Wrap Text
Unaudited interim results and cash dividend declaration for the six months ended 31 December 2017
FirstRand Limited
(Incorporated in the Republic of South Africa)
Registration number: 1966/010753/06
JSE ordinary share code: FSR
JSE ordinary share ISIN: ZAE000066304
JSE B preference share code: FSRP
JSE B preference share ISIN: ZAE000060141
NSX ordinary share code: FST
(FirstRand or the group or the company)
UNAUDITED INTERIM RESULTS AND CASH DIVIDEND DECLARATION
for the six months ended 31 December 2017
FirstRand's portfolio of businesses comprises FNB, RMB, WesBank and Ashburton Investments and provides a universal set of transactional, lending, investment and
insurance products and services. The FCC franchise represents group-wide functions.
This announcement covers the unaudited condensed consolidated financial results of FirstRand Limited based on International Financial Reporting Standards (IFRS) for the
six months ended 31 December 2017. The primary results and accompanying commentary are presented on a normalised basis as the group believes this most
accurately reflects its economic performance. The normalised results have been derived from the IFRS financial results. A detailed description of the difference between
normalised and IFRS results is provided on pages 103 to 105 of the Analysis of financial results booklet on www.firstrand.co.za. Commentary is based on normalised
results, unless otherwise indicated.
FINANCIAL HIGHLIGHTS
Six months ended Year ended
31 December 30 June
R million 2017 2016 % change 2017
Earnings performance
Basic and diluted normalised earnings per share (cents) 222.1 207.6 7 436.2
Normalised earnings 12 461 11 646 7 24 471
Normalised net asset value per share (cents) 2 014.2 1 843.0 9 1 941.7
Ordinary dividend per share (cents) 130.0 119.0 9 255.0
ROE (%) 22.5 22.9 23.4
Basic and diluted headline earnings per share (cents) 224.2 211.5 6 423.7
Basic and diluted earnings per share (cents) - IFRS 227.3 212.0 7 438.2
Net asset value per share (cents) - IFRS 2 014.1 1 843.6 9 1 941.2
OVERVIEW OF RESULTS
"FirstRand's portfolio of businesses produced a resilient performance, again characterised by quality topline growth, effective cost management and ongoing conservatism
in both origination and provisioning strategies."
Johan Burger
CEO
INTRODUCTION
FirstRand is a portfolio of integrated financial services businesses operating in South Africa, certain markets in sub-Saharan Africa, India and the UK. Many of these
businesses are market leaders in their respective segments and markets, and represent a universal set of transactional, lending, investment, and insurance products and
services.
FirstRand can provide its customers with differentiated and competitive value propositions due to its unique and highly flexible model of leveraging the most appropriate
brand, distribution channel, licence and operating platform available within the portfolio. This approach, which is underpinned by the disciplined allocation of financial
resources, allows the group to fully optimise the value of its portfolio. This has resulted in a long track record of consistent growth in high quality earnings and superior
and sustainable returns for shareholders.
GROUP STRATEGY
FirstRand's strategy accommodates a broad set of growth opportunities across the entire financial services universe from a product, market, segment and geographic
perspective.
Currently group earnings are tilted to its domestic market and are generated predominantly by lending and transactional activities, which have resulted in deep and loyal
client bases, and the group is focused on protecting and growing these valuable banking businesses. It also believes that through the utilisation of the origination
capabilities, operating platforms and distribution networks of these businesses, it can diversify and capture a larger share of profits from providing savings, insurance and
investment products.
The growth opportunity is significant given the level of annual flows to other providers from FNB's customer base alone. Through the manufacture and sale of its own
insurance, savings and investment products, the group will, over time, offer differentiated value propositions for customers and generate new and potentially meaningful
revenue streams.
With regards the group's strategy outside of its domestic market, in the rest of Africa it is growing its presence and offerings in nine markets where it believes it can
organically build competitive advantage and scale over time. In the UK, the group is acquiring Aldermore plc and will integrate its existing retail VAF business, MotoNovo,
into the Aldermore portfolio. This will result in more diversified lending business in the UK with a sustainable funding franchise.
THE MACROECONOMIC ENVIRONMENT
Whilst the South African economy experienced a mild recovery, persistent elevated risk and ongoing political uncertainty resulted in weak economic performance during
the period under review. GDP growth remained low, although agricultural production rebounded, business investment rose and lower inflation increased real income
growth. Expenditure also received some support from slightly lower debt service costs after the South African Reserve Bank (SARB) cut the repo rate to 6.75% in July
2017. Business and consumer confidence, however, remained depressed on the back of policy and political uncertainty.
In the rest of Africa, improved rainfall and higher commodity prices created a more supportive macro backdrop which allowed some countries to recover. Countries with
links to SA were, however, weighed down by low growth in the region's largest economy, causing activity levels to remain subdued.
Growth in the UK remained surprisingly resilient despite continued uncertainty around Brexit, as its labour market continued to tighten and higher European growth
supported demand for imports.
OVERVIEW OF RESULTS
Against this difficult backdrop, FirstRand's portfolio of businesses produced a resilient performance, again characterised by quality topline growth, effective cost
management and ongoing conservatism in both origination and provisioning strategies. The group continued to strengthen its balance sheet and protect its return profile.
Normalised earnings for the six months to 31 December 2017 increased 7% with a normalised ROE of 22.5%. The table below shows a breakdown of sources of
normalised earnings from the portfolio per operating business.
SOURCES OF NORMALISED EARNINGS
Six months ended 31 December Year ended 30 June
R million 2017 % composition 2016 % composition % change 2017 % composition
FNB 7 160 58 6 409 55 12 12 801 52
- FNB SA 7 093 6 351 12 776
- FNB Africa 67 58 25
RMB# 3 139 25 2 821 24 11 6 902 28
WesBank# 1 915 15 1 944 17 (1) 3 996 16
FCC (including Group Treasury) and other*,** 424 3 650 6 (35) 1 128 5
NCNR preference dividend (177) (1) (178) (2) (1) (356) (1)
Normalised earnings 12 461 100 11 646 100 7 24 471 100
* Includes FirstRand Limited (company).
** Includes capital endowment, the impact of accounting mismatches, interest rate management and foreign currency liquidity management.
# Includes rest of Africa.
FNB's results reflect another strong operating performance from its domestic business driven by good non-interest revenue (NIR) growth on the back of ongoing customer
gains and increased transactional volumes, and high quality net interest income (NII) growth, particularly from deposit generation. FNB's rest of Africa portfolio delivered a
modest improvement off a low base.
RMB's portfolio also delivered strong, high quality growth across most of its activities underpinned by disciplined cost management and a significant reduction in the
impairment charge due to the conservative proactive provisioning in previous reporting periods.
WesBank's performance showed a mixed picture. The South African VAF business experienced a tough six months on the back of worse than expected arrears and
non-performing loans, however, the personal loans and corporate business performed strongly and MotoNovo delivered a solid performance.
At a group level, total NII increased 6%, underpinned by good growth in deposits (+9%) and solid advances growth (+7%). Lending margins remained under pressure
from continued elevated term funding and liquidity costs, and competitive pressures. Term lending in RMB and WesBank's corporate businesses remained muted due to
ongoing discipline in origination to preserve returns.
Group NIR increased 10% and reflects strong fee and commission income growth of 9%. This was driven mainly by higher volumes across FNB's digital and electronic
channels and growth in customer numbers and cross-sell. Private equity realisations in RMB, whilst modest, were higher than the comparative period.
Insurance revenue increased 7%, benefiting from strong volume growth of 11% and 9%, respectively, in funeral and credit life policies in FNB. Fee, commission and
insurance income represents 81% (December 2016: 83%) of group operational NIR.
Total cost growth of 8% continues to trend above inflation due to ongoing investment in the new insurance and asset management activities, platforms to extract further
efficiencies and building the footprint in the rest of Africa. As a result, operating jaws were marginally negative and the cost-to-income ratio deteriorated slightly to 51.7%
(December 2016: 51.3%).
The group's credit impairment ratio of 87 bps remains below the through-the-cycle threshold and well within expectations. Many of the group's lending books are
trending in line or better than expected, particularly unsecured and corporate credit, mainly due to the group's early and proactive approach to origination and
provisioning.
The impairment charge, however, increased 8% and was driven by the following:
- a deterioration in WesBank's SA VAF charge, mainly due to higher than expected arrears as well as increased levels of conservatism in portfolio impairments;
- a normalisation of the MotoNovo impairment charge, reflecting new business strain given strong book growth over multiple periods and increased conservatism in
portfolio impairments;
- an increase in FNB's commercial segment, reflecting new business strain which was expected given the continued growth in new customers, cross-sell and up-
sell strategies, and the impact of the ongoing drought in certain areas of South Africa; and
- a further increase in FNB's rest of Africa charge, reflecting the ongoing tough macros in various of the jurisdictions the group operates in.
Portfolio impairments in the retail, commercial and rest of Africa portfolios increased at a franchise level. The group believes this is prudent given that the rebound in the
macro environment in the six months to December 2017 was modest.
Corporate impairments decreased period-on-period, reflecting the benefit of proactive provisioning in prior reporting periods.
Overall portfolio provisions increased 5% and remain conservative, resulting in a performing book coverage ratio of 98 bps, which is above the actual charge.
OPERATING REVIEWS
FNB
FNB represents FirstRand's activities in the retail and commercial segments in South Africa and the broader African continent. It is growing its franchise on the back of a
compelling customer offering that provides a broad range of innovative financial services products. FNB grew its pre-tax profits 11% to R10.4 billion on the back of a
strong performance from its South African business, which grew pre-tax profits 12%, whilst the rest of Africa portfolio remained under pressure, down 5% (up 3%
including the impact of a once-off profit in FNB India) compared to a 29% decline in December 2016. Total FNB produced an ROE of 40.6%.
