect recorded Potential effect recorded
in profit or loss directly in equity
Favourable Unfavourable Favourable Unfavourable
Rm Rm Rm Rm
Trading and hedging portfolio assets 126 113 - -
Loans and advances to customers 264 326 - -
Investment securities 1 527 1 735 5 4
Trading and hedging portfolio liabilities 51 51 - -
Other liabilities 5 2 - -
Deposits due to customers 122 122 - -
Debt securities in issue 59 59 - -
2 154 2 408 5 4
Note
(1)Restated, refer to note 23 for reporting changes.
21.10 Sensitivity analysis of valuations using unobservable inputs
The following table reflects how the unobservable parameters were changed in order to evaluate the sensitivities of
Level 3 assets and liabilities:
Positive/(negative) variance
Instrument Parameter 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
Investment securities (private equity,
property equity investments Future earnings and marketability discounts 15/(15)%
and other)
Comparator multiples
Discount rates
Structured notes and deposits designated at
fair value through profit or loss Yield curve 100/(100) bps
Investment properties Selling price per unit 15/(15)%
Selling price escalations per year
Rental income per unit
Rental escalations per year
Expense ratios
Vacancy rates
Income capitalisation rates
Risk adjusted rates
21.11 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.
Fair value of
asset/liability
Category of asset/liability Valuation techniques applied Significant observable inputs Rm
Cash, cash balances and Discounted cash flow Underlying price of market 7 796
balances with central bank traded instruments and interest rates
Loans and advances to banks Discounted cash flow Interest rate curves, money 6 140
market curves
Trading and hedging
portfolio
assets
Debt instruments Discount cash flow Underlying price of market 530
traded instruments and interest rates
Derivative assets 46 796
Commodity derivatives Discounted cash flow model, Spot price (physical or futures), 253
option pricing models, futures interest rates, volatility
pricing model, ETF model
Credit derivatives Discounted cash flow model, Interest rate, recovery rate, credit 258
credit default swap model spread, quanto ratio
(hazard rate model)
Equity derivatives Discounted cash flow model, Spot price, interest rate, 760
option pricing models, futures volatility, dividend stream
pricing model
Foreign exchange derivatives Discounted cash flow model, Spot price, interest rate, 7 053
option pricing models volatility
Interest rate derivatives Discounted cash flow model, Interest rate curves, repo curves, 38 472
option pricing models money market curves, volatility
Equity instruments Net asset value Underlying price of market traded 77
instruments
Money market assets Discounted cash flow Money market rates and interest rates 4 608
Loans and advances to Discounted cash flow Interest rate curves, money 4 069
customers market curves
Investment securities Listed equity - is valued at the last The underlying price of the market 7 156
market bid price. Unlisted equity is traded instrument
valued at par. Other items are valued
utilising discounted cash flow models.
Deposits from banks Discounted cash flow Interest rate curves and money 9 320
market curves
Trading and hedging portfolio liabilities
Derivative liabilities 49 578 49 578
Commodity derivatives Discounted cash flow model, option Spot price (physical or futures), 161
pricing models, futures pricing interest rates, volatility
model, etf model
Credit derivatives Discounted cash flow model, credit Interest rate, recovery rate, 478
default swap model (hazard rate model) credit spread, quanto ratio
Equity derivatives Discounted cash flow model, option Spot price, interest rate, 1 607
pricing models, futures pricing model volatility, dividend stream
Foreign exchange derivatives Discounted cash flow model, option Spot price, interest rate, 7 755
pricing models volatility
Interest rate derivatives Discounted cash flow model, option Interest rate curves, repo curves, 39 577
pricing models money market curves, volatility
Other liabilities Discounted cash flow The underlying price of the market 36
traded instrument, as well as
interest rate curves and money
market curves
Deposits due to customers Discounted cash flow Interest rate curves and money 10 725
market curves
Debt securities in issue Discounted cash flow The underlying price of the market 3 508
traded instrument and interest rate curves
Liabilities under investment Discounted cash flow The underlying price of the market 19 773
contracts traded instrument and interest rate curves
21.12 Measurement of financial instruments at Level 3
The table below sets out information about significant unobservable inputs used at the end of the reporting period
in measuring financial instruments categorised as Level 3 in the fair value hierarchy.
Fair value
Range of estimates measurement Fair value of
Category of asset/ Valuation Significant utilised for the sensitivity to the asset/liability
liability techniques applied unobservable inputs unobservable inputs unobservable inputs Rm
Loans and advances Discounted cash flow, Credit ratings Credit spreads vary The sensitivity of the 6 477
to customers and dividend yield between 1,35% fair value measurement
models and 7,5% 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.
Investment securities Discounted cash flows, Weighted average cost Discount rates between The sensitivity of the fair 3 969
third party valuations, of capital, EBITDA 9,7% and 18%, multiples value measurement is dependent
earnings before multiples, liquidity between 5,5 and 6,1 on the unobservable inputs.
interest, tax, discounts, minority Significant changes to
depreciation and discounts, capitalisation the unobservable inputs in
amortisation rates isolation will have either
("EBITDA") multiples, a positive or negative
income capitalisation impact on value.
valuations, net asset
value models
Trading and hedging portfolio assets
Debt instruments Discounted Credit spreads used in 0% to 3,5% The sensitivity of 873
cash flows the calculation of the the fair value
counterparty credit risk measurement is dependent
adjustment on the unobservable inputs.
Significant changes to
the unobservable
inputs in isolation will
have either a positive
or negative impact on
fair value
Derivative assets 164
Credit derivatives Discounted cash flow Illiquid credit curves, 0% to 3,5% The sensitivity of the fair 11
model, credit default recovery rates, quanto value measurement is
swap model (hazard ratio dependent on the
rate model) unobservable inputs.
Significant changes to
the unobservable
inputs in isolation will
have either a positive
or negative impact on
fair value
Equity derivatives Discounted cash flow Volatility, dividend 16,9% to 37,2% The sensitivity of the fair -
model, option pricing streams >3 years value measurement is
models, futures dependent on the
pricing model unobservable inputs.
Significant changes to
the unobservable
inputs in isolation will
have either a positive
or negative impact on
fair value
Foreign exchange Discounted cash flow African basis -2,5% to 1,7% The sensitivity of the fair 39
derivatives model, option pricing curves > 1 year value measurement is
models dependent on the
unobservable inputs.
Significant changes to
the unobservable
inputs in isolation will
have either a positive
or negative impact on
fair value
Interest rate Discounted cash flow Interest rates -1,5% to 8,3% The sensitivity of the fair 114
derivatives model, option pricing (Zar-swap-spread value measurement is
models curves. Zar-real dependent on the
<1 year. Zar-mm- unobservable inputs.
fundingSpr >5 Significant changes to
years, repo curves the unobservable
> 1 year) inputs in isolation will
have either a positive
or negative impact on
fair value
Deposits due to Discounted cash flow ZAR MM funding 0,85% to 1,2% The sensitivity of the fair 7 138
customers spread greater value measurement is
than 5 years dependent on the
unobservable inputs.
