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JSE ABSP
ABSP
ABSP - Absa Bank - Audited Financial Results For The Year Ended
31 December 2009
ABSA BANK LIMITED
Authorised financial services and credit provider (NCRCP7)
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 LIMITED: PROFIT AND DIVIDEND ANNOUNCEMENT
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009
BANK SALIENT FEATURES
Year ended
31 December
2009 20081 Change
(Audited) (Audited) %
Statement of comprehensive
income(Rm)
Headline earnings(2) 5 986 7 770 (23,0)
Profit attributable to ordinary 5 315 8 464 (37,2)
equity holder of the Bank
Statement of financial
position(Rm)
Total assets 671 241 735 378 (8,7)
Loans and advances to customers 487 672 512 657 (4,9)
Deposits due to customers 343 763 373 176 (7,9)
Financial performance(%)
Return on average equity 14,4 21,8
Return on average assets 0,84 1,15
Operating performance(%)
Net interest margin on average 2,81 3,05
assets
Net interest margin on average 3,52 3,71
interest-bearing assets
Impairment losses on loans and 1,69 1,19
advances as % of average loans
and
advances to customers
Non-interest income as % of 44,0 43,9
total
operating income
Cost-to-income ratio 49,7 50,5
Effective tax rate, excluding 20,4 25,3
indirect taxation
Share statistics (million)
(including "A" ordinary shares)
Number of shares in issue 367,7 359,1
Weighted average number of 362,1 354,6
shares
Weighted average diluted number 362,1 354,6
of
shares
Share statistics(cents)
Earnings per share 1 467,8 2 386,9 (38,5)
Diluted earnings per share 1 467,8 2 386,9 (38,5)
Headline earnings per share 1 653,1 2 191,2 (24,6)
Diluted headline earnings per 1 653,1 2 191,2 (24,6)
share
Dividends per ordinary share 669,6 2,073,6 (67,7)
relating
to income for the year
Dividend cover (times) 2,5 1,0
Net asset value per share 11,606 11,231 3,3
Tangible net asset value per 11,464 11,149 2,8
share
(Unaudited) (Unaudited)
Capital adequacy(%)
Absa Bank 14,7 14,0
Notes
(1) Refer to the "Reclassifications and Restatements" section for the
restated and reclassified prior year figures.
(2) After allowing for R 421 million (December 2008: R457 million)
profit attributable to preference equity holders of the Bank.
BANK STATEMENT OF COMPREHENSIVE INCOME
Year ended
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
Net interest income 19 888 20 550 (3,2)
Interest and similar income 62 533 73 475 (14,9)
Interest expense and similar (42 645) (52 925) 19,4
charges
Impairment losses on loans and (8 392) (5 627) (49,1)
advances
Net interest income after 11 496 14 923 (23,0)
impairment losses on loans and
advances
Net fee and commission income 12 247 11 720 4,5
Fee and commission income 12 993 12 367 5,1
1.1
Fee and commission expense (746) (647) (15,3)
Gains and losses from banking 2 547 3 096 (17,7)
and trading activities
1.2
Gains and losses from 68 91 (25,3)
investment activities
1.3
Other operating income 736 1 170 (37,1)
Operating profit before 27 094 31 000 (12,6)
operating expenditure
Operating expenditure (19 835) (19 117) (3,8)
Operating expenses 2.1 (17 635) (18 498) 4,7
Other impairments 2.2 (1 436) 11 >(100,0)
Indirect taxation (764) (630) (21,3)
Share of retained (50) 65 >(100,0)
(losses)/earnings from
associates and joint ventures
Operating profit before income 7 209 11 948 (39,7)
tax
Taxation expense (1 469) (3 027) 51,5
Profit for the year 5 740 8 921 (35,7)
BANK STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
Year ended
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
Other comprehensive income
Exchange differences on (201) >(100,0)
translation of foreign (4)
operations
Movement in cash flow hedging (661) 2 668 >(100,0)
reserve
Fair value (losses)/gains (143) >(100,0)
arising during the year 2 064
Amount removed from other (776) >(100,0)
comprehensive income and
recognised in the profit and
loss component of the statement
of comprehensive income 1 636
Deferred tax 258 (1 032) >100,0
Movement in available-for-sale (329) (92) >(100,0)
reserve
Fair value losses arising (309) (27,2)
during the year (243)
Amount removed from other (205) (100,0)
comprehensive income and
recognised in the profit and
loss component of the statement
of the comprehensive income -
Amortisation of government 104 22,4
bonds -release to the profit
and loss component of the
statement of comprehensive 85
income
Deferred tax 81 66 22,7
Movement in retirement benefit 75 181 (58,6)
assets
Increase in retirement benefit 104 (58,7)
surplus 252
Deferred tax (29) (71) 59,2
Total comprehensive income for 4 624 (60,4)
the year 11 674
Profit attributable to:
Ordinary equity holder of the 5 315 8 464 (37,2)
Bank
Preference equity holders of 421 457 (7,9)
the Bank
Minority interest 4 (0) >100,0
5 740 8 921 (35,7)
Total comprehensive income
attributable to:
Ordinary equity holder of the 4 199 11 217 (62,6)
Bank
Preference equity holders of 421 457 (7,9)
the Bank
Minority interest 4 (0) >100,0
4 624 11 674 (60,4)
CONDENSED NOTES TO THE BANK STATEMENT OF COMPREHENSIVE INCOME
1. NON-INTEREST INCOME
Year ended
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
1.1 Fee and commission income
Asset management and other
related fees 100 72 38,9
Consulting and administration 127 163 (22,1)
fees
Credit-related fees and 12 061 11 151 8,2
commissions
Credit cards(1) 1 710 1 570 8,9
Cheque accounts 3 168 2 990 6,0
Electronic banking 3 490 3 013 15,8
Other 1 405 1 473 (4,6)
Savings accounts 2 288 2 105 8,7
Insurance commission received 323 384 (15,9)
Other fees and commissions 88 98 (10,2)
Project finance fees 268 474 (43,5)
Trust and other fiduciary 26 25 4,0
services(2)
Portfolio and other management 10 17 (41,2)
fees
Trust and estate income 16 8 100,0
12 993 12 367 5,1
Notes
(1) Includes merchant and issuing fees.
