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Unaudited condensed consolidated financial results
for the interim reporting period ended 30 June 2015
Absa Bank Limited
Authorised financial services and registered credit provider (NCRCP7)
Registration number: 1986/004794/06
Incorporated in the Republic of South Africa
JSE share code: ABSP and ABMN
ISIN: ZAE000079810
(Absa, Absa Bank, the Bank or the Company)
Unaudited condensed consolidated financial results
for the interim reporting period ended 30 June 2015.
These unaudited condensed consolidated financial results were prepared by Barclays Africa Group Limited
Financial Control under the direction and supervision of the Deputy Chief Executive Officer and Group
Financial Director, D W P Hodnett CA(SA).
Date of publication: 29 July 2015
Profit and dividend announcement
for the reporting period ended
Overview of results
Absa Bank Limited (“the Bank”) is a wholly owned subsidiary of Barclays Africa Group Limited
(“the Group”), which is listed on JSE Limited. These condensed consolidated financial results are
published to provide information to holders of the Bank’s listed non-cumulative, non-redeemable
preference shares.
Commentary relating to the Bank’s condensed consolidated financial results is included in the
Barclays Africa Group Limited results, as presented to shareholders on 29 July 2015.
Basis of presentation
The Bank’s interim financial results have been prepared in accordance with the recognition and
measurement requirements of International Financial Reporting Standards (“IFRS”), interpretations
issued by the IFRS Interpretations Committee (“IFRS-IC”), the South African Institute
of Chartered Accountants (“SAICA”) Financial Reporting Guides as issued by the Accounting
Practices Committee, Financial Reporting Pronouncements as issued by the Financial Reporting Standards
Council, the JSE Listings Requirements and the requirements of the Companies Act. The principal
accounting policies applied are set out in the Bank’s most recent annual consolidated
financial statements.
The Bank’s unaudited condensed consolidated interim financial statements comply with IAS 34 -
Interim Financial Reporting (“IAS 34”).
The preparation of financial information requires the use of estimates and assumptions about
future conditions. Use of available information and application of judgement are inherent in the
formation of estimates. The accounting policies that are deemed critical to the Bank’s results and
financial position, in terms of the materiality of the items to which the policies are applied, and
which involve a high degree of judgement including the use of assumptions and estimation are impairment
of loans and advances, goodwill impairment, fair value measurements, impairment of available-for-sale
financial assets, consolidation of structured or sponsored entities, post-retirement benefits,
provisions, income taxes, share-based payments and offsetting of financial assets and liabilities.
Accounting policies
The accounting policies applied in preparing the unaudited condensed consolidated interim
financial statements are the same as those in place for the reporting period ended 31 December 2014.
Events after the reporting period
The directors are not aware of any events occurring between the reporting date of 30 June 2015 and
the date of authorisation of these condensed consolidated interim financial results as defined in
IAS 10 - Events after the Reporting Period (“IAS 10”).
On behalf of the board
W E Lucas-Bull M Ramos
Chairman Chief Executive Officer
Johannesburg
29 July 2015
Declaration of preference share dividend number 19
Absa Bank non-cumulative, non-redeemable preference shares (Absa Bank preference shares)
The Absa Bank preference shares have an effective coupon rate of 70% of Absa Bank’s prevailing
prime overdraft lending rate (prime rate). Absa Bank’s current prime rate is 9,50%.
Notice is hereby given that preference dividend number 19, equal to 70% of the average prime rate
for 1 March 2015 to 31 August 2015, per Absa Bank preference share has been declared for the
period 1 March 2015 to 31 August 2015. The dividend is payable on Monday, 14 September 2015, to
shareholders of the Absa Bank preference shares recorded in the register of members of the Company
at the close of business on Friday, 11 September 2015.
The directors of Absa Bank confirm that the Bank will satisfy the solvency and liquidity test
immediately after completion of the dividend distribution.
Based on the current prime rate, the preference dividend payable for the period 1 March 2015 to
31 August 2015 would indicatively be 3 282,80822 cents per Absa Bank preference share.
The dividend will be subject to dividends withholding tax at a rate of 15% that was introduced on
1 April 2012. In accordance with paragraphs 11.17(a)(i) to (x) and 11.17(c) of the JSE Listings
Requirements, the following additional information is disclosed:
• The dividend has been declared out of income reserves.
• The local dividend tax rate is fifteen per centum (15%).
• The gross local dividend amount is 3 282,80822 cents per preference share for shareholders
exempt from the dividend tax.
• The net local dividend for shareholders subject to withholding tax at a rate of 15% amounts to
2 790,38699 cents per preference share.
• Absa Bank currently has 4 944 839 preference shares in issue.
• Absa Bank’s income tax reference number is 9575117719.
In compliance with the requirements of Strate, the electronic settlement and custody system used
by JSE Limited, the following salient dates for the payment of the dividend are applicable:
Last day to trade cum dividend Friday, 4 September 2015
Shares commence trading ex dividend Monday, 7 September 2015
Record date Friday, 11 September 2015
Payment date Monday, 14 September 2015
Share certificates may not be dematerialised or rematerialised between Monday, 7 September 2015
and Friday, 11 September 2015, both dates inclusive. On Monday, 14 September 2015, the dividend will
be electronically transferred to the bank accounts of all shareholders.
On behalf of the board
N R Drutman
Company Secretary
Johannesburg
29 July 2015
Absa Bank Limited is a company domiciled in South Africa. Its registered office is the 7th Floor,
Barclays Towers West, 15 Troye Street, Johannesburg, 2001.
Consolidated salient features
for the reporting period ended
30 June 31 December
2015 2014(2) 2014
Statement of comprehensive income (Rm)
Revenue 22 391 21 430 44 328
Operating expenses 12 717 12 101 25 309
Profit attributable to ordinary equity holder 4 677 4 093 8 995
Headline earnings(1) 4 655 4 040 8 787
Statement of financial position
Loans and advances to customers (Rm) 577 466 543 379 554 521
Total assets (Rm) 859 143 812 013 814 061
Deposits due to customers (Rm) 546 128 505 981 521 656
Loans-to-deposits and debt securities ratio (%) 86,9 88,9 88,5
Financial performance (%)
Return on average equity 17,1 15,6 16,9
Return on average assets 1,10 1,02 1,08
Return on average risk-weighted assets 2,05 1,98 2,10
Operating performance (%)
Net interest margin on average interest-bearing assets 3,84 3,69 3,83
Impairment losses ratio 0,93 1,10 0,94
Non-performing loans ratio 3,4 4,3 3,8
Non-interest income as % of revenue 40,5 42,4 41,5
Cost-to-income ratio 56,8 56,5 57,1
Jaws (0,61) (4,15) (1,99)
Effective tax rate, excluding indirect taxation 27,4 29,0 27,7
Share statistics (million) (including “A” ordinary shares)
Number of ordinary shares in issue 396,2 387,5 396,2
Weighted average number of ordinary shares in issue 396,2 385,1 386,9
Weighted average diluted number of ordinary shares in issue 396,2 385,1 386,9
Share statistics (cents)
Headline earnings per ordinary share 1 174,9 1 049,1 2 271,1
Diluted headline earnings per ordinary share 1 174,9 1 049,1 2 271,1
Basic earnings per ordinary share 1 180,5 1 062,8 2 324,9
Diluted basic earnings per ordinary share 1 180,5 1 062,8 2 324,9
Dividends per ordinary share relating to income for the reporing period 631,07 1 231,7 2 022,2
Dividend cover (times) 1,9 0,9 1,1
Net asset value per ordinary share 13 820 13 400 13 702
Tangible net asset value per ordinary share 13 435 13 053 13 341
Capital adequacy (%)
Absa Bank 12,8 13,9 13,7
Common Equity Tier 1 (%)
Absa Bank Limited 9,8 10,1 10,6
Notes
(1) After allowing for R159m (30 June 2014: R147m; 31 December 2014: R305m) profit attributable to
preference equity holders.
(2) Restated, refer to note 14 for reporting changes.
