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JSE ABSP
ABSP
ABSP - ABSA Bank Limited - Audited annual financial results for the year ended
31 December 2010
ABSA BANK LIMITED
Authorised financial services and registered credit provider (NCRCP7)
Incorporated in the Republic of South Africa
Registration number: 1986/004794/06
ISIN: ZAE000079810
JSE share code: ABSP
(Absa Bank, the Bank or the Company)
ABSA BANK LIMITED: PROFIT AND DIVIDEND ANNOUNCEMENT
AUDITED ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010
CONSOLIDATED SALIENT FEATURES
31 December
2010 2009(1) Change
(Audited) (Audited) %
Statement of comprehensive
income(Rm)
Headline earnings(2) 6 412 5 986 7
Profit attributable to ordinary 6 432 5 315 21
equity holder of the Bank
Statement of financial position
Total assets(Rm) 680 923 673 774 1
Loans and advances to 485 588 490 205 (1)
customers(Rm)
Deposits due to customers(Rm) 372 644 349 371 7
Loans-to-deposits ratio (%) 90,7 94,4
Financial performance (%)
Return on average equity 14,2 14,4
Return on average assets 0,94 0,84
Return on risk-weighted 1,71 1,68
assets(3)
Operating performance (%)
Net interest margin on average 3,69 3,52
interest-bearing assets
Impairment losses on loans and 1,15 1,69
advances as % of average loans
and
advances to customers
Notes
1 Comparatives have been reclassified. Refer to the "Reclassifications"
section.
After allowing for R320 million (31 December 2009: R421 million)
profit attributable to preference equity holders of the Bank.
3 This ratio is unaudited.
CONSOLIDATED SALIENT FEATURES (continued)
31 December
2010 2009(1) Change
(Audited) (Audited) %
Operating performance (%)
(continued)
Non-performing advances as % of 7,6 7,0
loans and advances to
customers(2)
Non-interest income as % of 41,0 44,0
total
operating income
Cost-to-income ratio 56,7 49,7
Effective tax rate, excluding 27,1 20,4
indirect taxation
Share statistics (million)
(including "A" ordinary shares)
Number of ordinary shares in 374,1 367,7
issue
Weighted average number of 369,9 362,1
ordinary shares in issue
Weighted average diluted number 369,9 362,1
of
ordinary shares in issue
Share statistics(cents)
Headline earnings per share 1 733,4 1 653,1 5
Diluted headline earnings per 1 733,4 1 653,1 5
share
Basic earnings per share 1 738,8 1 467,8 18
Diluted earnings per share 1 738,8 1 467,8 18
Dividends per ordinary share 959,2 676,5 42
relating to income for the year
Dividend cover (times) 1,8 2,4
Net asset value per share 12 955 11 606 12
Tangible net asset value per 12 781 11 464 11
share
Capital adequacy(%)(2)
Absa Bank 14,8 14,7
Note
1 Comparatives have been reclassified. Refer to the "Reclassifications"
section.
2 These ratios are unaudited.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December
2010 2009(1) 2008(1)
(Audited) (Audited) Change (Audited)
Rm Rm % Rm
Assets
Cash, cash balances and 17 343 12 16 549
balances with central 15 526
banks
Statutory liquid asset 48 215 33 943 42 33 019
portfolio
Loans and advances to 23 633 35 036 (33) 43 790
banks
Trading portfolio assets 57 647 47 303 22 72 929
Hedging portfolio assets 4 662 2 558 82 3 139
Other assets 12 954 7 219 79 8 594
Current tax assets 5 107 (95) -
Non-current assets held - - - 2 495
for sale
Loans and advances to 485 588 490 205 (1) 513 332
customers
1
Loans to Absa Group 8 071 16 232 (50) 18 990
companies
Investment securities 12 906 16 849 (23) 15 191
Investments in associates 406 (14) 2 071
and joint ventures 473
Goodwill and intangible 643 522 23 297
assets
Investment properties 1 771 1 705 4 379
Property and equipment 6 987 6 010 16 5 431
Deferred tax assets 92 86 7 78
Total assets 680 923 673 774 1 736 284
Liabilities
Deposits from banks 21 740 40 160 (46) 60 026
Trading portfolio 43 530 36 957 18 68 120
liabilities
Hedging portfolio 1 881 565 >100 1 080
liabilities
Other liabilities 7 788 9 089 (14) 7 476
Provisions 1 533 1 486 3 1 893
Current tax liabilities 929 31 >100 322
Note
1 Comparatives have been reclassified. Refer to the
"Reclassifications" section.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
As at 31 December
2010 2009(1) 2008(1)
(Audited) (Audited) Change (Audited)
Rm Rm % Rm
Non-current liabilities - - - 408
held for sale
Deposits due to customers 372 644 349 371 7 374 099
Debt securities in issue 162 526 169 788 (4) 159 042
Loans from Absa Group - 3 464 (100) 3 946
companies
Borrowed funds 2 13 649 13 530 1 12 143
Deferred tax liabilities 2 073 1 915 8 2 735
Total liabilities 628 293 626 356 0 691 290
Equity
Capital and reserves
Attributable to equity
holders of the Bank:
Ordinary share capital 303 303 - 303
Ordinary share premium 11 465 10 465 10 9 415
Preference share capital 1 1 - 1
Preference share premium 4 643 4 643 - 4 643
Other reserves 3 704 2 566 44 3 939
Retained earnings 32 449 29 340 11 26 670
52 565 47 318 11 44 971
Non-controlling interest 65 100 (35) 23
Total equity 52 630 47 418 11 44 994
Total equity and 680 923 673 774 1 736 284
liabilities
Note
1 Comparatives have been reclassified. Refer to the
"Reclassifications" section.
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER
2010
(Unaudited)
Expected
recoverie
s and Total
Outstandi fair Net identifie
ng value of exposur d
balance collatera e impairmen
l t
Rm Rm Rm Rm
1. NON PERFORMING ADVANCES
Cheque accounts 220 110 110 110
Credit cards 2 119 553 1 566 1 566
Instalment credit agreements 3 492 2 036 1 456 1 456
Micro loans 445 84 361 361
Mortgages 25 569 20 678 4 891 4 891
Personal loans 928 321 607 607
Retail Banking 32 773 23 782 8 991 8 991
Corporate 950 840 110 110
Large and Medium business 2 612 1 734 878 878
Small business 468 390 78 78
Commercial Asset Finance 648 169 479 479
Absa Business Bank 4 678 3 133 1 545 1 545
Absa Capital 549 208 341 341
Non-performing advances 38 000 27 123 10 877 10 877
Non-performing advances ratio 7,6
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
2009
(Unaudited)
Expected
recoveri
es and Total
Outstandi fair Net identifi
ng value of exposure ed
balance collater impairme
al nt
Rm Rm Rm Rm
1. NON PERFORMING ADVANCES
(continued)
Cheque accounts 148 96 52 52
Credit cards 2 335 479 1 856 1 856
Instalment credit agreements 2 505 1 409 1 096 1 096
Micro loans 510 207 303 303
Mortgages 23 644 19 552 4 092 4 092
Personal loans 568 196 372 372
Retail Banking1 29 710 21 939 7 771 7 771
Corporate 945 845 100 100
Large and Medium business 2 444 1 713 731 731
Small business 465 362 103 103
Commercial Asset Finance 648 244 404 404
Absa Business Bank(1) 4 502 3 164 1 338 1 338
Absa Capital 805 562 243 243
Non-performing advances 35 017 25 665 9 352 9 352
Non-performing advances ratio
7,0
Note
1 Comparatives have been reclassified for the move of Absa Small
Business from Retail Banking to Absa Business Bank.
