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ABSA BANK LIMITED - ABSP - Absa Bank Limited - Summary consolidated financial results for the reporting period ended 31 December 2018

Release Date: 11/03/2019 08:43
 
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ABSP - Absa Bank Limited - Summary consolidated financial results for the reporting period ended 31 December 2018

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

Absa Bank Limited
Summary consolidated financial results for the reporting period ended 31 December 2018

The board of Directors overseas the Banks 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 Absa Group Limited 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 summary consolidated financial results including 
the reporting changes contained in the announcement released on the Stock Exchange News Services (SENS) on 
11 March 2019. The GACC and the Board of Directors 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.

Absa Bank Limited
Summary consolidated financial results for the reporting period ended 31 December 2018

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)

These summary annual 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
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 audited summary provisional 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 summary provisional consolidated financial results is included in the Absa Group Limited
results, as presented to shareholders on 11 March 2019.

Normalised financial results as a consequence of Barclays PLC separation
On 1 March 2016, Barclays PLC announced its intention to sell down its 62.3% interest in the Group. A comprehensive 
separation programme was initiated by Barclays PLC and the Group to determine possible interactions between the companies 
to ensure that the Group can operate as an independent and sustainable group without the involvement of Barclays PLC.

Barclays PLC currently holds 14.9% in the Group.

As part of its divestment Barclays PLC contributed ?765m to the Group, primarily in recognition of the investments 
required for the Group to separate from Barclays PLC. Investments will be made primarily in rebranding, technology and 
separation-related projects and it is expected that these will neutralise the capital and cash flow impact of separation 
investments on the Group over time. 

The separation process will have an impact on the Group?s financial results for the next few years, most notably by 
increasing the capital base in the near term and generating endowment revenue thereon, with increased costs over time 
as the separation investments are concluded ahead of the associated benefit realisation. International Financial 
Reporting Standards (IFRS) require that the Barclays PLC contribution be recognised directly in equity, while the 
subsequent investment expenditure (including the depreciation or amortisation of capitalised assets), will be 
recognised in profit or loss. The aforementioned will result in a disconnect between underlying business performance 
and the IFRS financial results during the separation period. Normalised financial results will therefore be disclosed 
while the underlying business performance is materially different from the IFRS financial results.

The following presents the items which have been excluded from the normalised financial results:
* Barclays PLC contribution (including the endowment benefit)
* Hedging linked to separation activities
* Technology and brand separation projects
* Depreciation and amortisation on the aforementioned projects
* Transitional service payments to Barclays PLC
* Employee cost and benefits linked to separation activities
* Separation project execution and support cost

Basis of presentation
IFRS financial results
The Bank's summary provisional annual 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 Johannesburg Stock 
Exchange (JSE) Listings Requirements and the requirements of the Companies Act of South Africa. 

The information disclosed in the SENS is derived from the information contained in the annual audited consolidated 
and separate financial statements (except items not indicated as audited) and does not contain full or complete 
disclosure details. Any investment decisions by shareholders should be based on consideration of the audited annual 
consolidated financial statements, which are available on request. The presentation and disclosure of these summary 
provisional consolidated financial statements complies with IAS 34 Interim Financial Reporting (IAS 34).

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.

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, offsetting of financial assets and liabilities.

Normalised financial results
The summary provisional consolidated normalised financial results (normalised results) have been prepared to illustrate 
the impact of the separation from Barclays PLC and adjust for the interest income on Barclays PLC's separation 
contribution, hedging linked to the separating activities, operating expenses and other expenses, as well as the 
tax  impact of the aforementioned items (collectively the "separation"). The Bank will present normalised results 
for future periods where the financial impact of separation is considered material. Normalisation does not affect 
divisional disclosures.

Normalised results have been prepared for illustrative purposes only and because of their nature may not fairly
present the Bank's financial position, changes in equity, cash flows and results of operations.

The normalised results have not been prepared using the accounting policies of the Bank and do not comply with IFRS.
These results are considered to be pro forma financial information and have been prepared in terms of the Johannesburg
Stock Exchange listing requirements. The pro forma financial information, is the responsibility of the Bank's Board of 
the directors.

The pro forma financial information contained in this announcement has been reviewed by the group's external auditors
and their unmodified limited assurance report prepared in terms of ISAE 3420 is available for inspection at the
company's registered office on weekdays from 09:00 to 16:00

Accounting policies
The accounting policies applied in preparing the audited summary provisional consolidated financial results are the same 
for those in place for the Bank's annual consolidated financial statements for the reporting period ended 31 December 2017,
except for the adoption of IFRS 9, IFRS 15, internal accounting policy amendments and changes to the Bank's operating
segments and business portfolios changes between operating segments. Refer to note 15.

Standards issued not yet effective

IFRS 16 Leases (IFRS 16) sets out the principles for the recognition, measurement, presentation and disclosure of
leases. One of the key changes brought by IFRS 16 is the elimination of the classification of leases as either operating
leases or finance leases for a lessee, and the introduction a single lessee accounting model.

Applying the revised model, a lessee is required to recognise:
* a right of use asset together with a lease liability representing the future lease payments for all leases (unless
  the lease term is shorter than 12 months or the underlying asset is of low value and the related exemptions are 
  elected); and
* depreciation of lease assets separately from interest on lease liabilities in the statement of comprehensive income.

The standard provides revised guidance in defining what constitutes a lease and how the lease term is determined as
well as enhanced disclosure requirements for both lessees and lessors about its leasing activities and how exposures are
managed.

During 2018, the joint leases programme (incorporating corporate real estate services and finance) has focused its
efforts on implementing the IT solution, which will ensure that leases are recognised and disclosed in terms of the
requirements of IFRS 16, collating the required lease data, designing and testing new processes, and ensuring 
appropriate financial disclosures.

The effective date of IFRS 16 is 1 January 2019. The Bank intends to apply the modified retrospective approach on
adoption, with right of use assets measured retrospectively using the Bank's transition date incremental borrowing rate. 

The implementation of IFRS 16 will require the recognition of right-of-use assets (presented as part of property and
equipment) and lease liabilities, together with a debit against retained earnings of between R190m and R240m (net of
deferred tax and the release of IAS 17 straight line reserves). Right-of-use assets will be risk weighted in line with the
nature of the underlying assets, and the debit to retained income will reduce CET1. The value of the right-of-use assets
recognised is expected to be less than R3bn and the value of the increase in lease liabilities is expected to be less
than R3.7bn (before the release of the IAS 17 straight-lining liability of approximately R390m).

Audit report
Ernst & Young Inc. (EY), the Bank's independent auditor, has audited the annual consolidated and separate financial
statements of the Bank from which management prepared the summary provisional consolidated financial results. The auditor has
expressed an unqualified audit opinion on the consolidated annual financial statements. The summary provisional consolidated 
financial results comprise: the summary provisional consolidated statement of financial position at 31 December 2018, summary 
provisional consolidated statement of comprehensive income, summary provisional consolidated statement of changes in equity 
and summary provisional consolidated statement of cash flows for the reporting period then ended and selected explanatory 
notes (on pages 1 -3 and 9-66), excluding items indicated as unaudited. The audit report on the consolidated annual 
financial statements as well as the independent reporting accountants' reports on the normalised financial results is 
available for inspection at the Bank's registered office.

These summary provisional consolidated financial statements (on pages 1- 3 and 9-66) for the year ended 31 December 2018 have been
audited by EY, who expressed an unmodified opinion thereon. A copy of the auditor's report on the summary provisional consolidated
financial statements is available for inspection at the company's registered office. 

Events after the reporting period
Absa Bank Limited CEO, Maria Ramos announced her retirement on the 29 January 2019, effective 28 February 2019. The
Board has appointed Ren? van Wyk as Absa's Chief Executive with effect from 1 March 2019.
Apart from the above mentioned, the directors are not aware of any other events (as defined per IAS10 Events after the
Reporting Period) after the reporting date of 31 December 2018 and the date of authorisation of these annual
consolidated and separate financial statements.

On behalf of the Board

W E Lucas-Bull       J P Quinn
Chairman             Financial Director

Johannesburg
8 March 2019

Declaration of preference share dividend number 26

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 average prime overdraft lending
rate for 1 September 2018 to 28 February 2019.Absa Bank's prevailing prime overdraft lending rate as at 28 February 2019 was 10.25%.

Notice is hereby given that preference dividend number 26, equal to 70% of the average prime rate for 1 September 2018
to 28 February 2019, per Absa Bank preference share has been declared for the period 1 September 2018 to 
28 February 2019. The dividend is payable on Monday, 15 April 2019, to shareholders of the Absa Bank preference shares 
recorded in the Register of Members of the Company at the close of business on Friday, 12 April 2019.

The directors of Absa Bank confirm that the Bank will satisfy the solvency and liquidity test immediately after
completion of the dividend distribution.

Based on the average prime rate, the preference dividend payable for the period 1 September 2018 to 28 February 2019
is 3 518.6986 cents per Absa Bank preference share.

The dividend will be subject to dividends withholding tax at a rate of 20%. In accordance with paragraphs 11.17(a)(i)
to (ix) and 11.17(c) of the JSE Listings Requirements, the following additional information is disclosed:
* The dividend has been declared out of income reserves.
* The local dividend tax rate is twenty per cent (20%).
* The gross local dividend amount is 3 518.6986 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 2 814.95888 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, 9 April 2019
Shares commence trading ex dividend            Wednesday, 10 April 2019
Record date                                    Friday, 12 April 2019
Payment date                                   Monday, 15 April 2019

Share certificates may not be dematerialised or rematerialised between Wednesday, 10 April 2019 and Friday, 
12 April 2019, both dates inclusive.

On Monday, 15 April 2019, the dividend will be electronically transferred to the bank accounts of shareholders.

On behalf of the Board

N R Drutman
Company Secretary

Johannesburg
8 March 2019

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

Summary provisional consolidated IFRS salient features for the reporting period ended
                                                                                    31 December
                                                                                 2018        2017
Statement of comprehensive income (Rm)                                                           
Income                                                                         51 843      50 094
Operating expenses                                                             34 341      31 609
Profit attributable to ordinary equity holders                                  7 480       8 068
Headline earnings(1)                                                            7 853       8 549
Statement of financial position                                                                  
Loans and advances to customers (Rm)                                          735 200     660 492
Total assets (Rm)                                                           1 079 679     988 358
Deposits due to customers (Rm)                                                605 647     583 825
Loans to deposits and debt securities ratio (%)                                 96. 0       91. 5
Financial performance (%)                                                                        
Return on equity (RoE)                                                           10.4        11.8
Return on average assets (RoA)                                                   0.77        0.91
Return on risk-weighted assets (RoRWA)                                           1.44        1.64
Stage 3 loans ratio on gross loans and advances                                  4.81         n/a
Non-performance loans (NPL) ratio on gross loans and advances                     n/a        3.75
Operating performance(%)                                                                         
Net interest margin on average interest - bearing assets(2)                      3.65        3.80
Credit loss ratio on gross loans and advances to customers and banks             0.68        0.73
Non-interest as a percentage of total income                                     42.2        41.3
Cost-to-income ratio                                                             66.2        63.1
Jaws                                                                               (5)        (12)
Effective tax rate                                                               27.2        27.9
Share statistics (million)                                                                       
Number of ordinary shares in issue                                              448.3       448.3
Weighted average number of ordinary shares in issue                             448.3       440.7
Diluted weighted average number of ordinary shares in issue                     448.3       440.7
Share statistics (cents)                                                                         
Headline earnings per ordinary share (HEPS)                                   1 751.7     1 939.4
Diluted headline earnings per ordinary share (DHEPS)                          1 751.7     1 939.4
Basic earnings per ordinary share (EPS)                                       1 668.7     1 830.3
Diluted basic earnings per ordinary share (DEPS)                              1 668.7     1 830.3
Dividend per ordinary share relating to income for the reporting period         713.8       2 373
Dividend cover times (times)                                                      2.5         0.8
NAV per ordinary share                                                         17 022      17 998
Tangible NAV per ordinary share                                                15 406      17 136
Capital adequacy (%)                                                                             
Absa Bank Limited                                                                16.5        16.9
Common Equity Tier 1 (%)                                                                         
Absa Bank Limited                                                                12.3        13.4

(1) After allowing for R351m (2017: R362m) profit attributable to preference equity holders and R190m (2017: R48m)
    profit attributable to Additional Tier 1 Capital holders.
(2) Net interest margin has been restated to reflect an update of the Bank's policy for classifying assets as 
    interest bearing or non-interest bearing. The updated policy classifies reverse repurchase transactions entered into 
    for regulatory purposes as interest bearing; under the previous policy these transactions were classified as 
    non-interest bearing. Under the previous policy the Bank's net interest margin would have been 3.79% (2017: 3.91%). 


Summary provisional consolidated normalised salient features for the reporting period ended
                                                                                   31 December
                                                                                 2018        2017 
                                                                                                  
Statement of comprehensive income (Rm)                                                            
Income                                                                         50 987      49 689 
Operating expenses                                                             31 499      29 708 
Profit attributable to ordinary equity holders                                  9 252       9 550 
Headline earnings(1)                                                            9 623       9 793 
Statement of financial position                                                                   
Total assets (Rm)                                                           1 076 520     987 446 
Financial performance (%)                                                                         
Return on equity (RoE)                                                           14.7        14.8 
Return on average assets (RoA)                                                   0.95        1.05 
Return on risk-weighted assets (RoRWA)                                           1.77        1.88 
Operating performance(%)                                                                          
Net interest margin on average interest - bearing assets(2)                      3.63        3.79 
Non-interest as a percentage of total income                                     41.9        41.5 
Cost-to-income ratio                                                             61.8        59.8 
Jaws                                                                               (3)         (6)
Effective tax rate                                                               25.7        27.0 
Share statistics (million)                                                                        
Weighted average number of ordinary shares in issue                             448.3       440.8 
Diluted weighted average number of ordinary shares in issue                     448.3       440.8 
Share statistics (cents)                                                                          
Headline earnings per ordinary share (HEPS)                                   2 146.6     2 221.9 
Diluted headline earnings per ordinary share (DHEPS)                          2 146.6     2 221.9 
Basic earnings per ordinary share (EPS)                                       2 063.6     2 166.5 
Diluted basic earnings per ordinary share (DEPS)                              2 063.6     2 166.5 
Dividend per ordinary share relating to income for the reporting period         713.8     2 372.7 
Dividend cover times (times)                                                      3.0         0.9 
NAV per ordinary share                                                         15 013      15 599 
Tangible NAV per ordinary share                                                13 997      14 913 
Capital adequacy (%)                                                                              
Absa Bank Limited                                                                15.4        15.0 
Common Equity Tier 1 (%)                                                                          
Absa Bank Limited                                                                11.2        11.6 

(1) After allowing for R351m (2017: R362m) profit attributable to preference equity holders and R190m (2017: R48m)
    profit attributable to Additional Tier 1 Capital.
(2) Net interest margin has been restated to reflect an update of the Bank's policy for classifying assets as 
    interest bearing or non-interest bearing. The updated policy classifies reverse repurchase transactions entered into 
    for regulatory purposes as interest bearing; under the previous policy these transactions were classified as 
    non-interest bearing. Under the previous policy the Bank's net interest margin would have been 3.77% (2017: 3.90%). 


