Wrap Text
Audited summary consolidated financial results for the reporting period ended 31 December 2015
Barclays Africa Group Limited
Authorised financial services and registered credit provider (NCRCP7)
Registration number: 1986/003934/06
Incorporated in the Republic of South Africa
JSE share code: BGA
ISIN: ZAE000174124
(Barclays Africa Group, BAGL or the Group)
Audited summary consolidated financial results for the reporting period ended 31 December 2015.
The annual consolidated and separate financial statements are available upon request from Barclays Africa Group Limited
Company Secretariat.
Salient features
- Diluted HEPS increased 10% to 1 686 cents.
- Declared a DPS of 1 000 cents, up 8%.
- Rest of Africa headline earnings grew 17% to R2,3bn and South Africa rose 8% to R12,0bn.
- RoE improved to 17,0% from 16,7%.
- Pre-provision profit increased 8% to R29,5bn.
- Revenue grew 6% to R67,2bn, as net interest income increased 8% and non-interest income rose 5%, while operating
expenses grew 5% to R37,7bn.
- Credit impairments increased 10% to R6,9bn resulting in a 1,05% credit loss ratio from 1,02%.
- Barclays Africa Group Limited's CET1 ratio of 11,9% remains above regulatory requirements and our board target
range.
Overview of results
Barclays Africa Group Limited's headline earnings increased 10% to R14 287m from R13 032m. Diluted headline earnings
per share ("HEPS") also grew 10% to 1 686 cents from 1 538 cents. The Group's Return on Equity ("RoE") improved to
17,0% from 16,7%, comfortably above its 13,75% Cost of Equity ("CoE") for 2015, due to its return on assets rising
to 1,37% from 1,33%. Barclays Africa Group declared a 8% higher full year ordinary Dividend per share ("DPS") of
1 000 cents, given its strong Common Equity Tier ("CET1") ratio and internal capital generation capacity. Net
asset value ("NAV") per share increased 8% to 10 558 cents.
Pre-provision profit increased 8% to R29.5bn, which drove earnings growth. Non-interest income grew 5% and net
interest income 8%, as the Group's net interest margin (on average interest-bearing assets) improved to 4,81% from
4,65%. Loans and advances to customers grew 11% to R703bn, while deposits due to customers increased 10% to R688bn.
The Group's cost-to-income ratio improved to 56,0% from 56,8% as operating expenses rose 5%. Credit impairments grew
10%, as Non-performing loans ("NPL") cover rose marginally and portfolio provisions increased to 0,73% of performing
loans from 0,70%. NPLs declined to 3,9% of gross loans and advances to customers from 4,2%.
Retail and Business Banking ("RBB") headline earnings increased 14% to R9,7bn, as revenue grew 6% and costs rose 4%,
with Home Loans and Card earnings growing 15% and 25% respectively. Wealth, Investment Management and Insurance
("WIMI") headline earnings increased 11% to R1,5bn, with 14% growth in Life Insurance, while Corporate Investment Bank
("CIB") grew 6% to R3,9bn, including 16% higher Corporate earnings.
Revenue from Rest of Africa grew 14% and headline earnings rose 17% to R2,3bn, to contribute 21% and 16% of the
total Group respectively.
Operating environment
Global markets saw heightened financial volatility, renewed pressure on commodity prices and concerns about growth.
We expect global growth of 3,1% in 2015, supported by consumption in advanced economies. Emerging market growth
slowed largely led by China, Brazil and Russia. The Federal Reserve raised rates for the first time since 2006.
Conversely, monetary policy was eased in the euro area during the year.
South Africa's growth slowed under the pressure of drought, continued electricity supply challenges and falling
commodity prices. Weak consumer confidence and rising interest rates weighed on household spending. Economic
growth is forecast to have slowed to 1,3% in 2015 from 1,5% in 2014. The rand lost a quarter of its value against major
currencies during the year. Growth in the Barclays Africa Group markets in the rest of Africa moderated further
due to lower commodity prices and an adverse external environment. Fiscal and current accounts deteriorated,
putting pressure on African currencies and inflation.
Group performance
Statement of financial position
Total Group assets increased 15% to R1 145bn at 31 December 2015, predominantly due to 11% higher loans and
advances to customers, while trading portfolio assets grew 52% and loans and advances to banks rose 19%.
Loans and advances to customers
Loans and advances to customers increased 11% to R703bn, or to 7% excluding rand depreciation and growth in reverse
repurchase agreements. Retail Banking South Africa's loans rose 2% to R375bn, given 6% growth in Vehicle and Asset
Finance ("VAF")and 8% higher Personal Loans, while Home Loans was flat. Business Banking South Africa's loans rose 4% to
R64bn, including 15% higher term loans and 9% growth in agriculture loans. RBB Rest of Africa's loans increased 26%
to R45bn,in part due to rand depreciation. CIB's loans increased 29% to R214bn, given strong growth in term loans,
preference shares and reverse repurchase agreements.
Funding
The Group maintained its strong liquidity position, growing deposits due to customers 10% to R688bn and improving
its loans-to-deposit ratio to 86% from 87%. Deposits due to customers contributed 78% to total funding from 80%.
Retail Banking South Africa maintained its leading market share and increased deposits 10% to R166bn. Business
Banking South Africa's deposits grew 9% to R110bn, with 19% higher savings and transmission deposits. RBB's 12%
deposit growth reduced the proportion of more expensive wholesale funding. CIB's deposits increased 6% to R242bn,
given 10% higher cheque account deposits and 8% lower fixed deposits.
Net asset value
The Group's NAV rose 8% to R89,3bn, as it generated profits of R14,3bn in the period, from which it paid R8,2bn
in dividends. Its foreign currency translation reserve grew by R3,0bn to R6,5bn. The Group's NAV per share also
grew 8% to 10 558 cents.
Capital to risk-weighted assets
Group risk-weighted assets ("RWA(s)"?) increased 13% to R703bn at 31 December 2015, in line with its asset growth.
The Group remains well capitalised, comfortably above minimum regulatory requirements. Barclays Africa Group
Limited's CET1 and Tier 1 capital adequacy ratios were 11,9% and 12,6% respectively (from 11,9% and 12,7%). The
Group generated 2,1% of CET1 capital internally during the period. Its total capital adequacy ratio was 14,5%,
at the top end of the board target range of 12,5% to 14,5%. Declaring an 8% higher DPS of 1 000 cents - a
dividend cover of 1,7 times - was well considered, based on the Group's strong capital position, internal capital
generation, strategy and growth plans.
Statement of comprehensive income
Net interest income
Net interest income increased 8% to R38 407m from R35 601m, with average interest-bearing assets growing 4%. The
Group's net interest margin improved to 4,81% from 4,65%.
Loan pricing had an 8 basis points ("bps"?) positive impact, as improved pricing in Home Loans and Personal Loans
offset compression in Vehicle and Asset Finance. The deposit margin was unchanged, as compression in Business
Banking offset improved retail spreads and the mix benefit of less wholesale funding.
Higher South African interest rates resulted in an endowment contribution on deposits and equity of 3 bps. Despite
releasing R1 110m to the income statement, the benefit from structural hedging declined by 6 bps. The cash flow
hedging reserve relating to the structural hedging programme decreased to a R2,1bn debit after tax from a R0.4bn
credit. Rest of Africa added 4 bps to the Group margin, as its margin improved by 10 bps and its weighting in the
overall composition increased. Changing the funding model for foreign currency loans within CIB added 8 bps to the
total margin, partly offset by higher liquid assets.
Non-interest income
Non-interest income increased 5% to R28 791m from R27 524m accounting for 43% of total income. Rest of Africa
grew 18% to R4 933m, with strong WIMI and RBB growth, to exceed South Africa's 2% increase to R23 858m. Net fee
and commission income rose 8% to R20 155m, with strong growth in credit cards and electronic banking of 37% and
12% respectively, while merchant income decreased 7% to R1 731m due to reduced industry interchange rates.
RBB's non-interest income grew 7% to R18 238m, 63% of the total. Retail Banking South Africa increased 5% to
R12 282m with 2% growth in customer numbers offsetting continued migration to bundled products and electronic
channels. Card non-interest income grew 9%, with 14% growth in acquiring volumes, despite new interchange rules
reducing revenue by R300m. Business Banking's non-interest income grew 5% to R3 336m, largely due to 14% higher
cheque account income and 10% growth in electronic banking income. Enhanced digital functionality and reclassifying
cash-handling device-related costs to non-interest income reduced cash-related transaction income growth by 3%,
while cheque payment volumes fell 21%. RBB Rest of Africa's 21% higher non-interest income of R2 620m reflects
increased transaction volumes, particularly in card and foreign exchange.
WIMI's non-interest income increased 7% to R4 962m, with improved growth in South Africa of 6% and a 24% rise in
the Rest of Africa. Net insurance premiums grew 8% and Wealth and Investments by 10% on higher assets under
management.
