ABSA GROUP LIMITED - bsa Group Limited unaudited condensed consolidated interim financial results for the period ended 30 June 2018

Release Date: 06/08/2018 07:05
Code(s): ABG
 
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bsa Group Limited unaudited condensed consolidated interim financial results for the period ended 30 June 2018

Absa Group Limited
(formerly known as 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: ABG
ISIN: ZAE000255915

Absa Group Limited unaudited condensed consolidated interim
financial results for the reporting period ended 30 June 2018

These condensed consolidated interim financial results were prepared by Absa Group Financial Control 
under the direction and supervision of Group Financial Director, J P Quinn CA(SA). 

The Board of Directors oversees the Group's activities and holds management accountable for adhering to the
risk governance framework. To do so, directors review reports prepared by the businesses, Risk, and others.
They exercise sound independent judgment, and probe and challenge recommendations, as well as decisions made 
by management.

Finance is responsible for establishing a strong control environment over the Group's financial reporting
processes and serves as an independent control function advising business management, escalating identified
risks and establishing policies or processes to manage risk.

Finance is led by the Group's Financial Director who reports directly to the Chief Executive Officer. 
The Financial Director has regular and unrestricted access to the Board of Directors as well as to the 
Group Audit Compliance Committee (GACC).

Together with the GACC, the Board has reviewed and approved the reporting changes contained in the
announcements released on the Stock Exchange News Services (SENS) on 6 August 2018. The GACC and the Board 
are satisfied that the changes disclosed in the SENS result in fair presentation of the consolidated 
financial position and comply, in all material respects, with the relevant provisions of the Companies 
Act, IFRS and interpretations of IFRS, and SAICA's Reporting Guides.

GROUP SENS
Profit and dividend announcement
Salient features
Absa Group Limited (the Group) discloses International Financial Reporting Standards (IFRS) financial
results and a normalised view, which adjusts for the financial consequences of separating from Barclays PLC.

IFRS basis
- Diluted IFRS Headline earnings per share (HEPS), which includes R1.4bn of separation costs decreased 
  4% to 877.8 cents. 
- An interim dividend of 490 cents was declared representing a 3% year-on-year increase.
- Retail and Business Banking (RBB) South Africa headline earnings grew 4% to R4.2bn, Corporate and
  Investment Bank (CIB) South Africa declined 6% to R1.7bn, Rest of Africa Banking rose 8% to R1.6bn and 
  Wealth, Investment Management and Insurance (WIMI) increased 5% to R646m.
- Return on equity (RoE) declined to 13.9%.
- Revenue grew 3% to R37.6bn.
- Operating expenses rose 8% to R22.2bn
- Pre-provision decreased 3% to R15.4bn
- Credit impairments fell 9% to R3.4bn, resulting in a 0.83% credit loss ratio from 0.96%.
- Absa Group Limited's IFRS Common Equity Tier 1 (CET 1) ratio of 13.3% remains above
  regulatory requirements and our board target range.
- Net asset value (NAV) per share rose 1% to 12 829 cents

Normalised basis
- Diluted HEPS grew 3% (5% on a constant currency basis) to 949.5 cents.
- RoE increased slightly to 16.9%.
- Revenue grew 3% to R37.0bn (4% on a constant currency basis).
- Operating expenses rose 4% to R20.8bn.
- Pre-provision profit increased 1% to R16.2bn.
- NAV per share rose 4% to 11 683 cents.

Normalised reporting
Given the process of separating from Barclays PLC, the Group continues to report both IFRS compliant 
financial results and a normalised view. The latter adjusts for the consequences of the separation and 
better reflects its underlying performance. The Group will present normalised results for future periods 
where the financial impact of separation is considered material.

Normalisation adjusts for the following items: R175m of interest income on Barclays PLC's separation contribution 
(30 June 2017: R46m); hedging revenue linked to separation activities of R413m (30 June 2017: R238m); operating 
expenses of R1 364m (30 June 2017: R460m) and R76m of other expenses (30 June 2017: R325m), plus a R133m tax 
impact of the aforementioned (30 June 2017: R111m) items. In total, these adjustments added R719m to the Group's 
normalised headline earnings during the period (30 June 2017: R152m). Since normalisation occurs at a Group level, 
it does not affect divisional disclosures.

Non-IFRS measures such as normalised results are considered pro forma financial information as per the JSE listing
requirements. The pro forma financial information, is the responsibility of the Group's Board of directors and
is presented for illustrative purposes only and because of its nature may not fairly present the Group's 
financial position, changes in equity, and results in operations or cash flows.

Overview of results
The Group's IFRS headline earnings declined 4% to R7 324m from R7 650m and diluted HEPS decreased 4% to 
877.8 cents. The Group's RoE fell to 13.9% from 16.2%, largely due to the higher capital base from the 
Barclays PLC seperation contribution and costs, while its RoA declined to 1.26% from 1.38%. Net interest 
income increased 3% and non-interest income grew 5%, resulting in 3% higher total revenue. Operating 
expenses grew 8%, increasing the cost-to-income ratio to 59.0% from 56.4%. Pre-provision profit decreased 
3% to R15.4bn. The Group's NAV per share rose 1% to 12 829 cents including Barclays PLC's remaining 
separation contribution in equity. 

On a normalised basis, the Group's headline earnings grew 3% to R8 043m from R7 802m and diluted HEPS 
rose 3% to 949.5 cents from 921.5 cents. The Group's normalised RoE was 16.9% from 16.8% and its return 
on assets was 1.40% from 1.41%. Revenue grew 3% to R37.0bn, with net interest income and non-interest 
income rising 2% and 4% respectively. Revenue grew 4% on a constant currency basis. The Group's net 
interest margin (on average interest-bearing assets) decreased to 4.76% from 4.81%. Gross loans and 
advances to customers grew 8% to R811bn, while deposits due to customers rose 3% to R714bn. With 
operating expenses growing 4%, the normalised cost-to-income ratio increased to 56.2% from 55.5%, 
and pre-provision profit rose 1% to R16.2bn. The stronger rand reduced Group revenue by 1% and headline 
earnings by 2%. In constant currency, pre-provision profit grew 3% and headline earnings 5%. Credit 
impairments fell 9% to R3.4bn, resulting in a 0.83% credit loss ratio from 0.96%. The Group's 
normalised NAV per share increased 4% to 11 683 cents and it declared a 3% higher half year 
DPS of 490 cents.

RBB South Africa's headline earnings rose 4% to R4 209m primarily due to 6% lower credit impairments. 
Retail Banking South Africa headline earnings grew 5% to R3 001m, while Business Banking South Africa 
increased 1% to R1 208m. CIB South Africa's earnings declined 6%, given a 1% lower pre-provision 
profit and 79% higher credit impairments. Corporate South Africa fell 3% to R556m and Investment 
Banking South Africa decreased 7% to R1 127m. Rest of Africa Banking headline earnings grew 8% to 
R1 636m, or 20% in constant currency. RBB Rest of Africa increased 38%, or 54% in constant currency, 
while CIB Rest of Africa grew 3% and 15% in constant currency. WIMI's headline earnings increased 
5% to R646m, reflecting significant growth in Short-term Insurance.

South African earnings grew 2% to R6.4bn, while Rest of Africa rose 9% or 21% in constant currency to
account for 20% of Group earnings. 

Operating environment
Global economic recovery continued during the period with the US leading the developed economies in the 
recovery process. Economic growth in Europe and Japan slowed, but domestic fundamentals remain solid 
giving confidence that growth will improve in the second half. Inflation in developed economies 
remains muted, while emerging markets saw an uptick due to currency pressures and higher commodity 
prices. Global monetary policy is still broadly accommodative, although the broad trend is toward 
tightening.

South Africa's GDP contracted by an annualised 2.2% in the first quarter after a strong annualised 3.1% in
the last quarter of 2017. The contraction was due to weakness across key sectors including agriculture, mining,
manufacturing and construction. Private sector fixed investment declined in contrast to the strong improvement 
in business confidence in the first quarter. Headline inflation bottomed at 3.8% in March before increasing
slowly to 4.6% in June. As such, the Reserve Bank reduced interest rates 25 basis points in March, but left it
unchanged in July.

Economic growth continued to improve in a number of our key Rest of Africa countries. The strengthening
global economy, higher commodity prices and improved weather conditions supported growth, with the primary 
sector activities including mining, construction and agriculturee standing out as the main growth drivers 
in many economies. Monetary policy easing continued in our markets as inflation trended lower. Key headwinds 
include the still weak fiscal positions in Mozambique, Zambia and Kenya.

Group performance
Statement of financial position
Total IFRS assets increased 9% to R1 235bn at June 2018, largely due to 8% growth in gross loans and
advances to customers and trading portfolio assets which grew by 23%. Normalised total assets increased 
8% to R1 233bn at 30 June 2018.

Loans and advances to customers
Gross loans and advances to customers increased 8% to R811bn. RBB South Africa loans rose 5% to R477bn.
Retail Banking South Africa's loans grew 5% to R407bn, reflecting 12% growth in Vehicle and Asset Finance 
(VAF), 10% higher Personal Loans and 1% growth in Home Loans, while Card and Payments increased by 1% despite 
a reduction in the store card portfolio. Business Banking South Africa's loans rose 9% to R70bn, with Term 
Loans and Agri Loans increasing 13% and 14% respectively. CIB South Africa's loans grew 14% to R235bn, 
including 13% growth in Corporate and 14% in the Investment Bank. Rest of Africa Banking loans increased 
14% to R94bn, or 10% in constant currency.

Funding
The Group's liquidity position remains strong, with liquid assets and other sources of liquidity growing 11%
to R218bn, which equates to 31% of customer deposits. The Group's three-month average liquidity coverage
ratio for the second quarter of 2018 was 109%, comfortably above the minimum regulatory hurdle of 90% during 
the first half of 2018. The Group's deposits due to customers grew 3% to R714bn. Its loans to deposit and 
debt securities ratio increased to 91.6% from 87.1%. Deposits due to customers constituted 76% of total 
funding. RBB South Africa's deposits grew 5% to R305bn, with Retail Banking South Africa up 7% to R193bn 
and Business Banking South Africa increasing 3% to R111bn. CIB South Africa's deposits were flat at R184bn. 
Rest of Africa Banking deposits increased 6% to R127bn, or 3% in constant currency.

Net asset value
The Group's IFRS NAV rose 1% to R109bn and its NAV per share grew 1% to 12 829 cents, despite a R4.2bn
reduction on adoption of IFRS 9 on 1 January 2018.  During the reporting period the Group generated 
retained earnings of R7.3bn (Normalised: R8bn), from which it paid R5.0bn in ordinary dividends. Its 
foreign currency translation reserve (FCTR) increased to R2.4bn from R1.8bn at the end of June 2017.

On a normalised basis, NAV rose 3% to R99bn and its NAV per share grew 4% to 11 683 cents.

Capital to risk-weighted assets
Group risk-weighted assets (RWAs) increased 6% to R771bn at 30 June 2018, mainly due to increased credit 
risk RWAs. The Group remains well capitalised, comfortably above minimum regulatory capital requirements. 
The Group's IFRS CET1 and total capital adequacy ratios were 13.3%and 16.7% respectively (from 13.7% and 
16.1%).

On a normalised basis the CET 1 and total capital adequacy ratios were 12.2% and 15.7% respectively 
(from 12.1% and 14.5%).

The Group generated 2.0% of CET1 capital internally over the past year. The day 1 impact from 
implementing IFRS 9 reduced the Group's CET1 ratio by 5 basis points, as we opted to phase it in 
over three years. Declaring a 3% higher half year DPS of 490 cents on a dividend cover of 1.9 times 
took into account the operating environment, the Group's strong capital position, internal capital 
generation, strategy and growth plans.

Statement of comprehensive income

Net interest income
Net interest income increased 3% to R21 363m from R20 837m (Normalised: increase of 2% to R21 188m from 
R20 791m), while average interest-bearing assets grew 3%. The Group's net interest margin (to average
interest-bearing assets) declined to 4.75% from 4.81% (Normalised: declined to 4.76% from 4.81%). Net 
interest income grew 3% on a constant currency basis.

Loan pricing reduced the Group's net interest margin by 6 bps, largely due to higher suspended interest in
RBB South Africa after implementing IFRS9. Loan composition added 2 bps to the margin, given slower growth in
Home Loans. Deposit pricing reduced the margin by 1 bp, primarily due to competitive pricing on fixed retail
deposits in South Africa. Deposit composition increased the margin by 3 bps, as wholesale funding balances were
flat. With lower interest rates in South Africa, the equity and deposit endowment reduced the Group margin by
4 bps. The structural hedge released R232m to the income statement, 3 bps more than in the prior reporting
period, to largely offset the reduced endowment contribution. Rest of Africa reduced the margin by 1 bp due 
to the stronger rand.

Non-interest income
IFRS non-interest income grew 5% to R16 267m from R15 532m to account for 43% of total revenue. On a
constant currency basis, the growth was 5%. 

On a normalised basis non-interest income grew 4% to R15 854m from R15 294m to account for 43% of 
total revenue from 42%.

Net fee and commission income grew 4% to R10 991m, which represented 68% of total non-interest income. 
Within this, cheque account fees increased 15% to R2 751m, electronic banking grew 3% to R2 576m, while 
credit cards and merchant income rose by 7% and 9% respectively. Investment, markets execution and investment 
banking fees decreased 8% to R266m.

Net trading excluding hedge accounting declined 6% to R2 510m, reflecting Markets in South Africa increasing
1%, while Rest of Africa Banking decreased 8%.

Within other operating income, sundry income increased significantly due to a non-headline gain on the
disposal of some subsidiaries.

RBB South Africa's non-interest income grew 5% to R8 763m, as Retail Banking South Africa increased 6% and
Business Banking South Africa was flat. Within Retail Banking, Transactional and Deposits rose 10%, reflecting
price increases, cheque account growth and reclassifying fee write-offs to credit impairments. CIB South
Africa increased 7% to R2 252m, with 10% growth in transactional revenue.

Rest of Africa Banking's non-interest income declined 2% to R2 427m as the impact of a stronger rand 
offset constant currency growth of 5%. In constant currency, CIB Rest of Africa increased 2% and RBB Rest 
of Africa 7%.

WIMI's non-interest income increased 11% to R2 844m, including 11% higher Life insurance net premium income,
3% growth in Short-term Insurance net premium income in South Africa and gains on the disposal of
subsidiaries.

Impairment losses
IFRS 9 replaced IAS 39 on 1 January 2018, in terms of which credit impairments moved from an incurred basis
to an expected credit loss approach. The Group has applied IFRS 9 retrospectively, with an adjustment to
retained earnings and other reserves as at 1 January 2018, and elected not to restate comparative periods.

Implementing IFRS 9 increased the Group's IAS 39 credit provisions and interest in suspense by R5.9bn or 
27% at 1 January 2018 to R27.8bn. Previously reported IAS 39 impairment ratios in respect of performing and
non-performing portfolios are not comparable to similar ratios under IFRS 9. At 30 June 2018 the Group's stage 
3 (defaulted) loans were 5.3% of gross loans and advances from 5.5% at 1 January 2018 and the expected credit 
loss coverage ratios on these were 42.0% and 40.7% respectively.

Credit impairments decreased 9% to R3 431m from R3 773m, which improved the Group's credit loss ratio to
0.83% from 0.96% of gross loans and advances to customers and banks.

RBB South Africa credit impairments decreased 6% to R2 728m, resulting in a 1.15% credit loss ratio from
1.28%. Retail Banking South Africa credit impairments declined 7% to R2 517m, reducing its credit loss ratio to
1.24% from 1.39%. Home Loans' charge fell 61% to R181m resulting in a 0.16% credit loss ratio from 0.41%. Card
and Payments' credit loss ratio declined to 4.23% from 5.36%, given 21% lower credit impairments of R897m.
Vehicle and Asset Finance credit impairments grew 25% to R594m, increasing its credit loss ratio to 1.14% from
1.01%. Personal Loans' charge rose 3% to R568m and its credit loss ratio improved to 5.87% from 6.21%. Business
Banking South Africa credit impairments increased 8% to R211m, in line with its loan growth, to produce a flat
credit loss ratio of 0.62%.

CIB South Africa credit impairments increased 79% to R381m from R213m, due to a large single name exposure.
Its credit loss ratio increased to 0.30% from 0.18%.

Rest of Africa Banking credit impairments fell 47% to R335m from R638m, reducing its credit loss ratio to
0.72% from 1.38%. RBB Rest of Africa's charge fell 39% to R318m, a 1.53% credit loss ratio, while CIB Rest 
of Africa decreased 91% to R11m or a 0.05% credit loss ratio.

Operating expenses
Group operating expenses grew 8% to R22 198m from R20 498m, resulting in a 59.0% cost-to-income ratio from
56.4%. Operating expenses increased 5% in constant currency. On a normalised basis operating expenses 4% to 
R20 834m from R20 038m, resulting in a 56.2% cost-to-income ratio from 55.5%.

Staff costs grew 6% and accounted for 54% of total operating expenses. Salaries and total incentives rose 
by 7% and 3%, respectively. On a normalised basis staff costs grew by 4% and accounted for 55% of total
expenses. Salaries rose by 5%, while total incentives fell 7%. Headcount decreased 1%, largely due to 
reductions in Rest of Africa and a disposal in WIMI.

Non-staff costs grew 11% (Normalised: 4%). Professional fees increased 2% to R1 033m (Normalised: fell 9% to
R717m), while telephone and postage declined 9% and printing and stationery increased 7% (Normalised: 6%).
Operating leases on properties decreased 2% to R799m and property costs increased 5% to R883m (Normalised:
decreased 1% to R834m). Marketing costs rose by 6% to R834m (Normalised: flat at R731m). Total IT-related spend
grew 13% to R3 970m and constituted 18% (Normalised: 19%) of Group operating expenses. Amortisation of intangible
assets rose 5% to R366m (Normalised: rose 4% to R363m), while cash transportation increased 14% to R612m. The
21% (Normalised: 20%) growth in depreciation reflects investment in technology and optimisation of the
corporate property portfolio and branch network.

RBB South Africa costs grew 7% to R12 593m. Retail Banking South Africa increased 7% and Business Banking
South Africa 8%, due to salary increases, investment in physical and cyber security, higher cost of cash 
and amortisation of IT infrastructure.

CIB South Africa expenses grew 10% to R3 071m, after two years of low cost growth, as it continues to invest
in systems and technology.

Rest of Africa Banking expenses increased 1%, or 7% in constant currency, to R4 333m. CIB Rest of Africa
increased 4% and RBB Rest of Africa was flat. A continued focus on optimising the branch network and enhancing
digital capabilities kept underlying cost growth below inflation.

WIMI's costs declined 3% to R1 776m, in part due to disposing of Employee Benefits. It achieved strongly
positive operating JAWS, which improved its cost-efficiency ratio to 33.6%.

Other expenses decreased 14% to R964m (Normalised: increased 12% to R888m).

Taxation
The Group's taxation expense increased 3% to R3 189m (Normalised: increased 4% to R3 322m), resulting in a
28.8% (Normalised: 27.8%) effective tax rate from 28.0% (Normalised: 27.7%).  

Segment performance
RBB South Africa
Headline earnings increased 4% to R4 209m, due to 6% lower credit impairments, as pre-provision profits 
were flat at R9 007m. Revenue grew 4% to R21 600m, with non-interest income increasing 5%. Costs rose 7% 
to R12 593m, resulting in a 58.3% cost-to-income ratio from 56.6%. Credit loss ratio improved to 1.15% 
from 1.28%. RBB South Africa generated a return on regulatory capital (RoRC) of 23.0% and constituted 
52% of total normalised headline earnings excluding the Group centre.

Retail Banking South Africa
Headline earnings grew 5% to R3 001m, primarily due to lower credit impairments, as pre-provision profits
were flat. Transactional and Deposits earnings fell 9% to R1 048m, largely due to significantly higher credit
impairments. Home Loans earnings grew 16% to R901m, given 61% lower credit impairments which offset increased
interest in suspense after implementing IFRS 9. Card and Payments earnings grew 19% to R717m, as a result of
lower credit impairments and 14% growth in acquiring turnover. Vehicle and Asset Finance earnings fell 6% to
R406m, as 25% higher credit impairments outweighed 9% higher net interest income. Personal Loans earnings
increased 10% to R201m, largely due to 7% net interest income growth.

Retail Banking South Africa accounted for 37% of normalised headline earnings excluding the Group centre.

Business Banking South Africa
Headline earnings increased 1% to R1 208m, as revenue grew 5% due to 7% net interest income growth.
Pre-provision profits were flat, given 8% cost growth due to continued investment in frontline staff and 
systems. Credit impairments increased 8%, largely in line with loan growth. Business Banking South Africa 
generated 15% of overall normalised headline earnings excluding the Group centre.

CIB South Africa
Headline earnings decreased 6% to R1 683m, primarily due to 79% higher credit impairments. Pre-provision
profits declined 1% as 10% higher costs exceeded 5% revenue growth. Despite 10% revenue growth, Corporate
earnings fell 3% to R556m given 18% higher costs. Investment Bank earnings decreased 7% to R1 127m, due to 
62% higher credit impairments. CIB South Africa contributed 21% of total normalised headline earnings 
excluding the Group centre and generated a 15.9% RoRC.

Rest of Africa Banking
Headline earnings grew 8%, or 20% in constant currency, to R1 636m, largely due to 47% lower credit
impairments. Pre-provision profits increased 3% in constant currency. Revenue fell 1% to R7 565m, although it
increased 5% in constant currency. Costs grew 1% to R4 333m, or 7% in constant currency, resulting in a 57,3%
cost-to-income ratio. RBB Rest of Africa earnings increased 38% to R463m, or 54% in constant currency, given 
positive operating leverage and 39% lower credit impairments. CIB Rest of Africa earnings grew 3%, or 15% in 
constant currency, to R1 246m as its credit impairments dropped 91%. Rest of Africa Banking accounted for 20% 
of total normalised headline earnings excluding the Group centre and produced a 19.6% RoE.

WIMI
Headline earnings grew 5% to R646m, with earnings from continuing business lines increasing 8% to R636m.
Gross operating income grew 11% to R3 455m and costs fell 7% to R1 551m. Life insurance net operating income 
grew 26%, while earnings declined 4% due to a deferred tax benefit in the base. Its embedded value of new 
business increased 25% in South Africa, due to improved retail lending and sales through bank branches. 
Assets under management grew 8% to R319bn, despite declining 5% year to date. Wealth and Investment 
Management's earnings declined 15%, largely due to margin compression. Short-term Insurance earnings grew 
117%. South African underwriting margins increased to 9.8%. WIMI's South African earnings increased 3% to 
R682m, while Rest of Africa reported a loss of R36m. WIMI's RoE improved to 22.5% and it generated 8% of 
total earnings excluding the Group centre. 

Prospects
In South Africa growth prospects remain challenging given subdued business confidence and headwinds to household
spending. We forecast real GDP growth of 1.2% this year and 2.0% next year. Fiscal policy remains a challenge 
as recent tax increases might not be enough to deliver the much needed consolidation. We expect the Reserve Bank
to leave interest rates unchanged for some time.

We forecast real GDP growth of 6% in our Rest of Africa portfolio, although monetary policy easing may have
bottomed. At current levels, the rand would dampen our earnings less in the second half than it did in the
first half.

Based on these assumptions, and excluding any unforeseen major political, macroeconomic or regulatory
developments, our guidance for 2018 is largely unchanged. We expect our loan and deposit growth to improve 
in 2018, with stronger loan growth in Rest of Africa, CIB and Retail South Africa. Our net interest margin
is likely to decline slightly this year. Costs will remain well controlled and our operating JAWS should 
improve from last year's but is unlikely to be positive. We expect our credit loss ratio to improve in 2018. 
Our CET1 ratio is expected to remain above board targets, which will allow us to maintain our current 
dividend cover. Lastly, our normalised RoE should improve slightly in 2018.

Basis of presentation
The Group's unaudited condensed interim financial results have been prepared in accordance with the
recognition and measurement requirements of International Financial Reporting Standards (IFRS), interpretations 
issued by the IFRS Interpretations Committee (IFRS-IC), the South African Institute of Chartered Accountants'
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 accounting policies applied in preparing the unaudited condensed consolidated interim financial results
comply with IAS 34 Interim Financial Reporting. The principal accounting policies applied are set out in the
Group's most recent audited annual consolidated financial statements , except for the adoption of IFRS 9
Financial Instruments (IFRS 9), IFRS 15 Revenue from Contracts with Customers (IFRS 15), internal accounting 
policy amendments and changes to the Group's operation segments and business portfolio changes. Refer to 
note 16.

The directors assess the Group's future performance and financial position on an ongoing basis and have no
reason to believe that the Group will not be a going concern in the reporting period ahead. For this reason,
the information in this report has been prepared on a going concern basis.

Note 16 includes the impact of the adoption of IFRS 9 Financial Instruments (IFRS 9) and specifically 
the transitional disclosures as required by IFRS 7 Financial Instruments: Disclosures. This summarised 
report is extracted from audited information with the full transitional report 'Reporting Changes' 
included from page 152 of Absa Group Limited's interim financial results for the reporting period 
ending 30 June 2018. All information marked as audited in the Reporting Changes section has been 
audited by Ernst & Young Inc. (EY) who expressed an unmodified opinion thereon in terms of ISA 805 – 
Special considerations - Audits of single financial statements and specific elements, accounts or 
items of financial statement. A copy of the auditor's report on the audited sections of the Reporting 
Changes section are available for inspection at the Group's registered office, together with a copy 
of the transitional disclosures that were audited.

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 fair value through other comprehensive income financial assets
(2018)/available-for-sale financial assets (2017), 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 unaudited condensed consolidated interim financial
statements are the same as those in place for the reporting period ended 31 December 2017 except for:
- The adoption of IFRS 9 Financial Instruments (IFRS 9) and IFRS 15 Revenue from Contracts with 
  Customers (IFRS 15);
- An accounting policy change with respect to the measurement of policyholder liabilities; and
- Changes of the Group's operating segments and business portfolios.

Refer to note 16 for further information.

Events after the reporting period
The directors are not aware of any events after the reporting date of 30 June 2018 and up to the date 
of authorisation of these condensed consolidated interim financial restuls (as defined per IAS 10 
Events after the Reporting Period (IAS 10)). 

