Nedbank Group - Audited final results 2013
Ref 3/14
24 February 2014
NEDBANK GROUP - AUDITED FINAL RESULTS 2013
Nedbank Group Limited ("Nedbank Group"), the majority-owned South African banking subsidiary of Old Mutual plc, released its audited summarised financial results for the year ended 31 December 2013 today, 24 February 2014.
The following is the full text of Nedbank Group's announcement:
"NEDBANK GROUP LIMITED
Audited financial results for the 12 months ended 31 December 2013
- Headline earnings increased 15,9% to R8 670m(1)
- Diluted headline earnings per share up 15,0% to 1 829 cents(1)
- NIR growth of 11,8% to R19 361m(1)
- ROE (excluding goodwill) increased to 17,2%
- Common-equity tier 1 ratio increased to 12,5% (2012: 11,6%)
- Full-year dividend per share up 19,0% to 895 cents
'Nedbank's growing franchise, together with the progress made with our strategic focus areas, has enabled the group once again to meet its target for growth in diluted headline earnings per share. In a challenging environment the group delivered a strong performance across a broad front, which resulted in improvements in both returns on assets and returns on equity.
Globally, capital flows have shifted in favour of developed markets, and conditions in emerging markets, including SA, are more volatile. Our historic focus on growing our transactional banking franchise, selective advances growth and prudent impairment methodologies, combined with our positive exposure to increased endowment, should position Nedbank favourably in an environment of rising interest rates.
Given the uncertain economic environment, forecast risk has increased. For the year ahead we are currently expecting organic growth in diluted headline earnings per share to be greater than the growth in nominal gross domestic product'.
Mike Brown
Chief Executive
Banking and economic environment
Globally, economic conditions improved during 2013, led by better prospects in key developed economies. In contrast, growth in emerging-market economies generally slowed during the year. The improved US environment has resulted in a tapering off of quantitative easing, and significant liquidity outflows from emerging markets and lower commodity prices led to currency depreciation in many emerging markets, in particular those with current and fiscal account deficits.
Locally, the economic environment remained challenging, with growth in gross domestic product (GDP) slowing to an expected 1,8% in 2013 and the current account and fiscal deficits continuing to widen. The downgrading of SA's sovereign credit rating by three of the major credit rating agencies in late 2012 and early 2013, now placing SA two notches above investment grade and the US commencement of the tapering off of quantitative easing contributed to the rand's 23,7% depreciation against the US dollar in 2013.
Growth in household credit demand fell to levels last seen during the global financial crisis as a result of lower overall wages due to strike action, persistently high unemployment rates and increases in administered prices, which, together with elevated levels of indebtedness, eroded consumer confidence.
Declining business confidence kept private sector investment at low levels. The demand for corporate credit generally fared better than household credit demand, as a modest increase in government fixed-capital investment on energy, transport and other infrastructure sectors provided some support.
Review of results
Nedbank Group performed well over the year ended 31 December 2013 ('the period'). The results reflect the tougher-than-anticipated economic environment offset by delivery on our strategic focus areas and continued internal momentum in building and growing the Nedbank franchise.
Headline earnings increased 15,9% to R8 670m (2012: R7 483m)(1), driven by good revenue growth, impairments increasing at a slower rate than net interest income and disciplined expense management.
Diluted headline earnings per share (HEPS) increased 15,0% to 1 829 cents (2012: 1 590 cents) and diluted earnings per share increased 15,1% to 1 822 cents (2012: 1 583 cents).(1)
We have continued to create value for our shareholders by increasing net asset value per share by 12,1% to 13 143 cents (2012: 11 721 cents) and dividends per share by 19,0% to 895 cents per share (2012: 752 cents per share).(1)
The group generated economic profit (EP) of R2 114m, up 39,0% (2012: R1 521m). The return on average ordinary shareholders' equity (ROE), excluding goodwill, increased to 17,2% (2012: 16,4%) and the ROE increased to 15,6% (2012: 14,8%), benefiting from an increased return on assets (ROA) of 1,23% (2012: 1,13%).
Nedbank Group is well capitalised, with the Basel III common-equity tier 1 ratio at 12,5% - at the top end of our internal target range (2012: Basel III pro forma ratio 11,6%). Funding and liquidity levels remained sound, with the surplus liquidity buffer at R28,0bn (2012: R24,4bn), and the final-quarter average long-term funding ratio was maintained at 26,2%.
Delivering sustainably to all our stakeholders
Our commitment to our vision to be Africa's most admired bank by delivering sustainably to all our stakeholders - staff, clients, shareholders, regulators, and communities - is demonstrated by the following:
For staff - providing employment to an additional 588 permanent staff in SA; investing R396m in training our people; 1 521 of our staffmembers participating in our Leading for Deep Green culture and values development programme; staff and culture survey results remaining good; and progressing well on staff transformation initiatives.
For clients - significantly investing in our distribution footprint to be a bank for all, with 334 additional ATMs and 28 reformatted 'branch of the future' outlets, with more to follow; systems uptime at multiyear highs; accelerating delivery in innovation, including market leading products such as PocketPOS™, MyFinancialLife™, the My eBills™ invoice issuing and payment system, the award-winning Nedbank App Suite™; offering clients a lower-priced credit life product with increased benefits; increasing loan payouts to R158,9bn (2012: R144bn) and assets under management by 26,5% to R190,3bn (2012: R150,5bn); and increasing total group client numbers by 9,8% to 6,7m in 2013 (2012: 6,1m).
For shareholders - delivering EP of R2 114m, increasing the ROE (excluding goodwill) to 17,2% and increasing the full-year dividend by 19,0%, ahead of 14,9% growth in HEPS; delivering total shareholder return of 16,0%; positioning the group for future shareholder value creation through our long-term, risk-mitigated and capital-efficient Pan-Africa banking strategy; and being voted as the Financial Times and The Banker magazine's 2013 SA Bank of the Year. Our 2012 Integrated Report was the overall winner of the 2013 Chartered Secretaries Southern Africa and JSE Annual Report awards.
For regulators - implementing Basel III successfully on 1 January 2013, with the group's common-equity tier 1 strengthening further to 12,5%; making cash taxation contributions of R8,0bn relating to direct, indirect, PAYE and other taxation; continuing with our strong, open and transparent relationships with all regulators and our commitment to responsible banking and insurance practices; and aspiring to be worldclass at managing risk and having appropriate remediation where required.
For communities - expanding our distribution footprint; contributing R413m to socioeconomic development since 2009 (2013: R111m); supporting 163 external bursars across 17 universities; maintaining our level 2 broad-based black economic empowerment (B-BBEE) contributor status for the fifth consecutive year; sourcing 78,1% of our procurement locally, improving on an already high benchmark; and being recognised as a leader in socially responsible banking at the 2013 African Banker Awards and winning the Sunday Times Top 100 Companies CSI Award.
Cluster performance
The group benefited from the diversified earnings streams from our clusters. Stronger earnings growth rates were achieved by our wholesale clusters, while earnings growth in Nedbank Retail and Nedbank Business Banking was impacted by higher impairments and continued investment for growth.
|
|
|
Headline |
|
||
|
|
% |
earnings |
ROE |
||
|
|
change |
(Rm) |
(%) |
||
|
Year-end |
|
2013 |
2012 |
2013 |
2012 |
|
Nedbank Capital |
20,6 |
1 726 |
1 431 |
29,4 |
25,4 |
|
Nedbank Corporate |
23,6 |
2 245 |
1 817 |
26,4 |
22,5 |
|
Nedbank Business Banking |
(1,6) |
929 |
944 |
19,4 |
21,5 |
|
Nedbank Retail |
(0,5) |
2 539 |
2 552 |
11,6 |
12,1 |
|
Nedbank Wealth |
25,3 |
900 |
718 |
36,2 |
29,7 |
|
Business clusters |
11,8 |
8 339 |
7 462 |
19,1 |
17,9 |
|
Centre, including Rest of Africa |
>100,0 |
331 |
21 |
|
|
|
Total |
15,9 |
8 670 |
7 483 |
15,6 |
14,8 |
Nedbank Capital produced an outstanding set of results. Growth in earnings came from good drawdowns in the investment banking pipeline and improvements in impairments to within the cluster's through-the-cycle target range.
Nedbank Corporate's strong earnings and ROE growth was achieved through excellent performance by Property Finance as a result of strong advances growth coupled with fair-value gains. Corporate Banking contributed to this achievement through continued growth in transactional income and increased liability revenues. This performance was underpinned by stable impairments and good expense management.
Nedbank Business Banking delivered headline earnings and an ROE similar to those in 2012, notwithstanding the single-client specific-impairments charge in June 2013. The full-year credit loss ratio (CLR) at 0,65% is within the target range due to the quality of client advances and proactive risk management practices. The strong growth in non-interest revenue (NIR) and asset payouts, mainly to existing clients, is reflective of good underlying business momentum, despite the protracted challenges facing the small-and-medium-enterprise sector in SA.
Nedbank Retail generated headline earnings of R2,5bn, which included absorbing a pretax charge of R323m in additional impairments as downside- risk protection for deteriorating levels of consumer credit health, fuelled by the high, industrywide unsecured lending growth rates in preceding years and resultant industry tightening of credit availability. The embedding of sound risk management practices and early comprehensive risk-mitigating actions resulted in the CLR of 2,16%, which is within the Retail CLR target range. Overall defaulted loans continued to decline, while coverage strengthened further.
The excellent momentum in sustainably repositioning the Retail Cluster, strategically and financially, was maintained in a very challenging macroeconomic and competitive environment. Investment in distribution and distinctive client value propositions is yielding significant client gains, with increases in related transactional, deposit and lending volumes contributing to good NIR growth - still ahead of expense growth. The proactive measures to derisk personal loans by slowing advances growth and offering lower priced credit life products with increased benefits have lowered NIR growth by one percentage point.
Nedbank Wealth achieved record headline earnings in 2013. The results were mainly attributable to strong growth in the areas of asset management, financial planning and stockbroking, as well as a significant year-on-year reduction in impairments.
Headline earnings at the centre represent, inter alia, an increase in earnings in the Rest of Africa Division, a reversal of R88m of insurance provisions following court rulings in our favour in the first half of the year, a small fair-value profit on hedging activities and net interest income (NII) earned on higher levels of surplus equity held at the centre. These were offset by an R60m portfolio provision raised in the second half of the year in view of various economic and regulatory uncertainties.
Detailed segmental information is available on the group's website at nedbankgroup.co.za under the financial information section.
Financial performance
NII
Net interest income grew 7,8% to R21 220m (2012: R19 680m)(1), with average interest-earning banking assets growth of 6,8% (2012 growth: 7,5%).
