| Fri 30 Mar 2012, 14:06 | | BIFR1 - FirstRand Bank Limited - Unaudited interim results for the six months |
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BIFR1 - FirstRand Bank Limited - Unaudited interim results for the six months
ended 31 December 2011
FirstRand Bank Limited
(Incorporated in the Republic of South Africa)
(Registration No. 1929/001225/06)
Company code: BIFR1
("FRB" or "the Bank")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011
Introduction
This report covers the unaudited financial results of FirstRand Bank Limited
based on International Financial Reporting Standards (IFRS) for the six months
ended 31 December 2011, as well as the normalised results of the Bank, and deals
with the financial and operating performance of its main business units. The
Bank consists of a portfolio of leading financial services franchises; these are
First National Bank (FNB), the retail and commercial bank, Rand Merchant Bank
(RMB), the investment bank, and WesBank, the instalment finance business.
The results and accompanying commentary are presented on a normalised basis as
the Bank believes this most accurately reflects its economic performance. A
detailed description of the difference between normalised and IFRS results is
provided on www.firstrand.co.za. Commentary is based on the normalised results,
unless indicated otherwise. Normalised results are unaudited.
Bondholders are advised that the Bank`s interim financial statements for the
period ended 31 December 2011 are available on its website at
www.firstrand.co.za/149/financial-results-for-firstrand-bank-limited/. The
interim financial statements are also available for inspection at the registered
office of FirstRand Bank Limited.
The Bank is a wholly-owned subsidiary of FirstRand Limited (the Group or
FirstRand).
Financial highlights
Six months ended Year
31 December ended
30 June
2011 2010 % change 2011
Normalised earnings (R million) 4 280 3 102 38 6 595
Normalised return on equity (%) 21.5 18.1 18.8
Capital adequacy - Tier 1 (%) 13.0 11.9 12.4
Capital adequacy ratio (%) 14.7 13.8 14.2
Credit loss ratio (%) 0.77 1.05 0.98
NPLs (%) 3.80 4.66 4.35
Gross advances (R million) 468 310 432 132 8 438 596
Cost to income ratio (%) 58.7 60.1 62.0
Net interest margin (%) 4.35 4.03 4.19
Reconciliation from headline earnings to normalised earnings
Six months ended % change Year ended
31 December 30 June
R million 2011 2010 2011
Attributable earnings to 4 529 4 296 5 7 785
ordinary shareholders
Adjusted for: (277) (1 224) (77) (1 245)
Profit on sale of available- (327) (174) 88 (335)
for-sale assets
Gain on the disposal of - (1 072) (100) (1 072)
intergroup
subsidiaries/associates*
Profit on disposal of - - - 33
subsidiaries
Loss on sale of property 30 3 >100 47
and equipment
Other - 19 (100) 69
Tax effects of adjustments 20 - n/a 13
Headline earnings 4 252 3 072 38 6 540
Adjusted for:
IFRS 2 Share-based payment 28 30 (7) 55
expense
Normalised earnings 4 280 3 102 38 6 595
* The gain on disposal of subsidiaries was a result of the Group
restructuring, which also impacted the Bank. These subsidiaries were
retained by the Group.
Reconciliation of IFRS attributable earnings to normalised attributable earnings
Six months ended % Year ended
31 December change 30 June
R million 2011 2010 2011
Attributable earnings to 4 529 4 296 5 7 785
ordinary shareholders
Adjusted for:
Profit on sale of available- - (1 072) (100) (1 072)
for-sale assets
Profit on disposal of - - n/a 33
subsidiaries
IFRS 2 Share-based payment 28 30 (7) 55
expense
Attributable earnings - 4 557 3 254 40 6 801
normalised
Overview of results
Introduction
The fragile global economic recovery that began in 2009 has been impacted by a
number of headwinds and risks in the six months to December 2011. The global
business cycle was negatively affected by a few unprecedented events, such as
the downgrade of the USA`s credit rating and the crisis in the Eurozone.
Business and consumer sentiment and risk appetite were further depressed by
increased concern that China would experience a significant slowdown in growth.