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
2010 2009
(Audited) (Audited) Change
Rm Rm %
2. BORROWED FUNDS
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
10,75% 26 March 2015 - 1 100 (100)
8,75% 1 September 1 500 1 500 -
2017
8,80% 7 March 2019 1 725 1 725 -
8,10% 27 March 2020 2 000 2 000 -
10,28% 3 May 2022 600 - 100
Three-month 26 March 2015 - (100)
JIBAR + 0,75% 400
Three-month 3 May 2022 400 100
JIBAR + 2,10% -
CPI - linked notes, fixed at
the following coupon rates:
6,25% 31 March 2018 1 886 1 886 -
6,00% 20 September 3 000 3 000 -
2019
5,50% 7 December 1 500 1 500 -
2028
Accrued interest 826 575 44
Fair value adjustment 212 (156) >100
13 649 13 530 1
Portfolio analysis
Financial liabilities 739 3
designated at fair value 718
through profit or loss
Financial liabilities held at 7 440 3
amortised cost 7 221
Amortised cost financial 5 470 (2)
liabilities held in a fair
value hedging relationship 5 591
13 649 13 530 1
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
2010 2009
(Audited) (Audited) Change
Rm Rm %
3. FINANCIAL GUARANTEE
CONTRACTS
Financial guarantee contracts 599 1 007 (41)
4. CONTINGENCIES
Guarantees(1) 11 052 9 829 12
Irrevocable facilities(2) 47 098 54 346 (13)
Letters of credit(3) 4 653 4 581 2
Other contingencies 43 5 >100
62 846 68 761 (9)
Notes
1 Guarantees include performance guarantee contracts and payment
guarantee contracts. Includes revocable facilities of R7 631 million
(2009: R4 851 million).
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. Includes equity
facilities with a value of R750 million (2009: Rnil) which are not
subject to credit risk.
3 Includes revocable facilities of R2 844 million (2009: R2 800
million).
5. COMMITMENTS
Authorised capital expenditure
Contracted but not provided 882 728 21
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 1 029 1 150 (11)
Later than one year and no 1 965 (8)
later than five years 2 132
Later than five years 386 307 26
3 380 3 589 (6)
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 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
6. ACQUISITIONS AND DISPOSALS OF BUSINESSES
6.1 Acquisitions during the current year
6.1.1 On 30 June 2010, the Virgin Money South Africa (Proprietary) Limited
(VMSA) joint venture arrangement was terminated. This was based on a
contractually agreed arrangement whereby, depending on the financial
performance of the joint venture, its future existence will be determined.
Due to the underperformance of the joint venture the arrangement was
terminated and the Bank acquired the underlying business. The termination
resulted in the Bank selling its 50% interest in VMSA for R1, while
acquiring VMSA`s credit and home loan business for R1. VMSA`s credit card
and home loan business contributed a net profit before tax of R40 million
and revenue of R57 million to the Bank for the period from 30 June 2010 to
31 December 2010. If the acquisition occurred on 1 January 2010, the Bank`s
revenue would have been R116 million higher and the net profit before tax
for the year would have been R21 million higher.
Details of the net assets acquired and gain on bargain Bank
purchase are as follows: December
2010
Fair value
recognised
on
acquisition
Rm
Other assets 0
Intangible assets 3
Other liabilities (1)
Deferred tax liabilities (1)
Net assets acquired 1
Satisfied by:
Fair value of previously held interest 0
Cash outflow on acquisition 0
Fair value of net liabilities acquired (1)
Gain on bargain purchase (1)
The consideration paid was less than the fair value of the assets and
liabilities acquired. This resulted in a gain on bargain purchase of R1
million which was recognised in other operating income in the statement of
comprehensive income.
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
6. ACQUISITIONS AND DISPOSALS OF BUSINESSES (continued)
6.1 Acquisitions during the current year (continued)
This bargain purchase gain arose primarily due to the under performance of
the underlying VMSA credit card and home loan portfolio. Any transaction
costs associated with the transaction were expensed when incurred. No
contingent liabilities were recognised as a result of the acquisition and no
contingent consideration is payable. No identifiable assets were identified
of which the fair values could not be reliably measured. No material
receivables were acquired as part of the transaction.
As part of the termination of the joint venture arrangement the Bank entered
into a separate agreement with Virgin Enterprise Limited to sell Virgin
branded credit cards and home loans in the market on which the Bank will pay
a fee for the use of the Virgin brand name.
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
6. ACQUISITIONS AND DISPOSALS OF BUSINESSES (continued)
6.1 Acquisitions during the current year (continued)
6.1.2 Absa Bank Limited, previously had a 50,0% share in the preference
shares of Sanlam Home Loans (SHL), the holding company of three
securitisation vehicles. The investment in SHL has previously been equity
accounted as the Bank and Sanlam Life Insurance Limited (Sanlam) had joint
control over SHL. On 1 August 2010, the Bank acquired the remaining 50,0%
preference shares in SHL, which resulted in the Bank controlling and
consolidating SHL. SHL contributed a net profit before tax of R39 million
and revenue of R12 million to the Bank for the period from 1 August 2010
to 31 December 2010. If the acquisition occurred on 1 January 2010, the
Bank`s revenue would have been R84 million higher and the net profit
before tax for the year would have been R70 million higher.
Details of the net assets acquired and gain on bargain Bank
purchase are as follows: December
2010
Fair value
recognised
on
acquisition
Rm
Cash, cash balances and balances with central banks 409
Other assets 11
Loans and advances to customers 4 621
Other liabilities (9)
Debt securities in issue (3 687)
Shareholders` loans (1 325)
Previously held interest (10)
Net assets acquired 10
Satisfied by:
Cash inflow on acquisition (61)
Fair value of net liabilities acquired (10)
Gain on bargain purchase (71)
The consideration paid was less than the fair value of the assets and
liabilities acquired. No goodwill resulted from the transaction and the
excess of R71 million, together with the gain of R10 million recognised as
a result of remeasuring the previously held interest to fair value was
realised in the statement of comprehensive income in other operating
income. Any transaction costs associated to the acquisition have been
expensed when incurred. No contingent liabilities were recognised as a
result of the acquisition and no contingent consideration is payable. No
identifiable assets were identified of which the fair values could not be
reliably measured.
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
6. ACQUISITIONS AND DISPOSALS OF BUSINESSES (continued)
6.1 Acquisitions during the current year (continued)
Subsequent to the acquisition the debt securities in issue were redeemed
in full.
