| Mon 31 May 2004, 8:22 | | PROFIT AND DIVIDEND ANNOUNCEMENT |
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ABSA GROUP LIMITED - PROFIT AND DIVIDEND ANNOUNCEMENT
ABSA GROUP LIMITED
JSE Code: ASA
Issuer Code: AMAGB
ISIN: ZAE000013389
SALIENT FEATURES
Year ended 31 March
2004 2003 Change 2002
%
Income Statement (Rm)
Headline earnings 4,447 3,441 29.2 1,888
Attributable income 4,505 3,391 32.9 1,686
Balance Sheet (Rm)
Total assets 306,848 269,064 14.0 247,300
Total advances 222,395 199,297 11.6 183,860
Total deposits 234,380 222,056 5.5 213,766
Financial Performance (%)
Return on average equity 24.6 21.4 12.9
Return on average assets, excluding
acceptances 1.55 1.35 0.86
Operating Performance (%)
Net interest margin on average assets 3.40 3.45 3.82
Net interest margin on average interest-
bearing assets 3.87 3.80 4.11
Charge for impairment of advances 0.90 1.02 2.38
Non-performing advances to total
advances 3.8 5.1 5.2
Non-interest income as % of operating
income 52.5 50.8 47.9
Cost-to-income ratio 57.1 60.0 60.3
Share Statistics (cents)
Headline earnings per share 688.5 528.1 30.4 291.1
Diluted headline earnings per share 682.8 528.1 29.3 291.1
Earnings per share 697.5 520.5 34.0 260.0
Diluted earnings per share 691.7 520.5 32.9 260.0
Dividends per share relating to income
for the year 182.0 145.0 25.5 116.0
Dividend cover (times) 3.8 3.6 2.5
Net asset value per share 2,996 2,589 15.7 2,354
Capital adequacy (%)
Absa Bank 12.3 11.5 10.2
Absa Group 13.0 12.5 11.2
GROUP INCOME STATEMENT
For the year ended 31 March
2004 2003 Change 2002
Rm Rm % Rm
Interest income 28,901 30,299 (4.6) 24,517
Interest expense (19,183) (21,467) 10.6 (16,133)
Net interest income 9,718 8,832 10.0 8,384
Impairment of advances (1,900) (1,957) 2.9 (4,042)
Income from lending activities 7,818 6,875 13.7 4,342
Non-interest income 10,753 9,127 17.8 7,694
Operating income 18,571 16,002 16.1 12,036
Operating expenditure (11,679) (10,780) (8.3) (9,700)
Indirect taxation (672) (695) 3.3 (649)
Impairment charge (116) (54) (114.8) (144)
Net income from operations 6,104 4,473 36.5 1,543
Share of associated companies` income 119 92 29.3 100
Net income before taxation 6,223 4,565 36.3 1,643
Taxation (1,627) (1,104) (47.4) (337)
Net income after taxation 4,596 3,461 32.8 1,306
Minority shareholders` interest (91) (70) (30.0) 380
Net income attributable to
shareholders 4,505 3,391 32.9 1,686
Headline earnings 4,447 3,441 29.2 1,888
DETERMINATION OF HEADLINE EARNINGS
For the year ended 31 March
2004 2003 Change 2002
Rm Rm % Rm
Net income attributable to shareholders 4,505 3,391 32.9 1,686
Adjustments for:
Net profit on disposal of property and
equipment (45) (30) (50.0) -
Profit on disposal of `available-for-
sale` assets (150) - (100,0) -
Profit on disposal of strategic invest-
ments (16) (16) - 26
Impairment of strategic investments,
associates and property 104 - 100.0 -
Goodwill written-off and impaired 49 96 (49.0) 176
Headline earnings 4,447 3,441 29.2 1,888
Number of shares in issue (000s) 651,055 651,547 651,547
Weighted average number of shares (000s) 645,890 651,547 648,580
Weighted average diluted number of
shares (000s) 651,333 651,547 648,580
GROUP BALANCE SHEET
At 31 March
2004 2003 Change 2002
Rm Rm % Rm
Assets
Cash and short-term assets 14,068 12,617 11.5 11,688
Money market assets 3,688 5,084 (27.5) 5,233
Capital market assets 9,161 10,471 (12.5) 10,095
Statutory liquid asset portfolio 12,598 12,970 (2.9) 13,677
Advances 222,395 199,297 11.6 183,860
Other assets 34,113 19,466 75.2 12,965
Investments 5,792 3,506 65.2 3,399
Subsidiary company - - - 131
Associated companies 624 450 38.7 442
Property and equipment 2,597 2,613 (0.6) 2,552
Goodwill 84 132 (36.4) 16
Intangible assets 50 55 (9.1) 50
Deferred taxation 167 223 (25.1) 445
