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ASA
AMAGB
ASA - Absa Group Limited - Profit and dividend announcement; unaudited interim
financial results for the six months ended 30 June 2007
ABSA GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1986/003934/06)
ISIN: ZAE000067237
JSE share code: ASA
Issuer code: AMAGB
(Absa, Absa Group or the Group)
ABSA GROUP: PROFIT AND DIVIDEND ANNOUNCEMENT
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
GROUP SALIENT FEATURES
Six months ended Twelve
months
ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) Change (Audited)
(Restated) %
Income statement (Rm)
Headline earnings*** 4 365 3 460 26,2 7 872
Profit attributable to 4 363 3 445 26,6 8 105
ordinary equity holders of
the Group
Balance sheet (Rm)
Total assets 553 893 463 252 19,6 495 112
Loans and advances to 415 964 345 980 20,2 374 946
customers
Deposits due to customers 291 306 258 215 12,8 279 849
Financial performance (%)
Return on average equity 26,8 24,7 27,4
Return on average assets 1,69 1,61 1,74
Loans-to-deposits ratio 142,8 134,0 134,0
Operating performance (%)
Net interest margin on 3,32 3,21 3,29
average assets
Net interest margin on 3,75 3,66 3,73
average interest-bearing
assets
Impairment losses on loans 0,49 0,37 0,45
and advances as % of average
loans and advances to
customers
Non-performing advances as %
of loans and advances to 1,5 1,4 1,3
customers
Six months ended Twelve
months
ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) Change (Audited)
(Restated) %
Non-interest income as % of 49,5 49,9 51,1
total operating income
Cost-to-income ratio 53,6 57,7 54,6
Effective tax rate, excluding 29,6 28,5 27,6
indirect taxation
Share statistics (million)
Number of shares in issue 675,0 670,2 672,0
Weighted average number of 670,2 664,5 666,1
shares
Weighted average diluted 716,5 708,8 703,2
number of shares
Share statistics (cents)
Earnings per share 651,0 518,5 25,6 1 216,8
Diluted earnings per share 610,0 486,9 25,3 1 154,4
Headline earnings per share 651,3 520,7 25,1 1 181,8
Diluted headline earnings 610,2 489,0 24,8 1 121,3
per share
Dividends per ordinary share 240,0 208,0 15,4 473,0
relating to income for the
period/year
Dividend cover (times) 2,7 2,5 2,5
Net asset value per share 5 020 4 173 20,3 4 717
Tangible net asset value per 4 971 4 145 19,9 4 682
share
Capital adequacy (%)
Absa Bank 12,9 12,7 12,3
Absa Group 13,9 12,9 13,1
*The comparatives for the six months ended 30 June 2006 have been restated for
the deconsolidation of certain cell captives, the reclassification of certain
assets and liabilities as well as the reclassification of interest and dividends
on fair value through profit and loss assets. See section on "Changes in
accounting policy and reclassifications".
**The comparatives for the twelve months ended 31 December 2006 have been
reclassified for certain assets and liabilities as well as interest and
investment gains on fair value through profit and loss assets. See section on
"Changes in accounting policy and reclassifications".
***Excludes R114 million (December 2006: R73 million) profit attributable to
preference equity holders of the Group.
GROUP INCOME STATEMENT
Twelve
Six months ended months
ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) (Audited)
(Restated) Change
Rm Rm % Rm
Net interest income 8 577 6 891 24,5 14 897
Interest and similar income 24 185 17 331 39,5 37 600
Interest expense and similar (15 608) (10 440) (49,5) (22 703)
charges
Impairment losses on loans
and advances (985) (594) (65,8) (1 573)
7 592 6 297 20,6 13 324
Net fee and commission 5 626 4 805 17,1 10 374
income
Fee and commission income 5 996 5 077 18,1 10 951
1.1
Fee and commission expense (370) (272) (36,0) (577)
Net insurance premium income 1 653 1 408 17,4 2 994
Net insurance claims and
benefits paid (778) (607) (28,2) (1 319)
Changes in insurance and
investment liabilities (573) (294) (94,9) (748)
Gains and losses from
banking and trading 930 610 52,5 1 416
activities 1.2
Gains and losses from
investment activities 1.3 1 084 588 84,4 1 891
Other operating income 469 359 30,6 938
Net operating income 16 003 13 166 21,5 28 870
Operating expenditure (9 590) (8 356) (14,8) (17 566)
Operating expenses 2.1 (9 113) (7 935) (14,8) (16 620)
Non-credit related (28) - >(100,0) (75)
impairments 2.2
Indirect taxation (449) (421) (6,7) (871)
Share of retained earnings
of associated undertakings
and joint ventures 16 69 (76,8) 113
Operating profit before 6 429 4 879 31,8 11 417
income tax
Taxation expense (1 900) (1 389) (36,8) (3 151)
Profit for the period/year 4 529 3 490 29,8 8 266
Attributable to:
Ordinary equity holders of 4 363 3 445 26,6 8 105
the Group
Minority interest -
preference shares 114 - >(100,0) 73
Minority interest - 52 45 (15,6) 88
ordinary shares
4 529 3 490 29,8 8 266
Headline earnings 3 4 365 3 460 26,2 7 872
NOTES TO THE INTERIM FINANCIAL RESULTS
1. NON INTEREST INCOME
Six months ended Twelve
months
ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) (Audited)
(Restated) Change
Rm Rm % Rm
1.1 Fee and commission
income
Asset management and related 29 13 >100,0 59
fees
Credit related fees and 4 845 4 089 18,5 8 948
commission
Credit cards 792 632 25,3 1 390
Cheque accounts 1 230 1 162 5,9 2 405
Electronic banking 1 226 1 055 16,2 2 248
Other 1 597 1 240 28,8 2 905
Corporate finance fees 65 45 44,4 136
Insurance commission 452 399 13,3 771
received
Portfolio and other 104 95 9,5 180
management fees
