| Tue 1 Mar 2016, 7:07 | | ABSA BANK LIMITED - Audited summary consolidated financial resultsfor the reporting period ended 31 December 2015 |
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ABSP 201603010003A
Audited summary consolidated financial results
for the reporting period ended 31 December 2015
Absa Bank Limited
Authorised financial services and registered credit provider (NCRCP7)
Registration number: 1986/004794/06
Incorporated in the Republic of South Africa
JSE share code: ABSP
ISIN: ZAE000079810
(Absa, Absa Bank, the Bank or the Company)
Audited summary consolidated financial results
for the reporting period ended 31 December 2015.
The annual consolidated and separate financial statements
are available upon request from Absa Bank Limited
Company Secretariat.
Audited summary consolidated financial results
for the reporting period ended 31 December 2015
Overview of results
Absa Bank Limited (“the Bank”) is a wholly owned subsidiary of Barclays Africa Group Limited (“the Group”), which is
listed on the exchange operated by the JSE Limited. These summary consolidated financial results are published to provide
information to holders of the Bank’s listed non-cumulative, non-redeemable preference shares.
Commentary relating to the Bank’s summary consolidated financial results is included in the Barclays Africa Group
Limited results, as presented to shareholders on 1 March 2016.
Basis of presentation
The Bank’s audited annual financial results have been prepared in accordance with the recognition and measurement
requirements of International Financial Reporting Standards (“IFRS”), interpretations issued by the IFRS Interpretations
Committee (“IFRS-IC”), the South African Institute of Chartered Accountants’ Financial Reporting Guides as issued by the
Accounting Practices Committee, Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council,
the JSE Listings Requirements and the requirements of the Companies Act. The principal accounting policies applied are
set out in the Group’s most recent annual consolidated financial statements.
The summary consolidated financial statements are prepared in accordance with the requirements of the JSE Limited
Listings Requirements for preliminary reports, and the requirements of the Companies Act applicable to summary
financial statements. The Listings Requirements require preliminary reports to be prepared in accordance with
the framework concepts and the measurement and recognition requirements of IFRS and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim
Financial Reporting ("IAS 34").
The information disclosed in the SENS is derived from the information contained in the audited annual consolidated
financial statements and does not contain full or complete disclosure details. Any investment decisions by shareholders
should be based on consideration of the audited annual consolidated financial statements, which is available on request.
The presentation and disclosure comply with International Accounting Standard IAS 34.
The preparation of financial information requires the use of estimates and assumptions about future conditions. Use of
available information and application of judgement are inherent in the formation of estimates. The accounting policies
that are deemed critical to the Bank’s results and financial position, in terms of the materiality of the items to which
the policies are applied, and which involve a high degree of judgement including the use of assumptions and estimation,
are impairment of loans and advances, goodwill impairment, fair value measurements, impairment of available-for-sale
financial assets, consolidation of structured or sponsored entities, post-retirement benefits, provisions, income taxes,
share-based payments, liabilities arising from claims made under short and long-term insurance contracts, and offsetting
of financial assets and liabilities.
Accounting policies
The accounting policies applied in preparing the audited summary consolidated annual financial statements are the same
as those in place for the reporting period ended 31 December 2014 except for:
- Business portfolio changes between operating segments.
Auditors’ report
PricewaterhouseCoopers Inc. and Ernst & Young Inc., the Bank’s independent auditors, have audited the consolidated
annual financial statements of the Bank from which management prepared the summary consolidated financial results. The
auditors have expressed an unqualified audit opinion on the consolidated annual financial statements. The summary
consolidated financial results comprise the summary consolidated statement of financial position at 31 December 2015,
summary consolidated statement of comprehensive income, summary consolidated statement of changes in equity and summary
consolidated statement of cash flows for the reporting period then ended and selected explanatory notes, excluding
items not indicated as audited. The audit report of the consolidated annual financial statements is available for
inspection at the Bank’s registered office.
These summary consolidated financial statements for the year ended 31 December 2015 have been audited by
PricewaterhouseCoopers Inc. and Ernst and Young Inc., who expressed an unmodified opinion thereon. The auditors also
expressed an unmodified opinion on the annual financial statements from which these summary consolidated financial
statements were derived.
Events after the reporting period
The directors are not aware of any events occurring between the reporting date of 31 December 2015 and the date of
authorisation of these summary consolidated financial results as defined in IAS 10 - Events after the Reporting Period
(“IAS 10”).
On behalf of the Board
W E Lucas-Bull M Ramos
Chairman Chief Executive Officer
Johannesburg
29 February 2016
Declaration of preference share dividend number 20
Absa Bank non-cumulative, non-redeemable preference shares (“Absa Bank preference shares”)
The Absa Bank preference shares have an effective coupon rate of 70% of Absa Bank’s prevailing prime overdraft lending
rate (prime rate). Absa Bank’s current prime rate is 10,25%.
Notice is hereby given that preference dividend number 20, equal to 70% of the average prime rate for 1 September 2015
to 29 February 2016, per Absa Bank preference share has been declared for the period 1 September 2015 to 29 February 2016.
The dividend is payable on Monday, 11 April 2016, to shareholders of the Absa Bank preference shares recorded in the
register of members of the Company at the close of business on Friday, 8 April 2016.
The directors of Absa Bank confirm that the Bank will satisfy the solvency and liquidity test immediately after
completion of the dividend distribution.
Based on the current prime rate, the preference dividend payable for the period 1 September 2015 to 29 February 2016
would indicatively be 3 395,47945 cents per Absa Bank preference share.
The dividend will be subject to dividend withholding tax at a rate of 15% that was introduced on 1 April 2012. In
accordance with paragraphs 11.17(a)(i) to (x) and 11.17(c) of the JSE Listings Requirements, the following additional
information is disclosed:
- The dividend has been declared out of income reserves.
- The local dividend tax rate is fifteen per centum (15%).
- The gross local dividend amount is 3 395,47945 cents per preference share for shareholders exempt from the dividend
tax.
- The net local dividend for shareholders subject to withholding tax at a rate of 15% amounts to 2 886,15753 cents per
preference share.
- Absa Bank currently has 4 944 839 preference shares in issue.
- Absa Bank’s income tax reference number is 9575117719.
In compliance with the requirements of Strate, the electronic settlement and custody system used by JSE Limited, the
following salient dates for the payment of the dividend are applicable:
Last day to trade cum dividend Friday, 1 April 2016
Shares commence trading ex dividend Monday, 4 April 2016
Record date Friday, 8 April 2016
Payment date Monday, 11 April 2016
Share certificates may not be dematerialised or rematerialised between Monday, 4 April 2016 and Friday, 8 April 2016,
both dates inclusive.
On Monday, 11 April 2016, the dividend will be electronically transferred to the bank accounts of certificated
shareholders.
The accounts of those shareholders who have dematerialised their shares (which are held at their participant or
broker) will also be credited on Monday, 11 April 2016.