On behalf of the Board

W E Lucas-Bull             M Ramos
Group Chairman             Chief Executive Officer

Johannesburg
6 August 2018

Declaration of interim dividend number 64
Shareholders are advised that an interim ordinary dividend of 490 cents per ordinary share was declared on 
6 August 2018, for the period ended 30 June 2018. The interim ordinary dividend is payable to shareholders
recorded in the register of members of the Company at the close of business on 14 September 2018. The directors 
of Absa Group Limited have apllied the solvency and liquidity test and reasonably concluded that the Group will 
satisfy the solvency and liquidity test immediately after completion of the dividend distribution.

The dividend will be subject to local dividends withholding tax at a rate of 20%. In accordance with
paragraphs 11.17 (a) (i) to (ix) 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 twenty per cent (20%).
- The gross local dividend amount is 490 cents per ordinary share for shareholders exempt from the 
  dividend tax.
- The net local dividend amount is 392 cents per ordinary share for shareholders liable to pay the 
  dividend tax.
- Absa Group Limited currently has 847 750 679 ordinary shares in issue (includes 16 009 837(1) treasury
  shares).
- Absa Group Limited's income tax reference number is 9150116714.

In compliance with the requirements of Strate, the electronic settlement and custody system used by the JSE
Limited, the following salient dates for the payment of the dividend are applicable:

Last day to trade cum dividend             Tuesday, 11 September 2018
Shares commence trading ex dividend        Wednesday, 12 September 2018
Record date                                Friday, 14 September 2018
Payment date                               Monday, 17 September 2018

Share certificates may not be dematerialised or rematerialised between Wednesday, 12 September 2018 and
Friday, 14 September 2018, both dates inclusive. On Monday, 17 September 2018, 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, 17 September 2018.

On behalf of the Board

N R Drutman
Group Company Secretary

Johannesburg
6 August 2018

Absa Group Limited is a company domiciled in South Africa. Its registered office is 7th Floor, Absa Towers
West, 15 Troye Street, Johannesburg, 2001.

(1) Includes 13 510 987 of Absa Group Limited shares to be used in the furtherance of the Group's objective 
    of establishing a BBBEE structure.

    
Condensed consolidated IFRS salient features for the reporting period 
                                                                                  30 June             31 December    
                                                                             2018           2017             2017    
Statement of comprehensive income (Rm)                                                                               
Income(1)                                                                  37 630         36 369           73 395    
Operating expenses                                                         22 198         20 498           43 304    
Profit attributable to ordinary equity holders                              7 253          7 423           13 888    
Headline earnings(1)(2)                                                     7 324          7 650           14 378    
Statement of financial position                                                                                      
Loans and advances to customers (Rm)                                      783 116        728 985          749 772    
Total assets (Rm)                                                       1 234 643      1 137 876        1 165 979    
Deposits due to customers (Rm)                                            714 491        696 362          689 867    
Loans to deposits and debt securities ratio (%)                              91.6           87.1             90.6    
Financial performance (%)                                                                                            
Return on equity (RoE)                                                       13.9           16.2             14.2    
Return on average assets (RoA)                                               1.26           1.38             1.27    
Return on risk-weighted assets (RoRWA)                                       2.00           2.18             2.00    
Stage 3 loans ratio on gross loans and advances                              5.31            n/a              n/a    
Non-performing loans (NPL) ratio on gross loans and advances                  n/a           3.73             3.75    
Operating performance (%)                                                                                            
Net interest margin on average interest-bearing assets(3)                    4.75           4.81             4.83    
Credit loss ratio on gross loans and advances to customers and banks         0.83           0.96             0.87    
Non-interest income as percentage of total income                            43.2           42.7             41.9    
Cost-to-income ratio                                                         59.0           56.4             59.0    
Jaws                                                                           (5)            (6)              (7)   
Effective tax rate                                                           28.7           28.0             28.1    
Share statistics (million)                                                                                           
Number of ordinary shares in issue                                          847.8          847.8            847.8    
Number of ordinary shares in issue (excluding treasury shares)              831.8          847.1            832.8    
Weighted average number of ordinary shares in issue(4)                      832.0          833.8            833.7    
Diluted weighted average number of ordinary shares in issue(4)              834.4          834.0            833.8    
Share statistics (cents)                                                                                             
Headline earnings per ordinary share (HEPS)(1),(4)                          880.3          917.5          1 724.5    
Diluted headline earnings per ordinary share (DHEPS)(1),(4)                 877.8          917.3          1 724.2    
Basic earnings per ordinary share (EPS)(1),(4)                              871.9          890.3          1 665.7    
Diluted basic earnings per ordinary share (DEPS)(1),(4)                     869.4          890.0          1 665.5    
Dividend per ordinary share relating to income for the reporting period       490            475            1 070    
Dividend cover (times)                                                        1.8            1.9              1.6    
NAV per ordinary share(1)                                                  12 829         12 654           12 811    
Tangible NAV per ordinary share(1)                                         12 075         12 215           12 373    
Capital adequacy (%)                                                                                                 
Absa Group Limited                                                           16.7           16.1             16.1    
Absa Bank Limited                                                            17.9           17.4             16.9    
Common Equity Tier 1 (%)                                                                                             
Absa Group Limited                                                           13.3           13.7             13.5    
Absa Bank Limited                                                            13.5           14.1             13.4    
                                                                                                                             
(1) Numbers have been restated, refer to note 16 for further details.
(2) After allowing for R176m (30 June 2017: R180m; 31 December 2017: R362m) profit attributable to
    preference equity holders and R96m (30 June 2017: Nil; 31 December 2017: R48m) profit attributable 
    to Additional Tier 1 capital holders. 
(3) Net interest margin for comparative prior periods have been restated to reflect an update of the Group's
    policy for classifying assets as interest bearing or non-interest bearing. The updated policy classifies
    certain assets held for regulatory purposes as interest bearing, under the previous policy these assets were
    classified as non-interest bearing.
(4) Numbers have been restated, refer to note 6.

Normalised salient features for the reporting period ended              
                                                                                   30 June            31 December    
                                                                             2018           2017             2017    
Statement of comprehensive income (Rm)                                                                               
Income(1)                                                                  37 042         36 085           72 990    
Operating expenses                                                         20 834         20 038           41 403    
Profit attributable to ordinary equity holders(1)                           7 972          7 813           15 370    
Headline earnings(1)(2)                                                     8 043          7 802           15 623    
Statement of financial position                                                                                      
Loans and advances to customers (Rm)                                      783 116        728 985          749 772    
Total assets (Rm)                                                       1 233 038      1 137 892        1 165 067    
Deposits due to customers (Rm)                                            714 491        696 362          689 867    
Loans to deposits and debt securities ratio (%)                              91.6           87.1             90.6    
Financial performance (%)                                                                                            
Return on equity (RoE)(1)                                                    16.9           16.8             16.5    
Return on average assets (RoA)                                               1.40           1.41             1.39    
Return on risk-weighted assets (RoRWA)                                       2.20           2.22             2.17    
Stage 3 loans ratio on gross loans and advances                              5.31            n/a              n/a    
Non-performing loans (NPL) ratio on gross loans and advances(3)               n/a           3.73             3.75    
Operating performance (%)                                                                                            
Net interest margin on average interest-bearing assets(4)                    4.76           4.81             4.83    
Credit loss ratio on gross loans and advances to customers and banks         0.83           0.96             0.87    
Non-interest income as percentage of total income                            42.8           42.4             42.0    
Cost-to-income ratio                                                         56.2           55.5             56.7    
Jaws                                                                           (1)            (4)              (3)   
Effective tax rate                                                           27.8           27.7             27.5    
Share statistics (million)                                                                                           
Number of ordinary shares in issue                                          847.8          847.8            847.8    
Number of ordinary shares in issue (excluding treasury shares)              844.5          847.1            845.6    
Weighted average number of ordinary shares in issue(5)                      844.7          846.5            846.5    
Diluted weighted average number of ordinary shares in issue(5)              847.1          846.7            846.6    
Share statistics (cents)                                                                                             
Headline earnings per ordinary share(1),(5)                                 952.2          921.7          1 845.6    
Diluted headline earnings per ordinary share(1),(5)                         949.5          921.5          1 845.4    
Basic earnings per ordinary share(1),(5)                                    943.8          923.0          1 815.7    
Diluted basic earnings per ordinary share(1),(5)                            941.1          922.8          1 815.5    
Dividend per ordinary share relating to income for the reporting period       490            475            1 070    
Dividend cover (times)                                                        1.9            1.9              1.7    
NAV per ordinary share(1)                                                  11 683         11 281           11 573    
Tangible NAV per ordinary share(1)                                         11 093         10 843           11 030    
Capital adequacy (%)                                                                                                 
Absa Group Limited                                                           15.7           14.5             14.9    
Absa Bank Limited                                                            16.3           15.2             15.0    
Common Equity Tier 1 (%)                                                                                             
Absa Group Limited                                                           12.2           12.1             12.1    
Absa Bank Limited                                                            11.9           11.9             11.6    
                                                                                                                        
(1) Numbers have been restated, refer to note 16 for further details.
(2) After allowing for R176m (30 June 2017: R180m; 31 December 2017: R362m) profit attributable to
    preference equity holders and R96m (30 June 2017: Nil; 31 December 2017: R48m) profit 
    attributable to Additional Tier 1 capital holders. 
(3) The NPL ratio is the net exposure, being the outstanding NPL balance, less expected recoveries and fair
    value of collateral, as a percentage of the total outstanding NPL balance.
(4) Net interest margin for comparative prior periods have been restated to reflect an update of the 
    Group's policy for classifying assets as interest bearing or non-interest bearing. The updated policy 
    classifies certain assets held for regulatory purposes as interest bearing, under the previous policy 
    these assets were classified as non-interest bearing.
(5) Numbers have been restated, refer to note 6.

Reconciliation of IFRS to normalised results for the reporting period ended
                                                                                        30 June
                                                                                        Barclays      Total Group     
                                                                       IFRS Group     separation       normalised    
                                                                      performance        effects      performance    
                                                                             2018           2018             2018    
Statement of comprehensive income (Rm)                                                                               
Net interest income                                                        21 363            175           21 188    
Non-interest income(1)                                                     16 267            413           15 854    
Total income                                                               37 630            588           37 042    
Impairment losses                                                          (3 431)             -           (3 431)   
Operating expenses                                                        (22 198)        (1 364)         (20 834)   
Other expenses                                                               (964)           (76)            (888)   
Share of post-tax results of associates and joint ventures                     56              -               56    
Operating profit before income tax                                         11 093           (852)          11 945    
Tax expenses(1)                                                            (3 189)           133           (3 204)   
Profit for the reporting period                                             7 904           (719)           8 623    
Profit attributable to:                                                                                              
Ordinary equity holders(1)                                                  7 253           (719)           7 972    
Non-controlling interest - ordinary shares                                    379              -              379    
Non-controlling interest - preference shares                                  176              -              176    
Non-controlling interest - additional Tier 1                                   96              -               96    
                                                                            7 904           (719)           8 623    
Headline earnings(1)                                                        7 324           (719)           8 043    
Operating performance (%)                                                                                            
Net interest margin on average interest-bearing assets(3)                    4.75            n/a             4.76    
Credit loss ratio on gross loans and advances to customers and banks         0.83            n/a             0.83    
Non-interest income as % of total income                                     43.2            n/a             42.8    
Income growth                                                                   3            n/a                3    
Operating expenses growth                                                       8            n/a                4    
Cost-to-income ratio                                                         59.0            n/a             56.2    
Effective tax rate                                                           28.7            n/a             27.8    
Statement of financial position (Rm)                                                                                 
Loans and advances to customers                                           783 116              -          783 116    
Loans and advances to banks                                                62 843              -           62 843    
Investment securities                                                     127 437              -          127 437    
Other assets                                                              261 247          1 605          259 642    
Total assets                                                            1 234 643          1 605        1 233 038    
Deposits due to customers                                                 714 491              -          714 491    
Debt securities in issue                                                  140 782              -          140 782    
Other liabilities(1)                                                      259 851      (8 496)(2)         268 347    
Total liabilities(1)                                                    1 115 124         (8 496)       1 123 620    
Equity(1)                                                                 119 519         10 101          109 418    
Total equity and liabilities(1)                                         1 234 643          1 605        1 233 038    
Key performance ratios (%)                                                                                           
RoA                                                                          1.26            n/a             1.40    
RoE                                                                          13.9            n/a             16.9    
Capital adequacy                                                             16.7            n/a             15.7    
Common Equity Tier 1                                                         13.3            n/a             12.2    
Share statistics (cents)                                                                                             
Diluted headline earnings per ordinary share                                877.8            n/a            949.5    
                                                                                                  
(1) Numbers have been restated, refer to note 16 for further details.
(2) This represents the contribution of R12.1bn that was received from Barclays PLC, net of amounts 
    already spent on separation activities. The cash received is held centrally by Treasury and is 
    presented as an intersegmental asset in ‘Other liabilities'.
(3) Net interest margin for comparative prior periods have been restated to reflect an update of the 
    Group's policy for classifying assets as interest bearing or non-interest bearing. The updated 
    policy classifies certain assets held for regulatory purposes as interest bearing, under the 
    previous policy these assets were classified as non-interest bearing.

Reconciliation of IFRS to normalised results for the reporting period ended
                                                                                        30 June
                                                                                        Barclays      Total Group     
                                                                       IFRS Group     separation       normalised    
                                                                      performance        effects      performance    
                                                                             2017           2017             2017    
Statement of comprehensive income (Rm)                                                                               
Net interest income                                                        20 837             46           20 791    
Non-interest income(1)                                                     15 532            238           15 294    
Total income                                                               36 369            284           36 085    
Expected credit losses/impairment losses on loans and advances             (3 773)             -           (3 773)   
Operating expenses                                                        (20 498)          (460)         (20 038)   
Other expenses                                                             (1 120)          (325)            (795)   
Share of post-tax results of associates and joint ventures                     79              -               79    
Operating profit before income tax                                         11 057           (501)          11 558    
Tax expenses(1)                                                            (3 093)           111           (3 304)   
Profit for the reporting period                                             7 964           (390)           8 354    
Profit attributable to:                                                                                              
Ordinary equity holders(1)                                                  7 423           (390)           7 813    
Non-controlling interest - ordinary shares                                    361              -              361    
Non-controlling interest - preference shares                                  180              -              180    
Non-controlling interest - additional Tier 1                                    -              -                -    
                                                                            7 964           (390)           8 354    
Headline earnings(1)                                                        7 650           (152)           7 802    
Operating performance (%)                                                                                            
Net interest margin on average interest-bearing assets(3)                    4.81            n/a             4.81    
Credit loss ratio on gross loans and advances to customers and banks         0.96            n/a             0.96    
Non-interest income as % of total income                                     42.7            n/a             42.4    
Income growth                                                                   -            n/a               (1)   
Operating expenses growth                                                       5            n/a                3    
Cost-to-income ratio                                                         56.4            n/a             55.5    
Effective tax rate                                                           28.0            n/a             27.7    
Statement of financial position (Rm)                                                                                 
Loans and advances to customers                                           728 985              -          728 985    
Loans and advances to banks                                                63 451              -           63 451    
Investment securities                                                     115 834              -          115 834    
Other assets                                                              229 606            (16)         229 622    
Total assets                                                            1 137 876            (16)       1 137 892    
Deposits due to customers                                                 696 362              -          696 362    
Debt securities in issue                                                  140 192              -          140 192    
Other liabilities(1)                                                      184 825     (11 731)(2)         196 556    
Total liabilities(1)                                                    1 021 379        (11 731)       1 033 110    
Equity(1)                                                                 116 497         11 715          104 782    
Total equity and liabilities(1)                                         1 137 876            (16)       1 137 892    
Key performance ratios (%)                                                                                           
RoA                                                                          1.38            n/a             1.41    
RoE                                                                          16.2            n/a             16.8    
Capital adequacy                                                             16.1            n/a             14.5    
Common Equity Tier 1                                                         13.7            n/a             12.1    
Share statistics (cents)                                                                                             
Diluted headline earnings per ordinary share                                917.3            n/a            921.5    
                                                                                                  
(1) Numbers have been restated, refer to note 16 for further details.
(2) This represents the contribution of R12.1bn that was received from Barclays PLC, net of amounts 
    already spent on separation activities. The cash received is held centrally by Treasury and is 
    presented as an intersegmental asset in ‘Other liabilities'.
(3) Net interest margin for comparative prior periods have been restated to reflect an update of the 
    Group's policy for classifying assets as interest bearing or non-interest bearing. The updated policy 
    classifies certain assets held for regulatory purposes as interest bearing, under the previous policy 
    these assets were classified as non-interest bearing.

Reconciliation of IFRS to normalised results for the reporting period ended
                                                                                     31 December
                                                                                        Barclays      Total Group     
                                                                       IFRS Group     separation       normalised    
                                                                      performance        effects      performance    
                                                                             2017           2017             2017    
Statement of comprehensive income (Rm)                                                                               
Net interest income                                                        42 644            325           42 319    
Non-interest income(1)                                                     30 751             80           30 671    
Total income                                                               73 395            405           72 990    
Expected credit losses/impairment losses on loans and advances             (7 022)             -           (7 022)   
Operating expenses                                                        (43 304)        (1 901)         (41 403)   
Other expenses                                                             (2 270)          (394)          (1 876)   
Share of post-tax results of associates and joint ventures                    170              -              170    
Operating profit before income tax                                         20 969         (1 890)          22 859    
Tax expenses(1)                                                            (5 882)           408           (6 290)   
Profit for the reporting period                                            15 087         (1 482)          16 569    
Profit attributable to:                                                                                              
Ordinary equity holders(1)                                                 13 888         (1 482)          15 370    
Non-controlling interest - ordinary shares                                    789              -              789    
Non-controlling interest - preference shares                                  362              -              362    
Non-controlling interest - additional Tier 1                                   48              -               48    
                                                                           15 087         (1 482)          16 569    
Headline earnings(1)                                                       14 378         (1 245)          15 623    
Operating performance (%)                                                                                            
Net interest margin on average interest-bearing assets(3)                    4.83            n/a             4.83    
Credit loss ratio on gross loans and advances to customers and banks         0.87            n/a             0.87    
Non-interest income as % of total income                                     41.9            n/a             42.0    
Income growth                                                                   1            n/a                1    
Operating expenses growth                                                       8            n/a                3    
Cost-to-income ratio                                                         59.0            n/a             56.7    
Effective tax rate                                                           28.1            n/a             27.5    
Statement of financial position (Rm)                                                                                 
Loans and advances to customers                                           749 772              -          749 772    
Loans and advances to banks                                                55 426              -           55 426    
Investment securities                                                     111 409              -          111 409    
Other assets                                                              249 372            912          248 460    
Total assets                                                            1 165 979            912        1 165 067    
Deposits due to customers                                                 689 867              -          689 867    
Debt securities in issue                                                  137 948              -          137 948    
Other liabilities(1)                                                      218 906     (9 840)(2)          228 746    
Total liabilities(1)                                                    1 046 721         (9 840)       1 056 561    
Equity(1)                                                                 119 258         10 752          108 506    
Total equity and liabilities(1)                                         1 165 979            912        1 165 067    
Key performance ratios (%)                                                                                           
RoA                                                                          1.27            n/a             1.39    
RoE                                                                          14.2            n/a             16.5    
Capital adequacy                                                             16.1            n/a             14.9    
Common Equity Tier 1                                                         13.5            n/a             12.1    
Share statistics (cents)                                                                                             
Diluted headline earnings per ordinary share                              1 724.2            n/a          1 845.4    
                                                                                   
(1) Numbers have been restated, refer to note 16 for further details.
(2) This represents the contribution of R12.1bn that was received from Barclays PLC, net of amounts 
    already spent on separation activities. The cash received is held centrally by Treasury and is 
    presented as an intersegmental asset in ‘Other liabilities'.
(3) Net interest margin for comparative prior periods have been restated to reflect an update of the 
    Group's policy for classifying assets as interest bearing or non-interest bearing. The updated 
    policy classifies certain assets held for regulatory purposes as interest bearing, under the 
    previous policy these assets were classified as non-interest bearing.

Condensed consolidated statement of financial position as at
                                                                                   30 June            31 December    
                                                                             2018           2017             2017    
                                                           Note                Rm             Rm               Rm    
Assets                                                                                                               
Cash, cash balances and balances with central banks                        48 578         45 078           48 669    
Investment securities                                                     127 437        115 834          111 409    
Loans and advances to banks                                                62 843         63 451           55 426    
Trading portfolio assets                                                  124 982        101 554          132 183    
Hedging portfolio assets                                                    2 325          2 278            2 673    
Other assets                                                               37 974         36 091           20 960    
Current tax assets                                                          1 018            536              314    
Non-current assets held for sale                                               79          2 601            1 308    
Loans and advances to customers                               1           783 116        728 985          749 772    
Reinsurance assets                                            2               905            814              892    
Investments linked to investment contracts                                 19 194         19 131           18 936    
Investments in associates and joint ventures                                1 217          1 144            1 235    
Investment properties                                                         420            268              231    
Property and equipment                                                     15 752         15 044           15 303    
Goodwill and intangible assets                                              6 392          3 714            5 377    
Deferred tax assets                                                         2 411          1 353            1 291    
Total assets                                                            1 234 643      1 137 876        1 165 979    
Liabilities                                                                                                          
Deposits from banks                                                        88 466         49 290           67 390    
Trading portfolio liabilities                                              67 697         42 564           64 047    
Hedging portfolio liabilities                                               1 339          1 478            1 123    
Other liabilities                                                          42 775         38 082           31 744    
Provisions                                                                  2 558          1 974            3 041    
Current tax liabilities                                                       309              -               57    
Non-current liabilities held for sale                         1                 7            114               48    
Deposits due to customers                                                 714 491        696 362          689 867    
Debt securities in issue                                                  140 782        140 192          137 948    
Liabilities under investment contracts                                     30 546         29 918           30 585    
Policyholder liabilities under insurance contracts(1)                       4 570          4 264            4 342    
Borrowed funds                                                3            21 448         15 963           15 895    
Deferred tax liabilities(1)                                                   136          1 178              634    
Total liabilities                                                       1 115 124      1 021 379        1 046 721    
Equity                                                                                                               
Capital and reserves                                                                                                 
Attributable to ordinary equity holders:                                                                             
  Share capital                                                             1 663          1 694            1 666    
  Share premium                                                            10 850         12 868           10 498    
  Retained earnings(1)                                                     90 148         87 965           92 080    
  Other reserves                                                            6 100          4 750            4 370    
                                                                          108 761        107 277          108 614    
Non-controlling interest - ordinary shares                                  4 614          4 576            4 500    
Non-controlling interest - preference shares                                4 644          4 644            4 644    
Non-controlling interest - Additional Tier 1 capital                        1 500              -            1 500    
Total equity                                                              119 519        116 497          119 258    
Total liabilities and equity                                            1 234 643      1 137 876        1 165 979    
                                                                                                                        
(1) Numbers have been restated, refer to note 16 for further details.

Condensed consolidated statement of comprehensive income for the reporting period ended
                                                                                  30 June             31 December     
                                                                             2018           2017             2017     
                                                           Note                Rm             Rm               Rm     
Net interest income                                                        21 363         20 837           42 644     
 Interest and similar income(2)                                            43 481         42 938           85 929     
   Effective interest income                                               43 131         42 341           84 656     
   Other interest income                                                      350            597            1 273     
Interest expense and similar charges(2)                                   (22 118)       (22 101)         (43 285)    
   Effective interest expense                                             (22 118)       (21 896)         (43 285)    
   Other interest expense                                                       -           (205)               -     
Non-interest income                                           4            16 267         15 532           30 751     
 Net fee and commission income                                             10 991         10 618           21 711     
   Fee and commission income                                               12 604         12 084           24 724     
   Fee and commission expense                                              (1 613)        (1 466)          (3 013)    
 Net insurance premium income                                               3 465          3 250            6 598     
 Net claims and benefits incurred on insurance contracts                   (1 741)        (1 694)          (3 334)    
 Changes in investment and insurance                                                  
 contract liabilities(1)                                                     (114)          (513)          (2 023)    
 Gains and losses from banking and trading activities                       3 097          3 104            5 246     
 Gains and losses from investment activities                                  243            448            1 905     
 Other operating income                                                       326            319              648     
Total income                                                               37 630         36 369           73 395     
Impairment losses                                                          (3 431)        (3 773)          (7 022)    
Operating income before operating expenditure                              34 199         32 596           66 373     
Operating expenditure                                                     (22 198)       (20 498)         (43 304)    
Other expenses                                                               (964)        (1 120)          (2 270)    
 Other impairments                                            5              (184)          (376)            (648)    
 Indirect taxation                                                           (780)          (744)          (1 622)    
Share of post-tax results of associates and                                          
joint ventures                                                                 56             79              170     
Operating profit before income tax                                         11 093         11 057           20 969     
Taxation expense(1)                                                        (3 189)        (3 093)          (5 882)    
Profit for the reporting period                                             7 904          7 964           15 087     
Profit attributable to:                                                                                               
Ordinary equity holders(1)                                                  7 253          7 423           13 888     
Non-controlling interest - ordinary shares                                    379            361              789     
Non-controlling interest - preference shares                                  176            180              362     
Non-controlling interest - Additional Tier 1 capital                           96              -               48     
                                                                            7 904          7 964           15 087     
Earnings per share:                                                                                                   
Basic earnings per share (cents)(1),(3)                                     871.9          890.3          1 724.5     
Diluted basic earnings per share (cents)(1),(3)                             869.4          890.0          1 724.2     

(1) Numbers have been restated, refer to note 16 for further details.
(2) An amendment was made to IAS 1 Presentation of Financial Statements, which is effective from 
    1 January 2018. The amendment requires interest and similar income which is calculated using 
    the effective interest method, to be presented separately on the face of the statement of 
    comprehensive income. The Group has elected to apply the same approach in presenting interest 
    expense and similar charges to achieve consistency.
(3) Numbers have been restated, refer to note 6.