FNB FINANCIAL HIGHLIGHTS
Year
Six months ended ended
31 December 30 June
%
R million 2017 2016 change 2017
Normalised earnings 7 160 6 409 12 12 801
Normalised profit before tax 10 430 9 367 11 18 624
- South Africa 9 864 8 820 12 17 744
- Rest of Africa 566 547 3 880
Total assets 413 097 394 658 5 401 937
Total liabilities 402 329 384 480 5 383 680
NPLs (%) 3.21 3.09 3.24
Credit loss ratio (%) 1.17 1.15 1.20
ROE (%) 40.6 38.1 36.9
ROA (%) 3.52 3.32 3.28
Cost-to-income ratio (%) 53.6 54.0 54.6
Advances margin (%) 3.63 3.61 3.58
SEGMENT RESULTS
Year
Six months ended ended
31 December % 30 June
R million 2017 2016 change 2017
Normalised PBT
Retail 5 947 5 347 11 10 658
FNB Africa 566 547 3 880
Commercial 3 917 3 473 13 7 086
Total FNB 10 430 9 367 11 18 624
FNB South Africa's performance reflects the success of its strategy to:
- grow and retain core transactional accounts;
- provide market-leading digital platforms to deliver cost effective and innovative transactional propositions to its customers;
- use its deep customer relationships and sophisticated data analytics to effectively cross-sell and up-sell a broad range of financial services products;
- apply disciplined origination strategies;
- provide innovative savings products to grow its retail deposit franchise; and
- right-size its physical infrastructure to achieve efficiencies.
FNB continued to see growth in customers as shown in the table below.
Period-
on-period
growth
Customer
numbers
Customer segment %
Consumer 1
Premium 12
Commercial 7
FNB's rest of Africa portfolio represents a mix of mature businesses with significant scale and market share, such as Namibia and Botswana, combined with newly
established and start-up businesses, such as Mozambique, Zambia, Tanzania and Ghana. Whilst the portfolio has shown some recovery in the period under review, these
businesses continue to face macro headwinds and regulatory challenges. The continued investment drag on the back of the organic build-out strategies continues to
place pressure on current performance.
A breakdown of key performance measures from the South African and rest of Africa businesses is shown below.
% FNB SA Rest of Africa
PBT growth 12 3
Cost increase 9 4
Credit loss ratio 1.07 1.88
Advances growth 5 -
NPLs as % of advances 2.88 5.77
Deposit growth 12 5
Cost-to-income ratio 51.5 68.9
Operating jaws 0.5 2.2
Despite the negative endowment impact of the 25 bps decrease in the repo rate in July 2017, total FNB NII increased 7%. Advances growth remained moderate (+5%)
with good growth in deposits (+11%). The table below breaks down advances and deposit growth on a segment basis and demonstrates FNB's success in continuing to
attract deposits.
SEGMENT ANALYSIS OF ADVANCES AND DEPOSIT GROWTH
Deposit growth Advances growth
Segment % R billion % R billion
Retail 13 24.7 4 10.7
- Consumer 10 7.4 3 1.1
- Premium 14 17.3 5 9.6
Commercial 11 20.4 8 6.7
FNB Africa 5 1.7 - 0.2
Total FNB 11 46.8 5 17.6
The subdued overall advances growth reflects ongoing prudency in FNB's origination strategies, particularly in the consumer segment where households are still
experiencing pressure on disposable income. FNB's focus on cross-selling into its core transactional retail and commercial customer bases continues to be the main
driver of both advances and deposit growth in the premium and commercial segments.
The tables below unpack advances, at both a segment and product level, and reflect the targeted nature of FNB's risk appetite and origination strategies. The consumer
segment saw good growth in its affordable housing book, but unsecured lending contracted on the back of conservative risk appetite. In the premium segment, mortgages
showed muted growth as FNB continued to focus on low risk origination, however, unsecured advances grew strongly on the back of cross-sell and up-sell strategies to
the existing customer base.
Consumer
Advances
R million 2017 2016 % change
Residential mortgages 23 811 21 339 12
Card 9 061 9 192 (1)
Personal loans 6 965 7 926 (12)
Retail other 3 033 3 309 (8)
Premium
Advances
R million 2017 2016 % change
Residential mortgages 174 893 170 098 3
Card 16 002 13 303 20
Personal loans 7 597 6 505 17
Retail other 12 068 11 049 9
Commercial
R million 2017 2016 % change
Advances 87 900 81 173 8
The quality of FNB's transactional franchise is clearly demonstrated in strong NIR growth of 11%, with the premium and commercial segments delivering growth of 16%
and 10%, respectively. Premium's NIR reflects the inclusion for the first time of the wealth and investment management (WIM) activities. In addition, the benefits of the
actions taken last year are clearly showing up in consumer's NIR growth of 10%.
Overall fee and commission income benefited from transactional volume growth of 10% driven by FNB's digital and electronic channels, as can be seen from the table
below.
CHANNEL VOLUMES
Thousands of transactions 2017 2016 % change
ATM/ADT 121 389 115 141 5
Internet 104 024 105 141 (1)
Banking app 73 590 44 400 66
Mobile 22 776 22 161 3
Point-of-sale 659 783 585 418 13
Cost growth continues to trend above inflation at 8%, mainly on the back of investment in diversification strategies and rest of Africa expansion. The domestic cost-to-
income ratio improved marginally to 51.5%.
FNB's overall bad debts and NPLs increased period-on-period (NPLs +9%), however, the main driver of this increase was the rest of Africa portfolio which continues to
show strain (NPLs +33%). NPLs in the South African retail books are well within expectations at this point in the cycle, increasing 5%. This reflects the quality of new
business written, appropriate pricing strategies and the positive effect of cutbacks in higher risk origination buckets. NPL formation in the commercial book is ticking up,
but this is not unexpected given previous book growth and some residual pressure in the agricultural sector due to the drought. Overall provisioning levels and overlays
have increased.
Insurance revenue increased 19%, benefiting from good volume growth of 11% and 9% in funeral and credit life policies, respectively.
As disclosed previously, from 1 July 2017 the wealth and investment management (WIM) activities were transferred from Ashburton Investments to FNB and progress is
promising. On the back of the launch of asset management solutions/funds originated by Ashburton Investments to the FNB customer base (branded FNB Horizon) in July
2016, assets under management (AUM) exceeded R3.6 billion at December 2017, with total WIM assets amounting to R239 billion. A split of WIM assets is provided in
the table below. Share trading and stockbroking assets under execution (AUE) increased 1% to R76 billion with good brokerage revenue growth in the second quarter due
to increased market volatility.
Assets under administration (AUA) on the linked investment service provider (LISP) platform grew from R14 billion to R17 billion, and customers on the platform increased
to 26 133. There was good growth in trust assets under administration from R26 billion to R36 billion and in the philanthropy trust offering. Assets under management
grew 16% from R37 billion to R44 billion, including growth in offshore portfolio management. Assets under advice increased from R57 billion to R61 billion.
R million 2017 2016 % change
FNB Horizon Series AUM 3 646 529 >100
Assets under advice 61 131 57 356 7
Assets under administration 17 973 14 618 23
Trust assets under administration 36 945 26 308 40
Assets under management 43 650 37 740 16
Assets under execution 76 098 75 199 1
Total WIM assets 239 443 211 750 13
RMB
RMB represents the group's activities in the corporate and investment banking segments in South Africa, the broader African continent and India. The business strategy
leverages a market-leading origination franchise to deliver an integrated corporate and investment banking value proposition to corporate and institutional clients. This,
combined with an expanding market-making and distribution product offering and an excellent track record in private equity investments, contributes to a well-diversified
and sustainable earnings base. The strategy is underpinned by sound risk management, designed to effectively balance the relationship between profit growth, returns
and earnings volatility.
RMB FINANCIAL HIGHLIGHTS
Year
Six months ended ended
31 December % 30 June
R million 2017 2016 change 2017
Normalised earnings 3 139 2 821 11 6 902
Normalised profit before tax 4 450 4 011 11 9 759
- South Africa 3 611 3 327 9 8 444
- Rest of Africa* 839 684 23 1 315
Total assets 460 844 421 350 9 431 920
Total liabilities 451 128 411 523 10 420 950
NPLs (%) 0.35 0.86 0.62
Credit loss ratio (%) - 0.20 0.20
ROE (%) 22.9 20.8 25.8
ROA (%) 1.40 1.33 1.61
Cost-to-income ratio (%) 46.7 47.0 43.4
* Strategy view, including in-country and cross-border activities.
BREAKDOWN OF PROFIT CONTRIBUTION BY ACTIVITY
Year
Six months ended ended
31 December % 30 June
R million 2017 2016 change 2017
Investment banking and advisory 1 811 1 534 18 3 626
Corporate and transactional banking 961 877 10 1 731
Markets and structuring 736 735 - 1 612
Investing 591 625 (5) 2 841
Investment management 19 5 >100 15
Other 332 235 41 (66)
Total RMB 4 450 4 011 11 9 759
RMB delivered a strong operational performance, with pre-tax profits increasing 11% to R4.5 billion. The ROE of 22.9% demonstrates both the quality and diversification
of the portfolio. RMB's balance sheet remains robust, with high quality earnings and solid operational leverage. Cost growth was well below inflation due to the benefits of
platform investment and ongoing automation, despite continued spend on regulatory and compliance initiatives.
The rest of Africa portfolio remains key to RMB's strategy and delivered pre-tax profits of R839 million, up 23% on the comparative period. This performance reflects a
strong performance from corporate and transactional banking and solid growth in structuring and flow trading income. Results were further bolstered by credit impairment
overlay releases given the improvement in the oil and gas sector.
The performance of investment banking and advisory activities was underpinned by good lending income aided by strong advances growth in prior periods, resilient fee
income on the back of advisory and capital market mandates, lower credit impairments given historical proactive provisioning and improved operational leverage due to a
continued focus on cost management. The macroeconomic environment, however, constrained advances growth in the current period, which also dampened origination
and structuring fee income. The business remains disciplined in its financial resource allocation to ensure preservation of returns and maintained its strong credit
provisioning levels.