Mortgage loans with a fair value of R4 621 million were acquired as a
result of the acquisition. The gross contractual capital amounts
receivable were R4 685 million on acquisition date and an impairment
provision of R64 million were carried against these loans on acquisition
date.
The joint venture agreement was terminated due to the underperformance of
the mortgage loan portfolio and consequently the Bank obtained full
control of SHL. The underperformance of the mortgage loan portfolio gave
rise to the gain on bargain purchase as the joint venture partner were
willing to sell its 50% stake at below fair value of the underlying assets
and liabilities.
Bank
December
2010
Rm
Net cash outflow due to acquisitions 0
Total cash and cash equivalents acquired 470
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
6. ACQUISITIONS AND DISPOSALS OF BUSINESSES (continued)
6.2 Acquisitions during the previous year
6.2.1 On 31 January 2009, the Bank acquired an additional 35,2% interest in
Abseq Properties (Proprietary) Limited increasing its shareholding to 85,0%.
Abseq Properties (Proprietary) Limited was previously recognised as an
associate designated as fair value through profit or loss. Abseq Properties
(Proprietary) Limited contributed a net profit before tax of R10 million to
the Bank for the period 31 January 2009 to 31 December 2009. If the
acquisition had occurred on 1 January 2009, the Bank`s revenue would have
been R8 million higher and the total profit for the year would have been R1
million higher.
Details of the net assets acquired and goodwill are as follows: Bank
December
2009
Fair value
recognised
on
acquisition
Rm
Other assets 36
Investments in associates and joint ventures 40
Investment properties 1 352
Deposits from banks (8)
Deferred tax liabilities (160)
Other liabilities (860)
Previously held interest (199)
Non-controlling interest (60)
Net assets acquired 141
Satisfied by:
Cash outflow on acquisition 166
Fair value of net assets acquired (141)
Goodwill 25
The goodwill is attributable to the synergies expected to arise after the
Bank`s acquisition of Abseq Properties (Proprietary) Limited. The cost of
acquisition includes directly attributable costs including legal, audit and
other professional fees. No contingent liabilities were recognised as a
result of the acquisition and no contingent consideration is payable.
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
6. ACQUISITIONS AND DISPOSALS OF BUSINESSES(continued)
6.2 Acquisitions during the previous year (continued)
6.2.2 On 1 August 2009, the Bank acquired the business of Meeg Bank Limited
from Absa Group Limited into Absa Bank Limited.
Details of net assets acquired and gain on bargain purchase are Bank
as follows: December
2009
Fair value
recognised
on
acquisition
Rm
Cash, cash balances and balances with central banks 34
Statutory liquid asset portfolio 24
Loans and advances to banks 483
Other assets 8
Loans and advances to customers 890
Property and equipment 13
Deferred tax assets 1
Other liabilities (8)
Provisions (3)
Deposits due to customers (1 282)
Loans from Absa Group companies (10)
Net assets acquired 150
Satisfied by:
Fair value of net assets acquired 150
Gain on bargain purchase (150)
Net cash outflow due to acquisitions 166
Total cash and cash equivalents acquired 34
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December
6. ACQUISITIONS AND DISPOSALS OF BUSINESSES (continued)
6.3 Disposal of businesses during the current year
6.3.1 Absa Property Equity Fund operated as a special purpose entity for
the investment of community upliftment projects. This fund was previously
consolidated under SIC 12 as the Bank held between 93% and 75% of units
(depending on the total number of units in issue at a specific point time)
and were thereby exposed to the majority of risks and rewards within the
fund.
Between January 2010 to August 2010 the Bank disposed some of the units it
owned to the extent that its effective holding decreased to below 50% of
the units in issue, at which point the fund was deconsolidated due to the
Bank not anymore being exposed to the majority of the risks and rewards in
the fund.
No gain or loss was recognised on deconsolidation of the fund due to the
underlying assets being measured at fair value.
The remainder of the investment retained after deconsolidation was disposed
during September 2010 and October 2010.
Details of the net assets disposed of are as follows: Bank
December
2010
Rm
Cash, cash balances and balances with central banks 22
Other assets 0
Investment securities 136
Other liabilities 0
Net assets disposed 158
Non-controlling interest (78)
Fair value of interest retained (64)
Consideration received 16
Cash and cash equivalents disposed (22)
Net cash and outflow on disposal (6)
6.4 Disposal of subsidiaries during the previous year
There were no disposals during the previous year.
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
7. ACQUISITIONS AND DISPOSALS OF INVESTMENTS IN ASSOCIATES AND JOINT
VENTURES
7.1. Net movement in the carrying value of investments in associates and
joint ventures
2010 2009
Effective Movement Effective Movement
holding (%) Rm holding Rm
(%)
Acquired during the
previous year, at cost:
Kilkishen Investments 50,0 n/a 50,0 31
(Proprietary) Limited
Meadowood Investments 8 50,0 n/a 50,0 0
(Proprietary) Limited
Pinnacle Point Group - 95 27,5 n/a
Limited
Stand 1135 Houghton 50,0 n/a 50,0 8
(Proprietary) Limited
Disposed during the
current year:
Pinnacle Point Group - (95) 27,5 n/a
Limited
Virgin Money South - (0) 50,0 n/a
Africa
(Proprietary)Limited
Disposed during the
previous year:
Ambit Properties Limited - n/a - (718)
Transferred to
subsidiaries during the
current year:
Sanlam Home Loans 100,0 - 50,0 n/a
(Proprietary) Limited
Transferred (to)/from
investments designated
at fair value through
profit or loss during
the current and previous
year:
Blue Financial Services 6,7 (32) 20,2 451
Limited
(32) (228)
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
7. ACQUISITIONS AND DISPOSALS OF INVESTMENTS IN ASSOCIATES AND JOINT
VENTURES (continued)
31 December
2010 2009
Rm Rm
7.2. Details of transfers and purchase
consideration on net assets acquired on the
aforementioned acquisitions are as follows:
Cash paid 95 61
Conversion of debt to equity 0 -
Purchase as part of business combination - 39
Transfer from investment securities - 390
95 490
7.3. Details of transfers and consideration
received on net assets disposed of on the
aforementioned disposals are as follows:
Cash received (95) -
Consideration in shares - (660)
Total consideration (95) (660)
Loss on disposal (0) (58)
Transfer to investment securities (32) -
Transfer to subsidiaries - -
(127) (718)
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
8. RELATED PARTIES
The Bank`s ultimate parent company is Barclays Bank PLC (incorporated in
the United Kingdom), which owns 55,5% (2009: 55,5%) of the ordinary shares
of Absa Group Limited. The remaining 44,5% (2009: 44,5%) 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 fund.
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 and/or dependants and spouses or partners of the individuals
referred to above.