The net interest margin (NIM) increased to 3,57% (2012: 3,53%), led by liability margin gains from a lower cost of marginal wholesale funding, deposit mix benefits and slightly lower levels of average long-term debt, partially offset by a decrease in asset margins. Notwithstanding improved risk-adjusted pricing of new advances, the asset margin was impacted by mix changes from the planned slowdown in growth of personal loans.
Impairments charge on loans and advances
Impairments increased 7,0% to R5 565m (2012: R5 199m)(1). The CLR was similar to that of 2012 at 1,06% (2012: 1,05%), having improved from 1,31% at June 2013.
|
CLR (%) |
Dec |
Jun |
Dec |
|
|
2013 |
2013 |
2012 |
|
Specific impairments |
0,95 |
1,24 |
0,91 |
|
Portfolio impairments |
0,11 |
0,07 |
0,14 |
|
Total CLR |
1,06 |
1,31 |
1,05 |
Sound asset quality and proactive risk management resulted in lower levels of inflows into defaulted advances, which declined 9,4% to R17 455m (2012: R19 273m), and amounted to 2,95% of gross advances (2012: 3,58%).
All clusters reported CLR within their respective through-the-cycle target ranges. The total CLR remained above the group's target range due to the higher weighting of retail impairments. Nedbank Retail's CLR of 2,16% is up on the 2012 ratio of 2,01% due to the additional aforementioned R323m impairment charges. The six-month writeoff period for personal loans, methodology changes and steps taken in prior periods to reduce risk led to personal-loan defaulted advances peaking in May 2013 and the CLR improving since June 2013.
|
CLR (%) |
% |
Dec |
Jun |
Dec |
2013 |
|
|
banking |
2013 |
2013 |
2012 |
through- |
|
|
advances |
|
|
|
the-cycle |
|
|
|
|
|
|
target |
|
|
|
|
|
|
ranges |
|
Nedbank Capital |
11,5 |
0,51 |
0,77 |
1,06 |
0,10 - 0,55 |
|
Nedbank Corporate |
32,1 |
0,23 |
0,30 |
0,24 |
0,20 - 0,35 |
|
Nedbank Business Banking |
12,0 |
0,65 |
1,02 |
0,34 |
0,55 - 0,75 |
|
Nedbank Retail |
38,2 |
2,16 |
2,56 |
2,01 |
1,50 - 2,20 |
|
Nedbank Wealth |
4,0 |
0,28 |
0,24 |
0,61 |
0,20 - 0,40 |
|
Group |
|
1,06 |
1,31 |
1,05 |
0,60 - 1,00 |
The coverage ratio for total and specific impairments increased to 65,6% (2012: 56,4%) and 42,8% (2012: 38,6%) respectively. Portfolio coverage on the performing book continued to strengthen to 0,70% (2012: 0,66%).
Our collections processes are robust and generated post-writeoff recoveries of R888m (2012: R866m), reflecting the prudency of cash accounting recoveries on the written-off book. This includes recoveries in Personal Loans of R276m (2012: R243m).
Non-interest revenue
NIR increased by 11,8% to R19 361m (2012: R17 324m)(1), due to the following:
- Commission and fee income increased strongly by 11,8% to R14 023m (2012: R12 538m)(1) from good transactional
volume increases across the group and improved cross-sell.
- Insurance income growth of 13,7% to R1 927m (2012: R1 695m) remained robust, with good sales in motor vehicle
insurance and an improvement in the claims environment partly offset by the volume-related slowdown in credit life income.
- Trading income held up well, increasing 4,1% to R2 564m (2012: R2 464m) off the high 2012 base.
- Private-equity income of R225m (2012: R391m) was recorded following unrealised losses in Nedbank Capital and the
higher realisations in 2012.
- Sundry income increased to R526m (2012: R394m) mostly owing to the reversal of insurance provisions following court
rulings in our favour in June 2013.
- Fair-value gains of R40m (2012: R265m loss) were recognised mainly as a result of basis risk on centrally hedged banking
book positions and accounting mismatches in the hedged fixed-rate advances portfolios.
Our strategy to grow NIR has resulted in an NIR increase of 13,0% (excluding fair-value adjustments) on a compound basis since 2009, with an increase in the NIR-to-expenses ratio from 78,8% in 2009 to 86,4% (2012: 84,4%) to exceed our medium-to-long-term target of > 85% for the first time over a full year since the introduction of this metric.
Expenses
Disciplined cost management, combined with ongoing investment in the franchise, resulted in operating expenses growing 9,2% to R22 362m (2012: R20 485m)(1).
Growth in expenses was primarily driven by:
- a staff-related cost increase of 10,5%, comprising salary and wage cost growth of 8,3% following average inflation-related
annual increases of 6,5% and 1,4% growth in average headcount, and a variable-compensation increase in line with the
group's financial performance, with the short-term incentive (STI) up 15,9% and long-term incentive (LTI) up 23,4%;
- investment in distribution channels of R151m;
- marketing costs growth of 13,3% as we invest in building our franchise and transactional banking client base; and
- a computer processing increase of 10,5% in line with increases in business volume growth.
Taxation
The base effect of capital gains tax and secondary tax on companies in 2012,
together with lower levels of dividend income, resulted in a lower effective tax
rate of 25,2% (2012: 26,8%)(1).
Statement of financial position
Capital
Strong balance sheet management and organic earnings growth during the period caused all capital adequacy ratios to remain well above the Basel III minimum regulatory capital requirements and at or above the top of the group's Basel III internal target ranges.
|
Nedbank |
2013 |
2012 |
Internal target |
Regulatory |
|
Group |
(Basel III) |
(Pro forma |
range |
minimum* |
|
|
|
Basel III) |
(Basel III) |
(Basel III) |
|
Common- |
12,5% |
11,6% |
10,5% - 12,5% |
4,5% |
|
equity tier 1 |
|
|
|
|
|
ratio |
|
|
|
|
|
Tier 1 ratio |
13,6% |
13,1% |
11,5% - 13,0% |
6,0% |
|
Total capital |
15,7% |
15,1% |
14,0% - 15,0% |
9,5% |
|
ratio |
|
|
|
|
(Ratios include unappropriated profits.)
* The Basel III regulatory minima are being phased in between 2013 and 2019, and exclude
Pillar 2B add-ons.
During the year a total of R3,0bn of new-style, fully loss-absorbent, Basel III-compliant, tier 2 subordinated debt was successfully issued to replace the R2,1bn of Basel II tier 2 capital that matured in September 2013.
Further detail on risk and capital management will be available in the Risk and balance sheet management review section of the group's results booklet and the Pillar 3 Report to be published on the website at nedbankgroup.co.za on 31 March 2014.
Funding and liquidity
Nedbank Group's surplus liquid asset buffer increased to R28,0bn (2012: R24,4bn), reflecting a strong liquidity position. The group has low levels of reliance on interbank and foreign currency funding, and continues successfully to diversify and lengthen its funding profile.
The last-quarter average long-term funding ratio was maintained at 26,2%, supported by the successful conclusion of a R2,0bn five-year commercial- mortgage securitisation in March 2013 as well as R5,8bn in senior unsecured debt issued during the year, replacing R3,4bn that matured in March and April 2013. The group has been compliant with the Basel III Liquidity Coverage Ratio on a pro forma basis since 31 December 2012.
Loans and advances
Loans and advances increased 9,9% to R579,4bn (2012: R527,2bn)(1), with good wholesale banking advances growth of 16,1%. Gross new-advances payouts increased 10,1% to R158,9bn (2012: R144,3bn).
Loans and advances by cluster are as follows:
|
Rm |
2013 |
2012 |
% change |
|
Nedbank Capital |
109 549 |
82 494 |
32,8 |
|
Banking activities |
72 066 |
52 732 |
36,7 |
|
Trading activities |
37 483 |
29 762 |
25,9 |
|
Nedbank Corporate |
175 274 |
162 730 |
7,7 |
|
Nedbank Business Banking |
62 785 |
60 115 |
4,4 |
|
Nedbank Retail |
195 435 |
190 647 |
2,5 |
|
Nedbank Wealth |
22 082 |
19 864 |
11,2 |
|
Centre, including Rest of Africa |
14 247 |
11 316 |
25,9 |
|
|
579 372 |
527 166 |
9,9 |
Banking advances growth in Nedbank Capital remained robust, following steady drawdown of the deal pipeline throughout the year, including the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), of which Nedbank supported over a third of the allocated renewable-energy capacity in the first and second phases. Growth in the trading advances book came largely from foreign-currency placements and deposits placed under reverse repurchase agreements related to surplus liquidity and the hedging of the group's liquid asset portfolio.
The increase in Nedbank Corporate's advances is comprised of 5,3% growth in corporate banking and 11,0% growth in property finance. Nedbank's market-leading commercial property franchise earned the accolade of being voted the best property finance bank in SA in the PWC SA banking survey
2013.
Nedbank Business Banking recorded advances growth of 4,4% as the small-to-medium-sized enterprises sector continued to experience economic pressure throughout 2013.
Retail banking advances continued to grow modestly at 2,5%. Advances growth was led by an increase of 14,2% and 13,8% for card and vehicle finance respectively, while personal-loan and home loan advances declined 9,4% and 2,1% respectively in line with the selective origination strategy in both advances categories ahead of expected interest rate increases.
At group level personal-loan advances now represent 3,6% and home loan advances 23,0% of total advances.
Growth in advances at the centre was led by increased business activity in the Rest of Africa, consistent with the group's focus on deepening its Pan-African banking client relationships and expanding its presence in the rest of Africa.
Deposits
Deposits grew 9,5% to R603,0bn (2012: R550,9bn)(1) and a sound loan-to-deposit ratio of 96,1% (2012: 95,7%) was maintained.
The Portfolio Tilt Strategy to drive deposit growth is reflected in good contributions seen from all the clusters. Current accounts increased 5,1% (2012: 7,9%) and savings accounts grew by a strong 30,3% (2012: 9,3%), as saving deposits held in Nedbank Wealth were boosted by rand depreciation. Call and term deposit balances were 9,7% (2012: 9,9%) higher due to increased funding from the commercial and asset management sectors. The strategy also focused on increasing fixed deposits, which resulted in 16,3% (2012: 8,2%) growth in fixed deposits while negotiable certificates of deposit were up 13,7% (2012: negative 21,4%).
Group strategic focus
Over the past four years Nedbank's franchise has grown strongly as reflected in our brand value increasing by 38,0% to R10,9bn (2009: R7,9bn), as measured by Brand Finance SA's 50 Most Valuable Brands Survey. We have made great strides in delivering on our four key strategic focus areas of repositioning Nedbank Retail, growing NIR, implementing the portfolio tilt strategy and expanding into the rest of Africa.