(2) The Bank provides custody, trustee, corporate administration,
investment management and advisory services to third parties, which
involves the Bank making allocation and purchase and sale decisions in
relation to a wide range of financial instruments. Some of these
arrangements involve the Bank accepting targets for benchmark levels of
returns for the assets under the Bank`s care.
Included above is net fee and commission linked to financial instruments
not at fair value
Fee and commission income
Credit cards 811 724 12,0
Cheque accounts 3 168 2 990 6,0
Electronic banking 3 490 3 013 15,8
Other 1 029 651 58,1
Savings accounts 2 288 2 105 8,7
10 786 9 483 13,7
1.2 Gains and losses from
banking and trading activities
Associates and joint ventures (13) - (100,0)
Dividends received 45 - 100,0
Loss realised on disposal (58) - (100,0)
Available-for-sale unwind from 115 (85) >100,0
reserve
Equity instruments 219 - 100,0
Statutory liquid asset portfolio (104) (85) (22,4)
Financial instruments
designated at fair value 91 (940) >100,0
through profit or loss
Debt instruments (31) 138 >(100,0)
Debt securities in issue (125) (765) 83,7
Deposits from banks and due to
customers (434) (3 400) 87,2
Equity instruments 59 1 241 (95,2)
Loans and advances to banks and
customers 610 1 852 (67,1)
Statutory liquid asset portfolio 12 (6) >100,0
Financial instruments held-for-
trading
Derivatives and trading 2 373 4 032 (41,1)
instruments
Ineffective hedges (19) 89 >(100,0)
Cash flow hedges (3) (18) 83,3
Fair value hedges (16) 107 >(100,0)
2 547 3 096 (17,7)
1.3 Gains and losses from
investment activities
Available-for-sale unwind from
reserve
Equity instruments 1 - 100,0
Financial instruments designated
at fair value through profit or
loss
Equity instruments 66 37 78,4
Subsidiaries 1 54 (98,1)
Dividends received 1 1 -
Profit realised on disposal - 53 (100,0)
68 91 (25,3)
CONDENSED NOTES TO THE BANK STATEMENT OF COMPREHENSIVE INCOME
2. OPERATING EXPENDITURE
Year ended
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
2.1 Operating expenses
Amortisation of intangible 62 103 39,8
assets
Auditors` remuneration 113 88 (28,4)
Audit fees 77 56 (37,5)
Audit fees - under provision
from prior periods 8 6 (33,3)
Other fees 28 26 (7,7)
Cash transportation 371 320 (15,9)
Depreciation 1 052 790 (33,2)
Equipment costs 199 207 3,9
Information technology 1 592 1 373 (16,0)
Investment property charges 4 13 69,2
Change in fair value of
investment property - 7 100,0
Operating expenses 4 6 33,3
Marketing costs 799 896 10,8
Operating lease expenses on 815 987 17,4
property
Other operating costs(1) 1 615 1 549 (4,3)
Printing and stationery 239 225 (6,2)
Professional fees 710 821 13,5
Research and development cost 146 114 (28,1)
Staff costs 9 242 10 268 10,0
Bonuses 518 1 440 64,0
Current service cost on post-
retirement benefits 542 529 (2,5)
Other staff costs(2) 287 487 41,1
Salaries 7 523 7 505 (0,2)
Share-based payments 211 120 (75,8)
Training costs 161 187 13,9
Telephone and postage 676 744 9,1
17 635 18 498 4,7
31 December
2009 2008
(Audited) (Audited) Change
Average number of employees
employed 31 851 32 959 (3,4)
by the Bank
Number of employees employed by
the 30 627 33 074 (7,4)
Bank at year-end
Notes
(1) Other operating costs include accommodation costs, travel and
entertainment costs.
(2) Other staff costs include recruitment costs, membership fees to
professional bodies, staff parking, redundancy fees, study assistance,
staff relocation and refreshment costs.
Year ended
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
2.2 Other impairments
Financial instruments
Available-for-sale instruments 36 1 >(100,0)
Other 1 400 (12) >(100,0)
Computer software development - 1 100,0
costs
Equipment 9 - (100,0)
Goodwill 37 - (100,0)
Investments in associates and
joint ventures 1 328 - (100,0)
Repossessed Properties 26 (13) >(100,0)
1 436 (11) >(100,0)
Notes
During the year, the Bank sold contractual rights it had generated in Ambit
Management Services (Proprietary) Limited to a third party. The company is
now dormant and consequently the goodwill previously recognised on this
investment has been written off.
During the year under review, indications existed that the carrying amount
of the investments in associates, that arose as a result of client defaults
on Single Stock Futures within Absa Capital, would not be recoverable. The
recoverable amount is the
fair value less cost to sell and was based on the Bank`s best estimate of
the price the Bank would achieve in a sale transaction of these
investments. These investments have consequently been impaired.