Summary provisional consolidated normalised reconciliation for the reporting period ended
                                                                                        31 December
                                                                              IFRS       Barclays       Normalised
                                                                              Bank     separation             Bank
                                                                     performance(1)     effects(2)   performance(3)
                                                                              2018           2018             2018
Statement of comprehensive income (Rm)
Net interest income                                                         29 952            331           29 621
Non-interest income                                                         21 891            525           21 366
Total income                                                                51 843            856           50 987
Impairment losses                                                           (5 078)             -           (5 078)   
Operating expenses                                                         (34 341)        (2 841)         (31 500)   
Other expenses                                                              (1 579)          (173)          (1 406)   
Share of post-tax results of associates and joint ventures                     179              -              179    
Operating profit before income tax                                          11 024         (2 158)          13 182    
Tax expenses                                                                (3 002)           388           (3 390)   
Profit for the reporting period                                              8 022         (1 770)           9 792    
Profit attributable to:                                                                                               
Ordinary equity holders                                                      7 481         (1 770)           9 251    
Preference shares                                                              351              -              351    
Additional Tier 1                                                              190              -              190    
                                                                             8 022         (1 770)           9 792    
Headline earnings                                                            7 853         (1 770)           9 623    
Operating performance (%)                                                                                             
Net interest margin on average interest - bearing assets                      3.65            n/a             3.63    
Credit loss ratio on gross loans and advances to customers and banks          0.68            n/a             0.68    
Non - interest income as % of total income                                    42.2            n/a             41.9    
Income growth                                                                    3            n/a                3    
Operating expenses growth                                                        9            n/a                6    
Cost-to-income ratio                                                          66.2            n/a             61.8    
Effective tax rate                                                            27.2            n/a             25.7    
Statement of financial position (Rm)                                                                                  
Loans and advances to customers                                            735 200              -          735 200    
Loans and advances to banks                                                 40 533              -           40 533    
Investment securities                                                       93 576              -           93 576    
Other assets                                                               210 370          3 159          207 211    
Total assets                                                             1 079 679          3 159        1 076 520    
Deposits due to customers                                                  605 647              -          605 647    
Debt securities in issue                                                   160 042              -          160 042    
Other liabilities                                                          230 304         (5 845)         236 149    
Total liabilities                                                          995 993         (5 845) (4)   1 001 838    
Equity                                                                      83 686          9 004           74 682    
Total equity and liabilities                                             1 079 679          3 159        1 076 520    
Key performance ratios (%)                                                                                            
RoA                                                                           0.77            n/a             0.95    
RoE                                                                           10.4            n/a             14.7    
Capital adequacy                                                              16.5            n/a             15.4    
Common Equity Tier 1                                                          12.3            n/a             11.2    
Share statistics (cents)                                                                                              
Diluted headline earnings per ordinary share                               1 751.7            n/a          2 146.6    
                                                                                                         
(1) IFRS performance, presents the IFRS information as extracted from the Bank's summary provisional consolidated 
     financial results for the reporting period ended 31 December 2018.
(2) Barclays separation effects, presents the financial effects of the separation on the summary provisional 
    consolidated financial results of the Group.
(3) Normalised performance presents the summary provisional consolidated financial resutls of the Bank, after 
    adjusting for the consequences of the seperation.
(4) This represents the contribution of R12.1bn that was received from Barclays PLC, net of amounts already spent on
    separation activities. The cash received is held centrally by Treasury and is presented as an intersegmental asset 
    in 'Other liabilities'.


Summary provisional consolidated normalised reconciliation for the reporting period ended
                                                                                          31 December
                                                                              IFRS        Barclays      Normalised    
                                                                              Bank      separation            Bank    
                                                                       performance         effects     performance    
                                                                              2017            2017            2017    
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                                                           (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 shares                                                              362               -             362    
Additional Tier 1                                                               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(1)                   3.80             n/a            3.79    
Credit loss ratio on gross loans and advances to customers and banks          0.87             n/a            0.87    
Non - interest income as % of total income                                    41.3             n/a            41.5    
Income growth                                                                    3             n/a               2    
Operating expenses growth                                                       15             n/a               8    
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                                                          181 262      (9 840) (2)        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 (%)                                                                                            
RoA                                                                           0.91             n/a            1.05    
RoE                                                                           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) Net interest margin has been restated to reflect an update of the Bank's policy for classifying assets as 
    interest bearing or non-interest bearing. The updated policy classifies reverse repurchase transactions entered into 
    for regulatory purposes as interest bearing; under the previous policy these transactions were classified as 
    non-interest bearing. Under the previous policy the Bank's net interest margin would have been 3.79% (2017:3.91%) on 
    IFRS and 3.77% (2017: 3.90%) on normalised basis.
(2) This represents the contribution of R12.1bn that was received from Barclays PLC, net of amounts already spent on
    separation activities. The cash received is held centrally by Treasury and is presented as an intersegmental asset 
    in 'Other liabilities'. 

Summary provisional consolidated statement of financial position as at
                                                                         31 December
                                                                      2018         2017    
                                                        Note            Rm           Rm    
Assets                                                                                     
Cash, cash balances and balances with central banks                 22 679       28 792    
Investment securities                                               93 576       76 524    
Loans and advances to banks                                2        40 533       43 217    
Trading portfolio assets                                           101 271      104 781    
Hedging portfolio assets                                             2 407        2 667    
Other assets                                                        22 294       15 513    
Current tax assets                                                     366           57    
Non-current assets held for sale                                        50        1 119    
Loans and advances to customers                            2       735 200      660 492    
Loans to Group Companies                                            37 363       36 530    
Investments in associates and joint ventures                         1 310        1 235    
Investment property                                                    180            -    
Property and equipment                                              13 609       13 519    
Goodwill and intangible assets                                       7 246        3 861    
Deferred tax assets                                                  1 595           51    
Total assets                                                     1 079 679      988 358    
Liabilities                                                                                
Deposits from banks                                                127 959       74 110    
Trading portfolio liabilities                                       46 280       59 834    
Hedging portfolio liabilities                                        1 343        1 117    
Other liabilities                                                   31 907       27 824    
Provisions                                                           2 682        2 073    
Current tax liabilities                                                 66           55    
Deposits due to customers                                          605 647      583 825    
Debt securities in issue                                           160 042      137 942    
Borrowed funds                                             3        20 052       15 866    
Deferred tax liabilities                                                15          383    
Total liabilities                                                  995 993      903 029    
Equity                                                                                     
Capital and reserves                                                                       
Attributable to ordinary 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                                            2 741        1 500    
Retained earnings                                                   35 209       37 855    
Other reserves                                                       3 918        4 145    
                                                                    83 695       85 327    
Non-controlling interest - ordinary shares                              (9)           2    
Total equity                                                        83 686       85 329    
Total liabilities and equity                                     1 079 679      988 358    


Summary provisional consolidated statement of comprehensive income for the reporting period ended
                                                                               31 December
                                                                                     Restated    
                                                                            2018         2017    
                                                               Note           Rm           Rm    
                                                                                                 
Net interest income                                                       29 952       29 413    
Interest and similar income                                               74 155       71 438    
Effective interest income (1)                                             72 565       70 161    
Other interest income (1)                                                  1 590        1 277    
Interest expense and similar charges                                     (44 203)     (42 025)   
Effective interest expense                                               (44 203)     (42 025)   
Non-interest income                                               4       21 891       20 681    
Net fee and commission income                                             18 491       17 279    
Fee and commission income                                                 19 781       18 608    
Fee and commission expense                                                (1 290)      (1 329)   
Gains and losses from banking and trading activities                       3 177        2 860    
Gains and losses from investment activities                                    1            3    
Other operating income                                                       222          539    
Total Income                                                              51 843       50 094    
Impairment losses on loans and advances                                   (5 078)      (5 113)   
Operating income before operating expenditure                             46 765       44 981    
Operating expenditure                                                    (34 341)     (31 608)   
Other expenses                                                            (1 579)      (1 788)   
Other impairments                                                 5         (433)        (512)   
Indirect taxation                                                         (1 146)       (1276)   
Share of post-tax results of associates and joint ventures                   179          170    
Operating profit before income tax                                        11 024       11 755    
Taxation expense                                                          (3 002)      (3 278)   
Profit for the reporting period                                            8 022        8 477    
Profit attributable to:                                                                          
Ordinary equity holders                                                    7 481        8 067    
Preference equity holders                                                    351          362    
Additional Tier 1 Capital                                                    190           48    
                                                                           8 022        8 477    
Earnings per share:                                                                              
Basic earnings per share (cents per share)                               1 668.7      1 830.3    
Diluted earnings per share (cents per share)                             1 668.7      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.

Summary provisional consolidated statement of comprehensive income for the reporting period ended
                                                                                        31 December
                                                                                      2018      2017    
                                                                                        Rm        Rm    
                                                                                                        
Profit for the reporting period                                                      8 022     8 477    
Other comprehensive income                                                                              
Items that will not be reclassified to profit or loss                                  (11)     (154)   
Fair value gain on equity instruments measured at FVOCI                                 19         -    
Fair value gains                                                                        27         -    
Deferred tax                                                                            (8)        -    
Movement of liabilities designated at FVTPL due to changes in own credit risk          (13)     (147)   
Fair value losses                                                                      (71)     (147)   
Deferred tax                                                                            58         -    
Movement in retirement benefit fund assets and liabilities                             (17)       (7)   
Increase in retirement benefit surplus                                                 (24)      (10)   
Deferred tax                                                                             7         3    
Items that are or may be subsequently reclassified to profit or loss                  (236)      677    
Movement in foreign currency translation reserve                                         -        55    
Differences in translation of foreign operations                                         -         3    
Release to profit or loss                                                                -        52    
Movement in cash flow hedging reserve                                                 (247)      794    
Fair value gains                                                                       207      1465    
Amount removed from other comprehensive income and recognised in profit or loss       (550)     (365)   
Deferred tax                                                                            96      (306)   
Movement in fair value of debt instruments measured at FVOCI                            11         -    
Fair value gains                                                                        26         -    
Release to profit or loss                                                               (9)        -    
Deferred tax                                                                            (6)        -    
Movement in available-for-sale reserve                                                   -      (172)   
Fair value losses                                                                        -      (307)   
Release to profit or loss                                                                -        67    
Deferred tax                                                                             -        68    
Total comprehensive income for the reporting period                                  7 775     9 000    
Total comprehensive income attributable to:                                                             
Ordinary equity holders                                                              7 234     8 590    
Preference equity holders                                                              351       362    
Additional Tier 1 Capital                                                              190        48    
                                                                                     7 775     9 000    

Summary provisional consolidated statement of changes in equity for the period ended 
                                                                                     2018
                                                               Number of                           Preference
                                                                ordinary        Share      Share        share
                                                              shares (1)      capital    premium      capital 
                                                                    '000           Rm         Rm           Rm 
Balance at the end of the previous reporting period              448 301          304     36 879            1 
IFRS 9                                                                 -            -          -            - 
IFRS 15                                                                -            -          -            - 
Adjusted balance at the beginning of the reporting period        448 301          304     36 879            1 
Total comprehensive income                                             -            -          -            - 
Profit for the period                                                  -            -          -            - 
Other comprehensive income                                             -            -          -            - 
Dividends paid during the reporting period                             -            -          -              
Distributions paid during the reporting period                         -            -          -            - 
Issuance of Additional Tier 1 Capital                                  -            -          -            - 
Purchase of Group shares in respect of equity-settled                                                 
share-based payment arrangements                                       -            -          -            - 
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             -            -          -            - 
Balance at the end of the reporting period                       448 301          304     36 879            1 

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

                                                                                       2018
                                                               Preference    Additional    Retained      Total
                                                                    share        Tier 1    earnings      other
                                                                  premium       Capital      equity   reserves    
                                                                       Rm            Rm          Rm         Rm    
Balance at the end of the previous reporting period                 4 643         1 500      37 855      4 145    
IFRS 9                                                                  -             -      (4 000)      (236)   
IFRS 15                                                                 -             -         (44)         -    
Adjusted balance at the beginning of the reporting period           4 643         1 500      33 811      3 909    
Total comprehensive income                                            351           190       7 449       (215)   
Profit for the period                                                 351           190       7 481          -    
Other comprehensive income                                              -             -         (32)      (215)   
Dividends paid during the reporting period                           (351)            -      (5 700)         -    
Distributions paid during the reporting period                          -          (190)          -          -    
Issuance of Additional Tier 1 Capital                                   -         1 241           -          -    
Purchase of Group shares in respect of equity-settled                                                 
share-based payment arrangements                                        -             -        (172)         -    
Movement in share-based payment reserve                                 -             -           -         45    
Transfer from share-based payment reserve                               -             -           -       (429)   
Value of employee services                                              -             -           -        497    
Deferred tax                                                            -             -           -        (23)   
Share of post-tax results of associates and joint ventures              -             -        (179)       179    
Balance at the end of the reporting period                          4 643         2 741      35 209      3 918    
                                                                                         

                                                                                       2018
                                                                   Fair value                   Foreign
                                                                through other   Cash flow      currency
                                                                comprehensive     hedging   translation    Capital
                                                               income reserve     reserve       reserve    Reserve    
                                                                           Rm          Rm            Rm         Rm    
Balance at the end of the previous reporting period                        87         649             1      1 422    
IFRS 9                                                                   (132)          -             -          -    
IFRS 15                                                                     -           -             -          -    
Adjusted balance at the beginning of the reporting period                 (45)        649             1      1 422    
Total comprehensive income                                                 32        (247)            -          -    
Profit for the period                                                       -           -             -          -    
Other comprehensive income                                                 32        (247)            -          -    
Dividends paid during the reporting period                                  -           -             -          -    
Distributions paid during the reporting period                              -           -             -          -    
Issuance of Additional Tier 1 Capital                                       -           -             -          -    
Purchase of Group shares in respect of equity-settled                                       
share-based payment arrangements                                            -           -             -          -    
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                  -           -             -          -    
Balance at the end of the reporting period                                (13)        402             1      1 422    
                                                                                            

                                                                                    2018
                                                                    Share-     Associates     Total equity
                                                                     based      and joint     attributable
                                                                   payment       ventures        to equity
                                                                   reserve        reserve          holders    
                                                                        Rm             Rm               Rm    
Balance at the end of the previous reporting period                    749          1 237           85 327    
IFRS 9                                                                   -           (104)          (4 236)   
IFRS 15                                                                  -              -              (44)   
Adjusted balance at the beginning of the reporting period              749          1 133           81 047    
Total comprehensive income                                               -              -            7 775    
Profit for the period                                                    -              -            8 022    
Other comprehensive income                                               -              -             (247)   
Dividends paid during the reporting period                               -              -           (6 051)   
Distributions paid during the reporting period                           -              -             (190)   
Issuance of Additional Tier 1 Capital                                    -              -            1 241    
Purchase of Group shares in respect of equity-settled                                          
share-based payment arrangements                                         -              -             (172)   
Movement in share-based payment reserve                                 45              -               45    
Transfer from share-based payment reserve                             (429)             -             (429)   
Value of employee services                                             497              -              497    
Deferred tax                                                           (23)             -              (23)   
Share of post-tax results of associates and joint ventures               -            179                -    
Balance at the end of the reporting period                             794          1 312           83 695    

                                                                      2018
                                                                  Non-controlling 
                                                                       interest - 
                                                                  ordinary shares       Total    
                                                                               Rm          Rm    
                                                                                                 
                                                                                                 
Balance at the end of the previous reporting period                             2      85 329    
IFRS 9                                                                          -      (4 236)   
IFRS 15                                                                         -         (44)   
Adjusted balance at the beginning of the reporting period                       2      81 049    
Total comprehensive income                                                      -       7 775    
Profit for the period                                                           -       8 022    
Other comprehensive income                                                      -        (247)   
Dividends paid during the reporting period                                    (11)     (6 062)   
Distributions paid during the reporting period                                  -        (190)   
Issuance of Additional Tier 1 Capital                                           -       1 241    
Purchase of Group shares in respect of equity-settled                   
share-based payment arrangements                                                -        (172)   
Movement in share-based payment reserve                                         -          45    
Transfer from share-based payment reserve                                       -        (429)   
Value of employee services                                                      -         497    
Deferred tax                                                                    -         (23)   
Share of post-tax results of associates and joint ventures                      -           -    
Balance at the end of the reporting period                                     (9)     83 686    

                                                                                               2017
                                                                          Number of                       Preference
                                                                           ordinary     Share     Share        share
                                                                         shares (1)   capital   premium      capital    
                                                                               '000        Rm        Rm           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 Barclays Africa 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 non-controlling interest and related transaction costs (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    
                                                                                                             

                                                                                            2017
                                                                      Preference  Additional    Retained      Total
                                                                           share      Tier 1    earnings      other
                                                                         premium   Capital(5)     equity   reserves
                                                                              Rm          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 Barclays Africa 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 non-controlling interest and related transaction costs (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    

                                                                                             2017
                                                                        Available-      Cash       Foreign
                                                                              for-      flow      currency
                                                                              sale   hedging   translation   Capital
                                                                           reserve   reserve       reserve   reserve    
                                                                                Rm        Rm            Rm        Rm    
Balance at the beginning of the reporting period                               259      (145)          (54)       22    
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 Barclays Africa 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 non-controlling interest and related transaction costs (2)           -         -             -         -    
Barclays separation (3)                                                          -         -             -         -    
Shareholder contribution - fair value of investment (4)                          -         -             -         -    
Balance at the end of the reporting period                                      87       649             1        22    

                                                                                             2017
                                                                             Share-    Associates    Total equity
                                                                              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 Barclays Africa 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 non-controlling interest and related transaction costs (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    

                                                                                             2017
                                                                                 Non-controlling 
                                                                                      interest - 
                                                                                 ordinary shares        Total    
                                                                                              Rm           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 Barclays Africa 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 non-controlling interest and related transaction costs (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 Bank 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 prior
    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 capital notes represent perpetual, subordinated instruments redeemable in full at the 
    option of Absa Group 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.
    