- Nedbank Retail has been fundamentally repositioned into a client-centred, aspirational bank for all with excellent risk
management practices, while delivering a sustainable turnaround in financial performance. Since 2009 headline earnings increased from a loss of R27m to a profit of R2,5bn and ROE from a negative 0,2% to 11,6% in 2013. This was achieved by generating R3,5bn incremental NIR at a 14% compound annual growth rate (CAGR), increasing NII by R2,7bn at a 7,2% CAGR as the quality, mix and pricing of the advances portfolio improved off moderate advances growth of 3,9% CAGR. Balance sheet impairments were strengthened materially by R1,8bn while reducing defaulted advances by R9,1bn to 5,4% of Retail advances, with coverage at 51%. Efficiencies of R1,1bn were extracted to invest R1,7bn in branches and ATMs, which have increased by 41% and 83% respectively; technology systems; people skills development; and new, innovative value propositions for all market segments with client-insight-led marketing that has changed client perceptions of Nedbank. The 2,2m growth in new clients to 6,4m is testimony to the excellent progress in strengthening the transactional banking franchise. Accelerating levels of consumer financial distress, increased conservatism in impairment methodologies while continuing to build the franchise sustainably and the higher cost of capital make it more challenging to achieve ROE at or above the cost of equity in the short term. Internal momentum, together with consistency in risk management, strategy and leadership, will ensure that Nedbank Retail continues to improve financial returns while growing our transactional franchise and contributing positively to the group.
- Excellent progress has been made in growing our NIR-to-expense ratio from 78,8% in 2009 to 86,4% in 2013, which exceeds our medium-to-long-term target of more than 85%. Over this period our client base has grown across all clusters and transactional banking volumes have increased. As a result, commission and fee income grew at a compound annual growth rate of 13,1% to R14 023m (2009: R8 583m).
- Under the portfolio tilt strategy EP increased significantly from R57m in 2009 to R2,1bn in 2013, supported by selective advances growth to mitigate against downside risk in personal loans and home loans while focusing on strongly EP generative activities such as, inter alia, deposit growth, cards, vehicle finance, insurance, asset management and investment banking.
- Our Rest of Africa strategy incorporates our strategic alliance with Ecobank in West and Central Africa, and strengthening our existing network and expanding our presence in the Southern African Development Community (SADC) and East Africa. Nedbank has the rights to take up to a 20% shareholding in ETI and a formal decision will be made during the rights exercise period in 2014. The acquisition of a majority shareholding of Banco Unico in Mozambique, along with the acquisition of the initial stake of 36,4%, has been approved, with completion targeted for the end of March 2014, providing the group with a pathway to control over time. This will contribute to the strengthening of Nedbank's franchise and client proposition in SADC and East Africa, increasing our presence to six countries. During 2013 the group concluded an alliance agreement with the Bank of China.
Refined strategic focus areas from 2014
Following the progress made on our four key strategic focus areas, the emphasis going forward will be on the five underlying strategic growth drivers. These are: client-centred innovation; growing our transactional banking franchise; optimise to invest; strategic portfolio tilt; and Pan-African banking network.
- 'Client-centred innovation' is vital in accelerating and building on the innovations launched in the past two years to enhance Nedbank's client value propositions and drive client growth and product cross-sell.
- 'Growing our transactional banking franchise' focuses on capturing a greater share of the overall groupwide transactional banking opportunity, with growing NIR and client deposits a key outcome.
- 'Optimise to invest' is aimed at driving internal efficiencies in an environment of slower revenue growth and enhancing our ability to invest in the franchise for the longer term. ignificant information technology (IT) innovations are planned to enhance our systems and deliver business benefits through managed evolution. Our 'rationalise, standardise and simplify' IT strategy forms part of this intent as we move from 220 to 60 core systems over time and embark on initiatives such as Project 4321, a SAP ERP system replacement in finance, human resources and procurement. In 2013 alone 30 IT systems were decommissioned.
- 'Strategic portfolio tilt' continues to emphasise the strategic nature of portfolio tilt and EP generative activities while incorporating Nedbank's Fair Share 2030 initiative, which encompasses a carefully calculated flow of money allocated each year to invest in future-proofing the environment, society and our business. We have also increased cooperation with our parent company, Old Mutual plc, and our sister companies in South Africa. New business flows from our financial planners to Old Mutual SA increased 58% in 2013 and we entered the direct insurance market in partnership with Mutual & Federal.
- 'Pan-African banking network' reflects the importance of providing banking services for our clients as they expand across the continent, and creating shareholder value through appropriate investment opportunities that are aligned with the Nedbank strategy and culture and meet our financial hurdles.
Economic outlook
The economic outlook for developed economies is expected to be more positive in 2014, with accelerated momentum in the US and UK, and the Eurozone beginning to show signs of fragile growth. These improved prospects, together with the effects of a tapering off of quantitative easing, will lead to global volatility and pose downside risk to many emerging markets. A further concern is China's economic slowdown, given its importance as a trade partner for SA.
The group currently anticipates GDP growth of 2,6% for SA in 2014. This is higher than the expected 1,8% growth in 2013, but remains below growth rates required to reduce unemployment levels meaningfully. The key drivers are likely to be better export performance and an increase in gross fixed- capital formation. Downside risk to growth has increased as interest rates have started on an upward trajectory, with a 50 basis point increase in January 2014 and further potential increases later in the year.
Growth in household credit demand is unlikely to improve in 2014 while employment conditions remain poor, real income constrained and consumer debt levels high. Growth across most retail advances categories will continue to be muted and consumer credit risks are likely to increase. The rate and extent of further interest rate increases will impact the ability of consumers to service their debt.
Corporate credit demand is expected to remain above retail credit demand, but will continue to be subdued as corporates delay committing to new projects in an environment of infrastructure constraints and low levels of confidence.
Prospects
In the context of a volatile and uncertain economic outlook forecast risk is high. Against this background the financial performance for 2014 is currently anticipated as follows:
- Advances to grow at mid to upper single digits.
- NIM to remain at levels similar to those of 2013.
- The CLR to be within the new CLR range of 80 to120 basis points, improving slightly on 2013.
- NIR (excluding fair-value adjustments) to grow at mid to upper single digits, incorporating the 0% transactional fee increase in 2014.
- Expenses to increase at upper single digits.
In the light of the volatile economic conditions the group is currently expecting organic diluted HEPS growth in 2014 to be greater than the growth in nominal GDP. As usual, this will be updated at our interim results presentation.
The group's medium-to-long-term targets are highlighted below. Our CLR target range of 0,60% to 1,00% was amended to 0,80% to 1,20% to reflect Nedbank Retail's more prudent provisioning methodologies and asset mix changes. The efficiency ratio target was amended from < 50,0% to a range of 50,0% to 53,0% to reflect the lower-interest-rate pattern and our strategy of investing for growth in the franchise.
|
|
2013 |
Medium-to-long-term |
2014 |
|
|
Metric |
|
|
|
|
|
|
performance |
targets |
outlook |
|
|
|
|
|
|
|
|
ROE (excluding |
|
5% above cost of |
|
|
|
goodwill)shareholders' |
17,2% |
ordinary |
Below target |
|
|
|
|
equity |
|
|
|
|
|
|
|
|
|
|
|
>- consumer price |
>- consumer price |
|
|
Growth in diluted |
|
|
|
|
|
|
15,0% |
index + GDP growth + |
index + GDP |
|
|
HEPS |
|
|
|
|
|
|
|
5% |
growth |
|
|
|
|
|
|
|
|
|
|
Between 0,8% and |
Meet target, |
|
|
CLR |
1,06% |
|
|
|
|
|
|
1,2% of average |
improving slightly |
|
|
|
|
|
|
|
|
|
|
banking advances |
on 2013 |
|
|
|
|
|
|
|
|
NIR-to-expense |
|
|
|
|
|
|
86,4% |
> 85% |
At target |
|
|
ratio |
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio |
55,2% |
50,0% to 53,0% |
Above target |
|
|
Common-equity |
|
|
|
|
|
tier 1 capital |
|
|
At or above the top |
|
|
|
12,5% |
10,5% to 12,5% |
|
|
|
adequacy ratio |
|
|
end of target |
|
|
(Basel III) |
|
|
|
|
|
|
|
|||
|
|
Internal Capital Adequacy Assessment Process (ICAAP): |
|||
|
Economic capital |
||||
|
|
A debt rating (including 10% capital buffer) |
|||
|
|
|
|
|
|
|
Dividend cover |
2,11 times |
1,75 to 2,25 times |
1,75 to 2,25 times |
|
Shareholders are advised that these forecasts are based on organic earnings and our latest macroeconomic outlook and have not been reviewed or reported on by the group's independent auditors.
Board changes
David Adomakoh was appointed independent non-executive director of Nedbank Group and Nedbank Limited with effect from 21 February 2014.
The following departures of non-executive directors of Nedbank Group and Nedbank Limited occurred during 2013:
- Don Hope, with effect from 30 June 2013, following his retirement from Old Mutual plc at the end of June 2013; and
- Thenjiwe Chikane, with effect from 13 August 2013.
Accounting policies(1)
Nedbank Group Limited is a company domiciled in SA. The summarized consolidated financial results of the group at and for the year ended 31 December 2013 comprise the company and its subsidiaries (the 'group') and the group's interests in associates and joint arrangements.
Nedbank Group's summarised consolidated financial results have been prepared in accordance with the framework, measurement and recognition criteria of International Financial Reporting Standards (IFRS) and are presented in accordance with the disclosures prescribed by International Accounting Standards (IAS) , the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Pronouncement as issued by Financial Reporting Standards Council and the provisions of the SA Companies Act, 71 of 2008.
Nedbank Group's principal accounting policies have been applied in terms of IFRS as issued by the International Accounting Standards Board (IASB) and have been applied consistently during the current and prior financial years, with the exception of changes noted below.
The following new standards and amendments have been mandatorily adopted with effect from 1 January 2013:
- IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other
Entities, as well as the consequential amendments to IAS 27 Separate Financial Statements (2011) and IAS 28 Investments
in Associates and Joint Ventures (2011).
As a result of adopting IFRS 10 the group has changed its accounting policy with respect to determining whether it has control over and consequently whether it is required to consolidate an investee. IFRS 10 introduces a new set of criteria for assessing control by referring to the investor's exposure or rights to variable returns from its involvement with the investee and the ability to affect those returns through its power over the investee.
IFRS 11 requires that the group classifies its interests in joint arrangements as either joint operations or joint ventures depending on the group's rights to assets and obligations for the liabilities of the arrangements. There has been no change to the method of accounting for joint arrangements.