The global economy continued to register positive, if slower, growth rates over
the period, however, the outlook remains uncertain. Developed markets continue
to experience muted growth and have limited policy space to support further
expansion. Although lower inflation and the easing of monetary policy should
support growth in emerging economies, some of these countries continue to face
structural risks associated with their growth models.
Against this backdrop, growth rates in South Africa also moderated. Local
factors further amplified the effect of the global slowdown as significant
industrial action in the third quarter of 2011 depressed manufacturing and
mining output. Households continued to drive the expansion supported by real
income growth, while capital investment and overall corporate activity remained
subdued, albeit with pockets of moderate growth. Credit extension recorded
single digit growth, which was below increases in nominal GDP. The risks to
growth and stable core inflation over the period resulted in the SARB
maintaining a monetary policy stance designed to stimulate economic activity.
Overview of results
Despite this challenging background, the Bank produced excellent results for the
six months to 31 December 2011, achieving normalised earnings of R4 280 million,
an increase of 38% on the comparative period, and producing a normalised return
on equity (ROE) of 21.5% (2010: 18.1%).
With regards to the Bank`s overall performance, the unwind of bad debts
continued to impact positively on the results of the retail franchises of FNB
and WesBank. However, on a rolling six-month basis, the impairment charge
benefit has reduced. The increase in earnings was delivered through very strong
operational perfor-mances from FNB and WesBank, driven by loan and customer
deposit growth, new customer acquisition, expanding lending margins and robust
transactional volumes.
RMB (including Global Transactional Services (GTS), previously FNB`s Corporate
Transactional Banking activities), experienced a 22% increase in profit before
tax, a strong performance given the tough trading environment and the high base
created in recent years.
The table below shows a breakdown of sources of normalised earnings.
Sources of normalised earnings
Six months ended 31 December %
change
R million 2011 % 2010 %
composition composition
Total FNB 2 629 62 2 161 70 22
FNB South Africa 2 643 62 2 185 70 21
FNB Africa (14) - (24) - (42)
Total RMB and GTS 1 286 30 1 036 33 24
RMB 1 154 27 927 30 24
GTS 132 3 109 3 21
WesBank 620 14 410 13 51
Corporate Centre (163) (4) (399) (13) (59)
and consolidation
adjustments
Non-cumulative (92) (2) (106) (3) (13)
non-redeemable
(NCNR) preference
dividend
Normalised 4 280 100 3 102 100 38
earnings
The Bank`s income statement benefited from an excellent increase of 17% in net
interest income (NII). This was driven by good growth in advances at FNB,
WesBank and RMB. In addition, the Bank`s asset margins expanded due to the
change in mix with a larger contribution from vehicle and asset finance (VAF)
and unsecured lending. Margins also continued to be positively impacted by
ongoing repricing strategies in the large retail lending books such as VAF and
residential mortgages.
NII growth included the benefit from the non-recurrence of a mark-to-market loss
on funding instruments incurred in the comparative period.
Total non-interest revenue (NIR) was up 12% on the comparative period. Fee and
commission income at FNB and WesBank was stronger than expected, increasing 16%
on the comparative period, driven by ongoing new customer acquisition and strong
transactional volumes (particularly through the electronic channels) at FNB and
fees generated on higher new business volumes at WesBank.
As a result of the continued focus on cost containment, total operating expenses
increased 12%, which is in line with targets. Core operational costs increased
9%. The cost-to-income ratio improved to 58.7% (2010: 60.1%).
The Bank`s balance sheet continued to show reasonable overall growth in advances
reflecting robust new business volumes. The following portfolios showed
particularly good growth as a result of the Bank`s strategy to grow its lending
books in certain targeted segments.
R million New
business
Unsecured lending in FNB`s Mass and Consumer segments 6.1
(excluding Card)
Unsecured lending at WesBank 2.0
VAF at WesBank 24.1
Despite the growth in unsecured lending, this is still coming off a very low
base and total unsecured loans (excluding Card) across all of the retail
portfolios represent a small portion (4%) of total advances.
