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FIRSTRAND LIMITED - Unaudited Interim Results and Cash Dividend Declaration for the six months ended 31 December 2013

Release Date: 04/03/2014 08:00
Code(s): FSR     PDF:  
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Unaudited Interim Results and Cash Dividend Declaration for the six months ended 31 December 2013

FirstRand Limited
Registration No: 1966/010753/06
JSE code: FSR ISIN: ZAE000066304
NSX share code: FST
Certain entities within the FirstRand Group are Authorised Financial Services and Credit Providers

UNAUDITED INTERIM RESULTS AND CASH DIVIDEND DECLARATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2013


Introduction


This announcement covers the unaudited financial results of FirstRand Limited (FirstRand or the Group) based on International Financial Reporting
Standards (IFRS) for the six months ended 31 December 2013.


The primary results and accompanying commentary are presented on a normalised basis as the Group believes this most accurately reflects its
economic performance. The normalised results have been derived from the IFRS financial results. The prior year numbers have been restated as a
result of the adoption of new and revised IFRS requirements.


Normalised results include a condensed consolidated income statement, statement of comprehensive income, statement of financial position,
statement of cash flows and a statement of changes in equity. A detailed description of the difference between normalised and IFRS results is
provided on www.firstrand.co.za. Commentary is based on normalised results, unless indicated otherwise.


Jaco van Wyk, CA(SA), supervised the preparation of the condensed consolidated financial results.



Financial highlights


                                                                                            Six months ended                                Year ended
                                                                                              31 December                                      30 June
                                                                                              2013               2012*     % change               2013*

Normalised earnings (R million)                                                              8 691              7 243            20             15 420
Diluted normalised earnings per share (cents)                                                154.2              128.5            20              273.5
Normalised net asset value per share (cents)                                               1 342.9            1 182.9            14            1 289.4
Dividend per ordinary share (cents)**                                                         77.0               55.0            40              136.0
Normalised return on equity (%)                                                               23.4               22.3                             22.7
* Refer to restatement of prior year numbers later in this announcement.
** For further information on the increase in dividend refer to dividend strategy.


The Group consists of a portfolio of leading financial services franchises; these are First National Bank (FNB), the retail and commercial bank, Rand
Merchant Bank (RMB), the corporate and investment bank, WesBank, the instalment finance business and Ashburton Investments, the Group's
newly-established investment management business.



STATEMENT OF HEADLINE EARNINGS - IFRS

                                                                                           Six months ended                                 Year ended
                                                                                             31 December                                       30 June
R million                                                                                    2013                2012*     % change               2013*

Profit for the period                                                                       9 430               7 618            24             15 954
Non-controlling interests                                                                    (447)               (363)           23               (872)
NCNR preference shareholders                                                                 (144)               (150)           (4)              (297)
Earnings attributable to ordinary equityholders                                             8 839               7 105            24             14 785
Adjusted for:                                                                                 (32)                176         (>100)               542
Loss/(gain) on disposal of investment securities and other investments of a
capital nature                                                                                  1                  (1)                              13
Gain on disposal of available-for-sale assets                                                 (66)                 (1)                             (33)
Loss on disposal of investments in associates or joint ventures                                 -                   -                                1
Gain on disposal of investments in subsidiaries                                               (12)                (10)                             (63)
Loss/(gain) on the disposal of property and equipment                                          12                  (1)                              77
Fair value of investment properties                                                             -                   -                               (7)
Impairment of goodwill                                                                          -                   2                              438
Impairment of assets in terms of IAS 36                                                        11                 254                              283
Gain from a bargain purchase                                                                    -                   -                              (14)
Other                                                                                          (1)                  -                             (138)
Tax effects of adjustments                                                                     20                 (69)                             (35)
Non-controlling interests adjustments                                                           3                   2                               20
Headline earnings                                                                           8 807               7 281            21             15 327
* Refer to restatement of prior year numbers later in this announcement.



RECONCILIATION FROM HEADLINE TO NORMALISED EARNINGS

                                                                                           Six months ended                                 Year ended
                                                                                             31 December                                       30 June
R million                                                                                    2013                2012*     % change               2013*
Headline earnings                                                                           8 807               7 281            21             15 327
Adjusted for:                                                                               (116)                 (38)         >100                 93
IFRS 2 Share-based payment expense                                                            12                   22           (45)                43
Treasury shares**                                                                             63                   42            50                 33
Total return swap adjustment (share hedge)                                                  (146)                 (53)         >100                 85
IAS 19 adjustment                                                                            (53)                 (56)           (5)              (110)
Private equity subsidiary realisations                                                         8                    7            14                 42
Normalised earnings                                                                        8 691                7 243            20             15 420
* Refer to restatement of prior year numbers on later in this announcement.
** Includes FirstRand shares held for client trading activities.



OVERVIEW OF RESULTS
Introduction


The macroeconomic environment for the first six months of the financial year continued to be challenging.


The local economy had to contend with a far less favourable global financial environment. Countries such as South Africa, with current account deficits
and large financing requirements, were particularly vulnerable to slowing capital flows and the rand continued to weaken. This placed upward
pressure on inflation and, in the first quarter of 2014, interest rates started to rise.


These external headwinds, combined with a slowdown in real income growth, resulted in continued pressure on South African households.


GDP growth in South Africa remained subdued as capacity constraints and labour market unrest negatively impacted the supply side of the
economy.


In the rest of the sub-Saharan region, growth has generally continued on a robust trend, led by strong domestic demand and commodity
exports. While US tapering, a slowdown in China and dual fiscal deficits pose some downside risk, long-term growth rates in the region should
continue to be underpinned by improved macroeconomic management, stronger institutions, increased investment and positive demographics.



Overview of results
FirstRand produced good results for the six months to 31 December 2013, achieving normalised earnings of R8 691 million, an increase of 20%
year-on-year and a normalised ROE of 23.4%.


All three operating franchises continued to achieve good operational performances, despite the deteriorating macroeconomic environment. FNB
experienced ongoing strong topline growth and profitability due to its consistent strategy to acquire core transactional accounts, grow loans and
deposits and drive transactional volumes across all of its platforms, particularly electronic. WesBank grew new business volumes across
all portfolios and RMB's diversified corporate and investment banking portfolios delivered strong growth in profits, particularly from the client-
centric and investment activities.


The table below shows a breakdown of sources of normalised earnings.



Sources of normalised earnings

                                                                     Six months ended 31 December                                      Year ended 30 June
                                                                                    %                             %                                              %
                                                                               compo-                        compo-             %                           compo-
R million                                                       2013           sition            2012        sition        change              2013         sition
FNB                                                              4 769             56           4 016            55            19             8 124             53
RMB                                                              2 268             26           1 943*           27            17             4 471*            29
WesBank                                                          1 406             16           1 389            19             1             2 834             18
Treasury and Corporate Centre**                                     18              -            (285)           (4)        (>100)              (70)             -
FirstRand Limited (company)                                        374              4             330             5            13               358              2
NCNR preference dividend                                          (144)            (2)           (150)           (2)           (4)             (297)            (2)
Normalised earnings                                              8 691            100           7 243           100            20            15 420            100
* Includes R155 million of IT enablement impairments relating to financial years prior to and including June 2012.
** The year-on-year benefit is primarily due to the unwind of certain accounting timing anomalies recorded by Group Treasury during the financial year ended 30
June 2013 e.g. mark-to-market losses on economic hedges, partially unwinding or not recurring during the six months to December 2013.
The Group's income statement benefited from an increase of 20% in net interest income (NII), driven by good growth in new business at FNB,
WesBank and RMB. Asset margins continued to be positively impacted by repricing and growth in advances in higher-yielding asset classes, such
as vehicle asset finance (VAF) and unsecured lending. This trend, however, is reducing on a rolling six-month basis.


Total non-interest revenue (NIR) increased 8% year-on-year, with strong contributions from all franchises. FNB's NIR growth continued to be
driven by increases in fee and commission income, particularly on the back of the acquisition of core transactional accounts. The strategy to
drive customers onto electronic platforms continued to produce strong growth in volumes across cellphone (+27%) and internet (+16%) banking
channels. WesBank's NIR benefited from robust levels of new business origination. Knowledge-based fees at RMB were resilient despite muted
levels of activity from the local corporate sector, however, client execution revenues remained strong particularly from RMB's activities in the rest
of Africa.


Overall operating cost growth was 14% for the period, reflecting the continued investment in FNB's electronic platforms and the Group's African
operating footprint. In addition, costs associated with the strong underlying growth from alliance partnerships (particularly at WesBank) also
increased.


Bad debts are currently trending below expectations at 77 bps, but, excluding portfolio overlays, the rand value of portfolio impairments are higher
in the core advances book due to the Group's view that the previously benign credit cycle has bottomed. This is considered prudent given the
strong book growth year-on-year. All of the Group's portfolios are tracking as anticipated, reflecting decisions taken as early as 2011 to exit
origination in high-risk segments, particularly in the unsecured lending market.


Overall non-performing loans (NPLs) have continued to trend down, with retail NPLs declining 8% mainly as a result of the continuing significant
reductions in residential mortgage NPLs. Unsecured lending NPLs have increased as expected, although all of these loan books are still performing
better than expected at this point in the cycle. Corporate NPLs declined 14% as a result of decreases in the WesBank corporate and RMB
portfolios.


The Group's overall balance sheet showed a robust increase in advances year-on-year, with particularly good growth from card, secured affordable
housing and overdrafts at FNB, and excellent growth generated from the FNB Africa portfolio. RMB's core advances book posted strong
growth, which also benefited from activities in the rest of Africa. On a rolling six-month basis, growth in certain retail portfolios, such as
unsecured lending and VAF, has moderated.



OVERVIEW OF OPERATING FRANCHISES


The Group's vision is to be the African financial services group of choice, create long-term franchise value, deliver superior and sustainable
economic returns to shareholders within acceptable levels of volatility and maintain balance sheet strength. FirstRand seeks to achieve this with
two parallel growth strategies which are executed through its portfolio of operating franchises within a framework set by the Group. The growth
strategies are:


- become a predominant player in all of the financial services profit pools in South Africa, growing in existing markets and those where it is under-
  represented; and
- grow its franchise in the broader African continent, targeting those countries expected to show above average domestic growth and which are well
  positioned to benefit from the trade and investment flows between Africa, India and China.


With regard to expansion into the rest of Africa, there are three pillars to its execution:


- utilise the capabilities of the South African franchise, particularly the domestic balance sheet, intellectual capital, international platforms and the
- existing operating footprint in the rest of Africa;
- start an in-country franchise and grow organically; and
- small-to medium-sized acquisitions where it makes commercial sense.


Below is a brief overview of the financial and operational performance of each franchise.



FNB


FNB represents FirstRand's activities in the retail and commercial segments in South Africa and the broader African continent. It is growing its
franchise strongly in both existing and new markets on the back of innovative products and delivery channels, particularly focusing on electronic and
digital platforms.


FNB financial highlights

                                                                                                 Year
                                                             Six months ended                   ended
                                                               31 December               %    30 June
R million                                                      2013       2012      change       2013
Normalised earnings                                           4 769      4 016          19      8 124
Normalised profit before tax                                  7 059      5 769          22     11 622
Total assets                                                312 340    283 755          10    296 338
Total liabilities                                           300 516    272 946          10    281 686
NPLs (%)                                                       3.55       4.45                   3.95
Credit loss ratio* (%)                                         0.95       1.19                   1.18
ROE (%)                                                        36.8       36.1                   35.4
ROA (%)                                                        3.26       2.94                   2.92
Cost-to-income ratio (%)                                       53.7       54.0                   54.8
Advances margin (%)                                            3.68       3.24                   3.39
* 2013 figure includes special impairment relating to merchant acquiring event of R215 million.