31 December
2010 2009 Change
Rm Rm %
8.1. Transactions with key management
personnel and entities controlled by key
management
Loans outstanding at the end of the year 25 21 19
Interest income earned 2 4 (50)
Deposits at the end of the year 25 24 4
Interest expense on deposits 1 2 (50)
Guarantees issued by the Bank 70 57 23
Other investments at the end of the year 68 126 (46)
Note
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.
8.2. Key management personnel compensation
Directors 55 77 (29)
Other key management personnel 77 46 67
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
31 December
2010 2009 Change
Rm Rm %
8. RELATED PARTIES (continued)
8.3. Transactions with ultimate parent
company
The following are balances with, and transactions entered into with the
ultimate parent company:
Balances
Loans and advances 15 586 10 433 49
Derivative assets 9 144 6 936 32
Nominal value of derivative assets 493 402 341 406 45
Other assets 552 196 >100
Investment securities 434 369 18
Debt securities in issue - (15) 100
Deposits (6 082) (8 246) 26
Derivative liabilities (9 006) (8 450) (7)
Nominal value of derivative liabilities (375 467) (318 237) (18)
Other liabilities (267) (127) >(100)
Transactions
Gains and losses from banking and trading 1 646 2 712 (39)
activities
Interest received (80) (215) 63
Interest paid 36 54 (33)
Net fee and operating income (15) - (100)
Operating expenditure 27 252 (89)
Other operating income (42) (37) (14)
Note
All transactions entered into are on the same commercial terms and
conditions as in the normal course of business
8.4. Transactions with parent company
The following are balances with and
transactions entered into with the parent
company:
Balances
Assets 174 205 (15)
Liabilities 139 637 (78)
Transactions
Income - 8 (100)
Expenses 10 - 100
Dividends 3 420 3 271 5
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
8. RELATED PARTIES (continued)
8.5. Associates, joint ventures and
retirement benefit fund
The Bank provides certain banking and financial services to associates and
joint ventures. The Bank also provides a number of current and interest-
bearing cash accounts to the Absa Group Pension Fund. These transactions
are conducted on the same terms as third-party transactions and are not
individually material.
In aggregate, the amounts included in the Bank`s financial statements are
as follows:
2010
Associate Retirement Total
s benefit Rm
and joint fund
ventures Rm
Rm
Value of Absa Group Pension Fund - 7 193 7 193
investments
managed by the Bank
Value of Absa shares held by the Absa Group - 116 116
Pension Fund
Value of other Absa securities held by the - 1 582 1 582
Absa
Group Pension Fund
Statement of financial position
Deposits (0) (30) (30)
Derivative transactions 4 - 4
Loans and advances 7 275 - 7 275
Other assets 17 - 17
Other liabilities (47) - (47)
Statement of comprehensive income
Current service costs(1) - 1 154 1 154
Interest and similar costs (617) - (617)
Interest expense and similar charges 8 1 9
Fees received (106) (17) (123)
Fees paid 173 - 173
Note
1 Current service costs, which were included in fees paid in the
previous year, are shown separately in the current year and consists of
employee and employer contributions to the Absa Group Pension Fund.
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(continued)
As at 31 December
8. RELATED PARTIES (continued)
8.5. Associates, joint ventures and
retirement benefit fund (continued)
2009
Associate Retirement Total
s benefit Rm
and joint fund
ventures Rm
Rm
Value of Absa Group Pension Fund - 7 047 7 047
investments
managed by the Bank
Value of Absa shares held by the Absa Group - 69 69
Pension Fund
Value of other Absa securities held by the - 1 444 1 444
Absa
Group Pension Fund
Statement of financial position
Deposits (177) (45) (222)
Loans and advances 8 411 - 8 411
Other assets 2 218 - 2 218
Other liabilities (127) - (127)
Statement of comprehensive income
Current service costs(1) - 1 042 1 042
Interest and similar income (1 026) - (1 026)
Interest expense and similar charges 41 1 42
Fees received (117) (17) (134)
Fees paid 4 - 4
Note
1 Current service costs, which were included in fees paid in the
previous year, are shown separately in the current year and consists of
employee and employer contributions to the Absa Group Pension Fund.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December
2010 2009
(Audited) (Audited) Change
Rm Rm %
Net interest income 21 244 19 888 7
Interest and similar 52 264 62 533 (16)
income
Interest expense and (31 020) (42 645) 27
similar charges
Impairment losses on loans and (5 578) (8 392) 34
advances
Net interest income after 15 666 11 496 36
impairment losses on loans and
advances
Net fee and commission income 12 416 12 247 1
1.1
Fee and commission income 13 378 12 993 3
Fee and commission expense (962) (746) (29)
Gains and losses from banking 1 851 2 547 (27)
and trading activities
1.2
Gains and losses from 24 68 (65)
investment activities
1.3
Other operating income 496 736 (33)
Operating profit before 30 453 27 094 12
operating expenditure
Operating expenditure (21 180) (19 835) (7)
Operating expenses (20 440) (17 635) (16)
2.1
Other impairments (109) (1 436) 92
2.2
Indirect taxation (631) (764) 17
Share of post-tax results of (8) (50) 84
associates and joint ventures
Operating profit before income 9 265 7 209 29
tax
Taxation expense (2 507) (1 469) (71)
Profit for the year 6 758 5 740 18
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (continued)
Year ended 31 December
2010 2009
(Audited) (Audited) Change
Rm Rm %
Other comprehensive income
Exchange differences on (234) (201) (16)
translation of foreign
operations
Movement in cash flow hedging 1 153 (661) >100
reserve
Fair value 3 422 (143) >100
gains/(losses)arising during
the year
Amount removed from other (1 820) (776) >(100)
comprehensive income and
recognised in the profit and
loss component of the
statement of comprehensive
income
Deferred tax (449) 258 >(100)
Movement in available-for-sale 170 (329) >100
reserve
Fair value gains/(losses) 150 (309) >100
arising during the year
Amount removed from other - (205) 100
comprehensive income and
recognised in the profit and
loss component of the
statement of the comprehensive
income
Amortisation of 92 104 (12)
government bonds -release to
the profit and loss component
of the statement of
comprehensive income
Deferred tax (72) 81 >(100)
Movement in retirement benefit 19 75 (75)
asset
Increase in retirement benefit 27 104 (74)
surplus
Deferred tax (8) (29) 72
Total comprehensive income for 7 866 4 624 70
the year
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (continued)
Year ended 31 December
2010 2009
(Audited) (Audited) Change
Rm Rm %
Profit attributable to:
Ordinary equity holder of the 6 432 5 315 21
Bank
Preference equity holders of 320 421 (24)
the Bank
Non-controlling interest 6 4 50
6 758 5 740 18
Total comprehensive income
attributable to:
Ordinary equity holder of the 7 540 4 199 80
Bank
Preference equity holders of 320 421 (24)
the Bank
Non-controlling interest 6 4 50
7 866 4 624 70
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December
2010 2009
(Audited) (Audited) Change
Rm Rm %
1. NON-INTEREST INCOME
1.1 Net fee and commission
income
Fee and commission income
Asset management and other- 102 2
related fees 100
Consulting and administration 154 127 21
fees
Credit-related fees and 12 393 12 061 3
commissions
Cheque accounts 3 156 3 168 (0)
Credit cards(1) 1 788 1 710 5
Electronic banking 3 823 3 490 10
Other 1 220 1 405 (13)
Savings accounts 2 406 2 288 5
Insurance commission received 386 323 20
Other fees and commissions 100 88 14
Project finance fees 205 268 (24)
Trust and other fiduciary 38 26 46
services2
Portfolio and other 26 10 >100
management fees
Trust and estate income 12 16 (25)
13 378 12 993 3
Fee and commission expense (962) (746) (29)
Cheque processing fees (173) (193) 10
Debt collecting fees (105) (66) (59)
Other (329) (176) (87)
Transaction-based legal fees (189) (146) (29)
Valuation fees (166) (165) (1)
