Absa Group Limited Absa Group Limited Annual Report IRUWKH\HDUHQGHG'HFHPEHU

$Absa Group Limited Absa Group Limited Annual Report IRUWKH\HDUHQGHG'HFHPEHU$

Absa Group Limited Absa Group Limited Annual report IRUWKH\HDUHQGHG'HFHPEHU

Annual report for the year ended 31 December 2010 Annual report

www.absa.co.za A journey to integrated reporting

Introduction -6(OLVWHG 6RXWK $IULFDQ FRPSDQLHV ZLWK \HDUHQGV IURP )HEUXDU\ DUH UHTXLUHG WR SURGXFH LQWHJUDWHG UHSRUWVLQDFFRUGDQFHZLWKWKH.LQJ&RGHRI*RYHUQDQFH3ULQFLSOHVIRU6RXWK$IULFD .LQJ,,,

7KH,QWHJUDWHG5HSRUWLQJ&RPPLWWHHRI6RXWK$IULFDGHILQHVDQLQWHJUDWHGUHSRUWDV¦DUHSRUWWKDWLQFRUSRUDWHVLQ FOHDUODQJXDJHPDWHULDOLQIRUPDWLRQIURPWKHVHDQGRWKHUVRXUFHVWRHQDEOHVWDNHKROGHUVWRHYDOXDWHWKHRUJDQLVDWLRQ©V SHUIRUPDQFHDQGWRPDNHDQLQIRUPHGDVVHVVPHQWDERXWLWVDELOLW\WRFUHDWHDQGVXVWDLQYDOXH$QLQWHJUDWHGUHSRUW VKRXOG SURYLGH VWDNHKROGHUV ZLWK D FRQFLVH RYHUYLHZ RI DQ RUJDQLVDWLRQ LQWHJUDWLQJ DQG FRQQHFWLQJ LPSRUWDQW LQIRUPDWLRQDERXWVWUDWHJ\ULVNVDQGRSSRUWXQLWLHVDQGUHODWLQJWKHPWRVRFLDOHQYLURQPHQWDOHFRQRPLFDQGILQDQFLDO LVVXHV§

7KLVDPRXQWVWRPRUHWKDQPHUHO\PHUJLQJWKHVXVWDLQDELOLW\DQGDQQXDOUHSRUWV7KHLQWHQWLRQLVIRUFRPSDQLHVWR LQWHJUDWHHQYLURQPHQWDOVRFLDODQGJRYHUQDQFH (6* LVVXHVDVZHOODVWKHLUVWUDWHJLHVDQGULVNVLQWRWKHPDLQVWUHDP RIEXVLQHVVWKLQNLQJDFWLRQVDQGUHSRUWLQJ$EVDVHHVWKHSDWKWRLQWHJUDWHGUHSRUWLQJDVDMRXUQH\ZKLFKVWDUWVZLWK FKDQJLQJPLQGVHWVSURFHVVHVDQGWKHQUHSRUWLQJ%DVHGRQWKHDFWLYLWLHVXQGHUWDNHQLQ$EVDZLOOEHUHDG\WR SURGXFHLWVILUVWLQWHJUDWHGUHSRUWIRUWKH\HDUHQGLQJ'HFHPEHU

Absa’s 2010 annual report 3URJUHVVWRZDUGVLQWHJUDWLQJWKH(6*HOHPHQWVZLOOUHDGLO\EHQRWLFHGLQWKH*URXS©VDQQXDOUHSRUW.H\FKDQJHV LQOD\RXWDQGGLVFORVXUHIURPWKHUHSRUWDUH LQFOXGLQJQRQILQDQFLDOLQGLFDWRUVLQPDQ\VHFWLRQVRIWKHUHSRUW LQWURGXFLQJLQGHSHQGHQWDVVXUDQFHRQDOLPLWHGEDVLVIRUDQXPEHURIQRQILQDQFLDOLQGLFDWRUVDQG GHWHUPLQLQJNH\PDWHULDOWRSLFV7KHVHPDWHULDOWRSLFVSURYLGHWKHIUDPHZRUNWRFRQILUPRXUDVVHVVPHQWWKDW $EVDKDVFUHDWHGHFRQRPLFHQYLURQPHQWDODQGVRFLDOYDOXHIRULWVHOIDQGLWVVWDNHKROGHUVDQGVHUYHVDVWKHEDVLV IRURXUEURDGHUVXVWDLQDELOLW\UHSRUWLQJ A journey to integrated reporting

Absa’s integrated reporting journey $WWKHDQQXDOJHQHUDOPHHWLQJ $*0 ZHDUHVHHNLQJVKDUHKROGHUV©DSSURYDOWRFKDQJHWKH&RPSDQ\©VDUWLFOHVRI DVVRFLDWLRQZLWKUHJDUGWRWKHGLVWULEXWLRQWRVKDUHKROGHUVRIVXPPDULVHGILQDQFLDOVWDWHPHQWVLQSULQWHGIRUPDWZKLOH SXEOLVKLQJWKHIXOOVHWRIILQDQFLDOVRQWKHZHEVLWH:HEHOLHYHWKLVFKDQJHZLOOHQDEOHXVWRGLVWULEXWHPRUHUHOHYDQW LQIRUPDWLRQWRRXUVWDNHKROGHUV7KHDQQXDOUHSRUWFRQWDLQVGHWDLOHGLQIRUPDWLRQSHUWDLQLQJWRRXUPDWHULDOWRSLFV *RLQJIRUZDUG$EVD©VPDWHULDOWRSLFVZLOOEHDIRFDOSRLQWIRURXULQWHJUDWHGUHSRUWLQJ

Scope and boundary of the 2010 annual report 7KLV UHSRUW FRYHUV $EVD©V 6RXWK $IULFDQ RSHUDWLRQV DQG RXU $IULFDQ HQWLWLHV LQ WKH PDMRULW\ RI WKH GLVFORVXUHV $V $EVD©V6RXWK$IULFDQRSHUDWLRQVFRQVWLWXWHWKHPDMRULW\RIWKH*URXS©VHDUQLQJVFHUWDLQVHFWLRQVKDYHDELDVWRZDUGV WKHVH7KHUHSRUWFRYHUVWKHSHULRGIURP-DQXDU\WR'HFHPEHU+RZHYHUZKHUHLWLVLQIRUPDWLYHWRDGG LQIRUPDWLRQSRVW'HFHPEHUWKLVKDVEHHQLQFOXGHGDQGQRWHG 6LQFHWKHUHOHDVHRI$EVD©VDQQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHUWKHUHKDVEHHQQRPDWHULDOFKDQJH WR WKH VWUXFWXUH RZQHUVKLS RU SURGXFWV DQG VHUYLFHV RI WKH *URXS 7KHUHIRUH WKH VFRSH RI WKH UHSRUW KDV UHPDLQHGODUJHO\XQFKDQJHG&KDQJHVWRWKHVWUXFWXUHRIWKH*URXSGXULQJWKH\HDUKDYHEHHQQRWHGLQWKHGLUHFWRUV© UHSRUW 7KH UHSRUW FRYHUV WKH HQWLUH *URXS FRPSULVLQJ UHWDLO FRPPHUFLDO FRUSRUDWH DQG LQYHVWPHQW EDQNLQJ DQG ILQDQFLDOVHUYLFHV

Absa’s reporting ethos $EVDDLPVWRDFKLHYHWKHKLJKHVWVWDQGDUGVLQDOOWKHGLVFORVXUHVLQFOXGHGLQWKLVUHSRUWLQRUGHUWRSURYLGHPHDQLQJIXO DFFXUDWHFRPSOHWHWUDQVSDUHQWDQGEDODQFHGLQIRUPDWLRQWRVWDNHKROGHUV7KHERDUGDQGERDUGFRPPLWWHHVZHUH DFWLYHO\LQYROYHGLQILQDOLVLQJWKHGLVFORVXUHVPDGH :H ZLOO EXLOG RQ WKLV UHSRUW DVVLVWHG E\ IHHGEDFN RQ WKH FRQWHQW DQG IRUP DV ZH PRYH WRZDUGV RXU ILUVW LQWHJUDWHGUHSRUWIRUWKH\HDUHQGLQJ'HFHPEHU

Garth Grifﬁn Maria Ramos Group Chairman Group Chief Executive

Navigation and content aids:

WebSURYLGHVWKHUHOHYDQWOLQNVWRWKHZHEVLWH People

Further readingER[HVUHIHUWKHUHDGHUWRRWKHUSDUWVRIWKHUHSRUWWKDWFRQWDLQUHOHYDQW Planet LQIRUPDWLRQ

$videoKDVEHHQSURYLGHGRQWKHZHEVLWH Proﬁt

A AssuredNH\SHUIRUPDQFHLQGLFDWRU Contents

A journey to integrated reporting Inside front cover $UHIOHFWLRQRQ$EVD*URXS©VLQWHJUDWHG UHSRUWLQJMRXUQH\

Who we are and what we do Pages 03 – 18 3 2XUFRPSDQ\ $QRYHUYLHZRIWKH$EVD*URXSLQWHUPVRI 4 2XUOHJDOVWUXFWXUH ZKDWWKH*URXSGRHVLWVNH\EXVLQHVV 5 2XUVWUDWHJ\ RSHUDWLRQVDQGVWUDWHJ\ 10 2XUEXVLQHVVPRGHO 14 2XUSHUIRUPDQFH

Sustainability review Pages 21 – 72 21 +LJKOHYHORYHUYLHZ $EVD©VVXVWDLQDELOLW\UHSRUWLQJLQFOXGLQJ 23 *URXSYDOXHDGGHGVWDWHPHQW LWVVWDNHKROGHUHQJDJHPHQWDSSURDFK 24 ,QGHSHQGHQWDVVXUDQFHUHSRUWWRWKHGLUHFWRUVRI DQGPDWHULDOLW\IUDPHZRUNWRFRQILUPWKDW $EVD*URXS/LPLWHG WKH*URXSFRQWLQXHVWRFUHDWHHFRQRPLF HQYLURQPHQWDODQGVRFLDOYDOXHIRULWVHOI 26 6WDNHKROGHUHQJDJHPHQW DQGLWVVWDNHKROGHUV 31 0DWHULDOLW\ 32 2XUPDWHULDOWRSLFV

Board and leadership Pages 75 – 98 2XUERDUG 7KH*URXS&KDLUPDQDQGWKH*URXS&KLHI ([HFXWLYHSUHVHQWWKHLUUHSRUWVWR 75 &KDLUPDQ©VVWDWHPHQW VWDNHKROGHUV 81 'LUHFWRUDWH 2XUOHDGHUVKLS 89 *URXS&KLHI([HFXWLYH©VUHYLHZ 93 *URXS([HFXWLYH&RPPLWWHH Business operations Pages 101 – 122 101 %XVLQHVVUHYLHZ $UHYLHZRIWKH*URXS©VEXVLQHVVRSHUDWLRQV 102 )LQDQFLDOUHSRUWLQJVWUXFWXUH WKHLUSHUIRUPDQFHDQGVWUDWHJLHVJRLQJ 103 3URILWFRQWULEXWLRQE\EXVLQHVVDUHD IRUZDUG 104 2SHUDWLRQDOUHYLHZV

Governance, remuneration, risk and controls Pages 125 – 320 125 *RYHUQDQFHDQGDFFRXQWDELOLW\ *RYHUQDQFHUHPXQHUDWLRQKXPDQUHVRXUFHV 145 5HPXQHUDWLRQDQGKXPDQUHVRXUFHV FRQWUROVFRPSOLDQFHDQGULVNPDQDJHPHQW 175 &RQWUROVDQGFRPSOLDQFH UHPDLQDFRUQHUVWRQHRIWKH*URXS©V RSHUDWLRQV 189 5LVNPDQDJHPHQW

Financial performance Pages 323 – 508 323 *URXS)LQDQFLDO'LUHFWRU©VUHYLHZ )XOOGLVFORVXUHRIWKH*URXS©VILQDQFLDO 325 )LQDQFLDODQDO\VLV SHUIRUPDQFH 332 1LQH\HDUVXPPDU\ 336 )LQDQFLDOVWDWHPHQWV

Shareholder information Pages 511 – 526 511 /HWWHUIURPWKH&KDLUPDQ ,PSRUWDQWVKDUHKROGHULQIRUPDWLRQLQFOXGLQJ 512 6KDUHSHUIRUPDQFHDQGVKDUHKROGHUV©LQIRUPDWLRQ WKHQRWLFHRIDQQXDOJHQHUDOPHHWLQJ 515 $QQXDOJHQHUDOPHHWLQJLQIRUPDWLRQ

Reference tools Pages 529 – 543 529 *OREDO5HSRUWLQJ,QLWLDWLYH,QGH[ 5HIHUHQFHWRROVWRDVVLVWWKHUHDGHU 543 *ORVVDU\

Administration3 and contact details Inside back cover

Who we are and what we do Contents

Who we are and what we do Pages 03 – 18

03 2XUFRPSDQ\ $QRYHUYLHZRIWKH$EVD*URXSLQWHUPV RIZKDWWKH*URXSGRHVLWVNH\EXVLQHVV 2XUOHJDOVWUXFWXUH 04 RSHUDWLRQVDQGVWUDWHJ\ 05 2XUVWUDWHJ\ 10 2XUEXVLQHVVPRGHO 14 2XUSHUIRUPDQFH Who we are and what we do

Our company

Absa Group Limited (Absa or the Group), listed on the JSE Limited, is one of South Africa’s largest ﬁnancial services groups offering a complete range of banking, insurance and wealth management products and services. Absa’s business is conducted primarily in South Africa. It also has equity holdings in banks in Mozambique and Tanzania and representative ofﬁces in Namibia and Nigeria. $EVDLVDVXEVLGLDU\RI%DUFOD\V%DQN3/&ZKLFKKDVDQHTXLW\LQWHUHVWRILQWKH*URXS%DUFOD\VLVDPDMRU JOREDOILQDQFLDOVHUYLFHVSURYLGHUHQJDJHGLQUHWDLOEDQNLQJFUHGLWFDUGVFRUSRUDWHDQGLQYHVWPHQWEDQNLQJDQGZHDOWK PDQDJHPHQWZLWKDQH[WHQVLYHLQWHUQDWLRQDOSUHVHQFH

Total customer base Our values 9DOXHRXUSHRSOHDQGWUHDWWKHPZLWKIDLUQHVV PLOOLRQ (2009: 11,7 million) 'HPRQVWUDWHLQWHJULW\LQDOORXUDFWLRQV 6WULYHWRH[FHHGWKHQHHGVRIRXUFXVWRPHUV Total staffed outlets 7DNHUHVSRQVLELOLW\IRUWKHTXDOLW\RIRXUZRUN 'LVSOD\OHDGHUVKLSLQDOOWKDWZHGR (2009: 1 062)

Our stakeholders Total permanent employees

$EVDKDVILYHVWDNHKROGHUJURXSVEHLQJ FXVWRPHUV (2009: 36 150) HPSOR\HHV VKDUHKROGHUV BBBEE1 Codes of Good Practice status FRPPXQLWLHVDQG JRYHUQPHQWVDQGUHJXODWRUV /HYHO (2009: Level 4)

Total assets 5ELOOLRQ (2009: R710,8 billion)

Market capitalisation 5ELOOLRQ Note Broad-based black economic empowerment. (2009: R92,3 billion)

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 03 Who we are and what we do

Our legal structure

Absa Group Limited

Absa Bank Absa Financial Other Associates, joint Limited Services Limited subsidiaries ventures and other (100%) (100%) interests

Retail Banking Insurance Banking Banking +RPH/RDQV $EVD/LIH/LPLWHG %DUFOD\V%DQN ))6)LQDQFH6RXWK$IULFD 9HKLFOHDQG$VVHW)LQDQFH $EVD/LIH 0R]DPELTXH6$ 3URSULHWDU\ /LPLWHG &DUG $ EVDidirect/LPLWHG 1DWLRQDO%DQNRI ,QWHJUDWHG3URFHVVLQJ &RPPHUFH/LPLWHG 6ROXWLRQV 3URSULHWDU\ 3HUVRQDO/RDQV $EVD,QVXUDQFH&RPSDQ\ /LPLWHG 7DQ]DQLD /LPLWHG 5HWDLO%DQN $EVD,QVXUDQFH5LVN :RROZRUWKV)LQDQFLDO 0$1)LQDQFLDO6HUYLFHV 6HUYLFHV 3URSULHWDU\ 6$ 3URSULHWDU\ /LPLWHG Commercial Banking 0DQDJHPHQW6HUYLFHV /LPLWHG /LPLWHG VKDUH $EVD%XVLQHVV%DQN Fiduciary Financial Services Investment Banking $EVD7UXVW/LPLWHG $EVD6WRFNEURNHUV $EVD&DSLWDO 3URSULHWDU\ /LPLWHG $EVD&RQVXOWDQWVDQG $EVD:HDOWK $FWXDULHV 3URSULHWDU\ $EVD3RUWIROLR0DQDJHUV /LPLWHG 3URSULHWDU\ /LPLWHG $EVD+HDOWK&DUH $EVD0DQ[,QVXUDQFH &RQVXOWDQWV 3URSULHWDU\ &RPSDQ\/LPLWHG /LPLWHG $EVD$VVHW0DQDJHPHQW 3URSULHWDU\ /LPLWHG Investments $EVD,QYHVWPHQW Other 0DQDJHPHQW6HUYLFHV $EVD&DSLWDO 3URSULHWDU\ /LPLWHG 5HSUHVHQWDWLYH2IILFH 1LJHULD /LPLWHG $EVD)XQG0DQDJHUV /LPLWHG $EVD'HYHORSPHQW &RPSDQ\+ROGLQJV $EVD0RUWJDJH)XQG 3URSULHWDU\ /LPLWHG 0DQDJHUV 3URSULHWDU\ /LPLWHG $EVD1DPLELD 3URSULHWDU\ /LPLWHG Other $OO3D\&RQVROLGDWHG $EVD,QVXUDQFHDQG ,QYHVWPHQW+ROGLQJV )LQDQFLDO$GYLVHUV 3URSULHWDU\ /LPLWHG 3URSULHWDU\ /LPLWHG $EVD7UDGLQJDQG ,QYHVWPHQWV6ROXWLRQV +ROGLQJV/LPLWHG

04 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Our strategy

Purpose 7REHSDUWQHUVLQJURZLQJSURVSHULW\IRUDOORXUVWDNHKROGHUV

Vision 7REHWKHEHVWSURYLGHURIILQDQFLDOVHUYLFHVLQ6RXWK$IULFDDQGVHOHFWHG $IULFDQPDUNHWV

One Absa strategy

Sustainable growth Balance sheet optimisation and in targeted markets proactive risk management

Simple, streamlined Group Customer- and people- for customer delivery centred organisation

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 05 Who we are and what we do

One Absa strategy

The One Absa strategy comprises four key pillars to position the Group for sustainable growth. To implement the One Absa strategy successfully, the Group has created a range of strategic workstreams. The table below indicates the key objectives across these workstreams, highlights the actions taken during 2010 and the beneﬁts of the strategy:

Strategic pillars Key objectives

Pillar 1: Sustainable growth How in targeted markets 'HYHORS LQQRYDWLYH SURGXFWV DLPHG DW JURZLQJ UHYHQXH ZKHUHWKH*URXSLVFXUUHQWO\XQGHUUHSUHVHQWHGWKHUHE\ What XQORFNLQJYDOXHFKDLQVDQGJURZLQJWKHFXVWRPHUEDVH 7R EHFRPH WKH OHDGLQJ ILQDQFLDO VHUYLFHV 'ULYHFXUUHQWPDUNHWVZLWKJURZWKSRWHQWLDODQGVHHNWR JURXSLQ6RXWK$IULFDDQGVHOHFWHG$IULFDQ LQFUHDVHYDOXHJHQHUDWLRQE\SURYLGLQJWDUJHWHGVHUYLFHV FRXQWULHVZKLOHLPSURYLQJSURILWDELOLW\DQG DQGRIIHULQJV UHWXUQV ,PSOHPHQWLQQRYDWLYHPHWKRGVWRPHHWFXVWRPHUQHHGV ZKLOHUHGXFLQJWKHFXUUHQWFRVWWRVHUYH

Pillar 2: Balance sheet How optimisation and proactive %DODQFHULVNDQGUHZDUGZKLOHHQVXULQJRSWLPDOOLTXLGLW\ risk management DQG FDSLWDO PDQDJHPHQW E\ XVLQJ FDSLWDO ZKHUH $EVD JHQHUDWHVKLJKUHWXUQV What 0DQDJHDOOWKHPDMRUULVNVIDFLQJWKH*URXSLQDSUXGHQW 7RPDLQWDLQDVWURQJEDODQFHVKHHWWKDWFDQ PDQQHU ZLWKVWDQGHFRQRPLFDQGILQDQFLDOVKRFNV

06 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 achievements 2010 beneﬁts

&RFRYHUDJH RI KLJKHQG FRUSRUDWH FOLHQWV WKURXJK Impact on people WKHHVWDEOLVKPHQWRIDFRUSRUDWHEDQN ,PSURYHGDFFHVVWREDQNLQJ ,QYHVWHG LQ D WUDQVDFWLRQDO EDQNLQJ SODWIRUP IRU ,QQRYDWLYHSURGXFWDQGVHUYLFHRIIHULQJV EXVLQHVVFOLHQWV 3URYLVLRQRIHQGWRHQGILQDQFLDOVROXWLRQV (QKDQFHG IXQFWLRQDOLW\ IRU FXVWRPHU VHOIVHUYLFH DQG ,PSURYHGFXVWRPHUVHUYLFH DQ\ZKHUHDQ\WLPHEDQNLQJWKURXJKQHZVHUYLFHVVXFK DVWDS©QJRFDUGVDJULSURFXUHPHQWFDUGVDQGidirect LQVXUDQFH Impact on proﬁt &RPSOHWHG D QHZ UHWDLO FXVWRPHU VHJPHQWDWLRQ DLPHG DW FKDQJLQJ WKH UHWDLO IUDQFKLVH IURP D 5HWXUQ RQ DYHUDJH HTXLW\ JUHDWHU WKDQ FRVW FXVWRPHUYROXPHWRYDOXHIRFXVHGXQLW RIHTXLW\ &RQYHUWHG D QXPEHU RI EUDQFKHV WR D UHIRFXVHG *URZWKLQSURILWEHIRUHWD[DWLRQ IRUPDW RIIHULQJ VLPSOH DQG HDV\ EDQNLQJ DQG 5HGXFHGFRVWWRVHUYHLQUHIRFXVHGEUDQFKHV LQVXUDQFH ,PSURYHG FURVVVHOO UDWLRV LQ HQWU\OHYHO DQG FRUSRUDWHEDQNLQJ

,PSOHPHQWHG DQG H[WHQGHG QHZ $OFR DQG EDODQFH Impact on proﬁt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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 07 Who we are and what we do

One Absa strategy

Strategic pillars Key objectives

Pillar 3: Simple, streamlined Group How for customer delivery 6LPSOLI\HQJDJHPHQWZLWKFHUWDLQFXVWRPHUJURXSVWRLPSURYH VDOHVHIIHFWLYHQHVV What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

Pillar 4: Customer- and people- How centred organisation 8QGHUVWDQGWKHNH\URRWFDXVHVIRUFXVWRPHUGLVVDWLVIDFWLRQ DQGUHGXFHWKHVH What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

Focus for 2011 7KH*URXSLVFRPPLWWHGWRLPSURYLQJLWVUHWXUQRQULVNZHLJKWHGDVVHWVDQGDYHUDJHHTXLW\RYHUWKHPHGLXPWHUP6WUHDPOLQLQJ WKHEXVLQHVVIRUVHUYLFHGHOLYHU\UHPDLQVDNH\SULRULW\ &RVWPDQDJHPHQWLVWRSRIPLQG7KH*URXSZLOOIXUWKHUVWUHQJWKHQLWVEDODQFHVKHHWLQFOXGLQJFRQWLQXLQJWRJURZLWVVXUSOXV OLTXLGLW\EXIIHUV+LJKOHYHOVRIFDSLWDOZLOOEHUHWDLQHG $IULFDZKLFKRIIHUVRQHRIWKHEHVWJURZWKRSSRUWXQLWLHVJOREDOO\UHPDLQVLPSRUWDQWWRWKH*URXS$EVDDQG%DUFOD\VZLOOZRUN FORVHO\WREXLOGRQDQDOUHDG\VWURQJFRPELQHGIUDQFKLVH

08 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 achievements 2010 beneﬁts

,QWURGXFHG D QHZ IRUHLJQ H[FKDQJH SODWIRUP WKDW Impact on people VLJQLILFDQWO\HQKDQFHGFXVWRPHUVHUYLFHGHOLYHU\ 6LPSOLILHGSURFHVVHV 5HSODWIRUPHG0R]DPELFDQDQG7DQ]DQLDQRSHUDWLRQV (QKDQFHGV\VWHPDYDLODELOLW\ ([SDQGHGHOHFWURQLFVWDWHPHQWVDQGPHVVDJLQJ 4XLFNHUWXUQDURXQGWLPHV ,PSOHPHQWHG QHZ VKRUWWHUP DQG OLIH DGPLQLVWUDWLRQ ,PSURYHGFXVWRPHUH[SHULHQFH V\VWHPV 6WUHDPOLQHGWKHFDVKPDQDJHPHQWSURFHVV Impact on planet (QKDQFHGWKHKRPHORDQRULJLQDWLRQSURFHVVHV 5HGXFHGSDSHUEDVHGSURFHVVHV ,PSOHPHQWHGDQHZEUDQFKIRUPDWDQGFRYHUDJHSLORW 5HGXFHGSK\VLFDOVWDWHPHQWVPDLOHG DLPHG DW DOLJQLQJ EUDQFK FRQILJXUDWLRQ WR FXVWRPHU /RZHUHGVSDFHUHTXLUHPHQWV GHPDQG ,QWURGXFHGVXVWDLQDEOHJUHHQLQIUDVWUXFWXUH &RPSOHWHG WKH $EVD 7RZHUV :HVW EXLOGLQJ DQG VXFFHVVIXOO\UHGXFHGRIILFHVSDFHRFFXSLHG Impact on proﬁt 6\VWHPDWLFDOO\ UHGXFHG SDSHUEDVHG SURFHVVLQJ &RVWHIILFLHQFLHV WKURXJKWKHXVHRIZRUNIORZVDQGLPDJLQJ (OLPLQDWHGVXUSOXVSURSHUW\UHQWDOFRVWV /RZHUSURFHVVLQJFRVWVLQWDUJHWHGDUHDV

(QKDQFHPHQWV PDGH WR H[LVWLQJ VHUYLFH RIIHULQJV Impact on people LQFOXGLQJLQWHUQHWEDQNLQJ ,PSURYHGHPSOR\HHHQJDJHPHQW 5ROOHGRXWQHZHQWU\OHYHOFXVWRPHUHGXFDWLRQSRLQWV (QKDQFHGHPSOR\HHZHOOEHLQJ LQVHOHFWHGRXWOHWV 6WURQJHPSOR\HHLGHQWLILFDWLRQZLWK$EVD©VJRDOV 6XFFHVVIXOO\SLORWHGDQHOHFWURQLF),&$SURFHVV DQGREMHFWLYHV 6LPSOLILHG NH\ FXVWRPHU GRFXPHQWV WR LPSURYH ,PSURYHGFXVWRPHUH[SHULHQFHDQGHQJDJHPHQW XQGHUVWDQGLQJDQGFRPPXQLFDWHLQSODLQODQJXDJH (QKDQFHGILQDQFLDOOLWHUDF\ ,QWURGXFHG DQ RQOLQH WUDLQLQJ SODWIRUP IRU 5HWDLO %DQNLQJHPSOR\HHV Impact on planet ,PSOHPHQWHG EHVW SUDFWLFH RSHUDWLRQDO PDQDJHPHQW 5HGXFHGWUDYHOUHTXLUHPHQWV WRROV DQG WHFKQLTXHV WR EHWWHU PDWFK DYDLODEOH HPSOR\HHFDSDFLW\WRGHPDQGLQRSHUDWLRQDODUHDV Impact on proﬁt ,QWURGXFHG WKH 2QH $EVD HPSOR\HH HQJDJHPHQW 2SWLPLVHGKXPDQFDSLWDOLQWKHSURFHVVLQJ SURJUDPPH HQYLURQPHQW

Note Financial Intelligence Centre Act, No. 38 of 2001.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 09 Who we are and what we do

Our business model

Segment Business scope

Retail Banking Retail Banking RIIHUV LQGLYLGXDOV D FRPSUHKHQVLYH +RPH/RDQV VXLWHRIUHWDLOEDQNLQJSURGXFWVDQGVHUYLFHV,WSURYLGHV 9HKLFOHDQG$VVHW)LQDQFH WKHVHWKURXJKDQH[WHQVLYHEUDQFKDQGVHOIVHUYLFH &DUG LQFOXGLQJ:RROZRUWKV)LQDQFLDO WHUPLQDO QHWZRUN DQG YLD UHODWLRQVKLS PDQDJHUV 6HUYLFHV 3URSULHWDU\ /LPLWHG LQWHUQHWDQGFHOOSKRQHEDQNLQJIDFLOLWLHV 3HUVRQDO/RDQV 5HWDLO%DQN

)XUWKHUUHDGLQJ

5HWDLO%DQNLQJ 104

Commercial Banking Absa Business Bank (ABB)RIIHUVDFRPSUHKHQVLYH $EVD%XVLQHVV%DQN UDQJH RI FRPPHUFLDO EDQNLQJ SURGXFWV DQG °&RUSRUDWH VSHFLDOLVHG VHUYLFHV WR FRUSRUDWH LQVWLWXWLRQV DQG °/DUJH%XVLQHVV ODUJHPHGLXPDQGVPDOOEXVLQHVVHV$%%DLPVWR °0HGLXP%XVLQHVV PHHWWKHIXOOVSHFWUXPRIFRUSRUDWHDQGFRPPHUFLDO °6PDOO%XVLQHVV FXVWRPHUV© QHHGV ,WV VHUYLFHV LQFOXGH DVVLVWLQJ °$IULFD VWDUWXSHQWUHSUHQHXUVDQGSURYLGLQJQRQWUDGLWLRQDO °5HDOHVWDWHLQYHVWPHQWSRUWIROLR GHYHORSPHQWDO FUHGLW 2IIHULQJV UDQJH IURP RIIWKH VKHOI WUDQVDFWLRQDO SURGXFWV WR FRPSOH[ ILQDQFLDO

)XUWKHUUHDGLQJ VROXWLRQV $%%©V REMHFWLYH LV WR PDNH EDQNLQJ ZKHWKHU ORFDO RU LQWHUQDWLRQDO FRQYHQLHQW DQG $EVD%XVLQHVV%DQN 108 HIILFLHQWIRULWVFXVWRPHUV

Notes Absa Development Company Holdings is disclosed as part of the real estate investment portfolio, together with commercial property ﬁnance equities. Calculated after the allocation of corporate, capital and funding centres.

10 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group headline Key ﬁnancial performance indicators earnings contribution2

2010 &KDQJH

7RWDOLQFRPH 5P 23 291 $WWULEXWDEOHHDUQLQJV 5P 3 353 +HDGOLQHHDUQLQJV 5P 3 232 5HWXUQRQUHJXODWRU\ FDSLWDO 20,7 &RVWWRLQFRPHUDWLR 57,1 ● ,PSDLUPHQWORVVHVUDWLR 1,49 5HWDLO%DQNLQJ ● 5HVWRI$EVD $YHUDJHULVNZHLJKWHG DVVHWV 5EQ 160

2010 &KDQJH

7RWDOLQFRPH 5P 11 626 $WWULEXWDEOHHDUQLQJV 5P 2 903 +HDGOLQHHDUQLQJV 5P 2 848 5HWXUQRQUHJXODWRU\ FDSLWDO 22,8 &RVWWRLQFRPHUDWLR 55,0 ● ,PSDLUPHQWORVVHVUDWLR 0,90 $EVD%XVLQHVV%DQN ● 5HVWRI$EVD $YHUDJHULVNZHLJKWHG DVVHWV 5EQ 128

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 11 Who we are and what we do

Our business model

Segment Business scope

Investment Banking Absa Capital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

Financial Services 7KH Financial Services VHJPHQW SURYLGHV /LIH,QVXUDQFH LQVXUDQFH ILGXFLDU\ DQG QRQEDQNLQJ UHODWHG 6KRUWWHUP,QVXUDQFH LQYHVWPHQW SURGXFWV DQG VHUYLFHV 7KHVH DUH ,QYHVWPHQWV RIIHUHG WKURXJK D ZHOO HVWDEOLVKHG DQG XQLTXH )LGXFLDU\ ILQDQFLDOVHUYLFHVRSHUDWLQJPRGHOWKDWFRPELQHVWKH 'LVWULEXWLRQ VWUHQJWKVRIDWUDGLWLRQDOEDQFDVVXUDQFHPRGHOZLWK DSXUHGLVWULEXWRUPRGHO 7KLV LQWHJUDWHG PRGHO HQDEOHV $EVD WR HIILFLHQWO\ SURYLGHILQDQFLDOVHUYLFHVWRDOOPDUNHWVHJPHQWVLQ VXE6DKDUDQ$IULFD )XUWKHUUHDGLQJ

)LQDQFLDO6HUYLFHV 116

Note Calculated after the allocation of corporate and funding centres.

12 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group headline Key ﬁnancial performance indicators earnings contribution1

2010 &KDQJH

7RWDOLQFRPH 5P 5 226 $WWULEXWDEOHHDUQLQJV 5P 1 480 ! +HDGOLQHHDUQLQJV 5P 1 527 5HWXUQRQUHJXODWRU\ FDSLWDO 16,0 &RVWWRLQFRPHUDWLR 54,3 ● $YHUDJHULVNZHLJKWHG $EVD&DSLWDO ● 5HVWRI$EVD DVVHWV 5EQ 98

2010 &KDQJH

$WWULEXWDEOHHDUQLQJV 5P 1 290 +HDGOLQHHDUQLQJV 5P 1 291 1HWSUHPLXPLQFRPH 5P 4 468 5HWXUQRQHTXLW\ 34,8 (PEHGGHGYDOXHRIQHZ EXVLQHVV 5P 465 &RPELQHGUDWLR 94,8 ● )LQDQFLDO6HUYLFHV ● 5HVWRI$EVD $VVHWVXQGHUPDQDJHPHQW 5EQ 163

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 13 Who we are and what we do

Our performance

Proﬁt Statement of comprehensive income

2010 &KDQJH Total income (Rm) 42 927 42 086 42 814 7RWDOLQFRPH 5P 42 814 ,PSDLUPHQWORVVHVRQORDQVDQG DGYDQFHV 5P (6 005) 2SHUDWLQJH[SHQVHV 5P (24 070) 2SHUDWLQJSURILWEHIRUHLQFRPHWD[ 5P 11 851 3URILWDWWULEXWDEOHWRRUGLQDU\HTXLW\ KROGHUVRIWKH*URXS 5P 8 118 +HDGOLQHHDUQLQJV 5P 8 041 2008 2009 2010 5HWDLO%DQNLQJ 3 232 $EVD%XVLQHVV%DQN 2 848 Attributable earnings mix $EVD&DSLWDO 1 527 14,3 )LQDQFLDO6HUYLFHV 1 291 +HDGRIILFHLQWHUVHJPHQW HOLPLQDWLRQVDQGRWKHU (857) ! (FRQRPLFSURILW 5P 562 16,4 37,1

Notes Comparatives have been reclassiﬁed. After allowing for R320 million (2009: R421 million) proﬁt attributable to preference equity holders of the Group. Calculated after the allocation of corporate, capital and funding centres. 32,2

20103

● 5HWDLO%DQNLQJ ● $EVD%XVLQHVV%DQN ● $EVD&DSLWDO ● )LQDQFLDO6HUYLFHV

Statement of ﬁnancial position

2010 &KDQJH Net asset value (Rm) 56 290 /RDQVDQGDGYDQFHVWRFXVWRPHUV 5P 498 635 47 607 50 547 'HSRVLWVGXHWRFXVWRPHUV 5P 378 111 1HWDVVHWYDOXH 5P 56 290 7RWDODVVHWV 5P 716 470 5LVNZHLJKWHGDVVHWV 5P 422 713 &DSLWDODGHTXDF\UDWLR &RUH7LHU 11,7 7LHU 12,8 2008 2009 2010 7RWDO 15,5 /RDQVWRGHSRVLWVUDWLR 91,9 Loans-to-deposits ratio (%) 97,0 Note 95,9 91,9 Comparatives have been reclassiﬁed.

2008 2009 2010

14 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Proﬁt Assets under management and administration

2010 &KDQJH Assets under management

$VVHWVXQGHUPDQDJHPHQWDQG and administration (Rm) DGPLQLVWUDWLRQ 5P 168 313 168 313 155 114 )LQDQFLDO6HUYLFHV 163 415 125 100 ° 0RQH\PDUNHW 66 256 ° 1RQPRQH\PDUNHW 97 159

2008 2009 2010

Financial returns

2010 % Return on average equity (%) 23,4 5HWXUQRQDYHUDJHHTXLW\ 15,1 5HWXUQRQUHJXODWRU\FDSLWDO 20,5 15,5 15,1 5HWXUQRQDYHUDJHHFRQRPLFFDSLWDO 19,7 5HWXUQRQDYHUDJHDVVHWV 1,12 5HWXUQRQULVNZHLJKWHGDVVHWV 1,99

2008 2009 2010

Operational performance

2010 % Cost-to-income ratio (%) 56,2 1HWLQWHUHVWPDUJLQRQDYHUDJHLQWHUHVWEHDULQJ 49,2 49,6 DVVHWV 4,01 ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHVDVD SHUFHQWDJHRIDYHUDJHORDQVDQGDGYDQFHVWR FXVWRPHUV LPSDLUPHQWORVVHVUDWLR 1,20 1RQSHUIRUPLQJDGYDQFHVDVDSHUFHQWDJHRIORDQV DQGDGYDQFHVWRFXVWRPHUV 7,7 1RQLQWHUHVWLQFRPHDVDSHUFHQWDJHRIWRWDO RSHUDWLQJLQFRPH 45,5 2008 2009 2010 &RVWWRLQFRPHUDWLR 56,2 &RVWWRDVVHWVUDWLR 3,3 (IIHFWLYHWD[UDWHH[FOXGLQJLQGLUHFWWD[DWLRQ 27,5 +RPH/RDQVDYHUDJHORDQWRYDOXH /79 UDWLRRQ DPDUNWRPDUNHWYDOXDWLRQ 44,3A

Note Loan-to-value ratio of outstanding home loans stock (ordinary building and further advances classiﬁed either as scored loans and advances or not scored loans and advances), based on a mark-to-market (MTM) valuation (total outstanding amount (excluding accounts in the legal process) as a percentage of the most recent property valuation (MTM)).

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 15 Who we are and what we do

Our performance

Proﬁt Share statistics

2010 &KDQJH Headline earnings per share (cents) +HDGOLQHHDUQLQJVSHUVKDUH FHQWV 1 122,6 1 474,8 'LOXWHGKHDGOLQHHDUQLQJVSHUVKDUH FHQWV 1 115,7 1 099,4 1 122,6 %DVLFHDUQLQJVSHUVKDUH FHQWV 1 133,3 'LOXWHGHDUQLQJVSHUVKDUH FHQWV 1 126,4 'LYLGHQGVSHURUGLQDU\VKDUHUHODWLQJWR LQFRPHIRUWKH\HDU FHQWV 455 'LYLGHQGFRYHU WLPHV 2,5 1HWDVVHWYDOXHSHUVKDUH FHQWV 7 838 2008 2009 2010 7DQJLEOHQHWDVVHWYDOXHSHUVKDUH FHQWV 7 588 Dividends per ordinary share 1XPEHURIRUGLQDU\VKDUHVLQLVVXH PLOOLRQV 718,2 (cents) :HLJKWHGDYHUDJHQXPEHURIRUGLQDU\ 595 VKDUHVLQLVVXH PLOOLRQV 716,3 445 455 :HLJKWHGDYHUDJHGLOXWHGQXPEHURI RUGLQDU\VKDUHVLQLVVXH PLOOLRQV 720,7

2008 2009 2010

People Customers

2010 &KDQJH Internet and cellphone banking

7RWDOEDQNLQJFXVWRPHUEDVH PLOOLRQV 11,8 customers (’000) 7RWDOQXPEHURI6RXWK$IULFDQ 2 513,0 EDQNLQJFXVWRPHUV PLOOLRQV 11,1A &RQWUDFWXDOILQDQFLDOVHUYLFHV 1 670,4 UHODWLRQVKLSV PLOOLRQV 5,8 1XPEHURIQHZVPDOOEXVLQHVVORDQV 1 094,5 A 1 005,2 DSSURYHG 11 625 3HUFHQWDJHRIFRPSODLQWVUHVROYHGDW ILUVWSRLQWRIFRQWDFW 81 $YHUDJHGD\VWDNHQWRUHVROYH 2008 2009 2010 FRPSODLQWV GD\V 1,27 ● ● 1XPEHURIFRPSODLQWVDVDSHUFHQWDJH Internet banking Cellphone banking RIWKHWRWDOQXPEHURI6RXWK$IULFDQ EDQNLQJFXVWRPHUV 1,74A ¥ 2XWOHWV 1 007 Percentage of complaints 6HOIVHUYLFHWHUPLQDOV 8 963 ,QWHUQHWEDQNLQJFXVWRPHUV © 1 094,5 resolved at first point of contact &HOOSKRQHEDQNLQJFXVWRPHUV © 2 513,0 (%) 81 Notes Total number of customers with active Absa core banking products such as cheque accounts, savings accounts, secured and unsecured loans. Excludes wills, life policies, 54 BBM, NBC, WFS and VMSA. 40 2The number of new small business loans approved (overdrafts, term loans, mortgages, vehicle and asset finance (including dealers sales), and commercial loans (excluding CAF)) paid out to SME businesses (defined as businesses with a turnover of less than R10 million who are registered via Cipro and have a level of banking exposure (excluding micro-enterprise finance). Number of customer complaints in South Africa logged by touch points on the Absa 2008 2009 2010 complaint management system as a percentage of the number of South African customers as at 31 December. Restated to align with the methodology applied in 2010.

16 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU People Employees

2010 &KDQJH Percentage of African, Coloured 2 7RWDOSHUPDQHQWDQGQRQSHUPDQHQW and Indian employees HPSOR\HHV QXPEHU 43 239 64,2 7RWDO6RXWK$IULFDQSHUPDQHQWDQG QRQSHUPDQHQWHPSOR\HHV QXPEHU 39 782A 7RWDOSHUPDQHQWHPSOR\HHV QXPEHU 36 770 3HUFHQWDJHRIIHPDOHHPSOR\HHV 65,2 3HUFHQWDJHRI$IULFDQ&RORXUHGDQG ,QGLDQHPSOR\HHV 64,2 3HUPDQHQWHPSOR\HHWXUQRYHUUDWHIRU A 6RXWK$IULFD 10,1 2010 7RWDO6RXWK$IULFDQWUDLQLQJVSHQG 5P 372A (PSOR\HHRSLQLRQVXUYH\ SDUWLFLSDWLRQ 91

Notes Number of employees includes permanent and temporary employees legally employed and paid by Absa payroll including ‘regular’ contracts; interns; graduates; specialists and brokers (excluding pension brokers). It covers operational and non-operational full-time, part-time, two thirds and commission paid employees. It also includes contingency workforce, which is all agency, contractors and self-employed employees paid via a third party for services rendered. The number excludes BBM, NBC and WFS. Excludes non-permanent employees, WFS, NBC and BBM. Number of terminations as a percentage of the average permanent headcount in South Africa (excluding WFS). Training spend is all veriﬁable and reportable spend on learning and skills programmes including accredited and non-accredited training; bursaries; learnership allowance; related travel; an employee matric equivalency programme and interventions focused on employees with disabilities.

Transformation

2010 BBBEE Codes of Good Practice

%URDGEDVHGEODFNHFRQRPLFHPSRZHUPHQW score and status %%%(( &RGHVRI*RRG3UDFWLFH¤WRWDOVFRUH 75,9 75,9 (TXLW\RZQHUVKLS 8,2 0DQDJHPHQWDQGFRQWURO 6,0 (PSOR\PHQWHTXLW\ 10,7 6NLOOVGHYHORSPHQW 12,5 3URFXUHPHQW 18,5 3 (QWHUSULVHGHYHORSPHQW 15,0 6RFLRHFRQRPLFGHYHORSPHQW 5,0 2010 ●● 7RWDOVFRUH %%%((VWDWXV %%%((VWDWXV Level 3 /HYHO

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 17 Who we are and what we do

Our performance

People Community

2010 &KDQJH Total socio-economic 7RWDOVRFLRHFRQRPLFGHYHORSPHQW development spend 5P A 6(' VSHQGLQ6RXWK$IULFD 5P 83 7RWDOHPSOR\HHVVXSSRUWHGDFURVVDOO A 6('SURJUDPPHV 7 012 83 1XPEHURIZRUNKRXUVWRVXSSRUW YROXQWHHULQJ 27 472 ! 1XPEHURISHUVRQDOKRXUVWRVXSSRUW YROXQWHHULQJ 4 405 ! )LQDQFLDOOLWHUDF\LQLWLDWLYHV¤QXPEHU RIFRQVXPHUVUHDFKHG 356 156 2010 Note In terms of the BBBEE CoGP, SED (which includes corporate social investment and consumer education) is 1% net profit after tax for the prior year thus the declining trend in recent years. Socio-economic spend is the rand value of: CSI including donations, CSI related sponsorships and direct costs associated with the implementation of CSI; and Consumer education spend focussing on financial literacy initiatives including supplier payments, financial literacy/consumer related sponsorships and direct costs associated with the implementation of consumer education.

Planet Environment

2010 &KDQJH Carbon emissions from electricity

2 7RWDOWUDQVDFWLRQVUHYLHZHGLQ (’000 tonnes CO ) DFFRUGDQFHZLWK(TXDWRU3ULQFLSOHV QXPEHU 7A 9 &DUERQIRRWSULQW ©WRQQHV&2 415 (OHFWULFLW\FRQVXPSWLRQ *:K 469 3DSHUFRQVXPSWLRQ WRQQHV 2 453

3DSHUUHF\FOHG WRQQHV 780 434 391 %XVLQHVVWUDYHO PLOOLRQVNP 140

Notes Total number of project finance transactions that have been reviewed for environmental 2009 2010 and social risks as per the Equator Principles. ● Gas emissions Carbon footprint comprises of 95% electricity with the balance being business travel. ● Eskom emissions Data has been collected through the installation of meters. Consumption has been estimated where meters are not installed. 2010 data is based on a small sample of actual metered data. Additional meters will be installed in 2011 to significantly enhance reporting in this regard. Not available. Restated. Includes company and functional vehicles, employee kilometer claims and car rental (but excludes flights).

18 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Sustainability review Contents

Sustainability review Pages 21 – 72

21 +LJKOHYHORYHUYLHZ $EVD©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ustainability review

High-level overview

Introduction Highlights

Sustainability is a fundamental responsibility that is owed to shareholders, employees, customers, society 5HWXUQRQDYHUDJHHTXLW\UHPDLQHGDERYH and the environment. The Group understands that the WKHFRVWRIHTXLW\ needs of shareholders are of primary importance. 6WURQJFDSLWDOSRVLWLRQPDLQWDLQHG However, Absa must balance this with doing business in %%%((VWDWXVLPSURYHGIURPD/HYHO a manner that is good for communities while keeping WRD/HYHOFRQWULEXWRU in mind that the planet has limited resources that affect ,QFUHDVHGSDUWLFLSDWLRQLQWKHDQQXDO and inﬂuences operations. The welfare of employees, HPSOR\HHRSLQLRQVXUYH\ customers and society in general, as well as the growing (QKDQFHGDFFHVVWRILQDQFLDOVHUYLFHVZLWK pressure on natural resources, is increasingly being LPSURYHGGLVWULEXWLRQFKDQQHODFFHVVLELOLW\ tied to the ﬁnancial performance and sound governance DQGUHDFKSURGXFWGHYHORSPHQWDQG of the business. FRQVXPHUHGXFDWLRQ As for many South African companies, 2010 was a year ,PSURYHGORJJLQJDQGUHVROXWLRQRIFXVWRPHU in which Absa continued to grow its role in sustainable FRPSODLQWV development in a way that is relevant and material 0DLQWDLQHG,7V\VWHPDYDLODELOLW\DQGVWDELOLW\ to the business and its stakeholders. It is believed RIFRUHV\VWHPV that the largest contribution Absa can make to society and the environment is by operating a commercially &RPSOHWLRQRIDJDVHQHUJ\FHQWUHLQWKH successful business in a responsible manner. QHZ$EVD7RZHUV:HVWEXLOGLQJVXSSRUWLQJ WKHHQHUJ\UHTXLUHPHQWVRIWKH$EVDKHDG Sustainability strategy and approach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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 21 Sustainability review

High-level overview

,Q OLQH ZLWK .LQJ ,,, $EVD©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©V JRDOV WKDW VXVWDLQDELOLW\ JDLQV WUDFWLRQDQGEHFRPHVLQWHJUDOWRWKHEXVLQHVV

Sustainability governance and accountability $FFRXQWDELOLW\IRUVXVWDLQDELOLW\OLHVZLWKWKH$EVD*URXSERDUG$EVD©VVXVWDLQDELOLW\VWDWXVLVSUHVHQWHGWRWKHERDUG RQDTXDUWHUO\EDVLVDVSDUWRIWKHERDUGVFRUHFDUG7KH*URXS$XGLWDQG&RPSOLDQFH&RPPLWWHHDERDUGFRPPLWWHH RYHUVHHV$EVD©VH[WHUQDOUHSRUWLQJ

Reporting standards and assurance $EVDUHIHUHQFHVWKH*OREDO5HSRUWLQJ,QLWLDWLYH *5, UHSRUWLQJIUDPHZRUNDQGWKH.LQJ,,,SULQFLSOHVLQLWVVXVWDLQDELOLW\ UHSRUWLQJ $VSDUWRIWKHMRXUQH\WRZDUGVLQWHJUDWHGUHSRUWLQJ$EVDDSSRLQWHG3ULFHZDWHUKRXVH&RRSHUV,QFDQG(UQVW

22 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group value added statement )RUWKH\HDUHQGHG'HFHPEHU

9DOXHDGGHGLVGHILQHGDVWKHYDOXHFUHDWHGE\WKH*URXS©VDFWLYLWLHVDQGLVGHWHUPLQHGDVLQFRPHOHVVLPSDLUPHQWVDQGRWKHU RSHUDWLQJH[SHQGLWXUH$EVD©VYDOXHDGGHGVWDWHPHQWVKRZVWKHWRWDOZHDOWKFUHDWHGE\WKH*URXSDQGKRZLWZDVGLVWULEXWHGWRWKH *URXS©V VWDNHKROGHUV WDNLQJ LQWR DFFRXQW WKH DPRXQWV UHWDLQHG DQG UHLQYHVWHG LQ WKH *URXS IRU WKH UHSODFHPHQW RI DVVHWV DQG WKHGHYHORSPHQWRIRSHUDWLRQV 2010 Rm 5P Value added ,QWHUHVWDQGVLPLODULQFRPH 54 241 1RQLQWHUHVWLQFRPH 19 474 ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHV (6 005) 2WKHURSHUDWLQJH[SHQGLWXUH (7 000) 60 710 Value allocated To employees 12 537 6DODULHV 9 707 9DULDEOHUHPXQHUDWLRQDQGVKDUHEDVHGSD\PHQWV 1 398 3RVWUHWLUHPHQWEHQHILWV 635 7UDLQLQJDQGVNLOOVVSHQG 269 2WKHU 528 To communities 6RFLRHFRQRPLFGHYHORSPHQWVSHQG 83 To government 4 033 'LUHFWWD[DWLRQ 3 262 ,QGLUHFWWD[DWLRQ 771 To depositors and policyholders 34 307 ,QWHUHVWH[SHQVHDQGVLPLODUFKDUJHV 30 901 %HQHILWVGXHWRSROLF\KROGHUVIURP)LQDQFLDO6HUYLFHV 3 406 To shareholders 3 511 2UGLQDU\GLYLGHQGV 3 191 3UHIHUHQFHGLYLGHQGV 320 To retention for expansion and growth 6 239 'HSUHFLDWLRQDQGDPRUWLVDWLRQ 1 312 5HWDLQHGLQFRPHIRU\HDU 4 927 60 710 2010 % Value added ,QWHUHVWDQGVLPLODULQFRPH 89,3 1RQLQWHUHVWLQFRPH 32,1 ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHV (9,9) 2WKHURSHUDWLQJH[SHQGLWXUH (11,5) 100,0 Value allocated To employees 20,6 6DODULHV 16,0 9DULDEOHUHPXQHUDWLRQDQGVKDUHEDVHGSD\PHQWV 2,3 3RVWUHWLUHPHQWEHQHILWV 1,0 7UDLQLQJDQGVNLOOVVSHQG 0,4 2WKHU 0,9 To communities 6RFLRHFRQRPLFGHYHORSPHQWVSHQG 0,1 To government 6,7 'LUHFWWD[DWLRQ 5,4 ,QGLUHFWWD[DWLRQ 1,3 To depositors 56,5 ,QWHUHVWH[SHQVHDQGVLPLODUFKDUJHV 50,9 %HQHILWVGXHWRSROLF\KROGHUVIURP)LQDQFLDO6HUYLFHV 5,6 To shareholders and policyholders 5,8 2UGLQDU\GLYLGHQGV 5,3 3UHIHUHQFHGLYLGHQGV 0,5 To retention for expansion and growth 10,3 'HSUHFLDWLRQDQGDPRUWLVDWLRQ 2,2 5HWDLQHGLQFRPHIRU\HDU 8,1 100,0

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 23 Sustainability review

Independent assurance report to the directors of Absa Group Limited

Introduction :H KDYH EHHQ HQJDJHG E\ WKH GLUHFWRUV RI $EVD *URXS /LPLWHG WR SHUIRUP DQ LQGHSHQGHQW OLPLWHG DVVXUDQFH HQJDJHPHQWLQUHVSHFWRIVHOHFWHG,GHQWLILHG6XVWDLQDELOLW\,QIRUPDWLRQLQFOXGHGLQ$EVD*URXS/LPLWHG©V6XVWDLQDELOLW\ 5HYLHZ5HSRUWDVLQFRUSRUDWHGLQWKH$QQXDO5HSRUWIRUWKH\HDUHQGHG'HFHPEHU WKH5HSRUW

Scope and subject matter 7KHIROORZLQJ,GHQWLILHG6XVWDLQDELOLW\,QIRUPDWLRQIRU$EVD*URXS/LPLWHG©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

Directors responsibilities $EVD*URXS/LPLWHG©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

Auditor’s responsibilities 2XU UHVSRQVLELOLW\ LV WR H[SUHVV RXU OLPLWHG DVVXUDQFH FRQFOXVLRQ WR WKH GLUHFWRUV RQ WKH ,GHQWLILHG 6XVWDLQDELOLW\ ,QIRUPDWLRQFRQWDLQHGLQWKH5HSRUWIRUWKH\HDUHQGHG'HFHPEHUEDVHGRQRXUOLPLWHGDVVXUDQFHHQJDJHPHQW :H FRQGXFWHG RXU OLPLWHG DVVXUDQFH HQJDJHPHQW LQ DFFRUGDQFH ZLWK WKH ,QWHUQDWLRQDO 6WDQGDUG RQ $VVXUDQFH (QJDJHPHQWV ,6$( Assurance engagements other than audits or reviews of historical ﬁnancial information LVVXHGE\WKH,QWHUQDWLRQDO$XGLWLQJDQG$VVXUDQFH6WDQGDUGV%RDUG7KLV6WDQGDUGUHTXLUHVWKDWZHFRPSO\ZLWK HWKLFDOUHTXLUHPHQWVDQGSODQDQGSHUIRUPWKHDVVXUDQFHHQJDJHPHQWWRREWDLQOLPLWHGDVVXUDQFHRQWKH,GHQWLILHG 6XVWDLQDELOLW\,QIRUPDWLRQDVSHUWKHWHUPVRIRXUHQJDJHPHQW

Basis of work – inherent limitations 7KHSURFHGXUHVVHOHFWHGGHSHQGRQRXUMXGJHPHQWLQFOXGLQJWKHDVVHVVPHQWRIWKHULVNRIPDWHULDOPLVVWDWHPHQWRI WKHVXEMHFWPDWWHUDQGWKHSXUSRVHRIRXUHQJDJHPHQW,QPDNLQJWKHVHDVVHVVPHQWVZHKDYHFRQVLGHUHGLQWHUQDO FRQWUROVUHOHYDQWWRWKHHQWLWLHVSUHSDUDWLRQDQGSUHVHQWDWLRQRIWKH,GHQWLILHG6XVWDLQDELOLW\,QIRUPDWLRQLQRUGHUWR GHVLJQSURFHGXUHVDSSURSULDWHIRUJDWKHULQJVXIILFLHQWDSSURSULDWHDVVXUDQFHHYLGHQFHWRGHWHUPLQHWKDWWKH,GHQWLILHG

24 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 6XVWDLQDELOLW\,QIRUPDWLRQLVQRWPDWHULDOO\PLVVWDWHGRUPLVOHDGLQJDVVHWRXWLQWKHVXPPDU\RIZRUNSHUIRUPHG2XU DVVHVVPHQWRIUHOHYDQWLQWHUQDOFRQWUROLVQRWIRUWKHSXUSRVHRIH[SUHVVLQJDFRQFOXVLRQRQWKHHIIHFWLYHQHVVRIWKH HQWLW\©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

Summary of work performed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

Conclusion Limited assurance %DVHGRQRXUOLPLWHGDVVXUDQFHSURFHGXUHVGHVFULEHGLQWKLVUHSRUWDQGVXEMHFWWRWKHOLPLWDWLRQVDERYHQRWKLQJKDV FRPHWRRXUDWWHQWLRQFDXVLQJXVWREHOLHYHWKDWWKH,GHQWLILHG6XVWDLQDELOLW\,QIRUPDWLRQVHOHFWHGIRUOLPLWHGDVVXUDQFH DQGLQGLFDWHGZLWKWKHV\PEROALQWKH5HSRUWIRUWKH\HDUHQGHG'HFHPEHUKDVQRWEHHQSUHSDUHGLQDOO PDWHULDOUHVSHFWVLQDFFRUGDQFHZLWKWKHFULWHULDDVGHVFULEHGLQWKHUHOHYDQWIRRWQRWHVLQWKH5HSRUW PricewaterhouseCoopers Inc. Ernst & Young Inc. Director: Herman Zulch Director: Alasdair Stewart Registered Auditor Registered Auditor Chartered Accountant (SA) Chartered Accountant (SA) 2 Eglin Road Wanderers Ofﬁce Park 6XQQLQJKLOO 52 Corlett Drive, ,OORYR $SULO $SULO

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 25 Sustainability review

Stakeholder engagement

Highlights Our stakeholders 7RGD\©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©VVWUDWHJ\SROLFLHVDQGDFWLRQV $EVD©VHWKLFVSROLFLHVDQG :KLOHWKH*URXSDFFHSWVWKHSULQFLSOHRIVHOIOHJLWLPLVDWLRQRIVWDNHKROGLQJ SURFHGXUHVSHUWDLQLQJWRVXSSOLHUV LW LV QRWHG WKDW QRW DOO VWDNHKROGHUV DUH HTXDO DQG HDFK KDYH GLIIHUHQW FRQVLGHUDWLRQV &RQGXFWHGPRUHWKDQ FXVWRPHUUHODWHGVXUYH\VGXULQJ ,QGHILQLQJLWVVWDNHKROGHUV$EVDKDVEHHQJXLGHGE\WKHQDWXUHRILWV VWDNHKROGHUV© H[SHFWDWLRQV DQG DV VXFK JURXSHG VWDNHKROGHUV ZLWK FRYHULQJDOOFXVWRPHU VLPLODULQWHUHVWV FKDQQHOVDQGVHJPHQWV 7KH$EVD*URXSERDUGKDVGHILQHGWKH*URXS©VVWDNHKROGHUJURXSVDV +RVWHGDQXPEHURIORFDO EHLQJ FRPPXQLW\HYHQWVGLDORJXH customers, ZLWKRXW ZKRP WKH *URXS ZRXOG QRW KDYH D EXVLQHVV VHVVLRQVDQGZRUNVKRSVDLPHGDW SXUSRVH IDFLOLWDWLQJLQIRUPDWLRQDQGVNLOOV employees,ZKRPDNHLWDOOSRVVLEOH VKDULQJ shareholdersWRZKRPWKHILQDQFLDOSHUVSHFWLYHLVLPSRUWDQW &RPPHQFHG$EVD©VLQWHJUDWHG the communities and the environmentLQZKLFK$EVDRSHUDWHVDQG UHSRUWLQJMRXUQH\ governments and regulators,ZKRFUHDWHWKHHQYLURQPHQWLQZKLFK WKH*URXSRSHUDWHV,QDGGLWLRQWRWKLVLWLVLPSHUDWLYHWRHQVXUHWKDW WUDQVIRUPDWLRQUHPDLQVDFRUHLPSHUDWLYHLQWKH*URXS $EVDLVFRPPLWWHGWRFUHDWLQJVXVWDLQDEOHYDOXHIRUHDFKVWDNHKROGHU DQGKDVDFOHDUVHJPHQWDWLRQPRGHOZLWKWDLORUHGHQJDJHPHQWVWRVXLW HDFKJURXSLQJ Absa’s key stakeholders

Employees Shareholders Governments Customers Communities and regulators

(PSOR\HHV 3RWHQWLDO /RFDO *RYHUQPHQW 5HWDLO LQYHVWRUV 6XSSOLHUV FRPPXQLWLHV DJHQFLHV

(PSOR\HH $QDO\VWV $FDGHPLF 5HJXODWRU\ :KROHVDOH UHSUHVHQWDWLYHV 0HGLD LQVWLWXWLRQV ERGLHV

6KDUHKROGHUV (QYLURQPHQW &LYLOVRFLHW\ ,QGXVWU\ERGLHV

2UJDQLVHG 1RQJRYHUQPHQW EXVLQHVV RUJDQLVDWLRQV 3ROLWLFDOSDUWLHV

$VVRFLDWLRQV

0HPEHUVKLS RUJDQLVDWLRQV

7UDGHXQLRQV

26 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Stakeholder engagement approach and governance $EVDXVHVYDULRXVSROLFLHVDQGPHWKRGRORJLHVJRYHUQLQJFRPPXQLFDWLRQDQGFRQGXFWZLWKVWDNHKROGHUVWRFDWHUIRU WKHLU GLYHUVH DQG VRPHWLPHV FRQIOLFWLQJ LQWHUHVWV DQG FRQFHUQV 7KLV LV D FRQWLQXRXV SURFHVV DQG SROLFLHV DQG PHWKRGRORJLHVDUHZLGHO\LQIRUPHGE\EHVWSUDFWLFHFRUSRUDWHJRYHUQDQFHDQGOHJLVODWLYHUHTXLUHPHQWVDVZHOODV ULVNDQGUHSXWDWLRQPDQDJHPHQWSULQFLSOHV $EVD KDV D IRUPDO GHFHQWUDOLVHG VWDNHKROGHU HQJDJHPHQW PRGHO ZLWK D SUDFWLFDO IUDPHZRUN GHVLJQHG DURXQG WKH*URXS©VPDLQVWDNHKROGHUJURXSVZKLOHHQVXULQJUHOHYDQFHWRWKHLVVXHVWKDWKDYHEHHQLGHQWLILHGDVPDWHULDOWR WKHVXVWDLQDELOLW\RI$EVD$VDUHVXOWHQJDJHPHQWLVXQGHUWDNHQE\DQXPEHURIVSHFLILFEXVLQHVVXQLWV ,QHQJDJLQJZLWKVWDNHKROGHUVWKH*URXSDLPVWRSURYLGHDFRQVLVWHQWPHVVDJHZLWKLQWKHFRQWH[WRIWKH2QH$EVD VWUDWHJ\ZKLFKIXUWKHUPLUURUVWKH*URXS©VFRUSRUDWHHWKLFVDQGYDOXHV $EVD©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

2010 review 7KH*URXSXQGHUVWDQGVWKDWVXFFHVVIXOVWDNHKROGHUPDQDJHPHQWLVQRWRQO\DERXWQHHGVDQGH[SHFWDWLRQVEXWDOVR WKHRQJRLQJLGHQWLILFDWLRQSULRULWLVDWLRQDQGPDQDJHPHQWRILVVXHVWKDWKDYHWKHJUHDWHVWLPSDFWRQDOOVWDNHKROGHUV ,QWKH\HDUXQGHUUHYLHZYDULRXVLVVXHVKDYHEHHQUHVSRQGHGWR

Customers $EVD©V FXVWRPHU DJHQGD LV HPERGLHG ZLWKLQ WKH 2QH $EVD VWUDWHJ\ SLOODU ¤ D FXVWRPHU DQG SHRSOHFHQWUHG RUJDQLVDWLRQ2QWKHFRQWLQXRXVMRXUQH\WRH[FHHGFXVWRPHUH[SHFWDWLRQVWKH*URXSUHJXODUO\VHHNVRXWFXVWRPHUV© RSLQLRQVDERXWSURGXFWVDQGVHUYLFHVWKURXJKFXVWRPHUIRFXVJURXSVDQGVXUYH\VFRPSODLQWVDQGFRPSOLPHQWVDQG UHVSRQVHVWRPDUNHWLQJDQGDGYHUWLVLQJ 7KHFXUUHQWNH\FXVWRPHULVVXHVDUHFXVWRPHUVHUYLFHOHYHOVV\VWHPDYDLODELOLW\DFFHVVWRILQDQFLDOVHUYLFHVWKHFRVW RIEDQNLQJLQIRUPDWLRQVHFXULW\DQGFXVWRPHULQGHEWHGQHVV,QUHVSRQVHWRWKHVH$EVDKDVinter aliaLQWURGXFHGD 'HEW6ROXWLRQV+HOSOLQHDQGWKH$EVD'HEW&RXQVHOOLQJ&DOO&HQWUHFRQWLQXHGWRVHFXUHDQGSURWHFWV\VWHPVDQG LQIRUPDWLRQDJDLQVWXQDXWKRULVHGDFFHVVDQGIUDXGDWWHPSWVLQYHVWHGLQWKHLPSURYHPHQWRILWVV\VWHPVOHIWIHHV XQFKDQJHGIRUPRQWKVLQWKHUHWDLOEDQNLQJHQYLURQPHQWDQGFUHDWHGDQHQWU\OHYHODQGLQFOXVLYHEDQNLQJXQLW

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 27 Sustainability review

Employees ,Q RUGHU WR DFKLHYH WKH *URXS©V JRDO RI EHLQJ WUXO\ FXVWRPHUFHQWUHG WKH RUJDQLVDWLRQ PXVW EH UHVRXUFHG ZLWK WDOHQWHG HQHUJLVHGDQGSDVVLRQDWHSHRSOH7KLVZLOOEHDFKLHYHGE\IRVWHULQJKHDOWK\DQGPXWXDOO\EHQHILFLDOUHODWLRQVKLSVZLWKDOOWKH *URXS©V HPSOR\HHV $ QXPEHU RI VXUYH\V DUH FRQGXFWHG WR DVFHUWDLQ HPSOR\HHV© YLHZV LQFOXGLQJ WKH DQQXDO HPSOR\HH RSLQLRQVXUYH\2WKHUPDMRUHQJDJHPHQWWRROVLQFOXGHWKH*URXS&KLHI([HFXWLYH©VEORJLQWHUQDOWHOHYLVLRQEURDGFDVWVDQG WKHHPSOR\HHPDJD]LQH 7UDLQLQJDQGGHYHORSPHQWUHZDUGVXFFHVVLRQSODQQLQJHPSOR\PHQWHTXLW\DUHVRPHRIWKHFRUHLVVXHVWRWKH*URXS©V HPSOR\HHV(DFKRIWKHVHFRQWLQXHGWRUHFHLYHDWWHQWLRQLQWKH\HDUXQGHUUHYLHZ

Shareholders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©VDQQXDODQGLQWHULPILQDQFLDOUHVXOWV VSHFLILFLQYHVWRUGD\VDQGFRQIHUHQFHV6HQLRUPDQDJHPHQWDOVRSDUWLFLSDWHLQURDGVKRZVZLWKERWKORFDODQGLQWHUQDWLRQDO LQYHVWRUV ,QWHUDFWLRQ ZLWK VKDUHKROGHUV LV XQGHUWDNHQ WKURXJK WKH *URXS©V DQQXDO UHSRUW DQQXDO JHQHUDO PHHWLQJ DQG GLUHFWO\

Communities Local communities, academic institutions, and civil society 7KH*URXSHPSOR\VDFRQVLVWHQWDSSURDFKWRFRPPXQLW\GHYHORSPHQWWKURXJKFRUSRUDWHVRFLDOLQYHVWPHQWDQGFRQVXPHU HGXFDWLRQLQLWLDWLYHV0DWWHUVUHTXLULQJIRFXVLQFOXGHHGXFDWLRQVNLOOVGHYHORSPHQWDQGMREFUHDWLRQKHDOWKDQGRWKHUJHQHUDO ZHOIDUH PDWWHUV $EVD SURYLGHV IXQGLQJ WR SURMHFWV WKDW FUHDWH VXVWDLQDEOH YDOXH IRU WKH FRPPXQLWLHV E\ PD[LPLVLQJ RSSRUWXQLWLHVIRUERWKVKRUWDQGORQJWHUPILQDQFLDOLQFOXVLYHQHVVDQGJURZWK$EVD©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

Media ,WLVQHFHVVDU\WRHQJDJHZLWKDZLGHVSHFWUXPRIQDWLRQDODQGLQWHUQDWLRQDOPHGLDRQDGDLO\EDVLVRQDZLGHDUUD\RIWRSLFV $EVDLQWHUDFWVZLWKWKHPHGLDLQDFRQVLVWHQWRSHQDQGWUDQVSDUHQWPDQQHU7KH*URXSVWULYHVWREHUHVSRQVLYHWRPHGLD TXHULHVDQGRWKHUUHTXHVWVIRULQIRUPDWLRQDERXWWKHEXVLQHVVLQRUGHUWRPDLQWDLQ$EVD©VLQWHJULW\DQGEUDQGUHSXWDWLRQ &RPPXQLFDWLRQLVXQGHUWDNHQSULPDULO\WKURXJKPHGLDEULHILQJVLQSUHSDUDWLRQIRUHYHQWVKRVWHGE\WKH*URXSRUE\$EVD©V VWDNHKROGHUV PHGLD UHOHDVHV PHGLD FRQIHUHQFHV LQWHUYLHZV ZLWK DSSURYHG HPSOR\HHV DQG UHVSRQVHV WR GLUHFW PHGLD TXHULHV

28 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Environment 9DULRXV VWDNHKROGHUV ZLWKLQ WKH FRPPXQLW\ VXFK DV QRQJRYHUQPHQWDO RUJDQLVDWLRQV DQG RUJDQLVHG EXVLQHVV DUH NHHQO\LQWHUHVWHGLQ$EVD©VUHVSRQVHWRHQYLURQPHQWDOLVVXHV,VVXHVDUHGHDOWZLWKWKURXJKRQJRLQJGLDORJXHVWKDW UDQJHIURPWKHGLUHFWLPSDFWRIWKH*URXS©VRSHUDWLRQVRQWKHHQYLURQPHQWSURSRVHGELOOVDQGOHJLVODWLRQDVZHOODV WKHOHQGLQJSUDFWLFHVZLWKDIRFXVRQHQYLURQPHQWDODQGVRFLDOULVNV7KHVHPDWWHUVDUHGHDOWZLWKWKURXJKDUDQJHRI LQWHUDFWLRQVLQFOXGLQJSDUWLFLSDWLRQLQUHJXODULQGXVWU\GLVFXVVLRQJURXSVLQFOXGLQJWKH1DWLRQDO%XVLQHVV,QLWLDWLYHDQG WKH%DQNLQJ$VVRFLDWLRQRI6RXWK$IULFD

Organised business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

Suppliers $EVDUHTXLUHVJRRGVDQGVHUYLFHVRQWLPHWRVSHFLILFDWLRQIURPUHSXWDEOHTXDOLW\VXSSOLHUV$EVD©VSURFXUHPHQW VWUDWHJ\LVWRSULPDULO\GHOLYHUVDYLQJVWKURXJKVWUDWHJLFVRXUFLQJDQGVHFRQGO\WRDSSO\%%%((UHTXLUHPHQWV&RVWV DUHPDQDJHGWKURXJKHIIHFWLYHFDWHJRU\PDQDJHPHQWDQGRYHUDOOVXSSOLHUUHODWLRQVKLSPDQDJHPHQW$VDUHVXOW HQJDJHPHQWZLWKVXSSOLHUVRFFXUVRQDGDLO\EDVLVXVLQJGLIIHUHQWSDUWQHULQJDSSURDFKHV ,Q UHVSRQVH WR FRQFHUQV UHJDUGLQJ WUDQVSDUHQF\ RI SUDFWLFH DQG HQWHULQJ WKH $EVD SURFXUHPHQW VXSSO\ FKDLQ D VXSSOLHU LQWHUQHW VLWH KDV EHHQ LQVWLWXWHG WR FRPPXQLFDWH WR FXUUHQW DQG SURVSHFWLYH VXSSOLHUV RQ $EVD©V HWKLFV SROLFLHVDQGSURFHGXUHVSHUWDLQLQJWRVXSSOLHUVDVZHOODVWKH$EVDVRXUFLQJFDOHQGDU7KHVLWHDOVRRIIHUVWRROVVXFK DVD%%%((VHOIDVVHVVPHQWWRRONLW$GHGLFDWHGVXSSOLHUVKDUHFDOOQXPEHULVDYDLODEOHIRUVXSSOLHUVWRFRQWDFW$EVD GLUHFWO\IRUHQTXLULHVDQGFRPSODLQWVKDQGOLQJ

Trade unions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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 29 Sustainability review

Governments and regulators Governments 7KHQDWLRQDOJRYHUQPHQWVLQWKHFRXQWULHVLQZKLFKWKH*URXSRSHUDWHVVHWWKHUHJXODWRU\HQYLURQPHQW$EVDVWULYHV WRSURPRWHJRRGUHODWLRQVZLWKYDULRXVJRYHUQPHQWDJHQFLHVDQGUHJXODWRU\ERGLHV7KH*URXSPDQDJHVNH\LVVXHV WKURXJK LPSURYHG JRYHUQDQFH DQG FRPSOLDQFH WR ODZV DQG UHJXODWLRQV DV ZHOO DV SDUWLFLSDWLRQ LQ URXQGWDEOH GLVFXVVLRQV(QJDJHPHQWZLWKJRYHUQPHQWVXVXDOO\WDNHVWKHIRUPRIVFKHGXOHGPHHWLQJVHYHQWVDQGFDPSDLJQV

Regulators and industry bodies 'LDORJXH ZLWK UHJXODWRUV WDNHV WKH IRUP RI EULHILQJ VHVVLRQV DQG RQHRQRQH LQWHUDFWLRQV ZLWK WKH UHOHYDQW VHQLRU PDQDJHPHQW LQ WKH *URXS $EVD DOVR SDUWLFLSDWHV LQ YDULRXV GLVFXVVLRQ IRUXPV DQG FRPPLWWHHV OHDG E\ LQGXVWU\ ERGLHVWDFNOLQJLQGXVWU\VSHFLILFDQGZLGHUHFRQRPLFLVVXHV

Political parties $EVDLVDFRPPLWWHGVXSSRUWHURIWKHPXOWLSDUW\GHPRFUDF\LQ6RXWK$IULFDDQGVXSSRUWVJRRGJRYHUQDQFHDQGKHDOWK\ FRPSHWLWLRQRILGHDVLQWKHFRXQWU\©VSROLF\PDNLQJHQYLURQPHQWWKURXJKWKHGHPRFUDF\VXSSRUWSURJUDPPH$EVD FRQWULEXWHG5PLOOLRQWKURXJKWKHERDUGDSSURYHGGHPRFUDF\VXSSRUWSURJUDPPHIRUWKH\HDUHQGHG'HFHPEHU $OOSROLWLFDOSDUWLHVWKDWDUHUHJLVWHUHGLQWHUPVRIVHFWLRQRIWKH(OHFWRUDO&RPPLVVLRQ$FW1RRI DQGKDYHWKUHHRUPRUHVHDWVLQWKH1DWLRQDO$VVHPEO\EHQHILWIURPWKLVSURJUDPPH

Focus for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

30 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Material topics

Materiality

Introduction 7KHSDVWWKUHH\HDUVKDYHEHHQWHVWLQJIRUWKHJUHDWHUILQDQFLDOVHUYLFHVLQGXVWU\7KLVKDVKLJKOLJKWHGWKHQHHGWR HQVXUHVXVWDLQDEOHYDOXHFUHDWLRQQRWRQO\IRUVKDUHKROGHUVEXWIRUDOOVWDNHKROGHUVRYHUWKHORQJWHUP:LWKWKLVLQ PLQG$EVDKDVDOLJQHGLWVUHSRUWLQJWRDGGUHVVWKRVHWRSLFVWKDWLPSDFWWKH*URXS©VIXWXUHVXVWDLQDELOLW\

Identifying Absa’s material topics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

Material topics

Principal risks Absa values :KROHVDOHFUHGLW 9DOXHRXUSHRSOH 5HWDLOFUHGLW DQGWUHDWWKHP 0DUNHWULVN ZLWKIDLUQHVV &DSLWDO 'HPRQVWUDWH /LTXLGLW\ LQWHJULW\LQDOORXU )LQDQFLDOUHSRUWLQJ DFWLRQV )LQDQFLDOFULPH 6WULYHWRH[FHHG 2SHUDWLRQV WKHQHHGVRIRXU 7HFKQRORJ\ Material topics FXVWRPHUV 3HRSOH 7DNHUHVSRQVLELOLW\ 7D[DWLRQ )LQDQFLDOYLDELOLW\ /HJDO IRUWKHTXDOLW\RI 5HJXODWRU\ 5LVNPDQDJHPHQW RXUZRUN ,QVXUDQFHXQGHUZULWLQJ &DSLWDODQGOLTXLGLW\ 'LVSOD\OHDGHUVKLS LQDOOWKDWZHGR DQGLQYHVWPHQWV *RYHUQDQFHDQGFRPSOLDQFH Other risks 3URFHVVDQGV\VWHPHIIHFWLYHQHVV 0DMRUFKDQJHSURJUDPPH &XVWRPHUH[SHULHQFH 6WUDWHJLFULVN &RUSRUDWHVXVWDLQDELOLW\ 5HVSRQVLEOHOHQGLQJ %UDQGULVN )LQDQFLDOLQFOXVLRQ (PSOR\HHHQJDJHPHQW One Absa strategy 7UDQVIRUPDWLRQZLWKDIRFXVRQ%%%(( 6XVWDLQDEOHJURZWK &RPPXQLW\LQYHVWPHQW LQWDUJHWHGPDUNHWV %DODQFHVKHHW Stakeholders (QYLURQPHQWDOLPSDFW RSWLPLVDWLRQDQG &XVWRPHUV SURDFWLYHULVN (PSOR\HHV PDQDJHPHQW 6KDUHKROGHUV 6LPSOHVWUHDPOLQHG &RPPXQLWLHV *URXSIRUFXVWRPHU *RYHUQPHQWVDQG GHOLYHU\ UHJXODWRUV &XVWRPHUDQG SHRSOHFHQWUHG RUJDQLVDWLRQ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 31 Material topics

Our 2010 material topics

Material topic Description

Financial viability Sustainable growth creating value for all stakeholders.

Risk management Identifying and managing signiﬁcant risks that impact on the Group’s sustainability.

Capital and liquidity Ensuring that the Group has the correct levels of capital and liquidity to meet its business requirements.

Governance and Being an ethical compliance company that maintains high standards of governance.

32 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 highlights Measuring achievement

6ROLGILQDQFLDOSHUIRUPDQFHZLWKDQLQFUHDVHLQKHDGOLQHHDUQLQJVRI WR5ELOOLRQ RoE relative to the CoE 5HWXUQRQDYHUDJHHTXLW\ 5R( UHPDLQHGDERYHWKHFRVWRIHTXLW\ &R( 15,1 1HW DVVHW YDOXH SHU VKDUH LQFUHDVHG E\ FRPSRXQGHG RYHU ILYH\HDUV (DUO\VXFFHVVHVIURPWKH2QH$EVDVWUDWHJ\SRVLWLRQV$EVDZHOOIRU 14,0 IXWXUHJURZWK

6WUHQJWKHQHGWKHEDODQFHVKHHW 2010 ●● 5R(● &R(

(QKDQFHGWKHTXDOLW\RIQHZEXVLQHVV Impairment losses ratio (%) 5HGXFHGLPSDLUPHQWVE\LPSURYLQJWKH*URXS©VFROOHFWLRQDFWLYLWLHV 1,74 0DQDJHGLQWHUHVWUDWHULVNLQWKHEDQNLQJERRNWRORZOHYHOV (QKDQFHGRSHUDWLRQDOULVNFRQWUROV 1,19 1,20 ,PSURYHGSULQFLSDOULVNLGHQWLILFDWLRQ 8SJUDGHGWUDGHGPDUNHWULVNPHDVXUHPHQWV\VWHPV

2008 2009 2010

6WURQJFDSLWDOSRVLWLRQPDLQWDLQHG %RDUGWDUJHWVLQFRUSRUDWHGDGHTXDWHFDSLWDOEXIIHUVDERYHPLQLPXP Core Tier 1 capital adequacy UHJXODWRU\UHTXLUHPHQWV ratio 11,7 5HWDLQHGLQYHVWPHQWJUDGHFUHGLWUDWLQJ 6LJQLILFDQWLQFUHDVHLQVXUSOXVOLTXLGDVVHWVKHOG &RQWLQXHGLPSURYHPHQWLQWHUPRIIXQGLQJ /RDQVWRGHSRVLWV UDWLR LPSURYHG WR LQ IURP LQ

2010

6XEVWDQWLDODSSOLFDWLRQRI.LQJ,,, +LJK OHYHOV RI DGKHUHQFH WR ORFDO DQG LQWHUQDWLRQDO JRYHUQDQFH Percentage of independent VWDQGDUGV board members (%) 63 63 (VWDEOLVKHGWKH,QIRUPDWLRQ7HFKQRORJ\6WHHULQJ&RPPLWWHHDVD 57 *URXS([FRVXEFRPPLWWHH &RPSOLHG ZLWK DOO DSSOLFDEOH ODZV UHJXODWLRQV VWDQGDUGV DQG FRGHV

2008 2009 2010

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 33 Material topics

Our 2010 material topics

Material topic Description

Process and system Process and system effectiveness effectiveness for simple, streamlined customer service delivery.

Customer experience Ensuring that the customer remains at the centre of everything the Group does.

Responsible lending Promoting fair, transparent, sustainable, and responsible access to credit.

Financial inclusion Providing innovative, appropriate and sustainable ﬁnancial services to those historically excluded.

34 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 highlights Measuring achievement

'HOLYHUHGVHYHUDOPDMRUSURJUDPPHVLQFOXGLQJ ° DQHZIRUHLJQH[FKDQJHSODWIRUPDQG System availability °QHZVKRUWWHUPDQGOLIHLQVXUDQFHDGPLQLVWUDWLRQV\VWHPV 99,2 99,8 0DLQWDLQHG,7V\VWHPDYDLODELOLW\DQGVWDELOLW\RIFRUHV\VWHPV ,PSOHPHQWHG ZRUNIORZ DQG LPDJLQJ LQ PDLQVWUHDP EXVLQHVV SURFHVVLQJ 5HGHVLJQHGVHYHUDONH\FXVWRPHUIDFLQJSURFHVVHV &RQWLQXHG WR UHGXFH WKH QXPEHU RI 6HYHULW\ LQFLGHQWV GRZQ WR 2010 LQIURPLQ ● $70DYHUDJHDYDLODELOLW\ ● &RUHQHWZRUNDYDLODELOLW\

2YHUDOO VDWLVIDFWLRQ ZLWK WKH *URXS©V VHUYLFH GHOLYHU\ UHPDLQHG VWDEOHWKURXJKRXW Average days to resolve ,QWKHOrange IndexFXVWRPHUVHUYLFHEHQFKPDUNVWXG\$EVD complaints (days) 3,00 DFKLHYHGVHFRQGSRVLWLRQLQEDQNLQJIRUWKHVHFRQG\HDU 2,68 ,PSURYHG ORJJLQJ DQG UHVROYLQJ FXVWRPHU FRPSODLQWV DFURVV DOO FKDQQHOV /DXQFKHGDQXPEHURILQQRYDWLYHSURGXFWVLQFOXGLQJ 1,27 ° :HVWHUQ 8QLRQ PRQH\ WUDQVIHUV RQ FHOOSKRQH DQG LQWHUQHW EDQNLQJSODWIRUPVDQG °SRLQWRIVDOHG\QDPLFFXUUHQF\FRQYHUVLRQ 2008 2009 2010 (PEHGGHG7UHDWLQJ&XVWRPHUV)DLUO\SULQFLSOHV

,PSOHPHQWHG D 'HEW 6ROXWLRQV +HOSOLQH DQG WKH $EVD 'HEW &RXQVHOOLQJ&DOO&HQWUHWRDVVLVWFXVWRPHUVLQILQDQFLDOGLVWUHVV Home Loans average LTV on a /RZHUHG WKH +RPH /RDQ DYHUDJH /79 UDWLR RQ D PDUNWRPDUNHW mark-to-market valuation (%) YDOXDWLRQWRIRU'HFHPEHUIURPIRU'HFHPEHU 45,9 44,3A $SSOLHG WKH (TXDWRU 3ULQFLSOHV UHTXLUHPHQWV WR SURMHFW ILQDQFH WUDQVDFWLRQV

2009 2010

&UHDWHGDQHQWU\OHYHODQGLQFOXVLYHEDQNLQJXQLW /DXQFKHGDUHIRFXVHGEUDQFKDSSURDFK Market share for individual savings accounts ,PSURYHG DFFHVV PHFKDQLVPV WKURXJK EUDQFKOHVV DQG PRELOH 55,2 EDQNLQJ ([SDQGHGPLFURHQWHUSULVHILQDQFHIRFXVLQJRQWKHVHOIHPSOR\HG ORZLQFRPHVHJPHQW

2010

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 35 Material topics

Our 2010 material topics

Material topic Description

Employee engagement Ensuring a motivated and engaged workforce.

Transformation, Ensuring that the with a focus on broad- Group’s shareholders, based black economic employees, suppliers empowerment and customers represent the demographics of South Africa.

Community Adding value to the investment communities in which the Group operates.

Environmental Managing Absa’s impact impact on the environment.

36 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 highlights Measuring achievement

,PSURYHGSDUWLFLSDWLRQLQWKHHPSOR\HHRSLQLRQVXUYH\ Permanent employee turnover 5HGXFHGHPSOR\HHWXUQRYHUUDWH rate for South Africa (%) 0HWWKH&R*3WDUJHWIRUWUDLQLQJVSHQGRQKLVWRULFDOO\GLVDGYDQWDJHG 15,4

LQGLYLGXDOV 12,3 A OHDUQHUVSDUWLFLSDWHGLQ$EVD©VOHDUQHUVKLSSURJUDPPHGXULQJ 10,1 0RUHWKDQ5PLOOLRQLQYHVWHGLQEXUVDULHVIRUHPSOR\HHVWRIXUWKHU WKHLUHGXFDWLRQ

2008 2009 2010

%%%((VWDWXVLPSURYHGIURPD/HYHOWRD/HYHOFRQWULEXWRU $EVD*URXSVSHQW 5PLOOLRQ RIWRWDOSURFXUHPHQWZLWK BBBEE Codes of Good %%%((DFFUHGLWHGVXSSOLHUV Practice score and status 75,9 5 PLOOLRQ RI $EVD©V OHYLDEOH VDODU\ ELOO ZDV LQYHVWHG LQ TXDOLI\LQJVNLOOVGHYHORSPHQWLQFOXGLQJ ° WKHLQWURGXFWLRQRIWKH$EVD'LVDELOLW\&RDFKLQJ3URJUDPPHDQG ° XQHPSOR\HG PDWULFXODQWV DQG JUDGXDWHV XQGHUWRRN OHDUQHUVKLSV 3 5 PLOOLRQ RI $EVD©V QHW SURILW DIWHU WD[ LQYHVWHG LQ HQWHUSULVHGHYHORSPHQW 2010 ●● 7RWDOVFRUH %%%((VWDWXV

,QYHVWHG 5 PLOOLRQ LQ TXDOLI\LQJ VRFLRHFRQRPLF GHYHORSPHQW LQLWLDWLYHVRQDQDWLRQDOSURYLQFLDODQGORFDOOHYHO Number of consumers reached through financial literacy initiatives 6LJQLILFDQWLQFUHDVHLQHPSOR\HHVLQYROYHGLQFRPPXQLW\SURMHFWV ,QGHSHQGHQWUHVHDUFKFRQILUPHGWKDWWKH%XERPLILQDQFLDOOLWHUDF\ 356 156 SURJUDPPH VLJQLILFDQWO\ LPSURYHG ILQDQFLDO FDSDELOLWLHV RI SDUWLFLSDQWV :RQ WZR 0DLO *XDUGLDQ ,QYHVWLQJ LQ WKH )XWXUH $ZDUGV LQ WKH SDUWQHUVKLS DQG VSRUWV GHYHORSPHQW FDWHJRULHV UXQQHUXS LQ WKHHQWHUSULVHGHYHORSPHQWFDWHJRU\DQGVSHFLDOFRPPHQGDWLRQLQ

WKHHPSOR\HHFRPPXQLW\LQYROYHPHQWFDWHJRU\ 2010

,QFUHDVHGHQHUJ\HIILFLHQF\E\LPSURYLQJDQGUHSODFLQJLQIUDVWUXFWXUH ,PSOHPHQWHG D SURMHFW WR LPSURYH WKH PHDVXUHPHQW RI HOHFWULFLW\ Carbon emissions from XVH electricity (’000 tonnes CO2)

&RPSOHWHG WKH JDV HQHUJ\ FHQWUH LQ WKH QHZ $EVD 7RZHUV :HVW 9 EXLOGLQJSURYLGLQJVHFXULW\RIHOHFWULFLW\VXSSO\DQGUHGXFLQJFDUERQ

GLR[LGH &2 HPLVVLRQV 434 &2HPLVVLRQVGURSSHGE\\HDURQ\HDUDVDUHVXOWRIWKHORZHU 391 FDUERQIDFWRURIJDVHPLVVLRQV ([SRVHGDQGHGXFDWHGFUHGLWSURFHVVLQJPDQDJHUVRQWKHSULQFLSOHV

HPERGLHGLQUHVSRQVLEOHHQYLURQPHQWDOILQDQFH 2009 2010 ● Gas emissions ● Eskom emissions

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 37 Sustainability review

Material topics – Financial viability

Sustainable growth creating value for all stakeholders.

Highlights Absa’s stance 7KHUHFHQWJOREDOILQDQFLDOWXUEXOHQFHUHLQIRUFHGWKHQHHGIRU (DUO\VXFFHVVHVIURPWKH2QH$EVDVWUDWHJ\ VWURQJJRYHUQDQFHOLTXLGLW\ULVNPDQDJHPHQWDQGHFRQRPLF SRVLWLRQV$EVDZHOOIRUIXWXUHJURZWK VXVWDLQDELOLW\ 7KH *URXS©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©V 6WUHQJWKHQHGWKHEDODQFHVKHHW )LQDQFLDO 6HUYLFHV RSHUDWLRQV E\ 7KLV ZLOO HQVXUH D VRXQGIXWXUHHDUQLQJVEDVH Key performance indicators

2010 &KDQJH 2010 review 7KH 2QH $EVD VWUDWHJ\ UHPDLQV SLYRWDO LQ HQVXULQJ 5HYHQXHJURZWKILYH\HDU VXVWDLQDEOH IXWXUH JURZWK ,Q DWWHQWLRQ ZDV SDLG WR FRPSRXQGHG 11 +HDGOLQHHDUQLQJVJURZWK HQKDQFLQJ EXVLQHVVDVXVXDO RSHUDWLRQV LPSURYLQJ JURZWK ILYH\HDUFRPSRXQGHG 5 $WWULEXWDEOHHDUQLQJV LQWDUJHWHGDUHDVDQGVWUHQJKWHQLQJWKHFRUHIXQGDPHQWDOVRI FRQWULEXWLRQ WKH*URXS©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

1Calculated after the allocation of corporate, capital and funding centres. UHGXFLQJFRVWV 2Compound annual growth rate based on 4,75 years owing to the Group’s March year end in 2005.

Headline earnings contribution (%) RoE relative to CoE (%)

17 15 20 23,4 17 17 25 15,5 43 32 15,1 25 15,5 36 30 14,0 14,0 23

20092010 Target mix 2008 2009 2010 ● Retail Banking ● ABB ● Absa Capital ● Financial Services ●● RoE ● CoE

38 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU $OWKRXJKWKHFRUSRUDWHEXVLQHVVZDVRQO\PLJUDWHGLQWKHIRXUWKTXDUWHU RIVRPHHDUO\ZLQVDOUHDG\GHPRQVWUDWHWKHQHZPRGHO©VEHQHILWV 7KH*URXSJDLQHGVHYHUDOKLJKSURILOHFOLHQWVLQWKHVHFRQGKDOIRI ,QDGGLWLRQ$EVDZRQQHZPXOWLQDWLRQDOFRUSRUDWHUHODWLRQVKLSVZKLFK KLJKOLJKWVWKHYDOXHRIZRUNLQJFORVHO\ZLWK%DUFOD\V&DVKDQGHOHFWURQLF EDQNLQJUHYHQXHVLQFUHDVHGVWURQJO\UHVXOWLQJLQWUDQVDFWLRQDOEDQNLQJ JDLQLQJPDUNHWVKDUHLQ 6WUHDPOLQLQJ WKH *URXS©V EXVLQHVV DV XVXDO RSHUDWLRQV FRQWLQXHG WR UHFHLYH DWWHQWLRQ 6XEVWDQWLDO LQYHVWPHQWV ZHUH XQGHUWDNHQ LQ WR HQVXUHHQKDQFHGSURFHVVHVDQGV\VWHPV7KLVLQFOXGHGGHSOR\LQJWKH SURYHQ%DUFOD\VIRUHLJQH[FKDQJHSODWIRUPUHSODWIRUPLQJFRUHV\VWHPV LQ WKH *URXS©V $IULFDQ RSHUDWLRQV HQKDQFLQJ IURQWHQG V\VWHPV LQ EUDQFKHV UHSODFLQJ OLIH DQG VKRUWWHUP LQVXUDQFH WHFKQRORJ\ SODWIRUPV DQGSUHSDULQJIRUWKHLPSOHPHQWDWLRQRIWKH$GYDQFHG,QWHUQDO5DWLQJV %DVHG $,5% DSSURDFKIRUWKHZKROHVDOHSRUWIROLR $UREXVWEDODQFHVKHHWDQGVWURQJULVNPDQDJHPHQWDUHFULWLFDOHQDEOHUV IRUDQ\ILQDQFLDOVHUYLFHVRUJDQLVDWLRQWRKDYH)RFXVLQKDVEHHQ RQPDLQWDLQLQJKLJKFDSLWDOOHYHOVLPSURYLQJWKH*URXS©VOLTXLGLW\SURILOH DQGJURZLQJWKHGHSRVLWEDVH7KH*URXSJUHZGHSRVLWVGXHWRFXVWRPHUV E\ ZLWK 5HWDLO %DQNLQJ LQFUHDVLQJ LWV GHSRVLWV EDVH E\ IRU WKH \HDUWRIXUWKHUFHPHQWLWVOHDGLQJPDUNHWVKDUH$%%H[SHULHQFHGD JURZWKLQGHSRVLWVPDLQO\IURPFKHTXHDFFRXQWVIL[HGGHSRVLWVIRUHLJQ FXUUHQF\ DQG VDYLQJV DQG WUDQVPLVVLRQ DFFRXQWV $EVD &DSLWDO©V LQFUHDVHZDVSULPDULO\RZLQJWRVWURQJJURZWKLQFKHTXHDFFRXQWV

Focus for 2011 ,Q HPSKDVLV ZLOO FRQWLQXH WR EH SODFHG RQ LPSOHPHQWLQJ WKH *URXS©VVWUDWHJLFZRUNVWUHDPVDQGHPEHGGLQJWKHPLQRSHUDWLRQV 6SHFLILFHPSKDVLVZLOOEHSODFHGRQ ,PSURYLQJWKH*URXS©VUHWXUQRQULVNZHLJKWHGDVVHWV &RVWPDQDJHPHQWDVWKH*URXSDLPVWRUHVWULFWFRVWJURZWKWRVLQJOH )XUWKHUUHDGLQJ GLJLWV

)XUWKHUVWUHQJWKHQLQJWKH*URXS©VEDODQFHVKHHWE\LQFUHDVLQJ )LQDQFLDODQDO\VLV 325 VXUSOXVOLTXLGDVVHWVDQGPDLQWDLQLQJKLJKFDSLWDOOHYHOV )LQDQFLDOVWDWHPHQWV 336

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 39 Sustainability review

Material topics – Risk management

Identifying and managing signiﬁcant risks that impact on the Group’s sustainability.

Highlights Absa’s stance 7KH*URXSSODFHVKLJKLPSRUWDQFHRQUREXVWULVNPDQDJHPHQW (QKDQFHGWKHTXDOLW\RIQHZEXVLQHVV SURFHVVHVWRHQDEOHLWWRUHVSRQGHIIHFWLYHO\WRWKHGHPDQGV RIWKHHQYLURQPHQW 5HGXFHGLPSDLUPHQWVE\LPSURYLQJWKH *URXS©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©VSULQFLSDOULVNIUDPHZRUNLQFRQMXQFWLRQZLWKWKH V\VWHPV LGHQWLILHG PDWHULDO WRSLFV HQVXUH WKH UHOHYDQW FRQWUROV DQG GLVFORVXUHVDUHLQSODFHIRULQWHJUDWHGULVNPDQDJHPHQWDQG UHVSRQVLEOHHWKLFDODQGVXVWDLQDEOHJURZWK

Key performance indicators

2010 &KDQJH

,PSDLUPHQWVORVVHVUDWLR 1,20 1RQSHUIRUPLQJDGYDQFHVDV DSHUFHQWDJHRIORDQVDQG DGYDQFHV 7,7 7UDGHGPDUNHWULVN'9D5 5P 27,9 (TXLW\LQYHVWPHQWVLQWKH EDQNLQJERRN5:$V 5EQ 25 911 0DUNHWULVN5:$V 9 013

Impairment losses ratio (%) Market risk RWA (Rm) 1,74 9 662 9 013

1,19 1,20

5 088

2008 2009 2010 2008 2009 2010

40 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 7KHWDEOHEHORZSURYLGHVDQRYHUYLHZRISULQFLSDOULVNVDQGDUHIHUHQFHWRWKHPDWHULDOWRSLFVDVFRQWDLQHGLQWKLV VHFWLRQRIWKHUHSRUW

Principal risk Material topic

:KROHVDOHFUHGLW 5LVNPDQDJHPHQWDQGUHVSRQVLEOHOHQGLQJ

5HWDLOFUHGLW 5LVNPDQDJHPHQWUHVSRQVLEOHOHQGLQJDQGILQDQFLDOLQFOXVLRQ

0DUNHWULVN 5LVNPDQDJHPHQW

&DSLWDO &DSLWDODQGOLTXLGLW\

/LTXLGLW\ &DSLWDODQGOLTXLGLW\

)LQDQFLDOUHSRUWLQJ &RYHUHGE\WKHUHTXLUHGGLVFORVXUHVLQWKHDQQXDOUHSRUW

)LQDQFLDOFULPH 5LVNPDQDJHPHQWDVZHOODVJRYHUQDQFHDQGFRPSOLDQFH

2SHUDWLRQV 3URFHVVDQGV\VWHPVHIIHFWLYHQHVV

2SHUDWLRQV SURGXFWGHYHORSPHQW 5HVSRQVLEOHOHQGLQJILQDQFLDOLQFOXVLRQDVZHOODVSURFHVVDQG V\VWHPVHIIHFWLYHQHVV

7HFKQRORJ\ 3URFHVVDQGV\VWHPVHIIHFWLYHQHVV

3HRSOH (PSOR\HHHQJDJHPHQWDQGWUDQVIRUPDWLRQ

7D[DWLRQ &RYHUHGE\WKHUHTXLUHGGLVFORVXUHVLQWKHDQQXDOUHSRUW

/HJDO &RYHUHGE\WKHUHTXLUHGGLVFORVXUHVLQWKHDQQXDOUHSRUW

5HJXODWRU\ &DSLWDODQGOLTXLGLW\JRYHUQDQFHDQGFRPSOLDQFHUHVSRQVLEOHOHQGLQJ DQGWUDQVIRUPDWLRQ

,QVXUDQFHXQGHUZULWLQJDQG &RYHUHGE\WKHUHTXLUHGGLVFORVXUHVLQWKHDQQXDOUHSRUW LQYHVWPHQWV

Other risks ,QDGGLWLRQWRWKHDERYHSULQFLSDOULVNVLVWKHFRUSRUDWHVXVWDLQDELOLW\SULQFLSDOULVNZKLFKHQVXUHVWKH*URXSPDQDJHV ULVNV UHODWLQJ WR SHRSOH DQG WKH SODQHW 5HIHUHQFH VKRXOG EH PDGH WR WKH IROORZLQJ PDWHULDO WRSLFV FXVWRPHU H[SHULHQFHUHVSRQVLEOHOHQGLQJILQDQFLDOLQFOXVLRQHPSOR\HHHQJDJHPHQWWUDQVIRUPDWLRQFRPPXQLW\LQYHVWPHQW DQGHQYLURQPHQWDOLPSDFW

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 41 Sustainability review

Material topics – Risk management

2010 review 'XULQJWKH\HDUWKH*URXSPDQDJHGLWVULVNZLWKLQLWVULVNDSSHWLWH.H\ KLJKOLJKWVDQGDFKLHYHPHQWVDUHGHWDLOHGEHORZ

Credit risk 7KH *URXS©V LPSDLUPHQW ORVVHV RQ ORDQV DQG DGYDQFHV LPSURYHG E\ GXULQJ 7KLV ZDV GULYHQ E\ FXVWRPHUV© LPSURYHG DELOLW\ WR PDNHSD\PHQWVJLYHQORZHULQWHUHVWUDWHVEHWWHUTXDOLW\RIQHZORDQV DQGVXEVWDQWLDOLQYHVWPHQWVPDGHLQWKHFROOHFWLRQVLQIUDVWUXFWXUH 1RQSHUIRUPLQJORDQVLQFUHDVHGGXULQJWKH\HDURZLQJWRWKHEXLOGXSRI GHOLQTXHQFLHVLQSULRU\HDUVDQG$EVD©VVWUDWHJ\ZKLFKYLHZVDVDOHLQ H[HFXWLRQDVWKHODVWSRVVLEOHRSWLRQ $ IXOO UHYLHZ ZDV SHUIRUPHG RQ DOO FUHGLW PRGHOV GXULQJ WKH \HDU $WWHQWLRQZDVSDLGWRLPSURYLQJWKHTXDOLW\DQGTXDQWLW\RIGDWDDYDLODEOH IRUXVHLQWKHVHPRGHOV ,QWKHZKROHVDOHFUHGLWHQYLURQPHQWLQIORZVWRWKHZDWFKOLVWPRGHUDWHGLQ WKH VHFRQG KDOI RI WKH \HDU DQG LPSDLUPHQWV UHPDLQHG LQ OLQH ZLWK WKH SUHYLRXV\HDU6LJQLILFDQWSURJUHVVZDVPDGHLQSUHSDULQJIRUWKH$GYDQFHG ,QWHUQDO 5DWLQJV %DVHG $,5% PHDVXUHPHQW DSSURDFK IRU WKH ZKROHVDOH SRUWIROLR

Market risk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

42 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Operational risk 2QJRLQJ LPSURYHPHQW RI RSHUDWLRQDO FRQWUROV DV ZHOO DV WKH ULVN PDQDJHPHQW V\VWHPV DQG SURFHVV $EVD©V IRFXV RQ WKH FRQWURO HQYLURQPHQW LQ UHFHQW \HDUV ZDV HYLGHQW DV ORVVHV GHFOLQHG VOLJKWO\ /DUJHORVVHVUHPDLQHGZHOOXQGHUFRQWUROZLWKDFOHDULPSURYHPHQWLQ )LQDQFLDOFULPHUHPDLQHGRQHRIWKH*URXS©VSULPDU\ULVNVDQGD QHZILQDQFLDOFULPHRSHUDWLQJPRGHOZDVLPSOHPHQWHG

Insurance and underwriting risk 7KH LQVXUDQFH HQYLURQPHQW ZDV LPSDFWHG E\ VORZHU JURZWK RZLQJ WR XQFHUWDLQ HFRQRPLF FRQGLWLRQV +RZHYHU IDYRXUDEOH UHWXUQV ZHUH VWLOO DFKLHYHGZLWKVKRUWWHUPORVVUDWLRVUHGXFLQJIURPWRDQG WKHUHWXUQRQVKDUHKROGHUV©DVVHWVH[FHHGLQJWKHH[SHFWHGEHQFKPDUN UDWH,QVXUDQFHHQWLWLHVIRFXVHGRQJRYHUQDQFHSURFHVVHVDQGPRGHOOLQJ UHTXLUHGWRHQKDQFHULVNPDQDJHPHQW ,Q WKH VKRUWWHUP LQVXUDQFH HQYLURQPHQW XQGHUZULWLQJ GLVFLSOLQH DQG FRQWUROVZHUHHQKDQFHGDQGSURJUHVVZDVPDGHLQGHYHORSLQJDFDSLWDO PRGHOIRUVROYHQF\OHJLVODWLYHGHYHORSPHQWV

Focus for 2011 7KH*URXSZLOOFRQWLQXHWRPRQLWRUWKHHFRQRPLFUHFRYHU\DQGHQVXUH WKDWLWDGDSWVLWVULVNPDQDJHPHQWSROLFLHVSURFHGXUHVULVNDSSHWLWHDQG VWUHVVWHVWVWRGHDOZLWKWKHFKDQJLQJGHPDQGVDQGFKDOOHQJHVRIWKH HFRQRPLF HQYLURQPHQW ,Q DGGLWLRQ WKH *URXS UHPDLQV FRPPLWWHG WR GHYHORSLQJ DQG HQKDQFLQJ DSSURSULDWH ULVN PDQDJHPHQW SURFHGXUHV DQG SUDFWLFHV WR NHHS SDFH ZLWK UHJXODWRU\ UHTXLUHPHQWV DQG EHVW SUDFWLFHLQWKHLQGXVWU\ 6WUDWHJLF DUHDV RI IRFXV DUH HQKDQFLQJ WKH *URXS©V ULVN DSSHWLWH DQG VWUHVVWHVWLQJIUDPHZRUNVWRDOORZWKH*URXSWRFRQWLQXRXVO\HYDOXDWHLWV VWUDWHJ\DQGSODQQLQJSURFHVVHVXQGHUFKDOOHQJLQJPDUNHWFRQGLWLRQV .H\IRFXVDUHDVDUHDVIROORZV )XUWKHU HPEHGGLQJ RI VWUHVV WHVWLQJ DQG VFHQDULR DQDO\VLV LQWR WKH SODQQLQJ DQG WKH FRQWLQXRXV HYDOXDWLRQ RI WKH *URXS©V ILQDQFLDO SHUIRUPDQFHRYHUDWKUHHWRILYH\HDUKRUL]RQDQG

(QKDQFLQJ DQG HYDOXDWLQJ UHDGLQHVV IRU WKH LPSOHPHQWDWLRQ RI WKH )XUWKHUUHDGLQJ SURSRVHG%DVHODPHQGPHQWVDQGHQVXULQJWKDWWKH*URXSLVDEOHWR 5LVNPDQDJHPHQW UHVSRQGHIIHFWLYHO\WRWKHVHFKDQJHV 190

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 43 Sustainability review

Material topics – Capital and liquidity

Ensuring that the Group has the correct levels of capital and liquidity to meet its business requirements.

Highlights Absa’s stance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©VFDSLWDOPDQDJHPHQWIUDPHZRUNSURYLGHVWKHEDVLVIRU KHOG HIIHFWLYH FDSLWDO SODQQLQJ DQG VWUXFWXULQJ FDSLWDO LVVXDQFH &RQWLQXHGLPSURYHPHQWLQWHUPRIIXQGLQJ %DVHO ,, DOLJQPHQW DQG HFRQRPLF FDSLWDO XWLOLVDWLRQ IRU WKH HQGWRHQG LQWHJUDWLRQ RI WKH *URXS©V VWUDWHJ\ ULVN /RDQVWRGHSRVLWVUDWLRLPSURYHGWRLQ PDQDJHPHQWDQGILQDQFLDOSURFHVVHV IURPLQ /LTXLGLW\LVPDQDJHGWKURXJKDIUDPHZRUNDQGSROLF\VRWR PDNHFHUWDLQWKH*URXSFDQFRQWLQXHRSHUDWLRQVDVDJRLQJ FRQFHUQ Key performance indicators 2010 review 2010 &KDQJH 'XULQJ WKH \HDU VXIILFLHQW DQG DSSURSULDWH LQIRUPDWLRQ UHJDUGLQJWKHSHUIRUPDQFHRIWKHSULQFLSDOULVNVDJDLQVWWKH &RUH7LHUFDSLWDODGHTXDF\ UDWLR 11,7 UHOHYDQWULVNSDUDPHWHUVVHWE\WKHERDUGZDVREWDLQHG.H\ 7RWDOFDSLWDODGHTXDF\ KLJKOLJKWVDQGDFKLHYHPHQWVDUHGHWDLOHGEHORZ UDWLR 15,5 $YHUDJHORQJWHUPIXQGLQJ UDWLR 25,6 Capital management /RDQVWRGHSRVLWVUDWLR 91,9 7KH *URXS©V FDSLWDO PDQDJHPHQW VWUDWHJ\ LV IRFXVHG RQ 5LVNZHLJKWHGDVVHWV 5EQ 423 PD[LPLVLQJ VKDUHKROGHU YDOXH E\ RSWLPLVLQJ WKH OHYHO DQG The ratio is shown in respect of the Company and reﬂects the average PL[RIFDSLWDOUHVRXUFHV'XULQJWKH*URXSPDLQWDLQHG over the year. LWV VWURQJ FDSLWDO DGHTXDF\ SRVLWLRQ DQG DFKLHYHG D WRWDO FDSLWDODGHTXDF\UDWLRRI $WWHQWLRQ ZDV SODFHG RQ ULVNZHLJKWHG DVVHWV 5:$V Core Tier 1 capital adequacy ratio (%) GHPDQG PDQDJHPHQW IUHH FDSLWDO JHQHUDWLRQ DQG WKH UHSODFHPHQWRIPDWXULQJFDSLWDOLQVWUXPHQWVGXULQJWKH\HDU

11,5 11,7 ,QWKLVUHJDUG 10,4 JURZWKLQFUHGLW5:$VZHUHLPSDFWHGE\WKHVORZGRZQLQ FUHGLW JURZWK GXULQJ WKH \HDU DQG WKH UHYLHZ DQG UHFDOLEUDWLRQ RI H[LVWLQJ PRGHOV WR HQVXUH WKH\ UHIOHFWHG WKHUHFHQWHFRQRPLFH[SHULHQFHV

2008 2009 2010

44 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU HPSKDVLVZDVSODFHGRQ5:$VUHOLHIE\WLJKWHQLQJULVNSDUDPHWHUV DQG PHWKRGRORJLHV DQG WDNLQJ FRJQLVDQFH RI WKH ULVN DQG UHZDUG SURILOHDVVRFLDWHGZLWKDVVHWVDQG WKH*URXSJHQHUDWHGIUHHFDSLWDO RI5ELOOLRQDIWHUGLYLGHQGSD\PHQWV

Liquidity management *OREDOO\EDQNVDUHIRFXVLQJVLJQLILFDQWO\RQSUXGHQWOLTXLGLW\PDQDJHPHQW SUDFWLFHVDVKLJKOLJKWHGE\WKHUHFHQWLQWHUQDWLRQDOILQDQFLDOFULVLV6WHSV FRQWLQXH WR EH WDNHQ WR H[WHQG WKH *URXS©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

Focus for 2011 &DSLWDO DQG OLTXLGLW\ PDQDJHPHQW UHPDLQV FULWLFDO IRU WKH VXVWDLQDEOH JURZWKRIWKH*URXS$EVDLVHQVXULQJWKDWLWVFDSLWDOSRVLWLRQLVRSWLPDO JLYHQWKHFKDQJHVWRUHJXODWLRQV5:$VRSWLPLVDWLRQUHPDLQVFULWLFDODV GRHVWKHSRVVLEOHLPSDFWVRIWKH%DVHODPHQGPHQWV )XUWKHUUHDGLQJ /LTXLGLW\PDQDJHPHQWZLOOUHPDLQDNH\IRFXVDUHDZLWKFRQWLQXHGDWWHQWLRQ &DSLWDOPDQDJHPHQW 203 EHLQJSDLGWRJURZLQJDQGGLYHUVLI\LQJWKHIXQGLQJEDVHIXUWKHUOHQJWKHQLQJ WKHEDQN©VIXQGLQJSURILOHFRQWLQXLQJWREXLOGVXUSOXVOLTXLGDVVHWKROGLQJV DQGIRFXVLQJRQORZHULQJWKHZHLJKWHGDYHUDJHFRVWRIIXQGLQJ

Average long-term funding ratio Loans-to-deposits ratio (%)

25,6 97,0 95,9 91,9

2010 2008 2009 2010

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 45 Sustainability review

Material topics – Governance and compliance

Being an ethical company that maintains high standards of governance.

Highlights Absa’s stance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©VFXOWXUHEXVLQHVVRSHUDWLRQVDQGVWUDWHJLHV 6WURQJ LQWHUQDO FRQWURO DQG FRPSOLDQFH FRQWULEXWHV *URXSZLGHSURMHFWVWRDGGUHVVWKH VLJQLILFDQWO\WRWKHVXVWDLQDELOLW\RI$EVDDVGRHVFRPSOLDQFH SUHVFULSWLRQVRIWKH)LQDQFLDO$GYLVRU\DQG ZLWKWKHUHOHYDQWODZVUXOHVFRGHVDQGVWDQGDUGV2YHUVLJKW ,QWHUPHGLDU\6HUYLFHV$FW©V)LWDQG3URSHU RIJRYHUQDQFHDQGFRPSOLDQFHUHVLGHVZLWKWKH*URXSERDUG UHTXLUHPHQWVWKH&RPSDQLHV$FWDQGWKH DQGLWVYDULRXVERDUGFRPPLWWHHV &RQVXPHU3URWHFWLRQ$FW 2010 review ,PSOHPHQWDWLRQDQGHQKDQFHPHQWRIWKH Governance FRQWUROHQYLURQPHQWPDQDJLQJPRQH\ $NH\IRFXVIRUWKH\HDUKDVEHHQWKHUHYLHZRIWKH.LQJOOO ODXQGHULQJDQGWHUURULVWILQDQFLQJULVNV SULQFLSOHVDQGLGHQWLI\LQJ$EVD©VOHYHORIDSSOLFDWLRQDQGWKH LQLWLDWLYHV UHTXLUHG WR IXUWKHU VWUHQJWKHQ WKH *URXS©V DSSOLFDWLRQRIWKHFRGH Key performance indicators (QVXULQJDQHIIHFWLYHDQGWUDQVSDUHQWFRUSRUDWHJRYHUQDQFH 2010 VWUXFWXUHLQWKH*URXSUHPDLQHGDIRFDOSRLQW'XULQJWKH\HDU WZRQHZPHPEHUVWKH*URXS)LQDQFLDO'LUHFWRUDQGDQHZ &RPSOLDQFHZLWKJRYHUQDQFHVWDQGDUGV King ll .LQJOO LQGHSHQGHQW GLUHFWRU ZHUH DSSRLQWHG WR WKH *URXS ERDUG WKHUHE\HQVXULQJDQDSSURSULDWHERDUGDQGERDUGFRPPLWWHH FRPSRVLWLRQ2QWKHUHWLUHPHQWRI'&%ULQNH[LVWLQJERDUG Percentage of independent board PHPEHU**ULIILQZDVDSSRLQWHGDVWKH*URXS©V&KDLUPDQ members (%) (IIHFWLYHQHVVHYDOXDWLRQVRIWKHERDUGERDUGFRPPLWWHHVDQG 63 63 DQXPEHURIWKH*URXS©VIXQFWLRQDODUHDVZHUHXQGHUWDNHQ$OO 57 ZHUHIRXQGWREHVDWLVIDFWRU\ *LYHQ WKH FULWLFDO UROH LQIRUPDWLRQ WHFKQRORJ\ SOD\V LQ WKH *URXS DQ ,QIRUPDWLRQ 7HFKQRORJ\ 6WHHULQJ &RPPLWWHH ZDV HVWDEOLVKHG WR FKDOOHQJH UHYLHZ DQG PRQLWRU WKH *URXS©V WHFKQRORJ\VWUDWHJ\DQGSHUIRUPDQFH

2008 2009 2010

46 Absa Group Limited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©V JRYHUQDQFHDSSURDFK'XULQJWKHLGHQWLILFDWLRQRILQLWLDWLYHVWRHQKDQFH WKH *URXS©V VXVWDLQDEOH GHYHORSPHQW SULQFLSOHV DQG SUDFWLFHV DQG WKH LQWHJUDWLRQRIQRQILQDQFLDOLQIRUPDWLRQZLWKLWVILQDQFLDOUHSRUWLQJWRRNSODFH

Compliance (IIHFWLYHFRPSOLDQFHZLWKODZVUXOHVFRGHVSULQFLSOHVDQGVWDQGDUGV FRQWLQXHG DFURVV WKH *URXS LQ 7KH NH\ DFWLYLWLHV XQGHUWDNHQ WR VXSSRUWWKHGLUHFWRUVH[HFXWLYHRIILFHUVPDQDJHPHQWDQGHPSOR\HHVLQ GLVFKDUJLQJ WKH UHOHYDQW FRPSOLDQFH UHVSRQVLELOLWLHV LQFOXGHG inter alia FRPSOLDQFHULVNLGHQWLILFDWLRQDVVHVVPHQWSULRULWLVDWLRQPRQLWRULQJDQG UHSRUWLQJ $ZDUHQHVV DQG WUDLQLQJ UHPDLQ D FRUQHUVWRQH RI $EVD©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©V )DLUO\ WKH RQJRLQJ GLDORJXH ZLWK WKH 0LQLVWHU RI )LQDQFH UHJDUGLQJ WKH &RPSHWLWLRQ &RPPLVVLRQ UHSRUW DQG WKH VWDQGDUGLVHGDVVHVVPHQWRIDOOQHZSURGXFWVDQGVHUYLFHVIRUSULPDU\ DQGFRQVHTXHQWLDOULVNV ILQDQFLDOFRPSOLDQFHOHJDODQGUHSXWDWLRQDO ,PSURYHG HWKLFDO VWDQGDUGV ZHUH DFKLHYHG E\ IXUWKHU HPEHGGLQJ WKH *URXS©VFRGHRIHWKLFVDQGDQWLFRUUXSWLRQSROLF\

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 47 Sustainability review

Material topics – Governance and compliance

Focus for 2011

)XUWKHUUHDGLQJ 0DLQWDLQLQJJRRGJRYHUQDQFHDQGFRPSOLDQFHLVDQRQJRLQJSURFHVV(PSKDVLVZLOO FRQWLQXHWREHSODFHGRQ &RUSRUDWHJRYHUQDQFH (QVXULQJ DQ HIIHFWLYH DQG WUDQVSDUHQW FRUSRUDWH JRYHUQDQFH VWUXFWXUH LQ WKH VWDWHPHQW 129 *URXS 5HPXQHUDWLRQUHSRUW 145 7KHLPSOHPHQWDWLRQRILQLWLDWLYHVWRIXUWKHUVWUHQJWKHQWKH*URXS©VDSSOLFDWLRQWR &RPSOLDQFHUHSRUW 175 .LQJOOOSULQFLSOHVZLOOUHFHLYHDWWHQWLRQ (WKLFVUHYLHZ 142 2ZLQJ WR WKH *URXS©V UHOLDQFH RQ LQIRUPDWLRQ WHFKQRORJ\ WKH DSSURSULDWH JRYHUQDQFHRILQIRUPDWLRQWHFKQRORJ\ZLOOEHDVSHFLILFIRFXVDUHD 7KHLPSOHPHQWDWLRQRIHQKDQFHPHQWVWRWKH*URXS©VFRGHRIHWKLFVWRHQVXUH KLJKVWDQGDUGVRIHWKLFVDQGLQWHJULW\ 7KHFRQVROLGDWLRQRIWKH*URXS©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

48 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Material topics – Process and systems effectiveness

Process and systems effectiveness for simple, streamlined customer service delivery.

Absa’s stance Highlights %DQNLQJ LV DOO DERXW SHRSOH WHFKQRORJ\ DQG SURFHVVHV 7HFKQRORJ\ LQ WKH ILQDQFLDO VHUYLFHV LQGXVWU\ LV GULYHQ E\ (VWDEOLVKHGWKH$EVD,QIRUPDWLRQ7HFKQRORJ\ EXVLQHVVIOH[LELOLW\FXVWRPHUIRFXVDQGULVNEDVHGDSSURDFKHV 6WHHULQJ&RPPLWWHH ZKLFK KDYH EHFRPH SLYRWDO WR DOO VHUYLFH GHOLYHU\ IXQFWLRQV 'HOLYHUHGVHYHUDOPDMRUSURJUDPPHV (YHU\SURGXFWHYHU\FKDQQHODQGHYHU\FXVWRPHUGHSHQGVRQ LQFOXGLQJ WHFKQRORJ\IRULWVVXFFHVV ° DQHZIRUHLJQH[FKDQJHSODWIRUPDQG °QHZVKRUWWHUPDQGOLIHLQVXUDQFH 6WUHDPOLQLQJDQGVWDQGDUGLVDWLRQDUHWZRFULWLFDOIRFXVDUHDV DGPLQLVWUDWLRQV\VWHPV IRUWKH*URXSDQG$EVDDLPVWRGULYHLWVFRVWWRLQFRPHUDWLR 0DLQWDLQHG,7V\VWHPDYDLODELOLW\DQGVWDELOLW\ WRZDUGV LQ WKH ORQJ WHUP ZKLOH LPSURYLQJ RYHUDOO RIFRUHV\VWHPV RSHUDWLQJHIILFLHQF\ ,PSOHPHQWHGZRUNIORZDQGLPDJLQJLQ PDLQVWUHDPEXVLQHVVSURFHVVLQJ 2010 review 5HGHVLJQHGVHYHUDONH\FXVWRPHUIDFLQJ SURFHVVHV Stability and availability &RQWLQXHGWRUHGXFHWKHQXPEHURI6HYHULW\ LQFLGHQWVGRZQWRLQIURPLQ 6WDELOLW\ RI WKH RSHUDWLQJ HQYLURQPHQW LV FUXFLDO WR WKH RQJRLQJYLDELOLW\DQGFRPSHWLWLYHQHVVRI$EVD+LJKVHUYLFH $EVD$IULFD,7ZDVDZDUGHGWKHiCMG OHYHOVRIV\VWHPVDQGFORVHWRDYDLODELOLW\KDVEHFRPH Architecture ExcellenceDZDUGIRUEXVLQHVV WKHVWDQGDUGH[SHFWHGE\FXVWRPHUV'XULQJ$EVDZDV DQG,7LQQRYDWLRQLQWKHPHUJHUVDQG DEOHWRPDLQWDLQ,7V\VWHPDYDLODELOLW\DQGWKHVWDELOLW\RIFRUH DFTXLVLWLRQFDWHJRU\ V\VWHPV SRLQWRIVDOH LQWHUQHW EUDQFK FDUGV ZLWKLQ WKH DJUHHGVHUYLFHOHYHOVIRUWKH\HDU7KLVWUDQVODWHGWRD Key performance indicators DYDLODELOLW\UDWH$70DYDLODELOLW\ZDVPDLQWDLQHGZHOODERYH DJUHHGOHYHOVWKURXJKRXW 2010

&RUHQHWZRUNDYDLODELOLW\ 99,8 $70DYHUDJHDYDLODELOLW\ 99,2 6HYHULW\LQFLGHQWV QXPEHU 10 Severity 1 incidents by type Note 1 Severity 1 is deﬁned as when a production server or other critical system(s) are down and no work around is immediately available.

3 System availability (%)

99,0 99,999,3 99,8 99,2 99,8

● +DUGZDUH● 6RIWZDUH● $SSOLFDWLRQFKDQJHV 2008 2009 2010 ● ATM average availability ● Core network availability

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 49 Sustainability review

Material topics – Process and systems effectiveness

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

Investment in technology and infrastructure $EVD©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©V LQIUDVWUXFWXUHDQGDSSOLFDWLRQUHQHZDOVWUDWHJ\VXFKDVWKHUHSODWIRUPLQJ RIWKH*URXS©V$IULFDRSHUDWLRQVWKHJOREDOSD\PHQWVXWLOLW\SODWIRUPD QHZFRQWDFWFHQWUHSODWIRUPDQGDQHZEUDQFKGHOLYHU\SODWIRUP

IT governance, risk and security (QKDQFLQJ ,7 JRYHUQDQFH SURFHVVHV FRXSOHG ZLWK D VKDUS IRFXV RQ RSHUDWLRQDO ULVN KDYH EHHQ NH\ IRFXV DUHDV 7KH $EVD ,QIRUPDWLRQ 7HFKQRORJ\ 6WHHULQJ &RPPLWWHH ,76& ZDV HVWDEOLVKHG DV D VXEFRPPLWWHHRI*URXS([FR $EVD UHPDLQV VHQVLWLYH WR WKH WKUHDWV RI VHFXULW\ EUHDFKHV LQ LWV WHFKQRORJ\HQYLURQPHQWIURPERWKLQWHUQDODQGH[WHUQDOVRXUFHV7KH LPSOHPHQWDWLRQRIDUDQJHRIQHZVHFXULW\PHDVXUHVDQGSURFHGXUHVWR SURYLGHFXVWRPHUVZLWKJUHDWHUFRQILGHQFHLQHQJDJLQJZLWKWKH*URXS SDUWLFXODUO\WKURXJK$EVD©VGLJLWDOFKDQQHOVWRRNSODFHGXULQJWKH\HDU

50 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Operations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

Cost containment and operational efﬁciency $QXPEHURILQLWLDWLYHVKDYHEHHQHPEDUNHGRQWRVWUHDPOLQHSURFHVVHV LPSURYHHIILFLHQFLHVDQGUHGXFHRSHUDWLQJFRVW([DPSOHVLQFOXGHVSDFH RSWLPLVDWLRQ HQKDQFHG FDVK KDQGOLQJ DQG WKH HQKDQFHPHQW RI WKH SD\PHQWVHQYLURQPHQW

Focus for 2011 &RQWLQXHG LQYHVWPHQW LQ WKH *URXS©V V\VWHPV DQG SURFHVVHV UHPDLQV FULWLFDOLQHQVXULQJWKHIXWXUHVXVWDLQDELOLW\RIWKHRUJDQLVDWLRQ7KURXJK WKHLPSOHPHQWDWLRQRIWKH*URXS©VVWUDWHJLFZRUNVWUHDPVWKHVWUHDPOLQLQJ DQGVWDQGDUGLVDWLRQRIV\VWHPVDQGSURFHVVHVZLOOFRQWLQXHWRUHFHLYH )XUWKHUUHDGLQJ DWWHQWLRQ,QDGGLWLRQVSHFLILFIRFXVZLOOEHSODFHGRQ LQIRUPDWLRQVHFXULW\ ,QIRUPDWLRQWHFKQRORJ\ 120 HQKDQFHGJRYHUQDQFHSURFHVVHV GLVDVWHUUHFRYHU\DQG VNLOOVUHWHQWLRQDQGDWWUDFWLRQ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 51 Sustainability review

Material topics – Customer experience

Ensuring that the customer remains at the centre of everything the Group does.

Highlights Absa’s stance $EVDUHJDUGVFXVWRPHUV©QHHGVDQGDVSLUDWLRQVDVWKHNH\ 2YHUDOOVDWLVIDFWLRQZLWKWKH*URXS©VVHUYLFH HQDEOHURIEHFRPLQJWKHOHDGLQJILQDQFLDOVHUYLFHVSURYLGHU GHOLYHU\UHPDLQHGVWDEOHWKURXJKRXW $EVD©VVWUDWHJ\LVRQHWKDWSODFHVWKHFXVWRPHUDWWKHFHQWUH RI HYHU\WKLQJ LW GRHV 7KLV LV IXUWKHU HPSKDVLVHG E\ $EVD ,QWKHOrange IndexFXVWRPHUVHUYLFH LGHQWLI\LQJWKHQHHGWREHFXVWRPHUFHQWULFZKLFKLVRQHRI EHQFKPDUNVWXG\$EVDDFKLHYHGVHFRQG WKHIRXUNH\SLOODUVRIWKH2QH$EVDVWUDWHJ\ SRVLWLRQLQEDQNLQJIRUWKHVHFRQG\HDU ,PSURYHGORJJLQJDQGUHVROYLQJFXVWRPHU 2010 review FRPSODLQWVDFURVVDOOFKDQQHOV ,QHQKDQFLQJWKHFXVWRPHUYDOXHSURSRVLWLRQHPSKDVLVZDV /DXQFKHGDQXPEHURILQQRYDWLYHSURGXFWV SODFHG RQ FRQVLVWHQW VHUYLFH GHOLYHU\ WKH LQWURGXFWLRQ RI D LQFOXGLQJ QXPEHURILQQRYDWLYHSURGXFWRIIHULQJVWKHHPEHGGLQJRIWKH °:HVWHUQ8QLRQPRQH\WUDQVIHUVRQFHOOSKRQH 7UHDWLQJ&XVWRPHUV)DLUO\SULQFLSOHVDQGWKHLPSURYHPHQWRI DQGLQWHUQHWEDQNLQJSODWIRUPVDQG WKHFXVWRPHUFRPSODLQWPDQDJHPHQWSURFHVVHV °SRLQWRIVDOHG\QDPLFFXUUHQF\FRQYHUVLRQ Customer satisfaction (PEHGGHG7UHDWLQJ&XVWRPHUV)DLUO\SULQFLSOHV 2YHUDOO FXVWRPHU VDWLVIDFWLRQ ZLWK WKH *URXS©V VHUYLFH 7KH VHUYLFHTXDOLW\ Ipsos/Markinor Telebus UHPDLQHGVWHDG\7KLVUHIOHFWVSRVLWLYHO\RQWKHRUJDQLVDWLRQ EHQFKPDUNUHVHDUFKVKRZVWKDWFXVWRPHUV© JLYHQ WKH FRQWLQXHG HFRQRPLF XQFHUWDLQW\ ,Q WKH SHUFHSWLRQRI$EVDRIIHULQJYDOXHIRUPRQH\ Orange Index Customer Service EHQFKPDUN VWXG\ $EVD IRUSURGXFWVDQGVHUYLFHVLPSURYHGGXULQJ DFKLHYHG VHFRQG SRVLWLRQ LQ EDQNLQJ IRU WKH VHFRQG \HDU WKH\HDU UXQQLQJ 7KH Ipsos/Markinor Telebus VHUYLFH TXDOLW\ EHQFKPDUN UHVHDUFK VKRZV WKDW FXVWRPHUV© SHUFHSWLRQ RI Key performance indicators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© 1 094,5 &HOOSKRQHEDQNLQJFXVWRPHUV © 2 513,0 3HUFHQWDJHRIFRPSODLQWV Absa’s banking customer base (millions) UHVROYHGDWILUVWSRLQWRI FRQWDFW 81 $YHUDJHGD\VWDNHQWRUHVROYH 11,7 11,8 FRPSODLQWV GD\V 1,27 10,7 9,6 1XPEHURIFRPSODLQWVDVD SHUFHQWDJHRIWKHWRWDOQXPEHU RI6RXWK$IULFDQEDQNLQJ FXVWRPHUV 1,74A Notes Total number of customers with active Absa core banking products such as cheque accounts, savings accounts, secured and unsecured loans. Excludes wills, life policies, BBM, NBC, WFS and VMSA. Number of customer complaints in South Africa logged by touch points 2007 2008 2009 2010 on the Absa complaint management system as a percentage of the number of South African customers as at 31 December. Restated to align with the methodology applied in 2010.

52 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU DFWLYLWLHVVXFKDVWKH.ZHHNDFDPSDLJQLQUHWDLOWRVXSSRUWFXVWRPHUV ERWKLQWHUPVRISURGXFWXVHDQGXQGHUVWDQGLQJDVZHOODVPDNLQJWKH PRVW RI WKH YDULRXV GLVWULEXWLRQ FKDQQHOV IRU WKHLU FRQYHQLHQFH DQG WR REWDLQWKHEHVWYDOXHIRUPRQH\7KHSRVLWLYHHIIHFWRIWKLVFDQEHVHHQ LQWKHLQFUHDVHGXVHRIFKDQQHOV

Enhanced and innovative product offerings &XVWRPHU H[SHULHQFH LV DQ RXWFRPH RI VHUYLFH DQG WKH *URXS©V UHWDLO DQG ZKROHVDOH SURGXFW RIIHULQJV ,Q WKHUH ZHUH D QXPEHU RI SURGXFWHQKDQFHPHQWVZKLFKLQFOXGHGWKHLQWURGXFWLRQRI:HVWHUQ8QLRQ PRQH\ WUDQVIHUV RQ FHOOSKRQH DQG LQWHUQHW EDQNLQJ DQG LPSURYHG Averaged days to resolve WUDQVDFWLRQDO DQG FDVK PDQDJHPHQW FDSDELOLWLHV LQ $%% ,QQRYDWLRQV complaints (days) LQFOXGHG WDS ©Q JR IRU HDV\ ORZ YDOXH SD\PHQWV G\QDPLF PRQH\ 3,00 FRQYHUVLRQDWSRLQWRIVDOHWKHFORVHGORRS$JULFDUGLQWURGXFWLRQRIWKH 2,68 JOREDOO\ UHFRJQLVHG 3$&( ); IRUHLJQ H[FKDQJH VROXWLRQ DQG WKH ILUVW 86&3,QRWHSODFHGZLWKDORFDOLQYHVWRU 1,27 Distribution channels $EVD KDV DQ H[WHQVLYH GLVWULEXWLRQ IRRWSULQW DQG VHUYHV FXVWRPHUV SULPDULO\ YLD RXWOHWV VHOIVHUYLFH WHUPLQDOV LQWHUQHW FHOOSKRQH DQG 2008 2009 2010 WHOHSKRQH EDQNLQJ 7KH *URXS FRQWLQXHV WR GHYHORS DQG HQKDQFH LWV FKDQQHOVWRVHUYHLWVFXVWRPHUV,QHQKDQFLQJLWVRIIHULQJWRWKHHQWU\ OHYHO EDQNLQJ PDUNHW WKH *URXS KDV ODXQFKHG D UHIRFXVHG EUDQFK Ombudsman complaints (number) DSSURDFK DQ LQVWRUH EDQNLQJ VROXWLRQ DQG UHPRWH DFFRXQW RSHQLQJ VROXWLRQ 4 426

Complaints management 2 976 7KHHIIHFWLYHDQGHIILFLHQWUHVROXWLRQRIFXVWRPHUFRPSODLQWVZDVDFRUH IRFXV GXULQJ DQG SHUIRUPDQFH LQGLFDWRUV VKRZ WKDW ORJJLQJ DQG UHVROXWLRQ DFURVV DOO FKDQQHOV LPSURYHG PDWHULDOO\ 7KH DYHUDJH FRPSODLQW UHVROXWLRQ WXUQDURXQG LPSURYHG WR GD\V ZKLFK LV D 274 342 0 0 VLJQLILFDQWLPSURYHPHQWIURPWKUHHGD\VLQ&RPSODLQWVUHVROYHGDW 2009 2010 ILUVWSRLQWRIFRQWDFWLPSURYHGE\XSWR ● Number of complaints where the regulator/ &RPSODLQWV WR WKH 2PEXGVPDQ IRU %DQNLQJ 6HUYLFHV GHFUHDVHG IURP ombudsman has found in favour of the customer ● LQGRZQWRLQ2IWKH5PLOOLRQUHFRYHUHGE\ Number of complaints referred to regulator/ ombudsman WKHRPEXGVPDQIURPEDQNVRQEHKDOIRIFXVWRPHUVGXULQJ$EVD©V ● Number of breaches of regulatory standards for SRUWLRQZDVRQO\5PLOOLRQ complaint handling

Resolution time

Jan 2010 Feb 2010 Mar 2010 Apr 2010 May 2010 Jun 2010 Jul 2010 Aug 2010 Sept 2010 Oct 2010 Nov 2010 Dec 2010 ● 3HUFHQWDJHUHVROYHGDWILUVWSRLQWRIFRQWDFWGD\● 3HUFHQWDJHUHVROYHG GD\V● 3HUFHQWDJHUHVROYHG GD\V

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 53 Sustainability review

Material topics – Customer experience

Customers service initiatives &XUUHQWO\ $EVD DSSOLHV WKH %DUFOD\V© 7UHDWLQJ &XVWRPHUV )DLUO\ 7&) SULQFLSOHV 7&) LV DERXW PDQDJHPHQW GHPRQVWUDWLQJ GLOLJHQFH LQ WKHLU HIIRUWV WR VHUYLFH FXVWRPHUV LQ D IDLU DQG DFFHSWDEOH PDQQHU 7KH SULQFLSOHV RI 7&) DSSO\ WR HYHU\ DVSHFW RI WKH *URXS©V EXVLQHVV IURPVXSSRUWWRFXVWRPHUIDFLQJIXQFWLRQV,WLVDQWLFLSDWHGWKDWWKH6RXWK $IULFDQ)LQDQFLDO6HUYLFHV%RDUGZLOODGRSWWKH7UHDWLQJ&XVWRPHU)DLUO\ DVVHVVPHQWIRUWKH)LQDQFLDO6HUYLFHVLQGXVWU\LQ

Focus for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

54 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Material topics – Responsible lending

Promoting fair, transparent, sustainable and responsible access to credit.

Absa’s stance Highlights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©V SURMHFWILQDQFHWUDQVDFWLRQV SKLORVRSK\ WR HQVXUH WKH FRUUHFW EDODQFH EHWZHHQ DQ DSSURSULDWH FUHGLW DSSHWLWH DQG DFFHVV WR IXQGV ZKLOH DFFHSWDEOHUHWXUQVDUHUHFHLYHGWKURXJKDQHFRQRPLFF\FOH ,WLV$EVD©VSROLF\WRDVVLVWFXVWRPHUVLQILQDQFLDOGLIILFXOW\ Key performance indicators 7KHOHJDOSURFHVVLVRQO\LQLWLDWHGDVDODVWUHVRUWDVQRSDUW\ 2010

EHQHILWVIURPWKHVDOHRIDVVHWVLQDÏRUFHGVDOH©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otes Loan-to-value ratio of the outstanding home loans stock (ordinary, MRLQWO\GLVFXVVYDULRXVRSWLRQVIRUDVVLVWDQFH$VDUHVSRQVLEOH building and further advances classified either as scored loans and advances or not scored loans and advances), based on a mark-to-market OHQGHU $EVD EHOLHYHV WKDW HDUO\ GHWHFWLRQ DQG DVVLVWDQFH (MTM) valuation (total outstanding amount (excluding accounts in the legal process) as a percentage of the most recent property value (MTM)). FDQ SUHYHQW ORQJWHUP SUREOHPV 7KHUH DUH YDULRXV Total number of project finance transactions that have been reviewed for UHKDELOLWDWLRQ SODQV ZKLFK DUH WDLORUPDGH IRU ILQDQFLDOO\ environmental and social risks as per the Equator Principles. GLVWUHVVHGFXVWRPHUV7KHVHLQFOXGH UHSD\LQJDUUHDUVRYHUDQDJUHHGWHUP UHVWUXFWXULQJWKHORDQWHUPWRPDNHWKHLQVWDOPHQWPRUH DIIRUGDEOH SD\PHQW EUHDWKHUV ZKHQ XQHPSOR\PHQW RU D GLVDELOLW\ KDVOHGWRWKHSUREOHP DQG WDNLQJ LQWR DFFRXQW HDFK FXVWRPHU©V SHUVRQDO FLUFXPVWDQFHVZKHQUHYLHZLQJZKLFKSODQLVEHVWVXLWHGWR WKHLUQHHGV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 55 Sustainability review

Material topics – Responsible lending

Environmental and social risk (TXDWRU3ULQFLSOHV 5HVSRQVLEOHOHQGLQJLVQRWMXVWDERXWWKHHYDOXDWLRQRIFUHGLWSURSRVDOV EDVHG RQ ILQDQFLDO LPSOLFDWLRQV $EVD LV DOVR FRPPLWWHG WR EDODQFLQJ 7KH(TXDWRU3ULQFLSOHVDUHD VRXQG ULVN PDQDJHPHQW ZLWK HFRQRPLF VRFLDO DQG HQYLURQPHQWDO ILQDQFLDOLQGXVWU\EHQFKPDUN YLDELOLW\ 7KH (QYLURQPHQWDO DQG 6RFLDO ,PSDFW $VVHVVPHQW (6,$ IRUGHWHUPLQLQJDVVHVVLQJ SROLF\ JRYHUQV $EVD©V PDQDJHPHQW RI HQYLURQPHQWDO DQG VRFLDO ULVN DQGPDQDJLQJVRFLDODQG DVVHVVPHQW$VSDUWRIWKHOHQGLQJSURFHVVFOLHQWHQYLURQPHQWDODQG HQYLURQPHQWDOULVNLQSURMHFW VRFLDOPDQDJHPHQWSUDFWLFHVDUHVFUXWLQLVHGWRUHGXFHSRWHQWLDOFUHGLW ILQDQFLQJ DQGUHSXWDWLRQDOULVNV KWWSZZZHTXDWRUSULQFLSOHVFRP! $VDQ(TXDWRU3ULQFLSOHVILQDQFHLQVWLWXWLRQ$EVDFRQWLQXHVWRLPSOHPHQW WKH DSSURSULDWH GXH GLOLJHQFH UHTXLUHPHQWV WR SURMHFW ILQDQFH GHDOV XQGHUWKH(TXDWRU3ULQFLSOHVVFRSH

Customers under debt $EVDKDVDGRSWHGWKHHQYLURQPHQWDODQGVRFLDOULVNJXLGDQFHQRWHVRI review – value 5EQ %DUFOD\V7KHVHDVVLVWZLWKWKHXQGHUVWDQGLQJDQGLGHQWLILFDWLRQRINH\ ULVNVDQGFRQVLGHUDWLRQVZKHQGHYHORSLQJEXVLQHVVUHODWLRQVKLSVZLWK 7,0 FXVWRPHUVRSHUDWLQJLQHQYLURQPHQWDOO\DQGVRFLDOO\VHQVLWLYHVHFWRUV

2010 review 7KH VXEGXHG GHPDQG IRU FUHGLW FRQWLQXHG LQWR ZLWK D UHVXOW WKDW $EVD©V ORDQV DQG DGYDQFHV WR FXVWRPHUV GHFOLQHG E\ WR 2010 5ELOOLRQ7KLVZDVEHFDXVHRIWKHFXUUHQWHFRQRPLFFRQGLWLRQV FRXSOHG ZLWK SUXGHQW FUHGLW FULWHULD $ FRQWLQXHG IRFXV RQ PDWFKLQJ ORDQVZLWKFXVWRPHUV©DELOLW\WRUHSD\ZDVHYLGHQWLQ ,QOLQHZLWK$EVD©VFRPPLWPHQWWRH[SORUHZD\VWRDVVLVWFXVWRPHUVLQ ILQDQFLDO GLIILFXOW\ WKH *URXS HVWDEOLVKHG VSHFLDOLVW WHDPV WR HQJDJH ZLWK FXVWRPHUV ZKR KDYH FRQFHUQV DERXW PHHWLQJ IXWXUH ILQDQFLDO FRPPLWPHQWV(DUO\LQWHUYHQWLRQLVEHQHILFLDOWRWKHFXVWRPHUDQG$EVD ,Q DGGLWLRQ WR WKLV $EVD KDV LPSOHPHQWHG D 'HEW 6ROXWLRQV +HOSOLQH WR DVVLVW $EVD FXVWRPHUV LQ ILQDQFLDO GLVWUHVV 'HSHQGLQJ RQ D FXVWRPHU©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©VQRQSHUIRUPLQJORDQFRYHUDJH UDWLRDOVRLPSURYHGIURP $EVDKDVDQDYHUDJH+RPH/RDQV/79RQDPDUNWRPDUNHWYDOXDWLRQ RI 1HZPRUWJDJH/79VZHUHLQGLFDWLQJWKH IRFXVRQZULWLQJTXDOLW\QHZEXVLQHVVDQGPDQDJLQJULVNZKLOHUHPDLQLQJ FRPSHWLWLYHLQWKHORFDOPDUNHW5HSRVVHVVLRQVDUHRQO\FRQVLGHUHGDV DODVWUHVRUW $EVDH[SHULHQFHGDLQFUHDVHLQFUHGLWFDUGORDQVDQGDGYDQFHVIRU WKH\HDU7KHORZHULQWHUHVWUDWHVKDYHUHVXOWHGLQDLPSURYHPHQW LQ WKH FDUG GLYLVLRQ©V LPSDLUPHQWV RQ ORDQV DQG DGYDQFHV ZKLFK LV

56 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU LQGLFDWLYH RI FXVWRPHUV© DELOLW\ WR UHSD\ WKHLU ORDQV *LYHQ WKH VORZ HFRQRPLFUHFRYHU\WKH*URXSKDVIRFXVHGRQLQFUHDVLQJH[SRVXUHVWR FXUUHQW $EVD FXVWRPHUV ZKHUH WKHUH LV D EHWWHU XQGHUVWDQGLQJ RI WKH )XUWKHUUHDGLQJ

FXVWRPHUV©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otal transactions reviewed in accordance with the Equator Principles 0DQXIDFWXULQJ

Project ﬁnance transactions ,QIUDVWUXFWXUH

Risk category Non-project 0LQLQJDQGPHWDOV ﬁnance 2LODQGJDV transactions referred 3RZHUJHQHUDWLRQ A B to the ERMD 6HUYLFHVLQGXVWU\ Sector Higher Medium Total team LQFOXGLQJKHDOWKFDUHDQG 0LQLQJDQG ¥ WHOHFRPPXQLFDWLRQV PHWDOV 8WLOLWLHVDQGZDVWHPDQDJHPHQW 2LODQGJDV ¥ ¥ ¥ 3RZHU JHQHUDWLRQ *HQHUDO ¥¥¥ PDQXIDFWXULQJ 8WLOLWLHVDQG ¥¥ ZDVWH PDQDJHPHQW ,QIUDVWUXFWXUH ¥ ¥

Total 4 3 7A 16

Total number of project ﬁnance transactions that have been reviewed for environmental and social risks as per the Equator Principles.

Focus for 2011 (QVXULQJWKHEDODQFHEHWZHHQWKHJUDQWLQJRIFUHGLWDQGSUXGHQWOHQGLQJ ZKLOHPDLQWDLQLQJDGHTXDWHUHWXUQVZLOOUHPDLQDFRUHIRFXVDUHD (PSKDVLVZLOOEHRQFRQWLQXLQJWRDVVLVWFXVWRPHUVZKRVKRZZLOOLQJQHVV WRPHHWWKHLUILQDQFLDOFRPPLWPHQWV7KHUHZLOOEHDIRFXVRQUHGXFLQJ ORDQV LQ GHEW FRXQVHOOLQJ SURDFWLYHO\ PDQDJLQJ WKH OHJDO ERRNV DQG HQVXULQJWKDWWKHSURSHUW\LQSRVVHVVLRQSRUWIROLRDQGUHSRVVHVVLRQVWRFN DUHRSWLPDOO\PDQDJHGDQGFRQWUROOHG

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 57 Sustainability review

Material topics – Financial inclusion

Providing innovative, appropriate and sustainable ﬁnancial services to those historically excluded.

Highlights Absa’s stance $EVD DLPV WR EULQJ D FRPSUHKHQVLYH EXW VLPSOH HIILFLHQW &UHDWHGDQHQWU\OHYHODQGLQFOXVLYHEDQNLQJ DQGDIIRUGDEOHEDQNLQJH[SHULHQFHWRORZLQFRPHLQGLYLGXDOV XQLW PLFURHQWHUSULVHVDVZHOODVWKRVHZKRKDYHKDGOLPLWHGRU QRDFFHVVWRIRUPDOILQDQFLDOVHUYLFHV /DXQFKHGDUHIRFXVHGEUDQFKDSSURDFK )LQDQFLDO LQFOXVLRQ UHPDLQV D KXJH FKDOOHQJH IDFLQJ PDQ\ ,PSURYHGDFFHVVPHFKDQLVPVWKURXJK 6RXWK$IULFDQV,WLVHVWLPDWHGWKDWURXJKO\RIWKH6RXWK EUDQFKOHVVEDQNLQJLQFOXGLQJPRELOHEDQNLQJ $IULFDQ DGXOW SRSXODWLRQ LV XQEDQNHG RU LQIRUPDOO\ EDQNHG ([SDQVLRQRIPLFURHQWHUSULVHILQDQFH 7KLV OHYHO RI ILQDQFLDO H[FOXVLRQ SRVHV D ULVN WR HFRQRPLF IRFXVLQJRQWKHVHOIHPSOR\HGORZLQFRPH GHYHORSPHQW DQG WKHUHIRUH $EVD©V RZQ H[LVWHQFH DQG VHJPHQW VXVWDLQDELOLW\,QIXUWKHULQJLQFOXVLYHEDQNLQJ$EVDWKURXJKD QXPEHURILWVEXVLQHVVXQLWV SURYLGHV SURGXFWV DQG VHUYLFHV WKDW DUH VSHFLILFDOO\ Key performance indicators WDLORUHGWRWKLVPDUNHW

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¤YROXPHRIKRPH PLOOLRQEHQHILFLDULHVHDFKPRQWKDQGWKURXJKWKHSURYLVLRQ ORDQVH[WHQGHG 5EQ 1,6 RIPLFURHQWHUSULVHORDQV Note The number of small business loans approved (overdrafts, term loans, mortgages, vehicle and asset finance (including dealers sales), and commercial loans (excluding CAF)) paid out to SME businesses (defined 2010 review as businesses with a turnover of less than R10 million who are registered via Cipro and have a level of banking exposure (excluding micro- Entry level and inclusive banking enterprise finance). $ NH\ FRPSRQHQW RI WKH 2QH $EVD VWUDWHJ\ LV WR ILQG Market share for individual savings LQQRYDWLYH DQG FRVW HIIHFWLYH ZD\V WR HQKDQFH $EVD©V accounts (%) H[LVWLQJPDVVPDUNHWSURSRVLWLRQVWRGHOLYHUDWUXO\LQFOXVLYH

55,4 56,5 55,2 RIIHULQJ ,Q HQKDQFLQJ $EVD©V RIIHULQJ LQ WKLV UHJDUG WKH *URXS FUHDWHG DQ HQWU\OHYHO DQG LQFOXVLYH EDQNLQJ XQLW LQ WKDW VHUYHV FXVWRPHUV ZLWK DQ LQFRPH RI OHVV WKDQ 5SHUPRQWK7KHXQLW©VNH\REMHFWLYHVLQFOXGH SURYLGLQJDIIRUGDEOHDQGUHOHYDQWEDQNLQJVROXWLRQV HQKDQFLQJDFFHVVWRILQDQFLDOVHUYLFHVLQWHUPVRIFKDQQHO DFFHVVLELOLW\DQGUHDFKSURGXFWVLPSOLFLW\DQGFRQVXPHU 2008 2009 2010 HGXFDWLRQ Source BA900

58 Absa Group Limited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©QHHGV $EVDEHOLHYHVWKDWWKLVDSSURDFKLVLQNHHSLQJZLWKLWVLQFOXVLYHEDQNLQJ REMHFWLYHVDVVLVWLQJFXVWRPHUVWRIDFHWKHKDUVKHUHFRQRPLFFOLPDWH $VDUHVSRQVLEOHFRUSRUDWHFLWL]HQZLWKWKHDLPRIFRQWULEXWLQJWRWKH FRXQWU\©V EURDGHU HFRQRPLF GHYHORSPHQW $EVD ZRXOG OLNH WR HQVXUH WKDW FXVWRPHUV DUH HGXFDWHG RQ WKH *URXS©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nternet and cellphone banking customers (’000) &RQWLQXLQJWRH[WHQG$EVD©VUHDFKDQGPDNHLWHDVLHUIRUFXVWRPHUVWR 2 513,0 WUDQVDFW $EVD ODXQFKHG D SUHSDLG FDUG VROXWLRQ IRU JRYHUQPHQW DQG

FRUSRUDWH LQVWLWXWLRQV 7KLV VROXWLRQ DOORZV WKH RUJDQLVDWLRQ WR UHORDG 1 670,4

DQG GLVEXUVH IXQGV WR EHQHILFLDULHV E\ WKHPVHOYHV RQ D FREUDQGHG 1 094,5 1 005,2 SUHSDLGFDUG

2008 2009 2010 ● Internet banking ● Cellphone banking

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 59 Sustainability review

Material topics – Financial inclusion

Affordable housing $EVD©V $IIRUGDEOH +RXVLQJ GLYLVLRQ DVVLVWV LQ SURYLGLQJ DFFHVV WR KRXVLQJ WKURXJK DQ HQGWRHQG KRXVLQJ VROXWLRQ IRU LQGLYLGXDOV RU KRXVHKROGVHDUQLQJOHVVWKDQ5SHUPRQWK%RUURZHUHGXFDWLRQ LVSURYLGHGWRFXVWRPHUVZKLFKHGXFDWHVWKHPRQDOODVSHFWVRIKRPH RZQHUVKLS$EVDKDVDQDIIRUGDEOHKRXVLQJSRUWIROLRVSUHDGDFURVVVL[ SURYLQFHV 7R GDWH WKH *URXS KDV PDQDJHG WKH FRQVWUXFWLRQ DQG GHOLYHUHG RYHU KRXVLQJ XQLWV LQ SDUWQHUVKLS ZLWK DOO OHYHOV RI JRYHUQPHQW 6RPH RI $EVD $IIRUGDEOH +RXVLQJ©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

Micro-enterprise ﬁnance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

Focus for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

60 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Sustainability review

Material topics – Employee engagement

Ensuring a motivated and engaged workforce.

Absa’s stance Highlights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©V UHODWLRQVKLSVZLWKDOOLWVHPSOR\HHV OHDUQHUVKLSSURJUDPPHGXULQJ 0RUHWKDQ5PLOOLRQLQYHVWHGLQEXUVDULHV 2010 review IRUHPSOR\HHVWRIXUWKHUWKHLUHGXFDWLRQ $EVDXQGHUWDNHVDQHPSOR\HHRSLQLRQVXUYH\ (26 RQDQ DQQXDO EDVLV WR WUDFN SURJUHVV RQ HPSOR\HH HQJDJHPHQW SHUIRUPDQFH VXSSRUW DQG OHDGHUVKLS ,Q RI Key performance indicators HPSOR\HHV UHVSRQGHG WR WKH VXUYH\ $EVD©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ransformation:7KH*URXSKDVPDGHJRRGSURJUHVVLQ 3HUFHQWDJHRI$IULFDQ&RORXUHGDQG WKH DFKLHYHPHQW RI HPSOR\PHQW HTXLW\ WDUJHWV GXULQJ ,QGLDQHPSOR\HHV 64,2 (PSOR\HHRSLQLRQVXUYH\ (26 ZLWK DOO FDWHJRULHV VKRZLQJ LPSURYHPHQW $EVD SDUWLFLSDWLRQ 91 EHOLHYHVVWURQJO\LQWKHSDUWLFLSDWLRQDQGHQJDJHPHQWRI (26FRPPLWPHQWVFRUH 75 (26SHUFHSWLRQRIEXVLQHVVXQLW HPSOR\HHVDWDOOOHYHOVDQGWKHUHDUHVHYHUDOWUDQVIRUPDWLRQ OHDGHUVKLS 61 IRUXPV 3HUPDQHQWHPSOR\HHWXUQRYHUUDWHIRU 6RXWK$IULFD 10,1A Reward: $ QHZ RXWRIF\FOH DQG SURPRWLRQV SROLF\ ZDV ,QWHUQDOSURPRWLRQVDQGWUDQVIHUV 36 $EVHQWHHLVPUDWH 1,8 LQWURGXFHGWRDGGUHVVFRQFHUQVUDLVHGDERXWSURPRWLRQV *ULHYDQFHVDVDSHUFHQWDJHRIWKHWRWDO ZLWKRXW D VDODU\ LQFUHDVH 7KH H[LVWLQJ UHZDUG DQG HPSOR\HHEDVH 0,6 7RWDO6RXWK$IULFDQWUDLQLQJVSHQG 5P 372A UHFRJQLWLRQ SURJUDPPHV DUH EHLQJ UHYLHZHG WR GHOLYHU D 'LVDEOLQJIUHTXHQF\LQMXU\UDWH 0,48 PRUHLQWHJUDWHGIUDPHZRUNIRU Notes Number of employees includes permanent and temporary employees Learning and development: )RU $EVD VSHQW legally employed and paid by Absa payroll including ‘regular’ 5PLOOLRQRQOHDUQLQJDFWLYLWLHVRIZKLFK5PLOOLRQ contracts; interns; graduates; specialists and brokers (excluding pension brokers). It covers operational and non-operational full-time, ZDV VSHQW RQ KLVWRULFDOO\ GLVDGYDQWDJHG JURXSV 7KLV part-time, two thirds and commission paid employees. It also includes contingency workforce, which is all agency, contractors and self- HTXDWHVWRRIOHYLDEOHSD\UROOVSHQG employed employees paid via a third party for services rendered. The number excludes BBM, NBC and WFS. Learnerships:,QWRWDOOHDUQHUVZHUHSURYLGHGDQ Excludes managerial positions. Excludes non-permanent employees WFS, NBC and BBM. RSSRUWXQLW\WRJDLQVNLOOVE\ZRUNLQJDW$EVDRIZKLFK Number of terminations as a percentage of the average permanent headcount in South Africa (excluding WFS). DUHFXUUHQWO\HPSOR\HGIXOOWLPHE\WKH*URXS$EVDDOVR Training spend is all veriﬁable and reportable spend on learning and skills programmes including accredited and non-accredited training; bursaries; learnership allowance; related travel; an employee matric equivalency programme and interventions focused on employees with disabilities.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 61 Sustainability review

Material topics – Employee engagement

SDUWQHUHG ZLWK WKH %DQNLQJ 6HFWRU (GXFDWLRQ DQG 7UDLQLQJ $XWKRULW\ %DQN6HWD WR RIIHU OHDUQHUVKLSV WR SUHYLRXVO\ GLVDGYDQWDJHG VFKRRO OHDYHUVDQGXQHPSOR\HGJUDGXDWHV Talent management: $ QHZ WDOHQW PDQDJHPHQW V\VWHP ZDV LQWURGXFHGWRLGHQWLI\DQGGHYHORSWRSWDOHQWZLWKLQWKHRUJDQLVDWLRQIRU PRUHHIIHFWLYHVXFFHVVLRQSODQQLQJ$QLQFUHDVHLQLQWHUQDOSURPRWLRQV DQG WUDQVIHUV FRPSDUHG WR H[WHUQDO DSSRLQWPHQWV ZDV HYLGHQW IURP ZLWKRIDSSRLQWPHQWVGXULQJIURPWKHUDQNVRI H[LVWLQJ$EVDWDOHQW Recruitment: ,QQRYDWLYH FKDQQHOV IRU UHFUXLWLQJ H[WHUQDO FDQGLGDWHV ZHUH LQWURGXFHG LQ WR VXSSOHPHQW WKH XVH RI UHFUXLWPHQW DJHQFLHV $EVDFRQWLQXHVWRIRVWHUVWURQJUHODWLRQVKLSVZLWKUHOHYDQWUROHSOD\HUV VXFKDVWKHHPSOR\HHXQLRQ6$6%2WRHQVXUHWKDWHPSOR\HHV©LQWHUHVWV DUHUHVSHFWHGDQGSURWHFWHG([WHQVLYHFRQVXOWDWLRQZLWK6$6%2WDNHV SODFHUHJXODUO\WRIDFLOLWDWHFRQVWUXFWLYHHQJDJHPHQWRQHPSOR\HHUHODWHG PDWWHUV $EVDKDVDFRPSUHKHQVLYHZHOOQHVVSURJUDPPHFDOOHG¨/LYH:HOO:RUN :HOO© WR HQFRXUDJH HPSOR\HHV WR FKRRVH KHDOWKLHU PRUH EDODQFHG OLIHVW\OHV ,Q WKH RYHUDOO ZHOOQHVV HQJDJHPHQW UDWH QRWDEO\ LQFUHDVHG$NQRZOHGJHDWWLWXGHDQGSHUFHSWLRQVXUYH\ZDVFRQGXFWHG Percentage of African, Coloured LQ WR REWDLQ D EHWWHU XQGHUVWDQGLQJ RI HPSOR\HHV© NQRZOHGJH and Indian employees (%) DWWLWXGHVDQGSHUFHSWLRQVRQLVVXHVVXFKDV+,9FRXQVHOOLQJDQGWHVWLQJ 64,2 61,1 61,7 FKURQLFGLVHDVHVDQGRWKHUZHOOQHVVPDWWHUV7KHILQGLQJVZLOOEHXVHGWR LQIRUPWKHLPSOHPHQWDWLRQRIDFRPSUHKHQVLYH$EVD+,9FRXQVHOOLQJDQG WHVWLQJ +&7 DQGFKURQLFGLVHDVHPDQDJHPHQWFDPSDLJQGXULQJ

Focus for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©RSLQLRQVJDWKHUHGLQWKHHPSOR\HHVXUYH\ )XUWKHUUHDGLQJ

+XPDQUHVRXUFHVUHSRUW 146

62 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Material topics – Transformation with a focus on broad- based black economic empowerment (BBBEE)

Ensuring that the Group’s shareholders, employees, suppliers and customers represent the demographics of South Africa.

