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JSE ABSP
ABSP
ABSP - ABSA Bank Limited - ABSA Bank: Profit And Dividend Announcement/Unaudited
Interim Financial Results For The Six Months Ended 30 June 2009
ABSA BANK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1986/004794/06)
ISIN: ZAE000079810
JSE share code: ABSP
(Absa Bank or the Bank))
ABSA BANK: PROFIT AND DIVIDEND ANNOUNCEMENT
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2009
BANK SALIENT FEATURES
Six months ended Year ended
30 June 31 December
2009 20081 Change 20081
(Unaudited) (Unaudited) % (Audited)
Statement of comprehensive
income (Rm)
Headline earnings2 2 854 3 746 (23,8) 7 713
Profit attributable to 2 238 4 359 (48,6) 8 390
ordinary
equity holder of the Bank
Statement of financial position
(Rm)
Total assets 715 654 687 832 4,0 734 979
Loans and advances to 503 331 474 081 6,2 512 684
customers
Deposits due to customers 362 012 339 186 6,7 373 176
Financial performance (%)
Return on average equity 14,6 21,6 21,8
Return on average assets 0,82 1,11 1,17
Operating performance (%)
Net interest margin on average 2,79 3,28 3,12
Assets3
Net interest margin on average 3,28 3,75 3,64
interest-bearing assets3
Impairment losses on loans and 1,81 0,94 1,19
advances as % of average loans
and
advances to customers
Non-interest income as % of 43,8 42,7 43,9
total
operating income3
Cost-to-income ratio 46,9 50,3 50,7
Effective tax rate, excluding
indirect taxation 21,3 25,2 25,4
Share statistics (million)
(including "A" ordinary shares)
Number of shares in issue 359,1 359,1 359,1
Weighted average number of 359,1 350,0 354,6
shares
Weighted average diluted 359,1 350,0 354,6
number of
shares
Share statistics (cents)
Earnings per share 623,3 1 245,3 (49,9) 2 366,1
Diluted earnings per share 623,3 1 245,3 (49,9) 2 366,1
Headline earnings per share 794,9 1 070,3 (25,7) 2 175,2
Diluted headline earnings per 794,9 1 070,3 (25,7) 2 175,2
share
Dividends per ordinary share 139,3 315,6 (55,9) 2 073,6
relating to income for the
period/year
Dividend cover (times) 5,7 3,4 1,0
Net asset value per share 10 841 9 415 15,1 11 139
Tangible net asset value per 10 761 9 346 15,1 11 058
share
Capital adequacy3 (%)
Absa Bank 13,7 13,5 14,0
1Refer to the "Reclassifications" section for the restatement of prior year
figures.
2After allowing for R234 million (June 2008: R220 million) profit attributable
to preference equity holders of the Bank.
3These ratios are unaudited.
BANK STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 June 31 December
2009 2008 2008
(Unaudited) (Unaudited) Change (Unaudited)
Rm Rm % Rm
Net interest income 9 729 9 987 (2,6) 20 550
Interest and similar 33 670 33 863 (0,6) 73 475
income
Interest expense and (23 941) (23 876) (0,3) (52 925)
similar charges
Impairment losses on loans and (4 527) (2 115) (114,0) (5 627)
advances
Net interest income after 5 202 7 872 (33,9) 14 923
impairment losses on loans and
advances
Net fee and commission income 5 928 5 284 12,2 11 720
Fee and commission income 6 288 5 641 11,5 12 367
1.1
Fee and commission expense (360) (357) (0,8) (647)
Gains and losses from banking 1 165 1 115 4,5 3 096
and trading activities
1.2
Gains and losses from 27 27 - 91
investment activities
1.3
Other operating income 477 1 028 (53,6) 1 153
Operating income before 12 799 15 326 (16,5) 30 983
operating expenditure
Operating expenditure (9 657) (9 237) (4,5) (19 196)
Operating expenses (8 130) (8 766) 7,3 (18 577)
2.1
Other impairments (1 175) (0) >(999,9) 11
2.2
Indirect taxation (352) (471) 25,3 (630)
Share of retained earnings from (1) 33 (103,0) 65