Overview of operating franchises
The Group`s vision is to be the African financial services group of choice,
creating long-term franchise value and delivering superior and sustainable
economic returns to shareholders within acceptable levels of volatility. This is
achieved through two parallel growth strategies:
become a predominant South African player focusing on both existing markets and
those markets where the business is currently under-represented; and
further grow the existing African franchise, targeting those markets expected
to produce above average domestic growth and are strongly positioned to benefit
from the trade and investment flows between Africa and Asia, particularly China
and India.
These strategies are executed through the Group`s operating franchises, within a
strategic framework set by the Group. Although the Group`s African subsidiaries
do not form part of the Bank`s operations, the African and corridor growth
strategy impacts the Bank in the following areas:
representative offices in Nigeria, Angola, Kenya and the Indian and London
branches reside in the Bank; and
the Bank`s balance sheet is utilised for certain transactions executed as part
of the African and corridor strategy.
FNB
FNB`s strategy is to grow its domestic franchise in market segments where it is
currently under-represented and target selective African countries and India for
investment. It enters these markets focusing on innovative products and delivery
channels, especially favouring electronic platforms.
FNB South Africa produced a strong performance for the year, growing pre-tax
profits 20%.
The growth in NIR of 7% reflects FNB`s strategy to grow customers (+5%) and
transactional volumes (+10%), which has been achieved through FNB`s introduction
of innovative products and channels to market. The growth in transactional
volumes also reflects the ongoing migration by customers to less expensive
electronic channels as a direct result of FNB`s strategy to encourage customers
(particularly through pricing) to use these cheaper channels. NIR also benefited
from good market share gains and growth in revenue from alternative sources,
such as prepaid commissions and insurance.
NII increased robustly as a result of strong deposit balance growth slightly
offset by reduced endowment margins, some advances growth with particularly good
growth in unsecured lending, which resulted in margin expansion and lower
suspended interest on NPLs. Advances growth was muted in residential mortgages
(3%) and Card (6%).
FNB`s costs for the period grew at only 10% despite ongoing investment in the
business, such as the rollout of the EasyPlan infrastructure, innovative mobile
platforms and customer acquisition strategies. There remains a firm focus on
cost reduction in those business units that are experiencing pressure on
revenues, however, investment will continue in areas of the business where
growth opportunities exist.
Impairments continued to improve, which is largely attributable to the ongoing
recovery in HomeLoans, and the decrease in NPLs and arrears and ongoing post
write-off recoveries in Card Issuing.
FNB continued to execute on certain growth strategies and other operational
initiatives during the period under review. For example, the Mass segment
sustained its rollout of EasyPlan, which represents an appropriate low-cost
banking offering to this segment. In both the Mass and Consumer segments, FNB
has focused on unsecured lending products where it is coming off a historically
low base. Innovative products and reward programmes have driven good growth in
customers and transactional volumes in the Consumer segment.
RMB
RMB`s ongoing strategic imperatives remain anchored around strengthening the
client franchise both locally and on the African continent with trading and
investing activities being scaled appropriately. RMB`s risk appetite framework
remains central to ensuring that its portfolio continues to reflect the
appropriate mix of client, trading and investing activities in order to preserve
and enhance the quality of earnings.
For the first time, RMB`s results include a contribution from GTS. GTS has now
been fully aligned with RMB`s existing activities (though it remains FNB
branded) as part of FirstRand`s strategy to create a full suite of integrated
Corporate and Investment Banking (CIB) products and services for large
corporates.
RMB`s pre-tax profits grew 25% to R1 570 million for the six months to December
2011, a very strong performance given the significant base created in previous
periods and the current tough macro environment for investment banks.
Investment Banking continued to grow despite an already high base, and Fixed
Income, Currency and Commodities (FICC) produced a robust performance showing
particularly good growth in structured trading activities. Equities experienced
pressure in client and trading activities, with client agency and structuring
revenues only increasing marginally and trading activities performing below
expectations.