Condensed consolidated statement of other comprehensive income for the reporting period ended
                                                                                    30 June           31 December      
                                                                             2018        2017(1)          2017(1)      
                                                                               Rm             Rm               Rm      
Profit for the reporting period(1)                                          7 904          7 964           15 087      
Other comprehensive income                                                                                             
Items that will not be reclassified to profit or loss                           3            (31)            (179)     
Fair value gain on equity instruments measured at FVOCI                         2              -                -      
Movement of liabilities designated at FVTPL due to                                      
changes in own credit risk                                                      5            (26)            (147)     
 Fair value losses                                                            (45)           (26)            (147)     
 Deferred tax                                                                  50              -                -      
 Movement in retirement benefit fund assets and liabilities                    (4)            (5)             (32)     
   Decrease in retirement benefit surplus                                      (6)            (6)             (91)     
   Decrease in retirement benefit deficit                                       1              2               45      
   Deferred tax                                                                 1             (1)              14      
Items that are or may be subsequently reclassified                                      
to profit or loss                                                           2 016           (414)          (1 328)     
 Movement in foreign currency translation reserve                           2 373           (675)          (2 219)     
   Differences in translation of foreign operations                         2 373           (623)          (2 271)     
   Release to profit or loss                                                    -            (52)              52      
 Movement in cash flow hedging reserve                                       (588)           518              794      
   Fair value (losses)/gains                                                 (737)           874            1 465      
   Amount removed from other comprehensive income and                                   
   recognised in profit or loss                                               (80)          (157)            (365)     
   Deferred tax                                                               229           (199)            (306)     
 Movement in fair value of debt instruments measured at FVOCI                 231              -                -      
   Fair value gains                                                           332              -                -      
   Release to profit or loss                                                    3              -                -      
   Deferred tax                                                              (104)             -                -      
 Movement in available-for-sale reserve                                         -           (257)              98      
   Fair value (losse)/gains                                                     -           (349)             154      
   Release to profit or loss                                                    -             18               67      
   Deferred tax                                                                 -             74             (123)     
                                                                                                                       
Total comprehensive income for the reporting period                         9 923          7 519           13 580      
Total comprehensive income attributable to:                                                                            
Ordinary equity holders(1)                                                  8 940          7 068           12 654      
Non-controlling interest - ordinary shares                                    711            271              516      
Non-controlling interest - preference shares                                  176            180              362      
Non-controlling interest - Additional Tier 1 capital                           96              -               48      
                                                                            9 923          7 519           13 580      
                                                                                        
(1) Numbers have been restated, refer to note 16 for further details.

Condensed consolidated statement of changes in equity for the reporting period ended
                                                                           30 June 2018
                                                                                                 Fair value
                                                                                                    through                              
                                                                                                      other                              
                                                                                        General     compre-                   Foreign      
                                  Number of                                     Total   credit-     hensive   Cash flow      currency       
                                   ordinary     Share     Share   Retained      other      risk      income     hedging   translation          
                                     shares   capital   premium   earnings   reserves   reserve     reserve     reserve       reserve         
                                       '000        Rm        Rm         Rm         Rm        Rm          Rm          Rm            Rm    
Restated balance at                                                                                                      
the end of the previous                                                                                                  
reporting period(1)                 832 838     1 666    10 498     92 080      4 370       779         445         650           431    
Impact of adopting new                                                                                                   
accounting standards at                                                                                                  
1 January 2018                                                                                                                           
  IFRS 9                                  -         -         -     (4 106)       (95)        -         (22)          -             -    
  IFRS 15                                 -         -         -        (44)         -         -           -           -             -    
Adjusted balance at                                                                                                      
the beginning of                                                                                                         
the reporting period                832 838     1 666    10 498     87 930      4 275       779         423         650           431    
Total comprehensive income                -         -         -      7 255      1 685         -         227        (588)        2 046    
  Profit for the period                   -         -         -      7 253          -         -           -           -             -    
  Other comprehensive income              -         -         -          2      1 685         -         227        (588)        2 046    
Dividends paid during the                                                                                                
reporting period                          -         -         -     (4 962)         -         -           -           -             -    
Distributions paid during                                                                                                
the reporting period                      -         -         -          -          -         -           -           -             -    
Shares issued                             -         -         -          -          -         -           -           -             -    
Purchase of Group shares                                                                                                 
in respect of equity-settled                                                                                             
share-based payment arrangements          -         -      (236)       (42)         -         -           -           -             -    
Elimination of the movement                                                                                              
in treasury shares                                                                                                       
held by Group entities               (1 097)       (3)      352          -          -         -           -           -             -    
Movement in share-based                                                                                                  
payment reserve                           -         -       236          -        107         -           -           -             -    
  Transfer from share-based                                                                                              
  payment reserve                         -         -       236          -       (236)        -           -           -             -    
  Value of employee services              -         -         -          -        371         -           -           -             -    
  Deferred tax                            -         -         -          -        (28)        -           -           -             -    
Movement in general                                                                                                      
credit risk reserve                       -         -         -         24        (24)      (24)          -           -             -    
Movement in foreign                                                                                                      
insurance subsidiary                                                                                                     
regulatory reserve                        -         -         -         (1)         1         -           -           -             -    
Share of post-tax results                                                                                                
of associates                                                                                                            
and joint ventures                        -         -         -        (56)        56         -           -           -             -    
Balance at the end of                                                                                                    
the reporting period                831 741     1 663    10 850     90 148      6 100       755         650          62         2 477    
                                  
                                  
Condensed consolidated statement of changes in equity for the reporting period ended (continued)
                                                                            30 June 2018
                                                                                                   Fair value
                                                                       Capital and                                       Non-          
                                    Foreign                               reserves           Non-          Non-   controlling            
                                  insurance    Share-   Associates    attributable    controlling   controlling    interest -                  
                                 subsidiary     based     and joint    to ordinary     interest -    interest -    additional                   
                                 regulatory   payment     ventures'         equity       ordinary    preference        Tier 1      Total           
                                    reserve   reserve       reserve        holders         shares        shares       capital     equity          
                                         Rm        Rm            Rm             Rm             Rm            Rm            Rm         Rm    
Restated balance at                                                                                                            
the end of the previous                                                                                                        
reporting period(1)                       6       837         1 222        108 614          4 500         4 644         1 500    119 258    
Impact of adopting new                                                                                                         
accounting standards at                                                                                                        
1 January 2018                                                                                                                              
  IFRS 9                                  -         -           (73)        (4 201)          (131)            -             -     (4 332)   
  IFRS 15                                 -         -             -            (44)             -             -             -        (44)   
Adjusted balance at                                                                                                            
the beginning of                                                                                                               
the reporting period                      6       837         1 149        104 369          4 369         4 644         1 500    114 882    
Total comprehensive income                -         -             -          8 940            711           176            96      9 923    
  Profit for the period                   -         -             -          7 253            379           176            96      7 904    
  Other comprehensive income              -         -             -          1 687            332             -             -      2 019    
Dividends paid during the                                                                                                      
reporting period                          -         -             -         (4 962)          (466)         (176)            -     (5 604)   
Distributions paid during                                                                                                      
the reporting period                      -         -             -              -              -             -           (96)       (96)   
Shares issued                             -         -             -              -              -             -             -          -    
Purchase of Group shares                                                                                                       
in respect of equity-settled                                                                                                   
share-based payment arrangements          -         -             -           (278)             -             -             -       (278)   
Elimination of the movement                                                                                                    
in treasury shares                                                                                                             
held by Group entities                    -         -             -            349              -             -             -        349    
Movement in share-based                                                                                                        
payment reserve                           -       107             -            343              -             -             -        343    
  Transfer from share-based                                                                                                    
  payment reserve                         -      (236)            -              -              -             -             -          -    
  Value of employee services              -       371             -            371              -             -             -        371    
  Deferred tax                            -       (28)            -            (28)             -             -             -        (28)   
Movement in general credit                                                                                                     
risk reserve                              -         -             -              -              -             -             -          -    
Movement in foreign                                                                                                            
insurance subsidiary                                                                                                           
regulatory reserve                        1         -             -              -              -             -             -          -    
Share of post-tax results                                                                                                      
of associates                                                                                                                  
and joint ventures                        -         -            56              -              -             -             -          -    
Balance at the end of                                                                                                          
the reporting period                      7       944         1 205        108 761          4 614         4 644         1 500    119 519    
    
    
(1) The 'Retained earnings' balance at the beginning of the reporting period has been restated, owing to the change 
    in life insurance accounting policy. As a result, 'Capital and reserves attributable to ordinary equity holders'
    and 'Total equity' at the beginning of the reporting period have also been restated. Refer to the reporting 
    changes overview in note 16.
        
Condensed consolidated statement of changes in equity for the reporting period ended
                                                                     30 June 2017
                                                                                                                            
                                                                                                                            
                                                                                       General                              
                                 Number of                                     Total   credit-   Available-   Cash flow     
                                  ordinary     Share     Share   Retained      other      risk     for-sale     hedging     
                                    shares   capital   premium   earnings   reserves   reserve     reserves     reserve     
                                      '000        Rm        Rm         Rm         Rm        Rm           Rm          Rm       
Balance as reported                                                                                           
at the end of the                                                                                             
previous reporting period          846 675     1 693     4 467     81 604      5 293       757          377        (144)     
Restatement owing to change                                                                                   
in life insurance                                                                                             
accounting policy                        -         -         -        134          -         -            -           -      
Restated balance at                                                                                           
the beginning of the                                                                                          
reporting period                   846 675     1 693     4 467     81 738      5 293       757          377        (144)     
Total comprehensive income               -         -         -      7 392       (324)        -         (313)        518      
  Profit for the period                  -         -         -      7 423          -         -            -           -      
  Other comprehensive income             -         -         -        (31)      (324)        -         (313)        518      
Dividends paid during the                                                                                     
reporting period                         -         -         -     (4 832)         -         -            -           -      
Purchase of Group shares                                                                                      
in respect of equity-settled                                                                                  
share-based payment arrangements         -         -      (525)        26          -         -            -           -      
Elimination of the                                                                                            
movement in treasury                                                                                          
shares held by Group entities          395         1       (14)         -          -         -            -           -      
Movement in share-based                                                                                       
payment reserve                          -         -       525          -       (268)        -            -           -      
  Transfer from share-based                                                                                   
  payment reserve                        -         -       525          -       (525)        -            -           -      
  Value of employee services             -         -         -          -        276         -            -           -      
  Deferred tax                           -         -         -          -        (19)        -            -           -      
Movement in general credit                                                                                    
risk reserve                             -         -         -         30        (30)      (30)           -           -      
Share of post-tax results of                                                                                  
 associates and joint ventures           -         -         -        (79)        79         -            -           -      
Disposal of non-controlling                                                                                   
interest(1)                              -         -         -          -          -         -            -           -      
Barclays separation(2)                   -         -     8 415      3 690          -         -            -           -      
Restated balance at the end                                                                                   
of the reporting period            847 070     1 694    12 868     87 965      4 750       727           64         374      
                                   

Condensed consolidated statement of changes in equity for the reporting period ended (continued)
                                                               30 June 2017
                                                                     Capital and                               
                                   Foreign                              reserves          Non-          Non-       
                                 insurance    Share-   Associates   attributable   controlling   controlling       
                                subsidiary     based    and joint    to ordinary    interest -    interest -        
                                regulatory   payment    ventures'         equity      ordinary    preference      Total  
                                   reserve   reserve      reserve        holders        shares        shares     equity  
                                        Rm        Rm           Rm             Rm            Rm            Rm         Rm     
Balance as reported                                                                                            
at the end of the                                                                                              
previous reporting period                6       892        1 052         93 057         4 579         4 644    102 280    
Restatement owing to                                                                                           
change in life insurance                                                                                       
accounting policy                        -         -            -            134             -             -        134    
Restated balance at                                                                                            
the beginning of the                                                                                           
reporting period                         6       892        1 052         93 191         4 579         4 644    102 414    
Total comprehensive income               -         -            -          7 068           271           180      7 519    
  Profit for the period                  -         -            -          7 423           361           180      7 964    
  Other comprehensive income             -         -            -           (355)          (90)            -       (445)   
Dividends paid during the                                                                                      
reporting period                         -         -            -         (4 832)         (243)         (180)    (5 255)   
Purchase of Group shares                                                                                       
in respect of equity-settled                                                                                   
share-based payment arrangements         -         -            -           (499)            -             -       (499)   
Elimination of the movement                                                                                    
in treasury shares held                                                                                        
by Group entities                        -         -            -            (13)            -             -        (13)   
Movement in share-based                                                                                        
payment reserve                          -      (268)           -            257            (8)            -        249    
  Transfer from share-based                                                                                    
  payment reserve                        -      (525)           -              -            (8)            -         (8)   
  Value of employee services             -       276            -            276             -             -        276    
  Deferred tax                           -       (19)           -            (19)            -             -        (19)   
Movement in general credit                                                                                     
risk reserve                             -         -            -              -             -             -          -    
Share of post-tax results of                                                                                   
associates and joint ventures            -         -           79              -             -             -          -    
Disposal of non-controlling                                                                                    
interest(1)                              -         -            -              -           (23)            -        (23)   
Barclays separation(2)                   -         -            -         12 105             -             -     12 105    
Restated balance at the end                                                                                    
of the reporting period                  6       624        1 131        107 277         4 576         4 644    116 497    
                                

(1) The Group disposed of its controlling stake in a non-core subsidiary which was classified as held 
    for sale.
(2) As part of the disinvestment, Barclays PLC contributed R12.1bn in recognition of the investments
    required for the Group to separate from Barclays PLC. The contribution meets the definition of a 
    transaction with a shareholder. 

Condensed consolidated statement of changes in equity for the reporting period ended
                                                                            31 December 2017                                 
                                                                                                                                        
                                                                                                                                        
                                                                                       General                                Foreign   
                                 Number of                                     Total   credit-   Available-   Cash flow      currency   
                                  ordinary     Share     Share   Retained      other      risk     for-sale     hedging   translation   
                                    shares   capital   premium   earnings   reserves   reserve     reserves     reserve       reserve   
                                      '000        Rm        Rm         Rm         Rm        Rm           Rm          Rm            Rm   
Balance as reported                                                                                                      
at the end of the                                                                                                        
previous reporting period          846 675     1 693     4 467     81 604      5 293       757          377        (144)        2 353    
Restatement owing to                                                                                                     
change in life insurance                                                                                                 
accounting policy                        -         -         -        134          -         -            -           -             -    
Restated balance at                                                                                                      
the beginning of the                                                                                                     
reporting period                   846 675     1 693     4 467     81 738      5 293       757          377        (144)        2 353    
Total comprehensive income               -         -         -     13 714     (1 060)        -           68         794        (1 922)   
Profit for the period                    -         -         -     13 888          -         -            -           -             -    
Other comprehensive income               -         -         -       (174)    (1 060)        -           68         794        (1 922)   
Dividends paid during                                                                                                    
the reporting period                     -         -         -     (8 821)         -         -            -           -             -    
Distributions paid during                                                                                                
the reporting period                     -         -         -          -          -         -                        -             -    
Issuance of Additional                                                                                                   
Tier 1 capital                           -         -         -          -          -         -                        -             -    
Purchase of Group shares                                                                                                 
in respect of equity-settled                                                                                             
share-based payment arrangements         -         -      (741)        12          -         -            -           -             -    
Elimination of the movement                                                                                              
in treasury shares held                                                                                                  
by Group entities                  (13 837)      (27)   (2 385)         -          -         -            -           -             -    
Movement in share-based                                                                                                  
payment reserve                          -         -       742          -        (55)        -            -           -             -    
Transfer from share-based                                                                                                
payment reserve                          -         -       742          -       (742)        -            -           -             -    
Value of employee services               -         -         -          -        655         -            -           -             -    
Deferred tax                             -         -         -          -         32         -            -           -             -    
Movement in general                                                                                                      
credit risk reserve                      -         -         -        (22)        22        22                        -             -    
Share of post-tax results                                                                                                
of associates                                                                                                            
and joint ventures                       -         -         -       (170)       170         -                        -             -    
Disposal of non-controlling                                                                                              
interest(1)                              -         -         -          -          -         -            -           -             -    
Barclays separation(2)                   -         -     8 415      3 690          -         -            -           -             -    
Barclays separation -                                                                                                    
Empowerment Trust(3)                     -         -         -      1 891          -         -                        -             -    
Shareholder contribution -                                                                                               
fair value of investment(4)              -         -         -         48          -         -            -           -             -    
Restated balance at the end                                                                                              
of the reporting period            832 838     1 666    10 498     92 080      4 370       779          445         650           431    

Condensed consolidated statement of changes in equity for the reporting period ended (continued)
                                                                                31 December 2017
                                                                       Capital and                                        Non-  
                                     Foreign                              reserves          Non-           Non-    controlling  
                                   insurance    Share-   Associates   attributable   controlling    controlling    interest -   
                                  subsidiary     based    and joint    to ordinary    interest -     interest -     additional  
                                  regulatory   payment    ventures'         equity      ordinary     preference         Tier 1      Total  
                                     reserve   reserve      reserve        holders        shares         shares        capital     equity  
                                          Rm        Rm           Rm             Rm            Rm             Rm             Rm         Rm
Balance as reported at                                                                                                          
the end of the previous                                                                                                         
reporting period                           6       892        1 052         93 057         4 579          4 644              -    102 280    
Restatement owing to                                                                                                            
change in life insurance                                                                                                        
accounting policy                          -         -            -            134             -              -              -        134    
Restated balance at                                                                                                             
the beginning of the                                                                                                            
reporting period                           6       892        1 052         93 191         4 579          4 644              -    102 414    
Total comprehensive income                 -         -            -         12 654           516            362             48     13 580    
Profit for the period                      -         -            -         13 888           789            362             48     15 087    
Other comprehensive income                 -         -            -         (1 234)         (273)             -              -     (1 507)   
Dividends paid during                                                                                                           
the reporting period                       -         -            -         (8 821)         (567)          (362)             -     (9 750)   
Distributions paid during                                                                                                       
the reporting period                       -         -            -              -             -              -            (48)       (48)   
Issuance of Additional                                                                                                          
Tier 1 capital                             -         -            -              -             -              -          1 500      1 500    
Purchase of Group shares in                                                                                                     
respect of equity-settled                                                                                                       
share-based payment arrangements           -         -            -           (729)            -              -              -       (729)   
Elimination of the movement                                                                                                     
in treasury shares held                                                                                                         
by Group entities                          -         -            -         (2 412)            -              -              -     (2 412)   
Movement in share-based                                                                                                         
payment reserve                            -       (55)           -            687            (4)             -              -        683    
Transfer from share-based                                                                                                       
payment reserve                            -      (742)           -              -             -              -              -          -    
Value of employee services                 -       655            -            655            (4)             -              -        651    
Deferred tax                               -        32            -             32             -              -              -         32    
Movement in general                                                                                                             
credit risk reserve                        -         -            -              -             -              -              -          -    
Share of post-tax results                                                                                                       
of associates                                                                                                                   
and joint ventures                         -         -          170              -             -              -              -          -    
Disposal of non-controlling                                                                                                     
interest(1)                                -         -            -              -           (24)             -              -        (24)   
Barclays separation(2)                     -         -            -         12 105             -              -              -     12 105    
Barclays separation -                                                                                                           
Empowerment Trust(3)                       -         -            -          1 891             -              -              -      1 891    
Shareholder contribution -                                                                                                      
fair value of investment(4)                -         -            -             48                                                     48    
Restated balance at the end                                                                                                     
of the reporting period                    6       837        1 222        108 614         4 500          4 644          1 500    119 258    

(1) The Group disposed of its controlling stake in a non-core subsidiary which was classified as held 
    for sale.
(2) As part of the disinvestment, Barclays PLC contributed R12.1bn in recognition of the investments
    required for the Group to separate from Barclays PLC. The contribution meets the definition of a 
    transaction with a shareholder.
(3) As part of the separation, Barclays PLC contributed cash of R1 891m to the independent Absa Empowerment
    Trust to allow for its subsidiary to purchase 12 716 260 BAGL shares (1.5%) in the furtherance of the 
    Group's objective of establishing a broad-based black empowerment structure. In terms of the requirements 
    of IFRS, these shares have been accounted for as treasury shares and eliminated against the Group's 
    share capital.
(4) CLS Group Holding AG shares were transferred to Barclays PLC for no consideration in 2005. During the
    reporting period these shares were transferred back to the Group for a nominal consideration of one 
    British Pound Sterling (GBP). The shares have been recognised at a fair value of R48m. The related 
    credit has been recognised in equity as a shareholder contribution.


Condensed consolidated statement of cash flows for the reporting period ended

                                                                                                  30 June            31 December    
                                                                                              2018      2017(3)          2017(3)    
                                                                          Note                  Rm           Rm               Rm    
                                                                                                                                    
Net cash (utilised in)/generated from operating activities                                  (1 471)       1 076             (534)   
Income taxes paid                                                                           (3 240)      (3 236)          (6 371)   
Net cash generated from other operating activities                                           1 769        4 312            5 837    
Net cash utilised in investing activities                                                   (1 706)      (1 455)          (2 634)   
Purchase of property and equipment                                                          (1 809)      (1 468)          (3 263)   
Proceeds from sale of non-current assets held for sale                                       1 481          347            1 146    
Net cash utilised in other investing activities                                             (1 378)        (334)            (517)   
Net cash (utilised in)/ generated from financing activities                                   (141)       6 721            2 593    
Net cash generated from Barclays separation                                                      -       12 105           12 105    
Issue of Additional Tier 1 capital                                                               -            -            1 500    
Proceeds from borrowed funds                                                                 5 488        1 000            2 841    
Repayment of borrowed funds                                                                      -       (1 142)          (2 805)   
Dividends paid                                                                              (5 605)      (5 255)          (9 750)   
Net cash (utilised in)/generated from other financing activities                               (24)          13           (1 298)   
Net (decrease)/increase in cash and cash equivalents                                        (3 318)       6 342             (575)   
Cash and cash equivalents at the beginning of the reporting period           1              17 320       17 734           17 734    
Effect of foreign exchange rate movements on cash and cash equivalents                         361           57              161    
Cash and cash equivalents at the end of the reporting period                 2              14 363       24 133           17 320    

Notes to the condensed consolidated statement of cash flows
1. Cash and cash equivalents at the beginning of the reporting period                                      
    Cash, cash balances and balances with central banks(1)                                  13 518       13 141           13 141    
    Loans and advances to banks(2)                                                           3 802        4 593            4 593    
                                                                                            17 320       17 734           17 734    
2. Cash and cash equivalents at the end of the reporting period                                                                     
    Cash, cash balances and balances with central banks(1)                                  10 428       10 924           13 518    
    Loans and advances to banks(2)                                                           3 935       13 209            3 802    
                                                                                            14 363       24 133           17 320    
(1) Includes coins and bank notes.
(2) Includes call advances, which are used as working capital by the Group.
(3) In order to provide more transparent disclosures, the condensed consolidated statement of cash flows 
    has been expanded to include line items specifying significant cash flow movements. The effect of 
    this is to provide specific disclosure of the following line items, rather than include them in the 
    total cash generated by/used in operating, investing or financing activities: Income taxes paid, 
    purchase of property and equipment, proceeds from sale of non-current assets, cash generated from 
    Barclays separation, Issue of shares, Issue of additional Tier 1 capital, proceeds/repayments of 
    borrowed funds, dividends paid. Comparative statements of cash flows have been restated to take 
    account of this additional disclosure.


Condensed notes to the consolidated financial results for the reporting period ended
1. Non-current assets and non-current liabilities held for sale
The following movements in non-current assets and non-current liabilities held for sale were effected 
during the current financial reporting period:
- Retail Banking South Africa disposed of a loan book with a carrying amount of R1 118m and property, 
  plant and equipment with a carrying amount of R1m.
- Rest of Africa Banking disposed of investment property with a carrying amount of R0.2m.
- WIMI disposed of a subsidiary with assets of R139m and liabilities of R34m out of non-current assets 
  and non-current liabilities held for sale respectively.
- WIMI further disposed of a business line with assets of R9m and liabilities of R9m out of non-current
  assets and non-current liabilities held for sale respectively.
- In addition, WIMI transferred assets of R2m and liabilities of R2m to non-current assets and non-current
  liabilities held for sale respectively.
- Head office transferred property, plant and equipment with a carrying amount of R37m to non-current 
  assets held for sale.

The following movements in non-current assets and non-current liabilities held for sale were effected during
the period ended 30 June 2017:
- Retail Banking South Africa transferred a subsidiary with total assets of R1 391m to non-current assets
  held for sale. The Commercial Property Finance (CPF) Equity division in Business Banking South Africa 
  disposed of a subsidiary with assets of R372m and liabilities of R26m out of non-current assets and 
  non-current liabilities held for sale respectively.
- CIB South Africa transferred investment securities with a carrying value of R467m to non-current assets 
  held for sale.
- WIMI transferred a subsidiary with assets of R233m and liabilities of R114m to non-current assets and 
  non-current liabilities held for sale respectively.

The following movements in non-current assets and non-current liabilities held for sale were effected during
the period ended 31 December 2017:
- Retail Banking South Africa transferred loans and advances to customers of R1 118m and property and 
  equipment of R1m to non-current assets held for sale. The Commercial Property Finance (CPF) Equity 
  division in Business Banking South Africa disposed of a subsidiary with assets of R373m and liabilities 
  of R26m out of non-current assets and non-current liabilities held for sale respectively. Business Banking 
  South Africa further disposed of two investment properties with a total carrying value of R475m. 
- Rest of Africa banking transferred property with a carrying value of R3m to non-current assets 
  held for sale.
- CIB South Africa transferred investment securities with a carrying value of R547m to non-current assets 
  held for sale. Prior to its disposal at a carrying value of R467m, a negative fair value adjustment of 
  R80m was applied to the investment securities.
- WIMI transferred two subsidiaries to non-current assets and non-current liabilities held for sale. 
  The subsidiaries held assets of R139m and R14m, and liabilities of R34m and R14m respectively.