associates and joint ventures
Operating profit before income 3 141 6 122 (48,7) 11 852
tax
Taxation expense (668) (1 543) 56,7 (3 005)
Profit for the period/year 2 473 4 579 (46,0) 8 847
Attributable to:
Ordinary equity holder of the 2 238 4 359 (48,6) 8 390
Bank
Minority interest - ordinary 1 0 46,0 (0)
shares
Preference equity holders of 234 220 6,4 457
the Bank
2 473 4 579 (46,0) 8 847
BANK STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
Six months ended Year Ended
30 June 31 December
2009 2008 2008
(Unaudited) (Unaudited) Change (Unaudited)
Rm Rm % Rm
Profit for the period/year 2 473 4 579 (46,0) 8 847
Other comprehensive income
Exchange differences on
translation of foreign (95) 105 (190,5) (4)
operations
Movement in cash flow hedging (485) (1 409) 65,6 2 668
reserve
Fair value (losses)/gains
arising during the period/year (787) (2 745) 71,3 2 064
Amount removed from equity
and recognised in the income 113 778 (85,5) 1 636
statement
Deferred tax 189 558 (66,1) (1 032)
Movement in available-for-sale (321) (15) >(999,9) (92)
reserve
Fair value losses arising
during the period/year (236) (96) (145,8) (243)
Amount removed from equity
and recognised in the income (205) - (100,0) -
statement
Amortisation of government
bonds -release to the income 41 22 86,4 85
statement
Deferred tax 79 59 33,9 66
Total comprehensive income for
the period/year 1 572 3 260 (51,8) 11 419
Total comprehensive income
attributable to:
Ordinary equity holder of the 1 337 3 040 (56,0) 10 962
Bank
Minority interest - ordinary 1 0 46,0 (0)
shares
Preference equity holders of 234 220 6,4 457
the Bank
1 572 3 260 (51,8) 11 419
CONDENSED NOTES TO THE INTERIM FINANCIAL RESULTS
1. NON-INTEREST INCOME
Six months ended Year ended
30 June 31
December
2009 2008 2008
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
1.1 Fee and commission income
Credit-related fees and 5 761 5 097 13,0 10 938
commission
Cheque accounts 1 569 1 427 10,0 2 990
Credit cards 810 746 8,6 1 570
Early redemption penalty 55 93 (40,9) 169
income
Electronic banking 1 626 1 378 18,0 3 013
Foreign exchange fees and
commissions 144 143 0,7 311
Savings accounts 1 091 1 004 8,7 2 105
Sundry 466 306 52,3 780
Asset management and other
related fees 39 37 5,4 72
External administration fees 61 88 (30,7) 163
Insurance commission received 178 225 (20,9) 384
Portfolio and other management 7 11 (36,4) 17
fees1
Project finance fees1 182 170 7,1 687
Unit and property trust income1 8 4 100,0 8
Other 52 9 477,8 98
6 288 5 641 11,5 12 367
Note
1Disclosed as part of trust and fiduciary services.
1.2 Gains and losses from
banking and trading activities2
Net gains on investments 109 294 (62,9) 1 200
Available-for-sale 175 (22) 895,5 (85)
Designated at fair value
through profit or loss (8) 310 (102,6) 1 285
(Loss)/profit on disposal
of and dividend income from
associates and joint ventures (58) 6 >(999,9 -
)
Net trading income1 1 018 780 30,5 1 921
Other 38 41 (7,3) (25)
1 165 1 115 4,5 3 096
Note
1Net trading income includes the profits and losses on Absa Capital`s desks
classified as "trading desks" arising from both the purchase and sale of
trading instruments and the revaluation to market value as well as Absa
Capital`s hedge ineffectiveness. This includes the interest income and interest
expense from these instruments and the related funding cost. This also includes
similar activities from African operations.
2Gains and losses from banking and trading activities has not been audited
refer to "Reclassifications" section for the restatement of prior year figures.