Significant changes to
the unobservable
inputs in isolation will
have either a positive
or negative impact on
fair value
Debt securities Discounted cash flow Credit spread 10 to 20 bps The sensitivity of the fair 35
in issue 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
fair value
Trading and hedging portfolio liabilities
Derivative liabilities 549
Credit derivatives Discounted cash Illiquid 0% to 3,5% The sensitivity of the fair 45
flow model, credit curves, value measurement is
credit default recovery rates, dependent on the
swap model quanto ratio unobservable inputs.
(hazard rate Significant changes to
model) the unobservable
inputs in isolation will
have either a positive
or negative impact on
fair value
Equity derivatives Discounted cash Volatility, 16,9% to 37,2% The sensitivity of the fair 306
flow model, dividend streams value measurement is
option pricing > 3 years dependent on the
models, futures unobservable inputs.
pricing model Significant changes to
the unobservable
inputs in isolation will
have either a positive
or negative impact on
fair value
Foreign exchange Discounted cash African basis -2,5% to 1,7% The sensitivity of the fair 57
derivatives flow model, curves > 1 year value measurement is
option pricing dependent on the
models unobservable inputs.
Significant changes to
the unobservable
inputs in isolation will
have either a positive
or negative impact on
fair value
Interest rate Discounted cash Interest rates -1,5% to 8,3% The sensitivity of the fair 141
derivatives flow model, option (Zar-swap-spread value measurement is
pricing models curves. Zar-real dependent on the
<1 year. Zar-mm- unobservable inputs.
fundingspr >5 Significant changes to
years, repo curves the unobservable
> 1 year) inputs in isolation will
have either a positive
or negative impact on
fair value
21.3 Measurement of non-financial assets and liabilities at Level 3
The tabel below sets out information about significant unobservable inputs used at the end of the reporting period
in measuring non-financial assets and liabilities categorised as Level 3 in the fair value hierachy
Fair value
measurement
Range of estimates sensitivity to Fair value of
Category of asset/ Valuation Significant utilised for the the unobservable asset/liability
Liability Techniques applied unobservable inputs unobservable inputs inputs Rm
Investment Discounted cash The sensitivity of the 1089
properties flow 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
fair value
Estimated of periods 2-7 years
in which rental units
will be disposed of
Selling price 0% - 6%
escalation per year
Rental escaltion per 0% - 10%
year
Expense ratios 22% - 75%
Vacancy rates 2% - 15%
Income capitalisation 10% - 12%
rate
Risk adjusted 14% - 16%
discount rates
22. Offsetting financial assets and financial liabilities
In accordance with IAS 32 Financial Instruments: Presentation ("IAS 32"), the Group 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. Where relevant, the Group 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 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 Group’s actual credit exposure as a variety of credit
mitigation strategies are employed in addition to netting and collateral arrangements.
2013
Amounts subject to enforceable netting arrangements
Effects of netting on statement of
financial position Related amounts not set off
Net Amounts
amounts not subject
reported on to Total
the enforceable per
statement Offsetting netting statement
Gross Amounts of financial financial Financial Net arrange- of financial
amounts set off(1) position(2) instruments collateral(3) amount ments(4) position(5)
Rm Rm Rm Rm Rm Rm Rm Rm
Derivative financial assets 46 278 (1 667) 44 611 (37 580) (3 981) 3 050 2 372 46 983
Reverse repurchase agreements
and other similar secured lending 36 515 (14 419) 22 096 - (22 096) - 745 22 841
Total assets 82 793 (16 086) 66 707 (37 580) (26 077) 3 050 3 117 69 824
Derivative financial liabilities (46 835) 550 (46 285) 37 580 256 (8 449) (3 842) (50 127)
Repurchase agreements and other
similar secured borrowing (18 263) - (18 263) - 18 263 - (312) (18 575)
Total liabilities (65 098) 550 (64 548) 37 580 18 831 (8 449) 4 154 (68 702)
Notes
(1)Amounts offset for derivative financial liabilities includes cash collateral netted of R1 117 million
(2012: R2 332 million). Amounts offset for reverse repurchase agreements relates to a short sale financial liability of
R14 419 million (2012: R11 424 million). No other significant recognised financial assets and liabilities
were offset on the statement of financial position.
(2)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.
(3)Financial collateral excludes over collateralisation amounts, which are measured at fair value and are in
excess of the net statement of financial position exposure.
(4)In certain jurisdictions a contractual right of set-off is subject to uncertainty under laws of the jurisdiction
and therefore netting is not applied and the amounts are classed as not subject to legally enforceable netting
arrangements.
(5)Total per statement of financial position is the sum of ‘net amounts reported in the statement of financial
position’ which are subject to enforceable netting arrangements and ‘amounts not subject to enforceable netting arrangements’.
2012(1)
Amounts subject to enforceable netting arrangements
Effects of netting on statement of
financial position Related amounts not set off
Net Amounts
amounts not subject
reported on to Total
the enforceable per
statement Offsetting netting statement
Gross Amounts of financial financial Financial Net arrange- of financial
amounts set off(2) position(3) instruments collateral(4) amount ments(5) position(6)
Rm Rm Rm Rm Rm Rm Rm Rm
Derivative financial assets 53 962 (3 997) 49 965 (43 678) (3 152) 3 135 2 332 52 297
Reverse repurchase agreements
and other similar secured lending 30 054 (11 424) 18 630 - (18 630) - 89 18 719
Total assets 84 016 (15 421) 68 595 (43 678) (21 782) 3 135 2 421 71 029
Derivative financial liabilities (49 153) 1 666 (47 487) 43 678 169 (3 640) (3 180) (50 667)
Repurchase agreements and other
similar secured borrowing (15 207) - (15 207) - 15 207 - - (15 207)
Total liabilities (64 360) 1 666 (62 694) 43 678 15 376 (3 640) (3 180) (65 874)
Offsetting and collateral arrangements
Derivative assets and liabilities
Credit risk is mitigated where possible through netting arrangements, such as the International Swaps and Derivative 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 arrangements 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.
Notes
(1)Restated, refer to note 23 for reporting changes. Recent developments in considering the impact of the amended IAS
32 offsetting requirements resulted in a change to the approach followed for variation margin on SAFEX and Yield-X
futures and options. The various margin on these contracts are considered a daily settlement of a derivative exposure as
opposed to collateral that is offset against the derivative value. As a result, these contracts are excluded from the scope
of the offsetting requirements in IAS 32 and the IFRS 7 offsetting disclosures. The change in approach has been applied
retrospectively and only impacts the disclosure provided in the above note.
(2)Amounts offset for derivative financial liabilities includes cash collateral netted of R2 332 million.
Amounts offset for reverse repurchase agreements relates to a short sale financial liability of R11 424 million.
No other significant recognised financial assets and liabilities were offset in the statement of financial position.
(3)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.
(4)Financial collateral excludes over collateralisation amounts, which are measured at fair value and are in
excess of the net statement of financial position exposure.
(5)In certain jurisdictions a contractual right of set-off is subject to uncertainty under laws of the jurisdiction
and therefore netting is not applied and the amounts are classed as not subject to legally enforceable netting
arrangements.
