Full integrated annual report - African Bank - Investoreports
Full integrated annual report - African Bank - Investoreports
Full integrated annual report - African Bank - Investoreports
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Financial review continued<br />
Economic profi t<br />
The <strong>Bank</strong>ing business unit increased its economic profi t from R442 million to R847 million, a rise of 92%. The<br />
Retail business unit incurred a R211 million economic loss which was a reduction of 23% on the R273 million<br />
loss in 2010. These results combined with a R153 million charge for STC and other adjustments, generated a<br />
net economic profi t of R494 million relative to R78 million for 2010 for the ABIL group.<br />
for the year ended<br />
30 September 2011<br />
Average<br />
ordinary<br />
Charge<br />
share-<br />
for the<br />
holders’ Return on Cost of Headline cost of Economic<br />
equity equity equity earnings equity profit/(loss)<br />
Rm % % Rm Rm Rm<br />
<strong>Bank</strong>ing unit<br />
<strong>Bank</strong>ing unit – based on<br />
10 034 22,9 14,5 2 302 (1 455) 847<br />
its own equity 6 034 38,2 14,5 2 302 (875) 1 427<br />
Goodwill 4 000 n/a 14,5 0 (580) (580)<br />
Retail unit<br />
Retail unit – based on its<br />
2 764 6,9 14,5 190 (401) (211)<br />
own equity<br />
Goodwill arising on<br />
acquisition – equity<br />
2 047 9,3 14,5 190 (297) (107)<br />
component 717 n/a 14,5 0 (104) (104)<br />
STC and other<br />
consolidation adjustments (76) 14,5 (153) 11 (142)<br />
Consolidated ABIL group<br />
for the year ended<br />
30 September 2010<br />
12 722 18,4 14,5 2 339 (1 845) 494<br />
<strong>Bank</strong>ing unit<br />
<strong>Bank</strong>ing unit – based on<br />
9 473 19,7 15,0 1 863 (1 421) 442<br />
its own equity 5 473 34,0 15,0 1 863 (821) 1 042<br />
Goodwill 4 000 n/a 15,0 0 (600) (600)<br />
Retail unit<br />
Retail unit – based on its<br />
2 684 4,8 15,0 130 (403) (273)<br />
own equity<br />
Goodwill arising on<br />
acquisition – equity<br />
1 967 6,6 15,0 130 (295) (165)<br />
component<br />
STC and other<br />
717 n/a 15,0 0 (108) (108)<br />
consolidation adjustments (74) 15,0 (103) 11 (92)<br />
Consolidated ABIL group 12 083 15,6 15,0 1 890 (1 812) 78<br />
The cost of equity used to calculate economic profi t is reviewed <strong>annual</strong>ly to take cognisance of changes<br />
in funding rates and risk premiums and was adjusted down from 15,0% to 14,5% in September 2011. The<br />
reduction in the cost of equity contributed R64 million to the overall improvement in economic profi t.<br />
Integrated <strong>report</strong> 2011 | <strong>African</strong> <strong>Bank</strong> Investments Limited<br />
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