Trust and estate income 111 98 13,3 201
Pension fund payment 232 222 4,5 452
services
External administration fees 158 116 36,2 204
5 996 5 077 18,1 10 951
1.2 Gains and losses from
banking and trading
activities
Net gains on investments 375 66 >100,0 530
Fair value through 375 66 >100,0 363
profit and loss
Profit on disposal of
associated undertakings and - - - 167
joint ventures
Dividend income 13 11 18,2 27
Net trading results 585 625 (6,4) 1 061
Derivatives (non-qualifying (43) (92) 53,3 (202)
hedges)
930 610 52,5 1 416
1.3 Gains and losses from
investment activities
Fair value through profit 1 040 571 82,1 1 715
and loss
Net investment gains
from insurance activities 1 026 586 75,1 1 635
Fair value gains 706 336 >100,0 1 167
Net interest income 253 168 50,6 344
Dividend income 67 82 (18,3) 124
Investment gains 14 (15) >100.0 80
Other dividend income 34 17 100,0 72
Available-for-sale 10 - >100,0 -
Profit on disposal of
associated undertakings and
joint ventures - - - 54
Profit on disposal of - - - 50
subsidiary
1 084 588 84,4 1 891
2. OPERATING EXPENDITURE
Six months ended Twelve
months
ended
31 December
30 June
2007 2006 2006
(Unaudited) (Unaudited) (Audited)
(Restated) Change
Rm Rm % Rm
2.1 Operating expenses
Amortisation 20 8 >(100,0) 37
Auditors` remuneration 49 48 (2,1) 69
Depreciation 386 369 (4,6) 739
Information technology cost 598 615 2,8 1 154
Marketing and advertising 428 354 (20,9) 728
costs
Operating lease rentals 459 412 (11,4) 748
Professional fees 349 415 15,9 1 023
Barclays synergy costs 300 262 (14,5) 640
Staff costs 4 833 3 853 (25,4) 8 218
Other operating expenses 1 691 1 599 (5,8) 3 264
9 113 7 935 (14,8) 16 620
2.2 Non-credit related
impairments
Associated undertakings and
joint - - - 10
ventures
Available-for-sale assets
and - - - (5)
strategic investments
Computer software 28 - >(100,0) 66
development costs
Property and equipment - - - 4
28 - >(100,0) 75
3. DETERMINATION OF HEADLINE EARNINGS
Six months ended Twelve
months
ended
31 December
30 June
2007 2006 2006
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Headline earnings is
determined
as follows:
Profit attributable to
ordinary equity holders of
the Group 4 363 3 445 26,6 8 105
Adjustments for:
Net profit on disposal of
property and equipment (11) (0) >(100,0) (11)
Net loss/(profit) on
disposal of available-for-
sale assets and strategic
investments 13 15 (13,3) (231)
Impairment costs - - - 9
Associated undertakings
and joint ventures - - - 10
Available-for-sale assets
and strategic investments - - - (5)
Property and equipment - - - 4
Headline earnings 4 365 3 460 26,2 7 872
GROUP BALANCE SHEET
30 June 31 December
2007 2006 2006
(Unaudited (Unaudited) (Audited)
(Restated) Change
Rm Rm % Rm
Assets
Cash, cash balances and 17 191 10 729 60,2 16 461
balances with central
banks
Statutory liquid asset 20 848 18 929 10,1 20 829
portfolio
Loans and advances to 18 737 25 148 (25,5) 21 800
banks
Trading assets 17 902 26 540 (32,5) 17 983
Hedging assets 796 304 >100.0 676
Loans and advances to 415 964 345 980 20,2 374 946
customers
Reinsurance assets 399 381 4,7 390
Other assets 30 377 10 907 >100,0 12 175
Investments 26 278 19 517 34,6 25 026
Investments in associated
undertakings and joint 849 1 047 (18,9) 693
ventures
Intangible assets 328 188 74,5 230
Property and equipment 4 069 3 482 16,9 3 750
Current tax assets 34 18 88,9 24
Deferred tax assets 121 82 47,6 129
Total assets 553 893 463 252 19,6 495 112
Liabilities
Deposits from banks 24 107 30 298 (20,4) 24 817
Trading liabilities 24 112 27 137 (11,1) 23 484
Hedging liabilities 2 994 1 377 >100,0 1 902
Deposits due to customers 291 306 258 215 12,8 279 848
Debt securities in issue 130 575 78 896 65,5 98 940
Current tax liabilities 366 550 (33,5) 1 181
Liabilities under
investment 6 108 3 726 63,9 5 129
contracts
Policyholder liabilities
under 3 271 2 970 10,1 3 187
insurance contracts
Borrowed funds 1 9 946 8 325 19,5 8 420
Other liabilities and
sundry provisions 20 218 18 234 10,9 10 746
Deferred tax liabilities 2 229 2 332 (4,4) 2 537
Total liabilities 515 232 432 060 19,3 460 191
Equity
Capital and reserves
Attributable to ordinary
equity holders of the
Group:
Share capital 1 342 1 331 0,8 1 338
Share premium 2 058 1 950 5,5 2 067
Other reserves 462 551 (16,2) 412
Distributable reserves 30 020 24 134 24,4 27 876
33 882 27 966 21,2 31 693
Minority interest - 4 505 2 992 50,6 2 992
preference shares
Minority interest - 274 234 17,1 236
ordinary shares
Total equity 38 661 31 192 23,9 34 921
Total equity and 553 893 463 252 19,6 495 112
liabilities
Contingent liabilities -
banking related 11 943 9 992 19,5 11 771
NOTES TO THE INTERIM FINANCIAL RESULTS
BORROWED FUNDS
Six months ended Twelve
months
ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Variable rate debentures - 3 (100,0) -
Secured redeemable
compulsorily convertible
debentures - 3 (100,0) -
Subordinated callable notes
14,25% (AB02) 3 100 3 100 - 3 100
10,75% (AB03) 1 100 1 100 - 1 100
3-month JIBAR + 0,75% 400 400 - 400
(AB04)
8,75% (AB05) 1 500 1 500 - 1 500
8,10%(AB06) 2 000 2 000 - 2 000
8,80% (AB07) 1 725 - >100,0 -
Accrued interest 299 252 18,7 253
Fair value adjustment (328) (184) (78,3) (85)
Redeemable cumulative
option-holding preference
shares 150 151 (0,7) 152
Shares issued 158 158 - 158
Consolidation of Absa Group
Limited Employee Share
Ownership Administration
(ESOP)Trust (12) (12) - (12)
Accrued dividend 4 5 (20,0) 6
9 946 8 325 19,5 8 420
Excludes impact of hedges.
