ABSA BANK LIMITED - Interim results and dividend announcement

Release Date: 06/08/2018 07:06
Code(s): ABSP
 
Wrap Text
Interim results and dividend announcement

Absa Bank Limited
Authorised financial services and registered credit provider (NCRCP7) 
Registration number: 1986/004794/06
Incorporated in the Republic of South Africa
JSE share code: ABSP
ISIN: ZAE000079810
(Absa, Absa Bank, the Bank or the Company)

Unaudited condensed consolidated interim financial results for the reporting period ended 30 June 2018

The Board of Directors oversees the Bank'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 judgement, 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 and Compliance
Committee (GACC).

Together with the GACC, the Board has reviewed and approved the reporting changes contained in the announcement
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.


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

Profit and dividend announcement 
for the reporting period ended

Overview of results

Absa Bank Limited (the Bank) is a subsidiary of Absa Group Limited (the Group), which is listed on the exchange
operated by the JSE Limited. These unaudited condensed consolidated interim financial results are published to provide
information to holders of the Bank's listed non-cumulative, non-redeemable preference shares.

Commentary relating to the Bank's condensed consolidated financial results is included in the Absa Group Limited
results, as presented to shareholders on 6 August 2018.

Normalised reporting 

Given the process of separating from Barclays PLC, the Bank continues to report both International Financial Reporting
Standards (IFRS) compliant financial results and a normalised view. The latter adjusts for the consequences of the
seperation and better reflects its underlying performance. The Bank will present normalised results for future periods 
where the financial impact of separation is considered material.

Normalisation adjusts for the following items: interest income on Barclays PLC's seperation contribution, hedging
revenue linked to seperation activities, operating expenses and other expenses, as well as the tax impact of the
aforementioned items. Normalisation does not affect divisional disclosures.

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

Basis of presentation

The Bank's unaudited condensed consolidated interim financial results have been prepared in accordance with the
recognition and measurement requirements of 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 of South Africa. 

The preparation of financial information requires the use of estimates and assumptions about future conditions. Use of
available information and application of judgement are inherent in the formation of estimates. The accounting policies
that are deemed critical to the Bank's results and financial position, in terms of the materiality of the items to which
the policies are applied, and which involve a high degree of judgement including the use of assumptions and estimation,
are impairment of loans and advances, goodwill impairment, fair value measurements, impairment of 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 and offsetting of
financial assets and liabilities.

The directors assess the Bank's future performance and financial position on an ongoing basis and have no reason to
believe that the Bank 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.

Accounting policies

The accounting policies applied in preparing the unaudited condensed consolidated interim financial results comply 
with IAS 34 Interim Financial Reporting (IAS 34). The principal accounting policies applied are set out in the Bank's 
most recent audited annual consolidated financial statements, except for:
- The adoption of IFRS 9 Financial Instruments (IFRS 9) and IFRS 15 Revenue from Contracts with Customers (IFRS 15)
as explained in note 16; and
- Changes to the Bank's operating segments and business portfolio changes.

Note 16 includes the impact of the adoption of IFRS 9 and specifically the transitional disclosures as required by
IFRS 7 Financial Instruments Disclosures (IFRS 7). All information marked as audited in note 16 has been audited by Ernst
and Young 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 Statements. A copy of the auditor's report on the
audited sections of note 16 are available for inspection at the Bank's registered office.

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 unaudited condensed consolidated interim financial results (as defined per IAS 10 Events after the Reporting
Period).

On behalf of the Board

W E Lucas-Bull             M Ramos
Chairman                   Chief Executive Officer

Johannesburg
6 August 2018

Profit and dividend announcement for the reporting period ended

Declaration of preference share dividend number 25 

Absa Bank non-cumulative, non-redeemable preference shares (Absa Bank preference shares)
The Absa Bank preference shares have an effective coupon rate of 70% of Absa Bank's prevailing prime overdraft lending
rate (prime rate). Absa Bank's current prime rate is 10%.

Notice is hereby given that preference dividend number 25, equal to 70% of the average prime rate for 1 March 2018 to
31 August 2018, per Absa Bank preference share has been declared for the period 1 March 2018 to 31 August 2018. The
dividend is payable on Monday, 17 September 2018, to shareholders of the Absa Bank preference shares recorded in the
Register of Members of the Company at the close of business on Friday, 14 September 2018.

The directors of Absa Bank Limited have applied the solvency and liquidity test and reasonably concluded that the Bank
will satisfy the solvency and liquidity test immediately after completion of the dividend distribution.

Based on the current prime rate, the preference dividend payable for the period 1 March 2018 to 31 August 2018 would
indicatively be 3 542.67 cents per Absa Bank preference share.

The dividend will be subject to dividend 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 3 542.67 cents per preference share for shareholders exempt from the dividend tax.
- The net local dividend for shareholders subject to withholding tax at a rate of 20% amounts to 2 834.136 cents 
  per preference share.
- Absa Bank currently has 4 944 839 preference shares in issue.
- Absa Bank's income tax reference number is 9575117719.

In compliance with the requirements of Strate, the electronic settlement and custody system used by JSE Limited, the
following salient dates for the payment of the dividend are applicable:
Last day to trade cum dividend                  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
On behalf of the Board

N R Drutman
Company Secretary
Johannesburg
6 August 2018

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

Condensed consolidated IFRS salient features for the reporting period ended

                                                                                30 June                 31 December
                                                                                   2018           2017         2017
                                                                                                                    
Statement of comprehensive income (Rm)                                                                              
Income                                                                           25 747         24 806       50 094
Operating expenses                                                               16 394         14 696       31 608
Profit attributable to ordinary equity holders                                    3 959          4 546        8 067
Headline earnings(1)                                                              4 151          4 805        8 548
Statement of financial position
Loans and advances to customers (Rm)                                            683 152        638 552      660 492
Total assets (Rm)                                                             1 029 261        948 523      988 358
Deposits due to customers (Rm)                                                  590 827        577 925      583 825
Loans to deposits and debt securities ratio (%)                                    93.4           89.0         91.5
Financial performance (%)
Return on average equity                                                           10.9           14.3         11.8
Return on average assets                                                           0.85           1.04         0.91
Return on average risk-weighted assets                                             1.62           1.96         1.64
Stage 3 loans ratio on gross loans and advances                                     5.1            n/a          n/a
Non-performing loans (NPL) ratio on gross loans and advances                        n/a            3.3          3.6
Operating performance (%)
Net interest margin on average interest-bearing assets                             3.77           3.83         3.91
Credit loss ratio on gross loans and advances to customers and banks               0.78           0.81         0.73
Non-interest income as a percentage of total income                                42.1           41.6         41.3
Cost-to-income ratio                                                               63.7           59.2         63.1
Jaws                                                                               (7.8)         (10.7)       (12.2)
Effective tax rate, excluding indirect taxation                                    27.4           27.4         27.9
Share statistics (million)
Number of ordinary shares in issue                                                448.3          448.3        448.3
Weighted average number of ordinary shares in issue                               448.3          433.1        440.7
Diluted weighted average number of ordinary shares in issue                       448.3          433.1        440.7
Share statistics (cents)
Headline earnings per ordinary share                                              925.7        1 109.4      1 939.4
Diluted headline earnings per ordinary share                                      925.7        1 109.4      1 939.4
Basic earnings per ordinary share                                                 883.3        1 049.6      1 830.3
Diluted basic earnings per ordinary share                                         883.3        1 049.6      1 830.3
Dividend per ordinary share relating to income for the reporting period           602.3          892.3      2 372.7
Dividend cover (times)                                                              1.5            1.2          0.8
Net asset value (NAV) per ordinary share                                         17 446         17 659       17 998
Tangible net asset value per ordinary share                                      16 351         17 176       17 136
Capital adequacy (%)
Absa Bank Limited                                                                  17.9           17.4         16.9
Common Equity Tier (CET) 1 (%)
Absa Bank Limited                                                                  13.5           14.1         13.4

(1) After allowing for R176m (30 June 2017: R180m; 31 December 2017: R362m) profit attributable to preference equity
    holders and R96m (30 June 2017: RNil; 31 December 2017: R48m) profit attributable to Additional Tier 1 capital.


Condensed consolidated normalised salient features for the reporting period ended

                                                                 30 June                      31 December
                                                                    2018            2017             2017
                                                                                                          
Statement of comprehensive income (Rm)
Income                                                            25 160          24 522           49 689
Operating expenses                                                15 039          14 236           29 708
Profit attributable to ordinary equity holders                     4 675           4 936            9 550
Headline earnings                                                  4 866           4 957            9 793
Statement of financial position
Total assets (Rm)                                              1 027 657         936 703          987 446
Financial performance (%)
Return on average equity                                            14.8            15.1             14.8
Return on average assets                                            1.00            1.08             1.05
Return on risk-weighted assets                                      1.90            2.02             1.88
Operating performance (%)
Non-interest income as a percentage of total income                 41.4            41.2             41.5
Cost-to-income ratio                                                59.8            58.1             59.8
Jaws                                                               (3.04)          (8.32)           (6.11)
Effective tax rate, excluding indirect taxation                     25.8            27.0             27.0
Share statistics (million)
Number of ordinary shares in issue                                 448.3           448.3            448.3
Weighted average number of ordinary shares in issue                448.3           433.1            440.8
Diluted weighted average number of ordinary shares in issue        448.3           433.1            440.8
Share statistics (cents)
Headline earnings per ordinary share                             1 085.7         1 144.5          2 221.9
Diluted headline earnings per ordinary share                     1 085.7         1 144.5          2 221.9
Basic earnings per ordinary share                                1 042.8         1 139.7          2 166.5
Diluted basic earnings per ordinary share                        1 042.8         1 139.7          2 166.5
NAV per ordinary share                                            15 193          15 046           15 599
Tangible NAV per ordinary share                                   14 411          14 563           14 913
Capital adequacy (%)
Absa Bank Limited                                                   16.3            15.2             15.0
Common Equity Tier 1 (%)
Absa Bank Limited                                                   11.9            11.9             11.6

Condensed consolidated normalised reconciliation for the reporting period ended

                                                                                        30 June 2018
Reconciliation of normalised to IFRS results                                             Adjustments        Normalised
                                                                          IFRS Bank     for Barclays              Bank
                                                                        performance       separation       performance
                                                                                             effects                   
Statement of comprehensive income (Rm)
Net interest income                                                          14 915              175            14 740
Non-interest income                                                          10 832              413            10 419
Total income                                                                 25 747              588            25 159
Expected credit losses                                                       (2 831)               -            (2 831)
Operating expenses                                                          (16 394)          (1 355)          (15 039)
Other expenses                                                                 (754)             (76)             (678)
Share of post-tax results of associates and joint ventures                       56                -                56
Operating profit before income tax                                            5 824             (843)            6 667
Tax expenses                                                                 (1 593)             128            (1 721)
Profit for the reporting period                                               4 231             (715)            4 946
Profit attributable to:
Ordinary equity holders                                                       3 959             (715)            4 674
Preference equity holders                                                       176                -               176
Additional Tier 1 capital                                                        96                -                96
                                                                              4 231             (715)            4 946
Headline earnings                                                             4 151             (715)            4 866
Operating performance (%)
Net interest margin on average interest-bearing assets                         3.77              n/a              3.76
Credit loss ratio on gross loans and advances to customers and banks           0.79              n/a              0.79
Non-interest income as a percentage of total income                            42.1              n/a              41.4
Income growth                                                                   3.8              n/a               2.6
Operating expenses growth                                                      11.6              n/a               5.6
Cost-to-income ratio                                                           63.7              n/a              59.8
Effective tax rate                                                             27.4              n/a              25.8
Statement of financial position (Rm)
Loans and advances to customers                                             683 152                -           683 152
Loans and advances to banks                                                  49 173                -            49 173
Investment securities                                                        86 794                -            86 794
Other assets                                                                210 142            1 603           208 539
Total assets                                                              1 029 261            1 603         1 027 658
Deposits due to customers                                                   590 827                -           590 827
Debt securities in issue                                                    140 363                -           140 363
Other liabilities(1)                                                        215 213           (8 502)          223 715
Total liabilities                                                           946 403           (8 502)          954 905
Equity                                                                       82 858           10 105            72 753
Total equity and liabilities                                              1 029 261            1 603         1 027 658
Key performance ratios (%)
Return on average risk-weighted assets                                         1.62              n/a              1.90
Return on average assets                                                       0.85              n/a              1.00
Return on average equity                                                       10.9              n/a              14.8
Capital adequacy                                                               17.9              n/a              16.3
Common Equity Tier 1                                                           13.5              n/a              11.9
Share statistics (cents)
Diluted headline earnings per ordinary share                                  925.7              n/a           1 085.7

(1) This represents the contribution of R12.1bn that was received from Barclays PLC, net of amounts already spent on
    seperation activities. The cash received is held centrally by Treasury and is presented as an intersegmental asset in
    ‘Other liabilities'. 

Condensed consolidated normalised reconciliation for the reporting period ended

                                                                                       30 June 2017
Reconciliation of normalised to IFRS results                            IFRS Bank       Adjustments        Normalised
                                                                      performance      for Barclays              Bank
                                                                                         separation       performance
                                                                                            effects
Statement of comprehensive income (Rm)
Net interest income                                                        14 475                46            14 429
Non-interest income                                                        10 331               238            10 093
Total income                                                               24 806               284            24 522
Impairment losses on loans and advances                                    (2 779)                -            (2 779)
Operating expenses                                                        (14 696)             (460)          (14 236)
Other expenses                                                               (821)             (325)             (496)
Operating profit before income tax                                          6 510              (501)            7 011
Tax expenses                                                               (1 783)              111            (1 894)
Profit for the reporting period                                             4 727              (390)            5 117
Profit attributable to:
Ordinary equity holders                                                     4 546              (390)            4 936
Non-controlling interest - ordinary shares                                     (1)                -                (1)
Preference equity holders                                                    (180)                -              (180)
Additional Tier 1 capital                                                       -                 -                 -
                                                                            4 365              (390)            4 755
Headline earnings                                                           4 805              (152)            4 957
Operating performance (%)
Net interest margin on average interest-bearing assets                       3.93               n/a             3.93
Credit loss ratio on gross loans and advances to customers and banks         0.82               n/a             0.82
Non-interest income as a percentage of total income                          41.6               n/a             41.2
Income growth                                                                 1.4               n/a              0.2
Operating expenses growth                                                    12.0               n/a              8.5
Cost-to-income ratio                                                         59.2               n/a             58.1
Effective tax rate                                                           27.4               n/a             27.0
Statement of financial position (Rm)
Loans and advances to customers                                           638 552                 -          638 552
Loans and advances to banks                                                50 824                 -           50 824
Investment securities                                                      81 876                 -           81 876
Other assets                                                              177 271              (105)         177 376
Total assets                                                              948 523              (105)         948 628
Deposits due to customers                                                 577 925                 -          577 925
Debt securities in issue                                                  139 906                 -          139 906
Other liabilities(1)                                                      146 879           (11 819)         158 698
Total liabilities                                                         864 710           (11 819)         876 529
Equity                                                                     83 813            11 714           72 099
Total equity and liabilities                                              948 523              (105)         948 628
Key performance ratios (%)
Return on average risk-weighted assets                                       1.96               n/a             2.02
Return on average assets                                                     1.04               n/a             1.08
Return on average equity                                                     14.3               n/a             15.1
Capital adequacy                                                             17.4               n/a             15.2
Common Equity Tier 1                                                         14.1               n/a             11.9
Share statistics (cents)
Diluted headline earnings per ordinary share                              1 109.4               n/a          1 144.5

(1)This represents the contribution of R12.1bn that was received from Barclays PLC, net of amounts already spent on
   seperation activities. The cash received is held centrally by Treasury and is presented as an intersegmental asset in
   ‘Other liabilities'.