Corporate and transactional banking's focus on leveraging platforms, managing costs and expanding product offerings locally and in the rest of Africa contributed to good
profit growth. The business benefited from increased transactional volumes and average deposit balances in the rest of Africa. In addition, increased demand for working
capital solutions bolstered the results. The global foreign exchange business, however, continued to be adversely impacted by regulatory changes in certain rest of Africa
jurisdictions.
Markets and structuring activities delivered a resilient performance, reflecting good client flow, robust structuring opportunities and an ability to successfully navigate
volatile fixed income and foreign exchange markets, both locally and in the rest of Africa. Earnings were, however, constrained by lower equity flows, coupled with weaker
performances in the credit trading and hard commodities portfolios.
Investing activities produced satisfactory results, supported by the realisation of certain investments in the Private Equity portfolio. Given the macroeconomic environment
and realisations in prior periods, annuity earnings have come under pressure. The quality and diversity of the Ventures and Corvest portfolios is, however, still reflected in
the strong unrealised value of the portfolio of R3.4 billion (June 2017: R3.7 billion). The business remains in an investment cycle and during the year, several additional
acquisitions were made.
Other activities benefited from the curtailment of losses in the RMB Resources and legacy portfolios, and higher endowment earned on capital invested. This was offset by
costs associated with the group's market infrastructure programme which is aimed at driving efficiencies, ensuring regulatory and legislative compliance and improving
risk mitigation.
WESBANK
WesBank represents the group's activities in instalment credit and related services in the retail, commercial and corporate segments of South Africa and the rest of Africa
(where represented), and through MotoNovo Finance in the UK. Through the Direct Axis brand, WesBank also operates in the unsecured lending market in South Africa.
WesBank's leading position in its chosen markets is due to its longstanding alliances with leading motor manufacturers, suppliers and dealer groups, strong point-of-sale
presence and innovative channel origination strategies.
WESBANK FINANCIAL HIGHLIGHTS
Year
Six months ended ended
31 December % 30 June
R million 2017 2016 change 2017
Normalised earnings 1 915 1 944 (1) 3 996
Normalised profit before tax 2 705 2 755 (2) 5 612
Total assets 216 648 203 848 6 214 222
Total liabilities 212 567 200 556 6 207 809
NPLs (%) 4.09 3.63 3.80
Credit loss ratio (%) 1.85 1.65 1.68
ROE (%) 18.6 19.9 20.0
ROA (%) 1.74 1.87 1.87
Cost-to-income ratio (%) 41.6 40.6 40.2
Net interest margin (%) 5.01 5.01 4.93
WesBank's profit before tax declined 2%, resulting in an ROE of 18.6% and an ROA of 1.74%. Whilst the local personal loans and corporate lending businesses showed
strong operational performances, the local VAF business had a challenging six months. MotoNovo remained resilient despite certain strategic actions taken on origination,
which impacted new business volumes and some ongoing investment drag.
The table below shows the relative performance of WesBank's various activities.
BREAKDOWN OF PROFIT CONTRIBUTION BY ACTIVITY
Year
Six months ended ended
31 December % 30 June
R million 2017 2016 change 2017
Normalised PBT
VAF 1 953 2 108 (7) 4 192
- Retail SA** 1 155 1 351 (15) 2 658
- MotoNovo# 600 588 2 1 190
- Corporate and commercial 198 169 17 344
Personal loans 731 622 18 1 352
Rest of Africa 21 25 (16) 68
Total WesBank 2 705 2 755 (2) 5 612
** Includes MotoVantage.
# Normalised PBT for MotoNovo up 3% to GBP34.0 million.
The performance of the SA VAF business was impacted by increased impairment levels, up from 1.42% in the prior period to 1.80%. This was partly due to an increase
in the performing loans coverage ratio to 0.92% from 0.83%, but also as a result of an increase in later stage arrears and NPL levels.
Higher than expected NPLs in the self employed and small business segments are a result of operational issues with some scorecards, including third-party data quality.
Some of this has been addressed, however, the impact of these issues will continue in the second half of the financial year. Overall NPLs continue to be impacted by
lengthening recovery timelines and more customers opting for court orders for repossessions. Similar impairment increases are also evident in the underlying associate
companies, further impacting associate earnings for the half year.
NIR growth of 4% has largely tracked book growth in SA retail VAF of 5%, but there is increasing competitive pressure particularly in the dealer value added products and
services (VAPS) segment.
Operating expenditure growth of 9% was largely due to increased profit shares payable to alliance partners and investment costs in platforms for both efficiency and
regulatory requirements.
WesBank's personal loans business performed well, on the back of strong advances growth of 15% period-on-period. Margins have stabilised post the NCAA rate caps
and targeted risk cuts, and the impairment ratio has consistently trended down to 7.54% (December 2016: 8.30%; June 2017: 7.91%) on the back of collection
strategies and active management of the debt-review portfolio.
The local corporate business posted a strong operational performance, albeit off a low base. This was mainly driven by resumed growth in new business and the
non-repeat of provisions created in the previous reporting period.
MotoNovo delivered GBP profit growth of 3% reflecting ongoing conservatism from an origination and provisioning perspective, resulting in GBP new business production
only increasing 0.3% (5.2% down in rand terms). Actions taken include targeted risk cuts and termination of certain origination relationships, which were resulting in
higher risk new business. As expected, arrears are tracking up in line with the macroeconomic environment. Provisions continue to increase with a GBP impairment ratio
of 1.57% for the period under review (December 2016: 1.43%; June 2017: 1.46%)
SEGMENT ANALYSIS OF NORMALISED EARNINGS
R million 2017 % composition 2016 % composition % change 2017 % composition
Retail 6 112 49 5 730 49 7 11 421 47
- FNB* 4 340 3 908 7 699
- WesBank* 1 772 1 822 3 722
Commercial 2 963 24 2 623 23 13 5 376 22
- FNB 2 820 2 501 5 102
- WesBank 143 122 274
Corporate and investment banking 3 139 25 2 821 24 11 6 902 28
- RMB* 3 139 2 821 6 902
Other 247 2 472 4 (48) 772 3
- FCC (including Group Treasury) and consolidation
adjustments** 424 650 1 128
- FirstRand and dividends paid on NCNR preference
shares (177) (178) (356)
Normalised earnings 12 461 100 11 646 100 7 24 471 100
* Includes rest of Africa.
** Includes the central credit overlay.
UPDATE ON INVESTMENT MANAGEMENT STRATEGY
The group has an organic strategy to grow its asset management and WIM activities. Following the group's decision to move the WIM activities from Ashburton
Investments (AI) to FNB, AI represents a pure asset management business and subsequently undertook a review of its operating platforms. This resulted in some
rationalisation of the cost base and the group believes the business is now well positioned to deliver on its more focused mandate.
AI focuses on both traditional and alternative funds to be able to deliver on client needs. This includes a traditional range of equity, fixed income and multi asset funds as
well as specialist credit, private equity, renewable energy and infrastructure.
AI grew AUM 15% to R101 billion. Of the R13 billion of AUM growth, R6 billion was due to the purchase of the Pointbreak Namibia asset management business and a
further R3 billion from taking over the FNB Namibia funds in the previous financial year. There were good flows into traditional funds, due to a strong performance in the
fixed income range. The institutional fixed income solutions business continues to deliver flows on the back of winning new mandates.
Despite a tough year for the local financial markets, investment performance continues to show resilience with the majority of funds delivering solid performances relative
to peer groups.
STRATEGIC RATIONALE FOR PROPOSED ACQUISITION OF ALDERMORE PLC
On 6 November 2017, FirstRand announced its formal offer for Aldermore plc. The offer, at 313 pence per share, valued Aldermore at approximately GBP1.1 billion (R20
billion) and represented a premium of 22% to Aldermore's closing price on 12 October 2017, being the day before the first transaction announcement. The offer also
implied a price to net tangible book value multiple of 1.80 times.
FirstRand's stated strategy is to achieve a more diversified revenue profile across products, segments and geographies. Currently 4% of total group earnings is generated
by the group's UK business MotoNovo, one of the largest providers of motor finance for second-hand vehicles in the country. The success of this business, since it was
acquired in 2006, can largely be attributed to the introduction of WesBank's operating model. FirstRand, however, believes that MotoNovo is currently undiversified from a
product and market perspective and the acquisition of Aldermore will accelerate the diversification process using the strength of Aldermore's position in the SME,
mortgage and savings markets.
FirstRand recognises that the existing management team of Aldermore has a deep understanding of the business environment within which Aldermore operates.
MotoNovo, which has built a meaningful market share in financing second-hand vehicles and is organically building a more diversified product set, including personal
loans and insurance, will be integrated within Aldermore to form a separate pillar. Phillip Monks, Aldermore's CEO will lead the new combined UK business.
Once MotoNovo and Aldermore are integrated, new business will be funded through further scaling Aldermore's deposit and funding platform supported by some
securitisations. MotoNovo's back books, which are currently in FirstRand's London branch, will be run down over time. This has the added benefit for FirstRand that hard
currency funding capacity currently allocated to MotoNovo from FirstRand's domestic balance sheet can be redeployed into its South African and rest of Africa growth
strategies.
FirstRand will work closely with Aldermore's management team to identify growth opportunities that Aldermore can explore under FirstRand's ownership. FirstRand already
sees the potential to broaden the business model of the combined platform. FirstRand also believes further UK growth can be unlocked through cross-selling the current
product offerings across the MotoNovo and Aldermore customer bases, and, in the longer term, developing further financial services offerings.
Aldermore and MotoNovo are both highly profitable businesses delivering returns above FirstRand group hurdles, and FirstRand believes it can unlock further value in the
short to medium term through applying its proven practices in financial resource management. FirstRand defines financial resource management as capital, funding,
liquidity and risk capacity, and its approach is a recognised key differentiator and a significant contributor to its outperformance relative to peers.