IFRS 12 introduces additional disclosure requirements in respect of interest in subsidiaries and associates, and also introduces new disclosure requirements for unconsolidated structured entities.
These standards and amendments have been applied retrospectively and have not required any significant restatement in the groups' financial report.
- IFRS 13 Fair-value Measurement
- IFRS 13 provides a revised definition of fair value and establishes a single source of guidance for the measurement of fair value, which had previously been included in various standards. The prospective adoption of this standard did not have a material impact on the measurement of the group's assets and liabilities. The group has an established control framework with respect to the measurement of fair value, which includes an ongoing review of the valuation methodologies applied.
- Disclosures - Offsetting Financial Assets and Financial Liabilities (amendments to IFRS 7) The group has adopted the amendments to IFRS 7, which requires extensive disclosures in respect of offsetting. The adoption had no impact on the measurement of the group's assets and liabilities.
- IAS 19 Employee Benefits (2011)
The group has adopted IAS 19 Employee Benefits (2011). The amendments include revised requirements for pensions and other postemployment benefits, termination benefits and certain other changes. The key amendments impacting the group include:
- requiring the recognition of changes in net defined-benefit liabilities/assets due to changes in determined expense/income in 'other comprehensive income' (eliminating the 'corridor approach' previously permitted in IAS 19);
- modifying the accounting for termination benefits; and
- clarifying various miscellaneous issues.
The adoption of the amendments to IAS 19 has been applied retrospectively and the resulting restatements, which are not considered material are set out in the note on restatements.
- IAS 1 Presentation of Financial Statements Amendments to IAS 1 require identification of items that may be reclassified from 'other comprehensive income' to 'profit or loss', and those that may not be so reclassified. As a consequence of adopting the amendments to IAS 1, items that may be reclassified from 'other comprehensive income' to 'profit or loss' have been denoted as such in the statement of comprehensive income.
In the preparation of these summarised consolidated financial results the group has applied key assumptions concerning the future and other inherent uncertainties in recording and measuring various assets and liabilities. The assumptions applied in the financial results for the year ended 31 December 2013 were consistent with those applied during the 2012 financial year. These assumptions are subject to ongoing review and possible amendments. The summarised consolidated financial results have been prepared under the supervision of Raisibe Morathi, the Chief Financial Officer.
Events after the reporting period(1)
In line with the bank's scheduled capital plans, there was a full capital redemption of NED8, the R1,7bn unsecured subordinated note that qualified as tier 2 capital under Basel II, with effect from 8 February 2014.
Audited summarised consolidated results - independent auditors' report KPMG Inc and Deloitte & Touche, Nedbank Group's independent auditors, have audited the consolidated financial results of Nedbank Group Limited from which the summarised consolidated financial results have been derived and have expressed an unmodified audit opinion on the consolidated financial statements. The auditor's report on the consolidated financial statements is available for inspection at Nedbank Group's registered office. The related notes are marked with (1).
The summarised consolidated financial results comprise the consolidated statement of financial position at 31 December 2013, consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cashflows for the year then ended and selected explanatory notes. The directors take full responsibility for the preparation of the summarised consolidated financial results and that the financial information has been correctly extracted from the underlying audited
annual financial statements.
Forward-looking statements
This announcement contains certain forward-looking statements with respect to the financial condition and results of operations of Nedbank Group and its group companies that, by their nature, involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, global, national and regional economic conditions; levels of securities markets; interest rates; credit or other risks of lending and investment activities; as well as competitive and regulatory factors. By consequence, all forward-looking statements have not been reviewed or reported on by the group's auditors.
Final dividend declaration
Notice is hereby given that a gross final dividend of 505 cents per ordinary share has been declared, payable to shareholders for the 12 months ended 31 December 2013. The dividend has been declared out of income reserves.
The dividend will be subject to a dividend withholding tax rate of 15% (applicable in SA) or 75,75 cents per ordinary share, resulting in a net dividend of 429,25 cents per ordinary share, unless the shareholder is exempt from paying dividend tax or is entitled to a reduced rate in terms of a applicable double-tax agreement. Nedbank Group Limited's tax reference number is 9375/082/71/7 and the number of ordinary shares in issue at the date of declaration is 510 204 377.
In accordance with the provisions of Strate, the electronic settlement and custody system used by JSE Limited, the relevant dates for the final dividend are as follows:
|
Event |
Date |
|
Last day to trade (cum dividend) |
Friday, 28 March 2014 |
|
Shares commence trading (ex dividend) |
Monday, 31 March 2014 |
|
Record date (date shareholders recorded in |
Friday, 4 April 2014 |
|
books) |
|
|
Payment date |
Monday, 7 April 2014 |
Share certificates may not be dematerialised or rematerialised between Monday, 31 March 2014, and Friday, 4 April 2014, both days inclusive.
On Monday, 7 April 2014, the dividend will be electronically transferred to the bank accounts of all certificated shareholders where this facility is available. Where electronic funds transfer is either not available or not elected by the shareholder, cheques dated Monday, 7 April 2014, will be posted on that date.
Holders of dematerialised shares will have their accounts credited at their participant or broker on Monday, 7 April 2014.
The above dates and times are subject to change. Any changes will be published on the Securities Exchange News Service (SENS) and in the press.
For and on behalf of the board
|
Dr RJ Khoza |
MWT Brown |
|
Chairman |
Chief Executive |
24 February 2014
Registered office
Nedbank Group Limited, Nedbank 135 Rivonia Campus, 135 Rivonia Road,
Sandown, Sandton, 2196.
PO Box 1144, Johannesburg, 2000.
Transfer secretaries in SA
Computershare Investor Services (Pty) Limited, 70 Marshall Street,
Johannesburg, 2001, SA.
PO Box 61051, Marshalltown, 2107, SA.
Transfer secretaries in Namibia
Transfer Secretaries (Pty) Limited, 4 Robert Mugabe Avenue, Windhoek,
Namibia.
PO Box 2401, Windhoek, Namibia.
Directors
Dr RJ Khoza (Chairman), MWT Brown* (Chief Executive), DKT Adomakoh
(Ghanaian), TA Boardman, GW Dempster* (Chief Operating Officer), MA
Enus-Brey, ID Gladman (British), PM Makwana, NP Mnxasana, RK Morathi*
(Chief Financial Officer), JK Netshitenzhe, JVF Roberts (British), GT Serobe,
MI Wyman** (British).
* Executive ** Senior independent non-executive director
|
Company Secretary: |
TSB Jali |
|
Reg No: |
1966/010630/06 |
|
JSE share code: |
NED |
|
NSX share code: |
NBK |
|
ISIN: |
ZAE000004875 |
|
Sponsors in SA: |
Merrill Lynch South Africa (Pty) Limited |
|
|
Nedbank Capital |
|
Sponsor in Namibia: |
Old Mutual Investment Services (Namibia) (Pty) |
This announcement is available on the group's website at
nedbankgroup.co.za, together with the following additional information:
- Detailed financial information in HTML and PDF formats.
- Financial results presentation to analysts.
- Link to a webcast of the presentation to analysts.
For further information kindly contact Nedbank Group Investor Relations at
nedbankgroupir@nedbank.co.za.
|
Financial highlights |
|||
|
at |
|
31 December |
31 December |
|
2013 |
2012 |
||
|
(Audited) |
(Audited) |
||
|
Restated |
|||
|
Statistics |
|
|
|
|
Number of shares listed |
m |
510.3 |
507.5 |
|
Number of shares in issue, excluding shares held by group entities |
m |
461.2 |
457.3 |
|
Weighted average number of shares |
m |
460.2 |
456.3 |
|
Diluted weighted average number of shares |
m |
474.1 |
470.7 |
|
Preprovisioning operating profit* |
Rm |
17,268 |
15,543 |
|
Economic profit* |
Rm |
2,114 |
1,521 |
|
Headline earnings per share* |
cents |
1,884 |
1,640 |
|
Diluted headline earnings per share* |
cents |
1,829 |
1,590 |
|
Ordinary dividends declared per share |
cents |
895 |
752 |
|
- Interim |
cents |
390 |
340 |
|
- Final |
cents |
505 |
412 |
|
Ordinary dividends paid per share |
cents |
802 |
680 |
|
Dividend cover* |
times |
2.11 |
2.18 |
|
Net asset value per share* |
cents |
13,143 |
11,721 |
|
Tangible net asset value per share* |
cents |
11,346 |
9,989 |
|
Closing share price |
cents |
21,000 |
18,800 |
|
Price/earnings ratio* |
historical |
11.1 |
11.5 |
|
Market capitalisation |
Rbn |
107.2 |
95.4 |
|
Number of employees |
29,513 |
28,748 |
|
|
Key ratios (%) |
|
|
|
|
Return on ordinary shareholders' equity (ROE)* |
15.6 |
14.8 |
|
|
ROE, excluding goodwill* |
17.2 |
16.4 |
|
|
Return on total assets (ROA) |
1.23 |
1.13 |
|
|
Net interest income to average interest-earning banking assets |
3.57 |
3.53 |
|
|
Credit loss ratio - banking advances |
1.06 |
1.05 |
|
|
Non-interest revenue to total operating expenses* |
86.4 |
84.4 |
|
|
Non-interest revenue to total income |
47.7 |
46.8 |
|
|
Efficiency ratio* |
55.2 |
55.6 |
|
|
Efficiency ratio [excluding black economic empowerment (BEE) transaction expenses]* |
55.1 |
55.4 |
|
|
Effective taxation rate |
25.2 |
26.8 |
|
|
Group capital adequacy ratios (including unappropriated profits):** |
|||
|
Common equity tier 1 |
12.5 |
11.4 |
|
|
Tier 1 |
13.6 |
12.9 |
|
|
Total |
15.7 |
14.9 |
|
|
Statement of financial position statistics (Rm) |
|||
|
Total equity attributable to equity holders of the parent* |
60,617 |
53,601 |
|
|
Total equity* |
64,336 |
57,375 |
|
|
Amounts owed to depositors |
602,952 |
550,878 |
|
|
Loans and advances |
579,372 |
527,166 |
|
|
- Gross |
590,828 |
538,037 |
|
|
- Impairment of loans and advances |
(11,456) |
(10,871) |
|
|
Total assets administered by the group |
939,935 |
833,453 |
|
|
- Total assets* |
749,594 |
682,958 |
|
|
- Assets under management |
190,341 |
150,495 |
|
|
Life assurance embedded value |
2,137 |
2,030 |
|
|
Life assurance value of new business |
352 |
563 |
* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
** 2012 and 2013 ratios were calculated according to Basel II.5 and Basel III principles respectively. These ratios are not reviewed by or reported on by the group's auditors.