Condensed consolidated statement of financial position
as at
30 June 31 December
2015 2014(1) 2014
Note Rm Rm Rm
Assets
Cash, cash balances and balances with central banks 23 318 18 313 21 419
Investment securities 62 474 69 056 70 618
Loans and advances to banks 71 267 63 297 47 599
Trading portfolio assets 72 549 75 606 78 572
Hedging portfolio assets 2 092 2 498 2 335
Other assets 25 080 12 747 9 311
Current tax assets 676 17 17
Non-current assets held for sale 1 236 414 250
Loans and advances to customers 577 466 543 379 554 521
Loans to Group companies 11 786 15 612 17 740
Investments in associates and joint ventures 901 767 839
Investment properties 263 243 252
Property and equipment 9 470 8 692 9 137
Goodwill and intangible assets 1 523 1 346 1 422
Deferred tax assets 42 26 29
Total assets 859 143 812 013 814 061
Liabilities
Deposits from banks 50 744 62 532 54 104
Trading portfolio liabilities 42 150 43 136 44 580
Hedging portfolio liabilities 2 432 2 512 2 577
Other liabilities 26 452 20 102 13 809
Provisions 1 078 1 048 1 857
Current tax liabilities 17 - 65
Deposits due to customers 546 128 505 981 521 656
Debt securities in issue 118 346 104 974 105 015
Loans from Group companies 277 - -
Borrowed funds 2 11 026 14 108 10 535
Deferred tax liabilities 1 093 1 049 937
Total liabilities 799 743 755 442 755 135
Equity
Capital and reserves
Attributable to equity holders:
Ordinary share capital 303 303 303
Ordinary share premium 16 465 14 465 16 465
Preference share capital 1 1 1
Preference share premium 4 643 4 643 4 643
Retained earnings 34 697 33 202 33 713
Other reserves 3 289 3 955 3 799
59 398 56 569 58 924
Non-controlling interest 2 2 2
Total equity 59 400 56 571 58 926
Total equity and liabilities 859 143 812 013 814 061
Note
(1) Restated, refer to note 14 for reporting changes.
Condensed consolidated statement of comprehensive income
for the reporting period ended
30 June 31 December
2015 2014 2014
Note Rm Rm Rm
Net interest income 13 330 12 342 25 928
Interest and similar income 28 701 26 540 54 810
Interest expense and similar charges (15 371) (14 198) (28 882)
Non-interest income 9 061 9 088 18 400
Net fee and commission income 7 715 7 170 14 775
Fee and commission income 8 342 7 759 15 964
Fee and commission expense (627) (589) (1 189)
Gains and losses from banking and trading activities 1 081 1 786 2 698
Gains and losses from investment activities 4 2 4
Other operating income 261 130 923
Total income 22 391 21 430 44 328
Impairment losses on loans and advances (2 615) (2 942) (5 110)
Operating income before operating expenditure 19 776 18 488 39 218
Operating expenses (12 717) (12 101) (25 309)
Other expenses (473) (486) (1 186)
Other impairments 3 17 (31) (418)
Indirect taxation (490) (455) (768)
Share of post-tax results of associates and joint ventures 75 73 147
Operating profit before income tax 6 661 5 974 12 870
Taxation expense (1 825) (1 734) (3 570)
Profit for the reporting period 4 836 4 240 9 300
Profit attributable to:
Ordinary equity holder 4 677 4 093 8 995
Preference equity holders 159 147 305
4 836 4 240 9 300
Earnings per share
Basic earnings per ordinary share (cents) 1 180,5 1 062,8 2 324,9
Diluted basic earnings per ordinary share (cents) 1 180,5 1 062,8 2 324,9
Condensed consolidated statement of comprehensive income
for the reporting period ended
30 June 31 December
2015 2014 2014
Rm Rm Rm
Profit for the reporting period 4 836 4 240 9 300
Other comprehensive income
Items that will not be reclassified to profit or loss:
Movement in retirement benefit fund assets and liabilities 3 14 2
Increase in retirement benefit surplus 4 20 3
Deferred tax (1) (6) (1)
Total items that will not be reclassified to profit or loss 3 14 2
Items that are or may be subsequently reclassified to profit or loss:
Movement in foreign currency translation reserve (2) 79 (327)
Movement in cash flow hedging reserve (616) (252) (253)
Fair value (losses)/gains arising during the reporting period (207) 321 1 092
Amount removed from other comprehensive income and recognised in
profit or loss (648) (671) (1 443)
Deferred tax 239 98 98
Movement in available-for-sale reserve (20) (217) (37)
Fair value losses arising during the reporting period (45) (306) (98)
Amortisation of government bonds - release to profit or loss 13 3 44
Deferred tax 12 86 17
Total items that are or may be subsequently reclassified to
profit or loss (638) (390) (617)
Total comprehensive income for the reporting period 4 201 3 864 8 685
Total comprehensive income attributable to:
Ordinary equity holder 4 042 3 717 8 380
Preference equity holders 159 147 305
4 201 3 864 8 685
Condensed consolidated statement of changes in equity
for the reporting period ended
30 June
2015(1)
Total
equity
attributable Non-
to equity controlling Total
holder interest equity
Rm Rm Rm
Balance at the beginning of the reporting period 58 924 2 58 926
Total comprehensive income for the reporting period 4 201 - 4 201
Profit for the reporting period 4 836 - 4 836
Other comprehensive income (635) - (635)
Dividends paid during the reporting period (refer to note 5) (3 775) - (3 775)
Purchase of Barclays Africa Group Limited shares in respect of
equity-settled share-based payment arrangements (5) - (5)
Movement in share-based payment reserve 53 - 53
Value of employee services 53 - 53
Share of post-tax results of associates and joint ventures - - -
Transfer from retained earnings (75) - (75)
Transfer to associates’ and joint ventures’ reserve 75 - 75
Balance at the end of the reporting period 59 398 2 59 400
Note
(1) All movements are reflected net of taxation.
30 June
2014(1)
Total
equity
attributable Non-
to equity controlling Total
holder interest equity
Rm Rm Rm
Balance at the beginning of the reporting period 57 209 50 57 259
Total comprehensive income for the reporting period 3 864 - 3 864
Profit for the reporting period 4 240 - 4 240
Other comprehensive income (376) - (376)
Dividends paid during the reporting period (refer to note 5) (5 483) - (5 483)
Shares issued 1 000 - 1 000
Purchase of Barclays Africa Group Limited shares in respect of
equity-settled share-based payment schemes (2) - (2)
Movement in share-based payment reserve (19) - (19)
Value of employee services (19) - (19)
Share of post-tax results of associates and joint ventures - - -
Transfer from retained earnings (73) - (73)
Transfer to associates’ and joint ventures’ reserve 73 - 73
Disposal of subsidiary(2) - (48) (48)
Balance at the end of the reporting period 56 569 2 56 571
Notes
(1) All movements are reflected net of taxation.
(2) The Bank sold its 85% shareholding in a non-core subsidiary on 2 January 2014
and the subsidiary has been derecognised.
Condensed consolidated statement of changes in equity
for the reporting period ended
31 December
2014(1)
Total
equity
attributable Non-
to equity controlling Total
holder interest equity
Rm Rm Rm
Balance at the beginning of the reporting period 57 209 50 57 259
Total comprehensive income for the reporting period 8 685 - 8 685
Profit for the reporting period 9 300 - 9 300
Other comprehensive income (615) - (615)
Dividends paid during the reporting period (refer to note 5) (9 940) - (9 940)
Shares issued 3 000 - 3 000
Purchase of Barclays Africa Group Limited shares in respect of
equity-settled share-based payment arrangements (8) - (8)
Movement in share-based payment reserve (22) - (22)
Value of employee services (22) - (22)
Share of post-tax results of associates and joint ventures - - -
Transfer from retained earnings (147) - (147)
Transfer to associates’ and joint ventures’ reserve 147 - 147
Disposal of subsidiary(2) - (48) (48)
Balance at the end of the reporting period 58 924 2 58 926
Notes
(1) All movements are reflected net of taxation.