Condensed consolidated normalised reconciliation for the reporting period ended

                                                                                    31 December 2017
Reconciliation of normalised to IFRS results                                            Adjustments        
                                                                             IFRS      for Barclays        Normalised   
                                                                             Bank        separation              Bank
                                                                      performance           effects       performance
Statement of comprehensive income (Rm)
Net interest income                                                        29 413               325            29 088
Non-interest income                                                        20 681                80            20 601
Total income                                                               50 094               405            49 689
Impairment losses on loans and advances                                    (5 113)                -            (5 113)
Operating expenses                                                        (31 608)           (1 901)          (29 707)
Other expenses                                                             (1 788)             (394)           (1 394)
Share of post-tax results of associates and joint ventures                    170                 -               170
Operating profit before income tax                                         11 755            (1 890)           13 645
Tax expenses                                                               (3 278)              408            (3 687)
Profit for the reporting period                                             8 477            (1 482)            9 959
Profit attributable to:
Ordinary equity holders                                                     8 067            (1 482)            9 549
Preference equity holders                                                     362                 -               362
Additional Tier 1 capital                                                      48                 -                48
                                                                            8 477            (1 482)            9 959
Headline earnings                                                           8 548            (1 245)            9 793
Operating performance (%)
Net interest margin on average interest-bearing assets                       3.91               n/a              3.90
Credit loss ratio on gross loans and advances to customers and banks         0.73               n/a              0.74
Non-interest income as a percentage of total income                          41.3               n/a              41.5
Income growth                                                                 2.6               n/a               1.8
Operating expenses growth                                                    14.8               n/a               7.9
Cost-to-income ratio                                                         63.1               n/a              59.8
Effective tax rate                                                           27.9               n/a              27.0
Statement of financial position (Rm)
Loans and advances to customers                                           660 492                 -           660 492
Loans and advances to banks                                                43 217                 -            43 217
Investment securities                                                      76 524                 -            76 524
Other assets                                                              208 125               912           207 213
Total assets                                                              988 358               912           987 446
Deposits due to customers                                                 583 825                 -           583 825
Debt securities in issue                                                  137 942                 -           137 942
Other liabilities(1)                                                      181 262            (9 840)          191 102
Total liabilities                                                         903 029            (9 840)          912 869
Equity                                                                     85 329            10 752            74 577
Total equity and liabilities                                              988 358               912           987 446
Key performance ratios (%)
Return on average assets                                                     0.91               n/a              1.05
Return on average equity                                                     14.3               n/a              14.8
Capital adequacy                                                             16.9               n/a              15.0
Common Equity Tier 1                                                         13.4               n/a              11.6
Share statistics (cents)
Diluted headline earnings per ordinary share                              1 939.4               n/a           2 221.9

(1) This represents the contribution of R12.1bn that was received from Barclays PLC, net of amounts already spent on
    seperation activities. The cash received is held centrally by Treasury and is presented as an intersegmental asset in
    ‘Other liabilities'.

Barclays separation financial results

‘Net interest income' includes the endowment benefit received on the Barclays PLC investment, while foreign exchange
hedging gains linked to the separation activities have been disclosed as ‘Non-interest income'. ‘Operating expenses'
includes R1.3bn (30 June 2017: R460m; 31 December 2017: R1.9bn) professional fees, information technology costs, marketing,
transitional service costs and salary costs for internal resources dedicated to the separation that was incurred during
the respective reporting periods. ‘Other expenses' reflects the VAT less any inputs incurred during the current
reporting period. In the prior reporting period, ‘Other expenses' included the impairment of an intangible asset that was
utilised. To date, there has been no further impairment recognised on intangible assets. 

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                      24 698           26 346           28 792
Investment securities                                                    86 794           81 876           76 524
Loans and advances to banks                                 2            49 173           50 824           43 217
Trading portfolio assets                                                 96 333           74 961          104 781
Hedging portfolio assets                                                  2 320            2 270            2 667
Other assets                                                             26 593           29 225           15 513
Current tax assets                                                          614              386               57
Non-current assets held for sale                            1                37            1 391            1 119
Loans and advances to customers                             2           683 152          638 552          660 492
Loans to Group companies                                                 38 730           26 117           36 530
Investments in associates and joint ventures                              1 217            1 144            1 235
Investment properties                                                       165                -                -
Property and equipment                                                   13 663           13 222           13 519
Goodwill and intangible assets                                            4 912            2 168            3 861
Deferred tax assets                                                         860               41               51
Total assets                                                          1 029 261          948 523          988 358
Liabilities
Deposits from banks                                                      95 723           56 475           74 110
Trading portfolio liabilities                                            57 011           39 680           59 834
Hedging portfolio liabilities                                             1 334            1 470            1 117
Other liabilities                                                        38 249           31 207           27 824
Provisions                                                                1 468            1 233            2 073
Current tax liabilities                                                       -                -               55
Deposits due to customers                                               590 827          577 925          583 825
Debt securities in issue                                                140 363          139 906          137 942
Borrowed funds                                              3            21 416           15 930           15 866
Deferred tax liabilities                                                     12              884              383
Total liabilities                                                       946 403          864 710          903 029
Equity
Capital and reserves
Attributable to ordinary equity holders:
Ordinary share capital                                                      304              304              304
Ordinary share premium                                                   36 879           36 880           36 879
Preference share capital                                                      1                1                1
Preference share premium                                                  4 643            4 643            4 643
Additional Tier 1 capital                                                 1 500                -            1 500
Retained earnings                                                        35 629           38 642           37 855
Other reserves                                                            3 901            3 341            4 145
                                                                         82 857           83 811           85 327
Non-controlling interest - ordinary shares                                    1                2                2
Total equity                                                             82 858           83 813           85 329
Total equity and liabilities                                          1 029 261          948 523          988 358

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                                                        14 915         14 475           29 413
Interest and similar income(1)                                             36 241         35 820           71 438
Effective interest income                                                  35 898         35 351           70 161
Other interest income                                                         343            469            1 277
Interest expense and similar charges(1)                                   (21 326)       (21 345)         (42 025)
Effective interest expense                                                (21 326)       (21 272)         (42 025)
Other interest expense                                                          -            (73)               -
Non-interest income                                                4       10 832         10 331           20 681
Net fee and commission income                                               9 023          8 429           17 279
Fee and commission income                                                   9 736          9 076           18 608
Fee and commission expense                                                   (713)          (647)          (1 329)
Gains from banking and trading activities                                   1 770          1 752            2 860
Gains from investment activities                                                4              -                3
Other operating income                                                         36            150              539
Total income                                                               25 747         24 806           50 094
Expected credit losses/impairment losses                                   (2 831)        (2 779)          (5 113)
Operating income before operating expenditure                              22 916         22 027           44 981
Operating expenditure                                                     (16 394)       (14 696)         (31 608)
Other expenses                                                               (754)          (900)          (1 788)
Other impairments                                                  5         (183)          (326)            (512)
Indirect taxation                                                            (571)          (574)          (1 276)
Share of post-tax results of associates and joint ventures                     56             79              170
Operating profit before income tax                                          5 824          6 510           11 755
Taxation expense                                                           (1 593)        (1 783)          (3 278)
Profit for the reporting period                                             4 231          4 727            8 477
Profit attributable to:
Ordinary equity holders                                                     3 959          4 546            8 067
Non-controlling interest                                                        -              1                -
Preference equity holders                                                     176            180              362
Additional Tier 1 capital                                                      96              -               48
                                                                            4 231          4 727            8 477
Earnings per share:
Basic earnings per share (cents per share)                                  883.3        1 049.6          1 830.3
Diluted earnings per share (cents per share)                                883.3        1 049.6          1 830.3

(1)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 Bank has elected to apply the same approach in
   presenting ‘Interest expense and similar charges' to achieve consistency. 

Condensed consolidated statement of comprehensive income for the reporting period ended

                                                                                    30 June                 31 December
                                                                                       2018       2017             2017
                                                                                         Rm         Rm               Rm
Profit for the reporting period                                                       4 231      4 727            8 477
Other comprehensive income
Items that will not be reclassified to profit or loss                                     3        (19)            (154)
Fair value gain on equity instruments measured at Fair Value through                     
Other Comprehensive Income (FVOCI)                                                        2          -                -
Movement due to changes in own credit risk on financial liabilities                      
designated at FVTPL                                                                       5        (13)            (147)
Fair value losses                                                                       (45)       (13)            (147)
Deferred tax                                                                             50          -                -
Movement in retirement benefit fund assets and liabilities                               (4)        (6)              (7)
Decrease in retirement benefit surplus                                                   (6)        (5)             (10)
Deferred tax                                                                              2         (1)               3
Items that are or may be subsequently reclassified to profit or loss                   (205)       215              677
 Movement in foreign currency translation reserve                                         -         54               55
Differences in translation of foreign operations                                          -         54                3
Release to profit or loss                                                                 -          -               52
Movement in cash flow hedging reserve                                                  (588)       519              794
Fair value (losses)/gains                                                              (737)       876            1 465
Amount removed from other comprehensive income and recognised in profit or loss         (80)      (157)            (365)
Deferred tax                                                                            229       (200)            (306)
Movement in fair value of debt instruments measured at FVOCI                            383          -                -
Fair value gains                                                                        529          -                -
Release to profit or loss                                                                 3          -                -
Deferred tax                                                                           (149)         -                -
Movement in available-for-sale reserve                                                    -       (358)            (172)
Fair value losses                                                                         -       (515)            (307)
Release to profit or loss                                                                 -         18               67
Deferred tax                                                                              -        139               68
Total comprehensive income for the reporting period                                   4 029      4 923            9 000
Total comprehensive income attributable to:
Ordinary equity holders                                                               3 757      4 742            8 590
Non-controlling interest                                                                  -          1                -
Preference equity holders                                                               176        180              362
Additional Tier 1 capital                                                                96          -               48
                                                                                      4 029      4 923            9 000

Condensed consolidated statement of changes in equity for the reporting period ended

                                                             Number of     Share       Share    Preference     Preference
                                                              ordinary   capital     premium        share           share
                                                             shares(1)        Rm          Rm       capital        premium
                                                                  '000                                  Rm             Rm
Balance as reported at the end of the previous                 448 301       304      36 879             1          4 643
reporting period
Impact of adopting new accounting standards at
1 January 2018
IFRS 9                                                               -         -           -             -              -
IFRS 15                                                              -         -           -             -              -
Adjusted balance at the beginning of the                       448 301       304      36 879             1          4 643
reporting period
Total comprehensive income for the reporting period                  -         -           -             -              -
Profit for the reporting period                                      -         -           -             -              -
Other comprehensive income                                           -         -           -             -              -
Dividends paid during the reporting period                           -         -           -             -              -
Distributions paid during the reporting period                       -         -           -             -              -
Purchase of Absa Group Limited shares in respect of                                             
equity-settled share-based payment arrangements                      -         -           -             -              -
Movement in share-based payment reserve                              -         -           -             -              -
Intercompany recharge                                                -         -           -             -              -
Value of employee services                                           -         -           -             -              -
Deferred tax                                                         -         -           -             -              -
Share of post-tax results of associates and joint ventures           -         -           -             -              -
Balance at the end of the reporting period                     448 301       304      36 879             1          4 643

                                                                                          30 June 2018
                                                            Additional       Retained         Total         Fair value
                                                                Tier 1       earnings         other            through
                                                               capital             Rm      reserves              other
                                                                    Rm                           Rm      comprehensive
                                                                                                                income
                                                                                                               reserve
                                                                                                                    Rm
Balance as reported at the end of the previous                   1 500         37 855         4 145                 87
reporting period
Impact of adopting new accounting standards at
1 January 2018
IFRS 9                                                               -         (3 103)         (204)              (131)
IFRS 15                                                              -            (44)            -                  -
Adjusted balance at the beginning of the                         1 500         34 708         3 941                (44)
reporting period
Total comprehensive income for the reporting period                  -          4 231          (202)               386
Profit for the reporting period                                      -          4 231             -                  -
Other comprehensive income                                           -              -          (202)               386
Dividends paid during the reporting period                           -         (3 176)            -                  -
Distributions paid during the reporting period                       -            (96)            -                  -
Purchase of Absa Group Limited shares in respect of         
equity-settled share-based payment arrangements                      -             18             -                  -
Movement in share-based payment reserve                              -              -           106                  -
Intercompany recharge                                                -              -          (193)                 -
Value of employee services                                           -              -           327                  -
Deferred tax                                                         -              -           (28)                 -
Share of post-tax results of associates and joint ventures           -            (56)           56                  -
Balance at the end of the reporting period                       1 500         35 629         3 901                342

                                                             Cash flow          Foreign       Capital        Share-
                                                               hedging         currency       reserve         based
                                                               reserve      translation            Rm       payment
                                                                    Rm          reserve                     reserve
                                                                                     Rm                          Rm
Balance as reported at the end of the previous                     649                1         1 422           749
reporting period
Impact of adopting new accounting standards at
1 January 2018
IFRS 9                                                               -                -             -             -
IFRS 15                                                              -                -             -             -
Adjusted balance at the beginning of the                           649                1         1 422           749
reporting period
Total comprehensive income for the reporting period               (588)               -             -             -
Profit for the reporting period                                      -                -             -             -
Other comprehensive income                                        (588)               -             -             -
Dividends paid during the reporting period                           -                -             -             -
Distributions paid during the reporting period                       -                -             -             -
Purchase of Absa Group Limited shares in respect of
equity-settled share-based payment arrangements                      -                -             -             -
Movement in share-based payment reserve                              -                -             -           106
Intercompany recharge                                                -                -             -          (193)
Value of employee services                                           -                -             -           327
Deferred tax                                                         -                -             -           (28)
Share of post-tax results of associates and joint ventures           -                -             -             -
Balance at the end of the reporting period                          61                1         1 422           855

                                                             Associates             Total              Non-        Total
                                                              and joint            equity       controlling       equity
                                                              ventures'      attributable        interest -           Rm
                                                                reserve         to equity          ordinary
                                                                     Rm           holders            shares
                                                                                       Rm                Rm
Balance as reported at the end of the previous                    1 237            85 327                 2       85 329    
reporting period
Impact of adopting new accounting standards at
1 January 2018
IFRS 9                                                              (73)           (3 307)                -       (3 307)
IFRS 15                                                               -               (44)                -          (44)
Adjusted balance at the beginning of the                          1 164            81 976                 2       81 978
reporting period
Total comprehensive income for the reporting period                   -             4 029                 -        4 029
Profit for the reporting period                                       -             4 231                 -        4 231
Other comprehensive income                                            -              (202)                -         (202)
Dividends paid during the reporting period                            -            (3 176)               (1)      (3 177)
Distributions paid during the reporting period                        -               (96)                -          (96)
Purchase of Absa Group Limited shares in respect of         
equity-settled share-based payment arrangements                       -                18                 -           18
Movement in share-based payment reserve                               -               106                 -          106
Intercompany recharge                                                 -              (193)                -         (193)
Value of employee services                                            -               327                 -          327
Deferred tax                                                          -               (28)                -          (28)
Share of post-tax results of associates and joint ventures           56                 -                 -            -
Balance at the end of the reporting period                        1 220            82 857                 1       82 858

All movements are reflected net of taxation.
(1) This includes ordinary shares and ‘A' ordinary shares.