(6)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’.
23. Reporting changes
The financial reporting changes that impact the comparative reporting periods of the Group’s results for the reporting
period ending 31 December 2013 are driven by:
1. The implementation of new International Financial Reporting Standards (“IFRS”), specifically IFRS 10 Consolidated
Financial Statements (“IFRS 10”) and IAS 19 Employee Benefits (amended 2011) (“IAS 19R”). All other amendments to IFRS effective
for the current reporting period have had no significant impact on the Group’s reported results, however, disclosures have been
updated to reflect the impact of the amendments.
2. Certain changes in internal accounting policies.
3. The acquisition of 100% of the issued ordinary share capital of Barclays Africa Limited, previously a fellow
subsidiary of BAGL, with a shared parent company Barclays Bank PLC. The Group accounted for this transaction in accordance with the
Group’s and Barclays Group accounting policy in respect of business combinations under common control, which resulted in the
restatement of the financial performance of comparative reporting periods.
4.Business portfolio changes between operating segments including the allocation of elements of the Head office segment to business
segments.
The Barclays Africa Limited acquisition and the implementation of new IFRS impact the net financial results of the
Group. The changes in the Group’s internal accounting policy impacts the individual lines on which the income or costs are
accounted for but not the net financial results of the Group. The inter-segmental changes for Head office allocations
and portfolio changes affect the reported results of the individual businesses in the segment report, but have no impact
on the Group’s primary statements.
23.1 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 resulted in
restatement of the Group’s results for the reporting period ended 31 December 2011 and 2012.
IFRS 10
IFRS 10 replaces the requirements of IAS 27 Consolidated and Separate Financial Statements and SIC 12 Consolidation -
Special Purpose Entities. The standard introduces new criteria to determine whether entities in which the Group has
interests should be consolidated. Implementation of this new standard results in the Group consolidating a small number of
entities that were previously not consolidated and deconsolidating a small number of entities that were previously
consolidated.
IAS 19R
IAS 19R amends the requirements of IAS 19 Employee Benefits. The standard introduces a number of changes relating to
defined benefit plans. For the Group, the main impacts of implementing IAS 19R were the removal of the recognition of
expected returns on plan assets within profit or loss in favour of interest income on plan assets being recognised in
profit or loss at the rate used to discount the pension fund obligation and the recognition of interest cost on reserves
owing to members in profit or loss. In addition, some benefits previously classified as short-term benefits are reclassified
as long-term benefits.
23.2 Internal accounting policy changes
The Group elected to make internal accounting policy changes set out below, involving classification of items between
statement of comprehensive income lines. These have no impact on the net earnings of the Group. To ensure
comparability, the comparative reporting periods have been restated.
The Group elected to change its accounting policy in terms of best practice and to better align with
Barclays’ internal accounting policies in terms of:
-‘ Collection costs’ - 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.
-‘Association costs’, - defined as costs incurred through the Group’s association with leading inter-change
agents resulting in a reclassification of certain costs from ‘operating expenses’ to ‘net fee and commission income’.
The Group elected to amend the disclosure of rental income from investment properties held in one of the Group’s
wholly-owned subsidiaries. This change resulted in a grossing up of income recognised in ‘other operating income’ and an
equal movement in ‘operating expenses’.
23.3 Acquisition of Barclays Africa Limited
In 2012, Absa Group Limited announced its intention to conclude the strategic combination of Barclays’ Africa
operations with the existing Absa Group operations.
Through the transaction, Absa Group Limited acquired 100% of the issued ordinary share capital of Barclays Africa
Limited, which was settled by the issuance of 129 540 636 Absa Group Limited ordinary shares. This increased Barclays Bank
Plc’s shareholding in the Group from 55,5% to 62,3%. This transaction concluded on 31 July 2013 and was accompanied by
the name change of Absa Group Limited to Barclays Africa Group Limited.
The transaction is a business combination of entities under common control as defined in International Financial
Reporting Standard 3: Business Combinations (“IFRS 3”). The Group elected, in accordance with IFRS 3 guidance and the Group’s
and Barclays Group’s accounting policies, to account for the transaction in terms of predecessor accounting principles.
Accordingly, the Group’s comparative financial results have been restated as if Barclays Africa Limited was always
part of the Group’s structure.
23.3 Impact of the reporting changes on the Group’s results
Condensed consolidated statement of financial position as at 31 December 2011
IFRS
As accounting Barclays BAGL
previously policy Africa Acquisition consolidation BAGL
reported(1) changes Limited accounting adjustments restated
Rm Rm(2) Rm Rm Rm Rm
Assets
Cash, cash balances and balances with central banks 26 997 444 17 338 - - 44 779
Statutory liquid asset portfolio 57 473 - - - - 57 473
Loans and advances to banks 57 499 1 18 282 - - 75 782
Trading portfolio assets 84 623 71 48 - - 84 742
Hedging portfolio assets 4 299 - 14 - - 4 313
Other assets 14 730 (137) 3 531 - - 18 124
Current tax assets 288 - 56 - - 344
Non-current assets held for sale 35 - - - - 35
Loans and advances to customers 504 925 (986) 38 188 - - 542 127
Loans to Absa Group companies - - 256 - (256) -
Reinsurance assets 1 009 - - - - 1 009
Investment securities 21 182 4 308 2 592 - - 28 082
Investments in associates and joint ventures 420 - - - - 420
Subsidiaries - - - 18 330 (18 330) -
Investment properties 2 839 - - - - 2 839
Property and equipment 7 996 - 1 646 - - 9 642
Goodwill and intangible assets 2 135 - 147 - - 2 282
Deferred tax assets 269 - 400 - - 669
Total assets 786 719 3 701 82 498 18 330 (18 586) 872 662
Liabilities
Deposits from banks 38 339 67 6 231 (1) - 44 636
Trading portfolio liabilities 55 960 - 37 - - 55 997
Hedging portfolio liabilities 2 456 - - - - 2 456
Other liabilities 14 695 (24) 2 627 - - 17 298
Provisions 1 710 - 548 - - 2 258
Current tax liabilities 267 - 34 - - 301
Non-current liabilities held for sale - - - - - -
Deposits due to customers 440 960 507 61 941 - - 503 408
Debt securities in issue 130 262 (1 394) 15 - - 128 883
Liabilities under investment contracts 15 233 4 689 - - - 19 922
Loans from Group companies - - 256 - (256) -
Policyholder liabilities under insurance contracts 3 183 - - - - 3 183
Borrowed funds 14 051 - 948 - - 14 999
Deferred tax liabilities 1 198 (41) 125 1 - 1 283
Total liabilities 718 314 3 804 72 762 - (256) 794 624
Equity
Capital and reserves
Attributable to ordinary equity holders of the Group:
Ordinary share capital 1 434 - 195 259 (195) 1 693
Ordinary share premium 4 676 - 539 18 071 (18 135) 5 151
Retained earnings 53 813 (103) 6 534 - - 60 244
Other reserves 2 385 - 1 101 - - 3 486
62 308 (103) 8 369 18 330 (18 330) 70 574
Non-controlling interest - ordinary shares 1 453 - 1 367 - - 2 820
Non-controlling interest - preference shares 4 644 - - - - 4 644
Total equity 68 405 (103) 9 736 18 330 (18 330) 78 038
Total liabilities and equity 786 719 (138) 82 498 18 330 (18 586) 872 662
Notes
(1) Column refers to amounts published on 12 February 2013.