2. Loans and advances
                                                               30 June 2018
                                                  Stage 1                                      Stage 2                 
                                     Gross                                      Gross                                  
                                  carrying            ECL           ECL      carrying            ECL           ECL      
                                     value      Allowance      coverage         value      Allowance      coverage     
                                        Rm             Rm             %            Rm             Rm             %           
Loans and advances              
to customers                       688 589          3 620          0.53        76 250          5 018          6.58          
RBB South Africa                   401 134          2 388          0.60        37 591          3 980         10.59          
 Retail Banking South Africa       343 612          1 767          0.51        30 235          3 581         11.84          
   Credit cards                     29 713            666          2.24         4 711          1 619         34.37          
   Instalment credit agreements     70 312            512          0.73         6 155            744         12.09          
   Loans to associates and      
   joint ventures                   24 682              1             -             -              -             -          
   Mortgages                       194 840            174          0.09        15 232            354          2.32          
   Other loans and advances          2 356             14          0.59           368             14          3.80          
   Overdrafts                        4 560             57          1.25         1 239            159         12.83          
   Personal and term loans          17 149            343          2.00         2 530            691         27.31          
 Business Banking South Africa      57 522            621          1.08         7 356            399          5.42          
CIB South Africa                   202 288            434          0.21        29 702            331          1.11          
Rest of Africa Banking              80 011            950          1.19         8 261            903         10.93          
WIMI                                 4 796             28          0.58           213              6          2.82          
Head Office, Treasury and       
other operations                
in South Africa                        360           (180)            -           483           (202)            -          
   Loans and advances                  360              8          2.22           483              2          0.41          
   Reclassification to          
   provisions(1)                         -           (188)            -             -           (204)            -          
Loans and advances to Banks         60 882             11          0.02         1 982             10             -          
Total loans and advances        
to customers and banks             749 471          3 631          0.48        78 232          5 028          6.43          

                                                                30 June 2018
                                                    Stage 3                                     Total
                                      Gross                                       Gross                     
                                   carrying            ECL           ECL       carrying            ECL           ECL  
                                      value      Allowance      coverage          value      Allowance      coverage 
                                         Rm             Rm             %             Rm             Rm             %       
Loans and advances              
to customers                         46 447         19 532         42.05        811 286         28 170          3.47      
RBB South Africa                     37 849         14 715         38.88        476 574         21 083          4.42      
 Retail Banking South Africa         32 713         12 195         37.28        406 560         17 543          4.31      
   Credit cards                       5 700          3 790         66.49         40 124          6 075         15.14      
   Instalment credit agreements       4 755          1 710         35.96         81 222          2 966          3.65      
   Loans to associates and      
   joint ventures                         -              -             -         24 682              1             -      
   Mortgages                         18 521          4 557         24.60        228 593          5 085          2.22      
   Other loans and advances              22             20         90.91          2 746             48          1.75      
   Overdrafts                           487            288         59.14          6 286            504          8.02      
   Personal and term loans            3 228          1 830         56.69         22 907          2 864         12.50      
 Business Banking South Africa        5 136          2 520         49.07         70 014          3 540          5.06      
CIB South Africa                      2 804          1 432         51.07        234 794          2 197          0.94      
Rest of Africa Banking                5 482          3 182         58.04         93 754          5 035          5.37      
WIMI                                    312            232         74.36          5 321            266          5.00      
Head Office, Treasury and       
other operations                
in South Africa                           -            (29)            -            843           (411)            -      
   Loans and advances                     -              -             -            843             10          1.19      
   Reclassification to          
   provisions(1)                          -            (29)            -              -           (421)            -      
Loans and advances to Banks               -              -             -         62 864             21          0.03      
Total loans and advances        
to customers and banks               46 447         19 532         42.05        874 150         28 191          3.22 

(1) Included in Stage 1 gross carrying amount on loans and advances to customers and banks is R65 242m
    relating to financial instruments measured at fair value through profit or loss. The fair value
    measurements for these instruments includes adjustments in respect of their credit quality.
(2) This represents the ECL Allowance on undrawn facilities which has resulted in the ECL on loans and
    advances exceeding the carrying value of the drawn exposure. This excess is recognised in 'Provisions'
    on the Group's statement of financial position.

2. Loans and advances (continued)                                                              
                                                                30 June 2017(1)
                                            Performing loans                Non-performing loans                         
                                               Impair-   Coverage              Impair-   Coverage   Net total            
                                     Exposure     ment      ratio   Exposure      ment      ratio    exposure            
Loans and advances                         Rm       Rm          %         Rm        Rm          %          Rm
RBB South Africa                      429 729    4 198       0.98     23 548     9 922      42.14     439 157            
 Retail Banking South Africa          368 494    3 354       0.91     20 484     8 806      42.99     376 818            
   Credit cards                        34 386      776       2.26      5 403     3 882      71.85      35 131            
   Instalment credit agreements        71 473      759       1.06      2 221     1 052      47.37      71 883            
   Loans to associates and joint                                                                   
   ventures                            20 707        -          -          -         -          -      20 707            
   Mortgages                          216 062    1 195       0.55     10 216     2 132      20.87     222 951            
   Other loans and advances             2 697        -          -          -         -          -       2 697            
   Overdrafts                           4 575       60       1.31        286       171      59.79       4 630            
   Personal and term loans             18 594      564       3.03      2 358     1 569      66.54      18 819            
 Business Banking South Africa         61 235      844       1.38      3 064     1 116      36.42      62 339            
   Mortgages (including CPF)           25 792      168       0.65      1 501       533      35.51      26 592            
   Overdrafts                          19 367      425       2.19        853       390      45.72      19 405            
   Term loans                          16 076      251       1.56        710       193      27.18      16 342            
                                                                                                                         
CIB South Africa                      204 310      604       0.30      1 604       617      38.47     204 693            
Rest of Africa Banking                 77 610    1 085       1.40      4 972     2 559      51.47      78 938            
WIMI                                    5 430       12       0.22        128        61      47.66       5 485            
Head Office, Treasury and other                                                                    
operations in South Africa                721        9       1.25          -         -          -         712            
Loans and advances to customers       717 800    5 908       0.82     30 252    13 159      43.50     728 985            
Loans and advances to banks            63 451        -          -          -         -          -      63 451            
                                      781 251    5 908       0.76     30 252    13 159      43.50     792 436            

                                                                31 December 2017(1)
                                            Performing loans                Non-performing loans             
                                               Impair-   Coverage              Impair-   Coverage   Net total
                                     Exposure     ment      ratio   Exposure      ment      ratio    exposure
Loans and advances                         Rm       Rm          %         Rm        Rm          %          Rm            
RBB South Africa                      436 694    3 997       0.92     23 868     9 671      40.52     446 894            
 Retail Banking South Africa          374 760    3 223       0.86     20 534     8 576      41.76     383 495            
   Credit cards                        34 503      729       2.11      5 053     3 605      71.34      35 222            
   Instalment credit agreements        74 429      698       0.94      2 362     1 117      47.29      74 970            
   Loans to associates and joint                                                                   
   ventures                            23 037        -          -          -         -          -      23 037            
   Mortgages                          215 469    1 124       0.52     10 353     2 073      20.02     222 625            
   Other loans and advances             2 807        -          -          -         -          -       2 807            
   Overdrafts                           5 348       71       1.33        383       215      56.14       5 445            
   Personal and term loans             19 167      601       3.14      2 383     1 566      65.72      19 383            
 Business Banking South Africa         61 934      774       1.25      3 334     1 095      32.84      63 399            
   Mortgages (including CPF)           26 158      141       0.54      1 477       519      35.12      26 975            
   Overdrafts                          19 864      396       1.99      1 082       374      34.57      20 176            
   Term loans                          15 912      237       1.49        775       202      26.08      16 248            
CIB South Africa                      218 437      559       0.26      2 019       832      41.21     219 065            
Rest of Africa Banking                 76 738      981       1.28      4 742     2 636      55.59      77 863            
WIMI                                    4 930       13       0.26        262       175      66.79       5 004            
Head Office, Treasury and other                                                                    
operations in South Africa                956       10       1.05          -         -          -         946            
Loans and advances to customers       737 755    5 560       0.75     30 891    13 314      43.10     749 772            
Loans and advances to banks            55 426        -          -          -         -          -      55 426            
                                      793 181    5 560       0.70     30 891    13 314      43.10     805 198            

(1) These numbers have been restated, refer to the reporting changes overview in note 16.

3. Borrowed funds
During the reporting period the significant movements in borrowed funds were as follows: R5 488m 
(30 June 2017: R1 142m; 31 December 2017: R2 841m) of subordinated notes were issued and Rnil 
(30 June 2017: R1 000m; 31 December 2017: R2 805m) were redeemed.

4. Disaggregation of non-interest income
The following table disaggregates non-interest income into income received from contracts with 
customers (by major service lines) and non-interest income from other sources: 
                                                                     Group 2018
                                                                            Head Office                          
                                                                               Treasury                          
                                                                              and other                       
                                                          Rest of            operations      Barclays               
                                      RBB SA    CIB SA     Africa     WIMI        in SA    Seperation    Total      
                                          Rm        Rm         Rm       Rm           Rm            Rm       Rm     
Fee and commission income from                                                                         
contracts with customers               8 878     1 165      1 487    1 652         (578)            -   12 604      
 Consulting and administration fees      116        56         27      103            -             -      302      
 Transactional fees and commissions    7 565       745      1 299       55            3             -    9 667      
   Cheque accounts                     2 619        55         50       27            -             -    2 751      
   Credit cards                        1 271         -         72        -            -             -    1 343      
   Electronic banking                  2 006       520         41        9            -             -    2 576      
   Other (1)                             635       169      1 130       19            2             -    1 955      
   Savings accounts                    1 034         1          6        -            1             -    1 042      
 Merchant income                         893         -         76        -            -             -      969      
 Asset management                         11         -          2      649          (13)            -      649      
 Other fees and commissions               19       118         50      293         (119)            -      361      
 Insurance commissions received          274         -         33      532         (449)            -      390      
 Investment banking fees                   -       246          -       20            -             -      266      
Other income from contracts                                                                            
with customers                            38         -          1        -          (14)            -       25      
Other non-interest income,                                                                             
net of expenses                         (153)    1 087        939    1 192          160           413    3 638      
Total non-interest income              8 763     2 252      2 427    2 844         (432)          413   16 267      
                                                                            
                                                                            
5. Other impairments
                                                                                  30 June          31 December   
                                                                               2018      2017             2017   
                                                                                 Rm        Rm               Rm   
Impairment raised on financial instruments                                        2         -                5   
Other                                                                           182       376              643   
 Goodwill                                                                         -         -               38   
 Intangible assets(2)                                                             -       376              384   
 Property and equipment(3)                                                      182         -              221   
                                                                                184       376              648   
(1) Includes fees on mortgage loans and foreign currency transactions.
(2) The impairment incurred during the prior period on intangible assets mainly related to internally
    generated software, Barclays.Net which was fully impaired.
(3) Management have decided to dispose of certain property and equipment resulting in an impairment 
    of R182m (30 June 2017: Rnil; 31 December 2017: R221m). As the property will be disposed of, the 
    impairment was calculated based on fair value less cost to sell.

6. Headline earnings 
                                                                      30 June                31 December                 
                                                               2018             2017             2017             
                                                              Gross   Net(1)   Gross   Net(1)   Gross   Net(1)    
                                                                 Rm       Rm      Rm       Rm      Rm       Rm    
Headline earnings is determined as follows:                                                                       
Profit attributable to ordinary equity holders                         7 253            7 423           13 888    
Total headline earnings adjustment:                                       71              227              490    
  IFRS 3 - Goodwill impairment                                    -        -       -        -      38       38    
  IFRS 5 - (Gain)/loss on disposal of                                                                  
           non-current assets held for sale                    (121)     (73)     (7)      (5)     36       39    
  IAS 16 - Loss/(profit) on disposal of                                                                
           property and equipment                                5        3     (28)     (23)    (43)     (34)   
  IAS 21 - Recycled foreign currency                                                                   
           translation reserve                                    -        -      52       52      52       52    
  IAS 36 - Impairment of property and equipment                 182      141       -        -     221      159    
  IAS 36 - Impairment of intangible assets                        -        -     376      274     384      280    
  IAS 38 - Release of available-for-sale reserves                 -        -      18       12      67       49    
  IAS 40 - Change in fair value of                                                                     
           investment properties                                  -        -     (95)     (78)   (105)     (88)   
  IAS 40 - Profit on disposal of                                                                       
           investment property                                    -        -      (5)      (5)     (5)      (5)   
                                                                       7 324            7 650           14 378    
Headline earnings per ordinary share (cents)                           880.3            917.5          1 724.5    
Diluted headline earnings per ordinary                                                                 
share (cents)                                                          877.8            917.3          1 724.2    

IAS 33 Earnings per share prescribes that the weighted average number of shares outstanding during a
reporting period, and for all periods presented, should be adjusted for events that change the number 
of ordinary shares outstanding without a corresponding change in resources. The contribution of cash 
by Barclays PLC and acquisition of Absa Group Limited (AGL) shares by a subsidiary of the independent 
Absa Empowerment Trust in the previous reporting period did not result in an adjustment to the net 
asset value of the Group. The weighted average number of shares outstanding in June 2017 has been 
restated to reflect the acquisition from Barclays PLC of 12 716 260 (1.5%) AGL shares in the current 
reporting period. The acquisition of shares has been treated as treasury shares from the beginning 
of 2017, which has led to a reduction in the number of ordinary shares outstanding for the purposes 
of determining the weighted average number of shares in the Headline earnings per share and Diluted 
headline earnings per share.            

(1) The net amount is reflected after taxation and non-controlling interest.

7. Dividends per share                                                                                              
                                                                                   30 June         31 December    
                                                                              2018       2017             2017    
                                                                                Rm         Rm               Rm    
Dividends declared per share to ordinary equity holders                                                           
Interim dividend (6 August 2018: 490 cents) (28 July 2017: 475 cents)        4 154      4 027            4 027    
Final dividend (1 March 2018: 595 cents)                                         -          -            5 044    
                                                                             4 154      4 027            9 071    
Dividends declared per share to ordinary equity holders                                                           
(net of treasury shares)(1)                                                                                          
Interim dividend (6 August 2018: 490 cents) (28 July 2017: 475 cents)        4 076      4 024            4 024    
Final dividend (1 March 2018: 595 cents)                                         -          -            4 955    
                                                                             4 076      4 024            8 979    
Dividends declared per share to non-controlling preference                                                        
equity holders                                                                                                    
Interim dividend (6 August 2018: 3 543.67 cents) (28 July 2017:            
3 684.06849 cents)                                                             182        182              182    
Final dividend (1 March 2018: 3 558.01 cents)                                    -          -              176    
                                                                               182        182              358    
Distributions declared per note to Additional Tier 1 capital                                                      
note holders                                                                                                      
Distributions (12 March 2018: 31 500 Rands) (12 June 2018:                 
32 200 Rands)                                                                   96          -               48    
(12 December 2017: 31 990.79 Rands)                                                                               
                                                                                96          -               48    

(1) The net amount is reflected after taxation and non-controlling interest.
(2) Numbers have been restated, refer to note 16 for details.

                                                                                   30 June         31 December    
                                                                              2018       2017             2017    
                                                                                Rm         Rm               Rm    
                                                                                                                  
Dividends paid per share to ordinary equity holders                    
(net of treasury shares)(1)                                            
Final dividend (16 April 2018: 595 cents) (10 April 2017: 570 cents)         4 962      4 832            4 832    
Interim dividend (11 September 2017: 475 cents)                                  -          -            3 989    
                                                                             4 962      4 832            8 821    
Dividends paid per share to non-controlling preference equity holders                                             
Final dividend (16 April 2018: 3 588.01 cents) (10 April 2017:         
3 644.79452 cents)                                                             176        180              180    
Interim dividend (11 September 2017: 3 684.06849 cents)                          -          -              182    
                                                                               176        180              362    
Distributions paid per note to Additional Tier 1 capital note holders                                                   
Distributions (12 March 2018: 31 500 Rands) (12 June 2018:             
32 200 Rands)                                                                   96          -               48    
(12 December 2017: 31 990.79 Rands)                                                                               
                                                                                96          -               48    

(1) The dividends paid on treasury shares are calculated on payment date.
                  
8. Acquisitions and disposals of businesses and other similar transactions
8.1.1 Acquisitions of businesses during the current reporting period
During the period, the Group acquired the remaining 50% in a non-core investment, which was previously 
held as an Investment in Associate at Fair Value.  The acquisition of the investment had an effective 
acquisition date of 16 March 2018 and is a business combination within the scope of IFRS 3. 
The acquisition date fair value of the consideration transferred amounted to R198m. 

                                                                                                         Group    
                                                                                                    Fair value     
                                                                                                 recognised on    
                                                                                                   acquisition    
                                                                                                  30 June 2018    
                                                                                                            Rm    
Consideration at date of acquisition:                                                                             
Cash                                                                                                        30    
Acquisition-date fair value of initial interest                                                            168    
Total consideration                                                                                        198    
Recognised amounts of identifiable assets acquired and liabilities assumed                                        
Cash and balances at central banks                                                                          15    
Other assets                                                                                                 4    
Investment properties                                                                                      165    
Current tax assets                                                                                           1    
Other liabilities                                                                                          (14)   
Deferred tax liabilities                                                                                    (5)   
Total identifiable net assets                                                                              166    
Total non-controlling interest                                                                               -    
Goodwill                                                                                                    32    
Total                                                                                                      198    

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:
                                                                                                2018      2017    
                                                                                                  Rm        Rm    
                                                                                                                  
Summary of net cash outflow due to acquisitions                                                   30         - 

(1) The dividends paid on treasury shares are calculated on payment date.   

8.1.2 Disposals of businesses during the current reporting period
Apart from the business classified as non-current assets/liabilities held for sale and disposed of (refer to
note 1), there were no other disposals of businesses that were finalised during the current reporting period.
The cash consideration received on disposal of a subsidiary included in non-current assets/liabilities held
for sale was R288m.

8.2.1 Acquisitions of businesses during the previous reporting period
There were no acquisitions of businesses during the previous reporting period.

8.2.2 Disposals of businesses during the previous reporting period
Apart from the businesses classified as non-current assets/liabilities held for sale and disposed of (refer
to note 1), there were no other disposals of businesses that were finalised during the previous reporting
period. The cash consideration received on disposal of a subsidiary included in non-current assets/liabilities
held for sale was R205m.

9. Related parties
There were no one-off significant transactions with related parties of Absa Group Limited during the current
reporting period.

In the prior reporting period, as part of the separation, Barclays PLC sold ordinary Absa Group Limited
shares representing 12.2% and 33.7% of issued ordinary share capital in May 2016 and June 2017 respectively.
Barclays PLC currently holds 126.2m ordinary Absa Group Limited shares representing 14.9% of issued ordinary
shares. The remaining 85.1 % of the shares are widely held on the JSE.

Barclays PLC contributed £765m to the Group, primarily in recognition of the investments required for the
Group to separate from Barclays PLC. This contribution will be invested primarily in rebranding, technology 
and separation-related projects and it is expected that it will neutralise the capital and cash flow impact 
of separation investments on the Group over time. 

Barclays PLC contributed cash of R1 891m to be used in the furtherance of the Group's objective of
establishing Broad-Based Black Economic Empowerment structure. The cash was contributed to the independent 
Absa Empowerment Trust, whose subsidiary purchased 12 716 260 BAGL shares. In terms of the requirements 
of IFRS, these shares have been accounted for as treasury shares and eliminated against the Group's 
share capital.

CLS Group Holding AG shares were transferred to Barclays PLC for no consideration in 2005. During the
current reporting period these shares were transferred back to the Group for a nominal consideration of 
one British Pound (GBP). The shares have been recognised at a fair value of R48m. The related credit has 
been recognised in equity as a shareholder contribution.

10. Financial guarantee contracts                                                                         
                                                                                30 June           31 December    
                                                                           2018         2017             2017    
                                                                             Rm           Rm               Rm    
Financial guarantee contracts                                                10            3               10    
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. The credit risk inherent in 
the balance has led to an ECL provision being raised for such amount.

11. Commitments                                                                                               
                                                                                30 June           31 December    
                                                                           2018         2017             2017    
                                                                             Rm           Rm               Rm    
Authorised capital expenditure                                                                                   
Contracted but not provided for                                           1 278          817              270    
The Group has capital commitments in respect of computer equipment, software and property development. 
Management is confident that future net revenues and funding will be sufficient to cover these commitments.

Operating lease payments due                                                                                     
 No later than one year                                                   1 466        1 336            1 365    
 Later than one year and no later than five years                         3 485        3 173            3 056    
 Later than five years                                                      829        1 096              948    
                                                                          5 780        5 605            5 369    
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.

12. Contingencies                                                                                            
                                                                                30 June           31 December    
                                                                           2018         2017             2017    
                                                                             Rm           Rm               Rm    
                                                                                                                 
Guarantees                                                               42 161       36 934           38 789    
Irrevocable debt facilities                                             170 222      140 877          162 907    
Irrevocable equity facilities                                                21          121               33    
Letters of credit                                                         6 968        8 543            7 814    
Other                                                                       342           91              262    
                                                                        219 714      186 566          209 805    
Guarantees include performance guarantee contracts 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. The credit risk inherent in the undrawn component of irrevocable lending facilities are 
managed and monitored by the Group together with the drawn component as a single exposure. The exposure 
at default (EAD) on the entire facility is therefore used to calculate the ECL on loans and advances. 
As a result, the total ECL is recognised in the ECL allowance for the financial asset unless the total 
ECL exceeds the gross carrying amount of the financial asset, in which case the ECL is recognised as a 
provision on the face of the statement of financial position.

Legal proceedings
The Group has been party to proceedings against it during the reporting period, and as at the reporting date
the following material cases are disclosed:
- Pinnacle Point Holdings Proprietary Limited :  It is alleged that a local bank conducted itself unlawfully
  in relation to a financial product offered by it, and that Absa Bank Limited was privy to such conduct.
  Subsequent to the withdrawal of the first plaintiff's (Pinnacle Point Holdings) claim, the total claim amount 
  has been substantially reduced, however, the second to fifth plaintiffs persist with their claims for 
  damages in an amount of R47m.
- Ayanda Collective Investment Scheme (the Scheme): Absa Capital Investor Services was the trustee of the
  Scheme, in which Corporate Money Managers (CMM) managed a portfolio of assets within the Scheme. The joint
  curators of the CMM group of companies and the Altron Pension Fund (an investor in the fund) allege that the
  defendants caused damages to them arising from their alleged failure to meet their obligations in the trust 
  deed together with their statutory obligations set out in the Collective Investment Scheme Act, in respect 
  of which they seek payment of R1 157m. 

The Group is engaged in various other legal, competition and regulatory matters, both in South Africa and a
number of other jurisdictions. It is involved in legal proceedings which arise in the ordinary course of
business from time to time, including (but not limited to) disputes in relation to contracts, securities, 
debt collection, consumer credit, fraud, trusts, client assets, competition, data protection, money laundering,
employment, environmental and other statutory and common law issues.

The Group is also subject to enquiries and examinations, requests for information, audits, investigations
and legal and other proceedings by regulators, governmental and other public bodies in connection with 
(but not limited to) consumer protection measures, compliance with legislation and regulation, wholesale 
trading activity and other areas of banking and business activities in which the Group is or has been engaged.

At the present time, the Group does not expect the ultimate resolution of any of these other matters to have
a material adverse effect on its financial position. However, in light of the uncertainties involved in such
matters and the matters specifically described in this note, there can be no assurance that the outcome of a
particular matter or matters will not be material to the Group's results of operations or cash flow for a
particular period, depending on, amongst other things, the amount of the loss resulting from the matter(s) 
and the amount of income otherwise reported for the reporting period.

The Group has not disclosed the contingent liabilities associated with these matters either because they
cannot reasonably be estimated or because such disclosure could be prejudicial to the outcome of the matter.
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 has resulted in a
significant tightening of regulation and changes to regulatory structures, 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 which, in some cases, is leading to increased regulation.
The nature and impact of future changes in the legal framework, policies and regulatory action, especially in
the areas of financial crime, banking and insurance regulation, cannot currently be fully predicted and are
beyond the Group's control. Some of these are likely to have an impact on the Group's businesses, systems and
earnings. 

The Group is continuously evaluating its programmes and controls in general relating to compliance with
regulation. The Group undertakes   monitoring, review and assurance activities, and the Group has also adopted
appropriate remedial and/or mitigating steps, where necessary or advisable, and has made disclosures on material
findings as and when appropriate. 

Absa Bank Limited, a subsidiary of Absa Group Limited, identified potentially fraudulent activities by
certain of its customers using advance payments for imports in 2014 and 2015 to effect foreign exchange transfers
from South Africa to beneficiary accounts located in East Asia, UK, Europe and the US. As a result, the Group
conducted a review of relevant activities, processes, systems and controls,  and provided information to
relevant authorities, in a process which has now largely concluded. No financial impact is anticipated.

In February 2017 the South African Competition Commission (SACC) referred Barclays PLC, BCI and Absa Bank
Limited, a subsidiary of Absa Group Limited, among other banks, to the Competition Tribunal to be prosecuted 
for breaches of South African antitrust law related to Foreign Exchange trading of South African Rand. The SACC
found from its investigation that between 2007 and 2013 the banks had engaged in various forms of collusive
behaviour. Barclays was the first to bring the conduct to the attention of the SACC under its leniency programme
and has cooperated with, and will continue to cooperate with, the SACC in relation to this matter.  The SACC
is therefore not seeking an order from the Tribunal to impose any fine on Barclays Bank PLC, BCI or Absa Bank
Limited.

Income taxes
The Group is subject to income taxes in numerous jurisdictions, and the calculation of the Group's tax
charge and provisions for income taxes necessarily involves a degree of estimation and judgement. There 
are many transactions and calculations for which the ultimate tax treatment is uncertain or in respect 
of which the relevant tax authorities may have indicated disagreement with the 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 provisions for anticipated tax audit issues based on estimates of whether additional
taxes will be due after taking into account external advice where appropriate. The carrying amount of any
resulting provisions will be sensitive to the manner in which tax matters are expected to be resolved, and 
the stage of negotiations or discussion with the relevant tax authorities. There may be significant 
uncertainty around the final outcome of tax proceedings, which in many instances, will only be concluded 
after a number of years. Management estimates are informed by a number of factors including, inter alia,
the progress made in discussions or negotiations with the tax authorities, the advice of expert legal 
counsel, precedent set by the outcome of any previous claims, as well as the nature of the relevant 
tax environment.  

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.