12 416 12 247 1
Notes
1 Includes merchant, acquiring 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.
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(continued)
Year ended 31 December
2010 2009
(Audited) (Audited) Change
Rm Rm %
1. NON-INTEREST INCOME
(continued)
1.1 Net fee and commission
income (continued)
Included above are net fees and
commissions linked to financial
instruments not at fair value
Fee and commission income
Cheque accounts 3 156 3 168 (0)
Credit cards 865 811 7
Electronic banking 3 823 3 490 10
Other 1 021 1 029 (1)
Savings accounts 2 406 2 288 5
11 271 10 786 5
Fee and commission expense (173) (193) 10
11 098 10 593 5
1.2 Gains and losses from
banking and trading activities
Associates and joint ventures 87 (13) >100
Dividends received 45 45 -
Profit/(loss) realised on 42 (58) >100
disposal
Available-for-sale unwind from (92) >(100)
reserve 115
Investment securities: unlisted - 219 (100)
equity and hybrid instruments
Statutory liquid asset (92) (104) 12
portfolio
Financial instruments (695) >(100)
designated at fair value 91
through profit or loss
Debt securities in issue (83) (125) 34
Deposits from banks and due to (1 618) >(100)
customers (434)
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(continued)
Year ended 31 December
2010 2009
(Audited) (Audited) Change
Rm Rm %
1. NON-INTEREST INCOME
(continued)
1.2 Gains and losses from
banking and trading activities
(continued)
Investment securities 190 28 >100
Debt instruments 27 (31) >100
Listed equity instruments 81 460 (82)
Unlisted equity and hybrid 82 (401) >100
instruments
Loans and advances to banks and 809 33
customers 610
Statutory liquid asset 7 12 (42)
portfolio
Financial instruments held for
trading
Derivatives and trading 2 451 2 373 3
instruments
Ineffective hedges 100 (19) >100
Cash flow hedges 115 (3) >100
Fair value hedges (15) (16) 6
1 851 2 547 (27)
1.3 Gains and losses from
investment activities
Available-for-sale unwind from
reserve
Investment securities
Unlisted equity and hybrid 0 1 (62)
instruments
Financial instruments
designated at fair value
through profit or loss
Investment securities 23 66 (65)
Listed equity instruments 21 54 (61)
Unlisted equity and hybrid 2 12 (83)
instruments
Subsidiaries
Dividends received 1 1 -
24 68 (65)
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(continued)
Year ended 31 December
2010 2009
(Audited) (Audited) Change
Rm Rm %
2. OPERATING EXPENDITURE
2.1 Operating expenses
Amortisation of intangible 101 62 63
assets
Auditors` remuneration 131 113 16
Audit fees 86 77 12
Audit fees - underprovision 6 8 (25)
from prior periods
Other fees 39 28 39
Cash transportation 625 371 68
Depreciation 1 062 1 052 1
Equipment costs 206 199 4
Rentals 116 121 (4)
Maintenance 90 78 15
Information technology(1) 1 969 1 644 20
Investment property charges 4 4 -
Marketing costs 974 799 22
Operating lease expenses on 877 815 8
properties
Other operating costs(2) 1 770 1 592 11
Printing and stationery 235 239 (2)
Professional fees 970 817 19
Staff costs 10 836 9 252 17
Bonuses 951 518 84
Current service costs on post- 525 542 (3)
retirement benefits
Other staff costs(3) 466 297 57
Salaries 8 372 7 523 11
Share-based payments and 280 211 33
incentive schemes
Training costs 242 161 50
Telephone and postage 680 676 1
20 440 17 635 16
Notes
1 Included above are research and development costs of R133 million
(2009: R146 million).
2 Other operating costs include accommodation, travel and entertainment
costs.
3 Other staff costs include recruitment costs, membership fees to
professional bodies, staff parking, redundancy fees, study assistance,
staff relocation and refreshment costs.
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(continued)
Year ended 31 December
2010 2009
(Audited) (Audited) Change
Rm Rm %
2. OPERATING EXPENDITURE
(continued)
2.2 Other impairments
Financial instruments 38 36 6
Amortised cost 13 - 100
instruments
Available-for-sale 25 36 (31)
instruments
Other 71 1 400 (95)
Computer software 4 100
development costs -
Equipment 13 9 44
Goodwill(1) - 37 (100)
Investments in associates 29 (98)
and joint ventures(2) 1 328
Repossessed properties 25 26 (4)
109 1 436 (92)
Notes
1 During the previous year, the Bank sold contractual rights it had
generated in Ambit Management Services (Proprietary) Limited. The company
was dormant and consequently the goodwill previously recognised on this
investment has been written off.