(2) The Bank sold its 85% shareholding in a non-core subsidiary on 2 January 2014
and the subsidiary has been derecognised.
Condensed consolidated statement of cash flows
for the reporting period ended
30 June 31 December
2015 2014(1) 2014
Notes Rm Rm Rm
Net cash generated from operating activities 2 841 2 937 12 859
Net cash utilised in investing activities (1 055) (842) (2 179)
Net cash utilised in financing activities (3 280) (6 210) (11 173)
Net decrease in cash and cash equivalents (1 494) (4 115) (493)
Cash and cash equivalents at the beginning of the reporting period 1 10 014 10 507 10 507
Effect of exchange rate movements on cash and cash equivalents - (3) -
Cash and cash equivalents at the end of the reporting period 2 8 520 6 389 10 014
Notes to the condensed statement of cash flows
1. Cash and cash equivalents at the beginning of the reporting period
Cash, cash balances and balances with central banks(2) 8 777 8 665 8 665
Loans and advances to banks(3) 1 237 1 842 1 842
10 014 10 507 10 507
2. Cash and cash equivalents at the end of the reporting period
Cash, cash balances and balances with central banks(2) 6 811 5 174 8 777
Loans and advances to banks(3) 1 709 1 215 1 237
8 520 6 389 10 014
Notes
(1) Restated, refer to note 14 for reporting changes.
(2) Includes coins and bank notes.
(3) Includes call advances, which are used as working capital for the Bank and are a
component of other advances within “Loans and advances to banks”.
1. Non-current assets held for sale
During the current reporting period the Bank effected the following changes to non-current assets held for sale:
In the Commercial Property Finance (“CPF”) division within RBB, investment securities with a carrying value of R14m
were disposed of.
2. Borrowed funds
During the reporting period, R2 500m (30 June 2014: Rnil; 31 December 2014: R500m) of subordinated notes were issued and
R2 000m (30 June 2014: R1 725m; 31 December 2014: R4 725m) were redeemed.
3. Other impairments
30 June 31 December
2015 2014 2014
Rm Rm Rm
Financial instruments (17) - 17
Other - 31 401
Goodwill - - 1
Intangible assets - - 127
Investments in associates and joint ventures - - 2
Property and equipment - 13 253
Other - 18 18
(17) 31 418
4. Headline earnings
30 June 31 December
2015 2014 2014
Gross Net(1) Gross Net(1) Gross Net(1)
Rm Rm Rm Rm Rm Rm
Headline earnings is determined as follows:
Profit attributable to ordinary equity holder 4 677 4 093 8 995
Total headline earnings adjustment: (22) (53) (208)
IFRS 3 - Goodwill impairment - - - - 1 1
IFRS 5 - Gains on disposal of non-current assets held for sale - - (42) (34) (105) (94)
IAS 16 - Profit on disposal of property and equipment (7) (5) (12) (10) (16) (13)
IAS 21 - Recycled foreign currency translation reserve (90) (90) - - (397) (397)
IAS 27 - Profit on disposal of subsidiaries - - (44) (35) (44) (35)
IAS 28 - Impairment of investment in associates and joint ventures - - - - 2 2
IAS 36 - Other impairment - - 18 15 18 15
IAS 36 - Impairment of intangible assets - - - - 127 91
IAS 36 - Impairment of property and equipment - - 13 8 253 183
IAS 39 - Release of available-for-sale reserves 101 73 3 2 44 31
IAS 40 - Change in fair value of investment properties - - 1 1 8 8
Headline earnings/diluted headline earnings 4 655 4 040 8 787
Headline earnings per share (cents)/diluted headline earnings (cents) 1 174,9 1 049,1 2 271,1
Note
(1) The net amounts are reflected after taxation and non-controlling interest.
5. Dividends per share
30 June 31 December
2015 2014 2014
Rm Rm Rm
Dividends declared to ordinary equity holder
Interim dividend (29 July 2015: 631,07 cents) (30 July 2014: 593,35 cents) 2 500 2 299 2 299
Special dividend (5 December 2014: 516,1 cents) (8 April 2014: 638,38 cents) - 2 446 4 446
Final dividend (3 March 2015: 912,78268 cents) - - 3 616
2 500 4 745 10 361
Dividends declared to preference equity holders
Interim dividend (29 July 2015: 3 282,8082 cents) (30 July 2014: 3 197,4658 cents) 162 158 158
Final dividend (3 March 2015: 3 210,8904 cents) - - 159
162 158 317
Dividends paid to ordinary equity holder
Final dividend (3 March 2015: 912,78268 cents) 3 616 2 890 2 890
Interim dividend (30 July 2014: 593,35 cents) - - 2 299
Special dividend (5 December 2014: 516,1 cents) (8 April 2014: 638,38 cents) - 2 446 4 446
3 616 5 336 9 635
Dividends paid to preference equity holders
Final dividend (3 March 2015: 3 210,8904 cents) 159 147 147
Interim dividend (30 July 2014: 3 197,4658 cents) - - 158
159 147 305
6. Acquisitions and disposals of businesses and other similar transactions
Acquisitions and disposals of businesses during the current reporting period
There were no acquisitions and disposals of businesses during the current
reporting period.
7. Related parties
There were no one-off significant transactions with related parties of the
Bank during the current and previous reporting period.
8. Financial guarantee contracts
30 June (1) 31 December
2015 2014 2014
Rm Rm Rm
Financial guarantee contracts 96 96 96
Financial guarantee contracts represent contracts where the Bank undertakes to make
specified payments to a counterparty, should the counterparty suffer a loss as a
result of a specified debtor failing to make payment when due in accordance
with the terms of a debt instrument. This amount represents the maximum off-statement
of financial position exposure.
Note
(1) During the previous reporting period, all financial guarantee contracts were reassessed and as a consequence
the disclosure has been refined. The comparatives have been restated accordingly from R4bn to R96m.
9. Commitments
30 June 31 December
2015 2014 2014
Rm Rm Rm
Authorised capital expenditure
Contracted but not provided for 1 333 203 576
The Bank has capital commitments in respect of computer equipment and property
development. Management is confident that future net revenue and funding will
be sufficient to cover these commitments.
Operating lease payments due
No later than one year 813 772 856
Later than one year and no later than five years 1 865 1 215 1 631
Later than five years 1 324 178 709
4 002 2 165 3 196
The operating lease commitments comprise a number of separate operating leases
in relation to property and equipment, none of which is individually significant
to the Bank. Leases are negotiated for an average term of three to five years and
rentals are renegotiated annually.
Sponsorship payment due
No later than one year 213 273 282
Later than one year and no later than five years 536 468 307
749 741 589
The Bank has sponsorship commitments in respect of sports, arts and culture.
10. Contingencies
30 June 31 December
2015 2014(1) 2014
Rm Rm Rm
Guarantees 29 980 19 073 28 076
Irrevocable debt facilities 131 453 109 953 114 614
Letters of credit 7 121 4 938 3 756
Other contingencies 12 3 7
168 566 133 967 146 453
Guarantees include performance and payment guarantee contracts.
Irrevocable facilities are commitments to extend credit where the Bank does not have the right to immediately terminate the
facilities by written notice. Commitments generally have fixed expiry dates. Since commitments may expire without being drawn
upon, the total contract amounts do not necessarily represent future cash requirements.
Note
(1) During the previous reporting period, terms and conditions associated with unutilised customer facilities were
reviewed and confirmed to be irrevocable in nature. These facilities were previously reported as R74bn and have
been restated to R110bn.
Legal proceedings
The Bank is engaged in various litigation proceedings involving claims by and against it, which
arise in the ordinary course of business. The Bank does not expect the ultimate resolution of any
proceedings, to which the Bank is party, to have a significant adverse effect on the financial
statements of the Bank. Provision is made for all liabilities which are expected to materialise.