13. Segment reporting                                                                              
                                                                     30 June            31 December    
                                                                 2018      2017(1)          2017(1)    
                                                                   Rm           Rm               Rm    
13.1 Headline earnings contribution by segment                                                     
RBB South Africa                                                4 209        4 039            8 748    
CIB South Africa                                                1 683        1 783            3 411    
Rest of Africa Banking                                          1 636        1 512            2 954    
WIMI                                                              646          616            1 231    
Head Office, Treasury and other operations in South Africa       (131)        (148)            (721)   
Barclays separation effects(2)                                   (719)        (152)          (1 245)   
                                                                7 324        7 650           14 378

(1) Operational changes, accounting policy changes, management changes and associated changes to 
    the way in which the chief operating decisionmaker views the performance of each segment, have 
    resulted in the allocation of earnings, assets and liabilities between segments, refer to 
    note 16 for further details.
(2) 'Barclays separation effects' is the reconciling stripe between IFRS and normalised results and 
    does not represent a reportable segment.
                                                                                                     
                                                                    30 June             31 December    
                                                                 2018      2017(1)          2017(1)    
                                                                   Rm           Rm               Rm    
13.2 Total income by segment                                                                       
RBB South Africa                                               21 600       20 774           42 607    
CIB South Africa                                                5 634        5 372           10 706    
Rest of Africa Banking                                          7 565        7 670           15 617    
WIMI                                                            2 998        2 729            5 580    
Head Office, Treasury and other operations in South Africa       (755)        (460)          (1 520)   
Barclays separation effects(2)                                    588          284              405    
                                                               37 630       36 369           73 395 

(1) Operational changes, accounting policy changes, management changes and associated changes to 
    the way in which the chief operating decisionmaker views the performance of each segment, have 
    resulted in the allocation of earnings, assets and liabilities between segments, refer to 
    note 16 for further details.
(2) 'Barclays separation effects' is the reconciling stripe between IFRS and normalised results and 
    does not represent a reportable segment.                                                               

                                                                     30 June            31 December    
                                                                 2018      2017(1)          2017(1)    
                                                                   Rm           Rm               Rm    
                                                                                                       
13.3 Total internal income by segment                                                              
RBB South Africa                                               (4 430)      (4 930)          (9 282)   
CIB South Africa                                               (3 674)      (1 729)          (7 900)   
Rest of Africa Banking                                              3          (74)            (241)   
WIMI                                                             (192)        (155)            (471)   
Head Office, Treasury and other operations in South Africa      8 118        6 842           17 569    
Barclays separation effects(3)                                    175           46              325    
                                                                    -            -                -    

                                                                     30 June            31 December    
                                                                 2018      2017(1)          2017(1)    
                                                                   Rm           Rm               Rm    
13.4 Total assets by segment                                                                       
RBB South Africa                                              758 949      732 049          753 849    
CIB South Africa                                              527 795      467 993          492 110    
Rest of Africa Banking                                        179 916      170 511          162 720    
WIMI                                                           51 456       51 146           50 697    
Head Office, Treasury and other operations in South Africa   (285 078)    (283 807)        (294 309)   
Barclays separation effects (3)                                 1 605          (16)             912    
                                                            1 234 643    1 137 876        1 165 979    

                                                                      30 June             31 December    
                                                                 2018      2017(1)          2017(1)    
                                                                   Rm           Rm               Rm    
13.5 Total liabilities by segment                                                                  
RBB South Africa                                              753 921      724 382          741 550    
CIB South Africa                                              522 466      462 821          485 310    
Rest of Africa Banking                                        157 355      149 829          142 394    
WIMI                                                           45 990       45 720           45 643    
Head Office, Treasury and other operations in South Africa   (356 112)    (349 642)        (358 336)   
Barclays separation effects(2), (3)                            (8 496)     (11 731)          (9 840)   
                                                            1 115 124    1 021 379        1 046 721

(1) Operational changes, accounting policy changes, management changes and associated changes to the 
    way in which the chief operating decisionmaker views the performance of each segment, have resulted 
    in the allocation of earnings, assets and liabilities between segments, refer to note 16 for 
    further details.
(2) This presents the cash contribution received from Barclays PLC, net of amounts already spent on 
    separation activities. The cash received is held centrally by Treasury and is presented as an 
    intersegmental asset in 'Other liabilities'.
(3) 'Barclays separation effects' is the reconciling stripe between IFRS and normalised results and 
    does not represent a reportable segment.

14. Assets and liabilities not held at fair value
The following table summarises the carrying amounts and fair value of those assets and liabilities 
not held at fair value.
                                                       30 June                       2017
                                              Carrying                     Carrying                      
                                                 value     Fair value         value      Fair value      
                                                    Rm             Rm            Rm              Rm      
Financial assets                                                                                         
Balances with other central banks               14 689         14 689        10 323          10 323      
Balances with the South African Reserve Bank    17 862         17 862        18 672          18 672      
Coins and bank notes                            10 429         10 429        10 924          10 924      
Money market assets                                101            101             -               -      
Cash, cash balances and balances                         
with central banks                              43 082         43 082        39 919          39 919      
Investment securities                            6 580          6 580             -               -      
Loans and advances to banks                     35 328         35 031        46 189          46 189      
Other assets                                    34 468         34 468        32 422          32 422      
RBB South Africa                               455 491        455 457       439 062         439 169      
Retail Banking South Africa                    389 017        388 982       376 818         376 925      
 Credit cards                                   34 050         34 050        35 130          35 130      
 Instalment credit agreements                   78 258         78 234        73 882          73 785      
 Loans to associates and joint ventures         24 681         24 681        20 707          20 707      
 Mortgages                                     223 507        223 507       222 952         222 960      
 Other loans and advances                        2 695          2 695           698             698      
 Overdrafts                                      5 783          5 783         4 631           4 631      
 Personal and term loans                        20 043         20 033        18 818          19 014      
Business Banking South Africa                   66 474         66 474        62 244          62 244      
 Mortgages (including CPF)                      27 784         27 784        26 498          26 498      
 Overdrafts                                     21 647         21 647        19 403          19 403      
 Term loans                                     17 043         17 043        16 343          16 343      
CIB South Africa                               194 870        194 870       177 508         177 508      
Rest of Africa Banking                          88 719         88 719        78 937          78 937      
WIMI                                             5 055          5 055         5 485           5 485      
Head Office, Treasury and other operations               
in South Africa                                  1 254          1 254           709             709      
Loans and advances to customers                          
- net of impairment losses                     745 389        745 354       701 701         701 808       
Total assets                                   864 847        864 515       820 231         820 338
Financial liabilities                                                                                         
Deposits from banks                             66 529         66 529        40 086          40 086           
Other liabilities                               38 267         38 267        33 576          33 576           
Call deposits                                   75 453         75 453        56 100          56 100           
Cheque account deposits                        196 198        196 198       208 545         208 545           
Credit card deposits                             1 788          1 788         1 811           1 811           
Fixed deposits                                 153 260        152 896       163 131         163 923           
Foreign currency deposits                       33 105         33 105        24 305          24 305           
Notice deposits                                 58 946         58 946        63 125          63 138           
Other deposits                                   2 021          2 021         3 456           3 456           
Savings and transmission deposits              161 789        161 789       153 058         153 058           
Deposits due to customers                      682 559        682 195       673 531         674 336           
Debt securities in issue                       136 728        136 728       135 421         135 421           
Borrowed funds                                  21 448         21 448        15 963          15 963           
Total liabilities (not held at fair value)     945 530        945 166       898 577         899 382           
                                                        

The table below summarises the carrying amounts and fair values of those assets and liabilities 
not held at fair value:
                                                                                  31 December                     
                                                                                     2017                       
                                                                           Carrying                     
                                                                              value      Fair value     
                                                                                 Rm              Rm     
Financial assets                                                                                        
Balances with other central banks                                            10 281          10 281     
Balances with the South African Reserve Bank                                 19 109          19 109     
Coins and bank notes                                                         13 519          13 519     
Cash, cash balances and balances with central banks                          42 908          42 909     
Loans and advances to banks                                                  38 228          39 037     
Other assets                                                                 17 486          17 556     
RBB South Africa                                                            447 752         447 984     
Retail Banking South Africa                                                 383 495         383 727     
 Credit cards                                                                35 223          35 224     
 Instalment credit agreements                                                77 044          77 275     
 Loans to associates and joint ventures                                      23 037          23 037     
 Mortgages                                                                  222 625         222 625     
 Other loans and advances                                                       740             740     
 Overdrafts                                                                   5 443           5 443     
 Personal and term loans                                                     19 383          19 383     
Business Banking South Africa                                                64 257          64 257     
 Mortgages (including CPF)                                                   27 833          27 833     
 Overdrafts                                                                  19 199          19 199     
 Term loans                                                                  17 225          17 225     
CIB South Africa                                                            192 257         192 257     
Rest of Africa Banking                                                       77 005          77 137     
WIMI                                                                          5 004           5 004     
Head Office, Treasury and other operations in South Africa                      943             943     
Loans and advances to customers - net of impairment losses                  722 961         723 325     
Non-current assets held for sale                                              1 118           1 118     
Total assets (not held at fair value)                                       822 702         823 945     
Financial liabilities                                                                                   
Deposits from banks                                                          54 835          54 915     
Other liabilities                                                            27 833          27 832     
Call deposits                                                                81 076          81 076     
Cheque account deposits                                                     191 048         191 048     
Credit card deposits                                                          1 921           1 921     
Fixed deposits                                                              148 328         148 328     
Foreign currency deposits                                                    28 418          28 418     
Notice deposits                                                              58 459          58 459     
Other deposits                                                                2 629           2 629     
Savings and transmission deposits                                           157 098         157 098     
Deposits due to customers                                                   668 977         668 977     
Debt securities in issue                                                    132 891         132 891     
Borrowed funds                                                               15 895          15 895     
Total liabilities (not held at fair value)                                  900 431         900 510     
                                                                         

15. Assets and liabilities held at fair value
15.1 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 Traded Risk and Valuations Committee and an Independent Valuation Control team (IVC), which is
independent from the front office.

The Traded Risk and Valuations 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 Absa Group Audit and Compliance Committee.

The Traded Risk and Valuations Committee is responsible for overseeing the valuation control process and
will therefore consider the appropriateness of valuation techniques and inputs for fair value measurement.

The IVC team independently verifies the results of trading and investment operations and all significant
fair value measurements. 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 team verifies the procedures 
performed by the front office and considers the appropriateness of any differences to external independent 
valuations.

15.2 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 are classified as Level 2 if they have been determined using models for which inputs are
observable in an active market.

A valuation input is considered observable if it can be directly observed from transactions in an active
market, or if there is compelling external evidence demonstrating an executable exit price.

Valuation technique using significant unobservable inputs - Level 3
Fair values are classified as Level 3 if their determination incorporates significant inputs that are not
based on observable market data (unobservable inputs). An input is deemed significant if it is shown to
contribute more than 10% to the fair value of an item. Unobservable input levels are generally determined 
based on observable inputs of a similar nature, historical observations or other analytical techniques.

Judgemental inputs on valuation of principal instruments
The following summary sets out the principal instruments whose valuation may involve judgemental inputs:

Debt securities and treasury and other eligible bills
These instruments are valued, based on quoted market prices from an exchange, dealer, broker, industry group
or pricing service, where available. Where unavailable, fair value is determined by reference to quoted
market prices for similar instruments or, in the case of certain mortgage-backed securities, valuation 
techniques using inputs derived from observable market data, and, where relevant, assumptions in respect 
of unobservable inputs.

Equity instruments
Equity instruments are valued, based on quoted market prices from an exchange, dealer, broker, industry
group or pricing service, where available. Where unavailable, fair value is determined by reference to quoted
market prices for similar instruments or by using valuation techniques using inputs derived from observable 
market data, and, where relevant, assumptions in respect of unobservable inputs.

Also included in equity instruments are non-public investments, which include investments in venture capital
organisations. The fair value of these investments is determined using appropriate valuation methodologies
which, dependent on the nature of the investment, may include discounted cash flow analysis, enterprise value
comparisons with similar companies and price:earnings comparisons. For each investment, the relevant methodology
is applied consistently over time.

Derivatives
Derivative contracts can be exchange-traded or traded over- the- counter (OTC). OTC derivative contracts
include forward, swap and option contracts related to interest rates, bonds, foreign currencies, credit spreads,
equity prices and commodity prices or indices on these instruments. Fair values of derivatives are obtained
from quoted market prices, dealer price quotations, discounted cash flow and option pricing models.

Loans and advances
The 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 flowprofiles, 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 as detailed
above.

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.

15.3 Fair value adjustments
The main valuation adjustments required to arrive at a fair value are described below:

Bid-offer valuation adjustments
For assets and liabilities where the Group is not a marketmaker mid prices are adjusted to bid and offer
prices respectively. Bid-offer adjustments reflect expected close-out strategy and, for derivatives, the fact
that they are managed on a portfolio basis. The methodology for determining the bid-offer adjustment for a
derivative portfolio will generally involve netting between long and short positions and the bucketing of risk by
strike and term in accordance with hedging strategy. Bid-offer levels are derived from market sources, such as
broker data. For those assets and liabilities where the firm is a marketmaker 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, the Group's own credit quality, as well as the cost of funding across
all asset classes.

Model valuation adjustments
Valuation models are reviewed under the Group's model governance framework. This process identifies the
assumptions used and any model limitations (for example, if the model does not incorporate volatility skew). 
Where necessary, fair value adjustments will be applied to take these factors into account. Model valuation
adjustments are dependent on the size of portfolio, complexity of the model, whether the model is market 
standard and to what extent it incorporates all known risk factors. All models and model valuation 
adjustments are subject to review on at least an annual basis. 

15.4 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. 
                                            
                                                  30 June
                                                    2018                                     2017
Recurring fair                    Level 1    Level 2    Level 3    Total    Level 1    Level 2    Level 3    Total    
value measurements                     Rm         Rm         Rm       Rm         Rm         Rm         Rm       Rm    
Financial assets                                                                                                      
 Cash, cash balances and                                                                                   
 balances with central banks        1 689      3 807          -    5 496      2 071      3 088          -    5 159    
 Investment securities             54 279     56 391     10 189  120 859     57 345     52 208      6 281  115 834    
 Loans and advances to banks            -     26 961        554   27 515          -     16 812        450   17 262    
 Trading and hedging                                                                                       
 portfolio assets                  52 028     72 194      2 508  126 730     43 617     56 750      1 787  102 154    
  Debt instruments                 29 413      6 189         74   35 676     21 501      6 327      1 390   29 218    
  Derivative assets                     -     58 331        848   59 179          -     41 035        177   41 212    
   Commodity derivatives                -      2 034          -    2 034          -        554          -      554    
   Credit derivatives                   -          -        165      165          -         17        164      181    
   Equity derivatives                   -      3 038        602    3 640          -      1 315         13    1 328    
   Foreign exchange derivatives         -     12 723          3   12 726          -      7 486          -    7 486    
   Interest rate derivatives            -     40 536         78   40 614          -     31 663          -   31 663    
  Equity instruments               21 229          -          -   21 229     20 120          -          -   20 120    
  Money market assets               1 386      7 674      1 586   10 646      1 996      9 388        220   11 604    
 Other assets                           -         73          -       73          -          2          4        6    
 Loans and advances to                                                                                      
 customers                              -     28 717      9 010   37 727          -     22 622      4 662   27 284    
 Investments linked to                                                                                      
 investment contracts              15 320      3 874          -   19 194     16 794      2 337          -   19 131    
Total financial assets            123 316    192 017     22 261  337 594    119 827    153 819     13 184  286 830    
Financial liabilities                                                                                                 
 Deposits from banks                    -     21 937          -   21 937          -      9 204          -    9 204    
 Trading and hedging                                                                                        
 portfolio liabilities             15 029     53 385        622   69 036      8 034     35 554        454   44 042    
  Derivative liabilities                -     53 385        622   54 007          -     35 554        454   36 008    
   Commodity derivatives                -      1 986          -    1 986          -        601          -      601    
   Credit derivatives                   -          7        158      165          -          9        188      197    
   Equity derivatives                   -      3 266        249    3 515          -      1 285         51    1 336    
   Foreign exchange derivatives         -     15 945          4   15 949          -      8 151          -    8 151    
   Interest rate derivatives            -     32 181        211   32 392          -     25 508        215   25 723    
  Short positions                  15 029          -          -   15 029      8 034          -          -    8 034    
 Other liabilities                      -         16         43       59          -         12          -       12    
 Deposits due to customers            158     28 959      2 815   31 932        149     21 772        910   22 831    
 Debt securities in issue               -      4 020         35    4 055         36      4 251        484    4 771    
 Liabilities under investment                                                                              
 contracts                              -     30 546          -   30 546          -     29 918          -   29 918    
Total financial liabilities        15 187    138 863      3 515  157 565      8 219    100 711      1 848  110 778    
Non-financial assets                                                                                                  
Commodity                             576          -          -      576      1 678          -          -    1 678    
Investment properties                   -          -        420      420          -          -        268      268    
Non-recurring fair value                                                                                   
measurements                                                                                               
Non-current assets held                                                                                    
for sale(1)                             -          -         79       79          -          -      2 601    2 601    
Non-current liabilities held                                                                               
for sale(1)                             -          -          7        7          -          -        114      114

(1) Includes certain items classified in terms of the requirements of IFRS 5 which are measured in terms of
    their respective standards.

                                                                                    31 December

                                                                                        2017
                                                                 Level 1       Level 2       Level 3         Total    
Recurring fair value measurements                                     Rm            Rm            Rm            Rm    
Financial assets                                                                                                      
 Cash, cash balances and balances with central banks               1 839         3 921             -         5 760    
 Investment securities                                            53 068        50 740         7 601       111 409    
 Loans and advances to banks                                           -        16 714           484        17 198    
 Trading and hedging portfolio assets                             54 966        76 015         1 824       132 805    
  Debt instruments                                                29 668         5 133           177        34 978    
  Derivative assets                                                    -        58 980           546        59 526    
   Commodity derivatives                                               -           981           124         1 105    
   Credit derivatives                                                  -             -           165           165    
   Equity derivatives                                                  -         2 371           173         2 544    
   Foreign exchange derivatives                                        -        15 878             8        15 886    
   Interest rate derivatives                                           -        39 750            76        39 826    
  Equity instruments                                              23 662             -             -        23 662    
  Money market assets                                              1 636        11 902         1 101        14 639    
 Other assets                                                          -             2             2             4    
 Loans and advances to customers                                       -        22 070         4 741        26 811    
 Investments linked to investment contracts                       17 906         1 030             -        18 936    
Total financial assets                                           127 779       170 492        14 652       312 923    
Financial liabilities                                                                                                 
 Deposits from banks                                                   -        12 555             -        12 555    
 Trading and hedging portfolio liabilities                        11 946        52 279           945        65 170    
  Derivative liabilities                                               -        52 279           945        53 224    
   Commodity derivatives                                               -         1 172           121         1 293    
   Credit derivatives                                                  -            10           148           158    
   Equity derivatives                                                  -         1 973           423         2 396    
   Foreign exchange derivatives                                        -        14 874             4        14 878    
   Interest rate derivatives                                           -        34 250           249        34 499    
  Short positions                                                 11 946             -             -        11 946    
 Other liabilities                                                     -             3             5             8    
 Deposits due to customers                                           203        19 115         1 572        20 890    
 Debt securities in issue                                            214         4 355           488         5 057    
 Liabilities under investment contracts                                -        30 585             -        30 585    
Total financial liabilities                                       12 363       118 892         3 010       134 265    
Non-financial assets                                                                                                  
Commodity                                                          2 051             -             -         2 051    
Investment properties                                                  -             -           231           231    
Non-recurring fair value measurements                                                                                 
Non-current assets held for sale(1)                                    -             -           190           190    
Non-current liabilities held for sale(1)                               -             -            48            48    

(1) Includes certain items classified in terms of the requirements of IFRS 5 which are measured 
    in terms of their respective standards.          

15.5 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                       Valuation                           Significant
asset/liability                   techniques applied                  observable inputs                         
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                                 
Derivatives
 Commodity derivatives            Discounted cash flow model          Spot price of physical or futures,
                                  and/or option pricing,                           
                                  futures pricing and/or              interest rates and/or volatility
                                  exchange traded fund                                   
                                  (ETF) models
 Credit derivatives               Discounted cash flow and/or         Interest rate, recovery rate,     
                                  credit default swap models          credit spread and/or quanto ratio
 Equity derivatives               Discounted cash flow, option        Spot price, interest rate, volatility
                                  pricing and/or futures              and/or dividend stream
                                  pricing models
 Foreign exchange derivatives     Discounted cash flow and/or         Spot price, interest rate and/or            
                                  option pricing models               volatility
 Interest rate derivatives        Discounted cash flow and/or         Interest rate curves, repurchase             
                                  option pricing models               agreement curves, money market 
                                                                      curves and/or volatility         
Money market assets               Discounted cash flow models         Money market curves and/or 
                                                                      interest rates             
Loans and advances to customers   Discounted cash flow models         Interest rate curves and/or 
                                                                      money market curves       
Investment securities and         Listed equity: market bid price     Underlying price of the market traded
investments linked to             Other items: discounted             instruments and/or interest
investment contracts              cash flow models                    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          Discounted cash flow models         Underlying price of the market
and other liabilities                                                 traded instrument and/or interest
                                                                      rate curves                           


15.6 Reconciliation of Level 3 assets and liabilities
A reconciliation of the opening balances to closing balances for all movements on Level 3 assets and
liabilities is set out below:
                                                                            30 June 2018
                                         Trading and
                                             hedging              Loans and   Loans and
                                           portfolio    Other   advances to    advances   Investment   Investment    Total assets    
                                              assets   assets     customers    to banks   securities   properties   at fair value    
                                                  Rm       Rm            Rm          Rm           Rm           Rm              Rm    
Opening balance at the beginning                                                                                   
of the reporting period                        1 824        2         4 741         484        7 601          231          14 883    
Net interest income                                -        -            32           -           40            -              72    
Other income                                       -        -             -           -            -            -               -    
Gains and losses from banking and                                                                                  
trading activities                               418        -           (59)          8          148            -             515    
Gains and losses from investment                                                                                   
activities                                         -        -             -           -           10            -              10    
Purchases                                        485        -         5 470          62        2 596          165           8 778    
Sales                                            (95)       -           (61)          -            -            -            (156)   
Movement in other comprehensive income             -        -             -           -           (9)           -              (9)   
Transfer in/(out) of Level 3                    (124)      (2)       (1 113)          -            -            -          (1 239)   
Step acquistion                                    -        -             -           -         (198)           -            (198)   
Level 3 FCTR                                       -        -             -           -            1           24              25    
Closing balance at the end                                                                                         
of the reporting period                        2 508        -         9 010         554       10 189          420          22 681    
                                                                                                                   
                                                                            30 June 2017
                                         Trading and                                                                                 
                                             hedging              Loans and   Loans and                                              
                                           portfolio    Other   advances to    advances   Investment   Investment    Total assets    
                                              assets   assets     customers    to banks   securities   properties   at fair value    
                                                  Rm       Rm            Rm          Rm           Rm           Rm              Rm
Opening balance at the beginning    
of the reporting period                        1 505        5         4 890         571        3 358          478          10 807    
Net interest income                                -        -            51           -           10            -              61    
Other income                                       -        -             -           -            -           (2)             (2)   
Gains and losses from banking                                                                                        
and trading activities                            (2)       -             -           -            -            -              (2)   
Gains and losses from                                                                                                
investment activities                              -        -             -         (51)          12            -             (39)   
Purchases                                        534        -           618           -        2 803           22           3 977    
Sales                                           (250)      (1)         (897)        (70)        (560)        (230)         (2 008)   
Transfer out of Level 3                            -        -             -           -          658            -             658    
Closing balance at the end 
of the reporting period                        1 787        4         4 662         450        6 281          268          13 452    
                                                                                                                 
                                                                                           
A reconciliation of the opening balances to closing balances for all movements on Level 3 assets 
is set out below (continued):
                                                                        31 December 2017
                                         Trading and
                                             hedging              Loans and   Loans and
                                           portfolio    Other   advances to    advances   Investment   Investment    Total assets    
                                              assets   assets     customers    to banks   securities   properties   at fair value    
                                                  Rm       Rm            Rm          Rm           Rm           Rm              Rm   
Opening balance at the beginning    
of the reporting period                        1 505        5         4 890         571        3 358          478          10 807    
Net interest income                                -        -            12           -           62            -              74    
Other income                                       -        -             -           -            -           12              12    
Gains and losses from banking                                                                                       
and trading activities                          (635)       -            29           -            -            -            (606)   
Gains and losses from                                                                                               
investment activities                              -        -             -           -            2            -               2    
Purchases                                      1 101        -         1 020          88        4 832            1           7 042    
Sales                                           (147)       -        (1 112)       (175)        (579)        (260)         (2 273)   
Movement in other                                                                                                   
comprehensive income                               -        -             -           -           29            -              29    
Settlements                                        -       (3)            -           -          (22)           -             (25)   
Transfer out of Level 3                            -        -           (98)          -          (81)           -            (179)   
Closing balance at the end 
of the reporting period                        1 824        2         4 741         484        7 601          231          14 883    
                                                                                                             
A reconciliation of the opening balances to closing balances for all movements on Level 3 liabilities 
is set out below:
                                                                    30 June 2018
                                              Trading and                                                               
                                   Deposits       hedging                                      Debt            Total    
                                       from     portfolio         Other   Deposits due   securities      liabilities    
                                      banks   liabilities   liabilities   to customers     in issue    at fair value    
                                         Rm            Rm            Rm             Rm           Rm               Rm    
Opening balance at the beginning                                                                      
of the reporting period                   -           945             5          1 572          488            3 010    
Gains and losses from banking                                                                         
and trading activities                    -          (202)            -              -            -             (202)   
Purchases                                 -             1            38              -            -               39    
Issues                                    -             -             -          4 352            -            4 352    
Settlements                               -            (1)            -         (1 618)           -           (1 619)   
Transfer in/(out) of Level 3              -          (121)            -         (1 491)        (453)          (2 065)   
Level 3 FCTR                              -             -             -              -            -                -    
Closing balance at the end of                                                                         
the reporting period                      -           622            43          2 815           35            3 515    

                                                                   30 June 2017
                                              Trading and                                            
                                   Deposits       hedging                                      Debt            Total    
                                       from     portfolio         Other   Deposits due   securities      liabilities    
                                      banks   liabilities   liabilities   to customers     in issue    at fair value    
                                         Rm            Rm            Rm             Rm           Rm               Rm    
Opening balance at the beginning                                                                     
of the reporting period                   -           308            41          1 139          604            2 092    
Gains and losses from banking                                                                        
and trading activities                    -           146             -              -            -              146    
Issues                                    -             -             -            295            -              295    
Settlements                               -             -           (41)          (540)        (120)            (701)   
Transfer in/(out) of Level 3              -             -             -             16            -               16    
Closing balance at the end of                                                                        
the reporting period                      -           454             -            910          484            1 848    
                                                                                                     
                                                                  31 December 2017
                                              Trading and                                                               
                                   Deposits       hedging                                      Debt            Total    
                                       from     portfolio         Other   Deposits due   securities      liabilities    
                                      banks   liabilities   liabilities   to customers     in issue    at fair value    
                                         Rm            Rm            Rm             Rm           Rm               Rm    
Opening balance at the beginning                                                                       
of the reporting period                   -           308            41          1 139          604            2 092    
Net interest income                       -             -             -              7            -                7    
Other income                              -             -             -              -            -                -    
Gains and losses from banking                                                                          
and trading activities                    -           585             -              -            -              585    
Gains and losses from investment                                                                       
activities                                -             -             -              -            -                -    
Purchases                                 -             -             -              -            -                -    
Sales                                     -             -             -              -            -                -    
Movement in other comprehensive                                                                        
income                                    -             -             -              -            -                -    
Issues                                    -            52             -          1 685           30            1 767    
Settlements                               -             -           (36)        (1 144)         (68)          (1 248)   
Transferred to/(from)                                                                                  
assets/liabilities                        -             -             -              -            -                -    
Transfer in/(out) of Level 3              -             -             -           (115)         (78)            (193)   
Closing balance at the end of the                                                                      
reporting period                          -           945             5          1 572          488            3 010    
                                                                                                                    

15.6.1 Significant transfers between levels
During the 2018 and 2017 reporting periods, transfers between levels occurred because of changes in the
observability of valuation inputs, in some instances owing to changes in the level of market activity. 
Transfers have been reflected as if they had taken place at the beginning of the year.