Summary provisional consolidated statement of cash flows for the period ended 
                                                                                           Restated
                                                                                 2018(1)     2017(1)    
                                                                       Note          Rm          Rm    
Net cash generated from/(utilised in) operating activies                          6 346      (4 478)   
Income taxes paid                                                                (3 614)     (3 513)   
Net cash generated from/(utilised in) other operating activies                    9 960        (965)   
Net cash utilised in investing activities                                        (5 482)     (3 906)   
Purchase of property and equipment                                               (2 641)     (2 622)   
Proceeds from sale of non-current assets held for sale                            1 079         672    
Net cash utilised in other investing activities                                  (3 920)     (1 956)   
Net cash utilised/generated from financing activities                            (1 946)      7 008    
Net cash generated from Barclays separation                                           -      12 106    
Issue of ordinary shares                                                              -       3 500    
Issue of Additional Tier 1 Capital                                                1 241       1 500    
Proceeds from borrowed funds                                                      6 432       2 841    
Repayment of borrowed funds                                                      (3 195)     (2 805)   
Dividends paid                                                                   (6 062)     (9 962)   
Net cash utilised in other financing activities                                    (362)       (172)   
Net (decrease)/increase in cash and cash equivalents                             (1 082)     (1 376)   
Cash and cash equivalents at the beginning of the reporting period        1      11 040      12 416    
Cash and cash equivalents at the end of the reporting period              2       9 958      11 040    


Notes to the summary provisional consolidated statement of cash flows

                                                                          2018(1)     2017(1)
                                                                               Rm          Rm
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
Loans and advances to banks(3)                                              1 356       2 754
                                                                           11 040      12 416
2. Cash and cash equivalents at the end of the reporting period                              
Cash, cash balances and balances with central banks(2)                      9 570       9 684
Loans and advances to banks(3)                                                388       1 356
                                                                            9 958      11 040

(1) In order to provide more transparent disclosures, the condensed summary provisional statement of cash flows 
    has been expanded to include line items specifying significant cash flow movements. The effect of this is to 
    provide specific disclosure of the following line items, rather than include them in the total cash generated 
    by/used in operating, investing or financing activities: Income taxes paid, purchase of property and equipment, 
    proceeds from sale of non-current assets, cash generated from Barclays separation, Issue of shares, Issue of 
    additional tier 1 capital, proceeds/repayments of borrowed funds, dividends paid. Comparative statements of 
    cash flows have been restated to take account of this additional disclosure.
(2) Includes coins and bank notes.
(3) Includes call advances, which are used as working capital for the Bank. 


Summary provisional notes to the consolidated financial results for the 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 R50m 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
previous reporting period:
* 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 (CIB SA) 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

                                                                 Carrying                    Stage 1
                                                                amount of 
                                                         financial assets
                                                            at fair value        Gross           ECL          ECL     
                                                           through profit     carrying      allowance     coverage    
                                                                  or loss        value                               
                                                                       Rm            Rm            Rm            %    
RBB South Africa                                                        -       406 248         2 658         0.65    
Retail Banking South Africa                                             -       344 824         2 116         0.61    
Credit cards                                                            -        24 568           650         2.65    
Instalment credit agreements                                            -        73 805           582         0.79    
Loans to associates and joint ventures                                  -        25 490             1            -    
Mortgages                                                               -       197 342           287         0.15    
Other loans and advances                                                -         3 045            21         0.69    
Overdrafts                                                              -         4 847            61         1.26    
Personal and term loans                                                 -        15 727           514         3.27    
Business Banking South Africa                                           -        61 424           542         0.88    
CIB South Africa                                                   45 263       195 618           415         0.21    
Wealth                                                                  -         5 342            24         0.45    
Head Office, Treasury and other operations in South Africa              -           300          (195)                
Loans and advances to customers                                         -           300             6         2.00    
Reclassification to provisions(1)                                       -             -          (201)           -    
Loans and advances to customers                                    45 263       607 508         2 902         0.48    
Loans and advances to banks                                        19 800        18 307             7         0.04    
Loans and advances to customers and banks                          65 063       625 815         2 909         0.46    

                                                                                     Stage 2
                                                                                          ECL          ECL     
                                                           Gross carrying value     allowance     coverage    
                                                                             Rm            Rm            %    
RBB South Africa                                                         35 352         3 234         9.15    
Retail Banking South Africa                                              27 900         2 779         9.96    
Credit cards                                                              2 906         1 101        37.89    
Instalment credit agreements                                              6 698           774        11.56    
Loans to associates and joint ventures                                        -             -            -    
Mortgages                                                                13 973           235         1.68    
Other loans and advances                                                    447            21         4.70    
Overdrafts                                                                1 254           194        15.47    
Personal and term loans                                                   2 622           454        17.32    
Business Banking South Africa                                             7 452           455         6.11    
CIB South Africa                                                         30 749           305         0.99    
Wealth                                                                      332            20         6.02    
Head Office, Treasury and other operations in South Africa                    9          (191)           -    
Loans and advances to customers                                               9             -            -    
Reclassification to provisions(1)                                             -          (191)           -    
Loans and advances to customers                                          66 442         3 368         5.07    
Loans and advances to banks                                               2 446            13         0.53    
Loans and advances to customers and banks                                68 888         3 381         4.91    

                                                                            Stage 3
                                                                 Gross                                    Net
                                                              carrying           ECL         ECL        total
                                                                 value     allowance    coverage     exposure    
                                                                    Rm            Rm           %           Rm    
RBB South Africa                                                35 284        14 031       39.77      456 961    
Retail Banking South Africa                                     30 728        11 744       38.22      386 813    
Credit cards                                                     4 103         2 876       70.10       26 950    
Instalment credit agreements                                     5 147         2 017       39.19       82 277    
Loans to associates and joint ventures                               -             -           -       25 489    
Mortgages                                                       18 241         4 774       26.17      224 260    
Other loans and advances                                            20            20      100.00        3 450    
Overdrafts                                                         567           376       66.31        6 037    
Personal and term loans                                          2 650         1 681       63.43       18 350    
Business Banking South Africa                                    4 556         2 287       50.20       70 148    
CIB South Africa                                                 2 860         1 978       69.16      271 792    
Wealth                                                             310           206       66.45        5 734    
Head Office, Treasury and other operations in South Africa           -           (18)          -          713    
Loans and advances to customers                                      -             -           -          303    
Reclassification to provisions(1)                                    -           (18)          -          410    
Loans and advances to customers                                 38 454        16 197       42.12      735 200    
Loans and advances to banks                                          -             -           -       40 533    
Loans and advances to customers and banks                       38 454        16 197       42.12      775 733    

(1) 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 as a provision in the 
    Bank's statement of financial position.

                                                               31 December 2017(1)
                                                               Performing loans
                                                               Exposure     Impairment      Coverage ratio    
                                                                     Rm             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            687                0.92    
Loans to associates and joint ventures                           23 037              -                   -    
Mortgages                                                       213 508          1 124                0.53    
Other loans and advances                                          2 795             16                0.37    
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              -                   -    
Loans and advances to customers and banks                       693 376          3 939                0.57    


                                               31 December 2017(1)
                                               Non-performing loans
                                               Exposure     Impairment     Coverage ratio     Net total exposure    
                                                     Rm             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                 74 990    
Loans to associates and joint ventures                -              -                  -                 23 037    
Mortgages                                        10 241          2 056              20.08                220 569    
Other loans and advances                              -              -                  -                  2 779    
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    
Loans and advances to customers and banks        23 956          9 684              40.42                703 709    

(1) These numbers have been restated, refer to the reporting changes overview in note 15. 

3. Borrowed funds
During the reporting period the significant movements in borrowed funds were as follows: R6 432m (31 December 2017:
 R1 142m) of subordinated notes were issued and R3 195m (31 December 2017: R2 805m) were redeemed.

4. Disaggregation of non-interest income
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: 

                                                                            Head Office, 
                                                                                Treasury 
                                                                               and other    Barclays
                                                                              operations   separation   
                                              RBB SA     CIB SA     Wealth         in SA      effects      Total    
                                                  Rm         Rm         Rm            Rm           Rm         Rm    
Fee and commission income from contracts                                                    
with customers                                17 490      2 143        202           (54)           -     19 781    
Consulting and administration fees               232         21          8             -            -        261    
Transactional fees and commissions            14 914      1 572        106            (2)           -     16 590    
Cheque accounts                                5 216        115         54             -            -      5 385    
Credit cards                                   2 204          -          -             -            -      2 204    
Electronic banking                             4 144      1 082         17             1            -      5 244    
Other (1)                                      1 287        374         34            (3)           -      1 692    
Savings accounts                               2 063          1          1             -            -      2 065    
Merchant income                                1 721          -          -             -            -      1 721    
Asset management                                  22          2         37             1            -         62    
Other fees and commissions                        47        113          8           (53)           -        115    
Insurance commissions received                   554          -          2             -            -        556    
Investment banking fees                            -        435         41             -            -        476    
Other income from contracts with customers        33          -          -            19            -         52    
Other non-interest income, net of expenses      (323)     1 764        (25)          117          525      2 058    
Total non-interest income                     17 200      3 907        177            82          525     21 891    
                                                                                            
(1) Includes fees on mortgage loans and foreign currency transactions. 

5. Other impairments
                                                  2018     2017    
                                                    Rm       Rm    
Impairment raised on financial instruments(1)        -      (30)   
Other                                              433      542    
Goodwill                                            34        -    
Intangible assets(2)                                 1      326    
Property and equipment(3)                          398      216    
                                                   433      512    

(1) With the adoption of IFRS 9 the impairment on other financial instruments has been included as part of 
    impairment losses.
(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 R398m 
    (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
                                                                            2018                  2017                 
                                                                            Gross         Net     Gross         Net    
                                                                               Rm          Rm        Rm          Rm    
Headline earnings is determined as follows:                                                                            
Profit attributable to ordinary equity holders of the Bank                              7 481                 8 067    
Total headline earnings adjustment:                                                       372                   481    
IFRS 3 - Goodwill impairment                                                   34          34         -           -    
IFRS 5 - Loss/(profit) on disposal of non-current assets held for sale         40          40        33          34    
IAS 16 -Loss/(profit) on disposal of property and equipment                    17          12       (18)        (13)   
IAS 21 - Recycled foreign currency translation reserve                          -           -        52          52    
IAS 36 - Impairment of property and equipment                                 398         297       216         155    
IAS 36 - Impairment of intangible assets                                        1           1       326         238    
IAS 39 - Release of available-for-sale reserves                                 -           -        67          49    
IAS 40 - Change in fair value of investment properties                        (15)        (12)      (37)        (29)   
IAS 40 - Profit on disposal of investment property                              -           -        (5)         (5)   
Headline earnings/diluted headline earnings                                             7 853                 8 548    
Headline earnings per share/diluted headline earnings per share (cents)               1 751.7               1 939.4    

7. Dividends per share
                                                                                                    2018       2017    
                                                                                                      Rm         Rm    
Dividends declared to ordinary equity holders                                                                          
Interim dividend (6 August 2018: 602.27349 cents) (28 July 2017: 892.25702 cents)                  2 700      4 000    
Special dividend (30 June 2017: 811.4669592 cents)                                                     -      3 500    
Final dividend (11 March 2019: 111.532 cents) (1 March 2018: 669.1928 cents)                         500      3 000    
                                                                                                   3 200     10 500    
Dividends declared to preference equity holders                                                                        
Interim dividend (6 August 2018: 3 542.67 cents) (28 July 2017: 3 685.06849 cents)                   175        182    
Final dividend (11 March 2019: 3 518.6986 cents) (1 March 2018: 3 558.01 cents)                      174        176    
                                                                                                     349        358    
Distributions declared to Additional Tier 1 Capital note holders                                                       
Distributions (12 December 2018: 31 620.63 Rands) (12 September 2018: 31 675.726 Rands)                                
(12 June 2018: 32 200 Rands) (12 March 2018: 31 500 Rands)(12 December 2017: 31 990.79 Rands)        190         48    
                                                                                                     190         48    
Dividends paid to ordinary equity holders                                                                              
Final dividend (16 April 2018: 669.1927668 cents) (10 April 2017: 486.88017 cents)                 3 000      2 100    
Interim dividend(17 September 2018: 602.27349 cents) (11 September 2017: 892.25702 cents)          2 700      4 000    
Special dividend (30 June 2017: 811.4669592 cents)                                                     -      3 500    
                                                                                                   5 700      9 600    
Dividends paid to preference equity holders                                                                            
Final dividend (16 April 2018: 3 558.01 cents) (10 April 2017: 3 644.79452 cents)                    176        180    
Interim dividend (17 September 2018: 3 542.669998 cents)(11 September 2017: 3 685.06849 cents)       175        182    
                                                                                                     351        362    
Distributions paid to Additional Tier 1 Capital note holders                                                           
Distributions (12 December 2018: 31 620.63 Rands) (12 September 2018: 31 675.726 Rands)                                
(12 June 2018: 32 200 Rands) (12 March 2018: 31 500 Rands)(12 December 2017: 31 990.79 Rands)        190         48    
                                                                                                     190         48    

8. Acquisitions and disposals of businesses and other similar transactions

8.1 Acquisitions of businesses during the current reporting period
During the current 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.

The Bank also acquired a 100% holding in Home Obligors Mortgage Enhanced Securities (RF) Limited (Homes) a 
structured entity (SE) established in 2006 as a securitisation funding vehicle. Since its establishment in 2006, 
Homes has been accounted for as a subsidiary of Absa Group Limited. The transaction meets the definition of a 
business combination under common control, and in accordance with the Bank's policy, predecessor accounting is 
applied. The assets, liabilities and equity of Homes were transferred to the consolidated Bank financial statements 
at their carrying value on the date of transfer. The acquisition of Homes at R100 had an effective date of 
01 December 2018.

