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JSE ABSP
ABSP
Absa Bank Limited - Profit and Dividend Announcement
Absa Bank Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1986/004794/06)
ISIN: ZAE000079810
JSE share code: ABSP
(Absa Bank)
ABSA BANK LIMITED: PROFIT AND DIVIDEND ANNOUNCEMENT
UNAUDITED FINANCIAL RESULTS FOR SIX MONTHS ENDED 30 JUNE 2006
BANK SALIENT FEATURES
Six months ended Nine months
ended
30 June 31 December
2006 2005 2005
(Unaudited) (Unaudited) Change (Audited)
(Pro forma) %
Income statement (Rm)
Headline earnings 2 648 1 792 47,8 3 443
Profit attributable to 2 634 1 794 46,8 3 431
equity holders
Balance sheet (Rm)
Total assets 430 905 351 321 22,7 376 687
Loans and advances to 352 645 277 404 27,1 308 196
customers
Deposits due to customers 355 836 283 145 25,7 316 552
and banks
Financial performance (%)
Return on average equity 22,8 18,5 22,8
Return on average assets, 1,32 1,08
excluding acceptances 1,31
Loans to deposits ratio 99,1 98,0 97,4
Operating performance (%)
Net interest margin on 3,29 3,24 3,36
average
assets
Net interest margin on 3,55 3,52
average 3,59
interest-bearing assets
Impairment losses on 0,36 0,39
loans and 0,26
advances as % of average
loans and
advances to customers
Non-interest income as % 43,9 47,2
of total 46,0
operating income
Cost-to-income ratio 60,7 63,7 62,5
Effective tax rate - 29,1 30,1 30,1
excluding
indirect taxation
Share statistics (million)
(including "A" ordinary
shares)
Number of shares in issue 337,3 314,1 332,9
Weighted average number 335,4 309,6 321,0
of shares
Weighted average diluted 335,4 328,4
number of 321,0
shares
Share statistics (cents)
Headline earnings per 789,5 579,0 36,4 1 072,6
share
Diluted headline earnings 789,5 556,9 41,8 1 085,4
per share
Earnings per share 785,5 579,5 35,5 1 068,8
Diluted earnings per 785,5 557,4 40,9 1 081,6
share
Dividends per share 383,3 n/a
relating to 1 309,7
income for the period
Dividend cover (times) 2,1 n/a 0,8
Net asset value per share 7 668 6 334 21,1 6 545
Tangible net asset value 7 635 6 299 21,2 6 507
per share
Capital adequacy (%)
Absa Bank 12,7 11,0 10,7
BANK INCOME STATEMENT
Nine months
Six months ended ended
30 June 31 December
2006 2005 2005
(Unaudited) (Unaudited) (Audited)
(Pro forma) Change
Rm Rm % Rm
Net interest income 6 636 5 110 29,9 8 820
Interest and similar 16,944 12 515 35,4 21 892
income
Interest expense and
similar charges (10,308) (7,405) (39,2) (13 072)
Impairment losses on loans
and advances (586) (513) (14,2) (561)
6 050 4 597 31,6 8 259
Net fee and commission 4 337 4 080 6,3 6 348
income
Fee and commission income 4 347 4 097 6,1 6 364
Fee and commission expense (10) (17) 41,2 (16)
Gains and losses from
banking and trading 464 213 >100,0 688
activities
Other operating income 383 276 38,8 466
Net operating income 11 234 9 166 22,6 15 761
Operating expenditure (7 555) (6 590) (14,6) (10 919)
Operating expenses (7 172) (6 170) (16,2) (10 196)
Impairments - (14) 100,0 (54)
Indirect taxation (383) (406) 5,7 (669)
Share of profit of
associated undertakings
and joint venture 35 (8) >100,0 69
companies
Operating profit before 3 714 2 568 44,6 4 911
income tax
Taxation expense (1 080) (774) (39,5) (1 480)
Profit for the period 2 634 1 794 46,8 3 431
Attributable to:
Equity holders of the 2 634 1 794 46,8 3 431
Bank
Minority interest - - - -