(2) Included in these adjustments is the impact of IAS 19 reflecting a credit on ‘others assets’ of R138 million, a
debit on ‘deferred tax liabilities’ of R39 million and a debit on ‘retained earnings’ of R99 million. The remaining
adjustments relate to the implementation of IFRS 10.
23.3 Impact of the reporting changes on the Group’s results (continued)
Condensed consolidated statement of financial position as at 31 December 2012
IFRS
As accounting Barclays Acquisition BAGL
previously policy Africa accounting consolidation BAGL
reported(1) changes Limited entries adjustments restated
Rm Rm(2) Rm Rm Rm Rm
Assets
Cash, cash balances and balances with central banks 26 221 326 18 223 - - 44 770
Statutory liquid asset portfolio 63 020 - - - - 63 020
Loans and advances to banks 44 649 2 17 942 - (82) 62 511
Trading portfolio assets 87 203 114 29 - (22) 87 324
Hedging portfolio assets 5 439 - 17 - - 5 456
Other assets 14 189 - 3 617 - (227) 17 579
Current tax assets 304 (1) 73 - - 376
Non-current assets held for sale 4 052 - - - - 4 052
Loans and advances to customers 528 191 (863) 38 934 - - 566 262
Loans to Group companies - - 537 - (537) -
Reinsurance assets 1 003 - - - - 1 003
Investment securities 20 555 5 069 5 289 - - 30 913
Investments in associates and joint ventures 569 - - - - 569
Subsidiaries - - - 18 330 (18 330) -
Investment properties 1 220 - - - - 1 220
Property and equipment 8 397 - 1 227 - - 9 624
Goodwill and intangible assets 2 561 - 487 - - 3 048
Deferred tax assets 366 - 278 - - 644
Total assets 807 939 4 647 86 653 18 330 (19 198) 898 371
Liabilities
Deposits from banks 36 035 149 5 322 - (82) 41 424
Trading portfolio liabilities 51 684 - 72 - (22) 51 734
Hedging portfolio liabilities 3 855 - - - - 3 855
Other liabilities 18 215 197 2 046 - (48) 20 410
Provisions 1 681 - 599 - - 2 280
Current tax liabilities 59 (1) (29) - - 29
Non-current liabilities held for sale 1 480 (1) - - - 1 480
Deposits due to customers 477 427 426 65 248 - - 543 101
Debt securities in issue 108 044 (1 265) 25 - - 106 804
Liabilities under investment contracts 13 609 5 159 - - - 18 768
Loans from Group companies - - 716 - (716) -
Policyholder liabilities under insurance contracts 3 550 - - - - 3 550
Borrowed funds 17 907 - 870 - - 18 777
Deferred tax liabilities 1 599 (4) 119 - - 1 714
Total liabilities 735 145 4 661 74 988 - (868) 813 926
Equity
Capital and reserves
Attributable to ordinary equity holders:
Share capital 1 435 - 195 259 (195) 1 694
Share premium 4 604 - 796 18 071 (18 135) 5 336
Retained earnings 56 903 (13) 8 009 - - 64 894
Other reserves 3 941 - 1 227 - - 5 166
66 883 - 10 227 18 330 (18 330) 77 096
Non-controlling interest - ordinary shares 1 267 - 1 438 - - 2 705
Non-controlling interest - preference shares 4 644 - - - - 4 644
Total equity 72 794 (14) 11 665 18 330 (18 330) 84 445
Total liabilities and equity 807 939 4 647 86 653 18 330 (19 198) 898 371
Note
(1) Column refers to the amounts published on 12 February 2013.
(2) Included in these adjustments is the impact of IAS 19 reflecting a credit on ‘others assets’ of R138 million, a
debit on ‘deferred tax liabilities’ of R39 million and a debit on ‘retained earnings’ of R99 million. The remaining
adjustments relate to the implementation of IFRS 10.
23.3 Impact of the reporting changes on the Group’s results (continued)
Condensed consolidated statement of comprehensive income for the reporting period ended
31 December 2012
BAGL
IFRS accounting Barclays BAGL
As previously accounting policy Africa consolidation BAGL
reported(1) policy changes Limited adjustments restated
Rm changes(2) Rm Rm Rm Rm
Net interest income 24 111 (119) - 5 310 - 29 302
Interest and similar income 50 766 (167) - 6 698 - 57 297
Interest expense and similar charges (26 655) 48 - (1 388) - (27 995)
Impairments losses on loans and advances (8 290) - (188) (377) - (8 855)
Net interest income after impairment losses on loans 15 821 (119) (188) 4 933 - 20 447
and advances
Non-interest income 22 741 119 (54) 2 868 - 25 674
Net fee and commission income 15 435 (32) (86) 2 066 - 17 383
Fee and commission income 17 936 - 2 160 - 20 096
Fee and commission expense (2 501) (32) (86) (94) - (2 713)
Net insurance premium income 5 618 - - - - 5 618
Net insurance claims and benefits paid (2 719) - - - - (2 719)
Changes in investment contract and insurance liabilities (980) (727) - - - (1 707)
Gains and losses from banking and trading activities 3 670 108 - 757 - 4 535
Gains and losses from investment activities 963 773 - (1) - 1 735
Other operating income 754 (3) 32 46 - 829
Operating income before operating expenditure 38 562 - (242) 7 801 - 46 121
Operating expenses (26 693) (91) 242 (4 643) - (31 185)
Operating expenses (25 874) (91) 242 (4 606) - (30 329)
Other impairments (113) - - (19) - (132)
Indirect taxation (706) - - (18) - (724)
Share of post-tax results of associates and joint ventures 249 - - - - 249
Operating profit before income tax 12 118 (91) - 3 158 - 15 185
Taxation expense (3 377) 22 - (1 084) - (4 439)
Profit for the reporting period 8 741 (69) - 2 074 - 10 746
Notes
(1) Column refers to the amounts published on 12 February 2013.
(2) Included in these adjustments is the impact of IAS 19, reflecting a debit on ‘operating expenses’ of R88 million,
a debit on ‘taxation expenses’ of R22 million and a net credit on ‘movement in retirement benefit fund assets and
liabilities’ with other comprehensive income of R158 million. The remaining adjustments relate to the implementation of IRFS
10.