On behalf of the Board
N R Drutman
Company Secretary
Johannesburg
1 March 2016
Absa Bank Limited is a company domiciled in South Africa. Its registered office is 7th Floor, Barclays Towers West,
15 Troye Street, Johannesburg, 2001.
Summary consolidated salient features
for the reporting period ended 31 December
2015 2014
Statement of comprehensive income (Rm)
Revenue 46 076 44 328
Operating expenses 26 390 25 309
Profit attributable to ordinary equity holders 9 726 8 995
Headline earnings(1) 9 657 8 787
Statement of financial position
Loans and advances to customers (Rm) 602 002 554 521
Total assets (Rm) 936 141 814 061
Deposits due to customers (Rm) 560 650 521 656
Loans-to-deposits and debt securities ratio (%) 87,4 88,5
Financial performance (%)
Return on average equity(2) 17,6 16,9
Return on average assets(2) 1,11 1,08
Return on average risk-weighted assets(2) 2,03 2,10
Non-performing loans ratio 3,3 3,8
Operating performance (%)
Net interest margin on average interest-bearing assets(2) 3,91 3,83
Credit loss ratio(2) 0,89 0,94
Non-interest income as % of revenue 40,3 41,5
Cost-to-income ratio 57,3 57,1
Jaws (0,33) (1,99)
Effective tax rate, excluding indirect taxation 26,7 27,7
Share statistics (million) (including “A” ordinary shares)
Number of ordinary shares in issue 412,8 396,2
Weighted average number of ordinary shares in issue 401,5 386,9
Weighted average diluted number of ordinary shares in issue 401,5 386,9
Share statistics (cents)
Headline earnings per ordinary share 2 405,2 2 271,1
Diluted headline earnings per ordinary share 2 405,2 2 271,1
Basic earnings per ordinary share 2 422,4 2 324,9
Diluted basic earnings per ordinary share 2 422,4 2 324,9
Dividends per ordinary share relating to income for the reporting period 2 365,6 2 022,2
Dividend cover (times) 1,0 1,1
Net asset value per ordinary share 13 537 13 702
Tangible net asset value per ordinary share 13 037 13 341
Capital adequacy (%)
Absa Bank Limited(2) 13,6 13,7
Common Equity Tier 1 (%)
Absa Bank Limited(2) 10,3 10,6
Notes
(1) After allowing for R321m (2014: R305m) profit attributable to preference equity holders.
(2) These ratios are unaudited.
Summary consolidated statement of financial position
as at 31 December
2015 2014
Note Rm Rm
Assets
Cash, cash balances and balances with central banks 26 101 21 419
Investment securities 73 065 70 618
Loans and advances to banks 58 585 47 599
Trading portfolio assets 116 455 78 572
Hedging portfolio assets 2 216 2 335
Other assets 18 840 9 311
Current tax assets 410 17
Non-current assets held for sale 1 109 250
Loans and advances to customers 602 002 554 521
Loans to Group companies 23 850 17 740
Investments in associates and joint ventures 962 839
Investment properties 518 252
Property and equipment 10 955 9 137
Goodwill and intangible assets 2 029 1 422
Deferred tax assets 44 29
Total assets 936 141 814 061
Liabilities
Deposits from banks 61 026 54 104
Trading portfolio liabilities 87 567 44 580
Hedging portfolio liabilities 4 531 2 577
Other liabilities 18 306 13 809
Provisions 1 970 1 857
Current tax liabilities 72 65
Deposits due to customers 560 650 521 656
Debt securities in issue 128 453 105 015
Borrowed funds 2 12 954 10 535
Deferred tax liabilities 115 937
Total liabilities 875 644 755 135
Equity
Capital and reserves
Attributable to equity holders:
Ordinary share capital 304 303
Ordinary share premium 21 455 16 465
Preference share capital 1 1
Preference share premium 4 643 4 643
Retained earnings 32 033 33 713
Other reserves 2 050 3 799
60 486 58 924
Non-controlling interest 11 2
Total equity 60 497 58 926
Total equity and liabilities 936 141 814 061
Summary consolidated statement of comprehensive income
for the reporting period ended 31 December
2015 2014
Note Rm Rm
Net interest income 27 524 25 928
Interest and similar income 60 979 54 810
Interest expense and similar charges (33 455) (28 882)
Non-interest income 18 552 18 400
Net fee and commission income 15 732 14 775
Fee and commission income 17 028 15 964
Fee and commission expense (1 296) (1 189)
Gains and losses from banking and trading activities 2 097 2 698
Gains and losses from investment activities 11 4
Other operating income 712 923
Total income 46 076 44 328
Impairment losses on loans and advances (5 113) (5 110)
Operating income before operating expenditure 40 963 39 218
Operating expenditure (26 390) (25 309)
Other expenses (999) (1 186)
Other impairments 3 43 (418)
Indirect taxation (1 042) (768)
Share of post-tax results of associates and joint ventures 136 147
Operating profit before income tax 13 710 12 870
Taxation expense (3 663) (3 570)
Profit for the reporting period 10 047 9 300
Profit attributable to:
Ordinary equity holders 9 726 8 995
Non-controlling interest - -
Preference equity holders 321 305
10 047 9 300
Earnings per share
Basic earnings per ordinary share (cents) 2 422,4 2 324,9
Diluted basic earnings per ordinary share (cents) 2 422,4 2 324,9
Profit for the reporting period 10 047 9 300
Other comprehensive income
Items that will not be reclassified to profit or loss: 9 2
Movement in retirement benefit fund assets and liabilities 9 2
Increase in retirement benefit surplus 12 3
Deferred tax (3) (1)
Items that are or may be subsequently reclassified to profit or loss: (2 429) (617)
Movement in foreign currency translation reserve 126 (327)
Differences on translation of foreign operations 393 70
Gains released to profit or loss (267) (397)
Movement in cash flow hedging reserve (2 222) (253)
Fair value (losses)/gains arising during the reporting period (2 028) 1 092
Amount removed from other comprehensive income and recognised in profit or loss (1 058) (1 443)
Deferred tax 864 98
Movement in available-for-sale reserve (333) (37)
Fair value losses arising during the reporting period (678) (98)
Release to profit or loss 210 44
Deferred tax 135 17
Total comprehensive income for the reporting period 7 627 8 685
Total comprehensive income attributable to:
Ordinary equity holders 7 306 8 380
Preference equity holders 321 305
7 627 8 685
Summary consolidated statement of changes in equity
for the reporting period ended 31 December
Bank
2015
Number of
ordinary Share Share
shares(1) capital premium
’000 Rm Rm
Balance at the beginning of the reporting period 396 151 303 16 465
Total comprehensive income for the reporting period - - -
Profit for the reporting period - - -
Other comprehensive income - - -
Dividends paid during the reporting period - - -
Shares issued 16 647 1 5 000
Purchase of Barclays Africa Group Limited shares in
respect of equity-settled share-based payment arrangements - - (10)
Movement in share-based payment reserve - - -
Value of employee services - - -
Conversion from cash-settled to equity-settled schemes - - -
Deferred tax - - -
Share of post-tax results of associates and joint ventures - - -
Disposal of interest in subsidiary(2) - - -
Acquisition of subsidiary - - -
Balance at the end of the reporting period 412 798 304 21 455
Bank
2015
Preference Preference
share share Retained
capital premium earnings
Rm Rm Rm
Balance at the beginning of the reporting period 1 4 643 33 713
Total comprehensive income for the reporting period - - 10 056
Profit for the reporting period - - 10 047
Other comprehensive income - - 9
Dividends paid during the reporting period - - (11 437)
Shares issued - - -
Purchase of Barclays Africa Group Limited shares in
respect of equity-settled share-based payment arrangements - - (154)
Movement in share-based payment reserve - - -
Value of employee services - - -
Conversion from cash-settled to equity-settled schemes - - -
Deferred tax - - -
Share of post-tax results of associates and joint ventures - - (136)
Disposal of interest in subsidiary(2) - - (9)
Acquisition of subsidiary - - -
Balance at the end of the reporting period 1 4 643 32 033
Bank
2015
Total Available- Cash flow
other for-sale hedging
reserves reserve reserve
Rm Rm Rm
Balance at the beginning of the reporting period 3 799 937 351
Total comprehensive income for the reporting period (2 429) (333) (2 222)
Profit for the reporting period - - -
Other comprehensive income (2 429) (333) (2 222)
Dividends paid during the reporting period - - -
Shares issued - - -
Purchase of Barclays Africa Group Limited shares in
respect of equity-settled share-based payment arrangements - - -
Movement in share-based payment reserve 544 - -
Value of employee services 209 - -
Conversion from cash-settled to equity-settled schemes 372 - -
Deferred tax (37) - -
Share of post-tax results of associates and joint ventures 136 - -
Disposal of interest in subsidiary(2) - - -
Acquisition of subsidiary - - -