2,634 1,794 46,8 3,431
Headline earnings 2 648 1 792 47,8 3 443
DETERMINATION OF HEADLINE EARNINGS
Six months ended Nine months
ended
30 June 31 December
2006 2005 2005
(Unaudited) (Unaudited) (Audited)
(Pro forma) Change
Rm Rm % Rm
Headline earnings is
determined as follows:
Profit attributable to
equity holders 2 634 1 794 46,8 3 431
Adjustments for:
Net loss/(profit) on
disposal of 0 (9) 100,0 (17)
property and equipment
Net loss/(profit) on
disposal of
available-for-sale assets
and strategic investments 14 (7) >100,0 15
Impairment costs - 14 14
(100,0)
Available-for-sale assets
and strategic investments - - - 14
Goodwill impaired - 14 (100,0) -
Headline earnings 2 648 1 792 47,8 3 443
BANK BALANCE SHEET
30 June 31 December
2006 2005 2005
(Unaudited) (Unaudited) (Audited)
(Pro forma) Change
Rm Rm % Rm
Assets
Cash, cash balances and 7 525 (26,7) 11 334
balances 10 269
with central banks
Statutory liquid asset 18 839 14 346 31,3 16 219
portfolio
Loans and advances to 12 148 3 345 >100,0 3 710
banks
Trading assets and hedging
derivative assets 26 823 32 951 (18,6) 23 863
Loans and advances to 352 645 277 404 27,1 308 196
customers
Loans to Group companies 1 151 1 942 (40,7) 2 058
Loans to holding company 1 566 1 245 25,8 1 402
Other assets 4 650 3 830 21,4 3 441
Investments 1 335 2 377 (43,8) 1 548
Investments in associated
undertakings and joint
ventures 665 256 >100,0 533
Intangible assets 112 112 - 120
Property and equipment 3 256 3 082 5,6 3 247
Deferred tax assets 29 39 (25,6) 55
Clients" liabilities under
acceptances 161 123 30,9 961
Total assets 430 905 351 321 22,7 376 687
Liabilities
Trading liabilities and
hedging derivative
liabilities 28 401 32 370 (12,3) 21 376
Deposits due to customers
and banks 355 836 283 145 25,7 316 552
Current tax liabilities 405 410 (1,2) 235
Policyholder liabilities
under insurance contracts 79 78 1,3 82
Borrowed funds 8 171 5 543 47,4 6 326
Other liabilities and
sundry provisions 9 938 7 922 25,4 7 822
Deferred tax liabilities 2 049 1 795 14,2 2 284
Liabilities to clients
under acceptances 161 123 30,9 961
Total liabilities 405 040 331 386 22,2 355 638
Equity
Capital and reserves
attributable to equity
holders:
Share capital 303 292 3,8 303
Share premium 5 415 2 852 89,9 4 665
Subordinated convertible
loan - 628 (100,0) -
Preference share capital 1 - >100,0 -
Preference share premium 2 991 - >100,0 -
Other reserves 1 551 1 721 (9,9) 1 817
Distributable reserves 15 604 14 401 8,4 14 224
25 865 19 894 30,0 21 009
Minority interest - 41 (100,0) 40
Total equity 25 865 19 935 29,7 21 049
Total equity and
liabilities 430 905 351 321 22,7 376 687
Contingent liabilities -
banking related 9 689 14 455 (33,0) 16 020
BANK STATEMENT OF CHANGES IN EQUITY
30 June 31 December
2006 2005 2005
(Unaudited) (Unaudited) (Audited)
(Pro forma) Change
Rm Rm % Rm
Share capital 303 292 3,8 303
Opening balance 303 292 3,8 292
Shares issued 0 - - -
Conversion of - -
subordinated debt to 11
capital -
Share premium 5 415 2 852 89,9 4 665
Opening balance 4 665 1 606 >100,0 1 606
Shares issued 750 1 250 (40,0) 2 447
Costs incurred - (4) 100,0 (5)
Conversion of
subordinated debt to 617
capital - - -
Preference share capital
Shares issued 1 - >100,0 -
Preference share premium 2 991 - >100,0 -
Shares issued 2 999 - >100,0 -
Costs incurred (8) - >(100,0) -
Borrowed funds -
subordinated convertible