1.3 Gains and losses from
investment activities
Net gains on investments
Designated at fair value
through profit or loss 27 27 - 37
Profit on disposal of - - - 54
subsidiaries
27 27 - 91
2. OPERATING EXPENDITURE
Six months ended Year ended
30 June 31
December
2009 2008 2008
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
2.1 Operating expenses
Amortisation 45 43 (4,7) 103
Auditors` remuneration 63 38 (65,8) 67
Cash transportation costs 178 151 (17,9) 320
Depreciation 497 390 (27,4) 790
Equipment rental and 89 103 13,6 207
maintenance
Information technology costs 795 624 (27,4) 1 394
Investment property charges - - - 13
Marketing and advertising 366 475 22,9 896
costs
Operating lease expenses on 415 463 10,4 987
property
Other professional fees 367 392 6,4 935
Printing and stationery 107 112 4,5 225
Staff costs 4 223 4 886 13,6 10 347
Telephone and postage 327 353 7,4 744
Other operating expenses 658 736 10,6 1,549
8 130 8 766 7,3 18 577
2.2 Other impairments
Financial instruments
Available-for-sale
financial instruments 28 - (100,0) 1
Other
Computer software - - - 1
development costs
Goodwill 38 - (100,0) -
Investments in
associates & joint ventures 1 067 - (100,0) -
Repossessed Properties 42 0 >(999,9) (13)
1 175 0 >(999,9) (11)
3. DETERMINATION OF HEADLINE EARNINGS
Six months ended Year ended
30 June 31
December
2009 2008 2008
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Headline earnings1 is
determined as follows:
Profit attributable to
ordinary equity holder of the 2 238 4 359 (48,6) 8 390
Bank
Adjustments for:
IAS 16 net profit on
disposal of property and (22) (26) 15,4 (35)
equipment
IAS 27 net profit on
disposal of subsidiaries - - - (45)
IAS 28 and 31 net loss
on disposal of associates and 42 - 100,0 -
joint ventures
IAS 28 impairment of
investments in associates and 768 - 100,0 -
joint ventures
IAS 28 headline earnings
component of associates` and
joint ventures` earnings (4) (11) 63,6 (53)
IAS 38 profit on
disposal of and impairment of (47) (636) 92,6 (635)
intangible assets
IAS 39 release of
available-for- sale reserves (158) 16 >(999,9) 61
IAS 39 disposal of and
impairment of available-for- 10 44 (77,3) 30
sale assets
IFRS 3 impairment of 27 - 100,0 -
goodwill
Headline earnings 2 854 3 746 (23,8) 7 713
Note
1The net amount is reflected after taxation and minority interest.
BANK STATEMENT OF FINANCIAL POSITION
30 June 31
December
2009 2008 2008
(Unaudited (Unaudited) Change (Audited)
Rm Rm % Rm
Assets
16 970 14 575 16,4 16 568
Cash, cash balances and
balances
with central banks
Statutory liquid asset 32 189 27 962 15,1 33 019
portfolio
Loans and advances to banks 47 635 60 303 (21,0) 43 559
Trading portfolio assets 58 763 62 150 (5,4) 72 929
Hedging portfolio assets 2 824 2 032 39,0 3 139
Other assets 12 314 17 359 (29,1) 8 066
Current tax assets 521 528 (1,3) -
Non-current assets held-for- 2 017 2 254 (10,5) 2 495
sale
Loans and advances to 503 331 474 081 6,2 512 684
customers
Loans to Absa Group companies 14 470 13 118 10,3 17 649
Loans to holding company 1 293 1 461 (11,5) 1 341
Investments 14 981 5 948 151,9 15 191
Investments in associates and
joint 779 972 (19,9) 2 071
ventures
Intangible assets 285 242 17,8 291
Investment property 1 647 - 100,0 385
Property and equipment 5 570 4 792 16,2 5 512
Deferred tax assets 65 55 18,2 80
Total assets 715 654 687 832 4,0 734 979
Liabilities
Deposits from banks 46 543 70 435 (33,9) 60 043
Trading portfolio liabilities 54 534 55 184 (1,2) 68 120
Hedging portfolio liabilities 1 188 4 815 (75,3) 1 080
Other liabilities and sundry 16 623 22 926 (27,5) 9 835
provisions
Current tax liabilities 39 3 >999,9 322
Deposits due to customers 362 012 339 186 6,7 373 176
Debt securities in issue 173 014 142 295 21,6 159 042