23.3 Impact of the reporting changes on the Group’s results (continued)
Condensed consolidated statement of comprehensive income for the reporting period ended
31 December 2012 (continued)
IFRS BAGL
accounting accounting Barclays BAGL
As previously policy policy Africa consolidation BAGL
reported(1) changes changes Limited adjustments restated
Rm Rm Rm Rm Rm Rm
Profit for the reporting period 8 741 (69) 2 074 10 746
Other comprehensive income
Items that will not be reclassified to the profit or
loss component of the statement of comprehensive income
Movement in retirement benefit assets and liabilities (242) 158 - (4) - (88)
Decrease in retirement benefit surplus (279) 218 - (10) - (71)
Increase in retirement benefit deficit (59) - - - (59)
Deferred tax 96 (60) - 6 - 42
Total items that will not be reclassified to the profit
or loss component of the statement (242) 158 - (4) - (88)
of comprehensive income
Items that are or may be subsequently reclassified to
the profit or loss component
of the statement of comprehensive income
Foreign exchange differences on translation of foreign
operations 140 - - 198 - 338
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 or loss component of the
statement of comprehensive income (2 088) - - - - (2 088)
Deferred tax (157) - - - - (157)
Movement in available-for-sale reserve 1 109 - - 209 - 1 318
Fair value gains arising during the reporting period 1 532 - - 207 - 1 739
Amount removed from other comprehensive income and
recognised in the profit or 10 - - - - 10
loss component of the statement of comprehensive income
Deferred tax (433) - - 2 - (431)
Total items that will or may be reclassified to the
profit or loss component of the statement of comprehensive
income 1 654 - - 407 - 2 061
Total comprehensive income for the reporting period 10 153 89 - 2 477 - 12 719
Profit attributable to:
Ordinary equity holders of the Group 8 393 (69) - 1 675 - 9 999
Non-controlling interest - ordinary shares 53 - - 399 - 452
Non-controlling interest - preference shares 295 - - - - 295
8 741 (69) - 2 074 - 10 746
Total comprehensive income attributable to:
Ordinary equity holders of the Group 9 812 89 - 1 947 - 11 848
Non-controlling interest - ordinary share 46 - - 530 - 576
Non-controlling interest - preference shares 295 - - - - 295
10 153 89 - 2 477 - 12 719
Note
(1) Column refers to the amounts published on 12 February 2013.
(2) Included in these adjustments is the impact of IAS 19, reflecting a debit on ‘operating expenses’ of R88 million,
a debit on ‘taxation expenses’ of R22 million and a net credit on ‘movement in retirement benefit fund assets and
liabilities’ with other comprehensive income of R158 million. The remaining adjustments relate to the implementation of IRFS
10.
Profit and dividend announcement
for the reporting period ended 31 December
Salient features
- Diluted headline earnings per share (HEPS) increased 14% to 1 396,6 cents.
- Pre-provision profit increased 5% to R26 billion.
- Return on equity (RoE) increased to 15,5% from 14,1%.
- Declared a final dividend per share (DPS) of 470 cents, taking the total to 820 cents, up 20%.
- Paid a special DPS of 708 cents.
- Revenue grew 8% to R59,4 billion.
- Net interest margin (on average interest-bearing assets) rose to 4,48% from 4,28%.
- Non-interest income increased 5% to R27,1 billion and accounted for 45,5% of total revenue.
- Operating expenses grew 10% to R33,4 billion, increasing the cost-to-income ratio to 56,3% from 55,2%.
- Loans and advances to customers grew 7% to R605,3 billion, while deposits due to customers increased 8% to R588,0
billion.
- Credit impairments declined 21% to R7,0 billion, resulting in a 1,20% credit loss ratio from 1,60%.
- Non-performing loans (NPLs) improved to 4,7% of gross loans and advances to customers from 5,9%. Return on
risk-weighted assets (RoRWA) increased to 2,18% and return on assets (RoA) improved to 1,29% from 2,09% and 1,17% respectively.
- Net asset value (NAV) per share increased to 9 125 cents, despite paying R11,6 billion in dividends during the
period.
- Barclays Africa Group Limited’s Common Equity Tier 1 (CET1) capital adequacy ratio was 11,9%, well above regulatory
requirements and ahead of our Board targets.
Overview of results
These are the first results for Barclays Africa Group Limited, incorporating Barclays Africa Limited and the
additional purchase consideration shares in issue. Barclays Africa Group Limited’s headline earnings increased 14% to R11 843
million from R10 419 million and attributable profit grew 20% to R11 981 million. Diluted HEPS also increased 14% to 1396,6
cents from 1 227,6 cents. The Group’s RoE improved to 15,5% from 14,1%, comfortably above its 13,0% cost of equity. A
total ordinary DPS of 820 cents was declared and a special DPS of 708 cents was paid, after considering regulatory
changes, the Group’s strong capital position, strategic plans and near-term business objectives.
Improved credit impairments, particularly in retail mortgages and commercial property finance, was the principal
reason for higher earnings. However, pre-provision profit increased 5% to R26,0 billion, as revenue growth improved in the
second half, while remaining below cost growth that included substantial investment spend.
Retail and Business Banking’s (RBB) headline earnings increased 41% to R8,0 billion, due largely to lower credit
impairments. Financial Services’ headline earnings grew 8% to R1,4 billion, while Corporate, Investment Bank and Wealth’s
(CIBW) headline earnings decreased 4% to R3,0 billion.
Headline earnings from the acquired Barclays Africa Limited increased 14% to R1,923 million, largely due to 25% growth
in net interest income, which outweighed 62% higher credit impairments and 19% growth in operating expenses. The
acquisition was earnings accretive, adding 1,2% to the Group’s 2013 HEPS.
Operating environment
Global growth recovered steadily in 2013, supported for the first time since the global financial crisis by developed
market economies while emerging markets’ growth slowed. Central banks maintained their accommodative monetary policy
stance, with some cutting interest rates and others injecting liquidity into the financial system. South Africa’s economic
growth remained modest and uneven, affected largely by subdued global demand and protracted industrial action in key
sectors. Household consumption growth slowed further in 2013, reflecting deteriorating household balance sheets, a
lacklustre job market, subdued confidence, rising inflation and moderating real wage growth. Consumer appetite for credit waned
as credit extension to households slowed from 10,0% at the beginning of 2013 to 5,5% in December. The rand exchange rate
depreciated throughout the year reaching a low of R/$10,53 in December after starting the year at R/$8,56. The South
African economy looks to have grown by about 2% in 2013.
Economic growth in the Barclays Africa Group markets outside South Africa remained resilient in 2013 at an estimated
6,3%, about half a percent stronger than that witnessed in 2012.
The economies were affected by a more adverse external environment on the back of rising financing costs, slow growth
in emerging markets and lower commodity prices. In spite of resilient economic growth in several countries, fiscal
pressures continued to build in a number of markets and rating agencies reacted with a mix of outlook and/or rating
downgrades.
Group performance
Statement of financial position
Total Group assets increased 7% to R959,6 billion at 31 December 2013, largely due to 7% growth in loans and advances
to customers and 28% higher loans and advances to banks.
Loans and advances to customers
Gross loans and advances to customers increased 7% to R621,4 billion. Retail Banking South Africa’s gross loans grew
2% to R363,1 billion, given 12% growth in credit cards and 10% higher instalment credit agreements, offset by 2% lower
mortgages. Business Banking South Africa’s gross loans decreased 3%, due to 3% lower commercial property finance. RBB Rest
of Africa’s gross loans grew 25% to R40,2 billion, largely due to rand depreciation. CIBW gross loans increased 21%,
given strong growth in foreign currency loans, corporate overdrafts and Rest of Africa lending.