Absa’s stance Highlights $EVD KDV DOZD\V UHFRJQLVHG WKDW WKH JURZWK RI WKH 6RXWK $IULFDQ HFRQRP\ DQG WKXV WKH *URXS©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©VOHYLDEOHVDODU\ $VDVLJQDWRU\WRWKH)LQDQFLDO6HFWRU&KDUWHUDQGDQHDUO\ DGRSWHURIWKH'HSDUWPHQWRI7UDGHDQG,QGXVWU\©V&R*3RQ ELOOZDVLQYHVWHGLQTXDOLI\LQJVNLOOV %%%(($EVDVHHNVWRQRWRQO\PHHWEXWZKHUHSRVVLEOHWR GHYHORSPHQWLQFOXGLQJ H[FHHGWKHUHTXLUHPHQWVRIWKH&R*3 °WKHLQWURGXFWLRQRIWKH$EVDGLVDELOLW\ 7KHUH LV DQ HQWUHQFKHG XQGHUVWDQGLQJ WKDW HPSRZHUPHQW FRDFKLQJSURJUDPPHDQG WKURXJK WUDQVIRUPDWLRQ LV DQ RQJRLQJ MRXUQH\ DQG LV D °XQHPSOR\HGPDWULFXODQWDQG FRPSRQHQWRI$EVD©VVXVWDLQDELOLW\MRXUQH\$EVD©VJURZWKLV JUDGXDWHVXQGHUWRRNOHDGHUVKLSV SDUWO\ OLQNHG WR LWV DELOLW\ WR LGHQWLI\ DQG DGGUHVV WKH 5PLOOLRQ RI$EVD©VQHWSURILWDIWHU UHTXLUHPHQWV RI WKH HPHUJLQJ PDUNHW ZKLOH JURZLQJ WD[LQYHVWHGLQHQWHUSULVHGHYHORSPHQW VKDUHKROGHUYDOXH ,QYHVWHG5PLOOLRQLQTXDOLI\LQJVRFLR HFRQRPLFGHYHORSPHQWLQLWLDWLYHV

Key performance indicators

:HLJKWLQJ SRLQWV 2010

BBBEE CoGP score per element (TXLW\RZQHUVKLS 8,2 0DQDJHPHQWDQGFRQWURO 6,0 (PSOR\PHQWHTXLW\ 10,7 6NLOOVGHYHORSPHQW 12,5 3URFXUHPHQW 18,5 (QWHUSULVHGHYHORSPHQW 15,0 6RFLRHFRQRPLFGHYHORSPHQW 5,0

Total 75,9

%%%((UHFRJQLWLRQOHYHO 110%

%%%((VWDWXV Level 3 /HYHO /HYHO

%ODFNRZQHUVKLS 10,6% %ODFNIHPDOHRZQHUVKLS 2,3%

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 63 Sustainability review

Material topics – Transformation with a focus on broad- based black economic empowerment (BBBEE)

2010 review 'XULQJIRFXVZDVSODFHGRQHQKDQFLQJ$EVD©V%%%((UHFRJQLWLRQ OHYHOIURPD/HYHOFRQWULEXWRUUHFRUGHGIRUWREHLQJD/HYHO FRQWULEXWRU ,Q DGGLWLRQ WR PRQWKO\ PRQLWRULQJ RI WKH QXPHULFDO VFRUH HPSKDVLVZDVSODFHGRQWKHVSLULWRI%%%((DQGWKHEXVLQHVVUDWLRQDOH VRWRLQFUHDVHWKHTXDOLW\DQGGHSWKRILQWHUYHQWLRQV7KLVGHPRQVWUDWHV $EVD©V FRPPLWPHQW WR PRYH EH\RQG PHUH FRPSOLDQFH DQG LQWR WKH UHDOPRIWUXHVXVWDLQDELOLW\IRUWKHEXVLQHVVDQGIRUVRFLHW\ ,WLVUHFRJQLVHGWKDWIRUVRPHHOHPHQWVPD[LPXPSRLQWVDQGLPSDFWDUH TXLFNO\DFKLHYDEOHDQGFDQEHPDLQWDLQHGEXWIRURWKHUVVXVWDLQDEOH UHVXOWV FDQ RQO\ EH DFKLHYHG IURP LQFUHPHQWDO LPSURYHPHQWV 7KH IROORZLQJEHDUVKLJKOLJKWLQJ Equity ownership: %(( HTXLW\ RZQHUVKLS OHYHOV KDYH EHHQ PDLQWDLQHGIRU,Q-XQH%DWKR%RQNH&DSLWDO 3URSULHWDU\ /LPLWHG $EVD©V%%%((SDUWQHU VROGRILWV%%%((VKDUHKROGLQJ IRUSXUSRVHVRISDUWILQDQFLQJLWV$EVDVKDUHVZKLFKUHVXOWHGLQWKH *URXS©VRZQHUVKLSVFRUHUHGXFLQJIURP RXWRISRLQWV LQ WRWKHFXUUHQWSRLQWV Management and control: 7KH $EVD *URXS ERDUG KDV UHPDLQHG UHODWLYHO\ VWDEOH VLQFH DQG H[SHULHQFHG OLPLWHG FKDQJH GXULQJ WKH\HDU':3+RGQHWWZDVDSSRLQWHGIROORZLQJWKHUHVLJQDWLRQRI -+6FKLQGHKWWHDQG&%HJJVZDVDSSRLQWHGWRUHSODFH'&$UQROG ZKRZLOOEHUHWLULQJIURPWKH$EVD*URXSERDUGDWWKH$*0RQ$SULO BBBEE Codes of Good Practice 7UDQVIRUPDWLRQ DW WKLV OHYHO UHPDLQV D SULRULW\ IRU WKH score and status $EVD*URXSERDUG7KHDSSRLQWPHQWRIEODFNSHRSOHDWDQH[HFXWLYH 75,9 71,3 69,6 OHYHO KDV LPSURYHG GXULQJ WKH \HDU ZLWK WKH DSSRLQWPHQWV RI ) & 6 0DUXSHQ % 0DODELH DQG 3 .LQJVWRQ DQG WKH SURPRWLRQ RI '50RWVHSH Employment equity UHPDLQV D SLYRWDO IRFXV DUHD IRU WKH *URXS 7DUJHWV VHW IRU HDFK DUHD RI WKH EXVLQHVV DUH PRQLWRUHG E\ VHQLRU 4 4 3 PDQDJHPHQWPRQWKO\$*URXS7UDQVIRUPDWLRQ6WHHULQJ&RPPLWWHH 2008 2009 2010 FKDLUHGE\WKH*URXS&KLHI([HFXWLYHKDVEHHQHVWDEOLVKHGWRHQVXUH ●● Total score BBBEE status FRQVXOWDWLRQ LQ PRQLWRULQJ WKHVH WDUJHWV :KLOH SURJUHVV LV EHLQJ PDGH$EVDKDVVRPHZD\WRJRWRPHHWWDUJHWVLQUHVSHFWRIZRPHQ LQSDUWLFXODUEODFNZRPHQDQGSHRSOHZLWKGLVDELOLWLHV Skills development LVYLHZHGDVFULWLFDOO\LQWHUOLQNHGZLWKHPSOR\PHQW HTXLW\DVQRHIIHFWLYHHPSOR\PHQWHTXLW\SROLF\FDQZRUNZLWKRXWWKH UHTXLVLWHLQYHVWPHQWLQVWDIIWUDLQLQJ,Q$EVDVWURYHWRPDLQWDLQ LWVLQGXVWU\OHDGHUVKLS6SHFLILFHPSKDVLVZDVSODFHGRQWKHWUDLQLQJ RI HPSOR\HHV HVSHFLDOO\ WKRVH ZLWK GLVDELOLWLHV 7KH $EVD GLVDELOLW\ FRDFKLQJSURJUDPPHZDVLPSOHPHQWHGWRLPSURYHVNLOOVGHYHORSPHQW IRU SHRSOH ZLWK GLVDELOLWLHV DQG WR IRFXV RQ HQDEOLQJ WKH EXVLQHVV HQYLURQPHQW WR VXSSRUW HIIHFWLYH OHDUQLQJ IRU HPSOR\HHV ZLWK GLVDELOLWLHV

64 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU ProcurementLVDSSURDFKHGLQ$EVDE\EDODQFLQJHFRQRPLFLPSHUDWLYHVZLWKWUDQVIRUPDWLRQ$EVD©VSURFXUHPHQW VWUDWHJ\LVSULPDULO\WRGHOLYHUVDYLQJVWKURXJKVWUDWHJLFVRXUFLQJDQGVHFRQGO\WRDSSO\%%%((UHTXLUHPHQWV7KLV DSSURDFKKDVUHVXOWHGLQERWKFRVWDQGWUDQVIRUPDWLRQEHQHILWV$EVDVFRUHGSRLQWVRXWRIDSRWHQWLDOZLWK 5PLOOLRQ RIVSHQGEHLQJZLWK%%%((DFFUHGLWHGVXSSOLHUVLQFOXGLQJ ° &R*3WDUJHWRI ZLWKTXDOLI\LQJH[HPSWPLFURHQWHUSU LVHVDQGVPDOOHQWHUSULVHV DQLQFUHDVHIURP 5PLOOLRQLQWR5PLOOLRQLQ ° &R*3 WDUJHW RI ZLWK EODFNRZQHG HQWHUSULVHV DQ LQFUHDVH IURP 5 PLOOLRQ LQ WR 5PLOOLRQLQ DQG ° &R*3WDUJHWRI ZLWKEODFNZRPHQRZQHGHQWHUSULVHV DQLQFUHDVHIURP5PLOOLRQLQWR 5PLOOLRQLQ Enterprise developmentFRQWLQXHVWRH[FHHGWKHWDUJHWRIRIQHWSURILWDIWHUWD[,QHIIRUWVZHUHPDGH WRWKHIRXQGDWLRQIRULQFUHDVLQJWKHUHDFKWRFDWHJRU\$EHQHILFLDULHV ZLWKDQDQQXDOWXUQRYHURIXQGHU5PLOOLRQ DQG ZKR DUH EODFN RU EODFN ZRPHQRZQHG DQG RQ QRQUHFRYHUDEOH VSHQG LQFXUUHG LQ WKH RSHUDWLRQ RI (QWHUSULVH'HYHORSPHQW&HQWUHVDFURVV6RXWK$IULFD Socio-economic development FRQWLQXHV WR EH PDLQWDLQHG DW DFKLHYHPHQW WKURXJK D FRPELQDWLRQ RI FRUSRUDWHVRFLDOLQYHVWPHQWDQGFRQVXPHUHGXFDWLRQ ILQDQFLDOOLWHUDF\ LQWHUYHQWLRQV

Focus for 2011 ,QHQKDQFLQJWUDQVIRUPDWLRQLQWKH$EVD*URXSWKHIROORZLQJZLOOUHFHLYHDWWHQWLRQGXULQJ ,PSOHPHQWLQJDORZULVNVRXUFLQJPRGHOLQYHVWLJDWLQJWKHLPSOHPHQWDWLRQRIDSRUWDOIRUVPDOOHUEXVLQHVVHVDQG $EVD©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 65 Sustainability review

Material topics – Community investment

Adding value to the communities in which the Group operates.

Highlights Absa’s stance &RPPXQLW\ LQYHVWPHQW IRUPV SDUW RI $EVD©V VXVWDLQDELOLW\ ,QYHVWHG5PLOOLRQLQTXDOLI\LQJVRFLR VWUDWHJ\DQGLVLPSOHPHQWHGWKURXJKWZRGLVWLQFWSURJUDPPHV HFRQRPLFGHYHORSPHQWLQLWLDWLYHVRQD FRUSRUDWHVRFLDOLQYHVWPHQW &6, DQGFRQVXPHUHGXFDWLRQ $EVD©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anking on brighter futures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ooking after local communities VHHV WKH *URXS WKURXJKWKH7HDFK&KLOGUHQWR6DYHFDPSDLJQ VXSSRUWLQJFDXVHVWKDWPDWWHULQORFDOPDUNHWV7KLVLVRQH GHVSLWHWKHSXEOLFVHFWRUVWULNH RIWKHEHVWZD\VWKDW$EVDFDQPHHWVSHFLILFQHHGVDQG HQJDJHORFDOFRPPXQLWLHV$UHDVRIVXSSRUWLQFOXGHKHDOWK DQG ZHOIDUH WKH YXOQHUDEOH DQG JURXSV DW ULVN IRRG Key performance indicators VHFXULW\GLVDELOLW\OLWHUDF\KRPHEDVHGFDUHDQGVXSSRUW

2010 IRUHDUO\FKLOGKRRGGHYHORSPHQWFHQWUHV

7RWDOVRFLRHFRQRPLFGHYHORSPHQW 6(' VSHQGLQ6RXWK$IULFD 5P 83A 7RWDOHPSOR\HHVVXSSRUWHGDFURVVDOO 6('SURJUDPPHV 7 012 1XPEHURIZRUNKRXUVWRVXSSRUW Number of consumers reached through YROXQWHHULQJ 27 472 1XPEHURISHUVRQDOKRXUVWRVXSSRUW financial literacy initiatives YROXQWHHULQJ 4 405 386 803 )LQDQFLDOOLWHUDF\LQLWLDWLYHV¤QXPEHURI 356 156 FRQVXPHUVUHDFKHG 356 156 225 061 Note Socio-economic spend is the rand value of: CSI including donations, CSI related sponsorships and direct costs associated with the implementation of CSI; and Consumer education spend focussing on ﬁnancial literacy initiatives including supplier payments, ﬁnancial literacy/consumer related sponsorships and direct costs associated with the implementation of consumer education. 2008 2009 2010

66 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Charity begins at work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©VVSHQGRQ 6('

2010 review 'HVSLWHWKHVXEGXHGHFRQRPLFFRQGLWLRQVFRPPXQLW\LQYHVWPHQWUHPDLQHGDSULRULW\DQG$EVDQRWRQO\DFKLHYHGIXOO SRLQWVRQWKH&R*3EXWVLJQLILFDQWO\H[FHHGHGWKHUDQGWDUJHW

Corporate social investment (CSI) $EVDFRQWLQXHGLWVWZRIROGDSSURDFKWR&6,GHOLYHU\¤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©V HPSOR\HH YROXQWHHULQJSURJUDPPHDQGHIIHFWLYHO\FRPPXQLFDWH&6,YDOXHWRWKHEXVLQHVV7KHVXUYH\UHVXOWVZHUHXVHGWR LQIRUPWKH&6,FRPPXQLFDWLRQVWUDWHJ\DQGHQKDQFHWKHHPSOR\HHYROXQWHHULQJSURFHVVWRPDNHLWVLPSOHU7KH UHILQHPHQWVDUHWREHLPSOHPHQWHGIXOO\LQ 7KH,QYHVWLQJLQWKH)XWXUHDZDUGVVKRZFDVHH[FHOOHQFHLQ&6,S UDFWLFH)RUWKHDZDUGV$EVDHQWHUHGILYH &6,QRPLQDWLRQVZLWKWKHIROORZLQJUHVXOWV ° :RQWKHSDUWQHUVKLSDZDUG6RXWK$IULFDQ(DUO\&KLOGKRRG'HYHOR SPHQW$ZDUGV ° :RQWKHVSRUWVGHYHORSPHQWDZDUG$EVD6SDFHVIRU6SRUWV*DQVE DDL&RPPXQDO6SRUWV&HQWUH ° :DVDUXQQHUXSIRUHQWHUSULVHGHYHORSPHQWDZDUG%LJ)LVK6FKRRORI'LJLWDO)LOPPDNLQJ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 67 Sustainability review

Material topics – Community investment

Absa sponsorships ° 5HFHLYHG D VSHFLDO FRPPHQGDWLRQ IRU IXWXUH EHVW HPSOR\HH FRPPXQLW\ LQYROYHPHQW SURJUDPPH XQGHUWDNHQE\$UFKLEDOG+ROWKDX]HQ $EVD©VFRPPXQLW\LQYHVWPHQWLVSULPDULO\HYLGHQFHG LQ&6,DQGFRQVXPHUHGXFDWLRQ,QDGGLWLRQWRWKLV Consumer education WKH*URXSEHOLHYHVWKDWDUWVDQGFXOWXUHDVZHOODV VSRUWDUHLPSRUWDQWEXLOGLQJEORFNVIRUDKHDOWK\ $EVDFRQWLQXHGWRIROORZDSULPDULO\RXWVRXUFHGDSSURDFKWR VRFLHW\:KLOHILUVWDQGIRUHPRVWDQDFWLYLW\WR WKHLPSOHPHQWDWLRQRIFRQVXPHUHGXFDWLRQLQLWLDWLYHVLQ UHLQIRUFHEUDQGYDOXHVDQGEXVLQHVVREMHFWLYHV 7KH*URXS©VUHVSRQVLELOLW\LVWRIDFLOLWDWHJRYHUQDQFHTXDOLW\ WKURXJKFDUHIXOO\VHOHFWHGVSRQVRUVKLSV$EVDLVDOVR DVVXUDQFH PRQLWRULQJ DQG UHSRUWLQJ RI DOO RXWVRXUFHG DEOHWRFRQWULEXWHWRVRFLHW\ LQLWLDWLYHV 6RFFHULVRQHRIWKHFRUQHUVWRQHVRI$EVD©V %XERPL LV FRQVXPHU HGXFDWLRQ©V IODJVKLS SURJUDPPH VSRQVRUVKLSSRUWIROLRZKLFKLQFOXGHVWKH$EVD&XS 7UDQVODWHG IURP ;KRVD %XERPL PHDQV ¨7KDW©V /LIH© $EVD WKH$EVD3UHPLHUVKLSDQG%DIDQD%DIDQD6SRQVRUVKLS RZQVWKHLQWHOOHFWXDOSURSHUW\ULJKWVIRUDOO%XERPLRIIHULQJV LQLWLDWLYHVZLWKVWURQJGHYHORSPHQWDOREMHFWLYHVLQFOXGH DQG KDV UHJLVWHUHG WKH %XERPL LW©V /LIH WUDGHPDUN 7KH WKH$EVD:RPHQ©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©VPRQH\ZLVHO\ 8QLRQDQGSURYLGHVVXSSRUWWRWKH6KDUNV$FDGHP\ WKH&KHHWDKV$FDGHP\DQGWKH(DVWHUQ3URYLQFH 7KH UHOHDVH RI WKH UHVXOWV RI UHVHDUFK RQ WKH LPSDFW RI WKH 5XJE\8QLRQ %XERPLILQDQFLDOOLWHUDF\SURJUDPPHWRRNSODFHLQ$SULO 3DUWLFLSDWLYHVSRUWVSRQVRUVKLSVLQFOXGHWKH$EVD 7KLV UHVHDUFK FRQGXFWHG E\ 8QLVD©V %XUHDX RI 0DUNHW &DSH(SLF6RXWK$IULFD©VODUJHVWPRXQWDLQELNHUDFH 5HVHDUFKFRQILUPHGWKDWWKH%XERPLSURJUDPPHLQGLVSXWDEO\ WKH$EVD3UHPLHUV,QYLWDWLRQDODFKDULW\JROIHYHQW FRQWULEXWHG WR WKH XUJHQW QHHG IRU LPSURYHG PRQH\ DQGWKHPRWRUUDFLQJVSRQVRUVKLSWKH$EVD2II5RDG PDQDJHPHQW VNLOOV LQ 6RXWK $IULFD DQG WKDW WKHUH ZDV D FKDOOHQJH VWDWLVWLFDO GLIIHUHQFH LQ NQRZOHGJH EHWZHHQ WKRVH ZKR KDG DWWHQGHGWKH%XERPLWUDLQLQJDQGWKRVHZKRKDGQRW 7KH*URXS©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©$WHOLHUDUWFRPSHWLWLRQLQ 7&76DQG SDUWQHUVKLSZLWKWKH6RXWK$IULFDQ1DWLRQDO VSRQVRUVKLS RI WKH 1DWLRQDO (FRQRPLFV 2O\PSLDG $VVRFLDWLRQIRUWKH9LVXDO$UWV 6$1$9$ WKH)UHQFK LQ SDUWQHUVKLS ZLWK WKH 6RXWK $IULFDQ )RXQGDWLRQ IRU ,QVWLWXWH)UHQFK(PEDVV\DQGWKH)UHQFK$OOLDQFH (FRQRPLF DQG )LQDQFLDO (GXFDWLRQ DLPHG DW OHDUQHUV LQ $EVDDOVRVSRQVRUVWKH'HVLJQ,QGDED([SRZKLFKLV JUDGHVWR DFHOHEUDWLRQRI6RXWK$IULFD©VLQJUDLQHGFUHDWLYLW\

68 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Focus for 2011 &6, DQG FRQVXPHU HGXFDWLRQ UHPDLQ FULWLFDO LQ HQVXULQJ HQKDQFHGVXVWDLQDEOHGHYHORSPHQW7KH*URXSZLOOFRQWLQXHWR LQYHVWLQWKHFRPPXQLWLHVLQZKLFKLWRSHUDWHV

Corporate social investment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

Consumer education ,QFUHDVHG IRFXV ZLOO EH SODFHG RQ HPEHGGLQJ DQ LQWHJUDWHG DSSURDFK EHWZHHQ WKH FRQVXPHU HGXFDWLRQ WHDP (QWU\ /HYHO DQGLQFOXVLYH%DQNLQJXQLW$EVD3D\PHQWVDQG$EVD/HJDOWKXV VWUHQJWKHQLQJWKHTXDOLW\DQGUHDFKRISURJUDPPHV'LVFXVVLRQV DUHLQSURJUHVVZLWKDQXPEHURIJRYHUQPHQWGHSDUWPHQWVDQG FLYLO VRFLHW\ RUJDQLVDWLRQV ZLWK WKH DLP RI UHDFKLQJ FRQVXPHUVLQ7KLVZLOOEHDFKLHYHGWKURXJKIDFHWRIDFH LQWHUYHQWLRQVSULQWDQGEURDGFDVWPHGLDFDPSDLJQV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 69 Sustainability review

Material topics – Environmental impact

Minimising Absa’s impact on the environment.

Highlights Absa’s stance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©VHQYLURQPHQWDOYLVLRQLVWRVWUHQJWKHQWKHSRVLWLRQRIWKH

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©VHQYLURQPHQWDOLPSDFWLV UHJXODUO\ UHSRUWHG WR UHOHYDQW EXVLQHVV XQLW PDQDJHPHQW *URXS([FRDQGWKHERDUG Key performance indicators &KDQJH 2010 review 2010 7KH IRFXV IRU ZDV RQ WKH DFFXUDWH PHDVXUHPHQW RI &DUERQIRRWSULQW LQIRUPDWLRQUHTXLUHGIRUFDUERQGLR[LGHHPLVVLRQVUHSRUWLQJ ©WRQQHV&2 415 ¥ WKHHQHUJ\HIILFLHQF\RI$EVD©VSURSHUWLHVLPSURYLQJOHQGLQJ (OHFWULFLW\FRQVXPSWLRQ SURFHVVHV VWDII HGXFDWLRQ DQG DZDUHQHVV DV ZHOO DV *:K 469 VXSSRUWLQJWKHHQYLURQPHQWDODJHQGDZLWKLQGXVWU\ERGLHV 3DSHUFRQVXPSWLRQ WRQQHV 2 453

3DSHUUHF\FOHG WRQQHV 780 Carbon footprint %XVLQHVVWUDYHO PLOOLRQVNP 140 $EVD PHDVXUHV LWV FDUERQ IRRWSULQW E\ WDNLQJ WKH IROORZLQJ Notes: 6FRSHDQGDFWLYLWLHVLQWRDFFRXQW 1 Carbon footprint comprises of 95% electricity with the balance being business travel. *:K(OHFWULFLW\FRQVXPHG (VNRPDQGJDV 2 Data has been collected through the installation of meters. Consumption )XHO0RWRUYHKLFOHVXVHGIRUEXVLQHVVSXUSRVHV LQFOXGHV has been estimated where meters are not installed. 2010 date is based on FDUKLUH a small sample of actual material data. Additional meters will be installed in 2011 to signiﬁcantly enhance reporting in this regard. )XHO'LHVHOIRUEDFNXSJHQHUDWRUV 3 Not available. )XHO)OLJKWVIRUEXVLQHVVSXUSRVHV 4 Restated. (PLVVLRQV IURP HOHFWULFLW\ FRQVXPSWLRQ FRQWULEXWHG PRUH 5 Includes company and functional vehicles, employee kilometre claims and car rental (but excludes ﬂights). WKDQRI$EVD©VFDUERQIRRWSULQW

70 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU &RPSLOLQJ LQIRUPDWLRQ UHTXLUHG WR UHSRUW FDUERQ &2 HPLVVLRQV KDV EHHQDQLPPHQVHH[HUFLVHZLWKLQ$EVDDQGVLJQLILFDQWLQYHVWPHQWKDV Carbon emissions from electricity EHHQ PDGH LQ WKLV UHJDUG 7KLV LQLWLDWLYH KDV DVVLVWHG WKH *URXS LQ (’000 tonnes CO2) XQGHUVWDQGLQJWKHHQYLURQPHQWDOLPSDFWVRILWVRSHUDWLRQVDQGLQGULYLQJ HOHFWULFLW\HIILFLHQF\ 9 7R REWDLQ UHOLDEOH GDWD LQ WKLV UHJDUG $EVD KDV ODXQFKHG D SURMHFW WR PHDVXUH LWV RYHUDOO HOHFWULFLW\ XVH DQG WR SURYLGH DQ DFFXUDWH HQHUJ\

XVDJHEDVHOLQH7KLVSURMHFWFRPPHQFHGLQDQGZLOOEHFRPSOHWHG 434 391 GXULQJ

Carbon Disclosure Project (CDP) 2009 2010 $EVDSDUWLFLSDWHVLQWKH&DUERQ'LVFORVXUH3URMHFWZKLFKLVDJOREDOFDOO ● Gas emissions WR WKH ZRUOG©V ODUJHVW FRPSDQLHV WR PHDVXUH DQG UHSRUW WKHLU FDUERQ ● Eskom emissions HPLVVLRQV ZKLOH LQWHJUDWLQJ WKH ORQJWHUP YDOXH DQG FRVW RI FOLPDWH FKDQJHLQWRWKHLUDVVHVVPHQWRIWKHILQDQFLDOKHDOWKDQGIXWXUHSURVSHFWV RI WKHLU EXVLQHVV $V D ILUVW WLPH SDUWLFLSDQW $EVD ZDV RI 6RXWK $IULFDQFRPSDQLHVWKDWYROXQWDULO\SDUWLFLSDWHGLQ$EVD©VUHODWLYH SRVLWLRQLQWKLVSURMHFW UHSRUWHGDVDWPLG LQGLFDWHGWKDWDOWKRXJK WKH*URXSKDVFRPPHQFHGLWVFDUERQGLVFORVXUHMRXUQH\WKHUHLVVWLOO VRPHZD\WRJRLQWKLVUHJDUG

Energy efﬁciency $EVDKDVLQYHVWHGLQLPSURYLQJDQGUHSODFLQJLQIUDVWUXFWXUHWREHFRPH PRUHHQHUJ\HIILFLHQW7KLVLQFOXGHGD*URXSZLGHUHSODFHPHQWRIOLJKW EXOEV ZLWK PRUH HIILFLHQW YHUVLRQV RQJRLQJ LQVWDOODWLRQ RI WLPHUV DQG )XUWKHUUHDGLQJ VHQVRUVWRVZLWFKRIIOLJKWVDIWHUKRXUVDQGZKHUHWKHUHLVQRDFWLYLW\DQG 5HVSRQVLEOHOHQGLQJ WKHUROORXWRIWKHILUVWSKDVHRIWKHVPDUWPHWHULQJV\VWHPVWKDWWUDFNDQG 55 PDQDJHHOHFWULFLW\XVHLQWKH*URXS©VODUJHVWEUDQFKHVDQGRIILFHV $ JDV HQHUJ\ FHQWUH ZDV LQVWDOOHG LQ $EVD 7RZHUV :HVW SURYLGLQJ VHFXULW\RIHOHFWULFLW\VXSSO\DQGUHGXFLQJWKH*URXS©VFDUERQHPLVVLRQV

Carbon offsetting :KLOH $EVD©V IRFXV LV SULPDULO\ RQ PLQLPLVLQJ GLUHFW LPSDFW RQ WKH HQYLURQPHQW WKURXJK %DUFOD\V $EVD DOVR SDUWLFLSDWHV LQ FDUERQ RIIVHWWLQJ WKURXJK WKH SXUFKDVH RI FDUERQ FUHGLWV 7KH FDUERQ FUHGLWV DUHDVDPLQLPXPFHUWLILHGWRWKH9ROXQWDU\&DUERQ6WDQGDUGZKLFK

VKRZVWKHSURMHFWVJHQXLQHO\KHOSWRUHGXFH&2HPLVVLRQVDQGDUHERWK DXGLWDEOHDQGWUDFHDEOH

Water usage $EVDLVQRWDPDMRUFRQVXPHURIZDWHULWLVSULPDULO\XVHGIRUSHUVRQDO FRQVXPSWLRQDQGDEOXWLRQIDFLOLWLHV2ZLQJWRWKHORZXVDJHRIZDWHULQ WKH*URXS©VRSHUDWLRQVDQGWKHVLJQLILFDQWLQYHVWPHQWLQZDWHUPHWHUV UHTXLUHGIRUDFFXUDWHPHDVXUHPHQWWKLVPHWULFZLOORQO\EHDGGUHVVHGDV DIXWXUHSURMHFW

Paper use and recycling $EVD PDNHV H[WHQVLYH XVH RI SDSHU DQG WKH *URXS LV DFWLYHO\ LPSOHPHQWLQJ LQLWLDWLYHV WR UHGXFH LWV XVH 7KLV LQFOXGHV HQFRXUDJLQJ LQWHUQHW EDQNLQJ FXVWRPHUV WR HOHFW QRW WR UHFHLYH SDSHU VWDWHPHQWV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 71 Sustainability review

Material topics – Environmental impact

GRXEOHVLGHG SULQWLQJ LQ WKH *URXS©V RIILFH HQYLURQPHQW DQG WKH HOHFWURQLFGLVVHPLQDWLRQRILQWHUQDOPDQDJHPHQWUHSRUWV(PSOR\HHVDUH HQFRXUDJHGWRILOHHOHFWURQLFGRFXPHQWVZKHQHYHUSRVVLEOH :KHUHSUDFWLFDOO\SRVVLEOHSDSHUVKUHGGLQJDQGUHF\FOLQJELQVDUHPDGH DYDLODEOH $OWRJHWKHU WRQQHV RI SDSHU ZDV UHF\FOHG LQ PDUJLQDOO\ GRZQ IURP 7KLV ZLOO FRQWLQXH WR EH D IRFXV JRLQJ IRUZDUG

Absa Towers West 7RLPSURYHWKHHQYLURQPHQWDOSURILOHRI$EVD©VRIILFHVWKH*URXS©VQHZ KHDG RIILFH EXLOGLQJ $EVD 7RZHUV :HVW ZDV GHVLJQHG WR LQFRUSRUDWH JUHHQ EXLOGLQJ HOHPHQWV DQG SULQFLSOHV WR RSWLPLVH VXVWDLQDELOLW\ DQG SHUIRUPDQFHZKLOHUHWDLQLQJDHVWKHWLFDSSHDO7KHGHVLJQRIWKHEXLOGLQJ DLPV WR UHGXFH HQYLURQPHQWDO LPSDFW LQ WHUPV RI HQHUJ\ ZDWHU FRQVXPSWLRQPDWHULDOVRXUFHVDQGHPLVVLRQV 7KH HQHUJ\ FHQWUH ZKLFK LV DQ LPSRUWDQW DVSHFW RI WKH EXLOGLQJ ZLOO HQDEOH$EVD©VFRUSRUDWHFDPSXVWRPHHWWKHFRXQWU\©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©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

Focus in 2011 ZLOOVHHDQLQFUHPHQWDOIRFXVRQUHGXFLQJWKH*URXS©VHQYLURQPHQWDO LPSDFWDVZHOODVWKHDFFXUDWHPRQLWRULQJDQGPHDVXULQJRIWKH*URXS©V LPSDFWRQWKHHQYLURQPHQWZLOOEHDFULWLFDO\HDULQREWDLQLQJNH\ EDVHOLQHLQIRUPDWLRQ

72 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Board and leadership Contents

Board and leadership Pages 75 – 98

Our board 7KH*URXS&KDLUPDQDQGWKH*URXS &KLHI([HFXWLYHSUHVHQWWKHLUUHSRUWV 75 &KDLUPDQ©VVWDWHPHQW WRVWDNHKROGHUV 81 'LUHFWRUDWH

Our leadership 89 *URXS&KLHI([HFXWLYH©VUHYLHZ 93 *URXS([HFXWLYH&RPPLWWHH Board and leadership

Chairman’s statement

Garth Grifﬁn *URXS&KDLUPDQ

Introduction and overview

7KLVLVP\ILUVWVWDWHPHQWWR\RXDV$EVD*URXS©V&KDLUPDQ,ORRNIRUZDUGWRVHUYLQJ WKH*URXSDQGDOOLWVVWDNHKROGHUVLQWKLVFDSDFLW\

$EVDGHPRQVWUDWHGUHVLOLHQFHLQDFKDOOHQJLQJRSHUDWLQJHQYLURQPHQWRIVORZHFRQRPLF UHFRYHU\DQGPXWHGFUHGLWGHPDQGGXULQJ'HVSLWHPRGHVWUHYHQXHJURZWKWKH *URXS LQFUHDVHG LWV KHDGOLQH HDUQLQJV E\ WR 5 ELOOLRQ DV LPSDLUPHQWV LPSURYHG IURPXQXVXDOO\KLJKOHYHOV,WZDVDOVRJUDWLI\LQJWKDW$EVDNHSWLWVUHWXUQRQHTXLW\DERYH LWV FRVW RI HTXLW\ ZKLOH PDLQWDLQLQJ FDSLWDO FRPIRUWDEO\ DERYH ERDUG WDUJHWV DQG UHJXODWRU\UHTXLUHPHQWV

$VVDWLVI\LQJDVWKHVHILQDQFLDOUHVXOWVZHUHVRWRRZDVWKHSURJUHVVPDGHWRHQKDQFH WKH*URXS©VFDSDFLW\DQGFDSDELOLWLHVLQPDQ\LPSRUWDQWDUHDVWRHQDEOHIXWXUHJURZWK ([DPSOHVLQFOXGHWKHUREXVW$EVD&DSLWDOEXVLQHVVLPSOHPHQWLQJDFRPPRQSODWIRUP IRURXU$IULFDQRSHUDWLRQVDQGGHYHORSLQJDZRUOGFODVVIRUHLJQH[FKDQJHFDSDELOLW\IRU RXUFOLHQWV:HKDYHPDGHJRRGSURJUHVVRQVHYHUDORWKHULQLWLDWLYHVXQGHUSLQQLQJRXU

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 75 Board and leadership

Chairman’s statement

2QH$EVDVWUDWHJ\7KHVHHIIRUWVDUHH[DPSOHVRIEDODQFLQJWKH*URXS©VVKRUW WHUP UHVXOWV ZLWK LWV ORQJHUWHUP SURVSHFWV 7KXV $EVD KDV QDYLJDWHG WKH UHFHVVLRQ FRPPHQGDEO\ DQG LV ZHOO SRVLWLRQHG WR WDNH IXOO DGYDQWDJH RI JUDGXDOO\LPSURYLQJFRQGLWLRQV

7KHDQQXDOUHSRUWLQFOXGLQJWKH*URXS&KLHI([HFXWLYHDQGWKH*URXS)LQDQFLDO 'LUHFWRU©VUHYLHZVWKHDQQXDOILQDQFLDOVWDWHPHQWVDQGWKHEXVLQHVVRSHUDWLRQDO UHYLHZSURYLGHVDFRPSUHKHQVLYHRYHUYLHZRI$EVD©VDFWLYLWLHVLQ:LWKRXW UHSHDWLQJDQ\RIWKHGHWDLO,KLJKOLJKWEHORZDIHZNH\DUHDV

Commitment to sustainability

7KHUHFHQWJOREDOILQDQFLDOFULVLVXQGHUVFRUHGWKHLPSRUWDQFHRIVXVWDLQDELOLW\ SDUWLFXODUO\ LQ WKH EDQNLQJ VHFWRU ZKHUH VRPH UHVSHFWHG JURXSV IDLOHG DQG VLJQLILFDQW ORQJWHUP GDPDJH ZDV GRQH WR JOREDO ILQDQFLDO DQG HFRQRPLF V\VWHPV $EVD©V ERDUG FRQVLGHUV VXVWDLQDELOLW\ DQ LPSRUWDQW REOLJDWLRQ ZLWK ORQJWHUPYLDELOLW\ZHLJKLQJPRUHKHDYLO\WKDQVKRUWWHUPILQDQFLDOJDLQ7KXV ZHUHPDLQFRPPLWWHGWRJURZLQJRXUEXVLQHVVLQDVXVWDLQDEOHDQGUHVSRQVLEOH PDQQHUDQGLQOLQHZLWKWKH.LQJ,,,UHFRPPHQGDWLRQVUHFRJQLVHWKHQHHGWR HPEHGVXVWDLQDELOLW\LQWRRXUEXVLQHVVRSHUDWLRQVDQGUHSRUWRQRXUSURJUHVVDV ZHSURFHHG

0DQDJHPHQWKDVLGHQWLILHGPDWHULDOWRSLFVWKDWZHEHOLHYHWREHFULWLFDOWRXV DQGRXUVWDNHKROGHUVEHFDXVHWDNHQWRJHWKHUDQGRYHUWLPHWKH\GHWHUPLQH WKH *URXS©V ORQJWHUP UHOHYDQFH DQG VXVWDLQDELOLW\ 7KH WRSLFV DUH FRYHUHG HDFKLQVRPHGHWDLOLQWKHVHFWLRQWLWOHG¦VXVWDLQDELOLW\UHYLHZ§LQWKLVUHSRUW$W LWVPRVWEDVLFOHYHOKRZHYHUVXVWDLQDELOLW\GHSHQGVRQDFRPSDQ\©VDELOLW\WR EHKDYHHWKLFDOO\LQLWVLQWHUDFWLRQVZLWKDOOLWVVWDNHKROGHUV7KLVLVRQO\SRVVLEOH LIDFRPSDQ\HPEUDFHVDVHWRIYDOXHVWKDWGHPDQGVRILWVSHRSOHUHVSHFWIRU RWKHUV¤ERWKLQWHUQDODQGH[WHUQDO¤DQGDQDWWLWXGHRIDFFRXQWDELOLW\7KHVH DWWULEXWHVDUHFRUHHOHPHQWVRIWKH$EVDYDOXHVDQGWKHERDUGIXOO\LQWHQGVWR HQVXUHWKDWWKH*URXSUHPDLQVDERYHUHSURDFKRQWKLVVFRUH

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

76 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU UDWLQJSURFXULQJ5ELOOLRQRIJRRGVDQGVHUYLFHVIURPH[HPSWDQGTXDOLI\LQJVPDOOHQWHUSULVHVDQGPLFURHQWHUSULVH ILQDQFHVXSSRUWLQJ LQIRUPDOVHOIHPSOR\HGLQGLYLGXDOVLQWKHLULQFRPHJHQHUDWLQJDFWLYLWLHVWKDW VXVWDLQWKHLUIDPLOLHVDQGFRPPXQLWLHV

)URPWKHVHFRPPHQWV,WUXVW\RXZLOODSSUHFLDWHWKDWEHJLQQLQJZLWKWKHERDUG$EVDLVFRPPLWWHGWRHQVXULQJWKH VXVWDLQDELOLW\RILWVRSHUDWLRQV7KLVFDOOVIRUDQDSSURSULDWHFRUSRUDWHIRRWSULQWWKDWLVVHQVLWLYHWRLWVHQYLURQPHQWDQG FRQVWLWXHQFLHVDQGKDVDSRVLWLYHLPSDFWDQGOHJDF\3XWVLPSO\ZHVHHNWREHDUHVSHFWHGFRUSRUDWHFLWL]HQWKDW PDNHVDYDOXHGFRQWULEXWLRQWRGHYHORSLQJWKHPDUNHWVDQGFRPPXQLWLHVZHVHUYH

Regulatory developments

7KHEDQNLQJLQGXVWU\LVIRUJRRGUHDVRQVXEMHFWWRVWULQJHQWUHJXODWRU\RYHUVLJKWDQGPXFKKDVFKDQJHGIROORZLQJ WKHEDQNLQJFULVLVFHQWUHGLQWKH8QLWHG6WDWHVDQG(XURSH)RUWXQDWHO\WKHORFDOEDQNLQJLQGXVWU\ZHDWKHUHG WKHVWRUPUHODWLYHO\ZHOOGXHLQSDUWWRPRUHGHPDQGLQJUHJXODWRU\UHTXLUHPHQWV)ROORZLQJWKHLQWHUQDWLRQDOFULVLV VXEVWDQWLDOFKDQJHVKDYHEHHQRUDUHH[SHFWHGWREHPDGHWRUHJXODWRU\UHTXLUHPHQWVWKDWZLOODIIHFWWKHOHYHODQG QDWXUHRIFDSLWDOEDQNVDUHUHTXLUHGWRKROG&KDQJHVZLOODOVRHQDEOHEDQNVWREHWWHUZLWKVWDQGXQH[SHFWHGOLTXLGLW\ GHPDQGV

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

5HJXODWRU\ FKDQJH KRZHYHU LV QRW OLPLWHG WR SUXGHQWLDO RU VROYHQF\ LVVXHV WKH *URXS LV IDFHG ZLWK UHJXODU DQG VLJQLILFDQW OHJLVODWLYH DQG UHJXODWRU\ FKDQJHV LQ RWKHU DUHDV FRYHULQJ PDWWHUV VXFK DV DQWLPRQH\ ODXQGHULQJ DFWLYLWLHVWKHLPSOLFDWLRQVRIWKHQHZ&RPSDQLHV$FWDQGWKHQHZ&RQVXPHU3URWHFWLRQ$FWLQ6RXWK$IULFD&RPSO\LQJ ZLWKDOOOHJLVODWLYHDQGUHJXODWRU\UHTXLUHPHQWVLVDFRUHUHTXLUHPHQWIRUWKH*URXS

Remuneration

5HPXQHUDWLRQLQWKHEDQNLQJVHFWRULVDQLPSRUWDQWDQGZLGHO\GHEDWHGLVVXH,QGLVFULPLQDWHUHPXQHUDWLRQSROLFLHV WKDWLQFHQWLYLVHGVKRUWWHUPJDLQVDWWKHH[SHQVHRIORQJHUWHUPVXVWDLQDELOLW\KDYHEHHQLGHQWLILHGDVDFRQWULEXWRUWR WKH H[FHVVHV SUHFHGLQJ WKH ILQDQFLDO FULVLV :H FRYHU WKH *URXS©V UHPXQHUDWLRQ SROLFLHV LQ VRPH GHWDLO LQ WKH UHPXQHUDWLRQUHSRUWEXW,ZLOOFRPPHQWRQVRPHNH\IHDWXUHV

%DQNLQJFRYHUVDZLGHVSHFWUXPRIDFWLYLWLHVIURPWKHPRUHURXWLQHWRKLJKO\FRPSOH[DQGIDVWPRYLQJWUDQVDFWLRQV $OOWRDJUHDWHURUOHVVHUH[WHQWUHO\RQVSHFLDOLVWVNLOOVWRXOWLPDWHO\SURYLGHFXVWRPHUVZLWKDSSURSULDWHVROXWLRQVDQG WRPDQDJHWKHVXSSRUWLQJSURFHVVHV%DQNLQJKDVWKHUHIRUHFRPHWRGHSHQGRQGHYHORSLQJDQGUHWDLQLQJGHHSSRROV RIQHFHVVDU\H[SHUWLVH,QFUHDVLQJO\WKHVHFRPHDWDFRVW,QFHQWLYHVGHVLJQHGWRUHZDUGEHKDYLRXUWKDWLVDOLJQHG ZLWKWKHLQWHUHVWVRIRWKHUVWDNHKROGHUVDUHDQLPSRUWDQWFRPSRQHQWRIRXUUHZDUGVWUXFWXUH

:LWKLQ$EVDWKHUHIRUHZHWU\WRPDLQWDLQDQDSSURSULDWHEDODQFHEHWZHHQVKRUWDQGORQJHUWHUPLQFHQWLYHVRQWKH RQHKDQGDQGFDVKDQGVKDUHEDVHGSD\PHQWVRQWKHRWKHU7KLVLVWDUJHWHGDWHPSOR\HHVZKRVHVNLOOVPDNHD

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 77 Board and leadership

Chairman’s statement

PDWHULDODQGPHDVXUDEOHGLIIHUHQFHWRWKH*URXS©VSHUIRUPDQFHRYHUWLPH7KH VL]H DQG PL[ RI WKHVH LQFHQWLYHV ZLOO GHSHQG RQ WKH DUHD RI DFWLYLW\ DQG WKH SHUIRUPDQFH OHYHOV RI WKH LQGLYLGXDO DQG WKH EXVLQHVV DIWHU WDNLQJ ULVN LQWR DFFRXQW

:KLOH SRRUO\ GHVLJQHG LQFHQWLYHV PD\ HQFRXUDJH LQDSSURSULDWH ULVNWDNLQJ DW WKHH[SHQVHRIRWKHUSDUWLHVERWKLQWHUQDODQGH[WHUQDOWRWKHEXVLQHVVZHDUH RIWKHYLHZWKDWVXFKDFWLYLW\VKRXOGEHFRQVWUDLQHGLQWKHILUVWLQVWDQFHE\WKH LQKHUHQW ULVN FRQWUROV HVWDEOLVKHG E\ WKH EXVLQHVV 3XW GLIIHUHQWO\ WKH FRUH EXVLQHVV ULVN PDQDJHPHQW FRQWUROV VKRXOG GHWHFW DQG SUHYHQW LQDSSURSULDWH ULVNWDNLQJOHDYLQJWKHLQFHQWLYHVWUXFWXUHWRUHZDUGDSSURSULDWHSHUIRUPDQFH

+HQFHWKHUHDUHWZRIRXQGDWLRQDOHOHPHQWVWRDQHIIHFWLYHLQFHQWLYHIUDPHZRUN GHVLJQHG WR DWWUDFW DQG UHWDLQ WKH WDOHQW QHFHVVDU\ WR GULYH D ODUJH EDQNLQJ JURXS)LUVWO\DQHIIHFWLYHSHUIRUPDQFHPDQDJHPHQWSURFHVVDQGVHFRQGO\D FRPSUHKHQVLYHULVNPDQDJHPHQWSURFHVV$GGWRWKLVDQDJUHHPHQWRQZKDW GHWHUPLQHVWKHTXDQWXPRIWKHDYDLODEOHLQFHQWLYHSRRODQDSSURSULDWHPL[RI VKRUWDQGORQJWHUPDZDUGVDQGDSURSHUJRYHUQDQFHSURFHVVDQGZHKDYH WKHLQJUHGLHQWVRIDQHIIHFWLYHLQFHQWLYHSURJUDPPH

7KHVH HVVHQWLDOO\ DUH WKH HOHPHQWV ZH KDYH LQ SODFH DW $EVD DQG ZH FRQWLQXDOO\ VHHN WR LPSURYH WKH RYHUDOO V\VWHP WDNLQJ QRWH RI LQWHUQDWLRQDO GHYHORSPHQWVLQWKLVUHJDUG7KH%DVHOFRPPLWWHHKDVPDGHUHFRPPHQGDWLRQV RQFHUWDLQUHPXQHUDWLRQGLVFORVXUHV:HZLOOPRQLWRUWKHVHDQGORFDOUHJXODWRU\ GHYHORSPHQWVFORVHO\ZLWKDYLHZWRDGRSWLQJWKHPDVUHTXLUHG

$WWKHKHDUWRIRXUDSSURDFKLVWKHUHFRJQLWLRQWKDW$EVDLVDFFRXQWDEOHWRD UDQJHRIVWDNHKROGHUVDQGWKDWLQFHQWLYHVVKRXOGUHIOHFWWKHHIIRUWUHTXLUHGDQG WKH YDOXH WKDW LV EHLQJ DGGHG ZLWKLQ WKLV FRQWH[W 6RPHWLPHV WKLV UHVXOWV LQ LQGLYLGXDO LQFHQWLYHV WKDW DSSHDU KLJK EXW ZH UHPDLQ FRPIRUWDEOH WKDW VXFK LQFHQWLYHVKDYHEHHQVXEMHFWWRGXHSURFHVVZLWKLQDQHIIHFWLYHV\VWHP

Relationship with Barclays

$EVDEHQHILWVPHDQLQJIXOO\IURPDVWURQJFRPPLWWHGPDMRULW\VKDUHKROGHU2XU FRQVWUXFWLYHUHODWLRQVKLSZLWK%DUFOD\VFRQWLQXHVWRGHHSHQDVHYLGHQFHGE\ FORVHU FROODERUDWLRQ DFURVV WKH UHVW RI $IULFD DQG RXU PXFK LPSURYHG IRUHLJQ

)XUWKHUUHDGLQJ H[FKDQJHRIIHULQJIRULQVWDQFH:HDOVREHQHILWVLJQLILFDQWO\E\EHLQJDEOHWR EHQFKPDUNRXUDFWLYLWLHVDJDLQVWWKRVHRIDPDMRULQWHUQDWLRQDOEDQNLQJJURXS 5HPXQHUDWLRQUHSRUW 145 ZKLOH RXU SHRSOH©V VNLOOV DQG LQVLJKW JURZ DV D UHVXOW RI FKDOOHQJH IURP DQG

78 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU H[SRVXUH WR WKHLU %DUFOD\V FRXQWHUSDUWV 7KH *URXS ZLOO FRQWLQXH WR GUDZ RQ %DUFOD\V H[SHUWLVH DQG LQVLJKW LQ GHYHORSLQJ LWV RZQ VNLOOV DQG FDSDFLW\ ZKHUHYHU ZH RSHUDWH 2Q EHKDOI RI WKH ERDUG , ZRXOG OLNH WR WKDQN RXU FROOHDJXHVDW%DUFOD\VIRUWKHVXSSRUWWKH\KDYHSURYLGHG,ORRNIRUZDUGWRZRUNLQJZLWKWKHPWRIXUWKHUHQKDQFH $EVD©VHQWHUSULVHYDOXH

Board changes

'DYH%ULQNUHWLUHGIURPWKHERDUGDVIURPWKHHQGRI6HSWHPEHU+LVFRQWULEXWLRQDWERDUGOHYHOWR$EVDVLQFH ZDVLPPHQVH'XULQJWKLVSHULRGKHVHUYHGDV&KDLUPDQIURPWRDQGODWHUDV'HSXW\&KDLUPDQXQGHUERWK 'DQLH&URQMHDQG*LOO0DUFXV)URP-XO\XQWLOKLVUHWLUHPHQWKHRQFHDJDLQVHUYHGDV&KDLUPDQRIWKHERDUG DQGZHDOOEHQHILWHGIURPKLVH[SHULHQFHDQGLQVLJKWV

,WZDVWKHUHIRUHDJUHDWKRQRXUDQGSULYLOHJHWRVXFFHHG'DYHDQG,ORRNIRUZDUGWRZRUNLQJZLWKP\ERDUGFROOHDJXHV DVZHOODV0DULD5DPRVDQGKHUH[HFXWLYHWHDP

'HV$UQROGZLOOEHUHWLULQJDWWKHDQQXDOJHQHUDOPHHWLQJ'HVMRLQHGWKHERDUGLQDQGKDVPDGHDVLJQLILFDQW FRQWULEXWLRQSDUWLFXODUO\DV&KDLUPDQRIWKH*URXS$XGLWDQG&RPSOLDQFH&RPPLWWHH&ROLQ%HJJVZDVDSSRLQWHGWR WKHERDUGLQ-XQHDQGVXEMHFWWRUDWLILFDWLRQDWWKHDQQXDOJHQHUDOPHHWLQJZLOOVXFFHHG'HVDV&KDLUPDQRI WKH*URXS$XGLWDQG&RPSOLDQFH&RPPLWWHH0RQKOD+ODKODLVUHWLULQJE\URWDWLRQDQGKDVGHFLGHGQRWWRPDNHKHUVHOI DYDLODEOHIRUUHHOHFWLRQ2QEHKDOIRIWKHERDUG,WKDQN'HVDQG0RQKODIRUWKHLUFRQWULEXWLRQWRWKH*URXSDQGZLVK WKHPZHOO

Acknowledgements

8QGHU 0DULD 5DPRV© DEOH OHDGHUVKLS $EVD EHQHILWV IURP D VNLOOHG DQG FRPPLWWHG PDQDJHPHQW WHDP ZKRVH GHGLFDWLRQLVUHIOHFWHGLQERWKWKHILQDQFLDOUHVXOWVDQGWKHRQJRLQJFDSDFLW\DQGFDSDELOLW\GHYHORSPHQWXQGHUSLQQLQJ WKH*URXS©V2QH$EVDVWUDWHJ\0DULDDQGKHUWHDPOHDGWKHZD\LQHYHU\UHVSHFW

,ZRXOGOLNHWRWKDQNRXUVWDIIIRUWKHLUHQRUPRXVGHGLFDWLRQDQGKDUGZRUNLQDGLIILFXOWHQYLURQPHQW,WLVWKURXJKWKHLU HIIRUWVWKDWZHKDYHPDGHWKHSURJUHVVZHKDYH

7KDQN\RXDOVRWRP\FROOHDJXHVRQWKHERDUGIRU\RXUVXSSRUWDQGJXLGDQFH7KHGHPDQGVRQDQGUHVSRQVLELOLWLHV RIDQRQH[HFXWLYHEDQNGLUHFWRUDUHVLJQLILFDQWDQG,DPJUDWHIXOIRUWKHGHGLFDWLRQRIP\FROOHDJXHVLQHQVXULQJ HIIHFWLYHJRYHUQDQFHSURFHVVHVIRUWKH*URXS2QDYHUDJHQRQH[HFXWLYHGLUHFWRUVZHUHHDFKH[SHFWHGDWPRUHWKDQ PHHWLQJVLQLQFOXGLQJWUDLQLQJPHHWLQJVDQGLQWHUDFWLRQVZLWKWKHUHJXODWRU

:HDJDLQWKDQNRXUEDQNLQJUHJXODWRUIRUKLVZLVHVXSHUYLVLRQDQGFRQVWUXFWLYHPHWKRGRIHQJDJHPHQW0XFKRIWKH FUHGLWIRUWKHTXDOLW\RIWKHORFDOEDQNLQJVHFWRUKDVWRGRZLWKWKHQDWXUHDQGVW\OHRIWKLVLQWHUDFWLRQ

,PSRUWDQWO\,WKDQNRXUFXVWRPHUVVXSSOLHUVDQGVKDUHKROGHUVIRUWKHLUFRQWLQXHGVXSSRUW:LWKRXWWKLVRXUEXVLQHVV FRXOGQRWWKULYH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 79 Board and leadership

Chairman’s statement

Conclusion

,QVSLWHRIDUHODWLYHO\VXEGXHGHFRQRPLFHQYLURQPHQWWKH*URXSGHOLYHUHGVDWLVIDFWRU\UHVXOWVRYHUWKHSDVW\HDU ZKLOHPDNLQJJRRGSURJUHVVLQSUHSDULQJIRUWKHIXWXUH:HFRQWLQXHGWRLQYHVWERWKLQWHUQDOO\DQGLQWRWKHFRPPXQLWLHV ZHVHUYHDQGWRSOD\DQLPSRUWDQWUROHLQLPSURYLQJWKHTXDOLW\RIOLIHIRUPDQ\E\ZD\RIFRPPXQLW\RXWUHDFKDQG SURGXFWLQQRYDWLRQ:HVHHWKHVHDVVROLGIRXQGDWLRQVIRUWKHVXVWDLQDELOLW\RIWKH*URXSDQGZLOOFRQWLQXHWREXLOG FDSDFLW\DQGFDSDELOLW\WRVXSSRUWRXUIUDQFKLVHLQWKHPDUNHWVZHFXUUHQWO\VHUYH

$WWKHVDPHWLPH$IULFDRIIHUVDQH[FLWLQJIXWXUHIRUILQDQFLDOVHUYLFHVSDUWLFXODUO\EDQNLQJ,DPRSWLPLVWLFWKDW$EVD LQFRQMXQFWLRQZLWK%DUFOD\VLVZHOOSRVLWLRQHGWRWDNHDGYDQWDJHRIWKHVHRSSRUWXQLWLHV Garth Grifﬁn Group Chairman

0DUFK

80 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Board and leadership

Directorate

Introduction

The Absa Group board has an appropriate balance of executive, non-executive and independent directors. The board comprises a majority of independent directors (non-executive directors who are independent as deﬁned in the King II report). The Chairman of the board is an independent director.

Changes in board membership during 2010 7KHUHVLJQDWLRQRI-+6FKLQGHKWWHRQ)HEUXDU\ 7KHDSSRLQWPHQWRI':3+RGQHWWDVWKH*URXS)LQDQFLDO'LUHFWRURQ0DUFK 7KHDSSRLQWPHQWRI&%HJJVDVDQLQGHSHQGHQWGLUHFWRURQ-XQH 7KHUHWLUHPHQWRI'&%ULQNDV*URXS&KDLUPDQRQ6HSWHPEHU 7KHDSSRLQWPHQWRI**ULIILQDV*URXS&KDLUPDQRQ2FWREHU

Directors of the Absa Group as at 31 December 2010 ,QGHSHQGHQWQRQH[HFXWLYH '&$UQROG&%HJJV%3&RQQHOODQ6$)DNLH0:+ODKOD GLUHFWRUV 0-+XVDLQ**ULIILQ *URXS&KDLUPDQ 700RNJRVL0ZDQWHPEH (&0RQGODQH-U760XQGD\6*3UHWRULXVDQG%-:LOOHPVH

1RQH[HFXWLYHGLUHFWRUV <=&XED%&00GH9LWU\G©$YDXFRXUW$3-HQNLQVDQG5/H%ODQF

([HFXWLYHGLUHFWRUV ':3+RGQHWW05DPRVDQG//YRQ=HXQHU

Board committee membership as at 31 December 2010

Committee Membership

*URXS$XGLWDQG&RPSOLDQFH '&$UQROG &KDLUPDQ &%HJJV6$)DNLHDQG760XQGD\ &RPPLWWHH *$&&

*URXS5LVNDQG&DSLWDO '&$UQROG&%HJJV**ULIILQ0:+ODKOD0-+XVDLQ5/H%ODQF 0DQDJHPHQW&RPPLWWHH (&0RQGODQH-U760XQGD\ &KDLUPDQ DQG%-:LOOHPVH *5&0&

'LUHFWRUV©$IIDLUV&RPPLWWHH '&$UQROG**ULIILQ &KDLUPDQ 0-+XVDLQ5/H%ODQF760XQGD\ '$& DQG6*3UHWRULXV

*URXS5HPXQHUDWLRQDQG %3&RQQHOODQ%&00GH9LWU\G©$YDXFRXUW**ULIILQ$3-HQNLQV +XPDQ5HVRXUFHV 700RNJRVL0ZDQWHPEHDQG6*3UHWRULXV &KDLUPDQ &RPPLWWHH *5+5&

%RDUG)LQDQFH&RPPLWWHH '&$UQROG%3&RQQHOODQ<=&XED%&00GH9LWU\G©$YDXFRXUW %)& **ULIILQ &KDLUPDQ DQG760XQGD\

&RQFHQWUDWLRQ5LVN %3&RQQHOODQ**ULIILQ &KDLUPDQ ':3+RGQHWW760XQGD\ &RPPLWWHH &R5& 05DPRV//YRQ=HXQHUDQG%-:LOOHPVH

Notes Mozambican. French. British. Has been on the board for more than nine years.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 81 Board and leadership

Directorate Biographical information

$VDW'HFHPEHU

D C (Des) Arnold C (Colin) Beggs B P (Brian) Connellan

Qualifications Qualifications Qualifications &$ 6$ %&RP +RQV &$ 6$ )&0$ &$ 6$ Year appointed to the Absa Group board: $03 Year appointed to the Absa Group board: 1994 Year appointed to the Absa Group board: 2010 Independence 2003 Independence ,QGHSHQGHQWGLUHFWRU Independence ,QGHSHQGHQWGLUHFWRU Absa Group board committee memberships ,QGHSHQGHQWGLUHFWRU Absa Group board committee memberships *5+5& Absa Group board committee memberships *$&& &R5& *$&& &KDLUPDQ *5&0& %)& *5&0& Other directorships Other directorships '$& 'LUHFWRURI6DVRO/LPLWHG 'LUHFWRURI5HXQHUW/LPLWHG %)& Expertise and experience 'LUHFWRURI6DVRO/LPLWHG Other directorships &ROLQLVDIRUPHUVHQLRUSDUWQHUDQG&KLHI Expertise and experience 'LUHFWRURI:LWV+HDOWK&RQVRUWLXP ([HFXWLYH2IILFHURI3ULFHZDWHUKRXVH&RRSHUV %ULDQMRLQHGWKH%DUORZV*URXSLQ 3URSULHWDU\ /LPLWHG ,QF 3Z& LQVRXWKHUQ$IULFD+HUHWLUHGIURP +HPDQDJHGVHYHUDOVXEVLGLDULHVDQGZDV &KDLUPDQRIWKH%DUORZV3HQVLRQ)XQG WKLVSRVLWLRQLQ-XQH&ROLQKDVVHUYHG DSSRLQWHGDVDGLUHFWRURI%DUORZ5DQG Expertise and experience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

82 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Y Z (Yolanda) Cuba B C M M (Benoît) de Vitry d’Avaucourt S A (Shauket) Fakie

Qualifications Qualifications Qualifications %&RP 6WDWLVWLFV 06LQ7HFKQRORJ\DQG3ROLF\0,7 86 %&RP %&RP +RQV $FF 'LSORPDRI,QJHQLHXU&LYLOGHVSRQWVHW &$ 6$ &$ 6$ &KDXVVpHV )UDQFH Year appointed to the Absa Group board: Year appointed to the Absa Group board: 0DWKpPDWLTXHV6XSpULHXUHVDQG 2008 2006 0DWKpPDWLTXHV6SpFLDOHV )UDQFH Independence Year appointed to the Absa Group board: Independence ,QGHSHQGHQWGLUHFWRU 2009 1RQH[HFXWLYHGLUHFWRU Absa board committee memberships Absa board committee memberships Independence *$&& 1RQH[HFXWLYHGLUHFWRU *$&& SHUPDQHQWDWWHQGHH Other directorships and memberships %)& Absa board committee memberships 0HPEHURIWKH6RXWK$IULFDQ,QVWLWXWHRI Other directorships and memberships *5+5& &KDUWHUHG$FFRXQWDQWV 'LUHFWRURI0YHODSKDQGD*URXS/LPLWHG %)& 0HPEHURIWKH$XVWUDOLDQ,QVWLWXWHRI 1RQH[HFXWLYHGLUHFWRURI0YHODSKDQGD Other directorships and memberships &KDUWHUHG$FFRXQWDQWV 5HVRXUFHV/LPLWHG 9LFH&KDLUPDQRIWKH$VVRFLDWLRQIRU 0HPEHURIWKH,QVWLWXWHRI3XEOLF)LQDQFH 1RQH[HFXWLYHGLUHFWRURI$YXVD/LPLWHG )LQDQFLDO0DUNHWVLQ(XURSH DQG$XGLW 1RQH[HFXWLYHGLUHFWRURI6WHLQKRII Expertise and experience 'LUHFWRURIVHYHUDO071VXEVLGLDU\ ,QWHUQDWLRQDO+ROGLQJV/LPLWHG %HQRvWLVWKH0DQDJLQJ'LUHFWRUDQG&KLHI FRPSDQLHVLQ$IULFD 'LUHFWRURI7RWDO)DFLOLWLHV0DQDJHPHQW 2SHUDWLQJ2IILFHURI%DUFOD\V&DSLWDO+HLV Expertise and experience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xpertise and experience *HQHYDDQGWKH8QLWHG1DWLRQVLQ1HZ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 83 Board and leadership

Directorate

G (Garth) Grifﬁn M W (Monhla) Hlahla D W P (David) Hodnett

Chairman (Appointed: 1 October 2010) Qualifications Group Financial Director Qualifications %$ +RQV (FRQRPLFV (Appointed: 1 March 2010) %6F 0$8UEDQDQG5HJLRQDO3ODQQLQJ 86$ Qualifications ),$ Year appointed to the Absa Group board: %&RP )$66$ 2005 &$ 6$ Year appointed to the Absa Group board: Independence 0%$ 2001 ,QGHSHQGHQWGLUHFWRU Year appointed to the Absa Group board: 2010 Independence Absa Group board committee memberships ,QGHSHQGHQWGLUHFWRU *5&0& Independence Absa Group board committee memberships Other directorships ([HFXWLYHGLUHFWRU *$&& SHUPDQHQWDWWHQGHH 0DQDJLQJ'LUHFWRURI$LUSRUWV&RPSDQ\ Absa Group board committee memberships *5&0& 6RXWK$IULFD &R5& '$& &KDLUPDQ 1RQH[HFXWLYHGLUHFWRUDQG$FWLQJ Expertise and experience *5+5& &KDLUSHUVRQRIWKH,QGXVWULDO'HYHORSPHQW 'DYLGFRPSOHWHGKLVDUWLFOHVZLWK.30* &R5& &KDLUPDQ &RUSRUDWLRQ ZKHUHKHEHFDPHDSDUWQHULQWKHILQDQFLDO %)& &KDLUPDQ Expertise and experience VHUYLFHVWHDP+HWKHQMRLQHG6WDQGDUG Other directorships and memberships 0RQKODFRPPHQFHGKHUFDUHHUDWWKH %DQN*URXSZKHUHIRUVHYHQ\HDUVKHZDV 'LUHFWRURI6ZLVV5H/LIHDQG6ZLVV5H &RDOLWLRQIRU:RPHQ©V(FRQRPLF LQYROYHGLQJURXSULVNDQGUHWDLOFUHGLW'DYLG $IULFD 'HYHORSPHQWDSURYLGHURIPLFURORDQVWR MRLQHG$EVDLQDVWKH&KLHI5LVN 'LUHFWRURI6XLGHUODQG'HYHORSPHQW ZRPHQHQWUHSUHQHXUVLQWKH/RV$QJHOHV 2IILFHU+HZDVDSSRLQWHGDV$EVD©V*URXS &RUSRUDWLRQ DUHD )LQDQFLDO'LUHFWRURQ0DUFK 'LUHFWRURI5HVRXUFH%DOODVW7HFKQRORJLHV ,QVKHMRLQHGWKH'HYHORSPHQW%DQN 7UXVWHHRIWKH8QLYHUVLW\RI&DSH7RZQ RI6RXWKHUQ$IULFDZKHUHVKHVXFFHVVIXOO\ )RXQGDWLRQ PDQDJHGVHYHUDOODUJHLQIUDVWUXFWXUH Expertise and experience SURMHFWV6KHZDVDSSRLQWHGDV0DQDJLQJ *DUWKZRUNHGIRU2OG0XWXDOIURPWR 'LUHFWRUDQG&KLHI([HFXWLYH2IILFHURIWKH DQGZDVILQDOO\WKH0DQDJLQJ'LUHFWRU $LUSRUWV&RPSDQ\6RXWK$IULFDLQD UHVSRQVLEOHIRU2OG0XWXDO©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

84 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU M J (Mohamed) Husain A P (Antony) Jenkins R (Robert) Le Blanc

Qualifications Qualifications Qualifications %3URF 0DVWHUVLQSKLORVRSK\SROLWLFVDQG 06F Year appointed to the Absa Group board: HFRQRPLFV 8QLYHUVLW\RI2[IRUG 0%$ 2008 0%$ &UDQILHOG,QVWLWXWHRI7HFKQRORJ\ Year appointed to the Absa Group board: Year appointed to the Absa Group board: 2007 Independence 2009 ,QGHSHQGHQWGLUHFWRU Independence Absa Group board committee memberships Independence 1RQH[HFXWLYHGLUHFWRU *5&0& 1RQH[HFXWLYHGLUHFWRU Absa Group board committee memberships '$& Absa Group board committee memberships *5&0& Other directorships and memberships *$&& SHUPDQHQWDWWHQGHH '$& 3UHVLGHQWRIWKH,QWHUQDWLRQDO *5+5& Expertise and experience &RPPRQZHDOWK/DZ\HUV$VVRFLDWLRQ Other directorships 5REHUWZRUNHGIRUPDQ\\HDUVDW 7UXVWHHRIWKH:LWV/DZ6FKRRO 'LUHFWRURI9LVD(XURSH/LPLWHG -30RUJDQLQWKHFDSLWDOPDUNHWVIL[HG (QGRZPHQW$SSHDO Expertise and experience LQFRPHHPHUJLQJPDUNHWVDQGFUHGLWDUHDV 0HPEHURI(VNRP©V%RDUG7HQGHU $QWRQ\VWDUWHGKLVILQDQFHFDUHHULQ%DUFOD\V DQGODWHULQWKHULVNPDQDJHPHQWIXQFWLRQ &RPPLWWHH LQZKHQKHFRPSOHWHGWKH%DUFOD\V +HMRLQHG%DUFOD\VLQDVWKH+HDGRI 'LUHFWRURI.QRZOHV+XVDLQ/LQGVD\ PDQDJHPHQWGHYHORSPHQWSURJUDPPH 5LVN0DQDJHPHQWDW%DUFOD\V&DSLWDO ,QFRUSRUDWHG EHIRUHJRLQJRQWRKROGYDULRXVUROHVLQUHWDLO 5REHUWZDVDSSRLQWHG&KLHI5LVN2IILFHUDW 'LUHFWRURI./+,QYHVWPHQWV 3URSULHWDU\ DQGFRUSRUDWHEDQNLQJ+HPRYHGWR %DUFOD\VLQDQGKROGVWKLVSRVLWLRQWR /LPLWHG &LWLJURXSLQZRUNLQJLQERWK/RQGRQ GDWH &KDLUPDQRI$QGXOHOD,QYHVWPHQW DQG1HZ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 85 Board and leadership

Directorate

T M (Thoko) Mokgosi-Mwantembe E C (Eduardo) Mondlane, Jr T S (Trevor) Munday

Qualifications Qualifications Qualifications %6F 3ROLWLFDO6FLHQFH([WHQVLRQ6WXGHQW %&RP 06F 0HGLFDO&KHPLVWU\ 8&/$ Year appointed to the Absa Group board: 'LS(GXFDWLRQ Year appointed to the Absa Group board: 2007 Year appointed to the Absa Group board: 2007 Independence 2008 Independence ,QGHSHQGHQWGLUHFWRU Independence ,QGHSHQGHQWGLUHFWRU Absa Group board committee memberships ,QGHSHQGHQWGLUHFWRU Absa Group board committee memberships *$&& Absa Group board committee memberships *5&0& *5&0& &KDLUPDQ *5+5& Other directorships and memberships '$& Other directorships 'LUHFWRURI%DUFOD\V%DQN0R]DPELTXH &R5& 'LUHFWRURI.QRUU%UHPVH 6$ 0DQDJLQJ'LUHFWRURI1LQKDP6KDQG %)& 3URSULHWDU\ /LPLWHG 0R]DPELTXH/GD Other directorships 'LUHFWRURI9RGDFRP*URXS/LPLWHG 0HPEHURIWKH$GYLVRU\%RDUGRI &KDLUPDQRI5HXQHUW/LPLWHG 'LUHFWRURI3DUDFRQ+ROGLQJV/LPLWHG &RQIHGHUDWLRQRI(FRQRPLF$VVRFLDWLRQV 'LUHFWRURI6DVRO3HWUROHXP,QWHUQDWLRQDO 'LUHFWRURI,)&$7HFKQRORJLHV/LPLWHG 0R]DPELTXH DQGWKH$GYLVRU\%RDUGRI 3URSULHWDU\ /LPLWHG 'LUHFWRURI.XWDQD,QYHVWPHQW*URXS /DSGHVN 6RXWK$IULFD 'LUHFWRURI6DVRO6\QIXHOV,QWHUQDWLRQDO 'LUHFWRURIWKH$YHQJ*URXS &KDLUPDQRI3LFNQ3D\ 0R]DPELTXH 3URSULHWDU\ /LPLWHG Expertise and experience &KDLUPDQRI0DSXWR,URQ 6WHHO,QLWLDWLYH 'LUHFWRURI6DVRO1LWURDQG6DVRO 7KRNRVWDUWHGKHUFDUHHUDVWKH3URGXFW 'LUHFWRURI/LEHUW\+ROGLQJV/GD 3RO\PHUV¤GLYLVLRQVRI6DVRO&KHPLFDOV 0DQDJHUIRU*OD[R WR DQG 'LUHFWRURI,OKD4XLODOHD/GD ,QGXVWULHV/LPLWHG 0HUFN6KDUSDQG'RKPH WR Expertise and experience 'LUHFWRURI,URQ0LQHUDO%HQHILFLDWLRQ 6KHZDVHPSOR\HGLQYDULRXVSRVLWLRQVDW (GXDUGRHVWDEOLVKHGDQGRSHUDWHGDQ 6HUYLFHV 3URSULHWDU\ /LPLWHG 7HONRPIURPWR LQFOXGLQJ $IULFDIRFXVHGWUDGLQJFRPSDQ\EDVHGLQ 'LUHFWRURI/LIH+HDOWKFDUH*URXS 0DQDJLQJ([HFXWLYH&RQVXPHU6DOHVDQG 1HZ

86 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU S G (Brand) Pretorius M (Maria) Ramos

Qualiﬁcations Group Chief Executive 0&RP %XVLQHVV(FRQRPLFV Qualiﬁcations Year appointed to the Absa Group board: %&RP +RQV (FRQRPLFV 2009 06F(FRQRPLFV Independence ,QVWLWXWHRI%DQNHUV'LSORPD &$,% ,QGHSHQGHQWGLUHFWRU Year appointed to the Absa Group board: 2009 Absa Group board committee memberships '$& Independence *5+5& &KDLUPDQ ([HFXWLYHGLUHFWRU Other directorships and memberships Absa Group board committee memberships 'LUHFWRURI%LGYHVW*URXS/LPLWHG &R5& 'LUHFWRURIQXPHURXV0F&DUWK\*URXS Other memberships FRPSDQLHV 0HPEHURIWKH,QWHUQDWLRQDO%XVLQHVV %RDUGPHPEHURIWKH1DWLRQDO%XVLQHVV &RXQFLO([HFXWLYH&RPPLWWHH ,QLWLDWLYH 0HPEHURIWKH:RUOG%DQN&KLHI 0HPEHURIWKHERDUGRI7UXVWHHVRIWKH (FRQRPLVW$GYLVRU\3DQHO 5($'(GXFDWLRQDO7UXVW 0HPEHURI%XVLQHVV/HDGHUVKLS Expertise and experience 6RXWK$IULFD %UDQGVWDUWHGKLVFDUHHUDW7R\RWD6RXWK 0HPEHURIWKH%DQNLQJ$VVRFLDWLRQ $IULFDLQ,QKHZDVDSSRLQWHGDV RI6RXWK$IULFD 0DQDJLQJ'LUHFWRURI7R\RWD6RXWK$IULFD 0HPEHURIWKH,QVWLWXWHRI,QWHUQDWLRQDO 0DUNHWLQJ%UDQGZDVDSSRLQWHG&KLHI )LQDQFH ([HFXWLYH2IILFHURI0F&DUWK\0RWRU Expertise and experience +ROGLQJVLQ+HLVFXUUHQWO\WKH&KLHI 0DULDKDVIRUPHUO\DFWHGDVWKH'LUHFWRU ([HFXWLYHRI0F&DUWK\/LPLWHG *HQHUDORIWKH1DWLRQDO7UHDVXU\,Q 0DULDZDVDSSRLQWHG*URXS&KLHI([HFXWLYH RI7UDQVQHW/LPLWHG0DULDMRLQHG$EVDDV *URXS&KLHI([HFXWLYHLQ0DUFKDQG LVDPHPEHURIWKH%DUFOD\V3/&([HFXWLYH &RPPLWWHH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 87 Board and leadership

Directorate

L L (Louis) von Zeuner B J (Johan) Willemse

Deputy Group Chief Executive Qualiﬁcations %&RP +RQV (FRQRPLFV Qualiﬁcations 0&RP(FRQRPLFV %(FRQ 3K'$JULFXOWXUDO(FRQRPLFV Year appointed to the Absa Group board: Year appointed to the Absa Group board: 2004 2008 Independence Independence ([HFXWLYHGLUHFWRU ,QGHSHQGHQWGLUHFWRU Absa Group board committee memberships Absa Group board committee memberships &R5& *5&0& Expertise and experience &R5& /RXLVZRUNHGLQ$EVD©VUHWDLODQG Other directorships and memberships FRPPHUFLDOEDQNLQJRSHUDWLRQVVLQFH ,QGHSHQGHQWGLUHFWRURI1LFWXV/LPLWHG ZKHUHKHKHOGYDULRXVEUDQFKUHJLRQDODQG &KDLUPDQRIWKH'HSDUWPHQWRI SURYLQFLDOOHDGHUVKLSSRVLWLRQV/RXLVZDV $JULFXOWXUDO(FRQRPLFVDWWKH8QLYHUVLW\ DSSRLQWHG2SHUDWLQJ([HFXWLYHRI$EVD RIWKH)UHH6WDWH &RPPHUFLDO%DQNLQ+HZDVWKHQ 7UXVWHHRIWKH8QLYHUVLW\RIWKH)UHH6WDWH DSSRLQWHGDVDQH[HFXWLYHGLUHFWRURI$EVD SURYLGHQWIXQG *URXSLQDQG'HSXW\*URXS&KLHI ([HFXWLYHLQ Expertise and experience -RKDQKDVVHUYHGDV&KLHI(FRQRPLVWRIWKH 6RXWK$IULFDQ$JULFXOWXUDO8QLRQDVZHOODV &KLHI(FRQRPLVWRIWKH0DL]H%RDUG FRQVXOWLQJWRDJULEXVLQHVV,QWKHVHUROHV DQGDVPHPEHURIWKH1DWLRQDO$JULFXOWXUDO 0DUNHWLQJ&RXQFLOKHKDVJDLQHG H[SHULHQFHLQDZLGHYDULHW\RIHFRQRPLF DQGDJULFXOWXUDOLVVXHV-RKDQFXUUHQWO\ FRQVXOWVWRPDMRUDJULFXOWXUDOEXVLQHVVHVLQ 6RXWK$IULFDRQDJULFXOWXUDOEXVLQHVV VWUDWHJ\DQGPDUNHWV

88 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Board and leadership

Group Chief Executive’s review

Maria Ramos *URXS&KLHI([HFXWLYH

Highlights 3URGXFHGVROLGUHVXOWVLQDQXQHYHQHFRQRP\WRPDLQWDLQRXU UHWXUQRQHTXLW\DERYHWKHFRVWRIHTXLW\

(VWDEOLVKHGDFRUSRUDWHEDQN

&RQWLQXHGWRVWUHDPOLQHWKH*URXS©VEXVLQHVVDVXVXDORSHUDWLRQV

)XUWKHUVWUHQJWKHQHGWKHEDODQFHVKHHW

,PSURYHGHPSOR\HHHQJDJHPHQW

9LGHR

7RYLHZDYLGHRRIWKH *URXS&KLHI([HFXWLYHSOHDVH YLVLWabsair.co.za

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 89 Board and leadership

Group Chief Executive’s review

Performance review $VH[SHFWHGZDVDQRWKHUFKDOOHQJLQJ\HDU7KHHFRQRPLFUHFRYHU\KDV EHHQVORZDQGXQHYHQERWKJOREDOO\DQGGRPHVWLFDOO\,QSDUWLFXODUUHWDLODQG FRUSRUDWH FUHGLW GHPDQG DQG WUDQVDFWLRQ YROXPHV UHPDLQHG PXWHG ZKLFK GDPSHQHGUHYHQXHJURZWK1RQHWKHOHVVZHUHSRUWHGVROLGUHVXOWVLQFUHDVLQJ GLOXWHGKHDGOLQHHDUQLQJVSHUVKDUHE\WRFHQWVZKLOHFRQWLQXLQJWR LQYHVWLQRXUVWUDWHJLFJURZWKLQLWLDWLYHV/RZHULQWHUHVWUDWHVDQGRXUHQKDQFHG FROOHFWLRQV FDSDELOLW\ UHGXFHG UHWDLO LPSDLUPHQWV PDWHULDOO\ 0RUHRYHU RXU PDUJLQKHGJLQJVWUDWHJ\SURWHFWHGWKH*URXS©VQHWLQWHUHVWLQFRPHDVUDWHVIHOO WR \HDU ORZV ,PSRUWDQWO\ $EVD©V UHWXUQ RQ HTXLW\ UHPDLQHG DERYH LWVFRVWRIHTXLW\DQGWKH*URXS©VQHWDVVHWYDOXHSHUVKDUHLQFUHDVHGWR FHQWV Operational review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©VEHQHILWVDUH DOUHDG\HYLGHQW:HKDYHZRQRYHUDQXPEHURIKLJKSURILOHFXVWRPHUVDQG KDYHJURZQWUDQVDFWLRQDOEDQNLQJUHYHQXHVVWURQJO\ :HDUHVWUHDPOLQLQJWKH*URXSWRHQKDQFHRXUEXVLQHVVDVXVXDORSHUDWLRQV 2XUWHFKQRORJ\DQGRSHUDWLRQDOSODQVWREOHQGVKRUWWHUPUHTXLUHPHQWV ZLWKORQJHUWHUPDFWLRQVWRSURYLGHDIOH[LEOHEDVHIRUJURZWK:HGHSOR\HGWKH %DUFOD\VIRUHLJQH[FKDQJHSODWIRUPZKLFKLPSURYHGRXURIIHULQJFRQVLGHUDEO\ DQGKDVUHGXFHGRXUFRVWWRVHUYH2WKHUPDMRURSHUDWLRQDOSURMHFWVUDQJHG IURP UHHQJLQHHULQJ NH\ UHWDLO SURFHVVHV WR LQWURGXFLQJ QHZ ZHE EDVHG V\VWHPV LQ RXU OLIH DQG VKRUWWHUP LQVXUDQFH RSHUDWLRQV 2XU VXEVWDQWLDO LQYHVWPHQWLQWHFKQRORJ\LQIUDVWUXFWXUHLVGHVLJQHGWRNHHS$EVD©VV\VWHPV XSWRGDWHFRPSHWLWLYHDQGUHVLOLHQW :HIXUWKHUVWUHQJWKHQHGRXUEDODQFHVKHHW:HLPSURYHGWKH$EVD*URXS©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

90 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU ,Q)HEUXDU\WKH1DWLRQDO7UHDVXU\UHOHDVHGDSROLF\GRFXPHQWHQWLWOHG¦$VDIHUILQDQFLDOVHFWRUWRVHUYH6RXWK $IULFDEHWWHU§,WVSXUSRVHLVWRFRQILUP6RXWK$IULFD©VFRPPLWPHQWWRWKH*©VJOREDOILQDQFLDOUHIRUPDJHQGDDQGWR RXWOLQHSROLF\SULRULW\REMHFWLYHVDVZHOODVWHQSURSRVDOVRQVWUHQJWKHQLQJWKHUHJXODWRU\IUDPHZRUN5HFRJQLVLQJWKH GLIIHUHQWVNLOOVHWVUHTXLUHGIRUSUXGHQWLDODQGPDUNHWFRQGXFWUHJXODWLRQ6RXWK$IULFDZLOOPRYHWRZDUGVD¨WZLQSHDNV© PRGHOZKHUHWKH6RXWK$IULFDQ5HVHUYH%DQNLVWKHPDFURSUXGHQWLDOVXSHUYLVRUDQGWKH)LQDQFLDO6HUYLFHV%RDUGZLOO HVWDEOLVKDUHWDLOEDQNLQJPDUNHWUHJXODWRU $EVDZLOOFRQWLQXHWRFRQVWUXFWLYHO\HQJDJHZLWKWKHEDQNLQJUHJXODWRUDQGDSSURSULDWHJRYHUQPHQWLQVWLWXWLRQVRQWKH PDWWHUVFRQWDLQHGLQWKLVGRFXPHQWDQGRQWKH%DVHO,,,FDSLWDODQGOLTXLGLW\UHTXLUHPHQWV Barclays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©VJOREDOWHDPVZHKDYHWUDQVIRUPHGWKHEXVLQHVVIURP DFRUSRUDWHOHQGHUWRDPDUNHWVEDVHGEXVLQHVV7KHPDQ\DZDUGV$EVD&DSLWDOKDVUHFHLYHGDUHWHVWLPRQ\WRWKLV WUDQVIRUPDWLRQ $EVD©V&DUGGLYLVLRQLVQRZWKHVHFRQGODUJHVWLVVXHURIFUHGLWFDUGVDVPHDVXUHGE\RXWVWDQGLQJEDODQFHVLQ6RXWK $IULFD,WVKHDGOLQHHDUQLQJVLQFUHDVHGE\WRRYHU5ELOOLRQDQGLWVUHWXUQRQHFRQRPLFFDSLWDOH[FHHGHG &ROODERUDWLRQZLWK%DUFOD\FDUGRQFXVWRPHUYDOXHPDQDJHPHQWRSHUDWLRQVDQGLQQRYDWLRQKDVFRQWULEXWHGWR&DUG©V JURZWKRYHUWKH\HDUV %HLQJSDUWRIDJOREDOJURXSKDVNHSWXVDWWKHIRUHIURQWRIFKDQJHVDQGEHVWSUDFWLFHLQRWKHULPSRUWDQWDUHDVRIRXU EXVLQHVVDQGDOORZVXVWRWHVWZKDWZHDUHGRLQJDJDLQVWEHVWSUDFWLFH:HKDYHLQYHVWHGVXEVWDQWLDOO\LQXSJUDGLQJ RXUULVNDQGFRQWUROHQYLURQPHQWV 7KHV\QHUJLHVKDYHEHHQHYLGHQWERWKXSDQGGRZQVWUHDP $EVD&RQVXOWDQWVDQG$FWXDULHVZRQWKHWHQGHUWRSURYLGHDOOWKHEDFNRIILFHDGPLQLVWUDWLRQVHUYLFHVIRU%DUFOD\V 3HQVLRQ $GPLQLVWUDWLRQ $EVD©V :RUNSODFH %DQNLQJ LV WKH OHDGLQJ ¨DW ZRUN©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©VFXVWRPHUVKDYLQJ UHFHQWO\REWDLQHGDOLFHQVHWRGRVR Sustainability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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 91 Board and leadership

Group Chief Executive’s review

UHSXWDWLRQDQGDELOLW\WRGREXVLQHVV5HFRJQLVLQJWKDWRXUDFWLRQVLPSDFWWKHHQYLURQPHQWDQGWKHFRPPXQLWLHVZKHUH ZHRSHUDWHDIIHFWVDQGVKDSHVRXUFXVWRPHUDQGHPSOR\HHYDOXHSURSRVLWLRQV )LQDQFLDO LQFOXVLRQ UHVSRQVLEOH OHQGLQJ HPSOR\HH HQJDJHPHQW WUDQVIRUPDWLRQ FRPPXQLW\ LQYHVWPHQW DQG RXU HQYLURQPHQWDOLPSDFWDUHDPRQJWKHPDWHULDOWRSLFVWKDWDIIHFW$EVD©VVXVWDLQDELOLW\(DFKWRSLFLVGHWDLOHGLQRXU VXVWDLQDELOLW\UHYLHZLQFOXGLQJLWVVFRSHNH\SHUIRUPDQFHLQGLFDWRUVRXUDFWLRQVGXULQJWKH\HDUDQGRXWORRN:H UHFRJQLVHWKDWPDQDJLQJWKHVHDQGRWKHUPDWHULDOWRSLFVHIIHFWLYHO\LVFUXFLDOWR$EVD©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©VSODQQHGKRXVHV LQ0RJDOH&LW\7KURXJKWKHSD\UROO JLYLQJDQGPDWFKHGIXQGUDLVLQJSURJUDPPHVHPSOR\HHVPRELOLVHGRYHU5PLOOLRQIRUWKHEHQHILWRIQRQSURILW RUJDQLVDWLRQVDQGVFKRROV ,QFUHDVLQJDFFHVVWRILQDQFLDOVHUYLFHVLVDNH\LPSHUDWLYHLQWKH6RXWK$IULFDQDQG$IULFDQFRQWH[WZKLFKZLOOHQKDQFH $EVD©VORQJWHUPSURVSHFWV:HKDYHPLOOLRQHQWU\OHYHOFXVWRPHUVWKDQNVWRRXUODUJHGLVWULEXWLRQQHWZRUNDQG VWURQJHOHFWURQLFRIIHULQJ%XLOGLQJRQRXUILUVWWRPDUNHW&DVK6HQGRIIHULQJ$EVDKDVDGGHGLQQRYDWLRQVVXFKDV FRQWDFWOHVV SD\PHQW FDUGV NQRZQ DV WDS ©Q JR IRU HDV\ ORZYDOXH SD\PHQWV RXU LQVWRUH SRLQWRIVDOH EDQNLQJ VROXWLRQVDQGDSUHSDLGFDUGVROXWLRQIRUGLVEXUVLQJIXQGVRQFDUGVE\JRYHUQPHQWVDQGFRUSRUDWHLQVWLWXWLRQV$OORI WKHVHH[WHQGRXUUHDFKDQGPDNHLWHDVLHUIRUFXVWRPHUVWRWUDQVDFW $EVDDOVRKDVDVLJQLILFDQWIRFXVRQVPDOODQGPHGLXPEXVLQHVV:HKDYHRYHUVPDOOEXVLQHVVFXVWRPHUV DQGRYHUPHGLXPEXVLQHVVFXVWRPHUVZLWKORDQERRNVRI5ELOOLRQDQG5ELOOLRQUHVSHFWLYHO\,QDGGLWLRQWR DYDULHW\RIVPDOODQGPLFURHQWHUSULVHIXQGLQJVROXWLRQV$EVD6PDOO%XVLQHVVKDVHQWHUSULVHGHYHORSPHQWFHQWUHV DFURVVWKHQLQHSURYLQFHVWKDWDUHVWUDWHJLFDOO\ORFDWHGWRSURYLGHHDV\DFFHVV Outlook :HVWDUWZLWKDVWURQJEDODQFHVKHHWDQGHQMR\6RXWK$IULFD©VOHDGLQJGLVWULEXWLRQIRRWSULQW:HKDYHGLYHUVLILHG RXU HDUQLQJV QRWLFHDEO\ VLQFH ZKLOH UHPDLQLQJ WKH OHDGLQJ UHWDLO EDQN $EVD©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

Acknowledgements ,H[WHQGP\DSSUHFLDWLRQWR'DYH%ULQNZKRZDVRQRXUERDUGVLQFHXQWLOKHUHWLUHGDQGLQWKDWSHULRGWZLFH VHUYHGDV&KDLUPDQ,KDYHEHQHILWHGWUHPHQGRXVO\IURPKLVVXSSRUWDQGZLVHFRXQVHO,DOVRZHOFRPH*DUWK*ULIILQ©V DSSRLQWPHQWDV$EVD*URXS©VQHZ&KDLUPDQDQGORRNIRUZDUGWRZRUNLQJZLWKKLPLQWKLVFDSDFLW\ -RKQ9DUOH\DQQRXQFHGKLVGHFLVLRQWRVWHSGRZQDV&KLHI([HFXWLYHRI%DUFOD\VDQG%RE'LDPRQGWRRNXSWKLVUROH RQ-DQXDU\7KLVFKDQJHRYHUGLVSOD\HGFRQWLQXLW\RIVWUDWHJ\DQGOHDGHUVKLSDQG,ORRNIRUZDUGWRIXOILOOLQJRXU DVSLUDWLRQVLQ$IULFDXQGHU%RE©VOHDGHUVKLS,WKDQN-RKQIRUKLVYDOXDEOHVXSSRUWDQGJXLGDQFH ,DOVRWKDQNRXUH[WUHPHO\GHGLFDWHGDQGKDUGZRUNLQJHPSOR\HHVDQG$EVD©V([FRIRUWKHLUOHDGHUVKLS$ERYHDOOD ELJWKDQN\RXWRRXUFXVWRPHUVDQGVKDUHKROGHUVIRUWKHOR\DOW\DQGWKHFRQILGHQFHWKH\KDYHVKRZQLQXVGXULQJ

Maria Ramos Group Chief Executive

0DUFK

92 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Board and leadership

Group Executive Committee

Introduction Highlights

The Group Executive Committee (Group Exco), chaired by the Group Chief Executive, comprises the ':3+RGQHWWDSSRLQWHGDVWKH*URXS Group’s executive directors and other members of )LQDQFLDO'LUHFWRU executive management. It meets, as a general rule, 7KHDSSRLQWPHQWWR*URXS([FRLQ once a month and deals with all material matters RI-/XEEH%0DODELH)&60DUXSHQ relating to implementing Absa’s agreed strategy, '50RWVHSHDQG*52SSHUPDQUHVXOWHGLQ monitoring performance and considering Group DIXOOVWUHQJWKPDQDJHPHQWWHDP policies.

Group Exco in 2010 Group Exco composition *URXS([FRDSSRLQWPHQWVLQ 2010 * 5 2SSHUPDQ ZDV DSSRLQWHG DV &KLHI ([HFXWLYH % 5HWDLO%DQNRQ-DQXDU\ 3HUFHQWDJHRI$IULFDQ&RORXUHGDQG,QGLDQV 46,2 3HUFHQWDJHRIZRPHQ 23,1 ' 5 0RWVHSH ZDV DSSRLQWHG DV &KLHI ([HFXWLYH 3HUFHQWDJHRI$IULFDQ&RORXUHGDQG,QGLDQZRPHQ 15,4 8QVHFXUHG/HQGLQJRQ-DQXDU\ % 0DODELH MRLQHG $EVD DV &KLHI ([HFXWLYH $EVD %XVLQHVV%DQNRQ0DUFK ) & 6 0DUXSHQ MRLQHG $EVD DV WKH &KLHI +XPDQ 5HVRXUFHV([HFXWLYHRQ$SULO - /XEEH MRLQHG $EVD DV LWV &KLHI 5LVN 2IILFHU RQ 6HSWHPEHU

*URXS([FRUHVLJQDWLRQVLQ - + 6FKLQGHKWWH UHVLJQHG IURP WKH *URXS RQ )HEUXDU\ 9-.OHLQUHWLUHGIURPWKH*URXSRQ'HFHPEHU

Executive committees ,QDGGLWLRQWR*URXS([FRD*URXS2SHUDWLQJ&RPPLWWHH )XUWKHUUHDGLQJ DQG D 0DQDJHPHQW &RPPLWWHH DUH LQ SODFH XQGHU WKH 140 FKDLUPDQVKLS RI WKH 'HSXW\ *URXS &KLHI ([HFXWLYH DQG *URXS([FR©VPHHWLQJSURFHGXUHV *URXS&KLHI([HFXWLYHUHVSHFWLYHO\

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 93 Board and leadership

Group Executive Committee

Membership as at 31 December 2010 Committee Membership

Group Exco ':3+RGQHWW9-.OHLQ:7/DWHJDQ-/XEEH%0DODELH)&60DUXSHQ'50RWVHSH 91DLGRR+1WVKLQJLOD*52SSHUPDQ05DPRV &KDLUSHUVRQ 6YDQ&ROOHU//YRQ=HXQHU

Management ':3+RGQHWW-/XEEH)&60DUXSHQ91DLGRR+1WVKLQJLOD05DPRV &KDLUSHUVRQ Committee //YRQ=HXQHU

Group Exco members Non-Exco members Operating :7/DWHJDQ &KLHI([HFXWLYH$EVD /GH9LOOLHUV &KLHI,QIRUPDWLRQ2IILFHU Committee )LQDQFLDO6HUYLFHV $EVD*URXS %0DODELH &KLHI([HFXWLYH$EVD -*DFKRUD &KLHI([HFXWLYH$EVD$IULFD %XVLQHVV%DQN &*U|QXP *URXS7UHDVXUHU )&60DUXSHQ &KLHI+XPDQ5HVRXUFHV ,.ULHJOHU &KLHI,QIRUPDWLRQ2IILFHU ([HFXWLYH $EVD&DSLWDO '50RWVHSH &KLHI([HFXWLYH8QVHFXUHG 11TZHQL &KLHI([HFXWLYH$EVD:HDOWK /HQGLQJ 66LWKHEH &KLHI2SHUDWLQJ2IILFHU 91DLGRR *URXS&KLHI2SHUDWLQJ2IILFHU *URXS5LVN +1WVKLQJLOD &KLHI0DUNHWLQJDQG (:DVVHUPDQ +HDG%XVLQHVV &RPPXQLFDWLRQV2IILFHU 3HUIRUPDQFH0DQDJHPHQW *52SSHUPDQ &KLHI([HFXWLYH5HWDLO %DQN 6YDQ&ROOHU &KLHI([HFXWLYH2IILFHU $EVD&DSLWDO //YRQ=HXQHU 'HSXW\*URXS&KLHI ([HFXWLYH &KDLUPDQ

Note V J Klein retired from the Absa Group on 31 December 2010.

94 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Biographical information $VDW'HFHPEHU

D W P (David) Hodnett W T (Willie) Lategan J (Jan) Lubbe

Qualifications Qualifications Qualifications %&RP %&RP +RQV &$ 6$ &$ 6$ ))$ 0%$ 0&RP 0%$ Tenure at Absa Appointed: September 2010 Tenure at Absa \HDUV DSSRLQWHG 7KUHH\HDUV DSSRLQWHG Year appointed as an Exco member: 2007 Area of responsibility Year appointed as an Exco member: 2008 -DQLV$EVD©V&KLHI5LVN2IILFHU Area of responsibility Area of responsibility :LOOLHLV&KLHI([HFXWLYH$EVD)LQDQFLDO Expertise and experience -DQLQLWLDOO\ZRUNHGDW.30*ERWKLQ6RXWK 'DYLGLVWKH*URXS)LQDQFLDO'LUHFWRU 6HUYLFHV $IULFDDQGLQ/RQGRQZKHUHKHKHOGWKH Expertise and experience Expertise and experience SRVLWLRQRIDVHQLRUPDQDJHU,Q-DQ 'DYLGFRPSOHWHGKLVDUWLFOHVZLWK.30* :LOOLHMRLQHG$EVD&RQVXOWDQWVDQG$FWXDULHV PRYHGWR*ROGPDQ6DFKVZKHUHKHZDV ZKHUHKHEHFDPHDSDUWQHULQWKHILQDQFLDO DVDQDFWXDU\LQ+HVHUYHGDV*HQHUDO DSSRLQWHGDVDQH[HFXWLYHGLUHFWRU,Q VHUYLFHVWHDP+HWKHQMRLQHG6WDQGDUG 0DQDJHU2SHUDWLRQVDV0DQDJLQJ'LUHFWRU -DQMRLQHG)LUVW5DQGDQGZDVODWHU %DQN*URXSZKHUHIRUVHYHQ\HDUVKHZDV $EVD/LIHDQG0DQDJLQJ([HFXWLYH$EVD DSSRLQWHGDV)LUVW5DQG©V&KLHI5LVN2IILFHU LQYROYHGLQJURXSULVNDQGUHWDLOFUHGLW'DYLG )LQDQFLDO6HUYLFHV&RUSRUDWHGLYLVLRQ -DQMRLQHG$EVDLQDVWKH*URXS©V &KLHI5LVN2IILFHU MRLQHG$EVDLQDVWKH&KLHI5LVN :LOOLHSDUWLFLSDWHVLQWKH$VVRFLDWLRQIRU 2IILFHU+HZDVDSSRLQWHGDV$EVD©V*URXS 6DYLQJVDQG,QYHVWPHQWV6$DQGWKH )LQDQFLDO'LUHFWRURQ0DUFK $FWXDULDO6RFLHW\RI6RXWK$IULFD+HDOVR VHUYHVDVDWUXVWHHRI%DQNPHG

Note V J Klein retired from the Group on 31 December 2010.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 95 Board and leadership

Group Executive Committee

B (Bobby) Malabie F C S (Fergus) Marupen D R (Daphne) Motsepe

Qualifications Qualifications Qualifications %&RP $FFRXQWLQJ %$ +RQV 3V\FKRORJ\ %DFKHORURI$FFRXQWLQJ6FLHQFH 0%$ %(G 0%$ 0'3 +DUYDUG +'LS+50 0%$ Tenure at Absa Appointed: March 2010 )LYH\HDUV DSSRLQWHG Appointed: April 2010 Area of responsibility Year appointed as an Exco member: 2010 %REE\LVWKH&KLHI([HFXWLYH$EVD%XVLQHVV Area of responsibility %DQN )HUJXVLVWKH&KLHI+XPDQ5HVRXUFHV Area of responsibility 'DSKQHLVWKH&KLHI([HFXWLYH8QVHFXUHG Expertise and experience ([HFXWLYH /HQGLQJ %REE\KDVKHOGVHQLRUUROHVZLWKLQ&KDUWHU Expertise and experience /LIH1HGEDQN*URXSDQG6RXWK$IULFDQ )HUJXVZDV*HQHUDO0DQDJHU+XPDQ Expertise and experience %UHZHULHV+HWKHQMRLQHG/LEHUW\*URXS 5HVRXUFHVIRU.XPED,URQ2UH+HWKHQ 'DSKQHZDVWKH0DQDJLQJ'LUHFWRURI ZKHUHKHKHOGWKHSRVLWLRQRI&KLHI MRLQHG%+3%LOOLWRQZKHUHKHKHOGWKH 3RVW%DQNDQGKDVKHOGOHDGHUVKLSSRVLWLRQV ([HFXWLYH2IILFHU0DUNHWLQJDQG SRVLWLRQRI9LFH3UHVLGHQW+XPDQ DWWKH6RXWK$IULFDQ3RVW2IILFH:RPHQ©V 'LVWULEXWLRQ%REE\PRYHGIURP/LEHUW\ 5HVRXUFHVIRUWKHHQHUJ\DQGFRDOGLYLVLRQ 'HYHORSPHQW%DQNLQJ(QJHQ3HWUROHXP *URXSWR$EVDLQ )HUJXVPRYHGIURP%+3%LOOLWRQWR$EVDLQ /LPLWHGDQG1DWLRQDO6RUJKXP%UHZHULHV 'DSKQHKDVKHOGDQXPEHURIQRQH[HFXWLYH GLUHFWRUVKLSSRVLWLRQVLQFOXGLQJ,QYHVWHF %DQNDQGWKH/DQG%DQN'DSKQHMRLQHG $EVDLQDV0DQDJLQJ([HFXWLYH6PDOO %XVLQHVVDQG)OH[L%DQNLQJ6KHZDV DSSRLQWHGDV&KLHI([HFXWLYH8QVHFXUHG /HQGLQJLQ-DQXDU\

96 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU V (Alﬁe) Naidoo H (Happy) Ntshingila G R (Gavin) Opperman

Qualifications Qualifications Qualifications %6F %$ &RPPXQLFDWLRQV /,% 6$ ,QVWLWXWHRI%DQNHUV Tenure at Absa Tenure at Absa 'LSORPDLQ7KHRORJ\ 1LQH\HDUV DSSRLQWHG )LYH\HDUV DSSRLQWHG *6% 8&7%XVLQHVV6FKRRO &$,% 6$ Year appointed as an Exco member: 2005 Year appointed as an Exco member: 2008 $GYDQFHG0DUNHWLQJ'LSORPD ,QVWLWXWHRI Area of responsibility Area of responsibility %DQNHUV $OILHLVWKH*URXS&KLHI2SHUDWLQJ2IILFHU +DSS\LVUHVSRQVLEOHIRU*URXS0DUNHWLQJ Tenure at Absa Expertise and experience DQG&RPPXQLFDWLRQV \HDUV DSSRLQWHG $OILHMRLQHG$EVDLQ6HSWHPEHUDV Expertise and experience Year appointed as an Exco member: 2010 0DQDJLQJ([HFXWLYH(OHFWURQLF&KDQQHOV +DSS\LQLWLDOO\ZRUNHGDW8QLOHYHUDIWHU +HKDVVLQFHZRUNHGLQDYDULHW\RI ZKLFKKHKHOGPDUNHWLQJDQG Area of responsibility OHDGHUVKLSUROHVLQ5HWDLO%DQNLQJ+HZDV FRPPXQLFDWLRQVSRVLWLRQVDW,%0DQG7LJHU *DYLQLVWKH&KLHI([HFXWLYH5HWDLO%DQN DSSRLQWHGDV*URXS&KLHI2SHUDWLQJ2IILFHU 2DWVEHIRUHMRLQLQJ2JLOY\DQG0DWKHUDVDQ Expertise and experience LQ-XO\ DFFRXQWPDQDJHU,QKHFRIRXQGHG *DYLQKDV\HDUVRIFUHGLWRSHUDWLRQVDQG +HUG%XR\V$GYHUWLVLQJWKHILUVWEODFNRZQHG IURQWRIILFHH[SHULHQFHDFURVVUHWDLO DGYHUWLVLQJDJHQF\LQWKHFRXQWU\+DSS\ FRPPHUFLDOFRUSRUDWHDQGLQYHVWPHQW MRLQHG$EVDDV*URXS([HFXWLYH*URXS EDQNLQJERWKORFDOO\DQGDEURDG+HMRLQHG 0DUNHWLQJLQ+HVLWVRQYDULRXV$EVD $EVDLQDQGKHOGSRVLWLRQVRI ERDUGVLVDWUXVWHHRIWKH$EVD)RXQGDWLRQ 0DQDJLQJ'LUHFWRU$EVD%DQN$VLD/LPLWHG DQGKROGVGLUHFWRUVKLSVRIDQXPEHURI 0DQDJLQJ([HFXWLYH+RPH/RDQVDQG FRPSDQLHVLQKLVSHUVRQDOFDSDFLW\ *URXS([HFXWLYH6HFXUHG/HQGLQJ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 97 Board and leadership

Group Executive Committee

M (Maria) Ramos S (Stephen) van Coller L L (Louis) von Zeuner

Qualifications Qualifications Qualifications %&RP +RQV (FRQRPLFV %&RP +RQV %(FRQ 06F(FRQRPLFV +'LS$FF Tenure at Absa ,QVWLWXWHRI%DQNHUV'LSORPD &$,% &$ 6$ \HDUV DSSRLQWHG &0$ 8. Tenure at Absa Year appointed as an Exco member: 2004 7ZR\HDUV DSSRLQWHG Tenure at Absa Area of responsibility Year appointed as an Exco member: 2009 )RXU\HDUV DSSRLQWHG /RXLVLVWKH'HSXW\*URXS&KLHI([HFXWLYH Year appointed as an Exco member: 2009 Area of responsibility RIWKH*URXS 0DULDLVWKH*URXS&KLHI([HFXWLYH Area of responsibility Expertise and experience Expertise and experience 6WHSKHQLVWKH&KLHI([HFXWLYH2IILFHU$EVD /RXLVZRUNHGLQ$EVD©VUHWDLODQG 0DULDKDVIRUPHUO\DFWHGDVWKH'LUHFWRU &DSLWDOZLWKORFDOUHVSRQVLELOLW\IRU$EVD FRPPHUFLDOEDQNLQJRSHUDWLRQVVLQFH *HQHUDORIWKH1DWLRQDO7UHDVXU\,Q :HDOWK ZKHUHKHKHOGYDULRXVEUDQFKUHJLRQDODQG 0DULDZDVDSSRLQWHG*URXS&KLHI([HFXWLYH Expertise and experience SURYLQFLDOOHDGHUVKLSSRVLWLRQV/RXLVZDV RI7UDQVQHW/LPLWHG0DULDMRLQHG$EVDDV 6WHSKHQLQLWLDOO\ZRUNHGDW(UQVW

98 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Business operations Contents

Business operations Pages 101 – 122

101 %XVLQHVVUHYLHZ $UHYLHZRIWKH*URXS©VEXVLQHVVRSHUDWLRQV WKHLUSHUIRUPDQFHDQGVWUDWHJLHVJRLQJ )LQDQFLDOUHSRUWLQJVWUXFWXUH 102 IRUZDUG 103 3URILWFRQWULEXWLRQE\EXVLQHVVDUHD Operational reviews 104 5HWDLO%DQNLQJ 108 $EVD%XVLQHVV%DQN 112 $EVD&DSLWDO 116 )LQDQFLDO6HUYLFHV 120 ,QIRUPDWLRQWHFKQRORJ\ Business operations

Business review

In a tough operating environment, the Group’s Highlights business operations delivered a solid performance. Retail Banking grew headline ,QQRYDWLYHSURGXFWVZHUHLQWURGXFHGLQFOXGLQJ:HVWHUQ earnings by 85%, largely because of 36% lower 8QLRQYLDGLIIHUHQWFKDQQHOV3D\3DVVSRLQWRIVDOH impairment losses on loans and advances. G\QDPLFFXUUHQF\FRQYHUVLRQFORVHGORRS$JULFDUG Absa Capital’s headline earnings increased by DQGWKHILUVW86&3,QRWHSODFHGZLWKDORFDOLQYHVWRU 20% owing to an improved performance in 3URJUHVVPDGHRQLPSOHPHQWLQJWKH2QH$EVD Private Equity. Absa Business Bank’s headline ZRUNVWUHDPVLQFOXGLQJWKHQHZFRUSRUDWHDQG earnings declined by 11%, due to lower values LQYHVWPHQWEDQNLQJPRGHOHQKDQFLQJWKH*URXS©V in the commercial property ﬁnance equity IRUHLJQH[FKDQJHFDSDELOLW\VWUHQJWKHQLQJWKHEDODQFH VKHHWVWUHDPOLQLQJWKH*URXSDQGFRQWLQXLQJWRJURZ portfolio and a slight decline in assets. Financial GHSRVLWV Services’ headline earnings remained stable. 5HWDLOLPSDLUPHQWORVVHVRQORDQVDQGDGYDQFHV GHFOLQHGVLJQLILFDQWO\UHGXFLQJWKH*URXS©VLPSDLUPHQW ORVVHVUDWLRWRRIDYHUDJHORDQVDQGDGYDQFHV 7KH*URXS©VHIIHFWLYHKHGJLQJSURJUDPPHLQFUHDVHG WKHQHWLQWHUHVWPDUJLQRQDYHUDJHLQWHUHVWEHDULQJ DVVHWVWR )LQDQFLDO6HUYLFHVJUHZLWVOLIHDQGVKRUWWHUPJURVV SUHPLXPVE\DQGUHVSHFWLYHO\\HDURQ\HDU $EVD/LIH©VHPEHGGHGYDOXHRIQHZEXVLQHVV LQFUHDVHGE\WR5PLOOLRQ $VVHWVXQGHUPDQDJHPHQWDQGDGPLQLVWUDWLRQURVHE\ WR5ELOOLRQ $EVDZDVYRWHGWKH1XPEHU%DQNLQJ%UDQG EXVLQHVVWRFRQVXPHUFDWHJRU\ LQE\WKH Sunday Times7RS%UDQGVVXUYH\ $EVD&DSLWDOUHFHLYHGWKH%HVW2YHUDOO%DQNDZDUG IURPRisk South AfricaZLWKILUVWVLQHLJKWFDWHJRULHV

Headline earnings (Rm)

3 454 3 232 3 206 2 895 2 848

2 276

1 749 1 527 1 474 1 272 1 300 1 291

Retail Banking1 Absa Business Bank1 Absa Capital Financial Services ● 2008 – 2009 ● 2010

Note 1Comparatives have been reclassiﬁed.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 101 Business operations

Financial reporting structure

Absa Group Limited

Retail Commercial Investment Financial Other Group Banking Banking Banking Services activities

+RPH/RDQV LQFOXGLQJ $ EVD%XVLQHVV%DQN $EVD&DSLWDO Insurance &RUSRUDWHFHQWUH 5HSRVVHVVHG $%% ° ,QYHVWPHQW%DQNLQJ $EVD/LIH/LPLWHG &DSLWDODQGIXQGLQJ 3URSHUWLHV FHQWUH ° /DUJH%XVLQHVV ° 0DUNHWV $EVD,QVXUDQFH 9HKLFOHDQG$VVHW ,QWHUQDWLRQDORSHUDWLRQV ° 0HGLXP%XVLQHVV ° 3ULYDWH(TXLW\ &RPSDQ\/LPLWHG )LQDQFH 9$) ° 6PDOO%XVLQHVV DQG,QIUDVWUXFWXUH $EVDidirect/LPLWHG ° $EVD%DQN/RQGRQ &DUG ,QYHVWPHQWV ° 3XEOLFVHFWRU Investments ° $EVD0DQ[,QVXUDQFH :RROZRUWKV)LQDQFLDO ° 6LQJOHVWRFNIXWXUHV &RPSDQ\/LPLWHG ° &RPPHUFLDO$VVHW $EVD$VVHW 6HUYLFHV 3URSULHWDU\ DQGRWKHU /LPLWHG )LQDQFH &$) 0DQDJHPHQW ° $EVD:HDOWK 3URSULHWDU\ /LPLWHG 3HUVRQDO/RDQV ° &RPPHUFLDO3URSHUW\ )LQDQFH &3) $IULFDQRSHUDWLRQV $EVD)XQG0DQDJHUV 5HWDLO%DQN LQFOXGLQJ /LPLWHG $EVD3ULYDWH%DQN ° $EVD'HYHORSPHQW ° %DUFOD\V%DQN &RPSDQ\+ROGLQJV 0R]DPELTXH6$ $EVD,QYHVWPHQW $IULFDQRSHUDWLRQV 3URSULHWDU\ /LPLWHG %%0 0DQDJHPHQW6HUYLFHV ° %DUFOD\V%DQN $IULFDQRSHUDWLRQV ° 1DWLRQDO%DQNRI 3URSULHWDU\ /LPLWHG 0R]DPELTXH6$ &RPPHUFH/LPLWHG $EVD0RUWJDJH)XQG %%0 ° %DUFOD\V%DQN 0R]DPELTXH6$ 1%& 7DQ]DQLD 0DQDJHUV 3URSULHWDU\ ° 1DWLRQDO%DQNRI %%0 ,QWHUQDWLRQDO /LPLWHG &RPPHUFH/LPLWHG RSHUDWLRQV $EVD3RUWIROLR 1%& 7DQ]DQLD ° 1DWLRQDO%DQNRI &RPPHUFH/LPLWHG ° $EVD%DQN/RQGRQ 0DQDJHUV 3URSULHWDU\ 1%& 7DQ]DQLD /LPLWHG ,QWHUQDWLRQDO $EVD6WRFNEURNHUV RSHUDWLRQV 3URSULHWDU\ /LPLWHG ° $EVD%DQN/RQGRQ Fiduciary $EVD&RQVXOWDQWVDQG $FWXDULHV 3URSULHWDU\ /LPLWHG $EVD+HDOWK&DUH &RQVXOWDQWV 3URSULHWDU\ /LPLWHG $EVD7UXVW/LPLWHG Other $EVD,QVXUDQFHDQG )LQDQFLDO$GYLVHUV 3URSULHWDU\ /LPLWHG $EVD)LQDQFLDO6HUYLFHV /LPLWHG

Notes The Group previously had a 50% share in the ordinary shares of Sanlam Home Loans (SHL), the holding company of three securitisation vehicles. The investment in SHL was previously equity-accounted as the Group and Sanlam Life Insurance Limited had joint control over SHL. On 1 August 2010, the Group acquired the remaining 50% ordinary shares of SHL, which resulted in the Group controlling and consolidating SHL. On 30 June 2010, the Virgin Money South Africa (Proprietary) Limited (VMSA) joint-venture arrangement was terminated. The Group then acquired the underlying business which is reported as part of the Card division. The Group established a special-purpose entity (Cell Captive) in Woolworths Financial Services, during the year under review, that provides credit life insurance to Woolworths Financial Services customers. The Group’s African operations have been allocated to the various segments where those businesses are managed in terms of IFRS 8. The Group subscribed to additional shares in Barclays Bank Mozambique (BBM) in terms of a rights issue on 7 July 2010. The additional shares acquired increased the effective interest held from 80,0% to 95,9% as none of the non-controlling shareholders exercised their rights in terms of the rights issue. Non-controlling shareholders have an option until June 2011 to buy the shares from the Group. Absa Corporate and Business Bank (ACBB) changed its name to Absa Business Bank (ABB) during the year under review. The corporate business is still managed by ABB. Absa Small Business was moved from Retail Banking to ABB during the year under review. The Absa Property Equity Fund (the fund) was previously consolidated under SIC-12, as the Group held between 75% and 93% of the units and were thereby exposed to the majority of the risks and rewards within the fund. During the year under review, the Group disposed of all its units. Absa Bank London’s results have been allocated to Commercial Banking, Investment Banking and Other Group activities in terms of IFRS 8. Absa Capital Representative Ofﬁce Nigeria (Proprietary) Limited was incorporated as a wholly owned subsidiary during the year under review to facilitate the business of Absa Capital in Nigeria. The Group established Commissioner Street (Proprietary) Limited (Commissioner Street) during the year under review. Commissioner Street is consolidated as part of the Group due to the requirements of SIC-12 and the Group’s interest in Commissioner Street. Absa Capital Securities (Proprietary) Limited was established as a wholly owned subsidiary during the year under review and provides stockbroking services.

102 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Profit contribution by business area

Attributable earnings

14,3

37,1

16,4

32,2

2010

● 5HWDLO%DQNLQJ● $EVD%XVLQHVV%DQN● $EVD&DSLWDO● )LQDQFLDO6HUYLFHV

2010 &KDQJH Rm 5P

Banking operations 5HWDLO%DQNLQJ 3 353

+RPH/RDQV 196 ! 9HKLFOHDQG$VVHW)LQDQFH 280 &DUG 1 346 3HUVRQDO/RDQV 515 ! 5HWDLO%DQN 1 016

$EVD%XVLQHVV%DQN 2 903 $EVD&DSLWDO 1 480 !

8QGHUO\LQJSHUIRUPDQFH 1 518 6LQJOHVWRFNIXWXUHVLPSDLUPHQW (38)

&RUSRUDWHFHQWUH (396) ! &DSLWDODQGIXQGLQJFHQWUH (192) ! 1RQFRQWUROOLQJLQWHUHVW¤SUHIHUHQFHVKDUHV (320)

Total banking 6 828 )LQDQFLDO6HUYLFHV 1 290

Proﬁt attributable to ordinary equity holders of the Group 8 118 +HDGOLQHHDUQLQJVDGMXVWPHQWV (77) !

Headline earnings 8 041

Notes 1Calculated after the allocation of corporate, capital and funding centres. 2If calculated based on headline earnings, Absa Capital’s contribution would be 17,1% (31 December 2009: 16,9%). 3Comparatives have been reclassiﬁed for the move of Absa Small Business from Retail Banking to Absa Business Bank. 4Personal Loans were previously disclosed as part of Retail Bank.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 103 Business operations

Retail Banking

Highlights Business scope Retail BankingRIIHUVLQGLYLGXDOVDFRPSUHKHQVLYHVXLWHRI +HDGOLQHHDUQLQJVLQFUHDVHGE\WR UHWDLO EDQNLQJ SURGXFWV DQG VHUYLFHV ,W SURYLGHV WKHVH 5PLOOLRQ WKURXJK DQ H[WHQVLYH EUDQFK DQG VHOIVHUYLFH WHUPLQDO 7KHTXDOLW\RIWKHDGYDQFHVSRUWIROLRLPSURYHG QHWZRUN DQG YLD UHODWLRQVKLS PDQDJHUV LQWHUQHW DQG IXUWKHUUHVXOWLQJLQDLPSDLUPHQWORVVHVUDWLR FHOOSKRQHEDQNLQJIDFLOLWLHV 'HSRVLWVJUHZE\DQGWUDQVDFWLRQYROXPHV LQFUHDVHGE\ Key business areas $EVDEHFDPHWKHILUVWEDQNLQWKHZRUOGWRRIIHU :HVWHUQ8QLRQ©VPRQH\WUDQVIHUVRQERWK Home Loans Ä RIIHUV UHVLGHQWLDO SURSHUW\UHODWHG PRELOHDQGLQWHUQHWEDQNLQJSODWIRUPV RZQHUVKLSVROXWLRQV &HOOSKRQHFXVWRPHUEDVHJUHZE\WRRYHU Vehicle and Asset Finance (VAF)ÄRIIHUVFXVWRPLVHG PLOOLRQ YHKLFOHDQGDVVHWILQDQFHSURGXFWVDQGVHUYLFHV ,QWURGXFHG3D\3DVVIRUHDV\ORZYDOXH SD\PHQWVRQEDQNLVVXHGFKLSFDUGV Card Ä SURYLGHV ERWK FUHGLW DQG GHELW FDUGV DQG 7KHILUVWEDQNLQ6RXWK$IULFDWRRIIHUG\QDPLF PHUFKDQW DFTXLULQJ DFURVV 6RXWK $IULFD :RROZRUWKV FXUUHQF\FRQYHUVLRQDWSRLQWRIVDOH )LQDQFLDO6HUYLFHVLVSDUWRIWKHEXVLQHVVDUHDRIIHULQJ 2IIHUHGWKH$70/RDQYLD$EVD$70V LQVWRUHDQGFUHGLWFDUGV /DXQFKHGIODJVKLSFRQFHSWRXWOHWVIRUVLPSOHU Personal LoansÄRIIHUVXQVHFXUHGLQVWDOPHQWORDQV PRUHDIIRUGDEOHHQWU\OHYHOEDQNLQJ LQFOXGLQJPLFURDQGUHYROYLQJORDQV ([SDQGHG,VODPLF%DQNLQJRIIHULQJV Retail BankÄRIIHUVILQDQFLDOVROXWLRQVWRLQGLYLGXDOVLQ 6RXWK$IULFDDQGLQ$EVD©V$IULFDQRSHUDWLRQVUDQJLQJ Key performance indicators IURP WKRVH HQWHULQJ WKH PDUNHW ZLWK EDVLF EDQNLQJ 2010 &KDQJH QHHGV WR DIIOXHQW LQGLYLGXDOV ZKR UHTXLUH PRUH VRSKLVWLFDWHGEDQNLQJVROXWLRQV Proﬁt 7RWDOLQFRPH 5P 23 291 3URILWDWWULEXWDEOHWRRUGLQDU\ 2010 review HTXLW\KROGHUVRIWKH *URXS 5P 3 353 Financial performance +HDGOLQHHDUQLQJV 5P 3 232 +RPH/RDQV 125 ! +HDGOLQH HDUQLQJV LQFUHDVHG E\ WR 5 PLOOLRQ 9HKLFOHDQG$VVHW)LQDQFH 280 5PLOOLRQ ODUJHO\EHFDXVHRIORZHULPSDLUPHQW &DUG 1 344 3HUVRQDO/RDQV 515 ! ORVVHVRQORDQVDQGDGYDQFHV$WWULEXWDEOHHDUQLQJVJUHZ 5HWDLO%DQN 968 E\ WR 5 PLOOLRQ 5 PLOOLRQ 5HWDLO /RDQVDQGDGYDQFHV WRFXVWRPHUV 5P 325 790 %DQNLQJ©VLPSDLUPHQWORVVHVUDWLRIHOOWRIURP 'HSRVLWVGXHWRFXVWRPHUV 5P 115 046 5HWXUQRQHFRQRPLFFDSLWDO 17,9 RZLQJWRDQLPSURYHPHQWLQHDUO\VWDJHGHOLQTXHQFLHVDQG 5HWXUQRQDYHUDJHDVVHWV 0,68 ,PSDLUPHQWORVVHVUDWLR 1,49 D VXFFHVVIXO FROOHFWLRQV VWUDWHJ\ 5HYHQXH JUHZ E\ &RVWWRLQFRPHUDWLR 57,1

People %DQNLQJFXVWRPHUEDVH PLOOLRQV 11,3 Headline earnings (Rm) 2XWOHWV 1 007 6HOIVHUYLFHWHUPLQDOV 8 963 ,QWHUQHWEDQNLQJXVHUV © 936 3 232 &HOOSKRQHEDQNLQJXVHUV © 2 430 2 895 1XPEHURIGHELWFDUGV © 10 211 1XPEHURIFUHGLWFDUG DFFRXQWV © 1 851 1 749 1XPEHURIKRPHORDQ DFFRXQWV © 695 1XPEHURISHUPDQHQW HPSOR\HHV © 19 752 (PSOR\HHWXUQRYHUUDWH 9,5 3HUFHQWDJHRI$IULFDQ&RORXUHG DQG,QGLDQHPSOR\HHV 68,6 2008 2009 2010 Notes Comparatives have ben reclassiﬁed. Includes African operations. Includes the Group’s business and wealth outlets. South African operations. Based on permanent employee complement. Absa’s environmental data is not reported at a segment level at present.

104 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU UHIOHFWLQJOLPLWHGWUDQVDFWLRQDOYROXPHDQGORDQJURZWKSOXVIXQGLQJ PDUJLQSUHVVXUH2SHUDWLQJH[SHQVHVJUHZE\UHVXOWLQJLQDKLJKHU FRVWWRLQFRPHUDWLRRI +HDGOLQHHDUQLQJVIURP &DUG+RPH/RDQVDQG3HUVRQDO/RDQVLPSURYHGVLJQLILFDQWO\ZKLOH 5HWDLO %DQN©V KHDGOLQH HDUQLQJV GHFOLQHG E\ RZLQJ WR KLJKHU LPSDLUPHQWORVVHVRQORDQVDQGDGYDQFHV5HWDLO%DQNLQJ©VUHWXUQRQ UHJXODWRU\FDSLWDOLPSURYHGWR

Business overview 5HWDLO %DQNLQJ©V FXVWRPHU EDVH LQFUHDVHG VOLJKWO\ WR PLOOLRQ DW 'HFHPEHUIURPPLOOLRQDW'HFHPEHU&XVWRPHUV EHQHILWIURPDQH[WHQVLYHIRRWSULQWZLWKVHOIVHUYLFHWHUPLQDOVDQG RXWOHWVORFDWHGDFURVV6RXWK$IULFD7DQ]DQLDDQG0R]DPELTXH 5HWDLO%DQNLQJUDQDZDUHQHVVFDPSDLJQVVXFKDV.ZHHNDWRHQFRXUDJH FXVWRPHUV WR XVH FKDQQHOV VXFK DV $70V FDVK DFFHSWRUV LQWHUQHW DQGFHOOSKRQHEDQNLQJDQGFDUGSD\PHQWV7KHVHRIIHUFRQYHQLHQFH FKRLFHDQGVHFXULW\DQGIDFLOLWDWHDZLGHUDQJHRISD\PHQWVDQGFDVK WUDQVIHUV

Strategy implementation Objective Delivery

Entry-level customers 'HFUHDVHFRVWRIGHOLYHU\ ,QVWRUHEDQNLQJLVFXUUHQWO\EHLQJSLORWHGLQVHYHUDOUXUDOORFDWLRQV GHOLYHULQJFRVWHIIHFWLYHDFFHVVWREDVLFILQDQFLDOVHUYLFHVWKURXJK DQHWZRUNRIUHWDLODJHQWV &RPSHWLWLYHRIIHULQJWRUHWDLQFXVWRPHUV $QHZFRQFHSWHQWU\OHYHORXWOHWDQGFXVWRPHUYDOXHSURSRVLWLRQZDV ODXQFKHGLQSLORWSKDVHLQZKLFKLVWREHUROOHGRXWLQ 3DFNDJHGRIIHULQJRIWUDQVDFWLRQDO 3URYLVLRQRIDSDFNDJHRISURGXFWVDQGVHUYLFHVEXLOWDURXQGFXVWRPHUV© SURGXFWVLQVXUDQFHVDYLQJDQGOHQGLQJ IRXUNH\ILQDQFLDOQHHGV Afﬂuent and core middle market customers ([WUDFWYDOXHE\FURVVVHOOLQJDQG ,QQRYDWLYHVROXWLRQVODXQFKHG LQQRYDWLYHQHZSURGXFWRIIHULQJV ,PSURYHPHQWRIFXUUHQWRIIHULQJV (QKDQFHGFURVVVHOOLQJHIIRUWV 'LIIHUHQWLDWHWKURXJKVHUYLFH (QKDQFHGWKHFXVWRPHUH[SHULHQFHSURFHVVHV 2SWLPLVHWKHGHOLYHU\IRRWSULQW ,PSURYHGPDQDJHPHQWRIWKHGLVWULEXWLRQIRRWSULQW /HYHUDJHRIILQVXUDQFHRSSRUWXQLWLHV $IULFDLQVXUDQFHH[SDQVLRQJDLQLQJPRPHQWXP RXWVLGH6RXWK$IULFD

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 105 Business operations

Retail Banking

Awards and accolades 7KHSunday Times7RS%UDQGVVXUYH\YRWHG$EVDWKH1XPEHU %DQNLQJ%UDQG EXVLQHVVWRFRQVXPHUFDWHJRU\ LQ Global FinanceUDWHG$EVDWKH%HVW,QWHUQHW%DQNLQ6RXWK$IULFD Islamic Finance NewsUDWHG$EVDWKH%HVW,VODPLF%DQNLQ6RXWK $IULFDWKUHH\HDUVLQDURZ Global Finance Magazine UDWHG $EVD WKH %HVW ,VODPLF %DQN LQ $IULFDDQGWKH0LGGOH(DVWWZR\HDUVLQDURZ Home loans – new business loan-to- 7KHSunday Times*HQHUDWLRQ1H[WVXUYH\YRWHG$EVDWKH&RROHVW value percentage spread %DQNLQJ%UDQGLQ6RXWK$IULFDIRUILYH\HDUVLQDURZ

Home Loans 39,75 +HDGOLQH HDUQLQJV LPSURYHG E\ RYHU 5 ELOOLRQ WR 5 PLOOLRQ IRU WKH\HDUHQGHG'HFHPEHU 5PLOOLRQORVV ODUJHO\

EHFDXVHFUHGLWLPSDLUPHQWVZHUHORZHU *LYHQWKHPRGHUDWHHFRQRPLFUHFRYHU\KRXVHSULFHVURVH\HDU 3,26 RQ\HDULQQRPLQDOWHUPVLQWKHPLGGOHVHJPHQW0RUWJDJHDGYDQFHV JUHZDVXEGXHGGHVSLWHWKHDFTXLVLWLRQRIWKH6DQODP+RPH ! ! ! ! ! ! ! /RDQ EXVLQHVV DQG $OH[DQGHU )RUEHV© SHQVLRQEDFNHG ERRN ● ● ● ([FOXGLQJWKHVHWKHERRNUHPDLQHGDWWKHSULRU\HDU©VOHYHO6OLJKWO\ KLJKHUDGYDQFHVDQGDQLPSURYHGLQWHUHVWPDUJLQVDZQHWLQWHUHVW LQFRPH LQFUHDVH E\ *URZWK LQ RSHUDWLQJ H[SHQVHV ZDV VAF – quarterly loans and advances UHDVRQDEO\ZHOOFRQWDLQHGDWIRUWKH\HDU book (Rbn) 49 46 Vehicle and Asset Finance (VAF) 45 44 44 43 43 44 0RWRU YHKLFOH VDOHV LQFUHDVHG E\ GXULQJ DFFRUGLQJ WR WKH 1DWLRQDO $VVRFLDWLRQ RI $XWRPRELOH 0DQXIDFWXUHUV RI 6RXWK$IULFD7KHLQGXVWU\DOVREHQHILWHGIURPWKH),)$:RUOG &XS™ZKLFKLQFUHDVHGHFRQRPLFDFWLYLW\LQWKHWRXULVPFDUUHQWDO DQGWUDQVSRUWDWLRQLQGXVWULHV9$)©VKHDGOLQHHDUQLQJVLQFUHDVHGE\ WR5PLOOLRQ$OWKRXJKWKHERRNJUHZRQO\QHZEXVLQHVV

Mar Jun Sept Dec Mar Jun Sept Dec LQFUHDVHGE\LQDVJURZWKLPSURYHGLQWKHIRXUWKTXDUWHU ● 2009 ● 2010 7KHFRPELQDWLRQRIORZHUDYHUDJHORDQVDQGDGYDQFHVDQGVWDEOH LQWHUHVW PDUJLQV UHGXFHG QHW LQWHUHVW LQFRPH E\ ,PSDLUPHQW ORVVHVRQORDQVDQGDGYDQFHVLQFUHDVHGPDUJLQDOO\\HDURQ\HDU Card – quarterly loans and advances EXWLPSURYHGQRWLFHDEO\LQWKHVHFRQGKDOIRI book (Rbn)

19 19 Card 18 18 18 18 18 17 +HDGOLQHHDUQLQJVLQFUHDVHGE\WR5PLOOLRQODUJHO\RZLQJ WR WKH LQFOXVLRQ RI 906$©V ERRN VROLG WUDQVDFWLRQ YROXPH JURZWK DQGVLJQLILFDQWO\ORZHULPSDLUPHQWORVVHVRQORDQVDQGDGYDQFHV $FFRXQW EDODQFHV LQFUHDVHG E\ DV QHZ EXVLQHVV OHYHOV LQFUHDVHG LQ WKH IRXUWK TXDUWHU 2SHUDWLQJ H[SHQVHV ZHUH ZHOO FRQWDLQHGULVLQJ\HDURQ\HDU

Mar Jun Sept Dec Mar Jun Sept Dec ● 2009 ● 2010

106 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Personal Loans Personal loans – quarterly loans and +HDGOLQH HDUQLQJV LQFUHDVHG H[SRQHQWLDOO\ WR 5 PLOOLRQ advances book (Rbn) 7KLV ZDV SULPDULO\ RZLQJ WR D VLJQLILFDQW UHGXFWLRQ LQ LPSDLUPHQW 12 11 ORVVHV RQ ORDQV DQG DGYDQFHV DQG DQ JURZWK LQ UHYHQXH 11 10 10 10 10 2SHUDWLQJH[SHQVHVZHUHZHOOFRQWDLQHGDQGGHFOLQHGE\/RDQV 9 DQGDGYDQFHVJUHZE\LQODUJHO\RZLQJWRDQLQFUHDVHLQ FXVWRPHUGHPDQGDQGKLJKHUDYHUDJHORDQYDOXHV

Retail Bank +HDGOLQH HDUQLQJV IHOO E\ WR 5 PLOOLRQ RZLQJ WR KLJKHU LPSDLUPHQW ORVVHV RQ ORDQV DQG DGYDQFHV DQG Mar Jun Sept Dec Mar Jun Sept Dec ● ● ORZHUUHYHQXH7KHGHFOLQHLQUHYHQXHZDVRZLQJWROLPLWHGERRN 2009 2010 JURZWKDGHFOLQHLQLQFRPHIURPLQYHVWPHQWDFWLYLWLHVWKHDEVHQFH RI IHH LQFUHDVHV DQG VXEGXHG GHSRVLW PDUJLQV 7KH JURZWK LQ LPSDLUPHQWORVVHVRQORDQVDQGDGYDQFHVVWHPVIURPDOLJQLQJWKH $IULFDQRSHUDWLRQV©LPSDLUPHQWSROLFLHVZLWKWKH*URXS©VDQGDKLJK FKDUJH LQ WKH KLJK YDOXH VHJPHQW 5HWDLO %DQN LPSOHPHQWHG QXPHURXVLQLWLDWLYHVGXULQJWKH\HDUWRHQKDQFHFXVWRPHUVHUYLFH SURGXFWLYLW\ DQG HIILFLHQF\ 1%& DQG %%0©V V\VWHPV ZHUH DOVR UHSODFHG

Strategic focus )XUWKHU HQWUHQFKLQJ 5HWDLO %DQNLQJ©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 107 Business operations

Absa Business Bank

Highlights Business unit scope Absa Business Bank (ABB) RIIHUV D FRPSUHKHQVLYH 6ROLGJURZWKLQWUDQVDFWLRQDOIHHLQFRPH UDQJH RI FRPPHUFLDO EDQNLQJ SURGXFWV DQG VSHFLDOLVHG VHUYLFHV WR FRUSRUDWH LQVWLWXWLRQV DQG ODUJH PHGLXP DQG 6WURQJGHSRVLWJURZWKLQWDUJHWHGDUHDV VPDOO EXVLQHVVHV $%% DLPV WR PHHW WKH IXOO VSHFWUXP RI 6XFFHVVIXOO\LQWHJUDWHGWKH*URXS©V6PDOO FRUSRUDWH DQG FRPPHUFLDO FXVWRPHUV© QHHGV ,WV VHUYLFHV %XVLQHVVRSHUDWLRQV LQFOXGHDVVLVWLQJVWDUWXSHQWUHSUHQHXUVDQGSURYLGLQJQRQ ,GHQWLILHGFXVWRPHUVWRVHUYLFHYLDWKHQHZ WUDGLWLRQDOGHYHORSPHQWFUHGLW2IIHULQJVUDQJHIURPRIIWKH FRUSRUDWHDQGLQYHVWPHQWEDQNLQJPRGHO VKHOIWUDQVDFWLRQDOSURGXFWVWRFRPSOH[ILQDQFLDOVROXWLRQV &RQWLQXHGWRLQYHVWLQJURZWKLQLWLDWLYHV $%%©V REMHFWLYH LV WR PDNH EDQNLQJ ZKHWKHU ORFDO RU LQWHUQDWLRQDOFRQYHQLHQWDQGHIILFLHQWIRULWVFXVWRPHUV Key performance indicators 2010 &KDQJH Key business areas Corporate Ä SUHGRPLQDQWO\ LQFOXGHV JURXSV ZLWK DQ Proﬁt DQQXDOWXUQRYHUH[FHHGLQJ5PLOOLRQ 7RWDOLQFRPH 5P 11 626 3URILWEHIRUHWD[ 5P 4 079 Large Business Ä ODUJHO\ FRQVLVWV RI JURXSV ZLWK DQ &RUSRUDWH 425 DQQXDOWXUQRYHURI5PLOOLRQWR5PLOOLRQ /DUJH%XVLQHVV 1 293 0HGLXP%XVLQHVV 1 046 Medium BusinessÄSUHGRPLQDQWO\VHUYHVJURXSVZLWK 6PDOO%XVLQHVV 1 367 $IULFD (5) ! DQ DQQXDO WXUQRYHU RI EHWZHHQ 5 PLOOLRQ DQG 5HDOHVWDWHLQYHVWPHQWSRUWIROLR (47) ! 5PLOOLRQ 3URILWDWWULEXWDEOHWRRUGLQDU\HTXLW\ KROGHUVRIWKH*URXS 5P 2 903 Small Business Ä VHUYHV FXVWRPHUV ZLWK DQ DQQXDO +HDGOLQHHDUQLQJV 5P 2 848 WXUQRYHURIEHORZ5PLOOLRQ /RDQVDQGDGYDQFHVWR FXVWRPHUV 5P 123 618 'HSRVLWVGXHWRFXVWRPHUV 5P 136 619 5HWXUQRQHFRQRPLFFDSLWDO 23,9 5HWXUQRQDYHUDJHDVVHWV 1,82 ,PSDLUPHQWORVVHVUDWLR 0,90 &RVWWRLQFRPHUDWLR 55,0 Headline earnings (Rm)

People 3 454 %DQNLQJFXVWRPHUEDVH PLOOLRQV 0,5 3 206 1XPEHURIVPDOOEXVLQHVV 2 848 DFFRXQWVLQGHSULYHGDUHDV 225 779 1XPEHURIQHZVPDOOEXVLQHVV ORDQV 11 625A 1XPEHURIPLFURHQWHUSULVH ILQDQFHORDQVDSSURYHG 4 574 1XPEHURISHUPDQHQWHPSOR\HHV 3 938 (PSOR\HHWXUQRYHUUDWH 12,1 3HUFHQWDJHRI$IULFDQ&RORXUHG DQG,QGLDQHPSOR\HHV 50,1 2008 2009 2010 3HUFHQWDJHRIVHQLRU PDQDJHPHQWWKDWDUH$IULFDQ &RORXUHGDQG,QGLDQ 36,4 3HUFHQWDJHRIVHQLRU PDQDJHPHQWWKDWDUH IHPDOH 16,9 Notes Comparatives have been reclassified for the move of Small Business from Retail Banking to ABB. Includes realised and unrealised profits on CPF equities, unlisted CPF equities and Devco. Includes the Group’s commercial clients in the rest of Africa. The Group’s South African operations experienced a 2% decline in clients for the year. South African operations. 5Based on permanent employee complement. 6The number of small business loans approved (overdrafts, term loans, mortgages, vehicle and asset finance (including dealers sales), and commercial loans (excluding CAF)) paid out to SME businesses (defined as businesses with a turnover of less than R10 million who are registered via Cipro and have a level of banking exposure (excluding micro-enterprise finance). Absa’s environmental data is not reported at a segment level at present.

108 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 review Financial performance +HDGOLQH HDUQLQJV GHFOLQHG E\ WR 5 PLOOLRQ 5PLOOLRQ DVORDQVDQGDGYDQFHVGHFOLQHGE\DQGFRPPHUFLDO SURSHUW\ ILQDQFH HTXLW\ SRUWIROLR YDOXHV IHOO $%% H[SHULHQFHG D GHFUHDVH LQ LPSDLUPHQW ORVVHV RQ ORDQV DQG DGYDQFHV 1HW LQWHUHVW LQFRPH URVH E\ UHIOHFWLQJ VROLG GHSRVLW JURZWK ZKLFK SDUWLDOO\ RIIVHWORZHUORDQVDQGDGYDQFHVWRFXVWRPHUVDQGSUHVVXUHRQGHSRVLW PDUJLQV IURP ORZHU LQWHUHVW UDWHV )HH DQG FRPPLVVLRQ LQFRPH LQFUHDVHGE\GULYHQE\$%%©VHQKDQFHGWUDQVDFWLRQDOFDSDELOLWLHV 2SHUDWLQJ H[SHQVHV JUHZ E\ WR 5 PLOOLRQ 5 PLOOLRQ DVWKHEXVLQHVVFRQWLQXHGWRLQYHVWLQJURZWKLQLWLDWLYHV$%%©V UHWXUQRQUHJXODWRU\FDSLWDOUHPDLQHGDFUHGLEOH

Strategy implementation Objective Delivery

(QKDQFHWUDQVDFWLRQDOEDQNLQJ &DVKSURSRVLWLRQLPSURYHGDQGFDVKKDQGOLQJULVNVVLJQLILFDQWO\ FDSDELOLWLHVVSHFLILFDOO\FDVKDQG PLWLJDWHG HOHFWURQLFEDQNLQJ (OHFWURQLFEDQNLQJIXQFWLRQDOLPSURYHPHQWVLPSOHPHQWHG

/HYHUDJHDFRPSUHKHQVLYHEDQNLQJ 3ULPDU\EDQNHGUHODWLRQVKLSVHVWDEOLVKHG SURSRVLWLRQWRHVWDEOLVKVXVWDLQDEOHSULPDU\ EDQNLQJUHODWLRQVKLSVZLWKFOLHQWV

&RQWLQXHWRIRFXVRQJURZLQJGHSRVLWV 'HSRVLWVJUHZ\HDURQ\HDU

&ROODERUDWHDFURVVWKH*URXSWRHQVXUH ,QWHUQDWLRQDOEDQNLQJEDFNRIILFHDQGDGYLVHUV©WHDPH[SDQGHG SURGXFWLQQRYDWLRQ 1HZFRUSRUDWHFRYHUDJHPRGHOLPSOHPHQWHG

/HYHUDJHFDSDELOLWLHVLQDJULSXEOLFVHFWRU $JULEDQNLQJSURFXUHPHQWFDUGLQSODFH DQGRWKHUNH\LQGXVWULHVWRHQVXUHPDUNHW 6HHWKURXJKFUHGLWFRQFHSWLQSODFH OHDGHUVKLS 6WUXFWXUHGWUDGHDQGFRPPRGLW\ILQDQFHFDSDELOLWLHVEROVWHUHG

6XFFHVVIXOLQWHJUDWLRQRI6PDOO%XVLQHVV ,QWHJUDWLRQVXFFHVVIXOO\FRPSOHWHGDQGV\QHUJLHVOHYHUDJHG LQWR$%%

'ULYHFRPPHUFLDORSSRUWXQLWLHVLQVXE 3URJUHVVPDGHLQHQKDQFLQJWKHFRUSRUDWH$IULFDEDQNLQJ 6DKDUDQ$IULFDVSHFLILFDOO\DJULDQGWUDGH FDSDELOLW\ UHODWHG

2YHUKDXOIURQWOLQHFDSDELOLWLHVDQGHQGWR )LUVWVHJPHQWDWLRQDQDO\VLVFRPSOHWHG HQGSURFHVVHV 6DOHVSURFHVVFRQVWUDLQWVLGHQWLILHG 6DOHVHIIHFWLYHQHVVSURFHVVLQSURJUHVV

)RFXVRQULVNEDVHGGHEWSULFLQJRIQHZ 5LVNEDVHGSULFLQJDSSURDFKIXOO\HPEHGGHG DGYDQFHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 109 Business operations

Absa Business Bank

Business overview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©VVPDOOEXVLQHVVRSHUDWLRQV DQG SULFLQJQHZDGYDQFHVIRUULVN

Awards and accolades $EVD 9HKLFOH 0DQDJHPHQW 6ROXWLRQV $906 UHFHLYHG WZR *ROG$UURZDZDUGVDWWKHProfessional Management Review (PMR) Africa DZDUGV DFKLHYLQJ ILUVW SODFH LQ WKH H[FHOOHQFH FDWHJRU\IRUIOHHWPDQDJHPHQWDQGIOHHWFDUGVHUYLFHV 1RPLQDWHG DV ILQDOLVWV LQ WKH &DSH 0HGLD $FKLHYHU DZDUGV IRU WKH ILQDQFH VHFWRU DZDUG IRU WKH 6DOHV DQG 5HODWLRQVKLS 0DQDJHPHQW /HDGHUVKLS SURJUDPPH ZKLFK LV QRZ D )$,6 UHFRJQLVHGTXDOLILFDWLRQZLWKWKH)LQDQFLDO6HUYLFHV%RDUG Corporate advances and deposits (Rm and change %)

Æ5% 23 705 22 447 Corporate Å 7% 7KHFROODERUDWLRQZLWK$EVD&DSLWDOWKURXJKWKHLQWURGXFWLRQRIWKH 15 525 14 572 QHZ FRUSRUDWH FRYHUDJH PRGHO KDV HQDEOHG &RUSRUDWH WR RIIHU D KROLVWLF LQYHVWPHQW DQG WUDQVDFWLRQDO EDQNLQJ VROXWLRQ +LJKHU HOHFWURQLFEDQNLQJDQGFDVKYROXPHVXQGHUSLQQHGUREXVWUHYHQXH JURZWK$QXPEHURIQHZFOLHQWVZHUHRQERDUGHGRQWKHEDFNRID

Advances Deposits IRFXVHGPXOWLQDWLRQDO&RUSRUDWHVWUDWHJ\3URILWEHIRUHWD[JUHZE\ ● 2009 ● 2010 WR5PLOOLRQ 5PLOOLRQ

110 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Large Business Large Business advances and /DUJH %XVLQHVV FRQFHQWUDWHG RQ LQFUHDVLQJ FURVVVHOOLQJ LWV deposits (Rm and change %) VHFRQGDU\ PDUNHW HOHFWURQLF DQG LQWHUQDWLRQDO EDQNLQJ SURGXFWV Å9% DV ZHOO DV VSHFLDOLVHG ILQDQFLDO DQG ZRUNLQJ FDSLWDO VROXWLRQV Å2% 65 901 60 234 7LJKWFRVWFRQWUROZDVDSULRULW\VLQFHEDODQFHVKHHWJURZWKUHPDLQHG 56 559 57 471 VXEGXHG +LJK LPSDLUPHQW OHYHOV LQGLFDWH WKDW ODUJH EXVLQHVVHV UHPDLQXQGHUSUHVVXUHDIWHUWKHUHFHVVLRQ/DUJH%XVLQHVV©VSURILW EHIRUHWD[IHOOE\WR5PLOOLRQ 5PLOOLRQ 7KH EXVLQHVVJDLQHGSULPDU\EDQNLQJUHODWLRQVKLSVZKLFKRIIHUIXUWKHU RSSRUWXQLWLHVSDUWLFXODUO\LQWUDQVDFWLRQDOEDQNLQJ

Advances Deposits ● 2009 ● 2010

Medium Business Medium Business advances and 0HGLXP%XVLQHVV©VUHYHQXHJUHZLQDOOUHJLRQVZLWKWKHUHVXOWWKDW deposits (Rm and change %) SURILWEHIRUHWD[URVHE\WR5PLOOLRQ 5PLOOLRQ &URVVVHOOLQJ WR LWV H[LVWLQJ FXVWRPHUV DWWUDFWLQJ QHZ VHFRQGDU\ Æ4% PDUNHWV FXVWRPHUV DQG IRFXVLQJ RQ VSHFLDOLVHG ILQDQFH DQG 36 418 35 137 Å3% WUDQVDFWLRQDO EDQNLQJ UHPDLQHG SULRULWLHV LQ ,PSDLUPHQW 26 945 27 804 ORVVHVRQORDQVDQGDGYDQFHVLPSURYHGQRWLFHDEO\DQGRSHUDWLQJ H[SHQVHVUHPDLQHGZHOOPDQDJHG

Advances Deposits ● 2009 ● 2010

Small Business Small Business advances and 6PDOO %XVLQHVV©V SURILW EHIRUH WD[ JUHZ E\ WR 5 PLOOLRQ deposits (Rm and change %) 5 PLOOLRQ GHVSLWH NHHSLQJ IHHV IODW IRU WKH SDVW Å8% PRQWKV 7KH LQFUHDVH ODUJHO\ UHIOHFWV KHDOWK\ JURZWK LQ QHW 24 173 LQWHUHVWLQFRPHWLJKWFRVWFRQWURODQGORZHULPSDLUPHQWOHYHOV 22 326

Strategic focus Å1% 5 008 5 067 $%% DLPV WR XQORFN IXUWKHU YDOXH IURP WKH H[LVWLQJ FOLHQW EDVH WKURXJK FURVVVHOOLQJ DQG XSVHOOLQJ (QKDQFLQJ FRUH SURGXFWV OLNHWUDQVDFWLRQDOEDQNLQJZLOOEHDSULRULW\LQRUGHUWRGHHSHQDQG Advances Deposits ● 2009 ● 2010 H[SDQGSULPDU\EDQNLQJUHODWLRQVKLSVZLWKFOLHQWV,PSURYLQJFOLHQW LQVLJKWDQGVHJPHQWDWLRQZLOOEHLPSRUWDQWWREHFRPHDWUXHFOLHQW RULHQWDWHGEDQN7KHGLYLVLRQZLOODOVRFRPSUHKHQVLYHO\RYHUKDXOLWV HQGWRHQGFXVWRPHUSURFHVVDQGVDOHVRSHUDWLQJPRGHOWRLPSURYH FOLHQW HQJDJHPHQW ,PSURYLQJ RQ ULVN PDQDJHPHQW SUDFWLFHV LQ SDUWLFXODUWKHUHFRYHU\DQGEXVLQHVVVXSSRUWDUHDVUHPDLQVDNH\ SULRULW\IRU

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 111 Business operations

Absa Capital

Highlights Business unit scope 5HFHLYHG%HVW2YHUDOO,QYHVWPHQW%DQNLQ Absa Capital RIIHUV LQYHVWPHQW EDQNLQJ DQG ZHDOWK 6RXWK$IULFDIURPRisk MagazineDQGFDPHILUVW LQRXWRIWKHFDWHJRULHVIRUWKHSpire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

Key performance indicators Key business areas 2010 &KDQJH Investment Banking ÄVWUXFWXUHVLQQRYDWLYHVROXWLRQVWR PHHW FOLHQWV© VWUDWHJLF DFTXLVLWLRQ ILQDQFLQJ DQG ULVN Proﬁt PDQDJHPHQW UHTXLUHPHQWV DFURVV LQGXVWU\ VHFWRUV LQ 7RWDOLQFRPH 5P 5 226 6RXWK $IULFD DQG WKH VXE6DKDUDQ UHJLRQ ,W DOVR RIIHUV 7RWDOLQFRPHOHVVLPSDLUPHQW ORVVHVRQORDQVDQGDGYDQFHV 5P 5 118 SURGXFW H[SHUWLVH HQFRPSDVVLQJ ORDQV ERQGV DQG ,QYHVWPHQW%DQNLQJ 1 594 VWUXFWXUHG SURGXFWV VXFK DV SURMHFW ILQDQFH VWUXFWXUHG 0DUNHWV 3 180 3ULYDWH(TXLW\DQG HTXLW\ILQDQFHOHYHUDJHGILQDQFHDQGGHEWFDSLWDOPDUNHWV ,QIUDVWUXFWXUH,QYHVWPHQWV 22 ! 6LQJOHVWRFNIXWXUHVDQG MarketsÄRIIHUVWUDGLQJKHGJLQJDQGSULFLQJH[SHUWLVH RWKHU 28 ! DFURVVYDULRXVDVVHWFODVVHVWRDJOREDOFOLHQWEDVH $EVD:HDOWK 294 3URILWDWWULEXWDEOHWRRUGLQDU\ Private Equity and Infrastructure Investments Ä HTXLW\KROGHUVRIWKH*URXS 5P 1 480 ! 3ULYDWH (TXLW\ DFWV DV D SULQFLSDO E\ LQYHVWLQJ LQ HTXLW\ +HDGOLQHHDUQLQJV 5P 1 527 /RDQVDQGDGYDQFHVWR H[SRVXUHVWRFRPSDQLHVDQGRWKHUHQWLWLHV,QIUDVWUXFWXUH FXVWRPHUV 5P 50 044 ,QYHVWPHQWV DFWV DV D SULQFLSDO LQ HTXLW\ H[SRVXUHV WR 'HSRVLWVGXHWRFXVWRPHUV 5P 127 462 5HWXUQRQHFRQRPLFFDSLWDO 16,5 HQWLWLHV IRFXVHG RQ LQIUDVWUXFWXUH GHYHORSPHQW LQ VXE 5HWXUQRQDYHUDJHDVVHWV 0,41 6DKDUDQ$IULFD &RVWWRLQFRPHUDWLR 54,3

People 1XPEHURISHUPDQHQWHPSOR\HHV 1 478 Headline earnings (Rm) (PSOR\HHWXUQRYHUUDWH 12,2 3HUFHQWDJHRI$IULFDQ&RORXUHG DQG,QGLDQHPSOR\HHV 51,5 2 276 3HUFHQWDJHRIVHQLRU PDQDJHPHQWWKDWDUH$IULFDQ &RORXUHGDQG,QGLDQ 22,7 1 527 3HUFHQWDJHRIVHQLRUPDQDJHPHQW 1 272 WKDWDUHIHPDOH 14,1

Notes 1 National interest has been allocated to the business units for the ﬁrst time in 2010. Comparatives have been reclassiﬁed accordingly. 2 South African operations. 3Based on permanent employee complement. 2008 2009 2010 Absa’s environmental data is not reported at a segment level at present.