Balance at the end of the reporting period 2 050 604 (1 871)
Bank
2015
Foreign Share-
currency based
translation Capital payment
reserve reserve reserve
Rm Rm Rm
Balance at the beginning of the reporting period 273 1 422 3
Total comprehensive income for the reporting period 126 - -
Profit for the reporting period - - -
Other comprehensive income 126 - -
Dividends paid during the reporting period - - -
Shares issued - - -
Purchase of Barclays Africa Group Limited shares in
respect of equity-settled share-based payment arrangements - - -
Movement in share-based payment reserve - - 544
Value of employee services - - 209
Conversion from cash-settled to equity-settled schemes - - 372
Deferred tax - - (37)
Share of post-tax results of associates and joint ventures - - -
Disposal of interest in subsidiary(2) - - -
Acquisition of subsidiary - - -
Balance at the end of the reporting period 399 1 422 547
Bank
2015
Associates’ Total equity
and joint attributable
ventures’ to ordinary
reserve equity holders
Rm Rm
Balance at the beginning of the reporting period 813 58 924
Total comprehensive income for the reporting period - 7 627
Profit for the reporting period - 10 047
Other comprehensive income - (2 420)
Dividends paid during the reporting period - (11 437)
Shares issued - 5 001
Purchase of Barclays Africa Group Limited shares in
respect of equity-settled share-based payment arrangements - (164)
Movement in share-based payment reserve - 544
Value of employee services - 209
Conversion from cash-settled to equity-settled schemes - 372
Deferred tax - (37)
Share of post-tax results of associates and joint ventures 136 -
Disposal of interest in subsidiary(2) - (9)
Acquisition of subsidiary - -
Balance at the end of the reporting period 949 60 486
Bank
2015
Non-
control-
ling
interest -
ordinary Total
shares equity
Rm Rm
Balance at the beginning of the reporting period 2 58 926
Total comprehensive income for the reporting period - 7 627
Profit for the reporting period - 10 047
Other comprehensive income - (2 420)
Dividends paid during the reporting period - (11 437)
Shares issued - 5 001
Purchase of Barclays Africa Group Limited shares in
respect of equity-settled share-based payment arrangements - (164)
Movement in share-based payment reserve - 544
Value of employee services - 209
Conversion from cash-settled to equity-settled schemes - 372
Deferred tax - (37)
Share of post-tax results of associates and joint ventures - -
Disposal of interest in subsidiary(2) - (9)
Acquisition of subsidiary 9 9
Balance at the end of the reporting period 11 60 497
2014
Number of
ordinary Share Share
shares(1) capital premium
’000 Rm Rm
Balance at the beginning of the reporting period 383 117 303 13 465
Total comprehensive income for the reporting period - - -
Profit for the reporting period - - -
Other comprehensive income - - -
Dividends paid during the reporting period - - -
Shares issued 13 034 - 3 000
Purchase of Barclays Africa Group Limited shares in
respect of equity-settled share-based payment arrangements - - -
Movement in share-based payment reserve - - -
Value of employee services - - -
Share of post-tax results of associates and joint ventures - - -
Disposal of a non-core subsidiary - - -
Balance at the end of the reporting period 396 151 303 16 465
2014
Preference Preference
share share Retained
capital premium earnings
Rm Rm Rm
Balance at the beginning of the reporting period 1 4 643 34 506
Total comprehensive income for the reporting period - - 9 302
Profit for the reporting period - - 9 300
Other comprehensive income - - 2
Dividends paid during the reporting period - - (9 940)
Shares issued - - -
Purchase of Barclays Africa Group Limited shares in
respect of equity-settled share-based payment arrangements - - (8)
Movement in share-based payment reserve - - -
Value of employee services - - -
Share of post-tax results of associates and joint ventures - - (147)
Disposal of a non-core subsidiary - - -
Balance at the end of the reporting period 1 4 643 33 713
2014
Total Available- Cash flow
other for-sale hedging
reserves reserve reserve
Rm Rm Rm
Balance at the beginning of the reporting period 4 291 974 604
Total comprehensive income for the reporting period (617) (37) (253)
Profit for the reporting period - - -
Other comprehensive income (617) (37) (253)
Dividends paid during the reporting period - - -
Shares issued - - -
Purchase of Barclays Africa Group Limited shares in
respect of equity-settled share-based payment arrangements - - -
Movement in share-based payment reserve (22) - -
Value of employee services (22) - -
Share of post-tax results of associates and joint ventures 147 - -
Disposal of a non-core subsidiary - - -
Balance at the end of the reporting period 3 799 937 351
2014
Foreign Share-
currency based
translation Capital payment
reserve reserve reserve
Rm Rm Rm
Balance at the beginning of the reporting period 600 1 422 25
Total comprehensive income for the reporting period (327) - -
Profit for the reporting period - - -
Other comprehensive income (327) - -
Dividends paid during the reporting period - - -
Shares issued - - -
Purchase of Barclays Africa Group Limited shares in
respect of equity-settled share-based payment arrangements - - -
Movement in share-based payment reserve - - (22)
Value of employee services - - (22)
Share of post-tax results of associates and joint ventures - - -
Disposal of a non-core subsidiary - - -
Balance at the end of the reporting period 273 1 422 3
2014
Associates’ Total equity
and joint attributable
ventures’ to ordinary
reserve equity holders
Rm Rm
Balance at the beginning of the reporting period 666 57 209
Total comprehensive income for the reporting period - 8 685
Profit for the reporting period - 9 300
Other comprehensive income - (615)
Dividends paid during the reporting period - (9 940)
Shares issued - 3 000
Purchase of Barclays Africa Group Limited shares in
respect of equity-settled share-based payment arrangements - (8)
Movement in share-based payment reserve - (22)
Value of employee services - (22)
Share of post-tax results of associates and joint ventures 147 -
Disposal of a non-core subsidiary - -
Balance at the end of the reporting period 813 58 924
2014
Non-
control-
ling
interest -
ordinary Total
shares equity
Rm Rm
Balance at the beginning of the reporting period 50 57 259
Total comprehensive income for the reporting period - 8 685
Profit for the reporting period - 9 300
Other comprehensive income - (615)
Dividends paid during the reporting period - (9 940)
Shares issued - 3 000
Purchase of Barclays Africa Group Limited shares in
respect of equity-settled share-based payment arrangements - (8)
Movement in share-based payment reserve - (22)
Value of employee services - (22)
Share of post-tax results of associates and joint ventures - -
Disposal of a non-core subsidiary (48) (48)
Balance at the end of the reporting period 2 58 926
Notes
All movements are reflected net of taxation.
(1) This includes ordinary shares and “A” ordinary shares.
(2) This movement relates to certain subsidiaries being deregistered and the Bank’s equity being adjusted accordingly.
Summary consolidated statement of cash flows
for the reporting period ended 31 December
2015 2014
Note Rm Rm
Net cash generated from operating activities 12 055 12 859
Net cash utilised in investing activities (3 594) (2 179)
Net cash utilised in financing activities (4 101) (11 173)
Net increase/(decrease) in cash and cash equivalents 4 360 (493)
Cash and cash equivalents at the beginning of the reporting period 1 10 014 10 507
Cash and cash equivalents at the end of the reporting period 2 14 374 10 014
Notes to the statement of cash flows
1. Cash and cash equivalents at the beginning of the reporting period
Cash, cash balances and balances with central banks(1) 8 777 8 665
Loans and advances to banks(2) 1 237 1 842
10 014 10 507
2. Cash and cash equivalents at the end of the reporting period
Cash, cash balances and balances with central banks(1) 8 607 8 777
Loans and advances to banks(2) 5 767 1 237
14 374 10 014
Notes
(1) Includes coins and bank notes.
(2) Includes call advances, which are used as working capital for the Bank.
Summary notes to the consolidated financial results
for the reporting period ended 31 December
1. Non-current assets and non-current liabilities held for sale
During the reporting period disposals of non-current assets and liabilities held for sale occurred in RBB (including
Commercial Property Finance (“CPF”)). Other assets and liabilities disclosed remain classified as non-current assets held
for sale as the Bank has assessed that the sales remain highly probable.