Condensed consolidated statement of changes in equity for the reporting period ended

                                                             Number of         Share        Share      Preference
                                                              ordinary       capital      premium           share
                                                              shares(1)           Rm           Rm         capital     
                                                                   '000                                        Rm     
Balance at the beginning of the reporting period                431 318          304       24 964               1     
Total comprehensive income for the reporting period                   -            -            -               -     
Profit for the reporting period                                       -            -            -               -     
Other comprehensive income                                            -            -            -               -     
Dividends paid during the reporting period                            -            -            -               -     
Shares issued                                                    16 983            -        3 500               -     
Purchase of Absa Group Limited shares in respect of 
equity-settled share-based payment arrangements                       -            -            -               -     
Elimination of the movement in treasury shares held                   -            -            -               -     
by Group entities                                                                                                     
Transfer of vesting options                                           -            -            -               -     
Movement in share-based payment reserve                               -            -            -               -     
Transfer from share-based payment reserve                             -            -            -               -     
Value of employee services                                            -            -            -               -     
Deferred tax                                                          -            -            -               -     
Share of post-tax results of associates and joint ventures            -            -            -               -     
Disposal of non-controlling interest and related 
transaction costs(2)                                                  -            -            -               -     
Barclays separation(3)                                                -            -        8 416               -     
Balance at the end of the reporting period                      448 301          304       36 880               1     

                                                                                               30 June 2017                  
                                                            Preference      Retained               Total      Available-     
                                                                 share      earnings               other        for-sale     
                                                               premium            Rm            reserves         reserve     
                                                                    Rm                                Rm              Rm     
Balance at the beginning of the reporting period                 4 643        36 099               3 262             259     
Total comprehensive income for the reporting period                  -         4 707                 215            (358)    
Profit for the reporting period                                      -         4 726                   -               -     
Other comprehensive income                                           -           (19)                215            (358)    
Dividends paid during the reporting period                           -        (5 780)                  -               -     
Shares issued                                                        -             -                   -               -     
Purchase of Absa Group Limited shares in respect of 
equity-settled share-based payment arrangements                      -             5                   -               -     
Elimination of the movement in treasury shares held                  -             -                   -               -     
by Group entities                                                                                                            
Transfer of vesting options                                          -             -                   -               -     
Movement in share-based payment reserve                              -             -                (215)              -     
Transfer from share-based payment reserve                            -             -                (425)              -     
Value of employee services                                           -             -                 229               -     
Deferred tax                                                         -             -                 (19)              -     
Share of post-tax results of associates and joint ventures           -           (79)                 79               -     
Disposal of non-controlling interest and related 
transaction costs(2)                                                 -             -                   -               -     
Barclays separation(3)                                               -         3 690                   -               -     
Balance at the end of the reporting period                       4 643        38 642               3 341             (99)    

                                                            Cash flow            Foreign       Capital        Share-    
                                                              hedging           currency       reserve         based    
                                                              reserve        translation            Rm       payment    
                                                                   Rm            reserve                     reserve      
                                                                                      Rm                          Rm         
Balance at the beginning of the reporting period                 (145)               (54)        1 422           713    
Total comprehensive income for the reporting period               519                 54             -             -    
Profit for the reporting period                                     -                  -             -             -    
Other comprehensive income                                        519                 54             -             -    
Dividends paid during the reporting period                          -                  -             -             -    
Shares issued                                                       -                  -             -             -    
Purchase of Absa Group Limited shares in respect of         
equity-settled share-based payment arrangements                     -                  -             -             -    
Elimination of the movement in treasury shares held                 -                  -             -             -    
by Group entities                                                                                                       
Transfer of vesting options                                         -                  -             -             -    
Movement in share-based payment reserve                             -                  -             -          (215)   
Transfer from share-based payment reserve                           -                  -             -          (425)   
Value of employee services                                          -                  -             -           229    
Deferred tax                                                        -                  -             -           (19)   
Share of post-tax results of associates and joint ventures          -                  -             -             -    
Disposal of non-controlling interest and related            
transaction costs(2)                                                -                  -             -             -    
Barclays separation(3)                                              -                  -             -             -    
Balance at the end of the reporting period                        374                  -         1 422           498    

                                                             Associates              Total              Non-        Total    
                                                              and joint       attributable       controlling       equity    
                                                              ventures'        to ordinary        interest -           Rm    
                                                                reserve             equity          ordinary
                                                                     Rm            holders            shares
                                                                                        Rm                Rm
Balance at the beginning of the reporting period                  1 067             69 273                26       69 299    
Total comprehensive income for the reporting period                   -              4 922                 1        4 923    
Profit for the reporting period                                       -              4 726                 1        4 727    
Other comprehensive income                                            -                196                 -          196    
Dividends paid during the reporting period                            -             (5 780)                -       (5 780)   
Shares issued                                                         -              3 500                 -        3 500    
Purchase of Absa Group Limited shares in respect of         
equity-settled share-based payment arrangements                       -                  5                 -            5    
Elimination of the movement in treasury shares held                   -                  -                 -            -    
by Group entities                                                                                                            
Transfer of vesting options                                           -                  -                 -            -    
Movement in share-based payment reserve                               -               (215)                -         (215)   
Transfer from share-based payment reserve                             -               (425)     -                    (425)   
Value of employee services                                            -                229      -                     229    
Deferred tax                                                          -                (19)     -                     (19)   
Share of post-tax results of associates and joint ventures           79                  -                 -            -    
Disposal of non-controlling interest and related            
transaction costs(2)                                                  -                  -               (25)         (25)   
Barclays separation(3)                                                -             12 106                 -       12 106    
Balance at the end of the reporting period                        1 146             83 811                 2       83 813    

All movements are reflected net of taxation.
(1) This includes ordinary shares and ‘A' ordinary shares.
(2) The Group disposed of its controlling stake in a non-core subsidiary which was classified as held for sale.
(3) As part of the Barclays PLC disinvestment, the Bank issued 10 ordinary shares to Barclays Bank PLC for R8,4bn and
    received an additional R3,7bn as a cash contribution. The resultant cash received meets the definition of a transaction
    with a shareholder. 

Condensed consolidated statement of changes in equity for the reporting period ended

                                                                 Number of        Share        Share      Preference    
                                                                  ordinary      capital      premium           share    
                                                                 shares(1)           Rm           Rm         capital    
                                                                      '000                                        Rm    
Balance at the beginning of the reporting period                   431 318          304       24 964               1    
Total comprehensive income for the reporting period                      -            -            -               -    
Profit for the reporting period                                          -            -            -               -    
Other comprehensive income                                               -            -            -               -    
Dividends paid during the reporting period                               -            -            -               -    
Distributions paid during the reporting period                           -            -            -               -    
Shares issued                                                       16 983            -        3 500               -    
Issuance of Additional Tier 1 capital                                    -            -            -               -    
Purchase of Absa Group Limited shares in respect of 
equity-settled share-based payment arrangements                          -            -            -               -    
Movement in share-based payment reserve                                  -            -            -               -    
Transfer from share-based payment reserve                                -            -            -               -    
Value of employee services                                               -            -            -               -    
Conversion from cash-settled schemes                                     -            -            -               -    
Deferred tax                                                             -            -            -               -    
Share of post-tax results of associates and joint ventures               -            -            -               -    
Disposal of interest in subsidiary(2)                                    -            -            -               -    
Barclays separation(3)                                                   -            -        8 415               -    
Shareholder contribution - fair value of investment(4)                   -            -            -               -    
Balance at the end of the reporting period                         448 301          304       36 879               1    

                                                              Preference     Additional         Retained         Total     
                                                                   share         Tier 1         earnings         other     
                                                                 premium      capital(5)              Rm      reserves     
                                                                      Rm             Rm                             Rm     
Balance at the beginning of the reporting period                   4 643              -           36 099         3 262     
Total comprehensive income for the reporting period                    -              -            8 323           677     
Profit for the reporting period                                        -              -            8 477             -     
Other comprehensive income                                             -              -             (154)          677     
Dividends paid during the reporting period                             -              -           (9 962)            -     
Distributions paid during the reporting period                         -              -              (48)            -     
Shares issued                                                          -              -                -             -     
Issuance of Additional Tier 1 capital                                  -          1 500                -             -     
Purchase of Absa Group Limited shares in respect of                          
equity-settled share-based payment arrangements                        -              -             (125)            -     
Movement in share-based payment reserve                                -              -                -            36     
Transfer from share-based payment reserve                              -              -                -          (586)    
Value of employee services                                             -              -                -           590     
Conversion from cash-settled schemes                                   -              -                -             -     
Deferred tax                                                           -              -                -            32     
Share of post-tax results of associates and joint ventures             -              -             (170)          170     
Disposal of interest in subsidiary(2)                                  -              -                -             -     
Barclays separation(3)                                                 -              -            3 690             -     
Shareholder contribution - fair value of investment(4)                 -              -               48             -     
Balance at the end of the reporting period                         4 643          1 500           37 855         4 145     

                                                                             31 December 2017                                
                                                             Available-       Cash flow            Foreign       Capital     
                                                               for-sale         hedging           currency       reserve     
                                                                reserve         reserve        translation            Rm     
                                                                     Rm              Rm            reserve                   
                                                                                                        Rm                   
Balance at the beginning of the reporting period                    259            (145)               (54)        1 422     
Total comprehensive income for the reporting period                (172)            794                 55             -     
Profit for the reporting period                                       -               -                  -             -     
Other comprehensive income                                         (172)            794                 55             -     
Dividends paid during the reporting period                            -               -                  -             -     
Distributions paid during the reporting period                        -               -                  -             -     
Shares issued                                                         -               -                  -             -     
Issuance of Additional Tier 1 capital                                 -               -                  -             -     
Purchase of Absa Group Limited shares in respect of          
equity-settled share-based payment arrangements                       -               -                  -             -     
Movement in share-based payment reserve                               -               -                  -             -     
Transfer from share-based payment reserve                             -               -                  -             -     
Value of employee services                                            -               -                  -             -     
Conversion from cash-settled schemes                                  -               -                  -             -     
Deferred tax                                                          -               -                  -             -     
Share of post-tax results of associates and joint ventures            -               -                  -             -     
Disposal of interest in subsidiary(2)                                 -               -                  -             -     
Barclays separation(3)                                                -               -                  -             -     
Shareholder contribution - fair value of investment(4)                -               -                  -             -     
Balance at the end of the reporting period                           87             649                  1         1 422     

                                                              Share-       Associates              Total      
                                                               based        and joint       attributable      
                                                             payment        ventures'          to equity      
                                                             reserve          reserve            holders      
                                                                  Rm               Rm                 Rm      
Balance at the beginning of the reporting period                 713            1 067             69 273      
Total comprehensive income for the reporting period                -                -              9 000      
Profit for the reporting period                                    -                -              8 477      
Other comprehensive income                                         -                -                523      
Dividends paid during the reporting period                         -                -             (9 962)     
Distributions paid during the reporting period                     -                -                (48)     
Shares issued                                                      -                -              3 500      
Issuance of Additional Tier 1 capital                              -                -              1 500      
Purchase of Absa Group Limited shares in respect of          
equity-settled share-based payment arrangements                    -                -               (125)     
Movement in share-based payment reserve                           36                -                 36      
Transfer from share-based payment reserve                       (586)               -               (586)     
Value of employee services                                       590                -                590      
Conversion from cash-settled schemes                               -                -                  -      
Deferred tax                                                      32                -                 32      
Share of post-tax results of associates and joint ventures         -              170                  -      
Disposal of interest in subsidiary(2)                              -                -                  -      
Barclays separation(3)                                             -                -             12 105      
Shareholder contribution - fair value of investment(4)             -                -                 48      
Balance at the end of the reporting period                       749            1 237             85 327      

                                                                   Non-        Total    
                                                            controlling       equity    
                                                             interest -           Rm    
                                                               ordinary                    
                                                                 shares                       
                                                                     Rm                           
Balance at the beginning of the reporting period                     26       69 299    
Total comprehensive income for the reporting period                   -        9 000    
Profit for the reporting period                                       -        8 477    
Other comprehensive income                                            -          523    
Dividends paid during the reporting period                            -       (9 962)   
Distributions paid during the reporting period                        -          (48)   
Shares issued                                                         -        3 500    
Issuance of Additional Tier 1 capital                                 -        1 500    
Purchase of Absa Group Limited shares in respect of         
equity-settled share-based payment arrangements                       -         (125)   
Movement in share-based payment reserve                               -           36    
Transfer from share-based payment reserve                             -         (586)   
Value of employee services                                            -          590    
Conversion from cash-settled schemes                                  -            -    
Deferred tax                                                          -           32    
Share of post-tax results of associates and joint ventures            -            -    
Disposal of interest in subsidiary(2)                               (24)         (24)   
Barclays separation(3)                                                -       12 105    
Shareholder contribution - fair value of investment(4)                -           48    
Balance at the end of the reporting period                            2       85 329    

All movements are reflected net of taxation.
(1) This includes ordinary shares and ‘A' ordinary shares.
(2) The Group disposed of its controlling stake in a non-core subsidiary which was classified as held for sale.
(3) As part of the Barclays PLC disinvestment, the Bank issued 10 ordinary shares to Barclays Bank PLC for R8,4bn and
    received an additional R3,7bn as a cash contribution. The resultant cash received meets the definition of a transaction
    with a shareholder.
(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 Bank 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.
(5) The Additional Tier 1 notes represent perpetual subordinated instruments redeemable in full at the option of Absa
    Bank Limited (the issuer) on 12 September 2022 subject to regulatory approval. Interest is paid at the discretion of
    the issuer and is non-cumulative. In addition, if certain conditions are reached, the regulator may prohibit the issuer
    from making interest payments. Accordingly, the instruments are classified as equity instruments. 

Condensed consolidated statement of cash flows for the reporting period ended

                                                                                       30 June               1 December    
                                                                                  2018        2017(1)           2017(1)    
                                                                    Note            Rm             Rm                Rm             
Net cash utilised in operating activities                                       (4 336)        (3 913)           (4 478)        
Income taxes paid                                                               (1 921)        (1 765)           (3 513)        
Net cash utilised in other operating activities                                 (2 415)        (2 148)             (965)          
Net cash utilised in investing activities                                       (1 459)          (956)           (3 906)        
Purchase of property and equipment                                              (1 361)        (1 230)           (2 622)        
Proceeds from sale of non-current assets held for sale                           1 155            398               672            
Net cash utilised in other investing activities                                 (1 253)          (124)           (1 956)        
Net cash generated from financing activities                                     2 186         10 831             7 008          
Net cash generated from Barclays separation                                          -         12 106            12 106         
Issue of ordinary shares                                                             -          3 500             3 500          
Issue of Additional Tier 1 capital                                                   -              -             1 500          
Proceeds from borrowed funds                                                     5 488          1 000             2 841          
Repayment of borrowed funds                                                          -              -            (2 805)        
Dividends paid                                                                  (3 176)        (5 780)           (9 962)        
Net cash (utilised in)/generated from other financing activities                  (126)             5              (172)          
Net (decrease)/increase in cash and cash equivalents                            (3 609)         5 962            (1 376)        
Cash and cash equivalents at the beginning of the reporting period     1        11 040         12 416            12 416         
Cash and cash equivalents at the end of the reporting period           2         7 431         18 378            11 040         

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(2)                        9 684          9 662             9 662          
   Loans and advances to banks(3)                                                1 356          2 754             2 754          
                                                                                11 040         12 416            12 416         
2. Cash and cash equivalents at the end of the reporting period                                                                  
   Cash, cash balances and balances with central banks(2)                        6 833          7 673             9 684          
   Loans and advances to banks(3)                                                  598         10 705             1 356          
                                                                                 7 431         18 378            11 040         

(1) 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 and dividends paid. Comparative statements of cash flows have been restated 
    to take account of this additional disclosure. 
(2) Includes coins and bank notes.
(3) Includes call advances, which are used as working capital for the Bank. 