Regulatory matters
The scale of regulatory change remains challenging and the global financial crisis is resulting in
a significant tightening of regulation and changes to regulatory structures globally, especially
for companies that are deemed to be of systemic importance. Concurrently, there is continuing
political and regulatory scrutiny of the operation of the banking and consumer credit industries globally
which, in some cases, is leading to increased regulation. The nature and impact of future changes in
the legal framework, policies and regulatory action cannot currently be fully predicted and are
beyond the Bank’s control, but especially in the area of banking regulation, are likely to have an impact
on the Bank’s businesses and earnings.
The Bank is continuously evaluating its compliance programmes and controls in general. As a
consequence of these compliance programmes and controls, including monitoring and review activities, the
Bank has also adopted appropriate remedial and/or mitigating steps, where necessary or advisable, and
made disclosures on material findings as and when appropriate.
Income taxes
The Bank is subject to income taxes in numerous jurisdictions and the calculation of the Bank’s
tax charge and provisions for income taxes necessarily involves a degree of estimation and judgement.
There are many transactions and calculations for which the ultimate tax treatment is uncertain or in
respect of which the relevant tax authorities may have indicated disagreement with the Bank’s
treatment and accordingly the final tax charge cannot be determined until resolution has been reached
with the relevant tax authority. The Bank recognises liabilities for anticipated tax audit issues based
on estimates of whether additional taxes will be due after taking into account expert external
advice where appropriate. Where the final tax outcome of these matters is different from the amounts
that were initially recorded, such differences will impact the current and deferred income tax assets
and liabilities in the reporting period in which such determination is made. These risks are managed
in accordance with the Bank’s Tax Risk Framework.
11. Segment reporting
30 June 31 December
2015 2014(1) 2014(1)
Rm Rm Rm
11.1 Headline earnings contribution by segment
RBB 4 082 3 453 7 579
Corporate and Investment Bank (“CIB”) 1 155 1 076 2 192
Wealth (59) (24) (69)
Head Office, Treasury and other operations (523) (465) (915)
4 655 4 040 8 787
Note
(1) Operational changes, management changes and associated changes to the way in which the Chief Operating
Decision Maker (“CODM”) views the performance of each business segment, have resulted in the reallocation
of earnings, assets and liabilities between operating segments. For details on the business portfolio
changes, refer to the interim financial results booklet available on www.barclaysafrica.com published
on 29 July 2015.
30 June 31 December
2015 2014(1) 2014(1)
Rm Rm Rm
11.2 Total income revenue by segment
RBB 18 453 17 708 36 347
CIB 4 169 4 032 8 271
Wealth 216 221 467
Head Office, Treasury and other operations (447) (531) (757)
22 391 21 430 44 328
Note
(1) Operational changes, management changes and associated changes to the way in which the CODM
views the performance of each business segment, have resulted in the reallocation of earnings, assets
and liabilities between operating segments. For details on the business portfolio changes, refer to
the interim financial results booklet available on www.barclaysafrica.com published on 29 July 2015.
30 June 31 December
2015 2014(1) 2014(1)
Rm Rm Rm
11.3 Total internal revenue by segment
RBB (4 098) (4 073) (8 184)
CIB 1 239 2 125 2 720
Wealth 22 18 57
Head Office, Treasury and other operations 4 143 3 626 8 703
1 306 1 696 3 296
Note
(1) Operational changes, management changes and associated changes to the way in which the CODM views
the performance of each business segment, have resulted in the reallocation of earnings, assets and
liabilities between operating segments. For details on the business portfolio’s changes, refer to
the interim financial results booklet available on www.barclaysafrica.com published on 29 July 2015.
30 June 31 December
2015 2014(1) 2014(1)
Rm Rm Rm
11.4 Total assets by segment
RBB 684 198 634 622 664 819
CIB 414 819 392 011 406 607
Wealth 5 757 11 409 11 177
Head Office, Treasury and other operations (245 631) (226 029) (268 542)
859 143 812 013 814 061
Note
(1) Operational changes, management changes and associated changes to the way in which the CODM views
the performance of each business segment, have resulted in the reallocation of earnings, assets and
liabilities between operating segments. For details on the business portfolio’s changes, refer to the
interim financial results booklet available on www.barclaysafrica.com published on 29 July 2015.
30 June 31 December
2015 2014(1) 2014(1)
Rm Rm Rm
11.5 Total liabilities by segment
RBB 679 141 630 259 656 441
CIB 412 654 390 177 403 610
Wealth 5 815 11 433 11 246
Head Office, Treasury and other operations (297 867) (276 427) (316 162)
799 743 755 442 755 135
Note
(1) Operational changes, management changes and associated changes to the way in which the CODM
views the performance of each business segment, have resulted in the reallocation of earnings, assets
and liabilities between operating segments. For details on the business portfolio changes, refer to
the interim financial results booklet available on www.barclaysafrica.com published on 29 July 2015.
12. Assets and liabilities not held at fair value
The following table summarises the carrying amounts and fair values of those financial assets
and liabilities not held at fair value:
30 June
2015 2014(1)
Carrying Carrying
value Fair value value Fair value
Rm Rm Rm Rm
Financial assets
Balances with the South African Reserve Bank (“SARB”) 16 485 16 485 13 126 13 126
Coins and bank notes 6 812 6 812 5 174 5 174
Money market assets 21 21 13 13
Cash, cash balances and balances with central banks 23 318 23 318 18 313 18 313
Loans and advances to banks 45 783 45 783 52 234 52 234
Other assets 23 687 23 687 11 480 11 480
Retail Banking 359 076 358 540 351 114 351 114
Credit cards 29 376 29 376 28 557 28 557
Instalment credit agreements 72 921 72 296 67 174 67 174
Loans to associates and joint ventures 14 163 14 163 10 968 10 968
Mortgages 225 551 225 579 227 652 227 652
Other loans and advances 331 331 296 296
Overdrafts 2 442 2 442 2 262 2 262
Personal and term loans 14 292 14 353 14 205 14 205
Business Banking 63 219 63 246 60 325 60 325
Mortgages (including CPF) 30 200 30 227 29 719 29 719
Overdrafts 19 377 19 377 18 519 18 519
Term loans 13 642 13 642 12 087 12 087
RBB Rest of Africa 21 21 - -
CIB 126 527 126 527 113 700 113 375
Wealth 5 117 5 117 5 361 5 361
Head Office, Treasury and other operations 2 939 2 939 2 213 2 213
Loans and advances to customers - net of impairment losses 556 899 556 390 532 713 532 388
Loans to Group companies 11 786 11 786 15 612 15 180
Total assets 661 473 660 964 630 352 629 595
Financial liabilities
Deposits from banks 33 789 33 789 44 017 44 017
Other liabilities 23 965 23 962 17 889 17 889
Call deposits 61 215 61 215 64 328 64 328
Cheque account deposits 159 891 159 891 143 065 143 065
Credit card deposits 1 889 1 889 1 834 1 834
Fixed deposits 113 376 113 734 116 079 116 079
Foreign currency deposits 26 877 26 877 13 212 13 212
Notice deposits 48 706 48 713 50 999 50 999
Other deposits 2 002 2 002 1 754 1 754
Saving and transmission deposits 113 716 113 716 95 544 95 544
Deposits due to customers 527 672 528 037 486 815 486 815
Debt securities in issue 111 106 111 466 100 521 100 742
Loans to Group companies 277 277 - -
Borrowed funds 11 026 11 392 14 108 14 539
Total liabilities 707 835 708 923 663 350 664 002
Note
(1) Operational changes, management changes and associated changes to the way in which the CODM views the performance of
each business segment, have resulted in the reallocation of earnings, assets and liabilities between operating segments.
For details on the business portfolio changes, refer to the interim financial results booklet available on
www.barclaysafrica.com published on 29 July 2015.