GROUP STATEMENT OF CHANGES IN EQUITY
30 June 31 December
2007 2006* 2006
(Unaudited) (Unaudited) (Audited)
(Restated) Change
Rm Rm % Rm
Share capital 1 342 1 331 0,8 1 338
Opening balance 1 338 1 327 0,8 1 327
Shares issued 6 7 (14,3) 10
Transfer from share-based
payments reserve 0 - >100,0 0
Share buy-back in respect
of Absa Group Limited Share
Incentive Trust 0 - >100,0 0
Elimination of treasury
shares held by Absa Life
Limited 0 1 (100,0) 0
Elimination of treasury
shares held by Absa Group
Limited Share Incentive
Trust (2) (4) 50,0 1
Share premium 2 058 1 950 5,5 2 067
Opening balance 2 067 1 875 10,2 1 875
Shares issued 103 113 (8,8) 170
Transfer from share-based
payments reserve 21 - >100,0 23
Share buy-back in respect
of Absa Group Limited Share
Incentive Trust (82) - >(100,0) (17)
Elimination of treasury
shares held by Absa Life
Limited (17) 13 >(100,0) 12
Elimination of treasury
shares held by Absa Group
Limited Share Incentive
Trust (34) (51) 33,3 4
Other reserves 462 551 (16,2) 412
Opening balance 412 622 (33,8) 622
Movement in foreign
currency translation
reserve (4) 209 >(100,0) 332
Movement in regulatory
general credit risk reserve 402 250 60,8 46
Movement in available-for-
sale reserve 16 2 >100,0 58
Movement in cash flow (436) (678) 35,7 (485)
hedges reserve
Movement in insurance
statutory reserve 21 14 50,0 38
Movement in associated
undertakings and joint
ventures` retained earnings
reserve 16 69 (76,8) 113
Disposal of associated
undertakings and joint
ventures - release of
reserves - - - (374)
Share-based payments for
the period/year 57 63 (9,5) 85
Transfer from share-based
payments reserve (22) - >(100,0) (23)
Distributable reserves 30 020 24 134 24,4 27 876
Opening balance 27 876 21 931 27,1 21 931
Subsidiary step-up - - - (43)
acquisitions
Transfer to regulatory
general credit risk reserve (402) (250) (60,8) (46)
Transfer to insurance
statutory reserve (21) (14) (50,0) (38)
Transfer to associated
undertakings and joint
ventures` retained earnings
reserve (16) (69) 76,8 (113)
Disposal of associated
undertakings and joint
ventures - release of - - - 374
reserves
Transfer from share-based
payment reserve 1 - >100,0 -
Profit attributable to
ordinary equity holders 4 363 3 445 26,6 8 105
Dividends paid during the
period/year (1 781) (909) (95,9) (2 294)
33 882 27 966 21,2 31 693
Minority interest - 4 505 2 992 50,6 2 992
preference shares
Opening balance 2 992 - >100,0 -
Shares issued 1 518 3 000 (49,4) 3 000
Costs incurred (5) (8) 37,5 (8)
Profit attributable to
preference equity holders 114 - >100,0 73
Preference dividends paid
during the year/period (114) - >(100,0) (73)
Minority interest - 274 234 17,1 236
ordinary shares
Opening balance 236 246 (4,1) 246
Disposals - - - (40)
Other reserve movements (14) (57) 75,4 (58)
Minority share of profit 52 45 15,6 88
Total equity 38 661 31 192 23,9 34 921
*In June 2006 the sale of Bankhaus Wolbern had not yet been concluded. Shortly
thereafter the sale was successfully concluded and to this end we have
reclassified the NAV of Wolbern to other assets in June 2006 to ensure
consistency with the treatment in December 2006.
GROUP CASH FLOW STATEMENT
Six months ended Twelve
months ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) (Audited)
(Restated) Change
Rm Rm % Rm
Net cash flow utilised in (1 422) (2 104) ( 1 125)
operating activities 32,4
Net cash flow utilised in
investing activities (772) (973) 20,7 (5 233)
Net cash from financing 1 317 4 162 (68,4) 2 799
activities
Net (decrease)/increase in
cash and cash equivalents (877) 1 085 >(100,0) (3 559)
Cash and cash equivalents
at the beginning of the
period/year 1 4 787 8 343 (42,6) 8 343
Effects of exchange rate
changes on cash on cash
equivalents 1 3 (66,7) 3
Cash and cash equivalents
at the end of the
period/year 2 3 911 9 431 (58,5) 4 787
NOTES TO THE CASH FLOW
STATEMENT
1. Cash and cash
equivalents at the
beginning of the
period/year
Coins and bank notes 3 936 3 431 14,7 3 431
Money on call 851 4 912 (82,7) 4 912
4 787 8 343 (42,6) 8 343
2. Cash and cash
equivalents at the end of
the period/year
Coins and bank notes 2 688 2 744 (2,0) 3 936
Money on call 1 223 6 687 (81,7) 851
3 911 9 431 (58,5) 4 787
PROFIT CONTRIBUTION BY BUSINESS AREA
Six months ended Twelve
months ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Banking operations
Retail banking 2 213 1 783 24,1 4 166
Absa Corporate and Business 740 506 46,2 1 282
Bank
Absa Capital 757 568 33,3 1 115
African operations 1 52 66 (21,2) 127
Corporate centre 2 87 104 (16,3) 311
Capital and funding centre 90 44 >100,0 131
Total banking 3 939 3 071 28,3 7 132
Bancassurance 750 560 33,9 1 500
Total earnings from 4 689 3 631 29,1 8 632
business areas
Synergy costs (after tax) (212) (186) (14,0) (454)
3
Minority interest - (114) - >(100,0) (73)
preference shares
Profit attributable to
ordinary equity holders 4 363 3 445 26,6 8 105
Headline earnings 2 15 (86,7) (233)
adjustments
Total headline earnings 4 365 3 460 26,2 7 872
REVENUE CONTRIBUTION BY BUSINESS AREA
Six months ended Twelve
months ended
30 June 31 December
2007 2006* 2006
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Banking operations
Retail banking 10 158 8 338 21,8 18 159
Absa Corporate and Business 2 791 2 287 22,0 5 010
Bank
Absa Capital 1 680 1 290 30,2 2 570
African operations 362 264 37,1 595
Corporate centre 2 279 193 44,6 807
Capital and funding centre 40 54 (25,9) 184
Total banking 15 310 12 425 23,2 27 325
Bancassurance 1 678 1 334 25,7 3 118
Total Revenue from business 16 988 13 760 23,5 30 443
areas
NOTES
1 The decline in earnings is the result of the Group`s sale of its equity
stake in Capricorn Investment Holdings (Proprietary) Limited (CIH), the holding
company of Bank Windhoek in Namibia, during 2006.