Taxation 28 15 86.7 53
Client liabilities under acceptances 1,483 2,165 (31.5) 2,694
Total assets 306,848 269,064 14.0 247,300
Liabilities
Deposits and current accounts 234,380 222,056 5.5 213,766
Deferred taxation 1,331 1,451 (8.3) 1,414
Taxation 567 327 73.4 740
Other liabilities 37,112 17,795 108.6 6,434
Provisions 1,272 1,081 17.7 919
Insurance funds 4,115 1,396 194.8 1,453
Subordinated debt 7,067 5,686 24.3 4,394
Liabilities to clients under
acceptances 1,483 2,165 (31.5) 2,694
Total liabilities 287,327 251,957 14.0 231,814
Shareholders` funds
Share capital 1,291 1,303 (0.9) 1,303
Share premium 1,309 1,532 (14.6) 1,532
Reserves 16,750 14,031 19.4 12,500
Shareholders` funds 19,350 16,866 14.7 15,335
Minority shareholders` interest 171 241 (29.0) 151
Total liabilities and shareholders`
funds 306,848 269,064 14.0 247,300
Contingencies 16,637 14,275 16.5 16,579
GROUP STATEMENT OF CHANGES IN EQUITY
At 31 March
2004 2003 2002
Rm Rm Rm
Share capital 1,291 1,303 1,303
Opening balance 1,303 1,303 1,297
Shares issued - - 6
Shares bought back (1) - -
Consolidation of share incentive trust (11) - -
Share premium 1,309 1,532 1,532
Opening balance 1,532 1,532 1,532
Utilised during share buy back (19) - -
Consolidation of share incentive trust (204) - -
Non-distributable reserves 755 443 1,408
Opening balance 443 1,408 749
AC 133 opening adjustments in respect of:
- regulatory general credit risk reserve 451 - -
- available-for-sale assets reserve (78) - -
- value of investments held by short-
term insurance companies 134 - -
Movement in foreign currency
translation reserve (286) (711) 549
Movement in regulatory general credit
risk reserve (119) - -
Movement in available-for-sale assets
reserve (2) - -
Movement in cash flow hedges reserve 95 - -
Insurance contingency reserve: transfer
from distributable reserves 34 (5) 2
Changes in value of investments held
by short-term insurance companies (5) (300) 12
Associated companies` earnings 88 51 96
Distributable reserves 15,995 13,588 11,092
Opening balance 13,588 11,092 10,291
AC 133 opening adjustment (1,165) - -
Consolidation of share incentive trust 97 - -
Transfer to insurance contingency
reserve (34) (29) (2)
Transfer to non-distributable reserves (92) (65) (73)
Transfer to regulatory general credit
risk reserve 119 - -
Attributable income 4,505 3,391 1,686
Dividends paid during the year (1,023) (801) (810)
Total shareholders` funds at end of year 19,350 16,866 15,335
GROUP CASH FLOW STATEMENT
Year ended 31 March
2004 2003 2002
Rm Rm Rm
Cash retained from operating activities 3,026 1,177 4,767
Net cash inflow from operating
activities 8,206 6,908 6,185
Net (decrease)/increase in operating
funds (3,290) (3,802) 4
Taxation paid (1,890) (1,929) (1,422)
Cash utilised in investing activities (2,780) (1,012) (1,690)
Cash flows from financing activities 1,509 1,484 1,606
Other movements (304) (720) 603
Increase in cash and cash equivalents 1,451 929 5,286
Cash and short-term assets
-at beginning of year 12,617 11,688 6,402
-at end of year 14,068 12,617 11,688
PROFIT CONTRIBUTION BY BUSINESS AREA
For the year ended 31 March
2004 2003 Change 2002
Rm Rm % Rm
Personal banking 1,497 941 59.1 (215)
Absa Card 355 279 27.2 281
Absa Home Loans 764 447 70.9 443
Repossessed Properties (142) (241) 41.1 (246)
Absa Private Bank 1 - 100.0 5
Personal Financial Services 129 129 - 118
Retail Banking Services 263 231 13.9 125
Flexi Banking Services 125 96 30.2 43
Meeg Bank 2 - 100.0 -
UniFer - - - (984)
Commercial banking 1,266 932 35.8 893
Business Banking 821 589 39.4 601
Absa Vehicle and Asset Finance (AVAF) 403 289 39.4 239
MLS Bank 42 54 (22.2) 53
Wholesale banking 684 807 (15.2) 691
Domestic operations 750 697 7.6 612
International operations (66) 110 (160.0) 79
African operations 75 91 (17.6) 59