31 December
2014(1)
Carrying
value Fair value
Rm Rm
Financial assets
Balances with the SARB 12 621 12 621
Coins and bank notes 8 777 8 777
Money market assets 21 21
Cash, cash balances and balances with central banks 21 419 21 419
Loans and advances to banks 27 076 27 021
Other assets 7 914 8 203
Retail Banking 355 313 354 885
Credit cards 29 338 29 338
Instalment credit agreements 70 819 70 257
Loans to associates and joint ventures 13 012 13 012
Mortgages 225 501 225 544
Other loans and advances 404 404
Overdrafts 2 254 2 254
Personal and term loans 13 985 14 076
Business Banking 60 928 60 926
Mortgages (including CPF) 30 161 30 157
Overdrafts 18 148 18 128
Term loans 12 619 12 641
CIB 121 250 120 321
Wealth 5 234 5 234
Head Office, Treasury and other operations 901 901
Loans and advances to customers - net of impairment losses 543 626 542 267
Loans to Group companies 17 740 21 762
Total assets 617 775 620 672
Financial liabilities
Deposits from banks 34 495 35 834
Other liabilities 11 316 11 322
Call deposits 56 986 56 986
Cheque account deposits 146 568 146 568
Credit card deposits 1 932 1 932
Fixed deposits 114 646 115 371
Foreign currency deposits 21 723 21 723
Notice deposits 49 764 49 843
Other deposits 1 972 1 972
Saving and transmission deposits 108 849 108 849
Deposits due to customers 502 440 503 244
Debt securities in issue 99 735 100 100
Borrowed funds 10 535 10 885
Total liabilities 658 521 661 385
Note
(1) Operational changes, management changes and associated changes to the way in which the CODM
views the performance of each business segment, have resulted in the reallocation of earnings, assets
and liabilities between operating segments. For details on the business portfolio changes, refer to
the interim financial results booklet available on www.barclaysafrica.com published on 29 July 2015.
13. Assets and liabilities held at fair value
13.1 Fair value measurement and valuation processes
Financial assets and financial liabilities
The Bank has an established control framework with respect to the measurement of fair values.
The framework includes a Valuation Committee and an Independent Valuation Control team (“IVC”),
which is independent from the front office.
The Valuation Committee, which comprises representatives from senior management, will formally
approve valuation policies and changes to valuation methodologies. Significant valuation issues are
reported to the Barclays Africa Group Audit and Compliance Committee.
The Valuation Committee is responsible for overseeing the valuation control process and will
therefore consider the appropriateness of valuation techniques and inputs for fair value measurement.
The IVC independently verifies the results of trading and investment operations and all
significant fair value measurements. They source independent data from external independent parties, as well
as internal risk areas when performing independent price verification for all financial instruments
held at fair value. They also assess and document the inputs obtained from external, independent
sources to measure the fair value which supports conclusions that valuations are performed in accordance
with International Financial Reporting Standards (“IFRS”) and internal valuation policies.
Investment properties
The fair value of investment properties is determined based on the most appropriate methodology
applicable to the specific property. Methodologies include the market comparable approach that
reflects recent transaction prices for similar properties, discounted cash flows and income capitalisation
methodologies. In estimating the fair value of the properties, the highest and best use of the
properties is taken into account.
Where possible, the fair value of the Bank’s investment properties is determined through
valuations performed by external independent valuators. When the Bank’s internal valuations are different to
that of the external independent valuers, detailed procedures are performed to substantiate the
differences, whereby the IVC verifies the procedures performed by the front office and considers the
appropriateness of any differences to external independent valuations.
13.2 Fair value measurements
Valuation inputs
IFRS 13 requires an entity to classify fair values measured and/or disclosed according to a
hierarchy that reflects the significance of observable market inputs. The three levels of the fair value
hierarchy are defined as follows:
Quoted market prices - Level 1
Fair values are classified as Level 1 if they have been determined using observable prices in an
active market. Such fair values are determined with reference to unadjusted quoted prices for
identical assets or liabilities in active markets where the quoted price is readily available, and the
price represents actual and regularly occurring market transactions on an arm’s length basis. An active
market is one in which transactions occur with sufficient volume and frequency to provide pricing
information on an ongoing basis.
Valuation technique using observable inputs - Level 2
Fair values classified as Level 2 have been determined using models for which inputs are
observable in an active market.
A valuation input is considered observable if it can be directly observed from transactions in an
active market, or if there is compelling external evidence demonstrating an executable exit price.
Valuation technique using significant unobservable inputs - Level 3
Fair values are classified as Level 3 if their determination incorporates significant inputs that
are not based on observable market data (unobservable inputs). An input is deemed significant if it
is shown to contribute more than 10% to the fair value of an item. Unobservable input levels are
generally determined based on observable inputs of a similar nature, historical observations or other
analytical techniques.
Judgemental inputs on valuation of principal instruments
The following summary sets out the principal instruments whose valuation may involve judgemental
inputs:
Debt securities and treasury and other eligible bills
These instruments are valued, based on quoted market prices from an exchange, dealer, broker,
industry group or pricing service, where available. Where unavailable, fair value is determined by
reference to quoted market prices for similar instruments or, in the case of certain mortgage-backed
securities, valuation techniques using inputs derived from observable market data, and, where relevant,
assumptions in respect of unobservable inputs.
Equity instruments
Equity instruments are valued, based on quoted market prices from an exchange, dealer, broker,
industry group or pricing service, where available. Where unavailable, fair value is determined
by reference to quoted market prices for similar instruments or by using valuation techniques
using inputs derived from observable market data, and, where relevant, assumptions in respect of
unobservable inputs.
Also included in equity instruments are non-public investments, which include investments in
venture capital organisations. The fair value of these investments is determined using appropriate
valuation methodologies which, dependent on the nature of the investment, may include discounted cash flow
analysis, enterprise value comparisons with similar companies and price:earnings comparisons. For
each investment, the relevant methodology is applied consistently over time.
Derivatives
Derivative contracts can be exchange-traded or traded Over The Counter (“OTC”). OTC derivative
contracts include forward, swap and option contracts related to interest rates, bonds, foreign
currencies, credit spreads, equity prices and commodity prices or indices on these instruments. Fair values
of derivatives are obtained from quoted market prices, dealer price quotations, discounted cash flow
and option pricing models.
Loans and advances
The fair value of loans and advances to banks and customers is determined by discounting
contractual cash flows. Discount factors are determined using the relevant forward base rates (as at
valuation date) plus the originally priced spread. Where a significant change in credit risk has occurred,
an updated spread is used to reflect valuation date pricing. Behavioural cash flow profiles, instead
of contractual cash flow profiles, are used to determine expected cash flows where contractual cash
flow profiles would provide an inaccurate fair value.
Deposits, debt securities in issue and borrowed funds
Deposits, debt securities in issue and borrowed funds are valued using discounted cash flow
models, applying rates currently offered for issuances with similar characteristics. Where these
instruments include embedded derivatives, the embedded derivative component is valued using the methodology
for derivatives.
The fair value of amortised cost deposits repayable on demand is considered to be equal to their
carrying value. For other financial liabilities at amortised cost the disclosed fair value
approximates the carrying value because the instruments are short-term in nature or have interest rates that
reprice frequently.
13.3 Fair value adjustments
The main valuation adjustments required to arrive at a fair value are described as follows:
Bid-offer valuation adjustments
For assets and liabilities where the Bank is not a market maker, mid-prices are adjusted to bid
and offer prices respectively unless the relevant mid-prices are reflective of the appropriate
exit price as a practical expedient given the nature of the underlying instruments. Bid-offer
adjustments reflect expected close out strategy and, for derivatives, the fact that they are managed
on a portfolio basis. The methodology for determining the bid-offer adjustment for a derivative
portfolio will generally involve netting between long and short positions and the bucketing of risk
by strike and term in accordance with hedging strategy. Bid-offer levels are derived from market
sources, such as broker data. For those assets and liabilities where the Bank is a market maker and
has the ability to transact at, or better than, mid-price (which is the case for certain equity,
bond and vanilla derivative markets), the mid-price is used, since the bid-offer spread does not
represent a transaction cost.
Uncollateralised derivative adjustments
A fair value adjustment is incorporated into uncollateralised derivative valuations to reflect
the impact on fair value of counterparty credit risk, as well as the cost of funding across
all asset classes.