GTS produced net income of R180 million, 3% higher than the comparative period
and achieved in an environment characterised by margin compression, which drove
financing revenue lower. The contribution from client fee revenue grew strongly
during the period on the back of higher volumes, although pricing remains
extremely competitive in this segment. Investment in the operating platform
continued during the period, placing pressure on costs.
RMB made good progress at growing its African franchise with a focus on building
investment banking and trading activities, as well as capturing trade and
investment flows into Africa from key Asian markets, such as India and China. A
number of transactions in key sectors such as resources, commodities, energy and
property were concluded in Africa.
WesBank
WesBank continues to focus on its core strategy of partnering with key industry
players through representation at the point of sale and is targeting domestic
segments where it remains under-represented, such as fleet management and full
maintenance rentals (FMR), as well as with larger corporate asset finance
customers and the public sector.
WesBank`s pre-tax profits increased 50% over the prior year to R845
million. This strong performance resulted from the continuation of the retail
and corporate credit unwind, strong new business origination across all
portfolios, improved interest margins resulting from repricing and growth in the
unsecured lending portfolio (WesBank loans).
Bad debts in the local lending business decreased 27% and NPLs decreased from
5.4% to 4.1% (June 2011 4.5%).
Advances grew R9.6 billion (10%) as a consequence of the excellent new business
volumes driven by the buoyant vehicle market, improved consumer affordability,
the natural replacement cycle and improved consumer and business confidence.
Origination growth has not been at the expense of price or change in risk
appetite.
NIR increased 45%, benefiting from the higher new business volumes, growing
advance volumes and growth in the FMR income.
Cost management remains an important contributor to WesBank`s results. Whilst
total cost growth for the period was 27%, this is largely related to increased
new business volumes. Core operating costs in the local lending operations
increased only 8% over the prior year.
MotoNovo (previously branded Carlyle Finance), the UK operation, contributed a
44% increase in profits and the business continues to produce excellent
origination volumes, margins, risk profile and cost management in a very tough
cycle in the UK market. 20% of the growth in profit is a direct result of the
devaluation of the Rand against the Pound.
Specific growth strategies continue to be pursued in the large corporate sector
and in FMR. The large corporate sector reflected year-on-year growth in new
business of 29%, while the FMR business grew number of units under management
58% off a moderate base.
Strategic issues
Progress on domestic and African expansion strategies
Given FirstRand`s size in its domestic market significant focus remains on
growing its franchises across all the available profit pools in financial
services within South Africa.
Many of these strategies are gaining traction. For example, FNB`s EasyPlan
strategy in the Mass segment is on track in that it is both protecting and
growing its well-established franchise in that segment. Through positioning its
low-cost network in the appropriate work and transport nodes, delivering a
strong transactional banking platform that includes cellphone banking, eWallet
and ATMs/ADTs, FNB has been successful in retaining existing customers and
capturing new customers from its competition. FNB is also actively growing its
lending books both in the unsecured space and in affordable housing in the Mass
segment. Unsecured advances total R5 billion and the affordable housing book
totals R9.5 billion.
As part of the overall strategy to grow CIB revenues, following a change in its
business model to service the large corporate segment, closer alignment of GTS
with RMB has now been completed. This structural adjustment follows the creation
of a Client Coverage team, and is already resulting in growth in share of the
corporate market. A strong transactional banking platform is critical to
servicing these customers particularly across the FICC and GTS service
offerings. Investment is continuing in both systems and skills and the Group
believes that leveraging off the strength of the RMB franchise will create a
strong CIB presence in the short to medium term.
At WesBank, specific growth strategies in the large corporate sector, are
delivering new business growth and long-term prospects remain good. WesBank
believes there are additional incremental growth opportunities in the medium
corporate environment and specific strategies are being put in place in that
sector.
The Group also seeks to generate incremental growth outside of its domestic
market. It executes "on the ground" through its operating franchises, and enters
each market depending on the opportunities presented.