Funding
The Group maintained its strong liquidity position, growing deposits due to customers 8% to R588,0 billion. Debt
securities in issue declined 8% to R97,8 billion. The funding tenor also remained robust with an average long-term funding
ratio of 24,3% for the period, from 26,5% in 2012. Deposits due to customers contributed 77,9% to total funding, while the
proportion of debt securities in issue dropped to 13,0% from 15,4%. Retail Banking South Africa maintained its leading
market share, increasing deposits 6% to R134,8 billion. Business Banking South Africa’s deposits grew 11%, largely due
to 57% growth in savings and transmission deposits. CIBW’s deposits increased 8%, due to 8% growth in fixed deposits and
59% higher Rest of Africa deposits. The Group’s loans-to-deposits ratio improved to 88,3% from 87,1%.
Net asset value
The Group’s NAV was flat at R77,3 billion, as it generated retained earnings of R11,4 billion in the period, which was
offset by paying R11,6 billion in dividends. The Group’s NAV per share was broadly flat at 9 125 cents.
Capital to risk-weighted assets
The Group’s risk-weighted assets were R560,9 billion at 31 December 2013, due to 7% growth in loans and advances to
customers and implementing Basel III from 1 January 2013, partially offset by various RWA optimisation initiatives.
Capital levels remain above Board targets and regulatory requirements. Barclays Africa Group Limited’s CET1 and Tier 1 capital
adequacy ratios were 11,9% and 13,0% respectively (from Absa Group’s 13,0% and 14,0%). The Group’s total capital ratio
was 15,6%, above our board target of 12,5% to 14,0%.
The total DPS of 820 cents for the period and the R6 billion special dividend were well considered, based on the
Group’s strong capital position, internal capital generation, strategy and growth plans.
After completing the Barclays Africa transaction, Barclays Africa Group Limited intends to establish a funding
programme to optimise the management of liquidity and capital requirements across the Group.
Statement of comprehensive income
Net interest income
Net interest income increased 10% to R32 351 million from R29 302 million, and average interest-bearing assets grew
6%. The net interest margin improved to 4,48% from 4,28%, largely due to including the Edcon portfolio for the full year,
CIBW’s improved margin and an increased proportion of higher margin Rest of Africa lending. The deposit margin
decreased, due to lower average rates and competition, and the contributions from hedging and the endowment also declined.
Impairment losses on loan and advances
Credit impairments fell 21% to R6 987 million from R8 855 million, resulting in a lower credit loss ratio of 1,20%
from 1,60%. Total NPL coverage improved further to 41,8% from 38,0%. Unidentified impairments and identified impairments
for performing loans increased 35% to R3,8 billion, which amounts to 0,64% of performing loans from 0,52% at 31 December
2012.
RBB’s credit impairments dropped 23% to R6 678 million, a 1,50% credit loss ratio from 2,05%. Retail Banking South
Africa’s credit impairments fell 22% to R5 162 million, improving its credit loss ratio to 1,48% from 1,96%. 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 65% to R1 552 million from last year’s elevated R4 461 million. Mortgage NPLs
fell 28% to R13,5 billion, with a material improvement in the legal book. Mortgage coverage decreased to 27,8% from
28,5% reflecting a reduction in the legal book where cover is higher. Vehicle and Asset Finance’s credit loss ratio improved
to 0,80% from 1,08%, reflecting improved collections and lower NPLs.
Despite consumers remaining under pressure, Personal Loans’ credit loss ratio was well within expectations at 6,23%
from 5,00%, given the focus on existing customers and on further improving this book’s risk profile. Card’s charge
increased to R1 903 million from R475 million, as the Edcon portfolio was included for a full year, from just two months in
2012. The credit impairment on the remaining Card book doubled to R811 million, which represents a 3,29% credit loss ratio
from 1,82%. The Edcon portfolio’s credit loss ratio increased to 11,86% from 9,56% in the first half, as its NPL cover
improved to 81%.
Business Banking South Africa’s credit impairments decreased 42% to R896 million, improving its credit loss ratio to
1,43% from 2,37%, largely due to lower commercial property finance provisions off a high base. RBB Rest of Africa’s
credit impairments grew 7% to R620 million, due only to rand depreciation, as its credit loss ratio improved to 1,79% from
2,45%. While CIBW’s charge more than doubled, this included a large portfolio provision and its credit loss ratio was just
0,22%.
Total NPLs have reduced by R4,8 billion to 4,7% of gross loans and advances to customers at 31 December 2013 from 5,9%
at 31 December 2012. Retail Banking South Africa’s NPLs fell 19% to R19,6 billion.
Non-interest income
Non-interest income increased 5% to R27 055 million from R25 674 million, with stronger growth in the second half. Net
fee and commission income rose 7% to R18,6 billion, largely due to 27% higher CIBW income and solid Financial Services
growth, while RBB increased 3%.
Retail Banking SA’s non-interest income grew 4% to R11,2 billion. Excluding the Edcon portfolio it decreased 1%, due
to fewer transaction accounts and deliberately migrating customers to lower priced Value Bundles. These were partially
offset by strong growth in the Rewards programme, 8% growth in merchant income (to R2,2 billion) and 14% growth in Home
Loans’ non-interest revenue.
Business Banking South Africa’s non-interest income grew 14% to R3,1 billion, predominantly due to a R320 million
positive swing in income from equities following valuation write downs in 2012. Net fee and commission income increased 2%
to R2,9 billion, reflecting 6% growth in electronic banking fees and 3% in cash fees that outweighed lower cheque payment
volumes.
RBB Rest of Africa’s non-interest income grew 7% to R2 037 million, due to currency effects. Excluding Rand
depreciation it decreased 4%. Fees and commissions fell 2% due to removing credit life insurance fees and lower transaction
volumes in some markets.
Financial Services’ revenue grew 8% to R4 367 million, as gross insurance premium income increased with 8% and fee
income from investments, Distribution and Fiduciary Services grew 13%.
CIBW’s non-interest income increased 8% to R6 924 million, in part due to the sale of the Custody and Trustee
business, although Corporate electronic banking fees grew 8% and Investment Banking’s growth was strong. CIBW’s net trading
result decreased 3% to R3 993 million, reflecting difficult trading conditions in the second quarter and continued margin
pressure in fixed income and foreign exchange.
Operating expenses
Operating expenses grew 10% to R33 420 million from R30 329 million, which increased the Group’s cost-to-income ratio
to 56,3% from 55,2%. Excluding the Edcon portfolio, which was included for the full year, total costs grew 7%. Rand
depreciation against other currencies in Africa added almost 3% to expense growth.
Staff costs increased 11% to R17 593 million to account for 53% of the total. Salaries (and current service costs on
post-retirement benefits) grew 7%, due to slightly higher headcount, inflationary pressures and rand depreciation. Total
incentives increased 25%, after a reduction in the previous year and a substantial recovery in RBB earnings.