Model valuation adjustments
Valuation models are reviewed under the Bank’s model governance framework. This process identifies
the assumptions used and any model limitations (for example, if the model does not incorporate
volatility skew). Where necessary, fair value adjustments will be applied to take these factors into
account. Model valuation adjustments are dependent on the size of the portfolio, complexity of the
model, whether the model is market standard and to what extent it incorporates all known risk factors.
All models and model valuation adjustments are subject to review on at least an annual basis.
13.4 Fair value hierarchy
The following table shows the Bank’s assets and liabilities that are recognised and subsequently
measured at fair value and are analysed by valuation techniques. The classification of assets and
liabilities is based on the lowest level of input that is significant to the fair value measurement in
its entirety.
30 June
2015 2014
Recurring fair value Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
measurements Rm Rm Rm Rm Rm Rm Rm Rm
Financial assets
Investment securities 42 875 17 871 1 728 62 474 66 747 - 2 309 69 056
Loans and advances to banks - 25 484 - 25 484 - 11 063 - 11 063
Trading and hedging portfolio assets 19 576 51 970 1 271 72 817 23 627 51 462 1 175 76 264
Debt instruments 18 209 8 396 872 27 477 20 775 3 361 870 25 006
Derivative assets 376 39 267 399 40 042 1 879 43 422 305 45 606
Commodity derivatives - 197 - 197 52 309 - 361
Credit derivatives - 224 111 335 - 230 48 278
Equity derivatives 11 1 480 45 1 536 - 1 331 - 1 331
Foreign exchange derivatives - 6 410 3 6 413 1 826 6 107 4 7 937
Interest rate derivatives 365 30 956 240 31 561 1 35 445 253 35 699
Equity instruments 930 - - 930 973 81 - 1 054
Money market assets 61 4 307 - 4 368 - 4 598 - 4 598
Other assets - - 17 17 - - 16 16
Loans and advances to customers 3 19 839 725 20 567 5 5 237 5 424 10 666
Total financial assets 62 454 115 164 3 741 181 359 90 379 67 762 8 924 167 065
Financial liabilities
Deposits from banks - 16 948 7 16 955 - 18 515 - 18 515
Trading and hedging portfolio liabilities 2 327 41 835 420 44 582 2 480 42 719 449 45 648
Derivative liabilities - 41 835 420 42 255 361 42 719 449 43 529
Commodity derivatives - 216 - 216 29 268 - 297
Credit derivatives - 173 129 302 - 208 39 247
Equity derivatives - 2 419 183 2 602 - 1 690 318 2 008
Foreign exchange derivatives - 5 771 7 5 778 332 4 437 2 4 771
Interest rate derivatives - 33 256 101 33 357 - 36 116 90 36 206
Short positions 2 327 - - 2 327 2 119 - - 2 119
Deposits due to customers 94 7 673 10 689 18 456 104 12 830 6 232 19 166
Debt securities in issue 2 5 172 2 066 7 240 366 4 068 19 4 453
Total financial liabilities 2 423 71 628 13 182 87 233 2 950 78 132 6 700 87 782
Non-financial assets
Commodities 1 824 - - 1 824 1 840 - - 1 840
Investment properties - - 263 263 - - 243 243
Non-recurring fair value measurements
Non-current assets held for sale(1) - - 236 236 - - 414 414
Note
(1)Includes certain items classified in terms of the requirements of IFRS 5 which are measured in
terms of their respective standards.
31 December
2014
Level 1 Level 2 Level 3 Total
Recurring fair value measurements Rm Rm Rm Rm
Financial assets
Investment securities 48 973 19 329 2 316 70 618
Loans and advances to banks - 20 523 - 20 523
Trading and hedging portfolio assets 25 061 52 995 1 151 79 207
Debt instruments 24 433 4 743 870 30 046
Derivative assets 2 42 347 281 42 630
Commodity derivatives 2 348 - 350
Credit derivatives - 284 91 375
Equity derivatives - 1 011 29 1 040
Foreign exchange derivatives - 8 327 1 8 328
Interest rate derivatives - 32 377 160 32 537
Equity instruments 626 321 - 947
Money market assets - 5 584 - 5 584
Other assets - - 17 17
Loans and advances to customers 4 6 160 4 731 10 895
Total financial assets 74 038 99 007 8 215 181 260
Financial liabilities
Deposits from banks - 19 609 - 19 609
Trading and hedging portfolio liabilities 2 795 44 042 320 47 157
Derivative liabilities - 44 042 320 44 362
Commodity derivatives - 308 - 308
Credit derivatives - 324 39 363
Equity derivatives - 1 296 198 1 494
Foreign exchange derivatives - 9 931 7 9 938
Interest rate derivatives - 32 183 76 32 259
Short positions 2 795 - - 2 795
Deposits due to customers 80 13 606 5 530 19 216
Debt securities in issue 2 5 236 42 5 280
Total financial liabilities 2 877 82 493 5 892 91 262
Non-financial assets
Commodities 1 700 - - 1 700
Investment properties - - 252 252
Non-recurring fair value measurements
Non-current assets held for sale(1) - - 250 250
Note
(1)Includes certain items classified in terms of the requirements of IFRS 5 which are measured in
terms of their respective standards.
13.5 Measurement of assets and liabilities categorised at Level 2
The following table presents information about the valuation techniques and significant observable
inputs used in measuring assets and liabilities categorised as Level 2 in the fair value hierarchy:
Category of asset/liability Valuation techniques applied Significant observable inputs
Cash, cash balances and balances with Discounted cash flow models Underlying price of market traded instruments
central banks and/or interest rates
Loans and advances to banks Discounted cash flow models Interest rate and/or money market curves
Trading and hedging portfolio assets and liabilities
Debt instruments Discounted cash flow models Underlying price of market traded instruments
and/or interest rates
Derivative assets
Commodity derivatives Discounted cash flow and/or option pricing, Spot price of physical or futures,
futures pricing and/or Exchange Traded Fund interest rates and/or volatility
(“ETF”) models
Credit derivatives Discounted cash flow and/or credit Interest rate, recovery rate, credit spread
default swap models and/or quanto ratio
Equity derivatives Discounted cash flow, option pricing and/or Spot price, interest rate, volatility and/or
futures pricing models dividend stream
Foreign exchange derivatives Discounted cash flow and/or option pricing Spot price, interest rate and/or volatility
models
Interest rate derivatives Discounted cash flow and/or option pricing Interest rate curves, repurchase agreement
models curves, money market curves and/or volatility
Equity instruments Net asset value Underlying price of market traded instruments
Money market assets Discounted cash flow models Money market rates and/or interest rates
Loans and advances to customers Discounted cash flow models Interest rate curves and/or money market curves
Investment securities Listed equity: market bid price. Other items: Underlying price of the market traded
Discounted cash flow models instruments interest rate curves
Deposits from banks Discounted cash flow models Interest rate curves and/or money market curves
Deposits due to customers Discounted cash flow models Interest rate curves and/or money market curves
Debt securities in issue and other liabilities Discounted cash flow models Underlying price of the market traded instrument
and/or interest rate curves
13.6 Reconciliation of Level 3 assets and liabilities
A reconciliation of the opening balances to closing balances for all movements on Level 3 assets
and liabilities is set out below:
30 June
2015
Trading and
hedging Loans and
portfolio Other advances to Investment Investment Total assets
assets assets customers securities properties at fair value
Rm Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 1 151 17 4 731 2 316 252 8 467
Movement in other comprehensive income - - - - - -
Net interest income - - - 38 - 38
Gains and losses from banking and trading activities - - (16) - - (16)
Gains and losses from investment activities - - - (7) 11 4
Purchases 132 - - - - 132
Sales (4) - (3 990) (619) - (4 613)
Settlements - - - - - -
Transferred to/(from) assets - - - - - -
Movement in/(out) of Level 3 (8) - - - - (8)
Closing balance at the end of the reporting period 1 271 17 725 1 728 263 4 004
30 June
2014
Trading and
hedging Loans and
portfolio Other advances to Investment Investment Total assets
assets assets customers securities properties at fair value
Rm Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 1 037 16 6 477 2 313 240 10 083
Movement in other comprehensive income - - - - - -
Net interest income - - 58 - - 58
Gains and losses from banking and trading activities 88 - - - - 88
Gains and losses from investment activities - - - (4) 3 (1)
Purchases 4 - 285 - - 289
Sales - - - - - -
Settlements - - (1 396) - - (1 396)