Segment results

                                                                                                 Year
                                                             Six months ended                   ended
Normalised PBT                                                 31 December               %    30 June
R million                                                      2013       2012      change       2013
Retail                                                        3 992      3 193          25      6 564
FNB Africa                                                      975        769          27      1 549
Commercial                                                    2 092      1 807          16      3 509
Total FNB                                                     7 059      5 769          22     11 622


FNB produced an excellent performance for the period, increasing pre-tax profits 22%, driven by increased NII and NIR and a decrease in bad debts,
particularly in residential mortgages. This performance can continue to be attributed to FNB's primary strategy to grow and retain core transactional
accounts through offering a compelling value proposition to the customer (innovative products and channels at an acceptable cost) supported by
rewards programmes, such as eBucks, SLOW lounges and fuel, data and airtime rewards. Innovations such as the banking app, cellphone banking
and eWallet also continue to attract and retain customers.


FNB's NII increased 17% driven by growth in both advances (+10%) and deposits (+14%). The 46 bps improvement in asset margins was driven by
good risk pricing across FNB's portfolios, the decrease in interest in suspense (ISP) and growth year-on-year in higher-margin products, although this
latter trend is reducing on a rolling six-month basis. Deposit margins held up well, decreasing only 4 bps. Deposit and advances growth came from
across all segments as indicated below.



Segment analysis of advances and deposit growth

                                                                   Six months ended 31 December 2013
                                                                 Deposit growth           Advances growth
Segments                                                             %     R billion           %      R billion

Retail                                                              12          13.9           7           12.4
FNB Africa                                                          22           8.2          27            7.7
Commercial                                                          13          14.8          14            5.6


Residential mortgages grew 5% as FNB continued to originate only in lower risk categories. Card increased 13% on the back of new customer
acquisition. Personal loans declined 2% year-on-year and 5% on a rolling six-month basis, reflecting the ongoing adjustments in credit appetite in
that segment.


Overall NPLs decreased 12% due to FNB's ongoing proactive workout strategy (particularly in residential mortgages). NPLs in the personal loans
portfolio remained flat at R919 million. The year-on-year decrease is mainly attributable to residential mortgages (-22%) and Commercial (-10%).


FNB's NIR increased 12% year-on-year reflecting growth in core transactional banking accounts. There was continued strong growth of 11% in overall
transactional volumes with electronic transactional volumes up 15%. An example of how customers are adapting to electronic channels is that
year-on-year ATM and ADT deposits increased 27%, whilst branch-based deposits decreased 13%. The adoption of FNB's innovative customer
proposition in the commercial and business segments resulted in strong NIR growth of 11% and 19% respectively.


FNB's overall operating expenditure increased 14%, reflecting on-going investment in its operating footprint, particularly in Africa (costs up 21%).
However, the business continues to deliver positive operating jaws.
The African subsidiaries performed well, growing pre-tax profits 27%. The established subsidiaries continued to show good growth, with Namibia
performing particularly strongly driven by increased NIR and NII. The newer subsidiaries, Zambia, Mozambique and Tanzania, continued to invest in
footprint and product roll-out.


FNB produced an ROE of 36.8%, which remains well above hurdle rates, despite ongoing investment in platforms and new territories.



RMB


RMB represents the Group's activities in the corporate and investment banking segments in South Africa, the broader African continent and India.
The business continues to benefit from its strategy to generate more income from client-driven activities, which is anchored around a risk appetite
designed to effectively manage the trade offs between earnings volatility, profit growth and returns. This strategy, coupled with steady investment
returns and a growing focus on originating asset management products, is delivering a high quality and sustainable earnings profile.



RMB financial highlights

                                                                                                 Year
                                                             Six months ended                   ended
                                                               31 December               %    30 June
R million                                                      2013       2012      change       2013
Normalised earnings                                           2 268      1 943*         17      4 471*
Normalised profit before tax                                  3 195      2 677          19      6 150
Total assets                                                374 929    355 380           6    354 758
Total liabilities                                           367 491    348 746           5    346 133
ROE (%)                                                        25.0       21.9                   25.0
ROA (%)                                                        1.33       1.13                   1.31
Credit loss ratio (%)                                          0.30       0.36                   0.55
Cost-to-income ratio (%)                                       44.7       46.1                   42.4
* Includes R155 million of IT enablement impairments relating to financial years prior to and including
  June 2012.



Divisional performance

                                                                                                 Year
                                                             Six months ended 31                ended
Normalised PBT                                                    December               %    30 June
R million                                                      2013       2012      change       2013
Investment banking                                            2 953      2 381          24      5 613
- Global Markets                                              1 012        892          13      1 935
- IBD                                                         1 701      1 499          13      3 423
- Private Equity                                                444        229          94        690
- Other RMB                                                    (204)      (239)        (15)      (435)
Corporate banking                                               242        296**       (18)       537**
Operational performance*                                        242        203          19        444
Normalisation adj (IT enablement for Dec 2012 period)             -         93        (100)        93
Total RMB                                                     3 195      2 677          19      6 150
* Dec 2013 operational performance includes IT enablement spend of R73 million (Dec 2012: 
  R93 million; June 2013: R164 million).
** Includes a normalisation adjustment of R248 million for December 2012 which carries through to
   June 2013 for IT enablement spend of which R155 million relates to years prior to and including June
   2012.


RMB Corporate and Investment Banking (CIB) produced strong results for the six months to December 2013. Pre-tax profits increased 19% to
R3.2 billion and the ROE improved to 25.0%. This performance reflects the strength of the domestic franchise and momentum from the African
expansion strategy.


RMB's revenue mix is diverse and remains extremely solid; it has continued to focus on building scale in the Corporate Banking franchise,
generating growth from the rest of Africa, strengthening the balance sheet and consolidating market share in the more established business lines.


The Global Markets division delivered a robust performance for the first half of the year across all business lines, notwithstanding challenging market
conditions and macroeconomic pressures. Profits grew 13% to R1 billion, reflecting the strength of the domestic client franchise, a growing African
footprint and enhanced fee-generating capacity.
The Investment Banking Division (IBD) delivered strong results, increasing pre-tax profits 13% to R1.7 billion. The growth was, to an extent, balance
sheet led with core advances up approximately 18% as IBD benefited from continued infrastructure spend (particularly in the renewable energy
sector) and strong growth in African cross-border lending. Advances in the rest of Africa increased more than 100% to R25 billion (2012: 
R12 billion). Good growth was also generated from structuring fees.


Private Equity's profits also increased year-on-year and benefited from the diversity of its portfolio, reporting good equity-accounted earnings and
income from investment subsidiaries. While earnings from associates were strong, no material realisations were seen in the period. Unrealised profits
grew 78% from R1.66 billion to R2.96 billion. Corvest and Ventures continue to invest and the Capital Partners business experienced improved
earnings from associates.


RMB Resources' (included in other RMB) improved performance was driven by a modest recovery in equity prices during the first half of the year and
an increase in interest margin from the debt portfolio. Junior mining counters remain under pressure and new investing limits remain in place until
performance improves.


The operational performance of the Corporate Banking division was up 19% year-on-year, with total revenue increasing due to good growth in
advances and deposits. Investment in platforms remains a key focus.



WesBank


WesBank represents the Group's activities in asset-based finance in the retail, commercial and corporate segments of South Africa and asset-based
motor finance sector through MotoNovo Finance in the UK. Through the Direct Axis brand, WesBank also operates in the unsecured lending market in
South Africa. WesBank's leading position in its chosen markets is due to its long-standing alliances with leading motor manufacturers, suppliers and
dealer groups, and strong point-of-sale presence.



WesBank financial highlights

                                                                                                 Year
                                                             Six months ended                   ended
                                                               31 December               %    30 June
R million                                                      2013       2012      change       2013
Normalised earnings                                           1 406      1 389           1      2 834
Normalised profit before tax                                  2 022      1 968           3      3 983
Total assets                                                157 273    132 574          19    145 179
Total liabilities                                           155 079    129 026          20    140 814
NPLs (%)                                                       2.67       3.14                   2.76
Credit loss ratio (%)                                          1.25       1.12                   1.26
ROE (%)                                                        27.5       31.7                   32.6
ROA (%)                                                        1.92       2.18                   2.13
Cost-to-income ratio (%)                                       43.1       40.7                   41.2
Net interest margin (%)                                        5.10       5.27                   5.30


WesBank's performance was resilient given its sensitivity to the credit cycle. Despite higher credit and operating costs, strong new business
volumes continued and for the six months ended 31 December 2013, WesBank grew pre-tax profits 3% to R2 billion and delivered an ROE of
27.5% and ROA of 1.92%. This performance was underpinned by strict credit discipline and effective and efficient origination channels.


The table below shows the relative performance year-on-year of WesBank's activities.



Breakdown of profit contribution by activity

                                                                                                 Year
                                                             Six months ended                   ended
Normalised PBT                                                 31 December               %    30 June
R million                                                      2013       2012      change       2013
VAF
- Local retail                                                  932        972          (4)     1 889
- International (MotoNovo)                                      293        211          39        444
- Corporate and commercial                                      221        189          17        528
Personal loans                                                  576        596          (3)     1 122
Total WesBank                                                 2 022      1 968           3      3 983


Profit growth continued in the corporate and MotoNovo businesses, while the personal loans business was marginally down on the prior year.


New business continued to reflect a good risk profile across all portfolios, with systemic tightening in credit appetite for higher risk segments.
Production was up 14% year-on-year, although trends in new business growth in the local retail portfolios are slowing. From a divisional perspective,
motor, corporate, personal loans and MotoNovo origination volumes were up 7%, 24%, 19% and 31% (GBP), respectively. WesBank's rest of Africa
business grew 20% year-on-year; these figures are reported under FNB Africa.


Total advances increased 19% to R154.2 billion driven by all of the underlying portfolios, with the retail motor, personal loans, corporate and
commercial and MotoNovo businesses reflecting advances growth of 17%, 25%, 9% and 57%, respectively. In addition, the corporate division
increased the value of the full maintenance rental asset book to R1.6 billion.


Interest margins were maintained despite increased competition across all portfolios with origination well within agreed risk thresholds. As key
macro inputs indicate upside risk to impairment ratios, credit appetite continues to be critically and regularly assessed and performance closely
monitored.


NPLs continued to reduce (2.67% at December 2013 compared to 2.76% at June 2013 and 3.14% at December 2012) despite the high proportion of
restructured debt review accounts, which are still disclosed as non-performing regardless of repayment behaviour. These accounts are increasing as
a proportion of NPLs and in the period under review, represented 22% of NPLs, compared to 18% at June 2013.


NIR, including income from associates, increased 19% year-on-year, reflective of the growth in the advances book and in rental assets, offset by
continued pricing pressure on the auto card business.


Core operating costs increased 13%, however, total expenses grew 22% when including the impact of the increase in profit share payments to alliance
partners (which now total R247 million and are up 20% year-on-year), investment in platforms and strategic initiatives, and the increase in depreciation
of full maintenance rental assets.



Ashburton Investments


The Group's investment management franchise, Ashburton Investments, continues to execute on its organic strategy.


Since the launch in June 2013, assets under management have grown 10% to R111 billion. This was mainly driven by good growth in retail structured
products and both traditional single- managed and multi-manager funds. Profitability is tracking in line with expectations given the current level of
investment in people and platforms.


Ashburton Investments has launched the first phase of the roll-out of its investor platform. Branded FNB, and initially only for internal distribution
channels, this first phase includes retirement and investment products, RMB structured products and Ashburton and third-party funds.
As expected Ashburton Investments is benefiting from both the product generation capabilities of RMB and the distribution platforms of FNB and
RMB Private Bank.
Both traditional and alternative fund performance exceeded benchmarks during the period.


Financial resource management
The Group believes a strong balance sheet is key to growth, particularly when entering periods of uncertainty.



Asset quality


When assessing the underlying risk in the balance sheet from an economic perspective, the Group's asset profile is dominated by a balanced
advances portfolio, which constitutes 78% of total assets. In terms of credit quality, 90% of advances are rated B upper or better. Cash, cash
equivalents and liquid assets represent 15% of total assets, with only a small portion related to the investment and trading businesses.



Funding


FirstRand's funding profile continues to reflect the structural funding issues associated with the South African banking sector, however, the Group
has continued to reduce its reliance on institutional funding and has further improved the term profile of institutional funding from a weighted average
remaining term of 12 months in 2009 to 23 months at 31 December 2013.



Capital


FirstRand's capital management strategy is aligned to the Group's overall objective to deliver sustainable returns to shareholders within appropriate
levels of volatility. The Group's philosophy, given the uncertain macro environment, is to operate at the higher end of its targeted capital levels to
ensure balance sheet resilience. Current targeted ranges and ratios are summarised in the table below.