The following movements in non-current assets held for sale were effected in the previous reporting period:
- RBB transferred investment securities and investment properties with a carrying value of R29m and Rnil respectively.
- The Head Office and other operations segment transferred property and equipment with a carrying value of R3m.
The CPF Equity division in RBB disposed of a non-core subsidiary with investment property with a carrying value of
R1 315m. Other disposals of non-current assets and liabilities held for sale occurred in the RBB, Wealth and Head Office
and other operations segments.
2. Borrowed funds
During the reporting period the significant movements in borrowed funds were as follows: R4 500m (2014: R500m) of subordinated
notes were issued and R2 000m (2014: R4 725m) were redeemed.
3. Other impairments
2015 2014
Rm Rm
(Reversal)/impairment raised on financial instruments (43) 17
Other impairments raised - 401
Goodwill - 1
Intangible assets - 127
Investments in associates and joint ventures - 2
Property and equipment - 253
Other - 18
(43) 418
4. Headline earnings
2015 2014
Gross Net(1) Gross Net(1)
Rm Rm Rm Rm
Headline earnings is determined as follows:
Profit attributable to ordinary equity holder 9 726 8 995
Total headline earnings adjustment: (69) (208)
IFRS 3 - Goodwill impairment - - 1 1
IFRS 5 - Gains on disposal of non-current assets held for sale - - (105) (94)
IAS 16 - Profit on disposal of property and equipment (17) (12) (16) (13)
IAS 21 - Recycled foreign currency translation reserve (267) (267) (397) (397)
IAS 27 - Profit on disposal of subsidiaries - - (44) (35)
IAS 28 - Impairment of investment in associates and joint ventures - - 2 2
IAS 36 - Other impairment - - 18 15
IAS 36 - Impairment of intangible assets - - 127 91
IAS 36 - Impairment of property and equipment - - 253 183
IAS 39 - Release of available-for-sale reserves 210 151 44 31
IAS 40 - Change in fair value of investment properties 73 59 8 8
Headline earnings/diluted headline earnings 9 657 8 787
Headline earnings per ordinary share (cents)/diluted headline earnings
per ordinary share (cents) 2 405,2 2 271,1
Note
(1) The net amounts are reflected after taxation.
5. Dividends per share
Bank
2015 2014
Rm Rm
Dividends declared to ordinary equity holders
Interim dividend (29 July 2015: 631,07 cents) (30 July 2014: 593,35 cents) 2 500 2 299
Special dividend (30 September 2015: 745,15 cents) (31 July 2015: 504,86 cents) 5 000 4 446
(5 December 2014: 516,10 cents) (8 April 2014: 638,38 cents)
Final dividend (1 March 2016: 484,49896 cents) (3 March 2015: 912,78268 cents) 2 000 3 616
9 500 10 361
Dividends declared to preference equity holders
Interim dividend (29 July 2015: 3 282,8082 cents) (30 July 2014: 3 197,4658 cents) 162 158
Final dividend (1 March 2016: 3 395,47945 cents) (3 March 2015: 3 210,8904 cents) 168 159
330 317
Dividends paid to ordinary equity holders
Final dividend (3 March 2015: 912,78268 cents) (11 February 2014: 754,3 cents) 3 616 2 890
Interim dividend (29 July 2015: 631,07 cents) (30 July 2014: 593,35 cents) 2 500 2 299
Special dividend (30 September 2015: 745,15 cents) (31 July 2015: 504,86 cents) 5 000 4 446
(5 December 2014: 516,10 cents) (8 April 2014: 638,38 cents)
11 116 9 635
Dividends paid to preference equity holders
Final dividend (3 March 2015: 3 210,8904 cents) (11 February 2014: 2 979,3151 cents) 159 147
Interim dividend (29 July 2015: 3 282,8082 cents) (30 July 2014: 3 197,4658 cents) 162 158
321 305
6. Acquisitions and disposals of businesses and other similar transactions
6.1 Acquisitions of businesses during the current reporting period
The Bank purchased additional shares in a non-core joint venture which resulted in an increase in the Bank’s effective
shareholding from 50% to 67%. The profit share that the Bank is entitled to is 74%. The acquisition occurred on 18 November 2015.
A bargain purchase amount of R4m was recognised in the statement of comprehensive income.
2015
Fair value
recognised on
acquisition
Rm
Consideration at November 2015:
Cash 14
Total consideration 14
Recognised amounts of identifiable assets acquired and liabilities
Other assets 5
Investment properties 292
Other liabilities (1)
Deferred tax liabilities (4)
Loans from subsidiaries (176)
Loans from Absa Group companies (90)
Total identifiable net assets 26
Total non-controlling interest (8)
Goodwill/(bargain purchase) (4)
Total 14
A summary of the total net cash outflow and cash and cash equivalents related to acquisitions and disposals of businesses and
other similar transactions is included below:
Bank
2015 2014
Rm Rm
Summary of net cash outflow due to acquisitions 14 -
6.2 Disposals of businesses during the current reporting period
There were no disposals of businesses during the current reporting period.
6.3 Acquisitions and disposals of businesses during the previous reporting period
The Bank made no acquisitions or disposals during the previous reporting period.
7. Related parties
There were no one-off significant transactions with related parties of the Bank during the current and previous
reporting periods.
8. Financial guarantee contracts
2015 2014
Rm Rm
Financial guarantee contracts 24 96
Financial guarantee contracts represent contracts where the Bank undertakes to make specified payments to a counterparty,
should the counterparty suffer a loss as a result of a specified debtor failing to make payment when due in accordance with
the terms of a debt instrument. This amount represents the maximum off-statement of financial position exposure.
9. Commitments
2015 2014
Rm Rm
Authorised capital expenditure
Contracted but not provided for 591 576
The Bank has capital commitments in respect of computer equipment and
property development. Management is confident that future net revenue
and funding will be sufficient to cover these commitments.
Operating lease payments due
No later than one year 758 856
Later than one year and no later than five years 1 742 1 631
Later than five years 956 709
3 456 3 196
The operating lease commitments comprise a number of separate
operating leases in relation to property 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.
Sponsorship payment due
No later than one year 147 282
Later than one year and no later than five years 177 307
324 589
The Bank has sponsorship commitments in respect of sports, arts and culture.
10. Contingencies
2015 2014
Rm Rm
Guarantees 31 266 28 076
Irrevocable debt facilities 138 807 114 614
Letters of credit 6 319 3 756
Other contingencies 21 7
176 413 146 453
Guarantees include performance and payment guarantee contracts.
Irrevocable facilities are commitments to extend credit where the Bank does not have the right to immediately
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.
Legal proceedings
The Bank is engaged in various litigation proceedings involving claims by and against it, which arise in the ordinary
course of business. The Bank does not expect the ultimate resolution of any proceedings, to which the Bank is party,
to have a significant adverse effect on the financial statements of the Bank. Provision is made for all liabilities
which are expected to materialise.
Regulatory matters
The scale of regulatory change remains challenging and the global financial crisis is resulting in a significant
tightening of regulation and changes to regulatory structures globally, especially for companies that are deemed to
be of systemic importance. Concurrently, there is continuing political and regulatory scrutiny of the operation of
the banking and consumer credit industries globally which, in some cases, is leading to increased regulation. The
nature and impact of future changes in the legal framework, policies and regulatory action cannot currently be fully
predicted and are beyond the Bank’s control, but especially in the area of banking regulation, are likely to have an
impact on the Bank’s businesses and earnings.
The Bank is continuously evaluating its compliance programmes and controls in general. As a consequence of these
compliance programmes and controls, including monitoring and review activities, the Bank has also adopted appropriate
remedial and/or mitigating steps, where necessary or advisable, and made disclosures on material findings as and when
appropriate.