112 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Absa Wealth Ä SURYLGHV D IXOO UDQJH RI RQVKRUH DQG RIIVKRUH ZHDOWKPDQDJHPHQWVHUYLFHVWRLQGLYLGXDOVDQGIDPLOLHVLQWKHKLJK DQGXOWUDKLJKQHWZRUWKPDUNHW

2010 review Financial performance +HDGOLQHHDUQLQJVLQFUHDVHGE\WR5PLOOLRQ 5 PLOOLRQ DQG DWWULEXWDEOH HDUQLQJV LQFUHDVHG WR 5 PLOOLRQ 5PLOOLRQ 7KHODUJHJURZWKLQDWWULEXWDEOHHDUQLQJVLVGXH WRVLQJOHVWRFNIXWXUHVLPSDLUPHQWVIURPWKHSULRU\HDU3ULYDWH(TXLW\ UHYHQXH URVH VLJQLILFDQWO\ IURP WKH SULRU \HDU DV D UHVXOW RI DQ LPSURYHG SHUIRUPDQFH LQ WKH LQYHVWPHQW SRUWIROLR DQG UHGXFHG IXQGLQJ FRVWV 0DUNHWV UHYHQXH KHOG XS UHODWLYHO\ ZHOO FRQVLGHULQJ UHGXFHGFOLHQWIORZV:LWKFOLHQWDFWLYLW\OHYHOVEHORZ,QYHVWPHQW %DQNLQJ©VUHYHQXHGHFOLQHGE\$EVD:HDOWK©VQHWUHYHQXHJUHZ E\RZLQJWRLPSURYHGEDQNLQJDQGFUHGLWPDUJLQV$EVD&DSLWDO FRQWLQXHGWRH[SDQGLQWR$IULFDDQGDWWULEXWDEOHLQFRPHIURPWKHUHVW RI$IULFDJUHZE\WR5PLOOLRQ)XUWKHULQYHVWPHQWLQV\VWHPV LQIUDVWUXFWXUH DQG WDOHQW FRQWULEXWHG WR WKH ULVH LQ RSHUDWLQJ H[SHQVHVDQGDFRVWWRLQFRPHUDWLR$EVD&DSLWDO©VUHWXUQRQ UHJXODWRU\FDSLWDOZDVIRU

Strategy implementation

Objective Delivery

,QFUHDVLQJWKHQXPEHURIIUDQFKLVHV 6XFFHVVIXOPLJUDWLRQRIFRUSRUDWHFRYHUDJHWHDPDQGODUJH FRUSRUDWHFOLHQWVIURP$%% /DXQFKHG3$&();DIRUHLJQH[FKDQJHHOHFWURQLFH[HFXWLRQ SODWIRUPIRUFRUSRUDWHDQGLQVWLWXWLRQDOFOLHQWV

'HHSHQLQJWKHSURGXFWRIIHULQJ (QKDQFHGWKHWUHDVXU\SURGXFWRIIHULQJDQGLQWURGXFHGWKUHHQHZ SURGXFWVLQ7DQ]DQLD 6XFFHVVIXOLQWHJUDWLRQRI$EVD:HDOWK

6WHSFKDQJHJURZWKLQLWLDWLYHVWKURXJKQHZ 6XFFHVVIXOUROORXWRI&DVK(TXLWLHV(TXLW\&DSLWDO0DUNHWVDQG EXVLQHVVOLQHV 3ULPH6HUYLFHVIUDQFKLVHV

$WWUDFWLQJGHYHORSLQJDQGUHWDLQLQJWRS 2QJRLQJLQYHVWPHQWLQWDOHQWOLIHF\FOH WDOHQW

,QFUHDVHGFROODERUDWLRQZLWKRWKHU ,QFORVHDIILOLDWLRQZLWK%DUFOD\V$EVD&DSLWDOUHPDLQHGWKHWRS EXVLQHVVXQLWVZLWKLQ$EVD*URXSDQG DUUDQJHURIFRUSRUDWHERQGVE\6RXWK$IULFDQLVVXHUVLQ %DUFOD\V&DSLWDO 7RJHWKHUZLWK1%&WUDQVDFWHGD=$57=6OHYHUDJHGIRUZDUGIRU DODUJH7DQ]DQLDQFRUSRUDWH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 113 Business operations

Absa Capital

Business overview Awards and accolades $EVD&DSLWDOUHFHLYHGWKHIROORZLQJDZDUGVGXULQJ EuromoneySURMHFWILQDQFH'HDORIWKH

Investment Banking Investment Banking – salient features 1HW UHYHQXH GHFOLQHG E\ WR 5 PLOOLRQ PDLQO\ 2010 &KDQJH RZLQJ WR WKH FRUSRUDWH VHFWRU©V FRQWLQXHG ORZ GHPDQG Rm 5P IRU FUHGLW ,QFRPH IURP IHH EXVLQHVV IHOO E\ WR 5 5HYHQXH PLOOLRQUHIOHFWLQJPXWHGFRUSRUDWHDFWLYLW\DQGORZOHYHOVRI )HHEXVLQHVV 169 IXQGUDLVLQJDFWLYLW\LQ6RXWK$IULFDQFDSLWDOPDUNHWV,QFRPH 0DUJLQEXVLQHVV 1 425 IURP PDUJLQ EXVLQHVV GHFOLQHG E\ WR 5 PLOOLRQ SDUWO\ DV D UHVXOW RI D GHFUHDVH LQ LQWHUEDQN OHQGLQJ DQG WLJKWHUVSUHDGV

Markets Markets – revenue mix (Rm and change %) 7KH 0DUNHWV EXVLQHVV GHOLYHUHG D UHVLOLHQW SHUIRUPDQFH

Æ12% DJDLQVW WKH EDFNGURS RI JHQHUDOO\ UHGXFHG FOLHQW DFWLYLW\ 1 589 DFURVV PRVW DVVHW FODVVHV ORZHU PDUNHW YRODWLOLW\ DQG 1 405 WLJKWHU WUDGLQJ VSUHDGV 1HW UHYHQXH GHFUHDVHG E\ WR

0% 5 PLOOLRQ 5 PLOOLRQ 7KH VXE6DKDUDQ Æ49% $IULFD IUDQFKLVH FRQWLQXHG WR GHYHORS JURZLQJ WUDGLQJ DQG 692 637 636 Å Å21% 4% FOLHQW UHYHQXHV DQG EXVLQHVV DUHDV VXFK DV FUHGLW WUDGLQJ 354 329 342 Å>100% 235 285 DQGSULPHVHUYLFHVLQFUHDVHGWKHLUUHYHQXHVIURPDORZ 158 (66) EDVH

Fixed Foreign Equity Prime Africa Other Income Exchange and Services and Credit Commodities ● 2009 ● 2010

114 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Private Equity and Infrastructure Investments Private Equity and Infrastructure 3ULYDWH (TXLW\ DQG ,QIUDVWUXFWXUH ,QYHVWPHQWV UHFRUGHG QHW Investments – salient features UHYHQXHRI5PLOOLRQIRUWKH\HDUXQGHUUHYLHZDVXEVWDQWLDO 2010 &KDQJH LPSURYHPHQWRQ©V5PLOOLRQUHYHQXHORVV

7KRXJK WKH WRWDO SRUWIROLR UHGXFHG IURP 5 ELOOLRQ WR 7RWDOSRUWIROLRVL]H 5EQ 6,1 5ELOOLRQLWUHPDLQVZHOOGLYHUVLILHGE\LQGXVWU\ 1HWUHYHQXH 5P 22 !

5HYDOXDWLRQV 48 ! Absa Wealth 5HDOLVDWLRQVGLYLGHQGV 165 ! $EVD:HDOWKLQFUHDVHGQHWUHYHQXHE\7KLVLQFUHDVH LQWHUHVWDQGIHHV ZDVGULYHQE\JURZWKLQQRQLQWHUHVWLQFRPHDQGLPSURYHG )XQGLQJ (191) EDQNLQJ DQG FUHGLW PDUJLQV 1RQLQWHUHVW LQFRPH JURZWK RI UHIOHFWHG LQFUHDVHG VDOHV RI VWUXFWXUHG OHQGLQJ DQG LQYHVWPHQW VROXWLRQV $EVD :HDOWK H[SHULHQFHG KLJK LPSDLUPHQW ORVVHV RQ ORDQV DQG DGYDQFHV GXH WR GLIILFXOW FRQGLWLRQV LQ WKH FRPPHUFLDO SURSHUW\ ILQDQFH VHFWRU Absa Wealth – client balances &RQWLQXHGLQYHVWPHQWVZHUHPDGHWRDWWUDFWDQGUHWDLQWDOHQW (Rm and change %) Å LQ SURGXFW FDSDELOLW\ DQG LQIUDVWUXFWXUH WR VXSSRUW IXWXUH 3% 10 897 11 218 Å12% JURZWK 9 735 8 705 Strategic focus Æ29% 5 922

$EVD&DSLWDOLVZHOOSRVLWLRQHGIRUJURZWKGULYHQE\IUDQFKLVH 4 200 SHQHWUDWLRQ DQG LQFUHPHQWDO GHHSHQLQJ RI WKH SURGXFW RIIHULQJ7KHHIIRUWVLQWRIRFXVRQNH\EXVLQHVVOLQHV VXFKDVFDVKHTXLWLHVHTXLW\FDSLWDOPDUNHWVSULPHVHUYLFHV Deposits Advances Assets under DQG PHUJHUV DQG DFTXLVLWLRQV ZLOO SURYLGH WKH SODWIRUP IRU administration JURZWK LQ )XUWKHUPRUH $EVD &DSLWDO ZLOO FRQWLQXH WR ● 2009 ● 2010 EXLOGWKHFRUSRUDWHRIIHULQJDQGVROXWLRQVDVZHOODVJURZLQJ WKH IRUHLJQ H[FKDQJH FOLHQW IUDQFKLVH &DSLWDO RSWLPLVDWLRQ DQG PDLQWDLQLQJ D VWURQJ FRQWURO HQYLURQPHQW UHPDLQ FRUH JXLGLQJSULQFLSOHVXQGHUSLQQLQJDOOLQLWLDWLYHV 7KH$IULFDUHJLRQLVDQLPSRUWDQWFRPSRQHQWRIWKH%DUFOD\V (PHUJLQJ 0DUNHWV IUDQFKLVH $EVD &DSLWDO KDV SRVLWLRQHG LWVHOIWRWDNHDGYDQWDJHRIWKHJURZWKRSSRUWXQLWLHVWKURXJKRXW WKHFRQWLQHQW*URZWKLVQRWSRVVLEOHZLWKRXWSHRSOHDQGWKXV DWWUDFWLQJGHYHORSLQJDQGUHWDLQLQJWRSWDOHQWZLOOUHPDLQD NH\IRFXV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 115 Business operations

Financial Services

Highlights Business unit scope 7KH )LQDQFLDO 6HUYLFHV VHJPHQW SURYLGHV LQVXUDQFH /LIH©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ey business areas )LGXFLDU\VHUYLFHV©QXPEHURIPHPEHUVXQGHU Life Insurance (Life) Ä RIIHUV OLIH LQVXUDQFH FRYHULQJ DGPLQLVWUDWLRQJUHZE\ GHDWKGLVDELOLW\DQGUHWUHQFKPHQWDVZHOODVIXQHUDODQG $WWULEXWDEOHHDUQLQJVDIWHUWD[PDLQWDLQHGDW LQYHVWPHQWSURGXFWV SULRU\HDUOHYHOVLQDFKDOOHQJLQJHQYLURQPHQW Short-term Insurance (Insurance) Ä SURYLGHV VKRUW $Q5R(RIDQGDUHWXUQRQ HPEHGGHGYDOXHZDVDFKLHYHG WHUP LQVXUDQFH VROXWLRQV WR WKH UHWDLO DQG FRPPHUFLDO $EVD/LIH©VHPEHGGHGYDOXHHDUQLQJV PDUNHW VHJPHQWV &XVWRPLVHG VKRUWWHUP VROXWLRQV DUH LQFUHDVHGE\WR5PLOOLRQIURP DOVR RIIHUHG WR FRUSRUDWH FXVWRPHUV idirect D GLUHFWWR 5PLOOLRQ FXVWRPHUVKRUWWHUPVROXWLRQLVDOVRDYDLODEOHWRWKHUHWDLO idirectLVJDLQLQJWUDFWLRQ PDUNHW 2EWDLQHGDOLFHQFHWRRSHUDWHLQ%RWVZDQD Investments Ä FRQVLVWV RI VL[ EXVLQHVVHV ZKLFK ZRUN FROODERUDWLYHO\ WR RIIHU LQGLYLGXDO DQG LQVWLWXWLRQDO FOLHQWV DFFHVV WR KLJKTXDOLW\ LQYHVWPHQW SURGXFWV DQG VHUYLFHV Key performance indicators LQFOXGLQJ DVVHW PDQDJHPHQW SULYDWH FOLHQW DVVHW 2010 &KDQJH PDQDJHPHQWPXOWLPDQDJHPHQWXQLWWUXVWVVWRFNEURNLQJ SDUWLFLSDWLRQERQGVDQGOLQNHGLQYHVWPHQWV Proﬁt Fiduciary Ä RIIHUV UHWLUHPHQW IXQG DGPLQLVWUDWLRQ 1HWLQVXUDQFHSUHPLXPLQFRPH 5P 4 468 FRQVXOWLQJDQGDFWXDULDOVHUYLFHV,WDGPLQLVWHUVGHFHDVHG 3URILWDWWULEXWDEOHWRRUGLQDU\ HVWDWHVDQGSURYLGHVWUXVWHHVHUYLFHVIRUSHUVRQDOIDPLO\ HTXLW\KROGHUV 5P 1 290 /LIH 662 FKDULWDEOHDQGHPSOR\HHEHQHILWWUXVWV ,QVXUDQFH 278 Distribution Ä RQH RI WKH ODUJHVW ILQDQFLDO LQYHVWPHQW ,QYHVWPHQWV 300 2WKHU 50 DQGULVNDGYLVRU\FRPSDQLHVLQ6RXWK$IULFD,WSURYLGHV +HDGOLQHHDUQLQJV 5P 1 291 WKHIXOOVSHFWUXPRIILQDQFLDODGYLVRU\VHUYLFHVDQGDFWVDV 5HWXUQRQDYHUDJHHTXLW\ 34,8 (PEHGGHGYDOXHRIQHZ DQ LQWHUPHGLDU\ EHWZHHQ $EVD FXVWRPHUV DQG YDULRXV EXVLQHVV 5P 465 RWKHUSURGXFWSURYLGHUV 8QGHUZULWLQJPDUJLQ 5,2 $VVHWVXQGHUPDQDJHPHQW 5EQ 163

People &RQWUDFWXDOILQDQFLDOVHUYLFHV Headline earnings (Rm) UHODWLRQVKLSV PLOOLRQV 5,8 1XPEHURISHUPDQHQWHPSOR\HHV 2 885 1 474 (PSOR\HHWXUQRYHUUDWH 10,3 1 300 1 291 3HUFHQWDJHRI$IULFDQ&RORXUHG DQG,QGLDQHPSOR\HHV 61,8 3HUFHQWDJHRIVHQLRUPDQDJHPHQW WKDWDUH$IULFDQ&RORXUHGDQG ,QGLDQHPSOR\HHV 18,8 3HUFHQWDJHRIVHQLRUPDQDJHPHQW WKDWDUHIHPDOH 17,5

Notes 2008 2009 2010 1South African operations. 2Based on permanent employee complement. Absa’s environmental data is not reported at a segment level at present.

116 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 review Financial performance +HDGOLQH HDUQLQJV GHFOLQHG PDUJLQDOO\ WR 5 PLOOLRQ 'HFHPEHU 5PLOOLRQ LQDWRXJKRSHUDWLQJHQYLURQPHQW)LQDQFLDO6HUYLFHV© DWWULEXWDEOH HDUQLQJV UHPDLQHG UHODWLYHO\ XQFKDQJHG DW 5 PLOOLRQ 'HFHPEHU 5 PLOOLRQ 1RQHWKHOHVV LW DFKLHYHG D 5R( 'HFHPEHU /LIH DQG ,QVXUDQFH GHOLYHUHG VWURQJ JURVVSUHPLXPJURZWKRIDQGUHVSHFWLYHO\$EVD/LIH©VHPEHGGHG YDOXHRIQHZEXVLQHVVJUHZE\\HDURQ\HDUWR5PLOOLRQDQGLWV UHWXUQRQHPEHGGHGYDOXH 5R(9 ZDV$VVHWVXQGHUPDQDJHPHQW LQFUHDVHG E\ WR 5 ELOOLRQ 6KRUWWHUP LQVXUDQFH FODLPV UHPDLQHG KLJKUHODWLYHWRKLVWRULFDOWUHQGVDWDOWKRXJKWKH\ZHUHVOLJKWO\EHORZ ©V,QYHVWPHQWVLQGLVWULEXWLRQFKDQQHOVDQGWHFKQRORJ\DVZHOO DV LQFUHDVHG EXVLQHVV YROXPHV DQG QHZ PDQGDWHV VHFXUHG LQFUHDVHG RSHUDWLQJH[SHQVHVE\\HDURQ\HDU

Strategy implementation Objective Delivery

$FFHOHUDWLQJRUJDQLFJURZWKWKURXJKWKH JURZWKLQ$80 SURYLVLRQRIDFRPSHOOLQJYDOXHSURSRVLWLRQ 9DOXHRIQHZEXVLQHVVLQ/LIHXS 5HYHQXHIURPHPSOR\HHEHQHILWEXVLQHVVXS

,PSURYLQJFURVVVHOOLQJWRWKH$EVDFXVWRPHU /LIHLQVXUDQFHSUHPLXPVXS EDVH 6KRUWWHUPLQVXUDQFHSUHPLXPVXS

5HWDLQLQJH[LVWLQJDVVHWVDQGFXVWRPHUV 5HGXFWLRQLQSROLF\ODSVHUDWHVLQERWKLQVXUDQFHEXVLQHVVHV *URZWKLQPRQH\PDUNHWDQGHTXLW\IXQGV

([SDQGLQJWKH$IULFDQILQDQFLDOVHUYLFHV *UHHQILHOGVRSHUDWLRQLQ%RWVZDQDHVWDEOLVKHG RSHUDWLRQV

(QKDQFLQJGLVWULEXWLRQFKDQQHOV 'LJLWDOGLVWULEXWLRQFKDQQHOVHQKDQFHG

,PSURYLQJHIILFLHQFLHV :RUNIORZLPSOHPHQWHG 1HZRSHUDWLQJV\VWHPVIRULQVXUDQFHEXVLQHVVHVWRJROLYHHDUO\

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 117 Business operations

Financial Services

Business overview Awards and accolades 5HFHLYHG WKH Raging Bull DZDUGV IRU WKH ILYH\HDU SHUIRUPDQFHRIWKH$EVD6HOHFW(TXLW\)XQGDQGWKH$EVD %DODQFHG)XQG 7KH 6unday Times 7RS %UDQGV VXUYH\ YRWHG $EVD ,QVXUDQFH&RPSDQ\WKHQXPEHUWZRVKRUWWHUPLQVXUDQFH FRPSDQ\LQ

Life Life – salient features (Rm and change %) ,PSURYHGSHQHWUDWLRQRIWKH$EVDFXVWRPHUEDVHVWDELOLVLQJ Å25% UHWHQWLRQRQPRVWSURGXFWOLQHVWRJHWKHUZLWKDKLJKHUPDUNHW 1 732 VKDUHRIDGYLVHUEXVLQHVVJHQHUDWHGVWURQJJURZWKLQJURVV

1 386 SUHPLXPLQFRPHZKLFKLQFUHDVHGE\WR5PLOOLRQ

Å16% 7KHHPEHGGHGYDOXHRIQHZEXVLQHVVLQFUHDVHGE\WR Å13% 880 5PLOOLRQDQGHPEHGGHGYDOXHHDUQLQJVRI5PLOOLRQ 761 662 587 UHSUHVHQWHGDUHWXUQRQHPEHGGHGYDOXH$WWULEXWDEOH HDUQLQJVURVHWR5PLOOLRQ

Gross premium Attributable Annual premium income earnings equivalent ● 2009 ● 2010

Insurance – salient features Insurance 2010 $EVD,QVXUDQFHDQG$EVDidirectJURVVSUHPLXPLQFUHDVHG &KDQJH E\ WR 5 PLOOLRQ $ PDUNHG LQFUHDVH LQ ZHDWKHU UHODWHG FODLPV SDUWLFXODUO\ LQ WKH ODVW TXDUWHU RI WKH \HDU 1HWDVVHWYDOXH 5P 1 424 $WWULEXWDEOH QHJDWLYHO\LPSDFWHGWKH3HUVRQDO/LQHVDQG$JULSRUWIROLRV© HDUQLQJV 5P 278 XQGHUZULWLQJ SHUIRUPDQFH 7KH RYHUDOO XQGHUZULWLQJ UHVXOW *URVVSUHPLXPV 5P 3 420 RI 5 PLOOLRQ IRU WKH \HDU XQGHU UHYLHZ ZDV KLJKHU 8QGHUZULWLQJ VXUSOXV 5P 445 WKDQLQ7KHFRPELQHGUDWLRRILPSURYHGIURPWKH 8QGHUZULWLQJ DFKLHYHGLQ$WWULEXWDEOHHDUQLQJVLQFUHDVHGE\ PDUJLQ 5,2 WR5PLOOLRQ 6ROYHQF\PDUJLQ 55,3 /RVVUDWLR 68,5

118 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Investments Investments – salient features $80JUHZE\WR5ELOOLRQDW'HFHPEHUDLGHG 2010 &KDQJH E\QHWLQIORZVRI5ELOOLRQIRUWKH\HDU7KHPRQH\PDUNHW IXQG LQFUHDVHG QHDUO\ 5 ELOOLRQ ZKLOH RXWIORZV IURP WKH $WWULEXWDEOHLQFRPH GLYLGHQGLQFRPHIXQGGXHWRLQGXVWU\DQGUHJXODWRU\FKDQJHV 5P 300 RIIVHW VROLG JURZWK LQ RWKHU IXQGV 0DUJLQV GHFOLQHG VOLJKWO\ *URVVPDUJLQ ESV 46,0 IURPEDVLVSRLQWV ESV LQWRESVLQRZLQJ 1HWIORZV 5EQ 11,3 WRDKLJKHUSURSRUWLRQRILQVWLWXWLRQDOIXQGVXQGHUPDQDJHPHQW 1HWPRQH\PDUNHW IORZV 5EQ 10,9 ! 1HWQRQPRQH\ PDUNHWIORZV 5EQ 0,4 $80 5EQ 163 Fiduciary services 7RWDO UHYHQXH LQFUHDVHG E\ EXW HDUQLQJV IHOO WR 5 PLOOLRQ 7KH HPSOR\HH EHQHILWV EXVLQHVV DFTXLUHG VHYHUDO QHZ HPSOR\HH EHQHILWV DGPLQLVWUDWLRQ PDQGDWHV VRPH RI ZKLFK UHTXLUHG LQYHVWPHQW LQ UHVRXUFHV EXW DUH Fiduciary services – salient features H[SHFWHGWREHSURILWDEOHLQIXWXUH 2010 &KDQJH

$WWULEXWDEOH 93 Distribution HDUQLQJV 5P $VVHWVXQGHU 6 482 7KH HFRQRPLF HQYLURQPHQW UHPDLQHG FKDOOHQJLQJ DQG PDQDJHPHQW¤ LPSDFWHGWKLVEXVLQHVV©VDELOLW\WRDWWUDFWDQGUHWDLQWDOHQWRQ $EVD7UXVW 5P D SXUHO\ FRPPLVVLRQEDVHG UHPXQHUDWLRQ PRGHO 7KLV ZDV 9DOXHRIHVWDWHV 599 GLVWULEXWHG 5P IXUWKHUFRPSOLFDWHGE\FRPSHWLWRUVHPSOR\LQJXQVXVWDLQDEOH 0HPEHUVXQGHU 606 551 PHWKRGV WR DWWUDFW QHZ EXVLQHVV $EVD ,QVXUDQFH DQG DGPLQLVWUDWLRQ )LQDQFLDO$GYLVRUVVXFFHVVIXOO\LPSOHPHQWHGDQDFDGHP\WR QXPEHURIPHPEHUV GHYHORSQHZDGYLVHUWDOHQW

Strategic focus Distribution force (number)

7KH)LQDQFLDO6HUYLFHVVHJPHQWLVZHOOSODFHGWREHQHILWHYHQ 800 PRUHIURPLWVUHODWLRQVKLSZLWK5HWDLO%DQNLQJ$EVD%XVLQHVV %DQN$EVD:HDOWKDQG%DUFOD\VDQGIURPDGRSWLQJWKH2QH 621 $EVDVWUDWHJ\7KHEXVLQHVVIRFXVZLOOEHRQPDLQWDLQLQJLWV 509 496 SUHPLXPDQG$80JURZWKPRPHQWXPE\IXUWKHUOHYHUDJLQJ V\QHUJLHV SUHVHQWHG E\ *URXS UHODWLRQVKLSV DQG LPSURYLQJ

LQVLJKW LQWR LWV FXVWRPHU EDVH WR EHWWHU SHQHWUDWH DQG 165 144 106 VHUYLFHHDFKXQLTXHFXVWRPHUVHJPHQWLQFOXGLQJWKHZHDOWK 64 VHJPHQW %XLOGLQJ EHWWHU DQG PRUH FRQYHQLHQW GLVWULEXWLRQ Life Short-term Tied Call centre FKDQQHOVDQGUHWDLQLQJVDOHVVWDIIZLOOUHPDLQDSULRULW\ advisers advisers agents (including idirect) ● ● 7R DFFHOHUDWH WKH H[HFXWLRQ RI LWV VWUDWHJ\ DQG H[WHQG LWV 2009 2010 JHRJUDSKLF IRRWSULQW LQWR VXE6DKDUDQ $IULFD )LQDQFLDO 6HUYLFHV ZLOO ORRN DW DOO RSSRUWXQLWLHV WR H[SDQG LQWR $IULFD ZKLOHLQYHVWLQJLQWHFKQRORJ\DQGFDSDFLW\VRWKDWLWUHPDLQV FRPSHWLWLYHDQGFXVWRPHURULHQWDWHG

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 119 Business operations

Information technology

Highlights Introduction

Technology, in the ﬁnancial services industry, is pivotal (QKDQFHG,7JRYHUQDQFHVWUXFWXUHVWKURXJK for the effective and efﬁcient delivery of services. Every WKHHVWDEOLVKPHQWRIWKH$EVD,QIRUPDWLRQ product, channel and customer depends on the effective 7HFKQRORJ\6WHHULQJ&RPPLWWHH use of technology. 'HOLYHUHGDVLJQLILFDQWQXPEHURISURMHFWV ZLWKWDQJLEOHEHQHILWVDFFUXLQJ IT governance ,PSURYHGHIILFLHQFLHVRZLQJWRV\VWHP $EVDKDVDQXPEHURIJRYHUQDQFHERGLHVWRHQVXUHWKDWLWV HQKDQFHPHQWVDXWRPDWHGFRQILUPDWLRQ WHFKQRORJ\ HQGHDYRXUV FRPSO\ ZLWK DOO UHOHYDQW UHJXODWRU\ PDWFKLQJDQGVWUDLJKWWKURXJKSURFHVVLQJ DQG UHODWHGSDUW\ UHTXLUHPHQWV ,Q SDUWLFXODU WKHUH DUH WZR DXWRPDWLRQ FRPPLWWHHV HQWUXVWHG ZLWK HQVXULQJ WKDW WKH *URXS $EVD$IULFD,7ZDVDZDUGHGWKHiCMG LPSOHPHQWV DQG PRQLWRUV ,7 JRYHUQDQFH QDPHO\ WKH Architecture Excellence AwardIRUEXVLQHVV ,QIRUPDWLRQ7HFKQRORJ\6WHHULQJ&RPPLWWHH ,76& DQGWKH DQG,7LQQRYDWLRQLQWKHPHUJHUVDQG 5LVNDQG&RQWURO&RPPLWWHH 5 && DFTXLVLWLRQFDWHJRU\ Absa’s IT charter and policies

$EVD©V ,7 FKDUWHU LV DUWLFXODWHG WKURXJK WKH *URXS©V WHFKQRORJ\ ULVN FRQWURO IUDPHZRUN ZKLFK LV DOLJQHG WR WKH &RQWURO 2EMHFWLYHV IRU ,QIRUPDWLRQ DQG UHODWHG 7HFKQRORJ\ &R%LW LQWHUQDWLRQDOEHVWSUDFWLFHIUDPHZRUNDQGDSSURYHG E\WKH*5&0&LQDOLJQPHQWZLWK$EVD©VSULQFLSDOULVNSROLF\

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

7KH FRQWURO UHTXLUHPHQWV PDQGDWHG E\ WKH IUDPHZRUN DUH DSSOLFDEOHWRDOOOD\HUVRIWHFKQRORJ\LQFOXGLQJDSSOLFDWLRQV RSHUDWLQJV\VWHPVGDWDEDVHVDQGVXSSRUWLQJLQIUDVWUXFWXUH

120 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU XQOHVVRWKHUZLVHH[SOLFLWO\VWDWHG7KHWHFKQRORJ\ULVNSROLF\IUDPHZRUNVHWVRXWWKHJRYHUQDQFHFRQWUROVVWDQGDUGV JXLGDQFHDQGSURFHGXUHVIRU,7ZLWKLQWKH*URXS

Effectiveness of Absa’s IT controls

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

IT structure

*URXS7HFKQRORJ\SURYLGHVLQIRUPDWLRQWHFKQRORJ\VHUYLFHVWRDOOWKH*URXS©VRSHUDWLRQVDQGLVVWUXFWXUHGLQDZD\ WKDWRSWLPLVHVWKHXVHRIUHVRXUFHVZKLOHEULQJLQJIRFXVWRWKHYDULRXVVHFWRUVDQGEXVLQHVVFOXVWHUV7KURXJKWKH GHILQHGWHFKQRORJ\VWUXFWXUHVZKLFKLQFOXGHIRFXVHGWHDPVKHDGHGXSE\VSHFLDOLVWVHFWRUFKLHILQIRUPDWLRQRIILFHUV ,7JRYHUQDQFHLPSOHPHQWDWLRQLVDIRFXVHGHIIRUWWKDWLVHIIHFWLYHO\H[HFXWHGWKURXJKRXWWKHRUJDQLVDWLRQ7KH*URXS 7HFKQRORJ\RSHUDWLQJPRGHODQGJRYHUQDQFHSURFHVVDOVRHQFRXUDJHVFURVVGLYLVLRQDOFROODERUDWLRQDQGVWUDWHJLF GHFLVLRQPDNLQJ

Absa’s IT strategy

,QIRUPDWLRQWHFKQRORJ\LVDYLWDOHQDEOHURIWKH2QH$EVDVWUDWHJ\ZLWKWKHIRXUVWUDWHJLFSLOODUVXVHGWRVKDSH$EVD©V ILYH\HDU,7VWUDWHJ\WKHDLPRIZKLFKLVWRHQVXUHVLPSOHVWUHDPOLQHGFXVWRPHUGHOLYHU\ZKLOHDOVRHQVXULQJJRRG JRYHUQDQFHDQGULVNPDQDJHPHQW

$EVD©VNH\,7VWUDWHJLFSULQFLSOHVKDYHEHHQGHILQHGLQVXSSRUWRIWKH2QH$EVDVWUDWHJ\DQGDUHDVIROORZV ([DPLQLQJH[LVWLQJ DQGSODQQHG DUHDVRIGXSOLFDWLRQDQGGULYLQJDUFKLWHFWXUDOHIILFLHQF\DQGFRQVLVWHQF\DFURVV WKH*URXS /HYHUDJLQJH[LVWLQJFDSDELOLWLHVDQGSODQQHGLQYHVWPHQWVZKHUHWKHVHDUHILWIRUSXUSRVH 0DNLQJHIIHFWLYHXVHRIEHQFKPDUNLQJDQGEHVWSUDFWLFH 6LPSOLI\LQJ$EVD©VFXUUHQWWHFKQRORJ\HQYLURQPHQWDQGGULYLQJGRZQWRWDOFRVWRIRZQHUVKLS 5HFRJQLVLQJVKRUWWHUPEXVLQHVVUHVLOLHQFHUHPHGLDWLRQZKLOHVXSSRUWLQJIXWXUHEXVLQHVVFDSDELOLWLHV

,QRUGHUWRDFKLHYHWKH*URXS©V,7VWUDWHJ\DILYH\HDUURDGPDSKDVEHHQGHYHORSHG$OWRJHWKHUVHYHQNH\LQLWLDWLYHV KDYHEHHQLGHQWLILHGDVEHLQJFULWLFDOWRWKHHQDEOHPHQWRIWKH*URXS©V,7VWUDWHJ\ Integrated ﬁnance and risk: $Q LQWHJUDWHG DQG VLQJOH YLHZ RI WKH FXVWRPHU ZLOO HQVXUH WKDW $EVD LV DEOH WR WUDQVIRUPLWVFXVWRPHUFDSDELOLWLHVWRVXSSRUWEXVLQHVVJURZWKLQQRYDWLRQDQGH[SDQVLRQ Workﬂow and document management:7KHVWDQGDUGLVDWLRQRI$EVD©VGRFXPHQWPDQDJHPHQWV\VWHPRQWRDQ HQWHUSULVHV\VWHPLPSOHPHQWDWLRQRIZRUNIORZWRUHGXFHPDQXDOWDVNVDQGUHPRYHSDSHUDQGWKHDXWRPDWLRQRI EXVLQHVV SURFHVVHV LQ NH\ IXQFWLRQV OHDGLQJ WR UHGXFHG FRVWV UHGXFHG FRPSOH[LW\ HIILFLHQW SURFHVV DQG DQ HQKDQFHGFXVWRPHUH[SHULHQFH Pricing and billing:$FHQWUDOELOOLQJDQGSULFLQJHQJLQHDORQJZLWKDFHQWUDOSURGXFWFDWDORJXH Forex centre of excellence:$*URXSZLGHIRUHLJQH[FKDQJHFDSDELOLW\WRVWDQGDUGLVHWKHFXUUHQWSURFHVVHVDQG WHFKQRORJLHV EHLQJ HPSOR\HGZKLOH DGGUHVVLQJ WKH RUJDQLVDWLRQDO FKDQJHV QHFHVVDU\ WR HQDEOH DQ LQFUHDVH LQ IRUHLJQH[FKDQJHUHODWHGVDOHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 121 Business operations

Information technology

,ntegrated channel management: ,QWHJUDWHG DQG FURVVFKDQQHO PDQDJHPHQW LQFOXGLQJ DQ DJUHHG HQGVWDWH DUFKLWHFWXUHWRHQVXUHFRVWHIIHFWLYHIOH[LEOHFKDQQHOVFDSDELOLW\

Enterprise information management: $ QHZ PDQDJHPHQW LQIRUPDWLRQ LQIUDVWUXFWXUH ZLWK DSSURSULDWH VHFWRU EXVLQHVV PDUWV WKDW KDYH DQDO\WLF DQG UHSRUWLQJ FDSDELOLWLHV GHILQHG SURFHVVHV PDVWHU GDWD PDQDJHPHQW DQG DGHILQHGWRROVHW

Data centre remediation:%XVLQHVVFDSDELOLWLHVWRLPSURYHUHVLOLHQFHDXWRPDWHRSHUDWLRQVLQFUHDVHDJLOLW\DQG UHGXFHFRVWVWKHUHE\SURYLGLQJDPRUHVHFXUHHQWHUSULVHHQYLURQPHQWDQGWRSRVLWLRQWKHGDWDFHQWUHWRRSHUDWH DVDFORXGHQDEOHGLQIUDVWUXFWXUHVHUYLFH

2010 review

&ORVH WR ,7 SURMHFWV ZHUH GHOLYHUHG GXULQJ 3URMHFW LPSOHPHQWDWLRQ ZDV DFKLHYHG WKURXJK HLJKW PDMRU VRIWZDUHUHOHDVHVGXULQJWKHFRXUVHRIWKH\HDU6RPHRIWKHLQLWLDWLYHVXQGHUWDNHQZHUHDVIROORZV 3URYLGHGVWUDLJKWWKURXJKSURFHVVLQJIRUFXVWRPHUVLQ$EVD)LQDQFLDO6HUYLFHV (QKDQFHGHIILFLHQF\WKURXJKWKHUHSODFHPHQWRIWKHSROLF\DQGFODLPVPDQDJHPHQWV\VWHPWKHLPSOHPHQWDWLRQRI DQHZIURQWHQGV\VWHPLQWKHEUDQFKHQYLURQPHQWDQGWKHLPSOHPHQWDWLRQRIQHZLQIUDVWUXFWXUHDQGFRUHV\VWHPV LQ1%&DQG%%0 (QKDQFHGWKH*URXS©V,7GLVDVWHUUHFRYHU\HQVXULQJWKDWWKHUHFRYHU\FDSDELOLW\ZDVGHPRQVWUDWHGDQGZRUNLQJ HIIHFWLYHO\ ,PSOHPHQWHGFKDQJHVWRH[LVWLQJEXVLQHVVSURFHVVHVDQGSURFHGXUHVWRDFKLHYHFRPSOLDQFHZLWKYDULRXVDFWVDQG UHJXODWRU\UHTXLUHPHQWVLQWKHPRVWFRVWHIIHFWLYHZD\ZKLOHHQVXULQJWKDWWKHLPSDFWRQ$EVD©VFXVWRPHUVZDV PLQLPLVHG &RQWLQXHGWRDGRSWDQGDGDSW%DUFOD\V&DSLWDO©VZRUOGFODVVVFDODEOHDQGIOH[LEOHDSSOLFDWLRQVDQGSODWIRUPVZKHUH DSSOLFDEOH 2SWLPLVHGFRVWVWKURXJK$EVD&DSLWDO©VGDWDFHQWUHYLUWXDOLVDWLRQSURDFWLYHWHFKQRORJ\ULVNPDQDJHPHQWDQGE\ EHQHILWLQJIURP%DUFOD\V&DSLWDO©VHFRQRPLHVRIVFDOH (QKDQFHGWKHFOLHQWH[SHULHQFHWKURXJK3$&(); DQDZDUGZLQQLQJIRUHLJQH[FKDQJHHFRPPHUFHSODWIRUP ,QWHJUDWLRQRIWKHUHJLRQDOORFDWLRQPRGHODFURVV$EVD&DSLWDODQG$EVD:HDOWK7HFKQRORJ\

Focus for 2011

$EVD©V,7IRFXVIRUZLOOEHWR FRQWLQXH WR VHFXUH DQG SURWHFW V\VWHPV DQG LQIRUPDWLRQ DJDLQVW XQDXWKRULVHG DFFHVV DQG IUDXG DWWHPSWV WKDW HVFDODWHGDLO\ XSJUDGHWKH*URXS©VWZRGDWDFHQWUHV VWUHQJWKHQJRYHUQDQFHSURFHVVHVLQOLQHZLWK.LQJ,,,UHTXLUHPHQWV HQVXUHWKDWDOONH\SURGXFWLRQV\VWHPVKDYHFRPSUHKHQVLYHGLVDVWHUUHFRYHU\DQGEXVLQHVVFRQWLQXLW\FDSDELOLWLHV GHYHORS D PHGLXPWHUP SODQ IRU $EVD &DSLWDO©V VXE6DKDUDQ LQIUDVWUXFWXUH PRGHO EDVHG RQ D VWURQJ IHGHUDO DUFKLWHFWXUHFRPPXQLW\ PDQDJHVNLOOVUHWHQWLRQWKURXJKVSHFLILFUHWHQWLRQVWUDWHJLHVDQGFDUHHUSDWKLQJDQG UHGXFHHZDVWHDQGHQHUJ\FRQVXPSWLRQ

122 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Governance, remuneration, risk and controls Contents

Governance, remuneration, Pages 125 – 320 risk and controls

Governance and accountability *RYHUQDQFHUHPXQHUDWLRQKXPDQUHVRXUFHV FRQWUROVFRPSOLDQFHDQGULVNPDQDJHPHQW 125 5HSRUWIURPWKH&KDLUPDQRIWKH 'LUHFWRUV©$IIDLUV&RPPLWWHH UHPDLQDFRUQHUVWRQHRIWKH*URXS©V RSHUDWLRQV 129 &RUSRUDWHJRYHUQDQFHVWDWHPHQW 142 (WKLFVUHYLHZ Remuneration and human resources 145 5HSRUWIURPWKH&KDLUPDQRIWKH *URXS5HPXQHUDWLRQDQG+XPDQ 5HVRXUFHV&RPPLWWHH 150 5HPXQHUDWLRQUHSRUW 171 +XPDQUHVRXUFHVUHSRUW

Controls and compliance 175 5HSRUWIURPWKH&KDLUPDQRIWKH *URXS$XGLWDQG&RPSOLDQFH &RPPLWWHH 181 &RPSOLDQFHUHSRUW

Risk management 190 5HSRUWIURPWKH&KDLUPDQRI WKH*URXS5LVNDQG&DSLWDO 0DQDJHPHQW&RPPLWWHH 198 'LVFORVXUHVDQGJRYHUQDQFH 203 &DSLWDOPDQDJHPHQW 215 &UHGLWULVN 270 0DUNHWULVN 291 /LTXLGLW\ULVN 305 2SHUDWLRQDOULVN 309 ,QVXUDQFHULVN Governance, remuneration, risk and controls

Report from the Chairman of the Directors’ Affairs Committee

Garth Grifﬁn &KDLUPDQ'LUHFWRUV©$IIDLUV&RPPLWWHH

Highlights 0RYLQJWRZDUGVWKHDGRSWLRQRI.LQJ,,,

(QVXULQJERDUGFRQWLQXLW\DQGEDODQFHWKURXJKQHZ DSSRLQWPHQWV

°7KHDSSRLQWPHQWRI':3+RGQHWWDV*URXS)LQDQFLDO 'LUHFWRURQ0DUFK

°7KHDSSRLQWPHQWRI&%HJJVDVDQLQGHSHQGHQWGLUHFWRU RQ-XQH

°7KHDSSRLQWPHQWRI**ULIILQDVWKH*URXS&KDLUPDQRQ 2FWREHU

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 125 Governance, remuneration, risk and controls

Report from the Chairman of the Directors’ Affairs Committee

Introduction

The Absa Group board of directors is the foundation of corporate governance in the Group and oversees processes that ensure that its relationships with management, shareholders and other stakeholders are underpinned by sound, ethical corporate governance principles.

The Directors’ Affairs Committee (DAC) is the appointed board subcommittee advising the board on governance matters.

Absa’s approach to corporate governance $EVD UHFRJQLVHV WKH QHHG WR FRQGXFW WKH DIIDLUV RI WKH HQWHUSULVH ZLWK LQWHJULW\ DQG LQ OLQH ZLWK EHVW FRUSRUDWH JRYHUQDQFHSUDFWLFHV)RUWKDWUHDVRQ$EVDLVIXOO\FRPPLWWHGWRWKHSULQFLSOHVRIWKH&RGHRI&RUSRUDWH3UDFWLFHV DQG&RQGXFW WKH&RGH DVVHWRXWLQWKH.LQJ5HSRUWRQ&RUSRUDWH*RYHUQDQFHIRU6RXWK$IULFD .LQJ,, 7KH ERDUGDQGWKH'$&DUHRIWKHRSLQLRQWKDWWKH*URXSDQGLWVVXEVLGLDULHVFRPSOLHGZLWKDQGDSSOLHGWKHUHTXLUHPHQWV RI.LQJ,,WKURXJKRXW %DUFOD\V%DQN3/&VXEVFULEHVWRWKH8.&RPELQHG&RGHRQ&RUSRUDWH*RYHUQDQFHZKLFKKDVUHFHQWO\EHHQUHYLVHG DQGUHQDPHGWKH8.&RUSRUDWH*RYHUQDQFH&RGH WKH8.&RGH $EVD*URXSDVDVXEVLGLDU\RI%DUFOD\V%DQN 3/&WDNHVFRJQLVDQFHRIWKH8.&RGHDQGDOVRVWULYHVWRDGKHUHWRWKHLQWHUQDWLRQDOEHVWSUDFWLFHJXLGHOLQHVDVVHW RXWWKHUHLQ

The King Code of Governance Principles for South Africa 2009 (King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

126 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 review $EVD*URXS©VFRUSRUDWH ,QDGGLWLRQWRUHYLHZLQJWKH.LQJOOOSULQFLSOHVWKH'$&©VNH\DFWLYLWLHVDQG JRYHUQDQFHREMHFWLYHV GHFLVLRQVGXULQJLQFOXGHG FRQVLGHULQJFXUUHQWDQGHPHUJLQJWUHQGVLQFRUSRUDWHJRYHUQDQFHDQG (QVXULQJDQHIIHFWLYHDQGWUDQVSDUHQW FRUSRUDWHJRYHUQDQFHVWUXFWXUHLQWKH WKH*URXS©VJRYHUQDQFHREMHFWLYHVIRUDVZHOODVEHQFKPDUNLQJ $EVD*URXS WKH *URXS©V JRYHUQDQFH V\VWHPV DQG REMHFWLYHV DJDLQVW ORFDO DQG %HQFKPDUNLQJ$EVD©VJRYHUQDQFH LQWHUQDWLRQDOEHVWSUDFWLFH VWUXFWXUHZLWKDSSOLFDEOHOHJLVODWLRQDQG UHYLHZLQJ WKH VL]H GLYHUVLW\ GHPRJUDSKLFV VNLOOV DQG H[SHULHQFH RI FRUSRUDWHJRYHUQDQFHFRGHV RIEHVWSUDFWLFH WKHERDUGSHUFHLYHGJDSVLQWKHERDUG©VFRPSRVLWLRQDQGWKHERDUG©V VXFFHVVLRQSODQV 8QGHUVWDQGLQJRIGXWLHVDQG UHVSRQVLELOLWLHVRIGLUHFWRUVDQGWKH FRQVLGHULQJ FDQGLGDWHV DQG UHFRPPHQGLQJ WR WKH ERDUG WKH DSSURSULDWHERDUGDQGERDUGFRPPLWWHH DSSRLQWPHQW RI D QHZ *URXS )LQDQFLDO 'LUHFWRU ' : 3 +RGQHWW FRPSRVLWLRQ D QHZ LQGHSHQGHQW GLUHFWRU & %HJJV DQG WKH DSSRLQWPHQW RI $JUHHLQJZLWKPDQDJHPHQW$EVD©V DQHZ*URXS&KDLUPDQ **ULIILQ VWUDWHJ\DQGORQJWHUPSODQVDQG UHYLHZLQJPDQDJHPHQW©VLPSOHPHQWDWLRQ FRQGXFWLQJ DQ HIIHFWLYHQHVV HYDOXDWLRQ RI WKH ERDUG WR UHYLHZ LWV WKHUHRI

SHUIRUPDQFHLQPHHWLQJLWVNH\UHVSRQVLELOLWLHVDQGUHSRUWLQJRQWKLVWR )DLUDQGUHVSRQVLEOHUHPXQHUDWLRQLQ WKHERDUGDQG OLQHZLWKFRUSRUDWHDQGUHJXODWRU\EHVW SUDFWLFH HYDOXDWLQJ WKH GLUHFWRUV© SHUIRUPDQFH DQG UHSRUWLQJ RQ WKLV WR WKHERDUG 5REXVWWLPHOLQHVIRUERDUGDQGERDUG FRPPLWWHHPHHWLQJV

(IIHFWLYHFRPSOLDQFHZLWKWKHODZVUXOHV The 2010 corporate governance statement FRGHVDQGVWDQGDUGVDFURVVWKH*URXS

7KHFRUSRUDWHJRYHUQDQFHVWDWHPHQWLVVHWRXWRQWKHSDJHVWKDW ,QVWLOOLQJDFXOWXUHRILQWHJULW\HWKLFVDQG IROORZ DQG FRQWDLQV GHWDLOV RI WKH *URXS©V FRUSRUDWH JRYHUQDQFH UHVSRQVLEOHFRUSRUDWHFLWL]HQVKLS IUDPHZRUN .LQJ ,,, DQG WKH 8. &RGH KDYH JXLGHG WKH GLVFORVXUHV $GRSWLQJDQDSSURDFKLQFOXVLYHRIDOO SURYLGHGLQWKLVVWDWHPHQW $EVD©VVWDNHKROGHUVHIIHFWLYH JRYHUQDQFHRIFRPPXQLFDWLRQ 7KHVWDWHPHQWFRYHUV UHODWLRQVKLSVDQGFRQGXFWZLWK VWDNHKROGHUV $EVD©VFRUSRUDWHJRYHUQDQFHVWUXFWXUH WKH$EVD*URXSERDUGZLWKDVSHFLILFIRFXVRQ $GYDQFLQJWKHSULQFLSOHVDQGSUDFWLFHRI VXVWDLQDEOHGHYHORSPHQWDQGLQWHJUDWLQJ ° WKHERDUGFRPSRVLWLRQ QRQILQDQFLDOUHSRUWLQJZLWKILQDQFLDO ° PHHWLQJV UHSRUWLQJ ° SURFHGXUHV ° DSSRLQWPHQWVDQGVXFFHVVLRQSODQQLQJ ° GLUHFWRUWUDLQLQJDQGGHYHORSPHQW ° WKHDVVHVVPHQWRIWKHERDUG©VSHUIRUPDQFHDQG °ERDUGFRPPLWWHHVZLWKVSHFLILFUHIHUHQFHWRPHPEHUVKLSFRPSRVLWLRQ PHHWLQJSURFHGXUHVSULQFLSDOIXQFWLRQDQGPDQGDWHV ERDUGDQGFRPPLWWHHPHHWLQJDWWHQGDQFH WKH*URXS([FRDQG DXWKRULWLHVDQGSURFHGXUHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 127 Governance, remuneration, risk and controls

Report from the Chairman of the Directors’ Affairs Committee

Focus for 2011 :HFRQVLGHUWKHREMHFWLYHVVHWLQWREHODUJHO\DSSURSULDWHIRUDVZHOO+RZHYHUWKHUHZLOOEHWZRVSHFLILF IRFXVDUHDV

Corporate governance and the Companies Act of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

Information technology (IT) governance and board oversight .LQJ,,,UHTXLUHVVRPHYHU\VSHFLILFDFWLRQVE\WKHERDUGWRHQVXUHDSSURSULDWHJRYHUQDQFHRI,7ZLWKLQDFRPSDQ\ 7KLVLVSDUWLFXODUO\UHOHYDQWWRDEDQNLQJJURXSZLWKLWVYHU\VLJQLILFDQWUHOLDQFHRQ,7

Conclusion 7KH '$& LV VDWLVILHG WKDW WKH *URXS WKURXJK WKH '$& DQG WKH ERDUG KDV PDLQWDLQHG DSSURSULDWH VWDQGDUGV RI FRUSRUDWH JRYHUQDQFH 7KH *URXS KDV ZHOOIXQFWLRQLQJ SURFHVVHV DQG SURFHGXUHV WR HQVXUH DGKHUHQFH WR WKH UHTXLUHGVWDQGDUGVDQGZHDUHVDWLVILHGWKDWFRUSRUDWHJRYHUQDQFHLQWKH*URXSLVVXFKDVWRHQVXUHWKHPDLQWHQDQFH RIWKHVWDQGDUGVH[SHFWHGRIXVE\RXUYDULRXVVWDNHKROGHUV Garth Grifﬁn Chairman: Directors’ Affairs Committee

0DUFK

128 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Corporate governance statement

Introduction Absa Group’s board is responsible for ensuring that the Group’s operations, processes and activities are underpinned by a strong system of governance that is fully integrated into all aspects of its business. Moreover, the board remains accountable for the ongoing sustainability of the Group. Since the publication of King III during 2009, the Group has used the opportunity to review and formalise its governance frameworks to incorporate all aspects of sustainable development, i.e. its impact on the broader society and the environment, in addition to the ﬁnancial impacts. This process will be continued through 2011

King III focus areas 7KHERDUGLVRIWKHYLHZWKDWWKH*URXSVXEVWDQWLDOO\DSSOLHVWKHSULQFLSOHVRI.LQJ,,,$EVDZLOOEHIRFXVLQJRQFHUWDLQ LQLWLDWLYHVWRIXUWKHUVWUHQJWKHQWKH*URXS©VDSSOLFDWLRQRIWKHSULQFLSOHV.H\DPRQJVWWKHVHDUHWKHIROORZLQJ $IXOOUHYLHZRIVWDNHKROGHUUHODWLRQVKLSV (VWDEOLVKLQJDPRUHIRUPDO,7JRYHUQDQFHVWUXFWXUH (QKDQFHGLPSOHPHQWDWLRQRIWKHFRPELQHGDVVXUDQFHPRGHO )XUWKHUHQKDQFHPHQWRIWKH*URXS©VFRGHRIHWKLFV )XOODQGWUDQVSDUHQWGLVFORVXUHLVFULWLFDOWRWKHERDUGDQGWKHHQKDQFHGVWDQGDUGVRIGLVFORVXUHLQWHUPVRILQWHJUDWHG UHSRUWLQJZLOOEHGHYHORSHGDVGLUHFWLRQLVFRQILUPHGE\WKH,QWHJUDWHG5HSRUWLQJ&RPPLWWHH RI6$,&$ 7KHH[WHQW RILQGHSHQGHQWDVVXUDQFHRIWKH*URXS©VVXVWDLQDELOLW\UHSRUWLQJZLOODOVREHUHYLHZHG 7KHERDUGDFNQRZOHGJHVWKDWPDLQWDLQLQJJRRGFRUSRUDWHJRYHUQDQFHLVDQRQJRLQJSURFHVVDQGZLOOFORVHO\PRQLWRU WKH*URXS©V.LQJ,,,DSSOLFDWLRQ

Corporate governance structure 7KH$EVD*URXSERDUGWDNHVRYHUDOOUHVSRQVLELOLW\IRUWKH*URXS©VJRYHUQDQFHDQGFRPSOLDQFHZLWKWKHYDULRXVODZV DQGUHJXODWLRQVDSSOLFDEOHWRWKH*URXS)XUWKHULQIRUPDWLRQRQ$EVD©VFRPSOLDQFHZLWKWKHVHODZVDQGUHJXODWLRQV FDQEHIRXQGLQWKHFRPSOLDQFHUHSRUW

Absa Group’s governance structure

Board 'HOHJDWLRQ $FFRXQWDELOLW\ *URXS$XGLW *URXS5LVN 'LUHFWRUV© *URXS &RQFHQWUDWLRQ %RDUG)LQDQFH DQG DQG&DSLWDO $IIDLUV 5HPXQHUDWLRQ 5LVN &RPPLWWHH &RPSOLDQFH 0DQDJHPHQW &RPPLWWHH DQG+XPDQ &RPPLWWHH &RPPLWWHH &RPPLWWHH 5HVRXUFHV &RPPLWWHH

Group Chief Executive

*URXS([HFXWLYH&RPPLWWHH

*URXS2SHUDWLQJ 0DQDJHPHQW &RPPLWWHH &RPPLWWHH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 129 Governance, remuneration, risk and controls

Corporate governance statement

Absa Group board *URXSERDUGPHPEHUVKLS Board composition Member Appointment date $EVDKDVXQLWDU\ERDUGVWUXFWXUHVLQDOOLWV6RXWK$IULFDQ Chairman FRPSDQLHV * *DUWK *ULIILQ 2FWREHU DV&KDLUPDQ 7KH $EVD *URXS ERDUG KDV DQ DSSURSULDWH EDODQFH RI 2FWREHU LQGHSHQGHQWQRQH[HFXWLYHDQGH[HFXWLYHGLUHFWRUV7KH Independent non-executive directors ERDUG FRPSULVHV D PDMRULW\ RI LQGHSHQGHQW GLUHFWRUV '& 'HV $UQROG $SULO QRQH[HFXWLYHGLUHFWRUVZKRDUHLQGHSHQGHQWDVGHILQHG & &ROLQ %HJJV -XQH LQ WKH .LQJ ,, UHSRUW 7KH &KDLUPDQ RI WKH ERDUG LV DQ %3 %ULDQ &RQQHOODQ $XJXVW LQGHSHQGHQW GLUHFWRU 7KH SUDFWLFH RI DSSRLQWLQJ WKH 6$ 6KDXNHW )DNLH -DQXDU\ &KDLUPDQRQDQDQQXDOEDVLVZLOOEHLQWURGXFHGLQLQ 0: 0RQKOD +ODKOD 'HFHPEHU DFFRUGDQFHZLWKWKHUHFRPPHQGDWLRQVRI.LQJ,,, 0- 0RKDPHG +XVDLQ 1RYHPEHU 70 7KRNR 0RNJRVL0ZDQWHPEH 1RYHPEHU Board composition as at (& (GXDUGR 0RQGODQH-U 6HSWHPEHU 31 December 2010 (%) 76 7UHYRU 0XQGD\ $SULO 16 6* %UDQG 3UHWRULXV -DQXDU\ %- -RKDQ :LOOHPVH -DQXDU\

Non-executive directors <=

Executive directors ':3 'DYLG +RGQHWW 0DUFK ● Independent non-executive directors (12) 0 0DULD 5DPRV 0DUFK ● Non-executive directors (4) ● Executive directors (3) // /RXLV YRQ=HXQHU 6HSWHPEHU

French Independence British 7KH '$& DVVHVVHV WKH LQGHSHQGHQFH RI HDFK GLUHFWRU Mozambican DJDLQVW WKH FULWHULD VHW RXW LQ .LQJ ,, WKH -6( /LVWLQJV Note 5HTXLUHPHQWV WKH 8. &RGH DQG RWKHU FRUSRUDWH As at 31 December 2010. JRYHUQDQFH SULQFLSOHV 7KH *URXS KDG LQGHSHQGHQW QRQH[HFXWLYHGLUHFWRUVDVDW'HFHPEHUIRUPLQJ DPDMRULW\RQWKHERDUG

Executive directors 7KHUH ZHUH WKUHH H[HFXWLYH GLUHFWRUV RQ WKH ERDUG DQG VHYHUDOH[HFXWLYHGLUHFWRUVRQWKHERDUGVRIWKH*URXS©V PDLQ VXEVLGLDULHV DV DW 'HFHPEHU ([HFXWLYH GLUHFWRUVDUHUHTXLUHGWRUHWLUHIURPWKHERDUG DVH[HFXWLYH GLUHFWRUV DW )XUWKHUUHDGLQJ 7KHERDUGDSSRLQWVH[HFXWLYHGLUHFWRUVWDNLQJLQWRDFFRXQW 'LUHFWRUDWH 81 WKH UHFRPPHQGDWLRQV RI WKH *URXS &KLHI ([HFXWLYH WKH *5+5& DQG WKH '$& ,Q DGGLWLRQ WKH *5+5& UHFRPPHQGVWRWKHERDUGWKHDSSURYDORIWKHUHPXQHUDWLRQ DQGEHQHILWVRIWKH*URXSH[HFXWLYHGLUHFWRUV

130 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Board meetings

7KH ERDUG PHHWV UHJXODUO\ %RDUG PHHWLQJV DV ZHOO DV DGGLWLRQDO )XUWKHUUHDGLQJ LQIRUPDWLRQ DQG WUDLQLQJ VHVVLRQV DUH VFKHGXOHG ZHOO LQ DGYDQFH DFFRUGLQJWRDIRUZDUGSODQIRUWKH\HDU7KLVSODQVHWVRXWPDWWHUVIRU ([HFXWLYHGLUHFWRUV© UHPXQHUDWLRQ 162 FRQVLGHUDWLRQ DW HDFK PHHWLQJ $GGLWLRQDO ERDUG PHHWLQJV DSDUW IURP WKRVHSODQQHGDUHFRQYHQHGDVFLUFXPVWDQFHVGLFWDWH 6XEVLGLDU\ERDUGV 140 :KHUH GLUHFWRUV DUH XQDEOH WR DWWHQG D PHHWLQJ SHUVRQDOO\ YLGHR PHHWLQJDWWHQGDQFH 139 FRQIHUHQFLQJ DQGRU WHOHFRQIHUHQFLQJ IDFLOLWLHV DUH PDGH DYDLODEOH WR LQFOXGH WKHP LQ WKH SURFHHGLQJV 5HDVRQV IRU QRQDWWHQGDQFH DUH SURYLGHGWRWKH*URXS&KDLUPDQ

Agenda and meeting structure 7KHERDUGDJHQGDDQGPHHWLQJVWUXFWXUHIRFXVRQVWUDWHJ\SHUIRUPDQFH PRQLWRULQJ JRYHUQDQFH DQG UHODWHG PDWWHUV 7KLV HQVXUHV WKDW WKH ERDUG©V WLPH DQG HQHUJ\ DUH DSSURSULDWHO\ DSSOLHG 'LUHFWRUV PD\ SURSRVHDGGLWLRQDOPDWWHUVIRUGLVFXVVLRQDWERDUGPHHWLQJV

Board documentation 0DQDJHPHQW HQVXUHV WKDW DOO ERDUG PHPEHUV DUH SURYLGHG ZLWK DOO UHOHYDQW LQIRUPDWLRQ DQG IDFWV WR HQDEOH WKHP WR UHDFK REMHFWLYH DQG ZHOOLQIRUPHGGHFLVLRQV%RDUGGRFXPHQWDWLRQLVSURYLGHGWRGLUHFWRUVLQ DWLPHO\PDQQHUDQGWKHWDEOLQJRIGRFXPHQWVDWERDUGPHHWLQJVLVGRQH RQO\XQGHUH[FHSWLRQDOFLUFXPVWDQFHV

Board procedures and related matters 7KHERDUGKDVIXOOFRQWURORYHUDOOWKHFRPSDQLHVLQWKH*URXS,QWHUPV RIWKHERDUGFKDUWHUWKHERDUGGHOHJDWHVDXWKRULW\RQFHUWDLQPDWWHUVWR H[HFXWLYHPDQDJHPHQWEXWUHVHUYHVPDWWHUVVXFKDVVHWWLQJWKH*URXS VWUDWHJ\ DQG ORQJWHUP SODQV DV ZHOO DV PRQLWRULQJ H[HFXWLYH PDQDJHPHQW©VLPSOHPHQWDWLRQRIDSSURYHGSODQVDQGVWUDWHJLHVWRWKH ERDUGLWVHOI

Board’s access to information 7KHERDUGKDVXQUHVWULFWHGDFFHVVWRDOO&RPSDQ\LQIRUPDWLRQUHFRUGV GRFXPHQWV DQG SURSHUW\ 7KH LQIRUPDWLRQ QHHGV RI WKH ERDUG DUH UHYLHZHG DQQXDOO\ (IILFLHQW DQG WLPHO\ SURFHGXUHV IRU LQIRUPLQJ DQG EULHILQJ ERDUG PHPEHUV EHIRUH ERDUG PHHWLQJV KDYH EHHQ GHYHORSHG DQGLPSOHPHQWHG$OOGLUHFWRUVDUHNHSWLQIRUPHGRINH\GHYHORSPHQWV DIIHFWLQJWKH*URXSEHWZHHQERDUGPHHWLQJV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 131 Governance, remuneration, risk and controls

Corporate governance statement

The Absa board charter Purpose and objectives 7KHERDUGFKDUWHUUHJXODWHVKRZWKHERDUGDQGLQGLYLGXDOPHPEHUVRIWKHERDUGGLVFKDUJHWKHLUUHVSRQVLELOLWLHV DFFRUGLQJWRWKHSULQFLSOHVRIJRRGJRYHUQDQFH7KHFKDUWHUDLPVWRHQVXUHWKDWDOOERDUGPHPEHUVXQGHUVWDQG WKHLUGXWLHVDQGUHVSRQVLELOLWLHVDVZHOODVWKHODZVUHJXODWLRQVDQGEHVWSUDFWLFHVJRYHUQLQJWKHLUFRQGXFW

The charter clearly outlines: WKHUROHVRIWKH&KDLUPDQWKH*URXS&KLHI([HFXWLYHDQGLQGLYLGXDOERDUGPHPEHUV ERDUGFRPSRVLWLRQ VWDQGDUGVIRUFRQGXFWDURXQGFRQIOLFWVRILQWHUHVW WKHSURFHVVRIGHWHUPLQLQJERDUGUHPXQHUDWLRQDQGUHZDUGV GLUHFWRURULHQWDWLRQLQGXFWLRQDQGWUDLQLQJ VXFFHVVLRQSODQQLQJDQGGLUHFWRUVHOHFWLRQDQGDSSRLQWPHQW WKHUROHRIWKHERDUG LQFOXGLQJDGRSWLQJVWUDWHJLFSODQVDQGPRQLWRULQJRSHUDWLRQDOSHUIRUPDQFHDQG PDQDJHPHQW ERDUGSURFHGXUHV DFFHVVWRPDQDJHPHQWE\QRQH[HFXWLYHGLUHFWRUV PDWWHUVVSHFLILFDOO\UHVHUYHGIRUWKHERDUGLQFOXGLQJWKHDSSURYDORI °WKH*URXS©VREMHFWLYHVVWUDWHJ\VKRUWWHUPDQGPHGLXPWHUPSODQVDQGWKHPRQLWRULQJRISHUIRUPDQFH DJDLQVWDJUHHGFULWHULD °DQQXDOILQDQFLDOVWDWHPHQWVLQWHULPUHSRUWVGLYLGHQGVDQGUHODWHGILQDQFLDOPDWWHUV °$EVD©VFRGHRIHWKLFV °WKHDSSRLQWPHQWVWRDQGUHPRYDOVIURPWKHERDUG LQFOXGLQJWKH&KDLUPDQ*URXS&KLHI([HFXWLYHDQG H[HFXWLYHDQGQRQH[HFXWLYHGLUHFWRUV °GHOHJDWLRQVRIDXWKRULW\WRWKH*URXS&KLHI([HFXWLYH °ERDUGFRPPLWWHHPDQGDWHVDXWKRULWLHVDQGPHPEHUVKLS °$EVD©VULVNDSSHWLWH °VLJQLILFDQW&RPSDQ\SROLFLHV °$EVD©VFRUSRUDWHJRYHUQDQFHSKLORVRSK\DQGRQJRLQJJRYHUQDQFHFRPSOLDQFH °FRPSOLDQFHZLWKODZVDQGUHJXODWLRQV °ULVNPDQDJHPHQWDQGLQWHUQDOFRQWUROV °VWDNHKROGHUFRPPXQLFDWLRQDQG °ERDUGDQGLQGLYLGXDOGLUHFWRUSHUIRUPDQFHHYDOXDWLRQ

Board interactions with executive management 7KHERDUGPHHWVZLWKPDQDJHPHQWDQQXDOO\WRDJUHHRQWKH*URXS©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

132 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Board oversight of risks and performance

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©V H[SHQVH VKRXOG WKH\ FRQVLGHU LW QHFHVVDU\

Board appointments and succession planning 1RQH[HFXWLYHGLUHFWRUVRQWKHERDUGDUHDSSRLQWHGIRUDQLQLWLDOWHUPRI RIILFH RI WKUHH \HDUV LQ WHUPV RI WKH *URXS©V DUWLFOHV RI DVVRFLDWLRQ 5HDSSRLQWPHQW WR WKH ERDUG LV QRW DXWRPDWLF DOWKRXJK GLUHFWRUV PD\ RIIHUWKHPVHOYHVIRUUHHOHFWLRQ$WKLUGRIWKHGLUHFWRUVUHWLUHE\URWDWLRQ DQQXDOO\ 7KHQDPHVRIGLUHFWRUVHOLJLEOHIRUUHHOHFWLRQDUHVXEPLWWHGDWWKH$*0 DFFRPSDQLHG E\ WKH DSSURSULDWH ELRJUDSKLFDO GHWDLOV 1RQH[HFXWLYH GLUHFWRUVDUHUHTXLUHGWRUHWLUHDWWKH$*0IROORZLQJWKHLUWKELUWKGD\ XQOHVVWKH\DUHDVNHGWRUHPDLQRQWKHERDUGZLWKJRRGFDXVHVKRZQ

Directors who have served for nine years or more ,Q OLQH ZLWK LQWHUQDWLRQDO EHVW SUDFWLFH DOO *URXS GLUHFWRUV ZKR KDYH VHUYHGRQWKHERDUGIRUORQJHUWKDQQLQH\HDUVDUHVXEMHFWWRDQQXDOUH HOHFWLRQE\VKDUHKROGHUVDWWKH$*0 7KHERDUGDOVRDVVHVVHVZKHWKHUWKHLQGHSHQGHQFHRIWKHVHGLUHFWRUV KDVEHHQLPSDLUHG'LUHFWRUVZKRKDYHVHUYHGRQWKHERDUGIRUPRUH WKDQQLQH\HDUVDUH%3&RQQHOODQDQG**ULIILQ7KHERDUGLVVDWLVILHG WKDW WKHLU LQGHSHQGHQFH RI FKDUDFWHU DQG MXGJHPHQW KDV QRW EHHQ FRPSURPLVHG

Appointment of directors by the board 7KHERDUGDVDZKROHVHOHFWVDQGDSSRLQWVGLUHFWRUVLQFOXGLQJWKH*URXS &KLHI([HFXWLYHDQGH[HFXWLYHGLUHFWRUVEDVHGRQUHFRPPHQGDWLRQVIURP WKH '$& :KHUH DSSURSULDWH WKHVH UHFRPPHQGDWLRQV DUH VXSSRUWHGE\ UHFRPPHQGDWLRQVRIWKH*5+5&%DUFOD\VLVFRQVXOWHGGXULQJWKHSURFHVV RIGLUHFWRUVHOHFWLRQDQGDSSRLQWPHQW $OODSSRLQWPHQWVIROORZDIRUPDODQGWUDQVSDUHQWSURFHGXUHDQGDUHVXEMHFW WRFRQILUPDWLRQE\VKDUHKROGHUVDWWKH$*0%HIRUHDSSRLQWPHQWSRWHQWLDO ERDUGDSSRLQWHHVPXVWXQGHUJRDILWDQGSURSHUWHVWLQWHUPVRIWKH-6( /LVWLQJV5HTXLUHPHQWVDQGWKH%DQNV$FW

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 133 Governance, remuneration, risk and controls

Corporate governance statement

Succession planning 7KH'$&PDNHVUHFRPPHQGDWLRQVDURXQGQRQH[HFXWLYHGLUHFWRUVXFFHVVLRQSODQQLQJWRWKHERDUG7KHVXFFHVVLRQ SODQQLQJ SURFHVV HQFRPSDVVHV DQ HYDOXDWLRQ RI WKH VNLOOV NQRZOHGJH DQG H[SHULHQFH UHTXLUHG WR LPSOHPHQW WKH *URXS©VEXVLQHVVSODQVDQGVWUDWHJ\DVZHOODVWKHQHHGWRWUDQVIRUPWKHERDUGDQGHQVXUHJUHDWHUGLYHUVLW\7KH *5+5&PDNHVUHFRPPHQGDWLRQVDERXWH[HFXWLYHGLUHFWRUVXFFHVVLRQSODQQLQJWRWKH'$&IRUDSSURYDOE\WKHERDUG

Director induction, training and development programmes 7UDLQLQJDQGRULHQWDWLRQZRUNVKRSVDUHKHOGIRUQHZDQGH[LVWLQJGLUHFWRUV7KHZRUNVKRSVFRYHUWRSLFVVXFKDVWKH *URXS©V EXVLQHVV FRUSRUDWH JRYHUQDQFH ILGXFLDU\ GXWLHV DQG UHVSRQVLELOLWLHV QHZ ODZV DQG UHJXODWLRQV DQG ULVN PDQDJHPHQW'LUHFWRUV SDUWLFXODUO\QHZGLUHFWRUV DUHHQFRXUDJHGWRDWWHQGGHYHORSPHQWSURJUDPPHVWKDWIRFXVRQ WKHGXWLHVUHVSRQVLELOLWLHVSRZHUVDQGSRWHQWLDOOLDELOLWLHVRIGLUHFWRUV

Orientation for new board members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

Ongoing training for directors 'LUHFWRU WUDLQLQJ LV VFKHGXOHG WKURXJKRXW WKH \HDU 7KH WUDLQLQJ PD\ EH SURYLGHG LQWHUQDOO\ RU E\ H[WHUQDO VHUYLFH SURYLGHUV6HVVLRQVDUHDOVRKRVWHGIRUERDUGFRPPLWWHHPHPEHUVRQVSHFLDOLVWWRSLFV'LUHFWRUSDUWLFLSDWLRQLQWKH WUDLQLQJWKDWWKH*URXSSURYLGHVLVPRQLWRUHG'LUHFWRUVDUHDOVRHQFRXUDJHGWRDWWHQGH[WHUQDOFRXUVHVWKDWIRFXVRQ JRYHUQDQFHDQGWKHILQDQFLDOVHUYLFHVLQGXVWU\

Performance assessment Chairman and non-executive directors 7KH*URXS&KDLUPDQSHUIRUPVDQDQQXDOHYDOXDWLRQRILQGLYLGXDOQRQH[HFXWLYHGLUHFWRUV7KH&KDLUPDQ©VILQGLQJV DUHSUHVHQWHGWRWKH'$&ZKLFKPDNHVUHFRPPHQGDWLRQVWRWKHERDUGEDVHGRQWKHLQIRUPDWLRQVXSSOLHG7KH'$& LVUHVSRQVLEOHIRUHYDOXDWLQJWKH*URXS&KDLUPDQ©VSHUIRUPDQFH 7KHERDUGFRQVLGHUVWKHUHFRPPHQGDWLRQVRIWKH'$&WRGHWHUPLQHZKHWKHULWZLOOHQGRUVHDUHWLULQJGLUHFWRU©VUH HOHFWLRQ,IDGLUHFWRU©VSHUIRUPDQFHLVQRWVDWLVIDFWRU\WKHERDUGZLOOQRWHQGRUVHWKHUHHOHFWLRQ

Collective board evaluation 7KHERDUGFRQGXFWVDFROOHFWLYHERDUGHYDOXDWLRQGXULQJWKHILUVWTXDUWHURIHYHU\\HDUZLWKDYLHZWRGHWHUPLQLQJKRZ WKH ERDUG©V HIIHFWLYHQHVV FDQ EH LPSURYHG 7KH '$& FRQVLGHUV WKH UHVXOWV RI WKH HYDOXDWLRQ DQG PDNHV UHFRPPHQGDWLRQVWRWKHERDUGIRUDGRSWLRQ7KH*URXS&KDLUPDQPHHWVZLWKHDFKGLUHFWRULQGLYLGXDOO\WRGLVFXVVDQ\ PDWWHUVWKDWDULVHIURPWKHHYDOXDWLRQSURFHVV

134 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Board remuneration and share ownership

1RQH[HFXWLYHGLUHFWRUVUHFHLYHIHHVIRUWKHLUFRQWULEXWLRQVWRWKHERDUG )XUWKHUUHDGLQJ DQGWRWKHFRPPLWWHHVRQZKLFKWKH\VHUYH,QOLQHZLWKLQWHUQDWLRQDOEHVW SUDFWLFHSURSRVDOVRQQRQH[HFXWLYHGLUHFWRUV©UHPXQHUDWLRQDUHPDGH $EVD©VUHZDUGSKLORVRSK\ SROLF\DQGSUDFWLFHV 151 E\WKH*URXS&KDLUPDQDQGWKH*URXS&KLHI([HFXWLYHIRUUHYLHZE\WKH ERDUG 1RQH[HFXWLYHGLUHFWRUV© UHPXQHUDWLRQ 158 7KHUHPXQHUDWLRQRIQRQH[HFXWLYHGLUHFWRUVLVVXEPLWWHGWRVKDUHKROGHUV 'LUHFWRUV©LQWHUHVWLQ IRUDSSURYDODWWKH$*0 $EVDVKDUHV 340 1RQH[HFXWLYHGLUHFWRUVPXVWKROGDPLQLPXPRI$EVDRUGLQDU\ VKDUHVWKURXJKRXWWKHLUWHQXUH1RQH[HFXWLYHGLUHFWRUVGRQRWUHFHLYH VKDUHRSWLRQVRULQFHQWLYHDZDUGV

Board committees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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 135 Governance, remuneration, risk and controls

Corporate governance statement

Group Audit and Compliance Committee (GACC) *$&&PHPEHUVKLS Composition and meeting procedures Appointment Member date 7KH*$&&LVFKDLUHGE\DQLQGHSHQGHQWGLUHFWRU $OOWKHPHPEHUVRIWKH*$&&DUHLQGHSHQGHQWGLUHFWRUV,QDGGLWLRQWZR '&$UQROG &KDLUPDQ $SULO IXUWKHU QRQH[HFXWLYH GLUHFWRUV < = &XED D UHSUHVHQWDWLYH RI %DWKR &%HJJV -XQH %RQNH&DSLWDO 3URSULHWDU\ /LPLWHG DQG$3-HQNLQV DUHSUHVHQWDWLYH 6$)DNLH $SULO RI%DUFOD\V DUHVWDQGLQJLQYLWHHVWRWKHFRPPLWWHHPHHWLQJV 760XQGD\ $SULO 0HHWLQJVRIWKHFRPPLWWHHDUHDWWHQGHGE\WKH*URXS&KLHI([HFXWLYH

Note 'HSXW\ *URXS &KLHI ([HFXWLYH *URXS )LQDQFLDO 'LUHFWRU &KLHI 5LVN As at 31 December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

Role, purpose and principal functions 7KH*$&&DVVLVWVWKHERDUGZLWKUHJDUGWRUHSRUWLQJILQDQFLDOLQIRUPDWLRQ VHOHFWLQJ DQG SURSHUO\ DSSO\LQJ DFFRXQWLQJ SULQFLSOHV DQG SROLFLHV PRQLWRULQJWKH*URXS©VLQWHUQDOFRQWUROV\VWHPVDQGYDULRXVFRPSOLDQFH UHODWHGPDWWHUV,QDFFRUGDQFHZLWKWKH.LQJ,,,SULQFLSOHUHJDUGLQJDXGLW FRPPLWWHHV WKH *$&& DOVR RYHUVHHV WKH *URXS©V H[WHUQDO UHSRUWLQJ SURFHVV 2WKHU DVSHFWV IRU ZKLFK WKH *$&& LV UHVSRQVLEOH LQFOXGH EXVLQHVVFRQWLQXLW\DQGWKHPDQDJHPHQWDQGJRYHUQDQFHRIWKH*URXS©V UHODWLRQVKLSZLWKDQGLQGHSHQGHQFHRIWKHH[WHUQDODXGLWRUV

136 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group Risk and Capital Management Committee (GRCMC) *5&0&PHPEHUVKLS Composition and meeting procedures '&$UQROG 7KH*5&0&LVFKDLUHGE\DQLQGHSHQGHQWGLUHFWRUDQGFRQVLVWVRID IXUWKHUVHYHQLQGHSHQGHQWGLUHFWRUVDQGRQHQRQH[HFXWLYHGLUHFWRU &%HJJV 5/H%ODQF0HHWLQJVRIWKHFRPPLWWHHDUHDWWHQGHGE\WKH*URXS **ULIILQ &KLHI([HFXWLYH'HSXW\*URXS&KLHI([HFXWLYH*URXS)LQDQFLDO 0:+ODKOD

'LUHFWRU&KLHI5LVN2IILFHUWKHH[WHUQDODXGLWRUV*URXS&RPSOLDQFH 0-+XVDLQ 2IILFHUDQGE\LQYLWDWLRQRWKHUPHPEHUVRIH[HFXWLYHPDQDJHPHQW 5/H%ODQF

6L[PHHWLQJVRIWKHFRPPLWWHHZHUHKHOGLQ (&0RQGODQH-U

760XQGD\ &KDLUPDQ Role, purpose and principal functions %-:LOOHPVH 7KH*5&0&DVVLVWVWKHERDUGZLWKUHJDUGWRULVNDQGFDSLWDOPDQDJHPHQW DQG HQVXULQJ FRPSOLDQFH ZLWK WKH UHTXLUHPHQWV RI WKH %DQNV $FW ,Q Note DGGLWLRQ WKH SXUSRVH RI WKH FRPPLWWHH LV WR UHYLHZ RQ EHKDOI RI WKH As at 31 December 2010. ERDUGPDQDJHPHQW©VUHFRPPHQGDWLRQVRQULVNLQSDUWLFXODU FRQVLGHUDQGUHFRPPHQGWRWKHERDUGWKH*URXS©VULVNDSSHWLWH

UHYLHZRQEHKDOIRIWKHERDUGWKH*URXS©VULVNSURILOH )XUWKHUUHDGLQJ PRQLWRUFXUUHQWDQGSODQQHGOHYHOVRIFDSLWDOUHODWLYHWRUHJXODWRU\DQG *5&0&PHHWLQJDWWHQGDQFH 139 HFRQRPLFFDSLWDOUHTXLUHPHQWVDQGWKHSODQVRIWKH*URXS 5HSRUWIURPWKH&KDLUPDQ VDWLVI\LWVHOIRQWKHGHVLJQDQGFRPSOHWHQHVVRIWKH*URXS©VLQWHUQDO RIWKH*5&0& 190 FRQWURODQGDVVXUDQFHIUDPHZRUNUHODWLYHWRWKHULVNSURILOHLQFOXGLQJ WKHSULQFLSDOULVNFDWHJRULHVDQG FRPPLVVLRQDQGUHFHLYHDQGFRQVLGHUUHSRUWVRQNH\ULVNLVVXHV

Directors’ Affairs Committee (DAC) '$&PHPEHUVKLS

Composition and meeting procedures '&$UQROG

7KH'$&LVFKDLUHGE\WKH*URXS&KDLUPDQDQGFRQVLVWVRIDPDMRULW\RI **ULIILQ &KDLUPDQ

LQGHSHQGHQW GLUHFWRUV ,W DOVR LQFOXGHV D %DUFOD\VQRPLQDWHG GLUHFWRU 0-+XVDLQ 5/H%ODQFDQGLVDWWHQGHGE\WKHWKUHHH[HFXWLYHGLUHFWRUV 5/H%ODQF

6L[PHHWLQJVRIWKHFRPPLWWHHZHUHKHOGLQ 760XQGD\

6*3UHWRULXV Role, purpose and principal functions 7KLVFRPPLWWHHDVVLVWVWKHERDUGZLWKUHJDUGWRFRUSRUDWHJRYHUQDQFH Note ERDUGQRPLQDWLRQVDQGUHODWHGPDWWHUV As at 31 December 2010.

)XUWKHUUHDGLQJ

'$&PHHWLQJDWWHQGDQFH 139 5HSRUWIURPWKH&KDLUPDQ RIWKH'$& 125

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 137 Governance, remuneration, risk and controls

Corporate governance statement

Group Remuneration and Human Resources Committee (GRHRC) *5+5&PHPEHUVKLS Composition and meeting procedures %3&RQQHOODQ 7KH*5+5&LVFKDLUHGE\DQLQGHSHQGHQWGLUHFWRUDQGFRPSULVHVPDLQO\ %&00GH9LWU\G©$YDXFRXUW LQGHSHQGHQWGLUHFWRUV7KH*URXS&KLHI([HFXWLYHWKH'HSXW\*URXS&KLHI

**ULIILQ ([HFXWLYHWKH&KLHI+XPDQ5HVRXUFHV([HFXWLYHDQGWKH*URXS)LQDQFLDO 'LUHFWRUDWWHQGPHHWLQJVE\LQYLWDWLRQEXWGRQRWSDUWLFLSDWHLQGLVFXVVLRQV $3-HQNLQV DQGGHFLVLRQVUHJDUGLQJWKHLUUHPXQHUDWLRQDQGEHQHILWV 700RNJRVL0ZDQWHPEH )LYHPHHWLQJVRIWKHFRPPLWWHHZHUHKHOGLQ 6*3UHWRULXV &KDLUPDQ Role, purpose and principal functions 7KLV FRPPLWWHH DVVLVWV ZLWK DQG DGYLVHV WKH ERDUG RQ YDULRXV VWUDWHJLF KXPDQ UHVRXUFH PDWWHUV PRUH VSHFLILFDOO\ UHPXQHUDWLRQ DQG LQFHQWLYH )XUWKHUUHDGLQJ DUUDQJHPHQWVWUDQVIRUPDWLRQWDOHQWPDQDJHPHQWVXFFHVVLRQSODQQLQJIRU VWUDWHJLF SRVLWLRQV HPSOR\HH ¨IUDQFKLVH KHDOWK© DQG UHWLUHPHQW EHQHILW *5+5&PHHWLQJDWWHQGDQFH 139 GHVLJQDQGJRYHUQDQFH 5HSRUWIURPWKH&KDLUPDQRI WKH*5+5& 145 Board Finance Committee (BFC) Composition and meeting procedures %)&PHPEHUVKLS 7KH %)& LV FKDLUHG E\ WKH *URXS &KDLUPDQ ZKR LV DQ LQGHSHQGHQW GLUHFWRUDVDUHWKHPDMRULW\RIWKHPHPEHUVRIWKLVFRPPLWWHH7KHWKUHH '&$UQROG H[HFXWLYHGLUHFWRUVDOVRDWWHQGPHHWLQJV %3&RQQHOODQ 6L[PHHWLQJVRIWKHFRPPLWWHHZHUHKHOGLQ <=&XED

%&00GH9LWU\G©$YDXFRXUW Role, purpose and principal functions

**ULIILQ &KDLUPDQ 7KHFRPPLWWHHLVPDQGDWHGE\WKHERDUGWRHQWHULQWRDQGVHWWOHWKHWHUPVRI DOO WUDQVDFWLRQV IRU DFTXLULQJ DQG GLVSRVLQJ RI LQYHVWPHQWV DV ZHOO DV WR 760XQGD\ DSSURYHFDSLWDOUDLVLQJDQGVHFXULWLVDWLRQWUDQVDFWLRQVVXEMHFWWROLPLWVVHWE\ WKH ERDUG 7KH FRPPLWWHH UHYLHZV WKH *URXS©V DQQXDO EXGJHW EHIRUH VXEPLVVLRQWRWKHERDUGIRUDSSURYDO,WDOVRILQDOO\DSSURYHVWKHILQDOLQWHULP DQG DQQXDO UHVXOWV DQQRXQFHPHQWV DQG GLYLGHQG GHFODUDWLRQV DIWHU )XUWKHUUHDGLQJ FRQVLGHUDWLRQE\WKHERDUGDQGLQWHUPVRIDVSHFLILFPDQGDWHDQGJXLGDQFH IURPWKHERDUG %)&PHHWLQJDWWHQGDQFH 139 Concentration Risk Committee (CoRC) Role, purpose and principal functions &R5&PHPEHUVKLS 7KLVFRPPLWWHHZDVHVWDEOLVKHGSXUVXDQWWRVHFWLRQRIWKH%DQNV$FW %3&RQQHOODQ 7KHFRPPLWWHHFRQVLGHUVDQGDSSURYHVFUHGLWDSSOLFDWLRQVZLWKILQDQFLQJ **ULIILQ &KDLUPDQ OLPLWVH[FHHGLQJRIWKH*URXS©VTXDOLI\LQJFDSLWDODQGUHVHUYHV

':3+RGQHWW Composition and meeting procedures 760XQGD\ 7KHFRPPLWWHHPHHWVRQDQDGKRFEDVLVWRDSSURYHORDQDSSOLFDWLRQVDV 05DPRV GHVFULEHGDERYH7KHTXRUXPIRUDSSURYDOLVWKUHHQRQH[HFXWLYHGLUHFWRUV //YRQ=HXQHU WKH*URXS&KLHI([HFXWLYHRUWKH'HSXW\&KLHI([HFXWLYHDQGWKH*URXS %-:LOOHPVH )LQDQFLDO 'LUHFWRU 6SHFLILF PHPEHUV RI PDQDJHPHQW VXFK DV WKH &KLHI 5LVN2IILFHUDWWHQGPHHWLQJVLQDQH[RIILFLRFDSDFLW\DVUHTXLUHG Notes $OOH[SRVXUHVDSSURYHGE\WKHFRPPLWWHHDUHUHSRUWHGWRWKH*5&0&DQG As at 31 December 2010. ERDUGIRUQRWLILFDWLRQ The composition of the CoRC was approved by the Registrar of Banks in terms of section 73(1)(a) of the Banks Act.

138 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Board and board committee meeting attendance 7KLVWDEOHRXWOLQHVGHWDLOVRIERDUGPHPEHUV©DWWHQGDQFHRIERDUGDQGERDUGFRPPLWWHHPHHWLQJVIRU

Absa Group and Absa Bank GACC GRCMC DAC GRHRC BFC Limited (seven (six (six (ﬁve (six board meetings meetings meetings meetings meetings Name meetings held) held) held) held) held) Total Current directors '&$UQROG &%HJJV %3&RQQHOODQ <=&XED %&00GH9LWU\ G©$YDXFRXUW 6$)DNLH **ULIILQ *URXS &KDLUPDQ 0:+ODKOD ':3+RGQHWW 0-+XVDLQ $3-HQNLQV 5/H%ODQF 700RNJRVL 0ZDQWHPEH (&0RQGODQH-U 760XQGD\ 6*3UHWRULXV 05DPRV //YRQ=HXQHU %-:LOOHPVH Previous directors '&%ULQN IRUPHU *URXS&KDLUPDQ -+6FKLQGHKWWH

Notes Excludes the CoRC, which meets as and when required. Denotes Chairman. Denotes attendance/standing invitee/ex ofﬁcio. )URPWKLVWDEOHLWFDQEHVHHQWKDWERDUGPHPEHUDWWHQGDQFHH[FHHGHGRIPHHWLQJVRYHUWKH\HDU,QDGGLWLRQWRWKH DERYHERDUGPHPEHUVZHUHH[SHFWHGWREHDYDLODEOHIRUPHHWLQJVZLWKWKHUHJXODWRUDWZRGD\ERDUGVWUDWHJ\PHHWLQJDQG DIXUWKHUWZRWUDLQLQJVHVVLRQV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 139 Governance, remuneration, risk and controls

Corporate governance statement

,QDGGLWLRQWRWKHERDUGFRPPLWWHHVQRWHGRQWKHSUHYLRXVSDJHVGLUHFWRUV ([FRPHPEHUVKLS DOVR VHUYH RQ D QXPEHU RI RWKHU FRPPLWWHHV DQG IRUXPV ZKHUH WKHLU

Appointment LQGHSHQGHQFHDQGH[SHULHQFHFDQEHRIYDOXHWRWKH*URXS Member date Group Executive Committee (Group Exco) ':3 'DYLG +RGQHWW -DQXDU\ Composition and meeting structure 9- 9HQHWH .OHLQ -XO\ *URXS ([FR FKDLUHG E\ WKH *URXS &KLHI ([HFXWLYH FRPSULVHV WKH :7 :LOOLH /DWHJDQ -DQXDU\ *URXS©V H[HFXWLYH GLUHFWRUV DQG RWKHU PHPEHUV RI WKH H[HFXWLYH - -DQ /XEEH 6HSWHPEHU PDQDJHPHQW,WPHHWVDVDJHQHUDOUXOHRQFHDPRQWKDQGGHDOVZLWK % %REE\ 0DODELH 0DUFK DOO PDWHULDO PDWWHUV UHODWLQJ WR LPSOHPHQWLQJ $EVD©V DJUHHG VWUDWHJ\ )&6 )HUJXV 0DUXSHQ $SULO PRQLWRULQJSHUIRUPDQFHDQGFRQVLGHULQJ*URXSSROLFLHV

'5 'DSKQH 0RWVHSH -DQXDU\ $0DQDJHPHQW&RPPLWWHHDQGDQ*URXS2SHUDWLQJ&RPPLWWHHDUHLQ

9 $OILH 1DLGRR )HEUXDU\ SODFH XQGHU WKH FKDLUPDQVKLS RI WKH *URXS &KLHI ([HFXWLYH DQG 'HSXW\ *URXS &KLHI ([HFXWLYH UHVSHFWLYHO\ 7KH 0DQDJHPHQW + +DSS\ 1WVKLQJLOD )HEUXDU\ &RPPLWWHH PHHWV ZHHNO\ DQG LWV PDLQ IXQFWLRQV DUH WR PRQLWRU WKH *5 *DYLQ 2SSHUPDQ -DQXDU\ *URXS©V ILQDQFLDO SHUIRUPDQFH IRFXV RQ WKH ULVN HQYLURQPHQW DQG 0 0DULD 5DPRV 0DUFK HYDOXDWHKLJKSULRULW\LVVXHVDIIHFWLQJWKH*URXS 6 6WHSKHQ YDQ&ROOHU 2FWREHU 7KH*URXS2SHUDWLQJ&RPPLWWHHPHHWVIRUWQLJKWO\DQGLWVPDLQIXQFWLRQV // /RXLV YRQ=HXQHU 6HSWHPEHU DUH H[HFXWLQJRSHUDWLRQVGHSOR\LQJVKDUHGUHVRXUFHVDQGLPSOHPHQWLQJ Notes *URXSSROLFLHVDQGJXLGHOLQHVDQG As at 31 December 2010. V J Klein retired on 31 December 2010. PRQLWRULQJILQDQFLDODQGRSHUDWLRQDOPHWULFVGHWHUPLQLQJURRWFDXVH RIGHYLDWLRQVDQGHQVXULQJVROXWLRQVDUHLPSOHPHQWHG

Authorities and procedures )XUWKHUUHDGLQJ 7KH ERDUG KDV GHOHJDWHG VSHFLILF DXWKRULWLHV WR WKH *URXS &KLHI ([HFXWLYH%RDUGDSSURYHGDXWKRULWLHVLQFOXGLQJVLJQLQJUHVROXWLRQVWR %LRJUDSKLFDOGHWDLOVRI*URXS([FR PHPEHUV 95 WKH*URXS&KLHI([HFXWLYHDUHUHYLHZHGDVFLUFXPVWDQFHVGLFWDWH 0HPEHUV RI *URXS ([FR DUH JHQHUDOO\ QRW SHUPLWWHG WR KROG DQ\ VLJQLILFDQW H[WHUQDO GLUHFWRUVKLSV XQOHVV WKH H[WHUQDO DSSRLQWPHQW LV WDNHQ XS DW $EVD©V UHTXHVW ,Q WHUPV RI WKH ERDUG FKDUWHU WKH SURSRVHGDSSRLQWPHQWPXVWILUVWEHGLVFXVVHGZLWKWKH*URXS&KDLUPDQ DQG WKHUHDIWHU DSSURYHG E\ WKH '$& ,Q OLQH ZLWK VWULFW JRYHUQDQFH SUDFWLFHVH[HFXWLYHGLUHFWRUVDUHUHVWULFWHGIURPDFFHSWLQJDSSRLQWPHQWV DVQRQH[HFXWLYHGLUHFWRUVRIDQ\FRPSDQ\ZKHUHDQ$EVD*URXSQRQ H[HFXWLYHGLUHFWRUDOUHDG\VHUYHV

The role of the subsidiary boards $OWKRXJKWKHERDUGXVXDOO\KDVRYHUDOOUHVSRQVLELOLW\IRUWKHDIIDLUVRI WKH*URXSVXEVLGLDU\ERDUGVSOD\DQLPSRUWDQWUROHLQWKHJRYHUQDQFH RIWKH*URXS$EVDGLUHFWRUVKDYHIXOODFFHVVWRDOOVXEVLGLDU\ERDUG GRFXPHQWDWLRQ $EVDLVLQWKHSURFHVVRIILQDOLVLQJDJRYHUQDQFHIUDPHZRUNEHWZHHQ WKH *URXS DQG LWV VXEVLGLDULHV 6WDQGDUG UHSRUWLQJ DQG UHSRVLWRU\ VRIWZDUH LV EHLQJ UROOHG RXW DFURVV WKH HQWLUH *URXS WR DVVLVW LQ WKLV UHJDUG7KH/HJDO(QWLW\5HYLHZ&RPPLWWHH /(5& DVXEFRPPLWWHH

140 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU WRWKH*URXS,QYHVWPHQW&RPPLWWHH *,& KDVWKHRYHUDOOUHVSRQVLELOLW\IRUWKHJRYHUQDQFHRIWKHOHJDOHQWLW\OLIHF\FOH IRUPDWLRQDFTXLVLWLRQ WR GHUHJLVWUDWLRQOLTXLGDWLRQ RI ERWK FRQVROLGDWHG VXEVLGLDULHV DQG FRQVROLGDWHG DQG QRQ FRQVROLGDWHGVSHFLDOSXUSRVHHQWLWLHVLQWKH*URXS $OWKRXJK WKH $IULFDQ VXEVLGLDULHV DUH VXEMHFWHG WR GLIIHUHQW OHJLVODWLRQ SDUWLFXODU WR WKRVH FRXQWULHV WKH\ DUH DOVR LQFOXGHGLQWKH*URXS©VJRYHUQDQFHIUDPHZRUNDVIDUDVSUDFWLFDOO\SRVVLEOH 7KH VXEVLGLDU\ ERDUGV PHHW DSSUR[LPDWHO\ ILYH WLPHV D \HDU XVXDOO\ EHIRUH *URXS ERDUG PHHWLQJV 7KH *URXS &KDLUPDQ * *ULIILQ FXUUHQWO\ VHUYHV RQ WKH ERDUGV RI WKH PDMRU ILQDQFLDO VHUYLFHV VXEVLGLDULHV EHFDXVH RI KLV H[SHUWLVHLQWKLVILHOG0U(0RQGODQH-UVHUYHVRQWKHERDUGRI%DUFOD\V%DQN0R]DPELTXH

Group Secretary $OO GLUHFWRUV KDYH DFFHVV WR WKH VXLWDEO\ TXDOLILHG DQG H[SHULHQFHG *URXS 6HFUHWDU\ 7KH *URXS 6HFUHWDU\ SURYLGHV JXLGDQFHWRWKHERDUGDVDZKROHDQGWRLQGLYLGXDOGLUHFWRUVZLWKUHJDUGWRKRZWKHLUUHVSRQVLELOLWLHVVKRXOGEHGLVFKDUJHG LQWKHEHVWLQWHUHVWVRIWKH*URXS 7KH*URXS6HFUHWDU\RYHUVHHVWKHLQGXFWLRQRIQHZGLUHFWRUV7KH*URXS6HFUHWDU\DOVRDVVLVWVWKH*URXS&KDLUPDQ DQG WKH *URXS &KLHI ([HFXWLYH WR GHWHUPLQH WKH DQQXDO ERDUG SODQ DQG ERDUG DJHQGDV DV ZHOO DV WR IRUPXODWH JRYHUQDQFHDQGERDUGUHODWHGLVVXHV

Interaction between Absa and Barclays $EVD*URXSDQG%DUFOD\VZRUNWRJHWKHUWRPD[LPLVHYDOXHIRUDOOVWDNHKROGHUVZKLOHFRPSO\LQJZLWKDOOUHOHYDQWODZV UHJXODWLRQVDQGVWDQGDUGV$EVD*URXSDQG%DUFOD\VLQWHUDFWLQDZD\WKDWWDNHVDFFRXQWRIWKHUHJXODWLRQVODZV ILGXFLDU\UHVSRQVLELOLWLHVDQGLQGXVWU\VWDQGDUGVWKDWDSSO\WRERWKJURXSV7KHWZRJURXSVLQWHUDFWLQDPDQQHUWKDW LVDOVRVHQVLWLYHWRWKHULJKWVDQGLQWHUHVWVRI$EVD©VPLQRULW\VKDUHKROGHUV

Democracy support ,QOLQHZLWKWKH*URXS©VVXSSRUWRIWKHSULQFLSOHRIPXOWLSDUW\GHPRFUDF\DVFRQWDLQHGLQWKHIRXQGLQJSURYLVLRQVRI WKH 6RXWK $IULFDQ &RQVWLWXWLRQ $EVD FRQWULEXWHG 5 PLOOLRQ 5 PLOOLRQ WKURXJK WKH ERDUG DSSURYHG 'HPRFUDF\6XSSRUW3URJUDPPHIRUWKH\HDUHQGHG'HFHPEHU $OOSROLWLFDOSDUWLHVWKDWDUHUHJLVWHUHGLQWHUPVRIVHFWLRQRIWKH(OHFWRUDO&RPPLVVLRQ$FW1RRIDQGKDYH WKUHHRUPRUHVHDWVLQWKH1DWLRQDO$VVHPEO\EHQHILWIURPWKLVSURJUDPPH

Going concern 7KHERDUGKDVFRQVLGHUHGDQGUHFRUGHGWKHIDFWVDQGDVVXPSWLRQVWKDWOHDGLWWRFRQFOXGHWKDWWKHEXVLQHVVZLOO FRQWLQXHDVDJRLQJFRQFHUQLQWKHILQDQFLDO\HDUDKHDG7KHERDUGFRQVLGHUVWKLVDVSHFWDWERWKLQWHULPUHSRUWLQJ VWDJHDQGILQDQFLDO\HDUHQG 7KHGLUHFWRUVDUHRIWKHRSLQLRQWKDWWKHEXVLQHVVZLOOEHDJRLQJFRQFHUQLQWKH\HDUDKHDG7KHLUVWDWHPHQWLQWKLVUHJDUGLV FRQWDLQHGLQWKHVWDWHPHQWRQWKHUHVSRQVLELOLW\RIGLUHFWRUVIRUWKHILQDQFLDOVWDWHPHQWV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 141 Governance, remuneration, risk and controls

Ethics review

Highlights Introduction

Ethics is the backbone of any organisation and is (IIHFWLYHQHVVDQGHPEHGGLQJRIWKH*URXS©V critical to its continued business success. FRGHRIHWKLFVDWWHVWHGDQQXDOO\ Absa is committed to upholding exacting levels of $SSOLFDWLRQRIFRQVHTXHQFHPDQDJHPHQWDV governance and compliance, and the Group’s UHTXLUHGE\WKHFRGHRIHWKLFV dedication to these ethical standards underpins all actions, both corporate and personal.

Absa remains steadfast to upholding the highest possible ethical standards. All activities should be $EVD©VYDOXHV conducted with honesty and integrity, with all people 9DOXHRXUSHRSOHDQGWUHDWWKHPZLWKIDLUQHVV being treated fairly and with dignity. 'HPRQVWUDWHLQWHJULW\LQDOORXUDFWLRQV

6WULYHWRH[FHHGWKHQHHGVRIRXUFXVWRPHUV Absa’s code of ethics

7DNHUHVSRQVLELOLW\IRUWKHTXDOLW\RIRXUZRUN 7R DFKLHYH WKHVH HVVHQWLDO REMHFWLYHV $EVD KDV

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©V FXOWXUH DQG YDOXHV LQWR SUDFWLFDO HPSOR\PHQWHTXLW\#DEVDFR]D EHKDYLRXUV 7KH+5&RQWDFW&HQWUHDW $OO HPSOR\HHV FRQGXFWLQJ EXVLQHVV RQ $EVD©V EHKDOI 7LSRIIV$QRQ\PRXVE\ UHJDUGOHVV RI WKHLU UROH RU ORFDWLRQ DUH H[SHFWHG WR ° SKRQLQJ)UHH&DOO FRQVLVWHQWO\GHPRQVWUDWH$EVD©VYDOXHVLQWKHZRUNSODFH ° ID[LQJ)UHH)D[ DQG EH\RQG LQ WKHLU EHKDYLRXU (PSOR\HHV DUH SURYLGHG

° VHQGLQJDQHPDLOWRDEVD#WLSRIIVFRP ZLWKGHWDLOHGJXLGHOLQHVDVVLVWLQJWKHPLQPDNLQJHWKLFDO GHFLVLRQVDQGSURYLGLQJWKHPZLWKWKHWRROVDQGNQRZKRZ ° $FWLRQ/LQHDWWHOHSKRQHQXPEHU WRFRUUHFWO\UHVROYHSRVVLEOHHWKLFDOGLOHPPDV ° 7KH$EVD(WKLFV2IILFHU ,WLVDOVRLPSRUWDQWWRQRWHWKDWWKHFRGHLVQRWLPSRVHG XQLODWHUDOO\RQHPSOR\HHVLWLVDSURGXFWRIDQH[WHQVLYH SURFHVV RI FRQVXOWDWLRQ ZLWK WKH UHSUHVHQWDWLYH WUDGH XQLRQ6$6%2 7KHGHWDLOVRIWKHFRGHDQGLWVUHTXLUHPHQWVDUHUHJXODUO\ FRPPXQLFDWHGWRDOOHPSOR\HHV7KHHIIHFWLYHQHVVRIWKH FRGH LV XQGHUWDNHQ E\ PHDQV RI D \HDUO\ DWWHVWDWLRQ SURFHVVLQZKLFKDOOHPSOR\HHVSDUWLFLSDWH 7KH *URXS KDV DQ HWKLFV RIILFHU ZKR SURYLGHV SURSHU RYHUVLJKWRIDOOPDWWHUVSHUWDLQLQJWRHWKLFVDQGSURYLGHV HPSOR\HHVDQGVWDNHKROGHUVZLWKDGYLFHDQGJXLGDQFHLQ WKLVUHJDUG

142 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Compliance with the Code &RPSOLDQFHZLWKWKHFRGHLVOLQNHGWRWKH$EVDGLVFLSOLQDU\FRGHDQGSURFHGXUH$Q\EUHDFKRIWKHFRGHPXVWLQWHUPV RI WKH GLVFLSOLQDU\ FRGH DQG SURFHGXUH EH ORJJHG RQ $EVD©V HPSOR\HH UHODWLRQV V\VWHP 7KH V\VWHP JXLGHV PDQDJHPHQWDVWRWKHDSSURSULDWHSURFHGXUHVWRIROORZDQGFRQVHTXHQFHPDQDJHPHQWWRDSSO\LQWKHHYHQWRID EUHDFK7KHV\VWHPDOVRHQVXUHVWKDWFRQVHTXHQFHPDQDJHPHQWLVDSSOLHGZLWKRXWH[FHSWLRQDQGWRWKHIXOOH[WHQW UHTXLUHGE\WKHFRGH

Ethics risk management 'XHWRWKHLPSRUWDQFHRIXSKROGLQJDQGHQVXULQJWKHKLJKHVWSRVVLEOHHWKLFDOVWDQGDUGVDQGEHKDYLRXUDPRQJVWDOO HPSOR\HHVDQLQWHQVLYHHWKLFVULVNIUDPHZRUNKDVEHHQGHYHORSHG7KHIUDPHZRUNLVJHDUHGWRZDUGVSUHYHQWLQJ EUHDFKHVRIWKHFRGHDQGWKHHDUO\GHWHFWLRQDQGUHVROXWLRQRIDQ\VXFKEUHDFKHV

Ethics risk management framework

Prevention Detection Resolution Monitoring

/HDGHUVKLS $ZDUHQHVV FRPPLWPHQWWR FDPSDLJQ HWKLFDOEHKDYLRXU &RPPXQLFDWLRQ 9LVLRQDQGYDOXHV $VVXUDQFHRI WKDWDUHHWKLFDOO\ DQRQ\PLW\ UHOHYDQW Tip-offs line

Strategy )RUPDOFRGHRI HWKLFVSROLF\ &RQWUROUHYLHZ 'LVFLSOLQDU\ 'LVFLSOLQDU\FRGH DQGHYROXWLRQ LQYHVWLJDWLRQ 7LSRIIVWROLQH DQGDFWLRQ 3ROLFLHVDQG PDQDJHUVDQGWR SURFHGXUHVDQG WKHKXPDQUHVRXUFHV &LYLOOLWLJDWLRQ UHJXODUUHYLHZ 7UDLQLQJRQHWKLFV FRQWDFWFHQWUH &ULPLQDOFKDUJHV WKHUHRIEDVHGRQ RQDQRQJRLQJ OHVVRQVOHDUQW EDVLVIRUDOO 6FUHHQLQJE\OLQH Investigation HPSOR\HHV PDQDJHUV 9LVLRQDQGYDOXHV &RPSOLDQFH UHTXLUHPHQWV )RUPDOFRGHRI HWKLFVSROLF\DV System and control enhancement System and control SDUWRIWHUPVDQG screening Continuous Awareness FRQGLWLRQVRI HPSOR\PHQW Continuous 'LVFLSOLQDU\FRGH screening

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 143 Governance, remuneration, risk and controls

Ethics review

2010 review Percentage breakdown of total tip-offs $EVDSURYLGHVVDIHHIIHFWLYHDQGLIVRGHVLUHGDQRQ\PRXV 17% Other PHFKDQLVPV IRU HPSOR\HHV WR VHHN JXLGDQFH RU UDLVH FRQFHUQV&RQFHUQVWKDWPD\EHUDLVHGDUHWDNHQVHULRXVO\ DQGDOOSRWHQWLDOEUHDFKHVDUHIXOO\LQYHVWLJDWHG7KHLGHQWLW\ RIHPSOR\HHVZKRUDLVHDFRQFHUQLVNHSWFRQILGHQWLDODQG WKHUHLVQRGLVFULPLQDWLRQDJDLQVWDQ\VWDNHKROGHUDVDUHVXOW 50% Crime 33% Human RIUDLVLQJDQLVVXHLQJRRGIDLWK resources related 'XULQJ WLSRIIV ZHUH UHFHLYHG RI ZKLFK SRWHQWLDOO\ UHODWHG WR HWKLFDO EUHDFKHV ,Q UHVSHFW RI RI WKHVHWLSRIIVLQYHVWLJDWLRQVZHUHFRQGXFWHGDQGWKHPDWWHUV ZHUH UHVROYHG HLWKHU E\ GLVFLSOLQDU\ DFWLRQ DJDLQVW WKH HPSOR\HH RU HPSOR\HHV LQYROYHG RU E\ FRQFOXGLQJ RQ WKH ● Crime ● Human resources related ● Other EDVLVRIWKHIDFWVJDWKHUHGLQWKHLQYHVWLJDWLRQWKDWWKHWLSRII ZDV XQVXEVWDQWLDWHG 7KH UHPDLQLQJ QLQH WLSRIIV DUH VWLOO EHLQJDFWLYHO\LQYHVWLJDWHG

Focus for 2011 (PSKDVLVLQZLOOEHSODFHGRQIXUWKHUUHILQHPHQWVWRWKH FRGH LQ DFFRUGDQFH ZLWK .LQJ ,,, DQG LQWHUQDWLRQDO EHVW SUDFWLFH DV ZHOO DV IXUWKHU HPEHGGLQJ WUDLQLQJ DQG VRFLDOLVDWLRQDFURVVWKH*URXS

)XUWKHUUHDGLQJ

&RUSRUDWHJRYHUQDQFHVWDWHPHQW 129 &RPSOLDQFHUHSRUW 175 5LVNPDQDJHPHQW 190

:HE

$EVD©V&RGHRI(WKLFV

144 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Governance, remuneration, risk and controls

Report from the Chairman of the Group Remuneration and Human Resources Committee

Brand Pretorius &KDLUPDQ*URXS5HPXQHUDWLRQDQG+XPDQ5HVRXUFHV&RPPLWWHH

Highlights ,QWHJUDWHG*URXSKXPDQUHVRXUFHVVWUDWHJ\DSSURYHGE\WKH ERDUGWRVXSSRUW$EVD©VDLPRIEHFRPLQJDPRUHSHRSOHFHQWUHG RUJDQLVDWLRQ +LJKOHYHOVRIDGKHUHQFHWRORFDODQGLQWHUQDWLRQDOJRYHUQDQFH VWDQGDUGVUHJDUGLQJFRPSHQVDWLRQ 6XFFHVVIXOLPSOHPHQWDWLRQRIDWRWDOLQFHQWLYHSKLORVRSK\ZKLFK HQVXUHVDEDODQFHEHWZHHQVKRUWDQGORQJWHUPFRPSHQVDWLRQ *RRGSURJUHVVLQWKHDFKLHYHPHQWRIHPSOR\PHQWHTXLW\WDUJHWV GXULQJ $QXPEHURIVHQLRUH[HFXWLYHVDSSRLQWHGWRVWUHQJWKHQWKH*URXS©V H[HFXWLYHWHDP ,QFUHDVHGHPSOR\HHSDUWLFLSDWLRQLQWKHDQQXDOHPSOR\HHRSLQLRQ VXUYH\ 1HZWDOHQWPDQDJHPHQWV\VWHPLQWURGXFHGWRLGHQWLI\DQGGHYHORS WRSWDOHQWZLWKLQWKHRUJDQLVDWLRQDQGWRDOORZIRUPRUHHIIHFWLYH VXFFHVVLRQSODQQLQJ $QHQKDQFHGSHUIRUPDQFHGHYHORSPHQWDSSURDFKLQWURGXFHG WRHQVXUHWKDWHPSOR\HHSHUIRUPDQFHLVFRQVLVWHQWO\DQGIDLUO\ UHYLHZHG 6LJQLILFDQWLQFUHDVHLQVNLOOVGHYHORSPHQWVSHQGRQKLVWRULFDOO\ GLVDGYDQWDJHGJURXSV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 145 Governance, remuneration, risk and controls

Report from the Chairman of the Group Remuneration and Human Resources Committee

Introduction The Group Remuneration and Human Resources Committee (GRHRC) has a broad remit in respect of the human resources environment within the Group. Accordingly, this year’s report includes both the general human resources report and the report dealing speciﬁcally with remuneration and related matters.

Overview of the GRHRC’s remit and responsibilities 7KH*5+5&©VUHPLWDVVHWRXWLQIRUPDOWHUPVRIUHIHUHQFHDSSURYHGE\WKHERDUG7KHUHPLWLQFOXGHVWKHJRYHUQDQFH RIFRPSHQVDWLRQZLWKLQWKH*URXSWUDQVIRUPDWLRQLVVXHVKXPDQUHVRXUFHVLVVXHVDQGPDWWHUVUHODWLQJWRWKH%%%(( &RGHVRI*RRG3UDFWLFHDQGLWVDVVRFLDWHGUHSRUWLQJDQGGLVFORVXUHV7KH*5+5&FRPSULVHVRQO\QRQH[HFXWLYH GLUHFWRUVWKHPDMRULW\RIZKRPDUHLQGHSHQGHQW 7KH*5+5&©VVSHFLILFUHVSRQVLELOLWLHVLQFOXGH DSSURYLQJWKH*URXS©VUHPXQHUDWLRQSKLORVRSK\SULQFLSOHVDQGSROLF\ DSSURYLQJWKHUHPXQHUDWLRQRIWKH*URXS&KLHI([HFXWLYHDQG*URXS([FRPHPEHUV7KH*5+5&DOVRRYHUVHHV WKHUHPXQHUDWLRQRIHPSOR\HHVGLUHFWO\UHSRUWLQJWR*URXS([FRPHPEHUVDQGHPSOR\HHVUHJDUGHGDVILOOLQJUROHV RIVWUDWHJLFLPSRUWDQFHWRWKH*URXS5HPXQHUDWLRQLQFOXGHVDOOHOHPHQWVJXDUDQWHHGIL[HGUHPXQHUDWLRQWRWDO LQFHQWLYHFRPSHQVDWLRQDQGDQ\RWKHUIRUPRIEHQHILWVRUSHUTXLVLWHV UHYLHZLQJWKHRSHUDWLRQRIWKH*URXS©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©V KXPDQ UHVRXUFHV SROLFLHV LQFOXGLQJ FRQGLWLRQV RIVHUYLFHDQGEHQHILWIXQGPDQDJHPHQW

2010 review 2QHRIWKHFRUHSLOODUVRIWKH2QH$EVDVWUDWHJ\LVWRHQDEOHDFXVWRPHUDQGSHRSOHFHQWUHGRUJDQLVDWLRQZKLFKDLPV WRDFKLHYHHQKDQFHGFXVWRPHUVHUYLFHWKURXJKWDOHQWHGDQGPRWLYDWHGSHRSOH7KH*5+5&RYHUVHHVWKH*URXS©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©VH[HFXWLYHPDQDJHPHQWWRDWWHQG PHHWLQJVZKHQUHOHYDQW'XULQJWKHRQO\RWKHUVHQLRUH[HFXWLYHWRDWWHQGFRPPLWWHHPHHWLQJVZDVWKH&KLHI ([HFXWLYH2IILFHURI$EVD&DSLWDO 1RH[HFXWLYHGLUHFWRURUVHQLRUH[HFXWLYHLVSUHVHQWZKHQKLVKHURZQSHUIRUPDQFHRUUHPXQHUDWLRQRUDQ\PDWWHU UHODWHGWRKLPKHULVGLVFXVVHG

146 Absa Group Limited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©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

Remuneration and related matters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©V )LQDQFLDO 6HUYLFHV $XWKRULW\ DQG WKH 8QLWHG 6WDWHV©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 147 Governance, remuneration, risk and controls

Report from the Chairman of the Group Remuneration and Human Resources Committee

The Group’s ﬁnancial performance in 2010 7KHSHUIRUPDQFHRIWKH*URXSLVGHVFULEHGLQGHWDLOLQWKH )XUWKHUUHDGLQJ *URXS )LQDQFLDO 'LUHFWRU©V UHYLHZ LQ WKH ILQDQFLDO DQDO\VLV )LQDQFLDODQDO\VLV 325 DQGLQWKHILQDQFLDOVWDWHPHQWV7KHNH\KLJKOLJKWVDORQJVLGH *5+5&PHPEHUVKLS 138 DUH UHOHYDQW LQ WKH FRQWH[W RI FRQVLGHULQJ WKH *URXS©V UHPXQHUDWLRQ UHSRUW DQG LQ SDUWLFXODU WKH UHPXQHUDWLRQ RI *5+5&PHHWLQJDWWHQGDQFH 139 H[HFXWLYHGLUHFWRUVDQGRWKHUVHQLRUH[HFXWLYHV *URXS)LQDQFLDO'LUHFWRU©VUHYLHZ 232 )LQDQFLDOVWDWHPHQWV 336 The 2010 remuneration report +XPDQUHVRXUFHVUHSRUW 146 7KH UHPXQHUDWLRQ UHSRUW LV VHW RXW RQ WKH IROORZLQJ $JJUHJDWHFRPSHQVDWLRQRI 1RWH RIWKH SDJHV IRU VKDUHKROGHU FRQVLGHUDWLRQ $V LQ SUHYLRXV \HDUV RWKHUVHQLRUH[HFXWLYHV FRQVROLGDWHG WKLV UHSRUW FRQWDLQV GHWDLOV RI WKH *URXS©V FRPSHQVDWLRQ ILQDQFLDOVWDWHPHQWV SROLFLHVDQGSODQVDQGWKHGLVFORVXUHRIVSHFLILFLQGLYLGXDO DUUDQJHPHQWV )RU WKLV \HDU©V UHSRUW WKH *URXS KDV LQ DGGLWLRQWRWKHUHOHYDQWVWDWXWHVEHHQJXLGHGE\.LQJ,,,WKH ,QWHUQDWLRQDO)LQDQFLDO6WDELOLW\%RDUG©V3ULQFLSOHVIRU6RXQG 2010 &KDQJH &RPSHQVDWLRQ 3UDFWLFH DQG WKH 8.©V )LQDQFLDO 6HUYLFHV $XWKRULW\©V5HPXQHUDWLRQ&RGH 3URILWEHIRUHWD[DWLRQ 5P 11 851 $WWULEXWDEOHHDUQLQJV 5P 8 118 7KHUHSRUWFRYHUVWKHIROORZLQJ +HDGOLQHHDUQLQJV 5P 8 041 5HPXQHUDWLRQJRYHUQDQFH 5HWXUQRQHTXLW\ 15,1 7KH$EVDUHZDUGSKLORVRSK\DQGSROLF\ DQGFKDQJHVWR &RVWRIHTXLW\ 14,0 (FRQRPLFSURILW 5P 562 WKHVH LQFOXGLQJ ° IL[HGFRPSHQVDWLRQ °WRWDOLQFHQWLYHFRPSHQVDWLRQFRYHULQJVKRUWDQGORQJ WHUPLQFHQWLYHVDQG ° WKHVSHFLDOUHWHQWLRQSODQ &RPSHQVDWLRQRIH[HFXWLYHGLUHFWRUVDQGVHQLRUH[HFXWLYHV 6SHFLDO DUUDQJHPHQWV LQ UHVSHFW RI H[HFXWLYH GLUHFWRUV DQGVHQLRUH[HFXWLYHV 5HPXQHUDWLRQRIQRQH[HFXWLYHGLUHFWRUV 7DEOHVRIGLVFORVXUHVVKRZLQJLQGLYLGXDOFRPSHQVDWLRQRI QRQH[HFXWLYH DQG H[HFXWLYH GLUHFWRUV DQG DJJUHJDWH FRPSHQVDWLRQ XQGHU UHODWHGSDUW\ SD\PHQWV RI RWKHU VHQLRUH[HFXWLYHV

7KH FRQWHQWV RI WKH GLVFORVHG WDEOHV DUH DXGLWHG ZKHUH QHFHVVDU\ E\ RQH RI WKH *URXS©V DXGLWRUV 3ULFHZDWHUKRXVH&RRSHUV,QF

2010 human resources report $V LQGLFDWHG SUHYLRXVO\ WKH *5+5& LV FKDUJHG ZLWK WKH RYHUVLJKWRIWKH*URXS©VSHRSOHDJHQGD7KH*URXS©VKXPDQ UHVRXUFHV UHSRUW LV FRQWDLQHG LQ WKLV UHSRUW DIWHU WKH UHPXQHUDWLRQUHSRUW

148 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 7KH ERDUG DSSURYHG WKH UHYLVHG *URXS KXPDQ UHVRXUFHV VWUDWHJ\ LQ 0DUFK 7KH WKUHH SULPDU\ SHRSOH LPSHUDWLYHVZHUHLGHQWLILHGDV WUDQVIRUPDWLRQPRYLQJIURPHPSOR\PHQWHTXLW\WRDFXOWXUHRILQFOXVLYLW\ WDOHQWPDQDJHPHQWLPSURYLQJWKHWDOHQWSLSHOLQHDQGVXFFHVVLRQUDWLRVDQG OHDUQLQJDQGGHYHORSPHQWVKLIWLQJWKHIRFXVIURPFRPSOLDQFHGULYHQOHDUQLQJWRVNLOOVGULYHQOHDUQLQJ

7KH*URXS©VSHRSOHDJHQGDLVFULWLFDOWRDFKLHYLQJWKHREMHFWLYHVRIWKH2QH$EVDVWUDWHJ\DQGVLJQLILFDQWSURJUHVV KDVEHHQPDGHLQ7KHKXPDQUHVRXUFHVUHSRUWGHWDLOVWKLVLOOXVWUDWLQJWKHVXFFHVVHVDFKLHYHGLQWKLVUHJDUG

7KHUHSRUWFRYHUVWKHIROORZLQJ +XPDQUHVRXUFHVJRYHUQDQFH 7UDQVIRUPDWLRQ 7DOHQWPDQDJHPHQW 6NLOOVGHYHORSPHQW 3HUIRUPDQFHGHYHORSPHQW (PSOR\HHHQJDJHPHQW (PSOR\HHUHODWLRQVDQGKXPDQULJKWV

Focus for 2011 7KHNH\IRFXVDUHDVIRUWKHFRPPLWWHHLQDUHDVIROORZV &RQVROLGDWLQJWKH*URXS©VUHZDUGIUDPHZRUNLQFOXGLQJUDWLRQDOLVLQJVKDUHEDVHGSODQV 2QJRLQJLQWHJUDWLRQRIULVNDQGUHZDUGLQGHDOLQJZLWKFRPSHQVDWLRQUHODWHGLVVXHV &RQWLQXLQJIRFXVRQHYROYLQJJRYHUQDQFHUXOHVDQGUHJXODWLRQVERWKJOREDOO\DQGORFDOO\ ,QFUHDVLQJIRFXVRQ °WUDQVIRUPDWLRQ °WDOHQWPDQDJHPHQWDQGVXFFHVVLRQSODQQLQJDQG °OHDUQLQJDQGGHYHORSPHQW &RQWLQXLQJHPSKDVLVRQLQLWLDWLYHVWREXLOG$EVDDVDSHRSOHFHQWUHGRUJDQLVDWLRQDVHSLWRPLVHGLQWKH2QH$EVD VWUDWHJ\

Conclusion $EVDLVFRPPLWWHGWRWKHREMHFWLYHRIEHLQJDSUHIHUUHGHPSOR\HUDWWUDFWLQJVNLOOHGDQGWDOHQWHGSHRSOH7KHLQLWLDWLYHV VHWRXWLQWKHUHPXQHUDWLRQDQGKXPDQUHVRXUFHVUHSRUWVEHDUWHVWLPRQ\WRWKLVFRPPLWPHQWDQGVHWDVWURQJDQG VXVWDLQDEOHIRXQGDWLRQIRUIXUWKHULQJWKH*URXS©VVXFFHVVLQWKLVUHJDUG

7KH*5+5&LVVDWLVILHGWKDWLWKDVGLVFKDUJHGLWVUHVSRQVLELOLWLHVDFFRUGLQJWRLWVWHUPVRIUHIHUHQFHDQGLQWKHEHVW LQWHUHVWRIDOO$EVD©VVWDNHKROGHUV Brand Pretorius Chairman: Group Remuneration and Human Resources Committee

0DUFK

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 149 Governance, remuneration, risk and controls

Remuneration report

Remuneration governance and the role and remit of the GRHRC Remuneration governance 7KH*5+5&LVUHVSRQVLEOHIRUWKHGHYHORSPHQWDQGLPSOHPHQWDWLRQRI$EVD©VUHPXQHUDWLRQSKLORVRSK\DQGSROLF\ DQGKDVRYHUVLJKWRYHUWKHFRPSHQVDWLRQRIH[HFXWLYHGLUHFWRUVDQGVHQLRUH[HFXWLYHV &RQVLVWHQWZLWKLQWHUQDWLRQDOEHVWSUDFWLFHWKH*URXS&KLHI([HFXWLYHDQGWKH*URXS&KDLUPDQPDNHUHFRPPHQGDWLRQV LQ UHVSHFW RI WKH UHPXQHUDWLRQ RI QRQH[HFXWLYH GLUHFWRUV IRU WKH ERDUG WR UHYLHZ DQG WKHUHDIWHU IRU VKDUHKROGHUV WRDSSURYH

Progressive governance to improve rigour and robustness of compensation decisions 7KH *5+5&©V UHPLW DV LW SHUWDLQV WR LQGLYLGXDO FRPSHQVDWLRQ LV ERWK TXDQWXP DQG OHYHO UHIHUHQFHG )XUWKHU DOO DSSRLQWPHQWVWRDQGH[LWVIURP*URXS([FRDUHVXEMHFWWRWKHGLUHFWUHYLHZDQGDSSURYDORIWKH*5+5&6LPLODUO\ QHZDSSRLQWPHQWVDQGVSHFLDOFLUFXPVWDQFHWHUPLQDWLRQVZKHUHWKHFRVWVH[FHHGDVWLSXODWHGPDWHULDOLW\WKUHVKROG DUHVXEMHFWWRRYHUVLJKWDQGDSSURYDOE\WKH*5+5& 7RHQVXUHULJRXUEHORZWKHVHOHYHOVDORZHUWKUHVKROGRIERWKFRVWDQGVHQLRULW\LVHVWDEOLVKHGDQGLVJRYHUQHGE\ WKH*URXS5HFUXLWPHQWDQG3URPRWLRQV&RPPLWWHH *53& 7KH*53&FRQVLVWVRIVL[VHQLRUH[HFXWLYHVDQGPHHWV ZHHNO\DVUHTXLUHG7KH*53&DOVRUHYLHZVDOOSURSRVDOVIRUWKH*5+5& RWKHUWKDQWKRVHUHODWLQJWRSHHUVRIWKH *53&PHPEHUZKLFKJRGLUHFWO\WRWKH*5+5& WRHQVXUHFRQVLVWHQF\LQGHFLVLRQPDNLQJDQGDGKHUHQFHWRWKH KLJKHVWVWDQGDUGVRIJRYHUQDQFH

Advisers to the GRHRC 7KH *5+5& KDV DFFHVV WR LQGHSHQGHQW ORFDO DQG LQWHUQDWLRQDO H[WHUQDO FRQVXOWDQWV WR HQVXUH LW UHFHLYHV H[SHUW DGYLFHRQUHPXQHUDWLRQERWKLQJHQHUDODQGLQWHUPVRIWKHVSHFLILFEXVLQHVVHVZLWKLQWKH*URXS7KH*URXSEHDUV DOOFRVWVRIWKHVHH[WHUQDOFRQVXOWDQWV $EVDXVHVWKHVHUYLFHVRI7RZHUV:DWVRQ SUHYLRXVO\7RZHUV3HUULQ0*0& DJOREDOUHPXQHUDWLRQFRQVXOWLQJILUP EDVHGLQ1HZ

For the purpose of the remuneration report, senior executives are deﬁned as members of Group Exco.

150 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Absa’s reward philosophy, policy and practice $EVD©V UHPXQHUDWLRQ SKLORVRSK\ DQG SROLF\ DUH GHVLJQHG WR DOLJQ WKH LQWHUHVWV RI VWDNHKROGHUV GLUHFWRUV DQG HPSOR\HHV ,Q GHWHUPLQLQJ WKH UHPXQHUDWLRQ RI H[HFXWLYH GLUHFWRUV DQG RWKHU VHQLRU HPSOR\HHV WKH *5+5& LV VHQVLWLYHWRWKHFRQGLWLRQVRIUHPXQHUDWLRQDQGHPSOR\PHQWIRUHPSOR\HHVDFURVVWKH*URXSDVZHOODVWKHFKDQJLQJ UHJXODWRU\DQGVWDWXWRU\IUDPHZRUNVWKDWDIIHFWFRPSHQVDWLRQ $EVD©VUHPXQHUDWLRQSROLF\DLPVWREXLOGORQJWHUPVXVWDLQDEOHVWDNHKROGHUYDOXHDQGWRDWWUDFWDQGUHWDLQHPSOR\HHV RIWKHKLJKHVWFDOLEUHZKRGHPRQVWUDWHWKH*URXS©VYDOXHV $EVD©VRYHUDOOUHPXQHUDWLRQSROLF\DLPVDUHDVIROORZV 3URPRWLQJ FRPSOLDQFH ZLWK JOREDO UHJXODWRU\ WUHQGV DQG ORFDO UHTXLUHPHQWV ZLWK DQ HPSKDVLV RQ ORQJWHUP VXVWDLQDELOLW\ +HOSLQJWRDOLJQWKHLQWHUHVWVRIVHQLRUH[HFXWLYHDQGSURIHVVLRQDOHPSOR\HHVLQFOXGLQJH[HFXWLYHGLUHFWRUVZLWK WKRVHRIWKH*URXS©VVWDNHKROGHUV 0D[LPLVLQJHPSOR\HHV©SHUVRQDOFRQWULEXWLRQVWRWKHEXVLQHVVXQLWLQZKLFKWKH\ZRUNDVZHOODVWRWKH*URXS7KLV ZLOOHQDEOHHPSOR\HHVWRPDNHWKHPRVWRIWKH*URXS©VRIIHULQJVWREHWWHUVHUYHFXVWRPHUV $VVLVWLQJ WR DFKLHYH FRPPHUFLDOO\ FRPSHWLWLYH UHZDUG OHYHOV HQDEOLQJ WKH *URXS WR DWWUDFW DQG UHWDLQ SHRSOH RISURYHQDELOLW\H[SHULHQFHDQGVNLOOV $VVLVWLQJ WR LPSOHPHQW UHZDUG SODQV WKDW DUH FOHDU DQG WUDQVSDUHQW DQG WKDW UHLQIRUFH WKH *URXS©V VWUDWHJLF SRVLWLRQLQJ 5HZDUGLQJDQGHQFRXUDJLQJEHKDYLRXUFRQVLVWHQWZLWKWKH*URXS©VYDOXHV 'HWHUPLQLQJUHZDUGIUDPHZRUNVFRQVLVWHQWZLWKHPHUJLQJJRYHUQDQFHIUDPHZRUNVRQH[HFXWLYHDQGPDQDJHULDO FRPSHQVDWLRQ 7KH DERYH SROLF\ ZKLFK XQGHUSLQV $EVD©V UHZDUG VWUDWHJ\ DLPV WR IDFLOLWDWH DSSURSULDWH DOLJQPHQW RI WKH KXPDQ UHVRXUFHV DJHQGD ZKLFK LQFOXGHV WKH DWWUDFWLRQ UHWHQWLRQ DQG PRWLYDWLRQ RI WDOHQWHG SHRSOH ZLWK WKH EURDGHU 2QH$EVDVWUDWHJLFREMHFWLYHRIEHLQJDFXVWRPHUDQGSHRSOHFHQWUHGRUJDQLVDWLRQ

Performance development $NH\SULQFLSOHRIWKH*URXS©VUHZDUGSKLORVRSK\LV¨SD\IRUSHUIRUPDQFH©7KH*URXS©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©VYDULDEOHFRPSHQVDWLRQDUUDQJHPHQWV )RUWKH\HDUHQGUDWLQJSURFHVVRIHPSOR\HHVUHFHLYHGSHUIRUPDQFHUDWLQJV$PRUHUREXVWDSSURDFKWR FDUHHUGHYHORSPHQWGLVFXVVLRQVZDVLQWURGXFHGDVSDUWRIWKHVL[PRQWKO\WDOHQWPDQDJHPHQWUHYLHZV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 151 Governance, remuneration, risk and controls

Remuneration report

Fixed compensation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©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

Variable compensation (total incentive compensation) 7KH *URXS LQWURGXFHG WKH FRQFHSW RI WRWDO LQFHQWLYH FRPSHQVDWLRQ LQ DV WKH SUHIHUUHG PHWKRGRORJ\ IRU WKH GHOLYHU\RIWRWDOYDULDEOHFRPSHQVDWLRQ7KLVSKLORVRSK\HQVXUHVDQDSSURSULDWHOLQNEHWZHHQVKRUWDQGORQJWHUP FRPSHQVDWLRQLQWKDWDFRQVROLGDWHGDSSURDFKLVWDNHQWRUHPXQHUDWLRQUHODWHGGHFLVLRQVLQOLQHZLWKWKH*URXS©V RYHUDOODSSURDFKWRWRWDOFRPSHQVDWLRQ 8QGHU WKH WRWDO LQFHQWLYH SKLORVRSK\ D VLQJOH WRWDO LQFHQWLYH UHFRPPHQGDWLRQ LV FRQVLGHUHG 7KH GHFLVLRQ LV WKHQ PDGHUHJDUGLQJWKHDSSURSULDWHSURSRUWLRQDOLW\EHWZHHQVKRUWWHUPFRPSHQVDWLRQ YLDDFDVKERQXVDZDUGIRU SHUIRUPDQFH DQGIXWXUHIRFXVHGVKDUHEDVHGFRPSHQVDWLRQWKURXJKWKH'HIHUUHG$ZDUG3ODQ '$3 ,QWKH SD\URXQGSURFHVVQRDZDUGVZHUHPDGHXQGHUDQ\RIWKH*URXS©VRWKHUVKDUHEDVHGSODQVLQDFFRUGDQFHZLWKWKH *URXS©VLQWHQWLRQWRVLPSOLI\FRPSHQVDWLRQDUUDQJHPHQWVDQGWRZLQGGRZQOHJDF\SODQV 7KHOHYHORIWRWDOIXQGLQJPDGHDYDLODEOHXQGHUWKHWRWDOLQFHQWLYHDUUDQJHPHQWVZDVLQIRUPHGE\WKH*URXS©VRYHUDOO SHUIRUPDQFHZLWKDVSHFLILFIRFXVRQ JURZWKLQSURILWEHIRUHWD[DWLRQ DWWULEXWDEOHHDUQLQJVJURZWKDQG JURZWKLQKHDGOLQHHDUQLQJV ,QDGGLWLRQWKHTXDOLW\RIWKH*URXS©VSHUIRUPDQFHZDVUHYLHZHG7KLVLQFOXGHGFRQVLGHUDWLRQRIWKHLPSDFWRIRQHRII LWHPVLQWKHFXUUHQWDQGSUHYLRXV\HDUFKDQJHVWRWKH*URXS©VLPSDLUPHQWDQGFRVWWRLQFRPHUDWLRVDQGWKH*URXS©V UHWXUQ RQ HTXLW\ &DSLWDO XWLOLVDWLRQ DQG WKH ORQJHUWHUP LPSDFW RI FOXVWHU SHUIRUPDQFH RQ IXWXUH UHVXOWV ZHUH DOVR FRQVLGHUHGLQDSSRUWLRQLQJWKHWRWDOLQFHQWLYHSRROV

152 Absa Group Limited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©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

Special retention plan 7KH*URXSLPSOHPHQWHGDKLJKO\VHOHFWLYHUHWHQWLRQSODQLQ0DUFK 7KLVRQHRIILQLWLDWLYHZDVDLPHGDWVHFXULQJWKHVHUYLFHVRIWKHWRS

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 153 Governance, remuneration, risk and controls

Remuneration report

NH\OHDGHUVDQGNH\VSHFLDOLVWVIRUWKH*URXSIRUWKHQH[WWZRWRWKUHH\HDUVDQGLVDOLJQHGWRWKHREMHFWLYHVRIWKH 2QH$EVDVWUDWHJ\RYHUWKHVDPHWLPHIUDPH7ZRSODQDUUDQJHPHQWVZHUHLPSOHPHQWHGDVIROORZV The Key Leaders Plan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he Key Specialists Plan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

Executive directors’ and senior executives’ compensation ([HFXWLYH GLUHFWRUV DQG VHQLRU H[HFXWLYHV DUH UHZDUGHG LQ DFFRUGDQFH ZLWK WKH SURYLVLRQV RI WKH $EVD UHZDUG SKLORVRSK\DQGSULQFLSOHV7KHIROORZLQJDUHWKHFRQGLWLRQVSHUWLQHQWWRWKHLPSOHPHQWDWLRQRIWKHUHZDUGVWRH[HFXWLYH GLUHFWRUVDQGVHQLRUH[HFXWLYHV

Performance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

154 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Fixed compensation

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

Determination of total incentive compensation (including that of the Group Chief Executive) 7KHDOORFDWLRQRIWRWDOLQFHQWLYHFRPSHQVDWLRQIRUH[HFXWLYHGLUHFWRUVDQG VHQLRU H[HFXWLYHV LV EDVHG RQ WKH FRQWULEXWLRQ WKH\ PDGH WR WKH VXVWDLQDEOH VXFFHVV RI WKH *URXS WRJHWKHU ZLWK WKH QHHG WR GULYH DSSURSULDWH IXWXUH IRFXV DQG UHWHQWLRQ DPRQJ WKH VHQLRU H[HFXWLYH SRSXODWLRQ ([HFXWLYH GLUHFWRUV DQG VHQLRU H[HFXWLYHV SDUWLFLSDWH LQ GLVFUHWLRQDU\ YDULDEOHFRPSHQVDWLRQSODQV7KHUHIRUHWKHUHDUHQRIRUPDODUUDQJHPHQWV LQ SODFH WR OLQN H[DFW SHUIRUPDQFH RXWFRPHV WR D VSHFLILF UDQG YDOXH DZDUG,QVWHDGDIXOOUDQJHRIIDFWRUVDUHFRQVLGHUHGZKHQGHFLGLQJRQ WKHDZDUGVWREHPDGHWRHDFKH[HFXWLYHGLUHFWRUDQGWRHDFKPHPEHU RI*URXS([FR)DFWRUVLQFOXGH FRQWULEXWLRQWR*URXSDQGFOXVWHUUHVXOWV FRQWULEXWLRQPDGHWRWKH*URXSRXWVLGHWKHLUVSHFLILFUROHRUUHPLW UHWHQWLRQ HQKDQFHPHQWRIORQJWHUPIRFXVDQG PDUNHWFRPSHWLWLYHQHVVUHODWLYHWRSHUIRUPDQFHDQGFRQWULEXWLRQ 7KH*URXS&KDLUPDQPDNHVUHFRPPHQGDWLRQVWRWKH*5+5&UHJDUGLQJ WKH *URXS &KLHI ([HFXWLYH©V LQFHQWLYH FRPSHQVDWLRQ FDVK DZDUG DQG '$3SDUWLFLSDWLRQ &DVKERQXVDZDUGVDQGDZDUGVXQGHUWKH'$3WR PHPEHUV RI *URXS ([FR DUH UHFRPPHQGHG E\ WKH *URXS &KLHI ([HFXWLYH 7KHVH DUH UHYLHZHG LQ GHWDLO E\ WKH *5+5& DQG ZKHUH QHFHVVDU\DPHQGPHQWVDUHPDGH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 155 Governance, remuneration, risk and controls

Remuneration report

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©V5HPXQHUDWLRQ&RGHZKLFKDSSO\JLYHQKHUUROHRQWKH%DUFOD\V*URXS([HFXWLYH&RPPLWWHH $IXUWKHUPDWHULDOUHTXLUHPHQWRIWKH8QLWHG.LQJGRP)LQDQFLDO6HUYLFHV$XWKRULW\©V5HPXQHUDWLRQ&RGHIRUWKH*URXS &KLHI([HFXWLYHLVWKDWQRWPRUHWKDQRIWRWDOLQFHQWLYHFRPSHQVDWLRQPD\EHGHOLYHUHGLQWKHIRUPRIDFDVK ERQXV$EVDLVFRPSOLDQWZLWKWKLVUHTXLUHPHQWDVWKHFDVKERQXVRIWKH*URXS&KLHI([HFXWLYH LQFOXVLYHRIWKHVKDUH OLQNHGFRPSRQHQWVXEMHFWWRWKHVL[PRQWKUHWHQWLRQSHULRG LVFDSSHGDWRIWRWDOLQFHQWLYHFRPSHQVDWLRQ

Payment of board fees to executive directors ([HFXWLYHGLUHFWRUVQRORQJHUUHFHLYHERDUGIHHVIRUWKHLUPHPEHUVKLSRIWKH$EVD*URXSERDUG7KHVHIHHVKDYH EHHQLQFRUSRUDWHGLQWRH[HFXWLYHGLUHFWRUV©&7&SDFNDJHVZLWKHIIHFWIURP$SULO7KLVDSSOLHGWR05DPRVDQG //YRQ=HXQHU':3+RGQHWW©VPHPEHUVKLSRIWKH$EVDERDUGZDVHIIHFWLYHIURP0DUFKDQGWKHFKDQJHV LQUHVSHFWRIERDUGIHHVIRUH[HFXWLYHGLUHFWRUVZHUHIDFWRUHGLQWRWKHGHFLVLRQUHJDUGLQJKLVQHZ&7&SDFNDJHDV *URXS)LQDQFLDO'LUHFWRU

Executive directors’ service contracts ([HFXWLYHGLUHFWRUVDUHHPSOR\HGRQSHUPDQHQWFRQWUDFWVRIHPSOR\PHQWZLWKWKH*URXS7KHVH DQGWKHFRQWUDFWV RIHPSOR\PHQWIRU*URXS([FRPHPEHUV SURYLGHIRUDVL[PRQWKQRWLFHSHULRG7KHFRQWUDFWVRIH[HFXWLYHGLUHFWRUV RUVHQLRUH[HFXWLYHVGRQRWSUHFOXGHWKH*URXSIURPH[HUFLVLQJLWVQRUPDOULJKWVWRWHUPLQDWHWKHFRQWUDFWLQWKHHYHQW RIPLVFRQGXFWRUSRRUSHUIRUPDQFH([HFXWLYHGLUHFWRUVUHWLUHIURPWKHLUSRVLWLRQVDQGIURPWKHERDUGDWWKHDJHRI

Special arrangements in respect of executive directors and senior executives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

156 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 7KHGHWDLOVRIWKHDUUDQJHPHQWVDUHDVIROORZV

J H Schindehütte: Execution of contractual exit terms -+6FKLQGHKWWHUHVLJQHGIURPKLVSRVLWLRQDV*URXS)LQDQFLDO'LUHFWRU DQGDVDQH[HFXWLYHGLUHFWRUHIIHFWLYHIURP)HEUXDU\XQGHUWKH WHUPVSUHYLRXVO\GLVFORVHG,QWHUPVRIWKLVDUUDQJHPHQWKHUHFHLYHGWKH IROORZLQJ $WHUPLQDWLRQSD\PHQWRI5PLOOLRQFRPSULVLQJRQH\HDU©VFRPSHQVDWLRQ FRQVLVWLQJRI&7&DQGDVSHFLILHGDQQXDOERQXVDPRXQW 6L[PRQWKV©FRQWUDFWXDOQRWLFHWDNHQDVVSHFLDOOHDYH *RRGOHDYHUWUHDWPHQWRQDOOVKDUHVDQGVKDUHEDVHGSD\PHQWV $OOSD\PHQWVGXHXQGHUWKLVDUUDQJHPHQWZHUHPDGHLQ6HSWHPEHU ZLWKWKHH[FHSWLRQRIWKRVHDSSOLFDEOHXQGHUWKHYDULRXVVKDUHRUVKDUH EDVHGSODQVDQGZKLFKDUHVXEMHFWWRDVSHFLILFYHVWLQJEDVHGRQWLPHRU RWKHUFRQGLWLRQV-+6FKLQGHKWWHFHDVHGWREHDQHPSOR\HHRIWKH$EVD *URXSRQ$XJXVW

L L von Zeuner: Conﬁrmation of scope of contractual exit terms $VLPLODUUHWHQWLRQFRQWUDFWZDVHQWHUHGLQWRZLWK//YRQ=HXQHU,QWHUPV RIWKLVWKHIROORZLQJWHUPLQDWLRQEHQHILWVDSSO\LQWKHHYHQWWKDWKHUHVLJQV RULVDVNHGWROHDYH RWKHUWKDQIRUPLVFRQGXFWRUSRRUSHUIRUPDQFH $WHUPLQDWLRQSD\PHQWRI5PLOOLRQ 6L[PRQWKV©FRQWUDFWXDOQRWLFHWDNHQDVVSHFLDOOHDYH *RRGOHDYHUWUHDWPHQWRQDOOVKDUHVDQGVKDUHEDVHGDZDUGVPDGHXS WRDQGLQFOXGLQJ)HEUXDU\ 7KHVHDUUDQJHPHQWVUHPDLQHIIHFWLYHQRWZLWKVWDQGLQJ0UYRQ=HXQHU©V LQFOXVLRQLQWKHVSHFLDOUHWHQWLRQDUUDQJHPHQWVOLQNHGWRWKH2QH $EVDVWUDWHJ\ :KHUH VSHFLILF UHWHQWLRQ DUUDQJHPHQWV ZHUH FRQFOXGHG VHH GHWDLOV XQGHU WKH VSHFLDO UHWHQWLRQ SODQV DQG WKH WDEOHV RI GLVFORVXUHV WKHVH ZHUHLQUHODWLRQWRVSHFLILFWLPHDQGEXVLQHVVSHUIRUPDQFHFRQGLWLRQV$OO DZDUGVZHUHVXEMHFWWRIXOORYHUVLJKWE\WKH*5+5&DQGDUHUHJDUGHGDV DOLJQHGZLWKWKHLQWHUHVWVRIVWDNHKROGHUV

Non-executive directors Non-executive directors’ terms of engagement 1RQH[HFXWLYH GLUHFWRUV GR QRW KDYH VHUYLFH FRQWUDFWV ,QVWHDG OHWWHUV )XUWKHUUHDGLQJ RIDSSRLQWPHQWFRQILUPWKHWHUPVRIHQJDJHPHQWRIQRQH[HFXWLYHGLUHFWRUV 'LUHFWRUV©UHSRUW 338 7KHOHWWHUVRIDSSRLQWPHQWFRQILUPWKDWQRQH[HFXWLYHGLUHFWRUVUHFHLYHIHHV ,QWHUHVWVLQ$EVD*URXS UDWKHUWKDQVDODULHVDQGVWLSXODWHWKDWWKH\DUHQRWHOLJLEOHIRUSDUWLFLSDWLRQ RUGLQDU\VKDUHV EHQHILFLDO LQHPSOR\HHLQFHQWLYHSODQV LQFOXGLQJORQJWHUPLQFHQWLYHSODQV DQGQRQEHQHILFLDO LQWHUHVWV 340 Absa shares held by non-executive directors ,QWHUHVWVLQ$EVD%DQN /LPLWHGSUHIHUHQFHVKDUHV 342 1RQH[HFXWLYH GLUHFWRUV© LQWHUHVW LQ $EVD VKDUHV DUH GLVFORVHG LQ WKH GLUHFWRUV©UHSRUW

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 157 Governance, remuneration, risk and controls

Remuneration report

Non-executive directors’ remuneration 1RQH[HFXWLYHGLUHFWRUUHPXQHUDWLRQLVUHFRPPHQGHGE\WKH*URXS&KLHI([HFXWLYHDQGWKH*URXS&KDLUPDQIRU UHYLHZE\WKH*5+5&7KH'$&DOVRKDVRYHUVLJKWDQGILQDOUHFRPPHQGDWLRQVDUHPDGHWRWKH$EVD*URXSERDUG ZKLFKUHFRPPHQGVWKHSURSRVHGIHHVIRUVKDUHKROGHUDSSURYDO 1RQH[HFXWLYHGLUHFWRUV©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¨DSSRLQWPHQWRIFKRLFH©ZKHQFRQVLGHULQJRQH©V RYHUDOOLQYROYHPHQWDVDQRQH[HFXWLYHGLUHFWRU7KLVHQVXUHVWKDWWKH*URXSLVDEOHWRDWWUDFWWRLWVERDUGWKHULJKW FDOLEUHRIQRQH[HFXWLYHGLUHFWRUFUHDWLQJHIIHFWLYHDQGUREXVWRYHUVLJKWRYHUWKH*URXS©VDIIDLUV

158 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Non-executive directors’ fee structure as approved by shareholders Fees )HHV of the 12-month RIWKHPRQWK period from SHULRGIURP 1 May 2010 to 0D\WR Category 30 April 2011 $SULO *URXS&KDLUPDQ 3 500 000 $EVD*URXSERDUGPHPEHU 166 900 *URXS$XGLWDQG&RPSOLDQFH&RPPLWWHH *$&& PHPEHU 155 300 *URXS5LVNDQG&DSLWDO0DQDJHPHQW&RPPLWWHH *5&0& PHPEHU 155 300 *URXS5HPXQHUDWLRQDQG+XPDQ5HVRXUFHV&RPPLWWHH *5+5& PHPEHU 82 600 'LUHFWRUV©$IIDLUV&RPPLWWHH '$& PHPEHU 56 800 &RQFHQWUDWLRQ5LVN&RPPLWWHH &R5& PHPEHU 56 800 *URXS&UHGLW&RPPLWWHHPHPEHU 1 100 per facility SHUIDFLOLW\ reviewed UHYLHZHG %UDQGDQG5HSXWDWLRQ&RPPLWWHHPHPEHU SHUPHHWLQJ 14 700 6SHFLDOERDUGPHHWLQJ SHUPHHWLQJ 22 900 6SHFLDOERDUGFRPPLWWHHPHHWLQJ LQFOXGLQJ%RDUG)LQDQFH 14 700 &RPPLWWHH SHUPHHWLQJ $GKRFERDUGIHHV 3HUDGKRFERDUGFRPPLWWHHPHHWLQJDWWHQGHG 14 700 &RQVXOWDQF\ZRUN SHUKRXU 3 300 per hour SHUKRXU

Note Brand and Reputation Committee was disbanded during 2010. Non-executive directors’ fees 2010 Subsidiary Absa board boards, Absa Absa committees board Group Bank and subcommittees Limited Limited committees and trusts Other Total 7RWDO Name R R R R R R 5 Current directors '&$UQROG 161 829 161 829 726 931 102 496 — 1 153 085 &%HJJV 87 243 87 243 120 005 — — 294 491 ¥ %3&RQQHOODQ 161 829 161 829 238 725 80 828 — 643 211 <=&XED 161 829 161 829 260 939 — — 584 597 %&00GH9LWU\G $YDXFRXUW 161 829 161 829 136 195 — — 459 853 6$)DNLH 161 829 161 829 150 597 — — 474 255 **ULIILQ *URXS&KDLUPDQ 995 104 120 104 420 291 234 744 — 1 770 243 0:+ODKOD 161 829 161 829 162 363 — — 486 021 0-+XVDLQ 161 829 161 829 217 437 — — 541 095 $3-HQNLQV 161 829 161 829 230 680 — — 554 338 5/H%ODQF 161 829 161 829 217 437 — — 541 095 700RNJRVL0ZDQWHPEH 161 829 161 829 106 795 47 143 — 477 596 (&0RQGODQH-U 161 829 161 829 162 363 358 003 — 844 024 760XQGD\ 161 829 161 829 617 958 — 66 500 1 008 116 6*3UHWRULXV 161 829 161 829 224 293 26 514 — 574 465 %-:LOOHPVH 161 829 161 829 274 049 — — 597 707 Past directors '&%ULQN IRUPHU*URXS &KDLUPDQ 2 625 000 — — — — 2 625 000 Total 5 972 953 2 472 953 4 267 058 849 728 66 500 13 629 192

Notes These fees are paid to Barclays and not to the individuals. 2Appointed as the Group Chairman on 1 October 2010. He received board and committee fees under the standard non-executive fee structure to this date. This was then changed to the ﬁxed compensation arrangements applicable to the Group Chairman. 3Retired from the board on 30 September 2010.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 159 Governance, remuneration, risk and controls

Remuneration report

Summary of executive and employee share-based plans operational in the Group $VSUHYLRXVO\LQGLFDWHGWKHUHDUHYDULRXVOHJDF\ORQJWHUPLQFHQWLYHSODQVLQRSHUDWLRQLQWKH*URXSVRPHRIZKLFK DUHLQWKHSURFHVVRIEHLQJZRXQGGRZQEDVHGRQWKHLUSDUWLFXODUYHVWLQJSURILOH7KHVHKLVWRULFDOORQJWHUPLQFHQWLYH SODQVDUHVHWRXWLQVXPPDU\IRUPRQWKHSDJHVWRIROORZ

Vesting proﬁle Per- formance Plan name Award year 2006 2007 2008 2009 2010 2011 2012 2013 2014 conditions Status

Executive share-based plans W W W Incentive Share Option Plan 2005 1/3 1/3 1/3 No Active O W 2006 Paid Yes Closed O W 2007 Lapsed Yes Closed O W Performance Share Plan 2008 (1) Partially lapsed Yes Closed O W 2008 (2) Lapsed Yes Closed O W 2009 Yes Active O W W 2006 Available No Active Executive Share Award O W W 1 Scheme (including the 2007 Available No Active Voluntary Executive Share O WW Award Scheme) 2008 No Active O WW 2009 No Active O W W W 2010 Paid 1/3 1/3 Yes Active O W W W Deferred Award Plan 2011 (1) 1/3 1/3 1/3 Yes Active O W W W 2011 (2) 1/3 1/3 1/3 No Active 2006 Variable based on the awards being substituted under the JSAP Joiners Share Award Plan (JSAP) onwards arrangements. No Active

Broad-based share-based plans Employee Share Ownership W Trust 2004 No Closed Batho Bonke Capital (Proprietary) W Limited 2004 No Active

O Award

W Vesting

)XOO GHWDLOV RI WKH UHVSHFWLYH SODQV H[FOXGLQJ WKH '$3 ZKLFK LV FRYHUHG LQ GHWDLO RQ SDJH DUH LQFOXGHG RQ SDJHVWRRIWKHUHSRUW

Note Executive Share Award Scheme shares may be exercised between the third and ﬁfth anniversary of the date of award.

Anticipated changes for 2011 ,WLVDQWLFLSDWHGWKDWZLOOVHHWKHFU\VWDOOLVDWLRQRIWKHSURJUHVVPDGHLQUHJDUGLQJWKHGHVLJQDQGJRYHUQDQFH RIUHPXQHUDWLRQSODQVZLWKLQWKH*URXS7KHIROORZLQJPDMRULQLWLDWLYHVDUHVFKHGXOHGWRFRQFOXGHLQ

160 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU &KDQJHVWRWKH'$3WRLQWURGXFHDWZRWLHUHGVWUXFWXUHIRUDZDUGVPDGHLQDUHVHWRXWEHORZ

Deferred Award Plan 1 Deferred Award Plan 2

Eligible 0HPEHUVRI*URXS([FRDQGWKHLUVHQLRUGLUHFWUHSRUWV $OOHPSOR\HHVHOLJLEOHIRU population DZDUGVXQGHUWKH'$3

Performance 5HWXUQRQDYHUDJHHTXLW\JUHDWHUWKDQRUHTXDOWRWKHFRVWRI 1RVSHFLILFSHUIRUPDQFH condition HTXLW\IRUHDFK\HDURIWKHDZDUG LQVHSDUDWHWUDQFKHV FRQGLWLRQV

Prudent $EVD©VRYHUDOOILQDQFLDOKHDOWKPXVWEHVXFKWKDWWKHYHVWLQJRIVKDUHEDVHGDZDUGVLV ﬁnancial control MXVWLILHG7KLVZLOODSSO\IRUHDFKWUDQFKHRIWKHDZDUGV provision

Malus $Q\DFWLRQVUHVXOWLQJLQWKHPLVVWDWHPHQWRIDFFRXQWVIDLOXUHVLQULVNPDQDJHPHQWRU condition DFWLRQVZKLFKUHVXOWLQUHSXWDWLRQDOGDPDJHIRU$EVDPD\EHJURXQGVIRUUHPRYDOIURPSODQ SDUWLFLSDWLRQ LQDGGLWLRQWRDQ\RWKHUVDQFWLRQWKDWPD\EHDSSURSULDWH

General 7KH*5+5&KDVWKHGLVFUHWLRQWRPDNHGHWHUPLQDWLRQVUHJDUGLQJWKHLPSDFWRIH[RJHQRXV GRHRC HYHQWVRQWKHDFKLHYHPHQW RURWKHUZLVH RISHUIRUPDQFHRUSUXGHQWILQDQFLDOFRQWURO override SURYLVLRQV

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©V UHPXQHUDWLRQ DQG ULVN FRPPLWWHHV $ SURFHVV RI JUHDWHU FRRSHUDWLRQ EHWZHHQ WKH *URXS©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isclosure overview 7KHGLVFORVXUHVVHWRXWRQWKHSDJHVWRIROORZFRPSO\ZLWKWKHIROORZLQJUHJXODWRU\SURYLVLRQV 6HFWLRQ N RIWKH-6(/LVWLQJV5HTXLUHPHQWV 3ULQFLSOH DQG 6WDQGDUG RI WKH ,QWHUQDWLRQDO )LQDQFLDO 6WDELOLW\ %RDUG©V 3ULQFLSOHV IRU 6RXQG &RPSHQVDWLRQ 3UDFWLFH WKH)6%SULQFLSOHV 7KHIROORZLQJDSSURDFKLVDGRSWHGLQWKLVUHSRUWIRUGLVFORVXUHXQGHUWKHVHVWDWXWHVFRGHVDQGUHJXODWLRQV 'HWDLOHGLQGLYLGXDOGLVFORVXUHVDUHPDGHLQUHVSHFWRIQRQH[HFXWLYHDQGH[HFXWLYHGLUHFWRUFRPSHQVDWLRQ LQFOXGLQJ DOODVSHFWVRIFRPSHQVDWLRQ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 161 Governance, remuneration, risk and controls

Remuneration report

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¨UHZDUGIRUIDLOXUH©

Appointment dates of executive directors

Date appointed Date resigned/retired Group executive director to the board from the board 05DPRV 0DUFK //YRQ=HXQHU 6HSWHPEHU ':3+RGQHWW 0DUFK -+6FKLQGHKWWH -DQXDU\ )HEUXDU\

Note Received six months’ special leave from 1 March 2010 to 31 August 2010.