CIB's non-interest income decreased 9% to R5 926m, largely due to a change in its funding model for foreign
currency loans that reduced trading revenue and R202m of negative revaluations in Private Equity. Overall Markets
net revenue (revenue including credit impairments) decreased 3% to R4 106m with a 23% decline in Fixed Income and
Credit and 19% lower Foreign Exchange and Commodities revenue in South Africa, offset by 23% and 21% growth in
Rest of Africa Markets and Equities and Prime Services respectively.
Impairment losses on loans and advances
Credit impairments increased 10% to R6 920m from R6 290m, resulting in a 1,05% credit loss ratio from 1,02%. Total
NPL cover improved to 43,2% from 43,0%. Balance sheet portfolio provisions increased 15% to R5,0bn, or 0,73% of
performing loans from 0,70%. Group NPLs declined to 3,9% of gross customer loans and advances from 4,2% while
increasing 2,2% to R28,0bn.
RBB's credit impairments grew 1% to R6,1bn, a 1,29% credit loss ratio from 1,32%. Retail Banking South Africa's
charge declined 2% to R4,8bn, as lower mortgage credit impairments outweighed a 6% rise in VAF.
Home Loans' charge decreased 20% to R689m, a 0,30% credit loss ratio, given improved collections processes and the
high quality of new business written in recent years. Mortgage NPLs fell 11% to R9,3bn, 4,0% of gross loans. NPL
cover in mortgages decreased to 22,1% from 25,3%, as aged NPLs were written off. VAF's credit loss ratio improved
to 0,98% from 1,01%. Instalment credit agreements NPLs increased to 2,2% of gross loans and its NPL cover declined
to 38,8%, due to accelerating write-offs of aged legal accounts, which reduced the NPL book's average age.
Credit card's charge increased 4% to R2 344m, a 6,07% credit loss ratio from 6,19%. The Edcon portfolio's charge
declined 15% to R893m, a 10,18% credit loss ratio. The credit loss ratio for the remainder of the Card book
increased 20% to R1 451m, reflecting the operating environment and seasoning of recent growth. Personal Loans'
credit loss ratio improved to 5,64% from 6,06% reflecting lending to lower risk existing customers and enhanced
collections.
Business Banking South Africa's credit impairments grew 4% to R548m, a flat 0,87% credit loss ratio. A 70% lower
charge for Commercial Property Finance ("CPF") and mortgages was the driver, while term loan impairments
increased significantly. NPLs fell 16% to R3 306m or 5,1% of gross loans. Performing loan cover increased further
to 1,07%. RBB Rest of Africa's credit impairments rose 21% to R777m, increasing its credit loss ratio to 2,07%
from 1,95%. Its NPLs increased 9% to R3 573m, while performing loan cover increased to 1,12% from 0,95%. CIB's
credit impairments increased 220% off a low base to R793m, reflecting maturation of its loan growth and
deterioration in some sectors. NPLs rose 72% to R2 834m, while portfolio provisions increased to 0,36% of
performing loans.
Operating expenses
Operating expenses grew 5% to R37 661m from R35 848m. South Africa's 4% cost growth was below inflation, while
Rest of Africa costs rose 9%, reflecting continued investment spend. Staff costs rose 8% to R20 902m to account
for 56% of total expenses. Salaries grew 8% due to higher wage increases for entry level employees and hiring in
specialist areas such as Information Technology ("IT"). Incentives rose 5%, as bonuses rose 11% and share-based
payments fell 8%.
Non-staff costs grew 1,5% to R16 759m, as structural cost programmes produced efficiency gains that enabled
continued investment in growth initiatives. Property-related costs decreased 1% to R5 209m, reflecting portfolio
optimisation and lower dilapidation costs. Total IT-related costs increased 7% to R6 675m, 18% of overall costs.
Depreciation declined 3% and amortisation of intangible assets decreased 6% due to impairments recognised in 2014.
Marketing costs grew 8% to R1 740m, given increased product advertising. Professional fees increased 18% reflecting
strategic growth projects. Barclays Bank PLC spent approximately GBP30m on IT in the rest of Africa, which will
continue for another two years. Other costs fell 18%, largely due to reduced fraud losses.
RBB and WIMI's operating expenses increased 4% to R28 168m and 4% to R3 018m respectively. Retail Banking South
Africa's operating expenses grew 3%, driven by operational efficiencies and managing discretionary costs. Despite
investing in relationship managers and systems, Business Banking South Africa's cost growth was contained to 4%.
RBB Rest of Africa's operating expenses grew 7% despite strategic investments and inflationary pressures. CIB's
cost grew 9% to R7 436m, reflecting higher IT spend.
Taxation
The Group's taxation expense increased 6% to R5 899m, slightly less than the 8% growth in pre-tax profit,
resulting in a 27,7% effective tax rate from 28,3%. The decline was largely due to reducing expenses that were
not deductible for tax purposes.
Segment performance
Group earnings remain well diversified by business and product line. RBB accounted for 64% of Group headline
earnings excluding head office, eliminations and other central items. CIB contributed 26% and WIMI 10%.
Retail Banking South Africa
Headline earnings grew 16% to R6 628m, driven by 10% higher pre-provision profits and 2% lower credit impairments.
Transactional and Deposits earnings grew 9% to R2 672m, given 14% higher net interest income on 11% deposit growth.
Home Loans' earnings rose 15% to R1 813m, due 9% lower costs and a 20% reduction in credit impairments. Card
earnings increased 25% to R1 678m, as 6% revenue growth exceeded 1% lower costs and its credit loss ratio improved
to 6,07%. The Edcon portfolio generated earnings of R123m, from its 2014 loss of R9m, due to far lower credit
impairments. VAF earnings declined 3% to R999m, given negative operating Jaws and 6% higher credit impairments.
Personal Loans earnings grew 211% to R361m, reflecting 10% revenue growth, while costs and credit impairments
fell 10% and 6% respectively. Losses in the "Other" segment grew 13% to R895m, due to increased spending
on strategic initiatives. Retail Banking South Africa accounted for 44% of total earnings, excluding the
Group centre.
Business Banking South Africa
Headline earnings increased 5% to R2 175m, reflecting 4% growth in its core franchise and a 17% smaller loss in the
non-core equity portfolio. Pre-provision profits grew 3% with 3% revenue growth slightly below 4% higher costs, while
its credit loss ratio remained flat at 0,87%. Its Return on Average Regulatory Capital ("RoRC") improved to 29,5%
(2014: 28,3%) excluding equities. Business Banking South Africa generated 14% of overall earnings excluding the
Group centre.
Retail and Business Banking Rest of Africa
Headline earnings grew 24% to R895m or 17% in constant currency. Revenue growth of 12% exceeded 7% higher costs to
increase pre-provision profits 28% and reduce its cost to income ratio to 69%. Credit impairments increased 21%
resulting in a 2,07% credit loss ratio. RBB Rest of Africa contributed 6% of total earnings excluding the Group
centre.
Corporate and Investment Bank
Headline earnings rose 6% to R3 940m, due to 6% higher pre-provision profits and 25% lower taxation. Revenues grew
8%, with Rest of Africa increasing 15% and South Africa 4%. Markets revenue declined 3%, with South Africa down 13%
while Rest of Africa grew 23%. Costs rose 9%, reflecting continued investment in systems and technology. Credit
impairments increased 220%, due to higher portfolio provisions and NPLs. Corporate earnings grew 16% to R1 965m, as
5% positive operating Jaws outweighed higher credit impairments. Corporate revenue grew 11% on 15% higher loans and
advances to customers. Investment Bank's earnings fell 3% to R1 975m, given negative operating Jaws and increased
credit impairments. CIB's return on regulatory capital declined to 17,1% from 19,5%, due to higher credit impairments.
It contributed 26% of total earnings excluding the Group centre.
Wealth, Investment Management and Insurance
Headline earnings grew 11% to R1 464m and net operating income increased 16% to R1 924m. Life Insurance earnings rose
14% to R794m, due to 12% higher net premium income and 2% lower costs. Its return on embedded value declined to 22,7%.
Life Insurance's embedded value of new business decreased 4% due to lower volumes in advice products and aligning
credit life products and pricing outside South Africa. Wealth and Investment Management's earnings grew 5% to R438m
given 11% gross operating income growth as net assets under management increased 6% to R274bn. Short-term Insurance
earnings grew 40% to R237m as its underwriting margin and loss ratio improved. Fiduciary Services earnings increased
17% to R137m, while Distribution returned to profitability. WIMI's South African earnings grew 13% to R1 400m, while
rest of Africa was flat at R49m. WIMI's RoE improved to 24,9% from 23,2% and it generated 10% of earnings excluding
the Group centre.
Prospects
While the risks of a global recession have abated, a meaningful acceleration in growth is unlikely. We forecast 3,3%
global growth in 2016, but the outlook remains fragile, with risks tilted to the downside. Global monetary policy is
expected to diverge, with tightening in the US while the euro area and China will continue to ease. In South Africa,
weak confidence points to low investment and consumption spending in 2016. Inflation is expected to rise sharply,
averaging 6,4% due to food inflation and a weaker rand. We forecast a further 75bps of interest rate increases this
year and expect GDP growth to slow to 0,9%. Key risks facing South Africa include continued electricity supply
disruptions and a potential credit ratings downgrade. Africa's medium-term outlook remains challenging given global
and domestic factors. Overall, we expect economic growth of 5,1% in our presence countries in the rest of Africa.