CONDENSED NOTES TO THE BANK STATEMENT OF COMPREHENSIVE INCOME
3. HEADLINE EARNINGS
Year ended
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
Headline earnings(1) is
determined as follows:
Profit attributable to ordinary
equity holder of the Bank 5 315 8 464 (37,2)
Adjustments for:
IFRS 3 business combinations -
goodwill (113) (17) >(100,0)
IAS 16 net profit on disposal
of property and equipment (49) (35) (40,0)
IAS 21 recycled foreign
currency translation reserve,
disposal of investments in (25) - (100,0)
foreign operations
IAS 27 net profit on disposal
of subsidiaries - (45) 100,0
IAS 28 net loss on disposal of
associates 50 - 100,0
IAS 28 impairment of associates 956 - >100,0
IAS 28 headline earnings
component of associates` 11 (53) >100,0
earnings
IAS 36 impairment of assets 6 - 100,0
IAS 38 net profit on disposal
of and impairment of (56) (636) 91,2
intangible assets
IAS 39 release of available-for-
sale reserves (115) 61 >(100,0)
IAS 39 impairment of and net
profit on disposal of available-
for-sale assets 16 31 (48,4)
IAS 40 change in fair value of
investment properties (10) - (100,0)
Headline earnings 5 986 7 770 (23,0)
Note
(1) The net amount is reflected after taxation and minority interest.
BANK STATEMENT OF FINANCIAL POSITION
31 December 31
December
2009 2008 2007
(Audited) (Audited) Change (Audited)
Rm Rm % Rm
Assets
Cash, cash balances and
balances with central 15 526 16 549 (6,2) 15 069
banks
Statutory liquid asset
portfolio 33 943 33 019 2,8 22 957
Loans and advances to 35 036 43 559 (19,6) 52 691
banks
Trading portfolio assets 47 303 72 929 (35,1) 25 876
Hedging portfolio assets 2 558 3 139 (18,5) 725
Other assets 7 219 8 594 (16,0) 5 107
Current tax assets 107 - 100,0 168
Non-current assets held-
for- sale - 2 495 (100,0) -
Loans and advances to 487 672 512 657 (4,9) 443 120
customers
Loans to Absa Group 16 232 18 990 (14,5) 15 338
companies
Investments 16 849 15 191 10,9 6 574
Investments in associates
and joint ventures 473 2 071 (77,2) 905
Goodwill and intangible 522 297 75,8 228
assets
Investment property 1 705 379 >100,0 -
Property and equipment 6 010 5 431 10,7 4 258
Deferred tax assets 86 78 10,3 48
Total assets 671 241 735 378 (8,7) 593 064
Liabilities
Deposits from banks 43 235 60 043 (28,0) 65 167
Trading portfolio 36 957 68 120 (45,7) 22 947
liabilities
Hedging portfolio 565 1 080 (47,7) 2 226
liabilities
Other liabilities 9 089 7 476 21,6 7 927
Provisions 1 486 1 893 (21,5) 2 253
Current tax liabilities 31 322 (90,4) 56
Non-current liabilities
held-for-sale - 408 (100,0) -
Deposits due to customers 343 763 373 176 (7,9) 304 877
Debt securities in issue 169 788 159 042 6,8 134 023
Loans from Absa Group 3 464 3 946 (12,2) 5 900
companies
Borrowed funds 13 530 12 143 11,4 9 796
1
Deferred tax liabilities 1 915 2 735 (30,0) 2 288
Total liabilities 623 823 690 384 (9,6) 557 460
Equity
Capital and reserves
Attributable to equity
holders of the Bank:
Ordinary share capital 303 303 0,0 303
Ordinary share premium 10 465 9 415 11,2 5 415
Preference share capital 1 1 - 1
Preference share premium 4 643 4 643 - 4 643
Other reserves 2 566 3 939 (34,9) 1 583
Retained earnings 29 340 26 670 10,0 23 633
47 318 44 971 5,2 35 578
Minority interest 100 23 >100,0 26
Total equity 47 418 44 994 5,4 35 604
Total equity and 671 241 735 378 (8,7) 593 064
liabilities
CONDENSED NOTES TO THE BANK STATEMENT OF FINANCIAL POSITION
1. BORROWED FUNDS
2.
3.
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
Subordinated callable notes
The subordinated debt instruments listed below qualify as secondary capital
in terms of
the Banks Act, No 94 of 1990 (as amended).
Interest rate Final maturity
date
14,25% 22 March 2014 - 3 100 (100,0)
10,75% 26 March 2015 1 100 1 100 -
8,75% 1 September 1 500 1 500 -
2017
8,10% 27 March 2020 2 000 2 000 -
8,80% 7 March 2019 1 725 1 725 -
Three-month 26 March 2015 -
JIBAR + 0,75% 400 400
Three-month 31 March 2018 -
JIBAR + 0,97% 1 080 1 080
Three-month 31 March 2018 -
JIBAR + 1,00% 179 179
Three-month 31 March 2018 -
JIBAR + 1,09% 361 361
Three-month 31 March 2018 -
JIBAR + 1,20% 266 266
Three-month 20 September
2019 3 000 - 100,0
JIBAR + 3,20%
Three-month 7 December 2028
JIBAR + 2,60% 1 500 - 100,0
Accrued interest 575 378 52,1
Fair value adjustment (156) 54 >(100,0)
13 530 12 143 11,4
Portfolio analysis
Subordinated callable notes
designated at fair value 718 671 7,0
through profit or loss
Subordinated callable notes
held at amortised cost 7 221 4 917 46,9
Amortised cost subordinated
callable notes in a fair value
hedging relationship 5 591 6 555 (14,7)
13 530 12 143 11,4
CONDENSED NOTES TO THE BANK STATEMENT OF FINANCIAL POSITION
2. CONTINGENT LIABILITIES
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
Financial guarantee contracts
Financial guarantee contracts 1 007 1 001 0,6
Contingencies
Guarantees(1) 9 829 9 134 7,6
Irrevocable facilities(2) 54 346 29 753 82,7
Letters of credit 4 581 6 069 (24,5)
Other contingencies 5 25 (80,0)
68 761 44 981 52,7
Total contingent liabilities 69 768 45 982 51,7
Notes
(1) Guarantees include performance guarantee contracts and payment
guarantee contracts.