Loans from Absa Group 3 946 2 805 40,7 3 946
companies
Policyholder liabilities under - 62 (100,0) -
insurance contracts
Borrowed funds 11 823 10 935 8,1 12 143
1
Deferred tax liabilities 2 296 1 583 45,0 2 609
Total liabilities 672 018 650 229 3,4 690 316
Equity
Capital and reserves
Attributable to equity holders
of the Bank:
Ordinary share capital 303 303 - 303
Ordinary share premium 9 415 9 415 - 9 415
Preference share capital 1 1 - 1
Preference share premium 4 643 4 643 - 4 643
Other reserves 2 897 (103) >999,9 3 939
Retained earnings 26 309 23 334 12,7 26 339
43 568 37 593 15,9 44 640
Minority interest 68 10 580,0 23
Total equity 43 636 37 603 16,0 44 663
Total equity and liabilities 715 654 687 832 4,0 734 979
CONDENSED NOTES TO THE INTERIM FINANCIAL RESULTS
BORROWED FUNDS
30 June 31
December
2009 2008 2008
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Subordinated callable notes
14,25% (AB02) - 3 100 (100,0) 3 100
10,75% (AB03) 1 100 1 100 - 1 100
3-month JIBAR + 0,75% (AB04) 400 400 - 400
8,75% (AB05) 1 500 1 500 - 1 500
8,10%(AB06) 2 000 2 000 - 2 000
8,80% (AB07) 1 725 1 725 - 1 725
3-month JIBAR + 0,97% (3,97% 86 86 - 86
Nacs)
3-month JIBAR + 0,97% (6,25% 994 994 - 994
Nacs)
3-month JIBAR + 1,00% (6,25% 179 179 -
Nacs) 179
3-month JIBAR + 1,09% (6,25% 361 - 100,0 361
Nacs)
3-month JIBAR + 1,20% (6,25% 266 266 - 266
Nacs)
Subordinated callable note (3 -
month JIBAR + 3,20%) 3 000 - 100,0 -
Accrued interest 403 328 22,9 378
Fair value adjustment (191) (743) 74,3 54
11 823 10 935 8,1 12 143
CONDENSED BANK STATEMENT OF CHANGES IN EQUITY
30 June 31
December
2009 2008 2008
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Share capital 303 303 - 303
Opening balance 303 303 - 303
Shares issued - 0 (100,0) 0
Share premium 9 415 9 415 - 9 415
Opening balance 9 415 5 415 73,9 5 415
Shares issued - 4 000 (100,0) 4 000
Preference share capital 1 1 - 1
Opening balance 1 1 - 1
Preference share premium 4 643 4 643 - 4 643
Opening balance 4 643 4 643 - 4 643
Other reserves 2 897 (103) >999,9 3 939
Opening balance 3 939 1 605 145,4 1 583
Reclassification of
investments in
associates and joint - (22) 100,0 -
ventures to
investments
Other comprehensive income (901) (1 319) 31,7 2 572
Movement in foreign
currency translation reserve (95) 105 (190,5) (4)
Movement in cash flow 65,6
hedging reserve (485) (1 409) 2 668
Movement in available-
for-sale reserve (321) (15) >(999,9) (92)
Movement in regulatory
general credit - (430) 100,0 (431)
risk reserve
Movement in associates and
joint (1) 33 (103,0) 65
ventures` retained earnings
reserve
Disposal of associates and
joint (82) - (100,0) 11
ventures - release of
reserves
Share-based payments for the (34) 51 (166,7) 181
period/year
Transfer from share-based
payments (24) (21) (14,3) (42)
reserve
Retained earnings 26 309 23 334 12,7 26 339
Opening balance 26 339 23 535 11,9 23 557
Reclassification of
investments in associates and
joint ventures to investments - 22 (100,0) -
Movement in regulatory
general credit risk reserve - 430 (100,0) 431
Transfer to associates and
joint ventures` retained 1 (33) 103,0 (65)
earnings reserve
Disposal of associates and
joint 82 - 100,0 -
ventures - release of
reserves
Transfer from share-based
payment reserve 24 21 14,3 42
Contribution to Absa Group
Limited Share Incentive Trust (25) - (100,0) (61)
Profit attributable to
ordinary equity holder 2 238 4 359 (48,6) 8 390
Profit attributable to
preference equity holders 234 220 6,4 457
Ordinary dividends paid
during the period/year (2 350) (5 000) 53,0 (5 955)
Preference dividends paid
during the period/year (234) (220) (6,4) (457)
43 568 37 593 15,9 44 640
Minority interest - Ordinary 68 10 580,0 23
shares
Opening balance 23 26 (11,5) 26
Acquisition and disposal of
subsidiaries 44 - 100,0 10