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 and equipment with a 
  carrying amount of R1m.
- Head office transferred property 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
reporting 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.
  
The following movements in non-current assets and non-current liabilities held for sale were effected during the
reporting 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 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.  
- Corporate and Investment Banking 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.
  
2. Loans and advances

                                                                                                            30 June 2018  
                                                               Stage 1                                       Stage 2      
                                                                   Gross        Expected           ECL              Gross 
                                                                carrying           Credit      coverage          carrying 
                                                                value(1)       Loss (ECL)             %             value 
                                                                      Rm        Allowance                              Rm 
                                                                                       Rm                                 
Loans and advances to customers                                  606 388            2 468          0.41            59 115 
Retail and Business Banking (RBB) South Africa                   392 311            2 185          0.56            35 578 
Retail Banking South Africa                                      334 064            1 564          0.47            28 221 
Credit cards                                                      23 636              511          2.16             3 128 
Instalment credit agreements                                      70 312              512          0.73             6 155 
Loans to associates and joint ventures                            24 682                1             -                 - 
Mortgages                                                        193 278              174          0.09            15 071 
Other loans and advances                                           2 341               14          0.58               368 
Overdrafts                                                         4 561               57          1.25             1 239 
Personal and term loans                                           15 254              295          1.93             2 260 
Business Banking South Africa                                     58 247              621          1.07             7 356 
Corporate and Investment Banking (CIB) South Africa              208 890              434          0.21            22 842 
Wealth                                                             4 796               28          0.58               213 
Head Office, Treasury and other operations in South Africa           391             (179)            -               483 
Loans and advances                                                   391                9          2.22               483 
Reclassification to provisions(2)                                      -             (188)            -                 - 
Loans and advances to banks                                       47 615                9          0.02             1 574 
Total credit risk exposure on loans and advances                 654 003            2 477          0.38            60 689 

                                                                                         Stage 3                       
                                                                    ECL          ECL           Gross            ECL    
                                                              Allowance      coverage       carrying      Allowance    
                                                                     Rm             %          value             Rm    
                                                                                                  Rm                   
Loans and advances to customers                                   3 500          5.92         38 466         14 849    
Retail and Business Banking (RBB) South Africa                    3 366          9.46         35 350         13 214    
Retail Banking South Africa                                       2 967         10.51         30 214         10 694    
Credit cards                                                      1 191         38.07          4 091          2 601    
Instalment credit agreements                                        744         12.08          4 755          1 710    
Loans to associates and joint ventures                                -             -              -              -    
Mortgages                                                           352          2.33         18 317          4 523    
Other loans and advances                                             14          3.88             22             20    
Overdrafts                                                          159         12.84            487            288    
Personal and term loans                                             507         22.44          2 542          1 552    
Business Banking South Africa                                       399          5.42          5 136          2 520    
Corporate and Investment Banking (CIB) South Africa                 331          1.45          2 804          1 432    
Wealth                                                                6          2.90            312            232    
Head Office, Treasury and other operations in South Africa         (203)            -              -            (29)   
Loans and advances                                                    1          0.24              -              -    
Reclassification to provisions(2)                                  (204)            -              -            (29)   
Loans and advances to banks                                           7          0.47              -              -    
Total credit risk exposure on loans and advances                  3 507          5.78         38 466         14 819    

                                                                        Total                                         
                                                                 ECL          Gross            ECL          ECL           
                                                             coverage      carrying      Allowance      coverage          
                                                                    %         value             Rm             %          
                                                                                 Rm                                       
Loans and advances to customers                                 38.60       703 969         20 817          2.96          
Retail and Business Banking (RBB) South Africa                  37.38       463 237         18 765          4.05          
Retail Banking South Africa                                     35.39       392 498         15 225          3.88          
Credit cards                                                    63.57        30 855          4 303         13.95          
Instalment credit agreements                                    35.96        81 222          2 966          3.65          
Loans to associates and joint ventures                              -        24 682              1             -          
Mortgages                                                       24.69       226 666          5 049          2.23          
Other loans and advances                                        92.85         2 731             48          1.76          
Overdrafts                                                      59.01         6 287            504          8.01          
Personal and term loans                                         61.04        20 056          2 354         11.73          
Business Banking South Africa                                   49.07        70 739          3 540          5.00          
Corporate and Investment Banking (CIB) South Africa             51.07       234 536          2 197          0.94          
Wealth                                                          74.38         5 321            266          4.99          
Head Office, Treasury and other operations in South Africa          -           874           (411)            -          
Loans and advances                                                  -           874             10          1.12          
Reclassification to provisions(2)                                   -             -           (421)            -          
Loans and advances to banks                                         -        49 189             16          0.03          
Total credit risk exposure on loans and advances                38.60       753 158         20 833          2.77          

(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 include  
    adjustments in respect of their credit quality.
(2) This represents the ECL allowance on undrawn facilities which has resulted in the ECL allowance on loans and advances 
    exceeding the carrying value of the drawn exposure. This excess is recognised in ‘Provisions' on the Bank's statement of 
    financial position.

                                                                           30 June 2017(1)
                                                           Performing loans
                                                 Exposure       Impair-      Coverage     
                                                       Rm          ment         ratio     
                                                                     Rm             %     
RBB South Africa                                  418 739         3 992          0.95     
Retail Banking South Africa                       356 819         3 148          0.88     
Credit cards                                       26 900           622          2.31     
Instalment credit agreements                       71 473           759          1.06     
Loans to associates and joint ventures             20 707             -             -     
Mortgages                                         213 920         1 211          0.57     
Other loans and advances                            2 686             -             -     
Overdrafts                                          4 575            40          0.87     
Personal and term loans                            16 558           516          3.12     
Business Banking South Africa                      61 920           844          1.36     
Mortgages (including CPF)                          26 477           168          0.63     
Overdrafts                                         19 367           425          2.19     
Term loans                                         16 076           251          1.56     
                                                                                          
CIB South Africa                                  204 297           604          0.30     
Wealth                                              5 430            12          0.22     
Head office, Treasury and other operations      
in South Africa                                       752             9          1.20     
Loans and advances to customers                   629 218         4 617          0.73     
Loans and advances to banks                        50 824             -             -     
                                                  680 042         4 617          0.68     

                                                      Non-performing loans
                                                Exposure       Impair-      Coverage     Net total
                                                      Rm          ment         ratio      exposure
                                                                    Rm             %            Rm
RBB South Africa                                  21 352         8 455         39.60       427 644
Retail Banking South Africa                       18 288         7 339         40.13       364 620
Credit cards                                       3 943         2 875         72.91        27 346
Instalment credit agreements                       2 221         1 052         47.37        71 883
Loans to associates and joint ventures                 -             -             -        20 707
Mortgages                                         10 102         2 118         20.97       220 693
Other loans and advances                               -             -             -         2 686
Overdrafts                                           286           171         59.79         4 650
Personal and term loans                            1 736         1 123         64.69        16 655
Business Banking South Africa                      3 064         1 116         36.42        63 024
Mortgages (including CPF)                          1 501           533         35.51        27 277
Overdrafts                                           853           390         45.72        19 405
Term loans                                           710           193         27.18        16 342
CIB South Africa                                   1 604           617         38.47       204 680
Wealth                                               128            61         47.66         5 485
Head office, Treasury and other operations      
in South Africa                                        -             -             -           743
Loans and advances to customers                   23 084         9 133         39.56       638 552
Loans and advances to banks                            -             -             -        50 824
                                                  23 084         9 133         39.56       689 376

                                                                        31 December 2017(1)     
                                                        Performing loans                        
                                                Exposure       Impair-      Coverage            
                                                      Rm          ment         ratio            
                                                                    Rm             %            
RBB South Africa                                 425 859         3 356          0.79            
Retail Banking South Africa                      363 074         2 583          0.71            
Credit cards                                      26 849           578          2.15            
Instalment credit agreements                      74 430           703          0.94            
Loans to associates and joint ventures            23 037             -             -            
Mortgages                                        213 508         1 124          0.53            
Other loans and advances                           2 794             -             -            
Overdrafts                                         5 349            51          0.95            
Personal and term loans                           17 107           127          0.74            
Business Banking South Africa                     62 785           773          1.23            
Mortgages (including CPF)                         27 010           140          0.52            
Overdrafts                                        19 865           393          1.98            
Term loans                                        15 910           240          1.51            
                                                                                                
CIB South Africa                                 218 383           559          0.26            
Wealth                                             4 930            14          0.28            
Head Office, Treasury and other operations                                                      
in South Africa                                      987            10          1.01            
Loans and advances to customers                  650 159         3 939          0.61            
Loans and advances to banks                       43 217             -             -            
                                                 693 376         3 939          0.57            

                                                              Non-performing loans
                                               Exposure       Impair-      Coverage      Net total
                                                     Rm          ment         ratio       exposure
                                                                   Rm             %             Rm
RBB South Africa                                 21 675         8 678         40.04        435 500
Retail Banking South Africa                      18 340         7 582         41.34        371 249
Credit cards                                      3 622         2 626         72.50         27 267
Instalment credit agreements                      2 360         1 112         47.12         74 975
Loans to associates and joint ventures                -             -             -         23 037
Mortgages                                        10 241         2 056         20.08        220 569
Other loans and advances                              -             -             -          2 794
Overdrafts                                          384           236         61.46          5 446
Personal and term loans                           1 733         1 552         89.56         17 161
Business Banking South Africa                     3 335         1 096         32.86         64 251
Mortgages (including CPF)                         1 477           519         35.14         27 828
Overdrafts                                        1 082           375         34.66         20 179
Term loans                                          776           202         26.03         16 244
CIB South Africa                                  2 019           832         41.21        219 011
Wealth                                              262           174         66.41          5 004
Head Office, Treasury and other operations                                               
in South Africa                                       -             -             -            977
Loans and advances to customers                  23 956         9 684         40.42        660 492
Loans and advances to banks                           -             -             -         43 217
                                                 23 956         9 684         40.42        703 709

(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 from contracts with customers

The following table disaggregates non-interest income splitting it into income received from contracts with customers
by major service lines and per reportable segment, and other items making up non-interest income:

                                            30 June 2018
                                                 RBB          CIB   Wealth    Head Office,         Barclays       Total
                                              South         South             Treasury and       separation
                                              Africa       Africa                    other          effects
                                                                             operations in
                                                                              South Africa
                                                  Rm           Rm       Rm              Rm               Rm          Rm
Fee and commission income from contracts       8 585        1 073      102             (24)               -       9 736
with customers
Consulting and administration fees               115           10        4               -                -         129
Transactional fees and commissions             7 362          744       54               4                -       8 164
Cheque accounts                                2 619           55       27               -                -       2 701
Credit cards                                   1 070            -        -               -                -       1 070
Electronic banking                             2 006          520        9               -                -       2 535
Other(1)                                         634          168       18               3                -         823
Savings accounts                               1 033            1        -               1                -       1 035
Merchant income                                  807            -        -               -                -         807
Asset management                                  11            1       18               -                -          30
Other fees and commissions                        19           72        5             (28)               -          68
Insurance commissions received                   271            -        1               -                -         272
Investment banking fees                            -          246       20               -                -         266
Other income from contracts with customers        31            -        -             (14)               -          17
Other non-interest income, net of expenses      (287)         793      (13)            173              413       1 079
Total non-interest income                      8 329        1 866       89             135              413      10 832

5. Other impairments

                                                               30 June         31 December    
                                                           2018      2017             2017    
                                                             Rm        Rm               Rm    
Impairment/(reversal) raised on financial instruments         1         -              (30)   
Other                                                       182       326              542    
Intangible assets(2)                                          -       326              326    
Property and equipment(3)                                   182         -              216    
                                                            183       326              512    

(1) Includes fees on mortgage loans and foreign currency transactions.
(2) The impairment incurred during the prior reporting period mainly related to computer 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: R216m). As the property will be disposed of, the impairment was calculated based on fair value less
    costs 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 are determined as follows:                                                                                   
Profit attributable to ordinary equity holders of the Bank                        3 959             4 546             8 067    
Total headline earnings adjustment:                                                 192               259               481    
IFRS 5 - Loss/(profit) on disposal of non-current assets held for sale      40       40      (7)       (5)     33        34    
IAS 16 - Loss/(profit) on disposal of property and equipment                15       10      (5)       (4)    (18)      (13)   
IAS 21 - Recycled foreign currency translation reserve                       -        -      52        52      52        52    
IAS 36 - Impairment of property and equipment                              182      142       -         -     216       155    
IAS 36 - Impairment of intangible assets                                     -        -     326       238     326       238    
IAS 39 - Release of available-for-sale reserves                              -        -      18        12      67        49    
IAS 40 - Change in fair value of investment properties                       -        -     (37)      (29)    (37)      (29)   
IAS 40 - Profit on disposal of investment property                           -        -      (5)       (5)     (5)       (5)   
Headline earnings/diluted headline earnings                                       4 151             4 805             8 548    
Headline earnings per share/diluted headline earnings per share (cents)           925.7           1 109.4           1 939.4    

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: 602.27349 cents) (28 July 2017: 892.25702 cents)     2 700        4 000            4 000    
Special dividend (30 June 2017: 811.4669592)                                              -        3 500            3 500    
Final dividend (1 March 2018: 669.1928 cents)                                             -            -            3 000    
                                                                                      2 700        7 500           10 500    
Dividends declared per share to preference equity holders                                                                    
Interim dividend (6 August 2018: 3 542.67 cents) (28 July 2017: 3 685.06849 cents)      175          182              182    
Final dividend (1 March 2018: 3 558.01 cents)                                             -            -              176    
                                                                                        175          182              358    
Distributions declared per note to Additional Tier 1 capital note holder                                                     
Distributions (12 March 2018: 31 500 Rands) (12 June 2018: 32 300 Rands)
(12 December 2017: 31 990.79 Rands)                                                      96            -               48    
                                                                                         96            -               48    
Dividends paid per share to ordinary equity holders                                                                          
Final dividend (16 April 2018: 669.1928 cents) (10 April 2017: 486.88017 cents)(2)    3 000        2 100            2 100    
Interim dividend (11 September 2017: 892.25702 cents)                                     -            -            4 000    
Special dividend (30 June 2017: 811.4669592 cents)                                        -        3 500            3 500    
                                                                                      3 000        5 600            9 600    
Dividends paid per share to preference equity holders                                                                   -    
Final dividend (16 April 2018: 3 558.01 cents) (10 April 2017: 3 644.79452 cents)       176          180              180    
Interim dividend (11 September 2017: 3 685.06849 cents)                                   -            -              182    
                                                                                        176          180              362    
Distributions paid per note to Additional Tier 1 capital note holder                                                         
Distributions (12 March 2018: 31 500 Rands) (12 June 2018: 32 300 Rands) 
(12 December 2017: 31 990.79 Rands)                                                      96            -               48    
                                                                                         96            -               48    

(1) The net amount is reflected after taxation.
(2) The final dividend paid on 10 April 2017 has been corrected since disclosed in the prior interim reporting period. The final 
    dividend per share paid to ordinary equity holders previously disclosed at interim was 1 249.15983 cents per share 
    (gross R5.6bn).