Capital ratios and targets

                                                                   CET1         Tier 1          Total

Regulatory minimum (%)*                                             4.5            6.0            9.5
Target (%)                                                   9.5 - 11.0           11.0    12.0 - 13.5
FirstRand actual (%)                                               13.7           14.8           16.2
FirstRand Bank** actual (%)                                        13.4           14.1           15.7
* The regulatory minimum excludes the bank-specific individual capital requirement.
** Reflects solo supervision, i.e. FRB excluding foreign branches.



Dividend strategy


When assessing the appropriate level of payout to shareholders, the Group considers the following:


- To ensure that the ROE remains within the long-term target range of 18% to 22%, FirstRand assesses the robustness of the ongoing capital
  generation of its business. The Group is currently of the view that its ROE is at a cyclical high and, therefore, the dividend cover needs to be
  sustainable on a risk view as well as a core view.


- The anticipated growth in risk weighted assets (RWA) given the operating environment and the overall organic growth plans of the operating
  franchises.


- The Group's objective to protect the R10 billion of capital currently allocated to its expansion strategy.


Following a comprehensive analysis of the above factors at the June 2013 year end, the Group reduced its full year dividend cover to 2.0x (2012:
2.2x). This cover has been maintained for the six months to 31 December 2013, which means that compared to the dividend declared at 31
December 2012 (when cover was 2.3x), the interim dividend for the current period increased 40%. This is significantly higher than growth in
normalised earnings.


Shareholders should note that the rate of growth in the dividend payout for the full financial year will be off the higher base recorded for the final
dividend of June 2013. The Group, therefore, expects growth in dividend for the full year to more closely track normalised earnings.


The appropriateness of the level of payout is re-evaluated on an annual basis.



Prospects


South Africa's dependence on foreign capital flows to fund the wide current account deficit continues to introduce uncertainty and vulnerability to the
macroeconomic outlook. This was illustrated by the recent rapid exchange rate depreciation and the South African Reserve Bank's (SARB) decision to
hike the repo rate by 50 bps in January 2014.


GDP growth has to date been supported by wage inflation, consumption and government spending and these trends are all slowing down.
Manufacturing, exports and investments will provide some underpin to growth, however, South Africa has now entered an interest rate hiking
cycle which will place further pressure on the South African consumer.


The Group believes that its strategy to grow customers, drive NIR and exercise discipline in its credit origination strategies in the retail market,
particularly over the past 18 months will place it in a strong position to weather what is expected to be a difficult domestic credit cycle.


The franchises are expected to continue to show good operational performances and expectations remain unchanged for the second half of the year.



Basis of presentation


FirstRand prepares its condensed consolidated interim financial results in accordance with:


-   recognition and measurement requirements of IFRS;
-   presentation and disclosure requirements of IAS 34;
-   SAICA Financial Reporting Guide as issued by the Accounting Practices Committee;
-   Financial Reporting Pronouncements as issued by Financial Reporting Standards Council; and
-   the requirements of the Companies Act 71 of 2008 applicable to summary financial statements.


The results are prepared in accordance with the going concern principle under the historical cost basis as modified by the fair value accounting of
certain assets and liabilities where required or permitted by IFRS.
The accounting policies applied in the preparation of the condensed interim consolidated financial statements are in terms of IFRS and are consistent
with those accounting policies applied in the preparation of the previous consolidated annual financial statements, except for the adoption of new
and revised IFRS requirements and a voluntary change in the Group's presentation of loans to associates. The details of these are set out below.



New and revised IFRS requirements


The following new and revised IFRS requirements were adopted by the Group for the first time for the six months ended 31 December 2013.
Unless stated otherwise, these requirements are applied retrospectively and the previously reported financial results have been restated.


- IFRS 10, IFRS 11, IFRS 12, IAS 27R and IAS 28R. These standards prescribe new and amended requirements for assessing whether control
  or joint control exists. The disclosure requirements for all interests in other entities, including unconsolidated structured entities, are now
  contained in a single standard. The impact of these new standards on the Group's previously reported financial position and performance is presented
  later in this announcement.


- IFRS 13 establishes a single framework for measuring and disclosing fair value. The standard requires prospective implementation and does not
  require comparative information to be presented for disclosures in the year of adoption. The standard, therefore, has had no impact on amounts
  previously reported. The additional disclosures are provided later in this announcement.


- Amendments to IFRS 7 require disclosures about the effect or potential effects of netting arrangements on the Group's financial position. The
  amendment does not impact recognition or measurement of amounts but requires additional disclosure in respect of financial instruments that are
  subject to an enforceable master netting arrangement or similar agreement. These additional disclosures, along with the comparative
  information, are presented later in this announcement.


- Amendments to IAS 19 have resulted in changes to the recognition, measurement and presentation of amounts in respect of defined benefit
  plans. The impact of these amendments on the Group's previously reported financial position and performance is presented later in this
  announcement.


All comparative information impacted by the new accounting policies has been restated.



Voluntary change in presentation


The Group has changed the manner in which it presents certain loans to associates and joint ventures. The change in presentation has had no impact
on the net asset value of the Group and only affects the classification of items on the statement of financial position. The impact on previously reported
results is set out further on in this announcement.


The condensed consolidated interim results for the six months ended 31 December 2013 have not been audited or independently reviewed by the
Group's external auditors.


The Group believes normalised earnings more accurately reflect operational performance. Headline earnings are adjusted to take into account
non-operational items and accounting anomalies. Details of the nature of these adjustments and the reasons therefore can be found on 
www.firstrand.co.za.


FirstRand's board of directors take full responsibility for the preparation of this anouncement.



Events after the reporting period


The directors are not aware of any material events, as defined in IAS 10 Events After the Reporting Period, occurring between 31 December
2013 and the date of authorisation of the results announcement.



Board changes


Mr Johan Petrus Burger was appointed deputy chief executive officer on 1 October 2013. He relinquished his position as financial director on 
1 January 2014.


Mr Hetash Surendrakumar (Harry) Kellan was appointed to the board as executive financial director on 1 January 2014.


Mr Bruce William Unser, having reached retirement age, retired as company secretary on 5 January 2014.


Mrs Carnita Low was appointed as company secretary on 6 January 2014.



Cash dividend declarations


Ordinary shares


The directors have declared a gross cash dividend totalling 77.0 cents per ordinary share out of income reserves for the six months ended 
31 December 2013.



Ordinary dividends

                                                             Six months ended
                                                               31 December
Cents per share                                                2013        2012
Interim (declared 3 March 2014)                                77.0        55.0


The salient dates for the interim dividend are as follows:
Last day to trade cum-dividend               Thursday 20 March 2014
Shares commence trading ex-dividend            Monday 24 March 2014
Record date                                    Friday 28 March 2014
Payment date                                   Monday 31 March 2014


Share certificates may not be dematerialised or rematerialised between Monday 24 March 2014 and Friday 28 March 2014, both days
inclusive.


The interim dividend of 77.0 cents per share carries no STC credits. Shareholders who are exempt from Dividend Withholding Tax (DWT) will receive
the full 77.0 cents per share. For shareholders who are subject to DWT, tax will be calculated at 15% (or such lower rate if a double taxation agreement
applies for foreign shareholders).


For South African shareholders who are subject to DWT, the net interim dividend after deducting 15% tax will be 65.45000 cents per share.


The issued share capital on the declaration date was 5 637 941 689 ordinary shares and 45 000 000 variable rate NCNR B preference shares.


FirstRand's income tax reference number is 9150/201/71/4.



B preference shares


Dividends on the B preference shares are calculated at a rate of 75.56% of the prime lending rate of FNB, a division of FirstRand Bank Limited.



Dividends declared and paid

                                                          B preference shares
Cents per share                                              2013         2012
Period:
28 February 2012 - 27 August   2012                                      333.1
28 August 2012 - 25 February   2013                                      320.3
26 February 2013 - 26 August   2013                         320.3
27 August 2013 - 24 February   2014                         320.3


LL Dippenaar       SE Nxasana         C Low
Chairman           CEO                Company secretary


3 March 2014



CONDENSED CONSOLIDATED INCOME STATEMENT - IFRS

                                                                                    Six months ended                            Year ended
                                                                                      31 December                                  30 June
R million                                                                             2013           2012*       % change             2013*
Net interest income before impairment of advances                                   14 673         12 408              18           24 769
Impairment of advances                                                              (2 294)        (2 250)              2           (4 807)
Net interest income after impairment of advances                                    12 379         10 158              22           19 962
Non-interest income                                                                 17 192         15 237              13           30 734
Income from operations                                                              29 571         25 395              16           50 696
Operating expenses                                                                 (17 047)       (15 353)             11          (30 804)
Net income from operations                                                          12 524         10 042              25           19 892
Share of profit of associates and joint ventures after tax                             360            293              23              824
Income before tax                                                                   12 884         10 335              25           20 716
Indirect tax                                                                          (465)          (462)              1             (645)
Profit before tax                                                                   12 419          9 873              26           20 071
Income tax expense                                                                  (2 989)        (2 255)             33           (4 117)
Profit for the period                                                                9 430          7 618              24           15 954
Attributable to:
Ordinary equityholders                                                               8 839          7 105              24           14 785
NCNR preference shareholders                                                           144            150              (4)             297
Equityholders of the Group                                                           8 983          7 255              24           15 082
Non-controlling interests                                                              447            363              23              872
Profit for the period                                                                9 430          7 618              24           15 954
Earnings per share (cents)
- Basic                                                                              161.1          129.6              24            269.7
- Diluted                                                                            159.6          128.1              25            266.4
Headline earnings per share (cents)
- Basic                                                                              160.5          132.8              21            279.6
- Diluted                                                                            159.1          131.2              21            276.2
* Refer to restatement of prior year numbers later in this announcement.



CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - IFRS

                                                                                    Six months ended                            Year ended
                                                                                      31 December                                  30 June
R million                                                                             2013           2012*       % change             2013*
Profit for the period                                                                9 430          7 618              24           15 954
Items that may subsequently be reclassified to profit or loss
Cash flow hedges                                                                        70            (89)          (>100)             853
Gains/(losses) arising during the period                                              (265)          (453)            (42)             417
Reclassification adjustments for amounts included in profit or loss                    364            329              11              768
Deferred income tax                                                                    (29)            35           (>100)            (332)
Available-for-sale financial assets                                                    (40)           431           (>100)            (104)
(Losses)/gains arising during the period                                               (19)           565           (>100)            (117)
Reclassification adjustments for amounts included in profit or loss                    (66)            (1)           >100              (33)
Deferred income tax                                                                     45           (133)          (>100)              46
Exchange differences on translating foreign operations                                 396            315              26              998
Gains arising during the period                                                        396            315              26              998
Share of other comprehensive income of associates after tax and non-controlling
interests                                                                                3             24             (88)             129
Items that may not subsequently be reclassified to profit or loss
Actuarial losses on defined benefit post-employment plans                              (20)           (22)             (9)              22
(Losses)/gains arising during the period                                               (25)           (32)            (22)              30
Deferred income tax                                                                      5             10             (50)              (8)
Other comprehensive income for the period                                              409            659             (38)           1 898
Total comprehensive income for the period                                            9 839          8 277              19           17 852
Attributable to:
Ordinary equityholders                                                               9 225          7 748              19           16 625
NCNR preference shareholders                                                           144            150              (4)             297
Equityholders of the Group                                                           9 369          7 898              19           16 922
Non-controlling interests                                                              470            379              24              930
Total comprehensive income for the period                                            9 839          8 277              19           17 852
* Refer to restatement of prior year numbers later in this announcement.



CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION - IFRS

                                                                                  As at 31 December         As at 30 June
R million                                                                             2013            2012*             2013*
ASSETS
Cash and cash equivalents                                                           49 546          51 570            48 565
Derivative financial instruments                                                    44 221          56 251            52 277
Commodities                                                                          6 894           8 003             6 016
Accounts receivable                                                                  7 349           6 755             7 804
Current tax asset                                                                      618             602               266
Advances                                                                           635 443         565 449           601 065
Investment securities and other investments                                        127 281         110 873           128 388
Investments in associates and joint ventures                                         6 293           5 252             5 396
Property and equipment                                                              14 300          12 520            13 453
Intangible assets                                                                    1 181           1 557             1 169
Reinsurance assets                                                                     396             846               394
Post-employment benefit asset                                                            3               -                 -
Investment properties                                                                  458             452               459
Deferred income tax asset                                                              432             355               460
Non-current assets and disposal groups held for sale                                    16             505                20
Total assets                                                                       894 431         820 990           865 732
EQUITY AND LIABILITIES
Liabilities
Short trading positions                                                              5 532           9 219             2 991
Derivative financial instruments                                                    48 836          58 284            53 008
Creditors and accruals                                                              10 256           8 733            11 079
Current tax liability                                                                  438             235               513
Deposits                                                                           727 032         651 375           697 035
Provisions                                                                             655             584               600
Employee liabilities                                                                 4 998           4 637             5 857
Other liabilities                                                                    4 591           4 822             6 101
Policyholder liabilities under insurance contracts                                     662           1 107               646
Deferred income tax liability                                                        1 185           1 180               753
Tier 2 liabilities                                                                   8 127           8 120             8 116
Liabilities directly associated with disposal groups held for sale                       -              83                 -
Total liabilities                                                                  812 312         748 379           786 699
Equity
Ordinary shares                                                                         55              55                55
Share premium                                                                        5 571           5 601             5 609
Reserves                                                                            69 115          59 840            65 954
Capital and reserves attributable to ordinary equityholders                         74 741          65 496            71 618
NCNR preference shareholders                                                         4 519           4 519             4 519
Capital and reserves attributable to equityholders of the Group                     79 260          70 015            76 137
Non-controlling interests                                                            2 859           2 596             2 896
Total equity                                                                        82 119          72 611            79 033
Total equity and liabilities                                                       894 431         820 990           865 732
 * Refer to restatement of prior year numbers later in this announcement.



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - IFRS

                                                                                  Six months ended                Year ended
                                                                                  31 December                        30 June
R million                                                                             2013            2012              2013
Net cash flows from operating activities                                            11 334          11 421            24 298
Net cash utilised from operations                                                   (2 888)           8014            (4 241)
Taxation paid                                                                       (3 273)          (3391)           (5 642)
Net cash inflow from operating activities                                            5 173          16 044            14 415
Net cash outflow from investing activities                                          (3 335)          (1347)           (3 803)
Net cash inflow from financing activities                                           (1 626)           (474)              325
Net increase in cash and cash equivalents from operations                              212          14 223            10 937
Cash and cash equivalents at the beginning of the year                              48 565          37 317            37 317
Cash and cash equivalents at the end of the period                                  48 777          51 540            48 254
Cash and cash equivalents acquired*                                                      -               -                 2
Cash and cash equivalents disposed of*                                                 326              (2)                -
Effect of exchange rate changes on cash and cash equivalents                           443              32               309
Cash and cash equivalents at the end of the period                                  49 546          51 570            48 565
Mandatory reserve balances included above**                                         17 005          14 991            16 160
* Cash and cash equivalents acquired and disposed of relate to cash balances held by subsidiaries acquired and disposed of during the period.
** Banks are required to deposit a minimum average balance calculated monthly with the central bank, which is not available for use in the Group's day-to-day
   operations. The deposit bears no or low interest. Money at short notice constitutes amounts withdrawable in 32 days or less.



CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - IFRS
for the six months ended 31 December

                                                                              Ordinary share capital and ordinary equityholders' funds
                                                                                                                                                                                                             Non-
                                                                            Defined                                                                                                        Reserves    cumulative
                                                               Share        benefit                                                     Foreign                                        attributable          non-
                                                             capital          post-   Cash flow     Share-based     Available-         currency                                         to ordinary    redeemable           Non-
                                       Share      Share    and share     employment       hedge         payment       for-sale      translation            Other          Retained          equity-    preference    controlling       Total
R million                            capital    premium      premium        reserve     reserve         reserve        reserve          reserve         reserves          earnings          holders        shares      interests      equity
Balance as reported at 30 June 2012       55      5 216        5 271              -        (753)          3 247            626            1 052              (61)           53 139           57 250         4 519          2 767      69 807
Prior period restatements                  -        216          216           (591)          -               -             (6)             (10)             (20)             (411)          (1 038)            -            (66)       (888)
Restated balance as at 1 July 2012        55      5 432        5 487           (591)       (753)          3 247            620            1 042              (81)           52 728           56 212         4 519          2 701      68 919
Issue of share capital                     -          -            -              -           -               -              -                -                -                 -                -             -             (4)         (4)
Movement in other reserves                 -          -            -              -           -            (262)             -                -              (40)                5             (297)            -             (7)       (304)
Ordinary dividends                         -          -            -              -           -               -              -                -                -            (3 193)          (3 193)            -           (412)     (3 605)
Preference dividends                       -          -            -              -           -               -              -                -                -                 -                -          (150)             -        (150)
Transfer from/(to) reserves                -          -            -              -           -               -              -                -               15               (15)               -             -              -           -
Changes in ownership interest of
subsidiaries                               -          -            -              -           -               -              -                -                -                22               22             -            (61)        (39)
Consolidation of treasury shares           -        169          169              -           -               -              -                -                -                50               50             -              -         219
Total comprehensive income for the
period                                     -          -            -            (22)        (89)              -            428              306               20             7 105            7 748           150            379       8 277
Vesting of share-based payment
reserve                                    -          -            -              -           -             (26)             -                -                -              (676)            (702)            -              -        (702)
Balance as at 31 December 2012            55      5 601        5 656           (613)       (842)          2 959          1 048            1 348              (86)           56 026           59 840         4 519          2 596      72 611
Balance as reported at 30 June 2013       55      5 397        5 452              -         100           3 173            539            1 995              140            60 786           66 733         4 519          2 924      79 628
Prior period restatements                  -        212          212           (569)          -               -            (21)               4              (14)             (179)            (779)            -            (28)       (595)
Balance as at 1 July 2013                 55      5 609        5 664           (569)        100           3 173            518            1 999              126            60 607           65 954         4 519          2 896      79 033
Issue of share capital                     -          -            -              -           -               -              -                -                -                 -                -             -              -           -
Movement in other reserves                 -          -            -              -           -            (499)             -                -               (9)              (27)            (535)            -            (28)       (563)
Ordinary dividends                         -          -            -              -           -               -              -                -                -            (4 444)          (4 444)            -           (360)     (4 804)
Preference dividends                       -          -            -              -           -               -              -                -                -                 -                -          (144)             -        (144)
Transfer from/(to) reserves                -          -            -              -           -               -              -                -               11               (11)               -             -              -           -
Changes in ownership interest of
subsidiaries                               -          -            -              -           -               -              -                -                -              (234)            (234)            -           (119)       (353)
Consolidation of treasury shares           -        (38)         (38)             -           -               -              -                -                -                 5                5             -              -         (33)
Total comprehensive income for the
period                                     -          -            -            (20)         70               -            (40)             372                4             8 839            9 225           144            470       9 839
Vesting of share-based payment
reserve                                    -          -            -              -           -             (15)             -                -                -              (841)            (856)            -              -        (856)
Balance as at 31 December 2013            55      5 571        5 626           (589)        170           2 659            478            2 371              132            63 894           69 115         4 519          2 859      82 119
FAIR VALUE MEASUREMENTS


Valuation methodology


In terms of IFRS, the Group is required to or elects to measure certain assets and liabilities at fair value. The Group has established control
frameworks and processes at a franchise level to independently validate its valuation techniques and inputs used to determine its fair value
measurements. At a franchise level, technical teams are responsible for the selection, implementation and any changes to the valuation techniques
used to determine fair value measurements. Valuation committees comprising representatives from key management have been established in
each franchise and at an overall Group level, and are responsible for overseeing the valuation control process and considering the appropriateness of
the valuation techniques applied in fair value measurement. The valuation models and methodologies are subject to independent review and
approval at a franchise level by the required technical teams, valuation committees, relevant risk committees and external auditors annually or more
frequently if considered appropriate.


Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date i.e. an exit price. Fair value is therefore a market-based measurement and when measuring fair value the Group
uses the assumptions that market participants would use when pricing an asset or liability under current market conditions, including assumptions
about risk. When determining fair value it is presumed that the entity is a going concern and the fair value is therefore not an amount that represents a
forced transaction, involuntary liquidation or a distressed sale.



Financial instruments


When determining the fair value of a financial instrument, where the financial instrument has a bid or ask price (for example in a dealer market), the
Group uses the price within the bid-ask spread that is most representative of fair value in the circumstances. Although not a requirement, the Group
uses the bid price for financial assets or the ask/offer price for financial liabilities where this best represents fair value.


When determining the fair value of a financial liability or the Group's own equity instruments the quoted price for the transfer of an identical or
similar liability or own equity instrument is used. Where this is not available and an identical item is held by another party as an asset, the fair value of
the liability or own equity instrument is measured using the quoted price in an active market of the identical item if that price is available, or using
observable inputs (such as the quoted price in an inactive market for the identical item) or using another valuation technique.


Where the Group has any financial liability with a demand feature, such as demand deposits, the fair value is not less than the amount payable on
demand, discounted from the first date that the amount could be required to be paid where the time value of money is significant.



Fair value hierarchy and measurements


The Group classifies assets and liabilities measured at fair value using a fair value hierarchy that reflects whether observable or unobservable inputs are
used in determining the fair value of the item. The valuation techniques employed by the Group include, inter alia, quoted prices for similar assets or
liabilities in an active market, quoted prices for the same asset or liability in an inactive market, adjusted prices from recent arm's length
transactions, option-pricing models and discounted cash flow techniques.


Where a valuation model is applied and the Group cannot mark-to-market, it applies a mark-to-model approach, subject to prudent valuation
adjustments. Mark-to-model is defined as any valuation which has to be benchmarked, extrapolated or otherwise calculated from a market input.
When applying mark-to-model, an extra degree of conservatism is applied. The Group will consider the following in assessing whether a mark-to-
model valuation is appropriate:


- as far as possible, market inputs are sourced in line with market prices;
- generally accepted valuation methodologies are consistently used for particular products unless deemed inappropriate by the relevant governance
  forums;
- where a model has been developed in-house, it is based on appropriate assumptions, which have been assessed and challenged by suitably
  qualified parties independent of the development process;
- formal change control procedures are in place;
- awareness of the weaknesses of the models used and appropriate reflection thereof in the valuation output;
- the model is subject to periodic review to determine the accuracy of its performance; and
- valuation adjustments are only made when appropriate, for example, to cover the uncertainty of the model valuation.



Level 1


Fair value is determined using unadjusted quoted prices in active markets for identical assets or liabilities where this is readily available and the price
represents actual and regularly occurring market transactions. An active market is one in which transactions occur with sufficient volume and
frequency to provide pricing information on an on-going basis. This category includes listed bonds and equity, exchange-traded derivatives,
exchange-traded commodities and short trading positions.


Level 2


Fair value is determined using inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly such as quoted
prices for similar items in an active market or for an identical item in an inactive market, or valuation models using observable inputs or inputs derived
from observable market data. This category includes loans and advances to customers, equities listed in an inactive market, certain debt instruments,
private equity investments, non-recourse investments and deposits, over the counter derivatives, deposits, other liabilities and Tier 2 liabilities.



Level 3


Fair value is determined using a valuation technique and significant inputs that are not based on observable market data (i.e. unobservable inputs) such
as an entity's own assumptions about what market participants would assume in pricing assets and liabilities. This category includes certain loans and
advances to customers, certain over the counter derivatives such as equity options, investments in certain debt instruments, private equity investments
and certain deposits such as credit linked notes.