Other reserve movements 0 (16) 100,0 (13)
Minority share of profit 1 0 46,0 (0)
Total equity 43 636 37 603 16,0 44 663
CONDENSED BANK STATEMENT OF CASH FLOWS
Six months ended Year ended
30 June 31
December
2009 2008 2008
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Net cash generated/(utilised) 3 450 (805) 528,6 708
from operating activities
Net cash utilised from (784) (1 668) 53,0 (1 223)
investing activities
Net cash (utilised)/generated (2 842) 305 >(999,9) (526)
from financing activities
Net decrease in cash and cash (176) (2 168) 91,9 (1 041)
equivalents
Cash and cash equivalents at 3 981 5 023 (20,7) 5 023
the beginning of the
period/year 1
Effect of exchange rate (1) (2) 50,0 (1)
movements on cash on cash
equivalents
Cash and cash equivalents at 3 804 2 853 33,3 3 981
the end of the period/year
2
NOTES TO THE STATEMENT OF
CASH FLOWS
1 Cash and cash equivalents
at the
beginning of the
period/year
Cash, cash balances and
balances 3 942 4 673 (15,6) 4 673
with central banks
Loans and advances to banks 39 350 (88,9) 350
3 981 5 023 (20,7) 5 023
2 Cash and cash equivalents
at the
end of the period/year
Cash, cash balances and
balances 3 059 2 790 9,6 3 942
with central banks
Loans and advances to banks 745 63 >999,9 39
3 804 2 853 33,3 3 981
BANK PROFIT CONTRIBUTION BY BUSINESS AREA
Six months ended Year ended
30 June 31
December
2009 20081 20081
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Banking operations
Retail banking 1 230 1 892 (35,0) 3 385
Retail Bank 1 639 1 107 48,1 2 419
Absa Home Loans (706) 294 (340,1) 143
Absa Card 280 258 8,5 536
Absa Vehicle and Asset 17 233 (92,7) 287
Finance
Absa Corporate and Business 1 037 1 033 0,4 2 774
Bank
Absa Capital and Absa Wealth 10 835 (98,8) 1 994
Absa Capital 1 820 (99,9) 1 967
Underlying performance 789 820 (3,8) 1 968
Single Stock Futures -
impairments of equity (788) - (100,0) (1)
investments
Absa Wealth 9 15 (40,0) 27
Corporate centre2 404 832 (51,4) 690
Capital and funding centre (209) (13) >(999,9) 4
Preference equity holders of (234) (220) (6,4) (457)
the Bank
Profit attributable to
ordinary equity holder 2 238 4 359 (48,6) 8 390
Headline earnings adjustments 616 (613) 200,5 (677)
Total headline earnings 2 854 3 746 (23,8) 7 713
BANK REVENUE3 CONTRIBUTION BY BUSINESS AREA
Six months ended Year ended
30 June 31
December
2009 20081 20081
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Banking operations
Retail banking 11 593 11 758 (1,4) 22 908
Retail Bank 7 385 7 508 (1,6) 13 603
Absa Home Loans 1 588 1 779 (10,7) 4 101
Absa Card 1 490 1 296 15,0 2 752
Absa Vehicle and Asset 1 130 1 175 (3,8) 2 452
Finance
Absa Corporate and Business 3 918 3 534 10,9 8 292
Bank
Absa Capital and Absa Wealth 2 076 2 230 (6,9) 5 213
Absa Capital 1 906 2 087 (8,7) 4 904
Absa Wealth 170 143 18,9 309
Corporate centre2 (206) (198) (4,0) 299
Capital and funding centre (55) 117 (147,0) (102)
Total revenue 17 326 17 441 (0,7) 36 610
NOTES
1. The comparative periods have been restated for:
- African operations have been split between Retail banking, Absa
Corporate and Business Bank and Absa Capital during 2008. This split
is in line with the current business model. June 2008 comparatives
have been restated accordingly.
- Absa Wealth was moved from Retail banking to Absa Capital during the
period under review
- Repossessed Properties was moved from Corporate centre to Retail
banking during the period under review.
2. The comparative periods include the profit on the VISA IPO shares.
3. Revenue includes net interest income and non interest income.
RECLASSIFICATIONS
BANK STATEMENT OF FINANCIAL POSITION - JUNE 2008
Reclassification of investments in associates and joint ventures to investments,
intergroup loans as well as contingent liabilities.