RMB recently established a Kenyan representative office. The India branch
continues to benefit from an increased focus on the Africa/India corridor and
the broader Asian corridor strategy continues to develop. Deals such as the Gold
One transaction, which represents the largest investment by Chinese investors in
the African gold sector, is testament to RMB`s ability to deliver investment
banking solutions to clients in the China/Africa corridor.
Capital
FirstRand`s capital management strategy is aligned to the Group`s overall
objective to deliver sustainable returns to shareholders within appropriate
levels of volatility.
The current philosophy, given the uncertain macro environment, is to operate at
the higher end of its targeted capital levels to ensure balance sheet
resilience. Current targeted levels and ratios are summarised in the table
below.
FirstRand Bank (FRB)* Regulatory
minimum
% Actual Target
Capital adequacy ratio 14.7 11.5 - 13.0 9.5#
Tier 1 ratio 13.0 10.5 7.0
Core Tier 1 ratio 12.0 9.0 - 10.5 5.25
* Reflects solo supervision, i.e. FirstRand Bank excluding branches
and subsidiaries.
# The regulatory minimum excludes the bank-specific (Pillar 2b) add-on
and capital floor.
FirstRand does not seek to hold excess capital for acquisitions, however, it has
previously indicated to shareholders that it is holding a "buffer" for
investments in certain growth opportunities already identified in its domestic
market and in certain African jurisdictions.
However, given the current economic conditions in South Africa and the subdued
credit appetite amongst consumers and corporates, the operating franchises
continue to generate good returns at a time when there is limited opportunity to
grow risk-weighted assets.
With regards to the impact of Basel 2.5 and 3, the Bank`s level of Core Tier 1
capital is sufficient as it has held buffers in anticipation of these changes.
These buffers will now be allocated to the operating franchises as part of the
capital allocation and performance management processes. This will result in
some adjustment to the franchise return profiles, however, the Bank return
profile should not change.
Each franchise is undertaking detailed assessments of actions that will be taken
to optimise returns given their new allocations.
Prospects
The Bank expects the domestic economic conditions to remain subdued for the
remainder of the current financial year.
Growth in retail advances is likely to remain at current levels with mortgage
lending expected to lag nominal GDP growth as levels of consumer indebtedness
remain high, and house prices are expected to reflect negative real growth in
the short term. In mitigation, the stabilisation of the economy at modest growth
rates and an ongoing low interest environment will result in reasonable growth
in unsecured, short-term advances.
Given that excess capacity remains in the corporate sector, with limited
expansionary opportunities, combined with very strong balance sheets across the
segment, corporate lending is also expected to remain slow.
The Bank expects its domestic franchises to continue to produce good organic
growth driven by specific strategies in those markets and/or segments that are
showing above average growth, where the Bank is under-represented or the ROE is
very attractive. However, achieving revenue growth is likely to remain a
challenge and, therefore, achieving a sustainable ROE and cost-to-income ratio
continues to be a balancing act between investment and cost management.
The quality of the Bank`s operating franchises and their respective strategies
domestically should underpin the Bank`s ability to produce sustainable returns.
Board changes
Mrs Mary Sina Bomela was appointed to the Boards of FirstRand Bank and the Group
as a non-executive director with effect from 24 September 2011. Mrs Bomela
joined the Board as a shareholder representative of Mineworkers Investment
Company, replacing Mr Paul Nkuna who resigned from the Board on 31 July 2011,
following his decision to retire in 2012.
Basis of presentation
The Bank prepares its standalone interim financial results in accordance with:
IFRS including IAS 34 Interim Financial Reporting;
the AC 500 standards issued by the Accounting Practices Board;
JSE Debt Listing requirements; and
the information as required by the Companies Act of South Africa.
The accounting policies applied are consistent with those applied in preparation
of previous financial statements.
Alan Hedding, CA(SA), supervised the preparation of the standalone interim
financial results.
The Bank believes normalised earnings more accurately reflect operational
performance. Headline earnings are adjusted to take into account non-operational
and accounting anomalies. Details of the nature of these adjustments and reasons
therefore can be found on www.firstrand.co.za.