Against this backdrop, we expect low single digit loan growth, with rest of Africa growing faster than South Africa.
The Group's net interest margin should decline slightly as a higher proportion of CIB lending, a lower contribution
from our hedging programme and introducing the National Credit Act caps in May 2016, offset the endowment benefit of
higher interest rates. The credit loss ratio is expected to increase, as arrears are rising and we believe NPLs have
bottomed. However, continued focus on revenue growth and cost management should improve the Group's cost-to-income
ratio further. The balance sheet is well positioned for a potential deteriorating economic environment given its
high level of portfolio provisions and low NPLs, as well as strong capital ratios and liquidity.
Basis of presentation
The Group's audited annual financial results have been prepared in accordance with the recognition and measurement
requirements of International Financial Reporting Standards ("IFRS"?), interpretations issued by the IFRS
Interpretations Committee ("IFRS-IC"?), the South African Institute of Chartered Accountants' 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 Group's most recent annual consolidated financial
statements.
The summary consolidated financial statements are prepared in accordance with the requirements of the JSE Limited
Listings Requirements for preliminary reports, and the requirements of the Companies Act applicable to summary
financial statements. The Listings Requirements require preliminary reports to be prepared in accordance with
the framework concepts and the measurement and recognition requirements of IFRS and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim
Financial Reporting ("IAS 34").
The information disclosed in the SENS is derived from the information contained in the audited annual consolidated
financial statements and does not contain full or complete disclosure details. Any investment decisions by
shareholders should be based on consideration of the consolidation of the audited annual consolidated financial
statements, which is available on request. The presentation and disclosure compy with International Accounting
Standards IAS 34.
The preparation of financial information requires the use of estimates and assumptions about future conditions. Use
of available information and application of judgement are inherent in the formation of estimates. The accounting
policies that are deemed critical to the Group's results and financial position, in terms of the materiality of the
items to which the 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, liabilities arising from claims made under short-term and
long-term insurance contracts and offsetting of financial assets and liabilities.
Accounting policies
The accounting policies applied in preparing the summary consolidated annual financial statements are the same as
those in place for the reporting period ended 31 December 2014 except for:
- Business portfolio changes between operating segments; and
- Reclassification changes.
Auditors' report
PricewaterhouseCoopers Inc. and Ernst & Young Inc., Barclays Africa Group Limited's independent auditors, have audited
the consolidated annual financial statements of Barclays Africa Group Limited from which management prepared the
summary consolidated financial results. The auditors have expressed an unqualified audit opinion on the consolidated
annual financial statements. The summary consolidated financial results comprise the summary consolidated statement
of financial position at 31 December 2015, summary consolidated statement of comprehensive income, summary
consolidated statement of changes in equity and summary consolidated statement of cash flows for the reporting period
then ended and selected explanatory notes, excluding items not indicated as audited. The audit report of the
consolidated annual financial statements is available for inspection at Barclays Africa Group Limited's registered
office.
These summary consolidated financial statements for the year ended 31 December 2015 have been audited by
PricewaterhouseCoopers Inc. and Ernst and Young Inc., who expressed an unmodified opinion thereon. The auditors also
expressed an unmodified opinion on the annual financial statements from which these summary consolidated fnancial
statements were derived.
Events after the reporting period
The directors are not aware of any events occurring between the reporting date of 31 December 2015 and the date of
authorisation of these condensed consolidated annual financial results as defined in IAS 10 - Events after the
Reporting Period ("IAS 10"?).
The directors refer shareholders to the Group's cautionary SENS announcement of 29 February 2016 regarding market
speculation surrounding Barclays PLC's shareholding in Barclays Africa Group Limited.
On behalf of the Board
W E Lucas-Bull M Ramos
Group Chairman Chief Executive Officer
Johannesburg
29 February 2016
Declaration of final ordinary dividend number 59
Shareholders are advised that an ordinary dividend of 550 cents per ordinary share was approved on 29 February 2016
and was declared today, 1 March 2016, for the period ended 31 December 2015. The ordinary dividend is payable to
shareholders recorded in the register of members of the Company at the close of business on 8 April 2016. The directors
of Barclays Africa Group Limited confirm that the Group will satisfy the solvency and liquidity test immediately
after completion of the dividend distribution.
The dividend will be subject to local dividend withholding tax at a rate of 15%. In accordance with paragraphs
11.17(a)(i) to (x) and 11.17(c) of the JSE Listings Requirements, the following additional information is disclosed:
- The dividend has been declared out of income reserves.
- The local dividend tax rate is fifteen per cent (15%).
- The gross local dividend amount is 550 cents per ordinary share for shareholders exempt from the dividend tax.
- The net local dividend amount is 467,50 cents per ordinary share for shareholders liable to pay for the dividend
tax.
- Barclays Africa Group currently has 847 750 679 ordinary shares in issue (includes 2 025 369 treasury shares).
- Barclays Africa Group Limited’s income tax reference number is 9150116714.
In compliance with the requirements of Strate, the electronic settlement and custody system used by JSE Limited, the
following salient dates for the payment of the dividend are applicable:
Last day to trade cum dividend Friday, 1 April 2016
Shares commence trading ex dividend Monday, 4 April 2016
Record date Friday, 8 April 2016
Payment date Monday, 11 April 2016
Share certificates may not be dematerialised or rematerialised between Monday, 4 April 2016 and Friday,
8 April 2016, both dates inclusive.
On Monday, 11 April 2016, the dividend will be electronically transferred to the bank accounts of certificated
shareholders. The accounts of those shareholders who have dematerialised their shares (which are held at their
participant or broker) will also be credited on Monday, 11 April 2016.
On behalf of the Board
N R Drutman
Group Company Secretary
Johannesburg
1 March 2016
Barclays Africa Group Limited is a company domiciled in South Africa. Its registered office is 7th Floor,
Barclays Towers West, 15 Troye Street, Johannesburg, 2001.
Summary consolidated salient features
for the reporting period ended 31 December
2015 2014
Statement of comprehensive income (Rm)
Revenue 67 198 63 125
Operating expenses 37 661 35 848
Profit attributable to ordinary equity holders 14 331 13 216
Headline earnings(1) 14 287 13 032
Statement of financial position
Loans and advances to customers (Rm) 703 359 636 326
Total assets (Rm) 1 144 604 991 414
Deposits due to customers (Rm) 688 419 624 886
Loans-to-deposits ratio (%) 86,1 87,1
Financial performance (%)
RoE(2) 17,0 16,7
Return on Average Assets ("RoA"?)(2) 1,37 1,33
RoRWA(2) 2,18 2,22
Non-performing loans ("NPL"?) ratio 3,88 4,19
Operating performance (%)
Net interest margin on average interest-bearing assets(2) 4,81 4,65
Credit loss ratio(2) 1,05 1,02
Non-interest income as percentage of total revenue 42,8 43,6
Cost-to-income ratio 56,0 56,8
Jaws 1,39 (1,00)
Effective tax rate 27,7 28,3
Share statistics (million)
Number of ordinary shares in issue 847,8 847,8
Number of ordinary shares in issue (excluding treasury shares) 845,7 846,9
Weighted average number of ordinary shares in issue 846,8 847,1
Diluted weighted average number of ordinary shares in issue 847,3 847,6
Share statistics (cents)
Headline earnings per ordinary share 1 687,2 1 538,4
Diluted headline earnings per ordinary share 1 686,2 1 537,5
Basic earnings per ordinary share 1 692,4 1 560,1
Diluted basic earnings per ordinary share 1 691,4 1 559,2
Dividend per ordinary share relating to income for the reporting period 1 000 925
Dividend cover (times) 1,7 1,7
NAV per ordinary share 10 558 9 764
Tangible NAV per ordinary share 10 112 9 384
Capital adequacy (%)
Barclays Africa Group Limited(2) 14,5 14,4
Absa Bank Limited(2) 13,6 13,7
Common Equity Tier 1 (%)
Barclays Africa Group Limited(2) 11,9 11,9
Absa Bank Limited(2) 10,3 10,6
Notes
(1) After allowing for R321m (31 December 2014: R305m) profit attributable to preference equity holders.
(2) These ratios are unaudited.