2 Corporate centre`s results include the Group`s remaining international
operations as well as non-financial services businesses.
3 Synergies relate to the integration of Absa and Barclays following the
acquisition by Barclays of a majority share in Absa. Synergy costs are one-off
costs incurred in achieving synergy benefits.
* The comparative period has been restated for:
- Migration of clients from Private Bank to Retail Banking Services in the
current year.
- Virgin Money has been moved from Absa Home Loans to Retail Banking Services
to align with current year disclosure.
- The finalisation of the client split between Absa Capital and Absa
Corporate and Business Bank was concluded in November 2006, the June 2006
position has been restated to reflect this agreement.
Revenue consists of net interest income and non-interest income. Non-interest
income consists of the following income statement line items: net fee and
commission income, net insurance premium income, net claims and benefits paid,
changes in insurance and investment liabilities, gains and losses from banking
and trading activities, gains and losses from investment activities as well as
other operating income.
CHANGES IN ACCOUNTING POLICY AND RECLASSIFICATIONS
GROUP BALANCE SHEET
Restated for deconsolidation of certain cell captives and other
reclassifications of loans and advances and deposits due to customers and banks.
30 June 30 June
2006 2006
(Unaudited) (Unaudited)
(As Accounting
previously policy Reclassi-
Rm Commentary reported) changes fications (Restated)
Assets
Cash, cash 1 10 775 (46) 10 729
balances and
balances with
central banks -
Statutory
liquid asset
portfolio 18 929 - - 18 829
Loans and
advances to
banks 2 12 999 - 12 149 25 148
Trading assets
and hedging
derivative
assets 3 26 844 (304) 26 540
Hedging
assets 3 - - 304 304
Loans and
advances to 2 & 4 & 5 366 760 - (20 780) 345 980
customers
Reinsurance
assets 381 - - 381
Other assets 1 & 7 10 708 (6) 205 10 907
Investments 1 & 4 14 199 (3 476) 8 794 19 517
Investments
in associated
undertakings
and joint
ventures 1 047 - - 1 047
Intangible
assets 188 - - 188
Property and
equipment 3 482 - - 3 482
Current tax
assets 18 - - 18
Deferred tax
assets 82 - - 82
Clients`
liabilities
under
acceptances 5 161 (161) -
Total assets 466 573 (3 528) 207 463 252
Liabilities
Deposits from
banks 2 - - 30 298 30 298
Trading
liabilities
and hedging
derivative
liabilities 3 28 514 - (1 377) 27 137
Hedging
liabilities 3 - - 1 377 1 377
Deposits due
to customers 2 & 5 & 6 367 248 - (109 033) 258 215
Debt
securities in
issue 6 - - 78 896 78 896
Current tax
liabilities 1 573 (23) - 550
Liabilities
under
investment 1 7 225 (3 499) - 3 726
contracts
Policyholder
liabilities
under
insurance
contracts 2 970 - - 2 970
Borrowed
funds 8 325 - - 8 325
Other
liabilities
and sundry
provisions 1 18 240 (6) - 18 234
Deferred tax
liabilities 2 332 - - 2 332
Liabilities
to clients
under
acceptances 5 161 - (161) -
Total
liabilities 435 588 (3 528) - 432 060
Equity
Capital and
reserves
Attributable
to ordinary
equity holders
of the Group:
Share capital 1 331 - - 1 331
Share premium 1 950 - - 1 950
Other
reserves 551 - - 551
Distributable
reserves 7 23 927 - 207 24 134
27 759 - 207 27 966
Minority
interest -
preference
shares 2 992 - - 2 992
Minority
interest -
ordinary
shares 234 - - 234
Total equity 30 985 - 207 31 192
Total equity
and
liabilities 466 573 (3 528) 207 463 252
GROUP INCOME STATEMENT
Six months
Restated for deconsolidation of certain cell captives and reclassifications of
interest and dividends on fair value through profit and loss assets.
Six months Six months
ended ended
30 June 30 June
2006 2006
(Unaudited) (Unaudited)
(As Accounting
previously policy Reclassi-
Rm Commentary reported) changes fications (Restated)
Net interest 1 & 4 & 8 7 163 - (272) 6 891
income
Interest and 17 977 - (646) 17 331
similar income
Interest (10 814) - 374 (10 440)
expense and
similar
charges
Impairment (594) - - (594)
losses on
loans and
advances
6 569 - (272) 6 297
Net fee and 4 841 3 (39) 4 805
commission
income
Fee and 1 & 10 5 113 3 (39) 5 077
commission
income
Fee and (272) - - (272)
commission
expense
Net insurance 1 1 408 - - 1 408
premium income
Net insurance (607) - - (607)
claims and
benefits paid
Changes in 1 (564) 270 - (294)
insurance and
investment
liabilities
Gains and 4 & 8 & 9 461 - 149 610
losses from
banking and
trading
activities
Gains and 1 & 4 & 8 & 629 (276) 235 588
losses from 9
investment
activities
Other 9 & 10 432 - (73) 359
operating
income
Net operating 13 169 (3) - 13 166
income
Operating (8 357) 1 - (8 356)
expenditure
Operating 1 (7 936) 1 - (7 935)
expenses
Impairments - - - -
Indirect 1 (421) 0 - (421)
taxation
Share of 69 - - 69
retained
earnings of
associated
undertakings
and joint
ventures
Operating 4 881 (2) - 4 879
profit before
income tax
Taxation 1 (1 391) 2 - (1 389)
expense
Profit for the 3 490 - - 3 490
period
Attributable
to:
Ordinary 3 445 - - 3 445
equity holders
of the Group
Minority 45 - - 45
interest -
ordinary
shares
Minority - - - -
interest -
preference
shares
3 490 - - 3 490
Headline 3 460 - - 3 460
earnings
GROUP BALANCE SHEET
Reclassification of certain assets and liabilities
31 December 31 December
2006 2006
(Audited) (Audited)
(As
previously Reclassi-
Rm Commentary reported) fications (Restated)
Assets
Cash, cash balances and 16 461 16 461
balances with central
banks -
Statutory liquid asset
portfolio 20 829 - 20 829
Loans and advances to
banks 21 800 - 21 800
Trading assets and hedging
derivative assets 17 983 - 17 983
Hedging assets 676 - 676
Loans and advances to
customers 4 386 174 (11 228) 374 946
Reinsurance assets 390 - 390
Other assets 12 175 - 12 175
Investments 4 13 798 11 228 25 026
Investments in associated
undertakings and joint
ventures 693 - 693
Intangible assets 230 - 230
Property and equipment 3 750 - 3 750
Current tax assets 24 - 24
Deferred tax assets 129 - 129
Total assets 495 112 - 495 112
Liabilities
Deposits from banks 6 35 156 (10 339) 24 817
Trading liabilities and
hedging derivative
liabilities 23 484 - 23 484
Hedging liabilities 1 902 - 1 902
Deposits due to customers 6 368 449 (88 601) 279 848
Debt securities in issue 6 - 98 940 98 940
Current tax liabilities 1 181 - 1 181
Liabilities under
investment
contracts 5 129 - 5 129
Policyholder liabilities
under
insurance contracts 3 187 - 3 187
Borrowed funds 8 420 - 8 420
Other liabilities and
sundry
provisions 10 746 - 10 746
Deferred tax liabilities 2 537 - 2 537
Total liabilities 460 191 - 460 191
Equity
Capital and reserves
Attributable to ordinary
equity holders of the
Group:
Share capital 1 338 - 1 338
Share premium 2 067 - 2 067
Other reserves 412 - 412
Distributable reserves 27 876 - 27 876
31 693 31 693
Minority interest -
preference shares 2 992 - 2 992
Minority interest -
ordinary shares 236 - 236
Total equity 34 921 - 34 921
Total equity and -
liabilities 495 112 495 112
GROUP INCOME STATEMENT
TWELVE MONTHS
Reclassification of interest and investment gains on fair value through profit
and loss assets.