loan - 628 (100,0) -
Opening balance - 628 (100,0) 628
Conversion of subordinated
debt to capital - - - (628)
Other reserves 1 551 1 721 (9,9) 1 817
Opening balance 1 817 1 729 5,1 1,717
Movement in foreign
currency translation
reserve 88 (29) >100,0 (116)
Movement in regulatory
general credit risk
reserve 250 - >100,0 -
Movement in available-for-
sale reserve 1 (19) >100,0 (16)
Movement in cash flow
hedges reserve (678) 39 >(100,0) 97
Movement in associated
undertakings and joint
ventures" retained
earnings reserve 35 (20) >100,0 69
Movement in share-based
payments reserve 63 21 >100,0 66
Disposal of reserves (25) - >(100,0) -
Distributable reserves 15 604 14 401 8,4 14 224
Opening balance 14 224 14 715 (3,3) 14 865
IFRS adjustments applied
prospectively - (278) 100,0 (278)
Transfer (to)/from
associated undertakings
and joint ventures"
retained earnings reserve (35) 20 >(100,0) (69)
Transfer to regulatory
general credit risk
reserve (250) - >(100,0) -
Disposal of reserves (217) - >(100,0) -
Profit attributable to
equity holders 2 634 1 794 46,8 3 431
Dividends paid during the
period (752) (1 850) 59,4 (3 725)
25 865 19 894 30,0 21 009
Minority interest - 41 (100,0) 40
Opening balance 40 40 - 41
Other reserve movements (40) 1 >(100,0) (1)
Minority share of profit - - - -
Total equity 25 865 19 935 29,7 21 049
BANK CASH FLOW STATEMENT
Nine months
Six months ended ended
30 June 31 December
2006 2005 2005
(Unaudited) (Unaudited) (Audited)
(Pro forma) Change
Rm Rm % Rm
Net cash flow (utilised (4 741) (73)
in)/from operating
activities 2 151 >(100,0)
Net cash flow (utilised
in)/from investing
activities (203) (184) (10,3) 2 615
Net cash from/(utilised
in) financing activities 4 989 (1 854) >100,0 (533)
Net increase in cash and
cash equivalents 45 113 (60,2) 2 009
Cash and cash equivalents
at the beginning of the
period 7 462 5 169 44,4 5 453
Effects of exchange rate
changes on cash on cash
equivalents 1 3 (66,7) -
Cash and cash equivalents
at the end of the period 7 508 5 285 42,1 7 462
PROFIT CONTRIBUTION BY BUSINESS AREA
Nine months
Six months ended ended
30 June 31 December
2006 2005 2005
(Unaudited) (Unaudited) (Audited)
(Pro forma) Change
Rm Rm % Rm
Banking operations
Retail banking 1 767 1 377 28,3 2 607
Absa Private Bank 126 107 17,8 153
Retail Banking Services 532 417 27,6 805
Absa Home Loans and 461 399 15,5 793
Repossessed
Properties
Absa Card 287 225 27,6 385
Absa Vehicle and Asset 361 229 57,6 471
Finance(AVAF)
Absa Corporate and
Business Banking Services 457 290 57,6 764
Absa Capital 541 360 50,3 530
African operations (14) (26) 46,2 (11)
Corporate centre 24 (175) >100,0 (160)
Capital and funding centre 44 (32) >100,0 (29)
Total banking 2 819 1 794 57,1 3 701
Costs relating to the
Barclays transaction - - - (120)
Synergy costs (after tax) (186) - >(100,0) (150)
Total attributable 2 634 1 794 46,8 3 431
earnings
Headline earnings 14 (2) >100,0 12
adjustments
Total headline earnings 2 648 1 792 47,8 3 443
PROFIT AND DIVIDEND ANNOUNCEMENT
Introduction
The listing of the non-cumulative, non-redeemable preference shares of Absa Bank
Limited (Absa Bank or the Company) on the JSE Limited has necessitated the
reporting of Absa Bank"s financial results and dividend declarations. Absa Bank
is a wholly-owned subsidiary of Absa Group Limited (Absa Group), which is listed
on the JSE Limited.