Total banking 3,522 2,771 27.1 1,428
Absa Financial Services 890 604 47.4 502
Other 35 66 (47.0) (42)
Total headline earnings 4,447 3,441 29.2 1,888
Absa Group Limited
Profit and dividend announcement
Introduction
The 2003/2004 financial year has been one of the most successful in the history
of Absa Group Limited.
All the Group`s stakeholders - and shareholders in particular - benefited from
the strong growth of 29,2% in headline earnings to R4 447 million. Headline
earnings per share increased by 30,4% to 688,5 cents per share compared with the
528,1 cents per share for the previous year.
Return on average shareholders` funds has been lifted to an all-time high of
24,6%, well in excess of the Group`s cost of equity of 16,6% over this period.
A final dividend of 110,0 cents per share has been declared, bringing the growth
in dividends for the year to 25,5%. This translates into a dividend cover of 3,8
times and a total dividend for the year of 182,0 cents.
During the period under review, the accounting statement AC 133 - Financial
Instruments: Recognition and Measurement was adopted for the first time. The
introduction of AC 133, the reduction in interest rates and the moderate
recovery of domestic equity markets during the reporting period had a positive
impact of R292 million on the results for the year. When the effect of AC 133 is
excluded from the results, the growth in headline earnings amounts to 20,7%.
The most notable performance came from personal and commercial market banking,
which flourished in an environment characterised by lower inflation and a
decline in the prime interest rate. The wholesale market continued to be
challenging.
Diluted earnings per share
The JSE Securities Exchange South Africa (JSE) issued a directive to listed
companies to consolidate their employee share trusts. In Absa`s case, this had
no material impact on reported earnings. However, this has led to a reduction of
R215 million in capital and share premium as disclosed in the statement of
changes in equity.
As a result of the strong improvement in the Group`s share price during the
year, the share options granted to staff appreciated in value. As a
consequence, headline earnings per share were diluted from 688,5 cents per share
to 682,8 cents per share.
Accounting policies
Because of the favourable movements in financial markets, the adoption of
accounting statement AC 133 impacted positively on the Group`s financial results
for the year under review.
Prospective application of the statement is required and this necessitated
certain adjustments to the Group`s opening equity. These transitional
adjustments are dealt with in greater detail under the heading `Net asset
value`.
Headline earnings determined on a post-AC 133 basis were R292 million higher
than those prepared on a pre-AC 133 basis. This increase resulted from the
following areas:
Rm
Net interest income 398
Impairment provisions for credit losses (159)
Non-interest income 419
Taxation (216)
Non-headline earnings items (150)
Increase in headline earnings 292
The additional net interest income of R398 million is largely attributable to
the unwinding of the net present value impairment as the maturity date of the
collection of non-performing loans approaches.
The additional impairment provision for credit losses of R159 million was
influenced by a charge of R362 million for the net present value impairment of
newly identified non-performing loans. This has been offset, to some extent, by
the reduction in the net present value impairment of non-performing loans
resulting from the reduction in interest rates.
The additional non-interest income of R419 million is mainly attributable to
fair value adjustments to the listed equity portfolio of Absa Insurance Company
Limited.