Twelve Twelve
months ended months ended
31 December 31 December
2006 2006
(Audited) (Audited)
(As
previously Reclassi-
Rm Commentary reported) fications (Restated)
Net interest income 4 & 8 14 941 (44) 14 897
Interest and similar income 38 368 (768) 37 600
Interest expense and (23 427) 724 (22 703)
similar charges
Impairment losses on loans (1 573) - (1 573)
and advances
13 368 (44) 13 324
Net fee and commission 10 374 - 10 374
income
Fee and commission income 10 951 - 10 951
Fee and commission expense (577) - (577)
Net insurance premium 2 994 - 2 994
income
Net insurance claims and (1 319) - (1 319)
benefits paid
Changes in insurance and (748) - (748)
investment liabilities
Gains and losses from 4 & 8 1 347 69 1 416
banking and trading
activities
Gains and losses from 4 & 8 1 916 (25) 1 891
investment activities
Other operating income 938 - 938
Net operating income 28 870 - 28 870
Operating expenditure (17 566) - (17 566)
Operating expenses (16 620) - (16 620)
Impairments (75) - (75)
Indirect taxation (871) - (871)
Share of retained earnings 113 - 113
of associated undertakings
and joint ventures
Operating profit before 11 417 - 11 417
income tax
Taxation expense (3 151) - (3 151)
Profit for the year 8 266 8 266
Attributable to:
Ordinary equity holders of 8 105 - 8 105
the Group
Minority interest - 73 - 73
preference
shares
Minority interest - 88 - 88
ordinary
shares
8 266 - 8 266
Headline earnings 7 872 - 7 872
COMMENTARY ON THE CHANGE IN ACCOUNTING POLICY AND RECLASSIFICATIONS
Accounting policy changes
1. Deconsolidation of certain cell captives
The financial statements for the period ended 30 June 2006 included all the
assets of the investment and insurance cells recognised as financial assets, and
a liability equal to the amount of the assets was recognised in favour of the
cell owner.
Where the cell is created for a linked investment product, the inclusion of
assets and liabilities is no longer considered to be appropriate. This results
in a reduction in both the assets and liabilities at 30 June 2006. From an
income statement perspective only the fee received by the Group is now
reflected.
Where the cell captive has been established for third party insurance purposes,
a policy is issued by the Group. The policyholder therefore has a claim against
the Group who will in turn recover amounts from the cell established and hence,
consolidation remains appropriate.
This adjustment is consistent with the change applied at 31 December 2006.
Reclassifications
2. Change in banks/non-banks advances and deposits split
The financial statements for the period ended 30 June 2006 classified wholesale
funding with banks as part of balances with customers. The Group has
reclassified this funding as part of balances with banks.
3. Reclassification of non-qualifying hedges
The financial statements for the period ended 30 June 2006 classified non-
qualifying assets and liability hedges as hedging assets or liabilities. The
Group has reclassified these as trading assets or liabilities.
4. Abacas
Abacas is a conduit vehicle within Absa Capital that buys longer-term rated
bonds and issues short-term paper. This vehicle is consolidated at an Absa
Group level and the assets were reflected under "Loans and advances to
customers" as the principal objective was to earn a spread on the difference in
duration of the paper. The assets within the vehicle are mark-to-market.
Management is of the view that a more appropriate classification would be
"Investments" - comparatives have also been reclassified.
5. Clients` liabilities under acceptances
The financial statements for the period ended 30 June 2006 disclosed clients`
liabilities under acceptances separately on the face of the balance sheet. The
Group has now included them as part of loans and advances to/deposits from
customers as they are of a similar nature.
6. Debt securities in issue
Negotiable certificates of deposits and other funding paper issued were
previously reported as a sub-category of "Deposits due to customers" and
"Deposits from banks". Going forward, this will be disclosed on a separate line
on the face of the balance sheet, called "Debt securities in issue".
7. Sale of Bankhaus Wolbern
In June 2006 the sale of Bankhaus Wolbern had not yet been concluded. Shortly
thereafter the sale was successfully concluded and to this end we have
reclassified the NAV of Wolbern to other assets in June 2006 to ensure
consistency with the treatment at December 2006.
8. Reclassification of interest
The financial statements for the period ended 30 June 2006 classified interest
on investments held at fair value through profit and loss in net interest
income. The Group has reclassified this interest and now discloses it under
"Gains and losses from banking and trading/investment activities".
9. Reclassification of dividend income
The financial statements for the period ended 30 June 2006 classified dividends
on non-trading activities as part of other income. The Group has reclassified
these to gains and losses on banking and trading/investment activities.
10. Fee and commission income
Reallocation of forex gains and losses to other operating income.