Income taxes
The Bank is subject to income taxes in numerous jurisdictions and the calculation of the Bank’s tax charge and
provisions for income taxes necessarily involves a degree of estimation and judgement. There are many transactions
and calculations for which the ultimate tax treatment is uncertain or in respect of which the relevant tax authorities
may have indicated disagreement with the Bank’s treatment and accordingly the final tax charge cannot be determined
until resolution has been reached with the relevant tax authority. The Bank recognises liabilities for anticipated tax
audit issues based on estimates of whether additional taxes will be due after taking into account expert external advice
where appropriate. Where the final tax outcome of these matters is different from the amounts that were initially
recorded, such differences will impact the current and deferred income tax assets and liabilities in the reporting
period in which such determination is made. These risks are managed in accordance with the Bank’s Tax Risk Framework.
11. Segment reporting
2015 2014(1)
Rm Rm
11.1 Headline earnings contribution by segment
RBB 8 596 7 579
CIB 2 391 2 192
Wealth (81) (69)
Head Office, Treasury and other operations (1 249) (915)
9 657 8 787
2015 2014(1)
Rm Rm
11.2 Total income by segment
RBB 38 084 36 347
CIB 8 727 8 271
Wealth 463 467
Head Office, Treasury and other operations (1 198) (757)
46 076 44 328
2015 2014(1)
Rm Rm
11.3 Total internal revenue by segment
RBB (7 913) (8 184)
CIB 94 2 720
Wealth 60 57
Head Office, Treasury and other operations 10 700 8 703
2 941 3 296
2015 2014(1)
Rm Rm
11.4 Total assets by segment
RBB 704 825 664 819
CIB 489 402 406 607
Wealth 5 792 11 177
Head Office, Treasury and other operations (263 878) (268 542)
936 141 814 061
2015 2014(1)
Rm Rm
11.5 Total liabilities by segment
RBB 694 896 656 441
CIB 485 611 403 610
Wealth 5 861 11 246
Head Office, Treasury and other operations (310 724) (316 162)
875 644 755 135
Note
(1) Operational changes, management changes and associated changes to the way in which the CODM views the performance
of each business segment, have resulted in the reallocation of earnings, assets and liabilities between operating
segments. For details on the business portfolio changes, refer to note 51.1 of the audited annual consolidated and separate
financial statements of Absa Bank Limited approved on 29 February 2016.
12. Assets and liabilities not held at fair value
2015 2014(1)
Carrying Carrying
value Fair value value Fair value
Rm Rm Rm Rm
Financial assets
Balances with the South African Reserve Bank 17 459 17 459 12 621 12 621
Coins and bank notes 8 607 8 607 8 777 8 777
Money market assets 34 34 21 21
Cash, cash balances and balances with central banks 26 100 26 100 21 419 21 419
Loans and advances to banks 34 257 34 257 27 076 27 021
Other assets 17 354 17 354 7 914 8 203
Retail Banking 362 303 361 273 355 313 354 885
Credit cards 29 515 29 515 29 338 29 338
Instalment credit agreements 72 860 71 798 70 819 70 257
Loans to associates and joint ventures 16 176 16 176 13 012 13 012
Mortgages 225 431 225 441 225 501 225 544
Other loans and advances 343 343 404 404
Overdrafts 2 819 2 819 2 254 2 254
Personal and term loans 15 159 15 181 13 985 14 076
Business Banking 63 434 63 462 60 928 60 926
Mortgages (including CPF) 30 730 30 742 30 161 30 157
Overdrafts 18 159 18 175 18 148 18 128
Term loans 14 523 14 523 12 619 12 641
RBB Rest of Africa 22 22 - -
CIB 140 796 140 796 121 250 120 321
Wealth 5 350 5 350 5 234 5 234
Head Office, Treasury and other operations 696 696 901 901
Loans and advances to customers - net of impairment losses 572 579 571 577 543 626 542 267
Loans from Group companies 23 850 23 958 17 740 21 762
Total assets 674 140 673 246 617 775 620 672
Financial liabilities
Deposits from banks 44 394 44 394 34 495 35 834
Other liabilities 16 346 16 250 11 316 11 322
Call deposits 72 130 72 130 56 986 56 986
Cheque account deposits 150 842 150 842 146 568 146 568
Credit card deposits 2 002 2 002 1 932 1 932
Fixed deposits 118 278 118 390 114 646 115 371
Foreign currency deposits 26 168 26 168 21 723 21 723
Notice deposits 48 954 48 963 49 764 49 843
Other deposits 1 943 1 943 1 972 1 972
Saving and transmission deposits 122 522 122 522 108 849 108 849
Deposits due to customers 542 839 542 960 502 440 503 244
Debt securities in issue 121 730 119 153 99 735 100 100
Borrowed funds 12 954 13 323 10 535 10 885
Total liabilities 738 263 736 080 658 521 661 385
Note
(1) Operational changes, management changes and associated changes to the way in which the CODM views the performance
of each business segment, have resulted in the reallocation of earnings, assets and liabilities between operating
segments. For details on the business portfolio changes, refer to note 51.1 of the audited annual consolidated and
separate financial statements of Absa Bank Limited approved on 29 February 2016.
13. Assets and liabilities held at fair value
13.1 Fair value measurement and valuation processes
Financial assets and financial liabilities
The Bank has an established control framework with respect to the measurement of fair values. The framework includes a
Valuation Committee and an Independent Valuation Control team (“IVC”), which is independent from the front office.
The Valuation Committee, which comprises representatives from senior management, will formally approve valuation
policies and changes to valuation methodologies. Significant valuation issues are reported to the Barclays Africa Group
Audit and Compliance Committee.
The Valuation Committee is responsible for overseeing the valuation control process and will therefore consider the
appropriateness of valuation techniques and inputs for fair value measurement.
The IVC independently verifies the results of trading and investment operations and all significant fair value
measurements. They source independent data from external independent parties, as well as internal risk areas when
performing independent price verification for all financial instruments held at fair value. They also assess and
document the inputs obtained from external, independent sources to measure the fair value which supports conclusions
that valuations are performed in accordance with International Financial Reporting Standards (“IFRS”) and internal
valuation policies.
Investment properties
The fair value of investment properties is determined based on the most appropriate methodology applicable to the
specific property. Methodologies include the market comparable approach that reflects recent transaction prices for
similar properties, discounted cash flows and income capitalisation methodologies. In estimating the fair value of
the properties, the highest and best use of the properties is taken into account.
Where possible, the fair value of the Bank’s investment properties is determined through valuations performed by
external independent valuators. When the Bank’s internal valuations are different to that of the external independent
valuers, detailed procedures are performed to substantiate the differences, whereby the IVC verifies the procedures
performed by the front office and considers the appropriateness of any differences to external independent valuations.
13.2 Fair value measurements
Valuation inputs
IFRS 13 requires an entity to classify fair values measured and/or disclosed according to a hierarchy that reflects
the significance of observable market inputs. The three levels of the fair value hierarchy are defined as follows:
Quoted market prices - Level 1
Fair values are classified as Level 1 if they have been determined using observable prices in an active market. Such
fair values are determined with reference to unadjusted quoted prices for identical assets or liabilities in active
markets where the quoted price is readily available, and the price represents actual and regularly occurring market
transactions on an arm’s length basis. An active market is one in which transactions occur with sufficient volume and
frequency to provide pricing information on an ongoing basis.
Valuation technique using observable inputs - Level 2
Fair values classified as Level 2 have been determined using models for which inputs are observable in an active
market.
A valuation input is considered observable if it can be directly observed from transactions in an active market, or
if there is compelling external evidence demonstrating an executable exit price.
Valuation technique using significant unobservable inputs - Level 3
Fair values are classified as Level 3 if their determination incorporates significant inputs that are not based on
observable market data (unobservable inputs). An input is deemed significant if it is shown to contribute more than
10% to the fair value of an item. Unobservable input levels are generally determined based on observable inputs of
a similar nature, historical observations or other analytical techniques.