30 June 30 June
2008 2008
(Unaudited) (Unaudited)
(As
previously Reclassi-
reported) fications (Restated)
Commentary Rm Rm Rm
Assets
Cash, cash balances and 14 575 14 575
balances
with central banks -
Statutory liquid asset
portfolio 27 962 - 27 962
Loans and advances to 60 303 - 60 303
banks
Trading portfolio 62 150 - 62 150
assets
Hedging portfolio 2 032 - 2 032
assets
Other assets 17 359 - 17 359
Current tax assets 528 - 528
Non-current assets held-
for- 2 254 - 2 254
sale
Loans and advances to
customers 474 081 - 474 081
Loans to Absa Group 2 10 313 2 805 13 118
companies
Loans to holding 1 461 - 1 461
company
Investments 1 5 300 648 5 948
Investments in
associates and 1 1 620 (648) 972
joint ventures
Intangible assets 242 - 242
Property and equipment 4 792 - 4 792
Deferred tax assets 55 - 55
Total assets 685 027 2 805 687 832
Liabilities
Deposits from banks 70 435 - 70 435
Trading portfolio 55 184 - 55 184
liabilities
Hedging portfolio 4 815 - 4 815
liabilities
Other liabilities and 22 926 22 926
sundry -
provisions
Current tax 3 - 3
liabilities
Deposits due to 339 186 - 339 186
customers
Debt securities in 142 295 - 142 295
issue
Loans from Absa Group 2 - 2 805
companies 2 805
Policyholder
liabilities under 62 - 62
insurance contracts
Borrowed funds 10 935 - 10 935
Deferred tax 1 583 - 1 583
liabilities
Total liabilities 647 424 2 805 650 229
Equity
Capital and reserves
Attributable to equity
holders of the Bank:
Ordinary share capital 303 - 303
Ordinary share premium 9 415 - 9 415
Preference share 1 - 1
capital
Preference share 4 643 - 4 643
premium
Other reserves 1 (84) (19) (103)
Retained earnings 1 23 315 19 23 334
37 593 - 37 593
Minority interest 10 - 10
Total equity 37 603 - 37 603
Total equity and 685 027 2 805 687 832
liabilities
BANK INCOME STATEMENT - JUNE 2008
Reclassification of investments in associates and joint ventures to investments
and profits and losses from financial instruments to interest and similar
income.
Six months Six months
ended ended
30 June 30 June
2008 2008
(Unaudited) (Unaudited)
(As
previously Reclassi-
reported) fications (Restated)
Commentary Rm Rm Rm
Net interest income 9 642 345 9 987
Interest and similar 3 33 518 345 33 863
income
Interest expense and (23 876) (23 876)
similar charges -
Impairment losses on loans (2 115) (2 115)
and advances -
Net interest income after 7 527 7 872
impairment losses on loans
and advances 345
Net fee and commission 5 284 - 5 284
income
Fee and commission 5 641 - 5 641
income
Fee and commission (357) - (357)
expense
Gains and losses from 1 462 1 115
banking and trading 1 & 3 (347)
activities
Gains and losses from 27 27
investment activities -
Other operating income 1 028 - 1 028
Operating income before 15 328 15 326
operating expenditure (2)
Operating expenditure (9 237) - (9 237)
Operating expenses (8 766) - (8 766)
Other impairments (0) - (0)
Indirect taxation (471) - (471)
Share of retained earnings 30 33
from associates and joint 1 3
ventures
Operating profit before 6 121 6 122
income tax 1
Taxation expense 1 (1 542) (1) (1 543)
Profit for the period 4 579 0 4 579
Attributable to:
Ordinary equity holder of 4 359 4 359
the Bank -
Minority interest - 0 - 0
ordinary shares
Preference equity holders 220 220
of the Bank -
4 579 - 4 579
BANK INCOME STATEMENT - DECEMBER 2008
Reclassification of profits and losses from financial instruments to interest
and similar income.