Transferred to/(from) assets 6 - - - - 6
Movement in/(out) of Level 3 40 - - - - 40
Closing balance at the end of the reporting period 1 175 16 5 424 2 309 243 9 167
31 December
2014
Trading and
hedging Loans and
portfolio Other advances to Investment Investment Total assets
assets assets customers securities properties at fair value
Rm Rm Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 1 037 16 6 477 2 313 240 10 083
Movement in other comprehensive income - - - 5 - 5
Net interest income - 1 373 69 - 443
Gains and losses from banking and trading activities 173 - (29) (7) - 137
Gains and losses from investment activities - - 2 (83) 12 (69)
Purchases - - 143 9 - 152
Sales (37) - (620) (9) - (666)
Settlements - - (1 615) - - (1 615)
Transferred to/(from) assets - - - - - -
Movement in/(out) of Level 3 (22) - - 19 - (3)
Closing balance at the end of the reporting period 1 151 17 4 731 2 316 252 8 467
30 June
2015
Trading and
hedging Debt Total
portfolio Deposits due securities liabilities
liabilities to customers in issue at fair value
Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 320 5 530 42 5 892
Movement in other comprehensive income - - - -
Net interest income - - - -
Gains and losses from banking and trading activities 147 282 168 261
Sales - - - -
Issue/(settlements) (5) 4 877 2 192 7 064
Movement in/(out) of Level 3 (42) - - (42)
Closing balance at the end of the reporting period 420 10 689 2 066 13 175
30 June
2014
Trading and
hedging Debt Total
portfolio Deposits due securities liabilities
liabilities to customers in issue at fair value
Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 542 7 138 35 7 715
Movement in other comprehensive income - - - -
Net interest income - 10 - 10
Gains and losses from banking and trading activities (114) (217) - (331)
Sales - - - -
Settlements - (699) (16) (715)
Movement in/(out) of Level 3 21 - - 21
Closing balance at the end of the reporting period 449 6 232 19 6 700
31 December
2014
Trading and
hedging Debt Total
portfolio Deposits due securities liabilities
liabilities to customers in issue at fair value
Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 542 7 138 35 7 715
Movement in other comprehensive income (8) - - (8)
Net interest income - 1 1 2
Gains and losses from banking and trading activities (62) (1 501) 6 (1 557)
Sales (75) - - (75)
Settlements - (81) - (81)
Movement in/(out) of Level 3 (77) (27) - (104)
Closing balance at the end of the reporting period 320 5 530 42 5 892
13.6.1 Significant transfers between levels
During the previous reporting period, it was determined that significant transfers between levels of the assets and
liabilities held at fair value occurred. Treasury bills of R18,5bn were transferred from Level 1 to Level 2, as these are
held in an inactive market.
13.7 Unrealised gains and losses on Level 3 assets and liabilities
The total unrealised gains and losses for the reporting period on Level 3 positions held at the reporting date are
set out below:
30 June
2015
Trading and
hedging Loans and Non-current
portfolio advances to Investment Investment assets held Total assets
assets customers securities properties for sale at fair value
Rm Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities 146 (28) - - - 118
30 June
2014
Trading and
hedging Loans and Non-current
portfolio advances to Investment Investment assets held Total assets
assets customers securities properties for sale at fair value
Rm Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities 60 (188) - - - (128)
31 December
2014
Trading and
hedging Loans and Non-current
portfolio advances to Investment Investment assets held Total assets
assets customers securities properties for sale at fair value
Rm Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities 79 (28) - - - 51
30 June
2015
Trading and
hedging Debt Total
portfolio Other Deposits due securities liabilities at
liabilities liabilities to customers in issue fair value
Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities - - - - -
30 June
2014
Trading and
hedging Debt Total
portfolio Other Deposits due securities liabilities at
liabilities liabilities to customers in issue fair value
Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities (23) - - - (23)
31 December
2014
Trading and
hedging Debt Total
portfolio Other Deposits due securities liabilities at
liabilities liabilities to customers in issue fair value
Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities (116) - - - (116)
13.8 Sensitivity analysis of valuations using unobservable inputs
As part of the Bank’s risk management processes, stress tests are applied on the significant unobservable parameters to
generate a range of potentially possible alternative valuations. The assets and liabilities that most impact this sensitivity
analysis are those with the more illiquid and/or structured portfolios. The stresses are applied independently and do not take
account of any cross correlation between separate asset classes that would reduce the overall effect on the valuations.
The following table reflects how the unobservable parameters were changed in order to evaluate the sensitivities of Level 3
assets and liabilities:
Significant unobservable parameter Positive/(negative) variance applied to parameters
Credit spreads 100/(100) bps
Volatilities 10/(10)%
Basis curves 100/(100) bps
Yield curves and repo curves 100/(100) bps
Future earnings and marketability discounts 15/(15)%
Funding spreads 100/(100) bps
A significant parameter has been deemed to be one which may result in a charge to the profit or loss or a change in the fair value
asset or liability of more than 10% of the underlying value of the affected item. This is demonstrated by the following sensitivity
analysis which includes a reasonable range of possible outcomes:
30 June
2015
Potential effect recorded Potential effect recorded
in profit or loss directly in equity
Significant Favourable/Unfavourable Favourable/Unfavourable
unobservable parameters Rm Rm
Deposits due to customers BAGL/Absa funding spread -/- -/-
Investment securities Yield curves, future earnings
and marketability discount,
comparator multiples 132/132 (5)/4
Loans and advances to customers Credit spreads 2/2 -/-
Other assets Volatility, credit spreads 3/3 -/-
Trading and hedging portfolio assets Volatility, credit spreads -/- -/-
Trading and hedging portfolio liabilities Volatility, credit spreads,
basis curves, yield curves,
repo curves, funding spreads -/- -/-
137/137 (5)/4
30 June
2014
Potential effect recorded Potential effect recorded
in profit or loss directly in equity
Significant Favourable/Unfavourable Favourable/Unfavourable
unobservable parameters Rm Rm
Loans and advances to customers Volatility, credit spreads,
yield curves, discount rates 5/168 -/-
Investment securities Yield curves, future earnings
and marketability discount,
comparator multiples -/- -/-
Other assets Volatility, credit spreads -/- -/-
Trading and hedging portfolio assets Volatility, credit spreads 44/- -/-
Investment properties Investment properties -/- -/-
Trading and hedging portfolio liabilities Credit spreads 281/284 -/-
Deposits due to customers Yield curves 500/500 -/-
830/952 -/-
31 December
2014
Potential effect recorded Potential effect recorded
bbin profit or loss directly in equity
Significant Favourable/Unfavourable Favourable/Unfavourable
unobservable parameters Rm Rm
Deposits due to customers BAGL/Absa funding spread -/- -/-
Investment securities Yield curves, future earnings
and marketability discount,
comparator multiples 131/131 -/-
Loans and advances to customers Credit spreads 1 037/23 -/-
Other assets Volatility, credit spreads 3/3 -/-
Trading and hedging portfolio assets Volatility, credit spreads -/- -/-
Trading and hedging portfolio liabilities Volatility, credit spreads,
basis curves, yield curves,
repo curves, funding spreads 34/34 -/-
1 205/191 -/-
13.9 Measurement of assets and liabilities at Level 3
The following table presents information about the valuation techniques and significant unobservable inputs used in measuring assets and
liabilities categorised as Level 3 in the fair value hierarchy:
June December
2015 2014 2014
Category of asset/ Valuation techniques Significant unobservable Range of estimates utilised
liability applied inputs for the unobservable inputs
Loans and Discounted cash flow, and/or Credit spreads 0,96% to 3,99% Credit spreads 0,96% to 3,99%
advances to dividend yield models vary between
customers 1,35% and 7,5%