|
Consolidated statement of comprehensive income |
|
|
|
|
for the year ended |
|
31 December |
31 December |
|
2013 |
2012 |
||
|
(Audited) |
(Audited) |
||
|
Rm |
Rm |
||
|
Restated |
|||
|
Interest and similar income |
46,087 |
44,730 |
|
|
Interest expense and similar charges |
24,867 |
25,050 |
|
|
Net interest income |
21,220 |
19,680 |
|
|
Impairments charge on loans and advances |
5,565 |
5,199 |
|
|
Income from lending activities |
15,655 |
14,481 |
|
|
Non-interest revenue |
19,361 |
17,324 |
|
|
Operating income |
35,016 |
31,805 |
|
|
Total operating expenses |
22,419 |
20,563 |
|
|
- Operating expenses** |
22,362 |
20,485 |
|
|
- BEE transaction expenses |
57 |
78 |
|
|
Indirect taxation |
601 |
561 |
|
|
Profit from operations before non-trading and capital items |
11,996 |
10,681 |
|
|
Non-trading and capital items |
(56) |
(18) |
|
|
- Net profit on sale of subsidiaries, investments, and property and equipment |
11 |
33 |
|
|
- Net impairment of investments, property and equipment, and capitalised development costs |
(67) |
(51) |
|
|
Fair-value adjustments of investment properties |
6 |
(12) |
|
|
Profit from operations |
11,946 |
10,651 |
|
|
Share of profits of associate companies and joint arrangements |
27 |
1 |
|
|
Profit before direct taxation |
11,973 |
10,652 |
|
|
Total direct taxation |
3,016 |
2,865 |
|
|
- Direct taxation** |
3,033 |
2,861 |
|
|
- Taxation on non-trading and capital items |
(18) |
4 |
|
|
- Taxation on revaluation of investment properties |
1 |
* |
|
|
Profit for the year |
8,957 |
7,787 |
|
|
Other comprehensive income net of taxation |
1,675 |
171 |
|
|
- Exchange differences on translating foreign operations*** |
690 |
162 |
|
|
- Fair-value adjustments on available-for-sale assets*** |
32 |
43 |
|
|
- Remeasurements on long-term employee benefit assets** |
731 |
(76) |
|
|
- Gains on property revaluations*** |
222 |
42 |
|
|
Total comprehensive income for the year |
10,632 |
7,958 |
|
|
Profit attributable to: |
|
|
|
|
equity holders of the parent** |
8,637 |
7,449 |
|
|
non-controlling interest - ordinary shareholders** |
28 |
45 |
|
|
Non-controlling interest - preference shareholders |
292 |
293 |
|
|
Profit for the year |
8,957 |
7,787 |
|
|
Total comprehensive income attributable to: |
|
|
|
|
equity holders of the parent** |
10,295 |
7,620 |
|
|
non-controlling interest - ordinary shareholders** |
45 |
45 |
|
|
non-controlling interest - preference shareholders |
292 |
293 |
|
|
Total comprehensive income for the year |
10,632 |
7,958 |
|
|
Basic earnings per share** |
cents |
1,877 |
1,632 |
|
Diluted earnings per share** |
cents |
1,822 |
1,583 |
* Represents amounts less than R1m.
** 2012 restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
*** These items may be reclassified subsequently as profit or loss.
|
Headline earnings reconciliation |
||||
|
for the year ended |
||||
|
|
31 December |
31 December |
31 December |
31 December |
|
2013 |
2013 |
2012 |
2012 |
|
|
(Audited) |
(Audited) |
(Audited) |
(Audited) |
|
|
Rm |
Rm |
Rm |
Rm |
|
|
Restated |
Restated |
|||
|
|
Gross |
Net of taxation |
Gross |
Net of taxation |
|
Profit attributable to equity holders of the parent* |
8,637 |
7,449 |
||
|
Less: non-headline earnings items |
(50) |
(33) |
(30) |
(34) |
|
- Net profit on sale of subsidiaries, investments, and property and equipment |
11 |
11 |
33 |
29 |
|
- Net impairment of investments, property and equipment, and capitalised development costs |
(67) |
(49) |
(51) |
(51) |
|
- Fair-value adjustments of investment properties |
6 |
5 |
(12) |
(12) |
|
Headline earnings |
8,670 |
7,483 |
* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
|
Consolidated statement of financial position |
|||
|
at |
31 December |
31 December |
31 December |
|
2013 |
2012 |
2011 |
|
|
(Audited) |
(Audited) |
(Audited) |
|
|
Rm |
Rm |
Rm |
|
|
Restated |
Restated |
||
|
Asset |
|||
|
Cash and cash equivalents |
20,842 |
14,445 |
13,457 |
|
Other short-term securities |
42,451 |
43,457 |
35,986 |
|
Derivative financial instruments |
13,390 |
13,812 |
12,840 |
|
Government and other securities |
32,091 |
26,753 |
30,176 |
|
Loans and advances |
579,372 |
527,166 |
499,023 |
|
Other assets |
8,673 |
9,488 |
12,051 |
|
Current taxation assets |
565 |
246 |
698 |
|
Investment securities ** |
19,348 |
16,213 |
13,881 |
|
Non-current assets held for sale |
12 |
508 |
8 |
|
Investments in private-equity associates, associate companies and joint arrangements ** |
1,101 |
1,032 |
968 |
|
Deferred taxation assets* |
216 |
541 |
354 |
|
Investment property |
214 |
205 |
614 |
|
Property and equipment |
6,818 |
6,398 |
6,312 |
|
Long-term employee benefit assets* |
2,980 |
2,095 |
2,102 |
|
Mandatory reserve deposits with central banks |
13,231 |
12,677 |
11,952 |
|
Intangible assets |
8,290 |
7,922 |
7,777 |
|
Total assets |
749,594 |
682,958 |
648,199 |
|
Equity and liabilities |
|||
|
Ordinary share capital |
461 |
457 |
455 |
|
Ordinary share premium |
16,343 |
16,033 |
15,934 |
|
Reserves* |
43,813 |
37,111 |
32,307 |
|
Total equity attributable to equity holders of the parent |
60,617 |
53,601 |
48,696 |
|
Non-controlling interest attributable to: |
|||
|
- ordinary shareholders* |
246 |
213 |
174 |
|
- preference shareholders |
3,473 |
3,561 |
3,561 |
|
Total equity |
64,336 |
57,375 |
52,431 |
|
Derivative financial instruments |
16,580 |
13,454 |
13,853 |
|
Amounts owed to depositors |
602,952 |
550,878 |
524,130 |
|
Provisions and other liabilities |
14,682 |
15,526 |
14,751 |
|
Current taxation liabilities |
301 |
193 |
200 |
|
Other liabilities held for sale |
36 |
||
|
Deferred taxation liabilities* |
789 |
793 |
1,341 |
|
Long-term employee benefit liabilities* |
1,842 |
1,913 |
1,809 |
|
Investment contract liabilities |
11,523 |
9,513 |
8,237 |
|
Insurance contract liabilities |
3,321 |
2,979 |
2,005 |
|
Long-term debt instruments |
33,268 |
30,298 |
29,442 |
|
Total liabilities |
685,258 |
625,583 |
595,768 |
|
Total equity and liabilities |
749,594 |
682,958 |
648,199 |
* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
** Certain investments were reclassified from investment securities to investments in private-equity associates, associate companies and joint arrangements to align better with industry practice. No adjustments to the carrying value of the financial instruments arose as a result of the reclassification. Furthermore, no changes were made to the categorisation of the financial instruments and they remain classified as designated at fair value through profit or loss.
|
Condensed consolidated statement of changes in equity |
||||
|
Non-controlling |
Non-controlling |
|||
|
Total equity |
interest |
interest |
||
|
attributable to |
attributable to |
attributable to |
||
|
equity holders |
ordinary |
preference |
||
|
of the parent |
shareholders |
shareholders |
Total equity |
|
|
Rm |
Rm |
Rm |
Rm |
|
|
Balance at 31 December 2011 |
48,946 |
178 |
3,561 |
52,685 |
|
Adoption of IAS 19 Employee Benefits (revised 2011) |
(250) |
(4) |
(254) |
|
|
Restated balance at 31 December 2011 |
48,696 |
174 |
3,561 |
52,431 |
|
Dividend to shareholders |
(3,248) |
(8) |
(3,256) |
|
|
Preference share dividend |
(293) |
(293) |
||
|
Issues of shares net of expenses |
14 |
14 |
||
|
Shares (acquired)/cancelled by group entities and BEE trusts |
119 |
119 |
||
|
Total comprehensive income for the year* |
7,620 |
45 |
293 |
7,958 |
|
Share-based payment reserve movement |
396 |
396 |
||
|
Regulatory risk reserve provision |
2 |
2 |
||
|
Acquisition of subsidiary |
2 |
2 |
||
|
Other movements |
2 |
2 |
||
|
Balance at 31 December 2012 |
53,601 |
213 |
3,561 |
57,375 |
|
Dividend to shareholders |
(3,821) |
(9) |
(3,830) |
|
|
Preference share dividend |
(292) |
(292) |
||
|
Issues of shares net of expenses |
475 |
475 |
||
|
Shares (acquired)/cancelled by group entities and BEE trusts |
(132) |
(132) |
||
|
Total comprehensive income for the year |
10,295 |
45 |
292 |
10,632 |
|
Share-based payment reserve movement |
206 |
206 |
||
|
Regulatory risk reserve provision |
(4) |
(4) |
||
|
Preference shares held by group entities |
(88) |
(88) |
||
|
Disposal of subsidiary |
(3) |
(3) |
||
|
Other movements |
(3) |
(3) |
||
|
Balance at 31 December 2013 |
60,617 |
246 |
3,473 |
64,336 |
* Restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
|
Condensed consolidated statement of cashflows |
||
|
for the year ended |
31 December |
31 December |
|
2013 |
2012 |
|
|
(Audited) |
(Audited) |
|
|
Rm |
||
|
Rm |
Restated |
|
|
Cash generated by operations ** |
20,553 |
18,769 |
|
Change in funds for operating activities ** |
(4,507) |
(5,912) |
|
Net cash from operating activities before taxation |
16,046 |
12,857 |
|
Taxation paid |
(3,890) |
(3,914) |
|
Cashflows from operating activities |
12,156 |
8,943 |
|
Cashflows utilised by investing activities |
(4,341) |
(4,696) |
|
Cashflows utilised by financing activities |
(800) |
(2,552) |
|
Effects of exchange rate changes on opening cash and cash equivalents (excluding foreign borrowings) |
(64) |
18 |
|
Net increase in cash and cash equivalents |
6,951 |
1,713 |
|
Cash and cash equivalents at the beginning of the year* |
27,122 |
25,409 |
|
Cash and cash equivalents at the end of the year* |
34,073 |
27,122 |
* Including mandatory reserve deposits with central banks.