Judgemental inputs on valuation of principal instruments
The following summary sets out the principal instruments whose valuation may involve judgemental inputs:
Debt securities and treasury and other eligible bills
These instruments are valued, based on quoted market prices from an exchange, dealer, broker, industry group or
pricing service, where available. Where unavailable, fair value is determined by reference to quoted market prices
for similar instruments or, in the case of certain mortgage-backed securities, valuation techniques using inputs
derived from observable market data, and, where relevant, assumptions in respect of unobservable inputs.
Equity instruments
Equity instruments are valued, based on quoted market prices from an exchange, dealer, broker, industry group or
pricing service, where available. Where unavailable, fair value is determined by reference to quoted market prices
for similar instruments or by using valuation techniques using inputs derived from observable market data, and,
where relevant, assumptions in respect of unobservable inputs.
Also included in equity instruments are non-public investments, which include investments in venture capital
organisations. The fair value of these investments is determined using appropriate valuation methodologies which,
dependent on the nature of the investment, may include discounted cash flow analysis, enterprise value comparisons
with similar companies and price:earnings comparisons. For each investment, the relevant methodology is applied
consistently over time.
Derivatives
Derivative contracts can be exchange-traded or traded over the counter (“OTC”). OTC derivative contracts include
forward, swap and option contracts related to interest rates, bonds, foreign currencies, credit spreads, equity
prices and commodity prices or indices on these instruments. Fair values of derivatives are obtained from quoted
market prices, dealer price quotations, discounted cash flow and option pricing models.
Loans and advances
The fair value of loans and advances to banks and customers is determined by discounting contractual cash flows.
Discount factors are determined using the relevant forward base rates (as at valuation date) plus the originally
priced spread. Where a significant change in credit risk has occurred, an updated spread is used to reflect
valuation date pricing. Behavioural cash flow profiles, instead of contractual cash flow profiles, are used to
determine expected cash flows where contractual cash flow profiles would provide an inaccurate fair value.
Deposits, debt securities in issue and borrowed funds
Deposits, debt securities in issue and borrowed funds are valued using discounted cash flow models, applying rates
currently offered for issuances with similar characteristics. Where these instruments include embedded derivatives,
the embedded derivative component is valued using the methodology for derivatives.
The fair value of amortised cost deposits repayable on demand is considered to be equal to their carrying value.
For other financial liabilities at amortised cost the disclosed fair value approximates the carrying value because
the instruments are short term in nature or have interest rates that reprice frequently.
13.3 Fair value adjustments
The main valuation adjustments required to arrive at a fair value are described as follows:
Bid-offer valuation adjustments
For assets and liabilities where the Bank is not a market maker, mid-prices are adjusted to bid and offer prices
respectively unless the relevant mid-prices are reflective of the appropriate exit price as a practical expedient
given the nature of the underlying instruments. Bid-offer adjustments reflect expected close out strategy and, for
derivatives, the fact that they are managed on a portfolio basis. The methodology for determining the bid-offer
adjustment for a derivative portfolio will generally involve netting between long and short positions and the
bucketing of risk by strike and term in accordance with hedging strategy. Bid-offer levels are derived from market
sources, such as broker data. For those assets and liabilities where the Bank is a market maker and has the ability
to transact at, or better than, mid-price (which is the case for certain equity, bond and vanilla derivative markets),
the mid-price is used, since the bid-offer spread does not represent a transaction cost.
Uncollateralised derivative adjustments
A fair value adjustment is incorporated into uncollateralised derivative valuations to reflect the impact on fair
value of counterparty credit risk, as well as the cost of funding across all asset classes.
Model valuation adjustments
Valuation models are reviewed under the Bank’s model governance framework. This process identifies the assumptions
used and any model limitations (for example, if the model does not incorporate volatility skew). Where necessary, fair
value adjustments will be applied to take these factors into account. Model valuation adjustments are dependent on the
size of the portfolio, complexity of the model, whether the model is market standard and to what extent it incorporates
all known risk factors. All models and model valuation adjustments are subject to review on at least an annual basis.
13.4 Fair value hierarchy
The following table shows the Bank’s assets and liabilities that are recognised and subsequently measured at fair
value and are analysed by valuation techniques. The classification of assets and liabilities is based on the lowest
level of input that is significant to the fair value measurement in its entirety.
2015
Recurring fair value measurements Level 1 Level 2 Level 3 Total
Rm Rm Rm Rm
Financial assets
Cash, cash balances and balances with central banks - 1 - 1
Investment securities 46 507 25 273 1 285 73 065
Loans and advances to banks - 22 219 2 109 24 328
Trading and hedging portfolio assets 20 083 95 168 1 415 116 666
Debt instruments 18 674 7 957 897 27 528
Derivative assets - 79 235 518 79 753
Commodity derivatives - 223 - 223
Credit derivatives - 885 23 908
Equity derivatives - 2 118 43 2 161
Foreign exchange derivatives - 26 996 - 26 996
Interest rate derivatives - 49 013 452 49 465
Listed equity instruments - HFT 1 409 - - 1 409
Money market assets - 7 976 - 7 976
Other assets - - 17 17
Loans and advances to customers 3 21 909 7 511 29 423
Total financial assets 66 593 164 570 12 337 243 500
Financial liabilities
Deposits from banks - 16 625 7 16 632
Trading and hedging portfolio liabilities 1 242 90 640 216 92 098
Derivative liabilities - 90 640 216 90 856
Commodity derivatives - 440 - 440
Credit derivatives - 879 14 893
Equity derivatives - 3 768 57 3 825
Foreign exchange derivatives - 28 193 - 28 193
Interest rate derivatives - 57 360 145 57 505
Short positions 1 242 - - 1 242
Deposits due to customers 110 15 144 2 557 17 811
Debt securities in issue 678 5 421 624 6 723
Total financial liabilities 2 030 127 830 3 404 133 264
Non-financial assets
Commodities 2 005 - - 2 005
Investment properties - - 518 518
Non-recurring fair value measurements
Non-current assets held for sale(1) - - 109 109
2014
Recurring fair value measurements Level 1 Level 2 Level 3 Total
Rm Rm Rm Rm
Financial assets
Cash, cash balances and balances with central banks - - - -
Investment securities 48 973 19 329 2 316 70 618
Loans and advances to banks - 20 523 - 20 523
Trading and hedging portfolio assets 25 061 52 995 1 151 79 207
Debt instruments 24 433 4 743 870 30 046
Derivative assets 2 42 347 281 42 630
Commodity derivatives 2 348 - 350
Credit derivatives - 284 91 375
Equity derivatives - 1 011 29 1 040
Foreign exchange derivatives - 8 327 1 8 328
Interest rate derivatives - 32 377 160 32 537
Listed equity instruments - HFT 626 321 - 947
Money market assets - 5 584 - 5 584
Other assets - - 17 17
Loans and advances to customers 4 6 160 4 731 10 895
Total financial assets 74 038 99 007 8 215 181 260
Financial liabilities
Deposits from banks - 19 609 - 19 609
Trading and hedging portfolio liabilities 2 795 44 042 320 47 157
Derivative liabilities - 44 042 320 44 362
Commodity derivatives - 308 - 308
Credit derivatives - 324 39 363
Equity derivatives - 1 296 198 1 494
Foreign exchange derivatives - 9 931 7 9 938
Interest rate derivatives - 32 183 76 32 259
Short positions 2 795 - - 2 795
Deposits due to customers 80 13 606 5 530 19 216
Debt securities in issue 2 5 236 42 5 280
Total financial liabilities 2 877 82 493 5 892 91 262
Non-financial assets
Commodities 1 700 - - 1 700
Investment properties - - 252 252
Non-recurring fair value measurements
Non-current assets held for sale(1) - - 250 250
Note
(1) Includes certain items classified in terms of the requirements of IFRS 5 which are measured in terms of their
respective standards.