FirstRand had carefully considered how current and potential macroeconomic future scenarios in the UK could impact the broader business. The group is comfortable that
the financial impact of this transaction is supportive of FirstRand's previous guidance to shareholders on growth, returns, capital position and dividend policy.
MANAGEMENT OF FINANCIAL RESOURCES
The management of the group's financial resources, which it defines as capital, funding and liquidity, and risk capacity, is critical and supportive to the achievement of
FirstRand's stated growth and return targets and is driven by the group's overall risk appetite. Forecast growth in earnings and balance sheet risk weighted assets is
based on the group's macroeconomic outlook and evaluated against available financial resources, considering the requirements of capital providers, regulators and rating
agencies. The expected outcomes and constraints are then stress tested and the group sets financial and prudential targets through different business cycles and
scenarios to enable FirstRand to deliver on its commitments to stakeholders at a defined confidence level. These stress scenarios include further sovereign downgrades
below investment grade on a local currency basis.
The management of the group's financial resources is executed through Group Treasury and is independent of the operating franchises. This ensures the required level of
discipline is applied in the allocation of financial resources and pricing of these resources. This also ensures that Group Treasury's mandate is aligned with the portfolio's
growth, return and volatility targets to deliver shareholder value. The group continues to monitor and proactively manage a fast-changing regulatory environment and
ongoing macroeconomic challenges.
The group adopts a disciplined approach to the management of its foreign currency balance sheet. The framework for the management of external debt takes into
account sources of sovereign risk and foreign currency funding capacity, as well as the macroeconomic vulnerabilities of South Africa. The group employs a self-imposed
structural borrowing limit and a liquidity risk limit more onerous than required in terms of regulations. This philosophy has translated into a resilient and sustainable
foreign currency balance sheet and has limited the impact on the group of the sovereign rating downgrade to sub-investment grade in March 2017 by S&P Global
Ratings. Prior to the downgrade, numerous steps to protect and enhance FirstRand's counterparty status in international funding, payments and derivative markets
provided the group with enhanced access to international financial market infrastructure and greater liquidity pools.
BALANCE SHEET STRENGTH
CAPITAL AND LEVERAGE POSITION
Current targeted ranges and actual ratios are summarised below.
December 2017
Capital
% CET1 Tier 1 Total Leverage#
Regulatory minimum* 7.3 8.5 10.8 4.0
Targets 10.0 - 11.0 >12.0 >14.0 >5.0
Actual** 14.0 14.6 16.9 8.5
* Excluding the bank-specific capital requirements.
** Includes unappropriated profits.
# Based on Basel III regulations.
The group has maintained its strong capital position. Capital planning is undertaken on a three-year forward-looking basis, and the level and composition of capital is
determined taking into account businesses' organic growth plans, corporate transactions and stress-testing scenario outcomes. In addition, the group considers external
issues that could impact capital levels, which include regulatory, accounting and tax changes, macroeconomic conditions and outlook.
The group continues to actively manage its capital composition and, to this end, issued R2.75 billion Basel III-compliant Tier 2 instruments in the domestic market during the period. This resulted in a
more efficient capital structure which is closely aligned with the group's internal targets. It remains the group's intention to continue optimising its capital stack by
frequently issuing Tier 2 instruments in domestic and/or international markets. This ensures sustainable support for ongoing growth initiatives and compensates for the
haircut applied to Tier 2 instruments which are not compliant with Basel III, as well as the maturity of existing Tier 2 instruments.
LIQUIDITY POSITION
Given the liquidity risk introduced by its business activities across various currencies, the group's objective is to optimise its funding profile within structural and regulatory
constraints to enable its businesses to operate in an efficient and sustainable manner. Liquidity buffers are actively managed via high quality liquid assets (HQLA) that are
available as protection against unexpected events or market disruptions as well as to facilitate the variable liquidity needs of the operating businesses. The quantum and
composition of the available sources of liquidity are defined by the behavioural funding liquidity at risk and the market liquidity depth of these resources. In addition,
adaptive overlays to liquidity requirements are derived from stress testing and scenario analysis of the cash inflows and outflows related to business activities.
The group exceeds the 80% minimum liquidity coverage ratio (LCR) requirement set out by the Basel Committee for Banking Supervision (BCBS) with the group LCR at
107% at 31 December 2017 (December 2016: 95%). FirstRand Bank's LCR was 101% (December 2016: 104%).
At 31 December 2017, the group's available HQLA sources of liquidity per the LCR amounted to R190 billion, with an additional R13 billion of management liquidity
available. FirstRand expects to be fully compliant with the net stable funding ratio (NSFR) requirements once implemented.
ACCOUNTING
IFRS 9 FINANCIAL INSTRUMENTS
The group's IFRS 9 implementation project continues to meet its objective of ensuring a high-quality implementation. The project adheres to strict governance practices.
The group elected not to restate comparative information included in the analysis of financial results or annual financial statements for the year ending 30 June 2019. In
the annual financial statements and analysis of financial results for the year ending 30 June 2019, the 2019 financial information will be based on IFRS 9 and the 2018
financial information will be based on IAS 39 Financial instruments: Recognition and Measurement. The amended disclosure requirements of IFRS 7 Financial Instruments:
Disclosures will also be prospectively applied by the group.
The group will, however, publish detailed information about the impact of transitioning to IFRS 9 during the fourth quarter of the 2018 calendar year. The external auditors
have been involved in the process, within allowed and acceptable practice per auditing regulations. This will facilitate compliance with the SARB's Directive 5/2017,
Regulatory treatment of accounting provisions - interim approach and transitional arrangements including disclosure and auditing aspects, which requires the IFRS 9
implementation to be audited within five months of the effective date.
DIVIDEND STRATEGY
Given the group's sustained superior return profile, sound operational performance and strong balance sheet, the board remains comfortable to pay a dividend higher
than earnings growth with a 1.7x cover which remains below its stated long-term cover range of 1.8x to 2.2x. This cover range is assessed on an annual basis as part of
the year end process.
PROSPECTS
Since the outcome of the ANC elective conference in December 2017, sentiment and markets have staged a material recovery and the outlook for South Africa is more
positive than it has been for some time.
FirstRand believes that the government should build on this renewed certainty, provide clear policy direction, appear willing to deal immediately with poor governance at
some of the large and systemic SOEs, address corruption and state capture, and strengthen fiscal discipline.
In the medium to longer term, given the market leading positions of its businesses and the growth strategies it is executing on, FirstRand considers itself strategically well
positioned to benefit from renewed growth.
Given the structural nature of many of South Africa's challenges, the group believes that the domestic fundamentals will not change quickly, therefore, it expects a similar
macro picture for the remainder of its financial year to June 2018. The group remains committed to delivering real growth in earnings and superior returns to
shareholders.
EVENTS AFTER REPORTING PERIOD
Since 31 December 2017 the group received final regulatory approval for the Aldermore transaction as disclosed in the SENS announcement of 1 March 2018. The
directors are not aware of any other material events that have occurred between the end of the reporting period and the date of this report.
BOARD CHANGES
Benedict James van der Ross retired as an independent non-executive director of FirstRand Limited and FirstRand Bank Limited on 30 November 2017.
Jan Hendrik van Greuning retired as an independent non-executive director of FirstRand Limited and FirstRand Bank Limited on 30 November 2017.
Lauritz Lanser Dippenaar will retire as board chairman and non-executive director of FirstRand Limited and FirstRand Bank Limited on 31 March 2018.
William Rodger Jardine has been appointed board chairman of FirstRand Limited and FirstRand Bank Limited, effective 1 April 2018.
MANAGEMENT CHANGES
On 27 February 2018, FirstRand announced the following changes:
- Johan Petrus Burger will retire as CEO of FirstRand Limited and FirstRand Bank Limited on 31 March 2018. He will remain an executive director of FirstRand Limited
and FirstRand Bank Limited until 31 August 2018 and, subject to regulatory approval, become a non-executive director of FirstRand Limited and FirstRand Bank
Limited on 1 September 2018.
- Alan Patrick Pullinger, currently deputy CEO, has been appointed CEO of FirstRand Limited and FirstRand Bank Limited, effective 1 April 2018.
- Mary Vilakazi has been appointed as COO and executive director of FirstRand Limited and FirstRand Bank Limited, effective 1 July 2018.
CASH DIVIDEND DECLARATIONS
ORDINARY SHARES
The directors declared a gross cash dividend totalling 130 cents per ordinary share out of income reserves for the six months ended 31 December 2017.
Six months ended
31 December
Cents per share 2017 2016
Interim (declared 5 March 2018) 130.0 119.0
The salient dates for the interim ordinary dividend are as follows:
Last day to trade cum-dividend Monday 26 March 2018
Shares commence trading ex-dividend Tuesday 27 March 2018
Record date Thursday 29 March 2018
Payment date Tuesday 3 April 2018
Share certificates may not be dematerialised or rematerialised between Tuesday 27 March 2018 and Thursday 29 March 2018, both days inclusive.
For shareholders who are subject to dividend withholding tax (DWT), tax will be calculated at 20% (or such lower rate if a double taxation agreement applies for foreign
shareholders).
For South African shareholders who are subject to DWT, the net interim dividend after deducting 20% tax will be 104.00000 cents per share.
The issued share capital on the declaration date was 5 609 488 001 ordinary shares and 45 000 000 variable rate NCNR B preference shares.
FirstRand's income tax reference number is 9150/201/71/4.
B PREFERENCE SHARES
Dividends on the B preference shares are calculated at a rate of 75.56% of the prime lending rate of FNB, a division of FirstRand Bank Limited.