Group executive directors’ total current year compensation Total Cash current Guaranteed perform- year Directors’ remune- ance compen- Group executive fees8 ration9 Other bonus sation director Period R R R R R 05DPRV 2010 37 922 6 519 857 — 4 550 000 11 107 779 ¥ //YRQ=HXQHU 2010 37 922 4 280 993 88 093 3 850 000 8 257 008 ¥ ':3+RGQHWW 2010 — 2 774 213 — 2 450 000 5 224 213 ¥¥¥¥¥ -+6FKLQGHKWWH 2010 25 281 503 757 10 503 600 — 11 032 638 Total 2010 101 125 14 078 820 10 591 693 10 850 000 35 621 638

Notes M Ramos’s 2010 performance bonus was paid 50% in cash in February 2011, with 50% being linked to the Absa share price and subject to release after six months. The amount disclosed is the full value of the bonus award. Performance bonus was for the period 1 March 2009 to 31 December 2009 (as M Ramos joined both Absa and the board on 1 March 2009), and was deferred in full to February 2011. The bonus was disclosed in the 2009 annual report. Guaranteed remuneration for 2009 is for the period 1 March 2009 to 31 December 2009 (i.e. the 10 months served as an employee and a Group executive director). Payment of R88 093 made in respect of accrued leave. The maximum days that employees are allowed to hold is capped and any additional leave days are paid out in cash. Guaranteed remuneration for 2010 is for the period 1 March 2010 to 31 December 2010 (i.e. the 10 months served as a Group executive director). The cash bonus is the full amount paid to D W P Hodnett in respect of 2010. Other payment refers to the value of J H Schindehütte’s termination benefits amounting to R9 million, and the value of the special leave was R1,5 million. Received a long service award to the value of R14 273. This payment was discontinued for all Group executive directors on 1 April 2010. No payments were made to D W P Hodnett in this regard, notwithstanding him having joined the board in March 2010. The composition of guaranteed remuneration is set out in detail in the table on page 164.

162 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group executive directors’ future contingent compensation

Illustrative potential vesting proﬁle (before share price movement, performance conditions and consideration for dividends3) Deferred Key Key Award Leaders’ Leaders’ Plan1 Plan2 Deferred Award Plan Plan Group executive 2011 2012 2013 2014 2013 director Period R R R R R R R

05DPRV 2010 8 450 000 8 000 000 — 2 816 667 2 816 667 2 816 667 8 000 000

¥ ¥ ¥

//YRQ=HXQHU 2010 7 150 000 8 000 000 — 2 383 333 2 383 333 2 383 333 8 000 000

¥ ¥ ¥

':3+RGQHWW 2010 4 550 000 6 000 000 — 1 516 667 1 516 667 1 516 667 6 000 000

¥ ¥ ¥ ¥ ¥ ¥ ¥

Total 2010 20 150 000 22 000 000 — 6 716 667 6 716 667 6 716 667 22 000 000

Notes Awards reflected under 2010 are made under the DAP in the 2010/11 payround (and therefore were awarded in February 2011) in respect of the period from 2011 to 2013, with vesting subject to the fulfilment of future-based performance conditions and vesting one-third each on the first, second and third anniversaries of the award grant date. Awards reflected under 2009 are awards made under the DAP in the 2009/10 payround process (awarded in February 2010) and are subject to 2010 to 2012 performance. These are long-term awards made in respect of the key leaders special retention plan linked to the achievement of the One Absa strategy. Awards were made 50% in cash and 50% in phantom shares, but the entire award vests after the end of 2012. The vesting of the cash component is subject to performance conditions. This section illustrates the vesting arrangements in regard to the various plans, and the value (before share price movement, performance conditions or consideration of dividends). The values show potential future payments against the awards made under each plan. The dates shown reflect the year in which payment will actually be made. The value of dividends that were paid to ordinary shareholders over the period of the award are added to the final value to vest. The award was pro rated in 2009 to reflect the 10 months served as an employee and Group executive director.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 163 Governance, remuneration, risk and controls

Remuneration report

Composition of guaranteed remuneration 7KHUHPXQHUDWLRQWDEOHGEHORZUHODWHVRQO\WRWKHSHULRGWKDWDQLQGLYLGXDOLVRUZDVD*URXSH[HFXWLYHGLUHFWRU7KXV ZKHUHD*URXSH[HFXWLYHGLUHFWRUMRLQHGWKHERDUGSDUWZD\WKURXJKWKH\HDURQO\WKHUHPXQHUDWLRQIRUWKHSHULRGRQ WKHERDUGLVUHIOHFWHG

Retirement and other Additional employee vehicle Medical beneﬁt Group executive Salary beneﬁt aid funding1 Total director Period R R R R R

05DPRV 2010 5 948 781 — 59 100 511 976 6 519 857

//YRQ=HXQHU 2010 3 789 461 86 293 76 044 329 195 4 280 993

':3+RGQHWW 20102 2 484 240 9 879 63 370 216 724 2 774 213

¥¥¥¥¥

-+6FKLQGHKWWH 20102 426 877 2 557 8 960 65 363 503 757

Total 2010 12 649 359 98 729 207 474 1 123 258 14 078 820

Notes Contributions towards Group Life, retirement fund and Group funeral scheme. The remuneration tabled above relates only to the period that an individual is or was a Group executive director during the reporting period and is therefore not full-year compensation.

Group executive directors’ share incentive scheme options: Composition of opening balances as at 1 January 2010

Expiry Number Price Date of date of of options per share Group executive director grant option granted R

//YRQ=HXQHU $XJ $XJ

$XJ $XJ

-+6FKLQGHKWWH $XJ $XJ

164 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group executive directors’ Share Incentive Scheme option movements1

Opening Shares Closing balance as at Purchase purchased/ balance as at 1 January Number date/ Price per gains on 31 December Group executive (number of options exercise option options (number director Period of options) exercised date2 R exercised3 of options)

//YRQ=HXQHU 2010 162 000 — — — — 162 000

6KDUHVSXUFKDVHGDWVKDUH )HE RSWLRQSULFHRI5

6KDUHVSXUFKDVHGDWVKDUH -XQ RSWLRQSULFHRI5

-+6FKLQGHKWWH 2010 30 000 — — — — 30 000

6KDUHVSXUFKDVHGDWVKDUH $XJ RSWLRQSULFHRI5

Notes The Share Incentive Scheme has not been used for new allocations to Group executive directors since 2006. Options are exercisable at any date from the vesting date. When the activity reported on is a purchase of shares, the purchase date is shown. In this case, a preceding exercise of the options would already have taken place. A ‘gain’ arises where the options have been exercised at a price higher than the grant date price during the year under review. Where no cash gain has been realised in circumstances where a purchase of the shares has taken place, the details of this purchase have been disclosed instead.

Group executive directors’ share award movements under the Phantom PSP1

Closing Opening balance balance as at as at Price Number 31 Decem- Number Value 1 January Number per of options ber of shares Share generated/ Group executive (number of options share2 Expiry vested/ (number imple- price (lost) director Period of options) awarded R date (lapsed) of options) mented3 R R

//YRQ=HXQHU 20104 161 073 — — — (31 696) 129 377 — — (4 212 398)

)HE

-+6FKLQGHKWWH 20104 106 450 — — — (24 878) 81 572 — — (3 306 286)

)HE

':3+RGQHWW 20105 48 556 — — — — 48 556 — — —

¥ ¥ ¥¥¥¥¥³³

Notes One Phantom PSP option has a value equivalent to one Absa ordinary share. The scheme is subject to performance measures: for 2007, profit after tax and earnings 2008, a combination of total shareholders’ return and earnings per share, and for 2009, profit after tax and earnings. The price is the volume-weighted average share price for the 20 trading days immediately preceding the grant date. A multiple of 1,9 was achieved for the period ended 2008 in respect of awards made in 2006. This was the final number of shares plus ‘dividend shares’ that vested per participant for the performance period from 2006 to 2008 in respect of outstanding awards granted in 2006. The PSP options awarded in 2007 lapsed in full in 2010 on account of the non-fulfilment of performance conditions. Calculated on the same basis as a vesting decision without the addition of ‘dividend shares’ (i.e. before the value of dividends paid to ordinary shareholders, which is added to the award based on the number of phantom shares held and released as additional shares on the vesting date).

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 165 Governance, remuneration, risk and controls

Remuneration report

Group executive directors’ holdings under ESAS

Closing Opening balance balance as at as at Number 31 Decem- Number 1 January Number Price per of vested ber of options Share Group executive (number of options share1 Expiry options (number imple- price4 Value director Period of options) awarded R date2 taken up of options) mented3 R R

//YRQ=HXQHU 2010 49 474 — — — 14 639 34 835 20 326 132,98 2 702 951

)HE

':3+RGQHWW 2010 13 835————13 835———

¥¥¥¥¥¥¥¥¥

-+6FKLQGHKWWH 2010 58 536———10 19148 34514 378141,01 2 027 442

)HE ¥ ¥¥¥

Notes The price is the volume-weighted average share price for the 20 trading days immediately preceding the grant date. Although the vesting date is the third anniversary of the award date, there is an opportunity for a participant to remain in the scheme for a further two-year period. The number of shares taken up on the third anniversary plus the 20% bonus shares and ‘dividend shares’ (see note 5 under Phantom PSP on page 165 for an explanation of ‘dividend shares’). Participants who did not elect to take up the shares on the third anniversary may still do so up to the fifth anniversary. The volume-weighted average share price of the 20 trading days prior to the implementation date.

Group executive directors’ holdings under VESAS

Closing Opening balance balance as at as at 1 January Number Price 31 December Group executive (number of shares per share (number director Period of shares) awarded R Expiry date of shares)

-+6FKLQGHKWWH 2010 23 224 — — 28 Feb 11 23 224

¥ ¥ )HE

166 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group executive directors’ share award holdings under the DAP1

Opening Closing balance as at balance as at 1 January Number of Price 31 December Group executive (number awards per share3 Expiry (number director Period of awards)2 awarded R date4 of awards)

05DPRV 2010 — 40 845 132,61 20 Feb 13 40 845 //YRQ=HXQHU 2010 — 49 016 132,61 20 Feb 13 49 016 ':3+RGQHWW 2010 — 24 508 132,61 20 Feb 13 24 508

Notes Long-term award made in the 2009/10 payround but in respect of the period from 2010 to 2012. Vesting subject to the fulfilment of performance conditions based on one third on each of the first, second and third anniversaries of the grant date. Allocations made in respect of future-based performance conditions over the period from 2010 to 2012, and therefore subject to risk, based on these conditions. The volume-weighted average share price of the 20 trading days prior to the grant date. The final expiry date of all tranches.

Group executive directors’ holdings under the Joiners Share Award Plan (JSAP)1

Opening balance Closing as at balance as at 1 January Number Share 31 December Group executive (number Expiry of vested price Value2 (number director Period of awards) date awards R R of awards)

':3+RGQHWW 20103 9 473 31 Mar 11 3 917 140,18 599 606 5 556

Notes Phantom restricted share plan used primarily to make whole previous share plan participation of new joiners. The final value plus ‘dividend shares’ that vested. 3JSAP award made in 2008.

Group executive directors’ holdings under Key Leaders Retention Plan (KLR)1

Opening balance Closing as at balance as at 1 January Number of Price 31 December Group executive (number awards per share2 Expiry (number director Period of awards) awarded R date of awards)

05DPRV 2010 — 30 098 132,90 Feb 13 30 098 //YRQ=HXQHU 2010 — 30 098 132,90 Feb 13 30 098 ':3+RGQHWW 2010 — 22 574 132,90 Feb 13 22 574

Notes See description of the plan on page 154 of the report. Altogether 50% of the award was made in phantom shares, which vest in the first quarter of 2013, and is reflected in the above table as a share-based payment. The balance of 50% of the award was made in cash, which will be released in the first quarter of 2013 subject to the achievement of the agreed performance conditions. The full award for each Group executive director is shown in the table headed “Group executive directors’ future contingent compensation”. The volume-weighted average share price of the 20 trading days prior to the implementation date.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 167 Governance, remuneration, risk and controls

Remuneration report

Share and share-based plans awarded primarily to senior employees Voluntary Executive Performance Executive Share Share Award Share Incentive Share Plan Award Scheme Scheme Joiners Share Scheme (PSP) (ESAS) (VESAS) Award Plan (JSAP)

Plan 6KDUH2SWLRQ 3KDQWRPUHVWULFWHG 3KDQWRPUHVWULFWHG 3KDQWRPUHVWULFWHG 3KDQWRPUHVWULFWHG type and 6FKHPHZLWKDZDUGV VKDUHSODQZLWKYHVWLQJ VKDUHSODQRIIHUHGDV SODQDOORZLQJIRU VKDUHSODQXVHG description SURYLGHGXQGHUWKH VXEMHFWWRSHUIRUPDQFH DPDQGDWRU\ERQXV YROXQWDU\GHIHUUDORI SULPDULO\WR $EVD*URXS6KDUH FRQGLWLRQV GHIHUUDODUUDQJHPHQW DQ\ERQXVXSWR PDNHZKROHWKH ,QFHQWLYH7UXVW IRUDOOERQXVHVDWRU RIWKHWRWDODZDUGLQWR SUHYLRXVVKDUHSODQ H[FHHGLQJDVSHFLILF WKHSODQ SDUWLFLSDWLRQRIQHZ WKUHVKROG MRLQHUVZKHUHWKLVLV 2QO\DSSOLHVWR IRUIHLWHGXSRQMRLQLQJ LQGLYLGXDOVDOUHDG\ $EVDRUWRSURYLGH SDUWLFLSDWLQJLQWKH DORQJHUWHUPVKDUH PDQGDWRU\(6$6 EDVHGLQFHQWLYHWR DUUDQJHPHQWV DWWUDFWQHZHQWUDQWV

Period of /DVWDZDUGVZHUH WR LQUHVSHFWRI LQUHVSHFWRI WRSUHVHQW VWLOO operation PDGHLQ WKHSHUIRUPDQFH WKHSHUIRUPDQFH LQRSHUDWLRQ 7KHVFKHPHLVVWLOO 7KHVFKHPHLVVWLOO \HDU WR LQ \HDU WR LQ DYDLODEOHIRUXVHVKRXOG DYDLODEOHIRUXVH UHVSHFWRIWKH UHVSHFWRIWKH LWEHFRPHDSSURSULDWHWR VKRXOGLWEHFRPH SHUIRUPDQFH\HDU SHUIRUPDQFH\HDU GRVR DSSURSULDWHWRGRVR 7KHVFKHPHLVVWLOO 7KHVFKHPHLVVWLOO DYDLODEOHIRUXVH DYDLODEOHIRUXVH VKRXOGLWEHFRPH VKRXOGLWEHFRPH DSSURSULDWHWRGRVR DSSURSULDWHWRGRVR

Vesting $OODZDUGVKDYH PSP 2006YHVWHGLQ RIWKHWRWDO 7KH9(6$6 7KLVLVDIOH[LEOH arrange- YHVWHGEXW DWDPXOWLSOHRIWLPHV ERQXVZKHUHWKLV DUUDQJHPHQWVDOORZ VFKHPHWKDWDOORZV ments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©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

168 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Performance Executive Share Voluntary Executive Share Incentive Share Plan Award Scheme Share Award Joiners Share Scheme (PSP) (ESAS) Scheme (VESAS) Award Plan (JSAP)

Vesting PSP 2009: 6KRXOGWKHSDUWLFLSDQW (PSOR\HHVPD\ -6$3DZDUGV arrange- 7KLVLVVXEMHFWWRDQ UHPDLQLQWKH WDNHGHOLYHU\RIWKH DUHQRWVXEMHFW ments DWWULEXWDEOHHDUQLQJV SODQXQWLOWKHILIWK VKDUHVDWDQ\WLPH WRSHUIRUPDQFH (continued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

Details of 3DJHRIWKLV 3DJHRIWKLVUHSRUW 3DJHRIWKLV 3DJHRIWKLV 3DJHRIWKLV awards made UHSRUW UHSRUW UHSRUW UHSRUW to executive directors

Further )XUWKHUGHWDLOVDUH )XUWKHUGHWDLOVDUH )XUWKHUGHWDLOVDUH )XUWKHUGHWDLOVDUH )XUWKHUGHWDLOVDUH details FRQWDLQHGLQQRWH FRQWDLQHGLQQRWHV FRQWDLQHGLQQRWHV FRQWDLQHGLQQRWHV FRQWDLQHGLQQRWH WRWKHFRQVROLGDWHG DQGWRWKH DQGWRWKH DQGWRWKH WRWKHFRQVROLGDWHG ILQDQFLDOVWDWHPHQWV FRQVROLGDWHGILQDQFLDO FRQVROLGDWHGILQDQFLDO FRQVROLGDWHGILQDQFLDO ILQDQFLDOVWDWHPHQWV VWDWHPHQWV VWDWHPHQWV VWDWHPHQWV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 169 Governance, remuneration, risk and controls

Remuneration report

Broad-based share-based plans

Employee Share Ownership Trust Batho Bonke Capital (Proprietary) Limited

Plan type and description %URDGEDVHGVKDUHRSWLRQSODQDSSOLFDEOH $ZDUGVXQGHUWKH%DWKR%RQNHVFKHPHIRU WRDOOHPSOR\HHV(DFKHPSOR\HHLQWKH HPSOR\HHVDQGVRPHQRQH[HFXWLYHGLUHFWRUV *URXSDVDW-XO\ZDVDOORWWHG TXDOLI\LQJDV¨SUHYLRXVO\GLVDGYDQWDJHG©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

Period of operation WR WRSUHVHQW

Vesting arrangements $OODZDUGVPDGHXQGHUWKLVDUUDQJHPHQW 7KHILQDOYHVWLQJRIWKHVKDUHVLQWKH+'6$ YHVWHGLQ-XQH7KHWUXVWLVWKXVLQWKH (PSOR\HHV7UXVWLVVXEMHFWWRDSSURYDOE\ SURFHVVRIEHLQJZRXQGXS VXFKZLQGLQJXS WKHERDUGRI%DWKR%RQNH&DSLWDODQGWKH KDYLQJEHHQDSSURYHGE\WKHERDUGDQGWKH WUXVWHHV *5+5&LQ'HFHPEHU

Awards made to executive $OODZDUGVPDGHXQGHUWKLVSODQYHVWHGLQ 7KHGHWDLOVRIDZDUGVPDGHWRH[HFXWLYH directors and other senior DQGZHUHGLVFORVHGLQWKHDQQXDO GLUHFWRUVDUHOLVWHGRQSDJHRIWKLVUHSRUW executives UHSRUW

Further details 7KHUHDUHQRRXWVWDQGLQJDZDUGVXQGHUWKLV )XUWKHUGHWDLOVDUHFRQWDLQHGLQQRWH DUUDQJHPHQW WRWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRQ SDJHRIWKLVUHSRUW

170 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Governance, remuneration, risk and controls

Human resources report

Introduction ,QWHJUDOWRWKH2QH$EVDVWUDWHJ\WKH*URXSXQGHUVWDQGVWKDWWRPHHWLWVJRDORIEHLQJWUXO\FXVWRPHUFHQWUHGLQ HYHU\WKLQJWKDWLWGRHVLWPXVWEHUHVRXUFHGZLWKWDOHQWHGHQHUJLVHGDQGSDVVLRQDWHSHRSOH)RU$EVDWREHFRPHD PRUH SHRSOHFHQWUHG RUJDQLVDWLRQ LWV IRFXV LV RQ IRVWHULQJ KHDOWK\ DQG PXWXDOO\ EHQHILFLDO UHODWLRQVKLSV ZLWK LWV HPSOR\HHV7KHUHYLVHG*URXS+XPDQ5HVRXUFHVVWUDWHJ\ WR ZDVDSSURYHGE\WKHERDUGLQ0DUFK DQGXQGHUOLQHVWKUHHSHRSOHLPSHUDWLYHV Transformation:PRYLQJIURPHPSOR\PHQWHTXLW\WRDFXOWXUHRILQFOXVLYLW\ Talent management:LPSURYLQJWKHWDOHQWSLSHOLQHDQGVXFFHVVLRQUDWLR Learning and development:VKLIWLQJWKHIRFXVIURPFRPSOLDQFHGULYHQOHDUQLQJWRVNLOOVGULYHQOHDUQLQJ

Governance (IIHFWLYHPDQDJHPHQWDQGRYHUVLJKWRIDOOPDWWHUVSHUWDLQLQJWR$EVDHPSOR\HHVDUHYLWDOWRWKHDFKLHYHPHQWRIWKH 2QH$EVDVWUDWHJ\$VKLJKOLJKWHGLQWKHUHPXQHUDWLRQUHSRUWWKHUROHRIWKH*5+5&DQGWKH*53&GHOLYHURQWKH UHVSRQVLELOLW\ RI VXVWDLQDEOH UHPXQHUDWLRQ SUDFWLFHV DQG RWKHU KXPDQ UHVRXUFH PDWWHUV ,Q DGGLWLRQ WKH *URXS 7UDQVIRUPDWLRQ 6WHHULQJ &RPPLWWHH *7& KDV EHHQ WDVNHG ZLWK WKH UHVSRQVLELOLW\ RI RYHUVLJKW RI WKH FOXVWHU WUDQVIRUPDWLRQQDWLRQDOGLVDELOLW\DVZHOODVZRPHQ©VIRUXPV7KLVFRPPLWWHHLVFKDLUHGE\WKH*URXS&KLHI([HFXWLYH DQGPHHWVWZLFHD\HDU

Transformation Workforce demographics 7KH*URXS©VJHQGHUGLVWULEXWLRQKDVUHPDLQHGVWDEOHZLWKPDOHDQGIHPDOHHPSOR\HHVDWWKHHQGRI WKHILQDQFLDO\HDU7KHWRWDOZRUNIRUFHLQFUHDVHGPDUJLQDOO\E\\HDURQ\HDU$VDW'HFHPEHUWKH*URXS KDVSHUPDQHQWHPSOR\HHVDQGSHUPDQHQWDQGQRQSHUPDQHQWHPSOR\HHV

Employment equity $EVD LV IXOO\ FRPPLWWHG WR WUDQVIRUPDWLRQ DQG UHIOHFWLQJ WKH QDWXUDO GHPRJUDSKLFV RI 6RXWK $IULFDQ VRFLHW\ LQ LWV ZRUNIRUFH$EVDVXEVFULEHVWRWKHUHTXLUHPHQWVRIWKH'HSDUWPHQWRI7UDGHDQG,QGXVWU\©V%%%((&R*3DQGWRWKH FRPPLWPHQWVLQWKH)LQDQFLDO6HFWRU&KDUWHU7KH*URXSKDVPDGHJRRGSURJUHVVLQWKHDFKLHYHPHQWRIHPSOR\PHQW HTXLW\WDUJHWVGXULQJZLWKDOOFDWHJRULHVVKRZLQJLPSURYHPHQW7KHQHHGWRIXUWKHUGHOLYHURQWDUJHWVSDUWLFXODUO\ DWPLGGOHDQGVHQLRUPDQDJHPHQWOHYHOVZLOOUHPDLQDSULRULW\LQ

Talent management Recruitment: $WWUDFWLQJ WRS WDOHQW UHPDLQHG D NH\ GULYHU RI WKH KXPDQ UHVRXUFHV DJHQGD LQ DQG VLJQLILFDQW SURJUHVVKDVEHHQPDGHLQDWWUDFWLQJDQGSURPRWLQJPRUH$IULFDQWDOHQWZKHQFRPSDUHGWR*UHDWVWULGHVZHUH PDGHLQVHQLRUPDQDJHPHQWDSSRLQWPHQWVGXULQJZKLFKLQFOXGHGDEOHQGRIH[WHUQDODSSRLQWPHQWVDQGLQWHUQDO SURPRWLRQVWRHQVXUHDZHOOEDODQFHGPDQDJHPHQWWHDP Retention and succession planning: $ QHZ WDOHQW PDQDJHPHQW V\VWHP ZDV LQWURGXFHG LQ WR LGHQWLI\ DQG GHYHORSWRSWDOHQWZLWKLQWKHRUJDQLVDWLRQIRUPRUHHIIHFWLYHVXFFHVVLRQSODQQLQJ$QLQFUHDVHLQLQWHUQDOSURPRWLRQV DQGWUDQVIHUVFRPSDUHGWRH[WHUQDODSSRLQWPHQWVZDVHYLGHQWIURP ZLWKRIDSSRLQWPHQWVGXULQJ FRQVWLWXWLQJH[LVWLQJ$EVDWDOHQW7DOHQWH[FKDQJHSURJUDPPHVEHWZHHQ$EVDDQGLWV$IULFDQEXVLQHVVHVZHUH DOVRLQLWLDWHGWKLV\HDUWRSURYLGHWDOHQWHGHPSOR\HHVZLWKRSSRUWXQLWLHVWRJDLQPRUHH[WHQVLYHH[SHULHQFH

Note 1This ratio is based on the Absa Group’s permanent employee complement excluding Woorlworths Financial Services (Proprietary) Limited, NBC and BBM.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 171 Governance, remuneration, risk and controls

Human resources report

Skills development $EVDLVFRPPLWWHGWRSURPRWLQJDOHDUQLQJFXOWXUHZKLFKHQDEOHVHPSOR\HHVWRGHYHORSDQGJURZWRUHDFKWKHLUIXOO SRWHQWLDO $EVD VSHQW 5 PLOOLRQ RQ OHDUQLQJ DFWLYLWLHV LQ RI ZKLFK 5 PLOOLRQ ZDV VSHQW RQ KLVWRULFDOO\ GLVDGYDQWDJHGJURXSV7KLVHTXDWHVWRRIOHYLDEOHSD\UROOVSHQGPHHWLQJWKHWDUJHWVHWE\WKH'HSDUWPHQWRI 7UDGHDQG,QGXVWU\©V%%%((&R*3$VLJQLILFDQWLQYHVWPHQWLQVNLOOVGHYHORSPHQWZDVDOVRHYLGHQWLQ1%&DQG%%0 Learnerships:,QWRWDOOHDUQHUVZHUHSURYLGHGDQRSSRUWXQLW\WRJDLQVNLOOVE\ZRUNLQJDW$EVDRIZKLFK DUHFXUUHQWO\HPSOR\HGIXOOWLPHE\WKH*URXS$EVDDOVRSDUWQHUHGZLWKWKH%DQNLQJSector Education and Training Authority %DQN6HWD WRRIIHUOHDUQHUVKLSVWRSUHYLRXVO\GLVDGYDQWDJHGVFKRROOHDYHUVDQGXQHPSOR\HGJUDGXDWHV 'XULQJOHDUQHUVKLSVLQ$EVDZHUHPDGHDYDLODEOHWKURXJKWKHVH%DQN6HWDSURJUDPPHV Absa graduate programme: $EVD UXQV DQ DQQXDO JUDGXDWH SURJUDPPH ZKLFK FDWHUV IRU GHYHORSLQJ WKH VNLOOV RI XQLYHUVLW\JUDGXDWHVDFURVVDOOILHOGVDW$EVD$WRWDORIJUDGXDWHVFRPSOHWHGWKHSURJUDPPHLQ$OWRJHWKHU RIWKHJUDGXDWHLQWDNHZDVUHWDLQHGRIZKLFKKDVEHHQSURPRWHGGXULQJWKH\HDU1%&LQWURGXFHGDQ LQFRXQWU\JUDGXDWHSURJUDPPHLQZLWKWKHWRSILYHJUDGXDWHVRQWKLVSURJUDPPHEHLQJVHOHFWHGWRSDUWLFLSDWHLQ WKH$EVDJUDGXDWHSURJUDPPHLQ Leadership development:7KH$EVD'HYHORSPHQW,QLWLDWLYH $', DQG$FFHOHUDWHG/HDGHUVKLS'HYHORSPHQW $/' SURJUDPPHVRIIHU\RXQJSHRSOHZLWKSRWHQWLDODVHULHVRIJURZWKRSSRUWXQLWLHVWRHQKDQFHWKHLUOHDGHUVKLSDELOLWLHV $OWRJHWKHUHPSOR\HHVSDUWLFLSDWHGLQWKHVHSURJUDPPHVGXULQJWKHILQDQFLDO\HDURIZKLFKHPSOR\HHV FRPSOHWHGWKHLUILQDO\HDU Programmes for lifelong learning:0RUHWKDQ5PLOOLRQZDVLQYHVWHGE\$EVDWRDVVLVWHPSOR\HHVWRIXUWKHU WKHLUHGXFDWLRQGXULQJZKLFKLVDVLJQLILFDQWXSOLIWIURP1%&DOVRRIIHUVDEXUVDU\VFKHPHWKURXJKWKH 8QLYHUVLW\RI'DU(V6DODDP2YHUDQGDERYHHPSOR\HHGHYHORSPHQW$EVDRIIHUVEXUVDULHVWRVXSSRUWHPSOR\HHV© GHSHQGDQWV

Performance development 7KH *URXS KDV D ZHOOHPEHGGHG DQG VWDQGDUGLVHG SURFHVV IRU WKH VHWWLQJ RI SHUIRUPDQFH REMHFWLYHV DQG WKH HYDOXDWLRQ RI SHUIRUPDQFH )RUPDO SHUIRUPDQFH UHYLHZV DUH FRQGXFWHG WZLFH D \HDU GXULQJ -XQH DQG 1RYHPEHU

172 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Employee engagement

Employee opinion survey (EOS) )XUWKHUUHDGLQJ )RVWHULQJKHDOWK\DQGPXWXDOO\EHQHILFLDOUHODWLRQVKLSVZLWKLWVHPSOR\HHV (PSOR\HHHQJDJHPHQW 61 LV FHQWUDO WR $EVD©V DPELWLRQ RI EHFRPLQJ D PRUH SHRSOHFHQWUHG RUJDQLVDWLRQ $QQXDOO\ $EVD SDUWLFLSDWHV ZLWK %DUFOD\V LQ DQ (26 DGPLQLVWHUHG E\ LQWHUQDWLRQDO UHVHDUFK ILUP 7RZHUV :DWVRQ 7KHDLPRI (26LVWRJDXJHHPSOR\HHHQJDJHPHQWOHYHOVDQGSHUFHSWLRQVDERXWWKHLU ZRUNHQYLURQPHQW,QVLJKWVJDLQHGIURPWKLVVXUYH\DUHXVHGWRJXLGHDQG SULRULWLVHHPSOR\HHHQJDJHPHQWDQGKXPDQUHVRXUFHVLQLWLDWLYHV6RPH RIWKH*URXS©VHPSOR\HHVLQFOXGLQJ$EVD%%0DQG1%&SDUWLFLSDWHG LQWKHVXUYH\ 7KHUHVXOWVVKRZHGVLJQLILFDQW\HDURQ \HDU LPSURYHPHQWV LQ VHYHQ RI FDWHJRULHV HVSHFLDOO\ LQ WKH DUHD RI HPSOR\HH FRPPLWPHQW 7KLV PDUNHG LPSURYHPHQW LQ WKH FRPPLWPHQW VFRUHSODFHV$EVDVWURQJO\ZKHQFRPSDUHGWRWKH7RZHUV:DWVRQJOREDO ILQDQFLDOVHUYLFHVQRUP Communicating with employees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

Employee relations and human rights Fair labour practices $EVDUHFRJQLVHVWKDWHYHU\HPSOR\HHLVHQWLWOHGWRIDLUODERXUSUDFWLFHV KDVWKHULJKWWRKLVKHUGLJQLW\DQGKDVWKHULJKWWRSULYDF\$UDQJHRI SROLFLHV DIILUP $EVD©V FRPPLWPHQW WR UHFRJQLVLQJ DQ HPSOR\HH©V ULJKWV DQG WR SURYLGH SURFHGXUHV WKDW SURWHFW VXFK ULJKWV $EVD FRQWLQXHV WR IRVWHUVWURQJUHODWLRQVKLSVZLWKUHOHYDQWUROHSOD\HUVVXFKDVWKHHPSOR\HH XQLRQVWRHQVXUHWKDWHPSOR\HHV©LQWHUHVWVDUHUHVSHFWHGDQGSURWHFWHG Employee wellness $EVDKDVDFRPSUHKHQVLYHZHOOQHVVSURJUDPPHFDOOHG¨/LYH:HOO:RUN :HOO© WR HQFRXUDJH HPSOR\HHV WR FKRRVH KHDOWKLHU PRUH EDODQFHG OLIHVW\OHV 7KH ILQGLQJV RI D NQRZOHGJH DWWLWXGH DQG SHUFHSWLRQ VXUYH\ FRQGXFWHGLQ$XJXVWZLOOEHXVHGWRLQIRUPWKHLPSOHPHQWDWLRQRID FRPSUHKHQVLYH $EVD +,9 FRXQVHOOLQJ DQG WHVWLQJ +&7 DQG FKURQLF GLVHDVH PDQDJHPHQW FDPSDLJQ LQ 7KH *URXS©V +,9$LGV SURJUDPPHDQGSROLF\XQGHUWDNHVWRGHDOZLWKLQIHFWHGHPSOR\HHVLQWKH VDPH PDQQHU DV HPSOR\HHV VXIIHULQJ IURP DQ\ RWKHU OLIHWKUHDWHQLQJ GLVHDVH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 173 Governance, remuneration, risk and controls

Human resources report

Focus for 2011 (PSKDVLV ZLOO FRQWLQXH WR EH SODFHG RQ WKH LGHQWLILHG IRFXV DUHDV RI WKH *URXS©V KXPDQ UHVRXUFHV VWUDWHJ\ ZLWK SDUWLFXODUDWWHQWLRQEHLQJSDLGWR Transformation:PRYLQJIURPHPSOR\PHQWHTXLW\GULYHUVWRDFXOWXUHRILQFOXVLYLW\ &RQWLQXHGIRFXVRQHQKDQFLQJ$EVD©VHPSOR\PHQWHTXLW\VWDWXV )XUWKHUVWUHQJWKHQLQJDQLQFOXVLYHFXOWXUHWKURXJKFRQWLQXRXVHPSOR\HHHQJDJHPHQW &UHDWLQJ GHYHORSPHQW RSSRUWXQLWLHV WKURXJK JUDGXDWH OHDUQHUVKLSV DQG OHDGHUVKLS SURJUDPPHV IRU KLVWRULFDOO\ GLVDGYDQWDJHGLQGLYLGXDOV Talent management:LPSURYLQJWKHWDOHQWSLSHOLQHDQGVXFFHVVLRQUDWLR )XUWKHUVWUHDPOLQLQJWKHUHFUXLWPHQWSURFHVVDQGEXLOGLQJDVWURQJLQWHUQDOUHFUXLWPHQWFDSDELOLW\ ,PSURYHGPDQDJHPHQWDQGVXFFHVVLRQSODQQLQJIRULQWHUQDOWDOHQW (QVXULQJDQLQWHJUDWHGDSSURDFKWRHPSOR\HHUHFRJQLWLRQWRHQKDQFHWDOHQWUHWHQWLRQ Learning and development:VKLIWLQJWKHIRFXVIURPFRPSOLDQFHGULYHQOHDUQLQJWRVNLOOVGULYHQOHDUQLQJ ,QWURGXFLQJDQHZRQOLQHOHDUQLQJPDQDJHPHQWV\VWHPIRUHPSOR\HHVWRHDVLO\DFFHVVOHDUQLQJRSSRUWXQLWLHV ,QWURGXFLQJQHZOHDGHUVKLSIUDPHZRUNWRLQIRUPOHDGHUVKLSFRPSHWHQFLHVDQGGHYHORSPHQW (PEHGGLQJDFRQVLVWHQWSHRSOHFKDQJHPDQDJHPHQWDSSURDFKLQWKHRUJDQLVDWLRQ

174 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Governance, remuneration, risk and controls

Report from the Chairman of the Group Audit and Compliance Committee

Des Arnold &KDLUPDQ*URXS$XGLWDQG&RPSOLDQFH&RPPLWWHH

Highlights ,QFUHDVHGDWWHQWLRQRQ,7FRQWUROVDQGSURFHVVHV

(QKDQFHGWKHFRQWURODQGFRPSOLDQFHHQYLURQPHQW

(PEHGPHQWRIWKHEXVLQHVVFRQWLQXLW\PDQDJHPHQWSURFHVVHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 175 Governance, remuneration, risk and controls

Report from the Chairman of the Group Audit and Compliance Committee

Introduction 7KH UHFHQW JOREDO ILQDQFLDO FULVLV VWUHVVHG WKH QHHG IRU VRXQG FRQWURO DQG FRPSOLDQFH SURFHGXUHV ,Q DGGLWLRQ .LQJ ,,, HPSKDVLVHV WKDW RUJDQLVDWLRQV PXVW KDYH LQGHSHQGHQW DXGLW FRPPLWWHHV WKDW RYHUVHH DXGLW FRQWURO DQG UHSRUWLQJDFWLYLWLHV (QVXULQJDFFXUDWHDQGWUDQVSDUHQWGLVFORVXUHWRVWDNHKROGHUVLVWKHUHIRUHDNH\ UHVSRQVLELOLW\RIDXGLWFRPPLWWHHV,WLQVWLOVWUXVWLQDQRUJDQLVDWLRQDQGLWVERDUG DQGPDQDJHPHQW,WDOVRDOORZVVKDUHKROGHUVDQGRWKHUVWDNHKROGHUVWRPDNH LQIRUPHGGHFLVLRQVUHODWLQJWRWKHRUJDQLVDWLRQ,QSURYLGLQJDFRPSUHKHQVLYH SLFWXUH RI WKH RUJDQLVDWLRQ©V SHUIRUPDQFH DQG LWV DELOLW\ WR FUHDWH YDOXH LW LV EHFRPLQJ LQFUHDVLQJO\ LPSRUWDQW WR SURYLGH ERWK ILQDQFLDO DQG QRQILQDQFLDO LQIRUPDWLRQLQDQLQWHJUDWHGPDQQHUDQGWRREWDLQWKHDSSURSULDWHDVVXUDQFHV IRUVXFKLQIRUPDWLRQ $EVD©VUHSRUWDLPVWRSURYLGHDYLHZRIWKH*URXS©VSHUIRUPDQFHWKURXJK WKHGLVFORVXUHRINH\VXVWDLQDELOLW\LQGLFDWRUV,QDGGLWLRQWRWKHH[WHUQDODXGLW UHTXLUHG IRU WKH *URXS©V DQQXDO ILQDQFLDO VWDWHPHQWV DVVXUDQFH KDV EHHQ REWDLQHGIRUVSHFLILFQRQILQDQFLDOLQGLFDWRUVRQDOLPLWHGEDVLV 6HWRXWRQWKHSDJHVWRIROORZLVP\UHSRUWLQWHUPVRIVHFWLRQ$ I RIWKH &RPSDQLHV$FW DVDPHQGHG 7KHUHSRUWSURYLGHVDQRYHUYLHZRIWKH *URXS$XGLWDQG&RPSOLDQFH&RPPLWWHH *$&& DQGLWVDFWLYLWLHVDQGKRZLW KDVGLVFKDUJHGLWVUHVSRQVLELOLWLHVLQ

Control and compliance framework Audit and compliance governance 6WURQJ LQWHUQDO FRQWURO DQG FRPSOLDQFH FRQWULEXWHV VLJQLILFDQWO\ WR WKH VXVWDLQDELOLW\RIWKHRUJDQLVDWLRQDVDZKROH7KH*$&&DVVLVWVWKHERDUGZLWK UHJDUG WR RYHUVLJKW RI H[WHUQDO GLVFORVXUH LQFOXGLQJ WKH DQQXDO UHSRUW DFFRXQWLQJ SROLFLHV DQG UHSRUWLQJ RI ILQDQFLDO LQIRUPDWLRQ PRQLWRULQJ WKH *URXS©VLQWHUQDOFRQWUROV\VWHPVDQGRYHUVLJKWRIFRPSOLDQFHUHODWHGPDWWHUV 7KH*$&&FRQVLVWVRIIRXULQGHSHQGHQWGLUHFWRUVDQGWKHERDUGUHSUHVHQWDWLYHV )XUWKHUUHDGLQJ RI%DWKR%RQNH&DSLWDO 3URSULHWDU\ /LPLWHGDQG%DUFOD\VZKRDUHPDQGDWRU\ LQYLWHHVWRWKHFRPPLWWHH$OOPHPEHUVRIWKH*$&&DUHILQDQFLDOO\OLWHUDWHDQG &RPSRVLWLRQDQGPHHWLQJ DUHH[SHULHQFHGILQDQFHSURIHVVLRQDOV$GHTXDWHWUDLQLQJLVFRQGXFWHGDQQXDOO\ SURFHGXUHVRIWKH*$&& 136 WRHQVXUHWKDWPHPEHUVFDQHIIHFWLYHO\GLVFKDUJHWKHLUGXWLHV7KH*$&&PD\ *$&&PHPEHUVKLS 136 DOVRFRQVXOWVSHFLDOLVWVLQWKHGLVFKDUJHRILWVGXWLHV 4XDOLILFDWLRQVRI *$&&PHPEHUV 82 0HHWLQJVRIWKHFRPPLWWHHDUHKHOGDWOHDVWRQFHDTXDUWHUDQGDUHDWWHQGHGE\ WKH *URXS &KLHI ([HFXWLYH WKH 'HSXW\ *URXS &KLHI ([HFXWLYH WKH *URXS $SSRLQWPHQWGDWHRI *$&&PHPEHUV 136 )LQDQFLDO'LUHFWRUWKH&KLHI5LVN2IILFHU&KLHI,QWHUQDO$XGLWRUDQGWKHH[WHUQDO *$&&PHHWLQJ DXGLWRUVWKH*URXS&RPSOLDQFH2IILFHUDQGE\LQYLWDWLRQPHPEHUVRIH[HFXWLYH DWWHQGDQFH 139 PDQDJHPHQWLQFOXGLQJWKRVHLQYROYHGLQFRQWUROVDQGILQDQFHDVZHOODVWKH *URXS&KDLUPDQ ZKRLVQRWDPHPEHURIWKHFRPPLWWHH

176 Absa Group Limited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© FRPSOLDQFHZLWKVXFKFRQWUROVDQGLPSOHPHQWFRUUHFWLYHDFWLRQZKHUHUHTXLUHG 7KHLU UHSRUWV DUH UHJXODUO\ SUHVHQWHG WR WKH *$&& DQG ZKHUH DSSURSULDWH SUHVHQWDWLRQVDUHUHTXHVWHGIURPPDQDJHPHQWIRUWKHIXUWKHULQIRUPDWLRQRIWKH *$&& ,QWHUQDO DXGLW FRQVLGHUV WKH HIIHFWLYHQHVV RI VHQLRU PDQDJHPHQW©V DVVHVVPHQW RI WKH FRQWURO HQYLURQPHQW RI DOO GLYLVLRQV LQ FRQILUPDWLRQ RI WKLV LPSRUWDQWILUVWOLQHRIGHIHQFH

External audit

7KH *$&& HQVXUHV WKDW WKH DSSRLQWPHQW RI WKH *URXS©V H[WHUQDO DXGLWRUV )XUWKHUUHDGLQJ FRPSOLHV ZLWK WKH &RPSDQLHV $FW DQG DQ\ RWKHU OHJLVODWLRQ LPSDFWLQJ WKH DSSRLQWPHQWRIDXGLWRUV7KHFRPPLWWHHPDNHVVXUHWKDWWKH*URXS©VDXGLWRUV $XGLWIHHVSDLG 425 DUH LQGHSHQGHQW DQG GHWHUPLQHV WKH H[WHUQDO DXGLWRUV© IHHV DQG WHUPV RI HQJDJHPHQW $EVD KDV D IRUPDO H[WHUQDO DXGLWRU HYDOXDWLRQ SURFHVV ZKLFK LV FRQGXFWHG DQQXDOO\7KHHYDOXDWLRQSURFHVVLQFOXGHVYDULRXVFULWHULDDQGVWDQGDUGVVXFK DVDXGLWSODQQLQJWHFKQLFDODELOLWLHVDXGLWSURFHVVDQGRXWSXWVTXDOLW\FRQWURO EXVLQHVVLQVLJKWDQGLQGHSHQGHQFH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 177 Governance, remuneration, risk and controls

Report from the Chairman of the Group Audit and Compliance Committee

$EVDDOVRKDVDQDXGLWSDUWQHUURWDWLRQSURFHVVDFFRUGLQJWRWKHUHOHYDQWOHJDODQGUHJXODWRU\UHTXLUHPHQWV7KH *$&& LV VDWLVILHG ZLWK WKH SHUIRUPDQFH DQG LQGHSHQGHQFH RI WKH H[WHUQDO DXGLWRUV DQG KDV QRPLQDWHG WKH UHDSSRLQWPHQWRI(UQVW

Internal audit $EVDKDVDGHGLFDWHGLQWHUQDODXGLWIXQFWLRQWKHFRUHSXUSRVHRIZKLFKLVWRSHUIRUPLQGHSHQGHQWUHYLHZVRIWKH LQWHUQDOFRQWUROHQYLURQPHQW LQFOXGLQJLQIRUPDWLRQWHFKQRORJ\FRQWUROV WRHQVXUHWKDWWKH*URXSFRPSOLHVZLWKWKH UHOHYDQW ODZV UHJXODWLRQV DQG VXSHUYLVRU\ UHTXLUHPHQWV 7KH ZRUN IRU WKH \HDU LV VXPPDULVHG LQ D SODQ WKDW LV FRQVLGHUHGE\WKH*$&&WRHQVXUHDGHTXDWHFRYHUDJHRIDOONH\ULVNDUHDVDQGDFFRXQWLQJFRQWUROVDFURVVDOOHQWLWLHV LQWKH*URXS7KH*$&&DSSURYHVWKHDSSRLQWPHQWRIWKH&KLHI,QWHUQDO$XGLWRU7KH&KLHI,QWHUQDO$XGLWRUUHSRUWVWR WKH*URXS&KLHI([HFXWLYHIURPDQDGPLQLVWUDWLYHSHUVSHFWLYHDQGWRWKH*$&&IXQFWLRQDOO\DQGKDVXQUHVWULFWHG DFFHVV WR WKH *$&& 7KH &KLHI ,QWHUQDO $XGLWRU DWWHQGV *$&& PHHWLQJV DQG SURYLGHV WKH *$&& ZLWK ZULWWHQ DVVHVVPHQWVRIWKHLQWHUQDOFRQWUROHQYLURQPHQW 7KH *$&& KDV UHYLHZHG WKH HYDOXDWLRQ RI WKH ZRUN FRQGXFWHG E\ WKH LQWHUQDO DXGLW IXQFWLRQ WKHLU ILQGLQJV DQG VXJJHVWHGLPSURYHPHQWVWRFRQWUROVZKHUHQHFHVVDU\7KH*$&&KDVDVVHVVHGWKHSHUIRUPDQFHDQGTXDOLILFDWLRQV RIWKHLQWHUQDODXGLWIXQFWLRQDQGIRXQGWKHPWREHVDWLVIDFWRU\

Group Financial Director and Group Finance 7KH*URXS)LQDQFLDO'LUHFWRUDQGWKHILQDQFHIXQFWLRQDUHNH\UROHSOD\HUVLQHQVXULQJDFFXUDWHUHSRUWLQJDQGILQDQFLDO FRQWURO7KH*URXS)LQDQFLDO'LUHFWRULVUHVSRQVLEOHIRUPDQDJLQJ$EVD©VH[WHUQDOUHSRUWLQJDQGLWVLQWHUQDOILQDQFLDO UHSRUWLQJ+HDWWHQGV*$&&PHHWLQJVLQDQH[RIILFLRFDSDFLW\ 'XULQJ WKH *$&& FRQGXFWHG D UHYLHZ RI WKH HIIHFWLYHQHVV RI WKH *URXS )LQDQFLDO 'LUHFWRU DQG WKH ILQDQFH IXQFWLRQZKLFKWKH\IRXQGWREHVDWLVIDFWRU\

Absa Group Compliance $Q HIIHFWLYH DQG LQGHSHQGHQW FRPSOLDQFH IXQFWLRQ LV D NH\ FRQWULEXWRU WR JRRG FRUSRUDWH JRYHUQDQFH DQG LV D UHTXLUHPHQWLQWHUPVRI.LQJ,,,WKH%DQNV$FWDQGYDULRXVUHOHYDQWOHJLVODWLRQ$EVD*URXS&RPSOLDQFHKDVGHGLFDWHG LQGHSHQGHQWFHQWUHVRIH[FHOOHQFHLQDOOEXVLQHVVXQLWVWKDWPRQLWRUFRQWURODQGUHSRUWRQFRPSOLDQFHLVVXHV7KH

178 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU DSSRLQWPHQWRIWKH*URXS&RPSOLDQFH2IILFHULVDSSURYHGE\WKH*$&&7KH *URXS &RPSOLDQFH 2IILFHU UHSRUWV WR *URXS )LQDQFLDO 'LUHFWRU IURP DQ )XUWKHUUHDGLQJ DGPLQLVWUDWLRQ SHUVSHFWLYH DQG WR WKH *$&& IXQFWLRQDOO\ 7KH *URXS©V FRPSOLDQFHSODQIRUWKH\HDULVUHYLHZHGDQGDSSURYHGE\WKH*$&&WRHQVXUH &RPSOLDQFHUHSRUW 175 DGHTXDWHFRYHUDJHRIDOOWKHNH\DUHDV)LQGLQJVDUHUHSRUWHGUHJXODUO\WRWKH $MRXUQH\WRLQWHJUDWHG *$&&7KH*$&&LVRIWKHRSLQLRQWKDWWKLVIXQFWLRQHIIHFWLYHO\GLVFKDUJHGLWV UHSRUWLQJ IFC UHVSRQVLELOLW\LQ

Integrated reporting .LQJ,,,DGYRFDWHVWKDW-6(OLVWHGFRPSDQLHVZLWKILQDQFLDO\HDUVFRPPHQFLQJ IURP0DUFKDUHUHTXLUHGWRSURGXFHLQWHJUDWHGUHSRUWVZKLFKHQDEOHV VWDNHKROGHUV WR HYDOXDWH DQ RUJDQLVDWLRQ©V SHUIRUPDQFH DQG WR PDNH DQ LQIRUPHGDVVHVVPHQWDERXWLWVDELOLW\WRFUHDWHYDOXH 7KH *URXS ZLOO SURYLGH LWV ILUVW LQWHJUDWHG UHSRUW WR VWDNHKROGHUV IRU WKH \HDU HQGHG'HFHPEHU,QSUHSDUDWLRQRIWKLVWKHIRFXVLQKDVEHHQRQ SURYLGLQJGLVFORVXUHVSHUWDLQLQJWRWKHLWHPVWKDWDUHPDWHULDOWRWKH*URXSDQG REWDLQLQJDVVXUDQFHRQDQXPEHURIQRQILQDQFLDONH\SHUIRUPDQFHLQGLFDWRUV RQ D OLPLWHG EDVLV 7KH *$&& LV VDWLVILHG WKDW WKLV DSSURDFK ZLOO IXUWKHU VWUHQJWKHQWKH*URXS©VDSSOLFDWLRQRIWKH.LQJ,,,SULQFLSOHV

2010 control and compliance landscape 1HZ OHJLVODWLRQ DQG UHJXODWRU\ DQG VXSHUYLVRU\ UHTXLUHPHQWV LPSDFWHG WKH FRPSOLDQFHDQGFRQWUROODQGVFDSHLQ7KH*$&&UHPDLQHGIRFXVHGRQ PDQDJLQJ WKH LPSDFWV VSHFLILFDOO\ UHODWLQJ WR H[WHUQDO GLVFORVXUH LQWHUQDO FRQWUROVDQGFRPSOLDQFH 'XULQJWKH*$&&©VDFWLYLWLHVDQGNH\GHFLVLRQVLQFOXGHG GHDOLQJ ZLWK PDWWHUV UHODWLQJ WR ILQDQFLDO DQG LQWHUQDO FRQWURO DFFRXQWLQJ SROLFLHVUHSRUWLQJDQGGLVFORVXUH UHYLHZLQJ DQG UHFRPPHQGLQJ WR WKH ERDUG LQWHULP DQG DQQXDO ILQDQFLDO VWDWHPHQWVSURILWDQGGLYLGHQGDQQRXQFHPHQWVDQGWKHDQQXDOUHSRUW UHYLHZLQJWRJHWKHUZLWKWKHH[WHUQDODXGLWRUVWKHFRQIRUPLW\RIWKHDXGLWHG ILQDQFLDO VWDWHPHQWV DQG UHODWHG VFKHGXOHV ZLWK ,)56 DQG WKH TXDOLW\ DQG DSSURSULDWHQHVVRI$EVD©VDFFRXQWLQJSROLFLHV UHYLHZLQJDQGDSSURYLQJLQWHUQDODXGLWDQGFRPSOLDQFHSROLFLHVSODQVUHSRUWV DQGILQGLQJV UHYLHZLQJWKHHIIHFWLYHQHVVRIWKHLQWHUQDODXGLWIXQFWLRQ HQVXULQJFRPSOLDQFHZLWKWKHDSSOLFDEOHOHJLVODWLRQDQGUHJXODWLRQV PDNLQJWKHQHFHVVDU\HQTXLULHVLQFROODERUDWLRQZLWKWKH*5&0&WRHQVXUH WKDWDOOULVNVWRZKLFKWKH*URXSLVH[SRVHGDUHLGHQWLILHGDQGPDQDJHGLQD ZHOOGHILQHGFRQWUROHQYLURQPHQW HQVXULQJ WKDW FRQWUROV DQG SURFHGXUHV UHODWLQJ WR WKH ,7 HQYLURQPHQW DQG SURFHVVHVZHUHDGHTXDWHO\FRQVLGHUHGE\LQWHUQDODXGLWLQFOXGLQJUHFRYHU\ SURFHGXUHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 179 Governance, remuneration, risk and controls

Report from the Chairman of the Group Audit and Compliance Committee

UHFRPPHQGLQJWRWKHERDUGWKHDSSRLQWPHQWRIH[WHUQDODXGLWRUVDQGIHHVSD\DEOHWRWKHH[WHUQDODXGLWRUV HYDOXDWLQJWKHSHUIRUPDQFHRIWKHH[WHUQDODXGLWRUV UHYLHZLQJDQGDSSURYLQJH[WHUQDODXGLWSODQVILQGLQJVDQGUHSRUWV HQVXULQJWKDWWKHDSSRLQWPHQWRIWKHH[WHUQDODXGLWRUVFRPSOLHGZLWKWKH&RUSRUDWH/DZV$PHQGPHQW$FWDQGDQ\ RWKHUOHJLVODWLRQUHODWLQJWRH[WHUQDODXGLWRUV DSSURYLQJWKH*URXS©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©VERDUGDXGLWDQGULVNFRPPLWWHHPHHWLQJVDQG DWWHQGHG*RYHUQDQFHDQG&RQWURO&RPPLWWHHPHHWLQJVIRU5HWDLO%DQNLQJ$%%DQG$EVD)LQDQFLDO6HUYLFHV

Focus for 2011 'XULQJHPSKDVLVZLOOEHSODFHGRQHQVXULQJWKDWWKH*$&&PHHWVWKHUHTXLUHPHQWVDVVHWRXWLQWKH&RPSDQLHV $FW%DQNV$FWDQGWKHSULQFLSOHVDQGUHFRPPHQGDWLRQVRI.LQJ,,,7KLVZLOOUHVXOWLQWKHHIIHFWLYHRYHUVLJKWRIH[WHUQDO GLVFORVXUH WKH PRQLWRULQJ RI WKH *URXS©V LQWHUQDO FRQWURO V\VWHPV DQG RYHUVLJKW RI FRPSOLDQFH UHODWHG PDWWHUV 6SHFLILFHPSKDVLVZLOOEHSODFHGRQUHYLHZLQJGLVFORVXUHVPDGHE\WKH*URXSWRHQVXUHWKH\DUHDOLJQHGZLWKEHVW SUDFWLFHDQGWKDWWKHDFFRXQWLQJSROLFLHVDQGVWDQGDUGVDSSOLHGDUHDSSURSULDWH7KH*URXS©VLQWHJUDWHGUHSRUWLQJ MRXUQH\ZLOOFRQWLQXHWRUHFHLYHDWWHQWLRQZLWKWKHLQWHQWRILPSURYLQJQRQILQDQFLDOGLVFORVXUHVDQGDVVXUDQFH

Conclusion 7KH*$&&RSHUDWHVXQGHUZULWWHQWHUPVRIUHIHUHQFHUHYLHZHGDQGDSSURYHGE\WKHERDUGDQQXDOO\7KHERDUGLVRI WKHYLHZWKDWWKH*$&&KDVHIIHFWLYHO\GLVFKDUJHGLWVUHVSRQVLELOLWLHVDVFRQWDLQHGLQWKHUHVSHFWLYHWHUPVRIUHIHUHQFH GXULQJWKH\HDUXQGHUUHYLHZ

Des Arnold Chairman: Group Audit and Compliance Committee

0DUFK

180 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Governance, remuneration, risk and controls

Compliance report

Introduction Highlights As a leading ﬁnancial services institution and as a member of the Barclays Group, Absa faces complex &RQWLQXHGYLJLODQFHLQUHVSHFWRIWKH challenges in ensuring its activities comply with not LGHQWLILFDWLRQRIQHZDQGDPHQGHGUHJXODWRU\ only local laws, regulations and supervisory UHTXLUHPHQWVLPSDFWLQJRQWKH*URXS requirements and with those of the various jurisdictions *URXSZLGHSURMHFWVWRDGGUHVVWKH in which Absa operates, but also with the relevant SUHVFULSWLRQVRIWKHDPHQGHG)LQDQFLDO international requirements applicable to the Barclays $GYLVRU\DQG,QWHUPHGLDU\6HUYLFHV$FW©V Group. To this end, the board requires that the )LWDQG3URSHUUHTXLUHPHQWVWKH&RPSDQLHV compliance risks associated with Absa’s business $FWDQGWKH&RQVXPHU3URWHFWLRQ$FW activities are clearly directed, assessed, challenged, managed, controlled and reported on, as required by ,PSOHPHQWDWLRQDQGHQKDQFHPHQWRIWKH the relevant jurisdictions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©V OLFHQFHV WR SHUIRUP ILQDQFLDO VHUYLFHV UHODWHGDFWLYLWLHV

Approach to compliance 7KHERDUGWKURXJKWKH*$&&KDVGHOHJDWHGWRWKH*URXS &RPSOLDQFH 2IILFHU WKH DXWKRULW\ WR SUHVFULEH DQG LPSOHPHQWDJRYHUQDQFHIUDPHZRUNZLWKLQZKLFKGLUHFWRUV PDQDJHPHQW HPSOR\HHV DQG WKH FRPSOLDQFH IXQFWLRQ RSHUDWH LQ RUGHU WR HQIRUFH D FRPSOLDQFH FXOWXUH DQG WR LGHQWLI\ SULRULWLVH PDQDJH PRQLWRU DQG UHSRUW RQ WKH FRPSOLDQFHULVNVLQKHUHQWWRWKHEXVLQHVV$QHIIHFWLYHDQG LQGHSHQGHQW FRPSOLDQFH IXQFWLRQ LV D NH\ FRQWULEXWRU WR JRRGFRUSRUDWHJRYHUQDQFHDQGLVDUHTXLUHPHQWRI.LQJ ,,,WKH%DQNV$FWDQGYDULRXVRWKHUOHJLVODWLRQ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 181 Governance, remuneration, risk and controls

Compliance report

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

2010 review Key activities undertaken 7KHNH\DFWLYLWLHVXQGHUWDNHQE\5HJXODWRU\&RPSOLDQFHWRVXSSRUWWKHGLUHFWRUVH[HFXWLYHRIILFHUVPDQDJHPHQWDQG HPSOR\HHVLQGLVFKDUJLQJWKHUHOHYDQWFRPSOLDQFHUHVSRQVLELOLWLHVLQFOXGHGWKHIROORZLQJ

Compliance risk identiﬁcation, assessment and prioritisation: 7KH FRPSOLDQFH ULVNV RQFH DVVHVVHG DUH FRQVROLGDWHGLQWRDUHJXODWRU\ULVNSURILOH*LYHQWKDW$EVDLVDG\QDPLFFRUSRUDWHHQWLW\DQGWKDWWKHUHJXODWRU\ ODQGVFDSHLVHYROYLQJDQGEHFRPLQJLQFUHDVLQJO\VWULQJHQWWKHUHJXODWRU\ULVNSURILOHLVUHYLHZHGDQGXSGDWHGDW OHDVWWZLFHD\HDUWRHQVXUHDQ\SRVVLEOHULVNVRIQRQFRPSOLDQFHZLWKDSSOLFDEOHODZVUHJXODWLRQVDQGVXSHUYLVRU\ UHTXLUHPHQWVDUHDGGUHVVHG Compliance risk management:&RPSOLDQFHULVNPDQDJHPHQWSODQVZHUHFRPSLOHG7KH\VHUYHDVDPDQDJHPHQW WRRORXWOLQLQJWKHFRPSOLDQFHULVNVWKDWWKHEXVLQHVVXQLWVRU*URXSVXSSRUWIXQFWLRQVZHUHH[SRVHGWRDQGFRQWUROV LPSOHPHQWHGWRPDQDJHDQGPLWLJDWHWKRVHULVNV&RPSOLDQFHULVNPDQDJHPHQWSODQVDUHUHYLHZHGDQGXSGDWHG DWOHDVWDQQXDOO\ Compliance risk monitoring: &RPSOLDQFH ULVNV ZHUH PRQLWRUHG DQG WUDFNHG E\ YDULRXV SDUWLHV LQFOXGLQJ UHJXODWRUVPDQDJHPHQWDQGWKH*URXSFRPSOLDQFHIXQFWLRQ0RQLWRULQJXQGHUWDNHQE\UHJXODWRUVWDNHVSODFHDWD KLJKOHYHODQGLVVSHFLILFWRHDFKRIWKHUHJXODWRUV©VXSHUYLVLRQUHJLPHV0RQLWRULQJXQGHUWDNHQE\PDQDJHPHQW WDNHV SODFH GD\WRGD\ DV SDUW RI GDLO\ RSHUDWLRQV 0RQLWRULQJ XQGHUWDNHQ E\ *URXS &RPSOLDQFH LV FRQGXFWHG DFURVVWKHHQWLUH*URXSLQDFFRUGDQFHZLWKDULVNEDVHGDSSURDFK1RVLJQLILFDQWILQDQFLDOSHQDOWLHVUHJXODWRU\ FHQVXUHRUSXEOLFUHSULPDQGVZHUHLPSRVHGRQWKH*URXSGXULQJ Compliance risk reporting:&RPSOLDQFHUHSRUWVZHUHVXEPLWWHGWRJRYHUQDQFHFRPPLWWHHVDWWHQGHGE\GLUHFWRUV H[HFXWLYHRIILFHUVDQGPDQDJHPHQWDQGWRYDULRXVUHJXODWRUV Awareness and training:6WHSVZHUHWDNHQWRDGYLVHHPSOR\HHVRIDQGWUDLQWKHPRQWKHILQHUDVSHFWVRIWKH UHOHYDQWUHJXODWRU\UHTXLUHPHQWV

7KH NH\ DFWLYLWLHV XQGHUWDNHQ E\ *URXS 0RQH\ /DXQGHULQJ &RQWURO WR VXSSRUW WKH GLUHFWRUV H[HFXWLYH RIILFHUV PDQDJHPHQW DQG HPSOR\HHV LQ GLVFKDUJLQJ WKHLU UHVSRQVLELOLWLHV LQ UHVSHFW RI WKH ULVN RI PRQH\ ODXQGHULQJ DQG WHUURULVWILQDQFLQJULVNVLQFOXGHGWKHIROORZLQJ Governance and oversight:*URXS0RQH\/DXQGHULQJ&RQWUROVHWSROLFLHVDQGSURYLGHGJXLGDQFHDQGWUDLQLQJ UHODWLQJWRDQWLPRQH\ODXQGHULQJDQWLWHUURULVWILQDQFLQJDQGDQWLFRUUXSWLRQUHJXODWRU\UHTXLUHPHQWV Customer and payment screening: 7KH FXVWRPHU DQG SD\PHQW PRQLWRULQJ V\VWHPV HQVXUHG WKDW WKH ULVN RI HQWHULQJ LQWR D UHODWLRQVKLS ZLWK D VDQFWLRQHG SHUVRQ RU EHLQJ LQYROYHG LQ D SD\PHQW WR D SHUVRQ PHQWLRQHG RQDVDQFWLRQVOLVWLVORZ

182 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Cash threshold reporting:$OOFDVKWUDQVDFWLRQVRI5DQGDERYHZHUHUHSRUWHGWRWKH)LQDQFLDO,QWHOOLJHQFH &HQWUHLQDFFRUGDQFHZLWKWKHUHJXODWRU©VFDVKWKUHVKROGUHSRUWLQJUXOHV Dispensations and waivers of policy:$Q\GLVSHQVDWLRQVRUZDLYHUVUHODWLQJWRWKHSROLFLHVZHUHVWULFWO\FRQWUROOHG DQGPRQLWRUHGWRGHWHUPLQHZKHWKHUVXFKGLVSHQVDWLRQVDQGZDLYHUVZHUHVWLOOUHOHYDQW Regulatory or policy breaches:*URXS0RQH\/DXQGHULQJ&RQWUROUHSRUWVDQ\EUHDFKHVWRWKHYDULRXVJRYHUQDQFH IRUXPVDQGLIUHTXLUHGWRWKHUHJXODWRUV$Q\UHVXOWLQJFKDQJHVWRWKHFRQWUROHQYLURQPHQWDUHPDQDJHGE\WKH FHQWUDOIXQFWLRQLQFRQMXQFWLRQZLWKWKHEXVLQHVVXQLW©VPRQH\ODXQGHULQJFRQWURORIILFHUV

7KH DFWLYLWLHV GHVFULEHG DGGUHVV WKH NH\ FRPSOLDQFH UROHV DQG UHVSRQVLELOLWLHV SUHVFULEHG LQ WKH %DQNV $FW 7KH PHWKRGRORJ\IROORZHGE\*URXS&RPSOLDQFHKDVEHHQGHYHORSHGDQGEHQFKPDUNHGDJDLQVWLQGXVWU\DQGLQWHUQDWLRQDO EHVWSUDFWLFH

,QVXSSRUWRIWKH2QH$EVDVWUDWHJ\*URXS&RPSOLDQFH©VNH\IRFXVDUHDVIRULQFOXGHGWKHIROORZLQJ

Strategic pillar: Sustainable growth in targeted markets $EVDFRQWLQXRXVO\VWULYHVWRLGHQWLI\RSSRUWXQLWLHVWRJURZYDOXHHQWHUQHZPDUNHWVDQGXQGHUVWDQGDQGVDWLVI\WKH QHHGVRIFXVWRPHUV

,Q$XJXVWWKH&RPSHWLWLRQ&RPPLVVLRQODXQFKHGDQHQTXLU\LQWRWKHWUDQVDFWLRQDODVSHFWVRIWKH6RXWK$IULFDQ UHWDLOEDQNLQJVHFWRU7KHEDQNLQJHQTXLU\IRFXVHGRQWKHWUDQVSDUHQF\DQGOHYHORIIHHVDQGFKDUJHVLPSRVHGRQ FRQVXPHUVDVZHOODVWKHQHHGIRULQWHUFKDQJHIHHVIRU$70WUDQVDFWLRQVDQGWKHOHYHORILQWHUFKDQJHIHHVIRUFDUG WUDQVDFWLRQV

,Q-XQHWKHSDQHORIWKHEDQNLQJHQTXLU\FRQFOXGHGWKDWWUDQVDFWLRQFKDUJHVLQ6RXWK$IULFDZHUHKLJKHUWKDQ WKH\ ZRXOG EH DW FRPSHWLWLYH OHYHOV RZLQJ WR PDUNHW VWUXFWXUH FXUUHQW LQIRUPDWLRQ DV\PPHWULHV DQG SURGXFW FRPSOH[LWLHV 7R DGGUHVV WKHVH FRQFHUQV WKH SDQHO LVVXHG UHFRPPHQGDWLRQV WRXFKLQJ RQ PDQ\ DVSHFWV RI WUDQVDFWLRQDODFFRXQWVVXFKDV$70IHHVSD\PHQWFDUGVHOHFWURQLFIXQGWUDQVIHUVDQGGHELWRUGHUV

'XULQJ0D\WKH0LQLVWHURI)LQDQFHPHWZLWKUHSUHVHQWDWLYHVRI$EVDZLWKWKHDLPRIGHWHUPLQLQJSURJUHVVPDGH RQWKHUHFRPPHQGDWLRQVDVZHOODVREWDLQLQJWKHLQGXVWU\©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 183 Governance, remuneration, risk and controls

Compliance report

Strategic pillar: Balance sheet optimisation and proactive risk management $EVDUHTXLUHVWKDWDOOQHZSURGXFWVDQGVHUYLFHVEHVXEMHFWWRDVWDQGDUGLVHGSURFHVVWKDWPDNHVVXUHDQ\QHZ SURGXFW RU QHZ PDUNHW RU VLJQLILFDQW FKDQJHV WR H[LVWLQJ SURGXFWV RU PDUNHWV FDQ RQO\ EH ODXQFKHG DIWHU D FRPSUHKHQVLYH UHYLHZ DQG VLJQRII SURFHVV DFURVV DOO FRQWURO DQG ORJLVWLFV IXQFWLRQV 7KLV SURFHVV HQVXUHV WKH FRQVLVWHQF\RI$EVD©VRIIHULQJVLQWKHPDUNHWSODFHDFFRUGLQJWRLWVRYHUDOOEXVLQHVVVWUDWHJ\,WDOVRPDNHVFHUWDLQWKDW SURGXFWV DUH RQO\ FKDQJHG RU ODXQFKHG DIWHU GXH FRQVLGHUDWLRQ RI DOO SULPDU\ DQG FRQVHTXHQWLDO ULVNV VXFK DV ILQDQFLDOFRPSOLDQFHDQGOHJDO LQIUDVWUXFWXUHDQGUHVRXUFHV*URXS&RPSOLDQFHLVUHVSRQVLEOHIRUWKHFRPSOLDQFH ULVNHYDOXDWLRQDQGLVDFRPSXOVRU\VLJQDWRU\WRDQ\QHZSURGXFWDQGVHUYLFHDSSURYDO

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

184 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Strategic pillar: Simple, streamlined Group for customer delivery $EVDHQGHDYRXUVWRVLPSOLI\DQGVWUHDPOLQHLWVRSHUDWLRQVDQGWREXLOGSURFHVVHVDQGSURFHGXUHVZLWKWKHDLPRI LPSURYLQJHIILFLHQFLHV

,Q$SULOWKH)LQDQFLDO6HUYLFHV%RDUG )6% SXEOLVKHGDPHQGPHQWVWRWKH*HQHUDO&RGHRI&RQGXFWUHJXODWLQJ WKHLVVXHRIFRQIOLFWVRILQWHUHVW7KHDPHQGPHQWVZLOOKDYHDVLJQLILFDQWLPSDFWRQSURPRWLRQDODQGILQDQFLDOLQFHQWLYHV SURYLGHGWRILQDQFLDOVHUYLFHVSURYLGHUVUHSUHVHQWDWLYHVSURGXFWVXSSOLHUVDQGDVVRFLDWHV$*URXSZLGHSURMHFWLV DGGUHVVLQJWKHUHTXLUHPHQWVRIWKHDPHQGPHQWVE\LPSOHPHQWLQJDQGHQKDQFLQJ$EVD©VFRQWUROHQYLURQPHQW

7KHUHJXODWRU\ODQGVFDSHUHODWLQJWRILQDQFLDOLQVWLWXWLRQVLVFRQVWDQWO\FKDQJLQJDQGHYROYLQJZLWKWKHLQWURGXFWLRQRI QHZUHJXODWRU\UHTXLUHPHQWVDVZHOODVWKHDPHQGPHQWRIH[LVWLQJUHJXODWRU\UHTXLUHPHQWV$EVD©V1HZ5HJXODWRU\ )RUXP 15) LVUHVSRQVLEOHIRUDVVHVVLQJWKHLPSDFWWKDWQHZUHJXODWLRQVDVZHOODVFKDQJHVDQGDPHQGPHQWVWR H[LVWLQJUHJXODWLRQVZLOOKDYHRQWKH*URXS©VEXVLQHVV7KH15)VFDQVDQGHYDOXDWHVWKHHQWLUHUHJXODWRU\ODQGVFDSH LQUHVSHFWRIHDFKEXVLQHVVDUHDLQ$EVDDVZHOODVLQUHVSHFWRIWKH*URXSDVDZKROH,WDVVHVVHVFKDQJHVDFFRUGLQJ WRDOOLGHQWLILHGULVNFRPSRQHQWVDQGWKHQGHYHORSVDQGLQWURGXFHVUHPHGLDWLRQUHODWHGFRQWUROVWRPLQLPLVHWKHULVNV

$EVD©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

Strategic pillar: Customer- and people-centred organisation 9DOXHV DUH LQWHJUDO WR $EVD©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

$EVD KDV FRQWURO PHDVXUHV LQ SODFH WR PLQLPLVH WKH ULVN RI FRUUXSW DFWLYLWLHV DV RXWOLQHG LQ WKH 3UHYHQWLRQ DQG &RPEDWLQJRI&RUUXSW$FWLYLWLHV$FW$EVD©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 185 Governance, remuneration, risk and controls

Compliance report

(PSOR\HHVDQGRWKHUVWDNHKROGHUVPD\DQRQ\PRXVO\UHSRUWLQVWDQFHVRIXQODZIXORUXQHWKLFDOEHKDYLRXUWRWKH7LS RIIV$QRQ\PRXVKRWOLQH$OOHJDWLRQVRIFRUUXSWLRQDUHLQYHVWLJDWHGE\GHGLFDWHGVSHFLDOLVWWHDPVDQGWKHLQYHVWLJDWLRQV DUHPRQLWRUHGE\*URXS&RPSOLDQFH$Q\LGHQWLILHGLVVXHVDQGWUHQGVDUHUHSRUWHGWRWKHDSSURSULDWHIRUXPVWKURXJK WKH*URXSJRYHUQDQFHVWUXFWXUHV7KHSURFHVVLVGHVLJQHGWRSURWHFWZKLVWOHEORZHUVIURPEHLQJGLVFULPLQDWHGDJDLQVW DVDUHVXOWRIUHSRUWLQJXQODZIXORUXQHWKLFDOEHKDYLRXU

7KH 3URWHFWLRQ RI 3HUVRQDO ,QIRUPDWLRQ 323, %LOO WDEOHG EHIRUH SDUOLDPHQW LQ $XJXVW DQG H[SHFWHG WR EH SURPXOJDWHGGXULQJZLOOUHJXODWHSURFHVVLQJRIWKHSHUVRQDOLQIRUPDWLRQRILQGLYLGXDODQGMXULVWLFSHUVRQVDQG ZLOO DSSO\ WR LQGLYLGXDOV DQG DOO SULYDWH DQG SXEOLF VHFWRU ERGLHV 7KH FRPSOLDQFH IXQFWLRQ FRQWLQXHV WR PRQLWRU OHJLVODWLYHSURJUHVVPDGHLQUHVSHFWRIWKH323,%LOODQGZLOOWDNHDSSURSULDWHVWHSVWRLPSOHPHQWWKHUHTXLUHPHQWVRI WKH%LOORQFHLWLVHQDFWHGDQGLQVRGRLQJHQVXUHWKHGHOLYHU\RIH[FHOOHQWFXVWRPHUVHUYLFH

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

$ QHZ &3$ ZDV SURPXOJDWHG DQG LV HIIHFWLYH IURP $SULO 7KLV DFW DLPV WR SURPRWH D IDLU DFFHVVLEOH DQG VXVWDLQDEOHPDUNHWSODFHIRUFRQVXPHUSURGXFWVDQGVHUYLFHV7KHDFWZLOOHVWDEOLVKQDWLRQDOQRUPVDQGVWDQGDUGVIRU FRQVXPHU SURWHFWLRQ 7KH DFW SURKLELWV FHUWDLQ XQIDLU PDUNHWLQJ DQG EXVLQHVV SUDFWLFHV DQG SURPRWHV UHVSRQVLEOH FRQVXPHUEHKDYLRXU$*URXSZLGHSURMHFWZDVLQLWLDWHGDLPHGDWDGGUHVVLQJWKHUHTXLUHPHQWVRIWKLVDFW

7KHDELOLW\WRDGDSWDQGWUDQVIRUPLVLPSRUWDQWWRHQDEOHDQLQVWLWXWLRQWRGHOLYHUVHUYLFHVDQGSURGXFWVWRDGLYHUVH FXVWRPHUEDVHLQDSURJUHVVLYHHFRQRP\,QWKLVOLJKW$EVDDOUHDG\YLHZVWKH%%%((&R*3DVDFRUHPHDVXUHIRU SHUIRUPDQFHLQUHVSHFWRIWUDQVIRUPDWLRQ$EVDFRQWLQXRXVO\VHHNVWRDFKLHYHDQGH[FHHGLWVWUDQVIRUPDWLRQWDUJHWV 7KHFRPSOLDQFHIXQFWLRQVXSSRUWVWKH*URXSLQUHYLHZLQJLWVDGKHUHQFHWRWKH%%%((&R*3

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

186 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Focus for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

Disclosure requirements in terms of the Home Loan and Mortgage Disclosure Act 63 of 2000 7KH+RPH/RDQDQG0RUWJDJH'LVFORVXUH$FWRI ¦WKH+/$0'$§ UHTXLUHVFHUWDLQGLVFORVXUHVE\6RXWK $IULFDQILQDQFLDOLQVWLWXWLRQVRIORDQVRUDGYDQFHVWRSHUVRQVIRUSXUSRVHVRIFRQVWUXFWLQJSXUFKDVLQJUHQRYDWLQJ RULPSURYLQJLQDQ\ZD\VXFKSHUVRQ©VKRPHZLWKWKHVHFXULW\RIDUHJLVWHUHGPRUWJDJHERQGRURWKHUIRUPRI DFFHSWHG VHFXULW\ 7KH %DQN DQG PRUH VSHFLILFDOO\ +RPH /RDQV LV UHVSRQVLEOH IRU JUDQWLQJ KRPH ORDQV WR PHPEHUVRIWKHSXEOLFDVFRQWHPSODWHGE\WKH+/$0'$7KH%DQNDFFRUGLQJO\LVUHTXLUHGXQGHUWKH+/$0'$ WRGLVFORVHWKHWRWDOQXPEHUDQGDPRXQWLQUDQGRI

FRPSOHWHGKRPHORDQDSSOLFDWLRQVUHFHLYHG

KRPHORDQDSSOLFDWLRQVGHFOLQHGDQGUHDVRQVIRUWKHUHMHFWLRQV

KRPHORDQVFORVHGDQGGLVEXUVHGE\WKH%DQNDQG

KRPHORDQVDSSURYHGE\WKH%DQN

GXULQJWKHILQDQFLDO\HDULQUHVSHFWRIZKLFKILQDQFLDOVWDWHPHQWVKDYHEHHQSUHSDUHG8QGHUWKHUHJXODWLRQVWR WKH+/$0'$WKH%DQNLVUHTXLUHGWRPDNHWKHUHTXLUHGGLVFORVXUHVLQUHVSHFWRIUDFHJURXSV $IULFDQ:KLWH ,QGLDQDQG&RORXUHG DQGSURYLQFH

7KHUHDVRQVIRUWKHUHMHFWLRQRIKRPHORDQVE\WKH%DQNLQFOXGHXQDIIRUGDELOLW\RUDSRRUFUHGLWUHFRUGRQWKH SDUWRIWKHFXVWRPHURUDQXQDFFHSWDEOH/79UDWLRLQUHVSHFWRIWKHSURSHUW\

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 187 Governance, remuneration, risk and controls

Compliance report

Home loan disclosures in respect of race1

Approved – not taken Approved – taken up up/withdrawn Number R’000 Number R’000 $IULFDQ &RORXUHG ,QGLDQ :KLWH 8QNQRZQ 7RWDO

$SSURYHG¤QRWWDNHQXS $SSURYHG¤WDNHQXS ZLWKGUDZQ 1XPEHU 5© 1XPEHU 5© $IULFDQ &RORXUHG ,QGLDQ :KLWH 8QNQRZQ 7RWDO

Home loan disclosures in respect of provincial areas2

Approved – not taken Approved – taken up up/withdrawn Number R’000 Number R’000 (DVWHUQ&DSH )UHH6WDWH *DXWHQJ .ZD=XOX1DWDO /LPSRSR 0SXPDODQJD 1RUWK:HVW 1RUWKHUQ&DSH :HVWHUQ&DSH 8QNQRZQ 7RWDO

$SSURYHG¤QRWWDNHQXS $SSURYHG¤WDNHQXS ZLWKGUDZQ 1XPEHU 5© 1XPEHU 5© (DVWHUQ&DSH )UHH6WDWH *DXWHQJ .ZD=XOX1DWDO /LPSRSR 0SXPDODQJD 1RUWK:HVW 1RUWKHUQ&DSH :HVWHUQ&DSH 8QNQRZQ 7RWDO

Notes Race information as provided by the applicant during the mortgage loan application process. Provincial information is matched against deeds ofﬁce information.

188 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 Completed applications Declined Pending Disbursed received Number R’000 Number R’000 Number R’000 Number R’000

&RPSOHWHGDSSOLFDWLRQV 'HFOLQHG 3HQGLQJ 'LVEXUVHG UHFHLYHG 1XPEHU 5© 1XPEHU 5© 1XPEHU 5© 1XPEHU 5©

2010 Completed applications Declined Pending Disbursed received Number R’000 Number R’000 Number R’000 Number R’000

&RPSOHWHGDSSOLFDWLRQV 'HFOLQHG 3HQGLQJ 'LVEXUVHG UHFHLYHG 1XPEHU 5© 1XPEHU 5© 1XPEHU 5© 1XPEHU 5©

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 189 Governance, remuneration, risk and controls

Report from the Chairman of the Group Risk and Capital Management Committee

Trevor Munday &KDLUPDQ*URXS5LVNDQG&DSLWDO0DQDJHPHQW&RPPLWWHH

Highlights 6WURQJFDSLWDOSRVLWLRQPDLQWDLQHG

,QYHVWPHQWJUDGHFUHGLWUDWLQJPDLQWDLQHG

)RFXVRQTXDOLW\RIQHZEXVLQHVV

5HGXFWLRQLQDUUHDUVLPSDLUPHQWVWKURXJKLQYHVWLQJLQ FROOHFWLRQDFWLYLW\

7UDGHGPDUNHWULVNDQGUHYHQXHGRZQRQPXWHGPDUNHWVDQG FOLHQWYROXPHVEXWGHOLYHULQJDIDYRXUDEOHUHYHQXHWRULVNUDWLR

,QWHUHVWUDWHULVNLQWKHEDQNLQJERRNPDQDJHGWRORZOHYHOV

6LJQLILFDQWLQFUHDVHLQVXUSOXVOLTXLGDVVHWVKHOG

)RFXVRQIXUWKHUHQKDQFLQJFRQWUROVRYHURSHUDWLRQDOULVNV

190 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Introduction In 2010, world ﬁnancial markets found themselves operating under a cloud of uncertainty as to when the economic recovery would come, and what form it would take. In order to safeguard the interests of stakeholders during this period, the Group placed high importance on ensuring robust risk management processes were in place to ensure that the Group could respond effectively and timeously to the various pressures and demands of the environment.

Approach to risk management 5LVN PDQDJHPHQW LV D NH\ SLOODU RI WKH 2QH $EVD VWUDWHJ\ DQG WKH *URXS DSSOLHV D VWUXFWXUHG DQG GLVFLSOLQHG DSSURDFKWRWKHPDQDJHPHQWRIULVNWKURXJKRXWWKHRUJDQLVDWLRQ$SROLF\NQRZQDVWKHSULQFLSDOULVNSROLF\ 353 KDVEHHQGHYHORSHGDQGDSSURYHGE\WKHERDUG7KH353VHWVRXWWKHGHWDLODQGVFRSHRIWKHULVNVWKHEXVLQHVV UHVSRQVLELOLW\IRUPDQDJLQJWKHPDQGKLJKOHYHOSURFHGXUHVIRUULVNPDQDJHPHQW

Risk governance 7KH*URXS©VDSSURDFKWRULVNJRYHUQDQFHDLPVWREDODQFHWKHGHPDQGVRIG\QDPLFDQGHIILFLHQWEXVLQHVVGHFLVLRQ PDNLQJZLWKWKHUHTXLUHPHQWVRIFRQWURODQGWUDQVSDUHQF\

7KHUHVSRQVLELOLW\IRUULVNJRYHUQDQFHOLHVDWDOOOHYHOVRIWKHRUJDQLVDWLRQIURPGLUHFWRUVDWERDUGOHYHOWRLQGLYLGXDO HPSOR\HHVWDVNHGZLWKWKHUHVSRQVLELOLW\RIPDQDJLQJULVN6HQLRUPDQDJHPHQWVHWVULVNPDQDJHPHQWSROLFLHVWREH IROORZHG RQ DQ RUJDQLVDWLRQZLGH EDVLV ZLWKLQ WKH ULVN DSSHWLWH VHW E\ WKH ERDUG 7KHVH SROLFLHV DUH FOHDUO\ FRPPXQLFDWHG WKURXJKRXW WKH *URXS DQG DSSO\ WR DOO EXVLQHVV XQLWV ZKROO\ RZQHG VXEVLGLDULHV DQG PDMRULW\ VKDUHKROGLQJVZKHUHWKH*URXSKDVFRQWURORIWKHPDQDJHPHQWRIWKHHQWLW\

2YHUVLJKWRIULVNPDQDJHPHQWUHVLGHVZLWKWZRERDUGFRPPLWWHHVQDPHO\WKH*URXS5LVNDQG&DSLWDO0DQDJHPHQW &RPPLWWHH *5&0& DQGWKH*$&&

The Group Risk and Capital Management Committee 7KH*5&0&DVVLVWVWKHERDUGLQIXOILOOLQJLWVUHVSRQVLELOLWLHVLQPDQDJLQJULVNDQGFRPSO\LQJZLWKWKRVHUHTXLUHPHQWV RIWKH%DQNV$FWWKDWUHODWHWRULVNDQGFDSLWDOPDQDJHPHQW7KH*5&0&GHWHUPLQHVDQGUHFRPPHQGVWKH*URXS©V ULVNDSSHWLWHWRWKHERDUGDQGWKHQUHYLHZVDQGPRQLWRUVWKH*URXS©VULVNSURILOHDJDLQVWWKHULVNDSSHWLWHRQDTXDUWHUO\ EDVLV7KH*5&0&DOVRDSSURYHVFRQWUROIUDPHZRUNVIRUYDULRXVSULQFLSDOULVNVDQGDVVLVWVLQGHWHUPLQLQJFDSLWDO WDUJHWUDQJHVDQGPRQLWRULQJFDSLWDOOHYHOVRIWKH*URXS

7KHPHPEHUVKLSRIWKH*5&0&FRQVLVWVRIQLQHQRQH[HFXWLYHGLUHFWRUVHLJKWRIZKRPDUHLQGHSHQGHQWGLUHFWRUV 7KH*5&0&PHHWVRQDTXDUWHUO\EDVLV

'XULQJ*5&0&PHHWLQJVZHUHDOVRDWWHQGHGE\WKH*&('HSXW\*URXS&KLHI([HFXWLYH*URXS)LQDQFLDO 'LUHFWRU&KLHI5LVN2IILFHUDQG*URXS7UHDVXUHU7KH*5&0&PHHWLQJVDUHDWWHQGHGE\ERWKLQWHUQDODQGH[WHUQDO DXGLWRUVLQDFFRUGDQFHZLWKWKH*URXS©VJRYHUQDQFHSURFHVVHVDQGLQOLQHZLWKUHJXODWRU\SURYLVLRQV

7KH*5&0&PHHWLQJVWKDWWRRNSODFHGXULQJZHUHFRQYHQHGLQDFFRUGDQFHZLWKWKHPDQGDWHFRQWDLQHGLQLWV WHUPV RI UHIHUHQFH DQG LQ DFFRUGDQFH ZLWK DSSOLFDEOH UHJXODWLRQV 7KH *5&0& ZDV SURYLGHG ZLWK WKH UHTXLUHG UHSUHVHQWDWLRQVDQGLQIRUPDWLRQE\PDQDJHPHQWDWHDFKPHHWLQJZKLFKHQDEOHGWKH*5&0&WRSURSHUO\UHYLHZDQG PRQLWRU WKH YDULRXV ULVNV DQG LQ VR GRLQJ HIIHFWLYHO\ FRPSO\ ZLWK LWV PDQGDWH $GHTXDWH WUDLQLQJ LV FRQGXFWHG DQQXDOO\WRHQVXUHWKDWPHPEHUVFDQHIIHFWLYHO\GLVFKDUJHWKHLUGXWLHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 191 Governance, remuneration, risk and controls

Report from the Chairman of the Group Risk and Capital Management Committee

,QRUGHUWRH[HFXWHKLVUHVSRQVLELOLWLHVWKH&KDLUPDQRIWKH*5&0&DWWHQGHGDOOPHHWLQJVRIWKH*$&&PHWZLWKWKH &KLHI5LVN2IILFHUDQGH[HFXWLYHPDQDJHPHQWRQDUHJXODUEDVLVDQGUHSRUWHGWRWKHERDUGDIWHUHDFKFRPPLWWHH PHHWLQJ

7KH*5&0&LVVDWLVILHGWKDWWKHULVNPDQDJHPHQWSURFHVVHVDQGV\VWHPVSURYLGHFRPSUHKHQVLYHDQGDGHTXDWH RYHUVLJKWRYHUWKHULVNH[SRVXUHVRIWKH*URXS7KH*5&0&LVVDWLVILHGWKDWPDQDJHPHQWZDVDEOHWRHIIHFWLYHO\ UHVSRQGWRDQGPDQDJHWKHULVNVWKDWDURVHIURPWLPHWRWLPH

Risk landscape during 2010 7KH*URXS©VULVNODQGVFDSHGXULQJZDVDIIHFWHGE\WKHFRQWLQXLQJKHVLWDQWHFRQRPLFUHFRYHU\,QDQDWWHPSWWR VDIHJXDUGWKHLQWHUHVWRIVWDNHKROGHUVWKH*URXSIRFXVHGRQHQVXULQJWKDWUREXVWULVNPDQDJHPHQWSROLFLHVZHUHLQ SODFHDQGLQSDUWLFXODUIRFXVHGRQWKHIROORZLQJNH\DUHDV FUHGLWULVNPDQDJHPHQW OLTXLGLW\PDQDJHPHQW PDLQWDLQLQJDGHTXDWHFDSLWDOEXIIHUVDQG HQKDQFLQJWKHOHYHORILQWHJUDWLRQRIRSHUDWLRQDOULVNPDQDJHPHQWWRROVDQGSURFHVVHV

Core activities of the GRCMC 'XULQJWKH\HDUWKH*5&0&©VDFWLYLWLHVDQGNH\GHFLVLRQVLQFOXGHG 5HFRPPHQGLQJWKH*URXS©VULVNDSSHWLWHWRWKHERDUGIRUDSSURYDODQGPRQLWRULQJRQDTXDUWHUO\EDVLVWKHDFWXDO ULVNDJDLQVWWKHERDUGDSSURYHGDSSHWLWH $VVLVWLQJWKHERDUGLQH[HFXWLQJLWVGXWLHVZLWKUHVSHFWWRULVNDQGFDSLWDOPDQDJHPHQWDVUHTXLUHGE\WKH%DQNV $FWDQGLQSDUWLFXODUDVVLVWLQJWKHERDUGZLWK °HYDOXDWLQJWKHDGHTXDF\DQGHIILFLHQF\RIWKHULVNSROLFLHVSURFHGXUHVSUDFWLFHVDQGFRQWUROVDSSOLHGLQWKHGD\ WRGD\PDQDJHPHQWRIWKHEXVLQHVV °LGHQWLI\LQJWKHEXLOGXSDQGFRQFHQWUDWLRQRIULVNVDQGGHYHORSLQJDULVNPLWLJDWLRQVWUDWHJ\WRHQVXUHWKH*URXS LVDEOHWRRSWLPDOO\PDQDJHWKHVHULVNV °RYHUVHHLQJWKHLQGHSHQGHQWULVNPDQDJHPHQWIXQFWLRQFRRUGLQDWLQJWKHJOREDOLVHGPRQLWRULQJRIULVNPDQDJHPHQW DQG IDFLOLWDWLQJ DQG SURPRWLQJ FRPPXQLFDWLRQ UHJDUGLQJ ULVN SROLFLHV SURFHGXUHV SUDFWLFHV DQG FRQWUROV DQG RWKHUUHODWHGPDWWHUVDQG °HVWDEOLVKLQJDSURFHVVWKDWUHODWHVFDSLWDOWRULVNXQGHUWDNHQDQGGHILQLQJFDSLWDODGHTXDF\JRDOVZLWKUHVSHFWWR ULVNVWUDWHJLFIRFXVDQGEXVLQHVVSODQVRIWKH*URXS 0RQLWRULQJWKH*URXS©VHPHUJLQJULVNSURILOHVDQGUHSRUWLQJLWVILQGLQJVWRWKHERDUG 0RQLWRULQJWKHOHYHORIDYDLODEOHFDSLWDOERWKFXUUHQWDQGSURMHFWHGDQGUHSRUWLQJWRWKHERDUGRQWKHDGHTXDF\RI DYDLODEOHFDSLWDOUHODWLYHWRWKHHPHUJLQJULVNSURILOHRIWKH*URXS 5HYLHZLQJ WKH DGHTXDF\ DQG HIIHFWLYHQHVV RI WKH 353 WKH FRPSOHWHQHVV RI SULQFLSDO ULVNV FRYHUDJH DQG WKH RQJRLQJHIIHFWLYHQHVVRIWKHIUDPHZRUNDVLPSOHPHQWHGE\WKH*URXS $VVHVVLQJWKH*URXS©VULVNPDQDJHPHQWDSSURDFKDQGSUDFWLFHVLQOLJKWRIWKHJOREDOILQDQFLDOFULVLV /LDLVLQJ ZLWK WKH *$&& WR HQVXUH DSSURSULDWH RYHUVLJKW RI NH\ FRQWUROV DQG LQ WXUQ FRQVLGHULQJ DQG DFWLQJ RQ FRQFHUQVUDLVHGE\WKH*$&& (QVXULQJ WKH DSSURSULDWH GLVFORVXUH E\ WKH *URXS RI LWV ULVN PDQDJHPHQW DQG FDSLWDO PDQDJHPHQW VWDWXV DQG DFWLYLWLHV

192 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Risk management activities 'XULQJ WKH \HDU WKH *5&0& REWDLQHG VXIILFLHQW DQG DSSURSULDWH LQIRUPDWLRQ UHJDUGLQJ WKH SHUIRUPDQFH RI WKH SULQFLSDOULVNVDJDLQVWWKHUHOHYDQWULVNSDUDPHWHUVVHWE\WKHERDUG7KLVLQFOXGHGLQIRUPDWLRQUHJDUGLQJWKHSURFHVV HPSOR\HGE\H[HFXWLYHPDQDJHPHQWIRUPRQLWRULQJDQGPDQDJLQJWKHVHULVNV

7KHNH\KLJKOLJKWVDQGDFKLHYHPHQWVGXULQJDUHOLVWHGEHORZ

Capital management

&DSLWDOPDQDJHPHQWUHPDLQHGDNH\IRFXVDUHDGXHWRJOREDOEDQNLQJFRQGLWLRQVDQGVXEGXHGHFRQRPLFJURZWK

&DSLWDOOHYHOVZHUHDGHTXDWHO\PDLQWDLQHGDWDOOWLPHVDQG5ELOOLRQVXERUGLQDWHGGHEWZDVLVVXHGLQ0D\DV SDUWRIWKHRQJRLQJPDQDJHPHQWRI7LHUFDSLWDOOHYHOV7KHWRWDOWDUJHWVIRUFDSLWDODGHTXDF\OHYHOVVHWE\WKH ERDUGDUHDVIROORZV $EVD*URXS/LPLWHG¤ $EVD%DQN/LPLWHG¤

7KHFDSLWDOOHYHOVRI$EVD*URXS/LPLWHGDQG$EVD%DQN/LPLWHGDUHZHOODERYHWKHWDUJHWUDQJH

)XUWKHUIRFXVDUHDVZHUH UHYLVLRQVWRWKHFDSLWDOSODQVLQUHVSRQVHWRWKHLPSDFWRIWKHFUHGLWPRGHOUHILQHPHQWVFDUULHGRXWRQULVNZHLJKWHG DVVHWV 5:$V GXULQJ HYDOXDWLQJ%DVHODPHQGPHQWVDQGSODQQLQJIRUWKHLPSDFWRILWVSURSRVHGUHJXODWRU\FKDQJHVDQG ILQDOLVLQJWKHUHFDSLWDOLVDWLRQRI%%0LQ-XO\

Credit risk

:KROHVDOHDQGUHWDLOFUHGLWULVNVUHPDLQHGKLJKRQWKHULVNPDQDJHPHQWDJHQGD

,QWKHUHWDLOFUHGLWHQYLURQPHQWLPSDLUPHQWVUHGXFHGDFURVVWKH*URXS,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHVDV DSHUFHQWDJHRIDYHUDJHORDQVDQGDGYDQFHVLQZHUH &UHGLWPRGHOVZHUHUHYLHZHGDQG UHFDOLEUDWHG WR UHIOHFW WKH FXUUHQW HFRQRPLF FRQGLWLRQV 7KH SURGXFW DUHDV ZKHUH WKHVH LPSURYHPHQWV ZHUH LPSOHPHQWHGZHUHFDUGFKHTXHXQVHFXUHGORDQVLQVWDOPHQWFUHGLWDJUHHPHQWVDQGPRUWJDJHV

&UHGLW ULVN PDQDJHPHQW VWUDWHJLHV ZHUH DOLJQHG ZLWK UHWDLO EXVLQHVV VWUDWHJLHV LQFOXGLQJ HQWU\ OHYHO EDQNLQJ FXVWRPHUFHQWULFLW\DQG$IULFD LQVXSSRUWRIWKH2QH$EVDVWUDWHJ\(QKDQFHGSULFLQJSURILWDELOLW\PRGHOOLQJDQG5:$ PDQDJHPHQWZDVDFKLHYHG

,QWKHZKROHVDOHFUHGLWHQYLURQPHQWLQIORZVWRWKHZDWFKOLVWPRGHUDWHGLQWKHVHFRQGKDOIRIWKH\HDUDQGLPSDLUPHQWV UHPDLQHGLQOLQHZLWKWKH*URXS©VH[SHULHQFH6LJQLILFDQWSURJUHVVZDVPDGHLQSUHSDULQJIRUWKH$GYDQFHG ,QWHUQDO5DWLQJV%DVHG $,5% PHDVXUHPHQWDSSURDFKIRUWKHZKROHVDOHSRUWIROLR

,PSURYHPHQWVZHUHPDGHWRWKHFUHGLWULVNUHJXODWRU\FDSLWDOUHSRUWLQJSURFHVVDQGFUHGLWULVNJRYHUQDQFH

Market risk

7UDGHGPDUNHWULVNUHPDLQHGDWORZOHYHOVDQGZDVPDQDJHGZLWKLQWKHULVNDSSHWLWHVHW7UDGHGPDUNHWULVNDQG UHYHQXHZHUHGRZQEHFDXVHRIPXWHGPDUNHWFRQGLWLRQVDQGORZHUFXVWRPHUYROXPHVEXWDIDYRXUDEOHULVNDGMXVWHG UHWXUQZDVDFKLHYHG7RWDOGDLO\YDOXHDWULVN '9D5 UHGXFHG\HDURQ\HDUIURP5PLOOLRQWR5PLOOLRQ7UDGHG PDUNHWULVNPHDVXUHPHQWV\VWHPVZHUHXSJUDGHGGXULQJWKH\HDUWRHQKDQFHSHUIRUPDQFHDQGVFDODELOLW\

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 193 Governance, remuneration, risk and controls

Report from the Chairman of the Group Risk and Capital Management Committee

)RUQRQWUDGHGPDUNHWULVNVWKHIRFXVUHPDLQHGRQLQWHUHVWUDWHULVNDQGHTXLW\LQYHVWPHQWULVN7KHIROORZLQJZDV DFKLHYHG LQWHUHVWUDWHULVNZLWKLQWKHEDQNLQJERRNZDVPDQDJHGWRORZOHYHOV FDVK IORZ KHGJLQJ UHVHUYHV ZHUH IXUWKHU EROVWHUHG GXULQJ WKH \HDU DV D UHVXOW RI IDYRXUDEOH PDUNWRPDUNHW DGMXVWPHQWVDQG HTXLW\LQYHVWPHQWULVNH[SRVXUHLQWKHEDQNLQJERRNZDVPDQDJHGGRZQ9DOXDWLRQVVWDELOLVHGLQOLQHZLWKSRUWIROLR PRYHPHQWVDQGWKHSUHYDLOLQJPDUNHWFRQGLWLRQV

Liquidity risk

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

Operational risk

)RFXV ZDV SODFHG RQ WKH FRQWLQXHG LPSURYHPHQW RI RSHUDWLRQDO FRQWUROV DV ZHOO DV RSHUDWLRQDO ULVN PDQDJHPHQW V\VWHPVDQGSURFHVVHV,QDGGLWLRQDQHZILQDQFLDOFULPHRSHUDWLQJPRGHOZDVLPSOHPHQWHG

Insurance and underwriting risk

7KH LQVXUDQFH DQG XQGHUZULWLQJ HQYLURQPHQW ZDV LPSDFWHG E\ VORZHU JURZWK EHFDXVH RI WKH XQFHUWDLQ HFRQRPLF FRQGLWLRQVH[SHULHQFHGLQ+RZHYHUIDYRXUDEOHUHWXUQVZHUHVWLOODFKLHYHGZLWKVKRUWWHUPORVVUDWLRVUHGXFLQJIURP WR 5HWXUQ RQ VKDUHKROGHUV© DVVHWV H[FHHGHG WKH EHQFKPDUN VHW )RFXV ZDV SODFHG RQ JRYHUQDQFH SURFHVVHVDQGPRGHOOLQJUHTXLUHGWRHQKDQFHULVNPDQDJHPHQW

,QWKHVKRUWWHUPLQVXUDQFHHQYLURQPHQWXQGHUZULWLQJGLVFLSOLQHDQGFRQWUROVZHUHHQKDQFHGDQGSURJUHVVZDVPDGH LQGHYHORSLQJDFDSLWDOPRGHOLQOLQHZLWKVROYHQF\OHJLVODWLYHGHYHORSPHQWV

Regulatory risk

$QLQFUHDVLQJDPRXQWRIQHZUHJXODWRU\OHJLVODWLRQZDVWDEOHGZKLFKLVGXHWREHLPSOHPHQWHGLQDVZHOODV FHUWDLQLPSURYHPHQWVDQGFKDQJHVWRH[LVWLQJOHJLVODWLRQ$VDUHVXOWRIWKHVHGHYHORSPHQWVIRFXVZDVSODFHGRQWKH IROORZLQJDUHDV

WKHLPSDFWRIQHZOHJLVODWLRQRQULVNPDQDJHPHQWDQGWKH*URXS©VSURFHVVHV

VXSSRUWLQUHVSHFWRIQHZDQGDPHQGHGUHJXODWRU\UHTXLUHPHQWVLQFOXGLQJWKH)LQDQFLDO$GYLVRU\DQG,QWHUPHGLDU\ 6HUYLFHV )$,6 $FW 1R RI DQG WKH &RPSDQLHV $FW DQG &RQVXPHU 3URWHFWLRQ $FW 1R RI SURMHFWVDQG

HQKDQFHPHQWRIFRQWUROVDQGSROLFLHVLQUHVSRQVHWRQHZUHJXODWRU\SURYLVLRQVDQGDPHQGPHQWVLQFOXGLQJLQWHUQHW JDPEOLQJDQGRYHUVLJKWRIJHQHUDOFRPSOLDQFHJRYHUQDQFH

194 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Risk appetite 7KH*URXS©VIRUPDOLVHGULVNDSSHWLWHIUDPHZRUNZKLFKLVHPEHGGHGZLWKLQNH\GHFLVLRQPDNLQJSURFHVVHVVXSSRUWV WKHLPSOHPHQWDWLRQRIWKH*URXS©VVWUDWHJ\7KH*URXS©VULVNDSSHWLWHIUDPHZRUNDLPVWRPD[LPLVHUHWXUQVZLWKRXW H[SRVLQJWKH*URXSWROHYHOVRIULVNWKDWDUHRXWVLGHRILWVDSSHWLWH,WLVGHILQHGDVWKHOHYHORIULVNWKDWWKH*URXSLV ZLOOLQJWRDFFHSWLQIXOILOOLQJLWVEXVLQHVVREMHFWLYHV7KHULVNDSSHWLWHIUDPHZRUNLPSDFWVWKH*URXS©VVWUDWHJ\FDSLWDO DQGSRUWIROLRPDQDJHPHQWDQGWKHGD\WRGD\RSHUDWLRQVRIWKH*URXS

7KHULVNDSSHWLWHIUDPHZRUNLVGHYHORSHGXWLOLVLQJDIRUPDOTXDQWLWDWLYHPHWKRGDQGVWUHVVWHVWLQJWHFKQLTXHVEDVHG RQDGYDQFHGULVNDQDO\VLV7KHIUDPHZRUNVHWE\WKHERDUGLVXVHGDVDEDVLVIRUVHWWLQJEXVLQHVVXQLWWDUJHWVDQG ULVNWDNLQJOLPLWVDFURVVWKH*URXS6WUHVVWHVWLQJDQGVFHQDULRDQDO\VLVDUHFORVHO\DOLJQHGZLWKWKHULVNDSSHWLWH SURFHVVDQGDUHXWLOLVHGWRHYDOXDWHWKHUHDVRQDEOHQHVVRIWKHDSSHWLWHOHYHOVVHWRQDIRUZDUGORRNLQJEDVLV

Risk appetite methodology 7KH*URXS©VULVNDSSHWLWHFDQEHFDWHJRULVHGLQWKHIROORZLQJIRXUEURDGDUHDV HDUQLQJVYRODWLOLW\LQFRPSDULVRQWRWDUJHWV FDSDFLW\WRDEVRUEXQH[SHFWHGORVVHV FDSLWDOUDWLRWDUJHWVDQG GHVLUHGGLYLGHQGSD\RXWOHYHOV

7KHREMHFWLYHVRIWKHULVNDSSHWLWHIUDPHZRUNDUHWR DVVLVWLQSURWHFWLQJWKH*URXS©VILQDQFLDOSHUIRUPDQFH LPSURYHPDQDJHPHQWUHVSRQVLYHQHVVDQGGHEDWHUHJDUGLQJWKH*URXS©VULVNSURILOH DVVLVWH[HFXWLYHPDQDJHPHQWWRLPSURYHFRQWURODQGFRRUGLQDWLRQRIULVNWDNLQJDFURVVEXVLQHVVHVDQG

HQDEOHXQXVHGULVNFDSDFLW\WREHLGHQWLILHGLQSXUVXLWRISURILWDEOHRSSRUWXQLWLHV

Stress testing 6WUHVVWHVWLQJLVHPEHGGHGLQWKHULVNPDQDJHPHQWRIWKH*URXSDQGLVDNH\IRFXVDUHDGXULQJWKHVWUDWHJLFSODQQLQJ SURFHVVHV7KURXJKWKHXVHRIVWUHVVWHVWLQJDQGVFHQDULRDQDO\VLVWKH*URXSLVDEOHWRDVVHVVWKHSHUIRUPDQFHRI LWVSRUWIROLRVXQGHUWKHDQWLFLSDWHGHFRQRPLFHQYLURQPHQWDQGHYDOXDWHWKHLPSDFWRQLWVSRUWIROLRVGXULQJDGYHUVHDQG PRUHIDYRXUDEOHHFRQRPLFFRQGLWLRQV

7KHVWUHVVWHVWVVLPXODWHWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQDQGSURILWDQGORVVHIIHFWVRIVWUHVVHVDFURVVWKH*URXS DQDO\VLQJWKHLPSDFWRQSURILWVDQGWKHDELOLW\WRPDLQWDLQDSSURSULDWHFDSLWDOUDWLRV,QVLJKWVJDLQHGDUHIXOO\LQWHJUDWHG LQWRWKHPDQDJHPHQWSURFHVVWKDWFRQVLGHUVIRUZDUGORRNLQJWUHQGVDQGWKH*URXS©VILQDQFLDOSHUIRUPDQFHDQGFDSLWDO PDQDJHPHQWRYHUDWKUHHWRILYH\HDUKRUL]RQ6WUHVVWHVWLQJDOVRIRUPVDQLQWHJUDOSDUWRIHYDOXDWLQJWKH*URXS©VULVN DSSHWLWH IRU UHDVRQDEOHQHVV XQGHU VSHFLILFDOO\ GHVLJQHG VFHQDULRV 6WUHVV WHVWV DUH UHJXODUO\ GLVFXVVHG ZLWK WKH UHJXODWRU

5LVN DSSHWLWH RXWFRPHV DUH YDOLGDWHG E\ HVWLPDWLQJ WKH *URXS©V VHQVLWLYLW\ WR DGYHUVH FKDQJHV LQ WKH EXVLQHVV HQYLURQPHQWZKLFKLQFOXGHVRSHUDWLRQDOULVNHYHQWVWKDWPD\LPSDFWWKH*URXSDVDZKROH*URXSZLGHVWUHVVWHVWV DOORZVHQLRUPDQDJHPHQWWRJDLQDEHWWHUXQGHUVWDQGLQJRIKRZSRUWIROLRVDUHOLNHO\WRUHDFWWRFKDQJLQJHFRQRPLF DQGJHRSROLWLFDOFRQGLWLRQVDQGKRZWKH*URXSFDQEHVWUHDFWWRWKHP

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 195 Governance, remuneration, risk and controls

Report from the Chairman of the Group Risk and Capital Management Committee

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

Risk disclosure ,Q SUHSDUDWLRQ IRU .LQJ ,,, HIIHFWLYH 0DUFK WKH *URXS KDV HQKDQFHG LWV ULVN PDQDJHPHQW GLVFORVXUHV E\ FRPELQLQJDFFRXQWLQJDQGUHJXODWRU\GLVFORVXUHVWRSURYLGHJUHDWHUWUDQVSDUHQF\WRVWDNHKROGHUVLQHYDOXDWLQJWKH *URXS©VSHUIRUPDQFH

Focus in 2011 7KH*URXSZLOOFRQWLQXHWRPRQLWRUWKHHFRQRPLFUHFRYHU\DQGHQVXUHWKDWLWHIIHFWLYHO\DQGWLPHRXVO\DGDSWVLWVULVN PDQDJHPHQWSROLFLHVSURFHGXUHVULVNDSSHWLWHDQGVWUHVVWHVWVWRGHDOZLWKWKHFKDQJLQJGHPDQGVDQGFKDOOHQJHV RI WKH HFRQRPLF HQYLURQPHQW 7KH *URXS UHPDLQV FRPPLWWHG WR GHYHORSLQJ DQG HQKDQFLQJ DSSURSULDWH ULVN PDQDJHPHQWSURFHGXUHVDQGSUDFWLFHVDQGWRNHHSLQJSDFHZLWKDSSOLFDEOHUHJXODWRU\UHTXLUHPHQWVDQGZKDWLV FRQVLGHUHGEHVWSUDFWLFHLQWKHLQGXVWU\

6WUDWHJLFDUHDVRIIRFXVLQWHUPVRIULVNPDQDJHPHQWDUHWKHHQKDQFHPHQWRIWKH*URXS©VULVNDSSHWLWHDQGVWUHVV WHVWLQJIUDPHZRUNVWRDOORZWKH*URXSWRFRQWLQXRXVO\HYDOXDWHLWVVWUDWHJ\DQGSODQQLQJSURFHVVHVXQGHUFKDOOHQJLQJ PDUNHWFRQGLWLRQV.H\IRFXVDUHDVDUHDVIROORZV

IXUWKHUHPEHGGLQJVWUHVVWHVWLQJDQGVFHQDULRDQDO\VLVLQWKHSODQQLQJDQGFRQWLQXRXVHYDOXDWLRQRIWKH*URXS©V ILQDQFLDOSHUIRUPDQFHDQGFDSLWDOPDQDJHPHQWRYHUDWKUHHWRILYH\HDUKRUL]RQDQG

HQKDQFLQJ DQG FRQWLQXRXVO\ HYDOXDWLQJ WKH ULVN DSSHWLWH DQG OLTXLGLW\ PDQDJHPHQW WR HQVXUH WKDW WKH *URXS LV SUHSDUHG IRU WKH LPSOHPHQWDWLRQ RI WKH SURSRVHG %DVHO DPHQGPHQWV DQG WR HQVXUH WKDW WKH *URXS LV DEOH WR UHVSRQGHIIHFWLYHO\WRWKHVHFKDQJHV

,QWHUPVRIULVNPDQDJHPHQWIXUWKHUVWUDWHJLFDUHDVRIIRFXVDUHDVIROORZV

Liquidity and capital management /LTXLGLW\DQGFDSLWDOPDQDJHPHQWUHPDLQVFULWLFDOWRWKHVXVWDLQDEOHJURZWKRIWKH*URXS7KH*URXSZLOOHQVXUHLW VWD\VDEUHDVWZLWKLQWHUQDWLRQDODQGORFDOUHJXODWRU\FKDQJHV7KLVZLOOHQVXUHWKH*URXSDFKLHYHVEHVWSUDFWLFHLQ WKHPHDVXUHPHQWDQGPDQDJHPHQWRIULVNVDVVRFLDWHGZLWKOLTXLGLW\DQGFDSLWDOPDQDJHPHQW

Credit risk DNH\FRPSRQHQWZLOOEHWKHTXDOLW\RIQHZEXVLQHVVZULWWHQDQGWKH*URXSZLOOWDNHVWHSVWRHPEHGLPSURYHPHQWV PDGHLQWKHGHFLVLRQPDNLQJSURFHVVWKDWIRUPVSDUWRIZULWLQJQHZEXVLQHVV

ZLWKUHJDUGWRUHWDLOFUHGLWULVNWKH*URXSZLOOFRQWLQXHWRIRFXVRQLPSDLUPHQWVDQGUHODWHGFROOHFWLRQVDVZHOODV VWDELOLVLQJWKHGHEWFRXQVHOOLQJERRNDQG

WKH*URXSZLOOFRQWLQXHWRSUHSDUHIRUWKHFKDQJHWRWKH$,5%DSSURDFKIRUZKROHVDOHFUHGLWULVN

196 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Market risk WKH*URXSZLOOIRFXVRQWHVWLQJDQGHPEHGGLQJPRGHOVWRPHDVXUHWKHQHZWUDGLQJERRNFDSLWDOFKDUJHVIRUVWUHVV DQGLQFUHPHQWDOULVNDVUHTXLUHGXQGHUWKH%DVHOPDUNHWULVNDPHQGPHQWVDQG

WKH*URXSZLOOFRQWLQXHWRPDQDJHWKHVWUXFWXUDOEDQNLQJERRNLQWHUHVWUDWHKHGJLQJSURJUDPPHHIIHFWLYHO\DQG HIILFLHQWO\

Operational risk WKH *URXS ZLOO IRFXV RQ IXUWKHU LPSURYLQJ WKH HIIHFWLYHQHVV DQG HIILFLHQF\ RI RSHUDWLRQDO ULVN PDQDJHPHQW SURFHVVHVDQG

*URXS7HFKQRORJ\ZLOOIRFXVRQIXUWKHUVWUHQJWKHQLQJLQIRUPDWLRQWHFKQRORJ\JRYHUQDQFHSURFHVVHVFRQWLQXLQJWR VHFXUH DQG SURWHFW V\VWHPV DQG LQIRUPDWLRQ WKHUHE\ HQVXULQJ DYDLODELOLW\ RI NH\ SURGXFWLRQ V\VWHPV DQG WKDW FRPSUHKHQVLYHGLVDVWHUUHFRYHU\SODQVDUHPDLQWDLQHG

Insurance risk 7KH*URXSZLOONHHSDEUHDVWRIGHYHORSLQJVROYHQF\OHJLVODWLRQ

Regulatory risk 7KH*URXSZLOOIRFXVRQLPSOHPHQWLQJQHZUHJXODWRU\DQGOHJLVODWLYHUHTXLUHPHQWVDQGHQVXULQJWKDWDOOWKHUHOHYDQW SURFHVVHVV\VWHPVDQGJRYHUQDQFHPHDVXUHVFRPSO\ZLWKWKHQHZUHTXLUHPHQWV

Conclusion 5LVNPDQDJHPHQWUHPDLQVDQLQWHJUDOSDUWRIWKH*URXS©VRSHUDWLRQV7KH*5&0&LVVDWLVILHGWKDWGXULQJWKH ULVNVZHUHPDQDJHGZLWKLQWKHULVNDSSHWLWHVHWE\WKHERDUGDQGWKDWVXIILFLHQWPRQLWRULQJUHSRUWLQJDQGFRQWUROVH[LVW WRHQVXUHWKDWULVNVDUHHIIHFWLYHO\PDQDJHG

Trevor Munday Chairman: Group Risk and Capital Management Committee

0DUFK

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 197 Governance, remuneration, risk and controls

Disclosures and governance

Risk disclosures Introduction 7KH *URXS©V DSSURDFK WR GLVFORVXUHV RQ ULVN PDQDJHPHQW UHSUHVHQWV WKH UHTXLUHG GLVFORVXUHV XQGHU ERWK ,)56 DQG %DVHO3LOODUGLVFORVXUHUHTXLUHPHQWVDQGWKHUHIRUHSUHVHQWVDKROLVWLFYLHZRIULVNIRUWKH*URXS 5LVNGLVFORVXUHVFRQWDLQHGLQWKLVUHSRUWIRUPSDUWRIWKHVWDQGDUGGLVFORVXUHVUHTXLUHGLQWKH*URXS©VDXGLWHGDQQXDOILQDQFLDO VWDWHPHQWVDQGKDYHEHHQLQGLFDWHGDVDXGLWHG &UHGLWULVNWDEOHVDQGWR 0DUNHWULVNWDEOHVWRDQG /LTXLGLW\ULVNWDEOHVDQG ,QVXUDQFHULVNWDEOHVWR $OORWKHUGLVFORVXUHVUHSUHVHQWUHJXODWRU\GLVFORVXUHVZKLFKDUHXQDXGLWHG

Basel II and accounting consolidations 5HJXODWRU\DQGDFFRXQWLQJWUHDWPHQWPD\GLIIHUIRUFHUWDLQHQWLWLHV:KHUHGLIIHUHQWWUHDWPHQWLVDSSOLHGWKHIROORZLQJ DSSURDFKLVIROORZHG

Statutory accounting Basel II regulatory Entity treatment treatment 6XEVLGLDULHVHQJDJHGLQLQVXUDQFH &RQVROLGDWHG ([FOXGHGIURPWKHFDOFXODWLRQRI DFWLYLWLHV WKH*URXS©VFDSLWDODGHTXDF\UDWLR

$VVRFLDWHVMRLQWYHQWXUHVDQG (TXLW\DFFRXQWHG 'HGXFWHGIURPTXDOLI\LQJFDSLWDORU SDUWLFLSDWLRQVLQEXVLQHVVHVZKLFK SURSRUWLRQDWHO\FRQVROLGDWHG DUHILQDQFLDOLQQDWXUH

$VVRFLDWHVMRLQWYHQWXUHVDQG (TXLW\DFFRXQWHG ,QFOXGHGLQHTXLW\LQYHVWPHQWULVN SDUWLFLSDWLRQVLQEXVLQHVVHVZKLFK FDSLWDO DUHQRWILQDQFLDOLQQDWXUH

198 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Risk governance framework 5LVN PDQDJHPHQW LV FULWLFDO WR WKH VXVWDLQDELOLW\ RI WKH *URXS 6WURQJ RYHUVLJKW LV LQ SODFH WR HQVXUH HIIHFWLYHULVNPDQDJHPHQW 7KHERDUGLVUHVSRQVLEOHIRUVHWWLQJWKH*URXS©VULVNDSSHWLWHHVWDEOLVKLQJWKH353DQGWDNHVXOWLPDWH DFFRXQWDELOLW\IRUWKHPDQDJHPHQWRIULVN7KHERDUGWKHQGHOHJDWHVWKHPDQDJHPHQWDQGFRQWURORIWKH 353WRYDULRXVVXEFRPPLWWHHV

%RDUG Absa Group board

%RDUG *URXS5LVNDQG *URXS$XGLWDQG &RQFHQWUDWLRQ FRPPLWWHHV &DSLWDO0DQDJHPHQW &RPSOLDQFH 5LVN&RPPLWWHH &RPPLWWHH *5&0& &RPPLWWHH *$&& &R5&

%RDUG ([HFXWLYH0RGHO 7HFKQLFDO'LVFORVXUH VXEFRPPLWWHHV &RPPLWWHH (0& &RPPLWWHH 7'&

$EVD*URXS&KLHI([HFXWLYH *&( $EVD*&( DQG([FR *URXS([HFXWLYH&RPPLWWHH ([FR

*URXS$OFRDQG *URXS*RYHUQDQFH 2SHUDWLRQDO $EVD*URXS *URXS ,QIRUPDWLRQ 6KRUWWHUP &UHGLW5LVN 0DUNHW5LVN *URXS ([FR %DODQFH6KHHW DQG&RQWURO 5LVN &UHGLW ,QYHVWPHQW 7HFKQRORJ\ ,QVXUDQFH &RPPLWWHH &RPPLWWHH 7D[ VXEFRPPLWWHHV 0DQDJHPHQW &RPPLWWHH &RPPLWWHH &RPPLWWHH &RPPLWWHH 6WHHULQJ &RPPLWWHH &5& 05& &RPPLWWHH &RPPLWWHH **&& 25& $*&& *,& &RPPLWWHH 67,& ,76&

*RYHUQDQFHDQG $EVD&HQWUH $EVD%XVLQHVV $EVD&DSLWDO $EVD)LQDQFLDO &RQWURO&RPPLWWHHV 5HWDLO%DQNLQJ $EVD$IULFD 6HUYLFHV H[FOXGLQJ %DQN $%% DQG:HDOWK 6HUYLFHV $)6 *&&V 6HUYLFHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 199 Governance, remuneration, risk and controls

Disclosures and governance

The board and its committees 7KHLQIRUPDWLRQUHJDUGLQJWKHERDUGFDQEHIRXQGLQWKHFRUSRUDWHJRYHUQDQFHVWDWHPHQW

Concentration Risk Committee (CoRC) 7KH&R5&LVWKHKLJKHVWOHYHOFUHGLWVDQFWLRQLQJIRUXPLQWKH*URXSZLWKWKHPDQGDWHWRVDQFWLRQFUHGLWOLPLWVWR FXVWRPHUVHTXDOWRRUJUHDWHUWKDQRIWKH*URXS©VTXDOLI\LQJFDSLWDODQGUHVHUYHV

Group Chief Executive and Executive Committee 7KH*&(LVDSSRLQWHGE\WKHERDUGWRPDQDJHZLWKWKHDVVLVWDQFHRI([FRWKH*URXS©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

Exco risk committees 7KH &5& 05& 25& $*&& DQG *URXS $OFR DQG %DODQFH 6KHHW 0DQDJHPHQW &RPPLWWHH *URXS $OFR DUH FRPPLWWHHVHVWDEOLVKHGE\([FRWRPDQDJHWKHSULQFLSDOULVNV7KHFRPPLWWHHVFRQYHQHIUHTXHQWO\ZLWKDQRYHUDOO REMHFWLYHRIHQVXULQJWKDWWKHULVNUHZDUGSURILOHIRUHDFKULVNW\SHVXSSRUWVWKHRYHUDOOULVNDSSHWLWHRIWKH*URXS

Group Governance and Control Committee (GGCC) **&&LVDQ([FRFRPPLWWHHWKDWDVVLVWV([FRDQGWKH*$&&WKURXJKRYHUVLJKWRIWKHGHVLJQDQGLPSOHPHQWDWLRQRI WKHLQWHUQDOFRQWUROIUDPHZRUNRIWKH*URXS7KHFRPPLWWHHPHHWVTXDUWHUO\DQGLVUHVSRQVLEOHIRUWKHGHVLJQDQG RSHUDWLRQRIWKH*URXS©VFRQWUROIUDPHZRUNFRPPXQLFDWLRQRIWKHIUDPHZRUNDQGLWVFRQWHQWVLQGHSHQGHQWDVVXUDQFH DQG HQVXUHV WKHUH LV DQ DSSURSULDWH HVFDODWLRQ RI LVVXHV 7KH **&& UHYLHZV FRQWURO LVVXHV HVFDODWHG IURP WKH GLYLVLRQDOULVNJRYHUQDQFHDQGFRQWUROFRPPLWWHHVDQGHVFDODWHVWKHVHLVVXHVDVQHHGHGWRWKH*$&&

200 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Other oversight committees 7KH*URXSKDVHVWDEOLVKHGDQXPEHURIFRPPLWWHHVZLWKRYHUVLJKWRIVSHFLDOLVHGDUHDVVXFKDVLQYHVWPHQWVWD[DWLRQ DQGDFWXDULDOYDOXDWLRQLQWKHORQJWHUPLQVXUDQFHEXVLQHVVVKRUWWHUPLQVXUDQFHDQG,7

Risk management approach 7KH ULVN PDQDJHPHQW DSSURDFK IROORZHG E\ WKH *URXS LV WR HQVXUH WKDW DOO VLJQLILFDQW ULVNV DUH LGHQWLILHG DQG PDQDJHG7KHERDUGDSSURYHG353GHILQHVWKHPDMRUULVNVWKDWWKH*URXSLVH[SRVHGWR (DFKRIWKHSULQFLSDOULVNVLVDVVLJQHGDQRZQHUZKRLVUHVSRQVLEOHIRULPSOHPHQWLQJSROLFLHVSURFHVVHVDQGUHSRUWLQJ PHDVXUHV3ULQFLSDOULVNVDUHFORVHO\PRQLWRUHGLQWHUPVRIWKHFRQWUROIUDPHZRUNDSSOLHGE\WKH*URXS

Risk management process ,QWHJUDWHGDQGVWUXFWXUHGULVNDVVHVVPHQWVWDNHSODFHDFURVVDOOULVNW\SHVDQGEXVLQHVVHVLQDFFRUGDQFHZLWKWKH HVWDEOLVKHG ULVN PDQDJHPHQW IUDPHZRUN 0RQLWRULQJ LV FDUULHG RXW XVLQJ RQJRLQJ SURFHVVHV EXLOW LQWR WKH QRUPDO UHFXUULQJRSHUDWLQJDFWLYLWLHVDVZHOODVWDNLQJDFFRXQWRILQWHUQDODQGH[WHUQDODXGLWUHFRPPHQGDWLRQV$OOULVNVDUH FRPSUHKHQVLYHO\DQGUHJXODUO\UHSRUWHGDFURVVWKH*URXS7KHILYHVWHSSURFHVVDVGHVFULEHGEHORZLVIROORZHG

Risk management process

Identify 8QGHUVWDQGWKHSULQFLSDOULVNVIXQGDPHQWDOWRDFKLHYLQJWKH*URXS©VVWUDWHJ\ (VWDEOLVKWKHULVNDSSHWLWH (VWDEOLVKDQGFRPPXQLFDWHWKHULVNPDQDJHPHQWIUDPHZRUNLQFOXGLQJUHVSRQVLELOLWLHV DXWKRULWLHVDQGNH\FRQWUROV

Assess (VWDEOLVKWKHSURFHVVIRUDQDO\VLQJEXVLQHVVOHYHOULVNV $JUHHDQGLPSOHPHQWPHDVXUHPHQWDQGUHSRUWLQJVWDQGDUGVDQGPHWKRGRORJLHV

Control (VWDEOLVKNH\FRQWUROSURFHVVHVDQGSUDFWLFHVLQFOXGLQJOLPLWVWUXFWXUHVSURYLVLRQLQJ UHTXLUHPHQWVDQGUHSRUWLQJVWDQGDUGV 0RQLWRUFRQWUROVDQGDGKHUHQFHWRULVNGLUHFWLRQDQGOLPLWV 3URYLGHHDUO\ZDUQLQJRIFRQWURORUDSSHWLWHEUHDFKHV (QVXUHWKDWULVNPDQDJHPHQWSUDFWLFHVDQGFRQGLWLRQVDUHDSSURSULDWHIRUWKHEXVLQHVV HQYLURQPHQW

Report ,QWHUSUHWDQGUHSRUWRQULVNH[SRVXUHVFRQFHQWUDWLRQVDQGULVNWDNLQJRXWFRPHV ,QWHUSUHWDQGUHSRUWRQVHQVLWLYLWLHVDQGNH\ULVNLQGLFDWRUV &RPPXQLFDWHZLWKH[WHUQDOSDUWLHV

Manage/ 5HYLHZDQGFKDOOHQJHDOODVSHFWVRIWKH*URXS©VULVNSURILOH challenge $VVHVVQHZULVNUHWXUQRSSRUWXQLWLHV $GYLVHRQZD\VWRRSWLPLVHWKH*URXS©VULVNSURILOH 5HYLHZDQGFKDOOHQJHULVNPDQDJHPHQWSUDFWLFHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 201 Governance, remuneration, risk and controls

Disclosures and governance

Risk management and sustainability 7KHDLPRIWKH2QH$EVDVWUDWHJ\LVWRHQVXUHWKH*URXSJURZVLQDUHVSRQVLEOHHWKLFDODQGVXVWDLQDEOHPDQQHU7KH IRXUSLOODUVRIWKHVWUDWHJ\DUHGHVLJQHGWRPDNHWKLVDUHDOLW\7KH*URXS©VSULQFLSDOULVNIUDPHZRUNLQFRQMXQFWLRQZLWK WKH*URXS©VLGHQWLILHGPDWHULDOWRSLFVHQVXUHWKHUHOHYDQWFRQWUROVDQGGLVFORVXUHVDUHLQSODFH0DQ\RIWKH*URXS©V LGHQWLILHGPDWHULDOWRSLFVKDYHDGLUHFWUHODWLRQVKLSZLWKWKHSULQFLSDOULVNVWKHUHE\IXUWKHUHPSKDVLVLQJWKHUHOHYDQFH RIWKHVHULVNVDQGPDWHULDOWRSLFVWRWKH*URXS

3ULQFLSDOULVNVUHODWLYHWRWKHLGHQWLILHGPDWHULDOWRSLFV Principal risk Material topics coverage Wholesale credit 5LVNPDQDJHPHQWDQGUHVSRQVLEOHOHQGLQJ Retail credit 5LVNPDQDJHPHQWUHVSRQVLEOHOHQGLQJDQGILQDQFLDO LQFOXVLRQ Market risk 5LVNPDQDJHPHQW Capital &DSLWDODQGOLTXLGLW\ Liquidity &DSLWDODQGOLTXLGLW\ Financial reporting &RYHUHGE\WKHUHTXLUHGGLVFORVXUHVLQWKHDQQXDOUHSRUW Financial crime 5LVNPDQDJHPHQWDVZHOODVJRYHUQDQFHDQGFRPSOLDQFH Operations (excl product development) 3URFHVVDQGV\VWHPHIIHFWLYHQHVV Operations – product development 5HVSRQVLEOHOHQGLQJILQDQFLDOLQFOXVLRQDQGSURFHVVDQG V\VWHPHIIHFWLYHQHVV Technology 3URFHVVDQGV\VWHPHIIHFWLYHQHVV People (PSOR\HHHQJDJHPHQWDQGWUDQVIRUPDWLRQ Taxation &RYHUHGE\WKHUHTXLUHGGLVFORVXUHVLQWKHDQQXDOUHSRUW Legal &RYHUHGE\WKHUHTXLUHGGLVFORVXUHVLQWKHDQQXDOUHSRUW Regulatory &DSLWDODQGOLTXLGLW\JRYHUQDQFHDQGFRPSOLDQFH UHVSRQVLEOHOHQGLQJDQGWUDQVIRUPDWLRQ Insurance underwriting and investments &RYHUHGE\WKHUHTXLUHGGLVFORVXUHVLQWKHDQQXDOUHSRUW

7KH PDQDJHPHQW DQG PRQLWRULQJ RI WKH SHRSOH DQG FRUSRUDWH UHVSRQVLELOLW\ ULVNV LQ SDUWLFXODU HQVXUHV WKH *URXS PDQDJHVULVNVUHODWLQJWRSHRSOHDQGWKHSODQHW 3HRSOHULVNHQFRPSDVVHVDOORIWKHULVNVWKH*URXSLVH[SRVHGWRE\YLUWXHRIEHLQJDQHPSOR\HULQDOORILWVEXVLQHVVHV DQGILHOGVRIRSHUDWLRQ 7KHLQDELOLW\WRPDQDJHGLUHFWULVNVH[SRVHVWKH*URXSWRSRWHQWLDOGDPDJHWRUHSXWDWLRQILQDQFLDOSHQDOWLHVGXHWR QRQFRPSOLDQFHDQGWKHLQDELOLW\WRLGHQWLI\LQHIILFLHQWSUDFWLFHVUHVXOWLQJLQXQQHFHVVDU\FRVWV 7KH LQDELOLW\ WR PDQDJH LQGLUHFW ULVNV H[SRVHV WKH *URXS WR SRWHQWLDO ORDQ GHIDXOWV GHFUHDVHV LQ VHFXULW\ YDOXHV FROODWHUDODVVHWV GLUHFWOLDELOLW\IRUHQYLURQPHQWDOGDPDJHDQGGDPDJHWRUHSXWDWLRQ 7KH &5& FRQVLGHUV LVVXHV VXUURXQGLQJ HQYLURQPHQWDO FUHGLW ULVNV ZKLFK IDOO ZLWKLQ FRUSRUDWH UHVSRQVLELOLW\ ULVN (QYLURQPHQWDOULVNLVJRYHUQHGE\WKHHQYLURQPHQWDOPDQDJHPHQWSROLF\VWDWHPHQWDQGXOWLPDWHUHVSRQVLELOLW\OLHV ZLWK WKH (QYLURQPHQWDO 6WHHULQJ &RPPLWWHH (6& 7KH (QYLURQPHQWDO 5LVN GHSDUWPHQW SURYLGHV LQGHSHQGHQW RYHUVLJKWDQGFKDOOHQJHWRHQVXUHHQYLURQPHQWDOULVNVDUHPDQDJHGDWDQDGHTXDWHVWDQGDUGDFURVVWKH*URXSDQG VXSSRUWVEXVLQHVVXQLWV %8V LQLPSOHPHQWLQJWKHUHTXLUHGHQYLURQPHQWDOIUDPHZRUNVDQGSROLFLHV

202 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Capital management

Highlights

Key performance indicators1 6WURQJFDSLWDOSRVLWLRQPDLQWDLQHG Absa Group &DSLWDOEXIIHUVDERYHPLQLPXPUHJXODWRU\UHTXLUHPHQWV 0LQLPXP LQFRUSRUDWHGLQERDUGDSSURYHGFDSLWDOWDUJHWUDQJHV UHJXODWRU\ UHTXLUH ,QYHVWPHQWJUDGHFUHGLWUDWLQJPDLQWDLQHG 2010 PHQWV

Capital adequacy ratios (%) &RUH7LHU 11,7 7LHU 12,8 Historical capital adequacy – Absa Group Limited 7RWDO 15,5 (Rbn and %) 15,5% Capital supply and 15,6% 13,1% 14,1% 11 demand for the year 11 10 (Rm) 13,1% 12 9 )UHHFDVKIORZ JHQHUDWHG 2 017 4XDOLI\LQJFDSLWDO 65 417 32 40 44 49 54 7RWDO5:$V 422 713 2006 (BI) 2007 (BI) 2008 (BII) 2009 (BII) 2010 (BII) ● Tier 1 ● Tier 2 Key metrics (%) &RVWRIFDSLWDO 14,0 5HWXUQRQULVNZHLJKWHG DVVHWV 5R5:$ 1,99 5HWXUQRQDYHUDJH Historical capital adequacy – Absa Bank Limited HFRQRPLFFDSLWDO 5R(& 19,7 (Rbn and %) 14,8% 14,7% 14,0% 12,5% 11 Absa Bank 11 12,3% 11 12 10 0LQLPXP UHJXODWRU\ UHTXLUH 27 33 39 42 47 2010 PHQWV

2006 (BI) 2007 (BI) 2008 (BII) 2009 (BII) 2010 (BII) Capital adequacy ● ● Tier 1 Tier 2 ratios (%)

Notes &RUH7LHU 10,7 BI: Basel I 7LHU 11,9 BII: Basel II 7RWDO 14,8

Capital supply and demand for the year (Rm) Introduction )UHHFDVKIORZ JHQHUDWHG 1 532 &DSLWDO PDQDJHPHQW LV D NH\ IRFXV DUHD IRU WKH *URXS 7KH *URXS©V 4XDOLI\LQJFDSLWDO 57 801 FDSLWDO PDQDJHPHQW VWUDWHJ\ LV IRFXVHG RQ PD[LPLVLQJ VKDUHKROGHU 7RWDO5:$V 391 735

YDOXHE\RSWLPLVLQJWKHOHYHODQGPL[RIFDSLWDOUHVRXUFHV'HFLVLRQVRQ Key metrics (%) WKH DOORFDWLRQ RI FDSLWDO UHVRXUFHV DUH EDVHG RQ D QXPEHU RI IDFWRUV &RVWRIFDSLWDO 14,0

LQFOXGLQJUHWXUQRQHFRQRPLFFDSLWDO 5R(& DQGUHWXUQRQUHJXODWRU\ Notes Reported ratios include unappropriated proﬁts. FDSLWDO 5R5& DQGDUHSDUWRIWKHLQWHUQDOFDSLWDODGHTXDF\DVVHVVPHQW The average cost of capital is based on the Capital Asset Pricing SURFHVV ,&$$3 model (CAPM).

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 203 Governance, remuneration, risk and controls

Capital management

Strategy 7KHVWUDWHJLFREMHFWLYHVIRUFDSLWDOPDQDJHPHQWDUH PHHWLQJWKHFDSLWDOUDWLRVUHTXLUHGE\UHJXODWRUVDQGWKHWDUJHWUDQJHVVHWE\WKHERDUG PDLQWDLQLQJDQDGHTXDWHOHYHORIDYDLODEOHFDSLWDOUHVRXUFHVDVFRYHUIRUWKHHFRQRPLFFDSLWDO (& UHTXLUHPHQWV FDOFXODWHGDWDFRQILGHQFHOHYHO JHQHUDWLQJVXIILFLHQWFDSLWDOWRVXSSRUWDVVHWJURZWK PDLQWDLQLQJDQLQYHVWPHQWJUDGHFUHGLWUDWLQJDQG DFKLHYLQJDUHWXUQDERYHWKHFRVWRIHTXLW\ &R(

Governance &DSLWDO LV PDQDJHG DV D ERDUG OHYHO SULRULW\ LQ WKH *URXS ZLWK WKH ERDUG DVVHVVLQJ DQG DSSURYLQJ WKH FDSLWDO PDQDJHPHQWSROLF\FDSLWDOWDUJHWUDQJHVDQGFDSLWDOVWUDWHJ\ 7KH *URXS KDV D GHGLFDWHG WHDP WKDW PDQDJHV DQG H[HFXWHV WKHVH UHVSRQVLELOLWLHV 7KLV WHDP SUHVHQWV UHJXODU FDSLWDOUHSRUWVWRWKH*URXS$OFR([FR*5&0&DQGWKHERDUG5LVNRYHUVLJKWRIWKHFDSLWDOPDQDJHPHQWIXQFWLRQLV SURYLGHGE\WKH*5&0&XQGHUDVSHFLILFPDQGDWHIURPWKHERDUG

2010 review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

Approach to capital management 7KHSURSHUSODQQLQJDQGPDQDJHPHQWRIFDSLWDOLVHVVHQWLDOWRWKH*URXSWRHQVXUHLWKDVVXIILFLHQWDQGDSSURSULDWH VWUXFWXUHGFDSLWDOOHYHOVWRVXSSRUWLWVULVNDSSHWLWHEXVLQHVVDFWLYLWLHVFUHGLWUDWLQJDQGUHJXODWRU\UHTXLUHPHQWV 7KH FDSLWDO PDQDJHPHQW IUDPHZRUN DGRSWHG E\ WKH *URXS SURYLGHV WKH EDVLV IRU HIIHFWLYH FDSLWDO SODQQLQJ DQG VWUXFWXULQJFDSLWDOLVVXDQFH%DVHODOLJQPHQW(&XWLOLVDWLRQDQGHFRQRPLFSURILW,WSURYLGHVHQGWRHQGLQWHJUDWLRQRI WKH*URXS©VVWUDWHJ\ULVNPDQDJHPHQWDQGILQDQFLDOSURFHVVHV7KHSXUSRVHRIWKHIUDPHZRUNLVWRHQVXUHFDSLWDO FRQVXPSWLRQ LQ WKH EXVLQHVV GLYLVLRQV KDV DQ LPSDFW RQ SHUIRUPDQFH PHDVXUHPHQW ZKLFK LQ WXUQ WUDQVODWHV LQWR PDQDJHPHQWSHUIRUPDQFHDVVHVVPHQWSURGXFWSULFLQJUHTXLUHPHQWVDQGWKHDFKLHYHPHQWRIWKH*URXS©VGHVLUHG VWUDWHJLFSRVLWLRQLQJ

204 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU ICAAP process The building blocks of the Group's ICAAP are as follows: 7KH*URXSKDVDGRSWHGDEXLOGLQJEORFNDSSURDFKWRDFKLHYHDUREXVW

DQGLQWHJUDWHGFDSLWDOPDQDJHPHQWIUDPHZRUN(&IRUPVWKHIRXQGDWLRQ Governance RIWKLVDQGLVWKHSULPDU\PHDQVE\ZKLFKWKH*URXSDVVHVVHVWKHLPSDFW RIDFKDQJLQJEXVLQHVVHQYLURQPHQWDQGVWUDWHJ\RQLWVULVNSURILOHDQG WKHQHHGIRUFDSLWDO (&LVDOVRDPHDVXUHRIFDSLWDOUHTXLUHGWRPDLQWDLQRUDFKLHYHDWDUJHW Strategy and risk Risk identification GHEWUDWLQJ$VLGHIURPLWVDSSOLFDWLRQLQFDSLWDOPDQDJHPHQW(&LVD appetite setting and measurement NH\FRPSRQHQWRI*URXSOHYHODQGEXVLQHVVXQLWOHYHODSSOLFDWLRQVVXFK DV FDSLWDO PDQDJHPHQW VWDNHKROGHU FRPPXQLFDWLRQ ULVNDGMXVWHG

SHUIRUPDQFHPHDVXUHPHQWDQGSULFLQJVWUXFWXULQJ Monitoring, Capital adequacy management and planning and :KLOHWKH,&$$3LVLQWHQGHGWRDOLJQZLWKUHJXODWRU\UHTXLUHPHQWVXQGHU communication stress testing 3LOODUDQG3LOODURI%DVHOOOWKHPDLQJXLGLQJSULQFLSOHLQGHVLJQLQJWKH ,&$$3IRUWKH*URXSKDVEHHQVXLWDELOLW\IRUFDSLWDOPDQDJHPHQWDQG RWKHULQWHUQDODSSOLFDWLRQV7KH*URXSFRQVLGHUVLWV,&$$3WREHLQOLQH

ZLWKLQWHUQDWLRQDOEHVWSUDFWLFHDQGWKDWLWDGGUHVVHVWKHFRUHEDQNLQJ Da re ta, ctu IT an stru SULQFLSOHVRIWKHUHJXODWLRQV d model infra 7KHVHSURFHVVHVDUHFRQGXFWHGZLWKLQDQHQYLURQPHQWZLWKHVWDEOLVKHG JRYHUQDQFH SUDFWLFHV DQG RYHUVLJKW DQG DUH VXSSRUWHG E\ DGHTXDWH GDWD,7DQGPRGHOLQIUDVWUXFWXUH 6WUHVV WHVWLQJ LV SHUIRUPHG WR LGHQWLI\ HDUO\ ZDUQLQJ WKUHVKROGV DQG ULVNHYHQWVWKDWPD\DGYHUVHO\LPSDFWWKH*URXS©VULVNSURILOH,WLVDOVR XVHG WR IRUPXODWH DSSURSULDWH PDQDJHPHQW DFWLRQ )URP DQ ,&$$3 SHUVSHFWLYHVWUHVVWHVWLQJUHSUHVHQWVWKHOLQNEHWZHHQULVNPDQDJHPHQW DQGFDSLWDOPDQDJHPHQW$VDUHVXOWRIJOREDOHYHQWVVWUHVVWHVWLQJKDV EHFRPHLQFUHDVLQJO\LPSRUWDQWLQDVVHVVLQJDSSURSULDWHOHYHOVRIFDSLWDO

2010 capital management disclosures Risk-weighted assets 5:$VDUHGHWHUPLQHGE\DSSO\LQJWKHIROORZLQJ $,5%DSSURDFKIRUUHWDLOFUHGLW )RXQGDWLRQ ,QWHUQDO 5DWLQJV %DVHG ),5% DSSURDFK IRU ZKROHVDOH FUHGLW $GYDQFHG0HDVXUHPHQW$SSURDFK $0$ IRURSHUDWLRQDOULVN LQUHVSHFWRIWUDGHGPDUNHWULVN,QWHUQDO0RGHOV$SSURDFK ,0$ IRU JHQHUDO SRVLWLRQ ULVN DQG 6WDQGDUGLVHG $SSURDFK 6$ IRU LVVXHU VSHFLILFULVN ,QWHUQDO 5DWLQJV %DVHG ,5% PDUNHWEDVHG VLPSOH ULVNZHLJKWHG DSSURDFKIRUHTXLW\LQYHVWPHQWULVNLQWKHEDQNLQJERRNDQG 6$IRUFUHGLWULVNLQDOO$IULFDQHQWLWLHV

Note AMA for operational risk, except for an insigniﬁcant portion of the Group that uses the Basic Indicator Approach or Standardised Approach.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 205 Governance, remuneration, risk and controls

Capital management

Absa Group RWAs and minimum required capital – Table 1:

Required 5HTXLUHG capital FDSLWDO 2010 at 9,5%1 DW Basel II measurement approach Rm Rm 5P 5P &UHGLWULVN 316 967 30 112 3RUWIROLRVVXEMHFWWRWKH$,5%DSSURDFK 167 618 15 924 3RUWIROLRVVXEMHFWWRWKH),5%DSSURDFK 140 802 13 376 3RUWIROLRVVXEMHFWWRWKH6$ 8 547 812 (TXLW\LQYHVWPHQWULVN 0DUNHWEDVHGDSSURDFK VLPSOHULVNZHLJKWHG PHWKRG 25 911 2 462 0DUNHWULVN 9 013 856 6$ 2 752 261 ,0$ 6 261 595 2SHUDWLRQDOULVN $0$ 54 317 5 160 1RQFXVWRPHUDVVHWV 16 505 1 568

422 713 40 158

Absa Bank RWAs and minimum required capital – Table 2: Required 5HTXLUHG capital at FDSLWDODW 2010 9,5%1 Basel II measurement approach Rm Rm 5P 5P &UHGLWULVN 294 136 27 943 3RUWIROLRVVXEMHFWWRWKH$,5%DSSURDFK 155 841 14 805 3RUWIROLRVVXEMHFWWRWKH),5%DSSURDFK 138 285 13 137 3RUWIROLRVVXEMHFWWRWKH6$ 10 1 (TXLW\LQYHVWPHQWULVN 0DUNHWEDVHGDSSURDFK VLPSOHULVNZHLJKWHG PHWKRG 28 670 2 724 0DUNHWULVN 9 013 856 6$ 2 752 261 ,0$ 6 261 595 2SHUDWLRQDOULVN $0$ 48 819 4 638 1RQFXVWRPHUDVVHWV 11 097 1 054

391 735 37 215

Notes The required capital is the regulatory minimum excluding the bank speciﬁc (Pillar 2b) add on. AMA for operational risk, except for an insigniﬁcant portion of the Group that uses the Basic Indicator approach, or SA.

206 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Capital requirements 7KH*URXSPDQDJHVLWVFDSLWDOLQDFFRUGDQFHZLWKWKHPLQLPXPUHJXODWRU\UHTXLUHPHQWV(&UHTXLUHPHQWVDVZHOODV WKHWDUJHWUDQJHVDSSURYHGE\WKHERDUGDVIROORZV IURPDregulatory perspectiveQHWTXDOLI\LQJFDSLWDO 7LHUSOXV7LHUFDSLWDO PXVWVXIILFLHQWO\H[FHHG%DVHO,, PLQLPXPFDSLWDOUHTXLUHPHQWVWRKDYHDEXIIHUIRUSUXGHQFH IURPDQeconomic perspective:DYDLODEOHFDSLWDOUHVRXUFHVPXVWEHVXIILFLHQWWRPHHW(&UHTXLUHPHQWVRYHUD WKUHH\HDUSHULRGDQG LQDFFRUGDQFHZLWKboard approved target ranges:ZKLFKDUHGHULYHGIURPWKHVWUHVVWHVWLQJUHVXOWVDQGDUHVHW DERYHWKHPLQLPXPUHJXODWRU\UHTXLUHPHQWV

Capital adequacy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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 207 Governance, remuneration, risk and controls

Capital management

Absa Group Limited and its subsidiaries – local, foreign banking entities and insurance entities – Table 3:

2010 2010 Total target 7RWDO capital adequacy ratio FDSLWDO Total 7LHU DGHTXDF\ Tier 1 capital Regulatory Board ratio adequacy UDWLR UDWLR minimum target1 Operations Regulator % % % % Local entities (South Africa) $EVD*URXS /LPLWHG 6$5% 12,8 15,5 9,75 13,00 $EVD%DQN/LPLWHG 6$5% 11,9 14,8 9,75 13,00 Foreign banking entities %%0 %DQFRGH 0R]DPELTXH 22,4 22,4 8,00 15,00 1%& %DQNRI 7DQ]DQLD 13,0 13,0 12,00 14,00 Insurance entities $EVD/LIH )6% n/a 3,5 x CAR5 QD [&$5 1,0 x CAR5 2,0 x CAR $EVD,QVXUDQFH &RPSDQ\/LPLWHG )6% n/a 53,7% x NWP7 QD [1:3 25% x NWP7 45% x NWP $EVDidirect /LPLWHG )6% n/a 60,1% x NWP7 QD [1:3 25% x NWP7 25% x NWP

Notes The board approved the following target ranges for 2011:

Total Total Tier 1 Core Tier 1 Absa Group Limited 12,00% – 14,00% 10,00% – 12,00% 9,00% – 11,00% Absa Bank Limited 11,50% – 13,50% 9,50% – 11,50% 8,50% – 10,50%

Statutory ratios include unappropriated proﬁts. Basel I host regulatory ratios and requirements. Financial Services Board. Capital adequacy requirement (CAR). CAR: actuarial calculation of value at risk on insurance liabilities. Two times (2009: 2,5 times) being the target capital level determined by Absa Life. Net written premiums. 45% (2009: 45%) of NWP, being the target capital level determined by Absa Insurance Company Limited. Quota share reinsurance is used to maintain capital adequacy at a level sufﬁciently in excess of the regulatory minimum.

208 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Capital supply 7KH*URXSLQFUHDVHGLWVWRWDOTXDOLI\LQJFDSLWDOVXSSO\E\5ELOOLRQ 5ELOOLRQ

Qualifying capital 5HJXODWRU\JXLGHOLQHVGHILQHWKUHHWLHUVRIFDSLWDO Primary (Tier 1) Secondary (Tier 2) Tertiary (Tier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

Movements in qualifying capital – Table 4: Group 2010 Qualifying capital Rm

Balance at the beginning of the year 60 052 6KDUHFDSLWDOSUHPLXPDQGUHVHUYHV 4 743 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV (84) 7LHUVXERUGLQDWHGGHEWLVVXHG 1 000 7LHUVXERUGLQDWHGGHEWPDWXUHG (1 500) *HQHUDODOORZDQFHIRUFUHGLWLPSDLUPHQWV6$ (53) 5HJXODWRU\GHGXFWLRQV 1 259 Balance at the end of the year 65 417

Note Regulatory deductions decreased during the year, increasing capital.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 209 Governance, remuneration, risk and controls

Capital management

Movements in qualifying capital – Table 4 (continued): Bank 2010 Qualifying capital Rm

Balance at the beginning of the year 52 787 6KDUHFDSLWDOSUHPLXPDQGUHVHUYHV 4 288 7LHUVXERUGLQDWHGGHEWLVVXHG 1 000 7LHUVXERUGLQDWHGGHEWPDWXUHG (1 500) 5HJXODWRU\GHGXFWLRQV 1 226 Balance at the end of the year 57 801

Note Regulatory deductions decreased during the year, thereby increasing capital.

Breakdown of Absa Group’s capital – Table 5: 2010 Qualifying capital 4XDOLI\LQJFDSLWDO Rm %2 5P

Primary capital 2UGLQDU\VKDUHFDSLWDO 1 433 0,3 2UGLQDU\VKDUHSUHPLXP 4 590 1,1 3UHIHUHQFHVKDUHFDSLWDODQGSUHPLXP 4 644 1,1 5HVHUYHV 45 011 10,6 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV 1 215 0,3 'HGXFWLRQV (2 832) (0,7) *RRGZLOO (572) (0,1) ILQDQFLDODQGLQVXUDQFHHQWLWLHVQRWFRQVROLGDWHG (61) (0,0) RIDPRXQWE\ZKLFKH[SHFWHGORVVH[FHHGV HOLJLEOHSURYLVLRQV (1 214) (0,3) RIILUVWORVVFUHGLWHQKDQFHPHQWSURYLGHGLQ UHVSHFWRIDVHFXULWLVDWLRQVFKHPH —— 2WKHUGHGXFWLRQV (985) (0,3)

54 061 12,8 Secondary capital 6XERUGLQDWHGUHGHHPDEOHGHEW 12 611 3,0 *HQHUDODOORZDQFHIRUFUHGLWLPSDLUPHQWDIWHUGHIHUUHG WD[¤6$ 20 0,0 'HGXFWLRQV (1 275) (0,3) ILQDQFLDODQGLQVXUDQFHHQWLWLHVQRWFRQVROLGDWHG (61) (0,0) RIDPRXQWE\ZKLFKH[SHFWHGORVVH[FHHGV HOLJLEOHSURYLVLRQV (1 214) (0,3) RIILUVWORVVFUHGLWHQKDQFHPHQWSURYLGHGLQ UHVSHFWRIDVHFXULWLVDWLRQVFKHPH ——

11 356 2,7

65 417 15,5

Notes Percentage of capital to RWAs. Reserves include unappropriated banking proﬁts.

210 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Breakdown of Absa Bank’s capital – Table 6: 2010 Qualifying capital 4XDOLI\LQJFDSLWDO Rm %1 5P

Primary capital 2UGLQDU\VKDUHFDSLWDO 303 0,1 2UGLQDU\VKDUHSUHPLXP 11 465 2,9 3UHIHUHQFHVKDUHFDSLWDODQGSUHPLXP 4 644 1,2 5HVHUYHV 32 045 8,2 'HGXFWLRQV (1 877) (0,5) RIDPRXQWE\ZKLFKH[SHFWHGORVVH[FHHGV HOLJLEOHSURYLVLRQV (1 389) (0,4) RIILUVWORVVFUHGLWHQKDQFHPHQWSURYLGHGLQ UHVSHFWRIDVHFXULWLVDWLRQVFKHPH —— 2WKHUGHGXFWLRQV (488) (0,1)

46 580 11,9 Secondary capital 6XERUGLQDWHGUHGHHPDEOHGHEW 12 611 3,3 'HGXFWLRQV (1 390) (0,4) RIDPRXQWE\ZKLFKH[SHFWHGORVVH[FHHGV HOLJLEOHSURYLVLRQV (1 390) (0,4) RIILUVWORVVFUHGLWHQKDQFHPHQWSURYLGHGLQ UHVSHFWRIDVHFXULWLVDWLRQVFKHPH ——

11 221 2,9

57 801 14,8

Notes Percentage of capital to RWAs. Reserves include unappropriated banking proﬁts.