BW Unser
Company secretary
29 March 2012
Description of difference between normalised and IFRS results
The Bank believes normalised results more accurately reflect the economic
substance of the Bank`s performance. The Bank`s results are adjusted to take
into account non-operational and accounting anomalies.
Share-based payments, employee benefits and treasury shares: consolidation of
staff share trust
IFRS 2 Share-based payments requires that all share-based payment transactions
for goods or services received must be expensed with effect from financial
periods commencing on or after 1 January 2005. IAS 19 Employee Benefits requires
that an expense be raised if benefits are expected to be paid to employees in
return for services rendered.
In 2005 the Group concluded its BEE transaction; a part of this transaction was
that rights were granted to the Group`s black South African employees and black
non-executive directors of FirstRand. These rights are accounted for as IFRS 2
expenses. FirstRand hedged itself against the price risk of the FirstRand share
price in these schemes by buying the shares in the open market in various share
trusts. SIC 12 Consolidation - Special Purpose Entities requires that these
staff schemes be consolidated by the Group. FirstRand shares held by the staff
share schemes are therefore treated as treasury shares.
The economic cost to the Bank for both the IFRS 2 expense and the employee
benefit is the net funding cost paid by the Bank on the funding required to buy
these shares.
For purposes of calculating the normalised earnings, the share trusts are
deconsolidated, the FirstRand shares held by the staff share schemes are treated
as issued to parties external to the Bank and loans to share trusts are
recognised as external loans.
Economic hedges
The Bank enters into economic interest rate hedging transactions from time to
time, which do not qualify for hedge accounting in terms of the requirements of
IFRS. The Bank has reclassified the fair value changes on these hedging
instruments from NIR to NII to reflect the economic substance of these hedges.
Fair value annuity income - lending
The Bank accounts for the majority of its wholesale advances book within RMB on
a fair value basis in terms of IFRS. As a result, the margin on these advances
is reflected as part of NIR.
The Bank has reclassified the margin relating to the annuity fair value income
earned on the RMB wholesale advances book from NIR to NII to reflect the
economic substance of the income earned on these assets.
The corresponding impairment charge is reallocated from NIR to the impairment
charge. Fair value advances are adjusted to reflect the cumulative adjustment.
Income statement - IFRS
Six months ended % Year ended
31 December change 30 June
R million 2011 2010 2011
Interest and similar income 18 464 17 425 6 34 684
Interest expense and similar (11 229) (11 795) (5) (22 875)
charges
Net interest income before 7 235 5 630 29 11 809
impairment of advances
Impairment losses on loans (1 615) (2 029) (20) (3 637)
and advances
Net interest income after 5 620 3 601 56 8 172
impairment of advances
Non-interest income 12 331 12 461 (1) 23 774
Income from operations 17 951 16 062 12 31 946
Operating expenses (11 599) (10 369) 12 (21 191)
Income before tax 6 352 5 693 12 10 755
Indirect tax (356) (307) 16 (503)
Profit before direct tax 5 996 5 386 11 10 252
Direct tax (1 375) (984) 40 (2 266)
Profit for the period 4 621 4 402 5 7 986
Attributable to:
NCNR preference shareholders 92 106 (13) 201
Ordinary equityholders 4 529 4 296 5 7 785
Profit for the period 4 621 4 402 5 7 986
Statement of comprehensive income - IFRS
Six months ended % Year ended
31 December change 30 June
R million 2011 2010 2011
Profit for the year 4 621 4 402 5 7 986
Other comprehensive income
Cash flow hedges (275) (131) >100 21
Available-for-sale financial 142 167 (15) (47)
assets
Exchange differences on 174 (155) (>100) (133)
translating foreign
operations