2 During the previous year, 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 an arm`s length sale transaction of these investments. These
investments have consequently been impaired in the current and previous
years
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(continued)
Year ended 31 December
2010 2009
(Audited) (Audited) Change
Gross Net Gross Net Net
Rm Rm Rm Rm %
3. HEADLINE EARNINGS
Headline earnings(1) is determined
as follows:
Profit attributable to ordinary 6 432 21
equity holder of the Bank 5 315
Adjustments for:
IFRS 3 (gain on bargain purchase) (72) (72) 36
and goodwill impairment (113) (113)
IAS 16 profit on disposal of (26) (22) 55
property and equipment (55) (49)
IAS 21 recycled foreign - - 100
currency translation reserve,
disposal of investments in foreign (25) (25)
operations
IAS 28 and 31 headline (1) (1) >(100)
earnings component of share of
post-tax results of associates and 10 11
joint ventures
IAS 28 and 31 net (42) (42) >(100)
(profit)/loss on disposal of 58 50
associates and joint ventures
IAS 28 and 31 impairment of 29 21 (98)
investments in associates and 1 328 956
joint ventures
IAS 36 impairment of 13 9 9 6 50
equipment and leasehold
improvements
IAS 38 impairment and net 4 3 >100
profit on disposal of intangible (65) (56)
assets
IAS 39 release of available- 92 66 >100
for-sale reserves (105) (115)
IAS 39 impairment and net 25 18 13
profit on disposal of available- 25 16
for-sale instruments
IAS 40 change in fair value (0) (0) (100)
of investment properties (12) (10)
Headline earnings 6 412 5 986 7
Note
1 The net amount is reflected after taxation and non-controlling
interest.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December
2010
Total equity
attributable
to equity Non-
holder of controllin
the Bank g interest Total
equity
(Audited) (Audited) (Audited)
Rm Rm Rm
Balance at the beginning of the 47 318 100 47 418
year
Shares issued 1 000 - 1 000
Other reserves 1 138 - 1 138
Transfer from share-based payment (46) - (46)
reserve
Share-based payments for the year 43 - 43
Other comprehensive income 1 1 089 - 1089
Movement in associates` and joint (8) - (8)
ventures` retained earnings reserve
Disposal of associates and joint 60 - 60
ventures - release of reserves
Retained earnings 3 109 - 3 109
Contribution to Absa Group Limited (236) - (236)
Share Incentive Trust
Transfer from share-based payment 46 - 46
reserve
Transfer to associates` and joint 8 - 8
ventures` retained earnings reserve
(loss)
Disposal of associates and joint (60) - (60)
ventures - release of reserves
Profit attributable to ordinary 6 432 - 6 432
equity holder of the Bank 1
Other comprehensive income - 19 - 19
movement in retirement benefit
asset 1
Ordinary dividends paid during the (3 100) - (3 100)
year
Increase in non-controlling equity - 37 37
holders` interest
Disposal of businesses - (78) (78)
Profit attributable to non- - 6 6
controlling equity holders of the
Bank 1
Profit attributable to preference 320 - 320
equity holders of the Bank 1
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Year ended 31 December
2010
Total equity
attributable
to equity Non-
holder of controllin
the Bank g interest Total
equity
(Audited) (Audited) (Audited)
Rm Rm Rm
Preference dividends paid during (320) - (320)
the year
Balance at the end of the year 52 565 65 52 630
Note
Total comprehensive income
Profit attributable to equity 6 752 6 6 758
holder of the Bank
Other comprehensive income 1 108 - 1 108
7 860 6 7 866
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Year ended 31 December
2009
Total equity
attributable
to equity Non-
holders of controllin
the Bank g interest Total
equity
(Audited) (Audited) (Audited)
Rm Rm Rm
Balance at the beginning of the 44 971 23 44 994
year
Shares issued 1 050 - 1 050
Other reserves (1 373) - (1 373)
Transfer from share-based payment (68) - (68)
reserve
Share-based payments for the year 39 - 39
Other comprehensive income 1 (1 191) - (1 191)
Movement in capital reserve (3) - (3)
Movement in associates` and joint
ventures` retained earnings reserve (50) - (50)
Disposal of associates and joint
ventures - release of reserves (100) - (100)
Retained earnings 2 670 - 2 670
Transfer from share-based payment 68 - 68
reserve
Transfer to associates` and joint
ventures` retained earnings reserve 50 - 50
(loss)
Disposal of associates and joint
ventures - release of reserves 100 - 100
Contribution to Absa Group Limited
Share Incentive Trust (88) - (88)
Profit attributable to ordinary
equity holder of the Bank 1 5 315 - 5 315
Profit attributable to preference
equity holders of the Bank 1 421 - 421
Other comprehensive income -
movement in retirement benefit 75 - 75
asset 1
Ordinary dividends paid during the (2 850) - (2 850)
year
Preference dividends paid during (421) - (421)
the year
Acquisition of businesses - 73 73
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Year ended 31 December
2009
Total equity
attributable
to equity Non-
holders of controllin
the Bank g interest Total
equity
(Audited) (Audited) (Audited)
Rm Rm Rm
Profit attributable to non-
controlling equity holders of the - 4 4
Bank 1
Balance at the end of the year 47 318 100 47 418
Note
Total comprehensive income
Profit attributable to equity 5 736 4 5 740
holders of the Bank
Other comprehensive income (1 116) - (1 116)
4 620 4 4 624
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December
2010 2009
(Audited) (Audited) Change
Rm Rm %
DIVIDENDS PER SHARE
Dividends paid to ordinary
equity holder during the
year
16 February 2010 final 900 (31)
dividend number 47 of 244,8
cents per ordinary share (9
February 2009: 429,6 cents) 1 300
4 August 2010 interim 1 200 >100
dividend number 48 of 326,4
cents per ordinary share (3 500
August 2009: 139,3 cents)
27 August 2010 (1 September 1 000 (5)
2009) special dividend 1 050
3 100 2 850 9
Dividends paid to ordinary
equity holder relating to
income for the year
4 August 2010 interim 1 200 >100
dividend number 48 of 326,4
cents per ordinary share (3
August 2009: 139,3 cents) 500
27 August 2010 (1 September 1 000 (5)
2009) special dividend 1 050
15 February 2011 final 1 350 50
dividend number 49 of 360,9
cents per ordinary share
(16 February 2010: 244,8) 900
3 550 2 450 45
Note
The STC payable by the Bank in respect of the dividend approved and
declared subsequent to the reporting date, amounts to R135 million (2009:
R90 million). No provision has been made for this dividend and the
related STC in the financial statements at the reporting date.
CONDENSED NOTES TO THE CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December
2010 2009
(Audited) (Audited) Change
Rm Rm %
1. DIVIDENDS PER SHARE
(continued)
Dividends paid to preference
equity holders during the
year
16 February 2010 final 162 (31)
dividend number 8 of 3 280,3
cents per preference share (9
February 2009: 4 734,5 cents) 234
4 August 2010 interim 158 (16)
dividend number 9 of 3 197,5
cents per preference share (3 187
August 2009: 3 799,0 cents)
320 421 (24)
Dividends paid to preference
equity holders relating to
income for the year
4 August 2010 interim 158 187 (16)
dividend number 9 of 3 197,5
cents per preference share (3
August 2009: 3 799,0 cents)
15 February 2011 final 143 (12)
dividend number 10 of 2 887,6
cents per preference share 162
(16 February 2010:3 280,3)
301 349 (14)
Note
The STC payable by the Bank in respect of the dividend approved and
declared subsequent to the reporting date amounts to R14 million (2009: R16
million). No provision has been made for this dividend and the related STC
in the financial statements at the reporting date.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 December
2010 2009(1)
(Audited) (Audited) Change
Rm Rm %
Net cash generated from 1 750 3 602 (51)
operating activities
Net cash generated/(utilised) 775 (1 271) >100
from investing activities
Net cash utilised from (3 156) (909) >(100)
financing activities
Net (decrease)/increase in (631) >(100)
cash and cash equivalents 1 422
Cash and cash equivalents at 5 403 36
the beginning of the year 1 3 981
Effect of exchange rate 1 - 100
movements on cash and cash
equivalents
Cash and cash equivalents at 4 773 5 403 (12)
the end of the year 2
NOTES
1. Cash and cash equivalents
at the
beginning of the year
Cash, cash balances and 4 543 15
balances 3 942
with central banks
Loans and advances to banks 860 39 >100
5 403 3 981 36
2. Cash and cash equivalents
at the
end of the year
Cash, cash balances and 4 431 (2)
balances 4 543
with central banks
Loans and advances to banks 342 860 (60)
4 773 5 403 (12)
Note
1 Comparatives have been reclassified. Refer to the
"Reclassifications" section.