DIVIDENDS DECLARED AND PAID
Preference
Cents per share dividends
Period:
1 March 2016 - 29 August 2016 394.7
30 August 2016 - 27 February 2017 395.6
28 February 2017 - 28 August 2017 393.6
29 August 2017 - 26 February 2018 386.2
LL Dippenaar JP Burger C Low
Chairman CEO Company secretary
5 March 2018
STATEMENT OF HEADLINE EARNINGS - IFRS
Six months ended Year ended
31 December 30 June
R million 2017 2016 % change 2017
Profit for the period 13 396 12 563 7 26 139
NCNR preference shareholders (177) (181) (2) (356)
Non-controlling interests (470) (493) (5) (1 211)
Earnings attributable to ordinary equityholders 12 749 11 889 7 24 572
Adjusted for: (176) (30) >100 (810)
Gain on disposal of investment securities of a capital nature (31) - (3)
Gain on disposal of available-for-sale assets (22) (64) (52)
Loss on disposal of non-private equity associates - 4 5
Impairment of non-private equity associates - - 4
(Gain)/loss on disposal of investments in subsidiaries (97) 6 (1 817)
Loss on reclassification of non-current assets and disposal groups held for sale
which were not sold - - 95
(Gain)/loss on disposal of property and equipment (27) 9 14
Fair value movement on investment properties (4) - -
Impairment of goodwill - - 119
Impairment of assets in terms of IAS 36 - 1 370
Other (30) (1) -
Tax effects of adjustments 13 15 26
Non-controlling interests adjustments 22 - 429
Headline earnings 12 573 11 859 6 23 762
RECONCILIATION FROM HEADLINE TO NORMALISED EARNINGS
Six months ended Year ended
31 December 30 June
R million 2017 2016 % change 2017
Headline earnings 12 573 11 859 6 23 762
Adjusted for (112) (213) (47) 709
TRS and IFRS 2 liability remeasurement* (137) (166) (63)
Treasury shares** 8 7 (12)
IAS 19 adjustment (56) (54) (117)
Private equity-related# 73 - 901
Normalised earnings 12 461 11 646 7 24 471
* The group uses a TRS with external parties to economically hedge itself against the exposure to changes in the FirstRand share price associated with the group's long-
term incentive schemes.
The TRS is accounted for as a derivative in terms of IFRS, with the full fair value change recognised in NIR.
In the current period, FirstRand's share price increased by R20.10 and during the prior period increased by R8.33.
This resulted in a significant mark-to-market fair value profit in the current period being included in the group's IFRS attributable earnings. The normalised results
reflect the adjustment to normalise this period-on-period IFRS fair value volatility from the TRS.
** Includes FirstRand shares held for client trading activities.
# Realisation of private equity subsidiaries net of private equity-related goodwill and other asset impairments.
PRESENTATION
BASIS OF PRESENTATION
FirstRand prepares its condensed consolidated interim financial statements in accordance with and containing information required by:
- International Financial Reporting Standard, IAS 34 Interim Financial Reporting;
- Financial Reporting Pronouncements as issued by Financial Reporting Standards Council;
- SAICA Financial Reporting Guides as issued by the Accounting Practices Committee; and
- requirements of the Companies Act no 71 of 2008.
The condensed consolidated interim results for the six months ended 31 December 2017 have not been audited or independently reviewed by the group's external
auditors.
This announcement does not include information pursuant to paragraph 16 A (j) of IAS 34 as allowed by the JSE Listings Requirements. The full interim report, which
includes these disclosures, is available on www.firstrand.co.za, or from the company's registered office and upon request.
The directors take full responsibility and confirm that this information has been correctly extracted from the underlying report.
Jaco van Wyk, (CA(SA), supervised the preparation of the condensed consolidated financial results.
ACCOUNTING POLICIES
The accounting policies applied in the preparation of the condensed consolidated interim financial statements are in terms of IFRS and are consistent with those applied
for the year ended 30 June 2017. The condensed consolidated interim financial statements are prepared in accordance with the going concern principle under the
historical cost basis as modified by the fair value accounting of certain assets and liabilities where required or permitted by IFRS.
The group has made voluntary changes to the presentation of deposits. These changes relate to the presentation of accrued interest on certain deposits and the
classification of negotiable notes with specific contractual terms. The changes in presentation have had no impact on the profit or loss or net asset value of the group
and only affects the classification of items on the statement of financial position.
Amendments to IAS 7 Statement of Cash Flows (IAS 7) and IAS 12 Income Taxes (IAS 12) became effective in the current year. These amendments have not had an
impact on the group's reported earnings, financial position or reserves, or a material impact on the accounting policies.
The amendments to IAS 7 introduce additional disclosures in the statement of cash flows that will enable the users of the financial statements to evaluate changes in
liabilities arising from financing activities. This amendment has been applied retrospectively and comparative information has been presented in line with the amended
disclosure requirements. The amendment to IAS 12 relates to the recognition of a deferred tax asset for unrealised losses on debt instruments that are measured at fair
value for accounting purposes but considered at cost for tax purposes. The group is accounting for deferred tax on these assets in line with the amendments. The
adoption of these amendments has no impact on the group.
No other new or amended IFRS became effective for the six months ended 31 December 2017 that impacted the group's reported earnings, financial position or reserves,
or the accounting policies.
NORMALISED RESULTS
The group believes normalised earnings more accurately reflect operational performance. Consequently, headline earnings have been adjusted to take into account
non-operational and accounting anomalies, which, in terms of the JSE Listings Requirements, constitute pro forma financial information.
This pro forma financial information, which is the responsibility of the group's directors, has been prepared for illustrative purposes to more accurately reflect operational
performance and because of its nature may not fairly present in terms of IFRS, the group's financial position, changes in equity, and results of operations or cash flows.
CONDENSED CONSOLIDATED INCOME STATEMENT - IFRS
Six months ended Year ended
31 December 30 June
R million 2017 2016 % change 2017
Net interest income before impairment of advances 23 734 22 200 7 44 917
Impairment and fair value of credit of advances (4 052) (3 741) 8 (8 054)
Net interest income after impairment of advances 19 682 18 459 7 36 863
Non-interest revenue 21 389 19 514 10 40 922
Income from operations 41 071 37 973 8 77 785
Operating expenses (23 708) (21 708) 9 (44 585)
Net income from operations 17 363 16 265 7 33 200
Share of profit of associates after tax 283 340 (17) 757
Share of profit of joint ventures after tax 210 127 65 281
Income before tax 17 856 16 732 7 34 238
Indirect tax (478) (573) (17) (1 081)
Profit before tax 17 378 16 159 8 33 157
Income tax expense (3 982) (3 596) 11 (7 018)
Profit for the period 13 396 12 563 7 26 139
Attributable to
Ordinary equityholders 12 749 11 889 7 24 572
NCNR preference shareholders 177 181 (2) 356
Equityholders of the group 12 926 12 070 7 24 928
Non-controlling interests 470 493 (5) 1 211
Profit for the period 13 396 12 563 7 26 139
Earnings per share (cents)
- Basic 227.3 212.0 7 438.2
- Diluted 227.3 212.0 7 438.2
Headline earnings per share (cents)
- Basic 224.2 211.5 6 423.7
- Diluted 224.2 211.5 6 423.7
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME - IFRS
Six months ended Year ended
31 December 30 June
R million 2017 2016 % change 2017
Profit for the period 13 396 12 563 7 26 139
Items that may subsequently be reclassified to profit or loss
Cash flow hedges (99) 45 (>100) (150)
Gains/(losses) arising during the period 139 116 20 (141)
Reclassification adjustments for amounts included in profit or loss (7) (53) (87) (67)
Deferred income tax (231) (18) >100 58
Available-for-sale financial assets (86) (210) (59) (282)
Losses arising during the period (85) (199) (57) (397)
Reclassification adjustments for amounts included in profit or loss (22) (64) (66) (52)
Deferred income tax 21 53 (60) 167
Exchange differences on translating foreign operations (856) (1 437) (40) (1 633)
Losses arising during the period (856) (1 437) (40) (1 633)
Share of other comprehensive income/(loss) of associates and
joint ventures after tax and non-controlling interests 54 (60) (>100) (157)
Items that may not subsequently be reclassified to profit or loss
Remeasurements on defined benefit post-employment plans (43) (82) (48) 169
(Losses)/gains arising during the period (60) (113) (47) 241
Deferred income tax 17 31 (45) (72)
Other comprehensive loss for the period (1 030) (1 744) (41) (2 053)
Total comprehensive income for the period 12 366 10 819 14 24 086
Attributable to
Ordinary equityholders 11 729 10 213 15 22 574
NCNR preference shareholders 177 181 (2) 356
Equityholders of the group 11 906 10 394 15 22 930
Non-controlling interests 460 425 8 1 156
Total comprehensive income for the period 12 366 10 819 14 24 086
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION - IFRS
As at As at
31 December 30 June
R million 2017 2016* 2017*
ASSETS
Cash and cash equivalents 65 805 65 983 68 483
Derivative financial instruments 53 586 35 721 35 459
Commodities 15 489 9 110 14 380
Investment securities 188 840 166 245 167 427
Advances 927 732 864 171 893 106
- Advances to customers 874 476 821 384 848 649
- Marketable advances 53 256 42 787 44 457
Accounts receivable 9 443 9 514 8 878
Current tax asset 356 509 147
Non-current assets and disposal groups held for sale 498 833 580
Reinsurance assets 133 81 89
Investments in associates 5 726 5 173 5 924