PROFIT AND DIVIDEND ANNOUNCEMENT
Overview
Absa maintained good earnings momentum in the six months to June 2007. Supported
by positive economic conditions, all the clusters in the Group delivered strong
performances. The Group increased headline earnings by 26,2% to R4 365 million
compared with headline earnings of R3 460 million for the corresponding period
of the previous year.
Headline earnings per share increased by 25,1% to 651,3 cents per share and
fully diluted headline earnings per share grew by 24,8% to 610,2 cents per
share. The dilution is as a result of the option-holding preference shares
issued to the Group`s black economic empowerment partner, Batho Bonke Capital
(Proprietary) Limited and the employee share ownership programme, as well as
ordinary share options issued in terms of the Group`s incentive reward strategy.
The Group`s return on assets increased from 1,61% in the prior period to 1,69%
for the six months under review, driven by strong top-line revenue growth. The
Group delivered a return on equity of 26,8% (six months ended 30 June 2006:
24,7%).
An interim dividend of 240 cents per share has been declared for the six months
under review. This is 15,4% higher than the interim dividend declared for the
six months ended 30 June 2006 and represents a dividend cover of 2,7 times. In
view of the changing trading environment in the retail market, the board has
adopted a prudent approach to ensure that the growth in dividend can be
sustained for the full year. It is the Group`s intention to maintain a dividend
cover of 2,5 times for the full year.
The key features of the Group`s performance included:
* excellent top-line income growth;
* strong advances growth;
* retail credit impairment charges that increased, albeit in line with
expectations;
* a solid increase in fee income flowing from increased transaction volumes;
* strong investment performance; and
* improved diversification of earnings following strong growth in the
contributions of Absa Corporate and Business Bank and Absa Capital.
Operating environment
Although the South African economic expansion is showing signs of moderation,
the economy supported good growth in the financial services industry.
Furthermore, the economy continues to experience significant structural shifts.
Consumer spending has remained buoyant, driven by a growth in the middle class,
and has led to increased levels of indebtedness. Increased debt financing costs
and lower real disposable income growth rates are, however, expected to slow
consumer debt accumulation in coming months.
Supply-side capital formation is expected to be the key future driver of the
South African economy. Infrastructure and production capacity shortages are
becoming increasingly evident. Investment is required to improve the long-term
growth potential of the economy.
The Competition Commission`s enquiry into banking fees has continued throughout
the period under review. Absa has co-operated fully and has given detailed
responses to all requests made by the enquiry panel. Absa has presented the
facts and its views in comprehensive papers filed with the commission, focussing
on topics such as automated teller machines (ATMs), payment card systems
and interchange fees, the National Payments System and pricing behaviour.
The Competition Commission is due to release its report in the latter part of
2007.
Legislative developments - National Credit Act (NCA)
The NCA was promulgated on 13 March 2006 and implemented on 1 June 2007. It is
the Group`s view that this legislation will benefit and protect consumers. The
Group has amended its systems and processes to ensure a responsible and
consistent approach in interactions with customers and to maintain an audit
trail of its engagements with customers. The direct costs associated with
compliance amounted to approximately R100 million.
The Group aims to keep refining processes and technology solutions to bring
about greater efficiencies and to identify opportunities for product development
and improvements in the Group`s customer relationship model. Absa is committed
to full compliance with the NCA`s requirements and to supporting its intent. The
Group participates actively in initiatives to improve customer education in an
effort to prevent over-indebtedness.
Group performance
Balance sheet
The Group`s asset base exceeded R500 billion for the first time, growing by
19,6% to R553,9 billion.
Loans and advances to customers - increased by 20,2% (year-on-year) to R416
billion
The Group achieved strong advances growth. Mortgages (excluding commercial
property finance), instalment finance and credit card advances increased by
24,7%, 16,5% and 52,5% respectively over the past twelve months. The Group
exceeded market growth rates in overdrafts, while growing broadly in line with
the market in mortgages and credit cards. The lower growth experienced in the
instalment finance book can be attributed to slower growth in new motor vehicle
sales and continued price pressure in the used vehicle market. In addition, the
Group experienced strong growth in commercial property finance advances (32,0%).
Deposits due to customers - increased by 12,8% (year-on-year) to R291 billion
The Group`s deposit base was bolstered by strong growth in the Absa Corporate
and Business Bank deposit book and, in particular, strong growth in public
sector deposits. The retail cluster increased its deposits by 15,3% from 30 June
2006. The Group gained market share in savings, medium-term and transmission
deposits, assisted by a growth in customer numbers and innovative new products.
Net asset value - increased by 20,3% to 5 020 cents per share
The Group`s net asset value per share (excluding the Absa Bank non-cumulative,
non-redeemable preference shares) increased by 20,3% compared to 30 June 2006.
The Group`s solid operational performance was the main driver of the growth in
net asset value.
Capital to risk-weighted assets - 13,9% at 30 June 2007
On the basis of the prescribed consolidated regulatory capital requirements, the
Group`s capital stood at 13,9% of risk-weighted assets at 30 June 2007 (30 June
2006: 12,9%). The Group`s primary capital ratio was 10,5% (30 June 2006: 9,8%)
and its secondary capital ratio was 3,4% as at 30 June 2007 (30 June 2006:
3,1%).
During the period under review, Absa Bank Limited (Absa Bank) issued a total of
R1 518 million in non-cumulative, non-redeemable preference shares. Most of this
capital (R1 425 million) was raised in a single issue in April 2007 at an
effective dividend yield of 75% of prime. The first two tranches of Absa Bank`s
monthly preference share issuance programme comprised the balance. These Absa
Bank preference shares rank pari passu with the Absa Bank preference shares
already in issue.
On 16 July 2007, Absa Bank successfully issued notes to the value of EUR 600
million as part of its EUR medium-term note programme on the London Stock
Exchange. These notes have a five-year term and carry a coupon of three-month
Euribor plus 37,5 basis points. The notes provide term funding to Absa Bank
which will support future growth and improve its liquidity and maturity profile.
Income statement
Net interest income - increased by 24,5% to R8 577 million
Net interest income benefited from strong advances growth, albeit at a slower
rate than that achieved for 2006.
The Group`s net interest margin in respect of average assets improved marginally
to 3,32% for the six months under review, compared with 3,29% for the 2006 year.
The net interest margin benefited from higher spreads earned on non-rate
sensitive deposits and capital in the higher interest rate environment and a
change in the asset mix in favour of higher yielding advances. This benefit was
partially offset by competitive pressure on lending margins in mortgages,
vehicle finance and commercial banking.