** 2012 restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
|
Condensed segmental reporting |
|
|
|
|
|
|
|
for the year ended |
31 December |
31 December |
31 December |
31 December |
31 December |
31 December |
|
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
|
|
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
|
|
Rm |
Rm |
Rm |
Rm |
Rm |
Rm |
|
|
Restated |
Restated |
Restated |
||||
|
Total assets |
Operating income |
Headline earnings |
||||
|
Nedbank Capital |
180,708 |
142,290 |
4,380 |
4,044 |
1,726 |
1,431 |
|
Nedbank Corporate |
188,363 |
175,073 |
5,084 |
4,410 |
2,245 |
1,817 |
|
Total Nedbank Retail and Nedbank Business Banking |
302,371 |
290,198 |
19,929 |
18,989 |
3,468 |
3,496 |
|
Nedbank Retail |
203,155 |
198,072 |
15,502 |
14,693 |
2,539 |
2,552 |
|
Nedbank Business Banking |
99,216 |
92,126 |
4,427 |
4,296 |
929 |
944 |
|
Nedbank Wealth |
50,911 |
42,270 |
3,553 |
2,993 |
900 |
718 |
|
Shared Services |
7,346 |
6,048 |
78 |
4 |
159 |
40 |
|
Central Management, including Rest of Africa |
19,895 |
27,079 |
1,992 |
1,365 |
172 |
(19) |
|
Total |
749,594 |
682,958 |
35,016 |
31,805 |
8,670 |
7,483 |
The segmental results for 2012 have been restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011) and the transfer of a subsidiary from Shared Services to Central Management, including Rest of Africa. The amendments to IAS 19 include revised requirements for pensions and other postretirement benefits, termination benefits and certain other changes.
|
Condensed geographical segmental reporting |
||||
|
for the year ended |
31 December |
31 December |
31 December |
31 December |
|
2013 |
2012 |
2013 |
2012 |
|
|
(Audited) |
(Audited) |
(Audited) |
(Audited) |
|
|
Rm |
Rm |
Rm |
Rm |
|
|
Restated |
Restated |
|||
|
Operating income |
Headline earnings |
|||
|
SA |
32,721 |
29,748 |
8,054 |
6,869 |
|
- Business operations* |
32,721 |
29,748 |
8,409 |
7,230 |
|
- BEE transaction expenses |
(63) |
(68) |
||
|
- Profit attributable to non-controlling interest - preference shareholders |
|
|
(292) |
(293) |
|
Rest of Africa* |
1,427 |
1,259 |
335 |
297 |
|
Rest of world - business operations* |
868 |
798 |
281 |
317 |
|
Total |
35,016 |
31,805 |
8,670 |
7,483 |
* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (revised 2011).
Fair-value hierarchy
FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE
The fair value of a financial instrument is the price that would be received for the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date. Underlying the definition of fair value is a presumption that an entity is a going concern without any intention or need to liquidate, to curtail materially the scale of its operations or to undertake a transaction on adverse terms. Fair value is not, therefore, the amount that an entity would receive or pay in a forced transaction, involuntary liquidation or distressed sale.
The existence of published price quotations in an active market is the most reliable evidence of fair value and, where they exist, they are used to measure the financial asset or financial liability. A market is considered to be active if transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis. These quoted prices would generally be classified as level 1 in terms of the fair-value hierarchy.
Where a quoted price does not represent fair value at the measurement date or where the market for a financial instrument is not active, the group establishes fair value by using a valuation technique. These valuation techniques include, but are not limited to, reference to the current fair value of another instrument that is substantially the same in nature, reference to the value of the assets of underlying business, earnings multiples, discounted cashflow analysis and various option pricing models. Valuation techniques applied by the group would generally be classified as level 2 or level 3 in terms of the fair-value hierarchy. The determination of whether an instrument is classified as level 2 or level 3 is dependent on the significance of observable inputs versus unobservable inputs in relation to the fair value of the instrument. Inputs typically used in valuation techniques include, but are not limited to, discount rates, appropriate swap rates, volatility, servicing costs, equity prices, commodity prices, counterparty credit risk, and the group's own credit on financial liabilities.
The group has an established control framework for the measurement of fair value, which includes formalised review protocols for the independent review and validation of fair values separate from the business unit entering into the transaction. The valuation methodologies, techniques and inputs applied to the fair-value measurement of the financial instruments have been applied in a manner consistent with that of the previous financial year (nedbankgroup.co.za).
FAIR-VALUE HIERARCHY
The financial instruments recognised at fair value have been categorised into the three input levels of the International Financial Reporting Standards (IFRS) fair-value hierarchy as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.
Level 2: Valuation techniques based on (directly or indirectly) market-observable inputs. Various factors influence the availability of observable inputs. These factors may vary from product to product and change over time. Factors include the depth of activity in the relevant market, the type of product, whether the product is new and not widely traded in the market, the maturity of market modelling and the nature of the transaction (bespoke or generic).
Level 3: Valuation techniques based on significant inputs that are not observable. To the extent that a valuation is based on inputs that are not market-observable, the determination of the fair value can be more subjective, depending on the significance of the unobservable inputs to the overall valuation. Unobservable inputs are determined on the basis of the best information available and may include reference to similar instruments, similar maturities, appropriate proxies or other analytical techniques.
|
FINANCIAL ASSETS |
||||||||||
|
Total financial assets |
Total financial assets |
Total financial assets |
Total financial assets |
|||||||
|
|
Total financial assets |
recognised at amortised cost |
classified as level 1 |
classified as level 2 |
classified as level 3 |
|||||
|
|
31 December |
31 December |
31 December |
31 December |
31 December |
31 December |
31 December |
31 December |
31 December |
31 December |
|
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
|
|
|
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
|
Rm |
Rm |
Rm |
Rm |
Rm |
Rm |
Rm |
Rm |
Rm |
Rm |
|
|
Restated |
Restated |
Restated |
Restated |
Restated |
||||||
|
Cash and cash equivalents |
34,073 |
27,122 |
34,073 |
27,122 |
||||||
|
Other short-term securities |
42,451 |
43,457 |
13,409 |
16,599 |
643 |
818 |
28,399 |
26,040 |
||
|
Derivative financial instruments |
13,390 |
13,812 |
- |
67 |
10 |
13,323 |
13,800 |
- |
2 |
|
|
Government and other securities |
32,091 |
26,753 |
13,932 |
10,381 |
10,685 |
10,230 |
7,474 |
6,142 |
- |
|
|
Loans and advances |
579,372 |
527,166 |
480,952 |
441,407 |
90 |
67 |
98,297 |
85,575 |
33 |
117 |
|
Other assets* |
8,673 |
9,488 |
4,969 |
5,376 |
3,704 |
4,112 |
- |
- |
||
|
Investments in private-equity |
||||||||||
|
associates, associate companies |
||||||||||
|
and joint arrangements** |
860 |
1,000 |
- |
- |
- |
860 |
1,000 |
|||
|
Investment securities** |
19,348 |
16,213 |
- |
826 |
534 |
17,567 |
14,606 |
955 |
1,073 |
|
|
730,258 |
665,011 |
547,335 |
500,885 |
16,015 |
15,771 |
165,060 |
146,163 |
1,848 |
2,192 |
|
|
FINANCIAL LIABILITIES |
||||||||||
|
Total financial liabilities |
Total financial liabilities |
Total financial liabilities |
Total financial liabilities |
|||||||
|
Total financial liabilities |
recognised at amortised cost |
classified as level 1 |
classified as level 2 |
classified as level 3 |
||||||
|
31 December |
31 December |
31 December |
31 December |
31 December |
31 December |
31 December |
31 December |
31 December |
31 December |
|
|
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
|
|
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
|
|
Rm |
Rm |
Rm |
m |
Rm |
Rm |
Rm |
Rm |
Rm |
Rm |
|
|
Restated |
Restated |
Restated |
Restated |
Restated |
||||||
|
Derivative financial instruments |
16,580 |
13,454 |
31 |
6 |
16,549 |
13,447 |
- |
1 |
||
|
Amounts owed to depositors |
602,952 |
550,878 |
455,126 |
416,097 |
- |
147,826 |
134,781 |
- |
||
|
Provisions and other liabilities |
14,682 |
15,526 |
10,096 |
9,148 |
4,469 |
6,318 |
117 |
60 |
- |
|
|
Investment and insurance contract |
||||||||||
|
liabilties |
14,844 |
12,492 |
- |
- |
14,844 |
12,492 |
- |
|||
|
Long-term debt instruments*** |
33,268 |
30,298 |
29,490 |
24,668 |
2,317 |
5,447 |
1,461 |
183 |
- |
|
|
682,326 |
622,648 |
494,712 |
449,913 |
6,817 |
11,771 |
180,797 |
160,963 |
- |
1 |
|
* An amount of R301m was reclassified from level 2 to level 1 due to more accurate information becoming available.
** An amount of R364m was reclassified from investment securities to investments in private-equity associates, associate companies and joint arrangements to align better with industry practice. No adjustments to the carrying value of the finnacial instruments arose as a result of the reclassification. Furthermore, no changes were made to the categorisation of the financial instruments and they remain classified as designated at fair value through profit or loss.