Investments in joint ventures 1 946 1 458 1 430
Property and equipment 17 859 17 591 17 512
Intangible assets 1 663 1 689 1 686
Investment properties 675 399 399
Defined benefit post-employment asset 5 8 5
Deferred income tax asset 1 936 2 003 2 202
Total assets 1 291 692 1 180 488 1 217 707
EQUITY AND LIABILITIES
Liabilities
Short trading positions 15 266 13 874 15 276
Derivative financial instruments 58 102 45 499 44 403
Creditors, accruals and provisions 16 449 16 739 17 014
Current tax liability 415 536 277
Liabilities directly associated with disposal groups held for sale - 508 195
Deposits 1 040 042 952 121 983 529
- Deposits from customers 749 388 678 118 699 674
- Debt securities 203 243 172 472 194 542
- Asset-backed securities 36 953 38 382 35 445
- Other 50 458 63 149 53 868
Employee liabilities 8 270 7 316 9 884
Other liabilities 6 511 7 674 6 385
Policyholder liabilities 4 315 3 296 3 795
Tier 2 liabilities 20 048 20 146 18 933
Deferred income tax liability 958 1 005 832
Total liabilities 1 170 376 1 068 714 1 100 523
Equity
Ordinary shares 56 56 56
Share premium 7 985 8 034 7 960
Reserves 104 912 95 317 100 868
Capital and reserves attributable to ordinary equityholders 112 953 103 407 108 884
NCNR preference shares 4 519 4 519 4 519
Capital and reserves attributable to equityholders of the group 117 472 107 926 113 403
Non-controlling interests 3 844 3 848 3 781
Total equity 121 316 111 774 117 184
Total equities and liabilities 1 291 692 1 180 488 1 217 707
* Restated.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - IFRS
Six months ended Year ended
31 December 30 June
R million 2017 2016 2017
Cash generated from operating activities
Interest and fee commission receipts 58 490 53 326 108 306
Trading and other income 1 410 1 378 2 857
Interest payments (19 724) (17 308) (35 285)
Other operating expenses (19 182) (18 183) (35 106)
Dividends received 2 889 2 441 5 971
Dividends paid (7 806) (6 800) (13 650)
Dividends paid to non-controlling interests (289) (480) (1 099)
Cash generated from operating activities 15 788 14 374 31 994
Movement in operating assets and liabilities
Liquid assets and trading securities (21 231) (23 372) (24 588)
Advances (42 808) (21 869) (59 143)
Deposits 61 484 37 909 71 085
Creditors (net of debtors) (1 150) 543 3 262
Employee liabilities (4 902) (4 956) (5 337)
Other net liabilities (4 947) 4 323 (319)
Taxation paid (4 113) (3 891) (8 237)
Net cash generated from/(utilised by) operating activities (1 879) 3 061 8 717
Cash flows from investing activities
Acquisition of investments in associates (176) (88) (98)
Proceeds on disposal of investments in associates 11 1 38
Acquisition of investments in joint ventures (354) (44) (44)
Proceeds on disposal of investments in joint ventures - 16 17
Acquisition of investments in subsidiaries - - (257)
Proceeds on disposal of investments in subsidiaries 212 - 1 815
Acquisition of property and equipment (1 934) (2 585) (4 581)
Proceeds on disposal of property and equipment 218 198 514
Acquisition of intangible assets and investment properties (101) (237) (434)
Proceeds on disposal of intangible assets and investment properties - (8) -
Proceeds on disposal of non-current assets held for sale 219 246 170
Net cash outflow from investing activities (1 905) (2 501) (2 860)
Cash flows from financing activities
Issue/(redemption) of other liabilities 656 (232) (1 675)
Proceeds from the issue of Tier 2 liabilities 1 121 2 153 941
Acquisition of additional interest in subsidiaries from non-controlling interests (23) (43) (162)
Issue of share of additional interest in subsidiaries from non-controlling interests 23 129 -
Net cash inflow from financing activities 1 777 2 007 (896)
Net (decrease)/increase in cash and cash equivalents (2 007) 2 567 4 961
Cash and cash equivalents at the beginning of the period 68 483 64 303 64 303
Effect of exchange rate changes on cash and cash equivalents (671) (767) (763)
Transfer to non-current assets held for sale - (120) (18)
Cash and cash equivalents at the end of the period 65 805 65 983 68 483
Mandatory reserve balances included above* 25 919 24 048 24 749
* Banks are required to deposit a minimum average balance, calculated monthly with the central bank, which is not available for use in the group's day-to-day
operations. The deposit bears no or low interest. Money at short notice constitutes amounts withdrawable in 32 days or less.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - IFRS
for the six months ended 31 December
Ordinary share capital and ordinary equityholders' funds
Reserves
Defined Share- Foreign attributable
Share benefit Cash flow based Available- currency Other Retained to ordinary NCNR Non-
Share Share capital post- hedge payment for-sale translation reserves earnings equity- preference controlling Total
capital premium and share employment reserve reserve reserve reserve holders shares interests equity
R million premium reserve
Balance as at 1 July 2016 56 7 952 8 008 (930) 308 9 (441) 3 310 374 89 107 91 737 4 519 3 801 108 065
Net proceeds of issue of share capital and premium - - - - - - - - - - - - 129 129
Proceeds from the issue of share capital - - - - - - - - - - - - 130 130
Share issue expenses - - - - - - - - - - - - (1) (1)
Disposal of subsidiaries - - - - - - - - - - - - - -
Movement in other reserves - - - - - 2 - - 54 (44) 12 - (10) 2
Ordinary dividends - - - - - - - - - (6 619) (6 619) - (480) (7 099)
Preference dividends - - - - - - - - - - - (181) - (181)
Transfer from/(to) general risk reserves - - - - - - - - 7 (7) - - - -
Changes in ownership interest of subsidiaries - - - - - - - - - (26) (26) - (17) (43)
Consolidation of treasury shares - 82 82 - - - - - - - - - - 82
Total comprehensive income for the period - - - (82) 45 - (197) (1 395) (47) 11 889 10 213 181 425 10 819
Balance as at 31 December 2016 56 8 034 8 090 (1 012) 353 11 (638) 1 915 388 94 300 95 317 4 519 3 848 111 774
Balance as at 1 July 2017 56 7 960 8 016 (761) 158 9 (715) 1 690 462 100 025 100 868 4 519 3 781 117 184
Net proceeds of issue of share capital and premium - - - - - - - - - - - - 23 23
Proceeds from the issue of share capital - - - - - - - - - - - - 23 23
Share issue expenses - - - - - - - - - - - - - -
Disposal of subsidiaries - - - - - - - - - - - - (27) (27)
Movement in other reserves - - - - - - - - 238 (180) 58 - (79) (21)
Ordinary dividends - - - - - - - - - (7 629) (7 629) - (289) (7 918)
Preference dividends - - - - - - - - - - - (177) - (177)
Transfer (to)/from general risk reserves - - - - - - - - (8) 8 - - - -
Changes in ownership interest of subsidiaries - - - - - - - - - (103) (103) - (25) (128)
Consolidation of treasury shares - 25 25 - - - - - - (11) (11) - - 14
Total comprehensive income for the period - - - (43) (99) - (86) (841) 49 12 749 11 729 177 460 12 366
Balance as at 31 December 2017 56 7 985 8 041 (804) 59 9 (801) 849 741 104 859 104 912 4 519 3 844 121 316
RECONCILIATION OF NORMALISED TO IFRS CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 31 December 2017
Margin related Private Other TRS and
Private items included equity headline IFRS 2
equity Treasury in fair value IAS 19 subsidiary earnings liability
R million Normalised expenses shares* income adjustment realisations adjustments remeasurement IFRS
Net interest income before impairment of advances 24 565 - - (878) - - - 47 23 734
Impairment charge (4 052) - - - - - - - (4 052)
Net interest income after impairment of advances 20 513 - - (878) - - - 47 19 682
Total non-interest revenue 20 002 201 (8) 878 - (97) 211 695 21 882
- Operational non-interest revenue 19 514 201 (13) 878 - (97) 211 695 21 389
- Share of profit of associates and joint ventures after tax 488 - 5 - - - - - 493
Income from operations 40 515 201 (8) - - (97) 211 742 41 564
Operating expenses (23 033) (201) - - 78 - - (552) (23 708)
Income before tax 17 482 - (8) - 78 (97) 211 190 17 856
Indirect tax (478) - - - - - - - (478)
Profit before tax 17 004 - (8) - 78 (97) 211 190 17 378
Income tax expense (3 894) - - - (22) - (13) (53) (3 982)
Profit for the period 13 110 - (8) - 56 (97) 198 137 13 396
Attributable to
NCNR preference shareholders (177) - - - - - - - (177)
Non-controlling interests (472) - - - - 24 (22) - (470)
Ordinary equityholders of the group 12 461 - (8) - 56 (73) 176 137 12 749
Headline and normalised earnings adjustments - - 8 (56) 73 (176) (137) (288)
Normalised earnings attributable to ordinary equityholders of the group 12 461 - - - - - - - 12 461
* FirstRand shares held for client trading activities.
RECONCILIATION OF NORMALISED TO IFRS CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 31 December 2016
Margin related Private Other TRS and
Private items included equity headline IFRS 2
R million equity Treasury in fair value IAS 19 subsidiary earnings liability
Normalised expenses shares* income adjustment realisations adjustments remeasurement IFRS
Net interest income before impairment of advances 23 243 - - (1 043) - - - - 22 200
Impairment charge (3 741) - - - - - - - (3 741)
Net interest income after impairment of advances 19 502 - - (1 043) - - - - 18 459
Total non-interest revenue 18 132 282 (7) 1 043 - - 46 485 19 981
- Operational non-interest revenue 17 663 282 (8) 1 043 - - 49 485 19 514
- Share of profit of associates and joint ventures after tax 469 - 1 - - - (3) - 467
Income from operations 37 634 282 (7) - - - 46 485 38 440
Operating expenses (21 246) (282) - - 75 - (1) (254) (21 708)
Income before tax 16 388 - (7) - 75 - 45 231 16 732
Indirect tax (573) - - - - - - - (573)
Profit before tax 15 815 - (7) - 75 - 45 231 16 159
Income tax expense (3 495) - - - (21) - (15) (65) (3 596)
Profit for the period 12 320 - (7) - 54 - 30 166 12 563
Attributable to
NCNR preference shareholders (181) - - - - - - - (181)
Non-controlling interests (493) - - - - - - - (493)
Ordinary equityholders of the group 11 646 - (7) - 54 - 30 166 11 889
Headline and normalised earnings adjustments - - 7 - (54) - (30) (166) (243)
Normalised earnings attributable to ordinary equityholders of the group 11 646 - - - - - - - 11 646
* FirstRand shares held for client trading activities.