Capital transferability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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 211 Governance, remuneration, risk and controls

Capital management

Economic capital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

(&IRUZKROHVDOHFUHGLWULVNLQFOXGHVFRXQWHUSDUW\FUHGLWULVNDULVLQJDVDUHVXOWRIFUHGLWULVNRQWUDGHGPDUNHWH[SRVXUHV (&IRUPDUNHWULVNFRYHUVERWKWUDGHGDQGQRQWUDGHGPDUNHWULVN7KHIUDPHZRUNDOVRDGMXVWV(&WRUHIOHFWWLPH KRUL]RQFRUUHODWLRQRIULVNVDQGULVNFRQFHQWUDWLRQV (&LVDOORFDWHGRQDFRQVLVWHQWEDVLVDFURVVDOORIWKH*URXS©VEXVLQHVVHVDQGULVNDFWLYLWLHV$VLQJOHFRVWRIHTXLW\LV DSSOLHGWRFDOFXODWHWKHFRVWRIULVN7KHWRWDODYHUDJH(&UHTXLUHGE\WKH*URXSDVGHWHUPLQHGE\ULVNDVVHVVPHQW PRGHOVDQGDIWHUFRQVLGHULQJWKH*URXS©VHVWLPDWHGSRUWIROLRHIIHFWVLVFRPSDUHGZLWKWKHVXSSO\RI(&WRHYDOXDWH (&XWLOLVDWLRQ

Economic capital supply 7KHVXSSO\RI(&LVFDOFXODWHGDVWKHDYHUDJHDYDLODEOHVKDUHKROGHUV©HTXLW\DIWHUDGMXVWPHQWDQGLQFOXGLQJSUHIHUHQFH VKDUHV EXW H[FOXGLQJ RWKHU QRQFRQWUROOLQJ LQWHUHVWV 7KH *URXS©V (& FDOFXODWLRQV IRUP WKH EDVLV RI WKH *URXS©V VXEPLVVLRQIRUWKH%DVHO,,,&$$3 )XQGVDYDLODEOHIRU(&DUHLPSDFWHGE\DQXPEHURIIDFWRUVWKDWKDYHDULVHQIURPWKHDSSOLFDWLRQRI,)56DQGDUH DGMXVWHGIRULQFDOFXODWLQJDYDLODEOHIXQGVIRU(&(&VXSSO\LQFOXGHV RUGLQDU\VKDUHKROGHUV©HTXLW\ UHWDLQHGHDUQLQJVZKHWKHUDSSURSULDWHGRUQRWDQG QRQUHGHHPDEOHQRQFXPXODWLYHSUHIHUHQFHVKDUHV

212 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 7KHIROORZLQJRWKHUFDSLWDOUHVRXUFHVDUHH[FOXGHGIURP(& &DVKIORZKHGJLQJUHVHUYHWRWKHH[WHQWWKDWWKH*URXSXQGHUWDNHVWKHKHGJLQJRIIXWXUHFDVKIORZVVKDUHKROGHUV© HTXLW\ZLOOLQFOXGHJDLQVDQGORVVHVWKDWZLOOEHRIIVHWDJDLQVWWKHJDLQRUORVVRQWKHKHGJHGLWHPZKHQLWLVUHFRJQLVHG LQWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHDWWKHFRQFOXVLRQRIWKHKHGJHGWUDQVDFWLRQ*LYHQWKHIXWXUHRIIVHWRI VXFKJDLQVDQGORVVHVWKH\DUHH[FOXGHGIURPVKDUHKROGHUV©HTXLW\ZKHQFDOFXODWLQJ(& $YDLODEOHIRUVDOH UHVHUYH XQUHDOLVHG JDLQV DQG ORVVHV RQ VXFK VHFXULWLHV DUH LQFOXGHG LQ VKDUHKROGHUV© HTXLW\ XQWLOGLVSRVDORULPSDLUPHQW6XFKJDLQVDQGORVVHVDUHH[FOXGHGIURPVKDUHKROGHUV©HTXLW\IRUWKHSXUSRVHVRI FDOFXODWLQJ(& 5HWLUHPHQWEHQHILWDVVHWVDQGOLDELOLWLHVWKH*URXSKDVUHFRUGHGDVXUSOXVZLWKDFRQVHTXHQWLQFUHDVHLQVKDUHKROGHUV© HTXLW\7KLVUHSUHVHQWVDQRQFDVKLQFUHDVHLQVKDUHKROGHUV©HTXLW\)RUWKHSXUSRVHVRIFDOFXODWLQJ(&SHQVLRQ VXUSOXVLVH[FOXGHGIURPVKDUHKROGHUV©HTXLW\ 1RQFRQWUROOLQJLQWHUHVW *RRGZLOO 2WKHUSHUSHWXDOGHEWSUHIHUHQFHVKDUHVDQGVXERUGLQDWHGGHEW 7HUWLDU\FDSLWDO (& DOORFDWLRQV UHIOHFW YDU\LQJ OHYHOV RI ULVN 7KH (& IUDPHZRUN FRYHUV QRW RQO\ %DVHO ,, 3LOODU ULVNV EXW DOVR DGGLWLRQDO HFRQRPLF ULVNV QRW FRYHUHG DW DOO RU LQDGHTXDWHO\ FRYHUHG LQ 3LOODU )XUWKHU RWKHU ULVNV LQFOXGHG LQ(&DUHDQDGGRQIRUFRQFHQWUDWLRQULVNZLWKLQWKHFUHGLWSRUWIROLRDQGFRXQWU\WUDQVIHUULVN

Economic capital1 (%)

10 10

9 11

43 44 11 10

3 3 1

22 23

2010 2009

● Retail credit risk ● Wholesale credit risk ● Residual ● Traded and non-traded market risk ● Equity investment risk ● Operational risk ● Fixed assets

Note Excludes insurance due to difference in conﬁdence level in terms of insurance regulation.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 213 Governance, remuneration, risk and controls

Capital management

Credit ratings

Credit ratings – Table 7:

Moody’s )LWFKUDWLQJV July 2010 -DQXDU\ Absa Bank $EVD%DQN $EVD*URXS Limited /LPLWHG /LPLWHG National 6KRUWWHUP Prime-1.za ) ]DI ) ]DI /RQJWHUP Aa1.za $$$ ]DI $$$ ]DI 2XWORRN Stable 6WDEOH 6WDEOH Local currency 6KRUWWHUP Prime-1 ¤¤ /RQJWHUP A1 $$ 2XWORRN Stable 6WDEOH 6WDEOH Foreign currency 6KRUWWHUP Prime-2 ) ) /RQJWHUP A3 $$ 2XWORRN Stable 6WDEOH 6WDEOH Bank ﬁnancial strength C- && 2XWORRN Stable ¥¥ 6XSSRUW —

Fitch )LWFK UHYLVHG $EVD *URXS /LPLWHG DQG $EVD %DQN /LPLWHG©V IRUHLJQ FXUUHQF\ RXWORRN IURP QHJDWLYH WR VWDEOH LQ -DQXDU\

Moody’s 0RRG\©VUHOHDVHGDUDWLQJUHSRUWSHUWDLQLQJWR$EVD%DQN/LPLWHGLQ-XO\7KHUHZHUHQRFKDQJHVLQWKHUDWLQJV LQWKH-XO\UHSRUWFRPSDUHGWRWKH1RYHPEHUUHSRUW

Focus for 2011 ,QWKH\HDUDKHDGIRFXVZLOOEHSODFHGRQ 5:$RSWLPLVDWLRQLQWKH*URXS GHWHUPLQLQJDQGSODQQLQJIRUWKHDSSURSULDWHFDSLWDOOHYHODQGVWUXFWXUHIROORZLQJSURSRVHGUHJXODWRU\DPHQGPHQWV FRQWLQXLQJ UHILQHPHQW RI FDSLWDO DOORFDWLRQ PHWKRGRORJLHV WR VXSSRUW ULVN EDVHG SHUIRUPDQFH PHDVXUHPHQW DQG VWUDWHJLFSODQQLQJDQG HQJDJLQJZLWKLQYHVWRUVDQGUDWLQJDJHQFLHVWRGLVFXVVWKHLPSDFWRISURSRVHGUHJXODWRU\FKDQJHVDQGWKHDSSHWLWH DQGSULFLQJIRUFDSLWDOLQVWUXPHQWVZLWKQHZFKDUDFWHULVWLFV

214 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

Credit risk

Introduction Highlights &UHGLWULVNLVWKHULVNRIORVVWRWKH*URXSDULVLQJIURPWKH IDLOXUHRIDFXVWRPHURUFRXQWHUSDUW\WRIXOILOLWVSD\PHQW )RFXVRQTXDOLW\RIQHZEXVLQHVV REOLJDWLRQV &UHGLW ULVN DULVHV PRVWO\ IURP OHQGLQJ DQG UHODWHGEDQNLQJDFWLYLWLHVLQFOXGLQJXQGHUZULWLQJGHDOLQJ 3URJUHVVPDGHUHODWLQJWRWKHPLJUDWLRQWRZDUGV LQWUDGHGSURGXFWVVXFKDVGHULYDWLYHFRQWUDFWVDVZHOODV $,5% VHFXULWLHV ERUURZLQJ DQG OHQGLQJ SURGXFWV ,W PD\ DOVR )RFXVRQUHKDELOLWDWLQJFXVWRPHUDUUHDUVDQG DULVHZKHQIDLUYDOXHVRIWKH*URXS©VH[SRVXUHWRILQDQFLDO UHGXFLQJLPSDLUPHQWV LQVWUXPHQWVGHFOLQH ,PSURYHGXVHRIGDWDWRRSWLPLVHPDQDJHPHQW Strategy RIULVNUHZDUG &UHGLWULVNLVDFRUHFRPSRQHQWRIOHQGLQJTXDOLW\DQGLWV (QKDQFHGJRYHUQDQFHDQGRSHUDWLRQDO LPSDFWV RQ WKH ULVN YHUVXV UHZDUG PRGHO &UHGLW ULVN KDV HIIHFWLYHQHVV EHHQXQGHULQFUHDVHGIRFXVGXHWRWKHUHFHQWUHFHVVLRQDU\ 5HIUHVKHGDQGUHEXLOWFDSLWDOPRGHOVIRUUHWDLO FRQGLWLRQVDQGVXEGXHGJURZWK FUHGLWSRUWIROLRV 7KH*URXS©VFUHGLWULVNVWUDWHJ\LQYROYHV PDLQWDLQLQJ DQ DSSURSULDWH FUHGLW ULVN HQYLURQPHQW WKURXJK FRQWLQXRXV LQYHVWPHQW LQ VNLOOHG DQG H[SHULHQFHGVWDII RSHUDWLQJXQGHUDVRXQGFUHGLWJUDQWLQJSURFHVVXVLQJ Key performance indicators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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 215 Governance, remuneration, risk and controls

Credit risk

Governance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

:KROHVDOHSRUWIROLRV &DOOORDQV &KHTXHDFFRXQWV &RPPHUFLDOSURSHUW\ILQDQFH &RUSRUDWHWHUPORDQV &UHGLWFDUGV *XDUDQWHHV ,QVWDOPHQWVDOHV 27&DQGGHULYDWLYHV 60(ZRUNLQJFDSLWDOIDFLOLWLHV 2WKHU

5HWDLOSRUWIROLRV 5HVLGHQWLDOKRPHORDQV 9HKLFOHDQGDVVHWILQDQFH 3HUVRQDOORDQV 2YHUGUDIWV &UHGLWFDUGV &UHGLWH[SRVXUHRIVLPLODUW\SHVDERYHRULJLQDWHGE\MRLQWYHQWXUHV $GGLWLRQDORYHUVLJKWLVLQSODFHE\YLUWXHRIWKHUHTXLUHPHQWWRUHSRUWWRWKH*&&V&5&DQGXOWLPDWHO\WKH*5&0& WRHQVXUHWKDWWKHUHDUHDGHTXDWHUHYLHZVRIFRQWUROVULVNWUHQGVDQGWKDWFUHGLWULVNLVPDQDJHGHIIHFWLYHO\

2010 review Wholesale credit risk 2QHRIWKHPDLQIRFXVDUHDVKDVEHHQWKHLQLWLDWLYHWRPLJUDWHWKHZKROHVDOHSRUWIROLRWRWKH$,5%DSSURDFK9DULRXV ZRUNVWUHDPVDUHDFWLYHWRHQVXUHUHDGLQHVVGXULQJDQGVLJQLILFDQWSURJUHVVKDVEHHQPDGHZLWKWKHPLJUDWLRQ WRWKH$,5%DSSURDFK

Absa Business Bank 1RWZLWKVWDQGLQJWKHVLJQVWKDWWKH6RXWK$IULFDQHFRQRP\ZDVPRYLQJRXWRIUHFHVVLRQFXVWRPHUVLQWKHZKROHVDOH HQYLURQPHQWSDUWLFXODUO\LQLQGXVWULHVVXFKDVWUDQVSRUWPDQXIDFWXULQJDQGFRPPHUFLDOUHDOHVWDWHUHPDLQHGXQGHU SUHVVXUHGXULQJ8QFHUWDLQW\DERXWWKHVXVWDLQDELOLW\RIWKHHFRQRPLFUHFRYHU\UHVXOWHGLQDODFNRIFRPPLWPHQW

216 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU WRLQIUDVWUXFWXUHDQGZRUNLQJFDSLWDOLQYHVWPHQWZLWKFXVWRPHUVLQVWHDGIRFXVLQJRQPHDVXUHVWRGHOHYHUDJHWKHLU VWDWHPHQWVRIILQDQFLDOSRVLWLRQ'XULQJWKHVHFRQGKDOIRIWKH\HDUWKHUHZDVDPRGHUDWLRQLQLQIORZVWRWKHZDWFKOLVW +RZHYHUDVVHWSULFHVRIFRPPHUFLDOSURSHUWLHVFDPHXQGHUSUHVVXUHDQGDVH[SHFWHGLPSDLUPHQWVUHPDLQHGLQOLQH ZLWKWKHQXPEHUVH[SHULHQFHGLQ 7KHFUHGLWTXDOLW\RIWKHSHUIRUPLQJERRNKDVVKRZQVLJQLILFDQWLPSURYHPHQWDQGFXVWRPHUV©SUREDELOLW\RIGHIDXOWRYHU WKHQH[WPRQWKVLVRQDORQJWHUPDYHUDJHOHYHOIRUPRVWRIWKHLQGXVWULHV

Absa Capital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

Retail credit risk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©VVWUDWHJ\ZKLFKYLHZVDVDOHLQH[HFXWLRQDVWKH ODVWSRVVLEOHRSWLRQ 'XHWRWKHVLJQLILFDQWHFRQRPLFYRODWLOLW\LQUHFHQW\HDUVDIXOOUHYLHZZDVSHUIRUPHGRQDOORIWKH*URXS©VILQDQFLDO ULVNDQGUHZDUG PRGHOV7KHUHKDVDOVREHHQDIRFXVRQLPSURYLQJWKHTXDOLW\DQGTXDQWLW\RIGDWDDYDLODEOHIRUXVH LQGHYHORSLQJWKHVHPRGHOV

Securitisation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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 217 Governance, remuneration, risk and controls

Credit risk

7KH6DQODP+RPHORDQV6HFXULWLVDWLRQMRLQWYHQWXUHZLWK6DQODPZDVSXUFKDVHGLQIXOOE\WKH*URXSDQGWKHVFKHPH ZDVZRXQGXSLHWKHXQGHUO\LQJQRWHVZHUHUHGHHPHGRXWRIWKHVFKHPHWKHLVVXHGQRWHVUHSDLGDQGXQGHUO\LQJ DVVHWVZHUHWUDQVIHUUHGWR$EVD+RPH/RDQV

Approach to credit risk &UHGLW ULVN PHDVXUHPHQW DQG FRQWURO LV DSSOLHG RQ D WDLORUHG EDVLV DFURVV YDULRXV %8V WR PHHW WKH VSHFLILF UHTXLUHPHQWVRIWKHFUHGLWSRUWIROLRV &XUUHQWO\ WKH *URXS DSSOLHV ERWK WKH 6WDQGDUGLVHG DQG ,5% DSSURDFKHV WR YDULRXV SRUWIROLRV IRU WKH SXUSRVH RI FDOFXODWLQJ UHJXODWRU\ FDSLWDO UHTXLUHPHQWV EXW LQ PDQ\ FDVHV XVHV PRUH VRSKLVWLFDWHG DSSURDFKHV IRU WKH PDQDJHPHQWRIULVNLQWHUQDOO\

Basel II approaches adopted ,Q WHUPV RI WKH DSSURDFKHV XVHG XQGHU %DVHO ,, DQG ZLWK WKH DSSURYDO RI WKH 6$5% WKH IROORZLQJ UHSRUWLQJ PHFKDQLVPVDUHXVHGDFURVVWKHYDULRXVDSSURDFKHV

Approaches Standardised Foundation IRB AIRB

5HSRUWLQJRIEDODQFHV 6WDWXWRU\UHVHUYHDQG 'RPHVWLFFRUSRUDWH 'RPHVWLFUHWDLOSRUWIROLRV OLTXLGDVVHWV SRUWIROLRV LQFOXGLQJ60(V $IULFDQRSHUDWLRQV 3XEOLFVHFWRUHQWLWLHV /RFDOJRYHUQPHQW 0XQLFLSDOLWLHV 6RYHUHLJQEDQNVDQG VHFXULWLHVILUPV

$VVHVVPHQWDSSOLHG 6WDQGDUGULVNZHLJKW 6WDWLVWLFDOVWUXFWXUDODQG $XWRPDWHGDSSOLFDWLRQDQG SHUFHQWDJHDVSUHVFULEHG H[SHUWEDVHGPRGHOV EHKDYLRXUDOVFRULQJEDVHG LQWKHUHJXODWLRQVUHODWLQJ HLWKHUGHYHORSHG RQVWDWLVWLFDOPRGHOV WREDQNV LQWHUQDOO\RUEDVHG RQVHUYLFHRIH[WHUQDO YHQGRUV

EAD per Basel approach as at 31 December

60,25 57,89

34,01 33,86

8,10 5,90

● Standardised Approach 2010 ● Standardised Approach 2009 ● FIRB 2010 ● FIRB 2009 ● AIRB 2010 ● AIRB 2009

218 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Standardised Approach 7KH*URXS©V$IULFDQRSHUDWLRQVDQGWKHVWDWXWRU\OLTXLGDVVHWSRUWIROLRVDUHVXEMHFWWRWKH6WDQGDUGLVHG$SSURDFK )RU FDSLWDO FDOFXODWLRQ SXUSRVHV WKHVH H[SRVXUHV DUH PXOWLSOLHG ZLWK WKH VWDQGDUG ULVN ZHLJKW SHUFHQWDJHV DV VWLSXODWHGLQWKHUHJXODWLRQVUHODWLQJWREDQNV7KH*URXSLVLQYHVWLJDWLQJWKHSRVVLELOLW\RIPRYLQJLWVVWDWXWRU\OLTXLG DVVHWSRUWIROLRWRWKHPRUHDGYDQFHGDSSURDFKDVVHWRXWLQWKHUHJXODWLRQVUHODWLQJWRWKH%DQNV$FW1RRI

IRB Approach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¨YDOXHDWVWDNH© 9$6 IRUWKH*URXS7KH9$6PHDVXUHXVHGIRUDVSHFLILFPRGHOLVGHWHUPLQHGE\LWVUHOHYDQFHIRU WKHUHVSHFWLYHSRUWIROLRDVZHOODVWKHULVNWKHPRGHOLVLQWHQGHGWRDVVHVV7KHSHUWLQHQWPHDVXUHVIRUPRVWFUHGLW PRGHOVDUH(&DQGWKHDPRXQWRIH[SRVXUHFRYHUHGE\WKHPRGHO 7KHOHYHOVRIPDWHULDOLW\DW*URXSOHYHODVSUHVFULEHGE\WKH053DUHDVIROORZV $ VLJQLILFDQWPRGHOVUHTXLULQJ*URXS([FRDSSURYDO $ KLJKPDWHULDOLW\DW*URXSOHYHOUHTXLULQJ*URXS([FRDSSURYDO % PHGLXPPDWHULDOLW\DW*URXSOHYHO & ORZPDWHULDOLW\DW*URXSOHYHODQG ' YHU\ORZPDWHULDOLW\DW*URXSOHYHO $OOPRGHOVDUHPRQLWRUHGRQDQRQJRLQJEDVLVDQGYDOLGDWHGDWOHDVWDQQXDOO\E\DQLQGHSHQGHQWYDOLGDWLRQXQLWZLWKLQ *URXS&UHGLW0RQLWRULQJLQIRUPDWLRQDQGYDOLGDWLRQUHVXOWVDUHUHSRUWHGWRDQGGLVFXVVHGDWWKH&00&WKH&57& WKH&5&WKH(0&DQGWKH*5&0& 7KHJUDSKEHORZSURYLGHVDYLHZRIWKHVSOLWEHWZHHQWKHZKROHVDOHDQGUHWDLOSRUWIROLRVSHULQGXVWU\

Total industry EAD – 31 December 2010

Other

Private households

Community, social and personal services

Business services

Real estate

Financial intermediation and insurance

Transport, storage and communication

Wholesale and retail trade, repair of specified items

Construction

Electricity, gas and water supply

Manufacturing

Mining and quarrying

Agriculture, hunting, forestry and fishing 0% 20% 40% 60% 80% 100%

● Wholesale ● Retail

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 219 Governance, remuneration, risk and controls

Credit risk

Retail portfolios 7KH UDWLQJ DVVLJQPHQW DFURVV HDFK UHWDLO SRUWIROLR LV EDVHG RQ DXWRPDWHG DSSOLFDWLRQ DQG EHKDYLRXUDO VFRULQJ V\VWHPV 7KH XQGHUO\LQJ UDWLQJ LV FDOFXODWHG DW SRLQW RI DSSOLFDWLRQ DQG XSGDWHG PRQWKO\ WKHUHDIWHU IRU XVH LQ GHFLVLRQLQJ'HFLVLRQLQJLQFOXGHVXQGHUZULWLQJ¨SD\QRSD\©GHFLVLRQVDQGWKHDVVLJQPHQWRIDFFRXQWVWRULVNJUDGHV WKDWDUHLQWXUQXVHGLQWKHFDOFXODWLRQRIUHJXODWRU\FDSLWDO7KHPHWKRGRORJ\DQGGDWDHPSOR\HGLQWKHULVNHVWLPDWLRQ DQGWKHUDWLQJSURFHVVHVFDQEHVXPPDULVHGDVIROORZV

,QWHUQDO ULVN HVWLPDWHV RI 3' /*' DQG ($' DUH JURXQGHG LQ KLVWRULFDO H[SHULHQFH LQFRUSRUDWLQJ DOO UHOHYDQW PDWHULDO DQG DYDLODEOH GDWD LQIRUPDWLRQ DQG PHWKRGV %RWK WKH KLVWRULFDO REVHUYDWLRQ SHULRGV DQG GHIDXOW GHILQLWLRQVXVHGDUHFRQVLVWHQWZLWKUHJXODWRU\UHTXLUHPHQWV

)RUHDFKSURGXFW3'VDUHDVVLJQHGDWDFFRXQWOHYHOE\FDOLEUDWLQJWKHUDZEHKDYLRXUDOPRGHOVFRUHVUDWLQJVWR WKHREVHUYHGORQJUXQDYHUDJHGHIDXOWUDWHIRUHDFKSRRO

)RUHDFKSURGXFW($'VDUHDVVLJQHGWRHDFKDFFRXQWEDVHGRQWKH($'SRROWKDWWKHDFFRXQWKDVEHHQDVVLJQHG WR($'HVWLPDWHVLQFRUSRUDWHDOOUHOHYDQWGDWDDQGLQIRUPDWLRQLQFOXGLQJDFFRXQWEDODQFHXWLOLVHGDQGXQXWLOLVHG OLPLWVLISUHVHQW

/*'VDUHHVWLPDWHGIRUHDFKSURGXFWDQGDVVLJQHGDWDFFRXQWOHYHOEDVHGRQWKH/*'SRROWKDWWKHDFFRXQWKDV EHHQDVVLJQHGWR&DOLEUDWLRQGDWDRQKLVWRULFDOO\GHIDXOWHGDFFRXQWVLQFOXGHVREVHUYHG($'VUHFRYHU\VWUHDPV FXUHDQGZULWHRIIUDWHV7KHPRGHOVDOVRPDNHXVHRIVXLWDEOHULVNGULYHUVVXFKDV/79YDOXDWLRQVZKLFKDUHXSGDWHG PRQWKO\

Wholesale portfolio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©V FUHGLWVWDQGLQJ 7KHDVVHVVPHQWRIFUHGLWULVNUHOLHVKHDYLO\RQTXDQWLWDWLYHPRGHOVDQGWRROVZKLFKKDYHWRDODUJHGHJUHHEHHQ GHYHORSHGLQWHUQDOO\DQGZKLFKDUHVXSSOHPHQWHGE\YHQGRUVROXWLRQV 7KHIROORZLQJVHFWLRQVSURYLGHDQRYHUYLHZRIWKHDIRUHPHQWLRQHGFRQFHSWVDQGWKHLUXVDJHLQWKHDVVHVVPHQWRI FUHGLWULVNDFURVVWKH*URXS©VSRUWIROLRV

220 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Probability of default (PD) 7KH3'PHDVXUHVWKHOLNHOLKRRGRIDFXVWRPHUGHIDXOWLQJRQLWVREOLJDWLRQVZLWKLQWKHQH[WPRQWKVDQGLVDSULPDU\ FRPSRQHQWRIWKHLQWHUQDOULVNUDWLQJFDOFXODWHGIRUDOOFXVWRPHUV7KH*URXSXVHVWZRW\SHVRI3'VQDPHO\ SRLQWLQWLPH 3,7 3'ZKLFKLVUHIOHFWLYHRIFXUUHQWHFRQRPLFLQGXVWU\DQGERUURZHUFLUFXPVWDQFHVDQG WKURXJKWKHF\FOH 77& 3'ZKLFKUHIOHFWVWKH*URXS©VDVVHVVPHQWRIWKHERUURZHU©VORQJUXQDYHUDJHSURSHQVLW\ WRGHIDXOWLQWKHQH[W\HDU %RWKW\SHVRI3'VDUHXVHGH[WHQVLYHO\LQWKH*URXS©VGHFLVLRQSURFHVVHVDQGVHYHUDOW\SHVRIUDWLQJDSSURDFKHVDUH HPSOR\HGDFURVVWKH*URXS )RUFRPPXQLFDWLRQDQGFRPSDULVRQSXUSRVHVWKH*URXSPDSVLWV3'HVWLPDWHVWRDGHIDXOWJUDGH '* PDVWHU VFDOHZKLFKKDVEHHQDOLJQHGWRWKH6$5%JUDGHVFDOHXVHGIRUUHJXODWRU\UHSRUWLQJSXUSRVHV VHHWDEOH

Exposure at default (EAD) 7KH($'GHQRWHVWKHWRWDODPRXQWWKH*URXSH[SHFWVWREHRXWVWDQGLQJIURPDSDUWLFXODUFXVWRPHUDWWKHWLPHRI GHIDXOW7KH*URXSFDOFXODWHVWKHVHHVWLPDWHVIRUHDFKIDFLOLW\XVLQJPRGHOVGHYHORSHGRQWKHEDVLVRILQWHUQDODQG H[WHUQDOGHIDXOWGDWDDVZHOODVWKHH[SHULHQFHRIFUHGLWH[SHUWVLQUHODWLRQWRSDUWLFXODUSURGXFWVRUFXVWRPHUJURXSV ($'HVWLPDWHVLQFRUSRUDWHERWKRQDQGRIIVWDWHPHQWRIILQDQFLDOSRVLWLRQH[SRVXUHVUHVXOWLQJLQDFDSLWDOUHTXLUHPHQW ZKLFK LQFRUSRUDWHV H[LVWLQJ H[SRVXUHV DV ZHOO DV H[SRVXUHV ZKLFK DUH FRQWLQJHQW RQ D FRXQWHUSDUW\©V XVH RI DQ DYDLODEOHIDFLOLW\6WDQGDUGSDUDPHWHUVIRUFUHGLWFRQYHUVLRQDVSUHVFULEHGE\WKHORFDOUHJXODWRUDUHXVHGIRUWKRVH SRUWIROLRVRQWKH),5%DSSURDFK

Loss given default (LGD) 7KHWKLUGPDMRUULVNFRPSRQHQWPHDVXUHVWKHORVVH[SHFWHGRQDSDUWLFXODUIDFLOLW\LQWKHHYHQWRIGHIDXOWDQGWKHUHIRUH UHFRJQLVHVFUHGLWULVNPLWLJDQWVWKH*URXSPD\HPSOR\VXFKDVFROODWHUDORUFUHGLWULVNGHULYDWLYHV/*'HVWLPDWHVDUH FDOFXODWHGDVDSHUFHQWDJHRI($'XVLQJPRGHOVEDVHGRQLQWHUQDODQGH[WHUQDOORVVGDWDDVZHOODVWKHMXGJHPHQW RI FUHGLW H[SHUWV DQG DUH SULPDULO\ GULYHQ E\ WKH W\SH DQG YDOXH RI FROODWHUDO KHOG 7KH *URXS PRGLILHV LWV /*' HVWLPDWHVWRGLVWLQJXLVKEHWZHHQH[SHFWHGORVVHVRYHUWKHFRXUVHRIDQHFRQRPLFF\FOHDQGORVVHVWLPDWHVGXULQJ SHULRGVRIHFRQRPLFVWUHVV GRZQWXUQ/*' 6WDQGDUGSDUDPHWHUVDUHXVHGIRUWKRVHSRUWIROLRVRQWKH),5%DSSURDFK DVSUHVFULEHGE\WKHUHJXODWRU

Expected loss (EL) and capital requirements 7KHWKUHHFRPSRQHQWVGHVFULEHGQDPHO\3'($'DQG/*'DUHEXLOGLQJEORFNVXVHGLQDYDULHW\RIDSSOLFDWLRQV WKDWPHDVXUHFUHGLWULVNDFURVVWKHHQWLUHSRUWIROLR(/LVDPHDVXUHPHQWRIORVVZKLFKHQDEOHVWKHDSSOLFDWLRQRI FRQVLVWHQWFUHGLWULVNPHDVXUHPHQWDFURVVDOOUHWDLODQGZKROHVDOHFUHGLWH[SRVXUHV 7KHVHFRPSRQHQWVDUHWKHEDVLVIRUUHJXODWRU\DQGHFRQRPLFFDSLWDOFDOFXODWLRQV(/ILJXUHVDUHFDOFXODWHGDVWKHSURGXFW RI77&3'($'DQGGRZQWXUQ/*'DQGUHSUHVHQWWKH*URXS©VEHVWHVWLPDWHRIORVVHVRYHUWKHQH[W\HDUEDVHGRQ ORQJUXQHVWLPDWHVWKDWVSDQDQHQWLUHEXVLQHVVF\FOH 7KHVH HVWLPDWHV DUH DOVR XVHG LQ D UDQJH RI DSSOLFDWLRQV LQFOXGLQJ SULFLQJ FXVWRPHU DQG SRUWIROLR VWUDWHJ\ DQG SHUIRUPDQFHPHDVXUHPHQW(/HVWLPDWHVDUHFRPSDUHGWRLPSDLUPHQWILJXUHVEXWLWVKRXOGEHQRWHGWKDWZKLOHWKH\ PD\EHVLPLODUWKH\DUHFDOFXODWHGRQDGLIIHUHQWEDVLVDQGIRUGLVWLQFWO\GLIIHUHQWSXUSRVHVDQGVKRXOGWKHUHIRUHQRW EHH[SHFWHGWRPDWFKRQHDQRWKHU

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 221 Governance, remuneration, risk and controls

Credit risk

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

Mapping of DG to PD band, alphanumeric agency grades and regulatory bands – Table 8:

Default Absa DG to PD mapping Alphanumeric scale mapping Regulatory PD band to PD mapping grade Note Min Max PD Standard Moody’s Fitch PD Lower Upper bucket PD (>) % PD (<) % Midpoint % & Poor’s band bound % bound % $$$ $DD $$$ $$ $D $$ $ $ $ $$¤ $$ $$¤ %%% %DD %%% %%%%%% %DD%DD %%%%%% %%% %DD %%% %%%%%%¤ %DD%DD %%%%%%¤ %%%¤ %DD %%%¤ %%%¤%% %DD%D %%%¤%% %% %D %% %% %D %% %%%%¤ %D%D %%%%¤ %%%%¤ %D%D %%%%¤ %%¤ %D %%¤ % % % %% %% %% % % % %¤ % %¤ &&& &DD &&& &&& &DD &&& 'HIDXOW ' ' ' 'HIDXOW

7KH*URXS'*JUDGLQJUHSUHVHQWVDWKURXJKWKHF\FOHYLHZRIWKHGLVWULEXWLRQRIWKHERRN

Notes Default grades 1 – 10: assets falling within these DG buckets are regarded as ‘investment grade’ and, when converted to a rating agency equivalent, these correspond to a BB rating and better. Default grades 10 – 19: financial assets in these grades typically require more detailed management attention where clear evidence of financial deterioration or weakness exists. Assets in this category, although currently protected, are potentially weaker credits. These assets contain some credit deficiencies. Default grades 20 – 21: the probability of default of financial assets in these grades have deteriorated to such an extent that they are included for regular review. Assets so classified must have well defined weaknesses that exacerbate the probability of default. These assets are characterised by the distinct possibility that the borrower will default, and should the collateral pledged be insufficient to cover the asset, the Group will sustain some loss when default occurs.

222 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Expected vs actual losses Probability of default 7KH REMHFWLYH RI 3' EDFNWHVWLQJ LV WR FRPSDUH WKH DFFXUDF\ RI WKH SUREDELOLW\ RI GHIDXOW HVWLPDWHV IRU UHJXODWRU\ SXUSRVHVZLWKWKHDFWXDOGHIDXOWGDWD )RUHDFKUHWDLODQGZKROHVDOH%DVHO,,DVVHWFODVVWKHDVVLJQHG3'IRUUHJXODWRU\FDSLWDOSXUSRVHVDVDW'HFHPEHU LVFRPSDUHGWRWKHQRQSHUIRUPLQJORDQVUDWLRREVHUYHGDW'HFHPEHU 5HJXODWRU\3'LVDGMXVWHGWRWKHF\FOH 77&¤WKURXJKWKHF\FOH ZKLOHWKHQRQSHUIRUPLQJORDQVUDWLRLVREVHUYHGDW DSDUWLFXODUSRLQWLQWKHF\FOH 'HFHPEHU 7RFRPSOHWHWKHDQDO\VLVWKHREVHUYHGQRQSHUIRUPLQJORDQ 13/ UDWLRLVDOVRFRPSDUHGWRWKHSRLQWLQWLPH 'HFHPEHU SUREDELOLW\RIGHIDXOW 3,73'

7KHPDLQFRQFOXVLRQVRIWKHDQDO\VLVDUHDVIROORZV )RUDOODVVHWFODVVHVWKHUHJXODWRU\RU77&3'LVFOHDUO\DERYHWKH13/UDWLRREVHUYHGLQ'HFHPEHU 7KH3,73'LHWKHSRLQWLQWLPHHVWLPDWHVRIWKHPRGHOLVDERYHWKHREVHUYHG13/UDWLRLQPRVWRIWKHFDVHV H[FHSWIRUUHWDLOUHYROYLQJFUHGLW

$OOQXPEHUVVWDWHGDUH*URXSQXPEHUVDQGLQFOXGHGHIDXOWV

Comparison of PD estimates with actual default (Retail AIRB) 14,72 13,38 13,30 12,68 11,83 11,34 10,96 10,30 9,54 8,90 8,49 8,20

Retail mortgage Retail revolving credit Retail other SME retail ● TTC PD – 31 December 2009 ● PIT PD – 31 December 2010 ● NPL – 31 December 2010

Comparison of PD estimates with actual default (Wholesale FIRB)

12,41 12,11

5,89 4,77 4,44

0,95 0,68 0,17 0,24 0,32 0,30 0,33 0,20 0,07 0,00 0,00 0,00 0,06 0,08 0,00 0,00 Corporate SME – corporate Public sector entities Local government Sovereign Banks Security firms and municipalities ● TTC PD – 31 December 2009 ● PIT PD – 31 December 2010 ● NPL – 31 December 2010

Note Retail PIT PD and TTC PD models in place at 31 December 2009 have been replaced with new models at 31 December 2010. Comparatives are therefore not possible.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 223 Governance, remuneration, risk and controls

Credit risk

Exposure at default 7KHREMHFWLYHRI($'EDFNWHVWLQJLVWRFRPSDUHWKHDFFXUDF\RI($'HVWLPDWHVIRUUHJXODWRU\SXUSRVHVZLWKWKHDFWXDO ($'V )RUHDFKUHWDLODQGZKROHVDOH%DVHO,,DVVHWFODVVWKHHVWLPDWHG($'DVDW'HFHPEHULVFRPSDUHGWRWKH DFWXDO($'DVDW'HFHPEHU 7KHPDLQFRQFOXVLRQRIWKHDQDO\VLVLVWKDWWKHDFWXDO($'DVDW'HFHPEHUZDVORZHUWKDQWKHHVWLPDWHG ($'DVDW'HFHPEHULQDOOFDVHV DQGORZHULQWRWDOIRUUHWDLODQGZKROHVDOHUHVSHFWLYHO\

Comparison of EAD estimates with actual exposure of defaults (Retail AIRB) 5P

5HWDLOPRUWJDJH 5HWDLOUHYROYLQJFUHGLW 5HWDLORWKHU 60(UHWDLO ● ($'¤'HFHPEHU● ([SRVXUHRIGHIDXOWV¤'HFHPEHU

Comparison of EAD estimates with actual exposure of defaults (Wholesale FIRB) 5P

&RUSRUDWH 60(¤FRUSRUDWH 3XEOLFVHFWRUHQWLWLHV /RFDOJRYHUQPHQW 6RYHUHLJQ %DQNV 6HFXULW\ILUPV DQGPXQLFLSDOLWLHV ● ($'¤'HFHPEHU● ([SRVXUHRIGHIDXOWV¤'HFHPEHU

Note Retail EAD models that were in place at 31 December 2009 were replaced with new models at 31 December 2010. Woolworths Financial Services (Proprietary) Limited (R8,2 billion EAD) was excluded from the above.

224 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Expected losses compared to actual write-offs 7KHREMHFWLYHRI(/EDFNWHVWLQJLVWRFRPSDUHWKHDFFXUDF\RIWKH(/HVWLPDWHVZLWKDFWXDOZULWHRIIGDWD )RU HDFK UHWDLO DQG ZKROHVDOH %DVHO ,, DVVHW FODVV WKH HVWLPDWHG (/ DV DW 'HFHPEHU LV FRPSDUHG WR WKHDFWXDODPRXQWZULWWHQRIIIRUWKH\HDUHQGHG'HFHPEHU (/LVDIXQFWLRQRI77&3'GRZQWXUQ/*'DQG($'(EL = TTC PD x downturn LGD x EAD)LHLWLVD77&PHDVXUH DGMXVWHGIRUDQHFRQRPLFGRZQWXUQZKLOHWKHDPRXQWZULWWHQRIILVREVHUYHGDWDSDUWLFXODUSRLQWLQWLPH 'HFHPEHU 7KH PDLQ FRQFOXVLRQ RI WKH DQDO\VLV LV WKDW IRU DOO DVVHW FODVVHV WKH (/ HVWLPDWHV DUH FOHDUO\ DERYH WKH DFWXDO ZULWHRIIVREVHUYHGIRUWKH\HDUHQGHG'HFHPEHU

Comparison of EL estimates with actual write-offs (Retail AIRB) 5P 4 478

3 605

2 427

1 310 1 308 1 204 976

245

Retail mortgage Retail revolving credit Retail other SME retail ● Expected loss – 31 December 2009 ● Write-offs – 31 December 2010

Comparison of EL estimates with actual write-offs (Wholesale AIRB) 5P 3 054

1 060 835

0 10 0 0 0 1 0 7 0 8 0 Corporate SME – corporate Public sector entities Local government Sovereign Banks Security firms and municipalities ● Expected loss – 31 December 2009 ● Write-offs – 31 December 2010

Note The retail LGD and downturn LGD models that were in place at 31 December 2009 were replaced with new models at 31 December 2010.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 225 Governance, remuneration, risk and controls

Credit risk

Credit risk mitigation, collateral and other credit enhancements 7KH*URXSHPSOR\VDQXPEHURIWHFKQLTXHVWRPLWLJDWHFUHGLWULVN HQKDQFLQJ LWV SRVLWLRQ DV D OHQGHU LQ D UDQJH RI WUDQVDFWLRQV IURP UHWDLO PRUWJDJH OHQGLQJ WR ODUJH ZKROHVDOH ILQDQFLQJE\VWUXFWXULQJDVHFXULW\LQWHUHVWLQDSK\VLFDORUILQDQFLDODVVHW FROODWHUDO QHWWLQJRIGHEWRUDQGFUHGLWRUEDODQFHVXQGHUUHJXODWRU\DQGLQWHUQDOSROLF\ZKLFKUHTXLUHVDIRUPDODJUHHPHQWZLWK WKHFXVWRPHUWRQHWWKHEDODQFHVDQGDOHJDOULJKWWRVHWRII RQDQGRIIVWDWHPHQWRIILQDQFLDOSRVLWLRQ DQG VHOHFWLYHKHGJLQJWKURXJKFUHGLWGHULYDWLYHV 'HSHQGLQJRQWKH*URXS©VDVVHVVPHQWRIDFXVWRPHU©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©VSROLFLHVZLWKUHVSHFWWRDVVHVVLQJDFTXLULQJDQGPDQDJLQJFROODWHUDOIRUFDSLWDOFDOFXODWLRQSXUSRVHVDUH DOLJQHG ZLWK UHJXODWRU\ UHTXLUHPHQWV EXW LQ FHUWDLQ LQVWDQFHV DUH PRUH VSHFLILF WR HQVXUH UREXVW DQG HIILFLHQW SURFHVVHVZKLFKH[FHHGWKHPLQLPXPUHJXODWRU\UHTXLUHPHQWV

226 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Collateral types used by the Group, grouped by type of asset – Table 9: 7KH IROORZLQJ W\SHV RI FROODWHUDO DUH FXUUHQWO\ KHOG DJDLQVW DVVHWV VXEMHFW WR FUHGLW ULVN DQG DUH FRQVLVWHQW ZLWK DFFHSWHGPDUNHWSUDFWLFH

Assets subject to credit risk of financial position Type of collateral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

Note This list is not exhaustive. There may be other forms of collateral that may be recognised by the Group.

Valuation of collateral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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 227 Governance, remuneration, risk and controls

Credit risk

7KHFROODWHUDOPDQDJHPHQWSURFHVVLVIRFXVHGRQWKHHIILFLHQWKDQGOLQJDQGSURFHVVLQJRIDODUJHQXPEHURIFDVHV LQWKHUHWDLOSRUWIROLRDQGWKHORZHUHQGRIWKHFRUSRUDWHVHFWRUWKHUHIRUHUHO\LQJKHDYLO\RQWKH*URXS©VFROODWHUDODQG GRFXPHQW PDQDJHPHQW V\VWHPV )RU ODUJHU ZKROHVDOH H[SRVXUHV DQG FDSLWDO PDUNHW WUDQVDFWLRQV FROODWHUDO LV PDQDJHGMRLQWO\EHWZHHQWKHFUHGLWDQGOHJDOIXQFWLRQVDVWUDQVDFWLRQVDQGDVVRFLDWHGOHJDODJUHHPHQWVDUHRIWHQ EHVSRNHLQQDWXUHLQSDUWLFXODUZKHUHFUHGLWGHULYDWLYHVRUFXVWRPLVHGQHWWLQJDJUHHPHQWVDUHXVHGDVDULVNPLWLJDQW $OOVHFXULW\VWUXFWXUHVDQGOHJDOFRYHQDQWVDUHUHYLHZHGDWOHDVWDQQXDOO\WRHQVXUHWKH\UHPDLQILWIRUSXUSRVHDQG FRQVLVWHQWZLWKDFFHSWHGPDUNHWSUDFWLFH

Types of guarantor and credit derivative counterparties ,QWKHFRPPHUFLDOFRUSRUDWHDQGILQDQFLDOVHFWRUWKH*URXSRIWHQSODFHVUHOLDQFHRQDWKLUGSDUW\JXDUDQWRUZKLFK PD\EHDSDUHQWFRPSDQ\WRWKHERUURZHUDPDMRUVKDUHKROGHURUDEDQN6LPLODUO\FUHGLWGHULYDWLYHWUDQVDFWLRQVDUH RIWHQXVHGWRKHGJHVSHFLILFSDUWVRIDQ\VLQJOHQDPHULVNLQWKHZKROHVDOHSRUWIROLR)RUWKHVHWUDQVDFWLRQVWKHPRVW FRPPRQFRXQWHUSDUWLHVRULVVXHUVDUHEDQNVQRQEDQNILQDQFLDOLQVWLWXWLRQV 1%),V ODUJHFRUSRUDWHVSDUDVWDWDOV DQGJRYHUQPHQWV7KHFUHGLWZRUWKLQHVVRIWKHJXDUDQWRURUGHULYDWLYHFRXQWHUSDUW\LVVXHULVDVVHVVHGDVSDUWRIWKH FUHGLW DSSURYDO SURFHVV DQG WKH YDOXH RI VXFK D JXDUDQWHH RU GHULYDWLYH FRQWUDFW LV DGMXVWHG DFFRUGLQJO\ IRU WKH SXUSRVHRIFDOFXODWLQJLQWHUQDO/*'HVWLPDWHV

Use of netting agreements, International Swaps and Derivatives Association (ISDA) master agreements and Collateral Support Annexes (CSAs) ,Q OLQH ZLWK LQWHUQDWLRQDO PDUNHW SUDFWLFH WKH *URXS HQGHDYRXUV WR XVH QHWWLQJ DJUHHPHQWV ZKHUHYHU SRVVLEOH 7KH *URXS SULPDULO\ HPSOR\V WKH ,6'$ PDVWHU DJUHHPHQWV DV ZHOO DV WKH UHVSHFWLYH &6$V ZKLFK SURYLGH IRU VWDQGDUGLVHGDQGFRPPRQO\DFFHSWHGSURFHVVHVIRUWKHPDQDJLQJRIFROODWHUDODQGPDUJLQFDOOVRYHUWKHOLIHWLPHRI WKHWUDQVDFWLRQ&6$VPD\FUHDWHDQREOLJDWLRQRQWKH*URXSXQUHODWHGWRWKHXQGHUO\LQJLQVWUXPHQWVLQWKHHYHQWRI DFUHGLWGRZQJUDGH2QO\DVPDOOQXPEHURIWKH*URXS©VDJUHHPHQWVPDNHXVHRIVXFKDWLHUHGVWUXFWXUHDQGDQ LQVWDQWDQHRXVGRZQJUDGHE\RQHUDWLQJJUDGHIURPWKHFXUUHQW$$UDWLQJ 6 3DQG)LWFK ZRXOGQRWWULJJHUDQ\VXFK FODXVHVDQGFUHDWHDUHTXLUHPHQWIRUWKH*URXSWRSRVWDGGLWLRQDOFROODWHUDO

Fair value of collateral for loans past due but not impaired and loans individually impaired )LQDQFLDODVVHWVWKDWDUHSDVWGXHRULQGLYLGXDOO\DVVHVVHGDVLPSDLUHG VSHFLILFDOO\LPSDLUHG DUHIRUWKHPRVWSDUW FROODWHUDOLVHG RU VXEMHFW WR RWKHU IRUPV RI FUHGLW HQKDQFHPHQWV 7KH HIIHFWV RI VXFK DUUDQJHPHQWV DUH WDNHQ LQWR DFFRXQWLQWKHFDOFXODWLRQRIWKHLPSDLUPHQWDOORZDQFHKHOGDJDLQVWWKHP

228 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 7KHIDLUYDOXHRIFROODWHUDODQGRWKHUFUHGLWHQKDQFHPHQWVKHOGLQUHVSHFWRIORDQVDQGDGYDQFHVWRFXVWRPHUVSDVW GXHEXWQRWLPSDLUHGDQGLQGLYLGXDOO\DVVHVVHGDVLPSDLUHGLVDVIROORZV Fair value collateral for loans past due but not impaired and individually impaired – Table 10 (audited): Group 2010 Rm 5P 5HWDLO%DQNLQJ 34 574 &KHTXHDFFRXQWV 27 ,QVWDOPHQWFUHGLWDJUHHPHQWV 2 810 0RUWJDJHV 31 617 3HUVRQDODQGWHUPORDQV 120 $EVD%XVLQHVV%DQN 7 753 &RUSRUDWH 1 596 /DUJHDQG0HGLXP 5 665 2WKHU 169 6PDOO 323 $EVD&DSLWDO 241 42 568 Carrying values of loans past due but not impaired (refer to table 31) 5 964 Carrying values of loans individually impaired (refer to table 32) 57 713

Note Comparatives have been reclassiﬁed. $VKRUWIDOOH[LVWVEHWZHHQWKHIDLUYDOXHRIFROODWHUDOKHOGDQGWKHFDUU\LQJYDOXHVRIORDQVDQGDGYDQFHVSDVWGXHEXW QRWLPSDLUHGDQGLQGLYLGXDOO\DVVHVVHGDVLPSDLUHG7KLVLVGXHWRWKH*URXSXVLQJDSUREDELOLW\RIGHIDXOWPRGHOZKHQ DVVHVVLQJWKHLPSDLUPHQWVUDLVHGDJDLQVWWKHVHDVVHWV

Enforcement of collateral &DUU\LQJYDOXHRIDVVHWVKHOGE\WKH*URXSDWWKHUHSRUWLQJGDWHDVDUHVXOWRIWKHHQIRUFHPHQWRIFROODWHUDOZDV DVIROORZV Loans and advances to customers – Table 11 (audited): Group 2010 Rm 5P Residential properties 2SHQLQJEDODQFH 344 $FTXLVLWLRQV 240 'LVSRVDOV (135) Closing balance 449

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 229 Governance, remuneration, risk and controls

Credit risk

Credit derivatives 7KHIROORZLQJWDEOHSURYLGHVDQRYHUYLHZRIWKHRXWVWDQGLQJDPRXQWRIH[SRVXUHKHOGLQUHVSHFWRIWKH*URXS©VFUHGLW GHULYDWLYHSRVLWLRQVXVHGLQWKHPDQDJHPHQWRILWVFUHGLWSRUWIROLREURNHQGRZQE\SURGXFWW\SHLQGLFDWLQJZKHWKHU SURWHFWLRQZDVERXJKWRUVROG Exposures by instrument bought or sold – Table 12: 2010 Own credit portfolio 2ZQFUHGLWSRUWIROLR As protection As protection $VSURWHFWLRQ $VSURWHFWLRQ buyer seller EX\HU VHOOHU Rm Rm 5P 5P Credit derivative product type &UHGLWGHIDXOWVZDSV 2 567 7 253 7RWDOUHWXUQVZDSV —— Total notional exposure to credit derivative transactions 2 567 7 253 OTC derivative exposure (Rm)

12 000

10 000

8 000

6 000

4 000

2 000

0 Commodities Equity derivatives Foreign exchange Interest rate derivatives derivatives ● 31 December 2009 ● 31 December 2010

7KHGHFUHDVHLQHTXLW\GHULYDWLYHVZDVDVDUHVXOWRIWKHQHWWLQJRIXQGHUO\LQJVWRFNHTXLW\&)'VWR%DUFOD\V&DSLWDO VHFXULWLHV

Concentration risk 'XH WR WKH FRPSRVLWLRQ RI WKH *URXS©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©VPDUNWRPDUNHW 070 H[SRVXUH

230 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Concentration risk – Table 13 (audited): Group 2010 Asia Americas South Rest of and Africa Africa Europe Australia Total Rm Rm Rm Rm Rm

On-statement of ﬁnancial position exposures &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDO EDQNV 17 549 1 873 — — 19 422 6WDWXWRU\OLTXLGDVVHWSRUWIROLR 48 215———48 215 /RDQVDQGDGYDQFHVWREDQNV 3 249 1 308 19 361 959 24 877 7UDGLQJDQGKHGJLQJSRUWIROLRDVVHWV 40 562 87 19 787 1 226 61 662 2WKHUDVVHWV 12 574 221 583 128 13 506 /RDQVDQGDGYDQFHVWRFXVWRPHUV 488 578 7 388 1 146 1 523 498 635 5HLQVXUDQFHDVVHWV 703 — 137 20 860 ,QYHVWPHQWVHFXULWLHV 7 773 487 — — 8 260 Subject to credit risk (refer to table 22) 619 203 11 364 41 014 3 856 675 437 Off-statement of ﬁnancial position exposures )LQDQFLDOJXDUDQWHHV 552 — 47 — 599 *XDUDQWHHV 11 051———11 051 ,UUHYRFDEOHGHEWIDFLOLWLHV 45 432 672 391 — 46 495 /HWWHUVRIFUHGLW 4 976 3 — — 4 979 Subject to credit risk (refer to table 22) 62 011 675 438 — 63 124

$VLD $PHULFDV 6RXWK 5HVWRI DQG $IULFD $IULFD (XURSH $XVWUDOLD 7RWDO 5P 5P 5P 5P 5P

On-statement of ﬁnancial position exposures &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDO EDQNV ¥ 6WDWXWRU\OLTXLGDVVHWSRUWIROLR ¥¥¥ /RDQVDQGDGYDQFHVWREDQNV 7UDGLQJDQGKHGJLQJSRUWIROLRDVVHWV 2WKHUDVVHWV /RDQVDQGDGYDQFHVWRFXVWRPHUV 5HLQVXUDQFHDVVHWV ¥ ¥ ,QYHVWPHQWVVHFXULWLHV ¥ Subject to credit risk (refer to table 22)

Off-statement of ﬁnancial position exposures )LQDQFLDOJXDUDQWHHV ¥ ¥ *XDUDQWHHV ¥ ¥ ,UUHYRFDEOHGHEWIDFLOLWLHV ¥ /HWWHUVRIFUHGLW ¥ Subject to credit risk (refer to table 22) ¥

Notes Excludes cash under management. Comparatives have been reclassiﬁed.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 231 Governance, remuneration, risk and controls

Credit risk

7KHIROORZLQJWDEOHUHIOHFWVWKH*URXS©VFUHGLWH[SRVXUHVDWWKHLUFDUU\LQJDPRXQWVDVFDWHJRULVHGE\WKH LQGXVWU\VHFWRUVRIFRXQWHUSDUWLHVDWWKHUHSRUWLQJGDWH

Analysis of credit risk concentration by industry – Table 14:

Cash, cash Trading balances Statutory Loans and and balances liquid and hedging with central asset advances portfolio Other banks portfolio to banks assets assets1 Rm Rm Rm Rm Rm $JULFXOWXUH — — — 108 — &RQVWUXFWLRQDQGSURSHUW\ — — — 28 114 &RQVXPHU KRPHORDQV ————— &RQVXPHU RWKHUSHUVRQDO OHQGLQJ ————18 (OHFWULFLW\ 2 392 3 )LQDQFH 19 422 — 24 877 47 525 12 747 *RYHUQPHQW — 48 215 — 8 919 328 0DQXIDFWXULQJ — — — 632 — 0LQLQJ — — — 171 4 2WKHU — — — 129 271 6HUYLFHV — — — 759 15 7UDQVSRUW — — — 694 3 :KROHVDOH — — — 305 3 Subject to credit risk 19 422 48 215 24 877 61 662 13 506

&DVKFDVK 7UDGLQJ EDODQFHV 6WDWXWRU\ /RDQV DQG DQGEDODQFHV OLTXLG DQG KHGJLQJ ZLWKFHQWUDO DVVHW DGYDQFHV SRUWIROLR 2WKHU EDQNV SRUWIROLR WREDQNV DVVHWV DVVHWV 5P 5P 5P 5P 5P $JULFXOWXUH ¥ ¥ ¥ ¥ &RQVWUXFWLRQDQGSURSHUW\ ¥ ¥ ¥ &RQVXPHU KRPHORDQV ¥ ¥ ¥ ¥ &RQVXPHU RWKHUSHUVRQDO OHQGLQJ ¥ ¥ ¥ (OHFWULFLW\ ¥ ¥ ¥ )LQDQFH ¥ *RYHUQPHQW ¥ ¥ 0DQXIDFWXULQJ ¥ ¥ ¥ 0LQLQJ ¥ ¥ ¥ 2WKHU ¥ ¥ ¥ 6HUYLFHV ¥ ¥ ¥ 7UDQVSRUW ¥ ¥ ¥ ¥ :KROHVDOH ¥ ¥ ¥ 6XEMHFWWRFUHGLWULVN

Notes Excludes cash under management. Comparatives have been reclassiﬁed.

232 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010

Loans and advances Re- Irrevocable to insurance Investment Financial debt Letters of customers assets securities guarantees Guarantees facilities credit Total Rm Rm Rm Rm Rm Rm Rm Rm 20 680———295—2621 109 43 505 — 280 — 1 861 44 397 46 229 247 424——————247 424

28 983—————10129 102 2 674 — 22 164 63 2 135 1 7 454 73 807 860 3 897 250 2 467 40 136 1 686 227 674 7 871 — 679 — 468 — 228 66 708 12 528 — 26 185 2 020 — 304 15 695 6 265 — 1 284 — 340 898 981 9 943 27 107 — 1 528 — 2 331 2 977 1 160 35 503 4 033 — 508 — 203 172 12 5 702 7 216 — 36 — 704 — 61 8 714 16 542———2991332217 304 498 635 860 8 260 599 11 051 46 495 4 979 738 561

/RDQVDQG DGYDQFHV 5H ,UUHYRFDEOH WR LQVXUDQFH ,QYHVWPHQW )LQDQFLDO GHEW /HWWHUVRI FXVWRPHUV DVVHWV VHFXULWLHV JXDUDQWHHV *XDUDQWHHV IDFLOLWLHV FUHGLW 7RWDO 5P 5P 5P 5P 5P 5P 5P 5P ¥¥¥ ¥ ¥ ¥ ¥¥¥¥

¥¥¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥¥¥

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 233 Governance, remuneration, risk and controls

Credit risk

EAD per geographical area (%)

1,75 0,00 0,09 3,14 0,54 3,19 0,49 1,92

94,48 94,39

31 December 2010 31 December 2009

● South Africa ● Europe ● Other African countries ● South Africa ● Other African countries ● Europe ● North America ● Other ● Asia ● Other

Wrong-way risk :URQJZD\ULVNLVDQDGGLWLRQDOIRUPRIFRQFHQWUDWLRQULVNDQGDULVHVZKHQWKHUHLVDVWURQJFRUUHODWLRQEHWZHHQWKH FRXQWHUSDUW\©V3'DQGWKH070YDOXHRIWKHXQGHUO\LQJWUDQVDFWLRQ7KH*URXSGLVWLQJXLVKHVEHWZHHQWZRW\SHVRI ZURQJZD\ULVNQDPHO\ VSHFLILFZURQJZD\ULVNZKLFKPD\DULVHLQWUDQVDFWLRQVZLWKFHUWDLQVWUXFWXUDOIHDWXUHVVXFKDVWKHFROODWHUDOLVDWLRQ RIDORDQZLWKWKHERUURZHU©VRUDUHODWHGSDUW\©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

Counterparty credit risk &RXQWHUSDUW\FUHGLWH[SRVXUHDULVHVIURPWKHULVNWKDWSDUWLHVDUHXQDEOHWRPHHWWKHLUSD\PHQWREOLJDWLRQVXQGHU FHUWDLQILQDQFLDOFRQWUDFWVVXFKDVGHULYDWLYHVDQGVHFXULWLHVILQDQFLQJWUDQVDFWLRQV HJUHSXUFKDVHDJUHHPHQWV 8QOLNHFUHGLWULVNFRXQWHUSDUW\FUHGLWULVNLPSOLHVWKHELODWHUDOULVNRIORVV )RUDOORFDWLRQRI(&WR27&GHULYDWLYHH[SRVXUHV($'HVWLPDWHVDUHWUHDWHGDV070ORDQHTXLYDOHQWVZKHUHWKH DPRXQWRIFDSLWDODOORFDWHGWRDSDUWLFXODUWUDQVDFWLRQLVGULYHQE\WKH ERUURZHU©VQHWWLQJDUUDQJHPHQWV ERUURZHU©V77&3' WUDGH©VUHVLGXDOPDWXULW\ QDWXUHRIHDFKWUDGHDQG QHW($'DQGFRUUHVSRQGLQJ/*'

234 Absa Group Limited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©V SROLFLHV IRU HVWDEOLVKLQJ LPSDLUPHQW DOORZDQFHV IRU WUDGHG SURGXFWV© FRXQWHUSDUWLHV DUH EDVHG RQ WKH DSSOLFDEOH DFFRXQWLQJUHTXLUHPHQWV

Securitisation 6HFXULWLVDWLRQ WUDQVDFWLRQV XVHG DV SDUW RI WKH *URXS©V FUHGLW SRUWIROLR DUH SULPDULO\ IRFXVHG RQ WKH HIIHFWLYH PDQDJHPHQWRIIXQGLQJUHTXLUHPHQWV3ODQQHGVHFXULWLVDWLRQWUDQVDFWLRQVPDUNHWDSSHWLWHDQGSRWHQWLDOPDUNHWLQJ DQGSODFHPHQWVWUDWHJLHVDUHJRYHUQHGE\DGHOHJDWHGPDQGDWHIURPWKH%)&DQGDVVHVVHGZLWKWKHDVVLVWDQFHRI WKH05&7KHUHDUHWZRPDLQW\SHVRIVHFXULWLVDWLRQ WUDGLWLRQDOVHFXULWLVDWLRQVRULJLQDWLQJEDQNWUDQVIHUVDSRRORIDVVHWVWKDWLWRZQVWRDQ63(RQDQDUP©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©VRZQ VWDWHPHQWRIILQDQFLDOSRVLWLRQ

Securitisation activities of the Group 6HFXULWLVDWLRQ WUDQVDFWLRQV KDYH EHHQ XVHG DV D PHDQV RI UDLVLQJ ORQJWHUP IXQGLQJ 7KH *URXS DSSOLHV WKH ,5% DSSURDFKLQWKHDVVHVVPHQWRILWVVHFXULWLVDWLRQH[SRVXUHVIRUUHJXODWRU\FDSLWDOSXUSRVHVDQGXVHV)LWFK0RRG\©V DQG6 3DVH[WHUQDOFUHGLWDVVHVVPHQWLQVWLWXWLRQV (&$,V $SDUWIURPRULJLQDWLQJDQGVSRQVRULQJVHFXULWLVDWLRQVWKH*URXSDOVRDFWVDVDQLQYHVWRUDQGDSURYLGHURIVHUYLFHV OLTXLGLW\DQGFUHGLWHQKDQFHPHQWVWRDQXPEHURIVHFXULWLVDWLRQWUDQVDFWLRQV,QYHVWPHQWVLQVHFXULWLVDWLRQH[SRVXUHV PD\EHPDGHGLUHFWO\RULQGLUHFWO\WKURXJKWKH*URXS©VFRQGXLW $EDFDV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 235 Governance, remuneration, risk and controls

Credit risk

7KHIROORZLQJWDEOHSURYLGHVDEUHDNGRZQRIWKH*URXS©VUROHLQHDFKWUDQVDFWLRQLWLVLQYROYHGLQ

Roles played by the Group in securitisation transactions – Table 15: Credit enhancement Origi- Investor Investor Liquidity Service subordinated nator Sponsor (Absa) (Abacas) provider provider loan 2QWKH&DUGV,QYHVWPHQW,, ✓ +RPH2EOLJRUV0RUWJDJH (QKDQFHG6HFXULWLHV 3URSULHWDU\ /LPLWHG ✓✓✓ ✓ ✓ &ROODWHUDOLVHG$XWR5HFHLYDEOHV 6HFXULWLVDWLRQ3URJUDPPH 6HULHV 3URSULHWDU\ /LPLWHG ✓✓ ✓ ✓ 9XNLOH,QYHVWPHQW3URSHUW\ 6HFXULWLVDWLRQ 3URSULHWDU\ /LPLWHG ✓✓ 3ULPH5HDOW\2EOLJRUV3DFNDJHG 6HFXULWLHV 3URSULHWDU\ /LPLWHG ✓ 1TDED)LQDQFH 3URSULHWDU\ /LPLWHG ✓✓ 3ULYDWH5HVLGHQWLDO0RUWJDJHV 3URSULHWDU\ /LPLWHG ✓✓ *UD\VWRQ&RQGXLW 3URSULHWDU\ /LPLWHG ✓ ,NKD\D50%6/LPLWHG ✓✓ ,NKD\D50%6/LPLWHG ✓✓ $VVHW%DFNHG$UELWUDJH 6HFXULWLHV 3URSULHWDU\ /LPLWHG ✓✓ ✓ ✓ 3ULYDWH&RPPHUFLDO0RUWJDJHV 3URSULHWDU\ /LPLWHG ✓ 3ULYDWH&RPPHUFLDO0RUWJDJHV 3URSULHWDU\ /LPLWHG ✓ *URZWKSRLQW 3URSULHWDU\ /LPLWHG ✓ *URZWKSRLQW 3URSULHWDU\ /LPLWHG ✓ %OXH*UDQLWH 3URSULHWDU\ /LPLWHG ✓ %OXH*UDQLWH 3URSULHWDU\ /LPLWHG ✓ %OXH*UDQLWH 3URSULHWDU\ /LPLWHG ✓ %OXH*UDQLWH 3URSULHWDU\ /LPLWHG ✓ 7KHNZHQL)XQG 3URSULHWDU\ /LPLWHG ✓

236 Absa Group Limited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

Summary of applicable accounting policies $WWKHLQFHSWLRQRIDVHFXULWLVDWLRQWUDQVDFWLRQDVVHWVDUHVROGWRWKHVHFXULWLVDWLRQYHKLFOHDWSDUYDOXHDQGQRJDLQV RU ORVVHV DUH UHFRJQLVHG 7KH WUDQVDFWLRQV DUH WUHDWHG DV VDOHV UDWKHU WKDQ ILQDQFLQJ DQG IRU ILQDQFLDO UHSRUWLQJ SXUSRVHVWKHUHVSHFWLYHYHKLFOHVDUHFRQVROLGDWHGDW*URXSOHYHO $Q\UHWDLQHGLQWHUHVWLQWKHVHFXULWLVDWLRQYHKLFOHLVYDOXHGRQWKHEDVLVRIWKHUHVSHFWLYHDVVHW©VSHUIRUPDQFH:KHUH WKH*URXSDFWVDVDVHUYLFHSURYLGHUQRUPDOLPSDLUPHQWSROLFLHVDUHDSSOLHGDQGUHWDLQHGWUDQFKHVDUHXOWLPDWHO\ ZULWWHQRIIRQFHVXIILFLHQWFDSLWDOORVVHVDFFXPXODWH

Securitisation exposures 7KH IROORZLQJ WDEOH SURYLGHV D EUHDNGRZQ RI WKH WRWDO IXQGLQJ UDLVHG WKURXJK VHFXULWLVDWLRQ DW WKH UHSRUWLQJ GDWH H[FOXGLQJ$EDFDV DVZHOODVWKH(&$,VXVHGLQWKHYDULRXVDVVHWFODVVHV

Securitisation assets – Table 16: 2010 Amount Absa Bank originator $PRXQW $EVD%DQNRULJLQDWRU securitised ECAI VHFXULWLVHG (&$, Rm 5P ,QVWDOPHQWGHEWRUV — Moody’s 0RRG\©V 0RUWJDJHDGYDQFHV 5 057 Moody’s, Fitch and S&P 0RRG\©V)LWFKDQG6 3 5 057

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 237 Governance, remuneration, risk and controls

Credit risk

0RUWJDJHDGYDQFHVLQFUHDVHGGXHWRIXUWKHUKRPHORDQVEHLQJVHFXULWLVHGGXULQJWKH\HDUXQGHUUHYLHZ ,QVWDOPHQWGHEWRUVUHIOHFWHGDQLOEDODQFHDWWKHHQGRIWKH\HDUXQGHUUHYLHZDVWKHYHKLFOHILQDQFHVFKHPHZDV ZRXQGGRZQ1RVHFXULWLVHGDVVHWVH[LVWHGDWWKHUHSRUWLQJGDWH $EVDRULJLQDWHGVHFXULWLVDWLRQVSHUIRUPHGDFFRUGLQJWRH[SHFWDWLRQVDQGQRWULJJHUVZHUHEUHDFKHG

Outstanding underlying asset securitisation balances, including Abacas – Table 17:

31 December 2010 Retail: instalment Retail: sales and Retail: mortgages leasing other1 Total Rm Rm Rm Rm 2QVWDWHPHQWRIILQDQFLDOSRVLWLRQLQVWUXPHQWV 4 533 — 2 554 7 087 2IIVWDWHPHQWRIILQDQFLDOSRVLWLRQLQVWUXPHQWV ———— 7RWDO,5%H[SRVXUHV 4 533 — 2 554 7 087 2IZKLFKQRWHVLVVXHGLQYHVWPHQWJUDGH 4 019 — 2 554 6 573 6XELQYHVWPHQWJUDGH 1 038 — — 1 038

'HFHPEHU 5HWDLO LQVWDOPHQW 5HWDLO VDOHVDQG 5HWDLO PRUWJDJHV OHDVLQJ RWKHU 7RWDO 5P 5P 5P 5P 2QVWDWHPHQWRIILQDQFLDOSRVLWLRQLQVWUXPHQWV 7RWDO,5%H[SRVXUHV 2IZKLFKQRWHVLVVXHGLQYHVWPHQWJUDGH 6XELQYHVWPHQWJUDGH ¥

Notes Retail: other represents Abacas (the Group being the sponsor) that is a conduit of the Group’s asset backed commercial paper programme. Sub-investment grade – BBB below.

238 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Retained or purchased securitisation exposure by underlying asset type – Table 18:

31 December 2010 Retained Purchased Total Exposure type Rm Rm Rm &RUSRUDWHVRYHUHLJQEDQNV 240 — 240 2WKHUUHWDLO — 936 936 5HVLGHQWLDOPRUWJDJHV 946 993 1 939 6PDOODQGPHGLXPVL]HGHQWLWLHV — 351 351 1 186 2 280 3 466

'HFHPEHU 5HWDLQHG 3XUFKDVHG 7RWDO ([SRVXUHW\SH 5P 5P 5P &RUSRUDWHVRYHUHLJQEDQNV ¥ 2WKHUUHWDLO 5HVLGHQWLDOPRUWJDJHV 6PDOODQGPHGLXPVL]HGHQWLWLHV ¥

Retained or purchased securitisation exposure by risk weight band – Table 19:

31 December 2010 'HFHPEHU Retained Purchased 5HWDLQHG 3XUFKDVHG Risk-weight band Rm Rm 5P 5P ¤ —— ¥¥ ¤ 240 1 149 ¤ — 1 076 ¤ —— ¥¥ ¤ —— ¥¥ —55 23 — ¥ —— ¥¥ —— ¥¥ —— ¥¥ RUGHGXFWHG 923 — ¥ Total 1 186 2 280

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 239 Governance, remuneration, risk and controls

Credit risk

Retained securitised exposures in terms of the IRB approach – Table 20: ([FOXGLQJGHGXFWLRQVDQGLQYHVWRUV©LQWHUHVWLQUHVSHFWRIVFKHPHVZLWKHDUO\DPRUWLVDWLRQIHDWXUHV

31 December 2010 Retail: instalment SME Retail: sales and Retail: receivables mortgages leasing other Total Rm Rm Rm Rm Rm 6HQLRUH[SRVXUHUDWHG%%%RUKLJKHU 3,1 33,2 — 7,6 43,9 %DVHULVNZHLJKWH[SRVXUHVUDWHG%%%RUKLJKHU 4,8 103,3 11,1 86,5 205,7 ([SRVXUHUDWHG%%%RUEHORZ 5,4 19,2 — — 24,6 13,3 155,7 11,1 94,1 274,2

'HFHPEHU 5HWDLO LQVWDOPHQW 60( 5HWDLO VDOHVDQG 5HWDLO UHFHLYDEOHV PRUWJDJHV OHDVLQJ RWKHU 7RWDO 5P 5P 5P 5P 5P 6HQLRUH[SRVXUHUDWHG%%%RUKLJKHU %DVHULVNZHLJKWH[SRVXUHVUDWHG%%%RUKLJKHU ([SRVXUHUDWHG%%%RUEHORZ ¥ ¥

Note Small- and medium-sized enterprises as deﬁned by the regulations.

240 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Risk-weighted assets and capital deductions at Group level (IRB) – Table 21:

31 December 2010 Primary Secondary Required capital and capital and capital reserve reserve RWAs at 9,5% funds funds Rm Rm Rm Rm 5HWDLOLQVWDOPHQWVDOHVDQGOHDVLQJ 113 11 — — 5HWDLOPRUWJDJHV 1 597 152 — — 5HWDLORWKHU 966 92 — — 60(UHFHLYDEOHV 137 13 — — 2 813 268 — —

'HFHPEHU 3ULPDU\ 6HFRQGDU\ 5HTXLUHG FDSLWDODQG FDSLWDODQG FDSLWDO UHVHUYH UHVHUYH 5:$V DW IXQGV IXQGV 5P 5P 5P 5P 5HWDLOLQVWDOPHQWVDOHVDQGOHDVLQJ ¥ ¥ 5HWDLOPRUWJDJHV 5HWDLORWKHU ¥ ¥ 60(UHFHLYDEOHV ¥ ¥

Note 1Required capital is calculated at 9,5%. This excludes the Group speciﬁc (Pillar 2b) add on.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 241 Governance, remuneration, risk and controls

Credit risk

Basel II and accounting principles

Impairments

Relevant accounting impairment policy versus expected loss regulatory policy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

Impairment methods of assessment and use of allowance accounts 7KH*URXSHVWDEOLVKHVWKURXJKFKDUJHVDJDLQVWSURILWDQLPSDLUPHQWDOORZDQFHIRUWKHLQFXUUHGORVVLQKHUHQWLQWKH OHQGLQJERRN8QGHU,)56LPSDLUPHQWDOORZDQFHVDUHUHFRJQLVHGZKHUHWKHUHLVREMHFWLYHHYLGHQFHRILPSDLUPHQWDV DUHVXOWRIRQHRUPRUHORVVHYHQWVWKDWKDYHRFFXUUHGDIWHULQLWLDOUHFRJQLWLRQRIWKHDVVHWDQGZKHUHWKHVHHYHQWV KDGDQLPSDFWRQWKHHVWLPDWHGIXWXUHFDVKIORZVRIWKHILQDQFLDODVVHWRUSRUWIROLRRIILQDQFLDODVVHWV7RGHWHUPLQH LIDORVVHYHQWKDVRFFXUUHGKLVWRULFDOHFRQRPLFLQIRUPDWLRQVLPLODUWRWKHFXUUHQWHFRQRPLFFOLPDWHRYHUDOOFXVWRPHU ULVNSURILOHSD\PHQWUHFRUGDQGWKHUHDOLVDEOHYDOXHRIDQ\FROODWHUDODUHWDNHQLQWRFRQVLGHUDWLRQ 2EMHFWLYHHYLGHQFHWKDWDILQDQFLDODVVHWRUJURXSRIDVVHWVLVLPSDLUHGLQFOXGHVREVHUYDEOHGDWDWKDWFRPHVWRWKH DWWHQWLRQRIWKH*URXSZKLFKPD\LQFOXGHWKHIROORZLQJORVVHYHQWV 6LJQLILFDQWILQDQFLDOGLIILFXOW\RIWKHLVVXHURUERUURZHU $EUHDFKRIFRQWUDFWVXFKDVDGHIDXOWRUGHOLQTXHQF\LQLQWHUHVWRUSULQFLSDOSD\PHQWV 7KH*URXSJUDQWLQJWRWKHERUURZHUIRUHFRQRPLFRUOHJDOUHDVRQVUHODWLQJWRWKHERUURZHU©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°DGYHUVHFKDQJHVLQWKHSD\PHQWVWDWXVRIERUURZHUVLQWKHJURXSRU °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©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©VDELOLW\WRSD\DOODPRXQWVGXHDFFRUGLQJWRWKHFRQWUDFWXDOWHUPVRIWKHDVVHWV

242 Absa Group Limited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©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©VSUREDELOLW\RIPRYLQJIURPWKHSHUIRUPLQJSRUWIROLRWRWKHGHIDXOWHGSRUWIROLRDVDUHVXOWRIDULVNFRQGLWLRQZKLFK KDVDOUHDG\RFFXUUHGEXWZLOORQO\EHLGHQWLILDEOHDWDERUURZHUOHYHODWDIXWXUHGDWH $QHPHUJHQFHSHULRGFRQFHSWLVDSSOLHGWRHQVXUHWKDWRQO\LPSDLUPHQWVWKDWH[LVWDWWKHUHSRUWLQJGDWHDUHFDSWXUHG 7KHHPHUJHQFHSHULRGLVGHILQHGDVWKHWLPHODSVHEHWZHHQWKHRFFXUUHQFHRIDWULJJHUHYHQW SRUWIROLRLPSDLUPHQW DQG WKH LPSDLUPHQW EHLQJ LGHQWLILHG DW DQ LQGLYLGXDO DFFRXQW OHYHO VSHFLILF LPSDLUPHQW 7KH HPHUJHQFH SHULRGV EDVHGRQDFWXDOH[SHULHQFHYDU\DFURVVEXVLQHVVHVDQGDUHUHYLHZHGDQQXDOO\7KH3'IRUHDFKH[SRVXUHFODVVLV EDVHGRQKLVWRULFDOGHIDXOWH[SHULHQFHVFDOHGIRUWKHHPHUJHQFHSHULRGUHOHYDQWWRWKHH[SRVXUHFODVV7KLV3'LV WKHQDSSOLHGWRWKHWRWDOSRSXODWLRQRQZKLFKQRVSHFLILFLPSDLUPHQWVKDYHEHHQUHFRJQLVHG :KHUHWRWDO(/RIDOOFUHGLWULVNDVVHWVH[FHHGVWRWDOLPSDLUPHQWVWKHGLIIHUHQFHLVGHGXFWHGIURPHOLJLEOHFDSLWDO,Q WKHLQVWDQFHWKDWWRWDOLPSDLUPHQWVH[FHHGWRWDO(/WKHGLIIHUHQFHLVDGGHGWRHOLJLEOHFDSLWDOVXEMHFWWRDPD[LPXP RIRIWRWDO5:$V

Differences in impairment calculations across retail and wholesale operations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©VILQDQFLDOKHDOWKSUHVHQWVJURXQGVIRUFRQFHUQ LWLVLPPHGLDWHO\SODFHGLQWRWKHDSSURSULDWHFDWHJRU\$OOERUURZHUVDUHVXEMHFWWRDIXOOUHYLHZRIDOOIDFLOLWLHVRQDW OHDVWDQDQQXDOEDVLV,QWHULPUHYLHZVPD\EHSHUIRUPHGLIFLUFXPVWDQFHVGLFWDWH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 243 Governance, remuneration, risk and controls

Credit risk

:LWKLQWKH5HWDLO%DQNLQJSRUWIROLRVZKLFKWHQGWRFRPSULVHKRPRJHQHRXVDVVHWVVWDWLVWLFDOWHFKQLTXHVPRUHUHDGLO\ DOORZLPSDLUPHQWWREHPRQLWRUHGRQDSRUWIROLREDVLV,WLVFRQVLVWHQWZLWKWKH*URXS©VSROLF\RIUDLVLQJDQLPSDLUPHQW DOORZDQFHDVVRRQDVREMHFWLYHHYLGHQFHRILPSDLUPHQWLVLGHQWLILHGDVDUHVXOWRIRQHRUPRUHORVVHYHQWVWKDWKDYH RFFXUUHGVXEVHTXHQWWRLQLWLDOUHFRJQLWLRQ0RGHOVLQXVHDUHEDVHGXSRQFXVWRPHUV©SHUVRQDODQGILQDQFLDOSHUIRUPDQFH LQIRUPDWLRQRYHUUHFHQWSHULRGVZKLFKVHUYHDVDSUHGLFWRUIRUIXWXUHSHUIRUPDQFH7KHPRGHOV©RXWSXWDUHUHJXODUO\ UHYLHZHGDJDLQVWDFWXDOSHUIRUPDQFHDQGZKHUHQHFHVVDU\DPHQGHGWRRSWLPLVHWKHLUHIIHFWLYHQHVV

Exposure migration across PD bands – wholesale operations (Rm)

70 000

60 000

50 000

40 000

30 000

20 000

10 000

0 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Default ● 31 December 2009 ● 31 December 2010

Exposure migration across PD bands – retail operations (Rm)

80 000

70 000

60 000

50 000

40 000

30 000

20 000

10 000

0 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Default ● 31 December 2009 ● 31 December 2010

Credit rating downgrade 7KH*URXSHQWHUVLQWRGHULYDWLYHFRQWUDFWVZLWKUDWHGDQGXQUDWHGFRXQWHUSDUWLHV7RPLWLJDWHFRXQWHUSDUW\FUHGLWULVN WKH *URXS VWLSXODWHV FUHGLW SURWHFWLRQ WHUPV VXFK DV OLPLWDWLRQV RQ WKH DPRXQW RI XQVHFXUHG FUHGLW H[SRVXUH LWZLOODFFHSWFROODWHUDOLVDWLRQLQWKHHYHQWRID070FUHGLWH[SRVXUHH[FHHGLQJWKHFXUUHQWDPRXQWDQGFROODWHUDOLVDWLRQ DQGRUWHUPLQDWLRQRIDFRQWUDFWZKHQFHUWDLQFUHGLWHYHQWVRFFXULQFOXGLQJEXWQRWOLPLWHGWRDGRZQJUDGHRIWKH FRXQWHUSDUW\©VSXEOLFFUHGLWUDWLQJ &HUWDLQFRXQWHUSDUWLHVPD\UHTXLUHWKH*URXSWRSURYLGHVLPLODUFUHGLWSURWHFWLRQWHUPVWRZKLFKLWPD\DJUHHIURP WLPHWRWLPHRQDUHVWULFWLYHEDVLV5DWLQJGRZQJUDGHVDVDFROODWHUDOLVDWLRQRUWHUPLQDWLRQHYHQWDUHJHQHUDOO\RQO\ FRQFHGHGWRKLJKO\UDWHGFRXQWHUSDUWLHVDQGZKHQHYHUSRVVLEOHRQDUHFLSURFDOEDVLV

244 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 7KHLPSDFWRQWKH*URXSLQWHUPVRIWKHDGGLWLRQDODPRXQWRIFROODWHUDOUHTXLUHGLQWKHHYHQWRIDFUHGLWGRZQJUDGHLV GHWHUPLQHGE\WKHQHJDWLYH070YDOXHRQGHULYDWLYHFRQWUDFWV:KHUHWKHLPSDFWRQWKH*URXS©VOLTXLGLW\LVGHHPHG WREHPDWHULDOWKHSRWHQWLDOH[SRVXUHLVWDNHQLQWRDFFRXQWLQPRGHOVWUHVVWHVWLQJ+RZHYHUJHQHUDOO\WKHH[WHQWRI OHJDOFRPPLWPHQWVUHVXOWLQJLQDGGLWLRQDOFROODWHUDOUHTXLUHPHQWVFDXVHGE\DUDWLQJGRZQJUDGHLVQRWPDWHULDODQG ZRXOGQRWKDYHDQDGYHUVHHIIHFWRQWKH*URXS©VILQDQFLDOSRVLWLRQ $VDWWKHUHSRUWLQJGDWHWKHDGGLWLRQDOFROODWHUDOUHTXLUHGWREHSRVWHGIRUDRQHQRWFKGRZQJUDGHZDV5PLOOLRQ DQGIRUDWZRQRWFKGRZQJUDGHZDV5PLOOLRQ

Strategic focus for the year ahead Wholesale credit risk 7KHIRFXVRIWKH*URXS©VZKROHVDOH©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

Retail credit risk 7KH*URXS©VUHWDLORSHUDWLRQVZLOOFRQWLQXHWRHQKDQFHLWVVWUDWHJLHVGHDOLQJZLWKOHJDODFFRXQWVDQGDFFRXQWVXQGHU GHEWFRXQVHOOLQJ&XVWRPHUVDUHEHLQJHQFRXUDJHGWRPDNHSD\PHQWVHYHQLIWKH\FDQQRWPDNHIXOOLQVWDOPHQWV $VWKH*URXSUHOLHVRQGDWDGULYHQVWUDWHJLHVDXWRPDWHGFRQWUROVZHUHLPSOHPHQWHGGXULQJWRHQVXUHGDWD TXDOLW\UHPDLQVRIWKHXWPRVWLPSRUWDQFH ,QIUDVWUXFWXUH IRU WKH *URXS©V $IULFDQ RSHUDWLRQV LV FRQWLQXRXVO\ EHLQJ LPSURYHG &ROOHFWLRQV DQG XQGHUZULWLQJ SURFHVVHVDUHEHLQJHQKDQFHGWRDOLJQZLWKZRUOGFODVVVWDQGDUGV 7KHVHFXUHGSRUWIROLRLVH[SHFWHGWRFRQWLQXHWRPDWXUHDVQHZEXVLQHVVOHYHOVDUHDQWLFLSDWHGWRH[SHULHQFHVWHDG\ JURZWKZLWKDQHDVLQJRIWKHFUHGLWF\FOH*UHDWHUIRFXVZLOOEHSODFHGRQH[SDQGLQJWKHXQVHFXUHGSRUWIROLRZLWKDQ LQFUHDVHGIRFXVRQSHUVRQDOORDQV

Absa Capital – securitisation %DVHODPHQGPHQWVZLOOPRVWOLNHO\EHLPSOHPHQWHGLQ,WLVDQWLFLSDWHGWKDWWKHDPHQGPHQWVZLOOQRWKDYHD PDWHULDOLPSDFWRQWKH*URXS©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 245 Governance, remuneration, risk and controls

Credit risk

IFRS disclosures

Maximum exposure to credit risk )RUILQDQFLDODVVHWVUHFRJQLVHGLQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQWKHH[SRVXUHWRFUHGLWULVNHTXDOVWKHFDUU\LQJ DPRXQW)RUILQDQFLDOJXDUDQWHHVWKHPD[LPXPH[SRVXUHWRFUHGLWULVNLVWKHPD[LPXPDPRXQWWKH*URXSZRXOGKDYH WR SD\ LI WKH JXDUDQWHH ZDV FDOOHG XSRQ )RU ORDQ FRPPLWPHQWV DQG RWKHU FUHGLW UHODWHG FRPPLWPHQWV WKDW DUH LUUHYRFDEOH RYHU WKH OLIH RI WKH UHVSHFWLYH IDFLOLWLHV WKH PD[LPXP H[SRVXUH WR FUHGLW ULVN LV WKH IXOO DPRXQW RI WKH FRPPLWWHGIDFLOLWLHV 7KHIROORZLQJWDEOHLQGLFDWHVWKHPD[LPXPH[SRVXUHDWWKHUHSRUWLQJGDWHWRFUHGLWULVNIRURQDQGRIIVWDWHPHQWRI ILQDQFLDOSRVLWLRQILQDQFLDOLQVWUXPHQWVEHIRUHWDNLQJLQWRDFFRXQWDQ\FROODWHUDOKHOGRURWKHUFUHGLWHQKDQFHPHQWV DQGDIWHUWKHDOORZDQFHIRULPSDLUPHQWDQGQHWWLQJZKHUHDSSURSULDWH Credit risk exposures relating to on-statement of ﬁnancial position assets, net of impairments – Table 22 (audited): Group 2010 Rm 5P %DODQFHVZLWKRWKHUFHQWUDOEDQNV 859 %DODQFHVZLWKWKH6$5% 12 912 0RQH\PDUNHWDVVHWV 5 651 Cash, cash balances and balances with central banks (refer to note 2) 19 422 /DQG%DQNELOOV 50 56$JRYHUQPHQWERQGV 34 602 5HYHUVHUHSXUFKDVHDJUHHPHQWV 2 685 6$5%GHEHQWXUHV — 7UHDVXU\ELOOV 10 878 Statutory liquid asset portfolio (refer to note 3) 48 215 2WKHUORDQVDQGDGYDQFHVWREDQNV 19 305 5HYHUVHUHSXUFKDVHDJUHHPHQWV 5 572 Loans and advances to banks (refer to note 4) 24 877 'HEWLQVWUXPHQWV 11 694 'HULYDWLYHDVVHWV 43 404 0RQH\PDUNHWDVVHWV 1 902 Trading portfolio assets (refer to note 5) 57 000 'HULYDWLYHVGHVLJQDWHGDVFDVKIORZKHGJLQJLQVWUXPHQWV 3 813 'HULYDWLYHVGHVLJQDWHGDVIDLUYDOXHKHGJLQJLQVWUXPHQWV 849 Hedging portfolio assets (refer to note 5) 4 662 $FFRXQWVUHFHLYDEOH 4 708 &ROODWHUDO 4 171 6HWWOHPHQWDFFRXQWV 4 627 Other assets (refer to note 6) 13 506

Notes Comparatives have been reclassiﬁed. Excludes cash under management.

246 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Credit risk exposures relating to on-statement of ﬁnancial position assets, net of impairments – Table 22 (audited): (continued) Group 2010 Rm 5P 5HWDLO%DQNLQJ 325 790 &KHTXHDFFRXQWV 2 211 &UHGLWFDUGV 18 319 ,QVWDOPHQWFUHGLWDJUHHPHQWV 39 549 /RDQVWRDVVRFLDWHVDQGMRLQWYHQWXUHV 4 827 0LFURORDQV 1 662 0RUWJDJHV 245 963 2WKHUDGYDQFHV 31 3HUVRQDODQGWHUPORDQV 13 228 $EVD%XVLQHVV%DQN 123 618 &RUSRUDWH 23 816 /DUJHDQG0HGLXP 74 119 2WKHU 20 616 6PDOO 5 067 $EVD&DSLWDO 50 044 2WKHUDQGLQWHUJURXSHOLPLQDWLRQV (817) Loans and advances to customers (refer to note 8) 498 635 ,QVXUDQFHFRQWUDFWV 386 ,QYHVWPHQWFRQWUDFWV 474 Reinsurance assets (refer to note 10) 860 'HEWLQVWUXPHQWV 8 045 'HULYDWLYHLQVWUXPHQWV 215 Investment securities (refer to note 11) 8 260 Total assets subject to credit risk (refer to table 28) 675 437 $VVHWVQRWVXEMHFWWRFUHGLWULVN2 41 033 Total assets per the statement of ﬁnancial position 716 470

Credit risk exposures relating to off-statement of ﬁnancial position items – Table 23 (audited): )LQDQFLDOJXDUDQWHHV 599 *XDUDQWHHV 11 051 ,UUHYRFDEOHIDFLOLWLHV 46 495 /HWWHUVRIFUHGLW 4 979 63 124

Notes Comparatives have been reclassiﬁed. Includes coins and bank notes, prepayments, constructed assets held for sale, repossessed properties, deferred costs, cash under management, investments in equity instruments, deferred tax assets, intangible assets, investment properties and property and equipment which are not subject to credit risk.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 247 Governance, remuneration, risk and controls

Credit risk

Financial instruments designated at fair value through proﬁt or loss – Table 24 (audited): 7KHIROORZLQJUHSUHVHQWVWKHPD[LPXPH[SRVXUHDWWKHUHSRUWLQJGDWHWRFUHGLWULVNRIILQDQFLDOLQVWUXPHQWVGHVLJQDWHG DWIDLUYDOXHWKURXJKSURILWRUORVVEHIRUHWDNLQJLQWRDFFRXQWDQ\FROODWHUDOKHOGRURWKHUFUHGLWHQKDQFHPHQWV Group 2010 Rm 5P Assets &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDOEDQNV UHIHUWRQRWH 3 013 6WDWXWRU\OLTXLGDVVHWSRUWIROLR UHIHUWRQRWH 3 463 /RDQVDQGDGYDQFHVWREDQNV UHIHUWRQRWH 7 047 2WKHUDVVHWV UHIHUWRQRWH 16 ¥ /RDQVDQGDGYDQFHVWRFXVWRPHUV UHIHUWRQRWH 9 990 ,QYHVWPHQWVHFXULWLHV UHIHUWRQRWH 6 365 29 894 Liabilities 'HSRVLWVIURPEDQNV UHIHUWRQRWH 1 679 2WKHUOLDELOLWLHV UHIHUWRQRWH 12 'HSRVLWVGXHWRFXVWRPHUV UHIHUWRQRWH 16 856 'HEWVHFXULWLHVLQLVVXH UHIHUWRQRWH 1 561 /LDELOLWLHVXQGHULQYHVWPHQWFRQWUDFWV UHIHUWRQRWH 13 964 %RUURZHGIXQGV UHIHUWRQRWH 739 34 811 $WWKHUHSRUWLQJGDWHWKH*URXSGLGQRWXVHFUHGLWGHULYDWLYHVDVDPHFKDQLVPWRKHGJHLWVH[SRVXUHWRFUHGLWULVNIRU ILQDQFLDOLQVWUXPHQWVGHVLJQDWHGDWIDLUYDOXH

Contractual obligation at maturity of ﬁnancial liabilities designated at fair value through proﬁt or loss – Table 25 (audited): 7KHIROORZLQJUHSUHVHQWVWKHFDUU\LQJYDOXHRIILQDQFLDOOLDELOLWLHVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVVDQGWKH DPRXQWZKLFKWKH*URXSLVFRQWUDFWXDOO\UHTXLUHGWRSD\WRWKHKROGHURIWKHREOLJDWLRQDWPDWXULW\ Group 2010 Carrying Contractual &DUU\LQJ &RQWUDFWXDO value obligation YDOXH REOLJDWLRQ Rm Rm 5P 5P Liabilities 'HSRVLWVIURPEDQNV UHIHUWRQRWH 1 679 7 584 2WKHUOLDELOLWLHV UHIHUWRQRWH 12 12 'HSRVLWVGXHWRFXVWRPHUV UHIHUWRQRWH 16 856 21 913 'HEWVHFXULWLHVLQLVVXH UHIHUWRQRWH 1 561 5 907 /LDELOLWLHVXQGHULQYHVWPHQWFRQWUDFWV UHIHUWRQRWH 13 964 13 914 %RUURZHGIXQGV UHIHUWRQRWH 739 756 34 811 50 086

248 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Decrease in fair value attributable to changes in credit risk during the year – Table 26 (audited): Group 2010 Rm 5P Assets /RDQVDQGDGYDQFHVWRFXVWRPHUV (10)

Cumulative increase in fair value attributable to changes in credit risk – Table 27 (audited): Group 2010 Rm 5P Assets /RDQVDQGDGYDQFHVWRFXVWRPHUV 4 ,QYHVWPHQWVHFXULWLHV — 7KHIROORZLQJDSSURDFKHVDUHXVHGE\WKH*URXSLQGHWHUPLQLQJFKDQJHVLQIDLUYDOXHGXHWRFKDQJHVLQFUHGLWULVN IRUORDQVDQGUHFHLYDEOHVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV ,QWHUQDOULVNJUDGLQJDSSURDFKWKHFXPXODWLYHFKDQJHLQIDLUYDOXHGXHWRFKDQJHVLQFUHGLWULVNLVFDOFXODWHGE\ DVVLJQLQJWRHDFKFXVWRPHUDQLQWHUQDOULVNJUDGLQJEDVHGRQWKHFXVWRPHU©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 249 Governance, remuneration, risk and controls

Credit risk

Financial assets subject to credit risk

Financial assets subject to credit risk – Table 28 (audited): )RUWKHSXUSRVHVRIWKH*URXS©VGLVFORVXUHUHJDUGLQJFUHGLWTXDOLW\WKHPD[LPXPH[SRVXUHWRFUHGLWULVNRIILQDQFLDO DVVHWVDWWKHUHSRUWLQJGDWHKDVEHHQDQDO\VHGDVIROORZV

Cash, cash balances and Statutory Loans and balances with liquid asset advances to central banks1 portfolio banks Rm Rm Rm 1HLWKHUSDVWGXHQRULPSDLUHG UHIHUWRWDEOH 19 422 48 215 24 877 3DVWGXHEXWQRWLPSDLUHG UHIHUWRWDEOH ——— ,PSDLUHG UHIHUWRWDEOH ——— ,PSDLUPHQWDOORZDQFH UHIHUWRWDEOH ——— ,GHQWLILHGLPSDLUPHQWV UHIHUWRWDEOH ——— ,GHQWLILHGFROOHFWLYH ——— 1RQSHUIRUPLQJORDQV ——— 2WKHU ——— ,GHQWLILHGLQGLYLGXDO ——— 1RQSHUIRUPLQJORDQV ——— 2WKHU ——— 8QLGHQWLILHGLPSDLUPHQWV ———

Carrying value of ﬁnancial assets (refer to table 22) 19 422 48 215 24 877 &DVKFDVK EDODQFHVDQG 6WDWXWRU\ /RDQVDQG EDODQFHVZLWK OLTXLGDVVHW DGYDQFHVWR FHQWUDOEDQNV SRUWIROLR EDQNV 5P 5P 5P 1HLWKHUSDVWGXHQRULPSDLUHG UHIHUWRWDEOH 3DVWGXHEXWQRWLPSDLUHG UHIHUWRWDEOH ¥ ¥ ¥ ,PSDLUHG UHIHUWRWDEOH ¥ ¥ ¥ ,PSDLUPHQWDOORZDQFH UHIHUWRWDEOH ¥ ¥ ¥ ,GHQWLILHGLPSDLUPHQWV UHIHUWRWDEOH ,GHQWLILHGFROOHFWLYH ¥ ¥ ¥ 1RQSHUIRUPLQJORDQV ¥ ¥ ¥ 2WKHU ¥ ¥ ¥ ,GHQWLILHGLQGLYLGXDO ¥ ¥ ¥ 1RQSHUIRUPLQJORDQV ¥ ¥ ¥ 2WKHU ¥ ¥ ¥ 8QLGHQWLILHGLPSDLUPHQWV ¥ ¥ ¥

&DUU\LQJYDOXHRIILQDQFLDODVVHWV UHIHUWRWDEOH

Notes Cash, cash balances and balances with central banks exclude coins and bank notes which are not subject to credit risk. Trading portfolio assets and investment securities exclude equity instruments and commodities as they are not subject to credit risk. Exclude cash under management. Comparatives have been reclassiﬁed.

250 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010

Trading Hedging Loans and portfolio portfolio Other advances to Reinsurance Investment assets2 assets assets3 customers assets securities2 Total Rm Rm Rm Rm Rm Rm Rm 57 000 4 662 13 099 448 860 860 8 260 625 255 — — 55 5 964 — — 6 019 — — 372 57 713 — — 58 085 — — (20) (13 902) — — (13 922) — — (20) (12 949) — — (12 969) — — — (10 615) — — (10 615) — — — (9 903) — — (9 903) — — — (712) — — (712) — — (20) (2 334) — — (2 354) — — — (1 912) — — (1 912) — — (20) (422) — — (442) — — — (953) — — (953)

57 000 4 662 13 506 498 635 860 8 260 675 437

7UDGLQJ +HGJLQJ /RDQVDQG SRUWIROLR SRUWIROLR 2WKHU DGYDQFHVWR 5HLQVXUDQFH ,QYHVWPHQW DVVHWV DVVHWV DVVHWV FXVWRPHUV DVVHWV VHFXULWLHV 7RWDO 5P 5P 5P 5P 5P 5P 5P ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 251 Governance, remuneration, risk and controls

Credit risk

Financial assets neither past due nor impaired )LQDQFLDODVVHWVQHLWKHUSDVWGXHQRULPSDLUHGFDQEHDQDO\VHGDFFRUGLQJWRWKHLQWHUQDOUDWLQJV\VWHPXVHGLQWKH *URXS©VEXVLQHVV7KHFUHGLWTXDOLW\RIILQDQFLDODVVHWVVXEMHFWWRFUHGLWULVNWKDWZHUHQHLWKHUSDVWGXHQRULPSDLUHG EDVHGRQWKH*URXS©VLQWHUQDOUDWLQJVZHUHDVIROORZV Credit risk exposures relating to on-statement of ﬁnancial position assets – Table 29 (audited):

Group 2010 DG 1 – 11 DG 12 – 19 DG 20 – 21 Total Rm Rm Rm Rm %DODQFHVZLWKRWKHUFHQWUDOEDQNV 859 — — 859 %DODQFHVZLWKWKH6$5% 12 912 — — 12 912 0RQH\PDUNHWDVVHWV 5 651 — — 5 651 Cash, cash balances and balances with central banks 19 422 — — 19 422 /DQG%DQNELOOV 50——50 56$JRYHUQPHQWERQGV 34 602 — — 34 602 5HYHUVHUHSXUFKDVHDJUHHPHQWV 2 685 — — 2 685 7UHDVXU\ELOOV 10 878 — — 10 878 Statutory liquid asset portfolio 48 215 — — 48 215 2WKHUORDQVDQGDGYDQFHVWREDQNV 19 294 11 — 19 305 5HYHUVHUHSXUFKDVHDJUHHPHQWV 5 572 — — 5 572 Loans and advances to banks 24 866 11 — 24 877 'HEWLQVWUXPHQWV 11 694 — — 11 694 'HULYDWLYHDVVHWV 41 111 2 204 89 43 404 0RQH\PDUNHWDVVHWV 1 889 13 — 1 902 Trading portfolio assets 54 694 2 217 89 57 000 'HULYDWLYHVGHVLJQDWHGDVFDVKIORZKHGJLQJ LQVWUXPHQWV 3 813 — — 3 813 'HULYDWLYHVGHVLJQDWHGDVIDLUYDOXHKHGJLQJ LQVWUXPHQWV 849 — — 849 Hedging portfolio assets 4 662 — — 4 662 $FFRXQWVUHFHLYDEOH 4 300 1 — 4 301 &ROODWHUDO 4 171 — — 4 171 6HWWOHPHQWDFFRXQWV 4 447 180 — 4 627 Other assets 12 918 181 — 13 099

252 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Credit risk exposures relating to on-statement of ﬁnancial position assets – Table 29 (audited): (continued)

Group 2010 DG 1 – 11 DG 12 – 19 DG 20 – 21 Total Rm Rm Rm Rm 5HWDLO%DQNLQJ 87 321 189 630 7 438 284 389 &KHTXHDFFRXQWV 716 1 382 1 2 099 &UHGLWFDUGV 3 154 12 249 545 15 948 ,QVWDOPHQWFUHGLWDJUHHPHQWV 5 769 28 139 1 195 35 103 /RDQVWRDVVRFLDWHVDQGMRLQWYHQWXUHV 793 3 870 164 4 827 0LFURORDQV 454 807 220 1 481 0RUWJDJHV 74 083 135 732 2 917 212 732 2WKHUDGYDQFHV 31——31 3HUVRQDOORDQV 2 321 7 451 2 396 12 168 $EVD%XVLQHVV%DQN 53 720 57 474 4 147 115 341 &RUSRUDWH 16 866 5 272 40 22 178 /DUJHDQG0HGLXP 28 300 37 513 2 634 68 447 2WKHU 7 831 11 083 1 238 20 152 6PDOO 723 3 606 235 4 564 $EVD&DSLWDO 32 135 17 478 334 49 947 2WKHUDQGLQWHUJURXSHOLPLQDWLRQV (856) 39 — (817) Loans and advances to customers 172 320 264 621 11 919 448 860 ,QVXUDQFHFRQWUDFWV 386 — — 386 ,QYHVWPHQWFRQWUDFWV 474 — — 474 Reinsurance assets 860 — — 860 'HEWLQVWUXPHQWV 6 783 1 262 — 8 045 'HULYDWLYHLQVWUXPHQWV 215 — — 215 Investment securities 6 998 1 262 — 8 260 Total (refer to table 28) 344 955 268 292 12 008 625 255

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 253 Governance, remuneration, risk and controls

Credit risk

Credit risk exposures relating to on-statement of ﬁnancial position assets – Table 29 (audited): (continued) *URXS '*¤ '*¤ '*¤ 7RWDO 5P5P5P5P %DODQFHVZLWKRWKHUFHQWUDOEDQNV ¥ ¥ %DODQFHVZLWKWKH6$5% ¥ ¥ 0RQH\PDUNHWDVVHWV ¥ ¥ &DVKFDVKEDODQFHVDQGEDODQFHV ZLWKFHQWUDOEDQNV ¥ ¥ /DQG%DQNELOOV ¥ ¥ 56$JRYHUQPHQWERQGV ¥ ¥ 5HYHUVHUHSXUFKDVHDJUHHPHQWV ¥ ¥ 6$5%GHEHQWXUHV ¥ ¥ 7UHDVXU\ELOOV ¥ ¥ 6WDWXWRU\OLTXLGDVVHWSRUWIROLR ¥ ¥ 2WKHUORDQVDQGDGYDQFHVWREDQNV ¥ 5HYHUVHUHSXUFKDVHDJUHHPHQWV ¥ ¥ /RDQVDQGDGYDQFHVWREDQNV ¥ 'HEWLQVWUXPHQWV ¥ ¥ 'HULYDWLYHDVVHWV 0RQH\PDUNHWDVVHWV ¥ 7UDGLQJSRUWIROLRDVVHWV 'HULYDWLYHVGHVLJQDWHGDVFDVKIORZKHGJLQJ LQVWUXPHQWV ¥ ¥ 'HULYDWLYHVGHVLJQDWHGDVIDLUYDOXHKHGJLQJ LQVWUXPHQWV ¥ ¥ +HGJLQJSRUWIROLRDVVHWV ¥ ¥ $FFRXQWVUHFHLYDEOH ¥ &ROODWHUDO ¥ ¥ 6HWWOHPHQWDFFRXQWV ¥ 2WKHUDVVHWV ¥ 5HWDLO%DQNLQJ &KHTXHDFFRXQWV &UHGLWFDUGV ,QVWDOPHQWFUHGLWDJUHHPHQWV /RDQVWRDVVRFLDWHVDQGMRLQWYHQWXUHV 0LFURORDQV 0RUWJDJHV 2WKHUDGYDQFHV ¥ ¥ 3HUVRQDODQGWHUPORDQV

Note Comparatives have been reclassiﬁed.

254 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Credit risk exposures relating to on-statement of ﬁnancial position assets – Table 29 (audited): (continued) *URXS '*¤ '*¤ '*¤ 7RWDO 5P5P5P5P $EVD%XVLQHVV%DQN &RUSRUDWH /DUJHDQG0HGLXP 2WKHU 6PDOO $EVD&DSLWDO 2WKHU ¥ ¥ /RDQVDQGDGYDQFHVWRFXVWRPHUV ,QVXUDQFHFRQWUDFWV ¥ ¥ ,QYHVWPHQWFRQWUDFWV ¥ ¥ 5HLQVXUDQFHDVVHWV ¥ ¥ 'HEWLQVWUXPHQWV ¥ 'HULYDWLYHLQVWUXPHQWV ¥ ¥ ,QYHVWPHQWVHFXULWLHV ¥ 7RWDO UHIHUWRWDEOH

Note Comparatives have been reclassiﬁed.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 255 Governance, remuneration, risk and controls

Credit risk

Financial assets renegotiated &HUWDLQRIWKH*URXS©VORDQVDQGDGYDQFHVWRFXVWRPHUVZRXOGKDYHGHIDXOWHGLIWKHLUWHUPVKDGQRWEHHQUHQHJRWLDWHG $WWKHUHSRUWLQJGDWHWKHFDUU\LQJDPRXQWRIDVVHWVUHQHJRWLDWHGDQGWUDQVIHUUHGWRQHLWKHUSDVWGXHQRULPSDLUHG FODVVLILFDWLRQLQWKHODVWPRQWKVZDVDVIROORZV Loans and advances to customers – Table 30 (audited): Group 2010 Rm 5P 5HWDLO%DQNLQJ 2 276 &KHTXHDFFRXQWV 2 &UHGLWFDUGV 287 ¥ ,QVWDOPHQWFUHGLWDJUHHPHQWV 143 0LFURORDQV 6 0RUWJDJHV 1 708 2WKHUDGYDQFHV — 3HUVRQDODQGWHUPORDQV 130 $EVD%XVLQHVV%DQN 955 $EVD&DSLWDO 154 3 385

Notes Only assets included in loans and advances at the reporting date. Assets are only transferred to the neither past due nor impaired classification once the customer demonstrates the ability to make the contractual payments for a specified period. Comparatives have been reclassified.

,QWKHHYHQWDFXVWRPHUORDQEHFRPHVSDVWGXHDQGWKHFXVWRPHUFDQQRWWHPSRUDULO\DIIRUGWRSD\WKHDUUHDUVRU PRQWKO\LQVWDOPHQWVWKHFXVWRPHUFRXOGTXDOLI\IRUDUHPHGLDWLRQSHULRGWRJLYHKLPKHUWKHRSSRUWXQLW\WRUHFWLI\WKH VLWXDWLRQ 2Q H[SLU\ RI WKH UHPHGLDWLRQ SHULRG WKH FXVWRPHU©V VLWXDWLRQ LV UHDVVHVVHG DQG WKH UHFWLILFDWLRQ RI WKH DFFRXQWRUWKHUHQHJRWLDWLRQRIWKHWHUPVRIWKHDJUHHPHQWDUHH[SORUHG7KHWHUPVRIWKHDJUHHPHQWFDQRQO\EH SHUPDQHQWO\DOWHUHGRQFHLQDPRQWKSHULRGDQGLVVXEMHFWWRDIIRUGDELOLW\DQGFXVWRPHUULVNDVVHVVPHQWV7KH UHQHJRWLDWHGWHUPRIWKHFRQWUDFWLVOLPLWHGE\WKHPD[LPXPOHJDOO\DOORZHGILQDQFLQJWHUPIRUWKHVSHFLILFSURGXFW

256 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Financial assets that are past due but not impaired 7KHVH DUH DVVHWV ZKHUH FRQWUDFWXDO LQWHUHVW RU SULQFLSDO SD\PHQWV DUH SDVW GXH EXW WKH *URXS EHOLHYHV WKDW LPSDLUPHQWLVQRWDSSURSULDWHEDVHGRQWKHOHYHORIFROODWHUDODYDLODEOHDVVHFXULW\ 7KHDJHRIORDQVDQGDGYDQFHVWRFXVWRPHUVDQGRWKHUDVVHWVWKDWDUHSDVWGXHEXWQRWLPSDLUHGLVDVIROORZV Financial assets that are past due but not impaired – Table 31 (audited): Group 2010 Past due Past due Past due Past due Past due up to 1 – 2 2 – 3 3 – 4 older than 1 month months months months 4 months Total Rm Rm Rm Rm Rm Rm $FFRXQWVUHFHLYDEOH 11 7 33 — 4 55 Other assets 11 7 33 — 4 55 5HWDLO%DQNLQJ 610 70 55 55 2 153 2 943 &KHTXHDFFRXQWV 10————10 0RUWJDJHV 600 70 55 55 2 153 2 933

$EVD%XVLQHVV%DQN 1 988 348 331 35 313 3 015 &RUSRUDWH 435————435 /DUJHDQG0HGLXP 1 427 312 310 21 218 2 288 2WKHU 58 29 11 5 5 108 6PDOO 68 7 10 9 90 184 $EVD&DSLWDO ———— 66 Loans and advances to customers 2 598 418 386 90 2 472 5 964 Total (refer to table 28) 2 609 425 419 90 2 476 6 019

3DVWGXH 3DVWGXH 3DVWGXH 3DVWGXH 3DVWGXH XSWR ¤ ¤ ¤ ROGHUWKDQ PRQWK PRQWKV PRQWKV PRQWKV PRQWKV 7RWDO 5P 5P 5P 5P 5P 5P $FFRXQWVUHFHLYDEOH ¥ Other assets ¥ 5HWDLO%DQNLQJ &KHTXHDFFRXQWV ,QVWDOPHQWFUHGLWDJUHHPHQWV 0RUWJDJHV $EVD%XVLQHVV%DQN /DUJHDQG0HGLXP 2WKHU 6PDOO $EVD&DSLWDO ¥¥¥ ¥

Loans and advances to customers Total (refer to table 28) )RUGHWDLOVRIWKHFROODWHUDOKHOGDJDLQVWWKHDERYHORDQVDQGDGYDQFHVWRFXVWRPHUVUHIHUWRWDEOH

Note Comparatives have been reclassiﬁed.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 257 Governance, remuneration, risk and controls

Credit risk

Identiﬁed impairments on ﬁnancial assets 7KH*URXS©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

Analysis of identiﬁed impairment – Table 32 (audited): Group 2010 Impair- ,PSDLU Original ment Revised 2ULJLQDO PHQW 5HYLVHG carrying allow- carrying FDUU\LQJ DOORZ FDUU\LQJ amount ance amount DPRXQW DQFH DPRXQW Rm Rm Rm 5P 5P 5P $FFRXQWVUHFHLYDEOH 372 (20) 352 Other assets 372 (20) 352 5HWDLO%DQNLQJ 49 441 (10 519) 38 922

&KHTXHDFFRXQWV 242 (122) 120 &UHGLWFDUGV 4 559 (2 147) 2 412 ,QVWDOPHQWFUHGLWDJUHHPHQWV 6 025 (1 522) 4 503 0LFURORDQV 588 (384) 204 0RUWJDJHV 35 903 (5 290) 30 613 3HUVRQDODQGWHUPORDQV 2 124 (1 054) 1 070

$EVD%XVLQHVV%DQN 7 722 (2 088) 5 634 &RUSRUDWH 1 384 (147) 1 237 /DUJHDQG0HGLXP 4 860 (1 227) 3 633 2WKHU 1 052 (618) 434 6PDOO 426 (96) 330

$EVD&DSLWDO 550 (342) 208 2WKHU ——— Loans and advances to customers 57 713 (12 949) 44 764 Total (refer to table 28) 58 085 (12 969) 45 116 )RUGHWDLOVRIWKHFROODWHUDOKHOGDJDLQVWWKHDERYHORDQVDQGDGYDQFHVWRFXVWRPHUVUHIHUWRWDEOH

Note Comparatives have been reclassified.

258 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Reconciliation of total impairments (identiﬁed and unidentiﬁed)

Reconciliation of total impairments (identified and unidentified) – Table 33 (audited): Group 2010 Net present value unwind on non- Impairment Impairment Opening performing Exchange Amounts raised raised un- Closing Impairment of loans and balance book differences written off identified identified balance advances to customers Rm Rm Rm Rm Rm Rm Rm 5HWDLO%DQNLQJ 10 130 (671) — (3 862) 5 531 (145) 10 983 $EVD%XVLQHVV%DQN 2 470 (87) — (1 147) 1 264 (40) 2 460 $EVD&DSLWDO 547 (8) (2) (191) 121 (8) 459 2WKHU 11 2 — (19) 3 3 —

Total (refer to table 28) 13 158 (764) (2) (5 219) 6 919 (190) 13 902

1HWSUHVHQW YDOXH XQZLQG RQQRQ ,PSDLUPHQW ,PSDLUPHQW 2SHQLQJ SHUIRUPLQJ ([FKDQJH $PRXQWV UDLVHG UDLVHGXQ &ORVLQJ ,PSDLUPHQWRIORDQVDQG EDODQFH ERRN GLIIHUHQFHV ZULWWHQRII LGHQWLILHG LGHQWLILHG EDODQFH DGYDQFHVWRFXVWRPHUV 5P 5P 5P 5P 5P 5P 5P

5HWDLO%DQNLQJ ¥ $EVD%XVLQHVV%DQN $EVD&DSLWDO 2WKHU ¥ ¥ ¥ ¥

Total (refer to table 28)

Note Comparatives have been reclassiﬁed.

Write-offs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

Net present value unwind on non-performing book 7KH LPSDLUPHQW DOORZDQFH FRQWDLQV D QHW SUHVHQW YDOXH DGMXVWPHQW WKDW UHSUHVHQWV WKH WLPH YDOXH RI PRQH\ RI H[SHFWHGFDVKIORZV6XFKWLPHYDOXHRIPRQH\UHGXFHVDVWKHSRLQWRIFDVKIORZLVDSSURDFKHG7KHWLPHEDVHG UHGXFWLRQLQWLPHYDOXHRIPRQH\LVUHFRJQLVHGLQWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHDVLQWHUHVWUHFHLYHGRQ LPSDLUHGDVVHWV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 259 Governance, remuneration, risk and controls

Credit risk

Regulation 43 disclosure requirements Gross exposure per asset class and EAD per approach under Basel II – Table 34: 'HFHPEHU 31 December 2010 Utilised on-statement Off-statement of ﬁnancial of ﬁnancial Total position position credit exposure exposure exposure EAD ($' Standardised approach Rm Rm Rm Rm 5P &RUSRUDWHH[SRVXUH 3 275 1 620 4 895 4 895 &RUSRUDWH ————¥ 60( 3 275 1 620 4 895 4 895 %DQNV 1 514 — 1 514 1 514 3XEOLFVHFWRUHQWLWLHV 149 — 149 149 5HWDLO 1 362 — 1 362 1 362 6RYHUHLJQ 49 567 — 49 567 49 567 55 867 1 620 57 487 57 487

Note Average balances have been utilised where applicable for consistency with the regulations.

'HFHPEHU 31 December 2010 Utilised on- Off- statement statement OTC of of Repur- deriva- ﬁnancial ﬁnancial chase tive Total position position and resale instru- credit exposure exposure agreements ments exposure EAD ($' FIRB approach Rm Rm Rm Rm Rm Rm 5P &RUSRUDWH 133 557 136 362 132 5 709 275 760 185 424 /DUJH 111 890 128 312 132 5 518 245 852 159 542 60( 17 324 6 539 — — 23 863 21 211 6SHFLDOLVHGOHQGLQJ ¤LQFRPHSURGXFLQJ UHDOHVWDWH 2 305 1 394 — 175 3 874 2 500 ¥ 6SHFLDOLVHGOHQGLQJ ¤SURMHFWILQDQFH 2 038 117 — 16 2 171 2 171 ¥ %DQNV 20 036 23 882 8 712 42 367 94 997 31 427 /RFDOJRYHUQPHQWDQG PXQLFLSDOLWLHV 5 202 3 236 — — 8 438 7 325 ¥ 3XEOLFVHFWRUHQWLWLHV 5 089 10 906 2 210 2 547 20 752 14 322 5HWDLO 0—— 3314 ¥ 60( 0—— 3314 ¥ 6RYHUHLJQ 1 026 100 — — 1 126 1 026 6HFXULWLHVILUPV 1 536 274 721 47 2 578 1 903 166 446 174 760 11 775 50 673 403 654 241 441

Note 1Comparatives not available. Data has been reﬁned in current year to facilitate and improve disclosure.

260 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 'HFHPEHU 31 December 2010 Utilised on-statement Off-statement of ﬁnancial of ﬁnancial Total position position credit exposure exposure exposure EAD ($' AIRB approach Rm Rm Rm Rm 5P 5HWDLO 0RUWJDJHV 252 115 52 166 304 281 272 267 60(UHWDLO 16 863 9 333 26 196 22 600 5HYROYLQJFUHGLW 22 672 25 487 48 159 43 646 2WKHU 71 791 5 380 77 171 72 378 363 441 92 366 455 807 410 891 446 145

EAD exposure by geography – Table 35:

31 December 2010 Other African North South Africa Europe countries America Other Asia Total Rm Rm Rm Rm Rm Rm Rm

6WDQGDUGLVHG 48 215 — 9 272 — — — 57 487 ,QWHUQDO5DWLQJV%DVHG 622 451 22 640 3 146 3 455 615 25 652 332 $,5% 410 891 ————— 410 891 ),5% 211 560 22 640 3 146 3 455 615 25 241 441

670 666 22 640 12 418 3 455 615 25 709 819

'HFHPEHU 2WKHU $IULFDQ 1RUWK 6RXWK$IULFD (XURSH FRXQWULHV $PHULFD 2WKHU $VLD 7RWDO 5P 5P 5P 5P 5P 5P 5P 6WDQGDUGLVHG ¥ ¥ ¥ ¥ ,QWHUQDO5DWLQJV%DVHG ¥ ¥ 7RWDO ¥ ¥

Note Breakdown not disclosed previously.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 261 Governance, remuneration, risk and controls

Credit risk

PDs, EADs and LGDs by risk grade under the FIRB approach as at 31 December – Table 36:

Corporate SME corporate Exposure Exposure weighted weighted average average $YHUDJH Average risk Expected risk Expected 5LVNJUDGH 3' PD LGD weight loss EAD LGD weight loss EAD % % % Rm Rm % % Rm Rm 1RQGHIDXOW 1,19 43,40 68,31 905 154 668 42,07 78,39 225 19 171

¥ ————————— ¥ ————————— ¥ ————————— 0,03 44,08 14,17 1 8 377 — — — — 0,04 45,00 58,86 1 3 988 0,00 0,00 — — 0,06 40,87 19,00 2 9 830 35,36 14,37 0 103 0,08 44,71 25,58 3 8 506 45,00 21,94 0 9 0,12 44,34 33,48 5 8 863 43,06 25,15 0 40 0,17 43,53 37,87 9 12 898 43,57 32,85 0 123 0,22 41,58 42,86 9 9 328 43,52 37,58 1 1 424 0,31 42,59 52,99 18 11 911 43,95 45,23 2 1 685 0,46 44,26 65,57 24 11 640 41,39 49,73 4 2 163 0,62 43,30 73,36 23 8 530 43,93 62,04 4 1 442 0,92 43,13 85,87 51 12 943 41,82 67,76 8 2 015 1,26 43,34 86,38 48 9 662 39,48 70,55 12 2 567 1,86 43,67 109,25 95 11 669 43,45 87,52 11 1 361 2,50 43,83 95,94 148 13 572 43,28 95,09 17 1 548 3,61 43,76 131,32 77 4 897 40,98 98,89 26 1 686 5,23 44,04 149,09 67 2 905 44,22 117,63 21 931 7,61 43,99 172,19 85 2 465 40,15 119,08 23 812 10,05 44,73 192,30 25 563 43,86 150,24 7 171 14,30 43,23 211,45 49 773 37,89 147,74 31 600 19,88 44,91 236,60 30 333 43,66 191,06 20 226 29,94 39,91 220,51 94 782 44,25 206,86 26 195 38,59 44,95 240,56 41 233 44,66 208,57 12 70 'HIDXOW 100,00 15,34 11,56 411 4 874 14,17 12,10 460 2 040 4,02 42,54 66,58 1 316 159 542 39,39 72,02 685 21 211

262 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 Specialised lending – income producing real estate Specialised lending – project ﬁnance Public sector entities Exposure Exposure Exposure weighted weighted weighted average average average risk Expected risk Expected risk Expected LGD weight loss EAD LGD weight loss EAD LGD weight loss EAD % % Rm Rm % % Rm Rm % % Rm Rm 39,35 60,53 11 2 500 45,00 94,36 15 2 171 41,76 42,03 19 14 322 ———————————— ———————————— ———————————— ———————————— ———————————— 35,66 15,60 0 39 — — — — — — — — 36,05 18,96 0 0 — — — — 42,91 26,41 1 1 831 44,68 31,42 0 231 45,00 32,46 0 336 40,95 29,15 3 5 834 42,08 33,12 0 162 — — — — 45,00 41,68 1 1 673 37,76 38,47 0 125 — — — — 45,00 46,70 0 98 43,92 53,21 1 544 45,00 52,49 0 114 38,76 45,22 3 3 035 35,76 48,30 0 297 45,00 65,62 0 113 45,00 69,78 2 710 35,00 59,05 0 80 45,00 76,35 1 207 0,00 0,00 — — 35,67 63,32 1 256 45,00 92,18 0 6 45,00 89,00 1 300 38,13 79,23 2 528 45,00 102,89 1 85 45,00 105,45 1 163 35,32 74,04 0 11 45,00 111,95 7 860 45,00 107,21 3 407 35,00 92,46 0 0 45,00 119,54 0 23 45,00 122,36 3 214 35,55 88,96 2 124 45,00 132,17 6 427 45,00 136,90 0 4 0,00 0,00 — — — — — — 45,00 153,79 1 53 35,03 117,53 1 31 — — — — — — — — ———————————— 37,16 162,91 4 72 — — — — — — — — 0,00 0,00 — — — — — — — — — — ———————————— ———————————— ———————————— 39,35 60,53 11 2 500 45,00 94,36 15 2 171 41,76 42,03 19 14 322

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 263 Governance, remuneration, risk and controls

Credit risk

PDs, EADs and LGDs by risk grade under the FIRB approach as at 31 December – Table 36:

Local governments and municipalities Sovereign Banks Exposure Exposure Exposure weighted weighted weighted average average average risk Expected risk Expected risk Expected 5LVNJUDGH LGD weight loss EAD LGD weight loss EAD LGD weight loss EAD % % Rm Rm % % Rm Rm % % Rm Rm 1RQGHIDXOW 45,00 40,45 10 7 325 23,41 16,80 1 1 026 43,69 17,58 9 31 427

— —— — — ———— ——— — —— — — ———— ——— — —— — — ———— ——— 45,00 14,44 0 0 13,55 4,37 0 704 43,44 13,75 4 26 149 45,00 17,01 0 11 45,00 15,60 0 10 — — — — 45,00 19,65 0 2 008 0,00 0,00 — — 45,00 2,14 0 172 45,00 25,14 0 34 — — — — — — — — 45,00 33,85 1 1 783 45,00 33,51 0 260 45,00 29,81 2 2 838 44,95 37,75 1 409 45,00 39,48 0 0 44,76 40,59 1 1 456 45,00 47,03 1 606 — — — — 45,00 42,82 0 446 45,00 50,28 3 1 550 — — — — 45,00 54,08 0 49 45,00 68,98 2 687 — — — — 45,00 63,26 0 125 45,00 74,80 0 72 45,00 75,94 0 2 45,00 77,04 0 8 45,00 91,87 0 2 45,00 90,65 0 29 45,00 92,01 1 162 45,00 98,72 0 20 — — — — — — — — 45,00 109,77 0 23 45,00 117,19 0 1 45,00 112,34 0 10 45,00 122,61 1 94 45,00 122,36 1 20 45,00 125,12 0 0 45,00 133,57 0 12 0,00 0,00 — — 45,00 141,79 0 1 45,00 145,12 0 1 45,00 149,86 0 0 45,00 153,89 0 5 45,00 174,31 0 3 — — — — 45,00 175,80 0 0 45,00 202,77 0 0 — — — — 45,00 196,18 0 0 45,00 216,57 0 2 — — — — — — — — 45,00 238,23 0 2 — — — — — — — — — —— — ———— ——— 45,00 239,65 1 6 — — — — 45,00 244,25 1 6 'HIDXOW — —— — ———— ——— 45,00 40,45 10 7 325 23,41 16,80 1 1 026 43,69 17,58 9 31 427

264 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 SME retail Securities ﬁrms Total Exposure Exposure Exposure weighted weighted weighted average average average risk Expected risk Expected risk Expected LGD weight loss EAD LGD weight loss EAD LGD weight loss EAD ($' % % Rm Rm % % Rm Rm % % Rm Rm 5P 45,00 76,57 0 14 45,00 14,92 0 1 902 43,18 59,36 1 195 234 526 — ———————— ——— ¥ — ———————— ——— ¥ — ———————— ——— ¥ — — — — 45,00 14,44 0 1 888 43,10 13,70 5 37 118 — — — — — — — — 45,00 58,63 1 4 009 — — — — — — — — 41,55 18,82 2 12 152 — — — — — — — — 44,40 25,72 4 10 380 45,00 34,64 — 0 — — — — 44,53 31,69 11 20 185 — — — — 45,00 42,50 — 0 43,53 38,40 12 16 721 45,00 47,33 0 1 45,00 43,89 0 0 42,10 42,43 11 12 028 45,00 54,99 0 3 — — — — 42,36 50,83 27 18 891 45,00 66,32 0 3 — — — — 43,78 63,39 32 15 738 45,00 72,65 0 0 — — — — 43,37 71,74 28 10 341 45,00 90,24 0 6 45,00 80,48 0 12 42,90 83,32 62 15 731 45,00 102,89 0 1 45,00 105,80 0 1 42,40 83,34 64 13 027 — — — — — — — — 43,76 107,27 116 14 342 — — — — 45,00 119,14 0 1 43,80 96,45 170 15 472 45,00 136,90 0 0 — — — — 43,04 123,00 111 7 151 — — — — — — — — 44,10 141,64 89 3 895 — — — — — — — — 42,97 158,66 109 3 311 — — — — — — — — 44,53 182,50 32 734 — — — — — — — — 40,71 182,61 84 1 447 — — — — — — — — 44,41 218,25 50 561 — — — — — — — — 40,78 217,79 120 977 — — — — — — — — 44,89 233,53 55 315 — — — — 45,00 562,50 — 1 15,00 11,76 871 6 915 45,00 76,57 0 14 45,00 15,09 0 1 903 42,37 58,00 2 066 241 441

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 265 Governance, remuneration, risk and controls

Credit risk

PDs, EADs and LGDs by risk grade under the AIRB approach as at 31 December – Table 37:

Mortgages SME retail Exposure Exposure weighted weighted average average $YHUDJH Average risk Expected risk Expected 5LVNJUDGH 3' PD LGD weight loss EAD LGD weight loss EAD % % % Rm Rm % % Rm Rm

1RQGHIDXOW 3,26 13,96 25,14 989 244 094 50,06 50,26 403 21 530

¥ — — — — — — — — — ¥ — — — — — — — — — ¥ — — — — — — — — — — — — — — — — — — 0,03 11,46 0,98 0 12 534 86,14 1,78 0 755 0,05 11,35 1,62 1 10 987 35,37 6,12 0 215 0,08 — — — — 39,44 7,64 0 2 0,11 11,77 3,07 0 1 206 73,72 8,99 0 21 0,16 13,93 4,93 1 6 041 44,62 14,23 0 17 0,24 14,43 6,51 3 9 908 43,33 18,91 0 132 0,32 13,05 7,34 12 28 604 68,64 19,54 1 535 0,45 13,36 9,64 7 10 672 40,31 23,62 4 2 123 0,66 14,12 13,37 19 19 797 61,77 32,30 3 770 0,89 14,41 16,69 17 13 247 40,86 37,31 6 1 667 1,25 14,32 20,80 69 38 350 55,25 41,61 27 4 036 1,80 14,15 25,69 47 18 650 55,52 51,93 14 1 370 2,57 14,33 32,81 50 13 356 50,49 58,04 29 2 162 3,81 14,22 39,05 62 12 088 46,17 58,90 39 2 260 5,67 14,69 49,07 96 12 708 52,43 73,42 28 1 015 7,48 15,02 59,63 248 22 406 38,23 61,04 71 2 318 9,50 15,47 68,43 91 6 238 60,06 100,12 33 578 15,09 15,45 80,13 54 2 415 46,83 94,80 61 897 21,07 16,26 92,18 85 2 459 50,80 118,66 17 171 29,04 15,42 89,82 54 1 212 72,61 199,70 17 87 38,99 15,75 88,91 73 1 216 32,30 87,07 53 399

'HIDXOW 100,00 22,59 67,20 4 898 28 173 34,22 119,72 398 1 070

11,59 14,85 29,49 5 887 272 267 49,31 53,54 801 22 600

266 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 Retail – revolving credit Retail – other Total Exposure Exposure Exposure weighted weighted weighted average average average risk Expected risk Expected risk Expected LGD weight loss EAD LGD weight loss EAD LGD weight loss EAD ($' % % Rm Rm % % Rm Rm % % Rm Rm 5P

74,36 44,10 806 41 169 52,64 67,74 1 720 68 704 29,73 36,45 3 918 375 497

— — — — — — — — — — — — ¥ — — — — — — — — — — — — ¥ — — — — — — — — — — — — ¥ — — — — — — — — — — — — 88,67 2,06 1 3 114 61,34 5,28 0 654 30,78 1,38 1 17 057 88,71 3,79 0 12 0,00 0,00 — — 11,89 1,71 1 11 214 88,62 4,02 0 227 62,50 12,75 0 795 68,24 10,81 0 1 024 69,04 4,51 7 8 886 48,99 14,66 1 1 557 60,46 5,72 8 11 670 67,30 5,83 4 3 784 72,03 26,21 0 109 34,91 5,52 5 9 951 88,67 9,44 1 382 84,53 34,61 0 6 17,56 6,79 4 10 428 83,79 14,25 2 805 67,53 36,47 2 1 025 17,66 8,69 17 30 969 82,92 16,76 0 101 39,97 28,86 8 4 207 23,67 16,14 19 17 103 88,53 23,25 2 324 65,88 52,02 5 1 278 19,85 16,40 29 22 169 74,59 25,85 26 3 931 48,35 47,36 14 3 335 32,17 24,48 63 22 180 80,97 37,52 14 1 295 61,54 68,14 52 6 888 25,73 29,34 162 50 569 75,88 43,25 17 1 363 43,70 56,21 54 6 714 26,22 35,12 132 28 097 76,32 55,90 36 1 963 42,87 58,30 113 10 338 32,12 45,88 228 27 819 72,60 77,65 319 10 652 59,14 85,19 257 11 437 47,37 66,05 677 36 437 75,38 91,91 58 1 539 60,34 58,21 63 6 485 34,36 55,96 245 21 747 76,92 118,18 62 1 114 50,51 79,25 144 3 823 23,74 64,47 525 29 661 78,26 147,37 43 541 52,37 86,62 76 1 532 28,55 78,43 243 8 889 77,93 175,05 61 546 58,03 115,84 465 5 172 46,74 107,78 641 9 030 78,24 205,65 43 274 44,92 103,03 87 911 29,11 104,12 232 3 815 78,94 229,51 25 114 52,88 134,03 196 1 273 37,72 120,26 292 2 686 78,21 222,26 85 202 42,48 111,98 183 1 165 32,63 106,70 394 2 982

74,56 115,39 1 775 2 477 70,48 132,11 2 486 3 674 31,55 78,89 9 557 35 394

74,37 48,15 2 581 43 646 53,55 71,00 4 206 72 378 29,89 40,11 13 475 410 891

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 267 Governance, remuneration, risk and controls

Credit risk

Residual contractual maturity of exposures – Table 38:

31 December 2010 6 months Current to to More than 6 months 1 year 5 years Total FIRB and AIRB exposures Rm Rm Rm Rm %DQNV 31 421 6 0 31 427 &RUSRUDWHH[SRVXUH 114 489 7 824 63 111 185 424 &RUSRUDWH 103 540 7 187 48 815 159 542 60(FRUSRUDWH 9 521 510 11 180 21 211 6SHFLDOLVHGOHQGLQJ¤LQFRPHSURGXFLQJUHDOHVWDWH 479 127 1 894 2 500 6SHFLDOLVHGOHQGLQJ¤SURMHFWILQDQFH 949 — 1 222 2 171 /RFDOJRYHUQPHQWVDQGPXQLFLSDOLWLHV 3 477 1 108 2 740 7 325 3XEOLFVHFWRUHQWLWLHV 11 837 42 2 443 14 322 5HWDLO 47 768 542 362 595 410 905 0RUWJDJHV 128 — 272 139 272 267 5HWDLO¤RWKHU 6 036 — 66 342 72 378 5HWDLO¤UHYROYLQJFUHGLW 36 487 — 7 159 43 646 60(UHWDLO 5 117 542 16 955 22 614 6HFXULWLHVILUPV 1 903 — — 1 903 6RYHUHLJQ 991 — 35 1 026 211 886 9 522 430 924 652 332 6WDQGDUGLVHGH[SRVXUHV 57 487 709 819

Note Comparatives not available.

RWA and required capital – Table 39: 31 December 2010 Required FIRB and AIRB RWAs2 capital3 %DQNV 5 569 529 &RUSRUDWHH[SRVXUH 125 786 11 950 &RUSRUDWH 106 812 10 147 60(FRUSRUDWH 15 413 1 464 6SHFLDOLVHGOHQGLQJ¤LQFRPHSURGXFLQJUHDOHVWDWH 1 513 144 6SHFLDOLVHGOHQGLQJ¤SURMHFWILQDQFH 2 048 195 /RFDOJRYHUQPHQWVDQGPXQLFLSDOLWLHV 3 094 294 3XEOLFVHFWRUHQWLWLHV 6 019 572 5HWDLO 167 492 15 912 0RUWJDJHV 81 900 7 781 5HWDLO¤RWKHU 52 356 4 974 5HWDLO¤UHYROYLQJFUHGLW 21 128 2 007 60(UHWDLO 12 108 1 150 6HFXULWLHVILUPV 287 27 6RYHUHLJQ 173 16 308 420 29 300 6WDQGDUGLVHG 8 547 812 316 967 30 112

Note Comparatives not available. RWAs and required capital include securitisation balances. Refer to table 20 for more detailed analysis of securitisation information. Required capital is calculated at 9,5% of RWAs.

268 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Credit risk mitigation (CRM) – Table 40:

'HFHPEHU 31 December 2010 Net exposure after Credit &UHGLW Original netting and risk ULVN credit and credit risk Other mitigation PLWLJDWLRQ counter- Effects mitigation Eligible eligible affecting DIIHFWLQJ party of netting redistribution ﬁnancial IRB LGD /*' exposure agreements effects collateral collateral estimates HVWLPDWHV IRB approach Rm Rm Rm Rm Rm Rm 5P %DQNV 94 997 (38 133) 56 864 886 — 886 &RUSRUDWHH[SRVXUH 275 760 (1 603) 274 157 2 907 100 315 103 222 &RUSRUDWH 245 852 (1 603) 244 249 2 907 78 280 81 187 60(¤FRUSRUDWH 23 863 — 23 863 — 18 096 18 096 6SHFLDOLVHGOHQGLQJ¤ LQFRPHSURGXFLQJUHDO HVWDWH 3 874 — 3 874 — 3 939 3 939 ¥ 6SHFLDOLVHGOHQGLQJ¤ SURMHFWILQDQFH 2 171 — 2 171 — — — ¥ /RFDOJRYHUQPHQW DQGPXQLFLSDOLWLHV 8 438 — 8 438 — 4 4 ¥ 3XEOLFVHFWRUHQWLWLHV 20 752 (107) 20 645 1 003 — 1 003 ¥ 5HWDLO 455 809 — 455 809 49 168 578 362 627 530 0RUWJDJHV 304 280 — 304 280 — 555 650 555 650 5HWDLO¤RWKHU 77 171 — 77 171 49 168 — 49 168 5HWDLO¤UHYROYLQJFUHGLW 48 159 — 48 159 — — — ¥ 60(UHWDLO 26 199 — 26 199 — 22 712 22 712 6HFXULWLHVILUPV 2 578 (27) 2 551 — — — 6RYHUHLJQ 1 126 — 1 126 492 — 492 ¥ 859 460 (39 870) 819 590 54 456 678 681 733 137

Note No beneﬁt of CRM is being utilised or taken into account for the SA.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 269 Governance, remuneration, risk and controls

Market risk

Highlights Introduction 0DUNHWULVNLVWKHULVNWKDWWKH*URXS©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trategy 7KH*URXS©VPDUNHWULVNPDQDJHPHQWREMHFWLYHVDUH XQGHUVWDQGLQJ DQG FRQWUROOLQJ PDUNHW ULVN WKURXJK UREXVWPHDVXUHPHQWFRQWUROVDQGRYHUVLJKW Key performance indicators IDFLOLWDWLQJ EXVLQHVV JURZWK ZLWKLQ D FRQWUROOHG DQG 2010 WUDQVSDUHQWULVNPDQDJHPHQWIUDPHZRUN

$YHUDJHWUDGHGPDUNHWULVN HQVXULQJ WUDGHG PDUNHW ULVN UHVLGHV SULPDULO\ LQ $EVD ➪➪ '9D5 5P 27,85 &DSLWDODQG 7UDGHGPDUNHWULVN5& DWRI 5:$V 5P 721 HQVXULQJ D KLJKHU GHJUHH RI LQWHUHVW UDWH PLVPDWFK %DQNLQJERRN$(D5IRUD PDUJLQ VWDELOLW\ DQG ORZHU LQWHUHVW UDWH ULVN RYHU DQ

LQWHUHVWUDWHVKRFN RI*URXS1,, ➪ <5% LQWHUHVWUDWHF\FOHLQWKHEDQNLQJERRN (TXLW\LQYHVWPHQWVLQWKHEDQNLQJ ➪ ERRN5:$V 5P 25 911

270 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Governance 0DUNHWULVNLVPDQDJHGLQWHUPVRIWKH*URXS©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

Market risk governance structure &RPPLWWHHV 7HDPV

Board level *URXS5LVNDQG&DSLWDO0DQDJHPHQW&RPPLWWHH *5&0&

&KLHI5LVN2IILFHU &52 0DUNHW5LVN *URXS,QYHVWPHQW *URXS$OFR 3ULQFLSDO5LVN2ZQHU 352 Group level &RPPLWWHH 05& &RPPLWWHH *,& *URXSPDUNHWULVNWHDP

7UDGLQJ5LVN %XVLQHVVDQG %XVLQHVV,QYHVWPHQW ,QGHSHQGHQWEXVLQHVVULVN &RPPLWWHH 75& FOXVWHU$OFRV &RPPLWWHHV PDQDJHPHQWWHDPV

7UDGHG3RVLWLRQ Business unit level 5LVN5HYLHZ IRUXP 7355

$EVD&DSLWDO 9DOXDWLRQ*RYHUQDQFH IRUXP

$OOPDUNHWULVNVDUHUHSRUWHGWRWKH*5&0&RQDTXDUWHUO\EDVLVDORQJZLWKDPRQWKO\KLJKOLJKWVGDVKERDUG7KH05& PHHWV PRQWKO\ WR UHYLHZ DSSURYH DQG PDNH UHFRPPHQGDWLRQV FRQFHUQLQJ WKH PDUNHW ULVN SURILOH LQFOXGLQJ ULVN DSSHWLWHSROLFLHVOLPLWVDQGXWLOLVDWLRQ7KH*URXS$OFRPHHWVPRQWKO\WRUHYLHZPDUNHWULVNFDSLWDOUHTXLUHPHQWVDQG SHUIRUPDQFHDJDLQVWVWDWHPHQWRIILQDQFLDOSRVLWLRQPDQDJHPHQWREMHFWLYHV $EVD&DSLWDO©VPDUNHWULVNLVPDQDJHGE\WKH$EVD&DSLWDOPDUNHWULVNWHDPDQGLVUHYLHZHGPRQWKO\E\WKH75& ZLWKDZHHNO\WUDGHGSRVLWLRQVULVNUHYLHZ7KH$EVD&DSLWDOSURGXFWFRQWUROWHDP©VUHVSRQVLELOLWLHVLQFOXGHYDOXDWLRQ FRQWUROLQGHSHQGHQWSULFHWHVWLQJDQGELGRIIHUWHVWLQJWKHUHVXOWVRIZKLFKDUHUHYLHZHGPRQWKO\E\WKH$EVD&DSLWDO 9DOXDWLRQ*RYHUQDQFH)RUXP$EVD&DSLWDO©VDVVHWDQGOLDELOLW\ULVNVDUHPRQLWRUHGPRQWKO\E\WKH$EVD&DSLWDO$OFR

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 271 Governance, remuneration, risk and controls

Market risk

7KH*URXS7UHDVXU\DQGWKH$IULFDQVXEVLGLDULHV©WUHDVXULHVPDQDJHQRQWUDGHGDVVHWDQGOLDELOLW\PDUNHWULVNV(DFK RIWKH$IULFDQVXEVLGLDULHVKDVLWVRZQ$OFRZKLFKPRQLWRUVDVVHWDQGOLDELOLW\PDUNHWULVNVDQGUHSRUWVLQWRWKH$IULFD $OFR DQG *URXS $OFR 7KH *URXS DQG $EVD &DSLWDO PDUNHW ULVN WHDPV PDLQWDLQ UHJXODU FRQWDFW ZLWK WKH $IULFDQ VXEVLGLDULHV©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

2010 review Traded market risk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

Interest rate risk in the banking book: WKH*URXSFRQWLQXHGWRPDQDJHLWVVWUXFWXUDODQGQRQVWUXFWXUDOEDQNLQJ ERRNLQWHUHVWUDWHULVNWRORZULVNDSSHWLWHOHYHOV&DVKIORZKHGJLQJUHVHUYHVZHUHIXUWKHUEROVWHUHGDVDUHVXOWRI IDYRXUDEOH070PRYHPHQWVRQ¨UHFHLYHIL[VZDSV©LQWKHVWUXFWXUDOSURGXFWVDQGHTXLW\KHGJLQJSURJUDPPHZKLFK ZLOO EH UHOHDVHG WR WKH VWDWHPHQW RI FRPSUHKHQVLYH LQFRPH RQ DQ DFFUXDO EDVLV RYHU WKH DYHUDJH OLIH RI WKH SURJUDPPHVXEMHFWWRPDUNHWPRYHPHQWV:LWKORFDOLQWHUHVWUDWHVUHDFKLQJH[FHSWLRQDOO\ORZOHYHOVGXULQJWKH \HDUHIILFLHQWPDQDJHPHQWRIWKHVWUXFWXUDOKHGJLQJSURJUDPPHZDVDNH\IRFXVWRZDUGVSUHVHUYLQJWKHDYHUDJH ¨UHFHLYH IL[HG SURJUDPPH UDWH© 7KH *URXS UHPDLQV H[SRVHG WR LQWHUHVW UDWH UHVHW ULVN DULVLQJ IURP WKH WLPLQJ GLIIHUHQFH EHWZHHQ SUHGRPLQDQWO\ SULPH OLQNHG DVVHWV EHLQJ IXQGHG ZLWK OLDELOLWLHV ZLWK D WKUHH PRQWK UHSULFLQJ SURILOH DIWHU KHGJLQJ 7KLV WLPLQJ GLIIHUHQFH FRQWLQXHG WR KDYH DQ DGYHUVH VWDWHPHQW RI FRPSUHKHQVLYH LQFRPH LPSDFWGXULQJWKH\HDURIGHFUHDVLQJLQWHUHVWUDWHVH[SHULHQFHGLQ3UHSD\PHQWDQGUHFUXLWPHQWULVNWKDWPD\ DULVHIURPIL[HGUDWHSURGXFWRIIHULQJVWRFXVWRPHUVFRQWLQXHGWREHPDQDJHGRQFXVWRPHUEHKDYLRXUULVNSULQFLSOHV

Equity investment risk in the banking book: ZLWKFDSLWDODQGIXQGLQJFRQVLGHUHGLQFUHDVLQJO\VFDUFHUHVRXUFHV FDSLWDO DQG IXQGLQJ LQWHQVLYH HTXLW\ LQYHVWPHQWV ZHUH PDQDJHG GRZQ 3ULYDWH HTXLW\ LQYHVWPHQW YDOXDWLRQV VWDELOLVHGLQOLQHZLWKSRUWIROLRPRYHPHQWVDQGPDUNHWFRQGLWLRQV 5LVN DQDO\VHV DUH SURYLGHG LQ WKH VXEVHFWLRQV WKDW IROORZ IRU HDFK RI WKH PDWHULDO PDUNHW ULVNV WKDW WKH *URXS LV H[SRVHGWRQDPHO\WUDGHGPDUNHWULVNDQGQRQWUDGHGLQWHUHVWUDWHDQGHTXLW\ULVNLQWKHEDQNLQJERRN

Approach to market risk Traded market risk Objectives and policies 7UDGHGPDUNHWULVNLVSUHGRPLQDQWO\WKHUHVXOWRIIDFLOLWDWLQJFXVWRPHUVLQZKROHVDOHPDUNHWVZKLFKLQYROYHVPDUNHW PDNLQJRIIHULQJKHGJHVROXWLRQVSUHKHGJLQJDQGDVVLVWLQJFXVWRPHUVZLWKH[HFXWLQJODUJHWUDGHV1RWDOOFXVWRPHU WUDGHVDUHKHGJHGLQVWDQWDQHRXVO\RUFRPSOHWHO\JLYLQJULVHWRWUDGHGPDUNHWULVN7KH*URXS©VSROLF\LVWRFRQFHQWUDWH LWVWUDGHGPDUNHWULVNH[SRVXUHZLWKLQ$EVD&DSLWDO

272 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU ,Q$EVD&DSLWDOPDUNHWULVNRFFXUVLQERWKWKHWUDGLQJERRNDQGWKHEDQNLQJERRNDVGHILQHGIRUUHJXODWRU\SXUSRVHV ,QWHUHVWUDWHULVNLQ$EVD&DSLWDO©VEDQNLQJERRNLVVXEMHFWHGWRWKHVDPHULJRURXVPHDVXUHPHQWDQGFRQWUROVWDQGDUGV DVGHVFULEHGEHORZIRULWVWUDGLQJERRNEXWWKHDVVRFLDWHGVHQVLWLYLWLHVDUHUHSRUWHGDVSDUWRIWKHLQWHUHVWUDWHULVNLQ WKHEDQNLQJERRNVHQVLWLYLW\DQDO\VHVIXUWKHURQSDJHVWR

Measurement and control $ VXLWH RI FRPSOHPHQWDU\ WHFKQLTXHV LV XVHG WR PHDVXUH DQG FRQWURO WUDGHG PDUNHW ULVN RQ D GDLO\ EDVLV ZKLFK LQFOXGHV'9D5WDLOULVNDQGVWUHVVWHVWLQJ

Daily value at risk (DVa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©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

Tail risk metrics 7DLOULVNPHWULFVKLJKOLJKWWKHULVNEH\RQGWKHSHUFHQWLOHVHOHFWHGIRU'9D57KHWZRWDLOULVNPHWULFVFKRVHQIRUGDLO\ PRQLWRULQJXVLQJWKHFXUUHQWSRUWIROLRDQGWZR\HDUVRISULFHDQGUDWHKLVWRU\DUH WKHDYHUDJHRIWKHZRUVWWKUHHK\SRWKHWLFDOORVVHVIURPWKHKLVWRULFDOVLPXODWLRQDQG H[SHFWHGVKRUWIDOO DOVRUHIHUUHGWRDVH[SHFWHGWDLOORVV ZKLFKLVWKHDYHUDJHRIDOOK\SRWKHWLFDOORVVHVIURPWKH KLVWRULFDOVLPXODWLRQEH\RQGWKHWK'9D5SHUFHQWLOH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 273 Governance, remuneration, risk and controls

Market risk

Stress testing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

Risk limits 5LVNOLPLWVDUHVHWDQGUHYLHZHGDWOHDVWDQQXDOO\WRFRQWURO$EVD&DSLWDO©VWUDGLQJDFWLYLWLHVLQOLQHZLWKWKHGHILQHG ULVNDSSHWLWHRIWKH*URXS&ULWHULDIRUVHWWLQJULVNOLPLWVLQFOXGHUHOHYDQWPDUNHWDQDO\VLVPDUNHWOLTXLGLW\DQGEXVLQHVV VWUDWHJ\7UDGLQJULVNOLPLWVDUHVHWDWDJJUHJDWHULVNFDWHJRU\DQGORZHUOHYHOVDQGDUHH[SUHVVHGLQWHUPVRI'9D5 7KLV LV IXUWKHU VXSSRUWHG E\ D FRPSUHKHQVLYH VHW RI QRQ'9D5 OLPLWV LQFOXGLQJ IRUHLJQ H[FKDQJH SRVLWLRQ OLPLWV LQWHUHVWUDWHGHOWDOLPLWVRSWLRQEDVHGOLPLWVWDLOULVNDQGVWUHVVWULJJHUVDQGOLPLWV3HUIRUPDQFHWULJJHUVDUHDOVRXVHG DVSDUWRIWKHULVNPDQDJHPHQWSURFHVV

Interest rate risk in the banking book Objectives and policies ,QWHUHVWUDWHULVNLVWKHULVNWKDWWKH*URXS©VILQDQFLDOSRVLWLRQPD\EHDGYHUVHO\DIIHFWHGE\FKDQJHVLQLQWHUHVWUDWH OHYHOV\LHOGFXUYHVDQGVSUHDGV1RQWUDGHGLQWHUHVWUDWHULVNDULVHVLQWKHEDQNLQJERRNIURPWKHSURYLVLRQRIUHWDLO DQGZKROHVDOH QRQWUDGHG EDQNLQJSURGXFWVDQGVHUYLFHVDVZHOODVIURPFHUWDLQVWUXFWXUDOH[SRVXUHVZLWKLQWKH VWDWHPHQWRIILQDQFLDOSRVLWLRQPDLQO\GXHWRUHSULFLQJWLPLQJGLIIHUHQFHVEHWZHHQDVVHWVOLDELOLWLHVDQGHTXLW\7KHVH ULVNVLPSDFWERWKWKHHDUQLQJVDQGWKHHFRQRPLFYDOXHRIWKH*URXS 7KH*URXS©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©VLQWHUHVWUDWHULVNH[SRVXUHZLWKLQOLPLWV :KHUHSRVVLEOHKHGJHDFFRXQWLQJLVDSSOLHGWRGHULYDWLYHVWKDWDUHXVHGWRKHGJHLQWHUHVWUDWHULVNLQWKHEDQNLQJ ERRN ,Q FDVHV ZKHUH KHGJH UHODWLRQVKLSV GR QRW TXDOLI\ IRU KHGJH DFFRXQWLQJ PLVPDWFKHV PD\ DULVH GXH WR GLIIHUHQWEDVHVXVHGLQIDLUYDOXLQJWKHKHGJHVDQGWKHXQGHUO\LQJEDQNLQJERRNH[SRVXUH$SSOLFDEOHDFFRXQWLQJ UXOHVDVVWLSXODWHGLQWKH*URXS©VDFFRXQWLQJSROLFLHVDUHIROORZHG

274 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU $VSDUWRI*URXS7UHDVXU\©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©VHTXLW\DQGLVPDQDJHGE\*URXS7UHDVXU\6WUXFWXUDOEDODQFHVDUHW\SLFDOO\KHGJHG XVLQJDSRUWIROLRRIVZDSVZKHUHWKHPDWXULW\LVEDVHGRQWKHDVVXPHGVWDELOLW\RIWKHXQGHUO\LQJEDODQFH ,QWHUHVWUDWHULVNDOVRDULVHVLQHDFKRIWKH$IULFDQVXEVLGLDULHV©WUHDVXULHVLQWKHFRXUVHRIPDQDJLQJWKHEDODQFHVKHHW DQGIDFLOLWDWLQJFXVWRPHUDFWLYLW\7KHULVNLVPDQDJHGE\ORFDOWUHDVXU\IXQFWLRQVVXEMHFWWRPRGHVWULVNOLPLWVDQG RWKHUFRQWUROV

Measurement and control 7KHWHFKQLTXHVXVHGWRPHDVXUHDQGFRQWUROLQWHUHVWUDWHULVNLQWKHEDQNLQJERRNLQFOXGHUHSULFLQJSURILOHVDQQXDO HDUQLQJVDWULVN'9D5DQGWDLOPHWULFVHFRQRPLFYDOXHRIHTXLW\VHQVLWLYLW\DQGVWUHVVWHVWLQJ

Repricing proﬁles ,QVWUXPHQWVDUHDOORFDWHGWRWLPHSHULRGVZLWKUHIHUHQFHWRWKHHDUOLHURIWKHQH[WFRQWUDFWXDOLQWHUHVWUDWHUHSULFLQJ GDWHDQGWKHPDWXULW\GDWH,QVWUXPHQWVZKLFKKDYHQRH[SOLFLWFRQWUDFWXDOUHSULFLQJRUPDWXULW\GDWHVDUHSODFHGLQ WLPHEXFNHWVDFFRUGLQJWRPDQDJHPHQW©VMXGJHPHQWDQGDQDO\VLVEDVHGRQWKHPRVWOLNHO\UHSULFLQJEHKDYLRXU)RU H[DPSOHUHWDLOGHSRVLWVDUHUHSD\DEOHRQGHPDQGRUDWVKRUWQRWLFHEXWIRUPDVWDEOHEDVHIRUWKH*URXS©VRSHUDWLRQV DQGOLTXLGLW\QHHGVGXHWRWKHEURDGFXVWRPHUEDVH QXPHULFDOO\DQGE\GHSRVLWRUW\SH &XUUHQWO\WKHFRQWUDFWXDO SURILOHVRIDVVHWVDUHQRWDGMXVWHGIRUFXVWRPHUSUHSD\PHQWIHDWXUHV5HSULFLQJSURILOHVDUHPRQLWRUHGPRQWKO\

Annual earnings at risk (AEa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

Daily value at risk (DVaR) $SDUWIURP$EVD&DSLWDOWKH*URXSXVHVDVLPSOLILHGDSSURDFKWRFDOFXODWHLQWHUHVWUDWHULVNLQWKHEDQNLQJERRN'9D5 DWDFRQILGHQFHOHYHOZKLFKLVPRQLWRUHGDJDLQVWDSSURYHGLQWHUQDOOLPLWV,WLVXVHGDVDFRPSOHPHQWDU\WRROWR $(D5'9D5LVDOVRVXSSOHPHQWHGE\WDLOPHWULFV'9D5LVPRQLWRUHGGDLO\LQUHVSHFWRI*URXS7UHDVXU\DQGDWOHDVW PRQWKO\LQUHVSHFWRI$IULFDQVXEVLGLDULHV©WUHDVXULHV

Economic value of equity (EVE) sensitivity (9(VHQVLWLYLW\PHDVXUHVWKHVHQVLWLYLW\RIWKHSUHVHQWYDOXHRIWKHEDQNLQJERRNDWDVSHFLILFSRLQWLQWLPHWRD VSHFLILHG VKRFN WR WKH \LHOG FXUYH /LNH '9D5 (9( LV D SUHVHQW YDOXH VHQVLWLYLW\ DQG FRPSOHPHQWDU\ WR LQFRPH VHQVLWLYLW\PHDVXUHVVXFKDV$(D5(9(VHQVLWLYLW\LVPRQLWRUHGPRQWKO\

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 275 Governance, remuneration, risk and controls

Market risk

Stress testing 6WUHVVWHVWLQJLVFDUULHGRXWE\*URXS7UHDVXU\DQGWKHULVNIXQFWLRQVLQ$IULFDQVXEVLGLDULHVWRVXSSOHPHQW'9D5DQG $(D5PHWULFV7KHVWUHVVWHVWLQJLVWDLORUHGWRHDFKEDQNLQJERRNDQGFRQVLVWVRIDFRPELQDWLRQRIVWUHVVVFHQDULRV DQG KLVWRULFDO VWUHVV PRYHPHQWV DSSOLHG WR WKH UHVSHFWLYH EDQNLQJ ERRNV 6WUHVV UHVXOWV DUH PRQLWRUHG DW OHDVW PRQWKO\

Prepayment and recruitment risk (PEHGGHGFXVWRPHURSWLRQDOLW\ULVNPD\DOVRJLYHULVHWRLQWHUHVWUDWHULVNLQWKHEDQNLQJERRN7KLVULVNDULVHVIURP DFXVWRPHU©VULJKWWREX\VHOORULQVRPHPDQQHUDOWHUWKHFDVKIORZRIDILQDQFLDOFRQWUDFW(PEHGGHGFXVWRPHU RSWLRQDOLW\LVGLVWLQFWIURPGLUHFWRSWLRQDOLW\ZKLFKDULVHVWKURXJKWKHXQGHUO\LQJSURGXFWVWUXFWXUH HJFDSSHGUDWH ORDQSURGXFWV 7KH*URXS©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

Foreign exchange risk 7KH*URXSLVH[SRVHGWRWZRVRXUFHVRIIRUHLJQH[FKDQJHULVNQDPHO\WUDQVDFWLRQDODQGWUDQVODWLRQDOULVN

Transactional foreign exchange risk 7UDQVDFWLRQDOIRUHLJQH[FKDQJHULVNDULVHDVDUHVXOWRIEDQNLQJDVVHWVDQGOLDELOLWLHVZKLFKDUHQRWGHQRPLQDWHGLQ WKHIXQFWLRQDOFXUUHQF\RIWKHWUDQVDFWLQJHQWLW\7KH*URXS©VSROLF\LVIRUWUDQVDFWLRQDOIRUHLJQH[FKDQJHULVNWREH FRQFHQWUDWHGDQGPDQDJHGZLWKLQWKH$EVD&DSLWDOWUDGLQJERRN 6RPHWUDQVDFWLRQDOIRUHLJQH[FKDQJHULVNDULVHVZLWKLQWKH$IULFDQVXEVLGLDULHV©WUHDVXULHVLQWKHFRXUVHRIIRUHLJQ FXUUHQF\EDODQFHVKHHWPDQDJHPHQWDQGIDFLOLWDWLRQRIFXVWRPHUDFWLYLW\7KLVULVNLVPLQLPLVHGLQDFFRUGDQFHZLWK PRGHVWWUDQVDFWLRQDORSHQSRVLWLRQDQG'9D5OLPLWVDVDSSURYHGE\WKH05&)RUHLJQH[FKDQJHULVNLVPRQLWRUHG GDLO\DJDLQVWWKHVHOLPLWV$YHUDJHIRUHLJQH[FKDQJH'9D5DPRXQWHGWR5PLOOLRQIRU 5PLOOLRQ RQ DQXQGLYHUVLILHGEDVLVDFURVVWKHVHWUHDVXULHV ,QDFFRUGDQFHZLWKWKH*URXS©VSROLF\WKHUHZHUHQRVLJQLILFDQWQHWRSHQFXUUHQF\SRVLWLRQVRXWVLGHWKH$EVD&DSLWDO WUDGLQJERRNDWHLWKHU'HFHPEHURUWKDWZRXOGJLYHULVHWRPDWHULDOIRUHLJQH[FKDQJHJDLQVDQGORVVHV EHLQJUHFRJQLVHGLQWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHRULQHTXLW\DVDUHVXOWRIDIRUHLJQH[FKDQJHUDWHVKRFN

Translational foreign exchange risk 7UDQVODWLRQDOIRUHLJQH[FKDQJHULVNDULVHVIURPFDSLWDOUHVRXUFHV LQFOXGLQJLQYHVWPHQWVLQVXEVLGLDULHVDQGEUDQFKHV LQWDQJLEOH DVVHWV QRQFRQWUROOLQJ LQWHUHVW GHGXFWLRQV IURP FDSLWDO DQG GHEW FDSLWDO LQVWUXPHQWV DQG 5:$V EHLQJ GHQRPLQDWHGLQIRUHLJQFXUUHQFLHV&KDQJHVLQIRUHLJQH[FKDQJHUDWHVUHVXOWLQFKDQJHVLQWKH6RXWK$IULFDQUDQG =$5 HTXLYDOHQWYDOXHRIIRUHLJQFXUUHQF\GHQRPLQDWHGFDSLWDOUHVRXUFHVDQG5:$V

276 Absa Group Limited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©V WUDQVODWLRQDO IRUHLJQ H[FKDQJH ULVN DULVHV SULPDULO\ IURP LWV LQYHVWPHQWV LQ IRUHLJQ VXEVLGLDULHV DQG EUDQFKHV 7UDQVODWLRQDO KHGJLQJ FRQVLGHUDWLRQV LQFOXGH H[FKDQJH FRQWURO UHJXODWLRQV WKH VWUDWHJLF QDWXUH RI WKH LQYHVWPHQW PDWHULDOLW\RIWKHULVNSUHYDLOLQJIRUHLJQH[FKDQJHUDWHVPDUNHWOLTXLGLW\FRVWRIKHGJLQJDQGWKHLPSDFWRQFDSLWDO UDWLRV%DVHGRQWKHVHFRQVLGHUDWLRQVQRIRUHLJQFXUUHQF\QHWLQYHVWPHQWKHGJHVZHUHLQSODFHGXULQJ 7UDQVODWLRQDOIRUHLJQH[FKDQJHULVNPD\JLYHULVHWRVHQVLWLYLW\RIWKH*URXS©VFDSLWDOUDWLRVIURPWKHUDWLRRIIRUHLJQ FXUUHQF\ FDSLWDO UHVRXUFHV WR IRUHLJQ FXUUHQF\ 5:$V 7R PLQLPLVH YRODWLOLW\ RI FDSLWDO UDWLRV FDXVHG E\ IRUHLJQ H[FKDQJHUDWHPRYHPHQWVWKH*URXSDLPVWRPDLQWDLQDQDSSURSULDWHIRUHLJQFXUUHQF\FDSLWDOVWUXFWXUHE\PDLQWDLQLQJ WKHUDWLRRIIRUHLJQFXUUHQF\&RUH7LHU7LHUDQGWRWDOFDSLWDOUHVRXUFHVWRIRUHLJQFXUUHQF\5:$VLQOLQHZLWKWKH *URXS©VFDSLWDOUDWLRV7KLVLVSULPDULO\DFKLHYHGE\VXEVLGLDULHVLVVXLQJFDSLWDORUKROGLQJUHWDLQHGHDUQLQJVLQORFDO FXUUHQFLHVEXWFRXOGDOVREHDFKLHYHGWKURXJK*URXSLVVXDQFHRIGHEWFDSLWDOLQQRQ=$5FXUUHQFLHV 7UDQVODWLRQDO IRUHLJQ H[FKDQJH ULVN LV PRQLWRUHG UHJXODUO\ WR FRQVLGHU WKH QHHG IRU PLWLJDWLQJ DFWLRQV WRZDUGV PLQLPLVLQJPDWHULDOIOXFWXDWLRQV$VHQVLWLYLW\DQDO\VLVLVSURYLGHGLQWDEOH

Asset management structural market risk $VVHWPDQDJHPHQWVWUXFWXUDOPDUNHWULVNDULVHVZKHUHWKHIHHDQGFRPPLVVLRQLQFRPHHDUQHGE\DVVHWPDQDJHPHQW SURGXFWVDQGEXVLQHVVHVLVDIIHFWHGE\DFKDQJHLQPDUNHWOHYHOVSULPDULO\WKURXJKWKHOLQNEHWZHHQLQFRPHDQGWKH YDOXHRIDVVHWVXQGHUPDQDJHPHQW7KHULVNLVPHDVXUHGLQWHUPVRI$(D5WRUHIOHFWWKHVHQVLWLYLW\RIDQQXDOHDUQLQJV WRVKRFNVLQPDUNHWUDWHVQRWDEO\LQWHUHVWUDWHVDQGHTXLW\,WLVWKH*URXS©VSROLF\WKDWEXVLQHVVHVPRQLWRUDQGUHSRUW WKLVULVNDQGUHJXODUO\DVVHVVSRWHQWLDOKHGJLQJVWUDWHJLHV7KLVH[SRVXUHFXUUHQWO\DULVHVPDLQO\ZLWKLQ$EVD)LQDQFLDO 6HUYLFHV$VVHWPDQDJHPHQWVWUXFWXUDOPDUNHWULVNZDVQRWPDWHULDOGXULQJRU

Equity risk in the banking book Objectives and policies (TXLW\LQYHVWPHQWULVNUHIHUVWRWKHULVNRIDGYHUVHFKDQJHVLQWKHYDOXHRIOLVWHGDQGXQOLVWHGHTXLW\LQYHVWPHQWV 7KHVHLQYHVWPHQWVDUHORQJHUWHUPLQYHVWPHQWVKHOGLQWKHEDQNLQJERRNIRUQRQWUDGLQJSXUSRVHV,QYHVWPHQWVDUH HQWHUHGLQWRIRURQHRUPRUHRIWKHIROORZLQJUHDVRQV HQKDQFLQJORQJWHUPVXVWDLQDEOHLQFRPH SRVLWLRQLQJWKH*URXSVWUDWHJLFDOO\IRUIXWXUHPDUNHWVEHQHILWV DFKLHYLQJ%8JURZWKREMHFWLYHV LPSURYLQJLQWHUQDOHIILFLHQFLHVLQDFRVWHIIHFWLYHZD\DQGRU LPSURYLQJWKH*URXS©VDVVHWRUFXVWRPHUEDVH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 277 Governance, remuneration, risk and controls

Market risk

7KH*URXS©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©VHTXLW\LQYHVWPHQWVDUHKHOGLQ$EVD&DSLWDODQG$%%$EVD&DSLWDO©VLQYHVWPHQWVUDQJH DFURVVGLIIHUHQWLQGXVWULHVDQGDUHPRQLWRUHGLQWHUPVRIULVNDQGUHWXUQE\WKH3ULYDWH(TXLW\DQG&DSLWDO0DQDJHPHQW GHSDUWPHQWV ZLWKLQ $EVD &DSLWDO $%% LV PDLQO\ IRFXVHG RQ FRPPHUFLDO SURSHUW\ LQYHVWPHQWV DFURVV D UDQJH RI SURSHUW\VHFWRUVZKLFKDUHPRQLWRUHGLQWHUPVRIULVNDQGUHWXUQE\WKH$%%6SHFLDOLVW(TXLW\GHSDUWPHQW(TXLW\DQG RWKHULQYHVWPHQWVKHOGE\LQVXUDQFHHQWLWLHVRIWKH*URXSDUHDGGUHVVHGLQWKHLQVXUDQFHULVNPDQDJHPHQWVHFWLRQ RIWKLVUHSRUW

Relevant accounting policies ,$6UHTXLUHVDOOHTXLW\LQYHVWPHQWVWREHIDLUYDOXHGH[FHSWIRUXQTXRWHGHTXLW\LQYHVWPHQWVWKHIDLUYDOXHRIZKLFK FDQQRWEHUHOLDEO\PHDVXUHGDQGLVWKHQPHDVXUHGDWFRVW$FFRXQWLQJSROLFLHVUHJDUGLQJVXEVLGLDULHVDQGLQYHVWPHQWV LQDVVRFLDWHVDQGMRLQWYHQWXUHVDUHGLVFXVVHGVHSDUDWHO\LQQRWHRIWKH*URXS©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©VILQDQFLDOVWDWHPHQWV

Measurement and control (TXLW\LQYHVWPHQWULVNLVPRQLWRUHGPRQWKO\LQWHUPVRIUHJXODWRU\DQGHFRQRPLFFDSLWDOUHTXLUHPHQWVFRPSOHPHQWHG E\DUDQJHRIDGGLWLRQDOULVNPHWULFVDQGVWUHVVWHVWLQJ7KHHTXLW\LQYHVWPHQWULVNSURILOHLVIXUWKHUWUDFNHGDFURVVD UDQJHRIGLPHQVLRQVVXFKDVJHRJUDSK\LQGXVWU\DQGFXUUHQF\7KHULVNPRQLWRULQJLVGRQHLQDFFRUGDQFHZLWKDULVN DSSHWLWHPDQGDWHDQGVFDOHOLPLWVIUDPHZRUN

278 Absa Group Limited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

Deﬁned beneﬁt pension risk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©VILQDQFLDOVWDWHPHQWV

2010 market risk disclosures Traded market risk Analysis of traded market risk exposure 7KHIROORZLQJWDEOHUHIOHFWVWKH'9D5VWDWLVWLFVIRU$EVD&DSLWDO©VWUDGLQJERRNDFWLYLWLHVDVPHDVXUHGE\WKH *URXS©VLQWHUQDOPRGHOVDSSURDFKIRUJHQHUDOWUDGLQJSRVLWLRQULVN $EVD&DSLWDO©VWUDGHGPDUNHWULVNH[SRVXUHDVPHDVXUHGE\DYHUDJHWRWDO'9D5GHFUHDVHGE\WR5PLOOLRQ 5PLOOLRQ 7KLVZDVPDLQO\GXHWRD5PLOOLRQGHFUHDVHLQDYHUDJHIRUHLJQH[FKDQJH'9D5IURP ORZHU FXVWRPHU WUDGLQJ DFWLYLW\ LQ OLQH ZLWK 6RXWK $IULFDQ UDQG VWUHQJWK DQG UHGXFHG YRODWLOLW\ ([SHFWHG VKRUWIDOO VKRZHGDVLPLODUGHFUHDVHDYHUDJLQJ5PLOOLRQRYHU

Absa Capital trading book DVaR summary – Table 41 (audited):

Year ended

Notes The high (and low) DVaR figures reported for each category did not necessarily occur on the same day as the high (and low) total DVaR. Consequently, a diversification effect number for the high (and low) DVaR figures would not be meaningful and is therefore omitted from the above table. Credit spread risk remains small and is reported together with interest rate risk. The total value at risk over a 10-day holding period at a 99% confidence level as at the reporting date was R97,67 million (2009: R118,52 million).