                                                                           Home Obligors 
                                                   Pacific Heights     Mortgage Enhanced        Bank
                                                                              2018
                                                        Fair value        Carrying value
                                                     recognised on         recognised on
                                                       acquisition           acquisition
                                                                Rm                    Rm          Rm    
Consideration at date of acquisition:
Cash                                                            30                     -          30    
Acquisition - date fair value of initial interest              168                     -         168    
Total consideration                                            198                     -         198    
Recognised amounts of identifiable assets acquired                        
and liabilities assumed                                                   
Cash and balances at central banks                              15                     -          15    
Loans and advances to customers                                  -                 1 754       1 754    
Loans and advances to banks                                      -                    48          48    
Other assets                                                     4                     -           4    
Investment properties                                          165                     -         165    
Current tax assets                                               1                     4           5    
Other liabilities                                              (14)                   (1)        (15)   
Deferred tax assets/(liabilities)                               (7)                    2          (5)   
Subordinated liabilities                                         -                (1 807)     (1 807)   
Total identifiable net assets                                  164                     -         164    
Goodwill                                                        34                     -          34    
Total                                                          198                     -         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:

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

8.1.1 Acquisitions of businesses during the current reporting period 

The profit recognised in the consolidated statement of comprehensive income as a result of the acquisition of Home
Obligors Mortgage  

Enhanced Securities (RF) Limited is R1.2m and for Pacific Heights Investments 196 (Pty) Ltd is R30.6m.

8.1.2 Disposals of businesses during the current 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 current reporting period. The 
cash consideration received on disposals included in non-current assets/liabilities held for sale was   R1 079m.

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 disposals included in non-current assets/liabilities held for sale was R205m.

9. Related parties
There were no one-off significant transactions with related parties of the 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 Group, primarily in recognition of the investments required for the 
Group to separate from Barclays PLC. This contribution will be invested primarily in rebranding, technology and
separation-related projects and it is expected that it will neutralise the capital and cash flow impact of 
separation investments on the Group over time. 

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

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

10. Commitments
                                                                           2018       2017    
                                                                             Rm         Rm    
Authorised capital expenditure
Contracted but not provided for                                             589        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                                                      981      1 026    
Later than one year and no later than five years                          2 561      2 654    
Later than five years                                                       667        902    
                                                                          4 209      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.

11. Contingencies
                                                             2018         2017    
                                                               Rm           Rm    
Guarantees                                                 34 479       28 970    
Irrevocable debt facilities/other lending facilities      166 198      145 087    
Letters of credit                                           6 828        3 834    
Other                                                          63          151    
                                                          207 568      178 042    

Guarantees include performance guarantee contracts and financial guarantee contracts.

Financial guarantee contracts represent contracts where the Bank undertakes to make specified payments to a
counterparty, should the counterparty suffer a loss as a result of a specified debtor failing to make payment when 
due in accordance with the terms of a debt instrument. This amount represents the maximum off-statement of 
financial position exposure.

Irrevocable debt facilities are commitments to extend credit where the Bank does not have the right to terminate the
facilities by written notice. Following the implementation of IFRS 9 other lending facilities in respect of which 
expected credit losses are recognised have been included above, as the Bank does not enforce the ability to revoke 
these facilities in the normal day-to-day management thereof. 

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.

An impairment provision of R30m has been raised on financial guarantees, R43m has been raised for letters of credit
and R409m on irrevocable debt facilities/other lending facilities.

Irrevocable equity facilities and other contingencies fall outside the scope of the expected credit losses model of
IFRS 9.

Legal proceedings
The Bank has been party to proceedings against it during the reporting period. The following material cases were
ongoing at the reporting date:

* 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 for an amount 
of R470m. 
* Ayanda Collective Investment Scheme (the Scheme): Absa Capital Investor Services was the trustee of Ayanda
Collective Investment 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 R934m.

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 Banks'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 globally and locally, especially for companies that 
are deemed to be of systemic importance. Concurrently, there is continuing political and regulatory scrutiny of the 
operation of the banking and consumer credit industries globally which, in some cases, is leading to increased 
regulation. The nature and impact of future changes in the legal framework, policies and regulatory action 
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 Bank 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, 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. 

Summary provisional notes to the consolidated financial results for the period ended

12. Segment reporting
                                                                        2018      2017 (1)    
                                                                          Rm            Rm    
12.1 Headline earnings contribution by segment                                                
RBB South Africa                                                       8 646         8 507    
CIB South Africa                                                       2 819         3 355    
Wealth                                                                  (388)         (418)   
Head Office, Treasury and other operations in South Africa(2)         (1 454)       (1 651)   
Barclays separation effects(2)                                        (1 770)       (1 245)   
Total headline earnings                                                7 853         8 548    
12.2 Total income by segment                                                                  
RBB South Africa                                                      41 247        40 153    
CIB South Africa                                                      10 842        10 592    
Wealth                                                                   430           430    
Head Office, Treasury and other operations in South Africa (2)        (1 532)       (1 486)   
Barclays separation effects(2)                                           856           405    
Total income                                                          51 843        50 094    
12.3 Total internal income by segment
RBB South Africa                                                      (7 868)       (8 471)   
CIB South Africa                                                      (8 230)       (2 885)   
Wealth                                                                    34             6    
Head Office, Treasury and other operations in South Africa(2)         14 210        15 982    
Barclays separation effects(2)                                           330           325    
Total internal income                                                  1 524         4 957    
12.4 Total assets by segment
RBB South Africa                                                     791 709       740 856    
CIB South Africa                                                     521 468       486 168    
Wealth                                                                 7 370         6 097    
Head Office, Treasury and other operations in South Africa(2)       (244 027)     (245 675)   
Barclays separation effects(2)                                         3 159           912    
Total assets                                                       1 079 679       988 358    
12.5 Total liabilities by segment                                                             
RBB South Africa                                                     784 795       730 734    
CIB South Africa                                                     517 415       481 646    
Wealth                                                                 7 791         6 508    
Head Office, Treasury and other operations in South Africa          (308 163)     (306 019)   
Barclays separation effects                                           (5 845)       (9 840)   
Total liabilities                                                    995 993       903 029    

(1) Operational changes, management changes and associated changes to the way in which the CODM views the 
    performance of each business segment, have resulted in the reallocation of earnings, assets and liabilities 
    between operating segments. For details on the business portfolio changes refer to note 16.
(2) These represent reconciling strips and are not reporting segments. 

13. 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.
                                                                           31 December
                                                                  2018                     2017
                                                                Carrying        Fair     Carrying        Fair    
                                                                   value       value        value       value    
                                                                      Rm          Rm           Rm          Rm    
Financial assets
Balances with the South African Reserve Bank                      13 108      13 108       19 108      19 108    
Coins and bank notes                                               9 571       9 571        9 684       9 684    
Cash, cash balances and balances with central banks               22 679      22 679       28 792      28 792    
Investment securities                                              6 219       6 270            -           -    
Loans and advances to banks                                       20 733      23 191       26 020      26 020    
Other assets                                                      20 065      20 073       13 327      13 420    
RBB South Africa                                                 456 960     458 131      435 500     435 731    
Retail Banking South Africa                                      386 815     387 912      371 248     371 479    
Credit cards                                                      26 950      27 484       27 267      27 267    
Instalment credit agreements                                      82 282      82 616       77 044      77 275    
Loans to associates and joint ventures                            25 489      25 489       23 037      23 037    
Mortgages                                                        224 260     224 260      220 569     220 569    
Other loans and advances                                           3 447       3 447          726         726    
Overdrafts                                                         6 037       6 104        5 443       5 443    
Personal and term loans                                           18 350      18 512       17 162      17 162    
Business Banking South Africa                                     70 145      70 219       64 252      64 252    
Mortgages (including CPF)                                         29 917      29 917       27 828      27 828    
Overdrafts                                                        20 027      20 098       19 199      19 199    
Term loans                                                        20 201      20 204       17 225      17 225    
CIB South Africa                                                 226 530     226 530      192 203     192 203    
Wealth                                                             5 734       5 985        5 004       5 004    
Head Office, Treasury and other operations in South Africa           713         713          974         974    
Loans and advances to customers - net of impairment losses       689 937     691 358      633 681     633 912    
Loans to Group companies                                          37 363      37 363       36 530      36 530    
Non-current assets held for sale                                       -           -        1 118       1 118    
Total assets (not held at fair value)                            796 996     800 935      739 468     739 792    
Financial liabilities                                                                                            
Deposits from banks                                               73 069      77 174       52 079      52 079    
Other liabilities                                                 29 641      29 654       25 709      25 724    
Call deposits                                                     57 981      57 981       62 725      62 725    
Cheque account deposits                                          156 435     156 435      153 539     153 539    
Credit card deposits                                               1 904       1 904        1 896       1 896    
Fixed deposits                                                   133 031     133 031      131 521     131 521    
Foreign currency deposits                                         17 541      17 541       18 444      18 444    
Notice deposits                                                   58 367      58 367       58 460      58 460    
Other deposits                                                     1 473       1 473        1 414       1 414    
Saving and transmission deposits                                 141 066     141 066      135 375     135 375    
Deposits due to customers                                        567 798     567 798      563 374     563 374    
Debt securities in issue                                         144 154     146 438      132 701     132 701    
Borrowed funds                                                    20 052      20 052       15 866      15 866    
Total liabilities (not held at fair value)                       834 714     841 116      789 729     789 744    


14. Assets and liabilities held at fair value
14.1 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 team (IVC), which is 
independent from the front office.

The Traded Risk and Valuations Committee, which comprises representatives from senior management, will formally
approve valuation policies and any changes to valuation methodologies. Significant valuation issues are reported 
to the Absa Group Audit and Compliance Committee.

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

The IVC team independently verifies the results of trading and investment operations and all significant fair value
measurements. They source independent data from external independent parties, as well as internal risk areas when
performing independent price verification for all financial instruments held at fair value. They also assess and 
document the inputs obtained from external independent sources to measure the fair value which supports conclusions 
that valuations are performed in accordance with IFRS and internal valuation policies.

Investment properties
The fair value of investment properties is determined based on the most appropriate methodology applicable to the
specific property. Methodologies include the market comparable approach that reflects recent transaction prices for 
similar properties, discounted cash flows and income capitalisation methodologies. In estimating the fair value of 
the properties, the highest and best use of the properties is taken into account.

Where possible the fair value of the 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.

14.2 Fair value measurements 

Valuation inputs
IFRS 13 requires an entity to classify fair values measured and 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.

14.3 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 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. 

14.4 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.

                                                              31 December
                                                                 2018
                                              Level 1     Level 2     Level 3       Total    
Recurring fair value measurements                  Rm          Rm          Rm          Rm    
Financial Assets                                                                             
Investment securities                          42 352      35 468       9 537      87 357    
Loans and advances to banks                         -      19 800           -      19 800    
Trading and hedging portfolio assets           45 107      53 819       3 449     102 375    
Debt instruments                               43 005         789         445      44 239    
Derivative assets                                   -      43 680       2 450      46 130    
Commodity derivatives                               -       1 263         224       1 487    
Credit derivatives                                  -           -         173         173    
Equity derivatives                                  -       3 433       1 947       5 380    
Foreign exchange derivatives                        -       7 980          26       8 006    
Interest rate derivatives                           -      31 004          80      31 084    
Equity instruments                                533           -           -         533    
Money market assets                             1 569       9 350         554      11 473    
Loans and advances to customers                     -      34 602      10 661      45 263    
Total financial assets                         87 459     143 689      23 647     254 795    
Financial liabilities                                                                        
Deposits from banks                                 -      54 871          19      54 890    
Trading and hedging portfolio liabilities      11 072      35 097       1 454      47 623    
Derivative liabilities                              -      35 097       1 454      36 551    
Commodity derivatives                               -       1 267         222       1 489    
Credit derivatives                                  -           -         174         174    
Equity derivatives                                  -       2 313         778       3 091    
Foreign exchange derivatives                        -       8 391          19       8 410    
Interest rate derivatives                           -      23 126         261      23 387    
Short positions                                11 072           -           -      11 072    
Deposits due to customers                         238      34 789       2 822      37 849    
Debt securities in issue                            3      15 885           -      15 888    
Total financial liabilities                    11 313     140 642       4 295     156 250    
Non-financial assets
Commodities                                     1 304           -           -       1 304    
Investment properties                               -           -         180         180    
Non-recurring fair value measurements
Non-current assets held for sale(1)                 -           -          50          50    

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

                                                              31 December
                                                                  2017
                                              Level 1     Level 2     Level 3       Total    
Recurring fair value measurements                  Rm          Rm          Rm          Rm    
Financial Assets
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    
Investment properties                               -           -           -           -    
Non-recurring fair value measurements
Non-current assets held for sale(1)                 -           -           -           -    

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

14.5 Measurement of assets and liabilities categorised at Level 2
The following table presents information about the valuation techniques and significant observable inputs used in
measuring assets and liabilities categorised as Level 2 in the fair value hierarchy:

Category of asset/liability                       Valuation techniques applied       Significant observable inputs
Loans and advances to banks                       Future cash flows are              Interest rate and/or money
                                                  discounted using market-related    market curves, as credit spreads
                                                  interest rates, adjusted for 
                                                  credit inputs, over the 
                                                  contractual period of 
                                                  instruments (that is, discounted 
                                                  cash flow)         
Trading and hedging portfolio assets and 
liabilities
Debt instruments                                  Discounted cash flow models        Underlying price of market 
                                                                                     instruments and/or 
                                                                                     interest rates
Derivatives
Commodity derivatives                             Discounted cash flow techniques,   Spot price of physical or 
                                                  option pricing models              futures, interest rates 
                                                  such as the Black Scholes          and/or volatiles
                                                  model, futures pricing 
                                                  models and/or 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, 
                                                  pricing and/or futures pricing     volatility and/or dividend 
                                                  models                             stream
Foreign exchange derivatives                      Discounted cash flow and/or        Spot price, interest rate 
                                                  option pricing models              and/or volatility
Interest rate derivatives                         Discounted cash flow and/or        Interest rate curves,  
                                                  option pricing models              repurchase 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
                                                  Other items: discounted cash       traded instruments and/or 
                                                  flow models                        interest rate curves
Deposits from banks                               Discounted cash flow models        Interest rate curves and/or 
                                                                                     money market curves
Deposits due to customers                         Discounted cash flow models        Interest rate curves and/or 
                                                                                     money market curves
Debt securities in issue and other liabilities    Discounted cash flow models        Underlying price of the market 
                                                                                     traded instrument and/or 
                                                                                     interest rate curves                

14.6 Reconciliation of Level 3 assets and liabilities
A reconciliation of the opening balances to closing balances for all movements on Level 3 assets and liabilities is
set out below:            
                                                                           31 December
                                                                               2018
                                                Trading and hedging    Loans and advances    Loans and advances 
                                                   portfolio assets          to customers              to banks
                                                                 Rm                    Rm                    Rm    
Opening balance at the beginning of the                                                         
reporting period                                              1 824                 4 741                   484    
Net interest income                                               -                   153                     -    
Other income                                                      -                     -                     -    
Gains and losses from banking and                                                               
trading activities                                            1 240                   427                     -    
Gains and losses from investment activities                       -                     -                     -    
Purchases                                                     1 174                 6 617                     -    
Sales                                                          (257)                 (156)                  (18)   
Movement in other comprehensive income                            -                     -                     -    
Transfer to Level 3                                             357                     -                     -    
Transfer (out) of Level 3                                      (889)               (1 121)                 (466)   
Step acquistion of sub                                            -                     -                     -    
Closing balance at the end of the                                                               
reporting period                                              3 449                10 661                     -    