Summary consolidated statement of financial position
as at 31 December
2015 2014(1) 2013(1)
Note Rm Rm Rm
Assets
Cash, cash balances and balances with central banks 45 904 39 103 36 098
Investment securities 100 965 97 118 93 036
Loans and advances to banks 85 951 72 225 80 622
Trading portfolio assets 137 163 90 498 88 761
Hedging portfolio assets 2 232 2 350 3 357
Other assets 25 846 15 514 15 829
Current tax assets 833 381 529
Non-current assets held for sale 1 1 700 972 4 814
Loans and advances to customers 703 359 636 326 606 223
Reinsurance assets 581 731 870
Investments linked to investment contracts 19 517 19 317 16 134
Investments in associates and joint ventures 1 000 845 694
Investment properties 1 264 727 1 089
Property and equipment 13 252 11 177 10 679
Goodwill and intangible assets 3 772 3 219 3 141
Deferred tax assets 1 265 911 987
Total assets 1 144 604 991 414 962 863
Liabilities
Deposits from banks 62 980 52 977 70 791
Trading portfolio liabilities 90 407 49 772 52 128
Hedging portfolio liabilities 4 531 2 577 2 391
Other liabilities 24 982 21 079 19 775
Provisions 3 236 2 943 2 460
Current tax liabilities 242 54 173
Non-current liabilities held for sale 1 233 372 1 651
Deposits due to customers 688 419 624 886 588 897
Debt securities in issue 128 683 106 098 97 829
Liabilities under investment contracts 24 209 23 299 19 773
Policyholder liabilities under insurance contracts 4 340 3 871 3 958
Borrowed funds 2 13 151 11 208 16 525
Deferred tax liabilities 544 1 333 1 311
Total liabilities 1 045 957 900 469 877 662
Equity
Capital and reserves
Attributable to ordinary equity holders:
Share capital 1 691 1 694 1 695
Share premium 4 250 4 548 4 474
Retained earnings 75 785 70 237 64 701
Other reserves 7 566 6 211 6 447
89 292 82 690 77 317
Non-controlling interest - ordinary shares 4 711 3 611 3 240
Non-controlling interest - preference shares 4 644 4 644 4 644
Total equity 98 647 90 945 85 201
Total liabilities and equity 1 144 604 991 414 962 863
Note
(1) These numbers have been restated, refer to note 14 for reporting changes.
Summary consolidated statement of comprehensive income
for the reporting period ended 31 December
2015 2014
Note Rm Rm
Net interest income 38 407 35 601
Interest and similar income 73 603 65 646
Interest expense and similar charges (35 196) (30 045)
Non-interest income 28 791 27 524
Net fee and commission income 20 155 18 667
Fee and commission income 23 152 21 598
Fee and commission expense (2 997) (2 931)
Net insurance premium income 6 303 6 014
Net claims and benefits incurred on insurance contracts (3 145) (3 044)
Changes in investment and insurance contract liabilities (214) (752)
Gains and losses from banking and trading activities 3 933 4 373
Gains and losses from investment activities 786 1 133
Other operating income 973 1 133
Total income 67 198 63 125
Impairment losses on loans and advances (6 920) (6 290)
Operating income before operating expenditure 60 278 56 835
Operating expenses (37 661) (35 848)
Other expenses (1 443) (1 412)
Other impairments 3 (84) (429)
Indirect taxation (1 359) (983)
Share of post-tax results of associates and joint ventures 129 142
Operating profit before income tax 21 303 19 717
Taxation expense (5 899) (5 573)
Profit for the reporting period 15 404 14 144
Profit attributable to:
Ordinary equity holders 14 331 13 216
Non-controlling interest - ordinary shares 752 623
Non-controlling interest - preference shares 321 305
15 404 14 144
Earnings per share
Basic earnings per ordinary share (cents) 1 692,4 1 560,1
Diluted basic earnings per ordinary share (cents) 1 691,4 1 559,2
Summary consolidated statement of comprehensive income
for the reporting period ended 31 December
2015 2014
Rm Rm
Profit for the reporting period 15 404 14 144
Other comprehensive income
Items that will not be reclassified to profit or loss
Movement in retirement benefit fund assets and liabilities (118) 62
(Decrease)/increase in retirement benefit surplus (42) 149
Increase in retirement benefit deficit (72) (86)
Deferred tax (4) (1)
Items that are or may be subsequently reclassified to profit or loss 888 (517)
Movement in foreign currency translation reserve 3 428 (199)
Differences in translation of foreign operations 3 695 198
Gains released to profit or loss (267) (397)
Movement in cash flow hedging reserve (2 223) (251)
Fair value (losses)/gains arising during the reporting period (2 029) 1 094
Amount removed from other comprehensive income and recognised in
profit or loss (1 058) (1 443)
Deferred tax 864 98
Movement in available-for-sale reserve (317) (67)
Fair value losses arising during the reporting period (690) (142)
Release to profit or loss 210 44
Deferred tax 163 31
Total comprehensive income for the reporting period 16 174 13 689
Total comprehensive income attributable to:
Ordinary equity holders 14 649 12 682
Non-controlling interest - ordinary shares 1 204 702
Non-controlling interest - preference shares 321 305
16 174 13 689
Summary consolidated statement of changes in equity
for the reporting period ended 31 December
Number of Total General Available-
ordinary Share Share Retained other credit risk for-sale
shares capital premium(1) earnings reserves reserve reserve
'000 Rm Rm Rm Rm Rm Rm
Balance at the beginning of the reporting
period 846 870 1 694 4 548 70 237 6 211 597 912
Total comprehensive income - - - 14 228 421 - (352)
Profit for the period - - - 14 331 - - -
Other comprehensive income - - - (103) 421 - (352)
Dividends paid - - - (8 248) - - -
Purchase of Group shares in respect of
equity-settled share-based payment
arrangements - - (12) 3 - - -
Elimination of movement in treasury shares
held by Group entities (1 145) (3) (289) - - - -
Movement in share-based payment reserve - - 3 - 673 - -
Transfer from share-based payment reserve - - 3 - (3) - -
Value of employee services - - - - 283 - -
Conversion from cash-settled to equity-
settled schemes - - - - 430 - -
Deferred tax - - - - (37) - -
Movement in general credit risk reserve - - - (130) 130 130 -
Movement in foreign insurance subsidiary
regulatory reserve - - - (2) 2 - -
Share of post-tax results of associates
and joint ventures - - - (129) 129 - -
Acquisition of subsidiaries(2) - - - - - - -
Disposal of interest in subsidiary(3) - - - (174) - - -
Balance at the end of the reporting
period 845 725 1 691 4 250 75 785 7 566 727 560
Foreign Capital and Non-
Foreign insurance Share- Associates' reserves controlling
Cash flow currency subsidiary based and joint attributable interest -
hedging translation regulatory payment ventures' to ordinary ordinary
reserve reserve reserve reserve reserve equity shares
Rm Rm Rm Rm Rm holders Rm
Balance at the beginning of the reporting
period 353 3 465 20 56 808 82 690 3 611
Total comprehensive income (2 223) 2 996 - - - 14 649 1 204
Profit for the period - - - - - 14 331 752
Other comprehensive income (2 223) 2 996 - - - 318 452
Dividends paid - - - - - (8 248) (495)
Purchase of Group shares in respect of
equity-settled share-based payment
arrangements - - - - - (9) -
Elimination of movement in treasury shares
held by Group entities - - - - - (292) -
Movement in share-based payment reserve - - - 673 - 676 4
Transfer from share-based payment reserve - - - (3) - - -
Value of employee services - - - 283 - 283 4
Conversion from cash-settled to equity-
settled schemes - - - 430 - 430 -
Deferred tax - - - (37) - (37) -
Movement in general credit risk reserve - - - - - - -
Movement in foreign insurance subsidiary
regulatory reserve - - 2 - - - -
Share of post-tax results of associates
and joint ventures - - - - 129 - -
Acquisition of subsidiaries(2) - - - - - - 209
Disposal of interest in subsidiary(3) - - - - - (174) 178
Balance at the end of the reporting
period (1 870) 6 461 22 729 937 89 292 4 711
Non-
controlling
interest -
preference Total
shares equity
Rm Rm
Balance at the beginning of the reporting
period 4 644 90 945
Total comprehensive income 321 16 174
Profit for the period 321 15 404
Other comprehensive income - 770
Dividends paid (321) (9 064)
Purchase of Group shares in respect of
equity-settled share-based payment
arrangements - (9)
Elimination of movement in treasury shares
held by Group entities - (292)
Movement in share-based payment reserve - 680
Transfer from share-based payment reserve - -
Value of employee services - 287
Conversion from cash-settled to equity-
settled schemes - 430
Deferred tax - (37)
Movement in general credit risk reserve - -
Movement in foreign insurance subsidiary
regulatory reserve - -
Share of post-tax results of associates
and joint ventures - -
Acquisition of subsidiaries(2) - 209
Disposal of interest in subsidiary(3) - 4
Balance at the end of the reporting
period 4 644 98 647
Note
(1) All movements are reflected net of taxation.
The movement during the current reporting period is largely due to the elimination of treasury shares
in the share incentive trust. Thes shares were acquired by the trust as part of the conversion of the
cash settled share based payment schemes to the equity settled share based payment schemes.
(2) During the current reporting period the Group acquired a 63% shareholding in First Assurance Holdings
Limited.
(3) The Group disposed of part of its interest in National Bank of Commerce ("NBC") reducing its interest
from 66% to 55%.