(2) Irrevocable facilities are commitments to extend credit where the
Bank does not have the right to terminate the facilities by written
notice. Commitments generally have fixed expiry dates. Since commitments
may expire without being drawn upon, the total contract amounts do not
necessarily represent future cash requirements.
CONDENSED NOTES TO THE BANK STATEMENT OF FINANCIAL POSITION
3. COMMITMENTS
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
Authorised capital expenditure
Contracted but not provided 728 455 60,0
for(1)
Note
(1) The Bank has capital commitments in respect of computer equipment and
property development. Management is confident that future net revenues and
funding will be sufficient to cover these commitments.
Operating lease payments
due(1)
No later than one year 1 150 1 094 5,1
Later than one year and no
later than five years 2 132 2 221 (4,0)
Later than five years 307 473 (35,1)
3 589 3 788 (5,3)
Note
(1) The operating lease commitments comprise a number of separate
operating leases in relation to properties 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.
CONDENSED NOTES TO THE BANK STATEMENT OF FINANCIAL POSITION
4. ACQUISITIONS AND DISPOSALS OF ASSOCIATES AND SUBSIDIARIES
4.1 Disposal of investment in associate - Ambit Properties Limited and
subsidiary`s management rights - Ambit Management Services (Proprietary)
Limited
Absa Corporate and Business Bank held 34,5% of Ambit Properties Limited`s
equity; these shares were exchanged for ApexHi shares1. This resulted in a
loss of R58 million on disposal of the investment in Ambit Properties
Limited (previously recognised as an investment in associate). In addition,
ApexHi acquired the management rights to Ambit Properties Limited from
Absa.
4.2 Acquisition of a listed associate
The Bank acquired additional shares in Blue Financial Services Limited
during the year, increasing the total shareholding in Blue Financial
Services Limited to over 20% in May 2009 at a cost of R62 million.
4.3 Acquisition of additional shares in CPF venture capital organisations
- The Bank acquired an additional 50% in the development company
Ngwenya River Estate (Proprietary) Limited, increasing its
shareholding to 100% on 1 October 2008 (subject to South African
Reserve Bank approval). As at December 2008, the investment was
fully consolidated and minority interest of 50% was provided for.
The acquisition became effective from April 2009 after receiving
Reserve Bank and Competition Commission approval. The impact on the
Bank`s results were minimal.
- On 31 January 2009, the Bank acquired an additional 35,2% interest
in Abseq Properties (Proprietary) Limited (Abseq) at a cost of R166
million, increasing its shareholding to 85,0%. Abseq was previously
recognised as an associate designated as fair value through profit
or loss. On consolidation of Abseq, the two joint ventures of Abseq,
namely Kilkishen Investments (Proprietary) Limited and Stand 1135
(Proprietary) Limited, became joint ventures of the Bank.
- On 1 January 2009 the Bank acquired a 50% interest in Meadowood
Investments 8 (Proprietary) Limited for R1.
- On 1 November 2009 the Bank acquired a 50% interest in Tembisa Mall
(Proprietary) Limited at a cost of R29,1 million(investment
designated at fair value).
Note
(1) In terms of a scheme proposed by ApexHi whereby ApexHi would acquire
the entire shareholding of Ambit Properties Limited.
CONDENSED NOTES TO THE BANK STATEMENT OF FINANCIAL POSITION
5. RELATED PARTIES
The Bank`s ultimate parent company is Barclays PLC (incorporated in the
United Kingdom), which owns 55,5% (2008: 58,6%) of the ordinary shares of
Absa Group Limited. The remaining 44,5% (2008: 41,4%) of the shares are
widely held on the JSE. The following are defined as related parties of
the Bank:
1. Key management personnel.
2. The ultimate parent, Barclays Bank PLC.
3. The parent company, Absa Group Limited.
4. Subsidiaries.
5. Associates, joint ventures and retirement benefit funds.
6. An entity controlled/jointly controlled or significantly influenced by
any individual referred to above.
7. Post-employment benefit plans for the benefit of employees or any
entity that is a related party of the Bank.
8. Children or dependants of the individuals referred to above or the
spouses of the individuals referred to above.
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
1. Transactions with key
management personnel and
entities controlled by key
management(1)
Loans outstanding at the end
of the 21 77 (72,7)
year
Interest income earned 4 3 33,3
Deposits at the end of the 24 17 41,2
year
Interest expense on deposits 2 2 -
Guarantees issued by the Bank 57 40 42,5
Other investments at the end
of the year 126 185 (31,9)
Note
(1) The above transactions are entered into in the normal course of
business, under terms that are no more favourable than those arranged
with third parties.