Fair value hierarchy and measurements


The table below sets out the valuation techniques applied by the Group for fair value measurements of financial assets and liabilities categorised as
level 2 and level 3 in the fair value hierarchy:

                                                                                                                                                     Significant
                     Fair value                                                                                                                      unobservable
                     hierarchy       Valuation        Description of valuation technique and main                                                    inputs of level 3
Instrument           level           technique        assumptions                                               Observable inputs                    items
Derivative financial instruments
Option contracts     Level 2 and     Option pricing   The Black Scholes model is used.                          Strike price of the option, market   Volatilities
                     level 3         model                                                                      related discount rate, forward
                                                                                                                rate, and cap and floor volatility
Futures contracts    Level 2         Discounted       The future cash flows are discounted using a              Market interest rates and curves     Not applicable
                                     cash flows       market-related interest rate. Projected cash flows
                                                      are obtained by subtracting the strike price of the
                                                      forward contract from the market projected
                                                      forward value.
Swaps                Level 2         Discounted       The future cash flows are projected using a               Market interest rates and curves     Not applicable
                                     cash flows       forward curve and then discounted using a
                                                      market-related discount curve over the contractual
                                                      period. The reset date of each swaplet is
                                                      determined in terms of legal documents pertaining
                                                      to the swap.
Forward rate         Level 2         Discounted       The future cash flows are projected using a               Market interest rates and curves     Not applicable
agreements                           cash flows       forward curve and then discounted using a
                                                      market related discount curve over the contractual
                                                      period. The reset date is determined in terms of
                                                      legal documents.
Forward contracts    Level 2         Discounted       The future cash flows are projected using a               Market interest rates and curves     Not applicable
                                     cash flows       forward curve and then discounted using a
                                                      market-related discount curve over the contractual
                                                      period. Projected cash flows are obtained by
                                                      subtracting the strike price of the forward contract
                                                      from the market projected forward value.
Credit derivatives   Level 2 and     Discounted       The future cash flows are discounted using a              Market interest rates and curves     Credit inputs
                     level 3         cash flows       market-related interest rate. Where prices are
                                                      obtainable from the market, individual credit
                                                      spreads are used.
Commodity            Level 2         Discounted       Commodity linked instruments are measured by              Futures prices                       Not applicable
derivatives                          cash flows       taking into account the price, the location
                                                      differential, grade differential, silo differential and
                                                      the discount factor of the most liquidly traded
                                                      futures linked to the commodity.
Derivative financial instruments
                                                                                                                                                     Significant
                     Fair value                                                                                                                      unobservable
                     hierarchy       Valuation         Description of valuation technique and main                                                   inputs of level 3
Instrument           level           technique         assumptions                                              Observable inputs                    items
Equity derivatives   Level 2 and     Industry          The models calculate fair value based on input           Market interest rates and curves     Volatilities
                     level 3         standard          parameters such as stock prices, dividends,
                                     models            volatilities, interest rates, equity repo curves and,
                                                       for multi-asset products, correlations.
                                                       Unobservable model inputs are determined by
                                                       reference to liquid market instruments and
                                                       applying extrapolation techniques to match the
                                                       appropriate risk profile.
Loans and advances to customers
Investment           Level 3         Discounted        The future cash flows are discounted using a             Market interest rates and curves     Credit inputs
banking book*                        cash flows        market related interest rate. To calculate the fair
                                                       value of credit the Group uses a valuation
                                                       methodology based on the credit spread matrix,
                                                       which considers loss given default, tenor and the
                                                       internal credit committee rating criteria. The fair
                                                       value measurement includes the original credit
                                                       spread and is repriced when there is a change in
                                                       rating of the counterparty. A decline in credit
                                                       rating would result in an increase in the spread
                                                       above the base rate for discounting purposes and
                                                       consequently a reduction of the fair value of the
                                                       advance.
Other loans and      Level 2 and     Discounted        The future cash flows are discounted using a             Market interest rates and curves     Credit inputs
advances             level 3         cash flows        market related interest rate adjusted for credit
                                                       inputs, over the contractual period.
Investment securities and other investments
Equities/bonds       Level 2         Discounted        For listed equities and bonds, the listed price is       Market interest rates and curves     Not applicable
listed in an                         cash flows        used where the market is active (i.e. level 1).
inactive market                                        However if the market is not active and the listed
                                                       price is not representative of fair value, these are
                                                       classified as level 2 and a valuation technique is
                                                       used, for example the discounted cash flow is
                                                       used for listed bonds. This will be based on risk
                                                       parameters of comparable securities and the
                                                       potential pricing difference in spread and/or price
                                                       terms with the traded comparable is considered.
                                                       The future cash flows are discounted using a
                                                       market-related interest rate.
 Unlisted bonds      Level 2 and     Discounted        Unlisted bonds are valued similarly to advances          Market interest rates and curves     Credit inputs
                     level 3         cash flows        measured at fair value. The future cash flows are
                                                       discounted using a market related interest rate
                                                       adjusted for credit inputs, over the contractual
                                                       period.
* The Group has elected to designate the investment banking book of advances at fair value through profit or loss. Credit risk is not observable and has a
significant impact on the fair value measurement of these advances and as such, these advances are classified as level 3 on the fair value hierarchy.
 Investment securities and other investments
 Unlisted equities   Level 2 and     Price earnings    For unlisted equities, the earnings included in the      Market transactions                  Growth rates and
                     level 3         (P/E) model       model are derived from a combination of historical                                            P/E ratios
                                                       and budgeted earnings depending on the specific
                                                       circumstances of the entity whose equity is being
                                                       valued. The P/E multiple is derived from current
                                                       market observations taking into account an
                                                       appropriate discount for unlisted companies. The
                                                       valuation of these instruments may be
                                                       corroborated by a discounted cash flow valuation
                                                       or by the observation of other market transactions
                                                       that have taken place.
 Negotiable          Level 2         Discounted        Future cash flows are discounted using a                 Market interest rates and curves     Not applicable
 certificates of                     cash flows        market-related interest rate. Inputs to these
 deposit                                               models include information that is consistent with
                                                       similar market quoted instruments, where
                                                       available.
 Treasury bills      Level 2         BESA bond         The BESA bond pricing model uses the BESA                Market interest rates and curves     Not applicable
                                     pricing model     mark-to-market bond yield.
                                                                                                                                                     Significant
                     Fair value                                                                                                                      unobservable
                     hierarchy       Valuation         Description of valuation technique and main                                                   inputs of level 3
Instrument           level           technique         assumptions                                              Observable inputs                    items
Non-recourse         Level 2         Discounted        Future cash flows are discounted using a discount        Market interest rates and curves     Not applicable
investments                          cash flows        rate which is determined as a base rate plus a
                                                       spread. The base rate is determined by the legal
                                                       agreements as either a bond or swap curve. The
                                                       spread approximates the level of risk attached to
                                                       the cash flows. When there is a change in the
                                                       base rate in the market, the valuation is adjusted
                                                       accordingly. The valuation model is calibrated to
                                                       reflect transaction price at initial recognition.
Deposits
Call and non-term Level 2            None - the        The undiscounted amount of the deposit is the            None - the undiscounted amount       Not applicable
deposits                             undiscounted      fair value due to the short term nature of the           approximates fair value and no
                                     amount is used    instruments. These deposits are financial liabilities    valuation is performed
                                                       with a demand feature and the fair value is not
                                                       less than the amount payable on demand i.e. the
                                                       undiscounted amount of the deposit. 
Non-recourse         Level 2         Discounted        Fair value for interest rate and foreign exchange        Market interest rates and foreign    Not applicable
deposits                             cash flows        risk with no valuation adjustment for own credit         exchange rates, and credit inputs
                                                       risk. Valuation adjustments are affected for
                                                       changes in the applicable credit ratings of the
                                                       assets.
Deposits
Deposits that        Level 3         Discounted        These deposits represent the collateral leg of           Market interest rates and curves     Credit inputs on
represent                            cash flows        credit linked notes. The forward curve adjusted for                                           related advance
collateral on credit                                   liquidity premiums and business unit margins. The
linked notes                                           valuation methodology does not take early
                                                       withdrawals and other behavioural aspects into
                                                       account.
Other deposits       Level 2 and     Discounted        The forward curve adjusted for liquidity premiums        Market interest rates and curves     Credit inputs
                     level 3         cash flows        and business unit margins. The valuation
                                                       methodology does not take early withdrawals and
                                                       other behavioural aspects into account.
Other liabilities    Level 2         Discounted        Future cash flows are discounted using a                 Market interest rates and curves     Not applicable
and Tier 2                           cash flows        market-related interest rate.
liabilities
Financial assets     Level 2 and     Discounted        Future cash flows are discounted using a                 Market interest rates and curves     Credit inputs
and liabilities not  level 3         cash flows        market-related interest rate and curves adjusted
measured at fair                                       for credit inputs.
value but for
which fair value is
disclosed


During the current reporting period there were no changes in the valuation techniques used by the Group.



The following table presents the fair value measurements and fair value hierarchy of financial assets and liabilities of the Group recognised at fair value:

                                                                                                                       As at 31 December 2013
                                                                                                                                                               Total
R million                                                                                              Level 1           Level 2           Level 3        fair value
Assets
Derivative financial instruments                                                                             8            44 079               134            44 221
Advances*                                                                                                    -            34 649           129 686           164 335
Investment securities and other investments                                                             60 162            41 555             5 020           106 737
Non-recourse investments                                                                                     -            19 696                 -            19 696
Total financial assets measured at fair value                                                           60 170           139 979           134 840           334 989
Liabilities
Short trading positions                                                                                  5 532                 -                 -             5 532
Derivative financial instruments                                                                            24            48 801                11            48 836
Deposits                                                                                                     6            85 342             1 017            86 365
Non-recourse deposits                                                                                        -            19 696                 -            19 696
Other liabilities                                                                                            -               171                 -               171
Tier 2 liabilities                                                                                           -             1 041                 -             1 041
Total financial liabilities measured at fair value                                                       5 562           155 051             1 028           161 641
* Although the fair value of credit is not significant year-on-year it may become significant in future. For this reason, together with the fact that the majority of
  South African counterparties do not have actively traded or observable credit spreads, the Group has classified loans and advances to customers in level 3 of the
  fair value hierarchy. In the event that credit spreads are observable for a counterparty, loans and advances to customers are classified as level 2 of the fair value
  hierarchy.


There were no transfers of financial instruments between level 1 and level 2 during the current reporting period.



Additional disclosures for Level 3 financial instruments


Changes in level 3 financial instruments


The following tables show a reconciliation of the opening and closing balances for financial assets and liabilities classified as level 3 in terms of the fair
value hierarchy.

                                                                                           As at 31 December 2013
                                                                               Gains/
                                                                               losses         Pur-
                                                                Gains/         recog-      chases,
                                                                losses       nised in       sales,         Acqui-
                                             Fair value         recog-          other       issues       sitions/                                Exchange  Fair value
                                                     on          nised        compre-          and      disposals     Transfers     Transfer         rate          on
                                                30 June      in profit        hensive      settle-        of sub-          into       out of      differ-      31 Dec
R million                                          2013        or loss         income        ments      sidiaries       level 3      level 3        ences        2013
Assets
Derivative financial instruments                    110             20              -           (4)             -             8            -            -         134
Advances                                        116 749          1 818              -       10 708              -             -            -          411     129 686
Investment securities and other
investments                                       5 330             70             54         (433)             3             -          (14)          10       5 020
Total financial assets measured at fair
value in level 3                                122 189          1 908             54       10 271              3             8          (14)         421     134 840
Liabilities
Derivative financial instruments                      -              1              -            -              -            10            -            -          11
Deposits                                          1 517            196              -         (727)             -            19            -           12       1 017
Total financial liabilities measured at fair
value in level 3                                  1 517            197              -         (727)             -            29            -           12       1 028
Note: Decreases in the value of level 3 assets and liabilities are indicated with brackets. Decreases in the value of assets may be as a result of losses, sales and
settlements or the disposal of subsidiaries. Decreases in the value of liabilities may be as a result of gains, settlements or the disposal of subsidiaries.


During the current reporting period derivative financial instruments and deposits to the value of R37 million were transferred out of level 2 into level 3.
This transfer was as a result of certain unobservable inputs becoming significant to the calculation of fair value in current reporting periods. Investment
securities to the value of R14 million were transferred out of level 3 and into level 1. The transfer into level 1 was as a result of these investment
securities becoming listed on an exchange in an active market during the current period.