                                                             31 December
                                                                 2018
                                                Investment     Investment      Total assets 
                                                securities     properties     at fair value    
                                                        Rm             Rm                Rm    
Opening balance at the beginning of the                                        
reporting period                                     5 946              -            12 995    
Net interest income                                     89              -               242    
Other income                                             -             15                15    
Gains and losses from banking and                                              
trading activities                                      26              -             1 693    
Gains and losses from investment activities             23              -                23    
Purchases                                            3 181            165            11 137    
Sales                                                 (507)             -              (938)   
Movement in other comprehensive income                 (37)             -               (37)   
Transfer to Level 3                                  2 928              -             3 285    
Transfer (out) of Level 3                           (1 914)             -            (4 390)   
Step acquistion of sub                                (198)             -              (198)   
Closing balance at the end of the                                              
reporting period                                      9 537            180            23 827    

                                                                        31 December
                                                                            2017
                                                Trading and hedging     Loans and advances     Loans and advances 
                                                   portfolio assets           to customers               to banks    
                                                                 Rm                     Rm                     Rm    
Opening balance at the beginning of the                                    
reporting period                                              1 505                  4 890                    571    
Net interest income                                               -                     12                      -    
Other income                                                      -                      -                      -    
Gains and losses from banking and                                          
trading activities                                             (635)                    29                      -    
Gains and losses from investment activities                       -                      -                      -    
Purchases                                                     1 101                  1 020                     88    
Sales                                                          (147)                (1 112)                  (175)   
Movement in other comprehensive income                            -                      -                      -    
Transfer (out) of Level 3                                         -                    (98)                     -    
Closing balance at the end of the                                          
reporting period                                              1 824                  4 741                    484    

                                                               31 December
                                                                  2017
                                                Investment    Investment      Total assets 
                                                securities    properties     at fair value    
                                                        Rm            Rm                Rm    
Opening balance at the beginning of the                                       
reporting period                                     1 062           222             8 250    
Net interest income                                     62             -                74    
Other income                                             -            37                37    
Gains and losses from banking and                                             
trading activities                                       -             -              (606)   
Gains and losses from investment activities              2             -                 2    
Purchases                                            4 789             -             6 998    
Sales                                                    -          (259)           (1 693)   
Movement in other comprehensive income                  31             -                31    
Transfer (out) of Level 3                                -             -               (98)   
Closing balance at the end of the                                             
reporting period                                     5 946             -            12 995    

                                                              31 December 2018
                                                      Trading 
                                       Deposits   and hedging    Deposits          Debt           Total
                                           from     portfolio      due to    securities     liabilities
                                          banks   liabilities   customers      in issue   at fair value    
                                             Rm            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                        -           (52)          5             -             (47)   
Issues                                       19         1 043       2 500             -           3 562    
Settlements                                   -          (344)       (766)            -          (1 110)   
Transfer (out) of Level 3                     -          (137)       (489)         (488)         (1 114)   
Closing balance at the end of                                                              
the reporting period                         19         1 454       2 822             -           4 295    

                                                       31 December
                                                          2017
                                        Trading and 
                                            hedging    Deposits         Debt            Total 
                                          portfolio      due to   securities      liabilities
                                        liabilities   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)   
Transfer (out) of Level 3                         -        (115)         (78)            (193)   
Closing balance at the end of the                                               
reporting period                                944       1 572          488            3 004    

14.6.1 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.

14.7 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:

                                                          31 December 2018
                                       Trading and 
                                           hedging     Loans and
                                         portfolio   advances to    Investment      Total assets
                                            assets     customers    securities     at fair value    
                                                Rm            Rm            Rm                Rm    
Gains and (losses) from banking
and trading activities                       2 589         1 027           233             3 849    

                                               31 December 2018
                                      Trading and 
                                          hedging    Deposits             Total
                                        portfolio      due to       liabilities 
                                      liabilities   customers     at fair value    
                                               Rm          Rm                Rm    
Gains and (losses) from banking    
and trading activities                      (174)         134               (40)   

                                                                 31 December 2017
                                       Trading and 
                                           hedging     Loans and
                                         portfolio   advances to       Investment      Total assets
                                            assets     customers    securities (1)    at fair value    
                                                Rm            Rm               Rm                Rm    
Gains and (losses) from banking 
and trading activities                         142           761               76               979    


                                                      31 December 2017
                                      Trading and 
                                          hedging    Deposits             Total
                                        portfolio      due to       liabilities 
                                      liabilities   customers     at fair value    
                                               Rm          Rm                Rm    

Gains and (losses) from banking 
and trading activities                       (284)          -              (284)   

(1) The gains and losses from banking and trading activities on investment securities have been restated to include
    unrealised gains on unlisted Private Equity investments, resulting in an increase of R27.61m. Previously only 
    unrealised gains relating to unobservable corporate bonds were taken into account in the disclosure, and has 
    therefore been corrected accordingly.

14.8 Sensitivity analysis of valuations using unobservable inputs
As part of the Bank's risk management processes, we perform a sensitivity analysis on the significant unobservable
parameters, in order to determine the impact of reasonably possible alternative assumptions on the valuation of 
level 3 financial assets and liabilities. The assets and liabilities that most impact this sensitivity analysis 
are those with more illiquid and/or structured portfolios. The alternative assumptions are applied independently 
and do not take account of any cross correlation between assumptions that would reduce the overall effect on the 
valuations.

The following table reflects the reasonable possible variances applied to significant parameters utilised in our
valuations.

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

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

                                                                                           31 December 2018
                                                                             Potential effect      Potential effect 
                                                                           recorded in profit     recorded directly 
                                                                                      or loss             in equity    
                               Significant unobservable parameters                Favourable/           Favourable/
                                                                               (Unfavourable)        (Unfavourable)    
                                                                                           Rm                    Rm    
Loans and advances to banks    Absa Group Limited/Absa funding                            -/-                   -/-    
Deposits due to customers      Absa Group Limited/Absa funding                       178/(178)                  -/-    
Investment securities          Risk adjustment yield curves, future                 
                               earnings and marketability discount                        -/-               (20)/20    
Loans and advances to                                                             
customers                      Credit spreads                                       (323)/323                   -/-    
Trading and hedging                                                               
portfolio assets               Volatility, credit spreads, basis curves,          
                               yield curves, repo curves, funding spreads            162/(162)                  -/-    
Trading and hedging                                                               
portfolio liabilities          Volatility, credit spreads, basis curves,          
                               yield curves, repo curves, funding spreads           (224)/224                   -/-    

                                                                                          31 December 2017
                                                                             Potential effect      Potential effect 
                                                                           recorded in profit     recorded directly 
                                                                                      or loss             in equity    
                               Significant unobservable parameters                Favourable/           Favourable/
                                                                               (Unfavourable)        (Unfavourable)    
                                                                                           Rm                    Rm    
Loans and advances to banks    Absa Group Limited/Absa funding                         17/(17)                  -/-    
Deposits due to customers      Absa Group Limited/Absa funding                         13/(12)                  -/-    
Investment securities          Risk adjustment yield curves, future                 
                               earnings and marketability discount                     59/(59)             253/(240)    
Loans and advances to                                                             
customers                      Credit spreads                                          60/(69)                  -/-    
Trading and hedging                                                               
portfolio assets               Volatility, credit spreads, basis curves,          
                               yield curves, repo curves, funding spreads              33/(33)                  -/-    
Trading and hedging                                                               
portfolio liabilities          Volatility, credit spreads, basis curves,          
                               yield curves, repo curves, funding spreads              17/(17)                  -/-    


14.9 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:

                                                      31 December
Category of asset/liability     Valuation techniques applied     Significant unobservable inputs
Loans and advances to           Discounted cash flow             Credit spreads                      
banks and customers             and/or dividend                                                      
                                yield models                                                         
Investment securities           Discounted cash flow             Marketability                       
                                models, third-party              discounts and/or                    
                                valuations, earnings             comparator multiples                
                                multiples and/or                                                     
                                income                                                               
                                capitalisation                                                       
                                valuations                                                           
Trading and hedging                                                                                  
portfolio assets and                                                                                 
liabilities                                                                                          
Debt instruments                Discounted cash flow             Credit spreads                      
                                models                                                               
Derivative assets                                                                                    
Credit derivatives (1)          Discounted cash flow             Credit spreads,                     
                                and/or credit                    Recovery rates and/or,              
                                default swap (hazard             Quanto ratio                        
                                rate) models                                                         
Equity derivatives              Discounted cash flow,            Volatility and/or                   
                                option pricing and/              dividend streams                    
                                or futures pricing               (greater than 3 years)              
                                models                                                               
Foreign exchange                Discounted cash flow             African basis curves                
derivatives                     and/or option                    (greater than 1 year)               
                                pricing models                                                       
Interest rate                   Discounted cash flow             Real yield curves                   
derivatives                     and/or option                    (less than 1 year),                 
                                pricing models                   repurchase agreement                
                                                                 curves (less than 1                 
                                                                 year), funding spreads              
Deposits due to                 Discounted cash flow             The group's funding                 
customers                       models                           spreads (greater than               
                                                                 5 years)                            
Debt securities in              Discounted cash flow             Funding curves                      
issue                           models                           (greater than 5 years)              
Investment Properties           Discounted cash flow             Estimates of periods                
                                models                           in 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                               

                                     2018                  2017    
Category of asset/liability    Range of estimates utilised for the 
                                      unobservable inputs                          
Loans and advances to          .513% to 3.235%          0.3% to 2.3%    
banks and customers                                                     
Investment securities          Discount rate of     Discount rate of    
                                   7.75% to 8%            7% and 9%,    
                                                          comparator    
                                                   multiples between    
                                                          5 and 10.5    
Trading and hedging                                                     
portfolio assets and                                                    
liabilities                                                             
Debt instruments                 0.15% to 8.2%             3% to 15%    
                                                                        
Derivative assets                                                       
Credit derivatives (1)              0.03%-14%,         0.04% to 10%,    
                                      15%-76%,           15% to 76%,    
                                       60%-90%            54% to 90%    
Equity derivatives             14.91% to 53.2%      15.09% to 64.67%    
Foreign exchange              (4.48)% to 24.7%        (28%) to 29.5%    
derivatives                                                             
Interest rate                   0.20% to 9.34%       0.25% to 10.69%    
derivatives                                                             
Deposits due to                   1.3% to 1.8%          0.2% to 1.9%    
customers                                                               
Debt securities in                1.3% to 1.8%          0.2% to 1.9%    
issue                                                                   
Investment Properties             1 to 6 years          1 to 6 years    
                                            6%                    6%    
                                            6%                    6%    
                                           n/a                   n/a    
                                           n/a                   n/a    
                                           n/a                          
                                    7.5% to 8%           7.75% to 8%    
                                    10% to 15%            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 5 years. However, if the items mature in less than 5 years, 
these inputs are considered to be observable, depending on other facts and circumstances.

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.  

14.10 Unrecognised losses/(gains) as a result of the use of valuation models using unobservable inputs
The amount that is 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:

                                                                        31 December              
                                                                      2018      2017    
                                                                        Rm        Rm    
Opening balance at the beginning of the reporting period              (134)     (139)   
New transactions                                                      (367)      (27)   
Amounts recognised in profit or loss during the reporting period        73        32    
Closing balance at the end of the reporting period                    (428)     (134)   

14.11 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.

15. Reporting changes overview
A number of key financial reporting changes were effected during the current reporting period, including the 
adoption of IFRS 15 and IFRS 9, and a consequential amendment to IAS 1. The Bank elected to amend its accounting 
policy with regards to the presentation of interest expense, so as to align to the amendment for the presentation 
of effective interest under the IAS 1 amendment. 
Implementation of new International Financial Reporting Standards (IFRS):
* IFRS 9 Financial Instruments (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).

Amendments to IFRS:
* A change to the presentation of interest income, as required by an amendment to IAS 1. This amendment has 
resulted in the presentation of effective interest income as a separate line item within profit or loss on the 
face of the statement of comprehensive income.

Amendments to internal accounting policies:
* In addition to the amendment required to the presentation of effective interest income under IAS 1, the Bank has
voluntarily elected to bifurcate both interest income and interest expense, as presented on the face of the 
statement of comprehensive income. Further, the Bank has voluntarily elected to restate the prior reporting period.

The most significant reporting change effected during the current period was the adoption of IFRS 9. The project 
has been one of strategic importance to the Bank over the past 5 years, with extensive work being performed in 
building new models, and developing the necessary infrastructure and data management systems to deliver a high 
quality implementation on 1 January 2018. A natural concomitant of adopting any new IFRS, particularly one of this 
level of complexity, is the evolution of technical interpretation, particularly in areas where diversity has been 
identified and challenged. There are two areas of technical interpretation which have evolved since the publication 
of the Bank's IFRS 9 transitional disclosures within this report, as at 30 June 2018. These are as follows:
* Exclusion of post write-off recoveries (PWOR) from loss given default (LGD) modeling: IFRS 9 provides that 
financial assets should be written off, and accordingly derecognised, when the Bank believes there to be no 
reasonable expectation of recovery. The Bank has well-governed internal policies, which define how an individual 
account should be assessed for write-off, and ensure that post write-off recoveries remain insignificant over the 
long run. Further, the policies are recalibrated over time, as and when actual recovery experience changes. Whilst 
the Bank's write-off policy determines the point of derecognition at an individual account level, it also impacts 
the level of recoveries modelled on a collective basis for the purposes of determining the LGDs to be applied at 
a portfolio level.  The Bank's LGD models have historically included the present value of all forecast recoveries 
on a pool of loans, over the full life of such loans, thereby including cash flows which would otherwise be 
classified as post-write off recoveries, from an accounting perspective. 

The IFRS 9 requirements for write-off have been one of the most robustly debated topics following the global 
banking industry's adoption of IFRS 9. Whilst the guidance regarding derecognition under IFRS 9 remains largely 
unchanged from IAS 39, IFRS 9 does explicitly provide that write-off constitutes a derecognition event. The IASB's 
intention in drafting IFRS 9, and specifically with regards to the treatment of post write-off recoveries in the 
calculation of LGD, has been the subject of extensive technical debate across the industry. This matter has not 
however been formally tested through international accounting forums, such as the IFRS-IC and the IFRS 9 Transition 
Resource Group. In line, however, with evolving IFRS 9 technical interpretation, the Bank has reconsidered the 
approach previously applied to LGD modelling for accounting purposes. The Bank believes that under IFRS 9, the 
write-off assumptions should be consistently applied at both an individual account level and on a collective 
modelling basis. Accordingly, the Bank will adjust the original treatment it applied as at 1 January 2018. The 
exclusion of post write-off recoveries from LGD, under IFRS 9, has resulted in a significant increase in the 
allowance for ECL recognised in the statement of financial position, as at 1 January 2018. The restated allowance 
for ECL is R21 462m (including interest in suspense and ECL provision on financial guarantee contracts, letters 
of credit and undrawn facilities), relative to the amount of R20 216m as previously published.  This has further 
resulted in a reduction in the Bank's retained income as at 1 January 2018 of R897m (after taxation adjustment of
R349m). The 1 January 2018 IFRS 9 transition disclosures previously published in the 30 June 2018 report have been
restated. The change in valuation methodology did not have a significant impact on the credit losses recognised 
during the current reporting period, since the impact on both the 1 January 2018 and 31 December 2018 ECL 
allowances, were of a similar magnitude. Please refer to section https://protect-za.mimecast.com/s/wVmXC0gpVQcX7mRiWpu4A?domain=15.1.2.6 for further information.  