2. Key management personnel
compensation
Directors 89 60 48,3
Other key management personnel 59 54 9,3
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
3. Transactions with ultimate
parent company(1)
The following are balances
with, and transactions entered
into with the ultimate parent
company:
Balances
Assets 17 934 29 971 (40,2)
Liabilities 16 823 30 272 (44,4)
Transactions
Income 252 1 229 (79,5)
Expenses 54 259 79,2
Note
(1) All transactions entered into are on the same commercial terms and
conditions as in the normal course of business.
CONDENSED BANK STATEMENT OF CHANGES IN EQUITY
Year ended
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
Ordinary share capital 303 303 0,0
Opening balance 303 303 -
Shares issued 0 0 0,0
Ordinary share premium 10 9 415 11,2
465
Opening balance 9 415 5 415 73,9
Shares issued 1 050 4 000 (73,8)
Preference share capital 1 1 -
Opening balance 1 1 -
Preference share premium 4 643 4 643 -
Opening balance 4 643 4 643 -
Other reserves 2 3 939 (34,9)
566
Opening balance 3 939 1 583 >100,0
Other comprehensive income (1 2 572 >(100,0)
191)
Movement in foreign currency
translation reserve (201) (4) >(999.9)
Movement in cash flow hedging
reserve 2 668 >(100,0)
(661)
Movement in available-for-sale
reserve (329) (92) >(100,0)
Movement in general credit
risk reserve - (431) 100,0
Movement in capital reserve (3) - (100,0)
Movement in associates` and
joint (50) 65 >(100,0)
ventures` retained earnings
reserve
Disposal of associates and >(100,0)
joint (100) 11
ventures - release of
reserves
Share-based payments for the 181 (78,5)
year 39
Transfer from share-based
payment (68) (42) (61,9)
reserve
Year ended
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
Retained earnings 29 26 670 10,0
340
Opening balance as previously
reported 26 339 23 557 11,8
Restatement of opening 331 76 >100,0
balance(1)
Restated opening balance 26 23 633 12,9
670
Movement in general credit
risk reserve - 431 (100,0)
Transfer to associates` and
joint ventures` retained 50 (65) >100,0
earnings reserve
Disposal of associates and
joint 100 - 100,0
ventures - release of reserves
Transfer from share-based
payment reserve 68 42 61,9
Contribution to the Absa Group
Limited Share Incentive Trust (88) (61) (44,3)
Profit attributable to
ordinary equity holder of the 5 315 8 464 (37,2)
Bank
Profit attributable to
preference equity holders of 421 457 (7,9)
the Bank
Other comprehensive income -
movement in retirement benefit
assets 75 181 (58,6)
Ordinary dividends paid during
the year 1 (2 850) (5 955) 52,1
Preference dividends paid
during the year 1 (421) (457) 7,9
47 44 971 5,2
318
Minority interest 23 >100,0
100
Opening balance 26 (11,5)
23
Acquisition of subsidiaries 73 10 >100,0
Dividends declared during the (13) 100,0
year -
Profit attributable to minority
equity holders of the Bank 4 (0) >100,0
Total equity 47 418 44 994 5,4
Note
(1) Refer to the "Reclassifications and Restatements" section for the
restated and reclassified prior year figures.
CONDENSED NOTES TO THE BANK STATEMENT OF CHANGES IN EQUITY
1. DIVIDENDS PER SHARE
2.
3.
Year ended
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
Dividends paid to ordinary
equity holder during the year
9 February 2009 final dividend
number 45 of 429,6 cents per
ordinary share (19 February
2008: 323,8 cents) 1 300 980 32,7
3 August 2009 interim dividend
number 46 of 139,3 cents per
ordinary share (7 August 2008:
322,2 cents) 500 975 (48,7)
1 September 2009 special
dividend paid to Absa Group
Limited (8 621 397 "A"
ordinary shares of R121,79)
(17 March 2008: 21 768 707 "A" 1 050 4 000 (73,8)
ordinary shares of R183,75)
2 850 5 955 (52,1)
Dividends paid to ordinary
equity holder relating to
income for the year
3 August 2009 interim dividend
number 46 of 139,3 cents per
ordinary share (7 August 2008:
322,2 cents) 500 975 (48,7)
1 September 2009 special
dividend paid to Absa Group
Limited (8 621 397 "A"
ordinary shares of R121,79)
(17 March 2008: 21 768 707 "A" 1 050 4 000 (73,8)
ordinary shares of R183,75)
16 February 2010 final
dividend number 47 of 244,8
cents per ordinary share (9
February 2009: 429,6 cents) 900 1 300 (30,8)
2 450 6 275 (61,0)
Note
The STC payable by the Bank in respect of the dividend approved and
declared subsequent to the statement of financial position date, amounts to
R90 million. No provision has been made for this dividend and the related
STC in the financial statements at the statement of financial position
date.
Dividends paid to preference
equity holders during the year
9 February 2009 final dividend
number 6 of 4 734,5 cents per
preference share (19 February
2008: 4 436,0 cents) 234 6,8
219
3 August 2009 interim dividend
number 7 of 3 799,0 cents per
preference share (7 August
2008: 4 797,5 cents) 187 (21,4)
238
421 457 (7,9)
Dividends paid to preference
equity holders relating to
income
for the year
3 August 2009 interim dividend
number 7 of 3 799,0 cents per
preference share (7 August
2008: 4 797,5 cents) 187 238 (21,4)
16 February 2010 final
dividend number 8 of 3 280,3
cents per preference share (9
February 2009: 4 734,5 cents) 162 234 (30,8)
349 472 (26,1)
Note
The STC payable by the Bank in respect of the dividend approved and
declared subsequent to the statement of financial position date amounts to
R16 million. No provision has been made for this dividend and the related
STC in the financial statements at the statement of financial position
date.