Year ended Year ended
31 December 31 December
2008 2008
(Audited) (Unaudited)
(As
previously Reclassi-
reported) fications (Restated)
Commentary Rm Rm Rm
Net interest income 20 239 311 20 550
Interest and similar 3 73 164 311 73 475
income
Interest expense and (52 925) (52 925)
similar charges -
Impairment losses on loans (5 627) (5 627)
and advances -
Net interest income after 14 612 14 923
impairment losses on loans
and advances 311
Net fee and commission 11 720 - 11 720
income
Fee and commission 12 367 - 12 367
income
Fee and commission (647) - (647)
expense
Gains and losses from 3 407 3 096
banking and trading 3 (311)
activities
Gains and losses from 91 91
investment activities -
Other operating income 1 153 - 1 153
Operating income before 30 983 30 983
operating expenditure -
Operating expenditure (19 196) - (19 196)
Operating expenses (18 577) - (18 577)
Other impairments 11 - 11
Indirect taxation (630) - (630)
Share of retained earnings 65 65
from associates and joint -
ventures
Operating profit before 11 852 11 852
income tax -
Taxation expense (3 005) - (3 005)
Profit for the year 8 847 - 8 847
-
Attributable to: -
Ordinary equity holder of 8 390 - 8 390
the Bank
Minority interest - (0) - (0)
ordinary share
Preference equity holders 457 - 457
of the Bank
8 847 - 8 847
COMMENTARY ON THE RECLASSIFICATIONS
1. Commercial Property Fund investment in associates and joint ventures
During the 2007 financial year Absa Corporate and Business Bank launched the
Commercial Property Finance division. The CPF division`s aim is to identify and
invest in property developments by obtaining an equity investment in the
identified company and/or provide financing. The investment portfolio was
previously classified as investment in associates as the equity investment
generally ranges between 30% and 50% of the company`s issued equity. During 2008
these investments were reclassified from investments in associates to unlisted
investments being measured at fair value through profit and loss according to
the scope exclusion in IAS 28, Investments in Associates. The following factors
were considered in reclassifying the investments:
- The investments are in start-up ventures with an expectation of capital
growth rather than income return.
- The aim is to generate growth in the medium term in the investments and an
exit strategy is usually defined when the investment is made.
- The investments are typically in businesses unrelated to Absa Bank`s
business.
- The investments are managed on a fair value basis.
- The value of the investments reclassified from the investment in associates
category to the unlisted investments category was R648 million.
2. Intergroup loans
Intergroup loans receivable were previously reported net of intergroup loans
payable. During the year these two balances were reported separately and the
comparatives have been restated accordingly.
3. Profits and losses from financial instruments
During 2009 all profits and losses from financial instruments used as part of
the Bank`s interest rate risk management strategy have been reclassified to
interest and similar income in line with the Bank`s accounting policy in order
to eliminate mismatches experienced on this line. Interest income and expense
for all interest-bearing financial instruments, except for those classified as
held for trading, designated at fair value through profit and loss, or available
for sale (other than financial instruments used to economically hedge the Bank`s
interest rate risk), are recognised in "Net interest income" in the income
statement using the effective interest rates of the financial assets or
financial liabilities to which they relate. The value of the profits and losses
reclassified for June 2008 was R345 million (December 2008: R311 million).
PROFIT AND DIVIDEND ANNOUNCEMENT
Introduction
Absa Bank is a wholly-owned subsidiary of Absa Group Limited (Absa Group or the
Group), both of which are listed on the JSE Limited (the JSE).
Absa Bank and its subsidiaries` financial results for the six months ended 30
June 2009 and its preference dividend declaration for the period 1 March 2009 to
31 August 2009 are contained in this announcement.
Commentary pertaining to the operating environment and the results of Absa Bank
and its subsidiaries is set out in the Absa Group`s financial results
announcement. The Absa Group announcement was released on the JSE Securities
Exchange News Services (SENS) and Absa Group`s website (www.absa.co.za) on 3
August 2009 and will be published in the press on 4 August 2009.
Basis of presentation and changes in accounting policy
The Absa Bank interim results have been prepared in accordance with
International Financial Reporting Standards (IFRS). The disclosures comply with
International Accounting Standard (IAS) 34.
The accounting policies applied in preparing t
he financial results for the six months ended 30 June 2009 are the same as the
accounting policies in place for the year ended 31 December 2008, with the
exceptions mentioned below.
The following amendments to published standards affected the Bank during the
period:
Revised IAS 1 Presentation of Financial Statements (2007) introduces the term
`total comprehensive income`, which represents changes in equity during a period
other than those changes resulting from transactions with owners in their
capacity as owners. Total comprehensive income may be presented in either a
single statement of comprehensive income (effectively combining both the income
statement and all non-owner changes in equity in a single statement), or in an
income statement and a separate statement of comprehensive income. The amendment
also requires two sets of comparative numbers to be provided for the financial
position in any year where there has been a restatement or reclassification of
balances. Revised IAS 1, which became mandatory for the Bank`s 2009 consolidated
financial statements, will not affect the financial position or results of the
Bank but has introduced some changes to the presentation of the consolidated
financial statements.