Other comprehensive income 41 (119) (>100) (159)
for the period before tax
Income tax relating to 10 (45) (>100) (46)
components of other
comprehensive income
Other comprehensive income 51 (164) (>100) (205)
for the period after tax
Total comprehensive income 4 672 4 238 10 7 781
for the period
Total comprehensive income
attributable to:
NCNR preference shares 92 106 (13) 201
Equityholders of the group 4 580 4 132 11 7 580
Total comprehensive income 4 672 4 238 10 7 781
for the period
Statement of financial position - IFRS
As at % As at
31 December change 30 June
R million 2011 2010 2011
ASSETS
Cash and short-term funds 30 937 27 019 15 29 012
Derivative financial 57 321 50 446 14 36 666
instruments
Advances 458 965 422 864 9 429 134
Investment securities and 85 691 87 306 (2) 83 810
other investments
Commodities 5 880 4 164 41 4 388
Accounts receivable 2 829 3 152 (10) 2 744
Investments in associates 152 116 31 116
and joint ventures
Amounts due by holding 20 827 16 251 28 19 234
company and fellow
subsidiary companies
Property and equipment 8 792 8 168 8 8 480
Post-retirement benefit 2 913 2 833 3 2 830
asset
Intangible assets and 233 205 14 281
deferred acquisition costs
Tax asset - 641 (100) -
Loans to insurance group - 18 (100) -
Total assets 674 540 623 183 8 616 695
EQUITY AND LIABILITIES
Liabilities
Deposits and current 530 167 489 722 8 493 406
accounts
Short trading positions 8 036 5 737 40 5 777
Derivative financial 58 166 49 733 17 36 150
instruments
Creditors and accruals 7 408 5 045 47 6 199
Provisions 2 482 2 492 - 2 945
Tax liability 95 - n/a 95
Post-retirement liabilities 2 305 2 166 6 2 252
Deferred tax liability 1 474 1 873 (21) 1 348
Long-term liabilities 6 098 6 775 (10) 7 040
Amounts due to holding and 13 272 20 626 (36) 20 841
fellow subsidiary companies
Loans from insurance group - 228 (100) -
Total liabilities 629 503 584 397 8 576 053
Equity
Ordinary shares 4 4 - 4
Share premium 14 604 11 304 29 11 455
Reserves attributable to 27 429 24 478 12 26 183
equityholders
Total ordinary equityholders 42 037 35 786 17 37 642
funds
NCNR preference shares 3 000 3 000 - 3 000
Total equity 45 037 38 786 16 40 642
Total equity and liabilities 674 540 623 183 8 616 695
Statement of cash flows - IFRS
Six months ended Year ended
31 December 30 June
R million 2011 2010 2011
Cash flows from operating activities
Cash receipts from customers 29 455 28 208 56 932
Cash paid to customers, suppliers (21 372) (23 076) (42 172)
and employees
Dividends received 1 184 1 407 2 721
Ordinary dividends paid (3 361) (1 354) (3 072)
Preference dividends paid (92) (106) (201)
Net cash flows from operating 5 814 5 079 14 208
activities
Increase in income-earning assets (33 060) (31 458) (35 676)
Increase in deposits and other 29 605 30 648 30 214
liabilities
Net cash utilised in operations (3 455) (810) (5 462)
Tax paid (1 634) (758) (2 333)
Net cash inflow from operating 725 3 511 6 413
activities
Cash flows from investing activities
Acquisition of property and (1 195) (1 021) (2 187)
equipment
Proceeds from the disposal of 105 57 192
property and equipment
Proceeds on the disposal of - 688 967
subsidiaries
Acquisition of associates and joint (36) (185) (96)
ventures
Proceeds on disposal from associates - 1 021 1 530
and joint ventures
Proceeds on disposal of investment - - (69)
securities
Acquisition of intangible assets (14) (16) (205)
Net cash (outflow)/inflow from (1 140) 544 132
investing activities
Cash flows from financing activities
Proceeds from share issue 3 149 339 490
Repayment of long-term liabilities (809) (120) (760)
Net cash inflow/(outflow) from 2 340 219 (270)
financing activities
Net increase in cash and cash 1 925 4 274 6 275
equivalents
Cash and cash equivalents at the 29 012 22 745 22 745
beginning of the year
Cash and cash equivalents at the end 30 937 27 019 29 020
of the period
Effect of exchange rate changes on - - (8)
cash and cash equivalents
Cash and cash equivalents at the end 30 937 27 019 29 012
of the period