* Interest recoveries on cured stage 3 financial assets: IFRS 9 requires interest income on stage 3 assets to be
calculated based on the net carrying value of the exposure, that is, the gross carrying value less the ECL 
allowance. In order to practically give effect to this requirement, the Bank first suspends the recognition of 
contractual interest, and second, multiplies the net carrying value by the effective interest rate (EIR). Interest 
income recognised on stage 3 assets will therefore be less than the contractual interest charged. In some 
instances, the Bank may recover contractual interest which is in excess of that previously recognised under IFRS 9. 
This prompted extensive industry debate regarding whether such excess should be presented as a credit impairment 
gain, reflecting a credit recovery event, or as interest income, reflecting recovery of interest in the ordinary 
course of business. A request for clarification regarding this IFRS 9 requirement was submitted by the banking 
industry through the South African Institute of Chartered Accountants (SAICA) to the IFRS-IC in August 2018. At the 
IFRS-IC meeting held in November 2018, the committee observed that any unrecognised interest, which is subsequently 
recovered, should be presented as a credit impairment gain.  Since such clarification was only provided post the 
Bank's 30 June 2018 reporting date, the Bank had elected to present an amount of R292m as interest income over the 
reporting period ending 30 June 2018. It was the Bank's view that presentation of the recovered interest previously 
unrecognised as a credit impairment gain would understate, and accordingly distort, the Bank's ECL. The Bank has 
however amended its accounting treatment following the decision made by the IFRS-IC. The accounting treatment does 
not impact profit or loss, but it does reduce both the Bank's ECL and interest income. As at 31 December 2018, the
interest recoveries on cured stage 3 assets amounted to R608m and was presented within ECL as a credit impairment 
gain. This is discussed further in section https://protect-za.mimecast.com/s/5TdMCg5KLzC1oGLiEvc1g?domain=15.1.2.8.

Other less significant amendments to IFRS became effective during the current reporting period, although these had 
no impact on the financial results of the Bank. These amendments 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 2015. IFRS-IC 22 Foreign Currency Transactions and 
Advance Consideration is effective in the current reporting period.
 
The table below summarises the total impact on the Bank's statement of changes in equity:

                                              Share   Preference
                                            capital        share
                                                and      capital    Additional
                                              share    and share        Tier 1    Retained
                                            premium      premium       Capital    earnings    
                                                 Rm           Rm            Rm          Rm    
Balance reported as at 31 December 2017      37 183        4 644         1 500      37 855    
Reported impact of adopting IFRS 9                -            -             -      (3 103)   
IFRS 9 LGD restatement(1)                                                             (897)   
Restated impact of adopting IFRS 9                -            -             -      (4 000)   
Impact of adopting IFRS 15                        -            -             -         (44)   
Adjusted balance as at 1 January 2018        37 183        4 644         1 500      33 811    


                                                              Capital and reserves      Non-controlling
                                               Other      attributable to ordinary    interest-ordinary      Total
                                            reserves                equity holders               shares     equity    
                                                  Rm                            Rm                   Rm         Rm    
Balance reported as at 31 December 2017        4 145                        85 327                    2     85 329    
Reported impact of adopting IFRS 9              (204)                       (3 307)                   -     (3 307)   
IFRS 9 LGD restatement(1)                        (31)                         (928)                   -       (928)   
Restated impact of adopting IFRS 9              (235)                       (4 235)                   -     (4 235)   
Impact of adopting IFRS 15                         -                           (44)                   -        (44)   
Adjusted balance as at 1 January 2018          3 910                        81 048                    2     81 050    

(1) The Bank has restated the 1 January 2018 ECL allowance, and the related effects on retained income, which it
    previously presented in this report, as at 30 June 2018. Under this amendment, which follows from the adoption of 
    IFRS 9, post write-off recoveries have been excluded from LGD, thereby resulting in a reduction of R897m in 
    retained income as at 1 January 2018.

15.1            Initial adoption of IFRS 9 Financial Instruments
15.1.1            Overview and highlights
https://protect-za.mimecast.com/s/8q0qCj2MqDs4BR7FnDf9c?domain=15.1.1.1  The impact of IFRS 9 on the Bank 
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. The Bank employs a governed hedging programme to reduce margin 
volatility associated with structural balances (that is, 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 IASB's Dynamic Risk Management project in respect of macro hedging. 
The Bank has accordingly elected not to adopt the revised IFRS 9 hedge requirements.

https://protect-za.mimecast.com/s/HplMCk5KZECyK5MUkJrCd?domain=15.1.1.2  The impact of adopting a revised classification and measurement framework for financial instruments
A portfolio of South African consumer price index (CPI) linked investment securities have been reclassified from
available-for-sale under IAS 39, to amortised cost, under IFRS 9. 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 (refer 
to section 10). The accounting for financial liabilities remains largely unchanged, except for financial 
liabilities designated at fair value through profit or loss (FVTPL). Gains and losses on such financial liabilities 
are required to be presented in other comprehensive income (OCI), to the extent that they relate to changes in own 
credit risk. The Bank early adopted this requirement in 2017, and recognised a debit of R147m in OCI.

https://protect-za.mimecast.com/s/O8jhClOL5GtwVXBtgQNxF?domain=15.1.1.3  The impact of adopting a revised ECL methodology
The adoption of IFRS 9 will impact the timing of credit loss recognition, by accelerating the recognition of losses
relative to IAS 39, and potentially creating increased volatility through the incorporation of forward looking
assumptions. From an economic perspective, total long-run credit losses incurred by the Bank will not be impacted 
by the change in accounting framework. The Bank dedicates considerable resources to gaining a clear and accurate 
understanding of credit risk across the business and to correctly reflecting 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 in accordance with the Bank's 
credit risk policies.

https://protect-za.mimecast.com/s/IlOUCmw6QJHogWmi4Dj3h?domain=15.1.1.4  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. 

The adoption of IFRS 9 has impacted the financial and regulatory capital position of the Bank, as follows:
* The Bank's ECL allowance has increased from R15 902m as at 31 December 2017 to an amount of R21 462m as at 
1 January 2018. This includes the provision recognised in respect of off-statement of financial position items. 
The ECL allowance post the adoption of IFRS 9, as previously reported, was R20 216m. The exclusion of post 
write-off recoveries has therefore increased the ECL allowance post adoption by R1 236m. 
* Retained income decreased by R4 000m (net after a taxation adjustment of R1 560m). The impact of IFRS 9 on 
retained income, as at 1 January 2018, was previously reported to be R3 103m, with a tax adjustment of R1 211m. 
The net impact on retained income of excluding post write-off recoveries is therefore R897m.
* Other reserves decreased by R235m (previously reported R204m), owing principally to the reclassification of
investment securities from available-for-sale to amortised cost.
* The Bank remains strongly capitalised notwithstanding a R2 096m decrease in common equity tier 1 supply (CET1)
(previously reported to be R1 558m) and a 8 bps decrease in the CET1 ratio (previously reported 16 bps). The decrease 
of 8 bps is the amount determined before the application of the transitional arrangement elected by the Bank, which 
will spread the CET 1 impact over three years. This deferral reduces the impact on the CET 1 ratio on the date of 
initial adoption to 2 bps (previously reported 4 bps).

https://protect-za.mimecast.com/s/014OCnZXrKhZPmJiPXY0Z?domain=15.1.1.5 Summary provisional consolidated statement of financial position for Absa Bank Limited
The following table summarises the total impact of IFRS 9 on the statement of financial position as at 
1 January 2018:

                                                                                                 Impact of IFRS9
                                                                            Classification
                                                    31 December 2017     and Measurement(1)   Reported ECL(2)   
                                                                  Rm                    Rm                Rm    
Assets                                                                                                          
Investment securities                                         76 524                  (195)                -    
Loans and advances to banks                                   43 217                     -               (26)   
Loans and advances to customers                              660 492                   (20)           (3 827)   
Investments in associates and joint ventures(4)                1 235                     -               (73)   
Other assets(5)                                              206 890                    55               792    
Total assets                                                 988 358                  (160)           (3 134)   
Liabilities                                                                                                     
Trading portfolio liabilities                                 59 834                   (20)                -    
Provisions(6)                                                  2 073                     -               452    
Other liabilities(5)                                         841 122                     -              (419)   
Total liabilities                                            903 029                   (20)               33    
Equity                                                                                                          
Capital and reserves                                                                                            
Attributable to equity holders:                                                                                 
Ordinary share capital                                           304                     -                 -    
Ordinary share premium                                        36 879                     -                 -    
Preference share capital                                           1                     -                 -    
Preference share premium                                       4 643                     -                 -    
Additional Tier 1 capital                                      1 500                     -                 -    
Retained earnings                                             37 855                     -            (3 103)   
Other reserves                                                 4 145                  (140)              (64)   
                                                              85 327                  (140)           (3 167)   
Non-controlling interest - ordinary shares                         2                     -                 -    
Total equity                                                  85 329                  (140)           (3 167)   
Total liabilities and equity                                 988 358                  (160)           (3 134)   

                                                         Exclusion of PWOR                                    
                                                               from LGD (3)    Total IFRS 9                   
                                                   (IFRS 9 ECL Restatement)      ECL impact   1 January 2018  
                                                                        Rm               Rm               Rm  
Assets                                                                                                        
Investment securities                                                    -                -           76 329  
Loans and advances to banks                                              -              (26)          43 191  
Loans and advances to customers                                     (1 246)          (5 073)         655 399  
Investments in associates and joint ventures(4)                        (31)            (104)           1 131  
Other assets(5)                                                        349            1 141          208 086  
Total assets                                                          (928)          (4 062)         984 136  
Liabilities                                                                                                   
Trading portfolio liabilities                                            -                -           59 814  
Provisions(6)                                                            -              452            2 525  
Other liabilities(5)                                                     -             (419)         840 703  
Total liabilities                                                        -               33          903 042  
Equity                                                                                                        
Capital and reserves                                                                                          
Attributable to equity holders:                                                                               
Ordinary share capital                                                   -                -              304  
Ordinary share premium                                                   -                -           36 879  
Preference share capital                                                 -                -                1  
Preference share premium                                                 -                -            4 643  
Additional Tier 1 capital                                                -                -            1 500  
Retained earnings                                                     (897)          (4 000)          33 855  
Other reserves                                                         (31)             (95)           3 910  
                                                                      (928)          (4 095)          81 092  
Non-controlling interest - ordinary shares                               -                -                2  
Total equity                                                          (928)          (4 095)          81 094  
Total liabilities and equity                                          (928)          (4 062)         984 136  

(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 FVTPL under IFRS 9; and 
* A portfolio of CPI linked investment securities that have been reclassified from available-for-sale to amortised
cost.
(2) Reflects the IFRS 9 ECL impact as previously presented in this report as at 30 June 2018, (not extracted from
    the consolidated annual financial statements).
(3) Reflects the financial impact of amending the Bank's methodology for calculating LGD of loans and advances to
    customers (not extracted from the consolidated annual financial statements).
(4) Reflects the change in the Bank's share of net assets from associates and joint ventures due to their adoption 
    of IFRS 9.
(5) Relates to the adjustments to deferred tax and current tax assets.
(6) The increase in the carrying value of provisions relates to the expected credit losses recognised on financial
    guarantee contracts, letters of credit and undrawn facilities (to the extent that it exceeds the gross carrying 
    amount of loans and advances to customers at an account level).

15.1.2 Key elements of the revised impairment model under IFRS 9
https://protect-za.mimecast.com/s/A3QuCoYKQLiVgv7hE_ueD?domain=15.1.2.1 Introduction
IFRS 9 introduces an ECL impairment model that requires entities to recognise ECL based on a stage allocation
methodology, with such categorisation informing the level of provisioning required. The ECL allowance calculated on 
stage 1 assets reflects the lifetime losses associated with events of default that are expected to occur within 12 
months of the reporting date (12 month ECL). Assets classified within stage 2 and stage 3 carry an ECL allowance 
calculated based on the lifetime losses associated with defaults that are expected to occur over the lifetime of 
the exposure (lifetime ECL). The assessment of whether an exposure should be transferred from stage 1 to stage 2, 
is a relative measure, where the credit risk at the reporting date is compared to the risk that existed at initial 
recognition. 

The stage allocation is required to be performed as follows: 
* Stage 1: Stage 1 assets comprise exposures which 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 section https://protect-za.mimecast.com/s/8R7hCpgKQMc0VAji3Q6Ge?domain=15.1.2.3.
* 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. Purchased or originated credit impaired lending facilities 
are classified on the date of origination within stage 3. This definition is discussed further in section https://protect-za.mimecast.com/s/8R7hCpgKQMc0VAji3Q6Ge?domain=15.1.2.3.

https://protect-za.mimecast.com/s/hNyoCqj5YNsyEXpUWYjJ6?domain=15.1.2.2 Definition of a significant increase in credit risk
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.

https://protect-za.mimecast.com/s/8R7hCpgKQMc0VAji3Q6Ge?domain=15.1.2.3 Definition of credit impaired assets
Assets classified within stage 3 are considered to be credit impaired, which, as discussed in section 2.1 applies 
when an exposure is in default. Whilst IAS 39 does not prescribe any alignment between the accounting and 
regulatory definition default, this has been implemented by the Bank as an amendment under IFRS 9. This departure 
from IAS 39 has resulted in a large increase in the number of exposures which are classified within stage 3, and 
accordingly within accounting default. 

The default definition applied within Wholesale and Retail is now 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.

Further, within the Retail portfolios, two additional requirements for the classification of default are applied.
These have historically been included as criteria for determining whether default exists from a regulatory 
perspective, but not from an accounting perspective under IAS 39:
* Assets within forbearance/debt counselling 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. 

Defaulted assets are considered to be cured once the original event triggering default no longer applies, and the
defined probation period (that is, the required consecutive months of performance) have been met. In the Retail 
portfolio, the cure definition applied, per the credit risk management policy is stringent, and assets will 
typically only cure from stage 3 to stage 2, and therefore won't move directly from stage 3 to stage 1. In the 
Wholesale portfolio assets can move from stage 3 directly to stage 1.

https://protect-za.mimecast.com/s/BaGqCr05ROIRk25u07avi?domain=15.1.2.4 Determination of the lifetime of a credit exposure
The point of initial recognition and asset duration (lifetime) are critical judgements to be applied in determining
the quantum of lifetime losses to be recognised. 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.
  
In defining the period over which the entity is typically 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 the results of collective 
data modelling and the evidence accordingly provided of:
* The period over which the entity is exposed to credit risk on similar financial instruments;
* The length of time for related defaults to occur on similar financial instruments following a significant 
increase in credit risk; and 
* The credit risk management actions that an entity expects to take once the credit risk on the financial 
instrument has increased, such as the reduction or removal of undrawn limits.
For asset duration, the approaches which are applied (in line with IFRS 9 requirements) are:
* Term lending: the contractual maturity date, reduced for behavioural trends where appropriate (such as, expected
settlement and amortisation); and
* Revolving facilities: for Retail portfolios, asset duration is based on behavioural life and this is normally
greater than contractual life. For Wholesale portfolios, a sufficiently long period to cover expected life modelled 
and an attrition rate is applied to cater for early settlement.

https://protect-za.mimecast.com/s/6DmuCvg5oVcnYADUrFhzz?domain=15.1.2.5 Write-off policy
The gross carrying amount of a financial asset shall be directly reduced (that is, written off) when the entity 
has no reasonable expectations of recovering it in its entirety, or a portion thereof. A write-off constitutes a
derecognition event for accounting purposes. Depending on the nature of the account, balances are written off when: 
* There has been less than one qualifying payment received within the last 12 months; or
* It is no longer economically viable to keep the debt on the statement of financial position 
A qualifying payment, for use in the write-off assessment, is defined as the minimum monthly contractual payment due.

Indicators which suggest that an account is not economically viable to retain on the statement of financial 
position are as follows (but do not represent an exhaustive list):
* The exposure is unsecured i.e. there is no tangible security the Bank can claim against (excluding suretyships); 
* The debt has prescribed; 
* The exposure would attract reputational risk should the Bank pursue further legal action due to the
valuation/exposure ratio, for example where the exposure is low and the valuation is very high in relation to the 
low exposure;
* Where the cost to recover is high in relation to the valuation of the asset, for example legal, realisation and
safe-guarding cost and rates and taxes. 