13.5 Measurement of assets and liabilities categorised at Level 2
The following table presents information about the valuation techniques and significant observable inputs used in
measuring assets and liabilities categorised as Level 2 in the fair value hierarchy:
Category of asset/liability Valuation techniques applied Significant observable inputs
Cash, cash balances and balances Discounted cash flow models Underlying price of market traded instruments
with central banks and/or interest rates
Loans and advances to banks Discounted cash flow models Interest rate and/or money market curves
Trading and hedging portfolio
assets and liabilities
Debt instruments Discounted cash flow models Underlying price of market traded instruments
and/or interest rates
Derivative assets
Commodity derivatives Discounted cash flow and/or option pricing, Spot price of physical or futures,
futures pricing and/or exchange traded fund interest rates and/or volatility
(“ETF”) models
Credit derivatives Discounted cash flow and/or credit Interest rate, recovery rate, credit spread
default swap models and/or quanto ratio
Equity derivatives Discounted cash flow, option pricing and/or Spot price, interest rate, volatility and/or
futures pricing models dividend stream
Foreign exchange derivatives Discounted cash flow and/or option pricing Spot price, interest rate and/or volatility
models
Interest rate derivatives Discounted cash flow and/or option pricing Interest rate curves, repurchase agreement
models curves, money market curves and/or volatility
Equity instruments Net asset value Underlying price of market traded instruments
Money market assets Discounted cash flow models Money market rates and/or interest rates
Loans and advances to customers Discounted cash flow models Interest rate curves and/or money market curves
Investment securities Listed equity: market bid price. Other items: Underlying price of the market traded
discounted cash flow models instruments interest rate curves
Deposits from banks Discounted cash flow models Interest rate curves and/or money market curves
Deposits due to customers Discounted cash flow models Interest rate curves and/or money market curves
Debt securities in issue and
other liabilities Discounted cash flow models Underlying price of the market traded
instrument and/or interest rate curves
13.6 Reconciliation of Level 3 assets and liabilities
A reconciliation of the opening balances to closing balances for all movements on Level 3 assets and liabilities is
set out below:
2015
Trading and
hedging Loans and Loans and
portfolio Other advances to advances to
assets assets customers banks
Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 1 151 17 4 731 -
Net interest income - - 488 -
Gains and losses from banking and trading activities 331 - - -
Gains and losses from investment activities - - - (18)
Purchases 16 - 5 108 2 127
Sales (83) - (2 816) -
Movement in other comprehensive income - - - -
Closing balance at the end of the reporting period 1 415 17 7 511 2 109
2015
Total
Investment Investment assets
securities properties at fair value
Rm Rm Rm
Opening balance at the beginning of the reporting period 2 316 252 8 467
Net interest income 78 - 566
Gains and losses from banking and trading activities - - 331
Gains and losses from investment activities 14 4 -
Purchases 14 294 7 559
Sales (1 172) (32) (4 103)
Movement in other comprehensive income 35 - 35
Closing balance at the end of the reporting period 1 285 518 12 855
2014
Trading and
hedging Loans and Loans and
portfolio Other advances to advances to
assets assets customers banks
Rm Rm Rm Rm
Opening balance at the beginning of the reporting period 1 037 16 6 477 -
Movement in other comprehensive income - - - -
Net interest income - 1 373 -
Gains and losses from banking and trading activities 173 - (29) -
Gains and losses from investment activities - - 2 -
Purchases - - 143 -
Sales (37) - (620) -
Settlements - - (1 615) -
Transferred to/(from) assets - - - -
Movement in/(out of) Level 3 (22) - - -
Closing balance at the end of the reporting period 1 151 17 4 731 -
2014
Investment Investment Total assets
securities properties at fair value
Rm Rm Rm
Opening balance at the beginning of the reporting period 2 313 240 10 083
Movement in other comprehensive income 5 - 5
Net interest income 69 - 443
Gains and losses from banking and trading activities (7) - 137
Gains and losses from investment activities (83) 12 (69)
Purchases 9 - 152
Sales (9) - (666)
Settlements - - (1 615)
Transferred to/(from) assets - - -
Movement in/(out of) Level 3 19 - (3)
Closing balance at the end of the reporting period 2 316 252 8 467
2015
Trading and
hedging
Deposits portfolio Deposits due
from Bank liabilities to customers
Rm Rm Rm
Opening balance at the beginning of the reporting period - 320 5 530
Net interest income - - -
Gains and losses from banking and trading activities - (21) -
Gains and losses from investment activities - - 132
Purchases - - -
Sales - - -
Movement in other comprehensive income - - -
Issues 7 - 3 112
Settlements - (83) (3 265)
Movement out of Level 3 - - (2 952)
Closing balance at the end of the reporting period 7 216 2 557
2015
Debt Total
securities liabilities
in issue at fair value
Rm Rm
Opening balance at the beginning of the reporting period 42 5 892
Net interest income - -
Gains and losses from banking and trading activities - (21)
Gains and losses from investment activities 172 304
Purchases - -
Sales - -
Movement in other comprehensive income - -
Issues 410 3 529
Settlements - (3 348)
Movement out of Level 3 - (2 952)
Closing balance at the end of the reporting period 624 3 404
2014
Trading and
hedging
Deposits portfolio Deposits due
from Bank liabilities to customers
Rm Rm Rm
Opening balance at the beginning of the reporting period - 542 7 138
Movement in other comprehensive income - (8) -
Net interest income - - 1
Gains and losses from banking and trading activities - (62) (1 501)
Sales - (75) -
Settlements - - (81)
Movement in/(out of) Level 3 - (77) (27)
Closing balance at the end of the reporting period - 320 5 530
2014
Debt Total
securities liabilities
in issue at fair value
Rm Rm
Opening balance at the beginning of the reporting period 35 7 715
Movement in other comprehensive income - (8)
Net interest income 1 2
Gains and losses from banking and trading activities 6 (1 557)
Sales - (75)
Settlements - (81)
Movement in/(out of) Level 3 - (104)
Closing balance at the end of the reporting period 42 5 892
13.6.1 Significant transfers between levels
During the previous reporting period, it was determined that significant transfers between levels of assets and
liabilities at fair value occurred.
Treasury bills of R18,5bn were transferred from Level 1 to Level 2, as these are held in an inactive market.
Transfers out of Level 3 and into Level 2 arise where unobservable inputs become observable and/or unobservable
inputs are no longer considered to be significant to the valuation of an instrument.
Transfers have been reflected as if they had taken place at the beginning of the year.
13.7 Unrealised gains and losses on Level 3 assets and liabilities
The total unrealised gains and losses for the reporting period on Level 3 positions held at the reporting date
are set out below:
2015
Trading and
hedging Loans and Non-current
portfolio advances to Investment Investment assets held Total assets
assets customers securities properties for sale at fair value
Rm Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities 96 (28) 48 - - 116
2014
Trading and
hedging Loans and Non-current
portfolio advances to Investment Investment assets held Total assets
assets customers securities properties for sale at fair value
Rm Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities 79 (28) - - - 51
2015
Trading and
hedging Debt Total
portfolio Other Deposits due securities liabilities at
liabilities liabilities to customers in issue fair value
Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities 79 - - - 79
2014
Trading and
hedging Debt Total
portfolio Other Deposits due securities liabilities at
liabilities liabilities to customers in issue fair value
Rm Rm Rm Rm Rm
Gains and losses from banking and
trading activities (116) - - - (116)
13.8 Sensitivity analysis of valuations using unobservable inputs
As part of the Bank’s risk management processes, stress tests are applied on the significant unobservable parameters to generate
a range of potentially possible alternative valuations. The assets and liabilities that most impact this sensitivity analysis are
those with the more illiquid and/or structured portfolios. The stresses are applied independently and do not take account of any
cross correlation between separate asset classes that would reduce the overall effect on the valuations.