RECONCILIATION OF NORMALISED TO IFRS CONDENSED CONSOLIDATED INCOME STATEMENT
for the year ended 30 June 2017
Margin related Private Other TRS and
Private items included equity headline IFRS 2
R million equity Treasury in fair value IAS 19 subsidiary earnings liability
Normalised expenses shares* income adjustment realisations adjustments remeasurement IFRS
Net interest income before impairment of advances 46 626 - - (1 796) - - - 87 44 917
Impairment charge (8 054) - - - - - - - (8 054)
Net interest income after impairment of advances 38 572 - - (1 796) - - - 87 36 863
Total non-interest revenue 39 268 745 12 1 796 - (1 788) 1 849 78 41 960
- Operational non-interest revenue 38 227 745 11 1 796 - (1 788) 1 853 78 40 922
- Share of profit of associates and joint ventures after tax 1 041 - 1 - - - (4) - 1 038
Income from operations 77 840 745 12 - - (1 788) 1 849 165 78 823
Operating expenses (43 773) (314) - - 163 - (584) (77) (44 585)
Income before tax 34 067 431 12 - 163 (1 788) 1 265 88 34 238
Indirect tax (1 081) - - - - - - - (1 081)
Profit before tax 32 986 431 12 - 163 (1 788) 1 265 88 33 157
Income tax expense (6 951) - - - (46) 30 (26) (25) (7 018)
Profit for the year 26 035 431 12 - 117 (1 758) 1 239 63 26 139
Attributable to
NCNR preference shareholders (356) - - - - - - - (356)
Non-controlling interests (1 208) - - - - 426 (429) - (1 211)
Ordinary equityholders of the group 24 471 431 12 - 117 (1 332) 810 63 24 572
Headline and normalised earnings adjustments - (431)** (12) - (117) 1 332 (810) (63) (101)
Normalised earnings attributable to ordinary equityholders of the group 24 471 - - - - - - - 24 471
* FirstRand shares held for client trading activities.
** Private equity-related goodwill and other asset impairments.
RECONCILIATION OF NORMALISED TO IFRS CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2017
Treasury
R million Normalised shares* IFRS
ASSETS
Cash and cash equivalents 65 805 - 65 805
Derivative financial instruments 53 586 - 53 586
Commodities 15 489 - 15 489
Investment securities 188 928 (88) 188 840
Advances 927 732 - 927 732
- Advances to customers 874 476 - 874 476
- Marketable advances 53 256 - 53 256
Accounts receivable 9 443 - 9 443
Current tax asset 356 - 356
Non-current assets and disposal groups held for sale 498 - 498
Reinsurance assets 133 - 133
Investments in associates 5 726 - 5 726
Investments in joint ventures 1 890 56 1 946
Property and equipment 17 859 - 17 859
Intangible assets 1 663 - 1 663
Investment properties 675 - 675
Defined benefit post-employment asset 5 - 5
Deferred income tax asset 1 936 - 1 936
Total assets 1 291 724 (32) 1 291 692
EQUITY AND LIABILITIES
Liabilities
Short trading positions 15 266 - 15 266
Derivative financial instruments 58 102 - 58 102
Creditors, accruals and provisions 16 449 - 16 449
Current tax liability 415 - 415
Liabilities directly associated with disposal groups held for sale - - -
Deposits 1 040 042 - 1 040 042
- Deposits from customers 749 388 - 749 388
- Debt securities 203 243 - 203 243
- Asset-backed securities 36 953 - 36 953
- Other 50 458 - 50 458
Employee liabilities 8 270 - 8 270
Other liabilities 6 511 - 6 511
Policyholder liabilities 4 315 - 4 315
Tier 2 liabilities 20 048 - 20 048
Deferred income tax liability 958 - 958
Total liabilities 1 170 376 - 1 170 376
Equity
Ordinary shares 56 - 56
Share premium 8 056 (71) 7 985
Reserves 104 873 39 104 912
Capital and reserves attributable to ordinary equityholders 112 985 (32) 112 953
NCNR preference shares 4 519 - 4 519
Capital and reserves attributable to equityholders of the group 117 504 (32) 117 472
Non-controlling interests 3 844 - 3 844
Total equity 121 348 (32) 121 316
Total equities and liabilities 1 291 724 (32) 1 291 692
* FirstRand shares held for client trading activities.
RECONCILIATION OF NORMALISED TO IFRS CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2016
R million Treasury
Normalised shares* IFRS
ASSETS
Cash and cash equivalents 65 983 - 65 983
Derivative financial instruments 35 721 - 35 721
Commodities 9 110 - 9 110
Investment securities 166 270 (25) 166 245
Advances 864 171 - 864 171
- Advances to customers 821 384 - 821 384
- Marketable advances 42 787 42 787
Accounts receivable 9 514 - 9 514
Current tax asset 509 - 509
Non-current assets and disposal groups held for sale 833 - 833
Reinsurance assets 81 - 81
Investments in associates 5 173 - 5 173
Investments in joint ventures 1 407 51 1 458
Property and equipment 17 591 - 17 591
Intangible assets 1 689 - 1 689
Investment properties 399 - 399
Defined benefit post-employment asset 8 - 8
Deferred income tax asset 2 003 - 2 003
Total assets 1 180 462 26 1 180 488
EQUITY AND LIABILITIES
Liabilities
Short trading positions 13 874 - 13 874
Derivative financial instruments 45 499 - 45 499
Creditors, accruals and provisions** 16 739 - 16 739
Current tax liability 536 - 536
Liabilities directly associated with disposal groups held for sale 508 - 508
Deposits** 952 121 - 952 121
- Deposits from customers 678 118 - 678 118
- Debt securities 172 472 - 172 472
- Asset-backed securities 38 382 - 38 382
- Other 63 149 - 63 149
Employee liabilities 7 316 - 7 316
Other liabilities 7 674 - 7 674
Policyholder liabilities 3 296 - 3 296
Tier 2 liabilities 20 146 - 20 146
Deferred income tax liability 1 005 - 1 005
Total liabilities 1 068 714 - 1 068 714
Equity
Ordinary shares 56 - 56
Share premium 8 056 (22) 8 034
Reserves 95 269 48 95 317
Capital and reserves attributable to ordinary equityholders 103 381 26 103 407
NCNR preference shares 4 519 - 4 519
Capital and reserves attributable to equityholders of the group 107 900 26 107 926
Non-controlling interests 3 848 - 3 848
Total equity 111 748 26 111 774
Total equities and liabilities 1 180 462 26 1 180 488
* FirstRand shares held for client trading activities.
** Restated.
RECONCILIATION OF NORMALISED TO IFRS CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2017
R million Treasury
Normalised shares* IFRS
ASSETS
Cash and cash equivalents 68 483 - 68 483
Derivative financial instruments 35 459 - 35 459
Commodities 14 380 - 14 380
Investment securities 167 516 (89) 167 427
Advances 893 106 - 893 106
- Advances to customers 848 649 - 848 649
- Marketable advances 44 457 - 44 457
Accounts receivable 8 878 - 8 878
Current tax asset 147 - 147
Non-current assets and disposal groups held for sale 580 - 580
Reinsurance assets 89 - 89
Investments in associates 5 924 - 5 924
Investments in joint ventures 1 379 51 1 430
Property and equipment 17 512 - 17 512
Intangible assets 1 686 - 1 686
Investment properties 399 - 399
Defined benefit post-employment asset 5 - 5
Deferred income tax asset 2 202 - 2 202
Total assets 1 217 745 (38) 1 217 707
EQUITY AND LIABILITIES
Liabilities
Short trading positions 15 276 - 15 276
Derivative financial instruments 44 403 - 44 403
Creditors, accruals and provisions 17 014 - 17 014
Current tax liability 277 - 277
Liabilities directly associated with disposal groups held for sale 195 - 195
Deposits** 983 529 - 983 529
- Deposits from customers 699 674 - 699 674
- Debt securities 194 542 - 194 542
- Asset-backed securities 35 445 - 35 445
- Other 53 868 - 53 868
Employee liabilities 9 884 - 9 884
Other liabilities 6 385 - 6 385
Policyholder liabilities 3 795 - 3 795
Tier 2 liabilities 18 933 - 18 933
Deferred income tax liability 832 - 832
Total liabilities 1 100 523 - 1 100 523
Equity
Ordinary shares 56 - 56
Share premium 8 056 (96) 7 960
Reserves 100 810 58 100 868
Capital and reserves attributable to ordinary equityholders 108 922 (38) 108 884
NCNR preference shares 4 519 - 4 519
Capital and reserves attributable to equityholders of the group 113 441 (38) 113 403
Non-controlling interests 3 781 - 3 781
Total equity 117 222 (38) 117 184
Total equities and liabilities 1 217 745 (38) 1 217 707
* FirstRand shares held for client trading activities.
** Restated.
RESTATEMENT OF PRIOR YEAR NUMBERS
DESCRIPTION OF RESTATEMENTS
The group made the following changes to the presentation of deposits.
ACCRUED INTEREST ON DEPOSITS
The group previously recognised accrued interest on certain deposits as part of creditors, accruals and provisions in the statement of financial position. During the current
financial period, accrued interest was reclassified to deposits. This is more in line with the group's current practice for advances where the accrued interest is recognised
as part of the carrying value of the underlying financial instrument.
CLASSIFICATION OF DEBT SECURITIES
The SARB issued guidance clarifying that negotiable notes with an issue price, a redemption/maturity date and redemption price or face value should be classified as debt
securities rather than deposits from customers. The group reclassified certain issued notes to align the regulatory and statutory reporting requirements.
These changes in presentation had no impact on the profit or loss or net asset value of the group and only affected the classification of items on the statement of
financial position.