CONSOLIDATED PROFIT CONTRIBUTION BY BUSINESS AREA
Year ended 31 December
2010 2009(1)
(Audited) (Audited) Change
Rm Rm %
Banking operations
Retail Banking 3 148 1 896 66
Home Loans 166 (1 291) >100
Vehicle and Asset Finance 270 265 2
Card 1 243 787 58
Personal Loans(2) 515 20 >100
Retail Bank(2) 954 2 115 (55)
Absa Business Bank 2 903 3 194 (9)
Absa Capital 1 307 192 >100
Underlying performance 1 345 1 179 14
Single stock futures (38) (987) 96
impairments
Corporate centre (414) 489 >(100)
Capital and funding centre (192) (35) >(100)
Preference equity holders of (320) 24
the Bank (421)
Profit attributable to 6 432 21
ordinary equity holder of the 5 315
Bank
Headline earnings adjustments (20) 671 >(100)
Headline earnings 6 412 5 986 7
Notes
1 Comparatives have been reclassified for the move of Absa Small
Business from Retail Banking to Absa Business Bank.
2 Personal Loans were previously disclosed as part of Retail Bank.
CONSOLIDATED TOTAL REVENUE(1) CONTRIBUTION BY BUSINESS AREA
Year ended 31 December
2010 2009(2)
(Audited) (Audited) Change
Rm Rm %
Banking operations
Retail Banking 21 168 20 698 2
Home Loans 3 480 3 106 12
Vehicle and Asset 2 173 2 221 (2)
Finance
Card 3 224 3 073 5
Personal Loans(3) 1 936 1 753 10
Retail Bank(3) 10 355 10 545 (2)
Absa Business Bank 11 243 10 982 2
Absa Capital 4 816 4 150 16
Corporate centre (1 090) (644) (69)
Capital and funding centre (106) 300 >(100)
Total revenue 36 031 35 486 2
Notes
1 Revenue includes net interest income and non-interest income.
2 Comparatives have been reclassified for the move of Absa Small
Business from Retail Banking to Absa Business Bank.
3 Personal Loans were previously disclosed as part of Retail Bank.
CONSOLIDATED INTERNAL REVENUE(1) CONTRIBUTION BY BUSINESS AREA
Year ended 31 December
2010 2009(2)
(Audited) (Audited) Change
Rm Rm %
Banking operations
Retail Banking (13 169) (18 760) 30
Home Loans (15 157) (19 734) 24
Vehicle and Asset (2 929) (3 864) 24
Finance
Card (460) (741) 38
Personal Loans(3) (611) (786) 22
Retail Bank(3) 5 988 6 365 (6)
Absa Business Bank 1 987 724 >100
Absa Capital 12 370 20 618 (40)
Corporate centre (435) (787) 45
Capital and funding centre (820) (847) 3
Internal revenue (67) 948 >(100)
Notes
1 Revenue includes net interest income and non-interest income.
2 Comparatives have been reclassified for the move of Absa Small
Business from Retail Banking to Absa Business Bank.
3 Personal Loans were previously disclosed as part of Retail Bank.
CONSOLIDATED TOTAL ASSETS BY BUSINESS AREA
Year ended 31 December
2010 2009(1)
(Audited) (Audited) Change
Rm Rm %
Banking operations
Retail Banking 454 095 434 290 5
Home Loans 242 722 238 013 2
Vehicle and Asset 50 877 48 943 4
Finance
Card 20 961 18 565 13
Personal Loans(2) 12 887 9 488 36
Retail Bank(2) 126 648 119 281 6
Absa Business Bank 161 835 159 557 1
Absa Capital 354 152 360 506 (2)
Corporate centre (362 014) (347 344) (4)
Capital and funding centre 72 855 66 765 9
Total assets 680 923 673 774 1
Notes
1 Comparatives have been reclassified for the move of Absa Small
Business from Retail Banking to Absa Business Bank.
2 Personal Loans were previously disclosed as part of Retail Bank.
RECLASSIFICATIONS
Some items within the statement of financial position as at 31 December 2009
and as at 31 December 2008 were reclassified in the current year:
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2009
(Audited) (Audited) (Audited)
As
previously
Reported Reclassification Reclassified
s(1)
Rm Rm Rm
Assets
Cash, cash balances and 15 526 - 15 526
balances with central banks
Statutory liquid asset 33 943 - 33 943
portfolio
Loans and advances to banks 35 036 - 35 036
Trading portfolio assets 47 303 - 47 303
Hedging portfolio assets 2 558 - 2 558
Other assets 7 219 - 7 219
Current tax assets 107 - 107
Loans and advances to 487 672 2 533 490 205
customers
Loans to Absa Group 16 232 - 16 232
companies
Investment securities 16 849 - 16 849
Investments in associates 473 - 473
and
joint ventures
Goodwill and intangible 522 - 522
assets
Investment properties 1 705 - 1 705
Property and equipment 6 010 - 6 010
Deferred tax assets 86 - 86
Total assets 671 241 2 533 673 774
Liabilities
Deposits from banks 43 235 (3 075) 40 160
Trading portfolio 36 957 - 36 957
liabilities
Hedging portfolio 565 - 565
liabilities
Other liabilities 9 089 - 9 089
Provisions 1 486 - 1 486
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
As at 31 December 2009
(Audited) (Audited) (Audited)
As
previously
Reported Reclassification Reclassified
s(1)
Rm Rm Rm
Current tax liabilities 31 - 31
Deposits due to customers 343 763 5 608 349 371
Debt securities in issue 169 788 - 169 788
Loans from Absa Group 3 464 - 3 464
companies
Borrowed funds 13 530 - 13 530
Deferred tax liabilities 1 915 - 1 915
Total liabilities 623 823 2 533 626 356
Equity
Capital and reserves
Attributable to equity
holders of the Bank:
Ordinary share capital 303 - 303
Ordinary share premium 10 465 - 10 465
Preference share capital 1 - 1
Preference share premium 4 643 - 4 643
Other reserves 2 566 - 2 566
Retained earnings 29 340 - 29 340
47 318 47 318
Non-controlling interest 100 - 100
Total equity 47 418 - 47 418
Total equity and 671 241 2 533 673 774
liabilities
Note
1 The Bank has reassessed its counterparty risk for certain scrip
lending activities. This was done due to a change in interpretation of
customer agreements. This resulted in the Bank revisiting the principles
of netting down or grossing up some transactions to be in line with the
risks inherent to the transactions. It was concluded that the
reclassification would better reflect the risk that the Bank has to
manage on the different statement of financial position lines and that
this disclosure would enhance disclosure and provide users of the
financial statements with more relevant information. This disclosure is
now also aligned with industry practice.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2008
(Audited) (Audited) (Audited)
As
previously
reported Reclassification Reclassifie
s(1) d
Rm Rm Rm
Assets
Cash, cash balances and 16 549 - 16 549
balances with central banks
Statutory liquid asset 33 019 - 33 019
portfolio
Loans and advances to banks 43 559 231 43 790
Trading portfolio assets 72 929 - 72 929
Hedging portfolio assets 3 139 - 3 139
Other assets 8 594 - 8 594
Non-current assets held-for- 2 495 - 2 495
sale
Loans and advances to 512 657 675 513 332
customers
Loans to Absa Group 18 990 - 18 990
companies
Investment securities 15 191 - 15 191
Investments in associates 2 071 - 2 071
and
joint ventures
Goodwill and intangible 297 - 297
assets
Investment properties 379 - 379
Property and equipment 5 431 - 5 431
Deferred tax assets 78 - 78
Total assets 735 378 906 736 284
Liabilities
Deposits from banks 60 043 (17) 60 026
Trading portfolio 68 120 - 68 120
liabilities
Hedging portfolio 1 080 - 1 080
liabilities
Other liabilities 7 476 - 7 476
Provisions 1 893 - 1 893
Current tax liabilities 322 - 322
Non-current liabilities 408 - 408
held-for-sale
Deposits due to customers 373 176 923 374 099
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 2 735 - 2 735
Total liabilities 690 384 906 691 290
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (consolidated)
As at 31 December 2008
(Audited) (Audited) (Audited)
As
previously
reported Reclassification Reclassified
s(1)
Rm Rm Rm
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 26 670 - 26 670
44 971 - 44 971
Non-controlling interest 23 - 23
Total equity 44 994 - 44 994
Total equity and 735 378 906 736 284
liabilities
Note
1 The Bank has reassessed its counterparty risk for certain scrip
lending activities. This was done due to a change in interpretation of
customer agreements. This resulted in the Bank revisiting the principles
of netting down or grossing up some transactions to be in line with the
risks inherent to the transactions. It was concluded that the
reclassification would better reflect the risk that the Bank has to
manage on the different statement of financial position lines and that
this disclosure would enhance disclosure and provide users of the
financial statements with more relevant information. This disclosure is
now also aligned with industry practice.