*** During the year certain long-term debt instruments were determined to be trading in an inactive market. Previously the fair-value measurement of these instruments was determined with reference to published market values. Now the fair-value measurementis determined by using an appropriate valuation technique, which incorporates observable inputs for similar instruments, with similar maturities and coupons. This change in valuation methodology has resulted in a transfer of the affected instruments from level 1 to level 2.
|
Gains/(Losses) in |
|||||||
|
|
Gains/(Losses) in |
comprehensive |
Closing balance at 31 |
||||
|
|
Opening balance at 1 January |
profit for the year |
income for the year |
Purchases and issues |
Sales and settlements |
Transfers in/(out) |
December |
|
2013 (Audited) |
Rm |
Rm |
Rm |
Rm |
Rm |
Rm |
Rm |
|
FINANCIAL ASSETS |
|
|
|
|
|
|
|
|
Derivative financial instruments |
2 |
- |
- |
- |
(2) |
- |
- |
|
Loans and advances |
117 |
- |
- |
- |
(84) |
- |
33 |
|
Investment securities |
1,073 |
21 |
- |
200 |
(339) |
- |
955 |
|
Investments in private-equity associates, |
|
|
|
|
|
|
|
|
associate companies and joint arrangements |
1,000 |
(22) |
- |
59 |
(177) |
- |
860 |
|
2,192 |
(1) |
- |
259 |
(602) |
- |
1,848 |
|
|
FINANCIAL LIABILITIES |
|
|
|
|
|
|
|
|
Derivative financial instruments |
1 |
- |
- |
- |
(1) |
- |
- |
|
1 |
- |
- |
- |
(1) |
- |
- |
|
Gains/(Losses) in |
|||||||
|
|
|
Gains/(Losses) in |
comprehensive |
|
|
|
Closing balance at 31 |
|
2012 (Audited) |
Opening balance at 1 January |
profit for the year |
income for the year |
Purchases and issues |
Sales and settlements |
Transfers in/(out) |
December |
|
Restated |
Rm |
Rm |
Rm |
Rm |
Rm |
Rm |
Rm |
|
FINANCIAL ASSETS |
|
|
|
|
|
|
|
|
Derivative financial instruments |
29 |
2 |
|
|
(29) |
|
2 |
|
Loans and advances |
91 |
29 |
|
|
(3) |
|
117 |
|
Investment securities |
1,053 |
104 |
4 |
49 |
(137) |
|
1,073 |
|
Investments in private-equity associates, |
|
|
|
|
|
|
|
|
associate companies and joint arrangements |
945 |
(142) |
|
275 |
(78) |
|
1,000 |
|
2,118 |
(7) |
4 |
324 |
(247) |
- |
2,192 |
|
|
FINANCIAL LIABILITIES |
|
|
|
|
|
|
|
|
Derivative financial instruments |
5 |
(8) |
|
|
4 |
|
1 |
|
5 |
(8) |
- |
- |
4 |
- |
1 |
EFFECT OF CHANGES IN SIGNIFICANT UNOBSERVABLE ASSUMPTIONS TO REASONABLE POSSIBLE ALTERNATIVES
The fair value of financial instruments is, under certain circumstances, measured by means of valuation techniques based on assumptions that are not market-observable. Where these scenarios apply, the group performs stress testing on the fair value of the relevant instruments. In stress testing, appropriate levels are chosen for the unobservable input parameters so that they are consistent with prevailing market evidence and in line with the group's approach to valuation control.
The sensitivity of the fair-value measurement is dependent on the unobservable inputs. Significant changes to the unobservable inputs in isolation will have either a positive or a negative impact on the fair value. The following information is intended to illustrate the potential impact of the relative uncertainty in the fair value of financial instruments, the valuation of which depends on unobservable input parameters. However, it is unlikely in practice that all unobservable parameters would simultaneously be at the extremes of their ranges of reasonably possible alternatives.
Furthermore, the disclosure is neither predictive nor indicative of future movements in fair value.
|
Favourable change in |
||||||
|
|
|
|
|
Value per statement of |
fair value due to |
Unfavourable change in fair |
|
|
Valuation technique |
Principal assumption stressed |
Stress parameters |
financial position |
stress test |
value due to stress test |
|
December 2013 (Audited) |
|
|
% |
Rm |
Rm |
Rm |
|
FINANCIAL ASSETS |
|
|
|
|
|
|
|
Loans and advances |
Discounted cashflow model |
Credit spreads and discount rates |
Between (14) and 14 |
33 |
3 |
(4) |
|
Investment securities adjusted |
Discounted cashflows, |
Valuation multiples, correlations, |
|
|
|
|
|
|
net asset value, earnings |
volatilities and credit spreads |
Between (25) and 25 |
955 |
104 |
(119) |
|
|
multiples, third-party |
|
|
|
|
|
|
|
valuations, dividend yields |
|
|
|
|
|
|
Investments in private-equity associates, |
|
|
|
|
|
|
|
associate companies and joint arrangements |
Discounted cashflows, |
Valuation multiples |
Between (11) and 11 |
860 |
83 |
(93) |
|
|
earnings multiples |
|
|
|
|
|
|
Total financial assets classified as level 3 |
|
|
|
1,848 |
190 |
(216) |
|
|
|
|
|
|
Favourable change in |
|
|
|
|
|
|
Value per statement of |
fair value due to |
Unfavourable change in fair |
|
|
Valuation technique |
Principal assumption stressed |
Stress parameters |
financial position |
stress test |
value due to stress test |
|
December 2012 (Audited) |
|
|
|
|
|
|
|
Restated |
|
|
% |
Rm |
Rm |
Rm |
|
FINANCIAL ASSETS |
|
|
|
|
|
|
|
Derivative financial instruments |
Discounted cashflow model, |
Correlations, volatilities and |
Between (14) and 14 |
2 |
* |
* |
|
|
Black-Scholes model and |
credit spreads |
|
|
|
|
|
|
multiple valuation |
|
|
|
|
|
|
techniques |
||||||
|
Loans and advances |
Discounted cashflow model |
Credit spreads and discount rates |
Between (14) and 14 |
117 |
13 |
(16) |
|
Investment securities |
Discounted cashflows, adjusted |
Valuation multiples, |
Between (25) and 25 |
|
|
|
|
|
net asset value, earnings |
correlations, volatilities |
|
|
|
|
|
|
multiples, third-party |
and credit spreads |
|
|
|
|
|
|
valuations, dividend yields |
|
|
|
|
|
|
1,073 |
151 |
(178) |
||||
|
Investments in private-equity associates, |
|
|
|
|
|
|
|
associate companies and joint arrangements |
Discounted cashflows, earnings |
Valuation multiples |
Between (11) and 11 |
1,000 |
70 |
(70) |
|
|
multiples |
|
|
|
|
|
|
Total financial assets classified as level 3 |
|
|
|
2,192 |
234 |
(264) |
|
FINANCIAL LIABILITIES |
|
|
|
|
|
|
|
Derivative financial instruments |
Discounted cashflow model, |
Discount rates, risk-free rates, |
Between (25) and 25 |
1 |
* |
* |
|
|
Black-Scholes model and |
volatilities, credit spreads |
|
|
|
|
|
|
multiple valuation |
and valuation multiples |
|
|
|
|
|
techniques |
* Represents amounts less than R1m.
UNREALISED GAINS AND LOSSES
The unrealised gains or losses arising on instruments classified as level 3 include the following:
|
31 December |
31 December |
|
|
2013 |
2012 |
|
|
(Audited) |
(Audited) |
|
|
Rm |
Rm |
|
|
Trading income/(losses) |
11 |
(19) |
|
Private-equity losses |
(12) |
(25) |
|
Other fair-value adjustments |
29 |
|
|
(1) |
(15) |
SUMMARY OF PRINCIPAL VALUATION TECHNIQUES - LEVEL 2 INSTRUMENTS
The following table sets out the group's principal valuation techniques used in determining the fair value of financial assets and financial liabilities classified as
level 2 in the fair-value hierarchy:
|
Assets |
Valuation technique |
Key inputs |
|
Other short-term securities |
Discounted cashflow model |
Discount rates |
|
Derivative financial instruments |
Discounted cashflow model |
Discount rates |
|
|
Black-Scholes model |
Risk-free rate and volatilities |
|
|
Multiple valuation techniques |
Valuation multiples |
|
Government and other securities |
Discounted cashflow model |
Discount rates |
|
Loans and advances |
Discounted cashflow model |
Interest rate curves |
|
Investment securities |
Discounted cashflow models |
Money market rates and interest rates |
|
|
Adjusted net asset value |
Underlying price of market traded instruments |
|
|
Dividend yield method |
Dividend growth rates |
|
Liabilities |
|
|
|
Derivative financial instruments |
Discounted cashflow model |
Discount rates |
|
|
Black-Scholes model |
Risk-free rate and volatilities |
|
|
Multiple valuation techniques |
Valuation multiples |
|
Amounts owed to depositors |
Discounted cashflow model |
Discount rates |
|
Provisions and liabilities |
Discounted cashflow model |
Discount rates |
|
Investment and insurance contract liabilities |
Adjusted net asset value |
Underlying price of market traded instruments |
|
Long-term debt instruments |
Discounted cashflows |
Discount rates |
Offsetting financial assets and financial liabilities
In accordance with the requirements of IFRS 7 Financial Instruments: Disclosures, the table below sets out the impact of:
- recognised financial instruments that are set off in the statement of financial position in accordance with the requirements of
International Accounting Standard (IAS) 32 Financial Instruments: Presentation; and
- financial instruments that are subject to an enforceable master netting arrangement or similar agreement that covers similar
financial instruments and transactions that did not qualify for presentation on a net basis.
The group reports financial assets and financial liabilities on a net basis in the statement of financial position only if there is a
legally enforceable right to set off the recognised amounts and there is intention to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
Certain master netting arrangements may not meet the criteria for offsetting in the statement of financial position because:
- these agreements create a right of setoff that is enforceable only following an event of default, insolvency or bankruptcy; and
- the group and its counterparties do not intend to settle on a net basis or to realise the assets and settle the liabilities
simultaneously.
Master netting arrangements and similar agreements include derivative clearing agreements, global master repurchase
agreements and global master securities lending
agreements.