Summary consolidated statement of changes in equity
for the reporting period ended 31 December
Foreign
Number of Total General Available- Cash flow currency
ordinary Share Share Retained other credit risk for-sale hedging translation
shares capital premium earnings reserves reserve reserve reserve reserve
'000 Rm Rm Rm Rm Rm Rm Rm Rm
Balance at the beginning of
the reporting period 847 313 1 695 4 474 64 701 6447 440 979 604 3697
Total comprehensive income - - - 13 232 (550) - (67) (251) (232)
Profit for the period - - - 13 216 - - - - -
Other comprehensive income - - - 16 (550) - (67) (251) (232)
Dividends paid - - - (7 365) - - - - -
Purchase of Group shares in
respect of equity-settled
share-based payment arrangements - - (46) - - - - - -
Elimination of movement in
treasury shares held by Group
entities (443) (1) 97 - - - - - -
Movement in share-based payment
reserve - - 23 - 11 - - - -
Transfer from share-based
payment reserve - - 23 - (23) - - - -
Value of employee services - - - - 34 - - - -
Movement in general credit risk
reserve - - - (157) 157 157 - - -
Movement in foreign insurance
subsidiary regulatory reserve - - - (4) 4 - - - -
Share of post-tax results of
associates and joint ventures - - - (142) 142 - - - -
Disposal of a non-core subsidiary - - - - - - - - -
Transfer to non-controlling interest - - - (28) - - - - -
Balance at the end of the reporting
period 846 870 1 694 4 548 70 237 6 211 597 912 353 3 465
Foreign Total equity Non- Non-
insurance Share- Associates' attributable controlling controlling
subsidiary based and joint to ordinary interest - interest -
regulatory payment venture' equity ordinary preference Total
reserve reserve reserve holders shares shares equity
Rm Rm Rm Rm Rm Rm Rm
Balance at the beginning of
the reporting period 16 45 666 77 317 3 240 4 644 85 201
Total comprehensive income - - - 12 682 702 305 13 689
Profit for the period - - - 13 216 623 305 14 144
Other comprehensive income - - - (534) 79 - (455)
Dividends paid - - - (7 365) (311) (305) (7 981)
Purchase of Group shares in
respect of equity-settled
share-based payment arrangements - - - (46) - - (46)
Elimination of movement in
treasury shares held by Group
entities - - - 96 - - 96
Movement in share-based payment
reserve - 11 - 34 - - 34
Transfer from share-based
payment reserve - (23) - - - - -
Value of employee services - 34 - 34 - - 34
Movement in general credit risk
reserve - - - - - - -
Movement in foreign insurance
subsidiary regulatory reserve 4 - - - - - -
Share of post-tax results of
associates and joint ventures - - 142 - - - -
Disposal of a non-core subsidiary - - - - (48) - (48)
Transfer to non-controlling interest - - - (28) 28 - -
Balance at the end of the reporting
period 20 56 808 82 690 3 611 4 644 90 945
Note
All movements are reflected net of taxation.
Summary consolidated statement of cash flows
for the reporting period ended 31 December
2015 2014(1)
Note Rm Rm
Net cash generated from operating activities 16 357 18 233
Net cash utilised in investing activities (4 547) (5 462)
Net cash utilised in financing activities (7 316) (12 055)
Net increase in cash and cash equivalents 4 494 716
Cash and cash equivalents at the beginning of the reporting period 1 16 626 15 854
Effect of foreign exchange rate movements on cash and cash equivalents 246 56
Cash and cash equivalents at the end of the reporting period 2 21 366 16 626
Notes to the consolidated statement of cash flows
1. Cash and cash equivalents at the beginning of the reporting period
Cash, cash balances and balances with central banks(2) 12 903 12 653
Loans and advances to banks(3) 3 723 3 201
16 626 15 854
2. Cash and cash equivalents at the end of the reporting period
Cash, cash balances and balances with central banks(2) 12 899 12 903
Loans and advances to banks(3) 8 467 3 723
21 366 16 626
Notes
(1) These numbers have been restated, refer to note 14 for reporting changes.
(2) Includes coins and bank notes.
(3) Includes call advances, which are used as working capital by the Group.
Summary notes to the consolidated financial results
for the reporting period ended 31 December
1. Non-current assets and non-current liabilities held for sale
The following movements in non-current assets held for sale were effected during the current financial reporting
period:
- CIB transferred investment securities with a carrying value of R 1 282m.
- Disposals of non-current assets and liabilities held for sale occurred in RBB (including Commercial Property
Finance ("CPF")). The profit on disposal of the non-current assets held for sale has been recognised in other
operating income in the statement of comprehensive income.
- Other assets and liabilities disclosed remain classified as non-current assets held for sale as the Group has
assessed that the sales remain highly probable.
The following movements in non-current assets held for sale were effected during the previous financial reporting
period:
- RBB transferred investment securities with a carrying value of R29m.
- The Head Office and other operations segment transferred property and equipment with a carrying value of R3m.
- RBB transferred investment properties with a carrying value of R376m.
- The CPF Equity division in RBB disposed of a non-core subsidiary with investment property with a carrying value
of R1 315m. Other disposals of non-current assets and liabilities held for sale occurred in the RBB, WIMI and
Head Office and other operations segments.
- The General Fund was amalgamated with the Absa Select Equity Fund and WIMI, and therefore ceased to exist as an
independent fund. This resulted in the derecognition of the related financial assets of R2 324m and liabilities
of R973m of the Absa General Fund, previously classified as non- current assets and liabilities held for sale
in the 2013 financial reporting period.
2. Borrowed funds
During the reporting period the significant movements in borrowed funds were as follows: R4 870m (2014: R531m) of
subordinated notes were issued and R2 455m (2014: R4 966m) were redeemed.
3. Other impairments
2015 2014
Rm Rm
Financial instruments 10 20
Other 74 409
Goodwill 1 1
Intangible assets 72 146
Investments in associates and joint ventures - 2
Property and equipment 1 260
84 429
4. Headline earnings
2015 2014
Gross Net(1) Gross Net(1)
Rm Rm Rm Rm
Headline earnings is determined as follows:
Profit attributable to ordinary equity holders 14 331 13 216
Total headline earnings adjustment: (44) (184)
IFRS 3 - Goodwill impairment 1 1 1 1
IFRS 5 - Gains on disposal of non-current assets held for sale (1) (1) (97) (86)
IAS 16 - Profit on disposal of property and equipment (13) (10) (19) (15)
IAS 21 - Recycled foreign currency translation reserve (267) (267) (397) (397)
IAS 27 - Profit on disposal of subsidiary - - (44) (35)
IAS 28 - Impairment of investments in associates and joint ventures - - 2 2
IAS 36 - Impairment of property and equipment 1 1 260 189
IAS 36 and IAS 38 - Gain on disposal and impairment of intangible assets 65 46 148 107
IAS 39 - Release of available-for-sale reserves 210 152 44 31
IAS 40 - Change in fair value of investment properties 47 34 18 19
Headline earnings/diluted headline earnings 14 287 13 032
Headline earnings per ordinary share (cents) 1 687,2 1 538,4
Diluted headline earnings per ordinary share (cents) 1 686,2 1 537,5
Note
(1) The net amount is reflected after taxation and non-controlling interest.
5. Dividends per share
2015 2014
Rm Rm
Dividends declared to ordinary equity holders
Interim dividend net of treasury shares (29 July 2015: 450 cents) (30 July 2014: 400 cents) 3 807 3 384
Final dividend net of treasury shares (1 March 2016: 550 cents) (3 March 2015: 525 cents) 4 651 4 451
8 458 7 835
Dividends declared to non-controlling preference equity holders
Interim dividend (29 July 2015: 3 282,8082 cents) (30 July 2014: 3 197,4658 cents) 162 158
Final dividend (1 March 2016: 3 395,47945 cents) (3 March 2015: 3 210,8904 cents) 168 159
330 317
Dividends paid to ordinary equity holders(1)
Final dividend net of treasury shares (3 March 2015: 525 cents) (11 February 2014: 470 cents) 4 442 3 981
Interim dividend net of treasury shares (29 July 2015: 450 cents) (30 July 2014: 400 cents) 3 806 3 384
8 248 7 365
Dividends paid to non-controlling preference equity holders
Final dividend (3 March 2015: 3 210,8904 cents) (11 February 2014: 2 979,3151 cents) 159 147
Interim dividend (29 July 2015: 3 282,8082 cents) (30 July 2014: 3 197,4658 cents) 162 158
321 305
6. Acquisitions and disposals of businesses
6.1 Acquisitions of businesses during the current reporting period
The Group recently acquired 63% of the issued ordinary share capital of First Assurance Company Limited ("FACL"), an
East African insurer, with operations in both Kenya and Tanzania. The acquisition of the investment in FACL had an
effective acquisition date of 30 October 2015, and is a business combination within the scope of IFRS 3.
The non-controlling interest mentioned below was measured at its proportionate share of the acquiree's identifiable
net assets. Goodwill of R164m has been recognised mainly due to intangible assets that do not qualify for separate
recognition.
The transaction is currently under Purchase Price Allocation ("PPA") consideration as the due diligence is currently
under way to finalise the contractual net asset value ("NAV") and to agree the final NAV between purchaser and seller.
The initial accounting considerations include the valuation of intangible assets (identified in terms of IFRS 3 - i.e.
Brand Names and Distribution Force), Premium debtors, Investment Properties and the Valuation of Policyholder
liabilities. From the date of acquisition, FACL contributed R9m to profit after tax of the Group. If the combination
had taken place at the beginning of the year, profit after tax for the Group would have increased by R37m.