15.7 Unrealised gains and losses on Level 3 assets and liabilities
The total unrealised gains and losses for the reporting period on Level 3 positions held at the 
reporting date are set out below:

                                                            30 June 2018
                       Trading and                                                 Trading and                         
                           hedging     Loans and                                       hedging            Total    
                         portfolio   advances to      Investment    Total assets     portfolio   liabilities at    
                            assets     customers      securities   at fair value   liabilities       fair value    
                                Rm            Rm              Rm              Rm            Rm               Rm    
Gains and losses                                                                                
from banking and                                                                                
trading activities             848           581             304           1 738           622              622    
                                                                                                
                                                             30 June 2017
                       Trading and                                                 Trading and                     
                           hedging     Loans and                                       hedging            Total    
                         portfolio   advances to      Investment    Total assets     portfolio   liabilities at    
                            assets  customers(1)      securities   at fair value   liabilities       fair value    
                                Rm            Rm              Rm              Rm            Rm               Rm    
Gains and losses                                                                                
from banking and                                                                                
trading activities              65           771             287           1 123           136              136    
                                                                                                
                                                         31 December 2017
                       Trading and                                                 Trading and                    
                           hedging     Loans and                                       hedging           Total    
                         portfolio   advances to      Investment    Total assets     portfolio  liabilities at    
                            assets     customers   securities(2)   at fair value   liabilities      fair value    
                                Rm            Rm              Rm              Rm            Rm              Rm    
Gains and losses                                                                                
from banking and                                                                                
trading activities              67           761              88             916           284             284    
                     
(1) The unrealised gains and losses for loans and advances to customers for June 2017 have 
    been restated by R728m. The gains and losses from banking and trading activities on 
    loans and advances to customers has been restated to include the movement in the 
    unrealised gains relating to the base rates applicable to the assets. Previously 
    only unrealised gains relating to the unobservable credit spreads for these assets 
    were taken into account in the disclosure.
(2) The unrealised gains and losses for Investment Securities for June and December 2017 
    have been restated by R243m and R27.61m respectively. The gains and losses from banking 
    and trading activities on investment securities have been restated to include unrealised 
    gains on unlisted Private Equity investments. Previously only unrealised gains relating 
    to unobservable corporate bonds were taken into account in the disclosure.
                     
15.8 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 possible alternative valuations. The assets and 
liabilities that most impact this sensitivity analysis are those with the more illiquid and/or 
structured portfolios. The stresses are applied independently and do not take account of any 
cross correlation between separate asset classes that would reduce the overall effect on the 
valuations.

The following table reflects how the unobservable parameters were changed in order to evaluate 
the sensitivities of Level 3 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 discounts      15/(15)%                                              
Funding spreads                                  100/(100) bps                                         

A significant parameter has been deemed to be one which may result in a charge to profit or loss, 
or a change in the fair value asset or liability by more than 10% or the underlying value of the 
affected item. This is demonstrated by the following sensitivity  analysis which includes 
reasonable range of possible outcomes: 
                                                                                30 June 2018
                                                                    Potential effect     Potential effect
                                                                            recorded             recorded    
                                                                   in profit or loss   directly in equity    
                                                                         Favourable/          Favourable/
                         Significant                                  (unfavourable)       (unfavourable)    
                         unobservable parameters                                  Rm                   Rm    
Deposits due             Absa Group Limited (AGL)/    
to banks                 Absa funding spread                                     -/-                  -/-    

Deposits due to          
customers                AGL/Absa funding spread                             32/(29)                  -/-

Investment securities    Risk adjustment yield curves,    
and investments linked   future earnings and              
to investment contracts  marketability discount                             81/(127)            263/(254)    

Loans and advances       Credit spreads                                    133/(131)                  -/- 
to customers                                                            

Other assets             Volatility, credit spreads,                             -/-                  -/-    

Trading and hedging      Volatility, credit spreads,      
portfolio assets         basis curves, yield curves,      
                         repo curves, funding spreads                      338/(338)                  -/-    
                                                          
Trading and hedging      Volatility, credit spreads,      
portfolio liabilities    basis curves, yield curves,      
                         repo curves, funding spreads                        84/(84)                  -/-    
                                                          
Other liabilities        Volatility, credit spreads                              -/-                  -/-    
                                                                           668/(709)             263/(254)    

15.8 Sensitivity analysis of valuations using unobservable inputs
                                                                                30 June 2017   
                                                                    Potential effect     Potential effect    
                                                                            recorded             recorded    
                                                                   in profit or loss   directly in equity    
                                                                         Favourable/          Favourable/    
                         Significant                                  (unfavourable)       (unfavourable)    
                         unobservable parameters                                  Rm                   Rm
Deposits due             
to customers             AGL/Absa funding spread                                 -/-                  -/-

Investment securities    Risk adjustment yield curves, 
and investments linked   future earnings and marketability                   40/(62)            129/(125)    
to investment contracts  discount

Loans and advances       Credit spreads                                      90/(88)                  -/-
to customers                    

Other assets             Volatility, credit spreads                              -/-                  -/-    

Trading and hedging      Volatility, credit spreads,
portfolio assets         basis curves, yield curves, repo
                         curves, funding spreads                           153/(153)                  -/-    

Trading and hedging      Volatility, credit spreads, basis
portfolio liabilities    curves, yield curves, repo
                         curves, funding spreads                             39/(39)                  -/- 

Other liabilities        Volatility, credit spreads                              -/-                  -/-
                                                                           322/(342)            129/(125)   

                                                                               31 December 2017                
                                                                    Potential effect     Potential effect      
                                                                            recorded             recorded      
                                                                   in profit or loss   directly in equity      
                                                                         Favourable/          Favourable/      
                         Significant                                  (unfavourable)       (unfavourable)      
                         unobservable parameters                                  Rm                   Rm
Deposits due to banks    AGL/Absa funding spread                               17/17                  -/-    
Deposits due to 
customers                AGL/Absa funding spread                             13/(12)                  -/-    

Investment securities    Risk adjustment yield curves,
and investments linked   future earnings and
to investment contracts  marketability discount                              76/(76)            323/(306)    

Loans and advances 
to customers             Credit spreads                                      70/(69)                  -/-    

Other assets             Credit spreads                                          -/-                  -/-    

Trading and hedging      Volatility, credit spreads,
portfolio assets         basis curves, yield curves, 
                         repo curves, funding spreads                        33/(33)                  -/-    

Trading and hedging      Volatility, credit spreads,
portfolio liabilities    basis curves, yield curves, 
                         repo curves, funding spreads                        17/(17)                  -/-    

Other liabilities        Volatility, credit spreads                              -/-                  -/-    
                                                                            226/(224)            323/(306)    

15.9 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:

                                                                                         30 June                31 December
                                                                                 2018            2017                2017
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            0.04% to        (0.1%) to           0.3% to
to banks and             and/or dividend yield                                   1.97%           2.10%               2.3%
customers                models                                                                                     
                                                                                                                    
Investment securities    Discounted cash flow          Marketability             Discount rate   Discount rate       Discount rate
and investments linked   models, third-party           discounts and/or          of 7.75%        of 13%,             of 7% and 9%,
to investment contracts  valuations, earnings          comparator                to 8%           comparator          comparator
                         multiples and/or              multiples                                 multiples between   multiples between
                         income capitalisation                                                   5 and 10.5          5 and 10.5
                         valuations                                                                                               
                                                
Trading and hedging    
portfolio assets       
and liabilities        
Debt instruments         Discounted cash flow          Credit spreads            0.15% to 8.2%   0.07% to 27.5%      3% to 15%
                         models
Derivative assets      
 Credit                  Discounted cash flow          Credit spreads,           0.03% to 14%,   (0.3%) to 9%,       0.04% to 10%,
 derivatives(1)          and/or credit default         recovery rates and/or     15% to 76%,     15% to 76%,         15% to 76%,
                         swap (hazard rate)            quanto ratio              60% to 90%      54% to 90%          54% to 90%
                         models
                       
 Equity derivatives      Discounted cash flow,         Volatility and/or         14.3% to 41.9%  16.6% to 21%        15.09% to 64.67%
                         option pricing and/or         dividend streams
                         futures pricing models        (greater than 3 years)
 Foreign exchange        Discounted cash flow          African basis curves      3% to 45%       (12.2%) to 3.27%    (28%) to 29.5%
 derivatives             and/or option pricing models  (greater than 1 year)
 Interest rate           Discounted cash flow          Real yield curves         0.21% to 7.2%   0.1% to 8.33%       0.25% to 10.69%
 derivatives             and/or option pricing models  (greater than 1 year),
                                                       repurchase agreement 
                                                       curves (greater than 1 
                                                       year), funding spreads 
                                                          
Deposits due to          Discounted cash flow          Absa Group Limited's      1.3% to 1.9%    (0.1%) to 2.10%     0.2% to 1.9%
customers                models                        funding spreads(greater 
                                                       than 5 years) 
                       
Debt securities in       Discounted cash flow          Funding curves            1.3% to 1.9%    (0.1%) to 1.55%     0.2% to 1.9%
issue                    models                        (greater than 5 years)
                                                
Investment               Discounted cash flow          Estimates of periods in   1 to 6 years    1 to 10 years       1 to 6 years    
properties               models                        which rental units will
                                                       be disposed of
                                                       Annual selling price      0% to 6%       1% to 6%             0% to 6%              
                                                       escalations
                                                       Annual rental escalations n/a            1% to 7%             0% to 6%              
                                                       Expense ratios            n/a            25% to 50%           n/a             
                                                       Vacancy rates             n/a            1% to 7%             n/a             
                                                       Income capitalisation     7.5% to 8%     10% to 11%           7.75% to 8%     
                                                       rates                                                                                    
                                                       Risk adjusted discount    11% to 15%     14%                  11% to 15%      
                                                       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 5 years. However, if the items mature in less than 5 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.

(1) The range of estimates have been disaggregated to better reflect the individual assumptions used.

15.10 Unrecognised losses as a result of the use of valuation models using unobservable input
The amount that has yet to be recognised in the statement of comprehensive income that relates 
to the difference between the transaction price and the amount that would have arisen, had 
valuation models using unobservable inputs been used on initial recognition, less amounts 
subsequently recognised, is as follows:                                             
                                                                           30 June          31 December    
                                                                       2018       2017             2017    
                                                                         Rm         Rm               Rm    
                                                                                                           
Opening balance at the beginning of the reporting period               (134)      (139)            (139)   
New transactions                                                       (140)        17              (27)   
Amounts recognised in profit or loss during the reporting period         34        (18)              32    
Closing balance at the end of the reporting period                     (240)      (140)            (134)   

15.11 Third-party credit enhancements
There were no significant liabilities measured at fair value and issued with inseparable third-party credit
enhancements.

16. Reporting changes overview 
The financial reporting changes that have been applied in the current reporting period are as follows:
- The implementation of new IFRS:
  - IFRS 9 - The Group has applied IFRS 9 on a retrospective basis, with an adjustment to retained earnings
    and other reserves as at 1 January 2018. As permitted under IFRS 9, the Group has elected not to restate
    comparative periods.
  - IFRS 15 Revenue from Contracts with Customers (IFRS 15) - The Group has elected to adopt IFRS 15 using
    the cumulative effect method, under which the comparative information has not been restated. 

All other amendments to IFRS effective for the current reporting period have had no impact on the Group's
reported results(1);
- Changes in internal accounting policies:
  - A change in the valuation method applied to policyholder liabilities under the Group's life insurance
    contracts, and
  - The presentation of interest income and interest expense.

Comparative information has been restated to reflect the amendment to the Group's internal accounting
policies, and an adjustment has been recognised within retained earnings as at 1 January 2018 to reflect the 
impact of implementing new standards.

The table below summarises the total impact of the reporting changes on the Group's statement of changes in
equity.
                                                                    Capital and                                       Non-         
                                                                       reserves          Non-           Non-   controlling          
                                     Share                         attributable   controlling    controlling     interest-               
                                   capital                          to ordinary     interest-      interest-    additional                
                                 and share   Retained      Other         equity      ordinary     preference        Tier 1      Total      
                                   premium   earnings   reserves        holders        shares         shares       Capital     equity   
                                        Rm         Rm         Rm             Rm            Rm             Rm            Rm         Rm    
                                                                                                                                         
Balance reported as at                   
31 December 2016                     6 160     81 604      5 293         93 057         4 579          4 644             -    102 280
Restatement owing to change in                                                                                 
life insurance accounting policy         -        134          -            134             -              -             -        134    
Restated balance as at                   
31 December 2016                     6 160     81 738      5 293         93 191         4 579          4 644             -    102 414
Balance reported as at                  
31 December 2017                    12 164     91 882      4 370        108 416         4 500          4 644         1 500    119 060
Restatement owing to change in                                                                                 
life insurance accounting policy         -        198          -            198             -              -             -        198    
Restated balance as at 
31 December 2017                    12 164     92 080      4 370        108 614         4 500          4 644         1 500    119 258    
Impact of adopting IFRS 9                      (4 106)       (95)        (4 201)        ( 131)             -             -     (4 332)      
Impact of adopting IFRS 15               -        (44)         -            (44)            -              -             -        (44)        
Adjusted balance as at 
1 January 2018                      12 164     87 930      4 275        104 369         4 369          4 644         1 500    114 882      
                                                                                                                                        
(1) The amendments which are effective in the current reporting period relate to IAS 40 Investment
    Property, IAS 28 Investment in Associates and Joint Ventures, as well as IFRS 2 Share-based Payment 
    Transactions (IFRS 2). The changes to IFRS 2 were however early adopted by the Group in 2016. 
    A new IFRIC Interpretation, IFRIC 22 Foreign Currency Transactions and Advance Consideration is 
    effective in the current reporting period.

16.1 Initial adoption of IFRS 9 Financial Instruments
This summarised report is extracted from audited information with the full transitional report 
'Reporting changes' included from page 152 of Absa Group Limited's Interim Financial Results 
for the reporting period ending 30 June 2018. All information marked as audited in the Reporting 
Changes section has been audited by EY who expressed an unmodified opinion thereon in terms of  
ISA 805 - Special considerations - Audits of single financial statements and specific elements, 
accounts or items of financial statement. A copy of the auditor's report on the audited sections 
of the Reporting Changes section is available for inspection at the Group's registered office, 
together with a copy of the transitional disclosures that were audited.

16.1.1 Overview and highlights
16.1.1.1 The impact of IFRS 9 on the Group
IFRS 9 is effective from 1 January 2018 and introduces significant changes to three fundamental 
areas of the accounting for financial instruments, namely:
- The classification and measurement of financial instruments;
- The scope and calculation of credit losses, which has moved from an incurred loss, to an expected 
  credit loss (ECL) approach; and
- The hedge accounting model.

Whilst the adoption of a revised classification and measurement framework has had a less material impact on
the Group, application of the IFRS 9 ECL methodology has affected both the financial and regulatory capital
position, and can be reasonably expected to impact the net profit or loss of the Group going forward. 

In accordance with the transition options allowable under IFRS 9, the Group will continue to apply the hedge
accounting requirements set out in IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). The
Group employs a governed hedging programme to reduce margin volatility associated with structural balances (i.e.
rate insensitive liabilities as well as the endowment associated with equity). Operational complexity would
be introduced by adopting the revised IFRS 9 hedge accounting requirements ahead of the finalisation of the
International Accounting Standards Board's (IASB) Dynamic Risk Management project in respect of macro hedging.
The Group has accordingly elected not to adopt the revised IFRS 9 hedge requirements, but will adopt the revised
disclosures set out in the amendments to IFRS 7 Financial Instruments: Disclosures (IFRS 7), which include
those relating to hedge accounting.

16.1.1.2 The impact of adopting a revised classification and measurement framework for financial instruments
A portfolio of South African consumer price index (CPI) linked investment securities have been reclassified
from available-for-sale under IAS 39, to amortised cost. This aligns the portfolio's classification with the
Group's business model of holding the instruments to collect contractual cash flows. Other less significant
reclassifications of financial assets were also recorded, although these did not have any impact on equity 
(refer to 16.1.10.). The accounting for financial liabilities remains largely unchanged, except for financial
liabilities designated at fair value through profit or loss (FVTPL). Gains and losses on such financial 
liabilities are required to be presented in other comprehensive income (OCI), to the extent that they 
relate to changes in own credit risk. The Group early adopted this requirement in 2017, and recognised 
a debit of R147m in OCI.

16.1.1.3 The impact of adopting a revised ECL methodology
The adoption of IFRS 9 will impact the timing of credit loss recognition, by accelerating the recognition of
losses relative to IAS 39, and potentially creating increased volatility through the incorporation of forward
looking assumptions. Total write offs, debt collections, and the long-run actual credit losses incurred by
the Group should remain unchanged. The Group dedicates considerable resources to gaining a clear and accurate
understanding of credit risk across the business and to correctly reflect the value of the assets in accordance
with applicable accounting principles. The core processes remain the measurement of exposures and concentrations, 
performance monitoring and tracking of asset quality, and the write off of assets when the whole or part of a 
debt is irrecoverable.

The implementation of IFRS 9 has been a project of strategic importance to the Group. Over the past four
years, extensive work was performed to design, build and test new models, create the necessary infrastructure and
develop data management systems that were able to facilitate a successful parallel run in the second half of
2017, and deliver a high quality implementation on 1 January 2018. The Group has had the ability to test the
sensitivity of the ECL model and its sub-components to different macroeconomic scenarios, but has not been able
to back test the scenarios themselves. This is a natural concomitant of implementing an accounting standard
which requires the inclusion of point-in-time forward looking assumptions, and in respect of which, the
application of hindsight is expressly prohibited. 

16.1.1.4 Summary of the impact of IFRS 9 as at 1 January 2018
The disclosures set out within this section of the report serve to bridge the statement of financial
position of the Group as at 1 January 2018 between IAS 39 and IFRS 9. Information has been provided to 
facilitate an understanding of the key areas of difference, as well as the core drivers of ECL going 
forward. The Group highlights the role that unexpected changes in forward looking assumptions may play 
in driving earnings volatility, and that changes in stage distribution could have an impact on net interest 
income. Exposures within certain industry sectors or products are expected to be more sensitive to changes 
in macroeconomic conditions than others, which could mean that the overall response to changes in forward 
looking assumptions is driven by the relative composition of the loans and advances portfolios. 

The adoption of IFRS 9 has impacted the financial and regulatory capital position of the Group, as follows:
- An increase of R5 868m (27%) in the Group's ECL provisions (including interest in suspense), from 
  R21 899m as at 31 December 2017 to R27 767m as at 1 January 2018. Refer to 16.1.3.1. 
- A net decrease in retained earnings of R4 106m (after a taxation adjustment of R1 572m and a 
  non-controlling interest of R190m) together with a net decrease in other reserves of R95m which includes 
  the effects of reclassifying investment securities from available-for-sale to amortised cost. 
  Refer to 16.1.
- The Group remains strongly capitalised notwithstanding a R2 118m decrease in common equity tier 1 supply
  (CET1) and a 21bps decrease in the CET1 ratio. The decrease in the CET1 ratio is before the application of
  the transitional arrangement which recognises the impact over three years. This deferral reduces the impact 
  on the CET 1 ratio on the date of initial adoption to 5bps. Refer to 16.1.5.1.

16.1.1.5 Condensed consolidated statement of financial position for Absa Group Limited
The following table summarises the total impact of IFRS 9 on the statement of financial position as at 
1 January 2018

                                                                                 Impact of IFRS 9
                                                                      Classification
                                                        31 December              and     IFRS 9 ECL(2)     1 January
                                                               2017    measurement(1)                           2018            
                                                                 Rm                Rm               Rm            Rm              
Assets                                                                                                                      
Cash, cash balances and balances with central banks(3)       48 669                 -              (10)       48 659          
Investment securities                                       111 409              (195)              (2)      111 212         
Loans and advances to banks                                  55 426                 -              (67)       55 359          
Loans and advances to customers                             749 772               (20)          (5 034)      744 718         
Investments in associates and joint ventures(4)               1 235                 -              (73)        1 162           
Other assets(5)                                             199 468                55            1 149       200 672         
Total assets                                              1 165 979              (160)          (4 037)    1 161 782       
Liabilities                                                                                                                          
Trading portfolio liabilities                                64 047               (20)               -        64 027          
Provisions(6)                                                 3 041                 -              574         3 615           
Other liabilities(5)                                        979 831                 -             (419)      979 412         
Total liabilities                                         1 046 919               (20)             155     1 047 054       
Equity                                                                                                                                
Capital and reserves                                                                                                        
Attributable to equity holders:                                                                                             
Share capital                                                 1 666                 -                -         1 666           
Share premium                                                10 498                 -                -        10 498          
Retained earnings                                            91 882                 -           (4 106)       87 776          
Other reserves                                                4 370              (140)              45         4 275           
Ordinary equity holders                                     108 416              (140)          (4 061)      104 215         
Non-controlling interest - ordinary shares                    4 500                 -             (131)        4 369           
Non-controlling interest - preference shares                  4 644                 -                -         4 644           
Non-controlling interest - Additional Tier 1 capital          1 500                 -                -         1 500           
Total equity                                                119 060              (140)          (4 192)      114 728         
Total liabilities and equity                              1 165 979              (160)          (4 037)    1 161 782       
                                                                      
(1) Classification and measurement reclassifications relate to two portfolios:
    - Short-term commodity-linked instruments that had embedded derivatives which were previously bifurcated
      under IAS 39, have been mandatorily classified at FVPTL under IFRS 9; and 
    - A portfolio of CPI linked investment securities that have been reclassified from available-for-sale 
      to amortised cost.
(2) A further analysis of the ECL impact per segment has been disclosed in 16.1.3.1.
(3) Relates predominantly to a central bank within Rest of Africa
(4) Reflects the change in the Group's share of net assets from associates and joint ventures due to their
    adoption of IFRS 9. 
(5) Relates to the adjustments to deferred tax and current tax assets. 
(6) The increase in the carrying value of provisions relates to the expected credit losses recognised on 
    financial guarantee contracts, letters of credit and undrawn facilities (to the extent that it exceeds 
    the gross carrying amount of loans and advances to customers at an account level).
   
16.1.2 Key elements of the revised impairment model under IFRS 9
16.1.2.1 Introduction
IFRS 9 introduces an ECL impairment model that requires entities to recognise ECL based on a stage
allocation methodology, with such categorisation informing the level of provisioning required. The ECL allowance
calculated on stage 1 assets reflects the lifetime losses associated with events of default that are expected to
occur within 12 months of the reporting date (12 month ECL). Assets classified within stage 2 and stage 3 carry
an ECL allowance calculated based on the lifetime losses associated with defaults that are expected to occur
over the lifetime of the exposure (lifetime ECL). The assessment of whether an exposure should be transferred
from stage 1 to stage 2, is a relative measure, where the credit risk at the reporting date is compared to the
risk that existed at initial recognition. 

The stage allocation is required to be performed as follows: 
- Stage 1: Stage 1 assets comprise exposures that are performing in line with expectations at origination.
  Financial assets that are not purchased or originated with a credit impaired status are required to be
  classified on initial recognition within stage 1. 

- Stage 2: Exposures are required to be classified within stage 2 when a significant increase in credit risk has 
  been observed. The factors which trigger a reclassification from stage 1 to stage 2 have been defined so as to 
  meet the specific requirements of IFRS 9, and in order to align with the Group's credit risk management 
  practices. These are discussed further in 16.1. 2.2. Stage 2 assets are considered to be cured (i.e. 
  reclassified back into stage 1), when there is no longer evidence of a significant increase in credit 
  risk. The definition of high risk is from a credit management perspective central to controlling the 
  flow of exposures back to stage 1 and gives effect to any cure periods deemed necessary. 

- Stage 3: Credit exposures are classified within stage 3, when they are regarded as being credit impaired, which 
  aligns to the bank's regulatory definition of default. This definition is discussed further in 16.1.2.3. 
  Defaulted assets are considered cured once the original default trigger event no longer applies and both 
  internal and regulatory probation periods have been met. In the Retail portfolio, assets will move from 
  stage 3 to stage 2, but not directly from stage 3 to stage 1. In the Wholesale portfolio assets can move 
  from stage 3 directly to stage 1. Purchased or originated credit impaired lending facilities are classified 
  on origination within stage 3.

16.1.2.2 Definition of a significant increase in credit risk
The Group uses various quantitative, qualitative and back stop measures as indicators of a significant
increase in credit risk. The thresholds applied for each portfolio will be reviewed on a regular basis to ensure
they remain appropriate. Where evidence of a significant increase in credit risk is not yet available at an
individual instrument level, instruments that share similar risk characteristics are assessed on a collective
basis. 

Key drivers of a significant increase in credit risk include:  
- Where the weighted average probability of default (PD) for an individual exposure or group of exposures
  as at the reporting date evidences a material deterioration in credit quality, relative to that determined 
  on initial recognition; 
- Adverse changes in payment status, and where accounts are more than 30 days in arrears at reporting date.
  In certain portfolios a more conservative arrears rule is applied where this is found to be indicative of
  increased credit risk (e.g. 1 day in arrears);
- Accounts in the Retail portfolio which meet the portfolio's impairment high risk criteria; and
- The Group's watch list framework applied to the Wholesale portfolio, which is used to identify customers
  facing financial difficulties or where there are grounds for concern regarding their financial health.