The following table reflects how the unobservable parameters were changed in order to evaluate the sensitivities of Level 3
assets and liabilities:
Significant unobservable parameter Positive/(negative) variance applied to parameters
Credit spreads 100/(100) bps
Volatilities 10/(10)%
Basis curves 100/(100) bps
Yield curves and repo curves 100/(100) bps
Future earnings and marketability discounts 15/(15)%
Funding spreads 100/(100) bps
A significant parameter has been deemed to be one which may result in a charge to the profit or loss or a change in
the fair value asset or liability of more than 10% of the underlying value of the affected item. This is demonstrated by
the following sensitivity analysis which includes a reasonable range of possible outcomes:
2015
Potential Potential
effect recorded effect recorded
in profit and loss directly in equity
Favourable/ Favourable/
Significant (Unfavourable) (Unfavourable)
unobservable parameters Rm Rm
Deposits due to customers BAGL/Absa funding spread -/- -/-
Investment securities and investments Risks adjustment yield curves, future
linked to investment contracts earnings and marketability discount -/- -/-
Loans and advances to customers Credit spreads 235/246 -/-
Other assets Volatility, credit spreads -/- -/-
Trading and hedging portfolio
assets Volatility, credit spreads, basis curves,
yield curves, repo curves, funding spreads 107/107 -/-
Trading and hedging portfolio Volatility, credit spreads,
liabilities basis curves, yield curves,
repo curves,
funding spreads 15/15 -/-
Other liabilities Volatility, credit spreads -/- -/-
357/368 -/-
2014
Potential Potential
effect recorded effect recorded
in profit and loss directly in equity
Favourable/ Favourable/
Significant (Unfavourable) (Unfavourable)
unobservable parameters Rm Rm
Deposits due to customers BAGL/Absa funding spread -/- -/-
Investment securities Risks adjustment yield curves,
future earnings and marketability
discount, comparator multiples 131/131 -/-
Loans and advances to customers Credit spreads 1 037/23 -/-
Other assets Volatility, credit spreads 3/3 -/-
Trading and hedging portfolio
assets Volatility, credit spreads -/- -/-
Trading and hedging portfolio Volatility, credit spreads,
liabilities basis curves, yield curves,
repo curves,
funding spreads 34/34 -/-
1 205/191 -/-
13.9 Measurement of assets and liabilities at Level 3
The following table presents information about the valuation techniques and significant unobservable inputs used in
measuring assets and liabilities categorised as Level 3 in the fair value hierarchy:
2015 2014
Category of asset/ Valuation techniques Significant unobservable Range of estimates utilised
liability applied inputs for the unobservable inputs
Loans and Discounted cash flow and/or Credit spreads 0,96% to 3,99% 0,96% to 3,99%
advances to dividend yield models
customers
Investment Discounted cash flow models, Risk adjusted yield Discount rates between Discount rates
securities third-party valuations, curves, future earnings, 8% and 11,5%, between 9,1% and
earnings multiples and/or marketability discounts comparator multiples 17,9%, comparator
income capitalisation and/or comparator multiples between 5 and 10,5 multiples between
valuations 5 and 6
Trading and
hedging portfolio
assets and liabilities
Debt instruments Discounted cash flow models Credit spreads 0,9% to 3,5% 0,9% to 3,5%
Derivative assets
Credit derivatives Discounted cash flow and/or Credit spreads, recovery 0,0% to 23,64% 0% to 13,45%
credit default swap (hazard rates and/or quanto ratio
rate) models
Equity derivatives Discounted cash flow, option Volatility and/or dividend 17,82% to 67,71% 18,16% to 48,20%
pricing and/or futures pricing streams (greater than
models 3 years)
Foreign exchange Discounted cash flow and/or African basis curves (10,00%) to 10,50% (10,74%) to 6,53%
derivatives option pricing models (greater than 1 year)
Interest rate Discounted cash flow and/or Real yield curves 0,58% to 4,24% (1,56%) to 10,04%
derivatives option pricing models (greater than 1 year),
repurchase agreement
curves (greater than 1 year),
funding spreads
Deposits due to Discounted cash flow models Barclays Africa Group 1,52% to 2,15% 0,85% to 1,2%
customers Limited’s funding spreads
(greater than 5 years)
Debt securities Discounted cash flow models Funding curves (greater (0,20%) to 3,35% 1,28% to 1,38%
in issue than 5 years)
Investment Discounted cash flow models Estimates of periods in which 1 to 7 years 2 to 7 years
properties rental units will be disposed
of Annual selling price 0% to 6% 0% to 6%
escalations
Annual rental escalations 0% to 10% 0% to 10%
Expense ratios 26% to 51% 22% to 75%
Vacancy ratio 1% to 18% 2% to 15%
Income capitalisation rates 8% to 12% 10% to 12%
Risk adjusted discount rates 13% to 14% 14% to 16%
For those assets or liabilities held at amortised cost and disclosed in levels 2 and 3 in the fair value hierarchy,
the discounted cash flow valuation technique is used. Interest rates and money market curves are considered unobservable
inputs for items which mature after five years. However, if the items mature in less than five years, these inputs are
considered observable.
The sensitivity of the fair value measure is dependent on the unobservable inputs. Significant changes to the
unobservable inputs in isolation will have either a positive or negative impact on fair values.
13.10 Unrecognised (losses)/gains as a result of the use of valuation models using unobservable inputs
The amount that has yet to be recognised in the statement of comprehensive income that relates to the difference between the
transaction price and the amount that would have arisen had valuation models using unobservable inputs been used on initial
recognition, less amounts subsequently recognised, is as follows:
2015 2014
Rm Rm
Opening balance at the beginning of the reporting period (52) (55)
New transactions (91) (23)
Amounts recognised in profit and loss during the reporting period 38 26
Closing balance at the end of the reporting period (105) (52)
13.11 Third-party credit enhancements
There were no significant liabilities measured at fair value and issued with inseparable third-party credit
enhancements during the current and previous reporting period.
14. Reporting changes overview
The financial reporting changes that have had an impact on the Bank’s results for the comparative reporting period
ended 31 December 2014 include business portfolio changes between operating segments. Refer to note 51.1 of the audited
annual consolidated and separate financial statements of Absa Bank Limited.
Administration and contact details
Absa Bank Limited Registered office
Incorporated in the Republic of South Africa 7th Floor, Barclays Towers West
Registration number: 1986/004794/06 15 Troye Street, Johannesburg, 2001
Authorised financial services and registered PO Box 7735, Johannesburg, 2000
credit provider (NCRCP7)
JSE share code: ABSP and ABMN Switchboard: +27 11 350 4000
ISIN: ZAE000079810 barclaysafrica.com
Head Investor Relations Queries
Alan Hartdegen Please direct investor relations and annual report queries to
Telephone: +27 11 350 2598 groupinvestorrelations@barclaysafrica.com
Please direct media queries to groupmedia@barclaysafrica.com
For all customer and client queries, please go to www.absa.co.za for
the local customer contact information
Please direct queries relating to your Barclays Africa Bank shares to
questions@computershare.co.za
Please direct other queries regarding the Bank to
groupsec@barclaysafrica.com
Company Secretary
Nadine Drutman
Telephone: +27 11 350 5347
Head of Finance
Jason Quinn
Telephone: +27 11 350 7565
Transfer secretary ADR depositary
Computershare Investor Services (Pty) Ltd BNY Mellon
Telephone: +27 11 370 5000 Telephone: +1 212 815 2248
computershare.com/za/ bnymellon.com
Auditors Sponsors
Ernst & Young Inc. Lead independent sponsor
Telephone: +27 11 772 3000 J.P. Morgan Equities South Africa (Pty) Ltd
ey.com/ZA/en/Home Telephone: +27 11 507 0300
jpmorgan.com/pages/jpmorgan/emea/local/za
PricewaterhouseCoopers Inc. Joint sponsor
Telephone: +27 11 797 4000 Absa Bank Limited (Corporate and Investment Bank)
pwc.co.za Telephone: +27 11 895 6843
equitysponsor@absacapital.com
Date: 01/03/2016 07:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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