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 Bank 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. 

                                                                                  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:

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

8.1.2 Disposals of businesses during the current reporting period

There were no disposals of businesses during the current reporting period.

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 the disposal of a subsidiary included in non-current assets/liabilities held for sale was R205m.

9. Related parties

There were no once-off significant transactions with related parties of Absa Bank 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 £765 million to the Bank, primarily in recognition of the investments required for the Bank
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 Bank over time. 

CLS Group Holding AG shares were transferred to Barclays PLC for no consideration in 2005. During the previous
reporting period these shares were transferred back to the Bank for a nominal consideration of one British Pound (GBP). 
The shares were recognised at a fair value of R48m. The related credit was 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 Bank undertakes to make specified payments to a counterparty, 
should the counterparty suffer a loss as a result of a specified debtor failing to make payment when due in accordance 
with the terms of a debt instrument. 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                           664          767              257    

The Bank 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                                  1 065          971            1 026    
Later than one year and no later than five years        2 617        2 524            2 654    
Later than five years                                     781        1 068              902    
                                                        4 463        4 563            4 582    

The operating lease commitments comprise a number of separate operating leases in relation to property and equipment, 
none of which is individually significant to the Bank. Leases are negotiated for an average term of three to five years 
and rentals are renegotiated annually.                                               

                                                              30 June           31 December    
                                                         2018         2017             2017    
                                                           Rm           Rm               Rm    
                                                                                               
12. Contingencies                                                                          
Guarantees                                             31 035       29 182           28 960    
Irrevocable debt facilities                           148 673      126 605          145 087    
Letters of credit                                       3 269        4 481            3 834    
Other                                                      87           91              151    
                                                      183 064      160 359          178 032    

Guarantees include performance guarantee contracts and payment guarantee contracts.

Irrevocable facilities are commitments to extend credit where the Bank 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 is managed and monitored by the Bank 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 Bank 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 R470m.
- 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 Bank 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 Bank 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 Bank is or has been engaged.

At the present time, the Bank 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 Bank'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 Bank 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 Bank's control. Some of these are likely to 
have an impact on the Bank's businesses, systems and earnings. 

The Bank is continuously evaluating its programmes and controls in general relating to compliance with regulation. The
Bank undertakes monitoring, review and assurance activities, and the Bank 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 activity 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
activity, 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, Barclays Capital Inc. (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 Bank is subject to income taxes in numerous jurisdictions and the calculation of the Bank's tax charge and
provisions for income taxes necessarily involves a degree of estimation and judgement. There are many transactions and
calculations for which the ultimate tax treatment is uncertain or in respect of which the relevant tax authorities may have
indicated disagreement with the Bank's treatment and accordingly the final tax charge cannot be determined until resolution
has been reached with the relevant tax authority. 

The Bank recognises 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 Bank'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                                                 4 083        3 902            8 508    
CIB South Africa                                                 1 385        1 783            3 354    
Wealth                                                            (198)        (156)            (419)   
Head Office, Treasury and other operations in South Africa        (404)        (572)          (1 649)   
Barclays separation effects(2)                                    (715)        (152)          (1 245)   
Total headline earnings                                          4 151        4 805            8 548    

13.2 Total income by segment                                                                            
RBB South Africa                                                20 432       19 528           40 151    
CIB South Africa                                                 5 214        5 352           10 593    
Wealth                                                             208          214              430    
Head Office, Treasury and other operations in South Africa        (695)        (571)          (1 485)   
Barclays separation effects(2)                                     588          283              405    
Total income                                                    25 747       24 806           50 094    

13.3 Total internal income by segment                                                                      
RBB South Africa                                                   (4 051)        (4 520)        (8 471)   
CIB South Africa                                                   (3 274)            93         (2 885)   
Wealth                                                                 24             15              6    
Head Office, Treasury and other operations in South Africa          7 290          6 109         15 982    
Barclays separation effects(2)                                        175             46            325    
Total internal income                                                (163)         1 743          4 957    

13.4 Total assets by segment                                                                           
RBB South Africa                                                  747 268        718 518        740 856    
CIB South Africa                                                  514 632        445 114        486 168    
Wealth                                                              6 590          5 973          6 097    
Head Office, Treasury and other operations in South Africa       (239 832)      (221 066)      (245 674)   
Barclays separation effects(2)                                      1 603            (16)           912    
Total assets                                                    1 029 261        948 523        988 358    

13.5 Total liabilities by segment                                                                      
RBB South Africa                                                  742 955        712 954        730 734    
CIB South Africa                                                  512 052        442 163        481 646    
Wealth                                                              6 820          6 124          6 508    
Head Office, Treasury and other operations in South Africa       (306 922)      (284 800)      (306 019)   
Barclays separation effects(2),(3)                                (8 502)       (11 731)        (9 840)   
Total liabilities                                                 946 403        864 710        903 029    

(1) Operational changes, management changes and associated changes to the way in which the Chief Operating 
    Decision Maker (CODM) views the performance of each business segment, have resulted in the reallocation of 
    earnings, assets and liabilities between operating segments. For details on the business portfolio changes 
    refer to note 16.
(2) Barclays separation effects' is the reconciling stripe between IFRS and normalised results and does not 
    represent a reportable segment.
(3) 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 centrally held by Treasury and is presented as an 
    intersegmental asset in ‘Other liabilities'.

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
                                                                           2018                         2017
                                                                 Carrying                      Carrying
                                                                    value      Fair value         value      Fair value          
                                                                       Rm              Rm            Rm              Rm          
Financial assets                                                                                                                 
Balances with the South African Reserve Bank                       17 862          17 862        18 673          18 673          
Coins and bank notes                                                6 833           6 833         7 673           7 673          
Cash, cash balances and balances with central banks                24 695          24 695        26 346          26 346          
Investment securities                                               5 498           5 498             -               -          
Loans and advances to banks                                        21 658          21 357        33 562          33 562          
Other assets                                                       24 589          24 589        27 241          27 241          
RBB South Africa                                                  444 473         444 440       426 863         426 971          
Retail Banking South Africa                                       377 274         377 241       364 619         364 727          
 Credit cards                                                      26 552          26 552        27 346          27 346          
 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                                                        221 617         221 617       220 713         220 722          
 Other loans and advances                                           2 680           2 680           687             687          
 Overdrafts                                                         5 783           5 783         4 631           4 631          
 Personal and term loans                                           17 703          17 694        16 653          16 849          
Business Banking South Africa                                      67 199          67 199        62 244          62 244          
 Mortgages (including CPF)                                         28 509          28 509        26 498          26 498          
 Overdrafts                                                        21 647          21 647        19 403          19 403          
 Term loans                                                        17 043          17 043        16 343          16 343          
                                                                                                                                 
Rest of Africa Banking                                                  -               -           684             684          
CIB South Africa                                                  194 612         194 612       177 495         177 495          
Wealth                                                              5 055           5 055         5 485           5 485          
Head Office, Treasury and other operations in South Africa          1 285           1 285           740             740          
Loans and advances to customers - net of impairment losses        645 425         645 392       611 267         611 375          
Loans to Group companies                                           38 730          38 730        26 117          26 117          
Total assets (not held at fair value)                             760 595         760 261       724 533         724 641          
Financial liabilities                                                                                                            
Deposits from banks                                                64 582          64 582        38 212          38 212          
Other liabilities                                                  35 708          35 708        28 872          28 872          
Call deposits                                                      58 786          58 786        56 008          56 008          
Cheque account deposits                                           154 676         154 676       157 138         157 138          
Credit card deposits                                                1 788           1 788         1 811           1 811          
Fixed deposits                                                    130 708         130 397       121 292         122 084          
Foreign currency deposits                                          16 897          16 897        22 857          22 857          
Notice deposits                                                    58 946          58 946        63 125          63 138          
Other deposits                                                      1 300           1 300         2 113           2 113          
Savings and transmission deposits                                 136 663         136 663       130 709         130 709          
Deposits due to customers                                         559 764         559 453       555 053         555 858          
Debt securities in issue                                          136 004         136 004       134 957         134 957          
Borrowed funds                                                     21 416          21 416        15 930          15 930          
Total liabilities (not held at fair value)                        817 474         817 163       773 024         773 829          

The following table summarises the carrying amounts and fair value of those assets and liabilities not held at fair value.

                                                                                    31 December
                                                                                        2017
                                                                              Carrying                          
                                                                                 value      Fair value          
                                                                                    Rm              Rm          
Financial assets                                                                                                
Balances with the South African Reserve Bank                                    19 108          19 108          
Coins and bank notes                                                             9 684           9 684          
Cash, cash balances and balances with central banks                             28 792          28 792          
Loans and advances to banks                                                     26 020          26 020          
Other assets                                                                    13 327          13 420          
                                                                                                                
RBB South Africa                                                               435 500         435 731          
Retail Banking South Africa                                                    371 248         371 479          
 Credit cards                                                                   27 267          27 267          
 Instalment credit agreements                                                   77 044          77 275          
 Loans to associates and joint ventures                                         23 037          23 037          
 Mortgages                                                                     220 569         220 569          
 Other loans and advances                                                          726             726          
 Overdrafts                                                                      5 443           5 443          
 Personal and term loans                                                        17 162          17 162          
Business Banking South Africa                                                   64 252          64 252          
 Mortgages (including CPF)                                                      27 828          27 828          
 Overdrafts                                                                     19 199          19 199          
 Term loans                                                                     17 225          17 225          
                                                                                                                
CIB South Africa                                                               192 203         192 203          
Wealth                                                                           5 004           5 004          
Head Office, Treasury and other operations in South Africa                         974             974          
Loans and advances to customers - net of impairment losses                     633 681         633 912          
Loans to Group companies                                                        36 530          36 530          
Non-current assets held for sale                                                 1 118           1 118          
Total assets (not held at fair value)                                          739 468         739 792          
Financial liabilities                                                                                           
Deposits from banks                                                             52 079          52 079          
Other liabilities                                                               25 709          25 724          
Call deposits                                                                   62 725          62 725          
Cheque account deposits                                                        153 539         153 539          
Credit card deposits                                                             1 896           1 896          
Fixed deposits                                                                 131 521         131 521          
Foreign currency deposits                                                       18 444          18 444          
Notice deposits                                                                 58 460          58 460          
Other deposits                                                                   1 414           1 414          
Savings and transmission deposits                                              135 375         135 375          
Deposits due to customers                                                      563 374         563 374          
Debt securities in issue                                                       132 701         132 701          
Borrowed funds                                                                  15 866          15 866          
Total liabilities (not held at fair value)                                     789 729         789 744          

15. Assets and liabilities held at fair value

15.1 Fair value measurement and valuation processes

Financial assets and financial liabilities

The Bank has an established control framework with respect to the measurement of fair values. The framework includes a
Traded Risk and Valuations Committee and an Independent Valuation Control (IVC) team, 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 Bank's investment properties is determined through valuations performed by
external independent valuators.

When the Bank's internal valuations are different to that of the external independent valuers, detailed procedures are
performed to substantiate the differences, whereby the IVC 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 flow profiles, are used to determine expected cash
flows where contractual cash flow profiles would provide an inaccurate fair value.

Deposits, debt securities in issue and borrowed funds

Deposits, debt securities in issue and borrowed funds are valued using discounted cash flow models, applying rates
currently offered for issuances with similar characteristics. Where these instruments include embedded derivatives, the
embedded derivative component is valued using the methodology for derivatives 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 Bank is not a market maker, 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 market maker and has the ability to transact at, or better than, mid-price 
(which is the case for certain equity, bond and vanilla derivative markets), the mid-price is used since the bid-offer 
spread does not represent a transaction cost. 

Uncollateralised derivative adjustments

A fair value adjustment is incorporated into uncollateralised derivative valuations to reflect the impact on fair
value of counterparty credit risk, the Bank's own credit quality, as well as the cost of funding across all asset classes.

Model valuation adjustments

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

15. Assets and liabilities held at fair value (continued)

15.4 Fair value hierarchy

The following table shows the Bank's assets and liabilities that are recognised and subsequently measured at fair
value and are analysed by valuation techniques. The classification of assets and liabilities is based on the lowest level
input that is significant to the fair value measurement in its entirety.

                                                                   30 June
                                                                     2018
                                              Level 1       Level 2       Level 3        Total      
Recurring fair value measurements                  Rm            Rm            Rm           Rm      
Financial assets                                                                                    
Cash, cash balances and balances with               -             3             -            3      
central banks                                                                                       
Investment securities                          38 321        34 898         8 078       81 297      
Loans and advances to banks                         -        26 961           554       27 515      
Trading and hedging portfolio assets           30 964        64 605         2 508       98 077      
Debt instruments                               28 845           738            74       29 657      
Derivative assets                                   -        57 997           848       58 845      
Commodity derivatives                               -         2 026             -        2 026      
Credit derivatives                                  -             -           165          165      
Equity derivatives                                  -         3 019           601        3 620      
Foreign exchange derivatives                        -        12 438             4       12 442      
Interest rate derivatives                           -        40 514            78       40 592      
Equity instruments                                733             -             -          733      
Money market assets                             1 386         5 870         1 586        8 842      
Loans and advances to customers                     -        28 717         9 010       37 727      
Total financial assets                         69 285       155 184        20 150      244 619      
Financial liabilities                                                                               
Deposits from banks                                 -        31 141             -       31 141      
Trading and hedging portfolio liabilities       4 684        53 039           622       58 345      
Derivative liabilities                              -        53 039           622       53 661      
Commodity derivatives                               -         1 977             -        1 977      
Credit derivatives                                  -             -           158          158      
Equity derivatives                                  -         3 264           249        3 513      
Foreign exchange derivatives                        -        15 625             4       15 629      
Interest rate derivatives                           -        32 173           211       32 384      
Short positions                                 4 684             -             -        4 684      
Deposits due to customers                         184        28 063         2 815       31 062      
Debt securities in issue                            -         4 324            35        4 359      
Total financial liabilities                     4 868       116 567         3 472      124 907      
Non-financial assets                                                                                
Commodities                                       576             -             -          576      
Investment properties                               -             -           165          165      
Non-recurring fair value measurements                                                               
Non-current assets held for sale(1)                 -             -            37           37      