Investment Discounted cash flow models, Risk adjusted yield or Discount rates Discount rates Discount rates
securities third-party valuations, curves, future earnings, between 9,1% between 9,7% between 9,1% and
earnings multiples and/or marketability discounts and/ and 17,9%, and 18%, 17,9%, comparable
income capitalisation comparator multiples comparable multiples multiples between
valuations multiples between 5,5 5 and 6
between 5 and 6 and 6,1
Trading and
hedging portfolio
assets and liabilities
Debt instruments Discounted cash flow models Credit spreads 0,9% to 3,5% 0,9% to 3,5% 0,9% to 3,5%
Derivative assets
Credit derivatives Discounted cash flow, credit Credit spreads, recovery 0% to 23,58% 0% to 3,5% 0% to 13,45%
default swap (hazard rate) rates and/or quanto ratio
models
Equity derivatives Discounted cash flow, option Volatility and/or dividend 15,15% to 16,9% to 37,2% 18,16% to 48,20%
pricing and/or futures pricing streams (greater than 46,80%
models 3 years)
Foreign exchange Discounted cash flow and/or African basis curves -10,00% to 13,95% -2,5% to 1,7% -10,74% to 6,53%
derivatives option pricing models (greater than 1 year)
Interest rate Discounted cash flow and/or Real yield curves (less than -2,59% to 2,47% -1,5% to 8,3% -1,56% to 10,04%
derivatives option pricing models 2 years)
Deposits due to Discounted cash flow models BAGL funding spreads 0,85% to 1,2% 0,85% to 1,2% 0,85% to 1,2%
customers (greater than 5 years)
Debt securities in Discounted cash flow models ZAR-MM-Funding (greater 1,44% to 1,70% 10 to 20 bps 1,28% to 1,38%
issue than 5 years)
Investment Discounted cash flow models Estimates of periods in which 2 to 7 years 2 to 7 years 2 to 7 years
properties rental units will be disposed of
Annual selling price escalations 0% to 6% 0% to 6% 0% to 6%
Annual rental escalations 0% to 10% 0% to 10% 0% to 10%
Expense ratios 22% to 75% 22% to 75% 22% to 75%
Vacancy rates 2% to 15% 2% to 15% 2% to 15%
Income capitalisation rates 10% to 12% 10% to 12% 10% to 12%
Risk adjusted discount rates 14% to 16% 14% to 16% 14% to 16%
For those assets or liabilities held at amortised cost and disclosed in Levels 2 and 3 in the fair value hierarchy, the discounted cash flow
valuation technique is used. Interest rates and money market curves are considered unobservable inputs for items which mature after five years.
However, if the items mature in less than five years, these inputs are considered observable.
For debt securities in issue held at amortised cost, a further significant input would be the underlying price of the market traded instrument.
The sensitivity of the fair value measure is dependent on the unobservable inputs. Significant changes to the unobservable inputs in isolation
will have either a positive or negative impact on fair values.
13.10 Unrecognised (losses)/gains as a result of the use of valuation models using unobservable inputs
The amount that has yet to be recognised in the statement of comprehensive income that relates to the difference between the transaction price
and the amount that would have arisen had valuation models using unobservable inputs been used on initial recognition, less amounts subsequently
recognised, is as follows:
30 June 31 December
2015 2014 2014
Rm Rm Rm
Opening balance at the beginning of the reporting period (52) (55) (55)
New transactions (83) (4) (23)
Amounts recognised in profit and loss during the reporting period 28 15 26
Closing balance at the end of the reporting period (107) (44) (52)
13.11 Third-party credit enhancements
There were no significant liabilities measured at fair value and issued with inseparable third-party credit enhancements.
14. Reporting changes overview
The financial reporting changes that have had an impact on the Bank’s results for the comparative reporting period ended
30 June 2014 include:
• The implementation of amended IFRS, specifically amendments to IAS 32, relating to offsetting of financial assets and
financial liabilities. All other amendments to IFRS, and new interpretations, effective for the current reporting period
had no significant impact on the Bank’s reported results.
• Certain changes in internal reclassifications.
14.1 Accounting policy changes due to amended IFRS
The amendments to IAS 32 provide further application guidance on when the criteria for offsetting would be considered to be
met and became effective for reporting periods beginning on or after 1 January 2014.
The offsetting requirements in IAS 32 have been retained such that a financial asset and liability shall be offset and the
net amount presented in the statement of financial position, only when an entity currently has a legally enforceable right
to set off the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the
liability simultaneously. The amendments to IAS 32 provide more application guidance on when the criteria for offsetting
would be considered to be met.
The netting applied to certain financial instruments (i.e. variation margins on certain derivatives as well as certain hybrid
customer products) has been assessed in light of the amendments and it has been determined that netting is no longer permitted
under IFRS.
14.2 Internal reclassification changes
The Bank elected to make an internal reclassification change involving the classification of items in the statement of financial
position. Investment securities across the Bank have been appropriately grouped together as “Investment securities”.
This has resulted in the old “statutory liquid asset portfolio” line item in the statement of financial position no
longer being displayed.
This reclassification has no impact on the overall financial position or net earnings of the Bank. To ensure comparability,
the comparative reporting periods have been restated.
14.3 Impact of reporting changes on the Bank’s results
The impact of these changes in the statement of financial position is as follows:
Condensed consolidated statement of financial position as at 30 June 2014
IFRS
As accounting Internal
previously policy reclassification
reported(1) changes changes Restated
Rm Rm Rm Rm
Assets
Statutory liquid asset portfolio 63 589 - (63 589) -
Investment securities 5 467 - 63 589 69 056
Loans and advances to customers 542 481 898 - 543 379
Liabilities
Deposits due to customers 505 083 898 - 505 981
Note
(1) As per financial results published on 30 July 2014.
Administration and contact details
Absa Bank Limited Registered office
Incorporated in the Republic of South Africa 7th Floor, Barclays Towers West
Registration number: 1986/004794/06 15 Troye Street, Johannesburg, 2001
Authorised financial services and registered credit provider (NCRCP7) PO Box 7735, Johannesburg, 2000
JSE share code: ABSP and ABMN Switchboard: +27 11 350 4000
ISIN: ZAE000079810 barclaysafrica.com
Board of directors Queries
Independent non-executive directors Please direct investor relations and annual report
C Beggs, Y Z Cuba, T Dingaan, S A Fakie (resigned 30 June 2015), queries to groupinvestorrelations@barclaysafrica.com
M J Husain, T M Mokgosi-Mwantembe, T S Munday (Lead Independent Director) Please direct media queries to groupmedia@barclaysafrica.com
Non-executive director For all customer and client queries, please go to the relevant
W E Lucas-Bull (Chairman) country website (see details below) for the local customer contact information
Executive directors Please direct queries relating to your Barclays Africa Bank shares
D W P Hodnett (Deputy Chief Executive Officer and Financial Director), to questions@computershare.co.za
M Ramos (Chief Executive Officer) Please direct other queries regarding the Bank to
groupsec@barclaysafrica.com
Head of Investor Relations Transfer secretary
Alan Hartdegen Computershare Investor Services (Pty) Ltd
Telephone: +27 11 350 2598 Telephone: +27 11 370 5000
computershare.com/za/
Company Secretary
Nadine Drutman ADR depositary
Telephone: +27 11 350 5347 BNY Mellon
Telephone: +1 212 815 2248
bnymellon.com
Head of Finance
Jason Quinn
Telephone: +27 11 350 7565
Auditors Sponsors
Ernst & Young Inc. Lead independent sponsor
Telephone: +27 11 772 3000 J. P. Morgan Equities South Africa (Pty) Ltd
ey.com/ZA/en/Home Telephone: +27 11 507 0300
jpmorgan.com/pages/jpmorgan/emea/local/za
PricewaterhouseCoopers Inc. Joint sponsor
Telephone: +27 11 797 4000 Absa Bank Limited (Corporate and Investment Bank)
pwc.co.za Telephone: +27 11 895 6843
E-mail: equitysponsor@absacapital.com
Date: 29/07/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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