It is evident from the above that the change in accounting practice introduced
by AC 133 is likely to lead to increased earnings volatility in periods
characterised by substantial changes in interest rates and equity markets.
The Group`s financial statements comply in all material respects with the South
African Statements of Generally Accepted Accounting Practice. Apart from the
implementation of AC 133 and the consolidation of the employee share trust, they
are consistent with those applied in the previous year.
KPMG Incorporated. and Ernst & Young have audited the results for the year ended
31 March 2004. Their unqualified audit opinion is available for inspection at
the registered office of the Company.
Operating environment
Despite one of the strongest and most widely based global commodity price booms
in decades, the strong rand had an overriding effect on the supply side of the
economy during the past year.
Manufacturing and agriculture experienced recessionary conditions and the mining
sector managed to lift real output only slightly despite healthy international
demand.
In contrast, the expenditure side of the economy showed robust growth, expanding
by 4% in real terms during 2003. On average, motor vehicle sales volumes have
risen by nearly 10% and residential property prices have improved by
approximately 20% for the financial year under review.
Buoyant household expenditure growth was largely facilitated by lower inflation,
some tax relief for lower-income earners, and interest rate cuts since mid-2003.
CPIX inflation declined from 8,5% in April 2003 to 4,4% in March 2004 and the
prime overdraft rate dropped from 17% in April 2003 to 11,5% at year-end.
Group performance
Satisfactory advances growth of 11,6% and sound interest rate management
strategies enabled the Group to post double-digit growth in net interest income
despite a sharply declining interest rate cycle that brought the prime interest
rate to its lowest level in more than two decades. The Group`s net interest
margin declined marginally from 3,45% to 3,40%, largely as a result of the
endowment effect on capital and retail deposits.
A combination of leading edge credit scoring practices, a centralised approach
to credit and the prevailing low interest rates resulted in a notable
improvement in the quality of the advances book. As a result of this
improvement, the charge for impairment of advances declined marginally compared
with the previous year, despite the losses suffered by operations in Singapore.
It is pleasing to note that the ratio of impairments to average advances
declined to 0,90% (March 2003: 1,02%).
Non-interest income grew by 17,8% and enhanced the ratio of non-interest income
to total income to 52,5% - in line with the Group`s target of sustaining non-
interest income at greater than 50%.
Annuity income grew encouragingly, notably electronic banking revenue,
transaction fees and commissions. This category of income constitutes 62,4% of
non-interest income.
Insurance-related income increased by 36,1%, which is attributable to excellent
growth in short-term insurance underwriting and net life surpluses. The impact
of fair value accounting contributed to exceptional growth in investment income,
amounting to 124,6%.
Stringent cost management in the Group yielded good results in the past year.
Costs increased by 8,3% and the cost-to-income ratio improved to 57,1%.
The number of staff employed by the Group declined by 698 to 31 658 - mostly
through natural attrition. Although above inflation salary increases were
granted and incentive compensation showed a marked increase over the period,
staff costs increased by an acceptable 6,9%.
Segmental reporting
Personal banking
Personal banking increased its headline earnings contribution by more than 50%
to R1 497 million and improved its share of the Group`s earnings to 33%. Most of
the business units in this cluster benefited from high advances growth and low
bad debts.
The performance of the business units that serve the affluent, middle and mass
personal market segments were constrained by the endowment effect on deposits.
This was adequately offset by strong advances growth, higher asset margins and
the improvement in credit quality.
Absa Home Loans posted an outstanding performance by capitalising on the
favourable conditions in the residential property market.
There was strong growth in the acquisition of black customers as a result of a
specific focus on this market segment.
Commercial banking
Business banking and Absa Vehicle and Asset Finance (AVAF) reported strong
performances. Business banking achieved sound deposit growth, low bad debts and
solid asset growth in the areas of commercial property finance and the large
business market. Good progress has been made in targeting black-owned businesses
and enterprises in the consumables and tourism sectors.
AVAF maintained its market position in vehicle financing and is making inroads
into the marketing of other forms of asset finance. In addition, cost growth was
curtailed by the integration of outlets, back-office operations and credit
management into the existing Absa infrastructure.