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 279 Governance, remuneration, risk and controls

Market risk

7KHIROORZLQJJUDSKVKRZVWKHGDLO\KLVWRU\RI$EVD&DSLWDO©VWRWDOWUDGLQJERRN'9D5IRUDQGDORQJZLWK WKHSHULRGDYHUDJHVKLJKVDQGORZV,QFRPSDULVRQZLWKWKH'9D5GHPRQVWUDWHGUHGXFHGYDULDELOLW\ ORZHUDYHUDJHULVNOHYHOVDQGDUHGXFWLRQLQODUJH'9D5GD\V$EVD&DSLWDOGRHVRQVRPHRFFDVLRQVLQWKHFRQGXFW RIFXVWRPHUWUDQVDFWLRQVWDNHRQVLJQLILFDQWO\ODUJHUWKDQXVXDOPDUNHWULVN+RZHYHUWKLVLVDOZD\VXQGHUWDNHQZLWKLQ WKH*URXS©VPDUNHWULVNJRYHUQDQFHIUDPHZRUN

Absa Capital trading book DVaR (daily values, period average, high and low) 5P 60

2009 2010

Comparison of value at risk estimates with trading revenues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

Absa Capital daily trading book revenue backtested against regulatory value at risk 5P

-XQ 'HF Jun-10 Dec-10 ● $FWXDOGDLO\SURILWDQGORVV 5HJXODWRU\EDFNWHVWLQJ9D5 GD\

280 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Analysis of trading revenue 7KH IROORZLQJ KLVWRJUDPV VKRZ WKH GLVWULEXWLRQ RI GDLO\ WUDGLQJ UHYHQXH IRU WKH $EVD &DSLWDO WUDGLQJ ERRN IRU WKH PRQWKVRIDQG5HYHQXHLQFOXGHVQHWWUDGLQJERRNLQFRPHH[FOXGLQJQHWIHHVDQGFRPPLVVLRQV 7KHGLVWULEXWLRQVDUHVNHZHGWRWKHSURILWVLGH7KHDYHUDJHGDLO\WUDGLQJUHYHQXHIRUGHFUHDVHGIURPGXH WRIHZHUODUJHSURILWGD\V7KHSHUFHQWDJHRISRVLWLYHUHYHQXHGD\VLPSURYHGWRLQIURPLQ LQGLFDWLQJIHZHUORVVGD\VFRPSDUHGWR

Absa Capital daily trading book revenue (Rm) achieved per % of business days

25%

20%

15%

10%

< -40 -40 to -35 to -30 to -25 to -20 to -15 to -10 to -5 to 0 to 5 to 10 to 15 to 20 to 25 to 30 to 35 to > 40 < -35 < -30 < -25 < -20 < -15 < -10 < -5 < 0 < 5 < 10 < 15 < 20 < 25 < 30 < 35 < 40 ● 2009 ● 2010

Minimum regulatory capital requirement for traded market risk 7KH*URXS©VWUDGHGPDUNHWULVNPLQLPXPUHJXODWRU\FDSLWDOUHTXLUHPHQWFRPSULVHVWZRHOHPHQWV 7UDGLQJERRNSRVLWLRQVZKHUHWKHPDUNHWULVNLVPHDVXUHGXQGHUD6$5%DSSURYHGLQWHUQDO9D5PRGHO7KHFDSLWDO UHTXLUHPHQWLVFDOFXODWHGEDVHGRQWKHLQWHUQDOPRGHOZLWKDGD\KROGLQJSHULRGDWDFRQILGHQFHOHYHODQG RWKHUUHJXODWRU\GD\DYHUDJLQJDQGFDSLWDOPXOWLSOLHUVSHFLILFDWLRQV7KLVDSSURDFKFXUUHQWO\DSSOLHVWRFORVHWR RIWKH*URXS©VJHQHUDOSRVLWLRQULVNDFURVVLQWHUHVWUDWHIRUHLJQH[FKDQJHFRPPRGLW\HTXLW\DQGWUDGHG FUHGLWSURGXFWV$GHVFULSWLRQRIWKH*URXS©VLQWHUQDOPRGHODQGFRQWUROVPD\EHIRXQGRQSDJH 7UDGLQJERRNSRVLWLRQVZKLFKKDYHQRW\HWPHW6$5%RUWKH*URXS©VLQWHUQDOFRQGLWLRQVIRULQFOXVLRQZLWKLQWKH DSSURYHGLQWHUQDOPRGHO7KHFDSLWDOUHTXLUHPHQWLVFDOFXODWHGXVLQJVWDQGDUGLVHGUHJXODWRU\UXOHV7KLVDSSURDFK FXUUHQWO\DSSOLHVWRWKH*URXS©VLVVXHUVSHFLILFULVNH[SRVXUHV 7KH WRWDO WUDGHG PDUNHW ULVN PLQLPXP FDSLWDO UHTXLUHPHQW GHFUHDVHG E\ RU 5 PLOOLRQ \HDU RQ \HDU WR WKH UHSRUWLQJGDWHGULYHQE\DGHFUHDVHLQJHQHUDOSRVLWLRQULVNPHDVXUHGXQGHUWKHLQWHUQDOPRGHOVDSSURDFK

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 281 Governance, remuneration, risk and controls

Market risk

Minimum regulatory capital requirement (at 8% of RWAs) for traded market risk – Table 42:

Minimum capital As at $VDW 31 December 'HFHPEHU 2010 Rm 5P ,QWHUQDOPRGHOVDSSURDFK '9D5PRGHOEDVHG 501 6WDQGDUGLVHGDSSURDFK 220 ,QWHUHVWUDWHULVN 134 (TXLW\ULVN 36 )RUHLJQH[FKDQJHULVNLQFOXGLQJJROG — ¥ &RPPRGLW\ULVN — ¥ 2SWLRQV 50

Total traded market risk capital requirement 721

Interest rate risk in the banking book 7KUHHVHSDUDWHLQWHUHVWUDWHVHQVLWLYLW\DQDO\VHVIRUWKH*URXS©VEDQNLQJERRNDUHVHWRXWEHORZQDPHO\WKHUHSULFLQJ SURILOHRIWKHERRNWKHSRWHQWLDOHIIHFWRIFKDQJHVLQPDUNHWLQWHUHVWUDWHVRQDQQXDOHDUQLQJVDQGHTXLW\UHVHUYHV

Interest rate sensitivity analysis – repricing proﬁle 7KH UHSULFLQJ SURILOH RI WKH *URXS©V GRPHVWLF $IULFD VXEVLGLDU\ DQG FRQVROLGDWHG EDQNLQJ ERRNV VKRZV WKDW WKH FRQVROLGDWHGEDQNLQJERRNUHPDLQVDVVHWVHQVLWLYHRUSRVLWLYHO\JDSSHGDVLQWHUHVWHDUQLQJDVVHWVUHSULFHVRRQHU WKDQLQWHUHVWSD\LQJOLDELOLWLHVEHIRUHDQGDIWHUGHULYDWLYHKHGJLQJDFWLYLWLHV$FFRUGLQJO\IXWXUHQHWLQWHUHVWLQFRPH UHPDLQV YXOQHUDEOH WR D GHFUHDVH LQ PDUNHW LQWHUHVW UDWHV +RZHYHU DVVHW VHQVLWLYLW\ DV UHSUHVHQWHG E\ WKH FXPXODWLYHPRQWKLQWHUHVWUDWHJDSGHFUHDVHGIURPWR

282 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Expected repricing proﬁle – Table 43 (audited): As at 31 December 2010 On demand 4 – 6 7 – 12 Over 12 – 3 months months months months Rm Rm Rm Rm

Domestic bank book1 ,QWHUHVWUDWHVHQVLWLYLW\JDS 128 494 (33 570) (26 521) (33 699) 'HULYDWLYHV (120 901) 32 111 24 474 64 316 1HWLQWHUHVWUDWHVHQVLWLYLW\JDS 7 593 (1 459) (2 047) 30 617 &XPXODWLYHLQWHUHVWUDWHJDS 7 593 6 134 4 087 34 704 &XPXODWLYHJDSDVDSHUFHQWDJHRI$EVD%DQN /LPLWHG©VWRWDODVVHWV 1,1 0,9 0,6 5,1 Foreign subsidiaries’ bank books3 ,QWHUHVWUDWHVHQVLWLYLW\JDS 435 (394) (591) 410 'HULYDWLYHV 122 0 0 (121) 1HWLQWHUHVWUDWHVHQVLWLYLW\JDS 557 (394) (591) 289 &XPXODWLYHLQWHUHVWUDWHJDS 557 163 (428) (139) &XPXODWLYHJDSDVDSHUFHQWDJHRIIRUHLJQ VXEVLGLDULHV©WRWDODVVHWV 6,0 1,8 (4,6) (1,5) Total &XPXODWLYHLQWHUHVWUDWHJDS 8 150 6 297 3 659 34 565 &XPXODWLYHJDSDVDSHUFHQWDJHRIWKH *URXS©VWRWDODVVHWV 1,1 0,9 0,5 4,8

2QGHPDQG ¤ ¤ 2YHU ¤PRQWKV PRQWKV PRQWKV PRQWKV 5P 5P 5P 5P Domestic bank book1 ,QWHUHVWUDWHVHQVLWLYLW\JDS 'HULYDWLYHV 1HWLQWHUHVWUDWHVHQVLWLYLW\JDS &XPXODWLYHLQWHUHVWUDWHJDS &XPXODWLYHJDSDVDSHUFHQWDJHRI$EVD%DQN /LPLWHG©VWRWDODVVHWV Foreign subsidiaries’ bank books3 ,QWHUHVWUDWHVHQVLWLYLW\JDS 'HULYDWLYHV 1HWLQWHUHVWUDWHVHQVLWLYLW\JDS &XPXODWLYHLQWHUHVWUDWHJDS &XPXODWLYHJDSDVDSHUFHQWDJHRIIRUHLJQ VXEVLGLDULHV©WRWDODVVHWV Total &XPXODWLYHLQWHUHVWUDWHJDS &XPXODWLYHJDSDVDSHUFHQWDJHRIWKH *URXS©VWRWDODVVHWV

Notes Includes exposures held in the Absa Capital banking book. Derivatives for interest rate risk management purposes (net nominal value). Includes NBC and BBM.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 283 Governance, remuneration, risk and controls

Market risk

Interest rate sensitivity analysis – impact on earnings 7KHIROORZLQJWDEOHVKRZVWKHDQQXDOHDUQLQJVDWULVNIURPLPSDFWVWRQHWLQWHUHVWLQFRPHIRUDQGESVXSDQG GRZQPRYHPHQWVLQPDUNHWLQWHUHVWUDWHVIRUWKH*URXS©VEDQNLQJERRNV$VVXPLQJQRPDQDJHPHQWDFWLRQLVWDNHQ LQUHVSRQVHWRPDUNHWLQWHUHVWUDWHPRYHPHQWVDK\SRWKHWLFDOLPPHGLDWHDQGVXVWDLQHGSDUDOOHOGHFUHDVHRIESV LQ DOO PDUNHW LQWHUHVW UDWHV ZRXOG DV DW WKH UHSRUWLQJ GDWH UHVXOW LQ D SUHWD[ UHGXFWLRQ LQ SURMHFWHG PRQWK QHW LQWHUHVW LQFRPH RI 5 PLOOLRQ $ VLPLODU LQFUHDVH ZRXOG UHVXOW LQ DQ LQFUHDVH LQ SURMHFWHG PRQWK QHW LQWHUHVW LQFRPH RI 5 PLOOLRQ $(D5 WKHUHIRUH UHPDLQV ORZ DW ZHOO EHORZ RI WKH *URXS©V QHW LQWHUHVW LQFRPH IRU D ESVUDWHVKRFN $VHQVLWLYLW\DQDO\VLVE\PDMRUFXUUHQF\PDUNHWLQWHUHVWUDWHVLQGLFDWHVWKDWHDUQLQJVVHQVLWLYLW\WR=$5PDUNHWLQWHUHVW UDWHVFRQVWLWXWHVRIWKHWRWDOHDUQLQJVDWULVNDVUHSRUWHGIRU'HFHPEHU 'HFHPEHU WKHUHIRUHLQGLFDWLQJWKDWWKH*URXSUHPDLQVSULPDULO\H[SRVHGWR6RXWK$IULFDQPDUNHWLQWHUHVWUDWHV

Annual earnings at risk for a 100 and 200 bps change in market interest rates –Table 44 (audited):

Change in market interest rates 200 bps 100 bps 100 bps 200 bps decrease decrease increase increase As at 31 December 2010 'RPHVWLFEDQNERRN 5P (376) (176) 157 328 )RUHLJQVXEVLGLDULHV©EDQNERRNV 5P (13) (7) 7 13 Total (Rm) (389) (183) 164 341 3HUFHQWDJHRIWKH*URXS©VQHWLQWHUHVWLQFRPH (1,7) (0,8) 0,7 1,5 3HUFHQWDJHRIWKH*URXS©VHTXLW\ (0,6) (0,3) 0,3 0,5 $VDW'HFHPEHU 'RPHVWLFEDQNERRN 5P )RUHLJQVXEVLGLDULHV©EDQNERRNV 5P 7RWDO 5P 3HUFHQWDJHRIWKH*URXS©VQHWLQWHUHVWLQFRPH 3HUFHQWDJHRIWKH*URXS©VHTXLW\

Notes Includes Absa Bank Limited’s domestic banking book, which includes exposures held in the Absa Capital banking book. Includes NBC and BBM. African subsidiaries’ interest rate sensitivities are shown on a 100% (rather than actual) shareholding basis.

284 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Interest rate sensitivity analysis – impact on equity reserves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

Sensitivity of reserves to market interest rate movements – Table 45 (audited):

2010 Impact on ,PSDFWRQ equity HTXLW\ as at Maximum Minimum DVDW 0D[LPXP 0LQLPXP 31 December impact1 impact1 'HFHPEHU LPSDFW LPSDFW Rm Rm Rm 5P 5P 5P + 100 bps parallel move in all yield curves $YDLODEOHIRUVDOHUHVHUYH (841) (875) (675) &DVKIORZKHGJLQJUHVHUYH (1 731) (1 794) (1 506) Total (2 572) (2 655) (2 238) As a percentage of Group equity at 31 December (%) (4,1) (4,3) (3,6) – 100 bps parallel move in all yield curves $YDLODEOHIRUVDOHUHVHUYH 841 875 675 &DVKIORZKHGJLQJUHVHUYH 1 731 1 794 1 506 Total 2 572 2 655 2 238 As a percentage of Group equity at 31 December (%) 4,1 4,3 3,6

Note The maximum and minimum impacts reported for each reserve category did not necessarily occur for the same month as the maximum and minimum impact reported for the total.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 285 Governance, remuneration, risk and controls

Market risk

Interest rate sensitivity analysis – return on average balances $YHUDJHEDODQFHVDQGZHLJKWHGDYHUDJHHIIHFWLYHLQWHUHVWUDWHVZHUHDVIROORZV Interest return on average balances – Table 46: Group 2010 Average Interest $YHUDJH ,QWHUHVW balance Average income/ EDODQFH $YHUDJH LQFRPH (audited) rate1 (expense) DXGLWHG UDWH H[SHQVH Rm % Rm 5P 5P Assets &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDOEDQNV 1 741 5,92 103 6WDWXWRU\OLTXLGDVVHWSRUWIROLR 35 331 8,44 2 983 /RDQVDQGDGYDQFHVWREDQNVDQGFXVWRPHUV 530 502 9,34 49 550 ,QYHVWPHQWVHFXULWLHV 14 157 3,50 495 2WKHULQWHUHVW — — 1 110 ¥ ¥ ,QWHUHVWHDUQLQJDVVHWV 581 731 9,32 54 241 1RQLQWHUHVWHDUQLQJDVVHWV 138 123 — — ¥ ¥ Total assets 719 854 7,53 54 241 Liabilities 'HSRVLWVGXHWRFXVWRPHUVDQGIURPEDQNV 364 244 (4,80) (17 477) 'HEWVHFXULWLHVLQLVVXH 166 417 (7,68) (12 786) %RUURZHGIXQGV 13 198 (12,02) (1 586) 2WKHULQWHUHVW — — 948 ¥ ¥ ,QWHUHVWEHDULQJOLDELOLWLHV 543 859 (5,68) (30 901) 1RQLQWHUHVWEHDULQJOLDELOLWLHV 116 774 — — ¥ ¥ Total liabilities 660 633 (4,68) (30 901) Equity Capital and reserves $WWULEXWDEOHWRRUGLQDU\HTXLW\KROGHUVRIWKH*URXS 6KDUHFDSLWDO 1 433 — — ¥ ¥ 6KDUHSUHPLXP 4 728 — — ¥ ¥ 2WKHUUHVHUYHV 1 890 — — ¥ ¥ 5HWDLQHGHDUQLQJV 45 169 — — ¥ ¥ 53 220 — — ¥ ¥ 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV 1 357 — — ¥ ¥ 1RQFRQWUROOLQJLQWHUHVW¤SUHIHUHQFHVKDUHV 4 644 — — ¥ ¥ Total equity 59 221 — — ¥ ¥ Total equity and liabilities 719 854 (4,29) (30 901) Net interest margin on average interest earning assets 4,01 Net interest margin on average assets 3,24 'DLO\DYHUDJHVZHUHXVHGWRFDOFXODWHWKHDYHUDJHEDODQFHV

Notes The average prime rate for the year was 9,87% (2009: 10,89%). Also includes fair value adjustments on hedging instruments and hedged items.

286 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Foreign currency translation risk in the banking book 7KH*URXS©VWUDQVODWLRQDOIRUHLJQH[FKDQJHH[SRVXUHDULVHVSULPDULO\IURPLWVQHWLQYHVWPHQWVLQIRUHLJQVXEVLGLDULHV DQGEUDQFKHV7KHIROORZLQJWDEOHVKRZVWKHFDUU\LQJYDOXHRIIRUHLJQFXUUHQF\QHWLQYHVWPHQWVDQGWKHSUHWD[LPSDFW RQHTXLW\RIDFKDQJHLQWKHH[FKDQJHUDWHEHWZHHQ=$5DQGWKHUHOHYDQWIXQFWLRQDOIRUHLJQFXUUHQFLHV 7KH*URXS©VWRWDOIRUHLJQFXUUHQF\QHWLQYHVWPHQWH[SRVXUHUHPDLQVORZDQGGHFUHDVHGE\IURPWKHSUHYLRXV\HDU 7KHLQFUHDVHLQ0R]DPELFDQ0HWLFDOH[SRVXUHLVPDLQO\DVDUHVXOWRIUHFDSLWDOLVDWLRQRI%%0GXULQJWKH\HDUXQGHU UHYLHZ

Foreign currency translation sensitivity analysis – Table 47 (audited): Tanzanian Mozambican Sterling shilling metical Euro Total Functional foreign currency Rm Rm Rm Rm Rm As at 31 December 2010 )RUHLJQFXUUHQF\QHWLQYHVWPHQWV 1 481 276 477 0 2 234 ,PSDFWRQHTXLW\IURPD FXUUHQF\WUDQVODWLRQVKRFN 74 14 24 0 112 $VDW'HFHPEHU )RUHLJQFXUUHQF\QHWLQYHVWPHQWV ,PSDFWRQHTXLW\IURPD FXUUHQF\WUDQVODWLRQVKRFN

$VDWWKHUHSRUWLQJGDWHWKH*URXSKDV RILWVFDSLWDOLQIRUHLJQFXUUHQF\HQWLWLHVDJDLQVW RI LWV 5:$V $ DGYHUVH FKDQJH LQ WKH H[FKDQJH UDWH EHWZHHQ =$5 DQG HDFK RI WKH UHOHYDQW IXQFWLRQDOIRUHLJQFXUUHQFLHVZRXOGLPSDFWWKH*URXS©VWRWDOVWDWXWRU\FDSLWDODGHTXDF\UDWLRPLQLPDOO\E\EHWZHHQRQH DQGWZRESV

Equity investment risk Equity investment risk in the banking book (regulatory deﬁnition) 7KHHTXLW\SRUWIROLRVXEMHFWWRUHJXODWRU\DQGHFRQRPLFFDSLWDOLVDWLRQXQGHUHTXLW\ULVNLQWKHEDQNLQJERRNUXOHVRI WKH%DQNV$FWH[FOXGHVWKLUGSDUW\HTXLW\LQYHVWPHQWVXQGHUPDQDJHPHQWIRUZKLFKWKH*URXSGRHVQRWEHDUWKHULVN VHOHFWHGDVVRFLDWHVWUHDWHGXQGHUWKHSURUDWDFRQVROLGDWLRQPHWKRGRORJ\DQGHTXLW\LQYHVWPHQWVKHOGE\LQVXUDQFH HQWLWLHV DVWKHVHHQWLWLHVDUHUHJXODWHGVHSDUDWHO\DQGDGGUHVVHGLQWKHLQVXUDQFHULVNPDQDJHPHQWVHFWLRQRIWKLV UHSRUW 7KHVL]HFRPSRVLWLRQ5:$VDQGHFRQRPLFFDSLWDOUHTXLUHPHQWRIWKH*URXS©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 287 Governance, remuneration, risk and controls

Market risk

Equity investments in the banking book – Table 48:

As at $VDW 31 December 'HFHPEHU 2010 Rm 5P Statement of ﬁnancial position 6 757 ([FKDQJHWUDGHGLQYHVWPHQWVDVVRFLDWHVDQGMRLQWYHQWXUHV 1 025 3ULYDWHO\KHOGLQYHVWPHQWVDVVRFLDWHVDQGMRLQWYHQWXUHV 5 732 )DLUYDOXHRIH[FKDQJHWUDGHGLQYHVWPHQWVDVVRFLDWHVDQGMRLQWYHQWXUHV 1 039 Risk-weighted assets 25 911 ([FKDQJHWUDGHGLQYHVWPHQWVDVVRFLDWHVDQGMRLQWYHQWXUHV 3 074 3ULYDWHO\KHOGLQYHVWPHQWVDVVRFLDWHVDQGMRLQWYHQWXUHV 22 837

Economic capital 4 036 ([FKDQJHWUDGHGLQYHVWPHQWVDVVRFLDWHVDQGMRLQWYHQWXUHV 399 3ULYDWHO\KHOGLQYHVWPHQWVDVVRFLDWHVDQGMRLQWYHQWXUHV 3 637

Notes Includes significant minority financial investments deducted from net qualifying regulatory capital, amounting to Rnil as at 31 December 2010 (31 December 2009: R86 million). Includes significant minority financial investments deducted from net qualifying regulatory capital, which amounted to R23 million as at 31 December 2010 (31 December 2009: R19 million). To address specific SARB Pillar 3 requirements for equity risk in the banking book relating to the value of investments, it should be noted that the difference between the statement of financial position value and fair value of associates and joint ventures amounts to R14 million as at 31 December 2010 (31 December 2009: R89 million). The differences relate to conservative impairments applied on the listed associates, which followed a prudent and considered assessment by the board, therefore resulting in the fair value of the said investments being higher than the statement of financial position values. Additionally, there are no differences between the fair value and market value of exchange traded investments, associates and joint ventures.

5HDOLVHG DQG XQUHDOLVHG JDLQV ORVVHV IRU HTXLW\ LQYHVWPHQWV LQ WKH EDQNLQJ ERRN DV SHU VSHFLILF 6$5% 3LOODU GLVFORVXUHUHTXLUHPHQWVDUHUHIOHFWHGLQWKHIROORZLQJWDEOH

Realised and unrealised gains/(losses) on equity investments – Table 49:

Year to date

288 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Equity sensitivity analysis of Group’s investments, including insurance activities’ investments 1RWH RI WKH *URXS©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©LQYHVWPHQWV )RUWKHSROLF\KROGHUSRUWIROLRLWLVSROLF\ZKHUHSRVVLEOHWRIROORZDPDWFKHGLQYHVWPHQWVWUDWHJ\LQWHUPVRIDVVHWV EDFNLQJQRQOLQNHGSROLF\KROGHUOLDELOLWLHV 7KH VKDUHKROGHUV© LQYHVWPHQWV DUH VXVFHSWLEOH WR PDUNHW IOXFWXDWLRQV 7R PDQDJH WKH HTXLW\ ULVN HTXLW\ KHGJH VWUXFWXUHVKDYHEHHQLPSOHPHQWHGLQWHUPVRIZKLFKSURWHFWLRQLVREWDLQHGWRHQVXUHWKDWWKHSRVVLELOLW\RIQHJDWLYH UHWXUQVLVUHGXFHGIRUWKHILQDQFLDO\HDU 7KLV DQDO\VLV VKRXOG EH UHDG LQ FRQMXQFWLRQ ZLWK WKH LQVXUDQFH ULVN PDQDJHPHQW VHFWLRQ ZKLFK DGGUHVVHV OLIH LQVXUDQFHPLVPDWFKULVNDQGOLIHDQGVKRUWWHUPLQVXUDQFHLQYHVWPHQWULVNLQFOXGLQJDOVRLQYHVWPHQWH[SRVXUHV RWKHUWKDQHTXLW\LQYHVWPHQWV

Equity sensitivity analysis – impact on pretax profit and loss and equity after the effect of hedges – Table 50 (audited): 2010 Impact of a 5% Impact of a 5% ,PSDFWRID ,PSDFWRID reduction in increase in fair UHGXFWLRQLQIDLU LQFUHDVHLQIDLU fair value value YDOXH YDOXH Profit Profit 3URILW 3URILW and Fair and DQG )DLU DQG loss Equity value loss Equity ORVV (TXLW\ YDOXH ORVV (TXLW\ Rm Rm Rm Rm Rm 5P 5P 5P 5P 5P Insurance activities' listed and unlisted equity investments1, 2, 3, 4 (48) 0 1 210 48 0 /LVWHGHTXLW\LQYHVWPHQWV (38) 0 817 38 0 8QOLVWHGHTXLW\LQYHVWPHQWV (10) 0 393 10 0 Group listed and unlisted equity investments, excluding insurance activities' investments1, 4, 5 (326) (10) 6 724 326 10 /LVWHGHTXLW\LQYHVWPHQWV (47) (3) 985 47 3 8QOLVWHGHTXLW\LQYHVWPHQWV (279) (7) 5 739 279 7

Total Group equity investments1 (374) (10) 7 934 374 10

Notes Excludes debt instruments. The above sensitivities were only calculated on shareholder and policyholder assets (for unit linked policyholder liabilities there is no impact on the sensitivity analysis due to the fact that the asset and liability is 100% matched) and exclude all assets linked to investment and unit linked contracts due to the fact that the asset and liability is 100% matched. Equity hedge structures are in place for the shareholders’ equity investment portfolio. This assists to hedge downside risk on equities if market values decrease with more than 6% (2009: 15%) and will result in counterparties sharing in positive returns if market values increase with between 2% and 4% (2009: between 16% and 25%). The reclassification of 2009 figures relates to equity investment balances previously reflected against Group excluding insurance activities, now reflected under insurance activities. The total Group equity investments figure was not impacted. As a result of the reclassification the sensitivities have been adjusted accordingly to reflect these changes. The figures exclude all associates and joint ventures, which account for the differences in fair value compared to that shown in the table titled ‘Equity investments in the banking book’.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 289 Governance, remuneration, risk and controls

Market risk

Strategic focus for the year ahead Traded market risk:WKH%DVHO,,PDUNHWULVNDPHQGPHQWVSDFNDJHDJUHHGLQ-XO\LVLQWKHSURFHVVRIEHLQJ DGRSWHGLQWREDQNUHJXODWLRQV7KLVZLOOVHHWKHLQWURGXFWLRQRIQHZWUDGLQJERRNFDSLWDOFKDUJHVRIZKLFKQRWDEO\WKH VWUHVVHG9D5DQGLQFUHPHQWDOULVNFKDUJHVZLOOWUDQVODWHLQWRDQLQFUHDVHLQWKH*URXS©VWUDGLQJULVNUHJXODWRU\FKDUJH ,QRUGHUWRDFKLHYHUHDGLQHVVIRUWKHVHUHTXLUHPHQWVPRGHOGHYHORSPHQWDQGWHVWLQJEHJDQLQZKLFKZLOOEH ILQDOO\HPEHGGHGGXULQJ,QYLHZRIWKHOLNHO\LQFUHDVHLQWUDGLQJERRNUHJXODWRU\FDSLWDOFKDUJHVWKHIRFXVLQ ZLOOUHPDLQRQHIILFLHQWXVHRIULVNFDSLWDODFURVVWUDGLQJGHVNVDQGSURGXFWVDQGRQWKHUHODWLYHO\ORZFDSLWDO FRQVXPLQJFXVWRPHUIORZDQGFDVKHTXLWLHVEXVLQHVV([SDQVLRQRIFXVWRPHUULVNVROXWLRQVIRUVXE6DKDUDQ$IULFD PDUNHWVDOVRUHPDLQVDVWUDWHJLFIRFXVIRU Interest rate risk in the banking book:ZLWKORFDOLQWHUHVWUDWHVH[SHFWHGWRUHPDLQDWORZOHYHOVIRUVRPHWLPH HIILFLHQWPDQDJHPHQWRIWKHVWUXFWXUDOEDQNLQJERRNLQWHUHVWUDWHULVNKHGJLQJSURJUDPPHZLOOUHPDLQDVWUDWHJLFIRFXV DUHDLQWRZDUGVSUHVHUYLQJWKHDYHUDJHUHFHLYHIL[HGSURJUDPPHUDWH Equity investment risk in the banking book:JLYHQWKHFDSLWDODQGIXQGLQJLQWHQVLYHQDWXUHRIHTXLW\LQYHVWPHQWV WKHUHZLOOEHFRQWLQXHGIRFXVRQUHGXFLQJQRQFRUHSRUWIROLRVWRUHOHDVHFDSDFLW\ZKLFKSURFHVVEHJDQLQ

290 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Governance, remuneration, risk and controls

Liquidity risk

Introduction Highlights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ey performance indicators LQWKHILQDQFLDOPDUNHWVDQGLQHQVXULQJWKDWEDQNVSXUVXH 2010 VXVWDLQDEOH EXVLQHVV PRGHOV WKHUHE\ IXOILOOLQJ WKHLU NH\ % HFRQRPLFUROHRIPDWXULW\WUDQVIRUPDWLRQ LHWKHSURFHVV /RQJWHUPIXQGLQJUDWLR 25,6 E\ZKLFKEDQNVWUDQVIRUPGHSRVLWVIURPFXVWRPHUVZKLFK /RDQWRGHSRVLWUDWLR 91,9 WHQGWREHRIDVKRUWHUWHUPQDWXUHLQWRORDQVZKLFKWHQG WREHRIDORQJHUWHUPQDWXUH Notes The ratio is shown in respect of the Absa Bank Limited and reﬂects the 7KH HIILFLHQW PDQDJHPHQW RI OLTXLGLW\ ULVN LV HVVHQWLDO WR average over the calendar year. The ratio reﬂected here is in respect of Absa Group Limited. For further WKH*URXSWRHQVXUHWKDW details, see funding structure section. QRUPDOEDQNLQJRSHUDWLRQVFRQWLQXHXQLQWHUUXSWHG WKH LQWHUHVWV RI DOO VWDNHKROGHUV LQ WKH *URXS DUH SURWHFWHG ILQDQFLDOPDUNHWFRQILGHQFHLVPDLQWDLQHGDWDOOWLPHV DQG OLTXLGLW\ULVNLVPDQDJHGLQOLQHZLWKUHJXODWRU\OLTXLGLW\ UHTXLUHPHQWVDWDOOWLPHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 291 Governance, remuneration, risk and controls

Liquidity risk

Strategy 7KHOLTXLGLW\IXQGLQJVWUDWHJ\RIWKH*URXSLVEDVHGRQWKHIROORZLQJREMHFWLYHV JURZLQJDQGGLYHUVLI\LQJWKHIXQGLQJEDVHWRVXSSRUWDVVHWJURZWKDQGRWKHUVWUDWHJLFLQLWLDWLYHV IXUWKHUOHQJWKHQLQJWKH*URXS©VIXQGLQJSURILOHLQRUGHUWRFRQWLQXHLPSURYLQJNH\OLTXLGLW\PHWULFVDQGUHGXFLQJWKH *URXS©VOLTXLGLW\ULVNH[SRVXUH FRQWLQXLQJWREXLOGVXUSOXVOLTXLGDVVHWKROGLQJVLQYLHZRIWKH%DVHOOLTXLGLW\UHTXLUHPHQWVDQG IRFXVLQJRQORZHULQJWKHZHLJKWHGDYHUDJHFRVWRIIXQGLQJZLWKLQDJUHHGSDUDPHWHUVIRUOLTXLGLW\ULVN

Governance *URXS7UHDVXU\LVUHVSRQVLEOHIRUPDQDJLQJOLTXLGLW\ULVNRQEHKDOIRIWKH*URXS$VSDUWRIWKHRYHUDOOOLTXLGLW\ULVN PDQDJHPHQWFRQWUROSURFHVVLQGHSHQGHQWRYHUVLJKWDQGUHJXODULQGHSHQGHQWUHYLHZVDUHFRQGXFWHGWRDVVHVVWKH HIIHFWLYHQHVVRIWKHIXQFWLRQ *URXS7UHDVXU\UHSRUWVPRQWKO\WRWKH05&WKHUHE\HQVXULQJDFRQVWDQWUHYLHZRIWKHOLTXLGLW\SRVLWLRQRIWKH*URXS 7KH*5&0&XQGHUGHOHJDWHGDXWKRULW\IURPWKHERDUGUHYLHZVDQGDSSURYHVWKHFRQWUROIUDPHZRUNDQGSROLF\IRU OLTXLGLW\ULVNPDQDJHPHQW

2010 review 7KHUHLVFXUUHQWO\DVLJQLILFDQWIRFXVRQOLTXLGLW\ULVNE\EDQNVJOREDOO\LQOLJKWRIWKHLPSRUWDQFHRISUXGHQWOLTXLGLW\ ULVNPDQDJHPHQWSUDFWLFHVDVKLJKOLJKWHGE\WKHUHFHQWLQWHUQDWLRQDOILQDQFLDOFULVLV7KH*URXSGXULQJSDLG FDUHIXODWWHQWLRQWROLTXLGLW\ULVNWRHQVXUHWKHPDQDJHPHQWRIWKLVULVNUHPDLQVDSSURSULDWH 6WHSV FRQWLQXH WR EH WDNHQ WR H[WHQG WKH WHUP RI WKH IXQGLQJ ERRN DQG WKH DYHUDJH ORQJWHUP IXQGLQJ UDWLR KDV LQFUHDVHGE\GXULQJ 7KHORDQWRGHSRVLWUDWLRKDVLPSURYHGE\IURPWRDVDUHVXOWRIFRQWLQXHGIRFXVRQDVVHWTXDOLW\DQG SUXGHQWOLTXLGLW\ULVNPDQDJHPHQWSUDFWLFHV

Approach to liquidity risk $GHGLFDWHGWHDPLQ*URXS7UHDVXU\LVUHVSRQVLEOHIRULPSOHPHQWLQJWKHOLTXLGLW\ULVNIUDPHZRUNDQGSROLF\DQGIRU HQVXULQJWKDWOLTXLGLW\ULVNLVDGHTXDWHO\PDQDJHGDFURVVDOO%8V*URXS7UHDVXU\DOVRPRQLWRUVDQGPDQDJHVWKH *URXS©VOLTXLGLW\SRVLWLRQWRHQVXUHIXOOUHJXODWRU\FRPSOLDQFHLQUHVSHFWRIOLTXLGLW\ULVNPDQDJHPHQWDQGUHSRUWLQJ *URXS 7UHDVXU\ WDNHV FRJQLVDQFH RI WKH FRQWUDFWXDO DQG EXVLQHVVDVXVXDO OLTXLGLW\ SRVLWLRQV DV ZHOO DV RI WKH OLTXLGLW\SRVLWLRQXQGHUVWUHVV

Business-as-usual liquidity management %XVLQHVVDVXVXDOOLTXLGLW\ULVNPDQDJHPHQWUHIHUVWRWKHPDQDJHPHQWRIWKHFDVKIORZVH[SHULHQFHGE\DEDQNLQ WKHFRXUVHRIFRQGXFWLQJEXVLQHVV7KHEXVLQHVVDVXVXDOHQYLURQPHQWWHQGVWRGLVSOD\IDLUO\KLJKSUREDELOLW\ORZ VHYHULW\OLTXLGLW\HYHQWVDQGUHTXLUHVWKHEDODQFLQJRIWKH*URXS©VGD\WRGD\FDVKQHHGV*URXS7UHDVXU\©VDSSURDFK WRPDQDJLQJEXVLQHVVDVXVXDOOLTXLGLW\IRFXVHVRQDQXPEHURINH\DUHDVLQFOXGLQJ FRQWLQXRXV PDQDJHPHQW RI QHW DQWLFLSDWHG FDVK IORZV EHWZHHQ DVVHWV DQG OLDELOLWLHV ZLWKLQ DSSURYHG FDVK RXWIORZOLPLWV

292 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU DFWLYH GDLO\ PDQDJHPHQW RI WKH IXQGLQJ DQG OLTXLGLW\ SURILOH WDNLQJ Key risk metrics used in business- FRJQLVDQFH RI WKH ERDUGDSSURYHG OLTXLGLW\ ULVN PHWULFV GHVLJQHG as-usual liquidity risk management WRDFKLHYHWKH*URXS©VEXVLQHVVDVXVXDOOLTXLGLW\ULVNWROHUDQFHDQG Risk metric Purpose of metric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©VIXQGLQJEDVHLQRUGHUWRDFKLHYHDQ PRQWKV RSWLPDOIXQGLQJSURILOHDQGVRXQGOLTXLGLW\ULVNPDQDJHPHQW ,QWHUEDQN 3URYLGHVDQLQGLFDWLRQ Stress liquidity risk management IXQGLQJUDWLR RIWKHH[WHQWWRZKLFK UHOLDQFHLVSODFHGRQ 6WUHVVOLTXLGLW\ULVNPDQDJHPHQWUHIHUVWRWKHPDQDJHPHQWRIOLTXLGLW\ IXQGLQJIURPRWKHU ULVNGXULQJWLPHVRIXQH[SHFWHGRXWIORZVDULVLQJIURP*URXSVSHFLILFRU EDQNV V\VWHPLF VWUHVV HYHQWV *URXS 7UHDVXU\ UHJXODUO\ SHUIRUPV OLTXLGLW\ VFHQDULR DQDO\VLV DQG VWUHVV WHVWLQJ WR DVVHVV WKH DGHTXDF\ RI WKH 6KRUWWHUP 3URYLGHVDPHDVXUH *URXS©V VWUHVV IXQGLQJ VRXUFHV OLTXLGLW\ EXIIHUV DQG FRQWLQJHQF\ PDWXULW\ RIWKHH[WHQWWR IXQGLQJ VWUDWHJLHV WR GHDO ZLWK VXFK HYHQWV 6FHQDULR DQDO\VLV DQG FDVKIORZ ZKLFKFDVKIORZ VWUHVV WHVWLQJ HQFRPSDVVHV D UDQJH RI UHDOLVWLF DGYHUVH HYHQWV WKDW PLVPDWFKHV PLVPDWFKHVRFFXU DOWKRXJKWKHSRVVLELOLW\LVUHPRWHFRXOGKDYHDPDWHULDOLPSDFWRQWKH DWD LQWKHVKRUWWHUP OLTXLGLW\RIWKH*URXS©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 293 Governance, remuneration, risk and controls

Liquidity risk

Key risk metric used in stress VHWWLQJOLTXLGLW\OLPLWVVRXUFHVRIVWUHVVIXQGLQJDQGOLTXLGLW\EXIIHUV liquidity risk management DV ZHOO DV IRUPXODWLQJ D IXQGLQJ VWUDWHJ\ GHVLJQHG WR PLQLPLVH OLTXLGLW\ ULVN *URXS 7UHDVXU\©V RYHUDOO REMHFWLYH LV WR HQVXUH WKDW Risk metric Purpose of metric XQGHUDPRGHUDWHWRKLJKOLTXLGLW\VWUHVVHYHQWWKH*URXS©VVWUHVV IXQGLQJ VRXUFHV DQG OLTXLGLW\ EXIIHUV H[FHHG WKH HVWLPDWHG VWUHVV 6XUYLYDO 3URYLGHVDPHDVXUH IXQGLQJUHTXLUHPHQWVIRUDSHULRGRIDWOHDVWGD\V6WUHVVWHVWLQJ KRUL]RQ RIWKHDGHTXDF\RI DQGVFHQDULRDQDO\VLVLVXVHGWRHYDOXDWHWKHHIILFLHQF\RILGHQWLILHG WKHEDQN©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

The liquidity risk management approach of Absa is summarised in the diagram

Contractual “Business-as- Stressed Available sources mismatch usual mismatch” mismatch of stress funding

Contingency funding and liquidity planning Stress needs sources of stress funding

Retail and commercial Capital funding through: market » GHSRVLWWDNLQJ funding » Regulatory requirements » PRQH\PDUNHW » Ratings agency requirements WUDQVDFWLRQV

Solve for: • Funding profile Key liquidity risk metrics Funding strategy • Liquid assets » Cash outflow limits » Asset growth buffer » Short-, medium- and long-term » Deposit growth funding ratios » Capital plan » Cash flow mismatch ratios » Cash generated from » Interbank funding ratios operations

294 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 2010 liquidity disclosures

Regulatory changes in 2010 7KH *URXS©V PDQDJHPHQW GHYRWHG D VLJQLILFDQW DPRXQW RI WLPH LQ XQGHUVWDQGLQJ WKH SRWHQWLDO LPSOLFDWLRQV RI WKH SURSRVHG%DVHOOLTXLGLW\IUDPHZRUNIRUWKH*URXS$ILUVWGUDIWRI%DVHO©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

Key metrics under Basel liquidity risk framework and timeframes for compliance

Compliance Risk metric Purpose of metric required by:

/LTXLGLW\ 7RSURPRWHVKRUWWHUPUHVLOLHQFHRIDEDQN©VOLTXLGLW\ULVNSURILOHE\ FRYHUDJHUDWLR HQVXULQJWKDWLWKDVVXIILFLHQWKLJKTXDOLW\OLTXLGDVVHWVWRVXUYLYHD /&5 VLJQLILFDQWVWUHVVVFHQDULRODVWLQJIRURQHPRQWK

1HWVWDEOH 7RSURPRWHUHVLOLHQFHRYHUDORQJHUWLPHKRUL]RQ RQH\HDU E\FUHDWLQJ IXQGLQJUDWLR DGGLWLRQDOLQFHQWLYHVIRUEDQNVWRIXQGWKHLUDFWLYLWLHVZLWKPRUHVWDEOH 16)5 VRXUFHVRIIXQGLQJRQDQRQJRLQJEDVLV

7KH *URXS KDV DOUHDG\ VWDUWHG WDNLQJ VWHSV WR IXUWKHU LPSURYH LWV OLTXLGLW\ SRVLWLRQ DKHDG RI WKH WLPHIUDPHV IRU FRPSOLDQFHZLWKWKH%DVHOUXOHVRXWOLQHGLQWKHWDEOHDERYHE\LQFUHDVLQJWKHDPRXQWRIVXUSOXVOLTXLGDVVHWVKHOGDQG E\WDNLQJVWHSVWRH[WHQGWKHWHUPRILWVZKROHVDOHIXQGLQJERRN0RUHLQIRUPDWLRQRQWKHSURJUHVVPDGHDQGRQWKH SODQVIRUFDQEHIRXQGLQWKHVHFWLRQVWKDWIROORZ

Surplus liquid assets held 7KH DPRXQW RI VXUSOXV OLTXLG DVVHWV KHOG E\ $EVD %DQN /LPLWHG GHILQHG DV XQHQFXPEHUHG OLTXLG DVVHWV KHOG LQ H[FHVVRIWKHDPRXQWUHTXLUHGWREHKHOGE\ODZ KDVEHHQVLJQLILFDQWO\LQFUHDVHGGXULQJ$VDWWKHUHSRUWLQJ GDWH5ELOOLRQRIVXUSOXVOLTXLGDVVHWVZDVKHOGLQUHVSHFWRI$EVD%DQN/LPLWHGDQLQFUHDVHRI5ELOOLRQRQWKH DPRXQWKHOGDWWKHSUHYLRXVUHSRUWLQJGDWHDVUHIOHFWHGLQWKHJUDSKEHORZ

Notes 1See Consultative Document – International framework for liquidity risk measurement, standards and monitoring, available at http://www.bis.org/publ/bcbs165.pdf. 2See Basel III: International framework for liquidity risk measurement, standards and monitoring, available at http://www.bis.org/publ/bcbs188.pdf.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 295 Governance, remuneration, risk and controls

Liquidity risk

Summary of liquid asset holdings held by Absa Bank Limited over period 31 December 2008 to 31 December 2010 (Rbn)

50 20 45 18 40 16 35 14 30 12 25 10 20 8 15 6

Liquid asset holdings (Rbn) 10 4

5 2 Surplus liquid asset holdings (Rbn) 0 0

Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2008 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 Liquid asset holding Liquid asset requirement Surplus liquid assets 7KH FRVW RI PDLQWDLQLQJ WKH OLTXLGLW\ SRRO RI $EVD %DQN /LPLWHG FRQVLVWLQJ RI OLTXLG DVVHWV KHOG WR FRPSO\ ZLWK UHJXODWRU\UHTXLUHPHQWVSOXVVXUSOXVOLTXLGDVVHWVKHOGRYHUDQGDERYHWKHPLQLPXPUHJXODWRU\UHTXLUHPHQWV LVD IXQFWLRQRIWKHFRVWRIIXQGLQJXVHGWRSXUFKDVHWKHOLTXLGDVVHWVFRPSDUHGZLWKWKHUHWXUQHDUQHGRQWKHOLTXLGDVVHWV SXUFKDVHG

Cost of liquidity 7KHEHJLQQLQJRIVDZOLTXLGLW\SUHPLXPV LHWKHH[FHVVUHWXUQRU¨SUHPLXP©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

Liquidity premiums (bps) 160

140

120

100

Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec 2007 2007 2007 2008 2008 2008 2008 2008 2008 2009 2009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2010 6m 12m 18m 24m 36m

296 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Funding structure 7KH IXQGLQJ SRVLWLRQ RI WKH *URXS KDV UHPDLQHG EURDGO\ XQFKDQJHG GXULQJ 5HWDLO %DQNLQJ UHPDLQV SDUWO\ IXQGHGE\UHWDLOGHSRVLWVZKHUHDV$%%ZDVLQDVHOIIXQGHGSRVLWLRQDVDWWKHUHSRUWLQJGDWH7KH*URXSSODFHV UHOLDQFHRQZKROHVDOHIXQGLQJPDUNHWVIRUWKHEDODQFHRIIXQGLQJUHTXLUHGDQG$EVD&DSLWDODFWVDVWKH*URXS©V¨IDFH WRWKHPDUNHW©IRUREWDLQLQJWKHUHTXLUHGZKROHVDOHIXQGLQJ )XQGLQJLVVRXUFHGIURPDYDULHW\RIGHSRVLWRUVUHSUHVHQWLQJDFURVVVHFWLRQRI6RXWK$IULFDQHFRQRPLFVHFWRUVZLWK DZLGHUDQJHRIPDWXULWLHV7KH*URXSKDVDZHOOGLYHUVLILHGGHSRVLWEDVHDQGFRQFHQWUDWLRQULVNLVPDQDJHGZLWKLQ DSSURSULDWH JXLGHOLQHV 6RXUFHV RI OLTXLGLW\ DUH UHJXODUO\ UHYLHZHG WR PDLQWDLQ D ZLGH GLYHUVLILFDWLRQ E\ SURYLGHU SURGXFWDQGWHUP

Summary of funding composition (%)

2,8 6,6

30,1 30,9

42,4 39,8

1,8 1,6

22,9 21,1

31 December 2010 31 December 2009

● Deposits from banks ● Demand deposits ● Term deposits ● FX deposits ● Debt securities in issue

7KHSURJUHVVLRQRIWKHORDQWRGHSRVLWUDWLRRIWKH*URXSLVVXPPDULVHGLQWKHJUDSKEHORZ7KHUDWLRKDVLPSURYHG E\GXULQJDVDUHVXOWRIFRQWLQXHGIRFXVRQDVVHWTXDOLW\DQGSUXGHQWOLTXLGLW\ULVNPDQDJHPHQWSUDFWLFHV

Progression of the Group’s loan to deposit ratio between 31 December 2006 and 31 December 2010 (%)

104,8 97,6 97,0 95,9 91,9

20062007 2008 2009 2010

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 297 Governance, remuneration, risk and controls

Liquidity risk

$PRUHGHWDLOHGEUHDNGRZQRIWKHORDQWRGHSRVLWUDWLRIRUWKH*URXSLVSURYLGHGLQWKHWDEOHEHORZ Loan to deposit ratio breakdown of assets and deposits – Table 51: 2010 Rm 5P Advances /RDQVDQGDGYDQFHVWRFXVWRPHUV QRWH 498 635 Deposits 'HSRVLWVGXHWRFXVWRPHUV QRWH 378 111 'HEWVHFXULWLHVLQLVVXH QRWH 164 545 542 656 Ratio 91,9%

/HQJWKHQLQJWKHIXQGLQJSURILOHRIWKH*URXS©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

298 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

Progression in wholesale funding composition of Absa Bank Limited as at 31 December (% and months) 60 15 14 50 12 11 42,3 40 39,7 9 10 35,2 30 6 23,0 25,7 22,8 23,6 21,0 20 20,0 19,0 20,1 20,5 5 18,3 17,0 17,9 15,7 15,7 17,1 15,8 12,6 12,9 14,3 14,4 Funding contribution (%) 10 9,1 6,5 Average maturity profile (months) 0 0 2006 2007 2008 2009 2010 ● < 1 month ● 1 – 3 months ● 3 – 6 months ● 6 – 12 months ● > 12 months ● Average maturity of wholesale funding

$NH\PHWULFXVHGWRWUDFNWKHIXQGLQJVWUXFWXUHRI$EVD%DQN/LPLWHGLVWKHORQJWHUPIXQGLQJUDWLRZKLFKUHIOHFWVWKH SURSRUWLRQ RI WRWDO IXQGLQJ ZKLFK KDV DQ RXWVWDQGLQJ WHUP LQ H[FHVV RI VL[ PRQWKV 7KH SURJUHVVLRQ LQ $EVD %DQN /LPLWHG©V ORQJWHUP IXQGLQJ UDWLR LV VKRZQ EHORZ )URP WKLV DQDO\VLV D PDUNHG LPSURYHPHQW LQ IXQGLQJ VWUXFWXUH LV HYLGHQW

Average long-term funding ratio for Absa Bank Limited as at 31 December (%)

25,6 23,5 21,9 19,4

14,1

2006 2007 2008 2009 2010

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 299 Governance, remuneration, risk and controls

Liquidity risk

&DSLWDOPDUNHWVIXQGLQJLVXVHGDVDIXUWKHUWRROIRUWKHH[WHQVLRQRI WKHIXQGLQJWHUPRIWKH*URXS,QUHVSHFWRI5ELOOLRQRIWHUP Summary of capital markets IXQGLQJZDVLVVXHGE\WKH*URXSDVRXWOLQHGLQWKHWDEOHWRWKHULJKW issuance in respect of the 2010 funding target by Absa Contractual and behavioural liquidity mismatch Bank Limited (funding raised positions between December 2009 and 7KH JUDSK EHORZ VXPPDULVHV WKH FRQWUDFWXDO PLVPDWFK SRVLWLRQ LQ December 2010). UHVSHFWRIWKH*URXS7KHFXPXODWLYHFRQWUDFWXDOPLVPDWFKSRVLWLRQ 1RPLQDODPRXQW RYHU RQH \HDU KDV LPSURYHG GXULQJ GXH WR SUXGHQW OLTXLGLW\ &DWHJRU\ 5P PDQDJHPHQWSUDFWLFHVDQGDIXUWKHUH[WHQVLRQLQIXQGLQJWHUP $EVD6HQLRU%RQGV $EVD6XERUGLQDWHG%RQGV $EVD6HFXULWLVDWLRQ

7RWDO

Cumulative contractual mismatch position of the Group as at the the reporting date, expressed as a percentage of total assets (%)

40 35 36 30

20 15 10 10

(10)

(20) (18) (18) (20) (30) (26)

On demand Within 1 yearFrom 1 year to 5 years More than 5 years ● 2009 ● 2010

300 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU $PRUHGHWDLOHGEUHDNGRZQRIWKHFRQWUDFWXDOPLVPDWFKSRVLWLRQLVSURYLGHGLQWKHWDEOHVWKDWIROORZ Liquidity risk measurement – discounted – Table 52 (audited): Group 2010 From More On Within 1 year to than demand 1 year 5 years 5 years Total Rm Rm Rm Rm Rm Assets &DVKFDVKEDODQFHVDQGEDODQFHV ZLWKFHQWUDOEDQNV 19 123 2 415 2 823 — 24 361 6WDWXWRU\OLTXLGDVVHWSRUWIROLR 3 17 479 10 142 20 591 48 215 /RDQVDQGDGYDQFHVWREDQNV 14 719 7 150 1 084 1 924 24 877 7UDGLQJSRUWIROLRDVVHWV 61 393 — — — 61 393 +HGJLQJSRUWIROLRDVVHWV 4 662 — — — 4 662 2WKHUILQDQFLDODVVHWV 5 034 1 817 6 601 54 13 506 /RDQVDQGDGYDQFHVWRFXVWRPHUV 68 834 62 847 114 642 252 312 498 635 5HLQVXUDQFHDVVHWV — 236 474 150 860 ,QYHVWPHQWVHFXULWLHV 353 3 988 8 528 10 957 23 826 )LQDQFLDODVVHWV 174 121 95 932 144 294 285 988 700 335 1RQILQDQFLDODVVHWV 16 135 Total assets 716 470 Liabilities 'HSRVLWVIURPEDQNV 7 555 4 108 3 164 579 15 406 7UDGLQJSRUWIROLROLDELOLWLHV 47 454 — — — 47 454 +HGJLQJSRUWIROLROLDELOLWLHV 1 881 — — — 1 881 2WKHUILQDQFLDOOLDELOLWLHV 5 786 2 543 432 327 9 088 'HSRVLWVGXHWRFXVWRPHUV 243 267 111 413 8 237 15 194 378 111 'HEWVHFXULWLHVLQLVVXH — 115 295 42 985 6 265 164 545 /LDELOLWLHVXQGHULQYHVWPHQWFRQWUDFWV 150 2 273 7 367 4 174 13 964 3ROLF\KROGHUOLDELOLWLHVXQGHULQVXUDQFH FRQWUDFWV — 2 029 1 103 (131) 3 001 %RUURZHGIXQGV 123 722 10 304 2 500 13 649 )LQDQFLDOOLDELOLWLHV 306 216 238 383 73 592 28 908 647 099 1RQILQDQFLDOOLDELOLWLHV 7 222 Total liabilities 654 321 Equity 62 149 Total equity and liabilities 716 470 Net liquidity position of ﬁnancial instruments (132 095) (142 451) 70 702 257 080 53 236

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 301 Governance, remuneration, risk and controls

Liquidity risk

Liquidity risk measurement – discounted – Table 52 (audited) (continued): *URXS )URP 0RUH 2Q :LWKLQ \HDUWR WKDQ GHPDQG \HDU \HDUV \HDUV 7RWDO 5P 5P 5P 5P 5P Assets &DVKFDVKEDODQFHVDQGEDODQFHVZLWK FHQWUDOEDQNV ¥ 6WDWXWRU\OLTXLGDVVHWSRUWIROLR ¥ /RDQVDQGDGYDQFHVWREDQNV 7UDGLQJSRUWIROLRDVVHWV ¥¥¥ +HGJLQJSRUWIROLRDVVHWV ¥¥¥ 2WKHUILQDQFLDODVVHWV /RDQVDQGDGYDQFHVWRFXVWRPHUV 5HLQVXUDQFHDVVHWV ,QYHVWPHQWVHFXULWLHV )LQDQFLDODVVHWV 1RQILQDQFLDODVVHWV ¥¥¥¥ Total assets Liabilities 'HSRVLWVIURPEDQNV 7UDGLQJSRUWIROLROLDELOLWLHV ¥¥¥ +HGJLQJSRUWIROLROLDELOLWLHV ¥¥¥ 2WKHUILQDQFLDOOLDELOLWLHV 'HSRVLWVGXHWRFXVWRPHUV 'HEWVHFXULWLHVLQLVVXH /LDELOLWLHVXQGHULQYHVWPHQWFRQWUDFWV 3ROLF\KROGHUOLDELOLWLHVXQGHULQVXUDQFHFRQWUDFWV %RUURZHGIXQGV ¥ )LQDQFLDOOLDELOLWLHV 1RQILQDQFLDOOLDELOLWLHV ¥¥¥¥ Total liabilities Equity Total equity and liabilities Net liquidity position of ﬁnancial instruments

Note 1The prior year figures were reclassified due to a change in methodology regarding the maturity analysis.

302 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Liquidity risk measurement – undiscounted – Table 53 (audited): Group 2010 From 1 year More On Within to than Discount demand 1 year 5 years 5 years effect Total Rm Rm Rm Rm Rm Rm Liabilities On-statement of financial position 'HSRVLWVIURPEDQNV 8 517 3 198 4 082 3 (394) 15 406 7UDGLQJSRUWIROLROLDELOLWLHV 47 454————47 454 +HGJLQJSRUWIROLROLDELOLWLHV — 1 492 2 280 1 207 (3 098) 1 881 2WKHUILQDQFLDOOLDELOLWLHV 5 786 2 543 432 327 — 9 088 'HSRVLWVGXHWRFXVWRPHUV 244 874 114 160 13 954 20 734 (15 611) 378 111 'HEWVHFXULWLHVLQLVVXH 881 117 814 52 630 11 354 (18 134) 164 545 /LDELOLWLHVXQGHULQYHVWPHQW FRQWUDFWV 150 2 347 9 834 6 295 (4 662) 13 964 3ROLF\KROGHUOLDELOLWLHVXQGHU LQVXUDQFHFRQWUDFWV 243 1 771 1 600 (131) (482) 3 001 %RUURZHGIXQGV 123 1 840 13 491 5 304 (7 109) 13 649 Total liabilities 308 028 245 165 98 303 45 093 (49 490) 647 099 Off-statement of financial position )LQDQFLDOJXDUDQWHHFRQWUDFWV 599————599 /RDQFRPPLWPHQWV 46 074 — 1 171 — — 47 245 )URP \HDU 0RUH 2Q :LWKLQ WR WKDQ 'LVFRXQW GHPDQG \HDU \HDUV \HDUV HIIHFW 7RWDO 5P 5P 5P 5P 5P 5P Liabilities On-statement of financial position 'HSRVLWVIURPEDQNV 7UDGLQJSRUWIROLROLDELOLWLHV ¥¥¥¥ +HGJLQJSRUWIROLROLDELOLWLHV ¥ 2WKHUILQDQFLDOOLDELOLWLHV ¥ ¥ 'HSRVLWVGXHWRFXVWRPHUV 'HEWVHFXULWLHVLQLVVXH /LDELOLWLHVXQGHULQYHVWPHQW FRQWUDFWV ¥ 3ROLF\KROGHUOLDELOLWLHVXQGHU LQVXUDQFHFRQWUDFWV %RUURZHGIXQGV ¥ Total liabilities Off-statement of financial position )LQDQFLDOJXDUDQWHHFRQWUDFWV ¥¥¥¥ /RDQFRPPLWPHQWV ¥ ¥ ¥

Notes Includes both irrevocable debt and equity facilities granted. The prior year figures were reclassified due to a change in methodology regarding maturity analysis.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 303 Governance, remuneration, risk and controls

Liquidity risk

7KH *URXS PDQDJHV LWV EHKDYLRXUDO EXVLQHVVDVXVXDO PLVPDWFKHV ZLWKLQ ERDUGDSSURYHG OLPLWV 7KH EHKDYLRXUDO PLVPDWFKSRVLWLRQKDVVKRZQVLJQLILFDQWLPSURYHPHQWVLQRYHUGHVSLWHWKHFKDOOHQJLQJHFRQRPLFHQYLURQPHQW

Cumulative behavioural mismatch position of Absa Bank Limited as at 31 December expressed as a percentage of total liabilities to the public (%) 20 17 15 12 10

5 4

0 0 (1) (5) (4)

(10) (8) (11) (15)

On demand Within 1 yearFrom 1 year to 5 years More than 5 years ● 2009 ● 2010

Stress and scenario testing $VDW'HFHPEHU$EVD©VVXUYLYDOKRUL]RQZDVZHOOLQH[FHVVRILQWHUQDOOLPLWVZLWKVRXUFHVRIVWUHVVIXQGLQJ H[FHHGLQJIXQGLQJUHTXLUHG'XULQJVWHSVZHUHWDNHQWRUHGXFHUHOLDQFHRQXQVHFXUHGIXQGLQJVRXUFHVDQGWR LQFUHDVHVXUSOXVOLTXLGDVVHWVKHOG7KHJUDSKVEHORZVKRZ$EVD©VVRXUFHVRIVWUHVVIXQGLQJDVDW'HFHPEHU DQG 'HFHPEHU 1RWH WKDW WKH JUDSK RQO\ VKRZV WKH FRPSRVLWLRQ RI OLTXLGLW\ UHVRXUFHV RYHU DQG DERYH VWDWXWRU\OLTXLGLW\UHTXLUHPHQWV

Represents the surplus liquid securities held over and above regulatory requirements.

Summary of sources of stress funding in respect of Absa Bank Limited (%)

8 1 2 2 3 20

29 30

30 45

As at 31 December 2010 As at 31 December 2009

● Investment securities ● Unencumbered trading securities ● Surplus prudential liquid securities* ● Unlisted interbank funding ● Unsecured funding lines ● Price sensitive overnight loans

Strategic focus for the year ahead /LTXLGLW\ULVNPHDVXUHPHQWDQGPDQDJHPHQWZLOOFRQWLQXHWRUHFHLYHHPSKDVLVJOREDOO\DQGLWLVH[SHFWHGWKDWEHVW SUDFWLFHVZLOOFRQWLQXHWRHYROYHDWSDFH7KLVDUHDZLOOUHPDLQDNH\IRFXVDUHDRIWKH*URXSDQGDVLJQLILFDQWDPRXQW RIIXUWKHUGHYHORSPHQWZRUNLVH[SHFWHGWREHSHUIRUPHGE\WKH*URXSGXULQJ $VRXWOLQHGHDUOLHULQWKLVVHFWLRQWKHILQDOOLTXLGLW\IUDPHZRUNXQGHU%DVHOZDVSXEOLVKHGLQ'HFHPEHU$OWKRXJK WKHSURSRVDOVDIIRUGEDQNVDSHULRGRIWLPHEHIRUHIXOOFRPSOLDQFHLVH[SHFWHGWKH*URXSZLOOFRQWLQXHWRWDNHVWHSV LQDQGEH\RQGWRHQVXUHFRPSOLDQFHZLWKLQWKHUHTXLUHGWLPHIUDPHV

304 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Governance, remuneration, risk and controls

Operational risk

Introduction Highlights 2SHUDWLRQDO ULVN LV WKH ULVN RI GLUHFW RU LQGLUHFW ORVVHV UHVXOWLQJIURPLQDGHTXDWHRUIDLOHGLQWHUQDOSURFHVVHVRU 7KH*URXSPHDVXUHVRSHUDWLRQDOULVNWKURXJK V\VWHPVKXPDQHUURURUH[WHUQDOHYHQWV WKH$GYDQFHG0HDVXUHPHQW$SSURDFK $0$

Strategy &RQWUROHQKDQFHPHQWVLPSOHPHQWHGZLWK 2SHUDWLRQDO ULVN LV PDQDJHG XQGHU WKH RSHUDWLRQDO VSHFLILFHPSKDVLVRQILQDQFLDODQGYLROHQW ULVN PDQDJHPHQW IUDPHZRUN DGRSWHG E\ WKH *URXS FULPHDQWLPRQH\ODXQGHULQJWHFKQRORJ\ ZKLFK LV DQ DQFLOODU\ IUDPHZRUN RI WKH *URXS©V RYHUDOO FRQWUROVDQGEXVLQHVVFRQWLQXLW\ ULVN PDQDJHPHQW IUDPHZRUN $EVD DSSOLHV WKH $0$ WR RSHUDWLRQDO ULVN WKURXJKRXW PRVW RI WKH *URXS ZLWK WKH H[FHSWLRQRI$EVD©V$IULFDQRSHUDWLRQVDQGFHUWDLQVPDOO HQWLWLHV 7KH REMHFWLYH RI WKH RSHUDWLRQDO ULVN PDQDJHPHQW Key performance indicators IUDPHZRUNLVWRHQVXUHWKDWWKH*URXSPDQDJHVRSHUDWLRQDO ULVNVLQDQRSWLPDODQGFRQVLVWHQWPDQQHUPDNLQJFHUWDLQ &KDQJHIURPSULRU \HDU WKDW WKHVH ULVNV DUH PHDVXUHG DFFXUDWHO\ DQG WKDW WKH *URXSLVDGHTXDWHO\FDSLWDOLVHG Indicator 2010 ➪➪ ➪ 7RWDOQXPEHURIHYHQWV Governance

7RWDOORVVYDOXH ➪ 2SHUDWLRQDO ULVN LV JRYHUQHG WKURXJK D FOHDU KLHUDUFK\ RI FRPPLWWHHV WKURXJKRXW WKH RUJDQLVDWLRQ 7KHVH JRYHUQDQFH FRPPLWWHHV LQFOXGH EXVLQHVV XQLW VHJPHQW DQG *URXS OHYHO RSHUDWLRQDO ULVN FRPPLWWHHV VHJPHQW DQG*URXSOHYHO*&&©VDVZHOODVWKH*5&0&DWERDUG OHYHO 7KH RSHUDWLRQDO ULVN SURFHVVHV DOVR IRUPV DQ LQKHUHQWSDUWRIWKHLQWHUQDODXGLWSURFHVV

2010 review 7KHIRFXVRQWKHFRQWUROHQYLURQPHQWLQWKH*URXSRYHU WKHUHFHQW\HDUVZDVHYLGHQWLQDVORVVHVUHPDLQHG IDLUO\VWDEOH ZLWKDVOLJKWGRZQZDUGWUHQG /DUJHORVVHV UHPDLQHG ZHOO XQGHU FRQWURO ZLWK D FOHDU LPSURYHPHQW VHHQGXULQJ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 305 Governance, remuneration, risk and controls

Operational risk

7KH*URXSLPSOHPHQWHGFRQWUROLPSURYHPHQWVGXULQJWKH\HDUXQGHUUHYLHZDVSDUWRIWKHFRQWLQXLQJIRFXVRQFRQWURO HQKDQFHPHQWV6RPHRIWKHVHLPSURYHPHQWVZHUHDVIROORZV UHYLHZLQJDQGHQKDQFLQJWHFKQRORJ\UHODWHGFRQWUROV LQWURGXFLQJDIUDXGRYHUVLJKWSURFHVVWKDWFRPELQHVRQJRLQJLQYHVWLJDWLRQVZLWKOHVVRQVOHDUQW HQKDQFLQJWKH*URXS©V$IULFDRSHUDWLRQV©FRQWUROHQYLURQPHQWVSHFLILFDOO\ZLWKUHJDUGWRFULPHDQGWHFKQRORJ\DQG FDWHULQJIRUDOOFULWLFDOSURFHVVHVDQGV\VWHPVLQWKHHYHQWRIDGLVDVWHURURWKHUIRUFHGEUHDNLQQRUPDORSHUDWLRQV )LQDQFLDOFULPHUHPDLQHGRQHRIWKH*URXS©VSULPDU\ULVNV7KHULVNRIIDLOXUHLQWKHH[HFXWLRQRISURFHVVHVUHPDLQHG DVHFRQGDU\ULVN$QLQWHJUDWHGDSSURDFKWRWKHVHULVNVZDVDGRSWHGLQZKLFKZLOOFRQWLQXHGXULQJ3HRSOH ULVN ZDV DOVR D PDMRU IRFXV DUHD GXULQJ 7KH WRXJK HFRQRPLF FOLPDWH FRPELQHG ZLWK RWKHU SUHVVXUHV RQ SHRSOHVXFKDVLQFUHDVHGFRPSOH[LW\LQWKHZRUNHQYLURQPHQWODFNRIVNLOOVDQGLQFUHDVLQJUHJXODWLRQUHVXOWHGLQWKH *URXSIDFLQJKLJKHUULVNVWKDQQRUPDO

Approach to operational risk 7KH*URXSPDQDJHVRSHUDWLRQDOULVNWKURXJKWKH353ZKLFKFRQVLVWVRIFOHDUO\GHILQHGLQGLYLGXDOIUDPHZRUNV

Basel II measurement elected 7KH*URXSKDVHOHFWHGWRPHDVXUHRSHUDWLRQDOULVNE\XVLQJWKH$0$7KH$0$DSSURDFKLVDSSOLHGWRWKHPDMRULW\ RI WKH EXVLQHVV XQLWV LQ WKH *URXS $ IHZ VPDOO HQWLWLHV DUH VWLOO PHDVXUHG XVLQJ WKH 6$ DQG %DVLF ,QGLFDWRU $SSURDFK %,$

Capital modelling 7KHPRGHOXVHGWRGHWHUPLQHWKH*URXS©VRSHUDWLRQDOULVNFDSLWDOZDVULJRURXVO\UHYLHZHGYDOLGDWHGDQGDSSURYHGLQ DFFRUGDQFHZLWKWKH*URXS©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

306 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Coverage of the AMA framework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

Operational risk capital measurement

Economic capital Required capital

1,2 1,2 4,1 5,3

94,7 93,5

4 Q4 2010 4 Q4 2010 ● $0$● 6$● %,$ ● $0$● 6$● %,$

Insurance mitigation ,QVXUDQFHLVXVHGDVDPHFKDQLVPWRPLWLJDWHRSHUDWLRQDOULVNV7KH*URXS©V6KRUW7HUP,QVXUDQFH&RPPLWWHH 67,& LVUHVSRQVLEOHIRULQVXUDQFHGHVLJQDQGIRUPDQDJLQJWKHSULQFLSDOLQVXUDQFHSURJUDPPHVWKDWPLWLJDWHNH\DVSHFWV RIWKH*URXS©VRSHUDWLRQDOULVN7KH67,&HQVXUHVWKDWWKHVHSROLFLHVDUHFXUUHQWDQGUHPDLQDSSOLFDEOHWRWKH*URXS©V RSHUDWLQJHQYLURQPHQW7KH67,&DOVRRYHUVHHVPRUHVSHFLILFLQVXUDQFHFRYHUSXUFKDVHGDW*URXSRUVHJPHQWOHYHO WRGLVFKDUJHVWDWXWRU\DQGUHJXODWRU\GXWLHVRUWRPHHWFRXQWHUSDUW\FRPPLWPHQWVDQGVWDNHKROGHUH[SHFWDWLRQV 7KHSULPDU\LQVXUDQFHSROLFLHVSXUFKDVHGE\WKH*URXSDUH FRPSUHKHQVLYHFULPHDQGHOHFWURQLFFULPH GLUHFWRUV©DQGRIILFHUV©OLDELOLW\ SURIHVVLRQDOLQGHPQLW\DQG YDULRXVDVVHWSROLFLHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 307 Governance, remuneration, risk and controls

Operational risk

Reporting of Pillar 3 and IFRS requirements in relation to operational risk 7KH *URXS UHFRJQLVHV WKH VLJQLILFDQFH RI RSHUDWLRQDO ULVN DQG LV FRPPLWWHG WR HQKDQFLQJ WKH PHDVXUHPHQW DQG PDQDJHPHQW WKHUHRI :LWKLQ WKH *URXS©V RSHUDWLRQDO ULVN IUDPHZRUN TXDOLWDWLYH DQG TXDQWLWDWLYH PHWKRGRORJLHV DQGWRROVDUHDSSOLHG*URXSZLGHWRLGHQWLI\DQGDVVHVVRSHUDWLRQDOULVNVDQGWRSURYLGHPDQDJHPHQWLQIRUPDWLRQIRU GHWHUPLQLQJDSSURSULDWHPLWLJDWLQJPHDVXUHV

Focus for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

308 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Insurance risk

Introduction Highlights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ey performance indicators &RPSDQ\ /LPLWHG $EVD ,QVXUDQFH 5LVN 0DQDJHPHQW 6HUYLFHV$EVDidirect /LPLWHGDQG$EVD0DQ[,QVXUDQFH 2010 % &RPSDQ\/LPLWHG $EVD0DQ[ 6KRUWWHUPORVVUDWLR 69,9 9DOXHRIOLIHQHZEXVLQHVVPDUJLQ 6,6 Strategy 13,8 7KH LQVXUDQFH HQWLWLHV OLVWHG DERYH DFWLYHO\ SXUVXH 5HWXUQRQVKDUHKROGHUV©DVVHWV vs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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 309 Governance, remuneration, risk and controls

Insurance risk

Governance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

2010 review 7KHEDQFDVVXUDQFHVHFWRUZDVLPSDFWHGE\WKHVXEGXHGHFRQRPLFJURZWKDQGVORZHUWKDQH[SHFWHGUHFRYHU\LQ 7KHLQVXUDQFHODQGVFDSHZDVFKDUDFWHULVHGE\YDU\LQJIDFWRUVDFURVVWKHULVNVPDQDJHGE\WKHVH%8V

Underwriting risk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

Insurance underwriting risk 5P 1 246

1 063

4 4 4 4 4 4 4 Q4 2010 ● ● $SSHWLWH● 5LVN 6KRUWWHUPLQVXUDQFHORVVUDWLRVZHUHLQOLQHZLWKH[SHFWDWLRQVGXULQJWKH\HDUDOWKRXJKKLJKHUOHYHOVZHUHH[SHULHQFHG LQ1RYHPEHUDQG'HFHPEHUGXHWRWKHHIIHFWVRIDGYHUVHZHDWKHUFRQGLWLRQV

Short-term loss ratios (excluding Absa Manx)

77,6 73,3

-DQ )HE 0DU $SU 0D\ -XQ -XO $XJ 6HS 2FW 1RY Dec ● ●

310 Absa Group Limited$QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Life insurance mismatch risk 5LVN DSSHWLWH DQG XWLOLVDWLRQ ZDV VHW DQG PRQLWRUHG IRU OLIH LQVXUDQFH PLVPDWFK ULVN EDVHG RQ WKH UHVLOLHQFH ULVN FRPSRQHQWRIWKH$66$3*1FDSLWDODGHTXDF\UHTXLUHPHQWZKLFKPHDVXUHVWKHH[WHQWWRZKLFKDVVHWVIDOOE\ PRUHWKDQWKHOLDELOLWLHVZKHQPDUNHWFRQGLWLRQVFKDQJH

Life insurance mismatch risk 5P

391

4 4 4 4 4 4 4 Q4 2010 ● ● $SSHWLWH● 8WLOLVDWLRQ

/LIHLQVXUDQFHPLVPDWFKULVNDSSHWLWHZDVKLJKHUWKDQLQWKHSUHYLRXV\HDUWRDOORZIRUDGGLWLRQDOSURGXFWH[SRVXUH DQGWKHUHFDOLEUDWLRQRIWKHPRGHOIRULQFUHDVHGLPSOLHGORQJWHUPYRODWLOLWLHVDQGDQHHGWRWDNHSRWHQWLDOHFRQRPLF F\FOHLPSDFWVLQWRDFFRXQWUDWKHUWKDQRQO\H[SHFWHGFRQGLWLRQVIRUWKH\HDU7KHUHVXOWVRIWKHELDQQXDODVVHWOLDELOLW\ PRGHOOLQJH[HUFLVHVXQGHUWDNHQKDYHLPSURYHGPDQDJHPHQW©VDELOLW\WRPDQDJHPLVPDWFKULVNDQGZLOOFRQWLQXHWR GRVRJRLQJIRUZDUG

Investment risk 5LVNDSSHWLWHDQGXWLOLVDWLRQZDVVHWDQGPRQLWRUHGIRULQYHVWPHQWULVNEDVHGRQDFWXDODVVHWKROGLQJVPXOWLSOLHGE\ LQYHVWPHQWULVNFDSLWDOSHUFHQWDJHVFDOFXODWHGXVLQJWKHYDULDELOLW\RISXEOLVKHGLQGLFHV,QYHVWPHQWULVNLQFUHDVHGLQ OLQHZLWKXQGHUO\LQJEXVLQHVVJURZWKRIIVHWE\GLVLQYHVWPHQWIURPDQXQOLVWHGHTXLW\KROGLQJ9RODWLOLW\RIUHWXUQVRQ OLIHLQVXUDQFHDVVHWVZDVOLPLWHGWKURXJKKHGJLQJRIHTXLW\KROGLQJV7KHKHGJHVZHUHUROOHGRYHUDQGRUUHEDODQFHG TXDUWHUO\WRWDNHDFFRXQWRIWKHPRYHPHQWLQXQGHUO\LQJHTXLW\YDOXHV

Investment risk 5P

366

12,7

-DQ )HE 0DU $SU 0D\ -XQ -XO $XJ 6HS 2FW 1RY Dec 2010 ● ● $SSHWLWH● 5LVN 5¶ ● 5LVN RIPDUNHWYDOXH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 311 Governance, remuneration, risk and controls

Insurance risk

7KHGXUDWLRQRIWKHLQWHUHVWHDUQLQJDVVHWVEDFNLQJSROLF\KROGHUOLDELOLWLHVLQFUHDVHGLQOLQHZLWKWDUJHWIRUOLIHLQVXUDQFH DVVHWVDQGUHPDLQHGZLWKLQOLPLWIRUVKRUWWHUPLQVXUDQFHDVVHWV

Duration match (years)

8,2 8,2 8,2 8,2 8,2 8,2 8,2 8,2 8,2 8,2 8,2 8,2

7,6 7,6 7,7 7,2 7,3 7,5 7,5 7,4 7,4 7,6 7,4 7,5

0,7 0,6 0,5 0,5 0,5 0,5 0,6 0,5 0,5 0,8 0,7 0,7 1,0 1,0 1,0 1,0 1,0 1,0 1,0 1,0 1,0 1,0 1,0 1,0

Jan 2010 Feb 2010 Mar 2010 Apr 2010 May 2010 Jun 2010 Jul 2010 Aug 2010 Sept 2010 Oct 2010 Nov 2010 Dec 2010 ● Life target ● Short-term limit ● Life actual ● Short-term actual

Approach to insurance risk (audited): 8QGHUZULWLQJULVNOLIHLQVXUDQFHPLVPDWFKULVNDQGLQYHVWPHQWULVNDUHFRUHWRWKHEXVLQHVVRIWKHLQVXUDQFHHQWLWLHV 7KHVXFFHVVIXOPDQDJHPHQWRIWKHVHULVNVZLOOGHWHUPLQHWKHVXFFHVVRIWKHLQVXUDQFHHQWLWLHV Short-term insurance underwriting riskLVPDQDJHGWKURXJKXQGHUZULWLQJDXWKRULW\PDQGDWHVDQGE\UHIHUUDOWRDQ 8QGHUZULWLQJ5HYLHZ&RPPLWWHHZKHQUHTXLUHG5LVNJRYHUQDQFHLVPRQLWRUHGWKURXJKWKHHQWLW\DQG$EVD)LQDQFLDO 6HUYLFHV*RYHUQDQFHDQG&RQWURO&RPPLWWHHVWKH$FWXDULDO5HYLHZ&RPPLWWHHDQG3ULQFLSDO5LVNUHSRUWLQJ $Q8QGHUZULWLQJ5LVN)RUXPPRQLWRUVlife insurance underwritingSHUIRUPDQFHDQGTXDOLW\RQDPRQWKO\EDVLVWR HQVXUHULVNWDNHQLVLQOLQHZLWKULVNSULFHGDQGUHVHUYHGIRU5LVNJRYHUQDQFHLVPRQLWRUHGWKURXJKWKHHQWLW\DQG$EVD )LQDQFLDO 6HUYLFHV *RYHUQDQFH DQG &RQWURO &RPPLWWHHV WKH $FWXDULDO 5HYLHZ &RPPLWWHH DQG 3ULQFLSDO 5LVN UHSRUWLQJ $ PRQWKO\ ,QYHVWPHQW 5LVN &RPPLWWHH PHHWLQJ PRQLWRUV life insurance mismatch risk 4XDUWHUO\ UHYLHZ LV XQGHUWDNHQWKURXJKWKH$EVD)LQDQFLDO6HUYLFHV&DSLWDODQG,QYHVWPHQW5LVN&RPPLWWHHDQGWKH$FWXDULDO5HYLHZ &RPPLWWHH 0RQWKO\ HQWLW\ ,QYHVWPHQW 5LVN &RPPLWWHH PHHWLQJV PRQLWRU investment risk DFURVV WKH LQVXUDQFH HQWLWLHV $ TXDUWHUO\ UHYLHZ LV XQGHUWDNHQ E\ WKH $EVD )LQDQFLDO 6HUYLFHV &DSLWDO DQG ,QYHVWPHQW 5LVN &RPPLWWHH DQG WKH $FWXDULDO5HYLHZ&RPPLWWHHV

2010 Insurance risk disclosures Underwriting risk (audited): 8QGHUZULWLQJULVNLVLQIOXHQFHGE\WKHW\SHDQGQDWXUHRILQVXUDQFHDFWLYLWLHVXQGHUWDNHQDQGLVLPSDFWHGE\ WKHULVNDSSHWLWHRIWKHLQVXUDQFHEXVLQHVVHV WKHQDWXUHRIXQGHUZULWLQJH[SRVXUHVXQGHUO\LQJWKHSURGXFWVDQGVHUYLFHV SRUWIROLRFKDUDFWHULVWLFVDQG WKHQDWXUHDQGH[WHQWRIUHLQVXUDQFHFRYHU 8QGHUZULWLQJULVNLVPRQLWRUHGVHSDUDWHO\IRUWKHVKRUWWHUPLQVXUDQFHDQGOLIHLQVXUDQFHEXVLQHVVHV

Short-term insurance underwriting risk 6KRUWWHUPLQVXUDQFHXQGHUZULWLQJULVNGHVFULEHVWKHULVNDVVRFLDWHGZLWKWKHXQGHUZULWLQJRIIL[HGDQGRUPRYHDEOH DVVHWVDFFLGHQWVJXDUDQWHHVDQGOLDELOLWLHV

312 Absa Group Limited$QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Monitoring of risks (audited) 0RQWKO\ PRQLWRULQJ RI ORVV UDWLRV LGHQWLILHV SRUWLRQV RI WKH EXVLQHVV ZKHUH FODLPV DUH LQFUHDVLQJO\ FRPSDUHG WR XQGHUO\LQJUDWHV,IQHFHVVDU\DUHYLHZRIUHTXLUHGUDWHFKDQJHVRUFKDQJHVWRSROLF\FRQGLWLRQVWDNHVSODFH9ROXPHV RIEXVLQHVVDUHPRQLWRUHGIRULQFUHDVHVLQYROXPHVRXWRIOLQHZLWKH[SHFWDWLRQVLQGLFDWLQJWKDWUDWHVPD\EHORZ FRPSDUHGWRWKHPDUNHWUHTXLULQJUHYLHZ([WHQVLYHFODLPVFRQWUROPHDVXUHVDUHLQSODFHLQFOXGLQJDVVHVVPHQWRI FODLPVFKHFNVRIWRWDOSRWHQWLDOFODLPFRPSDUHGWRWKHVXPLQVXUHG DYHUDJLQJ DQGEXONSURFXUHPHQW

Risk management per product line (audited) Homeowners’ 0XOWLSOHVLPLODUFODLPVPDNHFODLPUDWHVPRUHSUHGLFWDEOHLQQRUPDO comprehensive FLUFXPVWDQFHV$VVHVVPHQWDQGDGMXVWPHQWRISRWHQWLDOFODLPVLVXQGHUWDNHQ insurance &RYHULVLQFOXGHGLQWKHFDWDVWURSKHUHLQVXUDQFHSXUFKDVH Personal lines, accident 6FLHQWLILFSULFLQJXVLQJPXOWLSOHULVNIDFWRUVLVXVHGLQULVNVHOHFWLRQDQGWR and travel insurance FKDUJHSUHPLXPVPDWFKHGWRXQGHUO\LQJULVN$VVHVVPHQWDQGDGMXVWPHQWRI SRWHQWLDOFODLPVLVXQGHUWDNHQ&RYHULVLQFOXGHGLQWKHFDWDVWURSKHUHLQVXUDQFH SXUFKDVH Commercial insurance ,QXQGHUZULWLQJWKHVHULVNVVLJQLILFDQWIRFXVLVSODFHGRQWKHTXDOLW\RIILUH for small, medium and SURWHFWLRQDQGRWKHUULVNPHDVXUHV$VVHVVPHQWDQGDGMXVWPHQWRISRWHQWLDO large companies FODLPVLVXQGHUWDNHQ&DWDVWURSKHUHLQVXUDQFHLVSXUFKDVHGWRSURWHFWDJDLQVW QDWXUDOFDWDVWURSKHVLQSDUWLFXODUHDUWKTXDNHVDQGDJDLQVWODUJHLQGLYLGXDO ORVVHV Agricultural insurance 'LYHUVLILFDWLRQLVVRXJKWDFURVVFURSVVHDVRQVDQGJHRJUDSKLFDOUHJLRQV6WRS ORVVUHLQVXUDQFHLVLQSODFHWRSURWHFWDJDLQVWH[FHVVLYHFODLPV5LVNVDUH LQGLYLGXDOO\XQGHUZULWWHQEHIRUHEHLQJWDNHQRQ&RQVWDQWDVVHVVPHQWRIFURS GHYHORSPHQWDQGWKHQDGMXVWPHQWRISRWHQWLDOFODLPVLVXQGHUWDNHQ Specialist lines 5LVNVXQGHUZULWWHQE\XQGHUZULWLQJPDQDJHPHQWDJHQFLHVDUHRQO\XQGHUWDNHQ ZLWKVSHFLDOLVWVLQWKHLUUHVSHFWLYHDUHDVZKRKDYHWUDFNUHFRUGVRIXQGHUZULWLQJ DQGFODLPVFRQWURO5HLQVXUDQFHIRUUHOHYDQWULVNVLVLQFOXGHGLQWKHPDLQRU VSHFLILFUHLQVXUDQFHWUHDWLHV

Reinsurance (unaudited) 7KHLPSDFWRIODUJHLQGLYLGXDOFODLPVLVOLPLWHGWKURXJKORZUHWHQWLRQOHYHOVSHUULVNZLWKWKHEDODQFHEHLQJSURWHFWHG WKURXJKUHLQVXUDQFH7KHDFFXPXODWLRQRIQHWH[SRVXUHVGXHWRPXOWLSOHFODLPVLVOLPLWHGWKURXJKWKHSXUFKDVHRI FDWDVWURSKH UHLQVXUDQFH &DWDVWURSKH UHLQVXUDQFH SDUWLFXODUO\ UHODWHG WR HDUWKTXDNH ULVN LV SXUFKDVHG WR FRYHU ORVVHVXSWR5ELOOLRQ 5ELOOLRQ

Reinsurer credit risk (audited) &UHGLWULVNLQUHVSHFWRIUHLQVXUDQFHSDUWQHUVLVPDQDJHGE\WUDQVDFWLQJZLWKDZLGHUDQJHRIUHLQVXUHUVZLWKJRRG FUHGLWUDWLQJV7KHFUHGLWZRUWKLQHVVRIUHLQVXUHUVLVFRQVLGHUHGRQDQDQQXDODQGRQJRLQJEDVLV,QRUGHUWRTXDOLI\ UHLQVXUHUV PXVW EH DVVLJQHG D PLQLPXP ¨$© UDWLQJ E\ 6 3©V RU HTXLYDOHQW UDWLQJ E\ 0RRG\©V RU $0 %HVW 0DQDJHPHQWPXVWDSSURYHDQ\H[FHSWLRQVWRWKLVUDWLQJZLWKQRWLILFDWLRQWRWKHERDUGVRIGLUHFWRUVRIWKHUHVSHFWLYH LQVXUDQFHHQWLWLHV7KHFXUUHQWUHLQVXUHUH[SRVXUHE\FUHGLWUDWLQJLVDVIROORZV

% of premium income (unaudited)

$$$

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 313 Governance, remuneration, risk and controls

Insurance risk

Concentration risk (audited) 7KHPDLQFRQFHQWUDWLRQULVNDULVHVIURPH[SRVXUHWRSHUVRQDODQGFRPPHUFLDOEXVLQHVVLQ3UHWRULD-RKDQQHVEXUJ DQGWKH(DVW5DQG$SSUR[LPDWHO\ RIWKHWRWDOJURVVVXPVLQVXUHGDUHVLWXDWHGLQ3UHWRULDZLWK LQ -RKDQQHVEXUJ DQG LQ WKH (DVW 5DQG 7KHVH H[SRVXUHV DUH UHGXFHG VLJQLILFDQWO\ WKURXJKUHLQVXUDQFHSURWHFWLRQ7KHPD[LPXPH[SHFWHGORVVIRUDRQHLQ\HDUHYHQWLVDORVVRI5ELOOLRQ 5ELOOLRQ

Outstanding claims reserves (OCR) (audited) $FDVHE\FDVHPHWKRGLVXVHGWRTXDQWLI\WKH2&5,QGLYLGXDOHVWLPDWHVDUHREWDLQHGIURPFODLPVDVVHVVRUVDQG UHYLHZHG DV DQG ZKHQ QHZ LQIRUPDWLRQ UHJDUGLQJ D FODLP EHFRPHV DYDLODEOH 7KH FODLPV SURYLVLRQ LQFOXGHV WKH H[SHFWHGFODLPFRVWDQGDVVRFLDWHGKDQGOLQJFRVWVZLWKDPD[LPXPRIWKHPD[LPXPORVVSD\DEOHXQGHUWKHWHUPV RIWKHSROLF\&ODLPVGHYHORSPHQWSDWWHUQVDUHPRQLWRUHGWRDVVHVVWUHQGVDQGWKHDSSURSULDWHOHYHORIUHVHUYLQJ

Incurred but not reported (IBNR) provision (audited) 7KH ,%15 SURYLVLRQ LQFOXGHV DQ DPRXQW IRU LQFXUUHG EXW QRW VXIILFLHQW UHSRUWHG FODLPV LH ZKHUH WKH 2&5 LV LQVXIILFLHQW $VWRFKDVWLFUHVHUYLQJPRGHOLVXVHGWRFDOFXODWHWKH,%15IRUWKHPDMRULW\RISURGXFWV)RURIWKH EXVLQHVV E\ SUHPLXP YROXPH ZKHUH GHWDLOHG GDWD LV DYDLODEOH WKH ,%15 LV FDOFXODWHG DW D VXIILFLHQF\:KHUHGHWDLOHGGDWDLVQRWDYDLODEOHWKH,%15LVEDVHGRQWKHVROYHQF\DVVHVVPHQWDQGPDQDJHPHQW GLVFXVVLRQGRFXPHQW¨,QWHULP0HDVXUHV5HODWLQJWR7HFKQLFDO3URYLVLRQVDQG&DSLWDO5HTXLUHPHQWVIRU6KRUW7HUP ,QVXUHUV© ,Q SDUWLFXODU ZDV XVHG IRU PRWRU DQG H[WHQGHG FRYHU EXVLQHVV IRU HQJLQHHULQJ DQG IRU PLVFHOODQHRXVEXVLQHVV

Changes in assumptions (audited) 7KH ,%15 DQG 2&5 SURYLVLRQ FDOFXODWLRQV WDNH LQWR DFFRXQW SDVW GDWD WUHQGV DQG UHFHQW H[SHULHQFH LQ FODLPV SURFHVVLQJDQGORVVUDWLRV7KHVHFDOFXODWLRQVWRJHWKHUZLWKFKDQJHVLQWKHXQGHUO\LQJULVNSURILOHRIWKHEXVLQHVV LPSDFWWKHGHWHUPLQDWLRQRIWKHILQDOEDODQFHV

Sensitivity analysis (audited) 7KH,%15SURYLVLRQLVGHWHUPLQHGE\WDNLQJLQWRDFFRXQWYDULRXVIDFWRUVSHUFODVVRIEXVLQHVVXQGHUZULWWHQLQFOXGLQJ WKHDFWXDODQGH[SHFWHGFODLPVH[SHULHQFH WKHDFWXDODQGH[SHFWHGUHSRUWLQJSDWWHUQVDQG SUHPLXPYROXPHV 7KHVHIDFWRUVDIIHFWWKHVHQVLWLYLW\RIWKH,%15DQGWRHQVXUHSURYLVLRQDGHTXDF\DPLQLPXPVXIILFLHQF\OHYHORI LVPDLQWDLQHG

Life insurance underwriting risk (audited) /LIHLQVXUDQFHXQGHUZULWLQJULVNGHVFULEHVWKHULVNDVVRFLDWHGZLWKLQVXULQJWKHOLYHVDQGRUKHDOWKRILQGLYLGXDOVRU JURXSVRILQGLYLGXDOV

Monitoring of risks (audited) 7KH QXPEHU RI ULVNV IDOOLQJ RXWVLGH RI PDQGDWHV LV UHYLHZHG WR GHWHUPLQH ZKHWKHU XQGHUZULWLQJ UXOHV QHHG WR EH WLJKWHQHGRUULVNSDUDPHWHUVUHYLHZHG$QQXDOH[SHULHQFHVWXGLHVDQGDQDO\VLVRIVXUSOXVHQDEOHWKHDFWXDOH[SHULHQFH WREHLQYHVWLJDWHG7KHQRQHFRQRPLFSULFLQJDQGUHVHUYLQJEDVHV LHPRUWDOLW\PRUELGLW\SHUVLVWHQF\DQGH[SHQVH DVVXPSWLRQV DUHUHYLVHGIRUDQ\FKDQJHVLQWUHQGVWKDWDUHFRQVLGHUHGWREHVXVWDLQDEOHLQIXWXUH

314 Absa Group Limited$QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Risk management per product line (audited) Mortgage protection 7KHPDLQULVNVDUHPRUWDOLW\DQGPRUELGLW\7KLVLVWKHRQO\EXVLQHVVWKDWLV and complex LQGLYLGXDOO\XQGHUZULWWHQ3UHPLXPUDWHVGLIIHUHQWLDWHE\JHQGHUDJHVPRNHUVWDWXV underwritten VRFLRHFRQRPLFFODVVDQGRFFXSDWLRQ6XEVWDQGDUGULVNVJHQHUDOO\UHFHLYHDGGLWLRQDO life business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uneral business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redit life business 7KHPDLQULVNVDUHUHWUHQFKPHQWDQGPRUWDOLW\7UHDW\UHLQVXUDQFHDUUDQJHPHQWVDUH LQSODFHZKHUHE\ULVNLVVKDUHGZLWKH[WHUQDOEXVLQHVVSDUWQHUV7KHULJKWWRFKDQJH SUHPLXPVZLWKDGD\QRWLFHSHULRGLVUHWDLQHG3UHPLXPVJHQHUDOO\GRQRW GLIIHUHQWLDWHRQWKHEDVLVRIJHQGHUDJHRUVPRNHUVWDWXVDQGGHPRJUDSKLFVKLIWV FRXOGLQWURGXFHDGGLWLRQDOLQVXUDQFHULVN Group life business 7KHPDLQULVNLVPRUWDOLW\ULVN7UHDW\UHLQVXUDQFHDUUDQJHPHQWVDUHLQSODFHZKHUHE\ ULVNLVVKDUHGZLWKH[WHUQDOEXVLQHVVSDUWQHUV&RQWUDFWVDQGSUHPLXPUDWHVDUH UHYLHZHGDQQXDOO\$GGLWLRQDOFDWDVWURSKHUHLQVXUDQFHFRYHUZLOOEHFRQVLGHUHGIRUDQ DFFXPXODWLRQRIORVVHVWKDWPD\RFFXUGXHWRWKHJHRJUDSKLFDOFRQFHQWUDWLRQRID JURXS

Reinsurance (audited) $ IRUPDO UHLQVXUDQFH SROLF\ KDV EHHQ DSSURYHG E\ $EVD /LIH©V ERDUG RI GLUHFWRUV 5HLQVXUDQFH LV XVHG IRU ODUJH LQGLYLGXDOULVNVIRUULVNVZKHUH$EVD/LIHQHHGVWREXLOGNQRZOHGJHDQGH[SHULHQFHDQGWRREWDLQWHFKQLFDODVVLVWDQFH &DWDVWURSKHUHLQVXUDQFHLVXVHGIRUSURWHFWLRQDJDLQVWDODUJHQXPEHURIGHSHQGHQWORVVHV

Reinsurer credit risk (audited) 5HLQVXUHUFUHGLWULVNLVPDQDJHGE\WUDQVDFWLQJVROHO\ZLWKUHLQVXUHUVWKDWKDYHJRRGFUHGLWUDWLQJVDQGE\KROGLQJ DGGLWLRQDOFDSLWDOLQOLQHZLWKUHJXODWRU\UHTXLUHPHQWV7KHIROORZLQJWDEOHVKRZVWKHFUHGLWUDWLQJRIUHLQVXUDQFHDVVHWV DWWKHUHSRUWLQJGDWHH[FOXGLQJFUHGLWOLIHUHLQVXUDQFH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 315 Governance, remuneration, risk and controls

Insurance risk

Credit rating of reinsurance assets – Table 54 (audited):

Parental S&P’s rating Description guarantee 7UHDW\DQGIDFXOWDWLYHUHLQVXUHU RIEXVLQHVVFHGHG $ 6WURQJ 1R 7UHDW\DQGIDFXOWDWLYHUHLQVXUHU RIEXVLQHVVFHGHG $$ ([WUHPHO\VWURQJ

$OWKRXJKDSDUHQWDOJXDUDQWHHLVQRWLQSODFHIRUDOOFRPSDQLHVWKH\DUHDOOVXEVLGLDULHVRIWKHLULQWHUQDWLRQDOSDUHQW FRPSDQLHVDQGRSHUDWHXQGHUWKHVDPHQDPH5HLQVXUHUV©UDWLQJVQRWLILHGGLVSXWHVDQGFROOHFWLRQH[SHULHQFHDUHXVHGWR GHWHUPLQHLIDQ\UHLQVXUDQFHDVVHWVVKRXOGEHLPSDLUHG$VDWWKHUHSRUWLQJGDWHWKHUHLQVXUDQFHDVVHWVZHUHXQLPSDLUHG DVQRQHRIWKHUHLQVXUDQFHDPRXQWVUHFHLYDEOHZHUHSDVWGXH

Concentration risk (audited) $ VPDOO FRQFHQWUDWLRQ RI LQVXUDQFH ULVN H[LVWV LQ UHVSHFW RI LQGLYLGXDO OLYHV DQG OLDELOLW\ H[SRVXUH LV ZHOO VSUHDG JHRJUDSKLFDOO\7KHFRQFHQWUDWLRQLQWHUPVRIVL]HRILQGLYLGXDOSROLFLHVLVORZDQGUHWHQWLRQOLPLWVDUHLQSODFHZLWK H[FHVVUHLQVXUDQFHWRFRYHUODUJHLQGLYLGXDOH[SRVXUHV7KHWDEOHEHORZVKRZVWKHFRQFHQWUDWLRQRIEHQHILWVDFURVV WKUHHEDQGVRIEHQHILWVSHUOLIHDVVXUHG Concentration of beneﬁts band per life assured – Table 55 (audited):

Gross of reinsurance Net of reinsurance Total Total benefits benefits assured assured Benefit band per life assured Rm % Rm % 2010 ¤ 54 193 58 51 696 65 ¤ 8 608 9 4 979 6 30 919 33 22 671 29 93 720 100 79 346 100

¤ ¤

,Q WKH FDVH RI WKH *URXS OLIH EXVLQHVV D JHRJUDSKLFDO FRQFHQWUDWLRQ RI ULVN SRWHQWLDOO\ H[LVWV ,Q DGGLWLRQ WR FRPSUHKHQVLYH TXRWD VKDUH UHLQVXUDQFH FDWDVWURSKH UHLQVXUDQFH LV XVHG WR SURYLGH SURWHFWLRQ DJDLQVW DQ DFFXPXODWLRQRIORVVHVLQUHVSHFWRIUHWDLQHGULVNV Mortality and morbidity risk (audited) $SSOLFDWLRQV IRU ULVN FRYHU LQ H[FHVV RI VSHFLILHG OLPLWV DUH UHYLHZHG E\ H[SHULHQFHG XQGHUZULWHUV DQG HYDOXDWHG DJDLQVWHVWDEOLVKHGVWDQGDUGV7HVWLQJIRU+,9LVFDUULHGRXWLQDOOFDVHVZKHUHWKHDSSOLFDWLRQVIRUULVNFRYHUH[FHHG VSHFLILHGOLPLWV&RYHULQH[FHVVRIVSHFLILHGPRQHWDU\RULPSDLUPHQWOLPLWVLVUHLQVXUHG0RUWDOLW\DQGPRUELGLW\ULVNV DUHPDQDJHGSHUSURGXFWOLQHEDVHGRQXQGHUZULWLQJFULWHULDSULFLQJUHLQVXUDQFHDQGH[SHULHQFHPRQLWRULQJ

316 Absa Group Limited$QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU HIV and Aids risk (audited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

Lapse risk (audited) )RU UHJXODU SUHPLXP SROLFLHV ZKHUH VLJQLILFDQW H[SHQVHV DUH LQFXUUHG DW WKH RXWVHW RI D SROLF\ LQ WKH IRUP RI FRPPLVVLRQDQGRUXQGHUZULWLQJFRVWVDORVVLVLQFXUUHGLIDSROLF\ODSVHVEHIRUHWKHFRVWVKDYHEHHQUHFRXSHG ,Q VRPH FDVHV WKLV ULVN LV PDQDJHG E\ HQWHULQJ LQWR ¨FODZEDFN© DUUDQJHPHQWV ZLWK ILQDQFLDO DGYLVHUV $QQXDO LQYHVWLJDWLRQVDUHFRQGXFWHGLQWRODSVHH[SHULHQFHWRHQVXUHWKDWSULFLQJDQGYDOXDWLRQDVVXPSWLRQVDUHDSSURSULDWH UHOHYDQWDQGLQOLQHZLWKH[SHULHQFH Expense risk (audited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

Model risk (audited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

Data risk (audited) 7KHUH LV D ULVN WKDW WKH SROLF\ GDWD XVHG WR PRGHO WKH OLDELOLWLHV LV LQFRUUHFW RU LQFRPSOHWH 7KLV ULVN LV PDQDJHG E\ SHUIRUPLQJ UHDVRQDELOLW\ FKHFNV RQ WKH GDWD DQG UHFRQFLOLQJ WKH GDWD ZLWK ERWK WKH SUHYLRXV YDOXDWLRQ GDWD LHDPRYHPHQWDQDO\VLV DQGZLWKWKHILQDQFLDOVWDWHPHQWV Assumption risk: Change and effect of assumptions since previous valuation (audited) %HVWHVWLPDWHDVVXPSWLRQVDUHGHULYHGIURPDQQXDOLQYHVWLJDWLRQVLQWRWKHGHPRJUDSKLFH[SHULHQFHRIWKHEXVLQHVV (FRQRPLFDVVXPSWLRQVDUHEDVHGRQREVHUYDEOHDFWXDOHFRQRPLFLQGLFDWRUVDQGDUHLQWHUQDOO\FRQVLVWHQW0DUJLQV DUHDGGHGWREHVWHVWLPDWHDVVXPSWLRQVWRDOORZIRUYDULDELOLW\7KHVHPDUJLQVLQFOXGHFRPSXOVRU\PDUJLQVDFFRUGLQJ WR$66$©V3*1DQGIXUWKHUGLVFUHWLRQDU\PDUJLQVZKHUHWKHVWDWXWRU\DFWXDU\GHHPVLWQHFHVVDU\7KHHIIHFWRI FKDQJHVLQDVVXPSWLRQVIURPWKHSUHYLRXVUHSRUWLQJSHULRGLVVKRZQLQWKHWDEOHWKDWIROORZV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 317 Governance, remuneration, risk and controls

Insurance risk

Changes in assumptions from previous reporting periods – Table 56 (audited): Increase/(decrease) on insurance liabilities 2010 Rm 5P (FRQRPLFEDVLV 37 ([SHQVHDVVXPSWLRQV 4 0RUWDOLW\DQG$LGVDVVXPSWLRQV (47) 0RUELGLW\DVVXPSWLRQV (25) ¥ /DSVHDVVXPSWLRQV 2 &KDQJHLQDFFRXQWLQJHVWLPDWH (117) (146)

Notes The economic basis was changed in line with market movements. The assumptions about the future investment return on assets and future inflation were adjusted to reflect the change in gilt yields, resulting in a 1,5% per annum lower investment return assumption compared to the previous year. The expense assumptions were changed to reflect the result of the most recent expense investigation, increasing the liability by R4,25 million (2009: R48 million increase). The Aids mortality assumptions have been updated since 2009 following the results of the experience investigation conducted in 2010. Disability and dread disease assumptions have been updated since 2009 to bring them in line with the results of experience investigations conducted in 2010. The change in accounting estimate relates to a decision to take full account of future management charges expected to be received on the unit linked business.

Assumptions (audited) 7KHULVNGLVFRXQWUDWHXVHGWRGLVFRXQWIXWXUHSURILWVLQFOXGHVDPDUJLQRYHUDVVXPHGLQYHVWPHQWUHWXUQVWRDOORZ IRUWKHULVNWKDWH[SHULHQFHLQIXWXUH\HDUVPD\GLIIHUIURPWKDWDVVXPHG7KHHFRQRPLFDVVXPSWLRQVXVHGDUHDV IROORZV JURVVRIWD[ZKHUHDSSOLFDEOH Economic assumptions – Table 57 (audited):

2010 % 5LVNIUHHUDWHUHWXUQ 8,00 (TXLW\UHWXUQ 11,50 &DVKUHWXUQ 6,00 2YHUDOOLQYHVWPHQWUHWXUQ 7,90 5LVNGLVFRXQWUDWH 11,25 ([SHQVHLQIODWLRQ 4,50

0DUJLQVDUHLQFRUSRUDWHGLQWRWKHOLDELOLWLHVLQRUGHUWRPLWLJDWHDVVXPSWLRQULVN7KHFRPSXOVRU\PDUJLQVSUHVFULEHG E\$66$LQ3*1DQGZKLFKKDYHEHHQDSSOLHGLQWKHYDOXDWLRQRIOLDELOLWLHVDUHVXPPDULVHGLQWKHWDEOHEHORZ Compulsory margins – Table 58 (audited):

Assumption Margin

0RUWDOLW\ LQFUHDVHIRUDVVXUDQFH 0RUELGLW\ /DSVH HJLIWKHEHVWHVWLPDWHLVWKHPDUJLQLV 6XUUHQGHUV LQFUHDVHRUGHFUHDVHGHSHQGLQJRQZKLFKDOWHUQDWLYHLQFUHDVHV OLDELOLWLHV ([SHQVHV ([SHQVHLQIODWLRQ RIHVWLPDWHGHVFDODWLRQUDWH &KDUJHDJDLQVWLQYHVWPHQWUHWXUQ ESVLQWKHPDQDJHPHQWIHHRUDQHTXLYDOHQWDVVHWEDVHGRULQYHVWPHQW SHUIRUPDQFHEDVHGPDUJLQ

318 Absa Group Limited$QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Sensitivity analysis (audited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ensitivity analysis – Table 59 (audited): 2010 Insurance Change ,QVXUDQFH &KDQJH liability % OLDELOLW\ Rm Rm 5P 5P &HQWUDOYDOXH DVSXEOLVKHG 1 391 — ¥ 0RUWDOLW\DQGPRUELGLW\ 1 523 9,5 /DSVHUDWH 1 350 (3,0) 5HQHZDODQGWHUPLQDWLRQH[SHQVH 1 415 1,8 ([SHQVHLQIODWLRQ 1 409 1,3 ,QYHVWPHQWUHWXUQ 1 466 5,4

Life insurance mismatch risk (audited) /LIHLQVXUDQFHPLVPDWFKULVNGHVFULEHVWKHULVNWKDWWKHSURILOHRIDVVHWVKHOGWREDFN$EVD/LIH©VSROLF\KROGHUOLDELOLWLHV LVLQDSSURSULDWHWRPDWFKWKHSURILOHRIWKRVHOLDELOLWLHV

Nature of risk (audited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©V 3*1 Interest rate risk (audited) ,QWHUHVWUDWHULVNLVPDQDJHGE\VHWWLQJDQGPRQLWRULQJDVVHWGXUDWLRQVLQFRPSDULVRQZLWKWDUJHWHGOHYHOVIRUWKH LQWHUHVWHDUQLQJLQYHVWPHQWVEDFNLQJWKHUDQGUHVHUYHV0RQWKO\PHHWLQJVDUHKHOGZLWKWKHDVVHWPDQDJHUWRPRQLWRU WKHVHDVVHWGXUDWLRQVDQGWDUJHWHGOHYHOV

Life and short-term investment risk /LIHDQGVKRUWWHUPLQYHVWPHQWULVNGHVFULEHVWKHULVNDVVRFLDWHGZLWKFKDQJHVLQDVVHWYDOXHVDQGLQFOXGHVLQWHUHVW UDWHIRUHLJQH[FKDQJHDQGHTXLW\LQYHVWPHQWULVN

Nature of risk ,QYHVWPHQWULVNUHODWHVWRYDULDELOLW\LQWKHYDOXHRIERWKVKDUHKROGHUDVVHWVDQGDVVHWVEDFNLQJSROLF\KROGHUOLDELOLWLHV LQ UHVSHFW RI VKRUWWHUP LQVXUDQFH DQG OLIH LQVXUDQFH VKDUHKROGHU DVVHWV ,QYHVWPHQW ULVN LV PLWLJDWHG WKURXJK GLYHUVLILHGDVVHWDOORFDWLRQVLQYHVWPHQWPDQGDWHVDQGWKHKHGJLQJRIHTXLW\ULVNV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 319 Governance, remuneration, risk and controls

Insurance risk

Short-term insurance investment risk $VLQJOHLQYHVWPHQWVWUDWHJ\LVPDLQWDLQHGIRUVKRUWWHUPLQVXUDQFHVKDUHKROGHUDVVHWVDQGIRUDVVHWVEDFNLQJVKRUW WHUP LQVXUDQFH SROLF\KROGHU OLDELOLWLHV $VVHWV DUH LQYHVWHG LQ VKRUW GDWHG LQWHUHVWHDUQLQJ DVVHWV DQG SUHIHUHQFH VKDUHV7KHGXUDWLRQRILQWHUHVWHDUQLQJDVVHWVLVPRQLWRUHGDJDLQVWDPD[LPXPHIIHFWLYHGXUDWLRQ

Life insurance investment risk 7KH$EVD/LIHLQVXUDQFHVKDUHKROGHUV©IXQGVDUHLQYHVWHGLQDEDODQFHGSRUWIROLRZLWKWKHFXUUHQWPDQGDWHGDVVHW DOORFDWLRQDVIROORZV

Life insurance investment risk (%)

9 8 3 5

● Offshore equities ● Offshore bonds ● Offshore hedge funds ● Domestic equities ● Domestic bonds ● Domestic cash

5HYLVHG DVVHW DOORFDWLRQV ZLOO EH LPSOHPHQWHG LQ IROORZLQJ D UHYLHZ RI WKH UHWDLQHG FDSLWDO DVVHW DOORFDWLRQ FRQGXFWHGLQWKHODVWTXDUWHURI'RPHVWLFDVVHWVKDYHDOLPLWRQDFWLYHHTXLW\H[SRVXUHV+HGJLQJVWUDWHJLHV DUHIROORZHGLQUHVSHFWRIGRPHVWLFHTXLWLHV

Counterparty credit risk &RXQWHUSDUW\FUHGLWULVNLQUHVSHFWRILQYHVWPHQWVLVPDQDJHGE\LQYHVWLQJZLWKDVSUHDGRILVVXHUVZLWKJRRGFUHGLW UDWLQJV &RXQWHUSDUW\ FUHGLW ULVN LQ UHVSHFW RI HTXLW\ KHGJLQJ LQVWUXPHQWV LV PDQDJHG E\ WUDQVDFWLQJ RQO\ ZLWK FRXQWHUSDUWLHVZLWKJRRGFUHGLWUDWLQJV Liquidity risk 7KHVKRUWWHUPLQVXUDQFHEXVLQHVVHVLQYHVWLQVKRUWGDWHGLQWHUHVWHDUQLQJDVVHWVZLWKOLPLWVRQLQYHVWPHQWVLQOHVV OLTXLGDVVHWVVXFKDVSUHIHUHQFHVKDUHVDQGFRUSRUDWHERQGV7KHOLIHLQVXUDQFHEXVLQHVVHVDUHOHVVH[SRVHGWR OLTXLGLW\ ULVNV GXH WR ORZ ULVN RI ODUJH FXPXODWLYH FODLPV /LTXLGLW\ ULVN LV PDQDJHG WKURXJK FORVH PDQDJHPHQW RI SRWHQWLDOFDVKRXWIORZLQGLVFXVVLRQZLWKWKHDVVHWPDQDJHU

Strategic focus for the year ahead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

320 Absa Group Limited$QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Financial performance Contents

Financial performance Pages 323 – 508

323 *URXS)LQDQFLDO'LUHFWRU©VUHYLHZ )XOOGLVFORVXUHRIWKH*URXS©VILQDQFLDO SHUIRUPDQFH 325 )LQDQFLDODQDO\VLV 332 1LQH\HDUVXPPDU\ 336 'LUHFWRUV©DSSURYDO 337 &RPSDQ\6HFUHWDU\©VFHUWLILFDWH WRWKHPHPEHUVRI$EVD*URXS /LPLWHG 337 ,QGHSHQGHQWDXGLWRUV©UHSRUW WRWKHPHPEHUVRI$EVD*URXS /LPLWHG 338 'LUHFWRUV©UHSRUW 346 &RQVROLGDWHGVWDWHPHQWRIILQDQFLDO SRVLWLRQ 347 &RQVROLGDWHGVWDWHPHQW RIFRPSUHKHQVLYHLQFRPH 348 &RQVROLGDWHGVWDWHPHQWRIFKDQJHV LQHTXLW\ 352 &RQVROLGDWHGVWDWHPHQW RIFDVKIORZV 353 $FFRXQWLQJSROLFLHV 393 1RWHVWRWKHFRQVROLGDWHGILQDQFLDO VWDWHPHQWV 496 $QQH[XUH$(PEHGGHGYDOXHUHSRUW RI$EVD/LIH/LPLWHG XQDXGLWHG 498 &RPSDQ\VWDWHPHQWRIILQDQFLDO SRVLWLRQ 499 &RPSDQ\VWDWHPHQWRI FRPSUHKHQVLYHLQFRPH 500 &RPSDQ\VWDWHPHQWRIFKDQJHV LQHTXLW\ 501 &RPSDQ\VWDWHPHQWRIFDVKIORZV 502 1RWHVWRWKH&RPSDQ\ILQDQFLDO VWDWHPHQWV Financial performance

Group Financial Director’s review

David Hodnett *URXS)LQDQFLDO'LUHFWRU

Highlights +HDGOLQHHDUQLQJVSHUVKDUH +(36 LQFUHDVHGE\WR FHQWV 'LOXWHG+(36LQFUHDVHGE\WRFHQWV 7RWDOGLYLGHQGRIFHQWVSHUVKDUHXS\HDURQ\HDU 1HWLQWHUHVWPDUJLQRQDYHUDJHLQWHUHVWEHDULQJDVVHWV LPSURYHGWRIURP ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHVIHOOE\WR 5PLOOLRQUHVXOWLQJLQDLPSDLUPHQWORVVHVUDWLR &RVWWRLQFRPHUDWLRLQFUHDVHGWR 5HWXUQRQDYHUDJHHTXLW\ 5R( RI 5HWXUQRQULVNZHLJKWHGDVVHWV 5R5:$V LPSURYHGWR 1HWDVVHWYDOXH 1$9 SHUVKDUHJUHZE\WRFHQWV &RUH7LHUFDSLWDODGHTXDF\UDWLRIRUWKH*URXSRIZHOO DERYHUHJXODWRU\UHTXLUHPHQWV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 323 Financial performance

Group Financial Director’s review

Introduction Absa’s 2010 ﬁnancial performance was resilient, considering the challenging operating environment following the global ﬁnancial meltdown and the local recession. The Group delivered headline earnings of R8 041 million, an increase of 6% from 2009. Our return on economic capital and return on risk-weighted assets improved to 19,7% (2009: 18,2%) and 1,99% (2009: 1,97%) respectively. 2010 review $EVD©V SHUIRUPDQFH ODUJHO\ UHIOHFWV D UHGXFWLRQ LQ UHWDLO FUHGLW LPSDLUPHQWV WR 5 PLOOLRQ 5PLOOLRQ IROORZLQJVXVWDLQDEOHLPSURYHPHQWVLQPRVWSURGXFWV©DUUHDUVSURILOHVDQGDJURZWKLQQHW LQWHUHVW LQFRPH WR 5 PLOOLRQ 5 PLOOLRQ 7KH ODWWHU EHQHILWHG IURP $EVD©V LQWHUHVW UDWH KHGJLQJ SURJUDPPH 7KHVH HDUQLQJV GULYHUV RXWZHLJKHG WKH JURZWK LQ RSHUDWLQJ H[SHQVHV WR 5 PLOOLRQ 5PLOOLRQ DVLQYHVWPHQWVZHUHPDGHWRWDNHDGYDQWDJHRIDQWLFLSDWHGJURZWKSURVSHFWVDQGDKLJKHUEXW PRUHVXVWDLQDEOHHIIHFWLYHWD[UDWHRI )ROORZLQJDUHGXFWLRQLQWRWDOH[SHQVHVLQWKHILYH\HDU FRPSRXQGDQQXDOJURZWKLQFRVWVZDV$OWKRXJKQRQLQWHUHVWLQFRPHJURZWKUHPDLQHGODFNOXVWUHWKHVWDELOLVLQJ SULYDWHHTXLW\YDOXDWLRQVDQGWKHORZHUUHOLDQFHRQLQFRPHIURPWKHVDOHRILQYHVWPHQWVDQGWKHPDUNWRPDUNHWRIWKH 9LVDSRVLWLRQZHUHQRWDEOHIHDWXUHV 'HVSLWHORZHUJHDULQJDQLPSURYHGUHWXUQRQDYHUDJHDVVHWV 5R$ NHSWWKH*URXS©V5R(DERYHLWV&R( $EVD©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ocus in 2011 'HOLYHULQJRQRXU2QH$EVDVWUDWHJ\ZLOOSRVLWLRQWKH*URXSWRSDUWLFLSDWHLQJURZWKRSSRUWXQLWLHVDVWKHHFRQRP\ JUDGXDOO\LPSURYHV1RQHWKHOHVVRYHUDOOUHYHQXHJURZWKLVH[SHFWHGWRUHPDLQVXEGXHGLQSDUWLFXODUO\JLYHQ PRGHUDWHFUHGLWJURZWK+RZHYHUZHH[SHFWVWURQJHUQRQLQWHUHVWLQFRPHJURZWKWKLV\HDUSDUWLFXODUO\LQNH\WDUJHW DUHDV&UHGLWLPSDLUPHQWVVKRXOGFRQWLQXHWRLPSURYHDOEHLWDWDVORZHUSDFHWKDQWKH\GLGODVW\HDU2ZLQJWRWKH XQFHUWDLQW\VXUURXQGLQJLQFRPHJURZWKFRQWDLQLQJFRVWJURZWKZLOOUHFHLYHVSHFLILFDWWHQWLRQGXULQJ ,WUHPDLQV$EVD©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inancial analysis 7KH ILQDQFLDO DQDO\VLV FRQWDLQLQJ D GHWDLOHG UHYLHZ RI WKH *URXS©V ILQDQFLDO SHUIRUPDQFH IRU WKH \HDU HQGHG 'HFHPEHUFDQEHIRXQGRQWKHSDJHVWRIROORZ

David Hodnett

*URXS)LQDQFLDO'LUHFWRU 0DUFK

324 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Financial performance

Financial analysis

Introduction Financial highlights Absa recorded a 6% growth in headline earnings to 2010 &KDQJH R8 041 million for the year ended 31 December 2010. Attributable earnings increased by 19% from R6 840 million to R8 118 million. 1HWLQWHUHVWLQFRPH 5P 23 340 HEPS increased by 2% from 1 099,4 cents per share to 1RQLQWHUHVWLQFRPH 5P 19 474 1 122,6 cents per share and fully diluted HEPS increased by 4% ,PSDLUPHQWORVVHVRQ from 1 072,0 cents per share to 1 115,7 cents per share. ORDQVDQGDGYDQFHV 5P (6 005) 2SHUDWLQJH[SHQVHV 5P The Group showed a strong improvement in RoA to 1,12% (24 070) $WWULEXWDEOHHDUQLQJV 5P (2009: 1,02%), but a lower leverage ratio in 2010 resulted in RoE 8 118 +HDGOLQHHDUQLQJV 5P declining to 15,1% (2009: 15,5%). 8 041 'LOXWHG+(36 FHQWV 1 115,7

/RDQVDQGDGYDQFHVWR Statement of comprehensive income FXVWRPHUV 5P 498 635 Net interest income and net interest margin 'HSRVLWVGXHWRFXVWRPHUV 5P 378 111 1HW LQWHUHVW LQFRPH LQFUHDVHG E\ WR 5 PLOOLRQ 5LVNZHLJKWHGDVVHWV 5P 422 713 5 PLOOLRQ GHVSLWH QHJDWLYH ORDQ JURZWK DQG ORZHU 7RWDOFDSLWDODGHTXDF\ DYHUDJHSULPHLQWHUHVWUDWHVGXULQJWKH\HDU7KLVLQFUHDVHLVODUJHO\ UDWLR 15,5 DWWULEXWDEOH WR $EVD©V HIIHFWLYH KHGJLQJ VWUDWHJ\ EXW DOVR UHIOHFWV 0DUNHWFDSLWDOLVDWLRQ 5EQ 100,5 EHWWHUQHZEXVLQHVVSULFLQJIRUFUHGLWULVNDQGDFKDQJHLQWKHORDQ PL[WRZDUGVKLJKHUPDUJLQSURGXFWV7KHVHRXWZHLJKHGWKHPDWHULDO QHJDWLYH HQGRZPHQW HIIHFW DQG IXQGLQJ SUHVVXUH RQ ZKROHVDOH GHSRVLWV 7KH *URXS©V QHW LQWHUHVW PDUJLQ RQ DYHUDJH LQWHUHVW EHDULQJDVVHWVLPSURYHGQRWLFHDEO\WRIURP

Key performance indicators

1HWLQWHUHVWLQFRPHDQGPDUJLQ 5PDQG 2010 4,01 3,83 3,81 3,72 3,74 5HYHQXHJURZWK 2

5HWXUQRQDYHUDJHHTXLW\ 15,1

5HWXUQRQDYHUDJHDVVHWV 1,12 2,94 2,93 1HWLQWHUHVWPDUJLQRQDYHUDJH 2,41 2,25 LQWHUHVWEHDULQJDVVHWV 4,01

1,72 ,PSDLUPHQWORVVHVUDWLR 1,20

&RVWWRLQFRPHUDWLR 56,2 14 887 18 890 22 106 21 854 23 340 20062007 2008 2009 2010 (IIHFWLYHWD[UDWH 27,5 ● ● Net interest income (Rm) 'LYLGHQGFRYHU WLPHV 2,5 ● Net interest margin on daily weighted average interest-bearing assets before impairment losses on loans and advances (%) 5HWXUQRQULVNZHLJKWHGDVVHWV 1,99 ● Net interest margin on daily weighted average assets after impairment 5HWXUQRQHFRQRPLFFDSLWDO 19,7 losses on loans and advances (%) 7LHUFDSLWDODGHTXDF\UDWLR 12,8

/RDQVWRGHSRVLWVUDWLR 91,9

/HYHUDJH WLPHV 13,5

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 325 Financial performance

Financial analysis

Impairment losses on loans and advances $IWHUDOPRVWTXDGUXSOLQJEHWZHHQDQG$EVD©VLPSDLUPHQWORVVHVRQORDQVDQGDGYDQFHVLPSURYHGE\ WR 5 PLOOLRQ 5 PLOOLRQ 5HWDLO %DQNLQJ ZKHUH LPSDLUPHQWV RQ ORDQV DQG DGYDQFHV IHOO WR 5PLOOLRQIURP5PLOOLRQZDVUHVSRQVLEOHIRUPRVWRIWKHUHGXFWLRQ(DUO\F\FOHGHOLQTXHQFLHVLPSURYHGDV ORZHUUDWHVKHOSHGFRQVXPHUVWRUHFRYHUDQGWKHEHQHILWVRIHIIHFWLYHFROOHFWLRQVPDQDJHPHQWDQGDVRXQGFUHGLW SROLF\EHFDPHHYLGHQW$%%©VFUHGLWLPSDLUPHQWVGHFOLQHGE\WR5PLOOLRQ 7KH*URXS©VLPSDLUPHQWORVVHVUDWLRLPSURYHGPRUHWKDQH[SHFWHGWRIURPWKHUHFRUGHGIRUDQG WKHIRUWKHVL[PRQWKVHQGHG-XQH7KLVLVZHOOEHORZWKHSHDNRIUHFRUGHGPRQWKVDJR 'HVSLWHIDUVPDOOHULQIORZVQRQSHUIRUPLQJORDQVUHPDLQHOHYDWHG1RQSHUIRUPLQJORDQVDVDSHUFHQWDJHRIDYHUDJH ORDQVDQGDGYDQFHVZHUHIRUWKH\HDUHQGHG'HFHPEHUKDYLQJUHPDLQHGLQOLQHZLWKWKHUHFRUGHG IRUWKHVL[PRQWKVHQGHG-XQHDQGLQFUHDVHGIURPWKHUHFRUGHGIRUWKH\HDUHQGHG'HFHPEHU $EVD©VORDQVVXEMHFWWRGHEWFRXQVHOOLQJGHFOLQHGWR5ELOOLRQIURP5ELOOLRQDW-XQHRZLQJWRVWURQJ FROOHFWLRQHIIRUWV7KH*URXS©VQRQSHUIRUPLQJORDQFRYHUDJHUDWLRLPSURYHGIURP

Impairment losses and non-performing advances ratios (%) 1,74

1,20 1,19 7,7 7,0

0,58 4,1 0,45

1,3 1,7

20062007 2008 2009 2010 ● ● Impairment losses ratio ● Non-performing advances ratio

Non-interest income $EVD©V QRQLQWHUHVW LQFRPH GHFOLQHG E\ WR 5 PLOOLRQ 5 PLOOLRQ ODUJHO\ EHFDXVH RI D UHYDOXDWLRQORVVRI5PLOOLRQRQLWV9LVDVWDNH 5PLOOLRQSURILW DQGQRQUHFXUUHQFHRIJDLQVIURPVHOOLQJ KROGLQJV LQ 0DVWHU&DUG DQG 1X3D\ 5 PLOOLRQ 1HW IHH DQG FRPPLVVLRQ LQFRPH JUHZ D PRGHVW WR 5PLOOLRQ 5PLOOLRQ EHFDXVHRIVOXJJLVKWUDQVDFWLRQYROXPHVDQGWKHDEVHQFHRIDSULFHLQFUHDVH LQ 5HWDLO %DQNLQJ (OHFWURQLF EDQNLQJ IHHV DQG $%%©V IHH DQG FRPPLVVLRQ LQFRPH LQFUHDVHG E\ DQG UHVSHFWLYHO\ $EVD &DSLWDO©V 0DUNHWV UHYHQXH IHOO E\ ZKLFK LV FRQVLGHUHG D VROLG SHUIRUPDQFH LQ D GLIILFXOW RSHUDWLQJ HQYLURQPHQW ZLWK UHGXFHG FOLHQW DFWLYLW\ 5HYDOXDWLRQV LQ 3ULYDWH (TXLW\ UHVXOWHG LQ D 5 PLOOLRQ SURILW 5PLOOLRQORVV ,QFRPHIURPUHDOLVDWLRQVRI5PLOOLRQ QLO LVDOVRLQFOXGHGLQQRQLQWHUHVWLQFRPH

326 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Non-interest income breakdown

2010 &KDQJH Rm 5P 5HWDLO%DQNLQJQHWIHHDQGFRPPLVVLRQLQFRPH 9 925 $EVD%XVLQHVV%DQNQHWIHHDQGFRPPLVVLRQLQFRPH 3 852 $EVD&DSLWDO©V0DUNHWVQHWWUDGLQJUHVXOWV 2 117 $EVD&DSLWDO©V3ULYDWH(TXLW\UHYDOXDWLRQV 48 ! $EVD%XVLQHVV%DQN©VFRPPHUFLDOSURSHUW\ILQDQFHUHYDOXDWLRQV 116 )LQDQFLDO6HUYLFHV 3 594 6KDUHKROGHUIXQGV 332 ,QVXUDQFHLQFRPH 3 262 2WKHULQYHVWPHQWLQFRPH (24) ! 5HYDOXDWLRQRILQYHVWPHQWLQ9LVD,QFRUSRUDWHG (128) ! 'LVSRVDORILQYHVWPHQWLQ0DVWHU&DUG,QFRUSRUDWHG — ! 2WKHU 104 2WKHULQFRPH (154) ! 19 474

Note Includes inter-segment eliminations. Operating expenses $EVD©VRSHUDWLQJH[SHQVHVJUHZE\WR5PLOOLRQ 5PLOOLRQ DVWKH*URXSFRQWLQXHGWRLQYHVW IRUIXWXUHJURZWK7KLVLQFOXGHGDJURZWKLQLQIRUPDWLRQWHFKQRORJ\FRVWVIURPWKHSUHYLRXV\HDU6WDIIFRVWVWKH ODUJHVWFRPSRQHQWLQFUHDVHGE\WR5PLOOLRQ 5PLOOLRQ UHIOHFWLQJZDJHVHWWOHPHQWVDQG KLJKHULQFHQWLYHV7KHFRPSRXQGDQQXDOJURZWKUDWHLQFRVWVRYHUILYH\HDUVZDVZHOOFRQWUROOHGDW$VH[SHFWHG JLYHQPRGHVWUHYHQXHJURZWKWKH*URXS©VFRVWWRLQFRPHUDWLRURVHWR

Operating expenses breakdown 2010 &KDQJH Rm 5P &DVKWUDQVSRUWDWLRQ 729 &RPPXQLFDWLRQFRVWV 1 092 'HSUHFLDWLRQDQGDPRUWLVDWLRQRILQWDQJLEOHDVVHWV 1 312 ,QIRUPDWLRQWHFKQRORJ\ 2 085 0DUNHWLQJFRVWV 1 070 2SHUDWLQJOHDVHH[SHQVHVRQSURSHUWLHV 978 3URIHVVLRQDOIHHV 1 096 6WDIIFRVWV 12 537 2WKHU 3 171 24 070

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 327 Financial performance

Financial analysis

Permanent employee complement1 (number)

37 828 36 893 36 150 36 770 35 154

5% 5% 3% (4%) 2%

20062007 2008 2009 2010

Employee expenses 2010 &KDQJH Rm 5P )L[HGUHPXQHUDWLRQ 9 707 9DULDEOHUHPXQHUDWLRQ 1 101 7UDLQLQJDQGVNLOOVVSHQG 269 2WKHU 1 460 12 537

Permanent employees 2010 &KDQJH 5HWDLO%DQNLQJ 19 752 $EVD%XVLQHVV%DQN 3 938 $EVD&DSLWDO 1 478 )LQDQFLDO6HUYLFHV 2 885 $IULFDQRSHUDWLRQV 2 430 +HDGRIILFHDQGRWKHU 6 287 36 770

Total IT spend 2010 &KDQJH Rm 5P 'HSUHFLDWLRQDQGDPRUWLVDWLRQRILQWDQJLEOHDVVHWV 833 ,QIRUPDWLRQWHFKQRORJ\ 2 085 6WDIIFRVWV 1 013 2WKHU 1 114 5 045

Taxation 7KH *URXS©V WD[DWLRQ LQFUHDVHG E\ WR 5 PLOOLRQ IURP 5 PLOOLRQ IRU DV LWV HIIHFWLYH WD[ UDWH LQFUHDVHGWRIURP7KHKLJKHUUDWHZDVPDLQO\RZLQJWRDORZHUSURSRUWLRQRIH[HPSWLQFRPH

Notes The employee complement ﬁgures exclude contract workers. The Group employed 6 469 non-permanent employees at 31 December 2010 (2009: 6 646).

328 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Segmental performance Retail Banking )XUWKHUUHDGLQJ

+HDGOLQH HDUQLQJV LQFUHDVHG E\ WR 5 PLOOLRQ 6HJPHQWDOUHSRUWLQJ 463 5 PLOOLRQ ODUJHO\ EHFDXVH RI ORZHU LPSDLUPHQW ORVVHV RQ ORDQV DQG DGYDQFHV $WWULEXWDEOH HDUQLQJV JUHZ E\ WR 5PLOOLRQ 5PLOOLRQ 5HWDLO%DQNLQJ©VLPSDLUPHQW ORVVHVUDWLRIHOOWRIURPRZLQJWRLPSURYLQJHDUO\VWDJH GHOLQTXHQFLHVDQGDVXFFHVVIXOFROOHFWLRQVVWUDWHJ\5HYHQXHJUHZ E\UHIOHFWLQJOLPLWHGWUDQVDFWLRQYROXPHDQGORDQJURZWKSOXV IXQGLQJPDUJLQSUHVVXUH2SHUDWLQJH[SHQVHVJUHZE\UHVXOWLQJ LQDKLJKHUFRVWWRLQFRPHUDWLRRI +HDGOLQH HDUQLQJV IURP &DUG +RPH /RDQV DQG 3HUVRQDO /RDQV LPSURYHG VLJQLILFDQWO\ +RZHYHU WKRVH IURP 5HWDLO %DQN GHFOLQHG E\ RZLQJ WR KLJKHU LPSDLUPHQW ORVVHV RQ ORDQV DQG DGYDQFHV 5HWDLO%DQNLQJ©VUHWXUQRQUHJXODWRU\FDSLWDOLPSURYHGWR Headline earnings per segment Absa Business Bank 2010 &KDQJH +HDGOLQH HDUQLQJV GURSSHG E\ WR 5 PLOOLRQ Rm 5P 5 PLOOLRQ DV ORDQV DQG DGYDQFHV GHFOLQHG E\ 5HWDLO%DQNLQJ 3 232 DQG FRPPHUFLDO SURSHUW\ ILQDQFH HTXLW\ SRUWIROLR YDOXHV IHOO $%% H[SHULHQFHG D GHFUHDVH LQ LPSDLUPHQWV RQ ORDQV DQG $EVD%XVLQHVV%DQN 2 848 DGYDQFHV 1HW LQWHUHVW LQFRPH URVH E\ UHIOHFWLQJ VROLG $EVD&DSLWDO 1 527 GHSRVLWJURZWKZKLFKSDUWLDOO\RIIVHWORZHUFXVWRPHUDGYDQFHVDQG )LQDQFLDO6HUYLFHV 1 291

SUHVVXUHRQGHSRVLWPDUJLQVIURPORZHULQWHUHVWUDWHV)HHLQFRPH +HDGRIILFHLQWHUVHJPHQW LQFUHDVHG E\ GULYHQ E\ $%%©V HQKDQFHG WUDQVDFWLRQDO HOLPLQDWLRQVDQGRWKHU (857) ! FDSDELOLWLHV 2SHUDWLQJ H[SHQVHV JUHZ E\ WR 5 PLOOLRQ 5PLOOLRQ DVWKHEXVLQHVVFRQWLQXHGWRLQYHVWLQJURZWK Total 8 041 LQLWLDWLYHV1RQHWKHOHVV$%%©VUHWXUQRQUHJXODWRU\FDSLWDOUHPDLQHG DFUHGLEOH

Absa Capital Attributable earnings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©V QHW UHYHQXH JUHZ E\ RZLQJ WR LPSURYHG EDQNLQJ DQG FUHGLW 32,2 PDUJLQV $EVD &DSLWDO FRQWLQXHG WR H[SDQG LQWR $IULFD DQG DWWULEXWDEOH LQFRPH IURP WKH UHVW RI $IULFD JUHZ E\ WR 5 PLOOLRQ )XUWKHU LQYHVWPHQW LQ V\VWHPV LQIUDVWUXFWXUH DQG 2010 WDOHQW FRQWULEXWHG WR WKH ULVH LQ RSHUDWLQJ H[SHQVHV DQG D ● 5HWDLO%DQNLQJ ● $EVD%XVLQHVV%DQN FRVWWRLQFRPH UDWLR $EVD &DSLWDO©V UHWXUQ RQ UHJXODWRU\ ● $EVD&DSLWDO ● )LQDQFLDO6HUYLFHV FDSLWDOZDV Note Comparatives have been reclassiﬁed. Calculated after the allocation of corporate, capital and funding centres.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 329 Financial performance

Financial analysis

Financial Services 6HJPHQWDOHDUQLQJVUHODWLYHWR UHWXUQV +HDGOLQH HDUQLQJV GHFOLQHG PDUJLQDOO\ WR 5 PLOOLRQ 5 PLOOLRQ LQ D WRXJK RSHUDWLQJ HQYLURQPHQW )LQDQFLDO Financial Services1 RoRC (%) 6HUYLFHV© DWWULEXWDEOH HDUQLQJV UHPDLQHG UHODWLYHO\ XQFKDQJHG DW 5PLOOLRQ 5PLOOLRQ 1RQHWKHOHVVLWDFKLHYHGD Retail Banking 5R( 7KH OLIH DQG VKRUWWHUP LQVXUDQFH FRPSDQLHV GHOLYHUHG VWURQJ SUHPLXP JURZWK RI DQG Absa Absa Capital UHVSHFWLYHO\$EVD/LIH©VHPEHGGHGYDOXHRIQHZEXVLQHVVJUHZE\ Business Bank \HDURQ\HDUWR5PLOOLRQDQGLWVUHWXUQRQHPEHGGHGYDOXH CoE = 14% ZDV $VVHWV XQGHU PDQDJHPHQW LQFUHDVHG E\ WR 5ELOOLRQ6KRUWWHUPLQVXUDQFHFODLPVUHPDLQHGKLJKUHODWLYHWR KLVWRULFDOWUHQGVDWDOWKRXJKWKH\ZHUHVOLJKWO\EHORZ©V Headline earnings growth (%) ,QYHVWPHQWVLQGLVWULEXWLRQFKDQQHOVDQGWHFKQRORJ\DVZHOO DV VSHQGLQJ UHODWLQJ WR JURZWK LQ EXVLQHVV YROXPHV DQG QHZ PDQGDWHVVHFXUHGLQFUHDVHGRSHUDWLQJFRVWVE\\HDURQ\HDU

● Retail Banking ● Absa Business Bank ● Absa Capital ● Financial Services Statement of ﬁnancial position

Note 7KH*URXS©VWRWDODVVHWVRI5ELOOLRQDVDW'HFHPEHU RoE LQFUHDVHGE\IURP'HFHPEHUEXWGHFOLQHGPDUJLQDOO\ IURP-XQH6XEVWDQWLDOJURZWKRILQ$EVD©VVWDWXWRU\ OLTXLG DVVHW SRUWIROLR WR VWUHQJWKHQ LWV OLTXLGLW\ RIIVHW ORZHU /RDQVDQGDGYDQFHVWRFXVWRPHUV LQYHVWPHQWVHFXULWLHVDQGORDQVDQGDGYDQFHVWREDQNV FRPSRVLWLRQ Loans and advances to customers 61,6 60,2 $EVD©V ORDQV DQG DGYDQFHV WR FXVWRPHUV GHFOLQHG E\ IURP 'HFHPEHU WR 5 ELOOLRQ EXW ZHUH IODW IURP -XQH 5HWDLO %DQNLQJ©V ORDQV DQG DGYDQFHV LQFUHDVHG E\ UHIOHFWLQJ ORZHU FXVWRPHU GHPDQG DQG D VXVWDLQHG IRFXV RQ ULVN DSSHWLWH DQG SULFLQJ 0RUWJDJHV ZKLFK FRQVWLWXWHG RI WRWDO 11,7 11,4 5,7 6,1

5,7 JURVV*URXSORDQVDQGDGYDQFHVJUHZE\\HDURQ\HDUDVWZR 4,5 5,3 5,1 4,5 4,3 4,1 4,0 3,1 2,7 VPDOO ERRNV ZHUH DFTXLUHG +RZHYHU JURZWK LQ FUHGLW FDUGV DQG 1 LQVWDOPHQWFUHGLWDJUHHPHQWVLPSURYHGLQWKHVHFRQGKDOIRI cards Credit Other Cheque accounts

overdrafts DQGSHUVRQDODQGWHUPORDQVJUHZ\HDURQ\HDU term loans Wholesale Mortgages agreements finance loans Personal and and specialised Instalment credit

Corporate overdrafts Deposits due to customers ● 2009 ● 2010 'HSRVLWVGXHWRFXVWRPHUVLQFUHDVHGE\WR5ELOOLRQIURP Note 'HFHPEHU ZLWK VROLG JURZWK LQ WDUJHWHG DUHDV 5HWDLO Includes the impairment of loans and advances. %DQNLQJDFKLHYHGJURZWKVSUHDGDFURVVPRVWRILWVSURGXFWV ZKLFKIXUWKHUHQWUHQFKHGLWVOHDGLQJPDUNHWVKDUHLQUHWDLOGHSRVLWV $%%©VGHSRVLWVJUHZE\IURP'HFHPEHUZLWKFKHTXH DFFRXQWVSHUIRUPLQJZHOO$%%©VVWUDWHJ\RIOHQJWKHQLQJLWVIXQGLQJ VDZLWLQFUHDVHIL[HGGHSRVLWVE\ )XUWKHUUHDGLQJ

/RDQVWRGHSRVLWVUDWLR 44

330 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Net asset value 1HW DVVHW YDOXH 1$9 JUHZ E\ WR 5 ELOOLRQ GXULQJ WKH \HDU 5HWDLQHG HDUQLQJV RI 5 ELOOLRQ ZDV JHQHUDWHG IURP QHW SURILWV DIWHU SD\LQJRUGLQDU\GLYLGHQGV&DVKIORZKHGJLQJLQFUHDVHGRWKHUUHVHUYHV E\WR5ELOOLRQ$EVD©V1$9SHUVKDUHURVHE\\HDURQ\HDU WRFHQWV FHQWV DQGKDVJURZQE\FRPSRXQGHG RYHUWKHSDVWILYH\HDUV

Net asset value, RoE and CoE (cents and %)

7 838 27,4 27,2 6 998 7 038

23,4 5 537 4 717

15,5 15,1

15,5 14,5 13,5 14,0 14,0

20062007 2008 2009 2010 ● ● NAV per share (cents)1 ● RoE (%) ● CoE (%)

Capital, liquidity and funding 'HVSLWHDJURZWKLQULVNZHLJKWHGDVVHWVFDXVHGE\UHFDOLEUDWLQJFUHGLW PRGHOVWRUHIOHFWWKHUHFHQWGRZQWXUQ$EVDPDLQWDLQHGLWVKHDOWK\FDSLWDO OHYHOV7KHVHUHPDLQZHOODERYHUHJXODWRU\UHTXLUHPHQWV$VDW'HFHPEHU $EVD *URXS©V &RUH 7LHU DQG 7LHU FDSLWDO DGHTXDF\ UDWLRV ZHUH DQG UHVSHFWLYHO\7KH*URXS©V WRWDOFDSLWDOUDWLRGHFOLQHGVOLJKWO\WR $EVD%DQN©V7LHU UDWLRLPSURYHGPDUJLQDOO\WR DQGLWVWRWDOUDWLRZDV DVDW'HFHPEHU $EVD©V RYHUDOO IXQGLQJ SRVLWLRQ UHPDLQHG EURDGO\ XQFKDQJHG DQG LWV NH\ OLTXLGLW\ULVNLQGLFDWRUVUHPDLQHGDWDFFHSWDEOHOHYHOVIRUEXVLQHVVDVXVXDO PDUNHW FRQGLWLRQV ,QWHUQDO VWUHVV WHVWLQJ VRXUFHV DUH VXIILFLHQW WR PHHW D PRGHUDWH WR KLJK ¨QDPH LQ PDUNHW© VWUHVV IXQGLQJ UHTXLUHPHQW :RUN LV FRQVWDQWO\ FRQGXFWHG WR HQKDQFH WKH IRUPXODWLRQ RI $EVD©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©VORDQVWRGHSRVLWVUDWLRLPSURYHGWRIURP

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 331 Financial performance Nine-year summary )RUWKH\HDUHQGHG'HFHPEHU0DUFK

)LYH\HDU December 'HFHPEHU 'HFHPEHU &$*5 2010 Rm 5P 5P Statement of comprehensive income ,QWHUHVWDQGVLPLODULQFRPH 54 241 ,QWHUHVWH[SHQVHDQGVLPLODUFKDUJHV (30 901) Net interest income 23 340 ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHV (6 005) Net interest income after impairment losses on loans and advances 17 335 1RQLQWHUHVWLQFRPH 19 474 Operating profit before operating expenditure 36 809 2SHUDWLQJH[SHQVHV (24 070) 2WKHULPSDLUPHQWV (108) ,QGLUHFWWD[DWLRQ (771) 6KDUHRISRVWWD[UHVXOWVRIDVVRFLDWHVDQG MRLQWYHQWXUHV ! (9) Operating profit before income tax 11 851 7D[DWLRQH[SHQVH (3 262) Profit for the year 8 589 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV (151) 1RQFRQWUROOLQJLQWHUHVW¤SUHIHUHQFHVKDUHV ! (320) Profit attributable to ordinary equity holders of the Group 8 118 +HDGOLQHHDUQLQJVDGMXVWPHQWV ! (77) Headline earnings 8 041

)LYH\HDU December 'HFHPEHU 'HFHPEHU &$*5 2010 Rm 5P 5P Consolidated statement of ﬁnancial position Assets /RDQVDQGDGYDQFHVWRFXVWRPHUVDQGEDQNV 523 512 Total assets 716 470 Equity and liabilities &DSLWDODQGUHVHUYHVDWWULEXWDEOHWRRUGLQDU\HTXLW\ KROGHUVRIWKH*URXS 56 290 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV 1 215 1RQFRQWUROOLQJLQWHUHVW¤SUHIHUHQFHVKDUHV ! 4 644 Total equity 62 149 Liabilities 'HSRVLWVGXHWRFXVWRPHUVDQGEDQNV 393 517 Total liabilities 654 321 Total equity and liabilities 716 470 /RDQVWRGHSRVLWVUDWLR 91,9

Notes Compound annual growth rate. Comparatives have been reclassiﬁed. For the 12-months ended 31 December 2005. Not disclosed previously.