Credit impairment charge - increased by 65,8% to R985 million
Credit impairments have continued to rise from the cyclical low experienced over
the last three reporting periods. The Group`s impairment ratio (income statement
charge as a percentage of average customer advances) increased from 0,37% for
the six months ended 30 June 2006 to 0,45% for the full 2006 year, and 0,49% for
the current period. The higher loss ratio resulted from increased delinquencies
in the retail book and was offset to some degree by low impairments in corporate
and business banking`s operations. The Group implemented a more conservative
approach to its retail banking scorecards and is enhancing collections
strategies to counter the risk associated with the current credit cycle.
Non-interest income - increased by 22,4% to R8 411 million
Non-interest income as a percentage of total income remained relatively
unchanged at approximately 50% for the period under review The Group recorded an
8,4% growth in its customer base during the past 12 months. The growing customer
base and increased delivery channels contributed to increased transactional
volumes and therefore also a growth in net fees and commissions to R5 626
million (up 17,1%). Absa has again maintained price increases at well below the
ruling inflation rate.
Investment markets continued to grow strongly during the period under review,
resulting in Absa`s bancassurance operations experiencing impressive investment
income growth amounting to R430 million compared with R305 million in the
previous period. Gains of R135 million on the Group`s commercial property equity
portfolio further assisted in increasing non-interest income.
In addition to this, new business volumes for both of the Group`s insurance
operations remained strong and the Group`s asset management business posted
solid gains, fuelled by a 31,4% growth in assets under management to R116,2
billion compared to 30 June 2006.
Operating expenses - increased by 14,8% to R9 113 million
The Group`s cost-to-income ratio improved from the 57,7% recorded for the six
months ended 30 June 2006 to 53,6% in the period under review.
The increase in operating expenses can largely be attributed to costs associated
with the expansion of the Group`s distribution footprint, further costs relating
to the realisation of the Absa-Barclays synergies, higher incentive provisions
and expenditure relating to compliance. Consequently, staff cost was the major
driver of the higher expenditure levels, with staff numbers 4,3% higher compared
to the same period of 2006.
Revenue growth exceeded cost growth by 8,7% and the Group`s objective is to
achieve a cost-to-income ratio of around 50% over the next three years.
Absa-Barclays synergies - R650 million in sustainable synergies
The Group has made excellent progress with value-adding initiatives through co-
operation with Barclays. As previously communicated, the sustainable profit
before tax benefit that the Group aims to derive four years from the date of
acquisition by Barclays of its controlling stake in Absa amounts to R1,4 billion
per annum.
In the six months under review, sustainable profit before tax benefits of R650
million were realised. One-off integration costs for the period amounted to R300
million, resulting in a net benefit of R350 million for the period.
Cluster performance
Retail banking - attributable earnings up by 24,1%
Attributable earnings of R2 213 million were achieved as a result of strong
advances growth in most areas and healthy non-interest income growth. Mortgage
advances increased by 24,7% and credit card advances by 52,5% from June 2006.
Instalment finance showed solid growth in advances of 16,5% over the last twelve
months, in spite of the decline in demand for new motor vehicles and the
declining values of used motor vehicles. Retail banking`s secured advances
represent 86,9% of total advances, slightly lower than the 88,6% recorded at 30
June 2006, as a result of the strong growth achieved in credit card advances and
personal loans.
Transaction volumes grew strongly. This growth emanated from the increased
activities of existing and new customers. As a result, non-interest income grew
by 20,0% compared with the comparable period in 2006, with the retail customer
base having increased by 8,4% to 8,7 million in the past 12 months. Volumes in
the branch network grew moderately. Good growth was experienced in ATM, internet
and cell phone banking transactions.
Interest margins remained broadly in line with those of the corresponding period
in 2006, benefiting from the endowment effect of interest rate increases and a
slight change in the asset mix in favour of higher yielding advances. These
benefits were countered by increased competition and the larger proportion of
wholesale funding used.
The retail impairment ratio for the period was 0,63%, compared with the 0,38%
and 0,48% for the first six months and full 2006 year respectively. The credit
cycle in retail banking is evolving in line with expectations as a result of
increased indebtedness and higher interest rates. The Group has been proactive
in reviewing scorecards and increasing the capacity and effectiveness of its
collections process.
Operating expenditure increased by 13,8%, mainly as a result of the continued
expansion of the delivery footprint and higher business volumes.
Absa Corporate and Business Bank - attributable earnings up by 46,2%
Absa Corporate and Business Bank increased its attributable earnings to R740
million (six months ended 30 June 2006: R506 million). This performance was
driven by a strong growth in advances, most significantly from commercial
property finance in the medium and large segments. Strong deposit growth,
particularly from the public sector and the medium business segment, as well as
increased transaction volumes, assisted in lifting earnings growth. Growth in
lending to large corporates remained modest, although some signs of increased
activity are becoming evident.
The quality of the advances book improved further, as evidenced by an impairment
loss ratio of 0,17% compared with the 0,58% for the six months ended 30 June
2006.
Operating expenses grew by 18,5%, mainly owing to an increased employee
complement, which is aimed at increasing sales and service capacity.
During the period, the cluster continued with the implementation of the value-
aligned performance measurement methodology and new operating models aimed at
improving sales and operational efficiency. The enabling system, tools and
practices were implemented during the period under review and the methodology is
now applied in the medium and large business banking segments.
Absa Capital - attributable earnings up by 33,3%
Absa Capital increased attributable earnings to R757 million (six months ended
30 June 2006: R568 million), reflecting the continued expansion of Absa
Capital`s franchise.
Investor Services and Equity Investments performed strongly. Private equity
investments remain a key pillar of the growth strategy and the first half of
2007 saw continued growth in this portfolio. Profits were buoyed by the
harvesting of certain investments and the strong underlying performance of the
portfolio.
Secondary Markets recorded solid growth, which was supported by a strong
performance in agency trading. Product innovation and continued growth in the
use of derivatives were key developments, along with increased customer flow.
Primary Markets` strategy of migrating away from an asset accumulation model
towards an originate-and-distribute model showed clear results over the period,
with the risk profile improving and fee income rising in excess of 150%.
Overall, the business recorded moderate growth, having restructured to position
for the change of strategy.