Non-staff costs increased 9% to R15,8 billion. Optimising the Group’s property portfolio reduced property costs by 13%
to R1 692 million, while leveraging Barclays’ capabilities and systems, reduced information technology costs 6% to R2,1
billion. Total IT spend, including related staff, amortisation and depreciation, grew 8% to R6 414 million and
accounted for 19% of Group expenses. Amortisation of intangible assets grew 44%, reflecting increased investment in systems.
Professional fees grew 68% to R1 578 million, which included substantially higher strategic initiative spend on
project delivery and systems. Marketing costs grew 19% as the Group’s Prosper campaign was launched.
Retail Banking South Africa’s operating expenses increased 13%, or 6% excluding the Edcon portfolio. Business
Banking South Africa’s costs fell 7% due to a large decline in its Equities expenses. Excluding this, its costs increased
2%. Retail and Business Banking Rest of Africa’s costs increased 25%, largely due to rand depreciation. Financial
Services’ operating expenses grew 9%, reflecting its expansion into the rest of Africa and amortisation on new operating
systems. CIBW’s operating expenses increased 8% with continued investment in key growth areas.
Taxation
The Group’s taxation expense increased 18% to R5 222 million, slightly less than the growth in pre-tax profit,
resulting in a 28,9% effective tax rate, a decrease from 29,2% in 2012.
Segment performance
Retail Banking South Africa
Headline earnings increased 36% to R4 941 million due largely to 22% lower credit impairments. Home Loans’ earnings
increased by R1 868 million, as credit impairments fell sharply from 2012’s elevated charge. Vehicle and Asset Finance’s 33%
earnings growth to R1 127 million reflects solid 12% loan growth, lower credit impairments and cost containment. Total Card
earnings grew 5% to R1 980 million, largely due to including the Edcon portfolio for the full year. Personal Loans’
earnings decreased 34% to R385 million, given higher credit impairments off a low base and lower revenue. Retail Bank
earnings, fell 56% to R573 million given continued revenue pressure and higher operating costs. Retail Banking South Africa
accounted for 40% of Group headline earnings excluding head office, eliminations and other central items. Its cost-to-income
ratio increased to 53,4% from 50,8%, although its RoA improved to 0,98% from 0,74%.
Business Banking South Africa
Business Banking South Africa’s headline earnings increased 64% to R1 710 million, reflecting 24% growth in its core
franchise and significantly lower losses in its equity portfolio that has stabilised. Solid 14% non-interest income
growth, 7% lower operating costs and a 42% reduction in credit impairments were the key drivers. These offset a 1% decline in
net interest income, as its loans declined 3%. Business Banking South Africa generated 14% of Group headline earnings
in 2013. Its cost to income ratio improved significantly to 58,7% from 66,2%, which helped to increase its RoA to 1,91%
from 1,19%.
Retail and Business Banking Rest of Africa
Retail and Business Banking Rest of Africa’s headline earnings increased 35% to R1 348 million, largely due to strong
30% growth in its net interest income. Rand depreciation accounted for over half of its earnings growth and 15% of its
cost growth. Non-interest income declined 4% on a constant currency basis. Retail and Business Banking Rest of Africa
constituted 11% of Group headline earnings. Its cost to income ratio increased to 62,6% from 62,0%, while its RoA declined
to 1,62% from 1,76%, in part due to rand depreciation increasing its asset base.
Corporate, Investment Bank and Wealth
Headline earnings declined 4% to R3 017 million, reflecting a higher effective tax rate and non-recurring gains in
2012. Net revenue growth of 10% exceeded 8% cost growth to drive 9% higher pre-tax profits. Market’s total net revenue
increased slightly, despite difficult trading conditions in the second quarter and margin compression in some key products.
However, Investment Banking and Corporate’s net revenue grew 37% and 18% respectively. Private equity revenue declined
due to lower revaluations. The sale of investments reduced this portfolio 42% to R3,3 billion, which should improve
future returns. CIBW accounted for 24% of Group headline earnings in 2013. Its RoRWA declined to 1,9% from 2,2%, given lower
earnings and an increase in market risk risk-weighted assets on implementing Basel III.
Financial Services
Headline earnings grew 8% to R1 370 million, while net operating income (NOI) increased 10% to R1 724 million.
Investments’ headline earnings increased 23% to R412 million, as its revenue grew 14% to R1 032 million as a result of improved
margins. Life Insurance’s embedded value of new business increased 18% to R427 million, reflecting increased branch
sales and bank volumes. Rest of Africa profits more than doubled to R37 million. The revised Distribution operating model
resulted in this business achieving break even, while employee benefits’ turnaround saw its earnings more than treble to
R42 million. However, short-term insurance earnings dropped 39%, due to higher industry wide weather-related claims.
Financial Services accounted for 11% of Group headline earnings. Its RoE improved to 28,6% from 27,2%.
Prospects
We expect a continuation of the recovery in the global economy during 2014 as uncertainty around United States Federal
Reserve tapering diminishes, fiscal headwinds abate, and monetary policy gains traction. We expect global GDP to expand
by 3,5% after growth of around 3% in the prior two years. Domestically, although we expect a modest recovery in GDP
growth to 2,7% in 2014, with the key risks being the impact on the consumer of higher inflation and policy rates, the
impact on the economy of labour strikes and the weak rand, and the impact on markets from global monetary policy. We see low
probability of GDP growth accelerating faster without major policy shifts, improved confidence levels, and/or an alleviation
of binding energy and transportation infrastructure constraints.
We expect steady growth in the Barclays Africa Group markets beyond South Africa, with some of the countries being
among the fastest growing in the world. However, important challenges are emerging. More notably, infrastructure
constraints and/or lower commodity prices have led to cuts in our growth forecasts for some of the economies. Also, fiscal and
current account imbalances are emerging in many countries just as the US Federal Reserve is slowing its asset purchase
programme. Whilst there are important differences between countries, as a grouping we believe that economic growth can approach
6% again in 2014, last year, supported by investment in infrastructure and improving global growth prospects. On the
monetary policy front, these countries show little room for further monetary easing in 2014, with the bias being towards
raising interest rates in some markets.
Against this backdrop, we expect mid-single digit loan growth in South Africa this year. We will continue to focus on
operating costs, while investing for growth. In the next three years, we aim to reduce our cost to income ratio to the
low 50s and to improve our RoE to between 18% and 20%. We expect the rest of Africa to account for 20% to 25% of Group
revenue by 2016.
Basis of presentation
The Group’s annual 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
(“IFRS-IC”) the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by Financial Reporting Standards Council, the JSE Listings Requirements and the requirements
of the Companies Act. The principal accounting policies applied are set out in the Group’s most
recent annual consolidated financial statements.
The information disclosed in the SENS is derived from the information contained in the audited annual
consolidated financial statements and does not contain full or complete disclosure details. Any investment decisions by
shareholders should be based on consideration of the audited annual consolidated financial statements available on
request. The presentation and disclosure complies with International Accounting Standard (IAS) 34.