                                                                     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                                                                                           
Investment securities                          45 985        31 263         4 628       81 876          
Loans and advances to banks                         -        16 812           450       17 262          
Trading and hedging portfolio assets           23 978        49 787         1 787       75 552          
Debt instruments                               21 316         3 220         1 390       25 926          
Derivative assets                                   -        40 511           177       40 688          
Commodity derivatives                               -           554             -          554          
Credit derivatives                                  -            17           164          181          
Equity derivatives                                  -         1 302            13        1 315          
Foreign exchange derivatives                        -         6 950             -        6 950          
Interest rate derivatives                           -        31 688             -       31 688          
Equity instruments                                667             -             -          667          
Money market assets                             1 995         6 056           220        8 271          
Loans and advances to customers                     -        22 623         4 662       27 285          
Total financial assets                         69 963       120 485        11 527      201 975          
Financial liabilities                                                                                   
Deposits from banks                                 -        18 263             -       18 263          
Trading and hedging portfolio liabilities       5 898        34 798           454       41 150          
Derivative liabilities                              -        34 798           454       35 252          
Commodity derivatives                               -           601             -          601          
Credit derivatives                                  -             3           188          191          
Equity derivatives                                  -         1 280            51        1 331          
Foreign exchange derivatives                        -         7 372             -        7 372          
Interest rate derivatives                           -        25 542           215       25 757          
Short positions                                 5 898             -             -        5 898          
Deposits due to customers                         149        21 813           910       22 872          
Debt securities in issue                          398         4 067           484        4 949          
Total financial liabilities                     6 445        78 941         1 848       87 234          
Non-financial assets                                                                                    
Commodities                                     1 679             -             -        1 679          
Investment properties                               -             -             -            -          
Non-recurring fair value measurements                                                                   
Non-current assets held for sale(1)                 -             -         1 391        1 391          

                                                                 31 December
                                                                     2017
                                              Level 1       Level 2       Level 3         Total          
Recurring fair value measurements                  Rm            Rm            Rm            Rm          
Financial assets                                                                                         
Investment securities                          37 737        32 841         5 946        76 524          
Loans and advances to banks                         -        16 713           484        17 197          
Trading and hedging portfolio assets           31 379        72 194         1 824       105 397          
Debt instruments                               29 185         2 410           177        31 772          
Derivative assets                                   -        58 594           546        59 140          
Commodity derivatives                               -           973           124         1 097          
Credit derivatives                                  -             -           165           165          
Equity derivatives                                  -         2 356           173         2 529          
Foreign exchange derivatives                        -        15 548             8        15 556          
Interest rate derivatives                           -        39 717            76        39 793          
Equity instruments                                567             -             -           567          
Money market assets                             1 627        11 190         1 101        13 918          
Loans and advances to customers                     -        22 070         4 741        26 811          
Total financial assets                         69 116       143 818        12 995       225 929          
Financial liabilities                                                                                    
Deposits from banks                                 -        22 031             -        22 031          
Trading and hedging portfolio liabilities       8 141        51 866           944        60 951          
Derivative liabilities                              -        51 866           944        52 810          
Commodity derivatives                               -         1 164           121         1 285          
Credit derivatives                                  -             -           148           148          
Equity derivatives                                  -         1 965           423         2 388          
Foreign exchange derivatives                        -        14 500             4        14 504          
Interest rate derivatives                           -        34 237           248        34 485          
Short positions                                 8 141             -             -         8 141          
Deposits due to customers                         203        18 676         1 572        20 451          
Debt securities in issue                          399         4 354           488         5 241          
Total financial liabilities                     8 743        96 927         3 004       108 674          
Non-financial assets                                                                                     
Commodities                                     2 051             -             -         2 051          

(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             Listed equity: market bid price     Underlying price of the market traded                 
                                  Other items: discounted             instruments and/or interest
                                  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 is set out below:

                                                                                30 June
                                                                                  2018
                                             Trading and
                                                 hedging     Loans and   Loans and
                                               portfolio   advances to    advances   Investment   Investment    Total assets    
                                                  assets     customers    to banks   securities   properties   at fair value    
                                                      Rm            Rm          Rm           Rm           Rm              Rm    
Opening balance at the beginning of                                                                            
the reporting period                               1 824         4 741         484        5 946            -          12 995    
Net interest income                                    -            32           -           40            -              72    
Gains and losses from banking and                                                                              
trading activities                                   418           (59)          8           (8)           -             359    
Gains and losses from investment activities            -             -           -           10            -              10    
Purchases                                            485         5 470          62        2 297          165           8 479    
Sales                                                (95)          (61)          -            -            -            (156)   
Movement in other comprehensive income                 -             -           -           (9)           -              (9)   
Transfer in/(out of) Level 3                        (124)       (1 113)          -            -            -          (1 237)   
Step acquisition                                       -             -           -         (198)           -            (198)   
Closing balance at the end of the                                                                              
reporting period                                   2 508         9 010         554        8 078          165          20 315    

                                                                                30 June
                                                                                  2017
                                             Trading and
                                                 hedging     Loans and   Loans and
                                               portfolio   advances to    advances   Investment   Investment    Total assets    
                                                  assets     customers    to banks   securities   properties   at fair value    
                                                      Rm            Rm          Rm           Rm           Rm              Rm    
Opening balance at the beginning of                                                                            
the reporting period                               1 505         4 890         571        1 062          222           8 250    
Net interest income                                    -            51           -           10            -              61    
Other income                                           -             -           -            -            9               9    
Gains and losses from banking and                                                                              
trading activities                                    (2)            -           -            -            -              (2)   
Gains and losses from investment activities            -             -         (51)           2            -             (49)   
Purchases                                            534           618           -        2 806            -           3 958    
Sales                                               (250)         (897)        (70)           -         (231)         (1 448)   
Transfer in/(out of) Level 3                           -             -           -          748            -             748    
Closing balance at the end of the                                                                              
reporting period                                   1 787         4 662         450        4 628            -          11 527    


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   advances to    advances   Investment   Investment    Total assets    
                                                  assets     customers    to banks   securities   properties   at fair value    
                                                      Rm            Rm          Rm           Rm           Rm              Rm    
Opening balance at the beginning of                                                                           
the reporting period                               1 505         4 890         571        1 062          222           8 250    
Net interest income                                    -            12           -           62            -              74    
Other income                                           -             -           -            -           37              37    
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        4 789            -           6 998    
Sales                                               (147)       (1 112)       (175)           -         (259)         (1 693)   
Movement in other comprehensive income                 -             -           -           31            -              31    
Transfer out of Level 3                                -           (98)          -            -            -             (98)   
Closing balance at the end of the                                                                             
reporting period                                   1 824         4 741         484        5 946            -          12 995    

                                                                         30 June
                                                                          2018
                                             Trading and
                                                 hedging                              Debt              Total    
                                               portfolio      Deposits due      securities        liabilities    
                                             liabilities      to customers        in issue      at fair value    
                                                      Rm                Rm              Rm                 Rm    
Opening balance at the beginning of the     
reporting period                                     944             1 572             488              3 004    
Gains and losses from banking and           
trading activities                                  (202)                -               -               (202)   
Purchases                                              1                 -               -                  1    
Issues                                                 -             4 352               -              4 352    
Settlements                                            -            (1 618)              -             (1 618)   
Transfer in/(out of) Level 3                        (121)           (1 491)           (453)            (2 065)   
Closing balance at the end of the           
reporting period                                     622             2 815              35              3 472    

                                                                        30 June
                                                                          2017
                                             Trading and
                                                 hedging                              Debt              Total    
                                               portfolio      Deposits due      securities        liabilities    
                                             liabilities      to customers        in issue      at fair value    
                                                      Rm                Rm              Rm                 Rm    
Opening balance at the beginning of the    
reporting period                                     307             1 139             604              2 050    
Gains and losses from banking and          
trading activities                                   147                 -               -                147    
Issues                                                 -               295               -                295    
Settlements                                            -              (540)           (120)              (660)   
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
                                                hedging                              Debt              Total    
                                              portfolio      Deposits due      securities        liabilities    
                                            liabilities      to customers        in issue      at fair value    
                                                     Rm                Rm              Rm                 Rm    
Opening balance at the beginning of the    
reporting period                                    307             1 139             604              2 050    
Net interest income                                   -                 7               -                  7    
Gains and losses from banking and          
trading activities                                  585                 -               -                585    
Issues                                               52             1 685              30              1 767    
Settlements                                           -            (1 144)            (68)            (1 212)   
Movement in/(out of) Level 3                          -              (115)            (78)              (193)   
Closing balance at the end of the          
reporting period                                    944             1 572             488              3 004    

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    
                                     assets     customers      securities   at fair value   liabilities   at 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    
                                     assets  customers(1)   securities(2)   at fair value   liabilities   at fair value    
                                         Rm            Rm              Rm              Rm            Rm              Rm    
                                                                                                                           
Gains and losses from banking                               
and trading activities                   65           771             281           1 117           136             136    

                                                                       31 December
                                                                           2017
                                Trading and                                                Trading and                    
                                    hedging    Loans and                                       hedging           Total    
                                  portfolio  advances to      Investment    Total assets     portfolio     liabilities    
                                     assets    customers   securities(2)   at fair value   liabilities   at fair value    
                                         Rm           Rm              Rm              Rm            Rm              Rm    
Gains and losses from banking                                                                            
and trading activities                  142          761              76             979          (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 Bank's risk management processes, stress tests are applied on the significant unobservable parameters
to generate a range of potentially possible alternative valuations. The assets and liabilities that most impact this
sensitivity analysis are those with the more illiquid and/or structured portfolios. The stresses are applied independently 
and do not take account of any cross correlation between separate asset classes that would reduce the overall effect on 
the valuations.

The following table reflects how the unobservable parameters were changed in order to evaluate the sensitivities of
Level 3 financial assets and liabilities:

Significant unobservable parameter              Positive/(negative) variance applied to parameters    
Credit spreads                                  100/(100) basis points (bps)                          
Volatilities                                    10/(10)%                                              
Basis curves                                    100/(100) bps                                         
Yield curves and repo curves                    100/(100) bps                                         
Future earnings and marketability discount      15/(15)%                                              
Funding spreads                                 100/(100) bps                                         

A significant parameter has been deemed to be one which may result in a charge to profit or loss, or a change in the
fair value asset or liability by more than 10% of the underlying value of the affected item. This is demonstrated by the
following sensitivity analysis which includes a reasonable range of possible outcomes:

                                                                           30 June
                                                                             2018
                                                            Potential effect     Potential effect
                                                                    recorded             recorded    
                                                           in profit or loss   directly in equity    
                                                                 Favourable/          Favourable/
                         Significant                          (unfavourable)       (unfavourable)    
                         unobservable parameters                          Rm                   Rm    
Loans and                Absa Group Limited (AGL)/    
advances to banks        Absa funding spread                             -/-                  -/-    

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

Investment securities    Risk adjustment yield curves,    
                         future earnings and              
                         marketability discount                     81/(127)            263/(254)    

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

Other assets             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)    
                                                                           
                                                                           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             AGL/Absa funding spread                         -/-                  -/-
to customers                                                                                      
                                                           
Investment               Risk adjustment yield curves,     
securities               future earnings and marketability           40/(62)            129/(125)    
                                                           
Loans and advances       Credit spreads                              90/(88)                  -/-
to customers                                               
                                                           
Other assets             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
Loans and advances       AGL/Absa funding spread                     17/(17)                  -/-  
to banks                                                   
                                                           
Deposits due             AGL/Absa funding spread                     13/(12)                  -/-
to customers                                                            
                                                           
Investment securities    Risk adjustment yield curves,     
                         future earnings and marketability           59/(59)            253/(240)    
                                                           
Loans and advances       Credit spreads                              60/(69)                  -/-  
to customers                                               
                                                           
Other assets             Volatility, credit spreads                      -/-                  -/-    
                                                           
Trading and hedging      Volatility, credit spreads, basis 
portfolio assets         curves, yield curves, repo curves,
                         funding spreads                             33/(33)                  -/-    
                                                           
Trading and hedging      Volatility, credit spreads, basis 
portfolio liabilities    curves, yield curves, repo curves,
                         funding spreads                             17/(17)                  -/-    
                                                           
Other liabilities        Volatility, credit spreads                      -/-                  -/-    
                                                                   199/(207)            253/(240) 

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:

Category of asset/   Valuation techniques          Significant              
liability            applied                       unobservable inputs      
                                                
Loans and advances   Discounted cash flow          Credit spreads           
to banks and         and/or dividend yield                                  
customers            models                                                 
                                                                            
Investment           Discounted cash flow          Marketability            
securities           models, third-party           discounts and/or         
                     valuations, earnings          comparator               
                     multiples and/or              multiples                
                     income capitalisation                                  
                     valuations                                             
                                                
Trading and hedging
portfolio assets 
and liabilities
Debt instruments     Discounted cash flow          Credit spreads           
                     models
Derivative assets
 Credit              Discounted cash flow          Credit spreads,          
 derivatives(1)      and/or credit default         recovery rates and/or    
                     swap (hazard rate)            quanto ratio             
                     models

 Equity derivatives  Discounted cash flow,         Volatility and/or        
                     option pricing and/or         dividend streams
                     futures pricing models        (greater than 3 years)
 Foreign exchange    Discounted cash flow          African basis curves     
 derivatives         and/or option pricing models  (greater than 1 year)
 Interest rate       Discounted cash flow          Real yield curves        
 derivatives         and/or option pricing models  (less than 1 year),
                                                   repurchase agreement 
                                                   curves (less than 1 
                                                   year), funding spreads 
                                                      
Deposits due to      Discounted cash flow          The Bank's funding      
customers            models                        spreads(greater than
                                                   5 years) 

Debt securities in   Discounted cash flow          Funding curves           
issue                models                        (greater than 5 years)
                                            
Investment           Discounted cash flow          Estimates of periods in  
properties           models                        which rental units will
                                                   be disposed of
                                                   Annual selling price     
                                                   escalations
                                                   Annual rental escalations
                                                   Expense ratios           
                                                   Vacancy rates            
                                                   Income capitalisation    
                                                   rates
                                                   Risk adjusted discount   
                                                   rates

                                 30 June                31 December
                      2018            2017                2017
Category of asset/         Range of estimates utilised
liability                  for the unobservable inputs
                      
Loans and advances    0.04% to        (0.1%) to           0.3% to
to banks and          1.97%           2.10%               2.3%
customers                                                
                                                         
Investment            Discount rate   Discount rate       Discount rate
securities            of 7.75%        of 13%,             of 7% and 9%,
                      to 8%           comparator          comparator
                                      multiples between   multiples between
                                      5 and 10.5          5 and 10.5
                                                                       
                      
Trading and hedging   
portfolio assets      
and liabilities       
Debt instruments      0.15% to 8.2%   0.007% to 27.5%     3% to 15%
                      
Derivative assets     
 Credit               0.03%-14%,      (0.3%) to 9%,       0.04% to 10%,
 derivatives(1)       15%-76%,        15% to 76%,         15% to 76%,
                      60%-90%         54% to 90%          54% to 90%
                      
                      
 Equity derivatives   14.3% to 41.9%  16.6% to 21%        15.09% to 64.67%
                      
                      
 Foreign exchange     3% to 45%       (12.2%) to 3.27%    (28%) to 29.5%
 derivatives          
 Interest rate        0.21% to 7.2%   0.1% to 8.33%       0.25% to 10.69%
 derivatives          
                      
                      
                      
                      
Deposits due to       1.3% to 1.9%    (0.1%) to 2.10%     0.2% to 1.9%
customers             
                      
                      
Debt securities in    1.3% to 1.9%    (0.1%) to 1.55%     0.2% to 1.9%
issue                 
                      
Investment            1 to 6 years    1 to 10 years       1 to 6 years    
properties            
                      
                      0% to 6%       1% to 6%             6%              
                      
                      n/a            1% to 7%             6%              
                      n/a            25% to 50%           n/a             
                      n/a            1% to 7%             n/a             
                      7.5% to 8%     10% to 11%           7.75% to 8%     
                      
                      11% to 15%     14%                  11% to 15%      
                      
For assets or liabilities held at amortised cost and disclosed in Levels 2 or 3 of the fair value hierarchy, the
discounted cash flow valuation technique is used. Interest rates and money market curves are considered unobservable 
inputs for items which mature after five years. However, if the items mature in less than five years, these inputs are
considered observable.