16.1.2.3 Definition of credit impaired assets
Assets classified within stage 3 are considered to be credit impaired, which, as discussed in 16.1.2.1.
applies when an exposure is in default. 
Default within Wholesale and Retail is aligned with the regulatory definition, and therefore assets are
classified as defaulted when either:
- The Group considers that the obligor is unlikely to pay its credit obligations without recourse by the
  Group to actions such as realising security. Elements to be taken as indications of unlikeliness to pay 
  include the following:
  - The Group consents to a distressed restructuring / forbearance of the credit obligation where this is
    likely to result in a diminished financial obligation caused by the material forgiveness of principal, 
    interest or fees;
  - The customer is under debt review, business rescue or similar protection; or,
  - Advice is received of customer insolvency or death.
- The obligor is past due 90 days or more on any credit obligation to the Group.
  In addition, within the Retail portfolios:
- All forms of forbearance are treated as in default, regardless of whether the restructure has led to a
  diminished financial obligation or not; and
- The Group requires an exposure to reflect 12 consecutive months of performance, in order to be considered
  to have been cured from default. 

16.1.2.4 Impact of IFRS 9 on interest recognition
Interest income is calculated on stage 1 or stage 2 financial assets by applying the effective interest rate
(EIR) to the gross carrying amount of such assets. When exposures are identified as credit impaired (stage
3), or when they are purchased or originated within stage 3, IFRS 9 requires interest income to be calculated
based on the net carrying value, which is the gross carrying value after deducting the ECL allowance. 

In order to practically give effect to this requirement for stage 3 assets, the Group follows a two-step
approach. First, the Group ceases to recognise in profit or loss the contractual interest charged on credit
impaired assets (that is to say, contractual interest is suspended). Second, the Group multiplies the net carrying
value of the impaired exposure by its EIR and recognises only this amount of interest income within profit or
loss. Simply, this means that if during a reporting period, an exposure were classified within stage 3, lower
interest income would be recognised than if it had been classified within stage 1 or stage 2 over the same
period.  

Since an ECL allowance is calculated by discounting the future cash flows expected to be recovered by the
exposure's EIR, interest income recognised on stage 3 assets reflects the financial effect of unwinding the
discount embedded in the calculation. Application of this approach results in the Group being able to
appropriately reflect in profit or loss the financial effect of the "time value of money", which is embedded 
within the calculation of the ECL allowance.

In principle, the approach applied by the Group to recognise interest on stage 3 assets under IFRS 9, is not
dissimilar from the manner in which the Group calculated the interest on specifically impaired financial
assets under IAS 39. The key departure from IAS 39 is however that IFRS 9 requires the balance of interest in
suspense to be presented as part of both the gross carrying value of the exposure and the related ECL allowance.
Under IAS 39, such amount was excluded from both balances. Therefore, this constitutes a change to the
presentation of the gross carrying value and ECL allowance, although it has no impact on the net carrying value 
of the exposure. Had this revised presentation requirement been applied as at 31 December 2017, the Group would 
have recognised a larger gross carrying value, and larger impairment allowance of R3 025m (refer to 16.1.3.1. 
for more detail).

The Group believes that IFRS 9 is not explicit regarding the treatment of contractual interest in suspense
which is subsequently recovered. There is only a clear prescription with regards to the recovery of contractual
interest previously unrecognised on exposures originated credit impaired, where the standard requires such
interest to be recognised as a credit impairment gain instead of interest income. There is presently diversity
in interpretation of this matter and therefore the Group has elected to make an accounting policy choice in
this regard. The Group's accounting policy is to recognise contractual interest that is recovered, but which was
previously unrecognised within net interest income, and resulted in R292m being recognised within interest
income over the current reporting period. The Group believes that this policy promotes a fairer presentation of
ECL as well as net interest income, both of which the Group believes would otherwise be understated.


16.1.3 Reconciliation of the allowance for impairment under IAS 39 to the total ECL allowance under IFRS 9
16.1.3.1 Summary of ECL by segment and class of credit exposure
The following table sets out the transition of the impairment allowances applied to all credit exposures
from IAS 39 to IFRS 9, by asset class, and by segment

                                                       IAS 39 - 31 December 2017                                         IFRS 9 - 1 January 2018
                                                     Non-             Total                                                                    Total IFRS 9          IFRS 9          
                                 Performing    performing            IAS 39   Interest in      Total IAS 39                                       provision      transition          
                                  provision     portfolio   (excluding IIS)      suspense   (including IIS)    Stage 1   Stage 2   Stage 3  (including IIS)      adjustment          
                                         Rm            Rm                Rm            Rm                Rm         Rm        Rm        Rm               Rm              Rm          
Retail and Business                                                                                                                          
Banking South Africa                  3 997         9 671            13 668         2 313            15 981      2 408     3 492    14 378           20 278           4 297          
Retail Banking                        3 223         8 576            11 799         1 264            13 063      1 768     3 184    11 756           16 708           3 645          
Credit cards                            729         3 605             4 334            83             4 417        654     1 343     3 727            5 724           1 307          
Instalment credit agreements            698         1 117             1 815            94             1 909        539       610     1 431            2 580             671          
Loans to associates and                                                                                                                          
joint ventures                            -             -                 -             -                 -          2         -         -                2               2          
Mortgages                             1 124         2 073             3 197           828             4 025        212       366     4 426            5 004             979          
Other loans and advances                  -             -                 -             -                 -          8        18         8               34              34          
Overdrafts                               71           215               286            73               359         45       127       240              412              53          
Personal and term loans                 601         1 566             2 167           186             2 353        308       720     1 924            2 952             599          
Business Banking South Africa           774         1 095             1 869         1 049             2 918        640       308     2 622            3 570             652          
CIB South Africa                        559           832             1 391           123             1 514        482       384       955            1 821             307          
Rest of Africa Banking                  981         2 636             3 617           564             4 181      1 090       798     3 087            4 975             794          
WIMI                                     13           175               188            25               213         27         6       233              266              53          
Head Office, Treasury and other                                                                                                                  
operations in South Africa               10             -                10             -                10       (188)     (172)      (47)            (407)           (417)         
Loans and advances                       10             -                10             -                10          8        11         -               19               9          
Reclassification to provisions            -             -                 -             -                 -       (196)     (183)      (47)            (426)           (426)         
Loans and advances to customers       5 560        13 314            18 874         3 025            21 899      3 819     4 508    18 606           26 933           5 034          
Loans and advances to banks               -             -                 -             -                 -         40        27         -               67              67          
Total Loans and advances              5 560        13 314            18 874         3 025            21 899      3 859     4 535    18 606           27 000           5 101          
Investment securities                     -             -                 -             -                 -         65       118         -              183             183          
Cash, cash balances and                                                                                                                          
balances with central banks1              -             -                 -             -                 -          3         7         -               10              10          
Total ECL allowance: On-statement                                                                                                                
of financial position                 5 560        13 314            18 874         3 025            21 899      3 927     4 660    18 606           27 193           5 294          
Off-statement of financial                                                                                                                       
position exposures                                                                                                                                        
Undrawn committed facilities(2)           -             -                 -             -                 -        196       183        47              426             426          
Financial guarantees                      -             -                 -             -                 -         91        48         -              139             139          
Letters of credit                         -             -                 -             -                 -          9         -         -                9               9          
Total ECL allowance: Off-statement                                                                                                               
of financial position                     -             -                 -             -                 -        296       231        47              574             574          
Total ECL allowance                   5 560        13 314            18 874         3 025            21 899      4 223     4 891    18 653           27 767           5 868          

(1) Relates predominantly to a central bank within Rest of Africa.
(2) Relates to ECL on undrawn committee facilities to the extent that it exceeds the gross carrying 
    amount on loans and advances at an accounting level.

16.1.3 Reconciliation of the allowance for impairment under IAS 39 to the total ECL allowance under 
IFRS 9 (continued)
The measurement of the ECL allowance is required to reflect an unbiased probability-weighted range of
possible future outcomes, which are factored into the PD and LGD models, as well as applied in determining 
whether a significant increase in credit risk has occurred. The reconciliation has not separately presented 
the effects of macroeconomic scenarios, since these are considered to be inextricably linked to the stage 
allocations above.

Key drivers of the ECL allowance are as follows:
- Interest in suspense: The cumulative interest which was suspended, and therefore not presented as part 
  of the impairment allowance as at 31 December 2017 has been included in the opening impairment allowance, 
  with an equivalent increase in the gross carrying value of the financial assets. 
- Change in emergence period of stage 1 assets: The emergence period under IAS 39 was calculated as the 
  average time between when a loss event occurred and the impairment event was actually identified, and 
  was typically 12 months or less. 
- Significant increase in credit loss for stage 2 classification: Under IAS 39, stage 2 assets were 
  classified as performing exposures with an impairment allowance being recognised to reflect latent 
  risks, and calculated based on an appropriate emergence period. Under IFRS 9, lending exposures that 
  have experienced a significant increase in credit risk since origination are required to carry a 
  lifetime ECL allowance.
- Change in default definition: The definition of credit impaired is aligned with the regulatory definition 
  of default, which has resulted in a larger population of credit exposures being classified within stage 3 
  compared to the NPL population under IAS 39.  The key differences include the application of a 90-day 
  backstop, as well as a widening of the watch list categories included within stage 3, relative to those 
  that were specifically impaired under IAS 39. Further, all debt counselling and performing forbearance 
  accounts are included in stage 3, but were not previously classified as NPL. 
- Off-balance sheet exposures: The credit risk inherent in the undrawn component of lending facilities are 
  managed and monitored by the Group together with the drawn component as a single exposure. The exposure 
  at default (EAD) on the entire facility is therefore used to calculate the ECL on loans and advances. 
  As a result, the total ECL is recognised in the ECL allowance for the financial asset unless the total 
  ECL exceeds the gross carrying amount of the financial asset, in which case the ECL is recognised as 
  a provision on the face of the statement of financial position. 

The Group presents the ECL on financial guarantees and letters of credit as a provision on the statement
of financial position. 

The calculation of ECL on other assets: Cash reserves with central banks and investment securities are
included within the scope of IFRS 9 ECL and have contributed to the Group's total ECL allowance.
 
16.1.4.1 Summary of ECL coverage by segment and class of credit exposure
The following table provides an analysis of the total ECL allowance by market segment, and per stage 
distribution. For credit exposures disclosed on the statement of financial position, the gross carrying 
value of on-statement of financial position exposures includes only the amounts that were drawn, 
as at 1 January 2018, whilst the allowance for ECL includes expected losses on committed, undrawn 
lending facilities. To the extent that the ECL allowance exceeds the carrying value of the drawn 
exposure, a liability (provision) has been recognised in the statement of financial position. 
This Provision is adjusted for in Head office.
                                                             1 January 2018
                                                  Stage 1                                      Stage 2                
                                     Gross                                      Gross                                 
                                  carrying            ECL           ECL      carrying            ECL           ECL    
                                     value      Allowance      coverage         value      Allowance      coverage    
                                        Rm             Rm             %            Rm             Rm             %       
RBB South Africa                   390 374          2 408          0.62        34 888          3 492         10.01      
Retail Banking South Africa        336 635          1 768          0.53        27 980          3 184         11.38      
Credit cards                        29 329            654          2.23         4 392          1 343         30.58      
Instalment credit agreements        67 498            539          0.80         5 217            610         11.69      
Loans to associates and          
joint ventures                      23 037              2          0.01             -              -             -      
Mortgages                          193 979            212          0.11        14 461            366          2.53      
Other loans and advances             2 453              8          0.33           345             18          5.22      
Overdrafts                           4 360             45          1.03         1 024            127         12.40      
Personal and term loans             15 979            308          1.93         2 541            720         28.34      
Business Banking South Africa       53 739            640          1.19         6 908            308          4.46      
CIB South Africa(1)                183 184            482          0.26        35 232            384          1.09      
Rest of Africa Banking              65 662          1 090          1.66        10 732            798          7.44      
WIMI                                 4 658             27          0.58           229              6          2.62      
Head Office, Treasury and other  
operations in South Africa             187           (188)            -           769           (172)            -      
Loans and advances                     187              8          4.28           769             11          1.43      
Reclassification to provisions           -           (196)            -             -           (183)            -      
                                                                                                                        
Loans and advances to customers    644 065          3 819          0.59        81 850          4 508          5.51      
Loans and advances to banks(2)      53 360             40          0.07         2 065             27          1.31      
Total loans and advances           697 425          3 859          0.55        83 915          4 535          5.40

                                                               1 January 2018
                                                    Stage 3                                     Totals
                                      Gross                                       Gross                     
                                   carrying            ECL           ECL       carrying            ECL           ECL  
                                      value      Allowance      coverage          value      Allowance      coverage 
                                         Rm             Rm             %             Rm             Rm             %        
RBB South Africa                     37 612         14 378         38.23        462 874         20 278          4.38       
Retail Banking South Africa          31 942         11 756         36.80        396 557         16 708          4.21       
Credit cards                          5 918          3 727         62.98         39 639          5 724         14.44       
Instalment credit agreements          4 167          1 431         34.34         76 882          2 580          3.36       
Loans to associates and          
joint ventures                            -              -             -         23 037              2          0.01       
Mortgages                            18 213          4 426         24.30        226 653          5 004          2.21       
Other loans and advances                 11              8         72.73          2 809             34          1.21       
Overdrafts                              416            240         57.69          5 800            412          7.10       
Personal and term loans               3 217          1 924         59.81         21 737          2 952         13.58       
Business Banking South Africa         5 670          2 622         46.24         66 317          3 570          5.38       
CIB South Africa(1)                   2 143            955         44.56        220 559          1 821          0.83       
Rest of Africa Banking                5 650          3 087         54.64         82 044          4 975          6.06       
WIMI                                    330            233         70.61          5 217            266          5.10       
Head Office, Treasury and other  
operations in South Africa                -            (47)            -            956           (407)       (42.59)      
Loans and advances                        -              -             -            956             19          1.99       
Reclassification to provisions            -            (47)            -              -           (426)            -       
                                                                                                                           
Loans and advances to customers      45 735         18 606         40.68        771 650         26 933          3.49       
Loans and advances to banks(2)            -              -             -         55 425             67          0.12       
Total loans and advances             45 735         18 606         40.68        827 075         27 000          3.26 
                                                       
(1) Included in stage 1 gross carrying amount on loans and advances to customers is R26 808m (CIB South Africa)
    relating to financial instruments measured at fair value through profit or loss. The fair value measurement 
    for these instruments includes adjustments in respect of their credit quality.
(2) Included in stage 1 gross carrying amount on loans and advances to banks is R17 198m relating to financial 
    instruments measured at fair value through profit or loss. The fair value measurement for these instruments 
    includes adjustments in respect of their credit quality.  

16.1.5 The impact of IFRS 9 on regulatory capital
16.1.5.1 Adoption of IFRS 9 and its impact on the Group's regulatory capital
The Group has elected to utilise the transition period of three years for phasing in the regulatory capital
impact of IFRS 9, as afforded by paragraph 2.2 of Directive 5 of 2017 issued by the SARB. The key drivers of
such impact are explained in the next table:

                       31 December 2017                                                                                        1 January 2018
                                                                                            Release of                      
                                                                                                RWA on      Eligible        Fully                 
                                        Initial       Release      Deferred    Impact on          non-       general       loaded    Transitional 
IFRS (Including                     recognition         of EL           tax        other    performing    provisions      capital         capital 
Unappropriated profits)   (IAS 39)       of ECL     shortfall         (RWA)     reserves         loans      (Tier 2)     position        position    
Note                                 16.1.5.1.1    16.1.5.1.2    16.1.5.1.3   16.1.5.1.4    16.1.5.1.5    16.1.5.1.6                                 
Capital supply (Rm)                                                                                                                                
Common Equity Tier 1        99 321       (4 106)        2 083                        (95)                                  97 203          98 792    
Tier 1 capital             103 686       (4 106)        2 083                        (95)                                 101 568         103 156    
Total capital              118 899       (4 106)        2 083                        (95)                      1 269      118 050         118 687    
Risk weighted assets       736 892                                    3 221                     (7 421)                   732 692         735 842    
Capital ratios (%)1                                                                                                                                
Common Equity Tier 1          13.5         (0.6)          0.3          (0.1)        (0.0)          0.2                       13.3            13.4    
Tier 1                        14.1         (0.6)          0.3          (0.1)        (0.0)          0.1                       13.9            14.0    
Total capital                 16.1         (0.6)          0.3          (0.1)        (0.0)          0.1           0.2         16.1            16.1    
  Leverage                                                                                                                                           
Leverage exposure        1 311 893       (5 868)        2 083         1 622         (189)                               1 309 541       1 311 305    
Leverage ratio (%)             7.9         (0.2)          0.1                                                                 7.8             7.9    
                                                                                                                                                             
(1) The Group's IFRS capital ratios decreased as follows as a result of the adoption of IFRS 9:
    - CET 1 ratio decreased by 22 bps on a fully loaded basis and 5 bps after phase-in.
    - Tier 1 ratio decreased by 22 bps on a fully loaded basis and 5 bps after phase-in.
    - Total capital ratio decreased by 3 bps on a fully loaded basis and 1 bps after phase-in.

16.1.5.1.1 Increase in ECL provision under IFRS 9
The adoption of the revised IFRS 9 ECL model has reduced shareholders equity by R5 868m which is partially
offset by the recognition of a net tax credit within retained earnings of R1 572m. The tax credit includes
current and deferred tax.

16.1.5.1.2 Release of ECL shortfall to credit provisions
For reporting periods up to 31 December 2017, the calculation of capital took into account the regulatory
expected loss for performing assets, which was greater than the IAS 39 provision, thereby resulting in an
additional deduction against CET 1 to the extent of the shortfall in the accounting provision. Under IFRS 9, 
the accounting ECL allowance has increased resulting in the elimination of the shortfall. This is reflected 
in the above reconciliation as a reversal of the previous deduction and has the effect of partially reducing 
the negative impact of IFRS 9 ECL on regulatory capital.  

16.1.5.1.3 Recognition of a higher deferred tax asset balance
As discussed in point 16.1.5.1.1, the carrying value of the Group's deferred tax asset balance has
increased, driven by an increase in the ECL provision. The reclassification of investment securities, as 
discussed below in 16.1.5.1.4 resulted in a reversal of a deferred tax liability. The net effect has 
been an increase in risk weighted assets (RWA) of R3 221m, and accordingly, a decrease in the CET 1 ratio.

16.1.5.1.4 Impact on other reserves under IFRS 9
Other reserves decreased by R95m (net of deferred tax) primarily as a result of a reclassification from
available-for-sale to amortised cost of a small portfolio of South African CPI linked investments so as 
to reflect the Group's business model of holding the instruments to collect contractual cash flows. 

16.1.5.1.5 Release of RWA on non-performing loans 
The alignment of the definition of default for both accounting and regulatory purposes resulted in a
reduction of RWA of R7 421m due to specific provisions (stage 3) being raised for an increased population 
of exposures. The methodology applied in calculating default RWA's permits a bank to reduce the LGD of the 
defaulted exposure by the bank's estimate of expected loss, represented by the bank's specific accounting 
provision. 

16.1.5.1.6 Tier 2 eligible provisions
In respect of the Group's standardised portfolio, the IFRS 9 general provision (stage 1 and stage 2) is
added back to Tier 2 capital, subject to a limit of 1.25% of the standardised credit RWA. This has resulted 
in an increase in total capital of R1 269m.

16.1.5.1.7 Impact of IFRS 9 ECL on leverage ratio
Key drivers of change in the leverage ratio as a result of the adoption of IFRS 9 were a decrease in
leverage exposure and Tier 1 capital, mainly attributable to increased ECL provisions. This was however 
partly offset by the release of the EL shortfall.

16.1.6 Drivers of the impairment charge under IFRS 9
Consistent with IAS 39, loans are written off when there is no realistic probability of recovery and the
Group's write-off policy remains materially unchanged. IFRS 9 impacts the timing of loss recognition, but 
over time, the long run expected cash losses are driven by economic and commercial factors, independent from 
the accounting framework applied. 

Differences in the timing of recognition of an impairment charge under IFRS 9 versus IAS 39 are attributed
to, inter alia:
- significant increases in credit risk causing a transfer of assets to stage 2 assets;
- significant changes in forward-looking macroeconomic conditions leading to assets moving between 
  stages; and
- the size of new business growth. 

Significant increase in credit risk: Transfers of exposures to stage 2 are driven by significant 
deterioration in credit quality, although a large stage 2 balance does not necessarily mean that the exposures 
have a poor default grade. An important principle under IFRS 9 is that a significant increase in credit risk 
constitutes a measure of relative credit risk, requiring the absolute credit quality of an exposure on origination 
to be compared against the absolute credit quality at reporting date. Exposures classified within stage 2 may actually 
have a better credit quality than other assets which remain in stage 1. Further, owing to the Group's definition of 
credit impaired, and the inclusion of performing forbearance accounts within stage 3, a credit impaired exposure may 
have a better credit quality than an exposure in stage 2. Notwithstanding this principle, should the Group's stage 2 
population start growing, this could indicate that the credit quality across the portfolio on reporting date may be 
worse than management had initially anticipated. 

Changes in forward-looking assumptions: IFRS 9 requires forward-looking and historical information to be
used in order to determine whether a significant increase in credit risk has occurred, as well as to determine
the appropriate PDs and LGDs to be applied. Transfers between stages could be driven by a deteriorating or
improving macroeconomic environment, which could make the impairment charge more susceptible to volatility.

New business growth: One of the key changes under IFRS 9 is the recognition of ECL losses in respect of all
exposures on initial recognition, or on the date that the Group becomes irrevocably committed to providing a
lending facility. This means that growth in new business will strain profitability in the short to medium term,
although over time the realised economic returns should, all else being equal, remain unchanged from IAS 39. 

16.1.7 Impact of IFRS 9 on the Group's tax position 
The adoption of IFRS 9 has resulted in a change in the timing of the recognition of credit losses, but does
not impact the value of credit losses ultimately incurred. Accordingly, the long run tax effect of credit
losses and recoveries are unchanged by the implementation of a new accounting framework. The change in the 
timing of loss recognition is accounted for through the recognition of a deferred tax adjustment, calculated 
based on the statutory tax rate applicable.  

In South Africa, the value of the deferred tax asset (and corresponding impact on retained earnings and
other reserves) which was recognised on adoption of IFRS 9 was impacted by both a change in the accounting
recognition of losses, as well as a change in the tax legislation. In accordance with amended tax legislation 
issued by the South African Revenue Service in 2017, the deduction permitted in respect of doubtful debt 
balances has changed to 25% for stage 1 ECL, 40% for stage 2 ECL and 85% for stage 3 ECL. This is a change 
from the previous deductions under IAS 39, which were 25% of incurred but not reported losses, 80% for 
portfolio specific impairments and 100% for specific impairments. A higher deferred tax asset has therefore 
been driven by an increase in the ECL provision under IFRS 9, partially offset by a change in the South 
African tax treatment of pre-existing allowances.

16.1.8 Incorporation of forward-looking information in the IFRS 9 modelling
The Group's IFRS 9 impairment models consume macroeconomic information to enable the models to provide 
an output that is based on forward-looking information. The macroeconomic variables and forecast 
scenarios are sourced from one of the world's largest research companies, and are reviewed and approved 
in accordance with the Group's macroeconomic governance framework. This review includes the testing 
of forecast estimates, the appropriateness of variables and probability weightings, as well as the 
incorporation of these forecasts into the ECL allowance. 

The Group has adopted the use of three economic scenarios: a base scenario, a mild upside scenario, and a
mild downside scenario. IFRS 9 requires the inclusion of point-in-time forward looking assumptions, and in
respect of which the application of hindsight is prohibited. The scenarios presented below are therefore 
reflective of the Group's view of forecast economic conditions as at the date of initial adoption.

16.1.8.1 Base scenario
Global
Global expansion is expected to remain broad-based across sectors and synchronised in developed economies.
The outlook on emerging market growth remains solid on the back of better growth in developed economies and
rising commodity prices. Developed market central banks continue tightening their monetary policies at a gradual
pace in 2018 to 2020 but this is not expected to be disruptive to emerging markets. 

South Africa
The economy recovered from a weak growth at the start of 2017, on the back of growing agricultural output,
but the near-term outlook still remains moderate. GDP growth is forecast to marginally increase in 2018.
Positive political developments are observed, although the consumer remains in a defensive mindset, and household
spending remains relatively muted given tax increases. Beyond 2019, growth is supported by a stronger global and
domestic environment. South Africa's fiscal fortunes and potential ratings downgrade remain a concern over
the forecast period. Disappointing growth could result in low fiscal revenue that is expected to undershoot
budget targets. No further interest rate cuts over the forecast horizon are assumed.

Rest of Africa
Sub-Saharan Africa's economic recovery continues although the trajectory is not smooth across all
jurisdictions. Headwinds that could still derail growth in some markets include low fiscal buffers and 
political risks ahead of elections in key markets this year. Countries with weak fiscal positions continue 
to necessitate close monitoring. Economic growth is supported largely by a recovery in the agriculture 
sector, improved commodity output and prices, as well as more accommodative monetary policy stances.

16.1.8.2 Mild upside scenario: Stronger near-term growth 
Global
The global economy grows faster than expected, and is supported by fiscal stimulus in the United States
(US), and a quick negotiation of Britain's exit (Brexit) from the European Union (EU), which boosts global
business confidence.  Commodity prices rise sharply relative to the base scenario and the global financial 
markets improve. Globally, investor and consumer sentiment rises, due to the favourable financial environment.

South Africa
It is assumed there are no further rating downgrades. Policy and political stability boosts business
confidence and private sector fixed investment. We assumed a strong rand compared to the base scenario 
that is driven by the sovereign rating being unchanged and the positive global sentiment toward emerging 
markets. Inflation moves lower on the back of the stronger rand and continued moderation in food price 
inflation. Falling inflation and diminished risk at a domestic level gives the South African Reserve 
Bank room to provide stimulus to the economy by cutting interest rates to support the economy. The 
cumulative interest rate cuts, higher commodity prices and stronger global growth boost South Africa's 
GDP growth. 

Rest of Africa
A stronger global economy and higher commodity prices help support growth in African commodity exports and
fixed investments. The level of output remains above the baseline scenario. Inflation moves lower as currencies
appreciate on the back of capital flows and higher commodity prices supporting exports. Easing inflation
allows central banks to lower interest rates, supporting the African economic growth further. 