The Group also purchased additional shares in a non-core joint venture which resulted in an increase in the Group's
effective shareholding from 50% to 67%. The profit share that the Group is entitled to is 74%. The acquisition
occurred on 18 November 2015. A Bargain Purchase amount of R4m was recognised in the statement of comprehensive
income.
Note
(1) The dividends paid on treasury shares are calculated on payment date.
6.1.1 Acquisitions of businesses during the current reporting period
First Assurance
Holdings Other Group
2015
Fair value recognised
on acquisition
Rm Rm Rm
Consideration at November 2015:
Cash 370 14 384
Total consideration 370 14 384
Recognised amounts of identifiable assets
acquired and liabilities assumed
Property, plant and equipment 28 - 28
Investment securities 145 - 145
Loans and advances to banks 196 - 196
Other assets 440 5 445
Investment properties 170 292 462
Current tax assets 2 - 2
Other liabilities (65) (1) (66)
Insurance liabilities (586) - (586)
Deferred tax liabilities (3) (4) (7)
Loans from subsidiaries - (176) (176)
Loans from Absa Group companies - (90) (90)
Total identifiable net assets 327 26 353
Total NCI (121) (8) (129)
Goodwill/(bargain purchase) 164 (4) 160
Total 370 14 384
A summary of the total net cash outflow and cash and cash equivalents related to
acquisitions and disposals of businesses and other similar transactions is included below:
Group
2015 2014
Rm Rm
Summary of net cash outflow due to acquisitions 384 -
6.1.2 Disposals of businesses during the current reporting period
National Bank of Commerce Limited ("NBC") was recapitalised through a rights issue to all its shareholders during
2013. As the Government of Tanzania ("GoT") did not wish to subscribe to its rights at the time, an option was
granted to GoT providing it with the right to purchase its pro rata portion of the shares from the Group within a
period of two years after the rights issue. The GoT exercised its option during the reporting period which
resulted in a decrease of the Group's shareholding from 66% to 55%.
6.2.1 Acquisitions and disposals of businesses during the previous reporting period
There were no acquisitions or disposals of businesses during the previous reporting period.
7. Related parties
There were no one-off significant transactions with related parties of the Group during the current and previous
reporting period.
8. Financial guarantee contracts
2015 2014
Rm Rm
Financial guarantee contracts 24 96
Financial guarantee contracts represent contracts where the Group
undertakes to make specified payments to a counterparty, should the
counterparty suffer a loss as a result of a specified debtor failing
to make payment when due in accordance with the terms of a debt
instrument. This amount represents the maximum off-statement of
financial position exposure.
9. Commitments
2015 2014
Rm Rm
Authorised capital expenditure
Contracted but not provided for 1 642 1 675
The Group has capital commitments in respect of computer equipment
and property development. Management is confident that future net
revenue and funding will be sufficient to cover these commitments.
Operating lease payments due
No later than one year 758 856
Later than one year and no later than five years 1 742 1 631
Later than five years 956 709
3 456 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 Group. Leases are negotiated for an
average term of three to five years and rentals are renegotiated
annually.
Sponsorship payments due
No later than one year 147 282
Later than one year and no later than five years 177 307
324 589
The Group has sponsorship commitments in respect of sports, arts and
culture.
Other commitments
No later than one year 991 991
The South African Reserve Bank ("SARB") announced in August 2014 that African Bank Investments Limited
("ABIL") would be placed under curatorship. A consortium of six South African banks (including Barclays
Africa Group Limited) and the Public Investment Corporation ("PIC") have underwritten R5bn respectively.
50% of the amount underwritten by the banks is guaranteed by the SARB, of which Barclays Africa Group
Limited committed R991m (pre the SARB guarantee). The value of the amount to be underwritten was
determined with reference to the respective underwriter's proportion of total Tier 1 capital of the
consortium as at 30 June 2014.
10. Contingencies
2015 2014
Rm Rm
Guarantees 37 901 34 011
Irrevocable debt facilities 152 984 125 334
Irrevocable equity facilities 364 366
Letters of credit 7 466 4 827
Other 5 325 3 774
204 040 168 312
Guarantees include performance and payment guarantee contracts.
Irrevocable facilities are commitments to extend credit where the Group does not have the right
to terminate the facilities by written notice. Commitments generally have fixed expiry dates.
Since commitments may expire without being drawn upon, the total contract amounts do not
necessarily represent future cash requirements.
Legal proceedings
The Group is engaged in various litigation proceedings involving claims by and against it, which
arise in the ordinary course of business. The Group does not expect the ultimate resolution of any
proceedings, to which the Group is party, to have a significant adverse effect on the financial
statements of the Group. 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 Group's control, but especially in the area of banking and insurance regulation,
are likely to have an impact on the Group's businesses and earnings. The Group 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 Group 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 Group is subject to income taxes in numerous jurisdictions and the calculation of the Group's tax
charge and worldwide 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 Group's
treatment and accordingly the final tax charge cannot be determined until resolution has been reached
with the relevant tax authority. The Group 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 Group's Tax Risk Framework.
11. Segment reporting
2015 2014(1)
Rm Rm
11.1 Headline earnings contribution by segment
RBB 9 698 8 525
CIB 3 940 3 734
WIMI 1 464 1 324
Head Office, Treasury and other operations (815) (551)
14 287 13 032
2015 2014(1)
Rm Rm
11.2 Total income by segment
RBB 49 208 46 242
CIB 13 764 12 779
WIMI 5 252 4 931
Head Office, Treasury and other operations (1 026) (827)
67 198 63 125
Note
(1) Operational changes, management changes and associated changes to the way in which the chief operation
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 business portfolio changes,
refer to note 1.21 of the audited annual consolidated and separate financial statements approved on
29 February 2016.
2015 2014(1)
Rm Rm
11.3 Total internal income by segment
RBB (9 265) (9 127)
CIB (855) 1 512
WIMI (409) (404)
Head Office, Treasury and other operations 10 529 8 019
- -
2015 2014(1)
Rm Rm
11.4 Total assets by segment
RBB 837 801 774 546
CIB 577 301 477 529
WIMI 43 920 46 765
Head Office, Treasury and other operations (314 418) (307 426)
1 144 604 991 414
2015 2014(1)
Rm Rm
11.5 Total liabilities by segment
RBB 810 563 752 935
CIB 566 062 466 489
WIMI 38 396 41 698
Head Office, Treasury and other operations (369 064) (360 653)
1 045 957 900 469
Note
(1) Operational changes, management changes and associated changes to the way in which the Chief Operation 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 business portfolio changes, refer to note 1.21
of the audited annual consolidated and separate financial statements approved on 29 February 2016.
12. Assets and liabilities not held at fair value
The table below summarises the carrying amounts and fair values of those assets and liabilities not held at fair
value:
2015 2014(1)
Carrying Carrying
value Fair value value Fair value
Rm Rm Rm Rm
Financial assets
Balances with other central banks 12 141 12 141 9 401 9 401
Balances with the SARB 17 459 17 459 12 621 12 621
Coins and bank notes 12 898 12 898 12 903 12 903
Money market assets 34 34 21 21
Cash, cash balances and balances with central banks 42 532 42 532 34 946 34 946
Investment securities - - 110 110
Loans and advances to banks 61 623 61 632 51 702 51 647
Other assets 22 875 22 875 12 835 13 124
Retail Banking South Africa 374 996 373 967 367 967 367 540
Credit cards 37 148 37 148 36 484 36 484
Instalment credit agreements 72 859 71 798 70 819 70 257
Loans to associates and joint ventures 16 175 16 175 13 012 13 012
Mortgages 228 349 228 359 229 023 229 067
Other loans and advances 367 367 410 410
Overdrafts 2 820 2 820 2 254 2 254
Personal and term loans 17 278 17 300 15 965 16 056
Business Banking South Africa 63 412 63 440 60 928 60 926
Mortgages (including Commercial Property Finance) 30 730 30 742 30 161 30 157
Overdrafts 18 159 18 175 18 148 18 128
Term loans 14 523 14 523 12 619 12 641
RBB Rest of Africa 45 212 45 212 35 812 35 812
CIB 184 342 184 344 154 620 154 228
WIMI 5 350 5 350 5 234 5 234
Head Office, Treasury and other operations 625 625 870 871
Loans and advances to customers - net of impairment losses 673 937 672 938 625 431 624 611
Total assets 800 967 799 977 725 024 724 438
Financial liabilities
Deposits from banks 50 962 50 962 36 476 37 816
Other liabilities 21 398 21 278 16 525 16 532
Call deposits 72 172 72 172 56 991 56 991
Cheque account deposits 200 614 200 614 186 932 186 932
Credit card deposits 2 002 2 002 1 932 1 932
Fixed deposits 157 661 157 774 145 623 146 349
Foreign currency deposits 27 865 27 865 24 976 24 976
Notice deposits 48 954 48 963 49 764 49 843
Other deposits 13 791 13 791 11 437 11 437
Savings and transmission deposits 147 561 147 561 128 025 128 025
Deposits due to customers 670 620 670 742 605 680 606 485
Debt securities in issue 122 436 119 859 100 986 101 351
Borrowed funds 13 151 13 520 11 208 11 559
Total liabilities 878 567 876 361 770 875 773 743
Notes
(1) Operational changes, management changes and associated changes to the way in which the Chief Operation 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 business portfolio changes, refer to note 1.21
of the audited annual consolidated and separate financial statements approved on 29 February 2016.