CONDENSED BANK STATEMENT OF CASH FLOWS
Year ended
31 December
2009 2008
(Audited) (Audited) Change
Rm Rm %
Net cash generated from 708 >100,0
operating activities
3 622
Net cash utilised from (1 (1 223) (5,6)
investing activities 291)
Net cash utilised from (909) (526) (72,8)
financing activities
Net increase/(decrease) in (1 041) >100,0
cash and cash equivalents 1 422
Cash and cash equivalents at 5 023 (20,7)
the beginning of the year 1
3 981
Effect of exchange rate - (1) 100,0
movements on cash on cash
equivalents
Cash and cash equivalents at 5 403 3 981 35,7
the end of the year 2
NOTES TO THE CONDENSED BANK
STATEMENT OF CASH FLOWS
1. Cash and cash equivalents
at the beginning of the year
Cash, cash balances and
balances 3 942 4 673 (15,6)
with central banks
Loans and advances to banks 39 350 (88,9)
3 981 5 023 (20,7)
2. Cash and cash equivalents
at the end of the year
Cash, cash balances and
balances with central banks 4 543 3 942 15,2
Loans and advances to banks 39 >100,0
860
5 403 3 981 35,7
BANK PROFIT CONTRIBUTION BY BUSINESS AREA
Year ended
31 December
2009 20081
(Audited) (Audited) Change
Rm Rm %
Banking operations
Retail banking 2 814 3 334 (15,6)
Retail Bank 3 053 2 419 26,2
Absa Home Loans (1 291) 92 >(100,0)
Absa Card 787 536 46,8
Absa Vehicle and Asset 265 287 (7,7)
Finance
Absa Corporate and Business 2 276 2 791 (18,5)
Bank
Absa Capital 192 1 994 (90,4)
Underlying performance 1 179 1 994 (40,9)
Single Stock Futures (987) - (100,0)
impairment
Corporate centre(2) 489 798 (38,7)
Capital and funding centre (35) 4 >(100,0)
Preference equity holders of
the Bank (421) (457) 7,9
Profit attributable to
ordinary equity holder of the 5 315 8 464 (37,2)
Bank
Headline earnings adjustments 671 (694) >100,0
Total headline earnings 5 986 7 770 (23,0)
BANK REVENUE(3) CONTRIBUTION BY BUSINESS AREA
Year ended
31 December
2009 20081
(Audited) (Audited) Change
Rm Rm %
Banking operations
Retail banking 23 487 22 879 2,7
Retail Bank 15 087 13 603 10,9
Absa Home Loans 3 106 4 072 (23,7)
Absa Card 3 073 2 752 11,7
Absa Vehicle and Asset 2 221 2 452 (9,4)
Finance
Absa Corporate and Business
Bank (ACBB) 8 193 8 309 (1,4)
Absa Capital 4 150 5 213 (20,4)
Corporate centre(2) (644) 328 >(100,0)
Capital and funding centre 300 (102) >100,0
Total revenue 35 486 36 627 (3,1)
Notes
1. The comparatives have been restated for:
- Repossessed Properties was moved from Corporate centre to Retail
banking during the year under review.
- ACBB, to account for the fair value adjustments on acquisition of
additional shares of two CPF subsidiaries in 2008.
- Absa Wealth was moved from Retail banking to Absa Capital during the
year under review.
- The change in accounting policy relating to the retirement benefit
assets.
2. Corporate centre`s comparatives include the profit on the VISA Initial
Public Offering (IPO) shares.
3. Revenue includes net interest income and non-interest income.
RECLASSIFICATIONS AND RESTATEMENTS
Some items within the statement of the comprehensive income and statement
of financial
position for the years ended 31 December 2008 and 31 December 2007 were
reclassified and restated in the current year:
BANK STATEMENT OF FINANCIAL POSITION - 31 DECEMBER 2008
(Audited) (Audited)
As previously Reclassificati Reclassified
ons
reported and and restated
restatements
Rm Rm Rm
Assets
Cash, cash balances and 16 568
balances with central banks (19) 16 549
1
Statutory liquid asset 33 019 - 33 019
portfolio
Loans and advances to banks 43 559 - 43 559
Trading portfolio assets 72 929 - 72 929
Hedging portfolio assets 3 139 - 3 139
Other assets 1+2 8 066 528 8 594
Non-current assets held-for- 2 495 - 2 495
sale
Loans and advances to
customers 1 512 684 (27) 512 657
Loans to Absa Group companies 18 990 - 18 990
Investments 15 191 - 15 191
Investments in associates and
joint ventures 2 071 - 2 071
Goodwill and intangible 291 6 297
assets 1
Investment property 1 385 (6) 379
Property and equipment 1 5 512 (81) 5 431
Deferred tax assets 1 80 (2) 78
Total assets 734 979 399 735 378
Liabilities
Deposits from banks 60 043 - 60 043
Trading portfolio liabilities 68 120 - 68 120
Hedging portfolio liabilities 1 080 - 1 080
Other liabilities and sundry 9 427 (9 427)
provisions 4 -
Other liabilities 1+4 - 7 476 7 476
Provisions 4 - 1 893 1 893
Current tax liabilities 322 - 322
Non-current liabilities held- 408 - 408
for- sale
Deposits due to customers 373 176 - 373 176
Debt securities in issue 159 042 - 159 042
Loans from Absa Group 3 946 - 3 946
companies
Borrowed funds 12 143 - 12 143
Deferred tax liabilities 1+2 2 609 126 2 735
Total liabilities 690 316 68 690 384
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 capital 1 - 1
Preference share premium 4 643 - 4 643
Other reserves 3 939 - 3 939
Retained earnings 1+2 26 339 331 26 670
44 640 331 44 971