Revised IAS 23 Borrowing Costs removes the option to expense borrowing costs and
requires that an entity capitalise the borrowing costs directly attributable to
the acquisition, construction or production of a qualifying asset as part of the
cost of that asset. The revised IAS 23 became mandatory for the Bank`s 2009
consolidated financial statements and will constitute a change in accounting
policy for the Bank. In accordance with the transitional provisions, the Bank
has applied the revised IAS 23 to qualifying assets for which capitalisation of
borrowing costs commenced on or after the effective date 1 January 2009. There
will, therefore, be no impact on prior periods in the Bank`s 2009 consolidated
financial statements. The standard did not have a material impact on the current
period`s results.
The following reclassifications have been effected to the Bank`s prior year
disclosures:
Gains and losses from financial instruments, used as part of the Bank`s interest
rate management, have been reclassified to net interest income from gains and
losses from banking and trading activities, in line with the Bank`s accounting
policy. This reclassification eliminates mismatches previously experienced
between these two income statement lines.
During the 2007 financial year, the commercial bank commenced with investments
in unlisted Commercial Property Finance related entities. The investment
portfolio was classified as `investments in associates` as the equity
investments generally ranged between 20% and 50% of the company`s issued equity.
During 2008, these investments were reclassified from `investments in
associates` to `unlisted investments` being measured at fair value through
profit and loss according to the scope exclusion for venture capital
organisations in IAS 28 Investments in Associates.
The carrying value of the investments reclassified from the `investments in
associates` category to the `unlisted investments` category as at 30 June 2008
was R648 million.
Declaration of dividend number 7: Absa Bank non-cumulative, non-redeemable
preference shares (Absa Bank preference shares)
The Absa Bank preference shares have an effective coupon rate of 63% of Absa
Bank`s prevailing prime overdraft lending rate (prime rate). Absa Bank`s current
prime rate is 11,0%.
Notice is hereby given that preference dividend number 7, equal to 63% of the
prime rate as at 31 August 2009, per Absa Bank preference share has been
declared for the period 1 March 2009 to 31 August 2009. The dividend is payable
on Monday, 31 August 2009, to shareholders of the Absa Bank preference shares
recorded in the register of members of the Company at the close of business on
Friday, 28 August 2009. Should the prime rate change prior to 31 August 2009,
the actual amount of the dividend will be adjusted accordingly.
Based on the current prime rate, the preference dividend payable for the period
1 March 2009 to 31 August 2009 would indicatively be 139,3 cents per Absa Bank
preference share.
In accordance with the provisions of Strate, the electronic settlement and
custody system used by the JSE, and the JSE Listings Requirements, the following
salient dates for the payment of the preference dividend are applicable:
Last day to trade cum dividend Friday, 21 August 2009
Shares commence trading ex dividend Monday, 24 August 2009
Record date Friday, 28 August 2009
Payment date Monday, 31 August 2009
Share certificates may not be dematerialised or rematerialised between Monday,
24 August 2009, and Friday, 28 August 2009, both dates inclusive.
On Monday, 31 August 2009, the dividend will be electronically transferred to
the bank accounts of certificated shareholders who use this facility. In respect
of those who do not, cheques dated 31 August 2009 will be posted on or about
that date. The accounts of those shareholders who have dematerialised their
shares (which are held at their participant or broker) will be credited on
Monday, 31 August 2009.
On behalf of the board
S Martin
Group Secretary
Johannesburg
3 August 2009
Please note that the preference dividend calculation dates are 28 (29) February
and 31 August of each year and that the payment date may not be later than 45
days after the preference dividend calculation date.
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
Jason Quinn
Group Financial Controller
Absa Group Limited
4th Floor, Absa Towers East, 170 Main Street, Johannesburg
Tel: +2711 350-7565, Fax: +2711 350-6487
E-mail: jason.quinn@absa.co.za
Ms Nerina Bodasing
Head: Investor Relations
Absa Group Limited
3rd Floor, Absa Towers East, 170 Main Street, Johannesburg
Tel: +2711 350-2598, Fax: +2711 350-5924
E-mail: Nerina.Bodasing@absa.co.za
Sponsor
J.P. Morgan Equities Limited
Date: 03/08/2009 07:30:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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