MLS Bank Limited is in a restructuring and rebuilding phase and earnings
declined over the past year. The assets and liabilities of MLS Bank will be
transferred to Absa Bank with effect from 1 April 2004, but MLS will continue
trading as a separate division. It will be able to benefit from both the
infrastructure and cross-selling opportunities in the Group.
Wholesale banking
Domestic wholesale operations yielded satisfactory earnings growth, taking into
consideration the tough trading conditions in this market.
Advances growth in core banking products was modest and efforts were
successfully directed at expanding the transaction base of the Group. Treasury
lifted the net trading contribution by 25,8%, although its contribution to total
non-interest earnings remained at 9,2%.
Costs were contained through greater centralisation of back-office functions.
The results of the Group`s international wholesale operations continued to be
volatile, with good contributions coming from the London branch and Bankhaus
Wolbern. Unfortunately, substantial credit impairments in the Singapore branch
impeded the performance of the Group`s international operations. Some of these
losses stem from structured trade and commodity finance transactions, leading to
a re-evaluation of the Group`s risk approach to these types of transactions.
Financial services
Absa Life Limited, short-term insurer Absa Insurance Company Limited and Absa
Fund Managers performed admirably in the past year. The embedded value and value
of new business of the life operations grew significantly and the underwriting
results of the short-term insurance activities reached a record level.
The growth in the South African financial equity markets and the fair value of
the equity portfolio boosted earnings further. Absa Fund Managers benefited from
the significant growth in the Absa Money Market Fund.
Absa Brokers achieved higher sales volumes, despite difficult trading conditions
in the life assurance industry, and increased its contribution to the Group`s
non-interest revenue.
African operations
The headline earnings contribution from African operations outside South Africa
was satisfactory although the performance of Banco Austral (Mozambique), in
particular, was not as solid as that of the previous year. National Bank of
Commerce (Tanzania), and Bank Windhoek (Namibia) continued to achieve solid
results and no income was recognised in respect of the Group`s investment in the
Commercial Bank of Zimbabwe.
Net asset value
The Group`s net asset value increased by 15,7% from 2 589 cents per share to 2
996 cents per share. Certain transitional AC 133 adjustments were made to the
Group`s equity on 1 April 2003 - the net effect being a reduction of R658
million in shareholders` equity.
This negative adjustment emanates primarily from fair value adjustments that had
to be made in the areas of interest rate risk management and credit impairments.
The fair value adjustment for interest rate hedges that did not meet the
stringent criteria of AC 133 caused a negative adjustment to equity with the
introduction of AC 133. In addition, specific impairments had to be increased to
take account of the difference between the expected recoveries from the non-
performing advances portfolio and the net present value of these recoveries.
The impact of these adjustments was cushioned by a net reduction in the general
provision/portfolio impairment.
Capital adequacy
On the basis of the prescribed consolidated capital requirements of the South
African Reserve Bank (SARB), the Group`s capital was 13,0% of risk-weighted
assets as at 31 March 2004.
At the same time, Absa Bank`s capital adequacy was 12,3% of risk-weighted
assets, with the primary (Tier l) capital ratio at 7,7% (in excess of the
proposed regulatory requirement of 7,5%) and the secondary (Tier ll) capital
ratio at 4,6%. The improvement in the Tier l ratio from 6,5% in March 2003 to
the current 7,7% was assisted by the Bank`s profitability and the conversion of
compulsorily convertible debt of R1 000 million to shareholders` equity. In the
last quarter of the financial year, the Bank launched a domestic medium-term
note programme and successfully raised R1 500 million of Tier ll capital at
favourable rates.
Corporate governance
Good corporate governance is integral to Absa`s operations. Accordingly, Absa is
fully committed to the principles of the Code of Corporate Practices and Conduct
set out in the King Committee Report on corporate governance (King II).
During the year under review, a Directors` Affairs Committee was established
pursuant to an amendment to the Banks Act, to assist the board with regard to
corporate governance, board nominations and related matters.
During the latter half of 2003, leading ratings agency CA Ratings independently
reviewed Absa`s governance processes. A rating of aa-g was assigned (`extremely
sound corporate governance`).
Financial sector charter and the introduction of broad-based black and employee
ownership
The financial sector charter was signed on 17 October 2003. The charter, a
voluntary private sector initiative to address black economic empowerment in the
financial services industry, provides the basis for the sector`s engagement with
stakeholders, including the government.