PROFIT AND DIVIDEND ANNOUNCEMENT
Introduction
Absa Bank (the Bank or the Company) increased attributable earnings by 21% to
R6 432 million, compared with the year ended 31 December 2009 (December 2009:
R5 315 million). Headline earnings for the year improved by 7% to R6 412
million (December 2009: R5 986 million). Basic earnings per share increased by
18% to 1 738,8 cents per share and headline earnings per share increased by 5%
to 1 733,4 cents per share. The Bank recorded a 14,2% return on average equity
(December 2009: 14,4%) and return on average assets of 0,94% (December 2009:
0,84%) for the year.
Commentary on the operating environment and the results of Absa Bank Limited
and its subsidiaries is set out in the Absa Group`s financial results
announcement. The Absa Group announcement was released on the JSE Limited
Securities Exchange News Service and Absa Group`s website (www.absa.co.za) on
15 February 2011 and published in the press on 16 February 2011.
Basis of presentation and changes in accounting policies
Absa Bank Limited is a company domiciled in South Africa. Its registered
office is the 3rd floor, Absa Towers East, 170 Main Street Johannesburg, 2001.
The Bank`s condensed results have been prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS) and contain the information
required by International Accounting Standard (IAS) 34.
The accounting policies applied in preparing the financial results for the
year ended 31 December 2010 are the same as the accounting policies in place
for the year ended 31 December 2009, with the exceptions mentioned below.
Revised IFRS 3 - Business Combinations affects acquisitions that are achieved
in stages and acquisitions where less than 100% of the equity is acquired. In
addition, all acquisition-related costs are expensed. The revised IFRS 3 has
been applied prospectively to all business combinations from 1 January 2010.
The impact of this amendment on the Bank was not significant during the year
under review.
Revised IAS 27 - Consolidated and Separate Financial Statements specifies that
changes in a parent`s ownership interest in a subsidiary that does not result
in the loss of control must be accounted for as equity transactions. The
requirements of IAS 27 have been applied prospectively to transactions with
non-controlling interests from 1 January 2010. The impact of this amendment on
the Bank was not significant during the year under review.
Reclassifications
The Bank has reassessed its counterparty risk for certain scrip lending and
other trading activities. This was done due to a change in interpretation of
customer agreements as well as a reconsideration of the risk inherent in some
of its trading portfolios. This resulted in the Bank revisiting the principles
of netting down or grossing up some transactions to be in line with the risks
inherent to the transactions. It was concluded that the reclassification would
better reflect the risk that the Bank has to manage on the different statement
of financial position lines and that this disclosure would enhance disclosure
and provide users of the financial statements with more relevant information.
This disclosure is now also aligned with industry practice. This has resulted
in comparatives being reclassified for December 2009 and December 2008.
Auditors` report
Ernst & Young Inc. and PricewaterhouseCoopers Inc., Absa Bank Limited`s
independent auditors, have audited the consolidated annual financial
statements of Absa Bank Limited from which the condensed consolidated
financial results have been derived. The auditors have expressed an
unqualified audit opinion on the consolidated annual financial statements. The
condensed consolidated financial results comprise the condensed consolidated
statement of financial position at 31 December 2010, condensed consolidated
statement of comprehensive income, condensed consolidated statement of changes
in equity and condensed consolidated statement of cash flows for the year then
ended, and selected explanatory notes. The audit report of the consolidated
annual financial statements is available for inspection at Absa Bank Limited`s
registered office.
Declaration of dividend number 10: 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 9,0%.
Notice is hereby given that preference dividend number 10, equal to 63% of the
average prime rate for 1 September 2010 to 28 February 2011, per Absa Bank
preference share has been declared for the period 1 September 2010 to 28
February 2011. The dividend is payable on Monday, 14 March 2011, to holders of
the Absa Bank preference shares recorded in the register of members of the
Company at the close of business on Friday, 11 March 2011.
Based on the current prime rate, the preference dividend payable for the
period 1 September 2010 to 28 February 2011 would be 2 887,6 cents per Absa
Bank preference share. Should the prime rate change prior to 28 February 2011,
the actual amount of the dividend will be adjusted accordingly.
In compliance with the requirements of Strate, the electronic settlement and
custody system used by the JSE Limited, the following salient dates for the
payment of the preference dividend are applicable:
Last day to trade cum dividend Friday, 4 March 2011
Shares commence trading ex dividend Monday, 7 March 2011
Record date Friday, 11 March 2011
Payment date Monday, 14 March 2011
Share certificates may not be dematerialised or rematerialised between Monday,
7 March 2011, and Friday, 11 March 2011, both dates inclusive.
On Monday, 14 March 2011, 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 14 March 2011 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, 14 March 2011.
On behalf of the board
S Martin
Secretary
Johannesburg
15 February 2011
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
Alan Hartdegen
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: Alan.Hartdegen@absa.co.za
Sponsor
J.P. Morgan Equities Limited
Date: 15/02/2011 08:00:45 Produced by the JSE SENS Department.
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