13. Assets and liabilities held at fair value
13.1 Fair value measurement and valuation processes
Financial assets and financial liabilities
The Group has an established control framework with respect to the measurement of fair values. The framework includes
a Valuation Committee and an Independent Valuation Control team ("IVC"), which is independent from the front office.
The Valuation Committee, which comprises representatives from senior management, will formally approve valuation
policies and any changes to valuation methodologies. Significant valuation issues are reported to the 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 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 Group's investment properties is determined through valuations performed by
external independent valuators. When the Group'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"?) derivatives. 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 disclosed 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 Group 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 Group is a market maker and has the ability
to transact at, or better than, mid-price (which is the case for certain equity, bond and vanilla derivative markets),
the mid-price is used, since the bid-offer spread does not represent a transaction cost.
Uncollateralised derivative adjustments
A fair value 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 Group's model governance framework. This process identifies the assumptions
used and any model limitations (for example, if the model does not incorporate volatility skew). Where necessary,
fair value adjustments will be applied to take these factors into account. Model valuation adjustments are dependent
on the size of 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 Group's assets and liabilities that are recognised and subsequently measured at fair
value and are analysed by valuation techniques. The classification of assets and liabilities is based on the lowest
level input that is significant to the fair value measurement in its entirety.
Group
2015 2014(1)
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Rm Rm Rm Rm Rm Rm Rm Rm
Financial assets
Cash, cash balances and balances with central banks 2 114 1 258 - 3 372 1 708 2 449 - 4 157
Investment securities 64 458 32 541 3 966 100 965 58 021 32 520 6 467 97 008
Loans and advances to banks - 22 219 2 109 24 328 - 20 523 - 20 523
Trading and hedging portfolio assets 37 037 98 935 1 418 137 390 34 658 55 327 1 162 91 147
Debt instruments 18 891 9 430 897 29 218 24 459 6 221 870 31 550
Derivative assets 51 79 938 521 80 510 5 42 367 292 42 664
Commodity derivatives - 212 - 212 2 313 - 315
Credit derivatives - 889 23 912 - 284 91 375
Equity derivatives 6 2 134 43 2 183 3 1 018 29 1 050
Foreign exchange derivatives 45 27 696 3 27 744 - 8 378 12 8 390
Interest rate derivatives - 49 007 452 49 459 - 32 374 160 32 534
Listed equity instruments - HFT 17 321 - - 17 321 9 591 321 - 9 912
Money market assets 774 9 567 - 10 341 603 6 418 - 7 021
Other assets - 1 25 26 7 1 17 25
Loans and advances to customers 3 21 908 7 511 29 422 4 6 160 4 731 10 895
Investment linked to investment contract 16 885 2 632 - 19 517 17 014 2 302 1 19 317
Total financial assets 120 497 179 494 15 029 315 020 111 412 119 282 12 378 243 072
Financial liabilities
Deposits from banks - 12 011 7 12 018 - 16 501 - 16 501
Trading and hedging portfolio liabilities 3 712 91 009 217 94 938 7 928 44 101 320 52 349
Derivative liabilities - 91 009 217 91 226 - 44 101 320 44 421
Commodity derivatives - 429 - 429 - 268 - 268
Credit derivatives - 879 14 893 - 352 39 391
Equity derivatives - 3 768 58 3 826 - 1 297 198 1 495
Foreign exchange derivatives - 28 576 - 28 576 - 10 001 7 10 008
Interest rate derivatives - 57 357 145 57 502 - 32 183 76 32 259
Short positions 3 712 - - 3 712 7 928 - - 7 928
Other liabilities - 7 5 12 - 23 28 51
Deposits due to customers 111 15 131 2 557 17 799 80 13 596 5 530 19 206
Debt securities in issue 202 5 421 624 6 247 179 4 891 42 5 112
Liabilities under investment contracts - 24 209 - 24 209 - 20 277 3 022 23 299
Total financial liabilities 4 025 147 788 3 410 155 223 8 187 99 389 8 942 116 518
Non-financial assets
Commodity 2 005 - - 2 005 1 701 - - 1 701
Investment properties - - 1 264 1 264 - - 727 727
Non-recurring fair value measurements
Non-current assets held for sale(2) - - 1 700 1 700 - - 972 972
Non-current liabilities held for sale(2) - - 233 233 - - 372 372
Notes
(1) These numbers have been restated, refer to note 14 for reporting changes.
(2) 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 model, 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 and/or
default swap (hazard rate) models 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 and/or money market curves
Investment securities and investments Listed equity: market bid price. Underlying price of the market traded
linked to investment contracts Other items: discounted cash flow models instrument, 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 Discounted cash flow models Underlying price of the market traded instrument
liabilities 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:
2015
Trading and Investments
hedging Loans and Loans and linked to
portfolio Other advances to advances Investment Investment investment Total assets
assets assets customers to banks securities properties contracts at fair value
Rm Rm Rm Rm Rm Rm Rm Rm
Opening balance at the beginning
of the reporting period 1 162 17 4 731 - 6 467 727 1 13 105
Net interest income - - 488 - 85 - - 573
Gains and losses from banking and
trading activities 323 - - - - - - 323
Gains and losses from investment
activities - - - (18) 50 60 - 92
Purchases 16 8 5 108 2 127 47 478 - 7 784
Sales (83) - (2 816) (2 718) (1) (1) (5 619)
Movement in other comprehensive income - - - - 35 - - 35
Issues - - - - - - - -
Settlements - - - - - - - -
Transferred to/(from) assets - - - - - - - -
Movement in/(out of) Level 3 - - - - - - - -
Closing balance at the end 1 418 25 7 511 2 109 3 966 1 264 - 16 293
of the reporting period
2014
Trading and Investments
hedging Loans and linked to
portfolio Other advances to Investment Investment investment Total assets
assets assets customers securities(1) properties contracts at fair value
Rm Rm Rm Rm Rm Rm Rm
Opening balance at the
beginning of the reporting
period 1 037 16 6 477 6 621 1 089 7 15 247
Net interest income - 1 373 69 - - 443
Gains and losses from banking
and trading activities 179 - (29) 136 - - 286
Gains and losses from
investment activities - - 2 (2) 6 - 6
Purchases - - 143 2 418 11 - 2 572
Sales (32) - (620) (863) (3) (6) (1 524)
Movement in other - - - 5 - - 5
comprehensive income
Settlements - - (1 615) (1 933) - - (3 548)
Transferred to/(from) assets(2) - - - - (376) - (376)
Movement in/(out of) Level 3 (22) - - 16 - - (6)
Closing balance at the end
of the reporting period 1 162 17 4 731 6 467 727 1 13 105
Notes
(1) These numbers have been restated, refer to note 14 for reporting changes.
(2) Transfer to non-current assets held for sale.
Group
2015
Trading and Liabilities
hedging Debt under Total
Deposits from portfolio Other Deposits due securities investment liabilities
banks liabilities liabilities to customers in issue contracts at fair value
Rm Rm Rm Rm Rm Rm Rm
Opening balance at the beginning of
the reporting period - 320 28 5 530 42 3 022 8 942
Net interest income - - - - - - -
Gains and losses from banking and
trading activities - (21) - - - - (21)
Gains and losses from investment activities - - (23) 132 172 (479) (198)
Purchases - - - - - - -
Sales - - - - - - -
Movement in other comprehensive income - - - - - - -
Issues 7 1 - 3 112 410 - 3 530
Settlements - (83) - (3 265) - - (3 348)
Transferred to/(from) - - - - - - -
assets/liabilities
Movement in/(out of) Level 3 - - - (2 952) - (2 543) (5 495)
Closing balance at the end of the reporting
period 7 217 5 2 557 624 - 3 410
2014
Trading and Liabilities
hedging Debt under Total
portfolio Other Deposits due securities investment liabilities
liabilities liabilities to customers in issue contracts at fair value
Rm Rm Rm Rm Rm Rm
Opening balance at the beginning
of the reporting period 549 - 7 138 35 - 7 722
Net interest income - - 1 1 - 2
Gains and losses from banking and
trading activities (62) - (1 501) 6 - (1 557)
Gains and losses from investment activities - - - - - -
Purchases - 28 - - 3 022 3 050
Sales (75) - - - - (75)
Movement in other comprehensive income (8) - - - - (8)
Settlements - - (81) - - (81)
Transferred to/(from) assets - - - - - -
Movement in/(out of) Level 3 (84) - (27) - - (111)
Closing balance at the end of the reporting
period 320 28 5 530 42 3 022 8 942
13.6.1 Significant transfers between levels
During the prior 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.
Transfers out of Level 3 and into Level 2 arise where unobservable inputs become observable and/or unobservable inputs
are no longer considered to be significant to the valuation of an instrument.