332 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 'HFHPEHU 'HFHPEHU 'HFHPEHU 0DUFK 0DUFK 0DUFK 5P 5P 5P 5P 5P 5P

¥¥¥¥

'HFHPEHU 'HFHPEHU 'HFHPEHU 0DUFK 0DUFK 0DUFK 5P 5P 5P 5P 5P 5P

¥¥¥¥

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 333 Financial performance Nine-year summary )RUWKH\HDUHQGHG'HFHPEHU0DUFK

December 'HFHPEHU 'HFHPEHU )LYH\HDU 2010 &$*5 Rm 5P 5P Financial performance (%) 5HWXUQRQDYHUDJHHTXLW\ 15,1 5HWXUQRQDYHUDJHDVVHWV 1,12 5HWXUQRQULVNZHLJKWHGDVVHWV 1,99

Operating performance (%) 1HWLQWHUHVWPDUJLQRQDYHUDJHLQWHUHVWEHDULQJDVVHWV 4,01 ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHVDVDRI DYHUDJHORDQVDQGDGYDQFHVWRFXVWRPHUV 1,20 1RQSHUIRUPLQJDGYDQFHVDVRIORDQVDQGDGYDQFHV WRFXVWRPHUV 7,7 1RQLQWHUHVWLQFRPHDVDRIWRWDORSHUDWLQJLQFRPH 45,5 &RVWWRLQFRPHUDWLR 56,2 (IIHFWLYHWD[UDWHH[FOXGLQJLQGLUHFWWD[DWLRQ 27,5

Capital adequacy (%)5 $EVD*URXS 15,5 $EVD%DQN 14,8

Share statistics per ordinary share (cents) %DVLFHDUQLQJV 1 133,3 +HDGOLQHHDUQLQJV 1 122,6 'LYLGHQGVSHURUGLQDU\VKDUHUHODWLQJWRLQFRPHIRUWKH\HDU 455 'LYLGHQGFRYHU WLPHV 2,5 1HWDVVHWYDOXH 7 838

Share statistics 1XPEHURIRUGLQDU\VKDUHVLQLVVXH PLOOLRQ :HLJKWHGDYHUDJH 716,3 :HLJKWHGDYHUDJHGLOXWHG 720,7 (QGRIWKH\HDU 718,2 'LYLGHQG\LHOG 3,2 (DUQLQJV\LHOG 8,1 3ULFHWRHDUQLQJVUDWLR WLPHV 12,5 6KDUHSULFH FHQWVSHUVKDUH +LJK 14 295 /RZ 12 000 &ORVLQJ 14 000 &ORVLQJSULFHQHWDVVHWYDOXHSHUVKDUH 1,79 9ROXPHRIVKDUHVWUDGHG PLOOLRQV 363,3 9DOXHRIVKDUHVWUDGHG 5P 48 266,8 0DUNHWFDSLWDOLVDWLRQ 5P 100 549,4

Employee statistics 1XPEHURIWRWDOSHUPDQHQWHPSOR\HHV 36 770

Notes Compound annual growth rate. December 2009 and 2008 comparatives have been restated. For the 12 months ended 31 December 2005. Ratios calculated using headline earnings. Only December 2008, 2009 and 2010 reﬂects Basel II. Dividend cover is calculated using the headline earnings per share and dividends per share. Not disclosed previously.

334 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 'HFHPEHU 'HFHPEHU 'HFHPEHU 0DUFK 0DUFK 0DUFK 5P 5P 5P 5P 5P 5P

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 335 Financial performance

Directors’ approval

Statement of directors’ responsibilities in relation to ﬁnancial statements 7KH GLUHFWRUV DUH UHVSRQVLEOH IRU WKH SUHSDUDWLRQ LQWHJULW\ DQG REMHFWLYLW\ RI WKH FRQVROLGDWHG DQG VHSDUDWH ILQDQFLDO VWDWHPHQWV WKDW IDLUO\ SUHVHQW WKH VWDWH RI WKH DIIDLUV RI $EVD *URXS /LPLWHG DQG LWV VXEVLGLDULHV WKH *URXS DQG RI WKH&RPSDQ\DWWKHHQGRIWKHILQDQFLDO\HDUDQGWKHQHWLQFRPHDQGFDVKIORZVIRUWKH\HDUDQGRWKHULQIRUPDWLRQ FRQWDLQHGLQWKLVUHSRUW 7RHQDEOHWKHGLUHFWRUVWRPHHWWKHVHUHVSRQVLELOLWLHV $OOGLUHFWRUVDQGHPSOR\HHVZLOOHQGHDYRXUWRPDLQWDLQWKHKLJKHVWHWKLFDOVWDQGDUGVLQHQVXULQJWKH*URXS©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©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©UHSRUWRQSDJHVWRDQGWKHILQDQFLDOVWDWHPHQWVRIWKH*URXSDQGWKH&RPSDQ\ZKLFKDSSHDURQ SDJHVWRZHUHDSSURYHGE\WKHERDUGRIGLUHFWRUVDQGDUHVLJQHGE\

G Grifﬁn Group Chairman

M Ramos Group Chief Executive (GCE)

-RKDQQHVEXUJ )HEUXDU\

336 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Company Secretary’s certificate to the members of Absa Group Limited

,QDFFRUGDQFHZLWKWKHSURYLVLRQVRIWKH&RPSDQLHV$FW1RRI DVDPHQGHG RI6RXWK$IULFD,FHUWLI\WKDWLQ UHVSHFWRIWKH\HDUHQGHG'HFHPEHUWKH&RPSDQ\KDVORGJHGZLWKWKH5HJLVWUDURI&RPSDQLHVDOOUHWXUQV SUHVFULEHGE\WKH$FWDQGWKDWDOOVXFKUHWXUQVDUHWUXHFRUUHFWDQGXSWRGDWH

S Martin -RKDQQHVEXUJ Company Secretary )HEUXDU\

Independent auditors’ report to the members of Absa Group Limited

Report on the ﬁnancial statements :HKDYHDXGLWHGWKH*URXSDQG&RPSDQ\ILQDQFLDOVWDWHPHQWVRI$EVD*URXS/LPLWHGZKLFKFRPSULVHWKHFRQVROLGDWHG DQGVHSDUDWHVWDWHPHQWVRIILQDQFLDOSRVLWLRQDVDW'HFHPEHUDQGWKHFRQVROLGDWHGDQGVHSDUDWHVWDWHPHQWVRI FRPSUHKHQVLYH LQFRPH FKDQJHV LQ HTXLW\ DQG FDVK IORZV IRU WKH \HDU WKHQ HQGHG DQG D VXPPDU\ RI VLJQLILFDQW DFFRXQWLQJ SROLFLHV DQG RWKHU H[SODQDWRU\ LQIRUPDWLRQ WKH GLUHFWRUV© UHSRUW DV VHW RXW RQ SDJHV WR DQG SDJHV WR DQG WKRVH VHFWLRQV PDUNHG DV DXGLWHG LQ WKH ULVN PDQDJHPHQW UHSRUW EXW H[FOXGHV WKH VHFWLRQV PDUNHGDV¨XQDXGLWHG©LQQRWHVDQG

Directors’ responsibility for the ﬁnancial statements 7KH &RPSDQ\©V GLUHFWRUV DUH UHVSRQVLEOH IRU WKH SUHSDUDWLRQ DQG IDLU SUHVHQWDWLRQ RI WKHVH ILQDQFLDO VWDWHPHQWV LQ DFFRUGDQFHZLWK,)56DQGLQWKHPDQQHUUHTXLUHGE\WKH&RPSDQLHV$FW1RRI DVDPHQGHG RI6RXWK$IULFD DQGIRUVXFKLQWHUQDOFRQWURODVWKHGLUHFWRUVGHWHUPLQHLVQHFHVVDU\WRHQDEOHWKHSUHSDUDWLRQRIILQDQFLDOVWDWHPHQWVWKDW DUHIUHHIURPPDWHULDOPLVVWDWHPHQWZKHWKHUGXHWRIUDXGRUHUURU

Auditors’ responsibility 2XUUHVSRQVLELOLW\LVWRH[SUHVVDQRSLQLRQRQWKHVHILQDQFLDOVWDWHPHQWVEDVHGRQRXUDXGLW:HFRQGXFWHGRXUDXGLWLQ DFFRUGDQFHZLWK,QWHUQDWLRQDO6WDQGDUGVRQ$XGLWLQJ7KRVHVWDQGDUGVUHTXLUHWKDWZHFRPSO\ZLWKHWKLFDOUHTXLUHPHQWV DQGSODQDQGSHUIRUPWKHDXGLWWRREWDLQUHDVRQDEOHDVVXUDQFHZKHWKHUWKHILQDQFLDOVWDWHPHQWVDUHIUHHIURPPDWHULDO PLVVWDWHPHQW $QDXGLWLQYROYHVSHUIRUPLQJSURFHGXUHVWRREWDLQDXGLWHYLGHQFHDERXWWKHDPRXQWVDQGGLVFORVXUHVLQWKHILQDQFLDO VWDWHPHQWV 7KH SURFHGXUHV VHOHFWHG GHSHQG RQ WKH DXGLWRU©V MXGJHPHQW LQFOXGLQJ WKH DVVHVVPHQW RI WKH ULVNV RI PDWHULDOPLVVWDWHPHQWRIWKHILQDQFLDOVWDWHPHQWVZKHWKHUGXHWRIUDXGRUHUURU,QPDNLQJWKRVHULVNDVVHVVPHQWVWKH DXGLWRUFRQVLGHUVLQWHUQDOFRQWUROUHOHYDQWWRWKHHQWLW\©VSUHSDUDWLRQDQGIDLUSUHVHQWDWLRQRIWKHILQDQFLDOVWDWHPHQWVLQ RUGHUWRGHVLJQDXGLWSURFHGXUHVWKDWDUHDSSURSULDWHLQWKHFLUFXPVWDQFHVEXWQRWIRUWKHSXUSRVHRIH[SUHVVLQJDQ RSLQLRQ RQ WKH HIIHFWLYHQHVV RI WKH HQWLW\©V LQWHUQDO FRQWURO $Q DXGLW DOVR LQFOXGHV HYDOXDWLQJ WKH DSSURSULDWHQHVV RI DFFRXQWLQJSROLFLHVXVHGDQGWKHUHDVRQDEOHQHVVRIDFFRXQWLQJHVWLPDWHVPDGHE\WKHGLUHFWRUVDVZHOODVHYDOXDWLQJ WKHRYHUDOOSUHVHQWDWLRQRIWKHILQDQFLDOVWDWHPHQWV :HEHOLHYHWKDWWKHDXGLWHYLGHQFHZHKDYHREWDLQHGLVVXIILFLHQWDQGDSSURSULDWHWRSURYLGHDEDVLVIRURXUDXGLWRSLQLRQ

Opinion ,QRXURSLQLRQWKHILQDQFLDOVWDWHPHQWVSUHVHQWIDLUO\LQDOOPDWHULDOUHVSHFWVWKHFRQVROLGDWHGDQGVHSDUDWHILQDQFLDO SRVLWLRQRIWKH*URXSDQGRIWKH&RPSDQ\DVDW'HFHPEHUDQGWKHLUILQDQFLDOSHUIRUPDQFHDQGWKHLUFDVKIORZV IRU WKH \HDU WKHQ HQGHG LQ DFFRUGDQFH ZLWK ,)56 DQG LQ WKH PDQQHU UHTXLUHG E\ WKH &RPSDQLHV $FW 1R RI DVDPHQGHG RI6RXWK$IULFD

Ernst & Young Inc. PricewaterhouseCoopers Inc. Director – Ernest van Rooyen Director – Tom Winterboer Registered Auditor Registered Auditor Chartered Accountant (SA) Chartered Accountant (SA) :DQGHUHUV2IILFH3DUN&RUOHWW'ULYH,OORYR (JOLQ5RDG6XQQLQJKLOO -RKDQQHVEXUJ )HEUXDU\

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 337 Financial performance

Directors’ report

General information and nature of activities 7KH*URXSZKLFKKDVDSULPDU\OLVWLQJRQWKH-6(/LPLWHG -6( LVLQFRUSRUDWHGDQGGRPLFLOHGLQ6RXWK$IULFDDQG SURYLGHVUHWDLOFRPPHUFLDOFRUSRUDWHDQGLQYHVWPHQWEDQNLQJILQDQFLDOVHUYLFHVDQGZHDOWKPDQDJHPHQWSURGXFWVDQG VHUYLFHV7KH*URXSRSHUDWHVSULPDULO\LQ6RXWK$IULFDDQGHPSOR\VRYHUSHRSOH7KHDGGUHVVRIWKH*URXS©V UHJLVWHUHGRIILFHLVUG)ORRU$EVD7RZHUV(DVW0DLQ6WUHHW-RKDQQHVEXUJ 7KH *URXS©V SDUHQW FRPSDQ\ LV %DUFOD\V %DQN 3/& ZKLFK LV LQFRUSRUDWHG DQG GRPLFLOHG LQ WKH 8QLWHG .LQJGRP 7KHDGGUHVVRILWVUHJLVWHUHGRIILFHLV&KXUFKLOO3ODFH&DQDU\:KDUI/RQGRQ8QLWHG.LQJGRP 7KH *URXS LV RQH RI 6RXWK $IULFD©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

Group results Main business and operations 7KH*URXSUHFRUGHGDQLQFUHDVHRILQKHDGOLQHHDUQLQJVWR5PLOOLRQIRUWKH\HDUHQGHG'HFHPEHU 5 PLOOLRQ +HDGOLQH HDUQLQJV SHU VKDUH +(36 LQFUHDVHG E\ WR FHQWV SHU VKDUH FHQWVSHUVKDUH DQGIXOO\GLOXWHG+(36LQFUHDVHGE\WR FHQWVSHUVKDUH FHQWVSHU VKDUH +HDGOLQHHDUQLQJVZHUHGHULYHGIURPWKHIROORZLQJDFWLYLWLHV 2010 Rm 5P Banking operations 5HWDLO%DQNLQJ 3 353 +RPH/RDQV 196 9HKLFOHDQG$VVHW)LQDQFH 280 &DUG 1 346 3HUVRQDO/RDQV 515 5HWDLO%DQN 1 016 $EVD%XVLQHVV%DQN 2 903 $EVD&DSLWDO 1 480 8QGHUO\LQJSHUIRUPDQFH 1 518 6LQJOHVWRFNIXWXUHVLPSDLUPHQW (38) &RUSRUDWHFHQWUH (396) &DSLWDODQGIXQGLQJFHQWUH (192) 1RQFRQWUROOLQJLQWHUHVW¤SUHIHUHQFHVKDUHV (320) Total banking 6 828 )LQDQFLDO6HUYLFHV 1 290 Proﬁt attributable to ordinary equity holders of the Group 8 118 +HDGOLQHHDUQLQJVDGMXVWPHQWV UHIHUWRQRWH (77) Headline earnings 8 041

Notes Comparatives have been reclassiﬁed for the move of Absa Small Business from Retail Banking to Absa Business Bank. Personal Loans were previously disclosed as part of Retail Bank. Includes volatility from investment in Visa Incorporated.

338 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Directors 7KHGLUHFWRUVRIWKH&RPSDQ\GXULQJWKH\HDUDQGWRWKHUHSRUWLQJGDWHDUHDVIROORZV **ULIILQ *URXS&KDLUPDQ DSSRLQWHGDV*URXS&KDLUPDQRQ2FWREHU '&%ULQN IRUPHU*URXS&KDLUPDQ UHVLJQHGDV*URXS&KDLUPDQDQGDVDGLUHFWRURQ6HSWHPEHU 05DPRV *URXS&KLHI([HFXWLYH //YRQ=HXQHU 'HSXW\*URXS&KLHI([HFXWLYH '&$UQROG &%HJJV DSSRLQWHGRQ-XQH %3&RQQHOODQ <=&XED %&00GH9LWU\G©$YDXFRXUW 6$)DNLH 0:+ODKOD ':3+RGQHWW DSSRLQWHGRQ0DUFK 0-+XVDLQ $3-HQNLQV 5/H%ODQF 700RNJRVL0ZDQWHPEH (&0RQGODQH-U 760XQGD\ 6*3UHWRULXV -+6FKLQGHKWWH UHVLJQHGRQ)HEUXDU\ %-:LOOHPVH

Notes Has been on the board for more than nine years. Independent director. Executive director. French. British. Mozambican.

Re-election of retiring directors (resolution number 3 to 10 – ordinary resolutions) ,Q OLQH ZLWK LQWHUQDWLRQDO EHVW SUDFWLFH WKH *URXS KDV LQWURGXFHG D UHTXLUHPHQW LQ WHUPV RI ZKLFK DOO GLUHFWRUV RQWKHERDUGIRUORQJHUWKDQQLQH\HDUVDUHVXEMHFWWRDQQXDOUHHOHFWLRQE\VKDUHKROGHUVDWWKHDQQXDOJHQHUDOPHHWLQJ $*0 7KHGLUHFWRUVZKRUHWLUHLQWHUPVRIWKHDERYHDUUDQJHPHQWDWWKH$*0DUH%3&RQQHOODQDQG**ULIILQ 7KHVHGLUHFWRUVDUHHOLJLEOHIRUUHHOHFWLRQDQGKDYHPDGHWKHPVHOYHVDYDLODEOHIRUUHHOHFWLRQ7KHERDUGUHFRPPHQGV WKHUHHOHFWLRQRIWKHVHGLUHFWRUV ,QWHUPVRIWKH&RPSDQ\©VDUWLFOHVRIDVVRFLDWLRQRQHWKLUGRIWKHGLUHFWRUVDUHUHTXLUHGWRUHWLUHDWHDFK$*0DQGPD\ RIIHUWKHPVHOYHVIRUUHHOHFWLRQ 7KHGLUHFWRUVZKRUHWLUHLQWHUPVRIWKHDERYHDUUDQJHPHQWDWWKH$*0DUH<=&XED%&00GH9LWU\G©$YDXFRXUW 0:+ODKOD$3-HQNLQV700RNJRVL0ZDQWHPEH760XQGD\DQG05DPRV0:+ODKODKDVQRWRIIHUHGKHUVHOIIRU UHHOHFWLRQ7KHERDUGUHFRPPHQGVWKHUHHOHFWLRQRIWKHRWKHUGLUHFWRUV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 339 Financial performance

Directors’ report

Directors’ interest in Absa Group Limited ordinary shares 7KHGLUHFWRUV©LQWHUHVWVLQWKHLVVXHGVKDUHVRIWKH&RPSDQ\DVDWWKHGDWHRIWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQDUH GLVFORVHGLQWKHWDEOHVWRIROORZ1RQH[HFXWLYHGLUHFWRUVDUHUHTXLUHGWRKROGDPLQLPXPVKDUHKROGLQJRI$EVD *URXS/LPLWHGRUGLQDU\VKDUHVDVUHTXLUHGE\DSDVWGLUHFWRUV©UHVROXWLRQ7KHVHVKDUHVKDYHWREHSDLGLQIXOO7KHVKDUH DZDUGVKHOGE\H[HFXWLYHGLUHFWRUVDUHGLVFORVHGVHSDUDWHO\LQWKH*URXSUHPXQHUDWLRQUHSRUW 'LUHFWQXPEHURIVKDUHV %HQHILFLDO 1RQEHQHILFLDO 2010 2010 Present directors //YRQ=HXQHU 'HSXW\*URXS&KLHI([HFXWLYH 226 061 — ¥ '&$UQROG 2 000 — ¥ &%HJJV 2 000 QD — QD %3&RQQHOODQ 1 000 — ¥ <=&XED 1 000 — ¥ %&00GH9LWU\G©$YDXFRXUW 1 000 — ¥ 6$)DNLH 1 000 — ¥ 0:+ODKOD 1 000 — ¥ 0-+XVDLQ 1 000 — ¥ $3-HQNLQV 1 000 — ¥ 5/H%ODQF 1 000 — ¥ 700RNJRVL0ZDQWHPEH 1 000 — ¥ (&0RQGODQH-U 1 000 — ¥ 760XQGD\ 1 000 — ¥ 6*3UHWRULXV 1 000 — ¥ Past directors -+6FKLQGHKWWH n/a n/a ¥

242 061 — ¥

,QGLUHFWQXPEHURIVKDUHV %HQHILFLDO 1RQEHQHILFLDO 2010 2010 Present directors **ULIILQ *URXS&KDLUPDQ 8 000 — ¥ 760XQGD\ 2 000 — ¥ %-:LOOHPVH 1 000 — ¥ Past directors '&%ULQN IRUPHU*URXS&KDLUPDQ n/a n/a -+6FKLQGHKWWH n/a ¥ n/a

11 000 —

Notes Executive director. Appointed as a director on 23 June 2010. French. British. Mozambican. Resigned as a director on 28 February 2010. Appointed as Group Chairman on 1 October 2010. Resigned as a director on 30 September 2010.

340 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 7RWDOGLUHFWDQGLQGLUHFWQXPEHURIVKDUHV %HQHILFLDO 1RQEHQHILFLDO 2010 2010 Present directors **ULIILQ *URXS&KDLUPDQ 8 000 — ¥ //YRQ=HXQHU 'HSXW\*URXS&KLHI([HFXWLYH 226 061 — ¥ '&$UQROG 2 000 — ¥ &%HJJV 2 000 QD — QD %3&RQQHOODQ 1 000 — ¥ <=&XED 1 000 — ¥ %&00GH9LWU\G©$YDXFRXUW 1 000 — ¥ 6$)DNLH 1 000 — ¥ 0:+ODKOD 1 000 — ¥ 0-+XVDLQ 1 000 — ¥ $-HQNLQV 1 000 — ¥ 5/H%ODQF 1 000 — ¥ 700RNJRVL0ZDQWHPEH 1 000 — ¥ (&0RQGODQH-U 1 000 — ¥ 760XQGD\ 3 000 — ¥ 6*3UHWRULXV 1 000 — ¥ %-:LOOHPVH 1 000 — ¥ Past directors '&%ULQN IRUPHU*URXS&KDLUPDQ n/a n/a -+6FKLQGHKWWH n/a n/a

253 061 —

Notes Appointed as Group Chairman on 1 October 2010. Executive director. Appointed as a director on 23 June 2010. French. British. Mozambican. Resigned as a director on 30 September 2010. Resigned as a director on 28 February 2010.

Directors’ interest in Batho Bonke Capital (Proprietary) Limited ordinary shares $VDWWKHUHSRUWLQJGDWHWKHIROORZLQJGLUHFWRUVKHOG$EVD*URXS/LPLWHGRUGLQDU\VKDUHVLQGLUHFWO\WKURXJKWKHLUGLUHFWRU LQGLUHFWKROGLQJVRIRUGLQDU\VKDUHVLQ%DWKR%RQNH&DSLWDO 3URSULHWDU\ /LPLWHG 1XPEHURIVKDUHV 2010 Present directors <=&XED 91 600 6$)DNLH 40 000 0:+ODKOD 50 000 0-+XVDLQ 40 000 700RNJRVL0ZDQWHPEH 40 000 261 600

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 341 Financial performance

Directors’ report

Directors’ interest in Absa Bank Limited preference shares $VDWWKHUHSRUWLQJGDWHWKHGLUHFWDQGLQGLUHFWSUHIHUHQFHVKDUHKROGLQJRIGLUHFWRUVLQ$EVD%DQN/LPLWHGZDVDVIROORZV 1XPEHURIVKDUHV 2010 Direct Indirect 'LUHFW ,QGLUHFW Present directors **ULIILQ *URXS&KDLUPDQ — 1 680 ¥¥ //YRQ=HXQHU 'HSXW\*URXS&KLHI([HFXWLYH 562 — ¥ '&$UQROG 400 — ¥ %3&RQQHOODQ 300 — ¥

1 262 1 680 ¥

Notes Appointed as Group Chairman on 1 October 2010. VExecutive director.

7KHUHKDVEHHQQRFKDQJHLQWKHLQWHUHVWRIGLUHFWRUVEHWZHHQWKHUHSRUWLQJGDWHDQG)HEUXDU\

Directors’ and ofﬁcers’ interest in contracts 1RFRQWUDFWVZHUHHQWHUHGLQWRLQZKLFKGLUHFWRUVDQGRIILFHUVRIWKH&RPSDQ\KDGDQLQWHUHVWDQGZKLFKVLJQLILFDQWO\ DIIHFWHGWKHEXVLQHVVRIWKH*URXS7KHGLUHFWRUVKDGQRLQWHUHVWLQDQ\WKLUGSDUW\RUFRPSDQ\UHVSRQVLEOHIRUPDQDJLQJ DQ\RIWKHEXVLQHVVDFWLYLWLHVRIWKH*URXS7KHHPROXPHQWVDQGVHUYLFHVRIH[HFXWLYHGLUHFWRUVDUHGHWHUPLQHGE\WKH *URXS5HPXQHUDWLRQDQG+XPDQ5HVRXUFHV&RPPLWWHH *5+5& 7UDQVDFWLRQVZLWKGLUHFWRUVDUHHQWHUHGLQWRLQWKHQRUPDOFRXUVHRIEXVLQHVVXQGHUWHUPVWKDWDUHQRPRUHIDYRXUDEOH WKDQWKRVHDUUDQJHGZLWKWKLUGSDUWLHV

Directors’ emoluments 'LUHFWRUV©HPROXPHQWVLQUHVSHFWRIWKH&RPSDQ\©VH[HFXWLYHGLUHFWRUVDUHGLVFORVHGLQQRWHRIWKHFRQVROLGDWHG ILQDQFLDOVWDWHPHQWV

Subsidiaries, associates and joint ventures 7KHLQWHUHVWVLQVXEVLGLDULHVDVVRFLDWHVDQGMRLQWYHQWXUHVDUHVHWRXWLQQRWHWRWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV

Acquisitions 7KHIROORZLQJLQWHUHVWVZHUHDFTXLUHGGXULQJWKH\HDUXQGHUUHYLHZ

Equity-accounted associates and/or joint ventures 'XULQJWKH\HDU$EVD,QVXUDQFH5LVN0DQDJHPHQW6HUYLFHV/LPLWHG $,506 DQG$EVD,QVXUDQFH&RPSDQ\/LPLWHG $,& HQWHUHGLQWRDVKDUHKROGHUV©DJUHHPHQWZLWK2QH&RPPHUFLDO,QYHVWPHQW+ROGLQJV 3URSULHWDU\ /LPLWHG &RP WR FUHDWHDFHOOFDSWLYHLQVXUDQFHVWUXFWXUHIRU&RP$,506ZLOOEHHQWLWOHGWRRIWKHSURILWVJHQHUDWHGE\WKH&RP FHOO FDSWLYH VWUXFWXUH DQG FRQVHTXHQWO\ WKH UHVXOWV RI WKH &RP FHOO FDSWLYH VWUXFWXUH KDV EHHQ HTXLW\ DFFRXQWHG E\ $,506DVDQDVVRFLDWH

342 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Associates and joint ventures designated at fair value through proﬁt or loss 'XULQJWKH\HDUWKH*URXSDFTXLUHGDVWDNHLQ$PULFKSURS3URSHUWLHV 3URSULHWDU\ /LPLWHG $PULFK $PULFKLV MRLQWO\ FRQWUROOHG E\ WKH *URXS DQG (TXLW\ (VWDWHV 3URSULHWDU\ /LPLWHG ,WV PDLQ EXVLQHVV LV WR SURYLGH SURSHUW\ PDQDJHPHQWVHUYLFHVWR$EVHT3URSHUWLHV 3URSULHWDU\ /LPLWHGDVXEVLGLDU\RIWKH*URXS7KHLQYHVWPHQWZDVDFTXLUHG IRUDQRPLQDODPRXQWDQGIRUPVSDUWRIWKH&RPPHUFLDO3URSHUW\)LQDQFH &3) YHQWXUHFDSLWDOSRUWIROLR

Subsidiaries $EVD &DSLWDO 5HSUHVHQWDWLYH 2IILFH 1LJHULD /LPLWHG ¨WKH 1LJHULDQ 5HS 2IILFH© ZDV LQFRUSRUDWHG DV D ZKROO\ RZQHG VXEVLGLDU\GXULQJWKH\HDUWRIDFLOLWDWHWKHEXVLQHVVRI$EVD&DSLWDOZLWKLQ1LJHULD7KHREMHFWLYHVRIWKH1LJHULDQ5HS 2IILFHDUHWRHQKDQFH$EVD&DSLWDO©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¤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©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 343 Financial performance

Directors’ report

Disposals 7KHIROORZLQJLQWHUHVWVKDYHEHHQVROGGXULQJWKH\HDUXQGHUUHYLHZ $EVD3URSHUW$TXLW$XQG WKH)XQG ZDVSUHYLRXVO\FRQVROLGDWHGXQGHU6,&DVWKH*URXSKHOGEHWZHHQDQG RIWKHXQLWVDQGZHUHWKHUHE\H[SRVHGWRWKHPDMRULW\RIULVNLQWKH)XQG'XULQJ6HSWHPEHUWKH*URXS GLVSRVHGRIVRPHRIWKHXQLWVDYDLODEOHGHFUHDVLQJLWVLQWHUHVWWR$VWKH*URXSQRORQJHUKDVWKHPDMRULW\RIULVNV DQG UHZDUGV 6,& QR ORQJHU DSSOLHV DQG WKH )XQG ZDV GHFRQVROLGDWHG RQ 6HSWHPEHU 7KH UHPDLQLQJ LQWHUHVWZDVGLVSRVHGRIGXULQJ2FWREHUZLWKQRLPSDFWRQWKH*URXS©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©V FUHGLWFDUGDQGKRPHORDQEXVLQHVVIRU5 $SURILWRQGLVSRVDORI5PLOOLRQKDVEHHQUHFRJQLVHGRIZKLFK5PLOOLRQKDVEHHQLQFOXGHGLQKHDGOLQHHDUQLQJV DVLWUHODWHVWR906$©VLQGHPQLILFDWLRQWRWKH*URXSIRUORVVHVLQFXUUHGLQWKHSDVWDQGLVWKHUHIRUHGHHPHGWREHRI DQRSHUDWLQJQDWXUH 7KHUHPDLQLQJ5PLOOLRQUHODWHVWRWKHUHOHDVHRISURYLVLRQVSUHYLRXVO\UDLVHGE\WKH*URXSIRUJXDUDQWHHVSURYLGHG LQIDYRXURI906$ ,QWDQJLEOHDVVHWVRI5PLOOLRQZHUHUHFRJQLVHGLQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQ$JDLQRQEDUJDLQSXUFKDVHRI 5PLOOLRQZDVUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHIROORZLQJWKH ILQDOLVDWLRQRIWKHIDLUYDOXHRIWKHDVVHWVDQGOLDELOLWLHVDFTXLUHG

5HIHUWRQRWHVDQGIRUDGGLWLRQDOLQIRUPDWLRQRQWKHDERYHDFTXLVLWLRQVDQGGLVSRVDOV

Special resolutions 7KHIROORZLQJVSHFLDOUHVROXWLRQZDVSDVVHGE\$EVD*URXS/LPLWHG©VRUGLQDU\VKDUHKROGHUVDWWKH$*0 7RSURYLGHWKHGLUHFWRUVZLWKIOH[LELOLW\WRUHSXUFKDVHRUGLQDU\VKDUHVLQWHUPVRIVHFWLRQRIWKH&RPSDQLHV$FW 1RRI DVDPHQGHG RI6RXWK$IULFDDVDQGZKHQVXLWDEOHVLWXDWLRQVDULVH 'XULQJWKHUHSRUWLQJSHULRGQRRUGLQDU\VKDUHVZHUHUHSXUFKDVHGE\WKHGLUHFWRUVLQWHUPVRIWKHVSHFLDOUHVROXWLRQ

Secretary 7KHVHFUHWDU\RIWKH&RPSDQ\LV60DUWLQ+HUFRQWDFWGHWDLOVDUHDVIROORZV WK)ORRU$EVD7RZHUV:HVW 7UR\H6WUHHW -RKDQQHVEXUJ Telephone: Fax: Email: VDULWDPDUWLQ#DEVDFR]D

Authorised and issued share capital Authorised 7KH DXWKRULVHG VKDUH FDSLWDO RI WKH &RPSDQ\ RI 5 5 FRQVLVWV RI RUGLQDU\VKDUHVRI5HDFK

344 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Issued 7KHUHZHUHQRVKDUHVLVVXHGGXULQJWKHFXUUHQW\HDU 7KHWRWDOLVVXHGVKDUHFDSLWDODVDWWKHUHSRUWLQJGDWHZDVPDGHXSDVIROORZV RUGLQDU\VKDUHVRI5HDFK 1RSUHIHUHQFHVKDUHVDUHLQLVVXHE\WKH&RPSDQ\

Dividends 2Q)HEUXDU\DGLYLGHQGRIFHQWVSHURUGLQDU\VKDUHZDVDQQRXQFHGWRRUGLQDU\VKDUHKROGHUVUHJLVWHUHG RQ0DUFK 2Q$XJXVWDGLYLGHQGRIFHQWVSHURUGLQDU\VKDUHZDVDQQRXQFHGWRRUGLQDU\VKDUHKROGHUVUHJLVWHUHGRQ $XJXVW 2Q)HEUXDU\DGLYLGHQGRIFHQWVSHURUGLQDU\VKDUHKDVEHHQDSSURYHG7KHGLYLGHQGZLOOEHDQQRXQFHG RQ)HEUXDU\WRRUGLQDU\VKDUHKROGHUVUHJLVWHUHGRQ0DUFK7KLVGLYLGHQGLVSD\DEOHRQ0DUFK

Auditors 3ULFHZDWHUKRXVH&RRSHUV ,QF DQG (UQVW

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 345 Financial performance

Consolidated statement of financial position $VDW'HFHPEHU

Group 2010 1RWH Rm 5P 5P Assets &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDOEDQNV 24 361 6WDWXWRU\OLTXLGDVVHWSRUWIROLR 48 215 /RDQVDQGDGYDQFHVWREDQNV 24 877 7UDGLQJSRUWIROLRDVVHWV 62 047 +HGJLQJSRUWIROLRDVVHWV 4 662 2WKHUDVVHWV 16 131 &XUUHQWWD[DVVHWV 196 1RQFXUUHQWDVVHWVKHOGIRUVDOH — ¥ /RDQVDQGDGYDQFHVWRFXVWRPHUV 498 635 5HLQVXUDQFHDVVHWV 860 ,QYHVWPHQWVHFXULWLHV 23 826 ,QYHVWPHQWVLQDVVRFLDWHVDQGMRLQWYHQWXUHV 416 *RRGZLOODQGLQWDQJLEOHDVVHWV 1 794 ,QYHVWPHQWSURSHUWLHV 2 523 3URSHUW\DQGHTXLSPHQW 7 493 'HIHUUHGWD[DVVHWV 434 Total assets 716 470 Liabilities 'HSRVLWVIURPEDQNV 15 406 7UDGLQJSRUWIROLROLDELOLWLHV 47 454 +HGJLQJSRUWIROLROLDELOLWLHV 1 881 2WKHUOLDELOLWLHV 11 239 3URYLVLRQV 1 808 &XUUHQWWD[OLDELOLWLHV 965 1RQFXUUHQWOLDELOLWLHVKHOGIRUVDOH — ¥ 'HSRVLWVGXHWRFXVWRPHUV 378 111 'HEWVHFXULWLHVLQLVVXH 164 545 /LDELOLWLHVXQGHULQYHVWPHQWFRQWUDFWV 13 964 3ROLF\KROGHUOLDELOLWLHVXQGHULQVXUDQFHFRQWUDFWV 3 001 %RUURZHGIXQGV 13 649 'HIHUUHGWD[OLDELOLWLHV 2 298 Total liabilities 654 321 Equity Capital and reserves $WWULEXWDEOHWRRUGLQDU\HTXLW\KROGHUVRIWKH*URXS 6KDUHFDSLWDO 1 433 6KDUHSUHPLXP 4 590 2WKHUUHVHUYHV 2 309 5HWDLQHGHDUQLQJV 47 958 56 290 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV 1 215 1RQFRQWUROOLQJLQWHUHVW¤SUHIHUHQFHVKDUHV 4 644 Total equity 62 149 Total equity and liabilities 716 470

Note 1Comparatives have been reclassiﬁed, refer to note 1.26.

346 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Consolidated statement of comprehensive income )RUWKH\HDUHQGHG'HFHPEHU

Group

2010 1RWH Rm 5P 1HWLQWHUHVWLQFRPH 23 340 ,QWHUHVWDQGVLPLODULQFRPH 54 241 ,QWHUHVWH[SHQVHDQGVLPLODUFKDUJHV (30 901) ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHV (6 005) Net interest income after impairment losses on loans and advances 17 335 1RQLQWHUHVWLQFRPH 19 474 1HWIHHDQGFRPPLVVLRQLQFRPH 14 391 )HHDQGFRPPLVVLRQLQFRPH 16 454 )HHDQGFRPPLVVLRQH[SHQVH (2 063) 1HWLQVXUDQFHSUHPLXPLQFRPH 4 602 1HWLQVXUDQFHFODLPVDQGEHQHILWVSDLG (2 405) &KDQJHVLQLQYHVWPHQWDQGLQVXUDQFHOLDELOLWLHV (1 059) *DLQVDQGORVVHVIURPEDQNLQJDQGWUDGLQJDFWLYLWLHV 2 349 *DLQVDQGORVVHVIURPLQYHVWPHQWDFWLYLWLHV 884 2WKHURSHUDWLQJLQFRPH 712

Operating profit before operating expenditure 36 809 2SHUDWLQJH[SHQGLWXUH (24 949) 2SHUDWLQJH[SHQVHV (24 070) 2WKHULPSDLUPHQWV (108) ,QGLUHFWWD[DWLRQ (771) 6KDUHRISRVWWD[UHVXOWVRIDVVRFLDWHVDQGMRLQWYHQWXUHV (9) Operating profit before income tax 11 851 7D[DWLRQH[SHQVH (3 262) Profit for the year 8 589 Other comprehensive income ([FKDQJHGLIIHUHQFHVRQWUDQVODWLRQRIIRUHLJQRSHUDWLRQV (371) 0RYHPHQWLQFDVKIORZKHGJLQJUHVHUYH 1 152 )DLUYDOXHJDLQV ORVVHV DULVLQJGXULQJWKH\HDU 3 421 $PRXQWUHPRYHGIURPRWKHUFRPSUHKHQVLYHLQFRPHDQGUHFRJQLVHGLQWKH SURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH (1 820) 'HIHUUHGWD[ (449) 0RYHPHQWLQDYDLODEOHIRUVDOHUHVHUYH 166 )DLUYDOXHJDLQV ORVVHV DULVLQJGXULQJWKH\HDU 146 $PRXQWUHPRYHGIURPRWKHUFRPSUHKHQVLYHLQFRPHDQGUHFRJQLVHGLQWKH SURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH — $PRUWLVDWLRQRIJRYHUQPHQWERQGV¤UHOHDVHWRWKHSURILWDQGORVV FRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH 92 'HIHUUHGWD[ (72) 0RYHPHQWLQUHWLUHPHQWEHQHILWDVVHWDQGOLDELOLWLHV 21 ,QFUHDVHLQUHWLUHPHQWEHQHILWVXUSOXV 27 'HFUHDVH LQFUHDVH LQUHWLUHPHQWEHQHILWGHILFLW 2 'HIHUUHGWD[ (8)

Total comprehensive income for the year 9 557 Proﬁt attributable to: 2UGLQDU\HTXLW\KROGHUVRIWKH*URXS 8 118 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV 151 1RQFRQWUROOLQJLQWHUHVW¤SUHIHUHQFHVKDUHV 320 8 589 Total comprehensive income attributable to: 2UGLQDU\HTXLW\KROGHUVRIWKH*URXS 9 138 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV 99 1RQFRQWUROOLQJLQWHUHVW¤SUHIHUHQFHVKDUHV 320 9 557 Earnings per share: %DVLFHDUQLQJVSHUVKDUH FHQWV 1 133,3 'LOXWHGHDUQLQJVSHUVKDUH FHQWV 1 126,4

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 347 Financial performance

Consolidated statement of changes in equity )RUWKH\HDUHQGHG'HFHPEHU

Number of General ordinary Share Share credit risk shares capital premium reserve ’000 Rm Rm Rm Balance at the beginning of the year 715 823 1 432 4 784 24 7RWDOFRPSUHKHQVLYHLQFRPH ———— 3URILWIRUWKH\HDU ———— 2WKHUFRPSUHKHQVLYHLQFRPH ———— 'LYLGHQGVSDLG ———— 6KDUHEX\EDFNLQUHVSHFWRI$EVD*URXS/LPLWHG 6KDUH,QFHQWLYH7UXVW — — (234) — (OLPLQDWLRQRIWKHPRYHPHQWLQWUHDVXU\VKDUHVKHOG E\$EVD*URXSFRPSDQLHV (25) (0) (49) — (OLPLQDWLRQRIWKHPRYHPHQWLQWUHDVXU\VKDUHVKHOG E\$EVD*URXS/LPLWHG6KDUH,QFHQWLYH7UXVW¤RSWLRQV H[HUFLVHGE\HPSOR\HHV 792 1 30 — 0RYHPHQWLQVKDUHEDVHGSD\PHQWUHVHUYH — 0 59 — 7UDQVIHUIURPVKDUHEDVHGSD\PHQWUHVHUYH — 0 59 — 9DOXHRIHPSOR\HHVHUYLFHV ———— 0RYHPHQWLQJHQHUDOFUHGLWULVNUHVHUYH ———39 0RYHPHQWLQLQVXUDQFHFRQWLQJHQF\UHVHUYH ———— 6KDUHRISRVWWD[UHVXOWVRIDVVRFLDWHVDQGMRLQW YHQWXUHV ———— 'LVSRVDORIDVVRFLDWHVDQGMRLQWYHQWXUHV¤UHOHDVHRI UHVHUYHV ———— 'LOXWLRQRIQRQFRQWUROOLQJVKDUHKROGHUV©LQWHUHVW ———— ,QFUHDVHLQWKHLQWHUHVWRIQRQFRQWUROOLQJHTXLW\KROGHUV ———— 'LVSRVDORIEXVLQHVVHV ———— Balance at the end of the year 716 590 1 433 4 590 63 1RWHV

Note All movements are reﬂected net of taxation, refer to note 16.

348 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010 Non- Non- Foreign Insurance Share- Associates’ controlling controlling Available- Cash ﬂow currency contin- based and joint interest – interest – for-sale hedging translation gency payment ventures’ Retained ordinary preference reserve reserve reserve reserve reserve reserve earnings shares shares Total Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm (362) 1 106 (321) 250 298 183 43 153 1 299 4 644 56 490 166 1 152 (319) — — — 8 139 99 320 9 557 ——————8 1181513208 589 166 1 152 (319) — — — 21 (52) — 968 ——————(3 191) (142) (320) (3 653)

—————————(234)

—————————(49)

—————————31 ————(13) — 2 — — 48 ————(61) — 2——— ————48————48 ——————(39) — — — — — — 55 — — (55) — — —

—————(9)9———

—————60(60) — — — —————— 0(0)—— ———————37—37 ———————(78) — (78) (196) 2 258 (640) 305 285 234 47 958 1 215 4 644 62 149

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 349 Financial performance

Consolidated statement of changes in equity )RUWKH\HDUHQGHG'HFHPEHU

1XPEHURI *HQHUDO RUGLQDU\ 6KDUH 6KDUH FUHGLWULVN VKDUHV FDSLWDO SUHPLXP UHVHUYH © 5P 5P 5P %DODQFHDWWKHEHJLQQLQJRIWKH\HDU 7RWDOFRPSUHKHQVLYHLQFRPH ¥ ¥ ¥ ¥ 3URILWIRUWKH\HDU ¥ ¥ ¥ ¥ 2WKHUFRPSUHKHQVLYHLQFRPH ¥ ¥ ¥ ¥ 'LYLGHQGVSDLG ¥ ¥ ¥ ¥ 6KDUHVLVVXHG ¥ 5HSXUFKDVHRISUHIHUHQFHVKDUHVKHOGE\%DWKR%RQNH &DSLWDO 3URSULHWDU\ /LPLWHG ¥ ¥ ¥ &RVWVLQFXUUHG ¥ ¥ ¥ (OLPLQDWLRQRIWKHPRYHPHQWLQJDLQVIURPGHULYDWLYH LQVWUXPHQWVRQRZQVKDUHV ¥ ¥ ¥ 6KDUHEX\EDFNLQUHVSHFWRI$EVD*URXS/LPLWHG 6KDUH,QFHQWLYH7UXVW ¥ ¥ ¥ (OLPLQDWLRQRIWKHPRYHPHQWLQWUHDVXU\VKDUHVKHOG E\$EVD*URXSFRPSDQLHV ¥ (OLPLQDWLRQRIWKHPRYHPHQWLQWUHDVXU\VKDUHVKHOG E\$EVD*URXS/LPLWHG(PSOR\HH6KDUH2ZQHUVKLS $GPLQLVWUDWLYH7UXVW ¥ ¥ 2SWLRQVH[HUFLVHGE\HPSOR\HHV ¥ ¥ 6KDUHVLVVXHGWRWKHWUXVW ¥ ¥ ¥ (OLPLQDWLRQRIWKHPRYHPHQWLQWUHDVXU\VKDUHVKHOG E\$EVD*URXS/LPLWHG6KDUH,QFHQWLYH7UXVW ¥ 2SWLRQVH[HUFLVHGE\HPSOR\HHV QD ¥ 6KDUHVLVVXHGWRWKHWUXVW QD ¥ 0RYHPHQWLQVKDUHEDVHGSD\PHQWUHVHUYH ¥ ¥ 7UDQVIHUIURPVKDUHEDVHGSD\PHQWUHVHUYH ¥ ¥ 9DOXHRIHPSOR\HHVHUYLFHV ¥ ¥ ¥ ¥ 0RYHPHQWLQJHQHUDOFUHGLWULVNUHVHUYH ¥ ¥ ¥ 0RYHPHQWLQLQVXUDQFHFRQWLQJHQF\UHVHUYH ¥ ¥ ¥ ¥ 6KDUHRISRVWWD[UHVXOWVRIDVVRFLDWHVDQGMRLQWYHQWXUHV ¥ ¥ ¥ ¥ 'LVSRVDORIDVVRFLDWHVDQGMRLQWYHQWXUHV¤UHOHDVHRI UHVHUYHV ¥ ¥ ¥ ¥ $FTXLVLWLRQRIEXVLQHVVHV ¥ ¥ ¥ ¥ %DODQFHDWWKHHQGRIWKH\HDU

1RWHV

Note All movements are reﬂected net of taxation, refer to note 16.

350 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU *URXS 1RQ 1RQ )RUHLJQ ,QVXUDQFH 6KDUH $VVRFLDWHV© FRQWUROOLQJ FRQWUROOLQJ $YDLODEOH &DVKIORZ FXUUHQF\ FRQWLQ EDVHG DQGMRLQW LQWHUHVW¤ LQWHUHVW¤ IRUVDOH KHGJLQJ WUDQVODWLRQ JHQF\ SD\PHQW YHQWXUHV© 5HWDLQHG RUGLQDU\ SUHIHUHQFH UHVHUYH UHVHUYH UHVHUYH UHVHUYH UHVHUYH UHVHUYH HDUQLQJV VKDUHV VKDUHV 7RWDO 5P 5P 5P 5P 5P 5P 5P 5P 5P 5P ¥ ¥ ¥ ¥¥¥¥¥¥ ¥ ¥ ¥ ¥ ¥¥¥¥¥¥ ¥¥¥¥¥¥¥¥¥

¥¥¥¥¥¥ ¥ ¥ ¥¥¥¥¥¥¥¥¥

¥¥¥¥¥¥¥¥¥

¥¥¥¥¥¥¥¥¥ ¥¥¥¥¥¥¥¥¥ ¥¥¥¥¥¥¥¥¥

¥¥¥¥¥¥¥¥¥ ¥¥¥¥¥¥¥¥¥ ¥¥¥¥¥¥¥¥¥ ¥¥¥¥ ¥ ¥ ¥ ¥¥¥¥ ¥ ¥¥¥ ¥¥¥¥¥¥¥¥ ¥¥¥¥¥¥¥¥¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥¥¥¥¥ ¥¥¥

¥¥¥¥¥ ¥¥¥ ¥¥¥¥¥¥¥¥

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 351 Financial performance

Consolidated statement of cash flows )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 1RWH Rm 5P Cash flow from operating activities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ash flow from investing activities 3XUFKDVHRILQYHVWPHQWSURSHUWLHV (288) 3XUFKDVHRISURSHUW\DQGHTXLSPHQW (2 351) 3URFHHGVIURPVDOHRISURSHUW\DQGHTXLSPHQW 255 3XUFKDVHRILQWDQJLEOHDVVHWV (718) 3URFHHGVIURPVDOHRILQWDQJLEOHDVVHWV — $FTXLVLWLRQRIEXVLQHVVHVQHWRIFDVK 470 'LVSRVDORIEXVLQHVVHVQHWRIFDVK (6) ¥ $FTXLVLWLRQRIDVVRFLDWHVDQGMRLQWYHQWXUHVQHWRIFDVK (95) 'LVSRVDORIDVVRFLDWHVDQGMRLQWYHQWXUHVQHWRIFDVK 95 1HWGHFUHDVH LQFUHDVH LQORDQVWRDVVRFLDWHVDQGMRLQWYHQWXUHV 4 1HWGHFUHDVHLQLQYHVWPHQWVHFXULWLHV 4 017 'LYLGHQGVUHFHLYHGIURPLQYHVWPHQWDFWLYLWLHV 117 1HWFDVKJHQHUDWHG XWLOLVHG IURPLQYHVWLQJDFWLYLWLHV 1 500 Cash flow from financing activities ,VVXHRIRUGLQDU\VKDUHV 31 6KDUHEX\EDFN (283) 3URFHHGVIURPERUURZHGIXQGV 1 000 5HSD\PHQWRIERUURZHGIXQGV (1 500) 'LYLGHQGVSDLG (3 511) 1HWFDVKXWLOLVHGIURPILQDQFLQJDFWLYLWLHV (4 263) 1HW GHFUHDVH LQFUHDVHLQFDVKDQGFDVKHTXLYDOHQWV (561) &DVKDQGFDVKHTXLYDOHQWVDWWKHEHJLQQLQJRIWKH\HDU 6 976 (IIHFWRIH[FKDQJHUDWHPRYHPHQWVRQFDVKDQGFDVKHTXLYDOHQWV 2 Cash and cash equivalents at the end of the year 6 417

Note Comparatives have been reclassiﬁed.

352 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies 7KHVLJQLILFDQWDFFRXQWLQJSROLFLHVDSSOLHGLQWKHSUHSDUDWLRQRIWKHVHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDUHVHW RXWEHORZ7KHVHSROLFLHVFRPSO\ZLWK,)56,QWHUSUHWDWLRQVLVVXHGE\WKH,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ ,QWHUSUHWDWLRQ&RPPLWWHH ,)5,& DQGWKHUHTXLUHPHQWVRIWKH&RPSDQLHV$FW1RRI DVDPHQGHG RI 6RXWK$IULFD

Standards and amendments to standards mandatory for the first time for this financial year AC 504 The Limit On A Defined Benefit Asset, Minimum Funding Requirements And Their Interaction In The South African Pension Fund Environment ZDVHDUO\DGRSWHGLQ IFRS 3 Business Combinations (revised) and consequential amendments to IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures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©V SURSRUWLRQDWH VKDUH RI WKH DFTXLUHH©V QHW DVVHWV $OO DFTXLVLWLRQUHODWHG FRVWV DUH H[SHQVHG IAS 27 (amendment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perating Segments (amendment) FODULILHVWKDWVHJPHQWLQIRUPDWLRQZLWKUHVSHFWWRWRWDODVVHWVLV UHTXLUHG RQO\ LI VXFK LQIRUPDWLRQ LV UHJXODUO\ UHSRUWHG WR WKH FKLHI RSHUDWLQJ GHFLVLRQ PDNHU &2'0 7KLV DPHQGPHQWKDGQRLPSDFWRQWKH*URXSDVWKH*URXSDOUHDG\UHSRUWVWKLVLQIRUPDWLRQ

New and amended standards, and interpretations mandatory for the ﬁrst time for this ﬁnancial year but not currently relevant to the Group (although they may affect the accounting for future transactions and events) IFRS 1 First-time Adoption of International Finance Reporting Standards (revised and amended) KDV EHHQ LVVXHG ZLWK DQ LPSURYHG VWUXFWXUH EXW QR FKDQJHV WR WHFKQLFDO FRQWHQW 7KH ,QWHUQDWLRQDO $FFRXQWLQJ 6WDQGDUGV %RDUG ,$6% SURYLGHG DGGLWLRQDO RSWLRQDO H[HPSWLRQV IRU ILUVWWLPH DGRSWHUV RI ,)56V WKDW ZLOO SHUPLW HQWLWLHV WR QRW UHDVVHVV WKH GHWHUPLQDWLRQ RI ZKHWKHU DQ DUUDQJHPHQW FRQWDLQV D OHDVH LI WKH VDPH DVVHVVPHQW DV WKDW UHTXLUHG E\ ,)5,& DUUDQJHPHQWV WKDW FRQWDLQV D OHDVH ZDV PDGH XQGHU SUHYLRXV *HQHUDOO\$FFHSWHG$FFRXQWLQJ3UDFWLFH *$$3 IFRS 2 Share-based Payment (amendments) LQFRUSRUDWH,)5,&6FRSHRI,)56DQG,)5,&,)56¤ *URXS DQG WUHDVXU\ VKDUH WUDQVDFWLRQV ,W IXUWKHU H[SDQGV RQ WKH JXLGDQFH LQ ,)5,& WR DGGUHVV WKH FODVVLILFDWLRQRIJURXSDUUDQJHPHQWVWKDWZHUHQRWFRYHUHGE\WKDWLQWHUSUHWDWLRQ7KHDPHQGPHQWVDOVRFODULI\ WKDW EXVLQHVV FRPELQDWLRQV DV GHILQHG LQ ,)56 DUH RXWVLGH WKH VFRSH RI ,)56 7KHUHIRUH EXVLQHVV FRPELQDWLRQVDPRQJVWHQWLWLHVXQGHUFRPPRQFRQWURODQGWKHFRQWULEXWLRQRIDEXVLQHVVXSRQWKHIRUPDWLRQRI DMRLQWYHQWXUHZLOOQRWEHDFFRXQWHGIRUXQGHU,)56 IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (amendments) VSHFLI\WKDWLIDQ HQWLW\LVFRPPLWWHGWRDVDOHSODQLQYROYLQJWKHORVVRIFRQWURORIDVXEVLGLDU\WKHQLWZRXOGFODVVLI\DOORIWKDW VXEVLGLDU\©VDVVHWVDQGOLDELOLWLHVDVKHOGIRUVDOHZKHQWKHKHOGIRUVDOHFULWHULDDUHPHWDQGWKDWGLVFORVXUHV IRUGLVFRQWLQXHGRSHUDWLRQVDUHUHTXLUHGE\WKHSDUHQWZKHQDVXEVLGLDU\PHHWVWKHGHILQLWLRQRIDGLVFRQWLQXHG RSHUDWLRQ ,W DOVR VSHFLILHV WKH GLVFORVXUHV UHTXLUHG LQ UHVSHFW RI QRQFXUUHQW DVVHWV RU GLVSRVDO JURXSV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 353 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) FODVVLILHGDVKHOGIRUVDOHRUGLVFRQWLQXHGRSHUDWLRQV,WDOVRFODULILHVWKDWWKHJHQHUDOUHTXLUHPHQWVRI,$6 3UHVHQWDWLRQRI)LQDQFLDO6WDWHPHQWVVWLOODSSO\LQSDUWLFXODUSDUDJUDSK WRDFKLHYHDIDLUSUHVHQWDWLRQ DQG SDUDJUDSK VRXUFHVRIHVWLPDWLRQXQFHUWDLQW\ IAS 1 (amendments)FODULI\WKDWWKHFODVVLILFDWLRQRIWKHOLDELOLW\FRPSRQHQWRIDFRQYHUWLEOHLQVWUXPHQWDV FXUUHQWRUQRQFXUUHQWLVQRWDIIHFWHGE\WHUPVWKDWFRXOGDWWKHRSWLRQRIWKHKROGHURIWKHLQVWUXPHQWUHVXOW LQVHWWOHPHQWRIWKHOLDELOLW\E\WKHLVVXHRIHTXLW\LQVWUXPHQWV IAS 7 Statement of Cash Flows (amendments)FODULI\WKDWRQO\H[SHQGLWXUHVWKDWUHVXOWLQWKHUHFRJQLWLRQRI DQDVVHWFDQEHFODVVLILHGDVDFDVKIORZIURPLQYHVWLQJDFWLYLWLHV IAS 17 Leases (amendments) FODULI\WKDWZKHQDOHDVHLQFOXGHVERWKWKHODQGDQGEXLOGLQJHOHPHQWVDQHQWLW\ VKRXOGGHWHUPLQHWKHFODVVLILFDWLRQRIHDFKHOHPHQWEDVHGRQSDUDJUDSKWRWDNLQJDFFRXQWRIWKHIDFWWKDW ODQGQRUPDOO\KDVDQLQGHILQLWHHFRQRPLFOLIH7KH,$6%DOVRGHOHWHGJXLGDQFHVWDWLQJWKDWDOHDVHRIODQGZLWK DQLQGHILQLWHHFRQRPLFOLIHQRUPDOO\LVFODVVLILHGDVDQRSHUDWLQJOHDVHXQOHVVDWWKHHQGRIWKHOHDVHWHUPWLWOH LVH[SHFWHGWRSDVVWRWKHOHVVHH IAS 36 Impairment of Assets (amendments)FODULILHVWKDWWKHODUJHVWFDVKJHQHUDWLQJXQLW RUJURXSRIXQLWV WR ZKLFK JRRGZLOO VKRXOG EH DOORFDWHG IRU WKH SXUSRVHV RI LPSDLUPHQW WHVWLQJ LV DQ RSHUDWLQJ VHJPHQW DV GHILQHG E\ SDUDJUDSK RI ,)56 WKDW LV EHIRUH WKH DJJUHJDWLRQ RI VHJPHQWV ZLWK VLPLODU HFRQRPLF FKDUDFWHULVWLFV IAS 38 Intangible Assets (amendments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eassessment of Embedded Derivatives (amendment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edges of a Net Investment in a Foreign Operation (amendments)UHPRYHWKHUHVWULFWLRQWKDW SUHYHQWHGDKHGJLQJLQVWUXPHQWIURPEHLQJKHOGE\DIRUHLJQRSHUDWLRQWKDWLWVHOILVEHLQJKHGJHG IFRIC 17 Distribution of Non-cash Assets to OwnersSURYLGHVJXLGDQFHRQDFFRXQWLQJIRUDUUDQJHPHQWV ZKHUHE\ DQ HQWLW\ GLVWULEXWHV QRQFDVK DVVHWV WR VKDUHKROGHUV HLWKHU DV D GLVWULEXWLRQ RI UHVHUYHV RU DV GLYLGHQGV,)56KDVDOVREHHQDPHQGHGWRUHTXLUHWKDWDVVHWVDUHFODVVLILHGDVKHOGIRUGLVWULEXWLRQRQO\ ZKHQWKH\DUHDYDLODEOHIRUGLVWULEXWLRQLQWKHLUSUHVHQWFRQGLWLRQDQGWKHGLVWULEXWLRQLVKLJKO\SUREDEOH IFRIC 18 Transfers of Assets from Customers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

354 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments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

1.1 Basis of presentation 7KH FRQVROLGDWHG DQG &RPSDQ\ ILQDQFLDO VWDWHPHQWV KDYH EHHQ SUHSDUHG LQ DFFRUGDQFH ZLWK ,)56 DQG ,QWHUSUHWDWLRQVLVVXHGE\WKH,)5,&WKHJRLQJFRQFHUQSULQFLSOHDQGXVLQJWKHKLVWRULFDOFRVWEDVLVH[FHSW ZKHUHVSHFLILFDOO\LQGLFDWHGRWKHUZLVHLQWKHDFFRXQWLQJSROLFLHV 7KHSUHSDUDWLRQRIILQDQFLDOVWDWHPHQWVLQFRQIRUPLW\ZLWK,)56UHTXLUHVWKHXVHRIFHUWDLQFULWLFDODFFRXQWLQJ HVWLPDWHVDQGDVVXPSWLRQV,WDOVRUHTXLUHVPDQDJHPHQWWRH[HUFLVHLWVMXGJHPHQWLQWKHSURFHVVRIDSSO\LQJ WKH*URXS©VDFFRXQWLQJSROLFLHV7KHQRWHVWRWKHILQDQFLDOVWDWHPHQWVVHWRXWDUHDVLQYROYLQJDKLJKHUGHJUHH RIMXGJHPHQWRUFRPSOH[LW\RUDUHDVZKHUHDVVXPSWLRQVDQGHVWLPDWHVDUHVLJQLILFDQWWRWKHFRQVROLGDWHGDQG &RPSDQ\ ILQDQFLDO VWDWHPHQWV 7KHVH SROLFLHV KDYH EHHQ FRQVLVWHQWO\ DSSOLHG WR DOO WKH \HDUV SUHVHQWHG XQOHVVRWKHUZLVHVWDWHG

1.2 Use of estimates, assumptions and judgements 7KHSUHSDUDWLRQRIILQDQFLDOLQIRUPDWLRQUHTXLUHVWKHXVHRIHVWLPDWHVDQGDVVXPSWLRQVDERXWIXWXUHFRQGLWLRQV 8VHRIDYDLODEOHLQIRUPDWLRQDQGDSSOLFDWLRQRIMXGJHPHQWDUHLQKHUHQWLQWKHIRUPDWLRQRIHVWLPDWHV$FWXDO UHVXOWVLQWKHIXWXUHPD\GLIIHUIURPWKRVHFXUUHQWHVWLPDWHVUHSRUWHG7KHDFFRXQWLQJSROLFLHVWKDWDUHGHHPHG FULWLFDOWRWKH*URXS©VUHVXOWVDQGILQDQFLDOSRVLWLRQLQWHUPVRIWKHPDWHULDOLW\RIWKHLWHPVWRZKLFKWKHSROLF\ LVDSSOLHGDQGZKLFKLQYROYHDKLJKGHJUHHRIMXGJHPHQWLQFOXGLQJWKHXVHRIDVVXPSWLRQVDQGHVWLPDWLRQDUH GLVFXVVHGEHORZ

1.2.1 Impairment of loans and advances 7KH *URXS©V DFFRXQWLQJ SROLF\ IRU ORVVHV DULVLQJ IURP WKH LPSDLUPHQW RI FXVWRPHU ORDQV DQG DGYDQFHV LV GHVFULEHGLQQRWH/RDQLPSDLUPHQWDOORZDQFHVUHSUHVHQWPDQDJHPHQW©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©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 355 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued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

1.2.2 Goodwill impairment 7KH*URXS©VDFFRXQWLQJSROLF\IRUJRRGZLOOLVGHVFULEHGLQQRWH 7KH SURFHVV RI LGHQWLI\LQJ DQG HYDOXDWLQJ JRRGZLOO LPSDLUPHQW LV LQKHUHQWO\ XQFHUWDLQ EHFDXVH LW UHTXLUHV VLJQLILFDQWPDQDJHPHQWMXGJHPHQWLQPDNLQJDVHULHVRIHVWLPDWLRQVWKHUHVXOWVRIZKLFKDUHKLJKO\VHQVLWLYH WRWKHDVVXPSWLRQVXVHG7KHUHYLHZRIJRRGZLOOLPSDLUPHQWUHSUHVHQWVPDQDJHPHQW©VEHVWHVWLPDWHRIWKH IDFWRUVEHORZ 7KHIXWXUHFDVKIORZVRIWKHFDVKJHQHUDWLQJXQLWV &*8V DUHVHQVLWLYHWRWKHFDVKIORZVSURMHFWHGIRUWKH SHULRGVIRUZKLFKGHWDLOHGIRUHFDVWVDUHDYDLODEOHDQGWRDVVXPSWLRQVUHJDUGLQJWKHORQJWHUPSDWWHUQRI VXVWDLQDEOHFDVKIORZVWKHUHDIWHU)RUHFDVWVDUHFRPSDUHGZLWKDFWXDOSHUIRUPDQFHDQGYHULILDEOHHFRQRPLF GDWDLQIXWXUH\HDUVKRZHYHUWKHFDVKIORZIRUHFDVWVQHFHVVDULO\DQGDSSURSULDWHO\UHIOHFWPDQDJHPHQW©V YLHZRIIXWXUHEXVLQHVVSURVSHFWVDWWKHWLPHRIWKHDVVHVVPHQW 7KHGLVFRXQWUDWHXVHGWRGLVFRXQWWKHIXWXUHH[SHFWHGFDVKIORZVLVEDVHGRQWKH*URXS©VZHLJKWHGDYHUDJH FRVWRIFDSLWDO7KHFRVWRIFDSLWDOSHUFHQWDJHLVJHQHUDOO\GHULYHGIURPDFDSLWDODVVHWSULFLQJPRGHOZKLFK LQFRUSRUDWHVLQSXWVUHIOHFWLQJDQXPEHURIILQDQFLDODQGHFRQRPLFYDULDEOHVLQFOXGLQJWKHULVNIUHHLQWHUHVW UDWHDQGDSUHPLXPWRUHIOHFWWKHLQKHUHQWULVNRIWKHEXVLQHVVEHLQJHYDOXDWHG7KHVHYDULDEOHVDUHVXEMHFW WRIOXFWXDWLRQVLQH[WHUQDOPDUNHWUDWHVDQGHFRQRPLFFRQGLWLRQVRXWVLGHRIPDQDJHPHQW©VFRQWURODQGDUH WKHUHIRUHHVWDEOLVKHGRQWKHEDVLVRIVLJQLILFDQWPDQDJHPHQWMXGJHPHQWDQGDUHVXEMHFWWRXQFHUWDLQW\ 1RWHLQFOXGHVGHWDLOVRIWKH&*8VZLWKVLJQLILFDQWEDODQFHVRIJRRGZLOODQGVWDWHVWKHNH\DVVXPSWLRQVXVHG WRDVVHVVWKHJRRGZLOOLQHDFKRIWKRVH&*8VIRULPSDLUPHQW

1.2.3 Valuation of ﬁnancial instruments 7KH*URXS©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

356 Absa Group Limited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©VOHQJWKWUDQVDFWLRQZRXOGRFFXUXQGHUQRUPDOEXVLQHVVFRQGLWLRQV+RZHYHULQPRVWFDVHV WKHUHLVVRPHPDUNHWGDWDDYDLODEOHRQZKLFKWREDVHDGHWHUPLQDWLRQRIIDLUYDOXHIRUH[DPSOHKLVWRULFDOGDWD DQGWKHIDLUYDOXHVRIPRVWILQDQFLDOLQVWUXPHQWVZLOOEHEDVHGRQVRPHPDUNHWREVHUYDEOHLQSXWVHYHQZKHUH WKHXQREVHUYDEOHLQSXWVDUHVLJQLILFDQW

1.2.4 Impairment of available-for-sale ﬁnancial assets 7KH*URXS©VDFFRXQWLQJSROLF\IRULPSDLUPHQWRIDYDLODEOHIRUVDOHILQDQFLDODVVHWVLVGHVFULEHGLQQRWH $YDLODEOHIRUVDOH ILQDQFLDO DVVHWV DUH PHDVXUHG DW IDLU YDOXH DQG FKDQJHV LQ IDLU YDOXH DUH UHFRJQLVHG LQ HTXLW\ LQ WKH DYDLODEOHIRUVDOH UHVHUYH XQWLO WKH ILQDQFLDO DVVHWV DUH HLWKHU VROG RU EHFRPH LPSDLUHG $Q LPSDLUPHQWORVVLVUHFRJQLVHGLIWKHUHLVREMHFWLYHHYLGHQFHRILPSDLUPHQWDVDUHVXOWRIORVVHYHQWVZKLFKKDYH DQ LPSDFW RQ WKH HVWLPDWHG IXWXUH FDVK IORZV RI WKH ILQDQFLDO DVVHW WKDW FDQ EH UHOLDEO\ HVWLPDWHG ,I DQ DYDLODEOHIRUVDOH ILQDQFLDO DVVHW EHFRPHV LPSDLUHG WKH HQWLUH EDODQFH LQ HTXLW\ UHODWLQJ WR WKDW DVVHW LV UHPRYHGIURPRWKHUFRPSUHKHQVLYHLQFRPHDQGUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQW RIFRPSUHKHQVLYHLQFRPHDVDQLPSDLUPHQWORVV 0DQDJHPHQW LV UHTXLUHG WR H[HUFLVH MXGJHPHQW LQ GHWHUPLQLQJ ZKHWKHU WKHUH LV REMHFWLYH HYLGHQFH WKDW DQ LPSDLUPHQW ORVV KDV RFFXUUHG 2QFH DQ LPSDLUPHQW KDV EHHQ LGHQWLILHG WKH DPRXQW RI LPSDLUPHQW ORVV LV PHDVXUHGLQUHODWLRQWRWKHIDLUYDOXHRIWKHDVVHW0RUHLQIRUPDWLRQRQDVVXPSWLRQVDQGHVWLPDWHVUHTXLULQJ PDQDJHPHQWMXGJHPHQWUHODWLQJWRWKHGHWHUPLQDWLRQRIIDLUYDOXHVRIILQDQFLDOLQVWUXPHQWVLVSURYLGHGDERYH LQ¨9DOXDWLRQRIILQDQFLDOLQVWUXPHQWV© 7KHREMHFWLYHHYLGHQFHUHTXLUHGWRGHWHUPLQHZKHWKHUDQDYDLODEOHIRUVDOHGHEWVHFXULW\LVLPSDLUHGFRPSULVHV HYLGHQFHRIWKHRFFXUUHQFHRIDORVVHYHQWDQGHYLGHQFHWKDWWKHORVVHYHQWUHVXOWVLQDGHFUHDVHLQHVWLPDWHG IXWXUHFDVKIORZV:KHUHFDVKIORZVDUHUHDGLO\GHWHUPLQDEOHDORZOHYHORIMXGJHPHQWPD\EHLQYROYHG:KHUH GHWHUPLQDWLRQRIHVWLPDWHGIXWXUHFDVKIORZVUHTXLUHVFRQVLGHUDWLRQRIDQXPEHURIYDULDEOHVVRPHRIZKLFK PD\EHXQREVHUYDEOHLQFXUUHQWPDUNHWFRQGLWLRQVPRUHVLJQLILFDQWMXGJHPHQWLVUHTXLUHG 7KHUHLVQRVLQJOHIDFWRUWRZKLFKWKH*URXS©VFKDUJHIRULPSDLUPHQWRIDYDLODEOHIRUVDOHGHEWLQVWUXPHQWVLV SDUWLFXODUO\VHQVLWLYHEHFDXVHRIWKHUDQJHRIGLIIHUHQWW\SHVRIVHFXULWLHVKHOGDQGWKHZLGHUDQJHRIIDFWRUV ZKLFKFDQDIIHFWWKHRFFXUUHQFHRIORVVHYHQWVDQGWKHFDVKIORZVRIVHFXULWLHVLQFOXGLQJGLIIHUHQWW\SHVRI FROODWHUDO

1.2.5 Impairment of investments in associates and joint ventures :KHQLQGLFDWLRQVH[LVWWKDWWKHFDUU\LQJDPRXQWRIWKHLQYHVWPHQWLQDVVRFLDWHVDQGMRLQWYHQWXUHVZRXOGQRW EHUHFRYHUDEOHDQLPSDLUPHQWLVUHFRJQLVHG7KHUHFRYHUDEOHDPRXQWLVWKHKLJKHURIYDOXHLQXVHDQGIDLU YDOXHOHVVFRVWWRVHOODQGLVEDVHGRQWKH*URXS©VEHVWHVWLPDWHRIWKHSULFHWKH*URXSZRXOGDFKLHYHLQD VDOHWUDQVDFWLRQRIWKHLQYHVWPHQW

1.2.6 Deferred tax assets 7KH*URXS©VDFFRXQWLQJSROLF\IRUWKHUHFRJQLWLRQRIGHIHUUHGWD[DVVHWVLVGHVFULEHGLQQRWH$GHIHUUHG WD[DVVHWLVUHFRJQLVHGWRWKHH[WHQWWKDWLWLVSUREDEOHWKDWIXWXUHWD[DEOHSURILWVZLOOEHDYDLODEOHDJDLQVWZKLFK

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 357 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) GHGXFWLEOH WHPSRUDU\ GLIIHUHQFHV FDQ EH XWLOLVHG 7KH UHFRJQLWLRQ RI D GHIHUUHG WD[ DVVHW UHOLHV RQ PDQDJHPHQW©VMXGJHPHQWVVXUURXQGLQJWKHSUREDELOLW\DQGVXIILFLHQF\RIIXWXUHWD[DEOHSURILWVIXWXUHUHYHUVDOV RIH[LVWLQJWD[DEOHWHPSRUDU\GLIIHUHQFHVDQGRQJRLQJWD[SODQQLQJVWUDWHJLHV 7KH DPRXQW RI GHIHUUHG WD[ DVVHWV UHFRJQLVHG LV EDVHG RQ WKH HYLGHQFH DYDLODEOH DERXW FRQGLWLRQV DW WKH UHSRUWLQJGDWHDQGUHTXLUHVVLJQLILFDQWMXGJHPHQWVWREHPDGHE\PDQDJHPHQW0DQDJHPHQW©VMXGJHPHQW WDNHV LQWR FRQVLGHUDWLRQ WKH LPSDFW RI ERWK SRVLWLYH DQG QHJDWLYH HYLGHQFH LQFOXGLQJ KLVWRULFDO ILQDQFLDO SHUIRUPDQFHSURMHFWLRQVRIIXWXUHWD[DEOHLQFRPHIXWXUHUHYHUVDOVRIH[LVWLQJWD[DEOHWHPSRUDU\GLIIHUHQFHV DQGWKHDYDLODELOLW\RIDVVHVVHGORVVHV7KHUHFRJQLWLRQRIWKHGHIHUUHGWD[DVVHWLVPDLQO\GHSHQGHQWXSRQWKH SURMHFWLRQRIIXWXUHWD[DEOHSURILWV 0DQDJHPHQW©VSURMHFWLRQVRIIXWXUHWD[DEOHLQFRPHDUHEDVHGRQEXVLQHVVSODQVIXWXUHFDSLWDOUHTXLUHPHQWV DQGRQJRLQJWD[SODQQLQJVWUDWHJLHV 0DQDJHPHQW©VIRUHFDVWVVXSSRUWWKHDVVXPSWLRQWKDWLWLVSUREDEOHWKDWWKHUHVXOWVRIIXWXUHRSHUDWLRQVZLOO JHQHUDWHVXIILFLHQWWD[DEOHLQFRPHWRXWLOLVHWKHGHIHUUHGWD[DVVHWV

1.2.7 Consolidation of special purpose entities (SPEs) 7KH *URXS FRQVROLGDWHV FHUWDLQ 63(V ZKLFK PD\ RU PD\ QRW EH GLUHFWO\ RU LQGLUHFWO\ RZQHG VXEVLGLDULHV 7KHVH63(VDUHFRQVROLGDWHGZKHQWKH\DUHFRQWUROOHGE\WKH*URXS-XGJHPHQWLVUHTXLUHGLQDVVHVVLQJDQG GHWHUPLQLQJLIWKH*URXSFRQWUROV63(V

1.2.8 Post-retirement beneﬁts 7KH FRQWULEXWLRQV WRZDUGV GHILQHG EHQHILW SHQVLRQ SODQV DUH GHWHUPLQHG XVLQJ DFWXDULDO YDOXDWLRQV 7KH DFWXDULDO YDOXDWLRQV LQYROYH PDNLQJ DVVXPSWLRQV DERXW GLVFRXQW UDWHV H[SHFWHG UDWHV RI UHWXUQ RQ DVVHWV IXWXUHVDODU\LQFUHDVHVPRUWDOLW\UDWHVDQGIXWXUHSHQVLRQLQFUHDVHV'XHWRWKHORQJWHUPQDWXUHRIWKHVH SODQVVXFKHVWLPDWHVDUHVXEMHFWWRVLJQLILFDQWXQFHUWDLQW\6HHQRWHIRUWKHDVVXPSWLRQVXVHG

1.2.9 Provisions 9DULRXVDVVXPSWLRQVDUHDSSOLHGLQDUULYLQJDWWKHFDUU\LQJYDOXHRISURYLVLRQVWKDWDUHUHFRJQLVHGLQWHUPVRI WKHUHTXLUHPHQWVRI,$63URYLVLRQV&RQWLQJHQW/LDELOLWLHVDQG&RQWLQJHQW$VVHWV7KHFDUU\LQJDPRXQWV RIWKHOLDELOLWLHVDUHGLVFORVHGLQQRWH 0DQDJHPHQW IXUWKHU UHOLHV RQ LQSXW IURP WKH *URXS©V ODZ\HUV LQ DVVHVVLQJ WKH SUREDELOLW\ RI PDWWHUV RI D VLJQLILFDQWQDWXUH

1.2.10 Share-based payments :KHUHWKHIDLUYDOXHRIVKDUHDZDUGVUHODWLQJWRVKDUHEDVHGSD\PHQWVLVQRWEDVHGRQWKH*URXS©VVKDUHSULFH ZLWKD]HURVWULNHSULFHLWLVGHWHUPLQHGXVLQJRSWLRQSULFLQJPRGHOV7KHLQSXWVWRWKHRSWLRQSULFLQJPRGHOV DUHGHULYHGIURPREVHUYDEOHPDUNHWGDWDZKHUHSRVVLEOHEXWZKHUHREVHUYDEOHPDUNHWGDWDLVQRWDYDLODEOH MXGJHPHQWLVUHTXLUHGWRHVWDEOLVKIDLUYDOXHV7KHYDOXDWLRQRIVKDUHDZDUGVLVGHVFULEHGLQPRUHGHWDLOLQ QRWH

1.2.11 Liabilities arising from claims made under short-term insurance contracts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

358 Absa Group Limited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

1.2.12 Liabilities arising from claims made under life insurance contracts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©UHDVRQDEOHEHQHILWH[SHFWDWLRQVJXDUDQWHHGEHQHILWVDQGH[SHQVHVZKLFK DOOHTXDOWKHEHVWHVWLPDWHDVVXPSWLRQVXVHGLQGHWHUPLQLQJWKHOLDELOLWLHV7KHVHDVVXPSWLRQVDUHEDVHGRQ UHFHQWH[SHULHQFHLQYHVWLJDWLRQV7KHULVNGLVFRXQWUDWHXVHGWRGLVFRXQWIXWXUHSURILWVLQFOXGHVDPDUJLQRYHU DVVXPHGLQYHVWPHQWUHWXUQVWRDOORZIRUWKHULVNWKDWH[SHULHQFHLQIXWXUH\HDUVPD\GLIIHUIURPWKDWDVVXPHG )RUPRUHGHWDLOVRQWKHOLIHLQVXUDQFHFRQWUDFWOLDELOLW\UHIHUWRQRWH

1.3 Consolidation 7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVLQFOXGHWKRVHRI$EVD*URXS/LPLWHGDQGDOOLWVVXEVLGLDULHVDVVRFLDWHV 63(VDQGMRLQWYHQWXUHV$FFRXQWLQJSROLFLHVDSSOLHGE\DOOHQWLWLHVZLWKLQWKH*URXSDUHFRQVLVWHQWZLWKWKRVH RI$EVD*URXS/LPLWHG

1.3.1 Subsidiaries 6XEVLGLDULHVDUHDOOHQWLWLHV LQFOXGLQJ63(V RYHUZKLFKWKH*URXSKDVWKHSRZHUWRJRYHUQWKHILQDQFLDODQG RSHUDWLQJ SROLFLHV JHQHUDOO\ DFFRPSDQ\LQJ D VKDUHKROGLQJ RI PRUH WKDQ RQH KDOI RI WKH YRWLQJ ULJKWV 7KH H[LVWHQFHDQGHIIHFWRISRWHQWLDOYRWLQJULJKWVWKDWDUHFXUUHQWO\H[HUFLVDEOHRUFRQYHUWLEOHDUHFRQVLGHUHGZKHQ DVVHVVLQJ ZKHWKHU WKH *URXS FRQWUROV DQRWKHU HQWLW\ 6XEVLGLDULHV DUH IXOO\ FRQVROLGDWHG IURP WKH GDWH RQ ZKLFKFRQWUROLVWUDQVIHUUHGWRWKH*URXS7KH\DUHGHFRQVROLGDWHGIURPWKHGDWHWKDWFRQWUROFHDVHV 7KH*URXSXVHVWKHDFTXLVLWLRQPHWKRGRIDFFRXQWLQJWRDFFRXQWIRUEXVLQHVVFRPELQDWLRQV7KHFRQVLGHUDWLRQ WUDQVIHUUHGIRUWKHDFTXLVLWLRQRIDVXEVLGLDU\LVWKHIDLUYDOXHVRIWKHDVVHWVWUDQVIHUUHGWKHOLDELOLWLHVLQFXUUHG DQGWKHHTXLW\LQWHUHVWVLVVXHGE\WKH*URXS7KHFRQVLGHUDWLRQWUDQVIHUUHGLQFOXGHVWKHIDLUYDOXHDWDFTXLVLWLRQ GDWHRIDQ\DVVHWRUOLDELOLW\UHVXOWLQJIURPDFRQWLQJHQWFRQVLGHUDWLRQDUUDQJHPHQW$FTXLVLWLRQUHODWHGFRVWV DUHH[SHQVHGDVLQFXUUHG,GHQWLILDEOHDVVHWVDFTXLUHGDQGOLDELOLWLHVDQGFRQWLQJHQWOLDELOLWLHVDVVXPHGLQD EXVLQHVVFRPELQDWLRQDUHPHDVXUHGLQLWLDOO\DWWKHLUIDLUYDOXHVDWWKHDFTXLVLWLRQGDWHH[FHSWWKDW GHIHUUHG WD[ DVVHWV RU OLDELOLWLHV DQG OLDELOLWLHV RU DVVHWV UHODWHG WR HPSOR\HH EHQHILW DUUDQJHPHQWV DUH UHFRJQLVHG DQG PHDVXUHG LQ DFFRUGDQFH ZLWK ,$6 ,QFRPH 7D[HV DQG ,$6 (PSOR\HH %HQHILWV UHVSHFWLYHO\ OLDELOLWLHV RU HTXLW\ LQVWUXPHQWV UHODWHG WR VKDUHEDVHG SD\PHQW DUUDQJHPHQWV RI WKH DFTXLUHH RU VKDUH EDVHGSD\PHQWDUUDQJHPHQWVRIWKH*URXSHQWHUHGLQWRWRUHSODFHVKDUHEDVHGSD\PHQWDUUDQJHPHQWVRI WKHDFTXLUHHDUHPHDVXUHGLQDFFRUGDQFHZLWK,)56DWWKHDFTXLVLWLRQGDWHDQG DVVHWV RUGLVSRVDOJURXSV WKDWDUHFODVVLILHGDVKHOGIRUVDOHLQDFFRUGDQFHZLWK,)56DUHPHDVXUHGLQ DFFRUGDQFHZLWKWKDWVWDQGDUG 2QDQDFTXLVLWLRQE\DFTXLVLWLRQEDVLVWKH*URXSUHFRJQLVHVDQ\QRQFRQWUROOLQJLQWHUHVWLQWKHDFTXLUHHHLWKHU DWIDLUYDOXHRUDWWKHQRQFRQWUROOLQJLQWHUHVW©VSURSRUWLRQDWHVKDUHRIWKHDFTXLUHH©VQHWDVVHWV ,QYHVWPHQWVLQVXEVLGLDULHVDUHDFFRXQWHGIRUDWFRVWOHVVLPSDLUPHQW&RVWLVDGMXVWHGWRUHIOHFWFKDQJHVLQ FRQVLGHUDWLRQDULVLQJIURPFRQWLQJHQWFRQVLGHUDWLRQDPHQGPHQWVZLWKDFRUUHVSRQGLQJDGMXVWPHQWWRJRRGZLOO 0HDVXUHPHQWSHULRGDGMXVWPHQWVDUHDGMXVWPHQWVWKDWDULVHIURPDGGLWLRQDOLQIRUPDWLRQREWDLQHGGXULQJWKH PHDVXUHPHQWSHULRG ZKLFKFDQQRWH[FHHGRQH\HDUIURPWKHDFTXLVLWLRQGDWH DERXWIDFWVDQGFLUFXPVWDQFHV WKDWH[LVWHGDWWKHDFTXLVLWLRQGDWH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 359 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued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©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

1.3.2 Investments in associates and joint ventures $VVRFLDWHV DUH WKRVH FRPSDQLHV ZKLFK DUH QRW VXEVLGLDULHV DQG LQ ZKLFK WKH *URXS H[HUFLVHV VLJQLILFDQW LQIOXHQFHRQWKHILQDQFLDODQGRSHUDWLQJSROLFLHV6LJQLILFDQWLQIOXHQFHLVQRUPDOO\HYLGHQWZKHQWKH*URXSRZQV EHWZHHQDQGRIDFRPSDQ\©VYRWLQJULJKWV $MRLQWYHQWXUHLVDFRQWUDFWXDODJUHHPHQWEHWZHHQWZRRUPRUHSDUWLHVWRXQGHUWDNHDQHFRQRPLFDFWLYLW\WKDW LVXQGHUMRLQWFRQWURO ,QYHVWPHQWVLQDVVRFLDWHVDQGMRLQWYHQWXUHVWKDWDUHQRWGHHPHGWREHSDUWRIWKH*URXS©VYHQWXUHFDSLWDO DFWLYLWLHV DUH KHOG DW FRVW SOXV HTXLW\DFFRXQWHG HDUQLQJV OHVV DQ\ DFFXPXODWHG LPSDLUPHQW 7KH *URXS©V LQYHVWPHQWFRVWLQFOXGHVJRRGZLOO,PSDLUPHQWRIDQDVVRFLDWHRUMRLQWYHQWXUHLVHYLGHQFHGE\DVLJQLILFDQWRU SURORQJHGGHFOLQHLQIDLUYDOXHEHORZFRVWDQGZKHQWKHUHFRYHUDEOHDPRXQWLVWKHKLJKHVWRIYDOXHLQXVHDQG IDLUYDOXHOHVVFRVWWRVHOO 7KHUHVXOWVRIDVVRFLDWHVDQGMRLQWYHQWXUHVDUHDFFRXQWHGIRUDFFRUGLQJWRWKHHTXLW\PHWKRGEDVHGRQWKHLU PRVWUHFHQWDXGLWHGILQDQFLDOVWDWHPHQWV,IWKHPRVWUHFHQWDYDLODEOHDXGLWHGILQDQFLDOVWDWHPHQWVDUHIRUDQ DFFRXQWLQJSHULRGWKDWHQGHGQRPRUHWKDQWKUHHPRQWKVSULRUWRWKH*URXS©V\HDUHQGWKHVHDUHDGMXVWHGLQ UHVSHFW RI PDWHULDO DGMXVWPHQWV EHWZHHQ WKHLU UHSRUWLQJ GDWH DQG WKH *URXS©V UHSRUWLQJ GDWH 7KH *URXS©V VKDUHRILWVSRVWDFTXLVLWLRQSURILWVRUORVVHVLVUHFRJQLVHGLQWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHDQGWKH *URXS©VLQWHUHVWLQWKHSRVWDFTXLVLWLRQUHVHUYHVRIDVVRFLDWHVDQGMRLQWYHQWXUHVLVWUHDWHGDVGLVWULEXWDEOH UHVHUYHV LQ WKH *URXS©V ILQDQFLDO VWDWHPHQWV :KHQ WKH *URXS©V VKDUH RI ORVVHV H[FHHGV LWV LQWHUHVW LQ DQ HTXLW\DFFRXQWHG LQYHVWHH WKH FDUU\LQJ DPRXQW RI WKDW LQWHUHVW LQFOXGLQJ DQ\ ORQJWHUP LQYHVWPHQWV LV UHGXFHGWRQLODQGWKHUHFRJQLWLRQRIIXUWKHUORVVHVLVGLVFRQWLQXHGH[FHSWWRWKHH[WHQWWKDWWKH*URXSKDVDQ REOLJDWLRQRUKDVPDGHSD\PHQWVRQEHKDOIRIWKHLQYHVWHH $IWHUDSSOLFDWLRQRIWKHHTXLW\PHWKRGWKH*URXSGHWHUPLQHVZKHWKHULWLVQHFHVVDU\WRUHFRJQLVHDQDGGLWLRQDO LPSDLUPHQWORVVRQWKH*URXS©VLQYHVWPHQWLQLWVDVVRFLDWHVDQGMRLQWYHQWXUHV7KH*URXSGHWHUPLQHVDWHDFK UHSRUWLQJGDWHZKHWKHUWKHUHLVREMHFWLYHHYLGHQFHWKDWWKHLQYHVWPHQWLQDVVRFLDWHRUMRLQWYHQWXUHLVLPSDLUHG 7KH SULPDU\ LQGLFDWRUV RI SRWHQWLDO LPSDLUPHQW DUH FRQVLGHUHG WR EH DGYHUVH IDLU YDOXH PRYHPHQWV WKH GLVDSSHDUDQFHRIDQDFWLYHPDUNHWIRUWKHLQYHVWPHQWVRUDGYHUVHFKDQJHVLQWKHWHFKQRORJLFDOHFRQRPLF OHJDORUWD[HQYLURQPHQWWKDWWKHHQWLW\RSHUDWHVLQ,IWKLVLVWKHFDVHWKH*URXSFDOFXODWHVWKHDPRXQWRI LPSDLUPHQWDVWKHGLIIHUHQFHEHWZHHQWKHUHFRYHUDEOHDPRXQW WKHKLJKHURIWKHDVVHW©VIDLUYDOXHOHVVFRVWV WRVHOODQGYDOXHLQXVH RIWKHDVVRFLDWHRUMRLQWYHQWXUHDQGLWVFDUU\LQJYDOXHDQGUHFRJQLVHVWKHDPRXQWLQ WKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH 8QUHDOLVHGJDLQVRQWUDQVDFWLRQVEHWZHHQWKH*URXSDQGLWVDVVRFLDWHVDQGMRLQWYHQWXUHVDUHHOLPLQDWHGWR WKHH[WHQWRIWKH*URXS©VLQWHUHVWLQWKHHQWLWLHV ,QYHVWPHQWVLQHQWLWLHVWKDWIRUPSDUWRIYHQWXUHFDSLWDODFWLYLWLHVRIWKH*URXSKDYHEHHQGHVLJQDWHGDWIDLU YDOXHWKURXJKSURILWRUORVVDQGGLVFORVHGXQGHU¨,QYHVWPHQWVHFXULWLHV©7KHGHVLJQDWLRQKDVEHHQPDGHLQ DFFRUGDQFHZLWK,$6EDVHGRQWKHVFRSHH[FOXVLRQWKDWLVSURYLGHGLQ,$6

360 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 9HQWXUHFDSLWDODVVRFLDWHGLQYHVWPHQWVDUHGLVWLQJXLVKHGIURPRWKHULQYHVWPHQWVE\FRQVLGHULQJWKHQDWXUHRI WKHLQYHVWPHQWVH[SHFWHGUHWXUQVDQGWKHPDQQHULQZKLFKWKH\DUHPDQDJHGE\WKH*URXS7KHVHDUHSULYDWH HTXLW\LQYHVWPHQWV3ULYDWHHTXLW\LVPHGLXPWRORQJWHUPILQDQFHWKDWLVSURYLGHGLQUHWXUQIRUDQHTXLW\VWDNH LQSRWHQWLDOO\KLJKJURZWKXQTXRWHGHQWLWLHV7KHIDLUYDOXHRIWKHVHLQYHVWPHQWVLVGHWHUPLQHGLQDFFRUGDQFH ZLWKLQWHUQDWLRQDOSULYDWHHTXLW\DQGYHQWXUHFDSLWDOYDOXDWLRQJXLGHOLQHV

1.3.3 Transactions with non-controlling interests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

1.3.4 Special purpose entities (SPEs) 7KH*URXSPD\HQWHULQWRWUDQVDFWLRQVZLWK63(V$Q63(LVFRQVROLGDWHGRQWKHVDPHEDVLVDVVXEVLGLDULHV DVVHWRXWLQLIEDVHGRQDQHYDOXDWLRQRIWKHVXEVWDQFHRIWKHUHODWLRQVKLSZLWKWKH*URXSDQGWKH63(©V ULVNVDQGUHZDUGVWKH*URXSFRQFOXGHVWKDWLWFRQWUROVWKH63(&RQWUROH[LVWVZKHQWKH*URXSKDVWKHSRZHU WRJRYHUQWKHILQDQFLDODQGRSHUDWLQJSROLFLHVRIHQWLWLHVVRDVWRREWDLQEHQHILWVIURPLWVDFWLYLWLHV 63(VFRQWUROOHGE\WKH*URXSDUHHVWDEOLVKHGXQGHUWHUPVWKDW LPSRVHVWULFWOLPLWDWLRQVRQWKHGHFLVLRQPDNLQJSRZHUVRIWKH63(©VPDQDJHPHQW UHVXOWLQWKH*URXSUHFHLYLQJWKHPDMRULW\RIWKHEHQHILWVUHODWHGWRWKH63(©VRSHUDWLRQVDQGQHWDVVHWV HQDEOHWKH*URXSWRUHWDLQWKHPDMRULW\RIWKHUHVLGXDORURZQHUVKLSULVNVUHODWHGWRWKH63(RULWVDVVHWV DQG WKH DFWLYLWLHV RI WKH 63( DUH EHLQJ FRQGXFWHG RQ EHKDOI RI WKH HQWLW\ DFFRUGLQJ WR WKH HQWLW\©V VSHFLILF EXVLQHVVQHHGV

1.3.5 Business combinations achieved in stages (step acquisitions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

1.3.6 Common control &RPPRQ FRQWURO WUDQVDFWLRQV DUH EXVLQHVV FRPELQDWLRQV LQ ZKLFK WKH FRPELQLQJ HQWLWLHV DUH XOWLPDWHO\ FRQWUROOHGE\WKH*URXS:KHUHWKHWUDQVDFWLRQKDVVXEVWDQFHFRPPRQFRQWUROWUDQVDFWLRQVDUHDFFRXQWHGIRU XQGHU ,)56 ZLWK WKH GLIIHUHQFH EHWZHHQ WKH SXUFKDVH SULFH DQG WKH IDLU YDOXH RI DVVHWV DQG OLDELOLWLHV UHFRUGHGLQJRRGZLOO

1.4 Segment reporting 2SHUDWLQJVHJPHQWVDUHUHSRUWHGLQDPDQQHUFRQVLVWHQWZLWKWKHLQWHUQDOUHSRUWLQJSURYLGHGWRWKH&2'07KH &2'0KDVEHHQLGHQWLILHGDVWKH*URXS&KLHI([HFXWLYH *&( ZKRPDNHVVWUDWHJLFGHFLVLRQV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 361 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) 7KH*URXSKDVLGHQWLILHGLWVUHSRUWDEOHVHJPHQWVEDVHGRQDFRPELQDWLRQRISURGXFWVDQGVHUYLFHVRIIHUHGWR FXVWRPHUV H[WHUQDO UHYHQXH DQG WKH ORFDWLRQ RI WKH PDUNHWV VHUYHG 7KH VHJPHQWV DOVR UHIOHFW KRZ WKH *URXS©VEXVLQHVVHVDUHPDQDJHGDQGUHSRUWHGWRWKH&2'07KHIROORZLQJVXPPDU\GHVFULEHVWKHRSHUDWLRQV LQHDFKRIWKH*URXS©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°+RPH /RDQV RIIHUV LQQRYDWLYH UHVLGHQWLDO SURSHUW\UHODWHG RZQHUVKLS VROXWLRQV WR WKH *URXS©V WDUJHW PDUNHWVHJPHQWV °9HKLFOHDQG$VVHW)LQDQFH 9$) RIIHUVFXVWRPLVHGYHKLFOHDQGDVVHWILQDQFHSURGXFWV UDQJLQJIURPWKH ILQDQFLQJRIPDQXIDFWXULQJHTXLSPHQWOHDVHVRIILFHDXWRPDWLRQDQGILQDQFLQJRISULYDWHYHKLFOHV DQG VHUYLFHVWRFXVWRPHUV °&DUG SURYLGHV WKH IXOO UDQJH RI 9LVD DQG 0DVWHU&DUG SURGXFWV PHUFKDQW VHUYLFHV DQG ZRUOGFODVV FXVWRPHUVHUYLFHVWRDEURDGVSHFWUXPRIWKHPDUNHW °3HUVRQDO/RDQVRIIHUVXQVHFXUHGLQVWDOPHQWORDQV LQFOXGLQJPLFURORDQV WRLQGLYLGXDOV °5HWDLO%DQNRIIHUVDFRPSUHKHQVLYHUDQJHRIEDQNLQJSURGXFWVDQGVHUYLFHVWRWKH6RXWK$IULFDQDIIOXHQW PLGGOHDQGORZHULQFRPHVHJPHQWRIWKHPDUNHW ,QIRUPDWLRQ UHJDUGLQJ WKH RSHUDWLRQ RI HDFK UHSRUWDEOH VHJPHQW LV GLVFORVHG LQ WKH QRWHV WR WKH ILQDQFLDO VWDWHPHQWV3HUIRUPDQFHLVPHDVXUHGEDVHGRQVHJPHQWSURILWEHIRUHLQFRPHWD[6HJPHQWSURILWLVPHDVXUHG DVPDQDJHPHQWEHOLHYHVWKDWVXFKLQIRUPDWLRQLVXVHIXOLQHYDOXDWLQJWKHUHVXOWVRIFHUWDLQVHJPHQWVUHODWLYH WRRWKHUHQWLWLHVWKDWRSHUDWHZLWKLQWKHILQDQFLDOVHUYLFHVLQGXVWU\ 7KH*URXS©VVHJPHQWVUHSRUWWKHLUSURILWRUORVVDQGWKHLUDVVHWVDQGOLDELOLWLHVEDVHGRQWKH*URXS©VDFFRXQWLQJ SROLFLHV$OOWUDQVDFWLRQVEHWZHHQWKHVHJPHQWVDUHFRQGXFWHGRQDQDUP©VOHQJWKEDVLV,QWHUQDOFKDUJHVDQG WUDQVIHUSULFLQJDGMXVWPHQWVDUHUHIOHFWHGLQWKHSHUIRUPDQFHRIHDFKEXVLQHVV 7KH *URXS KDV UHFODVVLILHG LWV RSHUDWLQJ VHJPHQWV GXULQJ WKH \HDU WR EH LQ OLQH ZLWK WKH PDQDJHPHQW RI WKHVHVHJPHQWV $EVD6PDOO%XVLQHVVZDVPRYHGIURP5HWDLO%DQNLQJWR$%% 7KHFKDQJHKDVQRHIIHFWRQWKHSURILWDQGORVVRIWKH*URXSDQGVHJPHQWDOFRPSDUDWLYHLQIRUPDWLRQKDVEHHQ UHFODVVLILHGWRUHIOHFWWKHDERYH

1.5 Foreign currencies 1.5.1 Functional and presentation currency ,WHPVLQFOXGHGLQWKHILQDQFLDOVWDWHPHQWVRIHDFKRIWKH*URXS©VHQWLWLHVDUHPHDVXUHGXVLQJWKHFXUUHQF\RI WKHSULPDU\HFRQRPLFHQYLURQPHQWLQZKLFKWKHHQWLW\RSHUDWHV WKHIXQFWLRQDOFXUUHQF\ 7KHFRQVROLGDWHG ILQDQFLDO VWDWHPHQWV DUH SUHVHQWHG LQ 6RXWK $IULFDQ UDQG ZKLFK LV WKH KROGLQJ &RPSDQ\©V IXQFWLRQDO DQG SUHVHQWDWLRQFXUUHQF\

1.5.2 Foreign currency translations 7KH UHVXOWV DQG ILQDQFLDO SRVLWLRQ RI DOO *URXS HQWLWLHV WKDW KDYH D IXQFWLRQDO FXUUHQF\ GLIIHUHQW IURP WKH SUHVHQWDWLRQFXUUHQF\DUHWUDQVODWHGLQWRWKHSUHVHQWDWLRQFXUUHQF\DVIROORZV

362 Absa Group Limited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¨2SHUDWLQJ H[SHQVHV©RU¨2WKHURSHUDWLQJLQFRPH©

1.5.3 Foreign currency transactions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

1.6 Earnings per share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

1.7 Financial instruments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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 363 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) ILQDQFLDO LQVWUXPHQWV KDYH EHHQ GHWHUPLQHG E\ UHIHUULQJ WR WKH QDWXUH DQG H[WHQW RI ULVNV DULVLQJ IURP WKH ILQDQFLDOLQVWUXPHQWVDQGKRZWKHVHDUHPDQDJHG

1.7.1 Held-to-maturity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

1.7.2 Financial instruments at fair value through proﬁt or loss 7KLVFDWHJRU\KDVWKUHHVXEFDWHJRULHVILQDQFLDOLQVWUXPHQWVKHOGIRUWUDGLQJILQDQFLDOLQVWUXPHQWVGHVLJQDWHG DWIDLUYDOXHWKURXJKSURILWRUORVVDQGGHULYDWLYHV

Financial instruments classiﬁed as held for trading )LQDQFLDOLQVWUXPHQWVVXFKDVWUHDVXU\ELOOVGHEWVHFXULWLHVHTXLW\VKDUHVDQGVKRUWSRVLWLRQVLQVHFXULWLHVDUH FODVVLILHGDVKHOGIRUWUDGLQJLIWKH\KDYHEHHQDFTXLUHGSULQFLSDOO\IRUWKHSXUSRVHRIVHOOLQJDQGUHSXUFKDVLQJ LQWKHQHDUWHUPRULIWKH\IRUPSDUWRIDSRUWIROLRRILGHQWLILHGILQDQFLDOLQVWUXPHQWVWKDWDUHPDQDJHGWRJHWKHU DQGIRUZKLFKWKHUHLVHYLGHQFHRIDUHFHQWSDWWHUQRIVKRUWWHUPSURILWWDNLQJ 7KHVHILQDQFLDOLQVWUXPHQWVDUHGLVFORVHGLQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQDV¨7UDGLQJSRUWIROLRDVVHWVRU OLDELOLWLHV©6XEVHTXHQWWRLQLWLDOUHFRJQLWLRQWKHLUIDLUYDOXHVDUHUHPHDVXUHGDQGDOOJDLQVDQGORVVHVIURP FKDQJHVWKHUHLQDUHUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHLQ ¨*DLQVDQGORVVHVIURPEDQNLQJDQGWUDGLQJDFWLYLWLHV©DVWKH\DULVH

Financial instruments designated at fair value through proﬁt or loss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°ILQDQFLDO DVVHWV EDFNLQJ LQVXUDQFH DQG LQYHVWPHQW FRQWUDFWV EHFDXVH WKH UHODWHG OLDELOLWLHV LH WKH LQVXUDQFHDQGLQYHVWPHQWFRQWUDFWV KDYHFDVKIORZVWKDWDUHFRQWUDFWXDOO\EDVHGRQWKHSHUIRUPDQFHRI WKHDVVHWVRUWKHUHODWHGOLDELOLWLHV)DLUYDOXLQJWKHDVVHWVWKURXJKSURILWRUORVVVLJQLILFDQWO\UHGXFHVWKH UHFRJQLWLRQLQFRQVLVWHQFLHVWKDWZRXOGDULVHLIWKHILQDQFLDODVVHWVZHUHFODVVLILHGDVDYDLODEOHIRUVDOHDQG °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

364 Absa Group Limited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¨*DLQVDQGORVVHVIURPEDQNLQJDQGWUDGLQJDFWLYLWLHV©DQG¨*DLQVDQGORVVHVIURPLQYHVWPHQWDFWLYLWLHV© GHSHQGLQJRQWKHQDWXUHRIWKHLQVWUXPHQWXQOHVVGLVFORVLQJVXFKIDLUYDOXHPRYHPHQWVLQDQRWKHUVWDWHPHQW RIFRPSUHKHQVLYHLQFRPHOLQHZRXOGHOLPLQDWHDQDFFRXQWLQJPLVPDWFK

Derivatives 6XEVHTXHQWWRLQLWLDOUHFRJQLWLRQGHULYDWLYHVDUHUHPHDVXUHGDWIDLUYDOXH$WWULEXWDEOHWUDQVDFWLRQFRVWVDUH UHFRJQLVHG LQ WKH SURILW DQG ORVV FRPSRQHQW RI WKH VWDWHPHQW RI FRPSUHKHQVLYH LQFRPH ZKHQ LQFXUUHG $OO GHULYDWLYHV DUH FDUULHG DV DVVHWV ZKHQ WKHLU IDLU YDOXH LV SRVLWLYH DQG DV OLDELOLWLHV ZKHQ WKHLU IDLU YDOXH LVQHJDWLYH&KDQJHVLQWKHIDLUYDOXHRIGHULYDWLYHVKHOGIRUWUDGLQJDUHLQFOXGHGLQ¨*DLQVDQGORVVHVIURP EDQNLQJ DQG WUDGLQJ DFWLYLWLHV© &KDQJHV LQ WKH IDLU YDOXH RI GHULYDWLYHV OLQNHG WR LQYHVWPHQW FRQWUDFWV DUH LQFOXGHG LQ ¨*DLQ DQG ORVVHV IURP LQYHVWPHQW DFWLYLWLHV© &KDQJHV LQ WKH IDLU YDOXH RI GHULYDWLYHV XVHG WR HFRQRPLFDOO\KHGJHWKH*URXS©VLQWHUHVWUDWHULVNDUHUHFRJQLVHGLQ¨1HWLQWHUHVWLQFRPH©LQWKHSURILWDQGORVV FRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH

1.7.3 Available-for-sale assets $YDLODEOHIRUVDOHDVVHWVLQFOXGHERWKGHEWDQGHTXLW\LQVWUXPHQWVQRUPDOO\KHOGIRUDQLQGHILQLWHSHULRGEXW WKDW PD\ EH VROG LQ UHVSRQVH WR QHHGV IRU OLTXLGLW\ RU FKDQJHV LQ LQWHUHVW UDWHV H[FKDQJH UDWHV RU RWKHU HFRQRPLF FRQGLWLRQV 7KH FDWHJRU\ DOVR LQFOXGHV ORQJHUGDWHG JRYHUQPHQW VWRFN KHOG IRU UHJXODWRU\ OLTXLG DVVHWSXUSRVHVDVZHOODVFHUWDLQLQYHVWPHQWVLQFRUSRUDWHERQGV 6XEVHTXHQWWRLQLWLDOUHFRJQLWLRQWKHIDLUYDOXHDGMXVWPHQWVZKLFKUHSUHVHQWJDLQVDQGORVVHVQHWRIDSSOLFDEOH WD[HVDUHUHSRUWHGLQRWKHUFRPSUHKHQVLYHLQFRPHXQWLOVXFKLQYHVWPHQWVDUHVROGRURWKHUZLVHGLVSRVHGRI RUXQWLOVXFKLQYHVWPHQWVDUHGHWHUPLQHGWREHLPSDLUHGDWZKLFKWLPHWKHFXPXODWLYHJDLQRUORVVSUHYLRXVO\ UHFRJQLVHGLQRWKHUFRPSUHKHQVLYHLQFRPHLVUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQW RIFRPSUHKHQVLYHLQFRPH+RZHYHULQWHUHVWRQDYDLODEOHIRUVDOHLQVWUXPHQWVFDOFXODWHGXVLQJWKHHIIHFWLYH LQWHUHVWUDWHPHWKRGLVUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH 'LYLGHQGV RQ DYDLODEOHIRUVDOH HTXLW\ LQVWUXPHQWV DUH UHFRJQLVHG LQ WKH SURILW DQG ORVV FRPSRQHQW RI WKH VWDWHPHQWRIFRPSUHKHQVLYHLQFRPHZKHQWKH*URXS©VULJKWWRUHFHLYHSD\PHQWLVHVWDEOLVKHG $YDLODEOHIRUVDOHDVVHWVDUHUHJXODUO\DVVHVVHGIRULPSDLUPHQW,QDVVHVVLQJZKHWKHURUQRWLPSDLUPHQWKDV RFFXUUHGFRQVLGHUDWLRQLVJLYHQWRLQWHUDOLDZKHWKHURUQRWWKHUHKDVEHHQDVLJQLILFDQWRUSURORQJHGGHFOLQH LQWKHIDLUYDOXHRIWKHVHFXULW\EHORZLWVFRVW)DFWRUVFRQVLGHUHGLQGHWHUPLQLQJZKHWKHUWKHUHKDVEHHQD VLJQLILFDQWRUSURORQJHGGHFOLQHLQWKHHTXLW\LQVWUXPHQWEHORZLWVFRVWLQFOXGH WKHOHQJWKRIWLPHDQGWKHH[WHQWWRZKLFKIDLUYDOXHKDVEHHQEHORZFRVW WKHVHYHULW\RIWKHUHGXFHGIDLUYDOXH WKHFDXVHRIWKHUHGXFHGIDLUYDOXHDQGWKHILQDQFLDOFRQGLWLRQDQGQHDUWHUPSURVSHFWVRIWKHLVVXHU DFWLYLW\LQWKHPDUNHWRIWKHLVVXHUZKLFKPD\LQGLFDWHDGYHUVHFUHGLWFRQGLWLRQVDQG WKH*URXS©VDELOLW\DQGLQWHQWWRKROGWKHLQVWUXPHQWIRUDSHULRGRIWLPHVXIILFLHQWWRDOORZIRUDQ\DQWLFLSDWHG UHFRYHU\ )DFWRUV FRQVLGHUHG LQ GHWHUPLQLQJ ZKHWKHU WKHUH KDV EHHQ D VLJQLILFDQW RU SURORQJHG GHFOLQH LQ GHEW LQVWUXPHQWVEHORZWKHLUFRVWVDUHWKHVDPHDVWKRVHPHQWLRQHGLQQRWHEHORZ ,ILPSDLUPHQWLVDVVHVVHGWRKDYHRFFXUUHGWKHFXPXODWLYHJDLQRUORVVWKDWKDVEHHQSUHYLRXVO\UHFRJQLVHG GLUHFWO\LQRWKHUFRPSUHKHQVLYHLQFRPHLVUHPRYHGIURPRWKHUFRPSUHKHQVLYHLQFRPHDQGLVUHFRJQLVHGLQWKH SURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH,QWKHFDVHRIGHEWLQVWUXPHQWVFODVVLILHG DVDYDLODEOHIRUVDOHLPSDLUPHQWLVDVVHVVHGEDVHGRQWKHVDPHFULWHULDDVDOORWKHUILQDQFLDODVVHWV,ILQD VXEVHTXHQWSHULRGWKHIDLUYDOXHRIDGHEWLQVWUXPHQWLQFUHDVHVDQGWKHLQFUHDVHFDQEHREMHFWLYHO\UHODWHGWR

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 365 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) DQHYHQWRFFXUULQJDIWHUWKHLPSDLUPHQWORVVZDVUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQW RIFRPSUHKHQVLYHLQFRPHWKHLPSDLUPHQWORVVVKDOOEHUHYHUVHGZLWKWKHDPRXQWRIWKHUHYHUVDOUHFRJQLVHG LQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH5HYHUVDOVRILPSDLUPHQWRIHTXLW\ LQVWUXPHQWVDUHQRWUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH LQFUHDVHVLQWKHIDLUYDOXHRIHTXLW\LQVWUXPHQWVDIWHULPSDLUPHQWDUHUHFRJQLVHGGLUHFWO\LQRWKHUFRPSUHKHQVLYH LQFRPH

1.7.4 Loans and receivables /RDQVDQGUHFHLYDEOHVDUHQRQGHULYDWLYHILQDQFLDODVVHWVZLWKIL[HGRUGHWHUPLQDEOHSD\PHQWVWKDWDUHQRW TXRWHGLQDQDFWLYHPDUNHW $IWHULQLWLDOPHDVXUHPHQWORDQVDQGUHFHLYDEOHVDUHVXEVHTXHQWO\PHDVXUHGDWDPRUWLVHGFRVWXVLQJWKHHIIHFWLYH LQWHUHVW UDWH PHWKRG OHVV DOORZDQFH IRU LPSDLUPHQW $PRUWLVHG FRVW LV FDOFXODWHG E\ WDNLQJ LQWR DFFRXQW DQ\ WUDQVDFWLRQFRVWVRQDFTXLVLWLRQDQGIHHVDQGFRVWVWKDWDUHDQLQWHJUDOSDUWRIWKHHIIHFWLYHLQWHUHVWUDWH7KH DPRUWLVDWLRQ LV LQFOXGHG LQ ¨,QWHUHVW DQG VLPLODU LQFRPH© LQ WKH SURILW DQG ORVV FRPSRQHQW RI WKH VWDWHPHQW RI FRPSUHKHQVLYHLQFRPH7KHFDUU\LQJDPRXQWRIORDQVFRQVLGHUHGWREHLPSDLUHGRQWKHVWDWHPHQWRIILQDQFLDO SRVLWLRQLVUHGXFHGWKURXJKWKHXVHRIDQDSSURSULDWHLPSDLUPHQWPHWKRGRORJ\ 2QFHDORDQKDVEHHQZULWWHQGRZQDVDUHVXOWRIDQLPSDLUPHQWORVVLQWHUHVWLQFRPHLVWKHUHDIWHUUHFRJQLVHG XVLQJWKHUDWHRILQWHUHVWXVHGWRGLVFRXQWWKHIXWXUHFDVKIORZVIRUWKHSXUSRVHRIPHDVXULQJWKHLPSDLUPHQWORVV

1.7.5 Embedded derivatives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

1.7.6 Financial liabilities )LQDQFLDOOLDELOLWLHVDUHPHDVXUHGDWDPRUWLVHGFRVWH[FHSWIRUWUDGLQJOLDELOLWLHVDQGOLDELOLWLHVGHVLJQDWHGDWIDLU YDOXHZKLFKDUHKHOGDWIDLUYDOXHWKURXJKSURILWRUORVV7KHIDLUYDOXHRIDILQDQFLDOOLDELOLW\ZLWKDGHPDQG IHDWXUH HJDGHPDQGGHSRVLW LVQRWOHVVWKDQWKHDPRXQWSD\DEOHRQGHPDQGGLVFRXQWHGIURPWKHILUVWGDWH WKDWWKHDPRXQWFRXOGEHUHTXLUHGWREHSDLG

1.7.7 Impairment of ﬁnancial assets at amortised cost $QLPSDLUPHQWDVVHVVPHQWRIILQDQFLDODVVHWVDWDPRUWLVHGFRVWLVSHUIRUPHGDWHDFKUHSRUWLQJGDWH $PRUWLVHGFRVWLQVWUXPHQWVDUHFRQVLGHUHGWREHLPSDLUHGLIREMHFWLYHHYLGHQFHLQGLFDWHVWKDWRQHRUPRUH HYHQWVKDYHKDGDQHJDWLYHHIIHFWRQWKHHVWLPDWHGIXWXUHFDVKIORZVRIWKDWDVVHW $Q LPSDLUPHQW ORVV LQ UHVSHFW RI DQ DPRUWLVHG FRVW LQYHVWPHQW LV FDOFXODWHG DV WKH GLIIHUHQFH EHWZHHQ LWV FDUU\LQJDPRXQWDQGWKHSUHVHQWYDOXHRIWKHHVWLPDWHGIXWXUHFDVKIORZVGLVFRXQWHGDWWKHRULJLQDOHIIHFWLYH LQWHUHVWUDWH /RDQVDQGUHFHLYDEOHVDUHVWDWHGQHWRILGHQWLILHGDQGXQLGHQWLILHGLPSDLUPHQWV $ILQDQFLDODVVHWRUJURXSRIILQDQFLDODVVHWVLVFRQVLGHUHGLPSDLUHGLIDQGRQO\LIWKHUHLVREMHFWLYHHYLGHQFH RILPSDLUPHQWDVDUHVXOWRIRQHRUPRUHHYHQWVWKDWRFFXUUHGDIWHUWKHLQLWLDOUHFRJQLWLRQRIWKHDVVHW NQRZQ DVWKHORVVHYHQW DQGWKDWORVVHYHQW RUHYHQWV KDVDQLPSDFWRQWKHHVWLPDWHGIXWXUHFDVKIORZVRIWKH ILQDQFLDODVVHWRUJURXSRIILQDQFLDODVVHWVDQGFDQEHUHOLDEO\PHDVXUHG,QGHWHUPLQLQJZKHWKHUDORVVHYHQW KDVRFFXUUHGDGYDQFHVDUHVXEMHFWHGWRUHJXODUHYDOXDWLRQVWKDWWDNHFRJQLVDQFHRILQWHUDOLDSDVWH[SHULHQFH

366 Absa Group Limited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©V ILQDQFLDO GLIILFXOW\DFRQFHVVLRQWKDWWKHOHQGHUZRXOGQRWRWKHUZLVHFRQVLGHU ,WEHFRPLQJSUREDEOHWKDWWKHERUURZHUZLOOHQWHULQVROYHQF\RURWKHUILQDQFLDOUHRUJDQLVDWLRQ 7KHGLVDSSHDUDQFHRIDQDFWLYHPDUNHWIRUWKDWILQDQFLDODVVHWEHFDXVHRIILQDQFLDOGLIILFXOWLHV 2EVHUYDEOHGDWDLQGLFDWLQJWKDWWKHUHLVDPHDVXUDEOHGHFUHDVHLQWKHHVWLPDWHGIXWXUHFDVKIORZVIURPD JURXSRIILQDQFLDODVVHWVVLQFHWKHLQLWLDOUHFRJQLWLRQRIWKRVHDVVHWVDOWKRXJKWKHGHFUHDVHFDQQRW\HWEH LGHQWLILHGZLWKWKHLQGLYLGXDOILQDQFLDODVVHWVLQWKHJURXSLQFOXGLQJ °DGYHUVHFKDQJHVLQWKHSD\PHQWVWDWXVRIERUURZHUVLQWKHJURXSRU °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©VFDUU\LQJDPRXQWDQGWKH SUHVHQWYDOXHRIHVWLPDWHGIXWXUHFDVKIORZV H[FOXGLQJIXWXUHFUHGLWORVVHV GLVFRXQWHGDWWKHILQDQFLDODVVHW©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©VJUDGLQJSURFHVVWKDWFRQVLGHUVDVVHWW\SHLQGXVWU\ JHRJUDSKLFDOORFDWLRQFROODWHUDOW\SHSDVWGXHVWDWXVDQGRWKHUUHOHYDQWIDFWRUV 7KHVHFKDUDFWHULVWLFVDUH UHOHYDQWWRWKHHVWLPDWLRQRIWKHFDVKIORZVIRUJURXSVRIVXFKDVVHWVE\EHLQJLQGLFDWLYHRIWKHGHEWRUV©DELOLW\ WRSD\DOODPRXQWVGXHDFFRUGLQJWRWKHFRQWUDFWXDOWHUPVRIWKHDVVHWVEHLQJHYDOXDWHG )XWXUHFDVKIORZVIRUDJURXSRIILQDQFLDODVVHWVWKDWDUHFROOHFWLYHO\HYDOXDWHGIRULPSDLUPHQWDUHHVWLPDWHG RQWKHEDVLVRIWKHFRQWUDFWXDOFDVKIORZVRIWKHDVVHWVLQWKHJURXSDQGKLVWRULFDOORVVH[SHULHQFHGIRUDVVHWV ZLWKFUHGLWULVNFKDUDFWHULVWLFVVLPLODUWRWKRVHLQWKHJURXS+LVWRULFDOORVVH[SHULHQFHLVDGMXVWHGRQWKHEDVLV RIFXUUHQWREVHUYDEOHGDWDWRUHIOHFWWKHHIIHFWVRIFXUUHQWFRQGLWLRQVDQGWRUHPRYHWKHHIIHFWVRIFRQGLWLRQVLQ WKHKLVWRULFDOSHULRGWKDWGRQRWFXUUHQWO\H[LVW (VWLPDWHVRIFKDQJHVLQIXWXUHFDVKIORZVIRUJURXSVRIDVVHWVVKRXOGUHIOHFWDQGEHGLUHFWLRQDOO\FRQVLVWHQW ZLWKFKDQJHVLQUHODWHGREVHUYDEOHGDWDIURPSHULRGWRSHULRG LHFKDQJHVLQXQHPSOR\PHQWUDWHVSURSHUW\ SULFHVSD\PHQWVWDWXVRURWKHUIDFWRUVLQGLFDWLYHRIFKDQJHVLQWKHSUREDELOLW\RIORVVHVLQWKHJURXSDQGWKHLU PDJQLWXGH 7KHPHWKRGRORJ\DQGDVVXPSWLRQVXVHGIRUHVWLPDWLQJIXWXUHFDVKIORZVDUHUHYLHZHGUHJXODUO\ E\WKH*URXSWRUHGXFHDQ\GLIIHUHQFHVEHWZHHQORVVHVWLPDWHVDQGDFWXDOORVVH[SHULHQFH /RDQVRURWKHUUHFHLYDEOHVWRJHWKHUZLWKWKHDVVRFLDWHGDOORZDQFHDUHZULWWHQRIIZKHQWKHUHDUHQRUHDOLVWLF SURVSHFWVRIIXWXUHUHFRYHU\DQGDOOFROODWHUDOKDVEHHQUHDOLVHGRUKDVEHHQWUDQVIHUUHGWRWKH*URXS

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 367 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) 'HWDLOVRIWKHVLJQLILFDQWHVWLPDWHVDQGMXGJHPHQWVPDGHE\WKH*URXSLQUHODWLRQWRLGHQWLILHGDQGXQLGHQWLILHG LPSDLUPHQWDUHDVIROORZV

Identiﬁed impairment ,PSDLUPHQWDOORZDQFHVDUHFDOFXODWHGRQDQLQGLYLGXDOEDVLVDQGDOOUHOHYDQWFRQVLGHUDWLRQVWKDWKDYHDEHDULQJ RQWKHH[SHFWHGIXWXUHFDVKIORZVRIWKDWLQVWUXPHQWEHLQJDVVHVVHGDUHWDNHQLQWRDFFRXQWIRUH[DPSOHWKH EXVLQHVVSURVSHFWVIRUWKHFXVWRPHUWKHIDLUYDOXHRIFROODWHUDOWKH*URXS©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

Unidentiﬁed impairment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©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

1.7.8 Renegotiated loans /RDQVZLWKUHQHJRWLDWHGWHUPVDUHORDQVWKDWKDYHEHHQUHVWUXFWXUHGGXHWRGHWHULRUDWLRQLQWKHERUURZHU©V ILQDQFLDOSRVLWLRQDQGZKHUHWKH*URXSKDVPDGHFRQFHVVLRQVWKDWLWZRXOGRWKHUZLVHQRWFRQVLGHU7KHVH ORDQVDUHQRWFRQVLGHUHGWREHSDVWGXHDIWHUUHQHJRWLDWLRQVEXWDUHWUHDWHGDVFXUUHQWORDQVDIWHUWKHORDQKDV SHUIRUPHGIRUDVSHFLILHGSHULRG7KHVHORDQVFRQWLQXHWREHVXEMHFWWRDQLQGLYLGXDORUFROOHFWLYHLPSDLUPHQW DVVHVVPHQWFDOFXODWHGXVLQJWKHORDQ©VRULJLQDOHIIHFWLYHLQWHUHVWUDWH

368 Absa Group Limited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

1.7.9 Derecognition of ﬁnancial assets $ILQDQFLDODVVHW RUZKHUHDSSOLFDEOHDSDUWRIDILQDQFLDODVVHWRUDSDUWRIDJURXSRIVLPLODUILQDQFLDODVVHWV LVGHUHFRJQLVHGZKHUH WKHULJKWVWRUHFHLYHFDVKIORZVIURPWKHDVVHWKDYHEHHQGLVFKDUJHGFDQFHOOHGRUH[SLUHGRU WKH*URXSUHWDLQVWKHULJKWWRUHFHLYHFDVKIORZVIURPWKHDVVHWEXWKDVDVVXPHGDQREOLJDWLRQWRSD\WKHP LQIXOOZLWKRXWPDWHULDOGHOD\WRDWKLUGSDUW\XQGHUDSDVVWKURXJKDUUDQJHPHQWDQG WKH*URXSKDVWUDQVIHUUHGLWVULJKWVWRUHFHLYHFDVKIORZVIURPWKHDVVHWDQGHLWKHU °KDVWUDQVIHUUHGVXEVWDQWLDOO\DOORIWKHULVNVDQGUHZDUGVRIWKHDVVHWRU °KDVQHLWKHUWUDQVIHUUHGQRUUHWDLQHGVXEVWDQWLDOO\DOOWKHULVNVDQGUHZDUGVRIWKHDVVHWEXWKDVWUDQVIHUUHG FRQWURORIWKHDVVHW :KHUHWKH*URXSKDVWUDQVIHUUHGLWVULJKWVWRUHFHLYHFDVKIORZVIURPDQDVVHWDQGKDVQHLWKHUWUDQVIHUUHGQRU UHWDLQHGVXEVWDQWLDOO\DOOWKHULVNVDQGUHZDUGVRIWKHDVVHWQRUWUDQVIHUUHGFRQWURORIWKHDVVHWWKHDVVHWLV UHFRJQLVHGWRWKHH[WHQWRIWKH*URXS©VFRQWLQXLQJLQYROYHPHQWLQWKHDVVHW&RQWLQXLQJLQYROYHPHQWWKDWWDNHV WKHIRUPRIDJXDUDQWHHRYHUWKHWUDQVIHUUHGDVVHWLVPHDVXUHGDWWKHORZHURIWKHRULJLQDOFDUU\LQJDPRXQWRI WKHDVVHWDQGWKHPD[LPXPDPRXQWRIWKHFRQVLGHUDWLRQWKDWWKH*URXSFRXOGEHUHTXLUHGWRUHSD\ :KHUHFRQWLQXLQJLQYROYHPHQWWDNHVWKHIRUPRIDZULWWHQDQGRUSXUFKDVHGRSWLRQ LQFOXGLQJDFDVKVHWWOHG RSWLRQRUVLPLODUSURYLVLRQ RQWKHWUDQVIHUUHGDVVHWWKHH[WHQWRIWKH*URXS©VFRQWLQXLQJLQYROYHPHQWLVWKH DPRXQWRIWKHWUDQVIHUUHGDVVHWWKDWWKH*URXSPD\UHSXUFKDVHH[FHSWWKDWLQWKHFDVHRIDZULWWHQSXWRSWLRQ LQFOXGLQJ D FDVKVHWWOHG RSWLRQ RU VLPLODU SURYLVLRQ RQ DQ DVVHW PHDVXUHG DW IDLU YDOXH WKH H[WHQW RI WKH *URXS©VFRQWLQXLQJLQYROYHPHQWLVOLPLWHGWRWKHORZHURIWKHIDLUYDOXHRIWKHWUDQVIHUUHGDVVHWDQGWKHRSWLRQ H[HUFLVHSULFH

1.7.10 Derecognition of ﬁnancial liabilities $ILQDQFLDOOLDELOLW\LVGHUHFRJQLVHGZKHQWKHREOLJDWLRQXQGHUWKHOLDELOLW\LVGLVFKDUJHGFDQFHOOHGRUH[SLUHV :KHUHDQH[LVWLQJILQDQFLDOOLDELOLW\LVUHSODFHGE\DQRWKHUIURPWKHVDPHSDUW\RQVXEVWDQWLDOO\GLIIHUHQWWHUPV RUWKHWHUPVRIDQH[LVWLQJOLDELOLW\DUHVXEVWDQWLDOO\PRGLILHGVXFKDQH[FKDQJHRUPRGLILFDWLRQLVWUHDWHGDVD GHUHFRJQLWLRQRIWKHRULJLQDOOLDELOLW\DQGWKHUHFRJQLWLRQRIDQHZOLDELOLW\DQGWKHGLIIHUHQFHLQWKHUHVSHFWLYH FDUU\LQJDPRXQWVLVUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH

1.7.11 Fair value 6RPHRIWKH*URXS©VILQDQFLDOLQVWUXPHQWVDUHFDUULHGDWIDLUYDOXHWKURXJKSURILWRUORVVVXFKDVWKRVHKHOGIRU WUDGLQJGHVLJQDWHGE\PDQDJHPHQWXQGHUWKHIDLUYDOXHRSWLRQDQGQRQFDVKIORZKHGJLQJGHULYDWLYHV 2WKHUQRQGHULYDWLYHILQDQFLDODVVHWVPD\EHGHVLJQDWHGDVDYDLODEOHIRUVDOH 7KHIDLUYDOXHRIDILQDQFLDOLQVWUXPHQWLVWKHDPRXQWDWZKLFKWKHLQVWUXPHQWFRXOGEHH[FKDQJHGLQDFXUUHQW WUDQVDFWLRQEHWZHHQZLOOLQJSDUWLHVRWKHUWKDQLQDIRUFHGRUOLTXLGDWLRQVDOH 7KHPHWKRGRIGHWHUPLQLQJWKHIDLUYDOXHRIILQDQFLDOLQVWUXPHQWVFDQEHDQDO\VHGLQWRWKHIROORZLQJFDWHJRULHV D /HYHO¤8QDGMXVWHGTXRWHGSULFHVLQDFWLYHPDUNHWVZKHUHWKH TXRWHGSULFHLVUHDGLO\DYDLODEOHDQGWKH SULFHUHSUHVHQWVDFWXDODQGUHJXODUO\RFFXUULQJPDUNHWWUDQVDFWLRQVRQDQDUP©VOHQJWKEDVLV E /HYHO¤9DOXDWLRQWHFKQLTXHVXVLQJPDUNHWREVHUYDEOHLQSXWV 6XFKWHFKQLTXHVPD\LQFOXGH XVLQJUHFHQWDUP©VOHQJWKPDUNHWWUDQVDFWLRQV UHIHUHQFHWRWKHFXUUHQWIDLUYDOXHRIVLPLODULQVWUXPHQWVDQG GLVFRXQWHG FDVK IORZ DQDO\VLV SULFLQJ PRGHOV RU RWKHU WHFKQLTXHV FRPPRQO\ XVHG E\ PDUNHW SDUWLFLSDQWV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 369 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) F /HYHO¤9DOXDWLRQWHFKQLTXHVDVGHVFULEHGLQ E DERYHIRU ZKLFKQRWDOOLQSXWVDUHPDUNHWREVHUYDEOH SULFHVRUUDWHV6XFKDILQDQFLDOLQVWUXPHQWLVLQLWLDOO\UHFRJQLVHGDWWKHWUDQVDFWLRQSULFHZKLFKLVWKHEHVW LQGLFDWRU RI IDLU YDOXH DOWKRXJK WKH YDOXH REWDLQHG IURP WKH UHOHYDQW YDOXDWLRQ PRGHO PD\ GLIIHU 7KH GLIIHUHQFHEHWZHHQWKHWUDQVDFWLRQSULFHDQGWKHPRGHOYDOXHFRPPRQO\UHIHUUHGWRDV¨GD\RQHSURILWDQG ORVV©LVHLWKHUDPRUWLVHGRYHUWKHOLIHRIWKHWUDQVDFWLRQGHIHUUHGXQWLOWKHLQVWUXPHQW©VIDLUYDOXHFDQEH GHWHUPLQHGXVLQJPDUNHWREVHUYDEOHLQSXWVRUUHDOLVHGWKURXJKVHWWOHPHQW 7KHYDOXDWLRQWHFKQLTXHVLQ E DQG F XVHLQSXWVVXFKDVLQWHUHVWUDWH\LHOGFXUYHVHTXLW\SULFHVFRPPRGLW\ DQG FXUUHQF\ SULFHV\LHOGV YRODWLOLWLHV RI XQGHUO\LQJV DQG FRUUHODWLRQV EHWZHHQ LQSXWV 7KH PRGHOV XVHG LQ WKHVH YDOXDWLRQ WHFKQLTXHV DUH FDOLEUDWHG DJDLQVW LQGXVWU\ VWDQGDUGV HFRQRPLF PRGHOV DQG WR REVHUYHG WUDQVDFWLRQSULFHVZKHUHDYDLODEOH

1.7.12 Scrip lending :KHUHWKH*URXSDFWVDVDQDJHQW LHIDFLOLWDWHVOHQGLQJWUDQVDFWLRQVRQEHKDOIRIFXVWRPHUV WKHDVVRFLDWHG WUDQVDFWLRQVDUHQRWDFFRXQWHGIRURQWKH*URXS©VVWDWHPHQWRIILQDQFLDOSRVLWLRQDVWKHULVNVDQGUHZDUGVRI RZQHUVKLSRIWKHVHUHODWHGDVVHWVDQGOLDELOLWLHVQHYHUWUDQVIHUWRWKH*URXS 7KHIHHVHDUQHGIRUWKHDGPLQLVWUDWLRQRIVFULSOHQGLQJWUDQVDFWLRQVDUHDFFRXQWHGIRURQDQDFFUXDOEDVLVLQ WKHSHULRGLQZKLFKWKHVHUYLFHLVUHQGHUHG :KHUHWKH*URXSERUURZVVHFXULWLHVEXWGRHVQRWDFTXLUHWKHULVNVDQGUHZDUGVRIRZQHUVKLSWKHWUDQVDFWLRQVDUH WUHDWHG DV FROODWHUDOLVHG ORDQV DQG WKH VHFXULWLHV DUH QRW LQFOXGHG LQ WKH VWDWHPHQW RI ILQDQFLDO SRVLWLRQ7KH *URXS©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

1.7.13 Hedge accounting 7KH*URXSDOVRXVHVGHULYDWLYHLQVWUXPHQWVDVSDUWRILWVDVVHWDQGOLDELOLW\PDQDJHPHQWDFWLYLWLHVWRKHGJH H[SRVXUHVWRLQWHUHVWUDWHIRUHLJQFXUUHQF\DQGFUHGLWULVNV7KH*URXSDSSOLHVHLWKHUIDLUYDOXHRUFDVKIORZ KHGJHDFFRXQWLQJZKHQWUDQVDFWLRQVPHHWWKHFULWHULDDVVHWRXWLQ,$6 $WWKHLQFHSWLRQRIDKHGJHUHODWLRQVKLSWKH*URXSIRUPDOO\GHVLJQDWHVDQGGRFXPHQWVWKHKHGJHUHODWLRQVKLS WRZKLFKWKH*URXSZLVKHVWRDSSO\KHGJHDFFRXQWLQJDQGWKHULVNPDQDJHPHQWREMHFWLYHDQGVWUDWHJ\IRU XQGHUWDNLQJWKHKHGJH7KHGRFXPHQWDWLRQLQFOXGHVLGHQWLILFDWLRQRIWKHKHGJLQJLQVWUXPHQWWKHKHGJHGLWHP RUWUDQVDFWLRQWKHQDWXUHRIWKHULVNEHLQJKHGJHGDQGKRZWKHHQWLW\ZLOODVVHVVWKHKHGJLQJLQVWUXPHQW©V HIIHFWLYHQHVVLQRIIVHWWLQJWKHH[SRVXUHWRFKDQJHVLQWKHKHGJHGLWHP©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

370 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Fair value hedges )RUTXDOLI\LQJLQWHUHVWUDWHIDLUYDOXHKHGJHVWKHFKDQJHLQIDLUYDOXHRIWKHKHGJLQJGHULYDWLYHLVUHFRJQLVHG LQ WKH SURILW DQG ORVV FRPSRQHQW RI WKH VWDWHPHQW RI FRPSUHKHQVLYH LQFRPH &KDQJHV LQ IDLU YDOXH RI WKH KHGJHGULVNZLWKLQWKHKHGJHGLWHPDUHUHIOHFWHGDVDQDGMXVWPHQWWRWKHFDUU\LQJYDOXHRIWKHKHGJHGLWHP ZKLFKLVDOVRUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH $Q\LQHIIHFWLYHQHVVLVUHFRJQLVHGLPPHGLDWHO\LQ¨*DLQVDQGORVVHVIURPEDQNLQJDQGWUDGLQJDFWLYLWLHV©LQWKH SURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH:KHQKHGJHDFFRXQWLQJFHDVHVDQ\ DGMXVWPHQWWRDKHGJHGLWHPIRUZKLFKWKHHIIHFWLYHLQWHUHVWUDWHPHWKRGLVXVHGLVDPRUWLVHGWRWKHSURILWDQG ORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHDVSDUWRIWKHUHFDOFXODWHGHIIHFWLYHLQWHUHVWUDWHRI WKHLWHPVRYHUWKHUHPDLQLQJOLIH

Cash ﬂow hedges *DLQV RU ORVVHV DULVLQJ IURP IDLU YDOXH DGMXVWPHQWV DVVRFLDWHG ZLWK WKH HIIHFWLYH SRUWLRQ RI D GHULYDWLYH GHVLJQDWHG DV D FDVK IORZ KHGJH DUH UHFRJQLVHG LQLWLDOO\ LQ RWKHU FRPSUHKHQVLYH LQFRPH $Q\ LQHIIHFWLYH SRUWLRQRIWKHKHGJLQJLQVWUXPHQWLVLPPHGLDWHO\UHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQW RIFRPSUHKHQVLYHLQFRPHLQ¨*DLQVDQGORVVHVIURPEDQNLQJDQGWUDGLQJDFWLYLWLHV©:KHQWKHFDVKIORZVWKDW WKHKHGJLQJLQVWUXPHQWLVKHGJLQJPDWHULDOLVHUHVXOWLQJLQLQFRPHRUH[SHQVHWKHDVVRFLDWHGJDLQRUORVVRQ WKHKHGJLQJLQVWUXPHQWLVVLPXOWDQHRXVO\WUDQVIHUUHGIURPRWKHUFRPSUHKHQVLYHLQFRPHWRWKHFRUUHVSRQGLQJ OLQHLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH :KHQKHGJHDFFRXQWLQJFHDVHVDQ\FXPXODWLYHJDLQRUORVVH[LVWLQJLQHTXLW\DWWKDWWLPHUHPDLQVLQRWKHU FRPSUHKHQVLYHLQFRPHDQGLVUHFRJQLVHGZKHQWKHIRUHFDVWWUDQVDFWLRQLVXOWLPDWHO\UHFRJQLVHGLQWKHSURILW DQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH:KHUHWKHKHGJHGLWHPLVWKHSXUFKDVHRID QRQILQDQFLDODVVHWRUQRQILQDQFLDOOLDELOLW\WKHDPRXQWVWDNHQWRRWKHUFRPSUHKHQVLYHLQFRPHDUHWUDQVIHUUHG WRWKHLQLWLDOFDUU\LQJDPRXQWRIWKHQRQILQDQFLDODVVHWRUOLDELOLW\DVDEDVLVDGMXVWPHQW :KHQDIRUHFDVWWUDQVDFWLRQLVQRORQJHUH[SHFWHGWRRFFXUWKHFXPXODWLYHJDLQRUORVVWKDWZDVUHSRUWHGLQ RWKHUFRPSUHKHQVLYHLQFRPHLVLPPHGLDWHO\WUDQVIHUUHGWRWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRI FRPSUHKHQVLYHLQFRPH

1.7.14 Offsetting )LQDQFLDOLQVWUXPHQWVDUHRIIVHWDQGWKHQHWDPRXQWUHSRUWHGLQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQZKHQWKH HQWLW\KROGVDFXUUHQWOHJDOO\HQIRUFHDEOHULJKWWRVHWRIIWKHUHFRJQLVHGDPRXQWVDQGKDVDQLQWHQWLRQWRHLWKHU VHWWOHRQDQHWEDVLVRUUHDOLVHWKHDVVHWDQGVHWWOHWKHOLDELOLW\VLPXOWDQHRXVO\

1.7.15 Repurchase and reverse repurchase agreements :KHUHWKH*URXSVHOOVILQDQFLDOLQVWUXPHQWVDQGDJUHHVWRUHSXUFKDVHWKHVHDWIXWXUHGDWHVWKHULVNVDQG UHZDUGVRIRZQHUVKLSUHPDLQZLWKWKH*URXSDQGWKHFRQVLGHUDWLRQVUHFHLYHGDUHLQFOXGHGXQGHUGHSRVLWVDQG FXUUHQWDFFRXQWV7KHLQYHVWPHQWVDUHVKRZQRQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQDQGYDOXHGDFFRUGLQJWR WKH*URXS©VSROLF\UHOHYDQWWRWKDWFDWHJRU\RILQYHVWPHQWV &RQYHUVHO\ZKHUHLQYHVWPHQWVDUHSXUFKDVHGVXEMHFWWRFRPPLWPHQWVWRUHVHOOWKHVHDWIXWXUHGDWHVDQGWKH ULVNRIRZQHUVKLSGRHVQRWSDVVWRWKH*URXSWKHFRQVLGHUDWLRQVSDLGDUHLQFOXGHGXQGHUDGYDQFHVDQGQRW XQGHULQYHVWPHQWV 5HSXUFKDVHDQGUHYHUVHUHSXUFKDVHDJUHHPHQWVPD\HLWKHUEHGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV LIWKHUHTXLUHPHQWVLQ,$6WRGHVLJQDWHDVVXFKDUHPHWRUFODVVLILHGDVORDQVDQGUHFHLYDEOHV

1.7.16 Compound ﬁnancial instruments 7KHOLDELOLW\FRPSRQHQWRIDFRPSRXQGILQDQFLDOLQVWUXPHQWLVUHFRJQLVHGLQLWLDOO\DWWKHIDLUYDOXHRIDVLPLODU OLDELOLW\WKDWGRHVQRWKDYHDQHTXLW\FRQYHUVLRQRSWLRQ7KHHTXLW\FRPSRQHQWLVUHFRJQLVHGLQLWLDOO\DVWKH GLIIHUHQFHEHWZHHQWKHIDLUYDOXHRIWKHFRPSRXQGILQDQFLDOLQVWUXPHQWDVDZKROHDQGWKHIDLUYDOXHRIWKH OLDELOLW\ FRPSRQHQW $Q\ GLUHFWO\ DWWULEXWDEOH WUDQVDFWLRQ FRVWV DUH DOORFDWHG WR WKH OLDELOLW\ DQG HTXLW\ FRPSRQHQWVLQSURSRUWLRQWRWKHLULQLWLDOFDUU\LQJDPRXQWV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 371 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) 6XEVHTXHQW WR LQLWLDO UHFRJQLWLRQ WKH OLDELOLW\ FRPSRQHQW RI D FRPSRXQG ILQDQFLDO LQVWUXPHQW LV PHDVXUHG DW DPRUWLVHGFRVWXVLQJWKHHIIHFWLYHLQWHUHVWUDWHPHWKRGXQOHVVLWLVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV 7KHHTXLW\FRPSRQHQWRIDFRPSRXQGILQDQFLDOLQVWUXPHQWLVQRWUHPHDVXUHGVXEVHTXHQWWRLQLWLDOUHFRJQLWLRQ

1.7.17 Loan commitments 7KH *URXS HQWHUV LQWR FRPPLWPHQWV WR OHQG WR LWV FXVWRPHUV VXEMHFW WR FHUWDLQ FRQGLWLRQV 6XFK ORDQ FRPPLWPHQWVDUHPDGHHLWKHUIRUDIL[HGSHULRGRUDUHFDQFHOODEOHE\WKH*URXSVXEMHFWWRQRWLFHFRQGLWLRQV 3URYLVLRQLVPDGHIRUXQGUDZQORDQFRPPLWPHQWVWREHSURYLGHGDWEHORZPDUNHWLQWHUHVWUDWHVDQGIRUVLPLODU IDFLOLWLHVLILWLVSUREDEOHWKDWWKHIDFLOLW\ZLOOEHGUDZQDQGUHVXOWLQUHFRJQLWLRQRIDQDVVHWDWDQDPRXQWOHVV WKDQWKHDPRXQWDGYDQFHG

1.7.18 Financial guarantee contracts )LQDQFLDOJXDUDQWHHFRQWUDFWVDUHFRQWUDFWVWKDWUHTXLUHWKHLVVXHUWRPDNHVSHFLILHGSD\PHQWVWRUHLPEXUVH WKHKROGHUIRUDORVVLWLQFXUVEHFDXVHDVSHFLILHGGHEWRUIDLOVWRPDNHSD\PHQWVZKHQGXHLQDFFRUGDQFHZLWK WKHWHUPVRIDGHEWLQVWUXPHQW )LQDQFLDO JXDUDQWHHV DUH LQLWLDOO\ UHFRJQLVHG LQ WKH ILQDQFLDO VWDWHPHQWV DW IDLU YDOXH RQ WKH GDWH WKDW WKH JXDUDQWHHZDVJLYHQ2WKHUWKDQZKHUHWKHIDLUYDOXHRSWLRQLVDSSOLHGVXEVHTXHQWWRLQLWLDOUHFRJQLWLRQWKH *URXS©V OLDELOLWLHV XQGHU VXFK JXDUDQWHHV DUH PHDVXUHG DW WKH KLJKHU RI WKH LQLWLDO PHDVXUHPHQW OHVV DPRUWLVDWLRQ FDOFXODWHG WR UHFRJQLVH LQ WKH SURILW DQG ORVV FRPSRQHQW RI WKH VWDWHPHQW RI FRPSUHKHQVLYH LQFRPHDQ\IHHLQFRPHHDUQHGRYHUWKHSHULRGDQGWKHEHVWHVWLPDWHRIWKHH[SHQGLWXUHUHTXLUHGWRVHWWOHDQ\ ILQDQFLDOREOLJDWLRQDULVLQJDVDUHVXOWRIWKHJXDUDQWHHVDWWKHUHSRUWLQJGDWH $Q\ LQFUHDVH LQ WKH OLDELOLW\ UHODWLQJ WR JXDUDQWHHV LV UHFRJQLVHG LQ WKH SURILW DQG ORVV FRPSRQHQW RI WKH VWDWHPHQWRIFRPSUHKHQVLYHLQFRPH$Q\OLDELOLW\UHPDLQLQJLVUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRI WKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHZKHQWKHJXDUDQWHHLVGLVFKDUJHGFDQFHOOHGRUH[SLUHV

1.8 Share capital 1.8.1 Ordinary share capital ,QFUHPHQWDO FRVWV GLUHFWO\ DWWULEXWDEOH WR LVVXH RUGLQDU\ VKDUHV DQG VKDUH RSWLRQV DUH UHFRJQLVHG DV D GHGXFWLRQIURPHTXLW\

1.8.2 Preference share capital 3UHIHUHQFHVKDUHFDSLWDOLVFODVVLILHGDVHTXLW\LILWLVQRQUHGHHPDEOHRUUHGHHPDEOHRQO\DWWKH&RPSDQ\©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

1.9 Revenue recognition 5HYHQXHLVUHFRJQLVHGWRWKHH[WHQWWKDWLWLVSUREDEOHWKDWWKHHFRQRPLFEHQHILWVZLOOIORZWRWKH*URXSDQG WKH UHYHQXH FDQ EH UHOLDEO\ PHDVXUHG 7KH IROORZLQJ VSHFLILF UHFRJQLWLRQ FULWHULD PXVW DOVR EH PHW EHIRUH UHYHQXHLVUHFRJQLVHG

1.9.1 Net interest income ,QWHUHVW LQFRPH DQG H[SHQVH IRU DOO LQWHUHVWEHDULQJ ILQDQFLDO LQVWUXPHQWV H[FHSW IRU WKRVH KHOG DW IDLU YDOXH WKURXJKSURILWRUORVVDUHUHFRJQLVHGLQ¨1HWLQWHUHVWLQFRPH©LQWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHXVLQJ WKHHIIHFWLYHLQWHUHVWUDWHVRIWKHILQDQFLDODVVHWVRUILQDQFLDOOLDELOLWLHVWRZKLFKWKH\UHODWH 7KH HIIHFWLYH LQWHUHVW UDWH PHWKRG LV D PHWKRG RI FDOFXODWLQJ WKH DPRUWLVHG FRVW RI D ILQDQFLDO DVVHW RU D ILQDQFLDOOLDELOLW\DQGRIDOORFDWLQJWKHLQWHUHVWLQFRPHRULQWHUHVWH[SHQVHRYHUWKHUHOHYDQWSHULRG7KHHIIHFWLYH LQWHUHVW UDWH LV WKH UDWH WKDW H[DFWO\ GLVFRXQWV WKH HVWLPDWHG IXWXUH FDVK SD\PHQWV RU UHFHLSWV WKURXJK WKH

372 Absa Group Limited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©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

1.9.2 Net income from ﬁnancial instruments designated at fair value through proﬁt or loss 1HWLQFRPHLQFOXGHVLQWHUHVWLQFRPHLQWHUHVWH[SHQVHGLYLGHQGLQFRPHDQGDOOJDLQVDQGORVVHVIURPFKDQJHV LQWKHIDLUYDOXHRIILQDQFLDOLQVWUXPHQWVKHOGDWIDLUYDOXHWKURXJKSURILWRUORVV 1HWLQFRPHIURPILQDQFLDOLQVWUXPHQWVKHOGDWIDLUYDOXHWKURXJKSURILWRUORVVDQGKHOGRULVVXHGDVSDUWRIWKH *URXS©VWUDGLQJDFWLYLWLHVLVDFFRXQWHGIRUDV¨*DLQVDQGORVVHVIURPEDQNLQJDQGWUDGLQJDFWLYLWLHV© 1HWLQFRPHIURPILQDQFLDOLQVWUXPHQWVKHOGDWIDLUYDOXHWKURXJKSURILWRUORVVDQGKHOGRULVVXHGDVSDUWRIWKH *URXS©VLQYHVWPHQWDFWLYLWLHVLVDFFRXQWHGIRUDV¨*DLQVDQGORVVHVIURPLQYHVWPHQWDFWLYLWLHV© 1HWLQFRPHIURPILQDQFLDOLQVWUXPHQWVXVHGWRHFRQRPLFDOO\KHGJHWKH*URXS©VLQWHUHVWUDWHULVNLVDFFRXQWHG IRUDV¨1HWLQWHUHVWLQFRPH© *DLQVDQGORVVHVIURPFKDQJHVLQWKHIDLUYDOXHRIILQDQFLDOLQVWUXPHQWVKHOGDWIDLUYDOXHWKURXJKSURILWRUORVVDQG LVVXHGRUKHOGDVSDUWRIWKH*URXS©VEDQNLQJDFWLYLWLHV RWKHUWKDQWKRVHXVHGWRHFRQRPLFDOO\KHGJHWKH*URXS©V LQWHUHVWUDWHULVN DUHDFFRXQWHGIRUDV¨*DLQVDQGORVVHVIURPEDQNLQJDQGWUDGLQJDFWLYLWLHV©,QWHUHVWLQFRPH LQWHUHVWH[SHQVHDQGGLYLGHQGLQFRPHRQWKHVHILQDQFLDOLQVWUXPHQWVDUHDFFRXQWHGIRUDV¨1HWLQWHUHVWLQFRPH©

1.9.3 Instalment credit agreements /HDVHVLQVWDOPHQWFUHGLWDQGUHQWDODJUHHPHQWVDUHUHJDUGHGDVOHDVHV5HQWDOVDQGLQVWDOPHQWUHFHLYDEOHV WKHUHXQGHU OHVV XQHDUQHG ILQDQFH FKDUJHV DUH LQFOXGHG XQGHU ORDQV DQG DGYDQFHV )LQDQFH FKDUJHV DUH UHFRJQLVHGDV¨,QWHUHVWDQGVLPLODULQFRPH©LQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYH LQFRPH RYHU WKH WHUP RI WKH OHDVH XVLQJ WKH QHW LQYHVWPHQW PHWKRG EHIRUH WD[ ZKLFK UHIOHFWV D FRQVWDQW SHULRGLFUDWHRIUHWXUQ

1.9.4 Net fee and commission income Fee and commission income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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 373 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued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

Fee and commission expense )HH DQG FRPPLVVLRQ H[SHQVH UHODWHV WR H[SHQVHV WKDW DUH GLUHFWO\ OLQNHG WR WKH SURGXFWLRQ RI IHH DQG FRPPLVVLRQLQFRPHDQGDOVRLQFOXGHVWUDQVDFWLRQDQGVHUYLFHIHHVZKLFKDUHH[SHQVHGDVWKHVHUYLFHVDUH UHFHLYHG)HHDQGFRPPLVVLRQH[SHQVHWKDWLVLQWHJUDOWRWKHHIIHFWLYHLQWHUHVWUDWHRQDILQDQFLDOLQVWUXPHQWLV LQFOXGHGLQWKHPHDVXUHPHQWRIWKHHIIHFWLYHLQWHUHVWUDWH

Trust and other ﬁduciary activities ,QFRPHIURPWUXVWDQGILGXFLDU\DFWLYLWLHVDULVHVDVDUHVXOWRIKROGLQJRULQYHVWLQJRIDVVHWVRQEHKDOIRILQGLYLGXDOV WUXVWVUHWLUHPHQWEHQHILWSODQVDQGRWKHULQVWLWXWLRQV7KLVLQFRPHVSHFLILFDOO\UHODWHVWRWKHDFWLYLWLHVRIVWHZDUGVKLS DQGFXVWRG\DQGUHODWHVWRDVVHWVWKDWDUHQRWUHFRJQLVHGLQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQ

1.9.5 Gains and losses from derivative and trading portfolio instruments 7KLVLQFOXGHVLQFRPHDULVLQJIURPWKHPDUJLQVWKDWDUHDFKLHYHGWKURXJKPDUNHWPDNLQJDQGFXVWRPHUEXVLQHVVDQG IURPFKDQJHVLQPDUNHWYDOXHFDXVHGE\PRYHPHQWVLQLQWHUHVWDQGH[FKDQJHUDWHVHTXLW\SULFHVFRPPRGLWLHV DQGRWKHUPDUNHWYDULDEOHV*DLQVRUORVVHVRQDVVHWVRUOLDELOLWLHVUHSRUWHGLQWKHWUDGLQJSRUWIROLRDUHLQFOXGHGLQ WKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHXQGHU¨*DLQVDQGORVVHVIURPEDQNLQJDQG WUDGLQJDFWLYLWLHV©WRJHWKHUZLWKLQWHUHVWDQGGLYLGHQGVDULVLQJIURPORQJDQGVKRUWSRVLWLRQVDQGIXQGLQJFRVWVUHODWLQJ WRWUDGLQJDFWLYLWLHV*DLQVDQGORVVHVRQGHULYDWLYHVOLQNHGWRLQYHVWPHQWFRQWUDFWVDUHUHFRJQLVHGLQ¨*DLQVDQG ORVVHVIURPLQYHVWPHQWDFWLYLWLHV©

1.9.6 Dividends received on investments in equity instruments 'LYLGHQGVUHFHLYHGDUHUHFRJQLVHGLQWKHSHULRGLQZKLFKWKHULJKWWRUHFHLSWLVHVWDEOLVKHG'LYLGHQGVUHFHLYHG DUHGLVFORVHGLQ¨*DLQVDQGORVVHVIURPLQYHVWPHQWDFWLYLWLHV©

1.9.7 Fee income and expenses from investment contracts Service fees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

Commissions paid 7KH LQFUHPHQWDO FRVW GLUHFWO\ UHODWHG WR WKH DFTXLVLWLRQ RI QHZ LQYHVWPHQW FRQWUDFWV RU UHQHZLQJ H[LVWLQJ LQYHVWPHQW FRQWUDFWV DUH GHIHUUHG DQG DPRUWLVHG RYHU WKH SHULRG GXULQJ ZKLFK WKH LQYHVWPHQW PDQDJHPHQW VHUYLFHVDUHSURYLGHG

374 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 1.9.8 Sale of assets under construction 5HYHQXHIURPWKHVDOHRIDVVHWVXQGHUFRQVWUXFWLRQLVUHFRJQLVHGZKHQWKHOHJDOWLWOHRIWKHDVVHWLVWUDQVIHUUHG SURYLGHGWKDWWKH*URXSKDVQRIXUWKHUVLJQLILFDQWDFWVWRFRPSOHWHXQGHUWKHFRQWUDFWDQGLVGLVFORVHGLQWKH SURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHXQGHU¨2WKHURSHUDWLQJLQFRPH©

1.9.9 Rental income 5HQWDOLQFRPHIURPLQYHVWPHQWSURSHUW\LVUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRI FRPSUHKHQVLYHLQFRPHRQDVWUDLJKWOLQHEDVLVRYHUWKHWHUPRIWKHOHDVHZKHUHWKHOHDVHLVDQRSHUDWLQJ OHDVH/HDVHLQFHQWLYHVJUDQWHGDUHUHFRJQLVHGDVDQLQWHJUDOSDUWRIWKHWRWDOUHQWDOLQFRPHRYHUWKHWHUPRI WKHOHDVHRQDVWUDLJKWOLQHEDVLV

1.10 Deferred revenue liability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

1.11 Classiﬁcation of insurance and investment contracts 7KH*URXSLVVXHVFRQWUDFWVWKDWWUDQVIHULQVXUDQFHULVNILQDQFLDOULVNRUERWK,QVXUDQFHFRQWUDFWVDUHWKRVH FRQWUDFWVWKDWWUDQVIHUVLJQLILFDQWLQVXUDQFHULVN6XFKFRQWUDFWVPD\DOVRWUDQVIHUILQDQFLDOULVN7KH*URXS GHILQHVVLJQLILFDQWLQVXUDQFHULVNDVWKHSRVVLELOLW\RIKDYLQJWRSD\VLJQLILFDQWEHQHILWVRQWKHRFFXUUHQFHRI DQLQVXUHGHYHQWFRPSDUHGWRWKRVHEHQHILWVSD\DEOHLIWKHLQVXUHGHYHQWGLGQRWRFFXU ,QYHVWPHQWFRQWUDFWVDUHWKRVHFRQWUDFWVWKDWWUDQVIHUILQDQFLDOULVNZLWKQRVLJQLILFDQWLQVXUDQFHULVN

1.11.1 Insurance contracts Short-term insurance contracts Revenue recognition and measurement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

Claims and loss adjustment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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 375 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) Liability adequacy test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

Life insurance contracts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

Valuation methodology $VVXPSWLRQVXVHGIRUYDOXLQJSROLF\OLDELOLWLHVDUHEDVHGRQEHVWHVWLPDWHVRIIXWXUHH[SHULHQFHJXLGHGE\ UHFHQW SDVW H[SHULHQFH DQG LQFUHDVHG E\ PDUJLQV SUHVFULEHG E\ WKH $66$ IRU SUXGHQFH DQG IXUWKHU GLVFUHWLRQDU\PDUJLQVWRHQVXUHWKDWSURILWVDUHUHOHDVHGDSSURSULDWHO\RYHUWKHWHUPRIHDFKSROLF\ 3ROLF\KROGHUV©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

Liability adequacy test /LDELOLWLHVDUHFDOFXODWHGLQWHUPVRIWKH)69EDVLVDVGHVFULEHGLQ3*16LQFHWKH)69EDVLVPHHWVWKH PLQLPXPUHTXLUHPHQWRIWKHOLDELOLW\DGHTXDF\WHVWLWLVQRWQHFHVVDU\WRSHUIRUPDGGLWLRQDODGHTXDF\WHVWVRQ WKHOLDELOLW\FRPSRQHQW)RUWKHOLDELOLW\UHODWLQJWRSRWHQWLDOIXWXUHFODLPVZKLFKKDYHDOUHDG\EHHQLQFXUUHGRQ WKHUHSRUWLQJGDWHEXWRIZKLFKWKH*URXSKDVQRW\HWEHHQLQIRUPHGWHVWVDUHSHUIRUPHGWRHQVXUHWKDWWKH OLDELOLW\LVVXIILFLHQWWRFRYHUKLVWRULFDOUXQRIISURILOHVDQGJURZWKLQWKHYROXPHRIEXVLQHVV

376 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Deferred policy acquisition costs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