Under IFRS 9, the Bank applies the write-off assumptions consistently at both an individual account level and on a
collective modelling basis. This means that the Bank's LGD model includes only the present value of forecast 
recoveries on a pool of loans up until the designated point of write-off. Recoveries of amounts previously written 
off are recognised as an ECL gain in the statement of comprehensive income as and when the cash is received.

https://protect-za.mimecast.com/s/wVmXC0gpVQcX7mRiWpu4A?domain=15.1.2.6 General IFRS 9 ECL parameters and modelling approach
15.1.2.6.1 Introduction
The estimate of ECL is required to reflect an unbiased and probability-weighted estimate of future losses, which
should be determined by evaluating a range of possible outcomes. In some cases, relatively simple modelling is 
considered to be sufficient, without the need to consider the outcome under different scenarios. For example, the 
average credit losses of a large group of financial instruments with shared risk characteristics may be a 
reasonable estimate of the probability-weighted amount. In other situations, the identification of scenarios that 
specify the amount and timing of the cash flows for particular outcomes and the estimated probability of those 
outcomes will be needed.  The IFRS 9 models make use of three parameters namely PD, LGD and EAD in the calculation 
of the ECL allowance. 

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 rigor applied to regulatory models. Testing procedures assess the quality of 
data, conceptual soundness and performance of models, model implementation and compliance with accounting 
requirements. 

15.1.2.6.2 Probability of default (PD)
The PD is the likelihood of default assessed based 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 therefore equate to a long run average. For IFRS 9 purposes, 
two distinct PD estimates are required:

* 12 month PD: the likelihood of accounts entering default within 12 months of the reporting date.
* Lifetime PD: the likelihood of accounts entering default during the remaining life of the asset.

15.1.2.6.3 Loss given default (LGD)
LGD is defined as the percentage loss rate suffered by a lender on a credit exposure if the obligor defaults. 
In other words, even if the counterparty fails to repay the amount owed, the lender will usually succeed in 
recovering some percentage of the current amount owed in the process of workout or sale of the obligor's assets. 
This percentage is termed the recovery rate (RR), that is, the following relation holds: RR = 1 - LGD. LGD can be 
estimated on the basis of historical data on realised losses. 

The modelling of loan behavior and cash recoveries on a collective basis has, theoretically, a risk diversification
effect which would cause the inclusion of some recoveries that would technically be defined as post write-off 
recoveries at an individual account level. Due to this fact, collective data modelling has historically been 
considered to more appropriately represent the forecast performance of a portfolio of loans, which is influenced 
by prepayments, late payments, PD, LGD and modifications. To illustrate this point, consider the assessment of 
whether an individual home loan will be prepaid. The entity may observe prepayment behaviour across its home loans 
portfolio, but might find it difficult to ascribe a probability of prepayment to an individual account.

From a regulatory perspective LGD parameters are modelled by forecasting full lifetime economic losses over the
duration of the portfolio. Accordingly, the points of write-off applied at an individual account level (for example, 
12 months of no payments), would not necessarily be aligned with those incorporated into the regulatory LGD models 
(which would include recoveries on derecognised accounts received beyond the 12 month write-off period). In line 
with the regulatory treatment of LGD, and in the absence of clear accounting guidance regarding the treatment under 
IAS 39, this approach has historically been accepted as a more appropriate manner in which to present the 
accounting performance on a portfolio of loans with similar characteristics, predominantly in the retail portfolios. 

Whilst the guidance regarding derecognition under IFRS 9 remains largely unchanged from IAS 39, IFRS 9 does
specifically provide that write-off constitutes a derecognition event. This has prompted the Bank to reconsider the 
treatment of post write-off recoveries in the calculation of accounting LGD. In line with evolving IFRS 9 
technical interpretation, the Bank has resolved to amend the approach historically applied to LGD modelling for 
accounting purposes. The Bank believes that under IFRS 9, the write-off assumptions should be consistently applied 
at both an individual account level and on a collective modelling basis. The decision to exclude post write-off 
recoveries from the LGD models applied across the Bank's portfolios has resulted in a significant increase in the 
allowance for ECL recognised in the statement of financial position, as at 1 January 2018. The ECL allowance as 
previously published has increased from R20 216m to a restated amount of R21 462m (including the ECL provision 
on financial guarantee contracts, letters of credit and undrawn facilities). This means that the total increase in 
the allowance for ECL under IFRS 9 is 35% (27% previously published) greater than the impairment allowance under 
IAS 39. This has resulted in a reduction in the Bank's retained income as at 1 January 2018 of R897m (from the 
previously published reduction in retained earnings of R3 103m, to a restated reduction amount of R4 000m). 

This change does not reflect a worsening of the Bank's view of credit quality, and full lifetime losses are not
expected to change with this adoption. The regulatory treatment of LGD remains unchanged.

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).

15.1.2.6.4 Exposure at default (EAD)
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. 

https://protect-za.mimecast.com/s/hqzDCwj5mWsEqyDiLtYkb?domain=15.1.2.7 Interaction of the IFRS 9 ECL model with the Basel Framework
The Bank applies both the standardised approach (TSA) and advanced internal ratings-based (AIRB) approaches to
calculate its regulatory capital requirements relating to credit risk. While, the Bank's operations across ARO 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, specifically within Wholesale South Africa, on the data used by the 
regulatory models to model IFRS 9 ECL and encourage easier reconciliation of inputs for capital requirement and 
impairment calculations.

Existing Basel models were used as a starting point to develop IFRS 9 ECL parameters. The following are key
differences to the regulatory capital parameters:

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

15.1.2.8.1 Impact on the statement of comprehensive income
IFRS 9 requires interest income to be calculated on stage 1 or stage 2 financial assets by multiplying the 
effective interest rate (EIR) by the gross carrying amount of such assets. Hypothetically, should the EIR per 
IFRS 9 equal the contractual interest rate charged, any interest income recognised will be aligned with the amount 
charged to the client as per the Bank's product system. In contrast to the treatment of stage 1 and stage 2 assets, 
IFRS 9 requires interest income on stage 3 financial assets to be calculated based on the net carrying value of the 
exposure, that is, the gross carrying value less the ECL allowance. In order to practically give effect to this 
requirement, the Bank first suspends the recognition of contractual interest, and second, multiplies the net 
carrying value by the EIR. Interest income recognised on stage 3 assets will therefore be less than the amount of 
contractual interest charged. In principle, this means that an exposure classified within stage 3 will realise 
lower interest income than that which would be recognised had it been classified within stage 1 or stage 2 over 
the same period. 

Cured stage 3 assets
In some instances, an entity may recover cash flows which are in excess of the cumulative interest previously
suspended over the life of the instrument. The accounting treatment to be applied when interest is recovered on a
credit-impaired financial asset which subsequently cures (that is, when it is paid in full or is no longer 
credit-impaired), prompted a significant amount of technical debate during the current reporting period. The Bank 
elected to present such excess interest received, amounting to R292m, within interest income, and not as a gain 
within ECL in its 30 June 2018 financial results.  

The existence of diverging interpretations across the local industry prompted a formal request for clarification to 
be made by SAICA to the IFRS-IC. In a meeting held on 27 November 2018, the IFRS-IC observed that the curing of the 
asset is a credit recovery event and that interest previously unrecognised, should be presented as a credit 
impairment gain, and not as interest income.  

Application of the revised accounting treatment observed by the IFRS-IC to be correct resulted in an amount of 
R608m being presented as a gain within credit impairment losses, and accordingly, as a reduction in interest income. 
There is no related corresponding amount presented for 2017 as this relates to the new presentation requirements 
of IFRS 9 which is being applied from 1 January 2018.

15.1.2.8.2 Impact on the statement of financial position
Under IFRS 9, Interesr in Suspense (IIS) is required to be presented as part of both the gross carrying value of the 
financial instrument and the related ECL allowance. Under IAS 39, cumulative suspended interest was not reflected 
on the statement of financial position at all. Accordingly, under IFRS 9, both the gross carrying value and the ECL 
allowance will be larger than it was under IAS 39, however, this amendment does not impact the net carrying value of 
the exposure.

Had the revised presentation requirement been applied as at 31 December 2017, the Bank would have recognised a 
larger gross carrying value, and a larger impairment allowance of R2 279m.

15.1.3 Reconciliation of the allowance for impairment under IAS 39 to the total ECL allowance under IFRS 9
https://protect-za.mimecast.com/s/RxcQCxG5vXF57x2iBb-xn?domain=15.1.3.1 Summary of ECL by segment and class of credit exposure
The following table sets out the transition of the impairment allowances applied to all credit exposures from 
IAS 39 to IFRS 9, by asset class, and by segment:

                                                     IAS 39 - 31 December 2017
                                                     Performing    Non-performing     Total IAS 39
                                                      provision         Portfolio       (excl. IIS)    
                                                             Rm                Rm               Rm    
Retail and Business Banking South Africa                  3 356             8 678           12 034    
Retail Banking                                            2 583             7 582           10 165    
Credit cards                                                578             2 626            3 204    
Instalment credit agreements                                703             1 112            1 815    
Loans to associates and joint ventures                        -                 -                -    
Mortgages                                                 1 124             2 056            3 180    
Other loans and advances                                      -                 -                -    
Overdrafts                                                   51               236              287    
Personal and term loans                                     127             1 552            1 679    
Business Banking South Africa                               773             1 096            1 869    
CIB South Africa                                            559               832            1 391    
Wealth                                                       14               174              188    
Head Office, Treasury and other operations in                                         
South Africa                                                 10                 -               10    
Loans and advances                                           10                 -               10    
Reclassification to provisions                                -                 -                -    
Loans and advances to customers                           3 939             9 684           13 623    
Loans and advances to banks                                   -                 -                -    
Investment securities                                         -                 -                -    
Total ECL allowance: On-statement of financial                                        
position exposures                                        3 939             9 684           13 623    
Off - statement of financial position exposures                                                       
Undrawn committed facilities(1)                               -                 -                -    
Financial guarantees                                          -                 -                -    
Letters of credit                                             -                 -                -    
Total ECL allowance: Off - statement of                                               
financial position exposures                                  -                 -                -    
Total ECL allowance                                       3 939             9 684           13 623    


                                                   Interest                                           Total IFRS 9
                                                         in     Total IAS 39    Reported      PWOR       provision
                                                   Suspense   (including IIS)     IFRS 9   Impacts  (including IIS)    
                                                         Rm               Rm          Rm        Rm              Rm    
Retail and Business Banking South Africa              2 131           14 165      18 049     1 246          19 295    
Retail Banking                                        1 082           11 247      14 479     1 176          15 655    
Credit cards                                              -            3 204       4 236       533           4 769    
Instalment credit agreements                             93            1 908       2 580       334           2 914    
Loans to associates and joint ventures                    -                -           2         -               2    
Mortgages                                               822            4 002       4 966        61           5 027    
Other loans and advances                                  -                -          34         -              34    
Overdrafts                                               69              356         411        86             497    
Personal and term loans                                  98            1 777       2 250       162           2 412    
Business Banking South Africa                         1 049            2 918       3 570        70           3 640    
CIB South Africa                                        123            1 514       1 821         -           1 821    
Wealth                                                   25              213         266         -             266    
Head Office, Treasury and other operations in
South Africa                                              -               10        (407)        -            (407)   
Loans and advances                                        -               10          19         -              19    
Reclassification to provisions                            -                -        (426)        -            (426)   
Loans and advances to customers                       2 279           15 902      19 729     1 246          20 975    
Loans and advances to banks                               -                -          26         -              26    
Investment securities                                     -                -           9         -               9    
Total ECL allowance: On-statement of financial                                                        
position exposures                                    2 279           15 902      19 764     1 246          21 010    
Off - statement of financial position exposures                                                                       
Undrawn committed facilities(1)                           -                -         426         -             426    
Financial guarantees                                      -                -          23         -              23    
Letters of credit                                         -                -           3         -               3    
Total ECL allowance: Off - statement of                                                               
financial position exposures                              -                -         452         -             452    
Total ECL allowance                                   2 279           15 902      20 216     1 246          21 462    

                                                  IFRS 9 - 1 January 2018
                                                                                      IFRS 9 transaction
                                                  Stage 1     Stage 2     Stage 3           adjustment(2)    
                                                       Rm          Rm          Rm                     Rm    
Retail and Business Banking South Africa            2 797       2 821      13 677                  5 130    
Retail Banking                                      2 147       2 478      11 030                  4 408    
Credit cards                                          603       1 072       3 094                  1 565    
Instalment credit agreements                          686         629       1 599                  1 006    
Loans to associates and joint ventures                  2           -           -                      2    
Mortgages                                             306         255       4 466                  1 025    
Other loans and advances                                8          18           8                     34    
Overdrafts                                             57         160         280                    141    
Personal and term loans                               485         344       1 583                    635    
Business Banking South Africa                         650         343       2 647                    722    
CIB South Africa                                      482         384         955                    307    
Wealth                                                 27           6         233                     53    
Head Office, Treasury and other operations in                                              
South Africa                                         (188)       (172)        (47)                  (417)   
Loans and advances                                      8          11           -                      9    
Reclassification to provisions                       (196)       (183)        (47)                  (426)   
Loans and advances to customers                     3 118       3 039      14 818                  5 073    
Loans and advances to banks                             4          22           -                     26    
Investment securities                                   9           -           -                      9    
Total ECL allowance: On-statement of financial                                             
position exposures                                  3 131       3 061      14 818                  5 108    
Off - statement of financial position exposures                                                             
Undrawn committed facilities(1)                       196         183          47                    426    
Financial guarantees                                   15           8           -                     23    
Letters of credit                                       1           2           -                      3    
Total ECL allowance: Off - statement of                                                    
financial position exposures                          212         193          47                    452    
Total ECL allowance                                 3 343       3 254      14 865                  5 560    


(1) Relates to ECL on undrawn committee facilities to the extent that it exceeds the gross carrying amount on loans
    and advances at an account level. 
(2) 'IFRS 9 transaction adjustment' is calculated as 'Total IFRS 9 provision (including IIS)' less 'Total IAS 39
    (including IIS)'.

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.

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, amounted to R2 279m. As at the date of initial adoption this has been 
included in the opening impairment allowance, with an equivalent increase in the gross carrying value of the 
financial assets. 
* Removal of post write-off recoveries from LGD: The Bank has adopted a revised approach to the collective data
modelling of LGD, and has specifically excluded post write-off recoveries from the forecast recoverable cash flows. 
This is an amendment under IFRS 9, and has resulted in an increase in the ECL allowance as at 1 January 2018.
* 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. An increase in the ECL allowance has been observed and is attributable to the period under IFRS 9 
being defined as 12 months (or less if the contractual period is less than 12 months) on stage 1 assets.  
* 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 differences have been discussed further in section 5 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. For this reason, it is not 
possible to identify the ECL on the loan commitment component separately from the financial asset component. 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. A provision of R426m was recognised on 1 January 2018.  

The Bank presents the ECL on financial guarantees and letters of credit as a provision on the statement of financial
position. This provision has been presented as part of the IFRS 9 ECL allowance for the purposes of illustrating 
the full effects of applying a revised methodology. As at 1 January 2018, the provision calculated in respect of 
these exposures was R26m. 

* The calculation of ECL on other assets: Cash reserves with central banks and investment securities are included
within the scope of IFRS 9 ECL and have contributed R9m to the Bank's total ECL allowance.

https://protect-za.mimecast.com/s/gMjmCy85rYhP8Lli6MWKL?domain=15.1.4.1 Summary of ECL coverage for loans and advances to banks and customers
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 (EL) 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.