For debt securities in issue held at amortised cost, a further significant input would be the underlying price of the
market traded instrument.

The sensitivity of the fair value measure is dependent on the unobservable inputs. Significant changes to the
unobservable inputs in isolation will have either a positive or negative impact on fair values.

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

15.10 Unrecognised gains/(losses) as a result of the use of valuation models using unobservable inputs

The amount that has yet to be recognised in the statement of comprehensive income that relates to the difference between 
the transaction price and the amount that would have arisen had valuation models using unobservable inputs been used on 
initial recognition, less amounts subsequently recognised, is as follows:

                                                                     30 June                31 December    
                                                                       2018       2017             2017    
                                                                         Rm         Rm               Rm    
Opening balance at the beginning of the reporting period               (134)      (139)            (139)   
New transactions                                                          -         17              (27)   
Amounts recognised in profit or loss during the reporting period          -        (18)              32    
Closing balance at the end of the reporting period                     (134)      (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 during the current and previous reporting periods.

16. Reporting changes overview 
Overview of reporting changes
The financial reporting changes that have been applied in the current reporting period are as follows:
- The implementation of new IFRS:
• IFRS 9 - The Bank 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 Bank has elected not to restate comparative 
  periods.(Audited)
• IFRS 15 - The Bank 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 Bank's reported
results(1);

- Changes in internal accounting policies:
• The presentation of interest income and interest expense

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

The table below summarises the total impact on the Bank's statement of changes in equity 

                                                                                                    Capital and 
                                                                                                       reserves 
                                                 Preference                                        attributable 
                                       Share          share                                                  to 
                                     capital        capital      Additional                            ordinary 
                                   and share      and share          Tier 1     Retained       Other     equity 
                                     premium        premium         capital     earnings    reserves    holders   
                                          Rm             Rm              Rm           Rm          Rm         Rm  
Balance reported as at                37 183          4 644           1 500       37 855        4 145    85 327
31 December 2017                                                                                                
Impact of adopting IFRS 9 (Audited)        -              -               -       (3 103)       (204)    (3 307)
Impact of adopting IFRS 15                 -              -               -          (44)          -        (44)  
Adjusted balance as at                37 183          4 644           1 500       34 708       3 941     81 976
1 January 2018                                                                                                  

                                        Non-
                                 controlling
                                   interest-
                                    ordinary              Total
                                      shares             equity
                                          Rm                 Rm
Balance reported as at                     2             85 329
31 December 2017                      
Impact of adopting IFRS 9                  -             (3 307)
Impact of adopting IFRS 15                 -                (44)
Adjusted balance as at                     2             81 978
1 January 2018

(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 Bank 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
Basis of presentation
This section includes the impact of the adoption of IFRS 9 and specifically the transitional disclosures as required
by IFRS 7 Financial Instruments: Disclosures.

The information presented in this section has been prepared using the principal accounting policies as set out in the
Bank's most recent audited annual consolidated financial statements except for application of the new accounting
requirements of IFRS 9 as explained in this section. All amounts are presented on the historical cost basis with the 
exception of financial assets and financial liabilities that are either required to or have been elected to be 
classified at fair value through profit or loss, or in respect of financial assets measured at fair value through 
other comprehensive income.

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

All information marked as audited in this 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 note 16 is available for 
inspection at the Bank's registered office.

16.1.1 Overview and highlights
16.1.1.1 The impact of IFRS 9 on the Bank (Audited)
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 Bank,
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 Bank going forward. 

In accordance with the transition options allowable under IFRS 9, the Bank will continue to apply the hedge accounting
requirements set out in  IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). The Bank 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 Bank 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, which include 
those relating to hedge accounting.

16.1.1.2 The impact of adopting a revised classification and measurement framework for financial instruments (Audited)
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 Bank'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. 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 Bank 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(1)
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 Bank should remain
unchanged. The Bank 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. (This paragraph has been audited)

The implementation of IFRS 9 has been a project of strategic importance to the Bank. Over the past four years,
extensive work was performed to design, build and test new models, create the necessary infrastructure and produce 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 Bank 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.

(1) Note that only the first paragraph of 16.1.1.3 has been audited.

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
Bank 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 Bank 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. (This paragraph 
has been audited)

The adoption of IFRS 9 has impacted the financial and regulatory capital position of the Bank, as follows:
- An increase of R4 314m (27%) in the Bank's ECL provisions (including interest in suspense), from R15 902m as 
  at 31 December 2017 to R20 216m as at 1 January 2018. Refer to section 16.1.3.1. (This bullet point has been audited)
- A net decrease in retained earnings of R3 103m (after a taxation adjustment of R1 211m) together with a net
  decrease in other reserves of R204m which includes the effects of reclassifying investment securities from available-
  for-sale to amortised cost. Refer to 16.1.3. (This bullet point has been audited)
- The Bank remains strongly capitalised notwithstanding a R1 558m decrease in CET 1 and a 16 bps decrease in the CET
  1 ratio. The decrease in the CET 1 ratio is  before the application of the transitional arrangement which defers the
  impact over three years. This deferral reduces the impact on the CET 1 ratio on the date of initial adoption to 4 bps.
  Refer to 16.1.5.1

16.1.1.5 Condensed consolidated statement of financial position for Absa Bank Limited (Audited)
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    1 January
                                                                      2017    measurement(1)     ECL(2)        2018
                                                                        Rm               Rm         Rm           Rm
Assets
Investment securities                                               76 524             (195)         -       76 329
Loans and advances to banks                                         43 217                -        (26)      43 191
Loans and advances to customers                                    660 492              (20)    (3 827)     656 645
Investments in associates and joint ventures(3)                      1 235                -        (73)       1 162
Other assets(4)                                                    206 890               55        792      207 737
Total assets                                                       988 358             (160)    (3 134)     985 064
Liabilities                                                       
Trading portfolio liabilities                                       59 834              (20)         -       59 814
Provisions(5)                                                        2 073                -        452        2 525
Other liabilities(4)                                               841 122                -       (419)     840 703
Total liabilities                                                  903 029              (20)        33      903 042
Equity                                                            
Capital and reserves                                              
Attributable to equity holders:                                   
Ordinary share capital                                                 304                -          -          304
Ordinary share premium                                              36 879                -          -       36 879
Preference share capital                                                 1                -          -            1
Preference share premium                                             4 643                -          -        4 643
Additional Tier 1 capital                                            1 500                -          -        1 500
Retained earnings                                                   37 855                -     (3 103)      34 752
Other reserves                                                       4 145             (140)       (64)       3 941
                                                                    85 327             (140)    (3 167)      82 020
Non-controlling interest - ordinary shares                               2                -          -            2
Total equity                                                        85 329             (140)    (3 167)      82 022
Total liabilities and equity                                       988 358             (160)    (3 134)     985 064

(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) Reflects the change in the Bank's share of net assets from associates and joint ventures due to them adopting 
    IFRS 9.
(4) Relates to the adjustments to deferred tax and current tax assets.
(5) 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). 

16.1.2 Key elements of the revised impairment model under IFRS 9
16.1.2.1 Introduction (Audited)
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 Bank'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 (Audited)
The Bank 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 lifetime 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 Bank'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 (Audited)
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 Bank considers that the obligor is unlikely to pay its credit obligations without recourse by the Bank to
  actions such as realising security. Elements to be taken as indications of unlikeliness to pay include the 
  following:
• The Bank 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 Bank.

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 Bank 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 (Audited)
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 Bank follows a two-step approach.
First, the Bank 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 Bank 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 was 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 Bank 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 Bank to recognise interest on stage 3 assets under IFRS 9, is not 
dissimilar from the manner in which the Bank 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 Bank would have recognised a larger gross 
carrying value, and larger impairment allowance of R2 279m (refer to section 16.1.3.1. for more detail).

The Bank 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 Bank has elected to make an accounting policy choice in this regard. The Bank'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 Bank believes that this policy promotes a fairer presentation of ECL as well as net interest 
income, both of which the Bank 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 (Audited)
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     
                                                                                                  Non-   
                                                                           Performing       performing    
                                                                            provision        portfolio   
                                                                                   Rm               Rm   
Retail and Business Banking South Africa                                        3 356            8 678   
Retail Banking                                                                  2 583            7 582   
Credit cards                                                                      578            2 626   
Instalment credit agreements                                                      703            1 112   
Loans to associates and joint ventures                                              -                -   
Mortgages                                                                       1 124            2 056   
Other loans and advances                                                            -                -   
Overdrafts                                                                         51              236   
Personal and term loans                                                           127            1 552   
Business Banking South Africa                                                     773            1 096   
CIB South Africa                                                                  559              832   
Wealth                                                                             14              174   
Head Office, Treasury and other operations in South Africa                         10                -   
Loans and advances                                                                 10                -   
Reclassification to provisions                                                      -                -   
Loans and advances to customers                                                 3 939            9 684   
Loans and advances to banks                                                         -                -   
Investment securities                                                               -                -   
Total ECL allowance: On-statement of financial position                         3 939            9 684   
Off-statement of financial position exposures                                                            
Undrawn committed facilities(1)                                                     -                -   
Financial guarantees                                                                -                -   
Letters of credit                                                                   -                -   
Total ECL allowance: Off-statement of financial position                            -                -   
Total ECL allowance                                                             3 939            9 684   

                                                                             IAS 39 - 31 December 2017 
                                                                                Total         
                                                                               IAS 39      Interest in    
                                                                       (excluding IIS)        suspense
                                                                                   Rm               Rm
Retail and Business Banking South Africa                                       12 034            2 131    
Retail Banking                                                                 10 165            1 082    
Credit cards                                                                    3 204                -    
Instalment credit agreements                                                    1 815               93    
Loans to associates and joint ventures                                              -                -    
Mortgages                                                                       3 180              822    
Other loans and advances                                                            -                -    
Overdrafts                                                                        287               69    
Personal and term loans                                                         1 679               98    
Business Banking South Africa                                                   1 869            1 049    
CIB South Africa                                                                1 391              123    
Wealth                                                                            188               25    
Head Office, Treasury and other operations in South Africa                         10                -    
Loans and advances                                                                 10                -    
Reclassification to provisions                                                      -                -    
                                                                                                          
Loans and advances to customers                                                13 623            2 279    
Loans and advances to banks                                                         -                -    
Investment securities                                                               -                -    
Total ECL allowance: On-statement of financial position                        13 623            2 279    
Off-statement of financial position exposures                                                             
Undrawn committed facilities(1)                                                     -                -    
Financial guarantees                                                                -                -    
Letters of credit                                                                   -                -    
Total ECL allowance: Off-statement of financial position                            -                -    
Total ECL allowance                                                            13 623            2 279    
                                                                                                          

                                                                        IAS 39 - 31 December 2017   
                                                                Total IAS 39    IFRS 9 - 1 January 2018
                                                              (including IIS)      Stage 1      Stage 2
                                                                          Rm            Rm           Rm
Retail and Business Banking South Africa                              14 165         2 193        2 929  
Retail Banking                                                        11 247         1 553        2 621  
Credit cards                                                           3 204           456        1 021  
Instalment credit agreements                                           1 908           539          610  
Loans to associates and joint ventures                                     -             2            -  
Mortgages                                                              4 002           210          364  
Other loans and advances                                                   -             8           18  
Overdrafts                                                               356            44          127  
Personal and term loans                                                1 777           294          481  
Business Banking South Africa                                          2 918           640          308  
CIB South Africa                                                       1 514           482          384  
Wealth                                                                   213            27            6  
Head Office, Treasury and other operations in South Africa                10          (188)        (172) 
Loans and advances                                                        10             8           11  
Reclassification to provisions                                             -          (196)        (183) 
Loans and advances to customers                                       15 902         2 514        3 147  
Loans and advances to banks                                                -             4           22  
Investment securities                                                      -             9            -  
Total ECL allowance: On-statement of financial position               15 902         2 527        3 169  
Off-statement of financial position exposures                                                            
Undrawn committed facilities(1)                                            -           196          183  
Financial guarantees                                                       -            15            8  
Letters of credit                                                          -             1            2  
Total ECL allowance: Off-statement of financial position                   -           212          193  
Total ECL allowance                                                   15 902         2 739        3 362  
                                                                                                         

                                                                       IAS 39 - 31 December 2017
                                                               Stage 3       Total IFRS 9          IFRS 9 
                                                                    Rm          provision      transition 
                                                                          (including IIS)      adjustment 
                                                                                       Rm              Rm 
                                                                                                          
Retail and Business Banking South Africa                        12 927             18 049           3 884 
Retail Banking                                                  10 305             14 479           3 232 
Credit cards                                                     2 759              4 236           1 032 
Instalment credit agreements                                     1 431              2 580             672 
Loans to associates and joint ventures                               -                  2               2 
Mortgages                                                        4 392              4 966             964 
Other loans and advances                                             8                 34              34 
Overdrafts                                                         240                411              55 
Personal and term loans                                          1 475              2 250             473 
Business Banking South Africa                                    2 622              3 570             652 
CIB South Africa                                                   955              1 821             307 
Wealth                                                             233                266              53 
Head Office, Treasury and other operations in South Africa         (47)              (407)           (417)
Loans and advances                                                   -                 19               9 
Reclassification to provisions                                     (47)              (426)           (426)
Loans and advances to customers                                 14 068             19 729           3 827 
Loans and advances to banks                                          -                 26              26 
Investment securities                                                -                  9               9 
Total ECL allowance: On-statement of financial position         14 068             19 764           3 862 
Off-statement of financial position exposures                                                             
Undrawn committed facilities(1)                                     47                426             426 
Financial guarantees                                                 -                 23              23 
Letters of credit                                                    -                  3               3 
Total ECL allowance: Off-statement of financial position            47                452             452 
Total ECL allowance                                             14 115             20 216           4 314 

(1) Relates to ECL on undrawn committee facilities to the extent that it exceeds the gross carrying amount 
    on loans.

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.

The 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 Bank 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 Bank 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 the South African Reserve Bank and investment 
  securities are included within the scope of IFRS 9 ECL and have contributed to the Bank's total ECL allowance.