African operations - attributable earnings down by 21,2%
The Group`s African operations experienced a decline in attributable earnings
from the R66 million recorded in the prior period to R52 million for the six
months ended 30 June 2007. The decline in earnings is the result of the Group`s
sale of its shareholding in Capricorn Investment Holdings (Proprietary) Limited
(CIH), the holding company of Bank Windhoek in Namibia, during 2006. The
remainder of the portfolio posted solid growth of 44,4% in attributable
earnings.
National Bank of Commerce (NBC) in Tanzania continued to perform strongly. Its
performance was driven by growth in advances (18,2%) and deposits (16,0%) during
the past twelve months and the bank`s ability to grow the yields earned on its
various asset classes. Banco Austral in Mozambique performed well and
experienced solid deposit (11,6%) and income (39,7%) growth for the period under
review. Both NBC and Banco Austral incurred additional costs by investing in the
expansion of their retail networks.
The acquisition of the Barclays sub-Saharan African operations remains
strategically attractive and is the agreed objective of both Absa and Barclays.
Concluding these transactions will take some time owing to the complexities and
number of individual businesses involved. The first steps have been taken in our
endeavour to acquire at least one of the sub-Saharan African country assets of
Barclays in 2007.
Bancassurance - attributable earnings up by 33,9%
Absa`s bancassurance operations posted attributable earnings of R750 million for
the six months under review.
The life insurance operations contributed 41,1% of earnings, benefiting from a
particularly strong operational performance. This performance was the result of
increased credit life business and a lower-than-expected claims experience,
which was further supported by a strong equity market performance. The embedded
value of the life business increased by 13,8% from 30 June 2006 to R2 328
million as at 30 June 2007. Embedded value earnings of R352 million for the six
months ended 30 June 2007 represents a return on embedded value of 30,3% on an
annualised basis.
The Group`s short-term insurance operations increased earnings by 37,2%, which
can be attributed to investment income and the growth in commercial business. A
high claims experience in the motor and personal lines business tempered growth.
The Group`s investment management operations reported growth in assets under
management of R27,7 billion since 30 June 2006, to R116,2 billion as at 30 June
2007. Strong performances were recorded in the equity unit trust business and
the Group`s money market fund. A high level of operational gearing resulted in
strong earnings growth in this business compared with the previous period.
Basis of presentation and changes in accounting policies
Absa Group`s interim financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and disclosures comply with
International Accounting Standard (IAS) 34.
The transition to IFRS caused significant changes, which altered the measurement
and recognition of certain items, having an impact on the disclosure in the
financial statements. Some refinements to interpretation in the application of
the IFRS standards also occurred. One such interpretation relates to the
treatment of insurance cell captives.
Previously (in June 2006), all cell captives operated by the Group were
consolidated, resulting in the assets of the cells being recognised with a
corresponding liability equal to the amount of the asset in favour of the cell
owner. In terms of the current interpretation, cell arrangements in relation to
linked investment products will no longer be consolidated. The comparative
information has been restated accordingly.
This restatement has resulted in a R3,5 billion reduction in the balance sheet
for the six months ended 30 June 2006. There is no impact on the attributable or
headline earnings of the Group.
The Group changed its accounting policy in December 2006 to recognise actuarial
gains and losses in accordance with the "corridor method" allowed under IAS 19 -
Employee Benefits. This change was prompted by the fact that the pension funds
of the various African subsidiaries are consolidated. Management is of the view
that this change results in more reliable and relevant information in relation
to the underlying operations of those entities. The result of this change is
immaterial in Group terms; hence, comparative information has not been restated.
Certain income statement and balance sheet line items have been reclassified to
enhance the usefulness of the Group`s reporting.
Prospects
The domestic trading environment is expected to remain favourable, but
inflationary pressures are expected to continue in the latter part of 2007, with
the CPIX inflation rate continuing to test the 6% upper limit of the target
range. The South African Reserve Bank is expected to continue its tight monetary
policy to contain inflationary pressures.
The rate of increase in the broader CPI measure of inflation, including mortgage
costs, is accelerating as a result of recent interest rate increases, impacting
on affordability and real growth in household disposable income. This, combined
with the expected ongoing impact of the NCA, will result in a slowing of
advances growth and a further increase in credit impairments. Equity returns are
also expected to slow during the remainder of the year.
These factors, together with the non-recurring revenue items included in the
base for the six months ended 31 December 2006, are expected to lead to the rate
of headline earnings growth for the full year being lower than the growth
experienced for the six months under review.
Declaration of interim ordinary dividend number 42
Shareholders are advised that an interim dividend of 240 cents per ordinary
share has been declared on Thursday, 2 August 2007, and is payable to
shareholders recorded in the register of members of the Company at the close of
business on Friday, 31 August 2007.
In accordance with the requirements of Strate, the electronic settlement and
custody system used by the JSE Limited and the JSE Listings Requirements, the
following salient dates for the payment of the dividend are applicable:
Last day to trade cum dividend Friday, 24 August 2007
Shares trade ex dividend Monday, 27 August 2007
Record date Friday, 31 August 2007
Payment date Monday, 3 September 2007
Share certificates may not be dematerialised or rematerialised between Monday,
27 August 2007, and Friday, 31 August 2007, both dates inclusive.
On Monday, 3 September 2007, the dividend will be transferred electronically to
the bank accounts of certificated shareholders who use this facility. In respect
of those who do not, cheques dated 3 September 2007 will be posted on or about
that date. The accounts of shareholders who have dematerialised their shares
(which are held at their central securities depository participant or broker)
will be credited on Monday, 3 September 2007.
Please refer to the interim financial results announcement of Absa Bank Limited
and its subsidiaries for further information pertaining to the dividend for the
non-cumulative, non-redeemable preference shares.
On behalf of the board
W R Somerville
Group secretary
Johannesburg
2 August 2007
Enquiries
Jacques Schindehutte
Group executive director
Absa Group Limited
5th floor, Absa Towers East, 170 Main Street, Johannesburg, 2001
Tel: +2711 350 4850, Fax: +2711 350 8433
e-mail: jacquessc@absa.co.za
Eric Wasserman
Group executive: Group Finance
Absa Group Limited
4th floor, Absa Towers East, 170 Main Street, Johannesburg, 2001
Tel: +2711 350 5887, Fax: +2711 350 6487
e-mail: ericwas@absa.co.za
Sponsor:
Merrill Lynch South Africa (Proprietary) Limited
Date: 02/08/2007 07:31:38 Produced by the JSE SENS Department.
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