The Group is committed to the enhancement of black economic empowerment in all
facets of the South African society as required by the financial sector charter.
The Group announced on 6 April 2004 that the board had proposed, subject to
approval by shareholders on 25 June 2004, the acquisition of 10% of the Group`s
enlarged shareholding by Batho Bonke, a broad-based black economic empowerment
grouping, as well as the introduction of an employee share ownership programme
(Esop) for Absa staff members. This share ownership programme will amount to a
maximum of 1% of the Group`s enlarged share capital.
Prospects
With monetary policy focus remaining firmly fixed on maintaining inflation at
between 3% and 6%, the Reserve Bank is likely to focus sharply on any factors
that might jeopardise this target. Spiralling international oil prices and
rising wage costs are issues of particular concern in this regard.
Base effects and the restoration of suppliers` pricing power are expected to
lead to moderate price pressures later in 2004. Pre-emptive monetary policy
tightening is expected by the fourth quarter of 2004.
Credit growth in the major consumer categories is nevertheless expected to be in
excess of inflation. The household debt-to-disposable-income ratio has shown
some improvement in the final quarter of 2003 and this bodes well for lending
activities by financial institutions. The expected higher interest rates could
have a moderating influence on both credit extension and household consumption
expenditure growth.
Given the quality of the advances book, the possible increase in interest rates
is not expected to have a notable effect on credit impairments. At the same
time, a lower inflation environment will dampen fee and service price increases.
In this environment, barring any major negative shocks to the local and global
economies and local equity markets, the Group expects to continue to deliver
real headline earnings growth.
On behalf of the board
D C Cronje E R Bosman
Chairman Group chief executive
31 May 2004
Declaration of ordinary dividend no 35
Notice is hereby given that a final dividend of 110,0 cents per ordinary share
has been declared and is payable to shareholders recorded in the register of the
company at the close of business on Friday, 25 June 2004.
In compliance with the requirements of Strate, the electronic settlement and
custody system used by the JSE Securities Exchange South Africa, the company has
determined the following salient dates for the payment of the dividend:
Last day to trade cum-dividend Friday, 18 June 2004
Shares commence trading ex-dividend Monday, 21 June 2004
Record date Friday, 25 June 2004
Payment of dividend Monday, 28 June 2004
Share certificates may not be dematerialised/rematerialised between Monday, 21
June 2004 and Friday, 25 June 2004, both days inclusive.
On Monday, 28 June 2004, the dividend will be electronically transferred to the
bank accounts of certificated shareholders who utilise this facility. In respect
of those who do not, cheques dated Monday, 28 June 2004, will be posted on or
about that date. Shareholders who have dematerialised their shares will have
their accounts, held at their central securities depository participant or
broker, credited on Monday, 28 June 2004.
On behalf of the board
W R Somerville
Group secretary
31 May 2004
SALIENT FEATURES EXCLUDING THE IMPACT OF AC 133
Year ended 31 March
2004 2003 Change 2002
%
Income statement (Rm)
Headline earnings 4,155 3,441 20.7 1,888
Balance sheet (Rm)
Total assets 306,650 269,064 14.0 247,300
Total advances 222,401 199,297 11.6 183,860
Total deposits 234,311 222,056 5.5 213,766
Financial performance (%)
Return on average equity 22.8 21.4 12.9
Return on average assets, excluding
acceptances 1.45 1.35 0.86
Operating performance (%)
Net interest margin on average
assets 3.26 3.45 3.82
Net interest margin on average
interest-bearing assets 3.71 3.80 4.11