16.1.4.1 Summary of ECL coverage for loans and advances to banks and customers (Audited)
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
                                                                      Gross                  
                                                                   carrying    Allowance       ECL      
                                                                      value      for ECL  coverage    
                                                                         Rm           Rm         %
RBB South Africa                                                    381 576        2 193      0.57      
Retail Banking South Africa                                         326 985        1 553      0.47      
Credit cards                                                         23 116          456      1.97      
Instalment credit agreements                                         67 498          539      0.80      
Loans to associates and joint ventures                               23 037            2      0.01      
Mortgages                                                           192 272          210      0.11      
Other loans and advances                                              2 439            8      0.33      
Overdrafts                                                            4 362           44      1.01      
Personal and term loans                                              14 261          294      2.06      
Business Banking South Africa                                        54 591          640      1.17      
CIB South Africa(1)                                                 183 130          482      0.26      
Wealth                                                                4 658           27      0.58      
Head Office, Treasury and other operations in                           218         (188)        -         
South Africa                                                                                            
 Loans and advances                                                     218            8      3.67      
 Reclassification to provision                                            -         (196)        -         
Loans and advances to customers                                     569 582        2 514      0.44      
Loans and advances to banks(2)                                       41 289            4      0.01      
Total Loans and advances                                            610 871        2 518      0.41      

                                                                            1 January 2018
                                                                               Stage 2
                                                                     Gross                      
                                                                  carrying      Allowance        ECL      
                                                                     value        for ECL   coverage 
                                                                        Rm            Rm          %  
RBB South Africa                                                    33 192         2 929       8.82   
Retail Banking South Africa                                         26 284         2 621       9.97   
Credit cards                                                         3 122         1 021      32.70  
Instalment credit agreements                                         5 217           610      11.69  
Loans to associates and joint ventures                                   -             -          -      
Mortgages                                                           14 290           364       2.55   
Other loans and advances                                               345            18       5.22   
Overdrafts                                                           1 024           127      12.40  
Personal and term loans                                              2 286           481      21.04  
Business Banking South Africa                                        6 908           308       4.46   
CIB South Africa(1)                                                 35 232          384        1.09   
Wealth                                                                 229            6        2.62   
Head Office, Treasury and other operations in                          769         (172)          -      
South Africa                                                                                         
 Loans and advances                                                    769           11        1.43   
 Reclassification to provision                                           -         (183)          -      
Loans and advances to customers                                     69 422        3 147        4.53   
Loans and advances to banks(2)                                       1 928           22        1.14   
Total Loans and advances                                            71 350        3 169        4.44   


                                                                                 Stage 3
                                                                    Gross                                
                                                                 carrying             ECL           ECL
                                                                    value       allowance      coverage
                                                                       Rm              Rm             %
RBB South Africa                                                    34 897         12 927         36.85  
Retail Banking South Africa                                         29 227         10 305         35.04  
Credit cards                                                        4 233          2 759          65.18  
Instalment credit agreements                                        4 167          1 431          34.34  
Loans to associates and joint ventures                              -              -              -      
Mortgages                                                           18 009         4 392          24.39  
Other loans and advances                                            11             8              72.73  
Overdrafts                                                          416            240            57.69  
Personal and term loans                                             2 391          1 475          61.69  
Business Banking South Africa                                       5 670          2 622          46.24  
CIB South Africa(1)                                                 2 143          955            44.56  
Wealth                                                              330            233            70.61  
Head Office, Treasury and other operations in                       -              (47)           -      
South Africa                                                                                             
 Loans and advances                                                 -              -              -      
 Reclassification to provision                                      -              (47)           -      
Loans and advances to customers                                     37 370         14 068         37.65  
Loans and advances to banks(2)                                      -              -              -      
Total Loans and advances                                            37 370         14 068         37.65  
 
                                                                     Gross      Total
                                                                  carrying           ECL          ECL
                                                                     value     allowance     coverage
                                                                        Rm            Rm            %
RBB South Africa                                                   449 665        18 049         4.01 
Retail Banking South Africa                                        382 496        14 479         3.79 
Credit cards                                                       30 471         4 236          13.90
Instalment credit agreements                                       76 882         2 580          3.36 
Loans to associates and joint ventures                             23 037         2              0.01 
Mortgages                                                          224 571        4 966          2.21 
Other loans and advances                                           2 795          34             1.22 
Overdrafts                                                         5 802          411            7.08 
Personal and term loans                                            18 938         2 250          11.88
Business Banking South Africa                                      67 169         3 570          5.31 
CIB South Africa(1)                                                220 505        1 821          0.83 
Wealth                                                             5 217          266            5.10 
Head Office, Treasury and other operations in                      987            (407)          -    
South Africa                                                                                          
 Loans and advances                                                987            19             1.93 
 Reclassification to provision                                     -              (426)          -    
Loans and advances to customers                                    676 374        19 729         2.92 
Loans and advances to banks(2)                                     43 217         26             0.06 
Total Loans and advances                                           719 591        19 755         2.75

(1) Included in Stage 1 gross carrying amount on loans and advances to customers is R26 808m 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 Bank's regulatory capital
The Bank 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 South African Reserve Bank 
(SARB). The key drivers of such impact are explained in the next table.

                                                      31 December 2017
Key capital metrics                      Initial       Release                       Impact on   
                           (IAS 39)  recognition         of EL        Deferred           other  
                                          of ECL     shortfall        tax (RWA)       reserves  
Note                                  16.1.5.1.1    16.1.5.1.2      16.1.5.1.3      16.1.5.1.4  
  Capital supply (Rm)                                                                           
Common Equity Tier 1         72 643       (3 103)        1 749                            (204) 
Tier 1 capital               76 454       (3 103)        1 749                            (204) 
Total capital                91 478       (3 103)        1 749                            (204) 
Risk weighted assets        542 199                                      2 331                   
  Capital ratios (%)(1)                                                                         
Common Equity Tier 1           13.4         (0.6)          0.3            (0.1)           (0.0)
Tier 1                         14.1         (0.6)          0.3            (0.1)           (0.0)
Total capital                  16.9         (0.6)          0.3            (0.1)           (0.0)
  Leverage ratio                                                                                
Leverage exposure         1 153 338       (4 314)        1 749           1 266            (259) 
Leverage ratio (%)              6.6         (0.2)          0.1            (0.0)           (0.0)

                                         31 December 2017              1 January 2018
Key capital metrics              Release of      
                                     RWA on         Eligible        Fully                
                                        non-         general       loaded   Transitional  
                                  performing      provisions      capital        capital  
                                       loans         (Tier 2)    position       position
Note                              16.1.5.1.5      16.1.5.1.6                              
  Capital supply (Rm)                                                                     
Common Equity Tier 1                                               71 085         72 253  
Tier 1 capital                                                     74 896         76 065  
Total capital                                             53       89 973         91 102  
Risk weighted assets                  (7 421)                     537 109        540 927  
  Capital ratios (%)(1)                                                                   
Common Equity Tier 1                     0.2                         13.2           13.4  
Tier 1                                   0.2                         13.9           14.1  
Total capital                            0.2               -         16.7           16.8  
  Leverage ratio                                                                          
Leverage exposure                          -               -    1 151 780      1 152 949  
Leverage ratio (%)                         -               -          6.5            6.6   

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 R4 314m which is partially 
offset by the recognition of a net tax credit within retained income of R1 211m. The tax credit includes 
current and deferred tax.

16.1.5.1.2 Release of Expected Loss (EL) 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 majority 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 16.1.5.1.1, the carrying value of the Bank'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 R2 331m, 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 R204m (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 Bank's business model of holding the instruments to collect contractual cash flows.

(1) The Bank's capital ratios decreased as follows as a result of the adoption of IFRS 9:
    - CET 1 ratio decreased by 16 bps on a fully loaded basis and 4 bps afer phase-in.
    - Tier 1 ratio decreased by 16 bps on a fully loaded basis and 4 bps afer phase-in.
    - Total capital ratio decreased by 12 bps on a fully loaded basis and 3 bps afer phase-in.

16.1.5 The impact of IFRS 9 on regulatory capital 
16.1.5.1 Adoption of IFRS 9 and its impact on the Bank's regulatory capital
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 Bank'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 R53m.

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 (Audited)
Consistent with IAS 39, loans are written off when there is no realistic probability of recovery and the Bank'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 forwarding 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 Bank'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 Bank'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. Transfers between stages could be driven by factors at an individual 
account level, or owing to a deteriorating macroeconomic environment.

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 Bank 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 Bank's tax position (Audited)
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 larger 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 their IFRS 9 modelling (Audited)
The Bank'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 Bank'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 Bank 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 Bank'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 2018-20 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 surging agricultural output, but the
near-term outlook still remains moderate. Gross Domestic Product (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 boost 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%-6% target range in 2018-2019, 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 (Audited)
16.1.9.1 Determination of the lifetime of a credit exposure
The choice of initial recognition and asset duration (lifetime) is another critical judgement 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 Bank 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 (which would typically be overnight). 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 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 Bank 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 Bank 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 Bank applies both the standardised (TSA) and advanced internal ratings-based (AIRB) approaches to calculate its
regulatory capital requirements relating to credit risk. While the Bank'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 Bank's own measures of PD, EAD and LGD. In designing IFRS 9 compliant ECL models, the Bank 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

Probability of default (PD)   Average of default within the next 12 months, but calculated based on the long-run 
                              historical average over the whole economic cycle (that is, through the cycle).      
Loss Given Default (LGD)      LGD is a downturn-based metric, representing a prudent view of recovery in adverse economic 
                              conditions.
                              The LGD calculation incorporates both direct and indirect costs associated with the 
                              collection of the exposure.
                              Cash flows are discounted at the risk-free rate plus an appropriate premium.
Exposure at default (EAD)     A downturn EAD is calculated to reflect what would be expected during a period of economic 
                              downturn.

Key risk parameter            IFRS 9
Probability of default (PD)   For stage 1 assets, the PD is measured for the next 12 months, whilst in the case of stage 2 
                              and stage 3 assets, PD is measured over the remaining 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)      A current or forward-looking LGD is used to reflect the impact of economic scenarios, with no 
                              bias to adverse economic conditions.
                              Collection costs incorporated into the LGD calculation include only those that are directly 
                              attributable to the collection of recoveries.
                              The discount rate applied is the EIR on the exposure.
Exposure at default (EAD)     The calculation of EAD considers all the contractual terms over the lifetime of the instrument.

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 Bank'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 a 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 (Audited)
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 Payment 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 Bank 
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 Bank early adopted this requirement in 2017.

16.1.10.1 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
                                                  Measurement category               Carrying    
                                                                                       amount   Reclassification
Assets                                                                                     Rm                 Rm
Cash, cash balances and balances                  Amortised cost - designated          28 792                  -  
with central banks                                                                     28 792                  -  
Investment securities                             Designated at FVTPL                  20 866             (9 503) 
                                                                                                           9 503  
                                                  AFS - designated                     35 241             (5 902) 
                                                                                                             287  
                                                  AFS - hedged items                   20 417                  -  
                                                                                            -              5 420  
                                                                                       76 524               (195) 
Loans and advances                                Designated at FVTPL                  17 197            (15 745) 
to banks                                                                                                  15 745  
                                                  Amortised cost - designated          26 020                  -  
                                                                                       43 217                  -  
Trading portfolio assets                          FVTPL - held for trading            102 730                  -  
Hedging portfolio assets                          FVTPL - hedging instrument            2 667                  -  
Other assets                                      Amortised cost - designated          13 327                  -  
Loans and advances                                Designated at FVTPL                  26 811            (19 378) 
to customers                                                                                              19 358  
                                                  Amortised cost - designated         633 635                  -  
                                                  Amortised cost - hedged items            46                  -  
                                                                                      660 492                (20) 
Loans to Group companies                          Amortised cost - designated          36 530                  -  
Non-current asset                                 Amortised cost - designated           1 118                  -  
held for sale                                                                                                     
Assets outside the                                                                     22 961                 55  
scope of IFRS 9                                                                                                   
Total assets                                                                          988 358               (160) 


                                                                  IFRS 9                                 
                                                                                                         Carrying
                                               Remeasurement      Measurement category                     amount
Assets                                                    Rm                                                   Rm
Cash, cash balances and balances          
with central banks                                         -      Held at amortised cost                   28 792 
                                                           -                                               28 792 
Investment securities                                      -      Designated at FVTPL                      11 363 
                                                           -      Mandatorily at FVTPL                      9 503 
                                                           -      FVOCI - debt instruments                 29 339 
                                                           -      FVOCI - equity instruments                  287 
                                                           -      FVOCI - hedged items                     20 417 
                                                                  Amortised cost - debt instruments         5 420 
                                                           -                                               76 329 
Loans and advances                                         -      Designated at FVTPL                       1 452 
to banks                                                   -      Mandatorily at FVTPL                     15 745 
                                                         (26)     Amortised cost - debt instruments        25 994 
                                                         (26)                                              43 191 
Trading portfolio assets                                   -      Mandatorily at FVTPL                    102 730 
Hedging portfolio assets                                   -      FVTPL - hedging Instrument                2 667 
Other assets                                               -      Held at amortised cost                   13 327 
Loans and advances                                         -      Designated at FVTPL                       7 433 
to customers                                               -      Mandatory at FVTPL                       19 358 
                                                      (3 827)     Amortised cost - designated             629 808 
                                                           -      Amortised cost - hedged items                46
                                                      (3 827)                                             656 645 
Loans to Group companies                                   -      Held at amortised cost                   36 530 
Non-current asset                                          -      Held at amortised cost                    1 118 
held for sale                             
Assets outside the                                       719      Assets outside the scope of IFRS 9       23 735 
scope of IFRS 9                           
Total assets                                          (3 134)                                             985 064       


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 
Bank'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 Bank'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 South Africa and investments in Wealth 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. 
- Commodity-linked debt instruments within CIB South Africa that 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.
- 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 Bank.

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 Bank'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 Bank'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 Bank'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 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 Bank has separately presented 
its effective interest income within profit or loss, but elect to present all interest which fall outside the 
aforementioned scope as a sub-component of ‘Interest and similar income'. The Bank 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 Bank:
- The Bank 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 Bank continued refining its cost allocation methodology, resulting in the restatement of operating expenses
  between and within segments.
- CIB South Africa review of customer portfolio to be industry specific resulted in a R16bn move of loans and
  advances to customers from Corporate to Investment Banking.
- The South Africa Banking segment (which consisted of RBB South Africa and CIB South Africa in aggregate) has 
  been removed in the Bank's segmental disclosures to align with how the banking operations are now managed.

Administration and contact details

Absa Bank Limited                                                        Registered office                    
Incorporated in the Republic of South Africa                             7th Floor, Absa Towers West          
Registration number: 1986/004794/06                                      15 Troye Street, Johannesburg, 2001  
Authorised financial services and registered credit provider (NCRCP7)    PO Box 7735, Johannesburg, 2000      
JSE share code: ABSP                                                     Switchboard: +27 11 350 4000         
ISIN: ZAE000079810                                                       www.absa.africa                      
                                                                                                              
                                                                                                                
Head Investor Relations                                                  Queries                                
Alan Hartdegen                                                           Please direct investor relations       
Telephone: +27 11 350 2598                                               queries to IR@absa.co.za               
                                                                         Please direct media queries to         
                                                                         groupmedia@absa.africa                 
                                                                         Please direct queries relating  
                                                                         to your Absa Group shares to 
                                                                         questions@computershare.co.za    
                                                                         Please direct other queries regarding 
                                                                         the Bank to groupsec@absa.co.za

Company Secretary                                                      
Nadine Drutman                                                         
Telephone: +27 11 350 5347                                             
Head of Financial Control                                              
John Annandale                                                         
Telephone: +27 11 350 3946                                             
                                                                       
                                                                       
Transfer secretary                                                       Sponsors                          
Computershare Investor Services (Pty) Ltd                                Absa Bank Limited (Corporate and  
Telephone: +27 11 370 5000                                               Investment Bank)                  
computershare.com/za/                                                    Telephone: +27 11 895 6843        
                                                                         equitysponsor@absa.africa         
                                                                                                           
Auditors                                                                                                   
Ernst & Young Inc.                                                                                         
Telephone: +27 11 772 3000                                                                                 
ey.com/ZA/en/Home                                                       
                                                                        
Date: 06/08/2018 07:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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