Unrealised gains or losses on level 3 financial instruments


The Group classifies financial assets or liabilities in level 3 of the fair value hierarchy when the significant inputs into the valuation model are not
observable. In addition the valuation model for level 3 financial assets or liabilities typically also relies on a number of inputs that are readily observable
either directly or indirectly. Thus, the gains and losses presented below include changes in the fair value related to both observable and unobservable
inputs.


The table below presents the total gains/losses relating to fair value remeasurement of financial assets and liabilities classified in level 3 that are still held
at reporting date. With the exception of interest on funding instruments and available-for-sale financial assets, all of the gains or losses are recognised
in non-interest income.

                                                                                                                        As at 31 December 2013
                                                                                                                                  Gains/losses
                                                                                                            Gains/losses         recognised in
                                                                                                           recognised in         other compre-
                                                                                                              the income               hensive                     Total
R million                                                                                                      statement                income              gains/losses
Assets  
Derivative financial instruments                                                                                      25                     -                        25
Advances*                                                                                                          1 320                     -                     1 320
Investment securities and other investments                                                                          131                    16                       147
Total                                                                                                              1 476                    16                     1 492
Liabilities
Derivative financial instruments                                                                                      10                     -                        10
Deposits                                                                                                             157                     -                       157
Total                                                                                                                167                     -                       167
* Amount mainly comprises of accrued interest on the fair value loans and advances and movements in interest rates that have been hedged.
Note: Decreases in the value of level 3 assets and liabilities are indicated with brackets. Decreases in the value of assets may be as a result of losses
recognised in profit or loss and other comprehensive income. Decreases in the value of liabilities may be as a result of gains recognised in profit or loss.



Effect of changes in significant unobservable assumptions of level 3 financial instruments to reasonably possible alternatives
As described, the fair value of financial assets and liabilities that are classified in level 3 of the fair value hierarchy is determined using valuation
techniques that make use of significant inputs that are not based on observable market data. These fair values could be sensitive to changes in the
assumptions used to derive the inputs. The table below illustrates the sensitivity of the significant inputs when they are changed to reasonably possible
alternative inputs:

                                                                                                As at 31 December 2013
                                                                                                                                            Reasonably possible
                                                                                                                                             alternative fair value
                                                                                                                                               Using            Using
                                                                                                                                                more             more
                                                                                      Reasonably                                            positive         negative
                                                   Significant                        possible changes                           Fair        assump-          assump-
R million                                          unobservable inputs                to significant unobservable inputs        value          tions            tions
Assets
Derivative financial instruments                   Volatilities                       Volatilities are increased and              134            190              113
                                                                                      decreased by 10%
Advances                                           Credit                             Credit migration matrix*                129 686        131 127          127 820
Investment securities and other investments        Growth rates and P/E ratios of     Unobservable inputs are                   5 020          5 572            4 394
                                                   unlisted investments               increased and decreased by 10%
Total financial assets measured at fair value in                                                                              134 840        136 889          132 327
level 3
Liabilities
Derivative financial instruments                   Volatilities                       Volatilities are increased and               11             11               11
                                                                                      decreased by 10%
Deposits                                           Credit risk of the cash collateral Credit migration matrix**                 1 017            916            1 117
                                                   leg of credit linked notes
Total financial liabilities measured at fair value                                                                              1 028            927            1 128
in level 3
* The credit migration matrix is used as part of the Group's credit risk management process for advances measured at fair value through profit or loss. The
  matrix is a simulation model that contains a matrix of probabilities for downgrading or upgrading to another rating bucket. The migration matrix is based on
  actual observed rating migrations from S&P over the long term and is based on the fair value in the 75th percentile.
** The deposits included in level 3 of the hierarchy represent the collateral leg of credit linked notes. The most significant unobservable input in determining fair
   value of the credit linked notes is the credit risk component. The sensitivity to credit risk has been assessed in the same way as for advances using the credit
   migration matrix with the deposit representing the cash collateral component thereof.



Other fair value measurements


The following represents the fair values of financial instruments not carried at fair value on the statement of financial position, for which fair value is
required to be disclosed:

                                                                                                                                        As at 31 December 2013
                                                                                                                                         Carrying
R million                                                                                                                                  amount       Fair value
Assets
Advances                                                                                                                                  471 108          467 257
Investment securities and other investments                                                                                                   848              848
Total financial assets at amortised cost                                                                                                  471 956          468 105
Liabilities
Deposits                                                                                                                                  620 970          622 027
Other liabilities                                                                                                                           4 412            4 260
Tier 2 liabilities                                                                                                                          7 086            7 162
Total financial liabilities at amortised cost                                                                                             632 468          633 449


For all other financial instruments the carrying value is equal to or a reasonable approximation of the fair value.
Day 1 profit or loss


The best evidence of the fair value of a financial instrument at initial recognition is the transaction price (i.e. the entry or exit price) unless the fair value
of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or
repackaging) or based on a valuation technique whose variables include only data from observable markets. Day 1 profit or loss arises on the initial
recognition of a financial instrument when the fair value of the instrument is determined using a valuation technique that makes use of inputs that are
not observable in an active market. In terms of IAS 39 if the fair value determined in accordance with such a valuation technique differs from the
transaction price the initial recognition should take place at the transaction price. The day 1 profits or losses arising as a result of the difference
between the two values should only be recognised over the life of the instrument as a result of changes that would also be considered by market
participants.


The following table represents the aggregate difference between transaction price and fair value based on a valuation technique yet to be recognised in
profit or loss:

R million                                                                                                                                                   2013
Balance at 1 July                                                                                                                                             28
Day 1 profits or losses not recognised on financial instruments initially recognised in the current reporting period                                           -
Amount recognised in profit or loss as a result of changes which would be observable by market participants                                                   (4)
Balance at 31 December                                                                                                                                        24



FINANCIAL INSTRUMENTS SUBJECT TO OFFSETTING, MASTER NETTING ARRANGEMENTS AND SIMILAR AGREEMENTS


In accordance with IAS 32, the Group offsets financial assets and financial liabilities and presents the net amount in the statement of financial position
only if there is both a legally enforceable right to offset and there is an intention to settle the amounts on a net basis or to realise the asset and settle
the liability simultaneously. Financial assets and financial liabilities subject to master netting arrangements (MNA) or similar agreements are not offset if
the right to offset under these agreements is only enforceable in the event of default, insolvency or bankruptcy.
The tables below include information about financial assets and financial liabilities that are offset and the net amount presented in the Group's statement of financial position in accordance with the requirements of IAS 32;
and subject to enforceable MNA or similar agreements where the amounts have not been offset because one or both of the requirements of IAS 32 are not met or the amounts relate to financial collateral (cash or non-cash)
that mitigates credit risk.

                                                                                                As at 31 December 2013                                                         As at 31 December 2013
                                                                                Financial instruments subject to offsetting agreements,        Financial instruments subject to offsetting agreements,
                                                                                   master netting agreement and similar agreements                 master netting agreement and similar agreements
                                                                                                        Amounts where offsetting is applied    Amounts where offsetting is not applied
                                                                                                                                                    Financial
                                                                                                                                 Net amount       instruments                                                     Financial
                                                                                                                                reported in        subject to                                                   instruments           Total
                                                                                                                              the statement               MNA                                                   not subject       statement
                                                                                             Gross               Amounts       of financial       and similar              Financial                             to set off    of financial
R million                                                                                   amount               set off           position*       agreements             collateral**        Net amount             or MNA        position#
Assets
Derivatives                                                                                 46 943                 6 819             40 124            33 522                  2 398               4 204              4 097          44 221
Reverse repurchase, securities borrowing and similar arrangements                           31 606                 7 627             23 979             1 351                 22 628                   -             12 620          36 599
Other advances                                                                               3 045                 3 045                  -                 -                      -                   -            598 844         598 844
Total                                                                                       81 594                17 491             64 103            34 873                 25 026               4 204            615 561         679 644
Liabilities
Derivatives                                                                                 51 005                 6 819             44 186            33 522                    934               9 730               4 650         48 836
Repurchase, securities lending and similar arrangements                                     35 731                 7 627             28 103             1 351                 26 752                   -              10 446         38 549
Other deposits                                                                               3 423                 3 045                379                 -                      -                 379             688 104        688 483
Total                                                                                       90 159                17 491             72 668            34 873                 27 686              10 109             703 200        775 868
* The net amount reported on the statement of financial position represents the net amount of financial assets and financial liabilities
where offsetting has been applied in terms of IAS 32 and financial instruments that are subject to MNA and similar agreements but no
offsetting has been applied.
** The financial collateral is limited to the net statement of financial position exposure in line with the requirements of IFRS 7 and
excludes the effect of any over-collateralisation. The amount of collateral included in the table for IFRS 7 disclosure purposes has been
determined at a business unit level. If these limits were determined on a Group-wide level, the amount of collateral included in this table
could increase.
# The total amount reported on the statement of financial position is the sum of the net amount and the amount of financial instruments
not subject to set off or MNA.
                                                                                                  As at 31 December 2012                                                           As at 31 December 2012
                                                                                  Financial instruments subject to offsetting agreements,          Financial instruments subject to offsetting agreements,
                                                                                     master netting agreement and similar agreements                  master netting agreement and similar agreements
                                                                                                       Amounts where offsetting is applied        Amounts where offsetting is not applied
                                                                                                                                                      Financial
                                                                                                                                 Net amount         instruments                                                        Financial
                                                                                                                                reported in          subject to                                                      instruments                 Total
                                                                                                                              the statement                 MNA                                                      not subject             statement
                                                                                             Gross               Amounts       of financial         and similar              Financial                                to set off          of financial
R million                                                                                   amount               set off           position*         agreements             collateral**        Net amount                or MNA              position#
Assets
Derivatives                                                                                 62 756                11 040             51 716              45 349                  1 240               5 127                 4 535                56 251
Reverse repurchase, securities borrowing and similar arrangements                           46 121                12 335             33 786               1 955                 31 831                   -                10 419                44 205
Other advances                                                                               3 427                 3 427                  -                   -                      -                   -               521 244               521 244
Total                                                                                      112 304                26 802             85 502              47 304                 33 071               5 127               536 198               621 700
Liabilities
Derivatives                                                                                 66 992                11 040             55 952              45 349                  2 891               7 712                 2 332                58 284
Repurchase, securities lending and similar arrangements                                     38 717                12 335             26 382               1 955                 24 427                   -                 6 583                32 965
Other deposits                                                                               3 980                 3 427                553                   -                      -                 553               617 857               618 410
Total                                                                                      109 689                26 802             82 887              47 304                 27 318               8 265               626 772               709 659
* The net amount reported on the statement of financial position represents the net amount of financial assets and financial liabilities where offsetting has been applied in terms of IAS 32 and financial instruments that are subject to MNA
  and similar agreements but no offsetting has been applied.
** The financial collateral is limited to the net statement of financial position exposure in line with the requirements of IFRS 7 and excludes the effect of any over-collateralisation. The amount of collateral included in the table for IFRS 7
   disclosure purposes has been determined at a business unit level. If these limits were determined on a Group-wide level, the amount of collateral included in this table could increase.
# The total amount reported on the statement of financial position is the sum of the net amount and the amount of financial instruments not subject to set off or MNA.