Charge for impairment of advances 0.83 1.02 2.38
Non-performing advances to total
advances 3.8 5.1 5.2
Non-interest income as % of
operating income 52.6 50.8 47.9
Cost-to-income ratio 59.4 60.0 60.3
Share statistics (cents)
Headline earnings per share 643.3 528.1 21.8 291.1
Earnings per share 629.1 520.5 20.9 260.0
Dividends per share relating to
income for the year 182.0 145.0 25.5 116.0
Dividend cover (times) 3.5 3.6 2.5
Net asset value per share 3,029 2,589 17.0 2,354
GROUP INCOME STATEMENT EXCLUDING THE IMPACT OF AC 133
For the year ended 31 March
2004 2003 Change 2002
Rm Rm % Rm
Net interest income 9,320 8,832 5.5 8,384
Impairment of advances (1,741) (1,957) 11.0 (4,042)
Non-interest income 10,334 9,127 13.2 7,694
Operating income 17,913 16,002 11.9 12,036
Operating expenditure (11,679) (10,780) (8.3) (9,700)
Indirect taxation (672) (695) 3.3 (649)
Impairment charge (116) (54) (114.8) (144)
Net income from operations 5,446 4,473 21.8 1,543
Share of associated companies`
income 119 92 29.3 100
Net income before taxation 5,565 4,565 21.9 1,643
Taxation (1,411) (1,104) (27.8) (337)
Net income after taxation 4,154 3,461 20.0 1,306
Minority shareholders` interest (91) (70) (30.0) 380
Net income attributable to
shareholders 4,063 3,391 19.8 1,686
Non-headline earnings items 92 50 84.0 202
Headline earnings 4,155 3,441 20.7 1,888
GROUP BALANCE SHEET EXCLUDING THE IMPACT OF AC 133
At 31 March
2004 2003 Change
Rm Rm %
Assets
Cash and short-term assets 14,068 12,617 11.5
Money market assets 3,686 5,084 (27.5)
Capital market assets 9,172 10,471 (12.4)
Statutory liquid asset portfolio 12,587 12,970 (3.0)
Advances 222,401 199,297 11.6
Other assets and taxation 34,308 19,704 74.1
Investments 5,590 3,506 59.4
Associated companies 624 450 38.7
Property and equipment 2,597 2,613 (0.6)
Intangible assets 134 187 (28.3)
Client liabilities under acceptances 1,483 2,165 (31.5)
Total assets 306,650 269,064 14.0
Liabilities
Deposits and current accounts 234,311 222,056 5.5
Other liabilities and provisions 39,937 20,654 93.4
Insurance funds 4,115 1,396 194.8
Subordinated debt 7,067 5,686 24.3
Liabilities to clients under acceptances 1,483 2,165 (31.5)
Total liabilities 286,913 251,957 13.9
Shareholders` funds 19,566 16,866 16.0
Minority shareholders` interest 171 241 (29.0)
Total liabilities and shareholders` funds 306,650 269,064 14.0
Contingencies 16,637 14,275 16.5
AC 133 IMPACT ON THE GROUP INCOME STATEMENT
For the year ended 31 March
Post- Pre-
AC 133 AC 133 AC 133
2004 2004 Impact
Notes Rm Rm Rm
Net interest income 1 9,718 9,320 398
Impairment of advances 2 (1,900) (1,741) (159)
Non-interest income 3 10,753 10,334 419
Operating income 18,571 17,913 658
Operating expenditure (11,679) (11,679) -
Indirect taxation (672) (672) -
Impairment charge (116) (116) -
Net income from operations 6,104 5,446 658
Share of associated companies` income 119 119 -
Net income before taxation 6,223 5,565 658
Taxation (1,627) (1,411) (216)
Net income after taxation 4,596 4,154 442
Minority shareholders` interest (91) (91) -
Net income attributable to
shareholders 4,505 4,063 442
Non-headline earning items 4 (58) 92 (150)
Headline earnings 4,447 4,155 292
Notes
1. Net interest income 398
Non-qualifying interest rate hedges 53
Fair value adjustments on instruments designated as
`held-for-trading`:
- Deposits (69)
- Liquid asset portfolio (23)
- Fixed rate loans 60
Unwinding of present value adjustment in respect of NPLs 324
Origination costs - net deferral 53
2. Impairment of advances (159)
Specific impairment (net present value impact) (362)
Lower interest rate impact on net present value calculation 166
Portfolio impairment / general provision 37
3. Non-interest income 419
Fair value adjustments to equity portfolio 335
Fair value adjustments to other investments 84
4. Non-headline earning items (150)
Profit on disposal of `available-for-sale` assets (150)
Date: 31/05/2004 07:01:19 AM Produced by the JSE SENS Department