RESTATED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION – IFRS
As at 31 December 2016 As at 30 June 2017
As Accrued As
previously Debt interest on previously Debt
R million reported securities deposits Restated reported securities Restated
ASSETS
Cash and cash equivalents 65 983 - - 65 983 68 483 - 68 483
Derivative financial instruments 35 721 - - 35 721 35 459 - 35 459
Commodities 9 110 - - 9 110 14 380 - 14 380
Investment securities 166 245 - - 166 245 167 427 - 167 427
Advances 864 171 - - 864 171 893 106 - 893 106
- Advances to customers 821 384 - - 821 384 848 649 - 848 649
- Marketable advances 42 787 - - 42 787 44 457 - 44 457
Accounts receivable 9 514 - - 9 514 8 878 - 8 878
Current tax asset 509 - - 509 147 - 147
Non-current assets and disposal groups held for sale 833 - - 833 580 - 580
Reinsurance assets 81 - - 81 89 - 89
Investments in associates 5 173 - - 5 173 5 924 - 5 924
Investments in joint ventures 1 458 - - 1 458 1 430 - 1 430
Property and equipment 17 591 - - 17 591 17 512 - 17 512
Intangible assets 1 689 - - 1 689 1 686 - 1 686
Investment properties 399 - - 399 399 - 399
Defined benefit post-employment asset 8 - - 8 5 - 5
Deferred income tax asset 2 003 - - 2 003 2 202 - 2 202
Total assets 1 180 488 - - 1 180 488 1 217 707 - 1 217 707
EQUITY AND LIABILITIES
Liabilities
Short trading positions 13 874 - - 13 874 15 276 - 15 276
Derivative financial instruments 45 499 - - 45 499 44 403 - 44 403
Creditors, accruals and provisions 16 890 - (151) 16 739 17 014 - 17 014
Current tax liability 536 - - 536 277 - 277
Liabilities directly associated with disposal groups held for sale 508 - - 508 195 - 195
- Deposits 951 970 - 151 952 121 983 529 - 983 529
- Deposits from customers 693 053 (14 950) 15 678 118 715 101 (15 427) 699 674
- Debt securities 157 522 14 950 - 172 472 179 115 15 427 194 542
- Asset-backed securities 38 382 - - 38 382 35 445 - 35 445
- Other 63 013 - 136 63 149 53 868 - 53 868
Employee liabilities 7 316 - - 7 316 9 884 - 9 884
Other liabilities 7 674 - - 7 674 6 385 - 6 385
Policyholder liabilities 3 296 - - 3 296 3 795 - 3 795
Tier 2 liabilities 20 146 - - 20 146 18 933 - 18 933
Deferred income tax liability 1 005 - - 1 005 832 - 832
Total liabilities 1 068 714 - - 1 068 714 1 100 523 - 1 100 523
Equity
Ordinary shares 56 - - 56 56 - 56
Share premium 8 034 - - 8 034 7 960 - 7 960
Reserves 95 317 - - 95 317 100 868 - 100 868
Capital and reserves attributable to ordinary equityholders 103 407 - - 103 407 108 884 - 108 884
NCNR preference shares 4 519 - - 4 519 4 519 - 4 519
Capital and reserves attributable to equityholders of the group 107 926 - - 107 926 113 403 - 113 403
Non-controlling interests 3 848 - - 3 848 3 781 - 3 781
Total equity 111 774 - - 111 774 117 184 - 117 184
Total equities and liabilities 1 180 488 - - 1 180 488 1 217 707 - 1 217 707
FAIR VALUE HIERARCHY AND MEASUREMENTS
TRANSFERS BETWEEN FAIR VALUE HIERARCHY LEVELS
There were no transfers in or out of the various levels for the financial periods ended 31 December 2016 and 31 December 2017.
The following represents the significant transfers into levels 1, 2 and 3 and the reasons for these transfers for the year ended 30 June 2017. Transfers between levels of
the fair value hierarchy are deemed to occur at the beginning of the reporting period.
As at 30 June 2017
Transfers Transfers
R million in out Reasons for significant transfers in
Level 1 - - There were no transfers into level 1.
Level 2 - (38) There were no transfers into level 2.
Level 3 38 - The JSE publishes volatilities of strike prices of options between 70% and 130%. Any volatility
above or below this range results in inputs becoming unobservable. During the year ended 30
June 2017, the observability of volatilities used in determining the fair value of certain over the
counter options became unobservable and resulted in the transfer of R38 million out of level 2
into level 3 of the fair value hierarchy.
Total transfers 38 (38)
CONDENSED SEGMENT REPORT - IFRS
Six months ended 31 December 2017
FNB RMB FCC
(including
Group FirstRand
FNB Investment Corporate Treasury) group Normalised
R million FNB Africa banking banking WesBank and other normalised adjustments Total
Profit before tax 9 864 566 3 489 961 2 705 (581) 17 004 374 17 378
Total assets 364 073 49 024 405 983 54 861 216 648 201 135 1 291 724 (32) 1 291 692
Total liabilities 353 438 48 891 397 558 53 570 212 567 104 352 1 170 376 - 1 170 376
Six months ended 31 December 2016
FNB RMB FCC
(including
Group FirstRand
FNB Investment Corporate Treasury) group Normalised
R million FNB Africa banking banking WesBank and other normalised adjustments Total
Profit before tax 8 820 547 3 134 877 2 755 (318) 15 815 344 16 159
Total assets 345 805 48 853 378 971 42 379 203 848 160 606 1 180 462 26 1 180 488
Total liabilities 336 049 48 431 370 296 41 227 200 556 72 155 1 068 714 - 1 068 714
Year ended 30 June 2017
FNB RMB FCC
(including
Group FirstRand
FNB Investment Corporate Treasury) group Normalised
R million FNB Africa banking banking WesBank and other normalised adjustments Total
Profit before tax 17 744 880 8 028 1 731 5 612 (1 009) 32 986 171 33 157
Total assets 351 978 49 959 386 048 45 872 214 222 169 666 1 217 745 (38) 1 217 707
Total liabilities 333 698 49 982 377 316 43 634 207 809 88 084 1 100 523 - 1 100 523
CONTINGENCIES AND COMMITMENTS
As at As at
31 December 30 June
R million 2017 2016 % change 2017
Contingencies and commitments
Guarantees (endorsements and performance guarantees) 35 028 40 317 (13) 34 006
Letters of credit 8 329 6 318 32 6 731
Total contingencies 43 357 46 635 (7) 40 737
Irrevocable commitments 114 604 115 381 (1) 119 325
Committed capital expenditure 2 659 1 736 53 3 936
Operating lease commitments 3 742 4 101 (9) 3 779
Other 222 318 (30) 306
Contingencies and commitments 164 584 168 171 (2) 168 083
Commitments
Commitments in respect of capital expenditure and long-term investments
approved by the directors 2 659 1 736 53 3 936
NUMBER OF ORDINARY SHARES IN ISSUE
Six months ended 31 December Year ended 30 June
2017 2016 2017
IFRS Normalised IFRS Normalised IFRS Normalised
Shares in issue
Opening balance as at 1 July 5 609 488 001 5 609 488 001 5 609 488 001 5 609 488 001 5 609 488 001 5 609 488 001
Less: treasury shares (1 314 888) - (473 626) - (311 919) -
- Shares for client trading* (1 314 888) - (473 626) - (311 919) -
Number of shares in issue (after treasury shares) 5 608 173 113 5 609 488 001 5 609 014 375 5 609 488 001 5 609 176 082 5 609 488 001
Weighted average number of shares
Weighted average number of shares before
treasury shares 5 609 488 001 5 609 488 001 5 609 488 001 5 609 488 001 5 609 488 001 5 609 488 001
Less: treasury shares (1 656 596) - (1 075 586) - (1 480 934) -
- Shares for client trading* (1 656 596) - (1 075 586) - (1 480 934) -
Basic and diluted weighted average number of
shares in issue 5 607 831 405 5 609 488 001 5 608 412 415 5 609 488 001 5 608 007 067 5 609 488 001
* For normalised reporting, shares held for client trading activities are treated as externally issued.
COMPANY INFORMATION
DIRECTORS
LL Dippenaar (chairman), JP Burger (chief executive officer), AP Pullinger (deputy chief executive officer), HS Kellan (financial director), MS Bomela, HL Bosman, JJ
Durand, GG Gelink, PM Goss, NN Gwagwa, PK Harris, WR Jardine, F Knoetze, RM Loubser, PJ Makosholo, TS Mashego, EG Matenge-Sebesho, AT Nzimande
COMPANY SECRETARY AND REGISTERED OFFICE
C Low
4 Merchant Place, Corner Fredman Drive and Rivonia Road
Sandton 2196
PO Box 650149, Benmore 2010
Tel: +27 11 282 1808
Fax: +27 11 282 8088
Website: www.firstrand.co.za
JSE SPONSOR
Rand Merchant Bank (a division of FirstRand Bank Limited)
Corporate Finance
1 Merchant Place, Corner Fredman Drive and Rivonia Road
Sandton 2196
Tel: +27 11 282 8000
Fax: +27 11 282 4184
NAMIBIAN SPONSOR
Simonis Storm Securities (Pty) Ltd
4 Koch Street
Klein Windhoek
Namibia
TRANSFER SECRETARIES - SOUTH AFRICA
Computershare Investor Services (Pty) Ltd
1st Floor, Rosebank Towers
15 Biermann Avenue
Rosebank 2196
PO Box 61051, Marshalltown 2107
Tel: +27 11 370 5000
Fax: +27 11 688 5248
TRANSFER SECRETARIES - NAMIBIA
Transfer Secretaries (Pty) Ltd
4 Robert Mugabe Avenue, Windhoek
PO Box 2401, Windhoek, Namibia
Tel: +264 612 27647
Fax: +264 612 48531
AUDITORS
PricewaterhouseCoopers Inc.
4 Lisbon Lane
Waterfall City, Jukskei View
2090
Deloitte & Touche
Building 8, Deloitte Place
The Woodlands, Woodlands Drive
Woodmead, Sandton
6 March 2018
Date: 06/03/2018 08:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.