16.1.8.3.  Mild downside scenario: Moderate recession 
Global
The US economy slows relative to baseline due to delays in implementing the stimulus package promised before
the elections. Business and consumer confidence falls in the US, followed by stock market indices. It is
assumed Brexit negotiations take longer than expected, increasing uncertainty on financial markets, weighing on
business and consumer confidence. As a result, eurozone growth slows compared to baseline, contributing to
economic and financial stress faced by some of the heavily indebted countries in the region. Furthermore, slower
growth in key markets affects China's exports and result in its GDP growth slowing. Commodity prices fall on the
back of weaker global growth.

South Africa
South Africa goes into recession on the back of weaker global growth environment and falling commodity
prices. As a result, government revenue comes under pressure and the finances of state-owned enterprises
deteriorate. Ratings agencies downgrade South Africa's sovereign rating further, resulting in capital outflow 
and rand weakness. The weakening of the rand drives inflation above the SARB's 3% to 6% target range in 2018 
to 2019, resulting in the SARB hiking the repurchase rate. The yield curve moves higher in line with the 
selling of South African bonds and higher short-term rates. Economic performance recovers slowly from 2020 
as the weaker exchange rate builds some export competitiveness aiding in arresting some of the rand's 
decline, and spending power returns slowly to consumers as inflation abates in the middle of 2020.

Rest of Africa
In Sub-Saharan Africa some economies go into recession on the back of lower global growth and commodity
prices. Fiscal positions deteriorate further and political risks increase in some markets. Capital outflows and
falling exports drive currencies weaker, pushing inflation higher. Central banks intervene by hiking interest
rates to help stem the flight of capital and protect currencies.

16.1.9. Critical judgements applied in implementing the new IFRS 9 ECL framework
16.1.9.1 Determination of the lifetime of a credit exposure
The determination of initial recognition and asset duration (lifetime) are critical judgements in
determining quantum of lifetime losses that apply. The date of initial recognition reflects the date that 
a transaction (or account) was first recognised on the statement of financial position. The PD recorded at 
this time provides the baseline used for subsequent determination of a significant increase in credit risk.  

When determining the period over which the entity is expected to be exposed to credit risk, but for which
the ECL would not be mitigated by the entity's normal credit risk management actions, the Group considers
factors such as historical information and experience about:
- the period over which the entity was exposed to credit risk on similar financial instruments;
- the length of time for related defaults to occur on similar financial instruments following a significant
  increase in credit risk; and 
- the credit risk management actions that an entity expects to take once the credit risk on the financial
  instrument has increased, such as the reduction or removal of undrawn limits.

For asset duration, the approaches which are applied (in line with IFRS 9 requirements) are:
- Term lending: the contractual maturity date, reduced for behavioural trends where appropriate (such as
  expected settlement and amortisation); and
- Revolving facilities: for Retail portfolios, asset duration is based on behavioural life and this is
  normally greater than contractual life. For Wholesale portfolios, a sufficiently long period to cover 
  expected life modelled and an attrition rate is applied to cater for early settlement.

16.1.9.2  General IFRS 9 ECL model parameters
The calculation of ECL incorporates the probability that a credit loss will occur, as well as the probability 
that no credit loss occurs, even if the most likely outcome is no credit loss. The estimate reflects an 
unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes. 
In some cases, relatively simple modelling is considered to be sufficient, without the need to consider 
the outcome under different scenarios. For example, the average credit losses of a large group of financial 
instruments with shared risk characteristics may be a reasonable estimate of the probability-weighted 
amount. In other situations, the identification of scenarios that specify the amount and timing of the 
cash flows for particular outcomes and the estimated probability of those outcomes will be needed. 

The IFRS 9 models make use of three parameters, namely PD, LGD and EAD in the calculation of the ECL
allowance. 

The PD is the likelihood of default assessed on the prevailing economic conditions at the reporting date
(that is, at a point in time), adjusted to take into account estimates of future economic conditions that 
are likely to impact the risk of default; it will not equate to a long run average. For IFRS 9 purposes, 
two distinct PD estimates are required:
- Lifetime PD: the likelihood of accounts entering default during the remaining life of the asset.
- 12 month PD: the likelihood of accounts entering default within 12 months of the reporting date.

The general approach for the IFRS 9 LGD models has been to leverage the Basel LGD models with bespoke IFRS 9
adjustments to ensure unbiased estimates. 

In calculating LGD, losses are discounted to the reporting date using the EIR determined at initial
recognition or an approximation thereof. For debt instruments, such as loans and advances, the discount rate 
applied is the EIR calculated on origination or acquisition date. For financial guarantee contracts or loan 
commitments for which the EIR cannot be determined, losses are discounted using a rate that reflects the 
current market assessment of the time value of money and the risks that are specific to the cash flows 
(to the extent that such risks have not already been taken into account by adjusting the cash shortfalls).
 
The EAD model estimates the exposure that an account is likely to have at any point of default in future.
This incorporates both the amortising profile of a term loan, as well as behavioural patterns such as the
propensity of the client to draw down on unutilised facilities in the lead up to a default event. 

Expert credit judgement may, in certain instances, be applied to account for situations where known or
expected risk factors have not been considered in the ECL assessment or modelling process, or where uncertain
future events have not been incorporated into the modelled approach. Adjustments are intended to be short-term
measures and will not be used to incorporate any continuous risk factors. The Group has a robust policy framework
which is applied in the estimation and approval of management adjustments. 

Models are validated with the same rigour applied to regulatory models. Testing procedures assess the
quality of data, conceptual soundness and performance of models, model implementation and compliance with 
accounting requirements.

16.1.9.3 Interaction of the IFRS 9 ECL models with the Basel Framework
The Group applies both the standardised (TSA) and advanced internal ratings-based (AIRB) approaches to
calculate its regulatory capital requirements relating to credit risk. While the Group's operations across 
the rest of Africa as well as the Edcon portfolio are subject to the TSA approach, the remaining portfolios are
subject to the AIRB approach, which applies the Group's own measures of PD, EAD and LGD. In designing IFRS 9
compliant ECL models, the Group recognised that it could leverage the data used by the regulatory models to model
IFRS 9 ECL and encourage easier reconciliation of inputs for capital requirement and impairment calculations. 
Existing Basel models were used as a starting point to develop IFRS 9 ECL parameters. The following are key
differences to the regulatory capital parameters:

Key risk parameter             Basel III                             IFRS 9
Probability of default (PD)    Average of default within the         For stage 1 assets, the PD is measured
                               next 12 months, but calculated        for the next 12 months, whilst in the
                               based on the long-run historical      case of stage 2 and stage 3 assets,
                               average over the whole economic       PD is measured over the remaining
                               cycle (that is, through the cycle).   life of the financial instrument.
                                                                     The PD should reflect the current and 
                                                                     future economic cycles to the extent 
                                                                     relevant to the remaining life of the 
                                                                     loan calculated at a point in time, 
                                                                     as at the reporting date. 
Loss given default (LGD)       LGD is a downturn-based metric,       A current or forward-looking LGD is              
                               representing a prudent view of        used to reflect the impact of economic     
                               recovery in adverse economic          scenarios, with no bias to adverse
                               conditions.                           economic conditions.                                                  
                               The LGD calculation incorporates      Collection costs incorporated into the
                               both direct and indirect              LGD calculation include only those
                               costs associated with the             that are directly attributable to
                               collection of the exposure.           the collection of recoveries.
                               Cash flows are discounted at the      The discount rate applied is the
                               risk-free rate plus an appropriate    EIR on the exposure. 
                               premium.
Exposure at default (EAD)      A downturn EAD is calculated to       The calculation of EAD considers all the
                               reflect what would be expected        contractual terms over the lifetime of
                               during a period of economic           the instrument.
                               downturn.

16.1.9.4 Retail ECL model parameters 
The Retail PD model consists of three elements, namely:
- a term structure, capturing typical default behaviour by the months since observation;
- a behavioural model which incorporates client level risk characteristics; and
- a macroeconomic model that incorporates forward-looking macroeconomic scenarios.

A further adjustment is made to incorporate an account's propensity to attrite. The PD model is used to
identify accounts that have increased significantly in credit risk since origination. The final PD is a
probability weighted average of the Group's three forecasted macroeconomic scenarios.

The LGD model estimates the loss that can be expected if an account defaults. The regulatory LGD model is
adjusted for:
- forward-looking macroeconomic adjustments; and
- future expected changes in collateral and EAD. 

The LGD model further incorporates the losses associated with re-defaults for lifetime losses.

16.1.9.5 Wholesale ECL model parameters 
Wholesale PDs and LGDs are modelled using the parameters from regulatory models as starting point.
Parameters are adjusted for differences between requirements under Basel III and IFRS 9. 
The main adjustments to PD comprise:
- a macroeconomic adjustment that changes the paradigm from a long-run average default rate to a PD that
  reflects the prevailing macroeconomic conditions, thereby adjusting the PD from a seven year historical 
  average to a PD reflective of the macroeconomic environment at the reporting date; and
- an adjustment to the regulatory PD to convert it from a PD over 12 months, to a PD over the lifetime of
  an exposure, to be able to assess significant increases in credit risk and estimate lifetime provisions 
  for stage 2. 

The main adjustments to LGD comprise a macroeconomic adjustment that changes the long-run LGD to reflect a
given macroeconomic scenario.  Lifetime projections of LGD take into account the expected balance outstanding
on a loan at the time of default, as well as the value of associated collateral at that point in time. 

16.1.10. The key elements of classification and measurement requirements under IFRS 9
IFRS 9 will require financial assets to be classified on the basis of two criteria:
- The business model within which financial assets are managed; and
- Their contractual cash flow characteristics, and specifically whether the cash flows represent Solely
  Payments of Principal and Interest (SPPI).

Financial assets will be measured at amortised cost if they are held within a business model whose objective
is to hold financial assets to collect contractual cash flows, and their contractual cash flows meet the SPPI
requirements.

Financial assets will be measured at FVOCI if they are held within a business model whose objective is
achieved by both collecting contractual cash flows as well as selling financial assets and their contractual 
cash flows meet the SPPI requirements.

Other financial assets are required to be measured at FVPL if they are held for the purposes of trading, if
their contractual cash flows do not meet the SPPI criterion, or if they are managed on a fair value basis and
the Group maximises cash flows through sale. IFRS 9 allows an entity to irrevocably designate a financial
asset as at FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency 
(i.e. an accounting mismatch).

An entity is permitted to make an irrevocable election for non-traded equity investments to be measured at
FVOCI, in which case dividends are recognised in profit or loss, but other gains or losses remain in equity 
and are not reclassified to profit or loss upon derecognition.

The accounting for financial liabilities remains largely unchanged, except for financial liabilities
designated at FVPTL. Gains and losses on such financial liabilities are required to be presented in OCI, to the
extent that they relate to changes in own credit risk. The Group early adopted this requirement in 2017.

Classification and measurement impact
The following table presents the changes in the classification of financial assets as at 1 January 2018, by
showing the changes in the carrying amounts on the basis of their measurement categories in accordance with
IAS 39 and the changes in the net carrying amounts, which includes the effects of ECL:

                                         IAS 39                                                                   IFRS 9                          
                            Measurement                Carrying    Reclassi-   Remeasure-    Measurement                         Carrying    
                            category                      amount    fication         ment    category                              amount    
Assets                                                        Rm          Rm           Rm                                              Rm    
Cash, cash balances         Designated at FVTPL            4 808      (4 808)           -    Designated at FVTPL                        -    
and balances with                                              -        4808            -    Mandatorily at FVTPL                    4808    
central banks               AFS - designated                 952           -            -    FVOCI - debt instruments                 952    
                            Amortised cost -                                  
                            designated                    42 909           -          (10)   Held at amortised cost                42 899    
                                                          48 669           -          (10)                                         48 659    
Investment securities       Designated at FVTPL           26 335     (14 972)           -    Designated at FVTPL                   11 363    
                                                               -      14 972            -    Mandatorily at FVTPL                  14 972    
                            AFS - designated              64 657      (7 593)           -    FVOCI - debt instruments              57 064    
                                                               -         752            -    FVOCI - equity instruments               752    
                            AFS - hedged items            20 417           -            -    FVOCI - hedged items                  20 417    
                                                               -       6 646           (2)   Amortised cost - debt instruments      6 644    
                                                         111 409        (195)          (2)                                        111 212    
Loans and advances          Designated at FVTPL           17 198     (15 747)           -    Designated at FVTPL                    1 451    
to banks                                                              15 747                 Mandatorily at FVTPL                  15 747    
                            Amortised cost                                    
                            - designated                  38 228           -          (67)   Amortised cost - debt instruments     38 161    
                                                          55 426           -          (67)                                         55 359    
Trading portfolio assets    FVTPL - held for                                  
                            trading                      130 132           -            -    Mandatorily at FVTPL                 130 132    
Hedging portfolio assets    FVTPL - hedging                                   
                            instrument                     2 673           -            -    FVTPL - hedging Instrument             2 673    
Other assets                Designated at FVTPL                4          (4)           -    Designated at FVTPL                        -    
                                                               -           4            -    Mandatorily at FVTPL                       4    
                            Amortised cost                                    
                            - designated                  17 486           -            -    Amortised cost - designated           17 486    
                                                          17 490           -            -                                          17 490    
Loans and advances          Designated at FVTPL           26 811     (19 378)           -    Designated at FVTPL                    7 433    
to customers                                                          19 358            -    Mandatory at FVTPL                    19 358    
                            Amortised cost                                    
                            - designated                 722 915           -        (5034)   Amortised cost - designated          717 881    
                            Amortised cost -                                  
                            hedged items                      46           -            -    Amortised cost - hedged items             46    
                                                         749 772         (20)      (5 034)                                        744 718    
Investments linked to       Designated at FVTPL           18 877     (18 877)           -    Designated at FVTPL                        -    
investment contracts                                           -      18 877            -    Mandatory at FVTPL                    18 877    
                            FVTPL - held for                                  
                            trading                           59           -            -    FVTPL - held for Trading                  59    
                                                          18 936           -            -                                          18 936    
Non-current asset           Amortised cost                                    
held for sale               - designated                   1 118           -            -    Amortised cost - designated            1 118
Assets outside the                                        30 354          55        1 076    Assets outside the scope of IFRS 9    31 485    
scope of IFRS 9                                                                                                                              
Total assets                                           1 165 979       ( 160)      (4 037)                                      1 161 782    

Adoption of the new classification and measurement rules will require a limited number of reclassifications
to be effected as at 1 January 2018, but will not require a significant adjustment to the gross carrying
values of the Group's financial assets and financial liabilities. Initial application of the new requirements
resulted in a decrease in reserves of R140m (after tax) as at 1 January 2018. Explanations of the reclassifications
that will be required are provided below:
- A portfolio of consumer price index (CPI) linked investment securities within Treasury, have been
  reclassified from available-for-sale under IAS 39, to amortised cost in terms of the Group's business model of
  holding the instruments to collect contractual cash flows. Had these assets not been reclassified to amortised, 
  the fair value of the instruments would have been R5 619m, and a fair value loss of R74m would have been
  recognised in OCI during the reporting period. 
- Certain financial assets, including loans and advances in CIB and investments in WIMI were designated at
  FVTPL under IAS 39 as they were managed on a fair value basis. In terms of IFRS 9, these assets are now
  required to be measured at FVTPL, and noted as mandatory designations. 
- Debt securities are held by Treasury in a separate portfolio to meet everyday liquidity needs. These were
  classified as available-for-sale under IAS 39. Treasury seeks to minimise the cost of managing liquidity
  needs and therefore actively manages the return on the portfolio. The return consists of collecting contractual
  cash flows as well as gains and losses from the sale of financial assets. The business model may result in sales
  activity and these instruments have therefore been classified at FVOCI under IFRS 9. 
- In a particular jurisdiction within Rest of Africa, a small portfolio of debt securities held by Treasury
  have been reclassified from available-for-sale to amortised cost as there is limited evidence of an ability
  to sell these securities, and the portfolio is therefore aligned to a business model with the objective of
  collecting contractual cash flows.
- Commodity-linked debt instruments within CIB were previously bifurcated and separately recognised as a
  loan at amortised cost and a derivative. These are now classified as FVTPL as their cash flows do not consist 
  of SPPI.
- Debt securities held by insurance entities within the rest of Africa have been reclassified from available-
  for-sale to amortised cost. The objective of the portfolio is to collect contractual cash flows as the 
  securities are neither held within a portfolio whose business model is to manage the securities and 
  evaluate their performance on a fair value basis, nor is it possible to evidence an adequate frequency 
  and volume of sales.

In October 2017, the IASB issued an amendment to IFRS 9 Prepayment Features with Negative Compensation.
Under the current IFRS 9 requirements, the SPPI condition is not met if the lender has to make a settlement
payment in the event of termination by the borrower (also referred to as early repayment gain). The amendment
clarifies how a company would classify and measure a debt instrument if the borrower is permitted to prepay the
instrument at an amount less than the unpaid principal and interest owed. Under the amendments, the sign of the
prepayment amount is not relevant. The calculation of this compensation payment must be the same for both the
case of an early repayment penalty and the case of an early repayment gain. This amendment is effective on 1
January 2019 and is not expected to have a significant impact on the Group.

16.1.11 Governance
16.1.11.1 Implementation of IFRS 9   
The implementation of IFRS 9 has been completed through a jointly accountable risk and finance governance
programme, with representation from all impacted departments. A parallel run of IFRS 9 and IAS 39 was initiated
in February 2017, providing oversight for both IAS 39 and IFRS 9 impairment results. This included model,
process and output validation, testing, calibration and analysis. During the course of the programme there have
been regular updates provided to the Group Audit Compliance Committee (GACC), who have approved key judgements
and decisions.

16.1.11.2 Ongoing governance of IFRS 9    
The Group's basic risk management framework has not been altered due to the introduction of IFRS 9. The
Group Credit Impairment Committee (GCIC) remains the key management committee responsible for the governance of
impairments as well as the oversight of the Group's impairment position. The overall credit risk appetite also
remains unchanged with all the controls in place in the business for the extension and subsequent monitoring of
credit exposure. It has, however, been necessary to develop new processes and related controls to support the
calculation of the Group's ECL. In particular, new governance processes have been established to review and
approve the forward-looking macroeconomic assumptions.

16.2. Adoption of IFRS 15 Revenue from contracts with customers (IFRS 15)
IFRS 15 is effective from 1 January 2018, and replaces the previous revenue recognition standards and
interpretations, including IAS 18 Revenue and IFRIC 13 Customer Loyalty Programmes. IFRS 15 establishes 
a single approach for the recognition and measurement of revenue, and requires an entity to recognise revenue 
as performance obligations are satisfied. It applies to all contracts with customers except for transactions 
specifically scoped out, which includes interest, dividends, leases, and insurance contracts. The adoption 
of IFRS 15 has resulted in a change in the accounting treatment of a loyalty programme which resulted in 
a reduction in retained earnings of R44m, net of tax.

16.3 Accounting policy amendments
16.3.1 The accounting treatment of policyholder liabilities under life insurance contracts
During the current reporting period, the Group amended its accounting policy with respect to the measurement
of policyholder liabilities, and specifically, with regards to the calculation of discretionary margins held
within policyholder reserves. This change impacts life insurance products where the present value of expected
benefit payments, plus the future expected administration expenses under a life insurance contract, is lower
than the expected discounted value of the contractual premiums to be received. Prior to the change, the Group's
policy was to eliminate all negative liabilities. The policy has been changed to allow for discretion to be
applied in full or partial elimination of negative liabilities in order to more appropriately provide for
prudent reserving and release of profits. This policy change will address scenarios where a loss is recognised 
in a reporting period solely as a consequence of incurring initial acquisition costs despite the contract being
expected to be profitable over its duration. In accordance with the revised policy, negative liabilities will
still be eliminated, to avoid the premature recognition of profits; however, such elimination is only applied to
the excess remaining after adjusting for the product's initial acquisition costs. The change in accounting
policy has been applied retrospectively to the extent practicable, and comparatives restated accordingly.

The effects of the retrospective application are not determinable prior to 2014 and the change in accounting
policy has been applied from the start of the 2014 financial year.

The impact of this change on the Group's condensed statement of financial position as at 31 December 2017 is
set out in the following table:
                                                      As previously             Restated                   
                                                           reported     Change in          
                                                        31 December    accounting      31 December
                                                               2017        policy             2017    
                                                                 Rm            Rm               Rm    
Assets                                                                                                
Total assets                                              1 165 979             -        1 165 979    
Liabilities                                                                                           
Policyholder liabilities under insurance contracts            4 617          (275)           4 342    
Deferred tax liabilities                                        557            77              634    
Other liabilities                                         1 041 745             -        1 041 745    
Liabilities                                               1 046 919          (198)       1 046 721    
Equity                                                                                                
Capital and reserves                                                                                  
Attributable to ordinary equity holders:                                                              
Share capital                                                 1 666             -            1 666    
Share premium                                                10 498             -           10 498    
Retained earnings                                            91 882           198           92 080    
Other reserves                                                4 370             -            4 370    
Ordinary equity holders                                     108 416           198          108 614    
Non-controlling interest - ordinary shares                    4 500             -            4 500    
Non-controlling interest - preference shares                  4 644             -            4 644    
Non-controlling interest - Additional Tier 1 capital          1 500             -            1 500    
Total equity                                                119 060           198          119 258    
Total liabilities and equity                              1 165 979             -        1 165 979       

The impact of this change on the Group's condensed statement of financial position as at 
31 December 2016 is set out in the following table:
                                                      As previously             Restated              
                                                           reported     Change in              
                                                        31 December    accounting      31 December    
                                                               2016        policy             2016    
                                                                 Rm            Rm               Rm    
Assets                                                                                                
Total assets                                              1 101 023             -        1 101 023    
Liabilities                                                                                           
Policyholder liabilities under insurance contracts            4 469          (186)           4 283    
Deferred tax liabilities                                      1 185            52            1 237    
Other liabilities                                           993 089             -          993 089    
Liabilities                                                 998 743          (134)         998 609    
Equity                                                                                                
Capital and reserves                                                                                  
Attributable to ordinary equity holders:                                                              
Share capital                                                 1 693             -            1 693    
Share premium                                                 4 467             -            4 467    
Retained earnings                                            81 604           134           81 738    
Other reserves                                                5 293             -            5 293    
Ordinary equity holders                                      93 057           134           93 191    
Non-controlling interest - ordinary shares                    4 579             -            4 579    
Non-controlling interest - Additional Tier 1 capital          4 644             -            4 644    
Total equity                                                102 280           134          102 414    
Total liabilities and equity                              1 101 023             -        1 101 023    


The impact of the change on the Group's condensed statement of comprehensive income for the 
reporting period ended 31 December 2017 is disclosed in the following table:

                                                      As previously             Restated              
                                                           reported     Change in              
                                                        31 December    accounting      31 December    
                                                               2017        policy             2017    
                                                                 Rm            Rm               Rm    
Net interest income                                          42 644             -           42 644    
Non-interest income                                          30 661            90           30 751    
Changes in investment and insurance                                     
contract liabilities                                         (2 113)           90           (2 023)   
Other non-interest income                                    32 774             -           32 774    
                                                                                                      
Operating income before operating expenses                   73 305            90           73 395    
Operating expenses                                          (52 596)            -          (52 596)   
Share of post-tax results of associates                                 
and joint ventures                                              170             -              170    
Operating profit before income tax                           20 879            90           20 969    
Taxation expense                                             (5 857)          (25)          (5 882)   
Profit for the reporting period                              15 022            65           15 087    
Ordinary equity holders                                      13 823            65           13 888    
Non-controlling interest                                      1 199             -            1 199    
                                                             15 022            65           15 087        
                                                
16.3.2 The presentation of net interest income
As a consequence of IFRS 9, an amendment was made to IAS 1 Presentation of Financial Statements, 
which is effective from 1 January 2018. The amendment requires interest revenue, which is calculated 
using the effective interest method, to be presented separately on the face of the statement of 
comprehensive income. This only includes interest earned on financial assets measured at amortised 
cost or at FVOCI, subject to the effects of applying hedge accounting to derivatives in designated 
hedge relationships. In compliance with this amendment the Group has separately presented its 
effective interest income within profit or loss, but elect to present all interest which fall 
outside the afore-mentioned scope as a sub-component of 'Interest and similar income'. The Group 
has elected to apply the same approach in presenting 'Interest expense and similar charges' to 
achieve consistency in the presentation of 'Net interest income'. The revised presentation has 
been applied on a retrospective basis, to ensure comparability between reporting periods.

16.4 Changes to reportable segments and business portfolios
The following business portfolio changes resulted in the restatement of financial results for the
comparative period. None of the restatements have impacted the overall financial position or net earnings 
of the Group:
- The Group refined its Treasury allocation methodology, resulting in the restatement of net interest
  income, cash and cash equivalents and investment securities between and within segments. 
- The Group continued refining its cost allocation methodology, resulting in the restatement of operating
  expenses between and within segments.
- Corporate and Investment Banking South Africa (CIB SA) review of customer portfolio to be industry
  specific resulted in R16bn move of loans and advances to customers from Corporate to Investment Banking.
- The South Africa Banking segment (which consisted of RBB (SA) and CIB (SA) in aggregate) has been removed
  in the Group's segmental disclosures to align with how the banking operations are now managed.



Administration and contact details

Absa Group Limited                                 Registered office
Incorporated in the Republic of South Africa       7th Floor, Absa 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)                           Switchboard: +27 11 350 4000
JSE share code: BGA                                www.absa.africa
ISIN: ZAE000174124

Head Investor Relations                            Queries
Alan Hartdegen                                     Please direct investor relations and annual report queries to
Telephone: +27 11 350 2598                         IR@absa.co.za
                                                   Please direct media queries to groupmedia@absa.africa
Group Company Secretary                            For all customer and client queries, please go to the relevant 
Nadine Drutman                                     country website (see details below) for the local customer 
Telephone: +27 11 350 5347                         contact information    
Head of Financial Control                          Please direct queries relating to your Absa Group shares 
John Annandale                                     to questions@computershare.co.za
Telephone: +27 11 350 3496                         Please direct other queries regarding the Group to
                                                   groupsec@absa.africa

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
                                                   Joint sponsor
                                                   Absa Bank Limited (Corporate and Investment Bank)
                                                   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.africa
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) Ltd                             absanamibia.com.na
Absa Capital Representative                        cib.absa.co.za
Office Nigeria Limited





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