                                                                                                  As at 30 June 2013                                                              As at 30 June 2013
                                                                                Financial instruments subject to offsetting agreements,            Financial instruments subject to offsetting agreements,
                                                                                   master netting agreement and similar agreements                    master netting agreement and similar agreements
                                                                                                    Amounts where offsetting is applied           Amounts where offsetting is not applied
                                                                                                                                                      Financial
                                                                                                                             Net amount             instruments                                                           Financial
                                                                                                                            reported in              subject to                                                         instruments                  Total
                                                                                                                          the statement                     MNA                                                         not subject              statement
                                                                                         Gross            Amounts          of financial             and similar              Financial                               to set off           of financial
R million                                                                              amount                set off           position*             agreements             collateral**       Net amount                or MNA               position#
Assets
Derivatives                                                                             56   216             8   179             48 037                  39 543                  3 029              5 465                 4 240                 52 277
Reverse repurchase, securities borrowing and similar arrangements                       46   379            10   098             36 281                   1 179                 35 102                  -                 4 281                 40 562
Other advances                                                                           2   861             2   861                  -                       -                      -                  -               560 503                560 503
Total                                                                                  105   456            21   138             84 318                  40 722                 38 131              5 465               569 024                653 342
Liabilities
Derivatives                                                                             57   689             8   179             49 510                  39 543                    726              9 241                 3 498                 53 008
Repurchase, securities lending and similar arrangements                                 40   311            10   098             30 213                   1 179                 29 034                  -                 7 560                 37 773
Other deposits                                                                           3   294             2   861                433                       -                      -                433               658 829                659 262
Total                                                                                  101   294            21   138             80 156                  40 722                 29 760              9 674               669 887                750 043


* The net amount reported on the statement of financial position represents the net amount of financial assets and financial liabilities where offsetting has been applied in terms of IAS 32 and financial instruments that are subject to MNA
and similar agreements but no offsetting has been applied.
** The financial collateral included in the table above is limited to the net statement of financial position exposure in line with the requirements of IFRS 7 and excludes the effect of any over-collateralisation. The amount of collateral
included in the table for IFRS 7 disclosure purposes has been determined at a business unit level. If these limits were determined on a Group-wide level, the amount of collateral included in this table could increase.
# The total amount reported on the statement of financial position is the sum of the net amount and the amount of financial instruments not subject to set off or MNA.



Details of the offsetting and collateral arrangements
Derivative assets and liabilities


The Group's derivative transactions that are not transacted on an exchange are entered into under International Derivatives Swaps and Dealers Association (ISDA) master netting agreements. Generally, under such
agreements the amounts owed by each counterparty that are due on a single day in respect of all transactions outstanding in the same currency under the agreement are aggregated into a single net amount being payable
by one party to the other. In certain circumstances, for example, when a credit event such as default occurs, all outstanding transactions under the agreement are terminated, the termination value is assessed and only a
single net amount is due or payable in settlement of all transactions (close-out netting).


The Group only offsets derivative financial assets and financial liabilities with a counterparty under ISDA agreements where the amounts are due on a single day and in the same currency. The Group's intention to settle
these transactions on a net basis is evidenced by a past practice of settling similar transactions on a net basis. The remaining financial assets and financial liabilities (where amounts are not due on a single day and in the
same currency) transacted under an ISDA agreement do not meet the IAS 32 requirements for offsetting. This is because a right of set off is created that is only enforceable in the event of default, insolvency or bankruptcy
of the Group or the counterparties. These amounts are, however, included in the table above under the financial instruments subject to MNA and similar agreements column.


To mitigate credit risk financial collateral (mostly cash) is also obtained, often daily, for the net exposure between counterparties.
Repurchase, reverse repurchase and securities borrowing and lending transactions


The Group's repurchase, reverse repurchase and securities borrowing and lending transactions are covered by master agreements with netting terms
similar to those of the ISDA master netting agreements. These financial assets and financial liabilities with the same counterparty are only set off in the
statement of financial position if they are due on a single day, denominated in the same currency and the Group has the intention to settle these
amounts on a net basis.


The Group receives and accepts collateral for these transactions in the form of cash and other investments and investment securities.



Other advances and deposits


The advances and deposits that are offset relate to transactions where the Group has a legally enforceable right to offset the amounts and the Group
has the intention to settle the net amount.



RESTATEMENT OF PRIOR YEAR NUMBERS


Description of restatements
IFRS 10, IFRS 11, IFRS 12, IAS 27R and IAS 28R


Under IFRS 10 there is one approach for determining consolidation of all entities based on concepts of power, variability of returns and linkage. The
application of control will be applied irrespective of the nature of the investee. The Group has control over an investee when the Group is exposed,
or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
IFRS 11 places more focus on the investors' rights and obligations than on the structure of the arrangement when determining whether a joint
arrangement exists.


IFRS 12 is a comprehensive standard on disclosure requirements for all forms of interests in other entities, including unconsolidated structured entities.
The standard impacts disclosure only and has no impact on recognition and measurement.


The adoption of IFRS 10 and 11 resulted in the following:


- Reclassification of a number of entities between associates and joint ventures. As it has always been the Group's policy to account for joint ventures
  in accordance with the equity accounting method, reclassification did not result in a change in measurement.


- A number of structured entities no longer meet the control criteria in terms of IFRS 10 and consequently are no longer consolidated.


- An investment previously classified as an associate was considered to be controlled under IFRS 10.


- Insurance cell captives do not meet the definition of asset silos in terms of IFRS 10 and do not qualify for consolidation. The cell captives are now
  treated as profit share arrangements and the income arising from the arrangements is included in other non-interest revenue and the unsettled income
  in accounts receivable. Certain insurance contracts of the cells are now considered to be plan assets in terms of IAS 19.



IAS 19


Amendments to IAS 19 require that all actuarial gains and losses in respect of defined benefit post-employment plans are recognised in other
comprehensive income. In addition, the standard no longer requires the expected return on plan assets to be recognised in profit or loss, rather a
net interest income/expense be recognised on the net asset or liability. All other remeasurements relating to plan assets are also recognised in other
comprehensive income.



Loans to associates


In accordance with IAS 28, the Group's net investment in associates and joint ventures includes loans for which settlement is neither planned
nor likely in the foreseeable future. The Group historically included these loans as part of investment in associates and joint ventures and reflected these
on the statement of financial position.


Given the underlying debt nature of these loans and developing industry practice, the Group has decided to present these as advances. The loans
will continue to form part of the Group's net investment in associates or joint ventures for purposes of determining the share of losses of the
investee attributable to the Group and for impairment.


The change in presentation had no impact on the net asset value of the Group, only on the classification of items on the statement of financial position.


RESTATED CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2012 - IFRS

                                                                                                                  Reclass-
                                                                               As                                ification
                                                                       previously      IFRS 10                 of loans to
R million                                                                reported       and 11     IAS 19       associates     Restated
Net interest income before impairment of advances                          12 376           30          -                2       12 408
Impairment of advances                                                      (2259)           -          -                9       (2 250)
Net interest income after impairment of advances                           10 117           30          -               11       10 158
Non-interest income                                                        15 735         (498)         -                -       15 237
Income from operations                                                     25 852         (468)         -               11       25 395
Operating expenses                                                        (15 652)         303          7              (11)     (15 353)
Net income from operations                                                 10 200         (165)         7                -       10 042
Share of profit of associates and joint ventures after tax                    298           (5)         -                -          293
Income before tax                                                          10 498         (170)         7                -       10 335
Indirect tax                                                                 (462)           -          -                -         (462)
Profit before tax                                                          10 036         (170)         7                -        9 873
Income tax expense                                                         (2 462)         207          -                -       (2 255)
Profit for the period                                                       7 574           37          7                -        7 618
Attributable to:
Ordinary equityholders                                                      7 019           79          7                -        7 105
NCNR preference shareholders                                                  150            -          -                -          150
Equityholders of the Group                                                  7 169           79          7                -        7 255
Non-controlling interests                                                     405          (42)         -                -          363
Profit for the period                                                       7 574           37          7                -        7 618



RESTATED CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 DECEMBER 2012 - IFRS

                                                                                                                 Reclass-
                                                                                As                              ification
                                                                        previously      IFRS 10               of loans to
R million                                                                 reported       and 11    IAS 19      associates    Restated
Profit for the period                                                        7 574           37         7               -       7 618
Items that may subsequently be reclassified to profit or loss
Cash flow hedges                                                               (89)           -         -               -         (89)
Losses arising during the period                                              (453)           -         -               -        (453)
Reclassification adjustments for amounts included in profit or loss            329            -         -               -         329
Deferred income tax                                                             35            -         -               -          35
Available-for-sale financial assets                                            445          (14)        -               -         431
Gains arising during the period                                                579          (14)        -               -         565
Reclassification adjustments for amounts included in profit or loss             (1)           -         -               -          (1)
Deferred income tax                                                           (133)           -         -                        (133)
Exchange differences on translating foreign operations                         323           (8)        -               -         315
Gains arising during the period                                                323           (8)        -               -         315
Share of other comprehensive income of associates and joint ventures
after tax and non-controlling interests                                         24            -         -               -          24
Items that may not be reclassified to profit or loss
Actuarial losses on defined benefit pension plans                                -            -       (22)              -         (22)
Losses arising during the period                                                 -            -       (32)              -         (32)
Deferred income tax relating to items that will not be reclassified              -            -        10               -          10
Other comprehensive income for the period                                      703          (22)      (22)              -         659
Total comprehensive income for the period                                    8 277           15       (15)              -       8 277
Attributable to:
Ordinary equityholders                                                       7 703           60       (15)              -       7 748
NCNR preference shareholders                                                   150            -         -               -         150
Equityholders of the Group                                                   7 853           60       (15)              -       7 898
Non-controlling interests                                                      424          (45)        -               -         379
Total comprehensive income for the period                                    8 277           15       (15)              -       8 277



RESTATED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2012 - IFRS

                                                                                                              Reclass-
                                                                           As                                ification
                                                                   previously      IFRS 10                 of loans to
R million                                                            reported       and 11      IAS 19      associates       Restated
ASSETS
Cash and cash equivalents                                              52 695       (1 125)          -               -         51 570
Derivative financial instruments                                       56 502         (251)          -               -         56 251
Commodities                                                             8 003            -           -               -          8 003
Accounts receivable                                                     6 400          385           -             (30)         6 755
Current tax asset                                                         606           (4)          -               -            602
Advances                                                              563 038          592           -           1 819        565 449
Investment securities and other investments                           113 944       (3 071)          -               -        110 873
Investments in associates and joint ventures                            7 040            1           -          (1 789)         5 252
Property and equipment                                                 13 207         (687)          -               -         12 520
Intangible assets                                                       1 557            -           -               -          1 557
Reinsurance assets                                                        846            -           -               -            846
Post-employment benefit asset                                               8            -          (8)              -              -
Investment properties                                                     452            -           -               -            452
Deferred income tax asset                                                 524         (169)          -               -            355
Non-current assets and disposal groups held for sale                      505            -           -               -            505
Total assets                                                          825 327       (4 329)         (8)              -        820 990
EQUITY AND LIABILITIES
Liabilities
Short trading positions                                                 9 219            -           -               -          9 219
Derivative financial instruments                                       58 284            -           -               -         58 284
Creditors and accruals                                                  8 788          (55)          -               -          8 733
Current tax liability                                                     289          (54)          -               -            235
Deposits                                                              651 349           26           -               -        651 375
Provisions                                                                584            -           -               -            584
Employee liabilities                                                    6 671       (2 591)        557               -          4 637
Other liabilities                                                       5 401         (579)          -               -          4 822
Policyholder liabilities under insurance contracts                      1 543         (436)          -               -          1 107
Deferred income tax liability                                           1 498         (318)          -               -          1 180
Tier 2 liabilities                                                      8 120            -           -               -          8 120
Liabilities directly associated with disposal groups held for sale         83            -           -               -             83
Total liabilities                                                     751 829       (4 007)        557               -        748 379
Equity
Ordinary shares                                                            55            -           -               -             55
Share premium                                                           5 387          214           -               -          5 601
Reserves                                                               60 832         (427)       (565)              -         59 840
Capital and reserves attributable to ordinary equityholders            66 274         (213)       (565)              -         65 496
NCNR preference shareholders                                            4 519            -           -               -          4 519
Capital and reserves attributable to equityholders of the Group        70 793         (213)       (565)              -         70 015
Non-controlling interests                                               2 705         (109)          -               -          2 596
Total equity                                                           73 498         (322)       (565)              -         72 611
Total equity and liabilities                                          825 327       (4 329)         (8)              -        820 990