Statement of changes in equity - IFRS for the six months ended 31 December
R million Share Share Share Cash flow
capital premium capital hedge
and reserve
share
premium
Balance as at 1 July 2010 4 10 965 10 969 (467)
Issue of share capital - 339 339 -
Total comprehensive income - - - (94)
Movement in other reserves - - - -
Ordinary dividends - - - -
Preference dividends - - - -
Contribution from parent - - - -
company
Balance as at 31 December 4 11 304 11 308 (561)
2010
Balance as at 1 July 2011 4 11 455 11 459 (452)
Issue of share capital - 3 149 3 149 -
Total comprehensive income - - (197)
Ordinary dividends - - - -
Preference dividends - - - -
Contribution from parent - - - -
company
Balance as at 31 December 4 14 604 14 608 (649)
2011
Statement of changes in equity - IFRS for the six months ended 31
December
R million Available- Share- Currency Other
for-sale based trans- reserves
reserve payment lation
reserve reserve
Balance as at 1 July 2010 530 411 (291) 1 345
Issue of share capital - - - -
Total comprehensive 85 - (155) -
income
Movement in other - - - -
reserves
Ordinary dividends - - - -
Preference dividends - - - -
Contribution from parent - (56) - -
company
Balance as at 31 December 615 355 (446) 1 345
2010
Balance as at 1 July 2011 443 342 (424) 1 345
Issue of share capital - - - -
Total comprehensive 75 - 173 -
income
Ordinary dividends - - - -
Preference dividends - - - -
Contribution from parent - 26 - -
company
Balance as at 31 December 518 368 (251) 1 345
2011
Statement of changes in equity - IFRS for the six months ended 31
December
R million Retained Reserves Non- Total
earnings attri- cumulative equity
butable non-
to redeemable
ordinary preference
equity- shares
holders
Balance as at 1 July 20 128 21 656 3 000 35 625
2010
Issue of share capital - - - 339
Total comprehensive 4 296 4 132 106 4 238
income
Movement in other 13 13 - 13
reserves
Ordinary dividends (1 354) (1 354) - (1 354)
Preference dividends - - (106) (106)
Contribution from parent 87 31 - 31
company
Balance as at 31 23 170 24 478 3 000 38 786
December 2010
Balance as at 1 July 24 929 26 183 3 000 40 642
2011
Issue of share capital - - - 3 149
Total comprehensive 4 529 4 580 92 4 672
income
Ordinary dividends (3 361) (3 361) - (3 361)
Preference dividends - - (92) (92)
Contribution from parent 1 27 - 27
company
Balance as at 31 26 098 27 429 3 000 45 037
December 2011
Reclassifications of prior year numbers
During the financial year the following income statement reclassifications were
made:
30 June Amount as Amount as Difference Explanation
2011 previously restated
Income reported
statement
R million
Non- 26 003 23 774 2 229 Fee and commission
interest expenses that are
income incremental or
directly attributable
to the generation of
fee and commission
income have been
reclassified out of
various operating
expense lines into
the fee and
commission expense
line. In addition,
the presentation of
fee and commission
expenses has been
updated by presenting
it as part of non-
interest income and
not as part of
operating expenses.
Operating (23 420) (21 191) (2 229) As per above.
expenses
Profit for 7 986 7 986 - No effect on profit
the year for the year.
31 December Amount as Amount as Difference Explanation
2010 previously restated
Income reported
statement
R million
Non- 13 591 12 461 1 130 Fee and commission
interest expenses that are
income incremental or
directly attributable
to the generation of
fee and commission
income have been
reclassified out of
various operating
expense lines into
the fee and
commission expense
line. In addition,
the presentation of
fee and commission
expenses has been
updated by presenting
it as part of non-
interest income and
not as part of
operating expenses.
Operating (11 499) (10 369) (1 130) As per above.
expenses
Profit for 4 402 4 402 - No effect on profit
the year for the year.
Date: 30/03/2012 14:06:02 Produced by the JSE SENS Department.
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