|
2013 (Audited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amounts |
|
|
|
subject to IFRS 7 |
|||||||
|
offsetting |
|||||||
|
Amounts |
disclosure |
||||||
|
recognised in |
recognised in |
||||||
|
the statement |
the statement |
||||||
|
of financial |
Amounts that |
|
Net amounts |
of financial |
|
Total amounts |
|
|
position and |
may be netted |
|
reflecting the |
position, |
Amounts not |
recognised in |
|
|
subject to |
off on the |
effect of master |
excluding the |
subject to |
the statement |
||
|
netting |
occurrence of a |
Financial |
netting |
effect of |
offsetting |
of financial |
|
|
Rm |
arrangements |
future event |
collateral |
arrangements |
collateral |
disclosure |
position |
|
Assets |
|||||||
|
Derivative financial instruments |
12,835 |
(6,700) |
|
6,135 |
12,835 |
555 |
13,390 |
|
Loans and advances |
27,838 |
|
27,838 |
27,838 |
551,534 |
579,372 |
|
|
Other assets |
3,349 |
(597) |
(545) |
2,207 |
3,349 |
5,324 |
8,673 |
|
44,022 |
(7,297) |
(545) |
36,180 |
44,022 |
557,413 |
601,435 |
|
|
Liabilities |
|||||||
|
Derivative financial instruments |
15,846 |
(7,320) |
|
8,526 |
15,846 |
734 |
16,580 |
|
Amounts owed to depositors |
61,660 |
|
|
61,660 |
61,660 |
541,292 |
602,952 |
|
Provisions and other liabilities |
2,610 |
(1,846) |
(764) |
- |
2,610 |
12,072 |
14,682 |
|
80,116 |
(9,166) |
(764) |
70,186 |
80,116 |
554,098 |
634,214 |
|
2012 (Audited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amounts |
|
|
|
subject to IFRS 7 |
|||||||
|
offsetting |
|||||||
|
Amounts |
disclosure |
||||||
|
recognised in |
recognised in |
||||||
|
the statement |
the statement |
||||||
|
|
of financial |
Amounts that |
|
Net amounts |
of financial |
|
Total amounts |
|
|
position and |
may benetted |
|
reflecting the |
position, |
Amounts not |
recognised in |
|
subject to |
off on the |
effect of master |
excluding the |
subject to |
the statement |
||
|
|
netting |
occurrence of a |
Financial |
netting |
effect of |
offsetting |
of financial |
|
Rm |
arrangements |
future event |
collateral |
arrangements |
collateral |
disclosure |
position |
|
Assets |
|||||||
|
Derivative financial instruments |
13,231 |
(7,021) |
|
6,210 |
13,231 |
581 |
13,812 |
|
Loans and advances |
24,338 |
|
|
24,338 |
24,338 |
502,828 |
527,166 |
|
Other assets |
3,734 |
|
(499) |
3,235 |
3,734 |
5,754 |
9,488 |
|
41,303 |
(7,021) |
(499) |
33,783 |
41,303 |
509,163 |
550,466 |
|
|
Liabilities |
|||||||
|
Derivative financial instruments |
13,386 |
(6,183) |
|
7,203 |
13,386 |
68 |
13,454 |
|
Amounts owed to depositors |
17,142 |
|
(7,319) |
9,823 |
17,142 |
533,736 |
550,878 |
|
Provisions and other liabilities |
4,069 |
|
(4,069) |
|
4,069 |
11,457 |
15,526 |
|
34,597 |
(6,183) |
(11,388) |
17,026 |
34,597 |
545,261 |
579,858 |
Restatements and reclassifications
During the year the group restated certain prior-year information due to the mandatory adoption of IAS 19 Employee Benefits and other reclassifications identified. The impact of the
relevant restatements and reclassifications are detailed below:
|
Consolidated statement of financial position |
|
|
|
|
|
|
||
|
December 2012 |
January 2012 |
|||||||
|
|
|
|
Other |
As previously |
|
|
Other |
As previously |
|
Rm |
Restated |
IAS 19* |
Reclassifications** |
reported |
Restated |
IAS 19* |
Reclassifications** |
reported |
|
Assets |
||||||||
|
Cash and cash equivalents |
14,445 |
|
|
14,445 |
13,457 |
|
|
13,457 |
|
Other short-term securities |
43,457 |
|
|
43,457 |
35,986 |
|
|
35,986 |
|
Derivative financial instruments |
13,812 |
|
|
13,812 |
12,840 |
|
|
12,840 |
|
Government and other securities |
26,753 |
|
|
26,753 |
30,176 |
|
|
30,176 |
|
Loans and advances |
527,166 |
|
|
527,166 |
499,023 |
|
|
499,023 |
|
Other assets |
9,488 |
9,488 |
12,051 |
12,051 |
||||
|
Current taxation assets |
246 |
|
|
246 |
698 |
|
|
698 |
|
Investment securities*** |
16,213 |
|
(364) |
16,577 |
13,881 |
|
(400) |
14,281 |
|
Non-current assets held for sale |
508 |
|
|
508 |
8 |
|
|
8 |
|
Investments in private-equity associates, associate companies and joint arrangements |
1,032 |
|
364 |
668 |
968 |
|
400 |
568 |
|
Deferred taxation assets |
541 |
142 |
|
399 |
354 |
88 |
|
266 |
|
Investment property |
205 |
|
|
205 |
614 |
|
|
614 |
|
Property and equipment |
6,398 |
|
|
6,398 |
6,312 |
|
|
6,312 |
|
Long-term employee benefit assets |
2,095 |
(163) |
|
2,258 |
2,102 |
(16) |
|
2,118 |
|
Mandatory reserve deposits with central bank |
12,677 |
|
|
12,677 |
11,952 |
|
|
11,952 |
|
Intangible assets |
7,922 |
|
|
7,922 |
7,777 |
|
|
7,777 |
|
Total assets |
682,958 |
(21) |
- |
682,979 |
648,199 |
72 |
- |
648,127 |
|
Equity and liabilities |
|
|
|
|
|
|
|
|
|
Ordinary share capital |
457 |
|
|
457 |
455 |
|
|
455 |
|
Ordinary share premium |
16,033 |
|
|
16,033 |
15,934 |
|
|
15,934 |
|
Reserves * |
37,111 |
(349) |
37,460 |
32,307 |
(250) |
32,557 |
||
|
Total equity attributable to equity holders of the parent |
53,601 |
(349) |
- |
53,950 |
48,696 |
(250) |
- |
48,946 |
|
Non-controlling interest attributable to: |
|
|
|
|
|
|
|
|
|
- ordinary shareholders |
213 |
(6) |
|
219 |
174 |
(4) |
|
178 |
|
- preference shareholders |
3,561 |
|
|
3,561 |
3,561 |
|
|
3,561 |
|
Total equity |
57,375 |
(355) |
- |
57,730 |
52,431 |
(254) |
- |
52,685 |
|
Derivative financial instruments |
13,454 |
|
|
13,454 |
13,853 |
|
|
13,853 |
|
Amounts owed to depositors |
550,878 |
|
|
550,878 |
524,130 |
|
|
524,130 |
|
Provisions and other liabilities |
15,526 |
|
|
15,526 |
14,751 |
|
|
14,751 |
|
Current taxation liabilities |
193 |
|
|
193 |
200 |
|
|
200 |
|
Other liabilities held for sale |
36 |
|
|
36 |
- |
|
|
- |
|
Deferred taxation liabilities |
793 |
12 |
|
781 |
1,341 |
(4) |
|
1,345 |
|
Long-term employee benefit liabilities |
1,913 |
322 |
|
1,591 |
1,809 |
330 |
|
1,479 |
|
Investment contract liabilities |
9,513 |
|
|
9,513 |
8,237 |
|
|
8,237 |
|
Insurance contract liabilities |
2,979 |
|
|
2,979 |
2,005 |
|
|
2,005 |
|
Long-term debt instruments |
30,298 |
|
|
30,298 |
29,442 |
|
|
29,442 |
|
Total liabilities |
625,583 |
334 |
- |
625,249 |
595,768 |
326 |
- |
595,442 |
|
Total equity and liabilities |
682,958 |
(21) |
- |
682,979 |
648,199 |
72 |
- |
648,127 |
* On 1 January 2013 the group adopted IAS 19 Employee Benefits (revised 2011) (IAS 19R). The adoption of IAS 19R resulted in the group restating its previously reported
financial results, in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
** Certain investments were reclassified from investment securities to investments in private-equity associates, associate companies and joint arrangements to align better with
industry practice.
No adjustments to the carrying value of the financial instruments arose as a result of the reclassification.
Furthermore, no changes were made to the categorisation of the financial instruments and they remain classified as designated at fair value through profit or loss.
*** An amount of R846m was reclassified from held for trading to designated at fair value to reflect management's original intention.
|
Consolidated statement of comprehensive income |
|||
|
December 2012 |
|||
|
As previously |
|||
|
Rm |
Restated |
IAS 19 |
reported |
|
Interest and similar income |
44,730 |
44,730 |
|
|
Interest expense and similar charges |
25,050 |
25,050 |
|
|
Net interest income |
19,680 |
- |
19,680 |
|
Impairments charge on loans and advances |
5,199 |
5,199 |
|
|
Income from lending activities |
14,481 |
- |
14,481 |
|
Non-interest revenue |
17,324 |
17,324 |
|
|
Operating income |
31,805 |
- |
31,805 |
|
Total operating expenses |
20,563 |
35 |
20,528 |
|
- Operating expenses |
20,485 |
35 |
20,450 |
|
- BEE transaction expenses |
78 |
78 |
|
|
Indirect taxation |
561 |
561 |
|
|
Profit from operations before non-trading and capital items |
10,681 |
(35) |
10,716 |
|
Non-trading and capital items |
(18) |
(18) |
|
|
Fair-value adjustments of investment properties |
(12) |
(12) |
|
|
Profit from operations |
10,651 |
(35) |
10,686 |
|
Share of profits of associate companies and joint arrangements |
1 |
1 |
|
|
Profit before direct taxation |
10,652 |
(35) |
10,687 |
|
Direct taxation ** |
2,865 |
(10) |
2,875 |
|
Profit for the year |
7,787 |
(25) |
7,812 |
|
Other comprehensive income/(loss) net of taxation |
171 |
(76) |
247 |
|
- Exchange differences on translating foreign operations |
162 |
162 |
|
|
- Fair-value adjustments on available-for-sale assets |
43 |
43 |
|
|
- Remeasurements on long-term employee benefit assets |
(76) |
(76) |
|
|
- Gains on property revaluations |
42 |
42 |
|
|
Total comprehensive income for the year |
7,958 |
(101) |
8,059 |
|
Profit attributable to: |
|||
|
- Equity holders of the parent |
7,449 |
(27) |
7,476 |
|
- Non-controlling interest - ordinary shareholders |
45 |
2 |
43 |
|
- Non-controlling interest - preference shareholders |
293 |
293 |
|
|
|
7,787 |
(25) |
7,812 |
|
Total comprehensive income attributable to: |
|||
|
- Equity holders of the parent |
7,620 |
(99) |
7,719 |
|
- Non-controlling interest - ordinary shareholders |
45 |
(2) |
47 |
|
- Non-controlling interest - preference shareholders |
293 |
293 |
|
|
Total comprehensive income for the year |
7,958 |
(101) |
8,059 |
|
Basic earnings per share (cents) |
1,632 |
(6) |
1,638 |
|
Diluted earnings per share (cents) |
1,583 |
(5) |
1,588 |
"
Enquiries
External communications
|
Patrick Bowes |
UK |
+44 20 7002 7440 |
|
Investor relations |
||
|
Dominic Lagan |
UK |
+44 20 7002 7190 |
|
Kelly de Kock |
SA |
+27 21 509 8709 |
|
Media |
||
|
William Baldwin-Charles |
+44 20 7002 7133 |
|
|
+44 7834 524833 |
Notes to Editors
Old Mutual
Old Mutual provides life assurance, asset management, banking and general insurance to more than 14 million customers in Africa, the Americas, Asia and Europe. Originating in South Africa in 1845, Old Mutual has been listed on the London and Johannesburg Stock Exchanges, among others, since 1999.
In the year ended 31 December 2012, the Group reported adjusted operating profit before tax of £1.6 billion (on an IFRS basis) and had £262 billion of funds under management from core operations.
For further information on Old Mutual plc, please visit the corporate website at www.oldmutual.com
This information is provided by RNS
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