RESTATED CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2013 - IFRS

                                                                                                               Reclass-
                                                                            As                                ification
                                                                    previously      IFRS 10                 of loans to
R million                                                             reported       and 11     IAS 19       associates      Restated
Net interest income before impairment of advances                       24 715           54          -                -        24 769
Impairment of advances                                                   (4812)          20          -              (15)        (4807)
Net interest income after impairment of advances                        19 903           74          -              (15)       19 962
Non-interest income                                                     31 614         (880)         -                -        30 734
Income from operations                                                  51 517         (806)         -              (15)       50 696
Operating expenses                                                     (31 486)         667         15                -       (30 804)
Net income from operations                                              20 031         (139)        15              (15)       19 892
Share of profit of associates and joint ventures after tax                 824          (15)         -               15           824
Income before tax                                                       20 855         (154)        15                -        20 716
Indirect tax                                                              (645)           -          -                -          (645)
Profit before tax                                                       20 210         (154)        15                -        20 071
Income tax expense                                                      (4 532)         415          -                -        (4 117)
Profit for the year                                                     15 678          261         15                -        15 954
Attributable to:
Ordinary equityholders                                                  14 539          231         15                -        14 785
NCNR preference shareholders                                               297            -          -                -           297
Equityholders of the Group                                              14 836          231         15                -        15 082
Non-controlling interests                                                  842           30          -                -           872
Profit for the year                                                     15 678          261         15                -        15 954



RESTATED CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013 - IFRS

                                                                                                                  Reclass-
                                                                              As                                 ification
                                                                      previously     IFRS 10                   of loans to
R million                                                               reported      and 11       IAS 19       associates        Restated
Profit for the year                                                       15 678         261           15                -          15 954
Items that may subsequently be reclassified to profit or loss
Cash flow hedges                                                             853           -            -                -             853
Gains arising during the year                                                417           -            -                -             417
Reclassification adjustments for amounts included in profit or loss          768           -            -                -             768
Deferred income tax                                                         (332)          -            -                -            (332)
Available-for-sale financial assets                                          (89)        (15)           -                -            (104)
Losses arising during the year                                              (102)        (15)           -                -            (117)
Reclassification adjustments for amounts included in profit or loss          (33)          -            -                -             (33)
Deferred income tax                                                           46           -            -                -              46
Exchange differences on translating foreign operations                       990           8            -                -             998
Gains arising during the year                                                990           8            -                -             998
Share of other comprehensive income of associates and joint ventures
after tax and non-controlling interests                                      129           -            -                -             129

Items that may not be reclassified to profit or loss
Actuarial gains on defined benefit pension plans                               -           -           22                               22
Gains arising during the year                                                  -           -           30                               30
Deferred income tax relating to items that will not be reclassified            -           -           (8)                              (8)
Other comprehensive income for the year                                    1 883          (7)          22                -           1 898
Total comprehensive income for the year                                   17 561         254           37                -          17 852
Attributable to:
Ordinary equityholders                                                    16 358         230           37                -          16 625
NCNR preference shareholders                                                 297           -            -                -             297
Equityholders of the Group                                                16 655         230           37                -          16 922
Non-controlling interests                                                    906          24            -                -             930
Total comprehensive income for the year                                   17 561         254           37                -          17 852



RESTATED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2013 - IFRS

                                                                                                                    Reclass-
                                                                                As                                 ification
                                                                        previously      IFRS 10                  of loans to
R million                                                                 reported       and 11       IAS 19      associates         Restated
ASSETS
Cash and cash equivalents                                                   49 620       (1 055)           -               -           48 565
Derivative financial instruments                                            52 316          (39)           -               -           52 277
Commodities                                                                  6 016            -            -               -            6 016
Accounts receivable                                                          7 471          333            -               -            7 804
Current tax asset                                                              275           (9)           -               -              266
Advances                                                                   598 975          488            -           1 602          601 065
Investment securities and other investments                                131 293       (2 905)           -               -          128 388
Investments in associates and joint ventures                                 6 992            6            -          (1 602)           5 396
Property and equipment                                                      14 058         (605)           -               -           13 453
Intangible assets                                                            1 169            -            -               -            1 169
Reinsurance assets                                                             394            -            -               -              394
Post-employment benefit asset                                                   13            -          (13)              -                -
Investment properties                                                          459            -            -               -              459
Deferred income tax asset                                                      598         (138)           -               -              460
Non-current assets and disposal groups held for sale                            20            -            -               -               20
Total assets                                                               869 669       (3 924)         (13)              -          865 732
EQUITY AND LIABILITIES
Liabilities
Short trading positions                                                      2 991            -            -               -            2 991
Derivative financial instruments                                            53 013           (5)           -               -           53 008
Creditors and accruals                                                      11 155          (76)           -               -           11 079
Current tax liability                                                          553          (40)           -               -              513
Deposits                                                                   697 005           30            -               -          697 035
Provisions                                                                     600            -            -               -              600
Employee liabilities                                                         8 092       (2 546)         311               -            5 857
Other liabilities                                                            6 669         (568)           -               -            6 101
Policyholder liabilities under insurance contracts                           1 112         (466)           -               -              646
Deferred income tax liability                                                  735           18            -               -              753
Tier 2 liabilities                                                           8 116            -            -               -            8 116
Total liabilities                                                          790 041       (3 653)         311               -          786 699
Equity
Ordinary shares                                                                 55            -            -               -               55
Share premium                                                                5 397          212            -               -            5 609
Reserves                                                                    66 733         (455)        (324)              -           65 954
Capital and reserves attributable to ordinary equityholders                 72 185         (243)        (324)              -           71 618
NCNR preference shareholders                                                 4 519            -            -               -            4 519
Capital and reserves attributable to equityholders of the Group             76 704         (243)        (324)              -           76 137
Non-controlling interests                                                    2 924          (28)           -               -            2 896
Total equity                                                                79 628         (271)        (324)              -           79 033
Total equity and liabilities                                               869 669       (3 924)         (13)              -          865 732



RESTATED RECONCILIATION OF IFRS CONDENSED CONSOLIDATED INCOME STATEMENT TO NORMALISED FOR THE SIX MONTHS ENDED 31
DECEMBER 2012

                                                                                                         Normalised adjustments
                                                                                                                                Private
                                                                                                                                 equity
                                                                            IFRS                        IAS 19               subsidiary          HEPS
                                                                  As     adjust-         Treasury      adjust-     Impair-       reali-       adjust-           As
R million                                                   reported       ments           shares        ments        ment      sations         ments     restated
Net interest income before impairment of advances             13 606          32               (9)           -           -            -             -       13 629
Impairment of advances                                        (2 518)          9                -            -           -            -             -       (2 509)

Net interest income after impairment of advances              11 088          41               (9)           -           -            -             -       11 120
Non-interest income                                           14 237        (498)               4            -           -            7           (13)      13 737
Income from operations                                        25 325        (457)              (5)           -           -            7           (13)      24 857
Operating expenses                                           (15 120)        299                -          (78)        248            -             8      (14 643)
Net income from operations                                    10 205        (158)              (5)         (78)        248            7            (5)      10 214
Share of profit of associates and joint ventures after tax       289          (5)               -            -           -            -             -          284
Income before tax                                             10 494        (163)              (5)         (78)        248            7            (5)      10 498
Indirect tax                                                    (462)          -                -            -           -            -             -         (462)
Profit before tax                                             10 032        (163)              (5)         (78)        248            7            (5)      10 036
Income tax expense                                            (2 442)        207                -           22         (69)           -             -       (2 282)
Profit for the period                                          7 590          44               (5)         (56)        179            7            (5)       7 754
Attributable to:
Non-controlling interests                                       (405)         42                -            -           -            -             2         (361)
NCNR preference shareholders                                    (150)          -                -            -           -            -             -         (150)
Ordinary equityholders of the Group                            7 035          86               (5)         (56)        179            7            (3)       7 243
Headline and normalised earnings adjustments                     183           -                -            -        (179)          (7)            3            -
Normalised earnings                                            7 218          86               (5)         (56)          -            -             -        7 243



RESTATED RECONCILIATION OF IFRS CONDENSED CONSOLIDATED INCOME STATEMENT TO NORMALISED FOR THE YEAR ENDED 30 JUNE 2013

                                                                                                                  Normalised adjustments
                                                                                                                                         Private
                                                                                                                                          equity
                                                                                        IFRS                   IAS 19 subsidiary            HEPS
                                                                              As     adjust-    Treasury      adjust-     reali-         adjust-           As
R million                                                               reported       ments      shares        ments    sations           ments     restated
Net interest income before impairment of advances                         28 064          54         (18)           -          -               -       28 100
Impairment of advances                                                    (5 705)          5           -            -          -               -       (5 700)
Net interest income after impairment of advances                          22 359          59         (18)           -          -               -       22 400
Non-interest income                                                       28 244        (880)         12            -         42            (153)      27 265
Income from operations                                                    50 603        (821)         (6)           -         42            (153)      49 665
Operating expenses                                                       (29 645)        682           -         (153)         -              52      (29 064)
Net income from operations                                                20 958        (139)         (6)        (153)        42            (101)      20 601
Share of profit of associates and joint ventures after tax                   817           -           -            -          -             (14)         803
Income before tax                                                         21 775        (139)         (6)        (153)        42            (115)      21 404
Indirect tax                                                                (645)          -           -            -          -               -         (645)
Profit before tax                                                         21 130        (139)         (6)        (153)        42            (115)      20 759
Income tax expense                                                        (4 682)        415           -           43          -              34       (4 190)
Profit for the year                                                       16 448         276          (6)        (110)        42             (81)      16 569
Attributable to:
Non-controlling interests                                                   (842)        (30)          -            -          -              20         (852)
NCNR preference shareholders                                                (297)          -           -            -          -               -         (297)
Ordinary equityholders of the Group                                       15 309         246          (6)        (110)        42             (61)      15 420
Headline and normalised earnings adjustment                                   14         (33)          -            -        (42)             61            -
Normalised earnings                                                       15 323         213          (6)        (110)         -               -       15 420



CONTINGENCIES AND COMMITMENTS

                                                                                                                                                  As at
                                                                                    As at 31 December                                           30 June
R million                                                                             2013                2012           % change                  2013

Contingencies
Guarantees                                                                          33 463              22 363                 50                30 137
Acceptances                                                                            278                 285                 (2)                  270
Letters of credit                                                                    7 703               8 688                (11)                8 925
Total contingencies                                                                 41 444              31 336                 32                39 332
Capital commitments
Contracted capital commitments                                                       1 653               1 496                 10                 1 585
Capital expenditure authorised not yet contracted                                      988               1 390                (29)                1 902
Total capital commitments                                                            2 641               2 886                 (8)                3 487
Other commitments
Irrevocable commitments                                                             81 411              73 059                 11                78 783
Operating lease and other commitments                                                3 099               3 225                 (4)                3 113
Total other commitments                                                             84 510              76 284                 11                81 896
Total contingencies and commitments                                                128 595             110 506                 16               124 715




Company information


Directors
LL Dippenaar (Chairman), SE Nxasana (Chief executive officer), VW Bartlett, JJH Bester, MS Bomela, JP Burger (Deputy chief executive officer), P
Cooper (alternate), L Crouse, JJ Durand, GG Gelink, PM Goss, NN Gwagwa, PK Harris, WR Jardine, HS Kellan (Financial director), EG Matenge-
Sebesho, AT Nzimande, D Premnarayen (India), KB Schoeman, BJ van der Ross, JH van Greuning



Secretary and registered office
C Low
4 Merchant Place, Corner Fredman Drive and Rivonia Road
Sandton 2196
PO Box 650149, Benmore 2010
Tel: +27 11 282 1808
Fax: +27 11 282 8088
Website: www.firstrand.co.za



JSE sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited)
Corporate Finance
1 Merchant Place, Corner Fredman Drive and Rivonia Road
Sandton 2196
Tel: +27 11 282 8000
Fax: +27 11 282 4184
JSE independent sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
2 Eglin Road
Sunninghill
Sandton 2196



Namibian sponsor
Simonis Storm Securities (Pty) Ltd
4 Koch Street
Klein Windhoek
Namibia



Transfer secretaries - South Africa
Computershare Investor Services (Pty) Ltd
70 Marshall Street
Johannesburg 2001
PO Box 61051, Marshalltown 2107
Tel: +27 11 370 5000
Fax: +27 11 688 5248



Transfer secretaries - Namibia
Transfer Secretaries (Pty) Ltd
4 Robert Mugabe Avenue, Windhoek
PO Box 2401, Windhoek, Namibia
Tel: +264 612 27647
Fax: +264 612 48531



Sandton


4 March 2014


Sponsor


Rand Merchant Bank
(a division of FirstRand Bank Limited)

Date: 04/03/2014 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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