The preparation of financial information requires the use of estimates and assumptions about future conditions. Use of
available information and application of judgement are inherent in the formation of estimates. The accounting policies
that are deemed critical to the Group’s results and financial position, in terms of the materiality of the items to
which the policy is applied, and which involve a high degree of judgement including the use of assumptions and estimation,
are impairment of loans and advances, goodwill impairment, valuation of financial instruments, impairment of
available-for-sale financial assets, impairment of investments in associates and joint ventures, deferred tax assets,
post-retirement benefits, provisions, share-based payments, liabilities arising from claims made under short-term insurance contracts,
liabilities arising from claims made under life-term insurance contracts, income taxes and offsetting of financial
assets and liabilities.
Accounting policies
The accounting policies applied in preparing the audited consolidated annual financial statements are the same as
those in place for the reporting period ended 31 December 2012. The new and amended standards that became effective for the
first time during the reporting period are specified in note 1.22 of the accounting policies contained in the most
recent annual consolidated financial statements. These changes can be summarised as:
- implementation of new IFRS standards specifically IFRS 10 Consolidated Financial Statements (“IFRS 10”) and IAS
19 Employee Benefits (amended 2011) (“IAS 19R”); and
- certain changes in internal accounting policies.
Change in accounting estimates
During the current year, the Group revised the estimated useful lives of computer equipment from 3 to 5 years to 4 to
6 years. This revision was done as a result of the requirement of IAS 16 to reassess the useful lives of property, plant
and equipment on an annual basis. This change in useful lives has brought the Group’s estimated useful lives of
computer equipment in line with the Barclays Plc estimated useful lives for computer equipment. The change in accounting
estimate has been accounted for prospectively in accordance with IAS 8.
Auditors report
Ernst & Young Inc. and PricewaterhouseCoopers Inc., Barclays Africa Group Limited’s independent auditors, have audited
the consolidated annual financial statements of Barclays Africa Group Limited from which management prepared the
condensed consolidated financial results. The auditors have expressed an unqualified audit opinion on the consolidated annual
financial statements. The condensed consolidated financial results comprise the condensed consolidated statement of
financial position at 31 December 2013, condensed consolidated statement of comprehensive income, condensed consolidated
statement of changes in equity and condensed consolidated statement of cash flows for the year then ended, and selected
explanatory notes, excluding items not indicated as audited. The audit report of the consolidated annual financial
statements is available for inspection at Barclays Africa Group Limited’s registered office.
The condensed consolidated financial results are extracted from audited information, but is not itself audited. The
directors take full responsibility for the preparation of the condensed consolidated financial results and the
financial information has been correctly extracted from the underlying consolidated annual financial statements.
Events after the reporting period
The directors are not aware of any events occurring between the reporting date of 31 December 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 Chief Executive Officer
Johannesburg
10 February 2014
Declaration of final ordinary dividend number 55
Shareholders are advised that an ordinary dividend of 470 cents per ordinary share was declared today, 11 February 2014,
for the period ended 31 December 2013. The ordinary dividend is payable to shareholders recorded in the register of members
of the Company at the close of business on 4 April 2014. The directors of Barclays Africa Group Limited confirm that the
Group will satisfy the solvency and liquidity test immediately after completion of the dividend distribution.
The dividend will be subject to the new 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.
- The local dividend tax rate is fifteen per cent (15%).
- The gross local dividend amount is 470 cents per ordinary share for shareholders exempt from the dividend tax.
- The net local dividend amount is 399,50 cents per ordinary share for shareholders liable to pay for the dividend
tax.
- Barclays Africa Group currently has 847 750 679 ordinary shares in issue (includes 437 896 treasury shares)
- Barclays Africa Group Limited’s income tax reference number is 9150116714.
In compliance with the requirements of Strate, the electronic settlement and custody system used by the JSE Limited,
the following salient dates for the payment of the dividend are applicable:
Last day to trade cum dividend 28 March 2014
Shares commence trading ex dividend 31 March 2014
Record date 4 April 2014
Payment date 7 April 2014
Share certificates may not be dematerialised or rematerialised between Monday, 31 March 2014 and Friday, 4 April 2014,
both dates inclusive.
On 7 April 2014 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 7 April 2014 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
7 April 2014.
On behalf of the board
N R Drutman
Company Secretary
Johannesburg
11 February 2014
Declaration of ordinary dividend number 2
Shareholders are advised that an ordinary dividend of zzz cents per ordinary share was declared today, 11 February
2014. The ordinary dividend is payable to shareholders recorded in the register of members of the Company at the close of
business on 4 April 2014. The directors of Barclays Africa Group confirm that the Group will satisfy the solvency and
liquidity test immediately after completion of the dividend distribution.
The dividend will be subject to the new 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.
- No STC credits have been utilised with regard to this special dividend.
- The local dividend tax rate is fifteen per cent (15%).
- The gross local dividend amount is zzz cents per ordinary share for shareholders exempt from the dividend tax.
- The net local dividend amount is zzz,zz cents per ordinary share for shareholders liable to pay for the dividend
tax.
- Barclays Africa Group currently has zzz zzz zzz ordinary shares in issue (includes zz treasury shares).
- Barclays Africa Group’s income tax reference number is 9150116714.
In compliance with the requirements of Strate, the electronic settlement and custody system used by the JSE Limited,
the following salient dates for the payment of the dividend are applicable
Last day to trade cum dividend Friday, 28 March 2014
Shares commence trading ex dividend Monday, 31 March 2014
Record date Friday, 4 April 2014
Payment date Monday, 7 April 2014
Share certificates may not be dematerialised or rematerialised between Monday, 31 March 2014 and Friday, 4 April 2014,
both dates inclusive. On Monday, 7 April 2014, 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 7 April 2014 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, 7 April 2014.
On behalf of the board
N R Drutman
Company Secretary
Johannesburg
11 February 2014
Barclays Africa Group 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
Barclays Africa Group Limited
Authorised financial services and registered credit provider (NCRCP7)
Registration number: 1986/003934/06
Incorporated in the Republic of South Africa
JSE share code: BGA
Issuer code: AMAGB
ISIN: ZAE000174124
Registered office
7th Floor, Barclays Towers West
15 Troye Street, Johannesburg, 2001
PO Box 7735, Johannesburg, 2000
Telephone: (+27 11) 350 4000
Email: groupsec@barclaysafrica.com
Board of directors
Group 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
Group non-executive directors
P A Clackson(1), MS Merson(1), A V Vaswani(2)
Group executive directors
D W P Hodnett (Deputy Executive Officer and Financial Director),
M Ramos (Group Executive Officer)
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
Barclays Africa Group should be directed to the following areas:
Group Investor Relations
A M Hartdegen (Head Investor Relations)
Telephone: (+27 11) 350 2598
Email: investorrelations@barclaysafrica.com
Company Secretary
N R Drutman
Telephone: (+27 11) 350 5347
Email: groupsec@absa.co.za
Other contacts
Group Finance
R Stromsoe (Head: Group Finance)
Telephone: (+27 11) 895 6365
Head office switchboard
Telephone: (+27 11) 350 4000
Notes
(1)British
(2)Singaporean
www.barclaysafrica.com
Date: 11/02/2014 08:29:59 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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