Minority interest 23 - 23
Total equity 44 663 331 44 994
Total equity and liabilities 734 979 399 735 378
BANK STATEMENT OF COMPREHENSIVE INCOME - 31 DECEMBER 2008
(Audited) (Audited)
As previously Reclassificati Reclassified
ons
reported and and restated
restatements
Rm Rm Rm
Net interest income 20 239 311 20 550
Interest and similar income 73 164 311 73 475
3
Interest expense and similar (52 925) (52 925)
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 income 11 720 - 11 720
Fee and commission income 12 367 - 12 367
Fee and commission expense (647) - (647)
Gains and losses from banking 3 407 3 096
and trading activities (311)
3
Gains and losses from 91 91
investment activities -
Other operating income 1 1 153 17 1 170
Operating profit before 30 983 31 000
operating expenditure 17
Operating expenditure (19 196) 79 (19 117)
Operating expenses 2 (18 577) 79 (18 498)
Other impairments 11 - 11
Indirect taxation (630) - (630)
Share of retained earnings 65 65
from associates and joint -
ventures
Operating profit before 11 852 96 11 948
income tax
Taxation expense 2 (3 005) (22) (3 027)
Profit for the year 8 847 74 8 921
Profit attributable to:
Ordinary equity holder of the 8 390 74 8 464
Bank
Preference equity holders of
the Bank 457 - 457
Minority interest (0) - (0)
8 847 74 8 921
BANK STATEMENT OF FINANCIAL POSITION - 31 DECEMBER 2007
(Audited) (Audited)
As previously
reported Restatements Restated
Rm Rm Rm
Assets
Cash, cash balances and 15 069 15 069
balances with central banks -
Statutory liquid asset 22 957 - 22 957
portfolio
Loans and advances to banks 52 691 - 52 691
Trading portfolio assets 25 876 - 25 876
Hedging portfolio assets 725 - 725
Other assets 5 002 105 5 107
2
Current tax assets 168 - 168
Loans and advances to
customers 443 120 - 443 120
Loans to Absa Group companies 15 338 - 15 338
Investments 6 574 - 6 574
Investments in associates and
joint ventures 905 - 905
Goodwill and intangible 228 - 228
assets
Property and equipment 4 258 - 4 258
Deferred tax assets 48 - 48
Total assets 592 959 105 593 064
Liabilities
Deposits from banks 65 167 - 65 167
Trading portfolio liabilities 22 947 - 22 947
Hedging portfolio liabilities 2 226 - 2 226
Other liabilities and sundry 10 180 (10 180) -
provisions 4
Other liabilities 4 - 7 927 7 927
Provisions 4 - 2 253 2 253
Current tax liabilities 56 - 56
Deposits due to customers 304 877 - 304 877
Debt securities in issue 134 023 - 134 023
Loans from Absa Group 5 900 - 5 900
companies
Borrowed funds 9 796 - 9 796
Deferred tax liabilities 2 2 259 29 2 288
Total liabilities 557 431 29 557 460
Equity
Capital and reserves
Attributable to equity holders
of the Bank:
Ordinary share capital 303 - 303
Ordinary share premium 5 415 - 5 415
Preference share capital 1 - 1
Preference share premium 4 643 - 4 643
Other reserves 1 583 - 1 583
Retained earnings 2 23 557 76 23 633
35 502 76 35 578
Minority interest 26 - 26
Total equity 35 528 76 35 604
Total equity and liabilities 592 959 105 593 064
COMMENTARY ON THE RECLASSIFICATIONS AND RESTATEMENTS
1. IFRS 3 - Business Combinations fair value adjustments
The acquisition of the majority interest in Balito Junction Development
(Proprietary) Limited and Ngwenya River Estate (Proprietary) Limited was
accounted for provisionally in the 2008 financial year in accordance with
IFRS 3 - Business Combinations. The Bank finalised the fair values of the
assets and liabilities on acquisition within the 12 month window period as
allowed by IFRS3. This resulted in a decrease in total assets of R36
million which includes additional goodwill of R6 million being recognised,
a decrease in total liabilities of R53 million as well as R17 million
negative goodwill recognised in the statement of comprehensive income.
2. Retirement benefit fund
The Bank early adopted AC 504 The Limit On A Defined Benefit Asset, Minimum
Funding Requirements and their interaction in the South African Pension
Fund Environment. This early adoption resulted in the Bank recognising its
defined benefit surplus as
an asset, retrospectively. AC 504 required the Bank to assess whether it
had an unconditional right to the surplus. This right specifically relates
to the surplus once the scheme has run off in the normal course of
business. The effective date for AC 504 is financial periods starting on or
after 1 April 2009, however the Bank elected the early adoption as this
guidance was published before the Bank`s year-end and seeks to clarify an
existing accounting pronouncement.
3. Profits and losses from derivatives
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 statements of comprehensive income
lines.
4. Provisions
Provisions were previously disclosed as part of other liabilities and
sundry provisions and are now disclosed separately on the statement of
financial position.