Transfers have been reflected as if they had taken place at the beginning of the year.
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:
2015
Trading and Investments
hedging Loans and linked to Non-current
portfolio Other advances to Investment investment assets held Total assets
assets assets customers securities contracts for sale at fair value
Rm Rm Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities 96 - (28) 48 - 116
2014
Trading and Investments
hedging Loans and linked to Non-current
portfolio Other advances to Investment investment assets held Total assets
assets assets customers securities contracts for sale at fair value
Rm Rm Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities 79 - (28) - - - 51
2015
Trading and Liabilities
hedging under Total
portfolio Other Deposits due investment liabilities at
liabilities liabilities to customers contracts fair value
Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities 79 - - - 79
2014
Trading and Liabilities
hedging under Total
portfolio Other Deposits due investment liabilities at
liabilities liabilities to customers contracts 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 Group's risk management processes, stress tests are applied on the significant unobservable parameters
to generate a range of potentially possible alternative valuations. The assets and liabilities that impact this
sensitivity analysis most 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 financial 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 discount 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% or the underlying value of the affected item. This is demonstrated
by the following sensitivity analysis which includes a reasonable range of possible outcomes:
2015
Significant Potential effect recorded Potential effect recorded
unobservable parameters in profit or loss directly in equity
Favourable/(Unfavourable) Favourable/(Unfavourable)
Rm Rm
Deposits due to customers BAGL/Absa funding spread -/- -/-
Investment securities and investments Risk adjustment yield curves, future earnings -/- -/-
linked to investment contracts and marketability discount
Loans and advances to customers Credit spreads 235/246 -/-
Other assets Volatility, credit spreads -/- -/-
Trading and hedging portfolio assets Volatility, credit spreads, basis curves, 107/107 -/-
yield curves, repo curves, funding spreads
Trading and hedging portfolio liabilities Volatility, credit spreads, basis curves, 15/15 -/-
yield curves, repo curves, funding spreads
Other liabilities Volatility, credit spreads -/- -/-
357/368 -/-
2014
Significant Potential effect recorded Potential effect recorded
unobservable parameters in profit or loss directly in equity
Favourable/(Unfavourable) Favourable/(Unfavourable)
Rm Rm
Deposits due to customers BAGL/Absa funding spread -/- -/-
Investment securities and investments linked to Yield curves, future earnings
investment contracts and marketability discount,
comparator multiples 672/126 -/-
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, basis
curves, yield curves, repo
curves, funding spreads -/- -/-
Trading and hedging portfolio liabilities Volatility, credit spreads, basis
curves, yield curves, repo
curves, funding spreads 34/34 -/-
Other liabilities Volatility, credit spreads 28/28 -/-
1 774/214 -/-
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:
2015 2014
Category of asset/ Valuation techniques Significant Range of estimates utilised
liability applied unobservable inputs for the unobservable inputs
Loans and advances Discounted cash flow Credit spreads 0,96% to 3,99% 0,96% to 3,99%
to customers and/or dividend yield models
Investment securities Discounted cash flow Risk adjusted yield Discount rates between Discount rates
and investments models, third-party curves, future earnings, 8% and 11,5%, between 9,7% and
linked to investment valuations, earnings marketability discounts comparator multiples 17,9%, comparator
contracts multiples and/or income and/or comparator between 5 and 10,5 multiples between
capitalisation valuations multiples 5,5 and 6
Trading and hedging
portfolio assets and
liabilities
Debt instruments Discounted cash flow Credit spreads 0,9% to 3,5% 0,9% to 3,5%
models
Derivative assets
Credit derivatives Discounted cash flow Credit spreads, recovery 0,0% to 23,64% 0% to 13,45%
and/or credit default swap rates and/or quanto ratio
(hazard rate) models
Equity derivatives Discounted cash flow, Volatility and/or dividend 17,82% to 67,71% 18,16% to 48,20%
option pricing and/or streams (greater than
futures pricing models 3 years)
Foreign exchange Discounted cash flow African basis curves (10,00%) to 10,50% (10,74%) to 6,53%
derivatives and/or option pricing models (greater than 1 year)
Interest rate Discounted cash flow Real yield curves (greater 0,58% to 4,24% (1,56%) to 10,04%
derivatives and/or option pricing models than 1 year), repurchase
agreement curves (greater
than 1 year), funding spreads
Deposits due to Discounted cash flow Barclays Africa Group 1,52% to 2,15% 0,85% to 1,2%
customers models Limited's funding
spreads (greater than
5 years)
Debt securities in Discounted cash flow Funding curves (0,20%) to 3,35% 1,28% to 1,38%
issue models (greater than 5 years)
Investment Discounted cash flow Estimates of periods in 1 to 7 years 2 to 7 years
properties models which rental units will be
disposed of
Annual selling price 0% to 6% 0% to 6%
escalations
Annual rental escalations 0% to 10% 0% to 10%
Expense ratios 26% to 51% 22% to 75%
Vacancy ratio 1% to 18% 2% to 15%
Income capitalisation 8% to 12% 10% to 12%
rates
Risk adjusted discount 13% to 14% 14% to 16%
rates
For assets or liabilities held at amortised cost and disclosed in levels 2 or 3 of 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 gains/(losses) as a result of the use of valuation models using unobservable inputs
The amount that has yet to be recognised in the statement of comprehensive income that relates to the difference between
the transaction price 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:
2015 2014
Rm Rm
Opening balance at the beginning of the reporting period (52) (55)
New transactions (91) (23)
Amounts recognised in profit and loss during the reporting period 38 26
Closing balance at the end of the reporting period (105) (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
Reclassification changes
In terms of the Group's policy, financial assets with a maturity of less than three months should be reported as"Cash,
cash balances and balances with central bank"?, while financial assets with a maturity of longer than three months are
reported as "Investment securities"?. Based on an analysis performed on the maturity periods of treasury bills, in the
Rest of Africa, it was established that some treasury bills' maturity period extended beyond three months and had been
reported as "Cash, cash balances and balances with central banks"?. These items are now being reported as "Investment
securities".
The impact of these changes on the statement of financial position is as follows:
Summary consolidated statement of financial position as at 31 December 2014
As
previously Internal
reported reclassifications Restated
Rm(1) Rm Rm
Assets
Cash, cash balances and balances with central banks 50 335 (11 232) 39 103
Investment securities 85 886 11 232 97 118
Summary consolidated statement of financial position as at 31 December 2013
As
previously Internal
reported reclassifications Restated
Rm(1) Rm Rm
Assets
Cash, cash balances and balances with central banks 50 130 (14 032) 36 098
Investment securities 79 004 14 032 93 036
Note
(1) As per financial results published on 31 December 2014.
Administration and contact details
Barclays Africa Group Limited Registered office
Incorporated in the Republic of South Africa 7th Floor, Barclays Towers West
Registration number: 1986/003934/06 15 Troye Street, Johannesburg, 2001
Authorised financial services and registered PO Box 7735, Johannesburg, 2000
credit provider (NCRCP7)
JSE share code: BGA Switchboard: +27 11 350 4000
ISIN: ZAE000174124 barclaysafrica.com
Head Investor Relations Queries
Alan Hartdegen Please direct investor relations and annual report queries
Telephone: +27 11 350 2598 to groupinvestorrelations@barclaysafrica.com
Please direct media queries to groupmedia@barclaysafrica.com
For all customer and client queries, please go to the relevant
country website (see details below) for the local customer
contact information
Please direct queries relating to your Barclays Africa Group
shares to questions@computershare.co.za
Please direct other queries regarding the Group to
groupsec@barclaysafrica.com
Group Company Secretary
Nadine Drutman
Telephone: +27 11 350 5347
Head of Finance
Jason Quinn
Telephone: +27 11 350 7565
Transfer secretary ADR depositary
Computershare Investor Services (Pty) Ltd BNY Mellon
Telephone: +27 11 370 5000 Telephone: +1 212 815 2248
computershare.com/za/ bnymellon.com
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
equitysponsor@absacapital.com
Significant banking subsidiaries
Information on the entity and the products and services provided (including banking, insurance and
investments) can be found at:
Absa Bank Limited absa.co.za
Barclays Bank of Botswana Limited barclays.co.bw
Barclays Bank of Ghana Limited gh.barclays.com/
Barclays Bank of Kenya Limited barclays.co.ke
Barclays Bank Mauritius Limited barclays.mu
Barclays Bank Mozambique SA barclays.co.mz/eng
Barclays Bank Seychelles Limited barclays.sc
Barclays Bank Tanzania Limited barclays.co.tz
Barclays Bank of Uganda Limited barclays.co.ug
Barclays Bank Zambia plc zm.barclays.com/
National Bank of Commerce Limited nbctz.com
Representative offices
Absa Namibia Pty Limited absanamibia.com.na
Absa Capital Representative Office Nigeria Limited cib.absa.co.za
While not members of the Barclays Africa Group Limited legal entity, these operations are managed by the Group
Barclays Bank Egypt S.A.E barclays.com.eg
Barclays Bank of Zimbabwe Limited zw.barclays.com/
Date: 01/03/2016 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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