Absa Bank and its subsidiaries" interim financial results for the six months
ended 30 June 2006 and its provisional preference dividend declaration for the
period 25 April 2006 to 31 August 2006 are contained in this announcement.
Commentary pertaining to Absa Bank"s core subsidiaries can be found in the Absa
Group"s interim financial results announcement. The Absa Group announcement has
been published on the JSE Limited"s Securities Exchange News Services (Sens) and
the Absa Group"s website (www.absa.co.za) on 3 August 2006, and in the press on
4 August 2006.
Changes in accounting policies
Absa Bank"s financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS).
The prior year saw significant change, with the transition to IFRS. This changed
the measurement and recognition of certain items and had a significant impact on
the format of the financial statements, especially the income statement. In the
current six months, there were further changes to accounting standards. These
standards have been assessed and it is believed they do not have any material
impact on the financial statements. Consequently, no changes in accounting
policy requiring a restatement of Absa Bank"s financial position or results are
required.
Provisional declaration of dividend number 1: Non-cumulative, non-redeemable
preference shares
Notice is hereby given that preference dividend number 1 of 2 410,40 cents per
share has been provisionally declared for the period from 25 April 2006 to 31
August 2006.
The Absa Bank preference shares have a coupon rate of 63% of the prime overdraft
lending rate. The final dividend announcement, including the actual amount of
the dividend to be paid, will be made on 7 August 2006. The dividend is payable
on Monday, 4 September 2006, to shareholders of the non-cumulative, non-
redeemable preference shares (preference shareholders) recorded in the books of
the Company at the close of business on Friday, 1 September 2006.
In accordance with the provisions of Strate, the electronic settlement and
custody system used by the JSE Limited, the relevant dates for the payment of
the preference dividend are as follows:
Last day to trade cum dividend Friday, 25 August 2006
Shares trade ex dividend Monday, 28 August 2006
Record date Friday, 1 September 2006
Payment date Monday, 4 September 2006
Share certificates may not be dematerialised or rematerialised between Monday,
28 August 2006, and Friday, 1 September 2006, both days inclusive. Where
applicable, dividends in respect of certificated shares will be transferred
electronically to shareholders" bank accounts on payment date.
In the absence of specific mandates, dividend cheques will be posted to
shareholders. Shareholders who have dematerialised their share certificates will
have their accounts at their central securities depository participant or broker
credited on Monday, 4 September 2006.
On behalf of the board
W R Somerville
Group secretary
3 August 2006
Please note that the preference dividend calculation dates are 28 (29) February
and 31 August of each year and that the payment date may not be later than 45
days after the preference dividend calculation date.
Enquiries
Jacques Schindehutte
Group executive director
Absa Group Limited
4th floor, Absa Towers East, 170 Main Street, Johannesburg
Tel: (+2711) 350-4850 Fax: (+2711) 350-8433
e-Mail: jacquessc@absa.co.za
Eric Wasserman
Group executive: Group Finance
Absa Group Limited
4th floor, Absa Towers East, 170 Main Street, Johannesburg
Tel: (+2711) 350-5887 Fax: (+2711) 350-6487
e-Mail: ericwas@absa.co.za
Issued by:
Jacques Badenhorst
Investor Relations
Absa Group Limited
4th floor, Absa Towers East, 170 Main Street, Johannesburg
Tel: (+2711) 350-4061 Fax: (+2711) 350-6487
e-Mail: jacques.badenhorst@absa.co.za
Lead sponsor:
Merrill Lynch South Africa (Proprietary) Limited
Co-sponsor:
Absa Capital - Corporate Finance, a division of Absa Bank Limited
Johannesburg
3 August 2006
Date: 03/08/2006 07:01:10 AM Produced by the JSE SENS Department
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