PROFIT AND DIVIDEND ANNOUNCEMENT
Introduction
Absa Bank (the Bank or the Company) 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 year ended 31
December 2009 and its preference dividend declaration for the period 1
September 2009 to 28 February 2010 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 16 February 2010 and will be published in the press on
17 February 2010.
Basis of presentation and changes in accounting policies
The Bank`s annual financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS).
The following amendments to published standards affected the Bank during
the period:
Revised IAS 1 - Presentation of Financial Statements separates owner and
non-owner changes in equity. The statement of changes in equity includes
only details of transactions with owners, with non-owner changes in equity
presented as a single line. In addition, the Standard introduces the
statement of comprehensive income: it presents all items of recognised
income and expense, either in one single statement, or in two linked
statements. The Bank has elected to present one statement.
Amended IFRS 7 - Financial instruments: Disclosure requires additional
disclosure about fair value measurement and liquidity risk. Fair value
measurements are to be disclosed by observability and significance of
inputs using a three-level hierarchy for each class of financial
instrument. The amendments also clarify the requirements for liquidity risk
disclosures. The fair value measurement disclosures are presented in the
notes to the financial statements. The liquidity risk disclosures are not
significantly impacted by the amendments.
In May 2008 the International Accounting Standards Board issued its first
omnibus of amendments to its standards, primarily with a view to removing
inconsistencies and clarify wording. There are separate transitional
provisions for each amendment. The adoption of the following amendment
resulted in a change to accounting policy but did not have any impact on
the financial position or performance of the Bank.
IAS 23 - Borrowing costs has been revised to require capitalisation of
borrowing costs on qualifying assets and the Bank has amended its
accounting policy accordingly. In accordance with the transitional
requirements of the Standard, this has been adopted as a prospective
change. Borrowing costs have been capitalised on qualifying assets from 1
January 2009. No changes have been made for borrowing costs incurred prior
to this date that have been expensed.
The Bank early adopted AC 504 - The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their interaction in the South African
Pension Fund Environment (AC 504). This early adoption resulted in the
Bank recognising its defined benefit surplus as an asset retrospectively.
AC 504 required the Bank to assess whether it had an unconditional right to
the surplus. This right specifically relates to the surplus once the
scheme has run off in the normal course of business. The effective date
for AC 504 is financial periods starting on or after 1 April 2009, however
the Bank elected early adoption as this guidance was published before the
Bank`s year end and seeks to clarify an existing accounting pronouncement.
Changes in accounting policies
The Bank changed its accounting policy in accordance with the allowed
alternative in IAS 19 - Employee Benefits (IAS 19) to recognise actuarial
gains and losses in other comprehensive income in the period in which they
occur. As a result of this change in accounting policy, any adjustments to
the surplus or deficit by applying the limit to the asset in accordance
with IAS 19 will also be recognised in other comprehensive income. This
new policy results in more relevant information on the Bank`s performance
by removing the volatility from changes in actuarial assumptions and
reserves.
Restatements
The fair values of certain assets acquired as part of business combinations
were determined provisionally in the prior year. The fair value of these
assets was finalised and adjusted in the current year in terms of the
Bank`s election to utilise a 12-month window period as allowed by IFRS 3 -
Business Combinations.
Reclassifications
The following reclassification has been effected to the Bank`s prior year
disclosures:
Gains and losses from financial instruments, used as part of the Banks
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 statements of comprehensive income
lines.
The Bank`s results for the year ended 31 December 2009 have been audited by
the Bank`s auditors, PricewaterhouseCoopers Inc. and Ernst & Young Inc.
Their audit report is available for inspection at the Bank`s registered
address, 3rd floor, Absa Towers East, 170 Main Street, Johannesburg, 2001.
Events subsequent to statement of financial position date
As at 31 December 2009, Absa Bank held 1,26 billion shares (23%) in an
associate, Pinnacle Point Group (PPG). On 8 February 2010 Absa Bank
concluded a transaction in terms of which it would subscribe for a further
1,47 billion shares in PPG and then sell the entire investment of 2,73
billion shares (39%) for R150 million of which R55 million is deferred.
Declaration of dividend number 8: 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 10,5%.
Notice is hereby given that preference dividend number 8, equal to 63% of
the prime rate as at 28 February 2010, per Absa Bank preference share has
been declared for the period 1 September 2009 to 28 February 2010. The
dividend is payable on Monday, 15 March 2010, 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 March 2010. Should the prime rate
change prior to 28 February 2010, the actual amount of the dividend will be
adjusted accordingly.
Based on the current prime rate, the preference dividend payable for the
period 1 September 2009 to 28 February 2010 would indicatively be 3 280,3
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, 5 March 2010
Shares commence trading ex dividend Monday, 8 March 2010
Record date Friday, 12 March 2010
Payment date Monday, 15 March 2010
Share certificates may not be dematerialised or rematerialised between
Monday, 8 March 2010, and Friday, 12 March 2010, both dates inclusive.
On Monday, 15 March 2010, 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 15 March 2010 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, 15 March 2010.
On behalf of the Board
S Martin
Secretary
Johannesburg
16 February 2010
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
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
Nwabisa Piki
Manager: Investor Relations
Absa Group Limited
3rd Floor, Absa Towers East, 170 Main Street, Johannesburg
Tel: +2711 350-5926, Fax: +2711 350-5924
E-mail: Nwabisa.piki@absa.co.za
Sponsor
JP Morgan Equities Limited
Date: 16/02/2010 08:01:02 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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