                                                                    1 January 2018
                                                                                Stage 1
                                                 Financial assets 
                                                   measurement at 
                                                   FVTPL Carrying    Carrying          ECL         ECL
                                                            value       value    allowance    coverage    
                                                               Rm          Rm           Rm           %    
RBB South Africa                                           26 899     381 576        2 797        0.73    
Retail Banking South Africa                                     -     326 985        2 147        0.66    
Credit cards                                                    -      23 116          603        2.61    
Installment credit agreements                                   -      67 498          686        1.02    
Loans to associates and joint ventures                          -      23 037            2        0.01    
Mortgages                                                       -     192 272          306        0.16    
Other loans and advances                                        -       2 439            8        0.33    
Overdrafts                                                      -       4 362           57        1.31    
Personal and term loans                                         -      14 261          485        3.40    
Business Banking South Africa                                   -      54 591          650        1.19    
CIB South Africa                                           26 899     156 231          482        0.31    
Wealth                                                          -       4 658           27        0.58    
Head Office, Treasury and other operations in                                                 
South Africa                                                    -         218         (188)          -    
Loans and advances                                              -         218            8        3.68    
Reclassification to provisions(1)                               -           -         (196)          -    
Loans and advances to customers                            26 899     542 683        3 118        0.57    
Loans and advances to banks                                17 197      24 092            4        0.02    
Total Loans and advances                                   44 096     566 775        3 122        0.55    


                                                   1 January 2018
                                                      Stage 2
                                                   Carrying value     ECL allowance     ECL coverage    
                                                               Rm                Rm                %    
RBB South Africa                                           33 192             2 821             8.82    
Retail Banking South Africa                                26 284             2 478             9.97    
Credit cards                                                3 122             1 072            32.70    
Installment credit agreements                               5 217               629            11.69    
Loans to associates and joint ventures                          -                 -                -    
Mortgages                                                  14 290               255             2.55    
Other loans and advances                                      345                18             5.22    
Overdrafts                                                  1 024               160            12.40    
Personal and term loans                                     2 286               344            21.04    
Business Banking South Africa                               6 908               343             4.46    
CIB South Africa                                           35 232               384             1.09    
Wealth                                                        229                 6             2.62    
Head Office, Treasury and other operations in     
South Africa                                                  769              (172)               -    
Loans and advances                                            769                11             1.43    
Reclassification to provisions                                  -              (183)               -    
Loans and advances to customers                            69 422             3 039             4.53    
Loans and advances to banks                                 1 928                22             1.14    
Total Loans and advances                                   71 350             3 061             4.44    
                                                  

                                                 1 January 2018
                                                    Stage 3                                            Net total
                                                 Carrying value     ECL allowance     ECL coverage      exposure    
                                                             Rm                Rm                %            Rm    
RBB South Africa                                         34 897            13 677            39.19       430 370    
Retail Banking South Africa                              29 227            11 030            37.74       366 841    
Credit cards                                              4 233             3 094            73.09        25 702    
Installment credit agreements                             4 167             1 599            38.37        73 968    
Loans to associates and joint ventures                        -                 -                -        23 035    
Mortgages                                                18 009             4 466            24.80       219 544    
Other loans and advances                                     11                 8            72.73         2 761    
Overdrafts                                                  416               280            67.31         5 305    
Personal and term loans                                   2 391             1 583            66.21        16 526    
Business Banking South Africa                             5 670             2 647            46.68        63 529    
CIB South Africa                                          2 143               955            44.56       218 684    
Wealth                                                      330               233            70.61         4 951    
Head Office, Treasury and other operations in                                                        
South Africa                                                  -               (47)               -         1 394    
Loans and advances                                            -                 -                -           968    
Reclassification to provisions                                -               (47)               -           426    
Loans and advances to customers                          37 370            14 818            39.65       655 399    
Loans and advances to banks                                   -                 -                -        43 191    
Total Loans and advances                                 37 370            14 818            39.65       698 590    
                                             
(1) 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 on the statement of
    financial position.

15.1.5 The impact of IFRS 9 on regulatory capital (unaudited)
https://protect-za.mimecast.com/s/kqGQCzm5KZTYk40irwL8t?domain=15.1.5.1 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 SARB. The key drivers of such impact are
explained in the next table:

                                                     Initial
IFRS (Including             31 December 2017     recognition       Release of     Deferred           Impact on 
Unappropriated profits)             (IAS 39)          of ECL     EL shortfall     tax (RWA)     other reserves    
Note                                             15.1.5.1.1.      15.1.5.1.2.   15.1.5.1.3.        15.1.5.1.4.    
Capital Supply (Rm)
Common equity tier 1                 72 648           (4 000)           2 139                            (235)   
Tier 1 capital                       76 460           (4 000)           2 139                            (235)   
Total capital                        91 484           (4 000)           2 139                            (235)   
Risk weighted assets                542 199                                          2 690                       
Capital Ratios (%)(1)
Common equity tier 1                   13.4             (0.7)             0.4         (0.1)                 -   
Tier 1                                 14.1             (0.7)             0.4         (0.1)                 -    
Total capital                          16.9             (0.7)             0.4         (0.1)                 -    
Leverage                                                                                                         
Leverage exposure                 1 149 575           (5 560)           2 139        1 409               (290)   
Leverage ratio (%)                      6.7             (0.3)             0.2            -                  -    
                                                                                

                                                                 1 January 2018
IFRS (Including                     Release of RWA      Eligible General        Fully loaded       Transitional
Unappropriated profits)    on non-performing loans    Provisions (Tier 2)   capital position      capital position    
Note                                    15.1.5.1.5.           15.1.5.1.6.
Capital Supply (Rm)
Common equity tier 1                                                                  70 552                72 124    
Tier 1 capital                                                                        74 364                75 936    
Total capital                                                        113              89 501                90 989    
Risk weighted assets                       (15 103)                                  529 785               539 094    
Capital Ratios (%)1                                                                                                   
Common equity tier 1                           0.4                                      13.3                  13.4    
Tier 1                                         0.4                                      14.0                  14.1    
Total capital                                  0.4                     -                16.9                  16.9    
Leverage                                                                                                              
Leverage exposure                                                                  1 147 273             1 148 999    
Leverage ratio (%)                                                                       6.5                   6.6    

(1) The Bank's capital ratios decreased as follows as a result of the adoption of IFRS 9: 
* CET1 ratio decreased by 8 bps on a fully loaded basis and 2 bps after phase-in.
* Tier 1 ratio decreased by 6 bps on a fully loaded basis and 2 bps after phase-in.
* Total Capital ratio decreased by 2 bps on a fully loaded basis and 1 bps after phase-in.

https://protect-za.mimecast.com/s/kqGQCzm5KZTYk40irwL8t?domain=15.1.5.1. Adoption of IFRS 9 and its impact on the Bank's regulatory capital (unaudited)
15.1.5.1.1.  Increase in ECL provision under IFRS 9
The adoption of the revised IFRS 9 ECL model has reduced shareholders equity by R5 560m (Reported: R4 314m) which is
partially offset by the recognition of a net tax credit of R1 560m (Reported: R1 211m). The tax credit includes 
current and deferred tax.

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

15.1.5.1.3. Recognition of a higher deferred tax asset balance
As discussed in point 15.1.5.1.1., 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 
15.1.5.1.4. resulted in a reversal of a deferred tax liability. The net effect has been an increase in risk 
weighted assets (RWA) of R2 690m (Reported: R2 331m), and accordingly, a decrease in the CET1 ratio.

15.1.5.1.4.  Impact on other reserves under IFRS 9
Other reserves decreased by R235m (Reported: 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.

15.1.5.1.5. 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 R15 103m (Reported: 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. 

15.1.5.1.6. Tier 2 eligible provisions
Under IFRS 9, the total stage 1 and stage 2 ECL provision calculated in respect of the Bank's AIRB portfolio 
exceeds the regulatory ECL. The excess is added back as Tier 2 capital, but the quantum is capped at 0.6% of the 
AIRB credit RWA. 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 R113m (Reported: R53m).

15.1.5.1.7.  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.

15.1.6. Drivers of the impairment charge under IFRS 9
IFRS 9 impacts the timing of loss recognition, but over time, the long run expected cash losses are driven by 
economic and commercial factors, independent from the accounting framework applied.
Differences in the timing of recognition of an impairment charge under IFRS 9 versus IAS 39 are attributed to, 
inter alia:
* significant increases in credit risk causing a transfer of assets to stage 2 assets; 
* significant changes in forward looking macroeconomic conditions leading to assets moving between stages; and 
* the size of new business growth. 

Significant increase in credit risk: Transfers of exposures to stage 2 are driven by significant deterioration in
credit quality, although a large stage 2 balance does not necessarily mean that the exposures have a poor default 
grade. An important principle under IFRS 9 is that a significant increase in credit risk constitutes a measure of 
relative credit risk, requiring the absolute credit quality of an exposure on origination to be compared against 
the absolute credit quality at reporting date. Exposures classified within stage 2 may actually have a better 
credit quality than other assets which remain in Stage 1. Further, owing to the 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. 

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 
macro-economic 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.    

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

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

15.1.8.  Incorporation of forward-looking information in their IFRS 9 modelling
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 macro-economic 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.

https://protect-za.mimecast.com/s/T7YVCAnoP4TKwEvU56Q0T?domain=15.1.8.1. 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 growing agricultural output, but 
the near-term outlook still remains moderate. GDP growth is forecast to marginally increase in 2018. Positive 
political developments are observed, although the consumer remains in a defensive mindset, and household spending 
remains relatively muted given tax increases. Beyond 2019, growth is supported by a stronger global and domestic 
environment. South Africa's fiscal fortunes and potential ratings downgrade remain a concern over the forecast 
period. Disappointing growth could result in low fiscal revenue that is expected to undershoot budget targets. No 
further interest rate cuts over the forecast horizon are assumed.

Africa Regions
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.

https://protect-za.mimecast.com/s/LNTnCBgpL4cXw8gi032Ub?domain=15.1.8.2. Mild upside scenario: Stronger near term growth

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, euro zone 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.

South Africa
It is assumed there are no further rating downgrades. Policy and political stability boosts business confidence 
and private sector fixed investment. We assumed a strong Rand compared to the base scenario that is driven by the 
sovereign rating being unchanged and the positive global sentiment toward emerging markets. Inflation moves lower 
on the back of the stronger Rand and continued moderation in food price inflation. Falling inflation and 
diminished risk at a domestic level gives the South African Reserve Bank (SARB) 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.  

Africa Regions
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. 

15.1.8.  Incorporation of forward-looking information in their IFRS 9 modelling
https://protect-za.mimecast.com/s/LNTnCBgpL4cXw8gi032Ub?domain=15.1.8.2. Mild upside scenario: Stronger near term growth
https://protect-za.mimecast.com/s/9NCZCDRr94TLE3RIpwGiG?domain=15.1.8.3. 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, euro zone 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. Rating 
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.

Africa Regions
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.

15.1.9 The key elements of classification and measurement requirements under IFRS 9
IFRS 9 will require financial assets to be classified on the basis of two criteria:
* The business model within which financial assets are managed, and
* Their contractual cash flow characteristics, and specifically whether the cash flows represent Solely 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 (that is, 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.

15.1.10 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 with central banks        
                                      Amortised cost - designated                 28 792                    -   
                                                                                  28 792                    -   
Investment securities                                                                                           
                                      Designated at FVTPL                         20 866               (9 503)  
                                                                                                        9 503   
                                      Available-for-sale (AFS) - 
                                      designated                                  35 241               (5 902)  
                                                                                                          287   
                                      AFS - hedged items                          20 417                    -   
                                                                                       -                5 420   
                                                                                  76 524                 (195)  
Loans and advances to banks                                                                                     
                                      Designated at FVTPL                         17 197              (15 745)  
                                                                                                       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 to customers                                                                                 
                                      Designated at FVTPL                         26 811              (19 378)  
                                                                                                       19 466   
                                      Amortised cost - designated                633 635                 (108)  
                                      Amortised cost - hedged items                   46                    -   
                                                                                 660 492                  (20)  
Loans to Group companies              Amortised cost - designated                 36 530                    -   
Non-current asset held for sale       Amortised cost - designated                  1 118                    -   
Assets outside the scope of IFRS 9                                                22 961                   55   
Total assets                                                                     988 358                 (160)  

                                                                     IFRS 9                                      
                                     Remeasurement     Measurement Category                   Carrying 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 to banks
                                                 -     Designated at FVTPL                              1 452    
                                                 -     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 to customers                                                                                  
                                                 -     Designated at FVTPL                              7 433    
                                                 -     Mandatory at FVTPL                              19 466    
                                            (5 073)    Amortised cost - designated                    628 454    
                                                 -     Amortised cost - hedged items                       46    
                                            (5 073)                                                   655 399    
Loans to Group companies                         -     Held at amortised cost                          36 530    
Non-current asset held for sale                  -     Held at amortised cost                           1 118    
Assets outside the scope of IFRS 9           1 037     Assets outside the scope of IFRS 9              24 053    
Total assets                                (4 062)                                                   984 136    

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 Banks 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 630m, and a fair value loss of R151m would have been recognised in OCI during 
the reporting period.  
* Certain financial assets, including loans and advances in CIB 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 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.

15.1.11. Governance
https://protect-za.mimecast.com/s/FmqZCElv94s8vpQFRB855?domain=15.1.11.1. 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 judgments and decisions. 

https://protect-za.mimecast.com/s/bZhgCGZx54hNDAVH6hsIZ?domain=15.1.11.2. 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. 
15.2. 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 IFRS-IC 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.

15.3. Internal accounting policy amendments
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 afore-mentioned 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.

15.4. Changes to reportable segments and business portfolios
The South Africa Banking segment (which consisted of RBB (SA) and CIB (SA) in aggregate) has been removed in the
Bank's segmental disclosures to align with how the banking operations are now managed.

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 following restatements: 
* Net interest income from RBB South Africa of R122m and CIB South Africa R2m to and Head Office, Treasury and other
operations R124m;
* Non-interest income from Head Office, Treasury and other operations to CIB South Africa R92m; and
* The Bank continued refining its cost allocation methodology, resulting in restatement of operating expenses from
RBB South Africa R42m to, CIB South Africa R24m, Wealth R16m and Head Office, Treasury and other operations R2m.

Administration and contact details
Absa Bank Limited
Formerly known as Barclays Africa Group Limited
Incorporated in the Republic of South Africa
Registration number: 1986/004794/06
Authorised financial services and registered credit provider (NCRCP7)
JSE share code: ABSP
ISIN: ZAE000079810

Head Investor Relations
Alan Hartdegen
Telephone: +27 11 350 2598

Company Secretary
Nadine Drutman
Telephone: +27 11 350 5347

Head of Financial Control
John Annandale
Telephone: +27 11 350 3496

Transfer secretary
Computershare Investor Services (Pty) Ltd Telephone: +27 11 370 5000 
https://protect-za.mimecast.com/s/CwUDCJZAq5hW6K7CAEtMI?domain=computershare.com

Auditors
Ernst & Young Inc. 
Telephone: +27 11 772 3000 https://protect-za.mimecast.com/s/Bt7oCKOBZ4tyX4jUY8Q64?domain=ey.com

Registered office
7th Floor, Absa Towers West
15 Troye Street, Johannesburg, 2001
PO Box 7735, Johannesburg, 2000

Switchboard: +27 11 350 4000

absa.africa

Queries
Please direct investors relations queries to IR@absa.co.za

Please direct media queries to groupmedia@absa.africa

Please direct other queries regarding the Bank to groupsec@absa.co.za

Sponsors 
Absa Bank Limited (Corporate and Investment Bank) 
Telephone: +27 11 895 6843 
equitysponsor@absa.africa

Date: 11/03/2019 08:43:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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