Deferred reinsurance acquisition revenue $FTXLVLWLRQ UHYHQXHV FRPSULVH FRPPLVVLRQ GLUHFWO\ FRQQHFWHG ZLWK WKH DFTXLVLWLRQ RU UHQHZDO RI VKRUWWHUP UHLQVXUDQFH FRQWUDFWV 7KH GHIHUUHG UHLQVXUDQFH DFTXLVLWLRQV UHYHQXH UHSUHVHQW WKH SRUWLRQ RI UHLQVXUDQFH DFTXLVLWLRQUHYHQXHLQFXUUHGZKLFKFRUUHVSRQGVWRWKHUHLQVXUDQFHXQHDUQHGSUHPLXPUHVHUYH 'HIHUUHGUHLQVXUDQFHDFTXLVLWLRQUHYHQXHVDUHHDUQHGLQOLQHZLWKH[SHFWHGIXWXUHUHLQVXUDQFHSUHPLXPV

Reinsurance contracts held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©V UHLQVXUDQFH DVVHWV DUH DVVHVVHG IRU LPSDLUPHQW DW HDFK UHSRUWLQJ GDWH ,I WKHUH LV REMHFWLYH HYLGHQFHWKDWWKHUHLQVXUDQFHDVVHWLVLPSDLUHGWKH*URXSUHGXFHVWKHFDUU\LQJDPRXQWRIWKHUHLQVXUDQFH DVVHWWRLWVUHFRYHUDEOHDPRXQWDQGUHFRJQLVHVWKHLPSDLUPHQWORVVLQWKHSURILWDQGORVVFRPSRQHQWRIWKH VWDWHPHQWRIFRPSUHKHQVLYHLQFRPH)RUKLVWRULFDPRXQWVWKHLPSDLUPHQWLVFDOFXODWHGDVWKHWRWDODPRXQW GXHIURPUHLQVXUHUVIRUZKLFKWKHUHLVDVLJQLILFDQWSUREDELOLW\WKDWWKHDPRXQWVGXHZRXOGQRWEHUHFRYHUDEOH OHVVDQ\RIIVHWWLQJDPRXQWV/LDELOLWLHVDUHUHYDOXHGDVVXPLQJWKDWQRUHLQVXUDQFHLVFHGHG

Receivables and payables related to insurance and investment contracts 5HFHLYDEOHVDQGSD\DEOHVDUHRQO\UHFRJQLVHGZKHQWKH\PHHWWKHGHILQLWLRQVDQGUHFRJQLWLRQFULWHULDRIILQDQFLDO DVVHWVDQGRUOLDELOLWLHV7KHVHLQFOXGHDPRXQWVGXHWRDQGIURPLQWHUPHGLDULHVDQGLQVXUDQFHFRQWUDFWKROGHUV

Salvage and subrogation reimbursements 6RPH LQVXUDQFH FRQWUDFWV SHUPLW WKH *URXS WR VHOO XVXDOO\ GDPDJHG SURSHUW\ DFTXLUHG LQ VHWWOLQJ D FODLP LHVDOYDJH 7KH *URXS PD\ DOVR KDYH WKH ULJKW WR SXUVXH WKLUG SDUWLHV IRU SD\PHQW RI VRPH RU DOO FRVWV LHVXEURJDWLRQ 7KH*URXSGRHVQRWDOORZIRUVDOYDJHUHFRYHULHVRUVXEURJDWLRQUHLPEXUVHPHQWVLQWKHPHDVXUHPHQWRILQVXUDQFH OLDELOLWLHVIRUFODLPV6DOYDJHDQGVXEURJDWLRQUHLPEXUVHPHQWVDUHUHFRJQLVHGZKHQWKHPRQH\LVGXH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 377 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) Philosophy on release of proﬁts on the valuation basis 3*1 DOORZV IRU DGGLWLRQDO PDUJLQV LI WKH VWDWXWRU\ DFWXDU\ EHOLHYHV WKDW WKH FRPSXOVRU\ PDUJLQV DUH LQVXIILFLHQWIRUSUXGHQWUHVHUYLQJDQGRUWRGHIHUWKHUHOHDVHRISURILWVLQOLQHZLWKSROLF\GHVLJQ ,WLVWKH*URXS©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©V SURILW UHFRJQLWLRQ SROLF\ GHWHUPLQHVWKDWDVVHWEDVHGIHHVDUHPRUHDSSURSULDWHO\DFFRXQWHGIRUDVDQGZKHQWKH\DUHLQYRLFHG $SHUFHQWDJHRISUHPLXPVIRUFHUWDLQUHJXODUSUHPLXPEXVLQHVVLVQRWWDNHQLQWRDFFRXQWZKHQOLDELOLWLHVDUH YDOXHG7KHHIIHFWLVWRLQFUHDVHOLDELOLWLHV7KLVDOORZVIRUXQFHUWDLQW\DVWRZKHWKHUWKHSUHPLXPVZLOODFWXDOO\ EHUHFHLYHGDQGLVLQOLQHZLWKWKHSURILWUHFRJQLWLRQSROLF\ZKHUHE\SURILWLVQRWUHFRJQLVHGLQDGYDQFH

1.11.2 Investment contracts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©V PDLQYDOXDWLRQWHFKQLTXHVLQFRUSRUDWHDOOIDFWRUVWKDWPDUNHWSDUWLFLSDQWVZRXOGFRQVLGHUDQGDUHEDVHGRQ REVHUYDEOHPDUNHWGDWD7KHIDLUYDOXHRIDXQLWOLQNHGLQYHVWPHQWFRQWUDFWLVGHWHUPLQHGXVLQJWKHFXUUHQWXQLW YDOXHVWKDWUHIOHFWWKHIDLUYDOXHVRIWKHILQDQFLDODVVHWVFRQWDLQHGZLWKLQWKH*URXS©VXQLWLVHGLQYHVWPHQWIXQGV OLQNHGWRWKHILQDQFLDOOLDELOLW\PXOWLSOLHGE\WKHQXPEHURIXQLWVDWWULEXWHGWRWKHFRQWUDFWKROGHUDWWKHUHSRUWLQJ GDWH7KHIDLUYDOXHRIIL[HGLQWHUHVWUDWHSURGXFWVLVGHWHUPLQHGE\GLVFRXQWLQJWKHPDWXULW\YDOXHDWPDUNHW UDWHVRILQWHUHVW ,IWKHLQYHVWPHQWFRQWUDFWLVVXEMHFWWRDSXWRUVXUUHQGHURSWLRQKHOGE\WKHFXVWRPHUWKHIDLUYDOXHRIWKH ILQDQFLDOOLDELOLW\LVQHYHUOHVVWKDQWKHDPRXQWSD\DEOHRQVXUUHQGHUGLVFRXQWHGIRUWKHUHTXLUHGQRWLFHSHULRG ZKHUHDSSOLFDEOH

1.12 Cell arrangements 7KHUHDUHFXUUHQWO\WZRGLVWLQFWW\SHVRIFHOOFDSWLYHDUUDQJHPHQWVEHLQJ ¨)LUVW SDUW\© ZKHUH WKH ULVNV WKDW DUH EHLQJ LQVXUHG UHODWH WR WKH FHOO RZQHU©V RSHUDWLRQV DQG WKDW RI WKHLU VXEVLGLDULHV &ODLPV ZLWKLQ WKHVH FHOOV DUH OLPLWHG WR WKH IXQGV DYDLODEOH LQ WKH FHOO DIWHU SURYLGLQJ IRU VROYHQF\ ¨7KLUGSDUW\©ZKHUHWKHFHOORZQHUKDVWKHDELOLW\WRVHOOEUDQGHGLQVXUDQFHSURGXFWVLQWRLWVRZQFXVWRPHU EDVH&ODLPVLQVWLWXWHGZLWKLQWKLUGSDUW\FHOOVDUHQRWOLPLWHGWRWKHIXQGVSURYLGHGE\WKHFHOORZQHUDIWHU SURYLGLQJIRUVROYHQF\

378 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU ,QUHVSHFWRIWKLUGSDUW\FHOOVZKHUHLQVXUDQFHFRQWUDFWVDUHLVVXHGWRWKLUGSDUWLHVGLUHFWO\LQWKHQDPHRIWKH *URXSWKHFHOOFDSWLYHLVFRQVLGHUHGWREHWKHUHLQVXUHUDVWKHUHLVLQVXUDQFHULVNWUDQVIHU7KHSROLF\KROGHU OLDELOLWLHVDQGUHLQVXUDQFHDVVHWVLQUHVSHFWRIWKHVHLQVXUDQFHFRQWUDFWVDUHUHFRJQLVHGLQWKHVWDWHPHQWRI ILQDQFLDOSRVLWLRQRIWKH*URXSLQWHUPVRIWKHUHLQVXUDQFHDUUDQJHPHQWZLWKWKHFHOOFDSWLYH([FHVVDVVHWV RYHUSROLF\KROGHUOLDELOLWLHVLQWKHFHOOFDSWLYHEHORQJWRWKHFHOORZQHUDQGDUHQRWUHFRJQLVHGE\WKH*URXS 7KHILQDQFLDOSRVLWLRQDQGSHUIRUPDQFHRIILUVWSDUW\FHOOVDUHQRWLQFOXGHGLQWKHILQDQFLDOVWDWHPHQWVRIWKH *URXSDVQRWUDQVIHURIULVNVDQGUHZDUGVRIDVVHWVDQGOLDELOLWLHVWDNHVSODFHDFFRUGLQJWRWKHFHOODJUHHPHQWV (DFKILUVWSDUW\FHOORZQHULVUHVSRQVLEOHIRUWKHVROYHQF\RIHDFKFHOODQGWKH*URXSWKHUHIRUHGRHVQRWFDUU\ DQ\ULVN+RZHYHUIRUWKLUGSDUW\FHOOVVKRXOGWKHFHOORZQHUQRWEHDEOHWRPHHWWKHREOLJDWLRQVZLWKLQWKHFHOO WKH*URXSZRXOGEHUHTXLUHGWRPHHWREOLJDWLRQVRIWKHFHOO7KH*URXSWKHUHIRUHFDUULHVDFUHGLWULVNDJDLQVW HDFKFHOORZQHU7KLVULVNLVOLPLWHGWKURXJKWKHVHOHFWLRQSURFHVVRIUHSXWDEOHFHOORZQHUV 0RQWKO\ILQDQFLDODFFRXQWVDUHSUHSDUHGDQGUHJXODUDFWXDULDOYDOXDWLRQVDUHSHUIRUPHGIRUHDFKFHOOFDSWLYHWR PRQLWRUWKHILQDQFLDOVRXQGQHVVRIWKHFHOO

1.13 Commodities &RPPRGLWLHVZKHUHWKH*URXSKDVDVKRUWHUWHUPWUDGLQJLQWHQWLRQDUHFDUULHGDWIDLUYDOXHOHVVFRVWWRVHOOLQ DFFRUGDQFHZLWKWKHEURNHUWUDGHUH[FHSWLRQLQ,$6,QYHQWRULHV 7KH IDLU YDOXH IRU FRPPRGLWLHV LV GHWHUPLQHG SULPDULO\ XVLQJ GDWD GHULYHG IURP WKH PDUNHWV RQ ZKLFK WKH XQGHUO\LQJFRPPRGLWLHVDUHWUDGHG

1.14 Intangible assets 1.14.1 Goodwill *RRGZLOO LV LQLWLDOO\ PHDVXUHG DW FRVW EHLQJ WKH H[FHVV RI WKH FRVW RI WKH EXVLQHVV FRPELQDWLRQ RYHU WKH *URXS©VVKDUHLQWKHQHWIDLUYDOXHRIWKHDFTXLUHH©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©V&*8VRUJURXSVRI&*8VWKDWDUH H[SHFWHGWREHQHILWIURPWKHV\QHUJLHVRIWKHFRPELQDWLRQLUUHVSHFWLYHRIZKHWKHURWKHUDVVHWVRUOLDELOLWLHVRI WKHDFTXLUHHDUHDVVLJQHGWRWKRVHXQLWVRUJURXSVRIXQLWV 7KHILUVWVWHSRIWKHLPSDLUPHQWUHYLHZSURFHVVUHTXLUHVWKHLGHQWLILFDWLRQRILQGHSHQGHQWRSHUDWLQJXQLWVE\ GLYLGLQJWKH*URXS©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©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 379 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) 1.14.2 Computer software, customer lists and other intangible assets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¨2SHUDWLQJ H[SHQVHV©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

380 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU $VXPPDU\RISROLFLHVDSSOLHGWRWKH*URXS©VLQWDQJLEOHDVVHWVLVDVIROORZV

Customer Development lists costs Other

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¤ ¤ UDWH

1.15 Property and equipment 1.15.1 Property and equipment not subject to lease agreements 3URSHUW\DQGHTXLSPHQWLVLQLWLDOO\UHFRJQLVHGDWFRVW,WLVVXEVHTXHQWO\PHDVXUHGDWFRVWOHVVDFFXPXODWHG GHSUHFLDWLRQDQGRUDFFXPXODWHGLPSDLUPHQWORVVHVLIDQ\6XEVHTXHQWFRVWVDQGDGGLWLRQVDUHLQFOXGHGLQWKH DVVHW©VFDUU\LQJDPRXQWRUDUHUHFRJQLVHGDVDVHSDUDWHDVVHWDVDSSURSULDWHRQO\ZKHQLWLVSUREDEOHWKDW IXWXUH HFRQRPLF EHQHILWV DVVRFLDWHG ZLWK WKH LWHP ZLOO IORZ WR WKH *URXS DQG WKH FRVW RI WKH LWHP FDQ EH PHDVXUHGUHOLDEO\$OORWKHUUHSDLUVDQGPDLQWHQDQFHFRVWVDUHFKDUJHGWRWKHSURILWDQGORVVFRPSRQHQWRIWKH VWDWHPHQWRIFRPSUHKHQVLYHLQFRPHGXULQJWKHILQDQFLDOSHULRGLQZKLFKWKH\DUHLQFXUUHG $OOSURSHUW\DQGHTXLSPHQWRWKHUWKDQODQGLVGHSUHFLDWHGRQDVWUDLJKWOLQHEDVLVWRZULWHGRZQWKHLUFRVWWR WKHLUUHVLGXDOYDOXHVRYHUWKHLUHVWLPDWHGXVHIXOOLYHV 7KH*URXSXVHVWKHIROORZLQJDQQXDOUDWHVLQFDOFXODWLQJGHSUHFLDWLRQ

Item Annual depreciation rate (%)

&RPSXWHUHTXLSPHQW ¤ )UHHKROGSURSHUW\ )XUQLWXUHDQGRWKHUHTXLSPHQW ¤ 0RWRUYHKLFOHV

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©VOHQJWKWUDQVDFWLRQ DIWHUSURSHUPDUNHWLQJZKHUHLQWKHSDUWLHVKDGHDFKDFWHGNQRZOHGJHDEO\SUXGHQWO\DQGZLWKRXWFRPSXOVLRQ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 381 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) $QLWHPRISURSHUW\DQGHTXLSPHQWLVGHUHFRJQLVHGXSRQGLVSRVDORUZKHQQRIXWXUHHFRQRPLFEHQHILWVDUH H[SHFWHGIURPLWVXVHRUGLVSRVDO$Q\JDLQRUORVVDULVLQJRQGHUHFRJQLWLRQRIWKHDVVHW FDOFXODWHGDVWKH GLIIHUHQFHEHWZHHQWKHQHWGLVSRVDOSURFHHGVDQGWKHFDUU\LQJDPRXQWRIWKHDVVHW LVLQFOXGHGLQWKHSURILW DQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHZLWKLQ¨2WKHURSHUDWLQJLQFRPH©LQWKH\HDUWKDW WKHDVVHWLVGHUHFRJQLVHG 7KHDVVHWV©UHVLGXDOYDOXHVXVHIXOOLYHVDQGPHWKRGVRIGHSUHFLDWLRQDUHUHYLHZHGDWHDFKILQDQFLDO\HDUHQG DQGDGMXVWHGSURVSHFWLYHO\LIDSSURSULDWH

1.15.2 Property and equipment subject to lease agreements 7KH GHWHUPLQDWLRQ RI ZKHWKHU DQ DUUDQJHPHQW LV RU FRQWDLQV D OHDVH LV EDVHG RQ WKH VXEVWDQFH RI WKH DUUDQJHPHQWDWLQFHSWLRQGDWHZKHWKHUIXOILOPHQWRIWKHDUUDQJHPHQWLVGHSHQGHQWRQWKHXVHRIDVSHFLILF DVVHWRUDVVHWVRUWKHDUUDQJHPHQWFRQYH\VDULJKWWRXVHWKHDVVHW

Finance leases /HDVHVZKHUHWKH*URXSDVOHVVHHDVVXPHVVXEVWDQWLDOO\DOOWKHULVNVDQGUHZDUGVRIRZQHUVKLSDUHFODVVLILHG DVILQDQFHOHDVHV)LQDQFHOHDVHVDUHFDSLWDOLVHGDWWKHOHDVH©VLQFHSWLRQDWWKHORZHURIWKHIDLUYDOXHRIWKH OHDVHGDVVHWDQGWKHSUHVHQWYDOXHRIPLQLPXPOHDVHSD\PHQWV/HDVHSD\PHQWVDUHDSSRUWLRQHGXVLQJWKH HIIHFWLYHLQWHUHVWUDWHPHWKRGWRLGHQWLI\WKHILQDQFHFRVWZKLFKLVFKDUJHGWRLQWHUHVWH[SHQVHVRYHUWKHOHDVH WHUPDQGWKHFDSLWDOUHSD\PHQWZKLFKUHGXFHVWKHOLDELOLW\WRWKHOHVVRU7KHSURSHUW\DQGHTXLSPHQWDFTXLUHG XQGHUILQDQFHOHDVHVDUHGHSUHFLDWHGRYHUWKHVKRUWHURIWKHDVVHW©VXVHIXOOLIHDQGWKHOHDVHWHUP

Operating leases /HDVHVRIDVVHWVDUHFODVVLILHGDVRSHUDWLQJOHDVHVLIWKHOHVVRUHIIHFWLYHO\UHWDLQVDOOWKHULVNVDQGUHZDUGVRI RZQHUVKLS$VVHWVOHDVHGXQGHURSHUDWLQJOHDVHVDUHQRWUHFRJQLVHGRQWKH*URXS©VVWDWHPHQWRIILQDQFLDO SRVLWLRQZKLOHSD\PHQWVPDGHDUHFKDUJHGWRWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYH LQFRPHRQDVWUDLJKWOLQHEDVLVRYHUWKHSHULRGRIWKHOHDVH/HDVHLQFHQWLYHVUHFHLYHGDUHUHFRJQLVHGDVDQ LQWHJUDOSDUWRIWKHWRWDOOHDVHH[SHQVHRYHUWKHWHUPRIWKHOHDVHRQDVWUDLJKWOLQHEDVLV

1.15.3 Investment properties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©V LQYHVWPHQW SURSHUW\ HDFK \HDU 7KH IDLU YDOXHV DUH EDVHG RQ PDUNHW YDOXHV EHLQJ WKH HVWLPDWHG DPRXQW IRU ZKLFK DSURSHUW\FRXOGEHH[FKDQJHGRQWKHGDWHRIWKHYDOXDWLRQEHWZHHQDZLOOLQJEX\HUDQGDZLOOLQJVHOOHULQDQ DUP©VOHQJWKWUDQVDFWLRQDIWHUSURSHUPDUNHWLQJZKHUHLQWKHSDUWLHVKDGHDFKDFWHGNQRZOHGJHDEO\SUXGHQWO\ DQGZLWKRXWFRPSXOVLRQ 9DOXDWLRQVUHIOHFWZKHQDSSURSULDWHWKHW\SHRIWHQDQWVDFWXDOO\LQRFFXSDWLRQRUUHVSRQVLEOHIRUPHHWLQJOHDVH FRPPLWPHQWV RU OLNHO\ WR EH LQ RFFXSDWLRQ DIWHU OHWWLQJ YDFDQW DFFRPPRGDWLRQ DQG WKH PDUNHW©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

382 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU ,QYHVWPHQW SURSHUWLHV DUH GHUHFRJQLVHG ZKHQ HLWKHU WKH\ KDYH EHHQ GLVSRVHG RI RU ZKHQ WKH LQYHVWPHQW SURSHUW\LVSHUPDQHQWO\ZLWKGUDZQIURPXVHDQGQRIXWXUHHFRQRPLFEHQHILWLVH[SHFWHGIURPLWVGLVSRVDO7KH GLIIHUHQFHEHWZHHQWKHQHWGLVSRVDOSURFHHGVDQGWKHFDUU\LQJDPRXQWRIWKHDVVHWLVUHFRJQLVHGLQWKHSURILW DQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHLQWKHSHULRGRIGHUHFRJQLWLRQ

1.16 Repossessed properties 5HSRVVHVVHGSURSHUWLHVDFTXLUHGLQH[FKDQJHIRUORDQVDVSDUWRIDQRUGHUO\UHDOLVDWLRQDUHUHSRUWHGLQ¨2WKHU DVVHWV©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¨2WKHULPSDLUPHQWV©$Q\VXEVHTXHQWLQFUHDVHLQWKHQHWUHDOLVDEOH YDOXHWRWKHH[WHQWWKDWLWGRHVQRWH[FHHGWKHFXPXODWLYHZULWHGRZQLVDOVRUHFRJQLVHGLQ¨2WKHULPSDLUPHQWV© *DLQVRUORVVHVRQGLVSRVDORIUHSRVVHVVHGSURSHUWLHVDUHUHSRUWHGLQ¨2WKHURSHUDWLQJLQFRPH©RU¨2SHUDWLQJ H[SHQGLWXUH©

1.17 Constructed assets held for sale &RQVWUXFWHGDVVHWVKHOGIRUVDOHDUHLQLWLDOO\UHFRJQLVHGDWFRVWDQGVXEVHTXHQWO\PHDVXUHGDWWKHORZHURI FRVWDQGQHWUHDOLVDEOHYDOXH&RVWVLQFOXGHWKHFRVWRIWKHODQGDQGFRQVWUXFWLRQFRVWVWRGDWH&RQVWUXFWLRQ DVVHWVKHOGIRUVDOHDUHGLVFORVHGDV¨2WKHUDVVHWV©LQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQ

1.18 Non-current assets held for sale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©VDFFRXQWLQJSROLFLHV7KHUHDIWHUWKHDVVHWV RUGLVSRVDOJURXS DUHPHDVXUHGDWWKHORZHURI WKHLUFDUU\LQJDPRXQWDQGIDLUYDOXHOHVVFRVWWRVHOO$Q\LPSDLUPHQWORVVRQDGLVSRVDOJURXSLVILUVWDOORFDWHG WR UHGXFH JRRGZLOO DQG WKHQ WR UHPDLQLQJ DVVHWV DQG OLDELOLWLHV RQ D SUR UDWD EDVLV H[FHSW WKDW QR ORVV LV DOORFDWHGWRILQDQFLDODVVHWVGHIHUUHGWD[DVVHWVLQYHVWPHQWSURSHUW\LQVXUDQFHDVVHWVDQGHPSOR\HHEHQHILW DVVHWVZKLFKFRQWLQXHWREHPHDVXUHGLQDFFRUGDQFHZLWKWKH*URXS©VDFFRXQWLQJSROLFLHV ,PSDLUPHQWORVVHVRQLQLWLDOFODVVLILFDWLRQDVKHOGIRUVDOHDQGVXEVHTXHQWJDLQVRUORVVHVRQUHPHDVXUHPHQW DUHUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH*DLQVDUHQRW UHFRJQLVHGLQH[FHVVRIDQ\FXPXODWLYHLPSDLUPHQWORVVXQWLOILQDOO\VROG 3URSHUW\HTXLSPHQWDQGLQWDQJLEOHDVVHWVRQFHFODVVLILHGDVKHOGIRUVDOHDUHQRWGHSUHFLDWHGRUDPRUWLVHG

1.19 Impairment of property, equipment and intangible assets $WHDFKUHSRUWLQJGDWHRUPRUHIUHTXHQWO\ZKHUHHYHQWVRUFKDQJHVLQFLUFXPVWDQFHVLQGLFDWHWKDWWKHFDUU\LQJ DPRXQWRIDQDVVHWH[FHHGVLWVUHFRYHUDEOHDPRXQWSURSHUW\HTXLSPHQWDQGLQWDQJLEOHDVVHWVDUHDVVHVVHG IRULPSDLUPHQW7KHLPSDLUPHQWUHYLHZFRPSULVHVDFRPSDULVRQRIWKHFDUU\LQJDPRXQWRIWKHDVVHWZLWKLWV UHFRYHUDEOHDPRXQWZKLFKLVWKHKLJKHURIWKHDVVHW©VRUWKH&*8©VIDLUYDOXHOHVVFRVWVWRVHOODQGLWVYDOXH LQXVH )DLU YDOXH OHVV FRVWV WR VHOO LV FDOFXODWHG E\ UHIHUHQFH WR WKH DPRXQW DW ZKLFK WKH DVVHW FRXOG EH GLVSRVHGRILQDELQGLQJVDOHDJUHHPHQWLQDQDUP©VOHQJWKWUDQVDFWLRQHYLGHQFHGE\DQDFWLYHPDUNHWRUUHFHQW WUDQVDFWLRQV IRU VLPLODU DVVHWV 9DOXHLQXVH LV FDOFXODWHG E\ GLVFRXQWLQJ WKH H[SHFWHG IXWXUH FDVK LQ RU RXWIORZVWREHREWDLQHGRULQFXUUHGDVDUHVXOWRIWKHDVVHW©VFRQWLQXHGXVHLQFOXGLQJWKRVHUHVXOWLQJIURPLWV XOWLPDWHGLVSRVDODWDPDUNHWEDVHGGLVFRXQWUDWHRQDSUHWD[EDVLV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 383 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued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©V RU &*8©V UHFRYHUDEOH DPRXQW $ SUHYLRXVO\ UHFRJQLVHG LPSDLUPHQWORVVLVUHYHUVHGRQO\LIWKHUHKDVEHHQDFKDQJHLQWKHDVVXPSWLRQVXVHGWRGHWHUPLQHWKHDVVHW©V UHFRYHUDEOHDPRXQWVLQFHWKHODVWLPSDLUPHQWORVVZDVUHFRJQLVHG7KHUHYHUVDOLVOLPLWHGVRWKDWWKHFDUU\LQJ DPRXQWRIWKHDVVHWGRHVQRWH[FHHGLWVUHFRYHUDEOHDPRXQWQRUH[FHHGWKHFDUU\LQJDPRXQWWKDWZRXOGKDYH EHHQGHWHUPLQHGQHWRIGHSUHFLDWLRQRUDPRUWLVDWLRQKDGQRLPSDLUPHQWORVVEHHQUHFRJQLVHGIRUWKHDVVHW LQSULRU\HDUV

1.20 Cash and cash equivalents )RUWKHSXUSRVHVRIWKHVWDWHPHQWRIFDVKIORZVFDVKFRPSULVHVFDVKRQKDQGDQGGHPDQGGHSRVLWV&DVK HTXLYDOHQWV FRPSULVH KLJKO\ OLTXLG LQYHVWPHQWV WKDW DUH FRQYHUWLEOH LQWR FDVK ZLWK DQ LQVLJQLILFDQW ULVN RI FKDQJHVLQYDOXHZLWKRULJLQDOPDWXULWLHVRIOHVVWKDQWKUHHPRQWKV

1.21 Provisions, contingent liabilities and commitments 3URYLVLRQVDUHUHFRJQLVHGZKHQWKH*URXSKDVDSUHVHQWFRQVWUXFWLYHRUOHJDOREOLJDWLRQDVDUHVXOWRISDVW HYHQWVDQGLWLVSUREDEOHWKDWDQRXWIORZRIUHVRXUFHVHPERG\LQJHFRQRPLFEHQHILWVZLOOEHUHTXLUHGWRVHWWOH WKHREOLJDWLRQDQGDUHOLDEOHHVWLPDWHRIWKHDPRXQWRIWKHREOLJDWLRQFDQEHPDGH 3URYLVLRQVDUHPHDVXUHGDWWKHSUHVHQWYDOXHRIPDQDJHPHQW©VEHVWHVWLPDWHRIWKHH[SHQGLWXUHUHTXLUHGWR VHWWOH WKH SUHVHQW REOLJDWLRQ DW WKH UHSRUWLQJ GDWH 7KH GLVFRXQW UDWH XVHG WR GHWHUPLQH WKH SUHVHQW YDOXH UHIOHFWVWKHPDUNHWDVVHVVPHQWVRIWKHWLPHYDOXHRIPRQH\DQGWKHLQFUHDVHVVSHFLILFWRWKHOLDELOLW\ 7UDQVDFWLRQV DUH FODVVLILHG DV FRQWLQJHQW OLDELOLWLHV ZKHUH WKH H[LVWHQFH RI WKH *URXS©V SRVVLEOH REOLJDWLRQV GHSHQGVRQXQFHUWDLQIXWXUHHYHQWVEH\RQGWKH*URXS©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

1.22 Employee beneﬁts 1.22.1 Post-retirement beneﬁts 7KH*URXSKDVGLIIHUHQWSHQVLRQSODQVZLWKGHILQHGFRQWULEXWLRQDQGGHILQHGEHQHILWVWUXFWXUHV

Deﬁned contribution structures 8QGHU WKH GHILQHG FRQWULEXWLRQ VWUXFWXUHV IL[HG FRQWULEXWLRQV SD\DEOH E\ WKH *URXS DQG PHPEHUV DUH DFFXPXODWHG WR SURYLGH UHWLUHPHQW EHQHILWV 7KH *URXS KDV QR OHJDO RU FRQVWUXFWLYH REOLJDWLRQ WR SD\ DQ\ IXUWKHUFRQWULEXWLRQVWKDQWKHVHIL[HGFRQWULEXWLRQV &RQWULEXWLRQVWRDQ\GHILQHGFRQWULEXWLRQSODQDUHH[SHQVHGDVLQFXUUHG

Deﬁned beneﬁt structures 7KHGHILQHGEHQHILWVWUXFWXUHVGHILQHWKHDPRXQWRISHQVLRQEHQHILWWKDWDQHPSOR\HHZLOOUHFHLYHRQUHWLUHPHQW XVXDOO\GHSHQGHQWRQRQHRUPRUHIDFWRUVVXFKDV\HDUVRIVHUYLFHDQGFRPSHQVDWLRQ

384 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 7KH*URXS©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©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

Short-term beneﬁts 6KRUWWHUP EHQHILWV FRQVLVW RI VDODULHV DFFXPXODWHG OHDYH SD\PHQWV SURILW VKDUH ERQXVHV DQG DQ\ QRQ PRQHWDU\EHQHILWVVXFKDVPHGLFDODLGFRQWULEXWLRQVDQGIUHHVHUYLFHV7KH\H[FOXGHHTXLW\EDVHGEHQHILWV DQGWHUPLQDWLRQEHQHILWV 6KRUWWHUPHPSOR\HHEHQHILWREOLJDWLRQVDUHPHDVXUHGRQDQXQGLVFRXQWHGEDVLVDQGDUHH[SHQVHGDVWKH UHODWHGVHUYLFHLVSURYLGHG $SURYLVLRQLVUHFRJQLVHGIRUWKHDPRXQWH[SHFWHGWREHSDLGXQGHUDVKRUWWHUPFDVKERQXVSURILWVKDULQJ SODQVRUDFFXPXODWHGOHDYHLIWKH*URXSKDVDSUHVHQWOHJDORUFRQVWUXFWLYHREOLJDWLRQWRSD\WKLVDPRXQWDV DUHVXOWRISDVWVHUYLFHSURYLGHGE\WKHHPSOR\HHDQGWKHREOLJDWLRQFDQEHHVWLPDWHGUHOLDEO\

1.22.2 Share-based compensation 7KH*URXSRSHUDWHVHTXLW\VHWWOHGDQGFDVKVHWWOHGVKDUHEDVHGFRPSHQVDWLRQSODQV

Employee services settled in equity instruments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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 385 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued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

Employee services settled in cash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

Determination of fair values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

1.23 Taxation 7KHWD[DWLRQFKDUJHFRPSULVHVFXUUHQWDQGGHIHUUHGWD[,QFRPHWD[DWLRQH[SHQVHLVUHFRJQLVHGLQWKHSURILWDQG ORVV FRPSRQHQW RI WKH VWDWHPHQW RI FRPSUHKHQVLYH LQFRPH H[FHSW WR WKH H[WHQW WKDW LW UHODWHV WR LWHPV UHFRJQLVHG GLUHFWO\ LQ RWKHU FRPSUHKHQVLYH LQFRPH LQ ZKLFK FDVH LW LV UHFRJQLVHG LQ RWKHU FRPSUHKHQVLYH LQFRPH

1.23.1 Current tax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

386 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 1.23.2 Deferred tax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

1.23.3 Secondary tax on companies (STC) 7KHOLDELOLW\WRSD\GLYLGHQGVLVRQO\UHFRJQLVHGRQFHWKHGLYLGHQGVDUHGHFODUHG 67&LVSURYLGHGIRUDWRQWKHQHWRIGLYLGHQGVGHFODUHGOHVVGLYLGHQGVUHFHLYHG XQOHVVH[HPSWIURP67& E\WKH*URXSDWWKHVDPHWLPHDVWKHOLDELOLW\WRSD\WKHUHODWHGGLYLGHQGVLVUHFRJQLVHG67&FUHGLWVWKDWDULVH IURPGLYLGHQGVUHFHLYHGDQGUHFHLYDEOHWKDWH[FHHGGLYLGHQGVSDLGDUHDFFRXQWHGIRUDVDGHIHUUHGWD[DVVHW 67& LV LQFOXGHG LQ WKH ¨7D[DWLRQ H[SHQVH© OLQH LQ WKH SURILW DQG ORVV FRPSRQHQW RI WKH VWDWHPHQW RI FRPSUHKHQVLYHLQFRPH

1.23.4 Value added tax (VAT) 5HYHQXHVH[SHQVHVDQGDVVHWVDUHUHFRJQLVHGQHWRIWKHDPRXQWRI9$7H[FHSW ZKHUHWKH9$7LQFXUUHGRQDSXUFKDVHRIDVVHWVRUVHUYLFHVLVQRWUHFRYHUDEOHIURPWKHWD[DWLRQDXWKRULW\ LQZKLFKFDVHWKH9$7LVUHFRJQLVHGDVSDUWRIWKHDVVHWRUDVSDUWRIWKHH[SHQVHLWHPVDVDSSOLFDEOHDQG UHFHLYDEOHVDQGSD\DEOHVWKDWDUHVWDWHGZLWKWKHDPRXQWRI9$7LQFOXGHG 7KHQHWDPRXQWRI9$7UHFRYHUDEOHIURPRUSD\DEOHWRWKHWD[DWLRQDXWKRULW\LVLQFOXGHGDVSDUWRIUHFHLYDEOHV RUSD\DEOHVLQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQ

1.24 Treasury shares :KHUH WKH &RPSDQ\ RU RWKHU PHPEHUV RI WKH FRQVROLGDWHG JURXS SXUFKDVH WKH &RPSDQ\©V HTXLW\ VKDUH FDSLWDOWKHSDUYDOXHRIWKHVHWUHDVXU\VKDUHVLVGHGXFWHGIURPVKDUHFDSLWDOZKHUHDVWKHUHPDLQGHURIWKH FRVWSULFHLVGHGXFWHGIURPVKDUHSUHPLXPXQWLOWKHWUHDVXU\VKDUHVDUHFDQFHOOHG:KHUHVXFKVKDUHVDUH VXEVHTXHQWO\VROGRUUHLVVXHGDQ\FRQVLGHUDWLRQUHFHLYHGLVLQFOXGHGLQVKDUHKROGHUV©HTXLW\ 7UHDVXU\ VKDUHV DUH GHGXFWHG IURP WKH LVVXHG DQG ZHLJKWHG DYHUDJH QXPEHU RI VKDUHV RQ FRQVROLGDWLRQ 'LYLGHQGVUHFHLYHGRQWUHDVXU\VKDUHVDUHHOLPLQDWHGRQFRQVROLGDWLRQ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 387 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) 7KH*URXSWKHUHIRUHGRHVQRWUHFRJQLVHDQ\JDLQVRUORVVHVWKURXJKWKHSURILWDQGORVVFRPSRQHQWRIWKH VWDWHPHQWRIFRPSUHKHQVLYHLQFRPHZKHQLWVRZQVKDUHVDUHUHSXUFKDVHG

1.25 Assets under management and administration :KHUH*URXSFRPSDQLHVRSHUDWHXQLWWUXVWVFKHPHVKROGDQGLQYHVWIXQGVRQEHKDOIRIFXVWRPHUVDQGDFWDV WUXVWHHVLQDQ\ILGXFLDU\FDSDFLW\DQGGRQRWKDYHFRQWURORYHUWKHXQLWWUXVWVFKHPHWKHDVVHWVDQGOLDELOLWLHV UHSUHVHQWLQJWKHVHDFWLYLWLHVDUHQRWUHIOHFWHGRQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQDVWKH\DUHQRWDVVHWVDQG OLDELOLWLHVRIWKH*URXS

1.26 Reclassiﬁcations 6RPHLWHPVZLWKLQWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHDQGVWDWHPHQWRIILQDQFLDOSRVLWLRQIRUWKH\HDUV HQGHG'HFHPEHUDQG'HFHPEHUZHUHUHFODVVLILHGLQWKHFXUUHQW\HDU

Trading related activities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

388 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 7KHUHFODVVLILFDWLRQVKDGWKHIROORZLQJLPSDFWRQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQ

'HFHPEHU $V SUHYLRXVO\ 5HFODVVLIL UHSRUWHG FDWLRQV 5HFODVVLILHG 5P 5P 5P Assets &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDOEDQNV ¥ 6WDWXWRU\OLTXLGDVVHWSRUWIROLR ¥ /RDQVDQGDGYDQFHVWREDQNV ¥ 7UDGLQJSRUWIROLRDVVHWV +HGJLQJSRUWIROLRDVVHWV ¥ 2WKHUDVVHWV ¥ &XUUHQWWD[DVVHWV ¥ /RDQVDQGDGYDQFHVWRFXVWRPHUV 5HLQVXUDQFHDVVHWV ¥ ,QYHVWPHQWVHFXULWLHV ¥ ,QYHVWPHQWVLQDVVRFLDWHVDQGMRLQWYHQWXUHV ¥ *RRGZLOODQGLQWDQJLEOHDVVHWV ¥ ,QYHVWPHQWSURSHUWLHV ¥ 3URSHUW\DQGHTXLSPHQW ¥ 'HIHUUHGWD[DVVHWV ¥ Total assets Liabilities 'HSRVLWVIURPEDQNV 7UDGLQJSRUWIROLROLDELOLWLHV +HGJLQJSRUWIROLROLDELOLWLHV ¥ 2WKHUOLDELOLWLHV ¥ 3URYLVLRQV ¥ &XUUHQWWD[OLDELOLWLHV ¥ 'HSRVLWVGXHWRFXVWRPHUV 'HEWVHFXULWLHVLQLVVXH ¥ /LDELOLWLHVXQGHULQYHVWPHQWFRQWUDFWV ¥ 3ROLF\KROGHUOLDELOLWLHVXQGHULQVXUDQFHFRQWUDFWV ¥ %RUURZHGIXQGV ¥ 'HIHUUHGWD[OLDELOLWLHV ¥ Total liabilities Equity Capital and reserves $WWULEXWDEOHWRRUGLQDU\HTXLW\KROGHUVRIWKH*URXS 6KDUHFDSLWDO ¥ 6KDUHSUHPLXP ¥ 2WKHUUHVHUYHV ¥ 5HWDLQHGHDUQLQJV ¥ ¥ 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV ¥ 1RQFRQWUROOLQJLQWHUHVW¤SUHIHUHQFHVKDUHV ¥ Total equity ¥ Total equity and liabilities

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 389 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of signiﬁcant accounting policies (continued) 'HFHPEHU $V SUHYLRXVO\ 5HFODVVL UHSRUWHG ILFDWLRQV 5HFODVVLILHG 5P 5P 5P Assets &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDOEDQNV ¥ 6WDWXWRU\OLTXLGDVVHWSRUWIROLR ¥ /RDQVDQGDGYDQFHVWREDQNV 7UDGLQJSRUWIROLRDVVHWV +HGJLQJSRUWIROLRDVVHWV ¥ 2WKHUDVVHWV ¥ &XUUHQWWD[DVVHWV ¥ 1RQFXUUHQWDVVHWVKHOGIRUVDOH ¥ /RDQVDQGDGYDQFHVWRFXVWRPHUV 5HLQVXUDQFHDVVHWV ¥ ,QYHVWPHQWVHFXULWLHV ¥ ,QYHVWPHQWVLQDVVRFLDWHVDQGMRLQWYHQWXUHV ¥ *RRGZLOODQGLQWDQJLEOHDVVHWV ¥ ,QYHVWPHQWSURSHUWLHV ¥ 3URSHUW\DQGHTXLSPHQW ¥ 'HIHUUHGWD[DVVHWV ¥ Total assets Liabilities 'HSRVLWVIURPEDQNV 7UDGLQJSRUWIROLROLDELOLWLHV +HGJLQJSRUWIROLROLDELOLWLHV ¥ 2WKHUOLDELOLWLHV ¥ 3URYLVLRQV ¥ &XUUHQWWD[OLDELOLWLHV ¥ 1RQFXUUHQWOLDELOLWLHVKHOGIRUVDOH ¥ 'HSRVLWVGXHWRFXVWRPHUV 'HEWVHFXULWLHVLQLVVXH ¥ /LDELOLWLHVXQGHULQYHVWPHQWFRQWUDFWV ¥ 3ROLF\KROGHUOLDELOLWLHVXQGHULQVXUDQFHFRQWUDFWV ¥ %RUURZHGIXQGV ¥ 'HIHUUHGWD[OLDELOLWLHV ¥ Total liabilities Equity Capital and reserves $WWULEXWDEOHWRRUGLQDU\HTXLW\KROGHUVRIWKH*URXS 6KDUHFDSLWDO ¥ 6KDUHSUHPLXP ¥ 2WKHUUHVHUYHV ¥ 5HWDLQHGHDUQLQJV ¥ ¥ 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV ¥ 1RQFRQWUROOLQJLQWHUHVW¤SUHIHUHQFHVKDUHV ¥ Total equity ¥ Total equity and liabilities

390 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 1.27 New standards and interpretations not yet adopted $QXPEHURIQHZVWDQGDUGVDPHQGPHQWVWRVWDQGDUGVDQGLQWHUSUHWDWLRQVLVVXHGDUHQRW\HWHIIHFWLYHIRUWKH \HDU HQGHG 'HFHPEHU DQG KDYH QRW EHHQ DSSOLHG LQ SUHSDULQJ WKHVH FRQVROLGDWHG ILQDQFLDO VWDWHPHQWV IFRS 1 (amendments)SURYLGHVFODULILFDWLRQWRILUVWWLPHDGRSWHUVRI,)56,WDOVRSURYLGHVUHOLHIIRUILUVWWLPH DGRSWHUVRI,)56IURPKDYLQJWRUHFRQVWUXFWWUDQVDFWLRQVWKDWRFFXUUHGEHIRUHWKHLUGDWHRIWUDQVLWLRQWR,)56 *XLGDQFHKDVEHHQDGGHGIRUHQWLWLHVHPHUJLQJIURPVHYHUHK\SHULQIODWLRQHLWKHUWRUHVXPHSUHVHQWLQJ,)56 ILQDQFLDOVWDWHPHQWVRUWRSUHVHQW,)56ILQDQFLDOVWDWHPHQWVIRUWKHILUVWWLPH7KHVHDPHQGPHQWVZLOOKDYHQR LPSDFWRQWKH*URXSDVWKH*URXSDGRSWHG,)56LQIXOOLQWKHILQDQFLDO\HDUHQGLQJ'HFHPEHU IFRS 3 (amendments) FODULI\ WKDW FRQWLQJHQW FRQVLGHUDWLRQ DULVLQJ LQ D EXVLQHVV FRPELQDWLRQ SUHYLRXVO\ DFFRXQWHGIRULQDFFRUGDQFHZLWK,)56 WKDWUHPDLQVRXWVWDQGLQJDWWKHDGRSWLRQGDWHRI,)56 FRQWLQXHVWREHDFFRXQWHGIRULQDFFRUGDQFHZLWK,)56 OLPLWWKHDFFRXQWLQJSROLF\FKRLFHWRPHDVXUH QRQFRQWUROOLQJLQWHUHVWVXSRQLQLWLDOUHFRJQLWLRQDWIDLUYDOXHRUDWWKHQRQFRQWUROOLQJLQWHUHVW©VSURSRUWLRQDWH VKDUHRIWKHDFTXLUHH©VLGHQWLILDEOHQHWDVVHWVWRLQVWUXPHQWVWKDWJLYHULVHWRDSUHVHQWRZQHUVKLSLQWHUHVWDQG WKDWFXUUHQWO\HQWLWOHWKHKROGHUWRDVKDUHRIQHWDVVHWVLQWKHHYHQWRIOLTXLGDWLRQDQGH[SDQGWKHFXUUHQW JXLGDQFHRQWKHDWWULEXWLRQRIWKHPDUNHWEDVHGPHDVXUHRIDQDFTXLUHU©VVKDUHEDVHGSD\PHQWDZDUGVLVVXHG LQH[FKDQJHIRUDFTXLUHHDZDUGVEHWZHHQFRQVLGHUDWLRQWUDQVIHUUHGDQGSRVWFRPELQDWLRQFRPSHQVDWLRQFRVW ZKHQ DQ DFTXLUHU LV REOLJHG WR UHSODFH WKH DFTXLUHH©V H[LVWLQJ DZDUGV WR HQFRPSDVV YROXQWDULO\ UHSODFHG XQH[SLUHGDFTXLUHHDZDUGV7KHDPHQGPHQWVZKLFKEHFRPHPDQGDWRU\IRUWKH*URXS©VILQDQFLDO\HDU HQGDUHQRWH[SHFWHGWRKDYHDPDWHULDOLPSDFWRQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRIWKH*URXS IFRS 7 Financial Instruments: Disclosures (amendments) DGGV DQ H[SOLFLW VWDWHPHQW WKDW TXDOLWDWLYH GLVFORVXUHVKRXOGEHPDGHLQWKHFRQWH[WRIWKHTXDQWLWDWLYHGLVFORVXUHVWREHWWHUHQDEOHXVHUVWRHYDOXDWHDQ HQWLW\©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©V ILQDQFLDO \HDUHQG DUH QRW H[SHFWHG WR KDYH D PDWHULDO LPSDFW RQ WKH FRQVROLGDWHG ILQDQFLDO VWDWHPHQWVRIWKH*URXS IFRS 9 Financial instruments ZDV SXEOLVKHG LQ 1RYHPEHU DV WKH ILUVW VWHS LQ UHSODFLQJ ,$6 DQG FRQWDLQV QHZ UHTXLUHPHQWV IRU WKH FODVVLILFDWLRQ DQG PHDVXUHPHQW UHTXLUHPHQWV IRU ILQDQFLDO DVVHWV 7KH FODVVLILFDWLRQ DQG PHDVXUHPHQW UHTXLUHPHQWV RI ILQDQFLDO OLDELOLWLHV ZHUH DGGHG WR ,)56 LQ 2FWREHU ,)56LVQRWHIIHFWLYHXQWLO-DQXDU\EXWLVDYDLODEOHIRUHDUO\DGRSWLRQ7KH*URXSLVFXUUHQWO\LQWKHSURFHVV RIDVVHVVLQJ,)56©VIXOOLPSDFWDQGLQLWLDOLQGLFDWLRQVDUHWKDWLWLVOLNHO\WRDIIHFWWKH*URXS©VDFFRXQWLQJIRU FHUWDLQW\SHVRIILQDQFLDODVVHWV,QWHUPVRI,)56WKH*URXS©VDFFRXQWLQJIRUILQDQFLDODVVHWVFODVVLILHGDV DYDLODEOHIRUVDOHZLOOEHDIIHFWHGDV,)56RQO\SHUPLWVWKHUHFRJQLWLRQRIIDLUYDOXHJDLQVDQGORVVHVLQRWKHU FRPSUHKHQVLYHLQFRPHLIWKH\UHODWHWRLQYHVWPHQWVLQHTXLW\LQVWUXPHQWVWKDWDUHQRWKHOGIRUWUDGLQJ,QYHVWPHQWV LQFHUWDLQOLVWHGGHEWLQVWUXPHQWVFXUUHQWO\FODVVLILHGDVILQDQFLDODVVHWVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRU ORVVZLOOEHSHUPLWWHGWREHPHDVXUHGDWDPRUWLVHGFRVW,QYHVWPHQWVLQVWUXFWXUHGQRWHVFXUUHQWO\DFFRXQWHGIRU DVDKRVWGHEWLQVWUXPHQWV PHDVXUHGDWDPRUWLVHGFRVW DQGHPEHGGHGGHULYDWLYHV PHDVXUHGDWIDLUYDOXH DUH UHTXLUHGWREHPHDVXUHGDWIDLUYDOXHLQWKHLUHQWLUHW\ZLWKIDLUYDOXHJDLQVDQGORVVHVEHLQJUHFRJQLVHGLQSURILW RUORVV,)56ZLOODOVRLPSDFWWKHPHDVXUHPHQWRIILQDQFLDOOLDELOLWLHVFXUUHQWO\FODVVLILHGDVILQDQFLDOOLDELOLWLHV GHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVVDVFKDQJHVLQIDLUYDOXHUHVXOWLQJIURPFKDQJHVLQWKH*URXS©V FUHGLWULVNZLOOEHUHFRJQLVHGLQRWKHUFRPSUHKHQVLYHLQFRPHDQGQRWLQSURILWRUORVV IAS 1 (amendments) FODULI\ WKDW GLVDJJUHJDWLRQ RI FKDQJHV LQ HDFK FRPSRQHQW RI HTXLW\ DULVLQJ IURP WUDQVDFWLRQV UHFRJQLVHG LQ RWKHU FRPSUHKHQVLYH LQFRPH DOVR LV UHTXLUHG WR EH SUHVHQWHG EXW PD\ EH SUHVHQWHG HLWKHU LQ WKH VWDWHPHQW RI FKDQJHV LQ HTXLW\ RU LQ WKH QRWHV 7KH DPHQGPHQWV ZKLFK EHFRPH PDQGDWRU\ IRU WKH *URXS©V ILQDQFLDO \HDUHQG DUH QRW H[SHFWHG WR KDYH DQ\ LPSDFW RQ WKH *URXS©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©VILQDQFLDO\HDUHQGLVQRWH[SHFWHGWRKDYHDQ\LPSDFWRQWKH *URXS©VFRQVROLGDWHGILQDQFLDOVWDWHPHQWV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 391 Financial performance

Accounting policies )RUWKH\HDUHQGHG'HFHPEHU

1. Summary of significant accounting policies (continued) IAS 24 Related Party Disclosures (revised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amendments) ZDV LVVXHG RQ 0D\ 7KH DPHQGPHQWV FODULI\ WKDW WKH FRQVHTXHQWLDO DPHQGPHQWVWR,$67KHHIIHFWVRIFKDQJHVLQIRUHLJQH[FKDQJHUDWHV,$6DQG,$6UHVXOWLQJIURP ,$6 VKRXOGEHDSSOLHGSURVSHFWLYHO\ZLWKWKHH[FHSWLRQRISDUDJUDSKRI,$6DQGSDUDJUDSK RI,$6ZKLFKVKRXOGEHDSSOLHGUHWURVSHFWLYHO\7KHDPHQGPHQWVZKLFKEHFRPHPDQGDWRU\IRUWKH *URXS©VILQDQFLDO\HDUHQGDUHQRWH[SHFWHGWRKDYHDQ\LPSDFWRQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV IAS 32 Financial Instruments: Presentation – amendments relating to classification of rights issues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©VILQDQFLDO\HDUHQGDUHQRWH[SHFWHGWRKDYHDQ\ LPSDFWRQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV IAS 34 Interim Financial Reporting (amendments)ZDVDPHQGHGWRSURYLGHFODULILFDWLRQDURXQGVLJQLILFDQW HYHQWVDQGWUDQVDFWLRQVWREHGLVFORVHGLQLQWHULPILQDQFLDOUHSRUWV7KHDPHQGPHQWLVLQWHQGHGWRHPSKDVLVH WKDW WKHVH LQWHULP GLVFORVXUHV VKRXOG XSGDWH WKH UHOHYDQW LQIRUPDWLRQ SUHVHQWHG LQ WKH PRVW UHFHQW DQQXDO ILQDQFLDOUHSRUW7KHDPHQGPHQWDOVRFODULILHVKRZWRDSSO\WKLVSULQFLSOHLQUHVSHFWRIILQDQFLDOLQVWUXPHQWVDQG WKHLUIDLUYDOXH IFRIC 13 Customer Loyalty Programmes (amendment)FODULILHVWKDWWKHIDLUYDOXHRIDZDUGFUHGLWVWDNHV LQWRDFFRXQWWKHDPRXQWRIGLVFRXQWVRULQFHQWLYHVWKDWRWKHUZLVHZRXOGEHRIIHUHGWRFXVWRPHUVWKDWKDYHQRW HDUQHGWKHDZDUGFUHGLWV7KHDPHQGPHQWZKLFKEHFRPHVPDQGDWRU\IRUWKH*URXS©VILQDQFLDO\HDUHQG LVQRWH[SHFWHGWRKDYHDQ\LPSDFWRQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV IFRIC 14, IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirement and their Interaction (amendments with respect to voluntary prepaid contributions) FRUUHFW DQ XQLQWHQGHG FRQVHTXHQFHRI,)5,&:LWKRXWWKHDPHQGPHQWVHQWLWLHVDUHQRWSHUPLWWHGWRUHFRJQLVHDVDQDVVHWVRPH YROXQWDU\SUHSD\PHQWVIRUPLQLPXPIXQGLQJFRQWULEXWLRQV7KLVZDVQRWLQWHQGHGZKHQ,)5,&ZDVLVVXHG DQG WKH DPHQGPHQWV FRUUHFW WKLV 7KH DPHQGPHQWV VKRXOG EH DSSOLHG UHWURVSHFWLYHO\ WR WKH HDUOLHVW FRPSDUDWLYH SHULRG SUHVHQWHG 7KH DPHQGPHQWV ZKLFK EHFRPH PDQGDWRU\ IRU WKH *URXS©V ILQDQFLDO \HDUHQGDUHQRWH[SHFWHGWRKDYHDQ\LPSDFWRQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV

392 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group

2010 Rm 5P 2. Cash, cash balances and balances with central banks %DODQFHVZLWKRWKHUFHQWUDOEDQNV 859 %DODQFHVZLWKWKH6RXWK$IULFDQ5HVHUYH%DQN 6$5% 12 912 &RLQVDQGEDQNQRWHV 4 939 0RQH\PDUNHWDVVHWV 5 651 24 361 Portfolio analysis $YDLODEOHIRUVDOHILQDQFLDODVVHWV 0RQH\PDUNHWDVVHWV 458 )LQDQFLDODVVHWVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV 0RQH\PDUNHWDVVHWV 3 013 +HOGWRPDWXULW\ILQDQFLDODVVHWV 0RQH\PDUNHWDVVHWV 556 /RDQVDQGUHFHLYDEOHV 20 334 %DODQFHVZLWKRWKHUFHQWUDOEDQNV 859 %DODQFHVZLWKWKH6$5% 12 912 &RLQVDQGEDQNQRWHV 4 939 0RQH\PDUNHWDVVHWV 1 624 ¥

24 361 ,QFOXGHGDERYHDUHOLTXLGDVVHWVZKLFKKDYHRULJLQDOPDWXULWLHV RIPRUHWKDQWKUHHPRQWKVZKLFKDUHUHDGLO\FRQYHUWLEOHWRFDVK,QFOXGHG DERYHDUHPDUNHWDVVHWVRI5PLOOLRQ 5PLOOLRQ ZKLFKDUH OLQNHGWRLQYHVWPHQWFRQWUDFWV UHIHUWRQRWH 3. Statutory liquid asset portfolio /DQG%DQNELOOV 50 5HSXEOLFRI6RXWK$IULFD 56$ JRYHUQPHQWERQGV 34 602 5HYHUVHUHSXUFKDVHDJUHHPHQWV UHIHUWRQRWH 2 685 6$5%GHEHQWXUHV — 7UHDVXU\ELOOV 10 878

48 215 Portfolio analysis $YDLODEOHIRUVDOHILQDQFLDODVVHWV 26 656 /DQG%DQNELOOV 50 56$JRYHUQPHQWERQGV 15 728 6$5%GHEHQWXUHV — 7UHDVXU\ELOOV 10 878 $YDLODEOHIRUVDOHLQVWUXPHQWVLQIDLUYDOXHKHGJLQJUHODWLRQVKLS 56$JRYHUQPHQWERQGV 18 096 )LQDQFLDODVVHWVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV 3 463 5HYHUVHUHSXUFKDVHDJUHHPHQWV 2 685 56$JRYHUQPHQWERQGV 778

48 215 56$JRYHUQPHQWERQGV6$5%GHEHQWXUHVDQGWUHDVXU\ELOOVYDOXHGDW5PLOOLRQ 5PLOOLRQ KDYH EHHQ SOHGJHG ZLWK WKH 6$5% UHIHU WR QRWH 7KH UHODWHG OLDELOLW\ IRU WKH SOHGJHG DVVHWV ZKLFK LV GLVFORVHGLQ¨'HSRVLWVIURPEDQNV©EHDUVLQWHUHVWDWWKH6$5%UHSXUFKDVHUDWH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 393 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group

2010 Rm 5P 5P 4. Loans and advances to banks 2WKHUORDQVDQGDGYDQFHVWREDQNV 19 305 5HYHUVHUHSXUFKDVHDJUHHPHQWV UHIHUWRQRWH 5 572 24 877 Portfolio analysis )LQDQFLDODVVHWVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILW RUORVV 7 047 2WKHUORDQVDQGDGYDQFHVWREDQNV 1 475 ¥ 5HYHUVHUHSXUFKDVHDJUHHPHQWV 5 572 /RDQVDQGUHFHLYDEOHV 17 830 24 877 Comparatives have been reclassified, refer to note 1.26. /RDQVZLWKYDULDEOHUDWHVDUH5PLOOLRQ 5PLOOLRQ5PLOOLRQ DQGIL[HGUDWHVDUH 5PLOOLRQ 5PLOOLRQ5PLOOLRQ ,QFOXGHGDERYHDUHORDQVDQGDGYDQFHVWREDQNVZLWKDFDUU\LQJYDOXHRI5PLOOLRQ 5PLOOLRQ 5 PLOOLRQ WKDW KDYH EHHQ SOHGJHG DV VHFXULW\ ZKLFK H[FOXGHV UHYHUVH UHSXUFKDVH DJUHHPHQWV DV GLVFORVHG LQ QRWH 7KH DPRXQW SOHGJHG LV WKH UHTXLUHG WKUHVKROG RI FDVK FROODWHUDO EDVHG RQ VSHFLILF DUUDQJHPHQWVZLWKGLIIHUHQWFRXQWHUSDUWLHV([SRVXUHVDUHUHYLHZHGRQDSHULRGLFEDVLVZKHUHE\WKHVHWKUHVKROGV DUHDGMXVWHGDFFRUGLQJO\ &ROODWHUDO WR WKH YDOXH RI 5QLO 5 PLOOLRQ 5 PLOOLRQ ZDV UHFHLYHG RQ ¨2WKHU ORDQV DQG DGYDQFHVWREDQNV©7KLVFROODWHUDOZDVRQSOHGJHGDVSDUWRIUHSXUFKDVHDJUHHPHQWV UHIHUWRQRWH Group 2010 Rm 5P 5P 5. Trading and hedging portfolio assets &RPPRGLWLHV 654 'HEWLQVWUXPHQWV 11 694 'HULYDWLYHDVVHWV UHIHUWRQRWH 43 404 &RPPRGLW\GHULYDWLYHV 301 &UHGLWGHULYDWLYHV 118 (TXLW\GHULYDWLYHV 875 )RUHLJQH[FKDQJHGHULYDWLYHV 12 932 ,QWHUHVWUDWHGHULYDWLYHV 29 178 (TXLW\LQVWUXPHQWV 4 393 0RQH\PDUNHWDVVHWV 1 902 7RWDOWUDGLQJSRUWIROLRDVVHWV 62 047 +HGJLQJSRUWIROLRDVVHWV UHIHUWRQRWH 4 662 66 709 Portfolio analysis 'HULYDWLYHVGHVLJQDWHGDVFDVKIORZKHGJLQJLQVWUXPHQWV 3 813 'HULYDWLYHVGHVLJQDWHGDVIDLUYDOXHKHGJLQJLQVWUXPHQWV 849 )LQDQFLDODVVHWVKHOGIRUWUDGLQJ 61 393 'HEWLQVWUXPHQWV 11 694 'HULYDWLYHDVVHWV 43 404 (TXLW\LQVWUXPHQWV 4 393 0RQH\PDUNHWDVVHWV 1 902 1RQILQDQFLDOLQVWUXPHQWV 654 66 709 Comparatives have been reclassified, refer to note 1.26.

394 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 5. Trading and hedging portfolio assets (continued) ,QFOXGHGDERYHDUHILQDQFLDOLQVWUXPHQWVUHODWHGWRWKH*URXS©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roup 2010 Rm 5P

6. Other assets $FFRXQWVUHFHLYDEOHDQGSUHSD\PHQWV 5 223 &ROODWHUDO 4 171 'HIHUUHGFRVWV 150

'HIHUUHGDFTXLVLWLRQFRVWV UHIHUWRQRWH 88 2WKHUGHIHUUHGFRVWV 62

,QYHQWRULHV 1 255

&RVW 1 344 :ULWHGRZQ (89)

5HWLUHPHQWEHQHILWIXQGVXUSOXV UHIHUWRQRWH 705 6HWWOHPHQWDFFRXQWV 4 627

16 131

Portfolio analysis /RDQVDQGUHFHLYDEOHV 13 490

$FFRXQWVUHFHLYDEOH 4 692 &ROODWHUDO 4 171 6HWWOHPHQWDFFRXQWV 4 627

)LQDQFLDODVVHWVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV 16 ¥ 1RQILQDQFLDODVVHWV 2 625

16 131 6.1 Deferred acquisition costs (refer to note 6) Balance at the beginning of the year 83 $GGLWLRQV 510 $PRUWLVDWLRQFKDUJH (505)

Balance at the end of the year 88 7. Current tax Current tax assets $PRXQWGXHIURPUHYHQXHDXWKRULWLHV 196 Current tax liabilities $PRXQWGXHWRUHYHQXHDXWKRULWLHV 965

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 395 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P 5P

8. Loans and advances to customers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ortfolio analysis )LQDQFLDODVVHWVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILW RUORVV 9 990 &RUSRUDWHRYHUGUDIWVDQGVSHFLDOLVHGILQDQFHORDQV 593 )RUHLJQFXUUHQF\ORDQV 703 ¥ 5HYHUVHUHSXUFKDVHDJUHHPHQWV 3 063 /RDQVWRDVVRFLDWHVDQGMRLQWYHQWXUHV — ¥ 0RUWJDJHV 1 161 2WKHUDGYDQFHV — ¥ 3UHIHUHQFHVKDUHV 1 245 ¥¥ :KROHVDOHRYHUGUDIWV 3 225 $PRUWLVHGFRVWLWHPVKHOGLQDIDLUYDOXHKHGJLQJUHODWLRQVKLS 747 &RUSRUDWHRYHUGUDIWVDQGVSHFLDOLVHGILQDQFHORDQV 118 ¥ :KROHVDOHRYHUGUDIWV 629 /RDQVDQGUHFHLYDEOHV 501 800 512 537 Comparatives have been reclassified, refer to note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

Note 1Other advances include client liabilities under acceptances and working capital solutions.

396 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 8. Loans and advances to customers (continued) 8.1 Instalment credit agreements Maturity analysis Group 2010 Gross Net investment Unearned investment in finance finance in finance leases charges leases Rm Rm Rm /HVVWKDQRQH\HDU 22 779 (3 398) 19 381 %HWZHHQRQHDQGILYH\HDUV 43 420 (6 931) 36 489 0RUHWKDQILYH\HDUV 1 318 (221) 1 097 67 517 (10 550) 56 967

*URVV 1HW LQYHVWPHQW 8QHDUQHG LQYHVWPHQW LQILQDQFH ILQDQFH LQILQDQFH OHDVHV FKDUJHV OHDVHV 5P 5P 5P /HVVWKDQRQH\HDU %HWZHHQRQHDQGILYH\HDUV 0RUHWKDQILYH\HDUV

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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 397 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P

9. Impairment losses on loans and advances Balance at the beginning of the year 13 158 $PRXQWVZULWWHQRIIGXULQJWKH\HDU (5 219) ([FKDQJHGLIIHUHQFHV (2) ,QWHUHVWRQLPSDLUHGDVVHWV UHIHUWRQRWH (764) 7 173 ,PSDLUPHQWVUDLVHGGXULQJWKH\HDU UHIHUWRQRWH 6 729 Balance at the end of the year (refer to note 8) 13 902 Comprising: ,GHQWLILHGLPSDLUPHQWV 12 949 8QLGHQWLILHGLPSDLUPHQWV 953 13 902 9.1 Statement of comprehensive income charge for impairment losses on loans and advances ,PSDLUPHQWVUDLVHGGXULQJWKH\HDU 6 729 ,GHQWLILHGLPSDLUPHQWV 6 919 8QLGHQWLILHGLPSDLUPHQWV (190) 5HFRYHULHVRIORDQVDQGDGYDQFHVSUHYLRXVO\ZULWWHQRII (724) 6 005

10. Reinsurance assets ,QVXUDQFHFRQWUDFWV UHIHUWRQRWH 386 /LIHLQVXUDQFHFRQWUDFWV 58 6KRUWWHUPLQVXUDQFHFRQWUDFWV 328 ,QYHVWPHQWFRQWUDFWV UHIHUWRQRWH 474 860 ,QFOXGHGLQ¨2WKHUDVVHWV© UHIHUWRQRWH LV5 PLOOLRQ 5PLOOLRQ UHODWLQJWRDPRXQWVUHFHLYDEOHIURPUHLQVXUHUVIRUFODLPV PDGHDJDLQVWWKHP 11. Investment securities 'HEWLQVWUXPHQWV 8 045 ,QYHVWPHQWVOLQNHGWRLQYHVWPHQWFRQWUDFWV UHIHUWRQRWH 7 847 'HEWLQVWUXPHQWV — 'HULYDWLYHLQVWUXPHQWV UHIHUWRQRWH 215 /LVWHGHTXLW\LQVWUXPHQWV 7 171 8QOLVWHGHTXLW\DQGK\EULGLQVWUXPHQWV 461 /LVWHGHTXLW\LQVWUXPHQWV 1 802 8QOLVWHGHTXLW\DQGK\EULGLQVWUXPHQWV 6 132 23 826 ,QFOXGHGLQ¨8QOLVWHGHTXLW\DQGK\EULGLQVWUXPHQWV©LVDQLQYHVWPHQWRI5PLOOLRQ 5PLOOLRQ LQD8QLWHG 6WDWHVGROODU 86' XQLWWUXVWZKLFKKDVEHHQGHVLJQDWHGDVDKHGJHRIH[SHFWHGIXWXUHSXUFKDVHVIURPIRUHLJQ VXSSOLHUVIRUZKLFKWKH*URXSKDVILUPFRPPLWPHQWV7KHXQLWWUXVWLQYHVWPHQWLVEHLQJXVHGWRKHGJHWKHIRUHLJQ FXUUHQF\ULVNRIWKHILUPFRPPLWPHQWV7KHFDVKIORZKHGJHRIWKHH[SHFWHGIXWXUHVDOHVZDVDVVHVVHGWREH KLJKO\HIIHFWLYHDWWKHUHSRUWLQJGDWH

398 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010 Rm 5P

11. Investment securities (continued) Market value and directors’ valuation 'LUHFWRUV©YDOXDWLRQRIXQOLVWHGHTXLW\DQGK\EULGLQVWUXPHQWV 6 593 0DUNHWYDOXHRIGHEWLQVWUXPHQWV 8 045 0DUNHWYDOXHRIGHULYDWLYHLQVWUXPHQWV 215 0DUNHWYDOXHRIOLVWHGHTXLW\LQVWUXPHQWV 8 973

23 826

Portfolio analysis $YDLODEOHIRUVDOHILQDQFLDODVVHWV UHIHUWRQRWH 1 492 'HEWLQVWUXPHQWV 1 292 /LVWHGHTXLW\LQVWUXPHQWV 51 8QOLVWHGHTXLW\DQGK\EULGLQVWUXPHQWV 149

)LQDQFLDODVVHWVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV 21 731

'HEWLQVWUXPHQWV 6 365 ,QYHVWPHQWVOLQNHGWRLQYHVWPHQWFRQWUDFWV 7 632 /LVWHGHTXLW\LQVWUXPHQWV 1 751 8QOLVWHGHTXLW\DQGK\EULGLQVWUXPHQWV 5 983

+HOGIRUWUDGLQJILQDQFLDODVVHWV 'HULYDWLYHLQVWUXPHQWVOLQNHGWRLQYHVWPHQWFRQWUDFWV 215 +HOGWRPDWXULW\ILQDQFLDODVVHWV 'HEWLQVWUXPHQWV 388

23 826 11.1 Available-for-sale financial assets &DUU\LQJYDOXHDWWKHEHJLQQLQJRIWKH\HDU 1 995

&RVWSOXVIDLUYDOXHPRYHPHQWV 2 107 ,PSDLUPHQWV (112)

0RYHPHQWLQLQYHVWPHQWVHFXULWLHV (478)

1HWGLVSRVDOV (463) )DLUYDOXHPRYHPHQWV (15)

0RYHPHQWLQLPSDLUPHQWV UHIHUWRQRWH (25) &DUU\LQJYDOXHDWWKHHQGRIWKH\HDU 1 492

&RVWSOXVIDLUYDOXHPRYHPHQWV 1 629 ,PSDLUPHQWV (137)

Note All impairments relate to equity instruments.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 399 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P 12. Investments in associates and joint ventures /LVWHGLQYHVWPHQWV 41 8QOLVWHGLQYHVWPHQWV 375

416

6KDUHRIFXUUHQW\HDU©VUHVXOWVEHIRUHWD[DWLRQ 52 7D[DWLRQRQFXUUHQW\HDU©VUHVXOWV (16) 'LYLGHQGVUHFHLYHG (45) 1HWPRYHPHQWUHVXOWLQJIURPDFTXLVLWLRQVGLVSRVDOVDQGWUDQVIHUV UHIHUWRQRWH (32) 'HFUHDVH LQFUHDVHLQORDQV (4) ,PSDLUPHQWFKDUJH UHIHUWRQRWH (29) 0RYHPHQWLQDPRXQWUHFRJQLVHGLQRWKHUOLDELOLWLHVIRUWKH*URXS©VVKDUH RIORVVHV 3 Balance at the end of the year 416

12.2 Analysis of carrying value Listed investments 6KDUHVDWERRNYDOXH 51

6KDUHVDWFRVW 57 ,PSDLUPHQWV (6)

6KDUHRISRVWDFTXLVLWLRQUHVHUYHV (10) 41

Unlisted investments 6KDUHVDWFRVW 114 6KDUHRISRVWDFTXLVLWLRQUHVHUYHV 250

/RDQVDQGUHFHLYDEOHV 11 375

$UHJLVWHURILQYHVWPHQWVLQDVVRFLDWHVDQGMRLQWYHQWXUHVLVDYDLODEOH IRULQVSHFWLRQDWWKHUHJLVWHUHGRIILFHRIWKH&RPSDQ\ 12.3 Market value and directors’ valuation 'LUHFWRUV©YDOXDWLRQRIXQOLVWHGLQYHVWPHQWV 375 0DUNHWYDOXHRIOLVWHGLQYHVWPHQWV 55 430

Note The directors’ valuation of unlisted investments is measured at fair value.

400 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010 Effective Movement (IIHFWLYH 0RYHPHQW holding (%) Rm KROGLQJ 5P 12. Investments in associates and joint ventures (continued) 12.4 Net movement resulting from acquisitions, disposals and transfers Acquired during the current year, at cost: 2QH&RPPHUFLDO,QYHVWPHQW+ROGLQJV 3URSULHWDU\ /LPLWHG 49,0 0 ¥¥ 3LQQDFOH3RLQW*URXS/LPLWHG —95 ¥ Acquired during the previous year, at cost: .LONLVKHQ,QYHVWPHQWV 3URSULHWDU\ /LPLWHG 50,0 — 0HDGRZRRG,QYHVWPHQWV 3URSULHWDU\ /LPLWHG 50,0 — ¥ 6WDQG+RXJKWRQ 3URSULHWDU\ /LPLWHG 50,0 — Disposed during the current year: 3LQQDFOH3RLQW*URXS/LPLWHG — (95) ¥ 9LUJLQ0RQH\6RXWK$IULFD 3URSULHWDU\ /LPLWHG — (0) ¥ Disposed during the previous year: $PELW3URSHUWLHV/LPLWHG —— ¥ %DQFR&RPPHUFLDO$QJRODQR —— ¥ Transferred to subsidiaries during the current year: 6DQODP+RPH/RDQV 3URSULHWDU\ /LPLWHG 100,0 — ¥ Transferred (to)/from investment securities during the current and previous year: %OXH)LQDQFLDO6HUYLFHV/LPLWHG 6,7 (32) (32)

Group 2010 Rm 5P

12.5 Details of transfers and purchase consideration on net assets acquired &DVKSDLG 95 3XUFKDVHDVSDUWRIEXVLQHVVFRPELQDWLRQ — 7UDQVIHUIURPLQYHVWPHQWVHFXULWLHV — 95

12.6 Details of transfers and consideration received on net assets disposed &DVKFRQVLGHUDWLRQ (95) &RQVLGHUDWLRQLQVKDUHV — 7RWDOFRQVLGHUDWLRQ (95) /RVVRQGLVSRVDO (0) 7UDQVIHUWRLQYHVWPHQWVHFXULWLHV (32) ¥ (127) 5HIHUWRQRWHIRUWKHIXOOGLVFORVXUHRIWKH*URXS©VLQYHVWPHQWVLQDVVRFLDWHVDQGMRLQWYHQWXUHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 401 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

13. Goodwill and intangible assets Group 2010 Accumulated $FFXPXODWHG amortisation DPRUWLVDWLRQ and/or Carrying DQGRU &DUU\LQJ Cost impairments value &RVW LPSDLUPHQWV YDOXH Rm Rm Rm 5P 5P 5P &RPSXWHUVRIWZDUH GHYHORSPHQWFRVWV 1 738 (616) 1 122 &XVWRPHUOLVWV 191 (96) 95 *RRGZLOO 693 (122) 571 2WKHU 10 (4) 6 2 632 (838) 1 794

Reconciliation of goodwill and intangible assets Group 2010 Additions through business Foreign Impair- Opening Addi- combi- Dis- exchange Amor- ment Closing balance tions nations posals movements tisation charge balance Rm Rm Rm Rm Rm Rm Rm Rm &RPSXWHU VRIWZDUH GHYHORS PHQWFRVWV 543 718 — — (3) (132) (4) 1 122 &XVWRPHU OLVWV 124 — 1 — — (30) — 95 *RRGZLOO 571 — — — — — — 571 2WKHU 7 — 2 — — (3) — 6 1 245 718 3 — (3) (165) (4) 1 794

$GGLWLRQV WKURXJK EXVLQHVV )RUHLJQ ,PSDLU 2SHQLQJ $GGL FRPEL 'LV H[FKDQJH $PRU PHQW &ORVLQJ EDODQFH WLRQV QDWLRQV SRVDOV PRYHPHQWV WLVDWLRQ FKDUJH EDODQFH 5P 5P 5P 5P 5P 5P 5P 5P &RPSXWHU VRIWZDUH GHYHORS PHQWFRVWV ¥ &XVWRPHU OLVWV ¥ ¥ ¥ ¥ ¥ *RRGZLOO ¥ ¥ ¥ ¥ 2WKHU ¥ ¥ ¥ ¥ ¥

5HIHU WR QRWH IRU XVHIXO OLYHV DPRUWLVDWLRQ PHWKRGV DQG DPRUWLVDWLRQ UDWHV 7KH PDMRULW\ RI FRPSXWHU VRIWZDUHGHYHORSPHQWFRVWVZHUHLQWHUQDOO\JHQHUDWHG7KHUHPDLQGHUZHUHDFTXLUHG ,QFOXGHGLQFRPSXWHUVRIWZDUHGHYHORSPHQWFRVWVLV5PLOOLRQ 5PLOOLRQ UHODWLQJWRDVVHWVVWLOOXQGHU FRQVWUXFWLRQ

402 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 13. Goodwill and intangible assets (continued) Group

2010 Rm 5P Composition of goodwill $EVHT3URSHUWLHV 3URSULHWDU\ /LPLWHG 25 $EYHVW+ROGLQJV 3URSULHWDU\ /LPLWHG 30 $EVD9HKLFOH0DQDJHPHQW 3URSULHWDU\ /LPLWHG 112 *OHQUDQG0,%HPSOR\HHEHQHILWVDQGKHDOWKFDUH 22 1JZHQ\D5LYHU(VWDWH 3URSULHWDU\ /LPLWHG 18 :RROZRUWKV)LQDQFLDO6HUYLFHV 3URSULHWDU\ /LPLWHG 364 571 Significant assumptions made in reviewing impairments 0DQDJHPHQW KDV WR FRQVLGHU DW OHDVW DQQXDOO\ ZKHWKHU WKH FXUUHQW FDUU\LQJ YDOXH RI JRRGZLOO LV LPSDLUHG 7KLV FDOFXODWLRQLVEDVHGRQGLVFRXQWLQJH[SHFWHGULVNDGMXVWHGSUHWD[FDVKIORZVDWDULVNDGMXVWHGSUHWD[LQWHUHVWUDWH DSSURSULDWHWRWKHRSHUDWLQJXQLWWKHGHWHUPLQDWLRQRIZKLFKUHTXLUHVWKHH[HUFLVHRIMXGJHPHQW7KHHVWLPDWLRQRI SUHWD[FDVKIORZVLVVHQVLWLYHWRWKHSHULRGVIRUZKLFKGHWDLOHGIRUHFDVWVDUHDYDLODEOHQRUPDOO\FDSSHGDWILYH\HDUV DQGWRDVVXPSWLRQVUHJDUGLQJWKHJURZWKUDWHDOWKRXJKWKLVLVXVXDOO\FDSSHGDWLQIODWLRQJURZWKZKHUHKLJKHUJURZWK LV IRUHFDVWHG E\ WKH &*8 :KLOH IRUHFDVWV DUH FRPSDUHG ZLWK DFWXDO SHUIRUPDQFH DQG H[WHUQDO VRXUFHV RI GDWD H[SHFWHGFDVKIORZVQDWXUDOO\UHIOHFWPDQDJHPHQW©VEHVWHVWLPDWHRIIXWXUHSHUIRUPDQFH7KHGLVFRXQWUDWHXVHGLQ WKHLPSDLUPHQWFDOFXODWLRQVLV *URZWKUDWHVXVHGLQWKHLPSDLUPHQWFDOFXODWLRQVUDQJHIURPWR WR Group 2010 Rm 5P

14. Investment properties Balance at the beginning of the year 2 195 $GGLWLRQVWKURXJKEXVLQHVVFRPELQDWLRQV UHIHUWRQRWH — $GGLWLRQV 288 $GGLWLRQVWRSURSHUW\XQGHUFRQVWUXFWLRQ — &KDQJHLQIDLUYDOXH UHIHUWRQRWH 50 'LVSRVDOV (2) ¥ )RUHLJQH[FKDQJHPRYHPHQWV (8) 7UDQVIHUIURPSURSHUW\DQGHTXLSPHQW UHIHUWRQRWH —

Balance at the end of the year 2 523 ,QYHVWPHQWSURSHUWLHVFRPSULVHDQXPEHURISURSHUWLHVWKDWDUHOHDVHGWRWKLUGSDUWLHVIRUHLWKHUFRPPHUFLDORU UHVLGHQWLDO XVH (DFK RI WKH OHDVHV FRQWDLQV DQ LQLWLDO UHQWDO SHULRG UDQJLQJ IURP VL[ PRQWKV WR \HDUV GHSHQGLQJ RQ WKH XVH RI WKH EXLOGLQJ EHLQJ OHDVHG 6XEVHTXHQW UHQHZDOV DUH QHJRWLDWHG ZLWK WKH OHVVHH 1RFRQWLQJHQWUHQWDOVDUHFKDUJHG 15. Property and equipment Group

2010 Accumulated $FFXPXODWHG depreciation GHSUHFLDWLRQ and/or Carrying DQGRU &DUU\LQJ Cost impairments value &RVW LPSDLUPHQWV YDOXH Rm Rm Rm 5P 5P 5P &RPSXWHUHTXLSPHQW 4 997 (3 322) 1 675 )UHHKROGSURSHUW\ 3 615 (226) 3 389 )XUQLWXUHDQGRWKHU HTXLSPHQW 4 776 (2 447) 2 329 /HDVHKROGSURSHUW\ 465 (375) 90 0RWRUYHKLFOHV 56 (46) 10 13 909 (6 416) 7 493

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 403 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

15. Property and equipment (continued) Reconciliation of property and equipment Group 2010 Transfer to Foreign invest- exchange Impair- Opening Addi- Dis- ment move- Depre- ment Closing balance tions posals properties ments ciation charge balance Rm Rm Rm Rm Rm Rm Rm Rm &RPSXWHUHTXLSPHQW 1 724 816 (177) — (19) (669) — 1 675 )UHHKROGSURSHUW\ 2 386 1 094 (12) — (49) (30) — 3 389 )XUQLWXUHDQGRWKHU HTXLSPHQW 2 364 430 (22) — (17) (413) (13) 2 329 /HDVHKROGSURSHUW\ 125 5 (2) — (6) (32) — 90 0RWRUYHKLFOHV 7 6 (1) — 1 (3) — 10 6 606 2 351 (214) — (90) (1 147) (13) 7 493

7UDQVIHU WR )RUHLJQ LQYHVW H[FKDQJH ,PSDLU 2SHQLQJ $GGL 'LV PHQW PRYH 'HSUH PHQW &ORVLQJ EDODQFH WLRQV SRVDOV SURSHUWLHV PHQWV FLDWLRQ FKDUJH EDODQFH 5P 5P 5P 5P 5P 5P 5P 5P &RPSXWHUHTXLSPHQW ¥ ¥ ¥ )UHHKROGSURSHUW\ ¥ )XUQLWXUHDQGRWKHU HTXLSPHQW ¥ /HDVHKROGSURSHUW\ ¥ ¥ 0RWRUYHKLFOHV ¥ ¥ ¥

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©VUHJLVWHUHGRIILFHDQGWKLVLQIRUPDWLRQZLOOEHPDGHDYDLODEOHWRVKDUHKROGHUVRQZULWWHQUHTXHVW

404 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010 Rm 5P 16. Deferred tax 16.1 Reconciliation of net deferred tax liability Balance at the beginning of the year 1 773 'HIHUUHGWD[DVVHWUHOHDVHG UDLVHG RQ67&FUHGLWV UHIHUWRQRWH 2 $FTXLVLWLRQRIEXVLQHVVHV UHIHUWRQRWH 1 'HIHUUHGWD[RQDPRXQWVFKDUJHGGLUHFWO\WRRWKHUFRPSUHKHQVLYHLQFRPH 529 $YDLODEOHIRUVDOHLQYHVWPHQWV 72 )DLUYDOXHPHDVXUHPHQW 72 7UDQVIHUWRWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRI FRPSUHKHQVLYHLQFRPH — &DVKIORZKHGJHV 449 )DLUYDOXHPHDVXUHPHQW (60) 7UDQVIHUWRWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRI FRPSUHKHQVLYHLQFRPH 509 5HWLUHPHQWEHQHILWDVVHWDQGOLDELOLWLHV 8 &KDUJHWRWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRI FRPSUHKHQVLYHLQFRPH UHIHUWRQRWH (449) 7D[HIIHFWRIWUDQVODWLRQDQGRWKHUGLIIHUHQFHV 8 Balance at the end of the year 1 864 16.2 Deferred tax liabilities/(assets) 7D[HIIHFWVRIWHPSRUDU\GLIIHUHQFHVEHWZHHQWD[DQGERRNYDOXHIRU $FFUXDOVDQGSURYLVLRQV 1 788 )DLUYDOXHDGMXVWPHQWVRQLQYHVWPHQWVHFXULWLHV 16 ,PSDLUPHQWRIDGYDQFHV (72) /HDVHDQGUHQWDOGHEWRUDOORZDQFHV 280 2WKHUWHPSRUDU\GLIIHUHQFHV 77 ¥ 3URSHUW\DOORZDQFHV 11 5HWLUHPHQWEHQHILWDVVHWDQGOLDELOLWLHV 198 Deferred tax liabilities 2 298 Deferred tax assets (434)

'HIHUUHGWD[DVVHW¤QRUPDO (365) 'HIHUUHGWD[DVVHW¤67&FUHGLW UHIHUWRQRWH (69)

Net deferred tax liability 1 864 16.3 Future tax relief 7KH*URXSKDVHVWLPDWHGWD[ORVVHVRI5 PLOOLRQ 5PLOOLRQ 7KHDERYHILJXUHVH[FOXGHWD[ORVVHVDQGWHPSRUDU\GLIIHUHQFHV RI5PLOOLRQ UHYHUVLQJWHPSRUDU\GLIIHUHQFHVRI5PLOOLRQ IRU ZKLFKGHIHUUHGWD[OLDELOLWLHV DVVHWV KDYHEHHQUDLVHG Balance at the beginning of the year 127 /RVVHVLQFXUUHG 26 0RYHPHQWLQWHPSRUDU\GLIIHUHQFHV 56 2SHUDWLQJORVVHVXWLOLVHG (2) Balance at the end of the year 207 16.4 Secondary taxation on companies (STC) $FFXPXODWHG67&FUHGLWV 685 'HIHUUHGWD[DVVHWUDLVHGDW UHIHUWRQRWH 69 Movement in deferred tax asset for the year (refer to note 16.1) (2) ,I WKH WRWDO UHVHUYHV RI 5 PLOOLRQ 5 PLOOLRQ DV DW WKH UHSRUWLQJ GDWH ZHUH WR EH GHFODUHG DV GLYLGHQGVWKHVHFRQGDU\WD[LPSDFWDWDUDWHRIZRXOGEH5PLOOLRQ 5PLOOLRQ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 405 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P 5P

17. Deposits from banks &DOOGHSRVLWV 6 537 )L[HGGHSRVLWV 860 )RUHLJQFXUUHQF\GHSRVLWV 1 704 2WKHUGHSRVLWV 2 091 5HSXUFKDVHDJUHHPHQWV UHIHUWRQRWH 4 214

15 406

Portfolio analysis )LQDQFLDOOLDELOLWLHVDWDPRUWLVHGFRVW 13 727 )LQDQFLDOOLDELOLWLHVGHVLJQDWHGDWIDLUYDOXHWKURXJK SURILWRUORVV 1 679

)L[HGGHSRVLWV 462 )RUHLJQFXUUHQF\GHSRVLWV 3 ¥ 2WKHUGHSRVLWV — ¥ 5HSXUFKDVHDJUHHPHQWV 1 214

15 406 Comparatives have been reclassified, refer to note 1.26. 'HSRVLWVZLWKYDULDEOHUDWHVDUH5PLOOLRQ 5PLOOLRQ5PLOOLRQ DQGIL[HGUDWHV DUH5PLOOLRQ 5PLOOLRQ 5PLOOLRQ 18. Trading and hedging portfolio liabilities 'HULYDWLYHOLDELOLWLHV UHIHUWRQRWH 43 527

&RPPRGLW\GHULYDWLYHV 154 &UHGLWGHULYDWLYHV 131 (TXLW\GHULYDWLYHV 1 968 )RUHLJQH[FKDQJHGHULYDWLYHV 12 465 ,QWHUHVWUDWHGHULYDWLYHV 28 809

6KRUWSRVLWLRQV 3 927

7RWDOWUDGLQJSRUWIROLROLDELOLWLHV 47 454 +HGJLQJSRUWIROLROLDELOLWLHV UHIHUWRQRWH 1 881

49 335

Portfolio analysis 'HULYDWLYHVGHVLJQDWHGDVFDVKIORZKHGJLQJLQVWUXPHQWV 94 'HULYDWLYHVGHVLJQDWHGDVIDLUYDOXHKHGJLQJLQVWUXPHQWV 1 787 )LQDQFLDOOLDELOLWLHVKHOGIRUWUDGLQJ 47 454

'HULYDWLYHOLDELOLWLHV 43 527 6KRUWSRVLWLRQV 3 927

49 335 Comparatives have been reclassified, refer to note 1.26. ,QFOXGHGDERYHDUHILQDQFLDOLQVWUXPHQWVUHODWHGWRWKH*URXS©VLQWHUHVWUDWHHFRQRPLFKHGJLQJSURJUDPPHZLWK DQRWLRQDOYDOXHRI5PLOOLRQ 5PLOOLRQ5PLOOLRQ DQGDIDLUYDOXHRI5PLOOLRQ 5PLOOLRQ5PLOOLRQ

406 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010 Rm 5P

19. Other liabilities $FFUXDOV 1 278 $XGLWIHHDFFUXDO 34 &UHGLWRUV 5 978 'HIHUUHGLQFRPH 179 /LDELOLWLHVXQGHUILQDQFHOHDVHV UHIHUWRQRWH 621 5HWLUHPHQWEHQHILWREOLJDWLRQ UHIHUWRQRWH 358 6HWWOHPHQWEDODQFHV 2 489 6KDUHEDVHGSD\PHQWOLDELOLW\ UHIHUWRQRWH 302 11 239 Portfolio analysis )LQDQFLDOOLDELOLWLHVDWDPRUWLVHGFRVW 9 076 &UHGLWRUV 5 966 /LDELOLWLHVXQGHUILQDQFHOHDVHV 621 6HWWOHPHQWEDODQFHV 2 489 )LQDQFLDOOLDELOLWLHVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV 12 1RQILQDQFLDOOLDELOLWLHV 2 151 11 239 19.1 Liabilities under finance leases Group 2010 Minimum lease payments due Interest Principal Rm Rm Rm /HVVWKDQRQH\HDU 262 (90) 172 %HWZHHQRQHDQGWZR\HDUV 274 (57) 217 %HWZHHQWZRDQGWKUHH\HDUV 204 (21) 183 %HWZHHQWKUHHDQGIRXU\HDUV 50 (1) 49 790 (169) 621 0LQLPXP OHDVH SD\PHQWV GXH ,QWHUHVW 3ULQFLSDO 5P 5P 5P /HVVWKDQRQH\HDU %HWZHHQRQHDQGWZR\HDUV %HWZHHQWZRDQGWKUHH\HDUV %HWZHHQWKUHHDQGIRXU\HDUV %HWZHHQIRXUDQGILYH\HDUV 8QGHUWKHWHUPVRIWKHOHDVHVQRFRQWLQJHQWUHQWDOVDUHSD\DEOH5HIHUWRQRWHIRUGHWDLOVRISURSHUW\DQG HTXLSPHQWVXEMHFWWRILQDQFHOHDVHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 407 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

19. Other liabilities (continued) 19.1 Liabilities under finance leases (continued) 19.1.1Terms and conditions of finance leases Description Address Details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inimum future income receivable from subleasing Group 2010 Rm 5P

5HFHLYDEOHZLWKLQRQH\HDU 6 5HFHLYDEOHZLWKLQWZRWRILYH\HDUV 1

7 20. Provisions Group 2010 Redundancy Staff and restruc- bonus and turing incentive Sundry provision provision provisions Total Rm Rm Rm Rm Balance at the beginning of the year — 822 862 1 684 $GGLWLRQV — 986 399 1 385 $PRXQWVXVHG — (874) (79) (953) 5HYHUVDOV — (25) (283) (308) Balance at the end of the year — 909 899 1 808

5HGXQGDQF\ 6WDII DQGUHVWUXF ERQXVDQG WXULQJ LQFHQWLYH 6XQGU\ SURYLVLRQ SURYLVLRQ SURYLVLRQV 7RWDO 5P 5P 5P 5P %DODQFHDWWKHEHJLQQLQJRIWKH\HDU $GGLWLRQV ¥ $PRXQWVXVHG 5HOHDVHRISURYLVLRQVXEMHFWWRVKDUHEDVHG SD\PHQWDUUDQJHPHQW ¥ ¥ %DODQFHDWWKHHQGRIWKH\HDU ¥ 3URYLVLRQV H[SHFWHG WR EH UHFRYHUHG RU VHWWOHG ZLWKLQ QR PRUH WKDQ PRQWKV DIWHU WKH UHSRUWLQJ GDWH ZHUH 5PLOOLRQ 5PLOOLRQ 6XQGU\SURYLVLRQVDUHPDGHZLWKUHVSHFWWRIUDXGFDVHVOLWLJDWLRQFODLPVDQG LQVXUDQFHFODLPV

408 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010 Rm 5P 5P

21. Deposits due to customers &DOOGHSRVLWV 54 707 &KHTXHDFFRXQWGHSRVLWV 107 787 &UHGLWFDUGGHSRVLWV 1 830 )L[HGGHSRVLWV 114 180 )RUHLJQFXUUHQF\GHSRVLWV 9 661 1RWLFHGHSRVLWV 11 365 2WKHUGHSRVLWV 3 702 5HSXUFKDVHDJUHHPHQWVZLWKQRQEDQNV UHIHUWRQRWH 7 035 6DYLQJVDQGWUDQVPLVVLRQGHSRVLWV 67 844

378 111

Portfolio analysis )LQDQFLDOOLDELOLWLHVDWDPRUWLVHGFRVW 361 255 )LQDQFLDOOLDELOLWLHVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRU ORVV 16 856 )L[HGGHSRVLWV 9 821 2WKHUGHSRVLWV — ¥ 5HSXUFKDVHDJUHHPHQWVZLWKQRQEDQNV 7 035

378 111 Comparatives have been reclassified, refer to note 1.26.

Note Included in other deposits are partnership contributions received, deposits due on structured deals, preference investments on behalf of customers and unclaimed deposits.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 409 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P

22. Debt securities in issue $EDFDV¤&RPPHUFLDOSDSHULVVXHGDQGIORDWLQJUDWHQRWHV 1 789 &UHGLWOLQNHGQRWHV 6 360 )ORDWLQJUDWHQRWHV 75 740 /LDELOLWLHVDULVLQJIURPVHFXULWLVHG63(V 4 216 1HJRWLDEOHFHUWLILFDWHVRIGHSRVLW 64 271 2WKHUGHEWVHFXULWLHVLQLVVXH — 3URPLVVRU\QRWHV 1 811 5HSOLFDERQGV 1 220 6HQLRUQRWHV 9 138

164 545

Portfolio analysis $PRUWLVHGFRVWLWHPVKHOGLQDIDLUYDOXHKHGJLQJUHODWLRQVKLS 5 273

)ORDWLQJUDWHQRWHV 5 187 1HJRWLDEOHFHUWLILFDWHVRIGHSRVLW 86

)LQDQFLDOOLDELOLWLHVDWDPRUWLVHGFRVW 157 711 )LQDQFLDOOLDELOLWLHVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV 1 561

&UHGLWOLQNHGQRWHV — 2WKHUGHEWVHFXULWLHVLQLVVXH — 3URPLVVRU\QRWHV 341 ¥ 5HSOLFDERQGV 1 220

164 545

23. Liabilities under investment contracts Balance at the beginning of the year 12 446 &KDQJHVLQLQYHVWPHQWFRQWUDFWV UHIHUWRQRWH 1 014 ,QIORZVRQLQYHVWPHQWFRQWUDFWV 2 644 3ROLF\KROGHUEHQHILWVRQLQYHVWPHQWFRQWUDFWV (2 114) /LQNHGLQYHVWPHQWSROLFLHV (26)

Balance at the end of the year 13 964

Portfolio analysis )LQDQFLDOOLDELOLWLHVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV 13 964

23.1 Liabilities under investment contracts attributable to external policyholders 7RWDOOLDELOLWLHVXQGHULQYHVWPHQWFRQWUDFWV 14 817 (OLPLQDWLRQRILQWHUJURXSEDODQFH (853) 13 964

410 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 23. Liabilities under investment contracts (continued) 23.2 Assets linked to investment contracts Group 2010 Attributable Linked to Intergroup to external investment assets and policy- contracts liabilities holders Rm Rm Rm

0RQH\PDUNHWDVVHWV UHIHUWRQRWH 6 473 (5 802) 671 ,QYHVWPHQWVHFXULWLHV UHIHUWRQRWH 7 866 (19) 7 847 2WKHUDVVHWV 16 — 16 2WKHUOLDELOLWLHV (12) — (12) ,QYHVWPHQWVLQOLQNHGLQYHVWPHQWSROLFLHV UHIHUWRQRWH 474 — 474 14 817 (5 821) 8 996

$WWULEXWDEOH /LQNHGWR ,QWHUJURXS WRH[WHUQDO LQYHVWPHQW DVVHWVDQG SROLF\ FRQWUDFWV OLDELOLWLHV KROGHUV 5P 5P 5P 0RQH\PDUNHWDVVHWV UHIHUWRQRWH ,QYHVWPHQWVHFXULWLHV UHIHUWRQRWH 2WKHUDVVHWV ¥ 2WKHUOLDELOLWLHV ¥ ,QYHVWPHQWVLQOLQNHGLQYHVWPHQWSROLFLHV UHIHUWRQRWH

Group 2010 Gross Reinsurance Net Rm Rm Rm

24. Policyholder liabilities under insurance contracts 6KRUWWHUPLQVXUDQFHFRQWUDFWV &ODLPVRXWVWDQGLQJ UHIHUWRQRWH 729 (208) 521

&ODLPVUHSRUWHGDQGORVVDGMXVWPHQWH[SHQVH 556 (186) 370 &ODLPVLQFXUUHGEXWQRWUHSRUWHG 173 (22) 151

8QHDUQHGSUHPLXPVDWWKHHQGRIWKH\HDU 809 (120) 689

%DODQFHDWWKHEHJLQQLQJRIWKH\HDU 897 (180) 717 ,QFUHDVHGXULQJWKH\HDU 2 857 (508) 2 349 5HOHDVHGXULQJWKH\HDU (2 945) 568 (2 377)

1 538 (328) 1 210 /RQJWHUPLQVXUDQFHFRQWUDFWV UHIHUWRQRWH 1 463 (58) 1 405

3 001 (386) 2 615

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 411 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

24. Policyholder liabilities under insurance contracts (continued) *URXS *URVV 5HLQVXUDQFH 1HW 5P 5P 5P 6KRUWWHUPLQVXUDQFHFRQWUDFWV &ODLPVRXWVWDQGLQJ UHIHUWRQRWH &ODLPVUHSRUWHGDQGORVVDGMXVWPHQWH[SHQVH &ODLPVLQFXUUHGEXWQRWUHSRUWHG 8QHDUQHGSUHPLXPVDWWKHHQGRIWKH\HDU %DODQFHDWWKHEHJLQQLQJRIWKH\HDU ,QFUHDVHGXULQJWKH\HDU 5HOHDVHGXULQJWKH\HDU

/RQJWHUPLQVXUDQFHFRQWUDFWV UHIHUWRQRWH

Group 2010 Rm 5P Comprising: 8QLWOLQNHGLQVXUDQFHFRQWUDFWV *URVV 1 049 1RQOLQNHGLQVXUDQFHFRQWUDFWV 1 566 *URVV 1 952 5HLQVXUDQFH UHIHUWRQRWH (386)

2 615 24.1 Reconciliation of claims outstanding, including claims incurred but not reported Group 2010 Gross Reinsurance Net Rm Rm Rm

Balance at the beginning of the year 837 (253) 584 &DVKSDLGIRUFODLPVVHWWOHGGXULQJWKH\HDU (2 199) 260 (1 939) ,QFUHDVH GHFUHDVH LQFODLPVDULVLQJIURPFXUUHQW\HDU FODLPVRXWVWDQGLQJ 2 073 (210) 1 863 ,QFUHDVH GHFUHDVH LQFODLPVDULVLQJIURPSUHYLRXV\HDUV© FODLPVRXWVWDQGLQJ 18 (5) 13 Balance at the end of the year (refer to note 24) 729 (208) 521

*URVV 5HLQVXUDQFH 1HW 5P 5P 5P %DODQFHDWWKHEHJLQQLQJRIWKH\HDU &DVKSDLGIRUFODLPVVHWWOHGGXULQJWKH\HDU ,QFUHDVH GHFUHDVH LQFODLPVDULVLQJIURPFXUUHQW\HDUFODLPV RXWVWDQGLQJ ,QFUHDVH GHFUHDVH LQFODLPVDULVLQJIURPSUHYLRXV\HDUV© FODLPVRXWVWDQGLQJ %DODQFHDWWKHHQGRIWKH\HDU UHIHUWRQRWH

412 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 24. Policyholder liabilities under insurance contracts (continued) 24.2 Reconciliation of the gross long-term insurance contracts Group 2010 Rm 5P Balance at the beginning of the year 1 402 5HLQVXUDQFHOLDELOLW\ 16 7UDQVIHUIURPVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH UHIHUWRQRWH 45 ,QFUHDVHLQUHWURVSHFWLYHOLDELOLWLHV 165 8QZLQGRIGLVFRXQWUDWH 34 1HZEXVLQHVV 59 &KDQJHLQPHWKRGRORJ\ (34) &KDQJHLQHFRQRPLFDVVXPSWLRQV 37 &KDQJHVLQQRQHFRQRPLFDVVXPSWLRQV (154) ([SHFWHGFDVKIORZ 354 ([SHFWHGUHOHDVHRIPDUJLQV (411) ([SHULHQFHYDULDQFHV (5)

Balance at the end of the year (refer to note 24) 1 463 5HFRYHUDEOHIURPUHLQVXUHUV 58 1HWOLDELOLWLHV 1 405 8QLWOLQNHGOLDELOLWLHV 1 049 1RQOLQNHGOLDELOLWLHV 356

1 463

Change in accounting estimate – changes in non-economic assumptions 2QHRIWKHPDUJLQVHVWDEOLVKHGLQWHUPVRIWKH*URXS©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©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 413 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P

25. Borrowed funds Subordinated callable notes 7KHVXERUGLQDWHGGHEWLQVWUXPHQWVOLVWHGEHORZTXDOLI\DVVHFRQGDU\ FDSLWDOLQWHUPVRIWKH%DQNV$FW1RRI DVDPHQGHG Interest rate Final maturity date Note 0DUFK L — 6HSWHPEHU LL 1 500 0DUFK LLL 1 725 0DUFK LY 2 000 0D\ Y 600 ¥ 7KUHHPRQWK-,%$5 0DUFK YL — 7KUHHPRQWK-,%$5 0D\ YLL 400 ¥

&3,OLQNHGQRWHVIL[HGDWWKHIROORZLQJFRXSRQUDWHV 0DUFK YLLL 1 886 6HSWHPEHU L[ 3 000 'HFHPEHU [ 1 500 $FFUXHGLQWHUHVW 826 )DLUYDOXHDGMXVWPHQW 212

13 649

Portfolio analysis $PRUWLVHGFRVWILQDQFLDOOLDELOLWLHVKHOGLQDIDLUYDOXHKHGJLQJ UHODWLRQVKLS 5 470 )LQDQFLDOOLDELOLWLHVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV 739 )LQDQFLDOOLDELOLWLHVKHOGDWDPRUWLVHGFRVW 7 440

13 649

414 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 25. Borrowed funds (continued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

$OOWKHDERYHQRWHVDUHOLVWHGRQWKH%RQG([FKDQJHRI6RXWK$IULFD %(6$ ,QDFFRUGDQFHZLWKWKH&RPSDQ\©VDUWLFOHVRIDVVRFLDWLRQWKHERUURZLQJSRZHUVRIWKH&RPSDQ\DUHXQOLPLWHG

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 415 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P

26. Share capital and premium 26.1 Ordinary share capital Authorised 880 467 500 RUGLQDU\VKDUHVRI5HDFK 1 761 Issued 718 210 043 RUGLQDU\VKDUHVRI5HDFK 1 437 570 000 WUHDVXU\VKDUHVKHOGE\$EVD*URXSFRPSDQLHV (1) 1 049 790 WUHDVXU\VKDUHVKHOGE\$EVD*URXS/LPLWHG 6KDUH,QFHQWLYH7UXVW (3) 1 433 Total issued capital 6KDUHFDSLWDO 1 433 6KDUHSUHPLXP 4 590 6 023

Shares issued during the current year 7KHUHZHUHQRVKDUHVLVVXHGGXULQJWKHFXUUHQW\HDU

416 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 26. Share capital and premium (continued) 26.1 Ordinary share capital (continued) Shares issued during the previous year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ther reserves Associates’ and joint ventures’ reserve 7KHDVVRFLDWHV©DQGMRLQWYHQWXUHV©UHVHUYHFRPSULVHVWKH*URXS ©VVKDUHRILWVDVVRFLDWHV©DQGRUMRLQWYHQWXUHV© UHVHUYHV

Available-for-sale reserve 7KHDYDLODEOHIRUVDOHUHVHUYHFRPSULVHVWKHFXPXODWLYHQHWFKD QJHLQWKHIDLUYDOXHRIDYDLODEOHIRUVDOHILQDQFLDO DVVHWVXQWLOWKHLQVWUXPHQWLVGHUHFRJQLVHGRULPSDLUHGLQZKLFKFDVHWKHFXPXODWLYHDPRXQWUHFRJQLVHGLQRWKHU FRPSUHKHQVLYHLQFRPHLVUHOHDVHGWRWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH

Cash flow hedging reserve 7KHFDVKIORZKHGJLQJUHVHUYHFRPSULVHVWKHHIIHFWLYHSRUWLRQR IWKHFXPXODWLYHQHWFKDQJHLQWKHIDLUYDOXHRI FDVKIORZKHGJLQJLQVWUXPHQWVUHODWHGWRKHGJHGWUDQVDFWLRQVWKDWKDYHQRW\HWRFFXUUHG

Foreign currency translation reserve 7KH WUDQVODWLRQ UHVHUYH FRPSULVHV DOO IRUHLJQ FXUUHQF\ GLIIHUHQFHV DULVLQJ IURP WKH WUDQVODWLRQ RI WKH ILQDQFLDO VWDWHPHQWVRIIRUHLJQRSHUDWLRQV

General credit risk reserve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

Insurance contingency reserve $FRQWLQJHQF\UHVHUYHLVPDLQWDLQHGDWRIQHWZULWWHQSUHPL XPVDVVWLSXODWHGE\WKH6KRUWWHUP,QVXUDQFH$FW 7KHXWLOLVDWLRQRIWKLVUHVHUYHLQFDVHRIFDWDVWURSKHLVVXEMHFWWRWKHDSSURYDORIWKH)LQDQFLDO6HUYLFHV %RDUG )6%

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 417 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

27. Other reserves (continued) Share-based payment reserve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roup

2010 Rm 5P 28. Non-controlling interest – preference shares Authorised 30 000 000 QRQFXPXODWLYHQRQUHGHHPDEOHOLVWHG SUHIHUHQFHVKDUHVRI5HDFK 1 Issued 4 944 839 QRQFXPXODWLYHQRQUHGHHPDEOHOLVWHG SUHIHUHQFHVKDUHVRI5HDFK 1 Total issued capital 6KDUHFDSLWDO 1 6KDUHSUHPLXP 4 643 4 644 7KHSUHIHUHQFHVKDUHVKDYHDGLYLGHQGUDWHRIRIWKHSULPHRYHUGUDIWOHQGLQJUDWH7KHKROGHUVRIVXFK VKDUHVVKDOOQRWEHHQWLWOHGWRYRWLQJULJKWVXQOHVVDGHFODUHGSUHIHUHQFHGLYLGHQGUHPDLQVLQDUUHDUDQGXQSDLG DIWHUVL[PRQWKVIURPWKHGXHGDWHWKHUHRIRUDUHVROXWLRQLVSURSRVHGE\WKH%DQNZKLFKGLUHFWO\DIIHFWVWKHULJKWV DWWDFKHGWRWKHSUHIHUHQFHVKDUHVRUWKHLQWHUHVWRIWKHKROGHUVWKHUHRI

418 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010 Rm 5P

29. Interest and similar income ,QWHUHVWDQGVLPLODULQFRPHLVHDUQHGIURP &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDOEDQNV 103 )DLUYDOXHDGMXVWPHQWVRQKHGJLQJLQVWUXPHQWV 1 023 ,QYHVWPHQWVHFXULWLHV 495 /RDQVDQGDGYDQFHVWREDQNV 1 234

2WKHUORDQVDQGDGYDQFHVWREDQNV 954 5HYHUVHUHSXUFKDVHDJUHHPHQWV 280

/RDQVDQGDGYDQFHVWRFXVWRPHUV 48 316

&KHTXHDFFRXQWV 3 162 &RUSRUDWHRYHUGUDIWVDQGVSHFLDOLVHGILQDQFHORDQV 1 254 &UHGLWFDUGV 2 998 )RUHLJQFXUUHQF\ORDQV 252 ,QVWDOPHQWFUHGLWDJUHHPHQWV 6 095 ,QWHUHVWRQLPSDLUHGILQDQFLDODVVHWV UHIHUWRQRWH 764 5HYHUVHUHSXUFKDVHDJUHHPHQWV — /RDQVWRDVVRFLDWHVDQGMRLQWYHQWXUHV 486 0LFURORDQV 706 0RUWJDJHV 25 071 2WKHUDGYDQFHV 943 2YHUQLJKWILQDQFH 640 3HUVRQDODQGWHUPORDQV 3 225 3UHIHUHQFHVKDUHV 693 :KROHVDOHRYHUGUDIWV 2 027

2WKHULQWHUHVW 87 6WDWXWRU\OLTXLGDVVHWSRUWIROLR 2 983

54 241

Portfolio analysis )DLUYDOXHDGMXVWPHQWVRQDPRUWLVHGFRVWDQGDYDLODEOHIRUVDOHLWHPV KHOGLQDIDLUYDOXHKHGJLQJUHODWLRQVKLS UHIHUWRQRWH 497

/RDQVDQGDGYDQFHVWRFXVWRPHUV 170 6WDWXWRU\OLTXLGDVVHWSRUWIROLR 327

)DLUYDOXHDGMXVWPHQWVRQKHGJLQJLQVWUXPHQWV 1 023

&DVKIORZKHGJHV UHIHUWRQRWH 1 485 )DLUYDOXHKHGJHV UHIHUWRQRWH (369) (FRQRPLFKHGJHV (93) ,QWHUHVWRQILQDQFLDODVVHWVKHOGDWDPRUWLVHGFRVWDQGDYDLODEOHIRUVDOH 51 302 ,QWHUHVWRQILQDQFLDODVVHWVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV 1 419 &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDOEDQNV 61 ,QYHVWPHQWVHFXULWLHV 344 /RDQVDQGDGYDQFHV 735 6WDWXWRU\OLTXLGDVVHWSRUWIROLR 279

54 241

Note Includes items such as interest on factored debtors’ books.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 419 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P

30. Interest expense and similar charges ,QWHUHVWH[SHQVHDQGVLPLODUFKDUJHVDUHSDLGRQ %RUURZHGIXQGV 1 586 'HEWVHFXULWLHVLQLVVXH 12 786 'HSRVLWVGXHWRFXVWRPHUV 17 204

&DOOGHSRVLWV 3 237 &KHTXHDFFRXQWGHSRVLWV 3 196 &UHGLWFDUGGHSRVLWV 13 )L[HGGHSRVLWV 7 197 )RUHLJQFXUUHQF\GHSRVLWV 142 1RWLFHGHSRVLWV 457 2WKHUGHSRVLWV 609 6DYLQJVDQGWUDQVPLVVLRQGHSRVLWV 2 353

'HSRVLWVIURPEDQNV 273

&DOOGHSRVLWV 177 )L[HGGHSRVLWV 62 2WKHU 34

)DLUYDOXHDGMXVWPHQWVRQKHGJLQJLQVWUXPHQWV (1 116) ,QWHUHVWLQFXUUHGRQILQDQFHOHDVHV 108 2WKHULQWHUHVW 60

30 901

Portfolio analysis )DLUYDOXHDGMXVWPHQWVRQDPRUWLVHGFRVWLWHPVKHOGLQDIDLUYDOXHKHGJLQJ UHODWLRQVKLS UHIHUWRQRWH 504

%RUURZHGIXQGV 291 'HEWVHFXULWLHVLQLVVXH 213

)DLUYDOXHDGMXVWPHQWVRQKHGJLQJLQVWUXPHQWV (1 116)

&DVKIORZKHGJHV UHIHUWRQRWH (644) )DLUYDOXHKHGJHV UHIHUWRQRWH (472)

,QWHUHVWRQILQDQFLDOOLDELOLWLHVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV 989

'HEWVHFXULWLHVLQLVVXH 364 'HSRVLWVGXHWRFXVWRPHUV 625

,QWHUHVWRQILQDQFLDOOLDELOLWLHVKHOGDWDPRUWLVHGFRVW 30 524

30 901

420 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group

2010 Rm 5P 31. Net fee and commission income Fee and commission income $VVHWPDQDJHPHQWDQGRWKHUUHODWHGIHHV 105 &RQVXOWLQJDQGDGPLQLVWUDWLRQIHHV 510 &UHGLWUHODWHGIHHVDQGFRPPLVVLRQV 12 855

&KHTXHDFFRXQWV 3 198 &UHGLWFDUGV 1 938 (OHFWURQLFEDQNLQJ 3 828 2WKHU 1 474 6DYLQJVDFFRXQWV 2 417

,QVXUDQFHFRPPLVVLRQUHFHLYHG 950 2WKHUIHHVDQGFRPPLVVLRQV 299 3HQVLRQIXQGSD\PHQWVHUYLFHV 497 3URMHFWILQDQFHIHHV 209 7UXVWDQGRWKHUILGXFLDU\VHUYLFHV 1 029

3RUWIROLRDQGRWKHUPDQDJHPHQWIHHV 783 7UXVWDQGHVWDWHLQFRPH 246

16 454 Fee and commission expense (2 063)

&KHTXHSURFHVVLQJIHHV (173) &RPPLVVLRQSDLG (867) 'HEWFROOHFWLQJIHHV (85) 2WKHU (561) 7UDQVDFWLRQEDVHGOHJDOIHHV (192) 9DOXDWLRQIHHV (185)

14 391 7KH*URXSSURYLGHVFXVWRG\WUXVWHHFRUSRUDWHDGPLQLVWUDWLRQLQYHVWPHQW PDQDJHPHQWDQGDGYLVRU\VHUYLFHVWRWKLUGSDUWLHVZKLFKLQYROYHVWKH *URXSPDNLQJDOORFDWLRQDQGSXUFKDVHDQGVDOHGHFLVLRQVLQUHODWLRQWRD ZLGHUDQJHRIILQDQFLDOLQVWUXPHQWV6RPHRIWKHVHDUUDQJHPHQWVLQYROYH WKH*URXSDFFHSWLQJWDUJHWVIRUEHQFKPDUNOHYHOVRIUHWXUQVIRUWKHDVVHWV XQGHUWKH*URXS©VFDUH

Notes Includes merchant, acquiring and issuing fees. Includes service, commission and credit-related fees on mortgage loans and foreign exchange transactions.

31.1 Included above are net fees and commissions linked to financial instruments not at fair value Fee and commission income &KHTXHDFFRXQWV 3 198 &UHGLWFDUGV 883 (OHFWURQLFEDQNLQJ 3 828 2WKHU 1 080 6DYLQJVDFFRXQWV 2 417

11 406 Fee and commission expense (173)

11 233

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 421 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P 32. Net insurance premium income *URVVLQVXUDQFHSUHPLXPV 5 365

/LIHLQVXUDQFHFRQWUDFWV 1 871 6KRUWWHUPLQVXUDQFHFRQWUDFWV 3 494

3UHPLXPVFHGHGWRUHLQVXUHUV (763)

5HLQVXUDQFHRQOLIHLQVXUDQFHFRQWUDFWV (154) 5HLQVXUDQFHRQVKRUWWHUPLQVXUDQFHFRQWUDFWV (609)

4 602

Comprising: /LIH 1 717

&UHGLWOLIH 575 )XQHUDOEXVLQHVV 375 +RPHPRUWJDJHSURWHFWLRQ 523 2WKHU 244

6KRUWWHUP 2 885

&RPPHUFLDOEXVLQHVV 1 044 3HUVRQDOEXVLQHVV 1 841

4 602

33. Net insurance claims and benefits paid *URVVFODLPVDQGEHQHILWVSDLGRQLQVXUDQFHFRQWUDFWV 2 864

/LIHLQVXUDQFHFODLPVDQGEHQHILWV 516 6KRUWWHUPLQVXUDQFHFODLPVDQGEHQHILWV 2 348 5HLQVXUDQFHUHFRYHULHV (459)

5HLQVXUDQFHUHFRYHULHVRQOLIHLQVXUDQFHFRQWUDFWV (79) 5HLQVXUDQFHUHFRYHULHVRQVKRUWWHUPLQVXUDQFHFRQWUDFWV (380)

2 405

Comprising: /LIH 437

&UHGLWOLIH 59 )XQHUDOEXVLQHVV 98 +RPHPRUWJDJHSURWHFWLRQ 241 2WKHU 39

6KRUWWHUP 1 968

&RPPHUFLDOEXVLQHVV 926 3HUVRQDOEXVLQHVV 1 042

2 405

422 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010 Rm 5P 34. Changes in investment and insurance liabilities ,QFUHDVH GHFUHDVH LQLQVXUDQFHOLDELOLWLHV UHIHUWRQRWH 45 ,QFUHDVHLQLQYHVWPHQWFRQWUDFWV UHIHUWRQRWH 1 014

1 059 35. Gains and losses from banking and trading activities $VVRFLDWHVDQGMRLQWYHQWXUHV 87

'LYLGHQGVUHFHLYHG 45 3URILW ORVV UHDOLVHGRQGLVSRVDO 42

$YDLODEOHIRUVDOHXQZLQGIURPUHVHUYH (92)

,QYHVWPHQWVHFXULWLHVXQOLVWHGHTXLW\DQGK\EULGLQVWUXPHQWV — 6WDWXWRU\OLTXLGDVVHWSRUWIROLR (92)

)LQDQFLDOLQVWUXPHQWVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV (316)

'HEWVHFXULWLHVLQLVVXH (28) 'HSRVLWVIURPEDQNVDQGGXHWRFXVWRPHUV (1 315) ,QYHVWPHQWVHFXULWLHV 180

'HEWLQVWUXPHQWV 26 /LVWHGHTXLW\LQVWUXPHQWV 86 8QOLVWHGHTXLW\DQGK\EULGLQVWUXPHQWV 68

/RDQVDQGDGYDQFHVWREDQNVDQGFXVWRPHUV 840 6WDWXWRU\OLTXLGDVVHWSRUWIROLR 7

)LQDQFLDOLQVWUXPHQWVKHOGIRUWUDGLQJ 'HULYDWLYHVDQGWUDGLQJLQVWUXPHQWV 2 570

,QHIIHFWLYHKHGJHV 100

&DVKIORZKHGJHV UHIHUWRQRWH 115 )DLUYDOXHKHGJHV UHIHUWRQRWH (15)

2 349

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 423 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P

36. Gains and losses from investment activities $VVRFLDWHVDQGMRLQWYHQWXUHV 3URILWUHDOLVHGRQGLVSRVDO — $YDLODEOHIRUVDOHXQZLQGIURPUHVHUYHV ,QYHVWPHQWVHFXULWLHVXQOLVWHGHTXLW\DQGK\EULGLQVWUXPHQWV — )LQDQFLDOLQVWUXPHQWVGHVLJQDWHGDWIDLUYDOXHWKURXJKSURILWRUORVV 908 &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDOEDQNV 217 ,QYHVWPHQWVHFXULWLHV 477 'HEWLQVWUXPHQWV 125 /LVWHGHTXLW\LQVWUXPHQWV 344 8QOLVWHGHTXLW\DQGK\EULGLQVWUXPHQWV 8 ,QYHVWPHQWVOLQNHGWRLQYHVWPHQWFRQWUDFWV 214 &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDOEDQNV (51) 'HEWLQVWUXPHQWV (24) /LVWHGHTXLW\LQVWUXPHQWV 289 8QOLVWHGHTXLW\DQGK\EULGLQVWUXPHQWV —

)LQDQFLDOLQVWUXPHQWVKHOGIRUWUDGLQJ ,QYHVWPHQWVOLQNHGWRLQYHVWPHQWFRQWUDFWVGHULYDWLYHLQVWUXPHQWV (24) 6XEVLGLDULHV /RVVUHDOLVHGRQGLVSRVDO — 884

37. Other operating income ([FKDQJHGLIIHUHQFHV 59 ,QFRPHIURPLQYHVWPHQWSURSHUWLHV 61 &KDQJHLQIDLUYDOXHRILQYHVWPHQWSURSHUWLHV UHIHUWRQRWH 50 ,QYHVWPHQWSURSHUW\UHQWDOV 11 ,QFRPHIURPPDLQWHQDQFHFRQWUDFWV 15 3URILWRQGLVSRVDORILQWDQJLEOHDVVHWV — 3URILWRQGLVSRVDORISURSHUW\DQGHTXLSPHQW 41 3URILWRQVDOHRIGHYHORSHGSURSHUWLHV 28 *URVVVDOHV 61 &RVWRIVDOHV (33) 3URILWRQVDOHRIUHSRVVHVVHGSURSHUWLHV 6 *URVVVDOHV 141 &RVWRIVDOHV (135) 5HQWDOLQFRPH 253 6XQGU\LQFRPH 249 712

Note 1Includes service fees levied on sundry non-core business activities.

424 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P

38. Operating expenses $PRUWLVDWLRQRILQWDQJLEOHDVVHWV UHIHUWRQRWH 165 $XGLWRUV©UHPXQHUDWLRQ 159 $XGLWIHHV 101 $XGLWIHHV¤XQGHUSURYLVLRQIURPSUHYLRXV\HDUV 6 2WKHUIHHV 52 &DVKWUDQVSRUWDWLRQ 729 'HSUHFLDWLRQ UHIHUWRQRWH 1 147 (TXLSPHQWFRVWV 271 5HQWDOV 134 0DLQWHQDQFH 137 ,QIRUPDWLRQWHFKQRORJ\ 2 085 ,QYHVWPHQWSURSHUW\FKDUJHV¤RSHUDWLQJH[SHQVHV 4 0DUNHWLQJFRVWV 1 070 2SHUDWLQJOHDVHH[SHQVHVRQSURSHUWLHV 978 2WKHURSHUDWLQJFRVWV 2 737 3ULQWLQJDQGVWDWLRQHU\ 272 3URIHVVLRQDOIHHV 1 096 6WDIIFRVWV 12 537 %RQXVHV 1 101 &XUUHQWVHUYLFHFRVWVRQSRVWUHWLUHPHQWEHQHILWV 635 2WKHUVWDIIFRVWV 528 6DODULHV 9 707 6KDUHEDVHGSD\PHQWV UHIHUWRQRWH 297 7UDLQLQJFRVWV 269 7HOHSKRQHDQGSRVWDJH 820 24 070

Notes Includes fees paid for assurance reports performed on behalf of various regulatory bodies. Includes research and development costs of R133 million (2009: R146 million). Includes accommodation, travel and entertainment costs. Includes recruitment costs, membership fees to professional bodies, staff parking, redundancy fees, study assistance, staff relocation and refreshment costs.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 425 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P

39. Other impairments )LQDQFLDOLQVWUXPHQWV 37 $PRUWLVHGFRVWLQVWUXPHQWV 12 $YDLODEOHIRUVDOHLQVWUXPHQWV UHIHUWRQRWH 25 2WKHU 71 &RPSXWHUVRIWZDUHGHYHORSPHQWFRVWV UHIHUWRQRWH 4 (TXLSPHQW UHIHUWRQRWH 13 *RRGZLOO UHIHUWRQRWH — ,QYHVWPHQWVLQDVVRFLDWHVDQGMRLQWYHQWXUHV UHIHUWRQRWH 29 5HSRVVHVVHGSURSHUWLHV 25

108

7KHFXUUHQW\HDU©VLPSDLUPHQWORVVHVDUHUHSRUWHGLQWKHIROORZLQJVHJPHQWV ,PSDLUPHQWV RQ LQYHVWPHQWV LQ DVVRFLDWHV DQG MRLQW YHQWXUHV DUH UHSRUWHG LQ WKH ¨$EVD &DSLWDO© DQG ¨$%%© VHJPHQWV ,PSDLUPHQWVRQDYDLODEOHIRUVDOHILQDQFLDOLQVWUXPHQWVDUHUHSRUWHGLQWKH¨$EVD&DSLWDO©VHJPHQW ,PSDLUPHQWVRQDPRUWLVHGFRVWILQDQFLDOLQVWUXPHQWVDUHUHSRUWHGLQWKH¨2WKHU©VHJPHQW ,PSDLUPHQWVRQFRPSXWHUVRIWZDUHGHYHORSPHQWFRVWVDUHUHSRUWHGLQWKH¨2WKHU©VHJPHQW ,PSDLUPHQWVRQHTXLSPHQWDUHUHSRUWHGLQWKH¨$EVD&DSLWDO©VHJPHQW ,PSDLUPHQWVRQUHSRVVHVVHGSURSHUWLHVDUHUHSRUWHGLQWKH¨5HWDLO%DQNLQJ©VHJPHQW 7KHSUHYLRXV\HDU©VLPSDLUPHQWORVVHVDUHUHSRUWHGLQWKHIROORZLQJVHJPHQWV ,PSDLUPHQWVRQDYDLODEOHIRUVDOHILQDQFLDOLQVWUXPHQWVDUHUHSRUWHGLQWKH¨$EVD&DSLWDO©VHJPHQW ,PSDLUPHQWVRQDPRUWLVHGFRVWILQDQFLDOLQVWUXPHQWVDUHUHSRUWHGLQWKH¨)LQDQFLDO6HUYLFHV©VHJPHQW ,PSDLUPHQWVRQFRPSXWHUVRIWZDUHGHYHORSPHQWFRVWVDUHUHSRUWHGLQWKH¨)LQDQFLDO6HUYLFHV©VHJPHQW ,PSDLUPHQWVRQHTXLSPHQWDUHUHSRUWHGLQWKH¨$%%©VHJPHQW ,PSDLUPHQWVRQJRRGZLOODUHUHSRUWHGLQWKH¨2WKHU©VHJPHQW ,PSDLUPHQWV RQ LQYHVWPHQWV LQ DVVRFLDWHV DQG MRLQW YHQWXUHV DUH UHSRUWHG LQ WKH ¨$EVD &DSLWDO© DQG ¨$%%© VHJPHQWV ,PSDLUPHQWRQUHSRVVHVVHGSURSHUWLHVDUHUHSRUWHGLQWKH¨5HWDLO%DQNLQJ©VHJPHQWV 'XULQJ WKH SUHYLRXV \HDU WKH *URXS VROG FRQWUDFWXDO ULJKWV LW KDG JHQHUDWHG LQ $PELW 0DQDJHPHQW 6HUYLFHV 3URSULHWDU\ /LPLWHG7KHFRPSDQ\LVQRZGRUPDQWDQGFRQVHTXHQWO\WKHJRRGZLOOSUHYLRXVO\UHFRJQLVHGRQWKLV LQYHVWPHQWZDVZULWWHQRII 'XULQJWKHSUHYLRXV\HDULQGLFDWLRQVH[LVWHGWKDWWKHFDUU\LQJDPRXQWRIWKHLQYHVWPHQWVLQDVVRFLDWHVWKDWDURVHDV DUHVXOWRIFXVWRPHUGHIDXOWVRQVLQJOHVWRFNIXWXUHVZLWKLQ$EVD&DSLWDOZRXOGQRWEHUHFRYHUDEOH7KHUHFRYHUDEOH DPRXQWLVWKHIDLUYDOXHOHVVFRVWVWRVHOODQGZDVEDVHGRQWKH*URXS©VEHVWHVWLPDWHRIWKHSULFHWKH*URXSZRXOG DFKLHYHLQDVDOHRIWKHVHLQYHVWPHQWV7KHVHLQYHVWPHQWVZHUHFRQVHTXHQWO\LPSDLUHG Group 2010 Rm 5P 40. Indirect taxation 3D\PHQWVWRWKLUGSDUWLHV 2 7UDLQLQJOHY\ 94 9DOXHDGGHGWD[QHWRILQSXWFUHGLWV 675 771

426 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P

41. Taxation expense Current )RUHLJQWD[DWLRQ 339 67& 117 6RXWK$IULFDQFXUUHQWWD[ 3 253 6RXWK$IULFDQFXUUHQWWD[¤SUHYLRXV\HDU 2 3 711 Deferred 'HIHUUHGWD[ UHIHUWRQRWH (449) $FFHOHUDWHGWD[GHSUHFLDWLRQ (153) $OORZDQFHVIRUORDQORVVHV 731 2WKHUSURYLVLRQV 302 2WKHUWHPSRUDU\GLIIHUHQFHV (1 347) 5HWLUHPHQWEHQHILWDVVHWDQGOLDELOLWLHV 18

3 262 Reconciliation between operating proﬁt and the taxation expense 2SHUDWLQJSURILWEHIRUHLQFRPHWD[ 11 851 6KDUHRISRVWWD[UHVXOWVRIDVVRFLDWHVDQGMRLQWYHQWXUHV 9 11 860 7D[FDOFXODWHGDWDWD[UDWHRI 3 321 (IIHFWRIGLIIHUHQWWD[UDWHVLQRWKHUFRXQWULHV 76 ([SHQVHVQRWGHGXFWLEOHIRUWD[SXUSRVHV 96 ,QFRPHQRWVXEMHFWWRWD[ (578) 2WKHU 230 67& 117 3 262 7KHHIIHFWLYH67&UDWHLVORZHUWKDQWKHVWDWXWRU\UDWHRIGXHWR 67&EHLQJSURYLGHGIRUGLYLGHQGVGHFODUHGQHWRIGLYLGHQGVUHFHLYHGDQG XQXWLOLVHG67&FUHGLWVIURPSUHYLRXV\HDUV 42. Earnings per share 42.1 Basic earnings per share %DVLFHDUQLQJVSHUVKDUHLVFDOFXODWHGE\GLYLGLQJWKHSURILWDWWULEXWDEOHWR RUGLQDU\HTXLW\KROGHUVRIWKH*URXSREWDLQHGIURPWKHSURILWDQGORVV FRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHE\WKHZHLJKWHG DYHUDJHQXPEHURIRUGLQDU\VKDUHVRXWVWDQGLQJGXULQJWKH\HDU 3URILWDWWULEXWDEOHWRRUGLQDU\HTXLW\KROGHUVRIWKH*URXS 8 118 :HLJKWHGDYHUDJHQXPEHURIRUGLQDU\VKDUHVLQLVVXH PLOOLRQV 716,3 ,VVXHGVKDUHVDWWKHEHJLQQLQJRIWKH\HDU PLOOLRQV 718,2 (IIHFWRIVKDUHVLVVXHGGXULQJWKH\HDU ZHLJKWHGPLOOLRQV — 7UHDVXU\VKDUHVKHOGE\$EVD*URXSFRPSDQLHV ZHLJKWHGPLOOLRQV (0,6) 7UHDVXU\VKDUHVKHOGE\$EVD*URXS/LPLWHG(PSOR\HH6KDUH2ZQHU VKLS $GPLQLVWUDWLYH7UXVW ZHLJKWHGPLOOLRQV — 7UHDVXU\VKDUHVKHOGE\$EVD*URXS/LPLWHG6KDUH,QFHQWLYH7UXV W ZHLJKWHGPLOOLRQV (1,3)

Basic earnings per share (cents) 1 133,3

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 427 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

42. Earnings per share (continued) 42.2 Diluted earnings per share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©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

Group 2010 Rm 5P 3URILWDWWULEXWDEOHWRRUGLQDU\HTXLW\KROGHUVRIWKH*URXS 8 118 ,QWHUHVWH[SHQVHRQFRQYHUWLEOHGHEW QHWRIWD[DWLRQ — Diluted earnings 8 118 'LOXWHGZHLJKWHGDYHUDJHQXPEHURIRUGLQDU\VKDUHVLQLVVXH PLOOLRQV 720,7 :HLJKWHGDYHUDJHQXPEHURIRUGLQDU\VKDUHVLQLVVXH PLOOLRQV 716,3 $GMXVWPHQWVIRUVKDUHVLVVXHGDWQRYDOXH 2SWLRQVOLQNHGWRUHGHHPDEOHFXPXODWLYHRSWLRQKROGLQJSUHIHUHQFHVKDUHV ZHLJKWHGPLOOLRQV — 6KDUHRSWLRQV ZHLJKWHGPLOOLRQV 4,4

Diluted earnings per share (cents) 1 126,4 7KHGLOXWLRQUHSUHVHQWVWKHHIIHFWLYHGLVFRXQWEHWZHHQWKHDYHUDJHRSWLRQSULFHDQGWKHDYHUDJHPDUNHWSULFH DW ZKLFK RSWLRQ KROGHUV FDQ FRQYHUW LQWR RUGLQDU\ VKDUHV 7KLV LQFOXGHV RSWLRQV LVVXHG LQ UHVSHFW RI WKH $EVD*URXS/LPLWHG6KDUH,QFHQWLYH7UXVW

428 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

Group 2010 Gross Net1 *URVV 1HW Rm Rm 5P 5P 43. Headline earnings Headline earnings is determined as follows: 3URILWDWWULEXWDEOHWRRUGLQDU\HTXLW\KROGHUV RIWKH*URXS 8 118 Adjustments for: ,)56¤ *DLQRQEDUJDLQSXUFKDVH DQG JRRGZLOO UHIHUWRQRWHVDQG (72) (72) ,$6¤3URILWRQGLVSRVDORISURSHUW\DQG HTXLSPHQW UHIHUWRQRWH (41) (37) ,$6¤5HF\FOHGIRUHLJQFXUUHQF\ WUDQVODWLRQUHVHUYHGLVSRVDORILQYHVWPHQWV LQIRUHLJQRSHUDWLRQV —— ,$6¤/RVVRQGLVSRVDORIVXEVLGLDULHV UHIHUWRQRWH —— ,$6DQG¤+HDGOLQHHDUQLQJV FRPSRQHQWRIVKDUHRISRVWWD[UHVXOWVRI DVVRFLDWHVDQGMRLQWYHQWXUHV (1) (1) ,$6DQG¤1HW SURILW ORVVRQGLVSRVDO RILQYHVWPHQWVLQDVVRFLDWHVDQGMRLQW YHQWXUHV UHIHUWRQRWHVDQG (42) (42) ,$6DQG¤,PSDLUPHQWRILQYHVWPHQWV LQDVVRFLDWHVDQGMRLQWYHQWXUHV UHIHUWR QRWH 29 21 ,$6¤,PSDLUPHQWRIHTXLSPHQW UHIHUWR QRWH 13 9 ,$6¤,PSDLUPHQWDQGQHWSURILWRQ GLVSRVDORILQWDQJLEOHDVVHWV UHIHUWR QRWHVDQG 43 ,$6¤5HOHDVHRIDYDLODEOHIRUVDOH UHVHUYHV UHIHUWRQRWH 92 66 ,$6¤,PSDLUPHQWDQGQHWSURILWRQ GLVSRVDORIDYDLODEOHIRUVDOHDVVHWV UHIHU WRQRWH 25 18 ,$6¤&KDQJHLQIDLUYDOXHRILQYHVWPHQW SURSHUWLHV UHIHUWRQRWH (50) (42) Headline earnings 8 041 ,QWHUHVWH[SHQVHRQFRQYHUWLEOHGHEW QHWRI WD[DWLRQ — Diluted headline earnings 8 041 Headline earnings per share (cents) 1 122,6 Diluted headline earnings per share (cents) 1 115,7

Notes The net amount is reﬂected after tax and non-controlling interest. The comparative year includes a portion of proﬁt realised on disposal of MasterCard Incorporated shares.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 429 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P 44. Retirement benefit obligations Surplus disclosed in ‘Other assets’ UHIHUWRQRWH 7KH$EVD*URXSGHILQHGEHQHILWSODQ UHIHUWRQRWH 705 Obligation disclosed in ‘Other liabilities’ UHIHUWRQRWH 6XEVLGLDULHV©GHILQHGEHQHILWSODQ UHIHUWRQRWH 352 6XEVLGLDULHV©SRVWUHWLUHPHQWPHGLFDODLG 6 358 Statement of comprehensive income charge included in staff costs and interest expense 6XEVLGLDULHV©GHILQHGEHQHILWSODQ UHIHUWRQRWH 44 7KH$EVD*URXSGHILQHGEHQHILWSODQ UHIHUWRQRWH (61) (17) 44.1 Subsidiaries’ defined benefit plan Reconciliation of movement in funded obligation %DODQFHDWWKHEHJLQQLQJRIWKH\HDU 418 %HQHILWVSDLG (22) &XUUHQWVHUYLFHFRVWV 7 ([FKDQJHGLIIHUHQFHV (90) ,QWHUHVWH[SHQVH 37 1HWDFWXDULDOORVVHV JDLQV 2 Balance at the end of the year 352 Total expenses comprise &XUUHQWVHUYLFHFRVWV 7 ,QWHUHVWH[SHQVH 37 44 7KHSULQFLSDODFWXDULDODVVXPSWLRQVXVHGZHUHDVIROORZV 'LVFRXQWUDWH 15,0 ([SHFWHGUDWHRQSODQDVVHWV 13,5 )XWXUHSHQVLRQLQFUHDVHV 4,6 )XWXUHVDODU\LQFUHDVHV 11,5 $VVXPSWLRQVUHJDUGLQJIXWXUHPRUWDOLW\H[SHULHQFHDUHVHWEDVHGRQDGYLFH IURPSXEOLVKHGVWDWLVWLFVDQGH[SHULHQFH 7KHDYHUDJHOLIHH[SHFWDQF\LQ\HDUVRIDSHQVLRQHUUHWLULQJDWWKHDJHRI LVDVIROORZV 0DOH 12,5 )HPDOH 14,4

Group 2010 Rm 5P Pension fund assets Investments *RYHUQPHQWERQGV 75 7UHDVXU\ELOOV 231 Current assets %DQNEDODQFHZLWK%DUFOD\V%DQN0R]DPELTXH6$ 19 ,QWHUHVWRZLQJE\JRYHUQPHQW 17 342 7KH*URXSH[SHFWVWRFRQWULEXWH5PLOOLRQ 5PLOOLRQ WRWKLVGHILQHGEHQHILWSODQLQWKHQH[WILQDQFLDO\HDU

430 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

44. Retirement benefit obligations (continued) 44.1 Subsidiaries’ defined benefit plan (continued) 7KHDVVHWVKDYHEHHQULQJIHQFHGWRWKHUHWLUHPHQWEHQHILWVEXWGRQRWTXDOLI\DVSODQDVVHWVLQWHUPVRI,$6 ¤(PSOR\HH%HQHILWVDVWKH\DUHQRWLQDVHSDUDWHHQWLW\DQGWKHUHIRUHDUHFDUULHGRQWKH*URXS©VVWDWHPHQWRI ILQDQFLDOSRVLWLRQ7KHPDMRUFRQVWUDLQWLQWKLVUHJDUGLVWKHODFNRIHQDEOLQJOHJLVODWLRQLQFHUWDLQ$IULFDQFRXQWULHV Group 2010 Rm 5P 5P 5P Historical information as at the reporting date 3UHVHQWYDOXHRIGHILQHGEHQHILWREOLJDWLRQ 352 ([SHULHQFHDGMXVWPHQWVRQSODQOLDELOLWLHV 2

44.2 Subsidiaries’ post-retirement medical aid plan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¤ (PSOR\HH EHQHILWV LV DVIROORZV Group 2010 Rm 5P Unfunded obligation 8QIXQGHGOLDELOLW\ 6 8QIXQGHGGHILFLW 6 1HWREOLJDWLRQ 6

5HFRQFLOLDWLRQVRIPRYHPHQWLQWKHREOLJDWLRQDQGIXQGLQJOLDELOLW\KDYHQRWEHHQSURYLGHGDVDPRXQWVDUHOHVV WKDQ5PLOOLRQ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 431 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P

44. Retirement benefit obligations(continued) 44.3 The Absa Group Pension Fund 44.3.1Defined benefit plan Funded obligation 3UHVHQWYDOXHRIIXQGHGREOLJDWLRQV (5 126) )DLUYDOXHRISODQDVVHWV 6 193 1HWDVVHWVEHIRUHVWDWXWRU\VXUSOXVHV 1 067 6WDWXWRU\VXUSOXVHVDVSHUWKHUXOHVRIWKHIXQG (362) 1HWVXUSOXV 705 Reconciliation of movement in obligation %DODQFHDWWKHEHJLQQLQJRIWKH\HDU 4 900 $FWXDULDOORVVHV 238 %HQHILWVSDLG (457) &XUUHQWVHUYLFHFRVWV 1 ,QWHUHVWH[SHQVH 444 Balance at the end of the year 5 126 Reconciliation of movement in plan assets %DODQFHDWWKHEHJLQQLQJRIWKH\HDU 5 853 $FWXDULDOJDLQV 290 %HQHILWVSDLG (457) (PSOR\HUFRQWULEXWLRQV 1 ([SHFWHGUHWXUQRQSODQDVVHWV 506 Balance at the end of the year 6 193 Pension fund plan assets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otal income (61) Recognised in other comprehensive income $FWXDULDOJDLQV (52) $SSOLFDWLRQRIWKHDVVHWFHLOLQJDGMXVWPHQW 25 (27) &XPXODWLYHDFWXDULDOJDLQVUHFRJQLVHGLQRWKHUFRPSUHKHQVLYHLQFRPH 884

432 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P 5P 5P 44. Retirement benefit obligations(continued) 44.3 The Absa Group Pension Fund (continued) 44.3.1Defined benefit plan(continued) Historical information as at the reporting date 3UHVHQWYDOXHRIGHILQHGEHQHILWREOLJDWLRQ (5 126) )DLUYDOXHRISODQDVVHWV 6 193 1HWDVVHWVEHIRUHVWDWXWRU\VXUSOXVHVDQG LQYHVWPHQWUHVHUYHDFFRXQW 1 067 ,QYHVWPHQWUHVHUYHDFFRXQW — ¥ ¥ 6WDWXWRU\VXUSOXVHVDVSHUWKHUXOHVRIWKH IXQG (362) 1HWVXUSOXV 705 ([SHULHQFHDGMXVWPHQWVRQSODQDVVHWV 290 ([SHULHQFHDGMXVWPHQWVRQSODQOLDELOLWLHV (238)

Group 2010 7KHSULQFLSDODFWXDULDODVVXPSWLRQVXVHGIRUWKHGHILQHGEHQHILWSODQZHUH DVIROORZV 'LVFRXQWUDWH 8,5 ([SHFWHGUHWXUQRQSODQDVVHWV 7,3 )XWXUHVDODU\LQFUHDVHV 6,25 + merit PHULW $VVXPSWLRQVUHJDUGLQJIXWXUHPRUWDOLW\H[SHULHQFHDUHVHWEDVHGRQDGYLFH IURPSXEOLVKHGVWDWLVWLFVDQGH[SHULHQFH 7KHDYHUDJHOLIHH[SHFWDQF\LQ\HDUVRIDSHQVLRQHUUHWLULQJDWWKHDJHRI LVDVIROORZV 0DOH 20,6 )HPDOH 25,5

Expected rate of future pension increases 'HSHQGLQJRQWKHPHPEHU©VFKRLFHZLWKUHJDUGWRWKUHVKROGUDWHVSHQVLRQLQFUHDVHVDUHJUDQWHGHDFK\HDUWR WKH H[WHQW WKDW WKH LQYHVWPHQW UHWXUQ H[FHHGV WKH SRVWUHWLUHPHQW YDOXDWLRQ UDWHV RI RU SHU DQQXP WKUHVKROGUDWHV ,ILQDQ\\HDUWKHLQYHVWPHQWUHWXUQLVOHVVWKDQWKHWKUHVKROGUDWHVWKHGLIIHUHQFHLV UHFRXSHGDWWKHQH[WGDWHRISHQVLRQLQFUHDVH 44.4 Post-retirement beneﬁts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©VSROLF\WRHQVXUHWKDWWKHIXQG LVDGHTXDWHO\IXQGHGWRSURYLGHIRUWKHEHQHILWVRIPHPEHUVDQGSDUWLFXODUO\WRHQVXUHWKDWDQ\VKRUWIDOOZLWK UHJDUGWRWKHGHILQHGEHQHILWVWUXFWXUHZLOOEHPHWE\ZD\RIDGGLWLRQDOFRQWULEXWLRQV 7KH EHQHILWV SURYLGHG E\ WKH GHILQHG EHQHILW VWUXFWXUH DUH EDVHG RQ D IRUPXOD WDNLQJ LQWR DFFRXQW \HDUV RI PHPEHUVKLSDQGUHPXQHUDWLRQOHYHOV7KHEHQHILWVSURYLGHGE\WKHGHILQHGFRQWULEXWLRQVWUXFWXUHDUHGHWHUPLQHGE\ DFFXPXODWHGFRQWULEXWLRQVDQGUHWXUQRQLQYHVWPHQWV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 433 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

44. Retirement beneﬁt obligations(continued) 44.4 Post-retirement beneﬁts(continued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roup 2010 Rm 5P 45. Dividends per share Dividends paid to ordinary equity holders during the year )HEUXDU\ILQDOGLYLGHQGQXPEHURIFHQWVSHURUGLQDU\VKDUH )HEUXDU\FHQWV 1 580 $XJXVWLQWHULPGLYLGHQGQXPEHURIFHQWVSHURUGLQDU\VKDUH $XJXVWFHQWV 1 616 'LYLGHQGVSDLGRQVKDUHVKHOGE\%DWKR%RQNH&DSLWDO 3URSULHWDU\ /LPLWHG LQWHUPVRIWKHEULGJLQJILQDQFHDUUDQJHPHQW UHIHUWRQRWH — 'LYLGHQGVSDLGRQWUHDVXU\VKDUHVKHOGE\$EVD*URXSFRPSDQLHV (5) 3 191 Dividends paid to ordinary equity holders relating to income for the year $XJXVWLQWHULPGLYLGHQGQXPEHURIFHQWVSHURUGLQDU\VKDUH $XJXVWFHQWV 1 616 )HEUXDU\ILQDOGLYLGHQGQXPEHURIFHQWVSHURUGLQDU\VKDUH )HEUXDU\FHQWV 1 652 'LYLGHQGVSDLGRQVKDUHVKHOGE\%DWKR%RQNH&DSLWDO 3URSULHWDU\ /LPLWHG LQWHUPVRIWKHEULGJLQJILQDQFHDUUDQJHPHQW UHIHUWRQRWH — 'LYLGHQGVSDLGRQWUHDVXU\VKDUHVKHOGE\$EVD*URXSFRPSDQLHV (3) 3 265 7KH67&SD\DEOHE\WKH*URXSLQUHVSHFWRIWKHGLYLGHQGDSSURYHGDQG GHFODUHGVXEVHTXHQWWRWKHUHSRUWLQJGDWHDPRXQWVWR5PLOOLRQ 5PLOOLRQ 1RSURYLVLRQKDVEHHQPDGHIRUWKLVGLYLGHQGDQGWKHUHODWHG 67&LQWKHILQDQFLDOVWDWHPHQWVDWWKHUHSRUWLQJGDWH Dividends paid to non-controlling preference equity holders during the year )HEUXDU\ILQDOGLYLGHQGQXPEHURIFHQWVSHUSUHIHUHQFH VKDUH )HEUXDU\FHQWV 162 $XJXVWLQWHULPGLYLGHQGQXPEHURIFHQWVSHUSUHIHUHQFH VKDUH $XJXVWFHQWV 158 320 Dividends paid to non-controlling preference equity holders relating to income for the year $XJXVWLQWHULPGLYLGHQGQXPEHURIFHQWVSHUSUHIHUHQFHVKDUH $XJXVWFHQWV 158 )HEUXDU\ILQDOGLYLGHQGQXPEHURIFHQWVSHUSUHIHUHQFH VKDUH )HEUXDU\FHQWV 143 301 7KH67&SD\DEOHE\WKH*URXSLQUHVSHFWRIWKHGLYLGHQGDSSURYHGDQGGHFODUHGVXEVHTXHQWWRWKHUHSRUWLQJ GDWHDPRXQWVWR5PLOOLRQ 5PLOOLRQ 1RSURYLVLRQKDVEHHQPDGHIRUWKLVGLYLGHQGDQGWKHUHODWHG 67&LQWKHILQDQFLDOVWDWHPHQWVDWWKHUHSRUWLQJGDWH

434 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

46. Securities borrowed/lent and repurchase/reverse repurchase agreements Reverse repurchase agreements and cash collateral on securities borrowed 5HYHUVHUHSXUFKDVHDJUHHPHQWVDUHDFFRXQWHGIRUDVFROODWHUDOLVHGORDQVXQGHUORDQVDQGDGYDQFHVZKLOHFDVK FROODWHUDOLVVKRZQXQGHURWKHUDVVHWV

Group Cash colla- Reverse &DVK 5HYHUVH teral on repurchase FROODWHUDORQ UHSXUFKDVH securities agree- VHFXULWLHV DJUHH borrowed ments ERUURZHG PHQWV 2010 2010 Rm Rm 5P 5P Assets 6WDWXWRU\OLTXLGDVVHWV UHIHUWRQRWH — 2 685 ¥ /RDQVDQGDGYDQFHVWREDQNV UHIHUWR QRWH — 5 572 ¥ 2WKHUDVVHWV 3 276 — ¥ /RDQVDQGDGYDQFHVWRFXVWRPHUV UHIHUWR QRWH — 3 063 ¥ 3 276 11 320 $VSDUWRIWKHUHYHUVHUHSXUFKDVHDJUHHPHQWVWKH*URXSKDVUHFHLYHGVHFXULWLHVDVFROODWHUDOWKDWDUHDOORZHG WR EH VROG RU UHSOHGJHG 7KH IDLU YDOXH RI WKHVH VHFXULWLHV DW WKH UHSRUWLQJ GDWH DPRXQWV WR 5 PLOOLRQ 5PLOOLRQ RIZKLFK5PLOOLRQ 5PLOOLRQ KDYHEHHQVROGRUUHSOHGJHG Repurchase agreements 6HFXULWLHVOHQWRUVROGVXEMHFWWRDFRPPLWPHQWWRUHSXUFKDVHWKHPDUHUHWDLQHGLQWKHVWDWHPHQWRIILQDQFLDO SRVLWLRQ ZKHUH VXEVWDQWLDOO\ DOO WKH ULVNV DQG UHZDUGV UHPDLQ ZLWK WKH *URXS $PRXQWV UHFHLYHG IURP WKH FRXQWHUSDUW\DUHWUHDWHGDVGHSRVLWV

Group Repurchase agreements 2010 Rm 5P Liabilities 'HSRVLWVIURPEDQNV UHIHUWRQRWH 4 214 'HSRVLWVGXHWRFXVWRPHUV UHIHUWRQRWH 7 035 11 249

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¨2WKHUORDQVDQGDGYDQFHVWREDQNV©WR WKHYDOXHRI5PLOOLRQUHIHUWRQRWH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 435 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P 47. Assets transferred not derecognised ,QWKHRUGLQDU\FRXUVHRIEXVLQHVVWKH*URXSHQWHUVLQWRWUDQVDFWLRQVWKDW UHVXOWLQWKHWUDQVIHURIDVVHWVWRWKLUGSDUWLHVRU63(VWKDWDUHQRW GHUHFRJQLVHG7KHLQIRUPDWLRQEHORZVHWVRXWWKHH[WHQWRIVXFKWUDQVIHUV Transferred assets &DUVVHFXULWLVDWLRQ — &RPPLVVLRQHU6WUHHW 585 ¥ +RPHVVHFXULWLVDWLRQ 4 555 5 140

Cars securitisation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¨/RDQVDQGDGYDQFHV WRFXVWRPHUV©5HIHUWRQRWHIRUIXUWKHUGHWDLOVRQWKHUHODWHGOLDELOLWLHV Commissioner Street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¨/RDQVDQGDGYDQFHVWRFXVWRPHUV©5HIHUWR QRWHIRUIXUWKHUGHWDLOVRQWKHUHODWHGOLDELOLWLHV Homes securitisation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¨/RDQVDQGDGYDQFHVWRFXVWRPHUV© 5HIHUWRQRWHIRUIXUWKHUGHWDLOVRQWKHUHODWHGOLDELOLWLHV 'HWDLOVDERXWRWKHUWUDQVDFWLRQVZKHUHDVVHWVZHUHWUDQVIHUUHGEXWQRWGHUHFRJQLVHGDUHGLVFORVHGLQQRWH 48. Related parties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

436 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

48. Related parties (continued) ,$6UHTXLUHVWKHLGHQWLILFDWLRQRINH\PDQDJHPHQWSHUVRQQHOZKRDUHLQGLYLGXDOVUHVSRQVLEOHIRUSODQQLQJ GLUHFWLQJDQGFRQWUROOLQJWKHDFWLYLWLHVRIWKHHQWLW\LQFOXGLQJGLUHFWRUV.H\PDQDJHPHQWSHUVRQQHODUHGHILQHG DVH[HFXWLYHDQGQRQH[HFXWLYHGLUHFWRUVDQGPHPEHUVRIWKH*URXS([HFXWLYH&RPPLWWHH ([FR 48.1 Transactions with key management personnel $QXPEHURIEDQNLQJDQGLQVXUDQFHWUDQVDFWLRQVDUHHQWHUHGLQWRZLWKNH\PDQDJHPHQWSHUVRQQHOLQWKHQRUPDO FRXUVH RI EXVLQHVV XQGHU WHUPV WKDW DUH QR PRUH IDYRXUDEOH WKDQ WKRVH DUUDQJHG ZLWK WKLUG SDUWLHV 7KHVH LQFOXGHORDQVGHSRVLWVDQGIRUHLJQFXUUHQF\WUDQVDFWLRQV7KHUHODWHGSDUW\WUDQVDFWLRQVRXWVWDQGLQJEDODQFHV DW\HDUHQGDQGUHODWHGH[SHQVHVDQGLQFRPHZLWKUHODWHGSDUWLHVIRUWKH\HDUDUHDVIROORZV Group Trans- 7UDQV actions DFWLRQV Trans- with entities 7UDQV ZLWKHQWLWLHV actions controlled DFWLRQV FRQWUROOHG with key by key ZLWKNH\ E\NH\ manage- manage- PDQDJH PDQDJH ment ment PHQW PHQW 2010 2010 Rm Rm 5P 5P

Loans Balance at the beginning of the year 11 10 /RDQVLVVXHG 41 7 /RDQVUHSDLG (38) (8) ,QFHSWLRQ GLVFRQWLQXDQFH RIUHODWHGSDUW\ UHODWLRQVKLSVDQGRWKHU 2— ¥ Balance at the end of the year 16 9 ,QWHUHVWLQFRPH 11 /RDQVLQFOXGHPRUWJDJHVDVVHWILQDQFHWUDQVDFWLRQVDQGRYHUGUDIWIDFLOLWLHV,QWHUHVWUDWHVRQORDQVWRPDQDJHPHQW DUHDWWKHIULQJHEHQHILWWD[UDWHWKDWDOOHPSOR\HHVRIWKH*URXSDUHHQWLWOHGWR Group Trans- 7UDQV actions DFWLRQV Trans- with entities 7UDQV ZLWKHQWLWLHV actions controlled DFWLRQV FRQWUROOHG with key by key ZLWKNH\ E\NH\ manage- manage- PDQDJH PDQDJH ment ment PHQW PHQW 2010 2010 Rm Rm 5P 5P

Deposits Balance at the beginning of the year 19 5 'HSRVLWVUHFHLYHG 158 90 'HSRVLWVUHSDLG (161) (88) ,QFHSWLRQ GLVFRQWLQXDQFH RIUHODWHGSDUW\ UHODWLRQVKLSVDQGRWKHU 7 (5) Balance at the end of the year 23 2 ,QWHUHVWH[SHQVH 1— *XDUDQWHHVLVVXHGE\WKH*URXS 51 19 ,QDGGLWLRQWRWKHVSHFLILFJXDUDQWHHVDQXPEHURINH\PDQDJHPHQWDQGHQWLWLHVFRQWUROOHGE\NH\PDQDJHPHQW KDYHXQOLPLWHGVXUHW\ZLWKWKH*URXS

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 437 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

48. Related parties(continued) 48.1 Transactions with key management personnel(continued) Group Trans- 7UDQV actions DFWLRQV Trans- with entities 7UDQV ZLWKHQWLWLHV actions controlled DFWLRQV FRQWUROOHG with key by key ZLWKNH\ E\NH\ manage- manage- PDQDJH PDQDJH ment ment PHQW PHQW 2010 2010 Rm Rm 5P 5P

Other investments Balance at the beginning of the year 84 42 9DOXHRIQHZLQYHVWPHQWVFRQWULEXWLRQV 57 9DOXHRIZLWKGUDZDOVGLVLQYHVWPHQWV (28) (12) )HHVDQGFKDUJHV —— ¥ ,QYHVWPHQWUHWXUQ 10 5 'LVFRQWLQXDQFHRIUHODWHGSDUW\UHODWLRQVKLSV DQGRWKHU (45) — Balance at the end of the year 26 42

Insurance premiums paid and claims received .H\ PDQDJHPHQW SHUVRQQHO SDLG LQVXUDQFH SUHPLXPV RI 5 PLOOLRQ 5 PLOOLRQ .H\ PDQDJHPHQW SHUVRQQHOUHFHLYHGFODLPVRI5PLOOLRQ 5PLOOLRQ

438 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

Group 2010 Rm 5P

48. Related parties(continued) 48.2 Key management personnel compensation Executive directors 3RVWHPSOR\PHQWEHQHILWFRQWULEXWLRQV 1 6DODULHVDQGRWKHUVKRUWWHUPEHQHILWV 38 6KDUHEDVHGSD\PHQWV 17 7HUPLQDWLRQEHQHILWV 10 66 Other key management personnel 3RVWHPSOR\PHQWEHQHILWFRQWULEXWLRQV 2 6DODULHVDQGRWKHUVKRUWWHUPEHQHILWV 43 6KDUHEDVHGSD\PHQWV 33 7HUPLQDWLRQEHQHILWV — 78 48.3 Balances and transactions with parent company Balances /RDQVDQGDGYDQFHV 15 673 'HULYDWLYHDVVHWV 9 144 1RPLQDOYDOXHRIGHULYDWLYHDVVHWV 493 402 2WKHUDVVHWV 552 5HLQVXUDQFHDVVHWV — ,QYHVWPHQWVHFXULWLHV 581 'HSRVLWV (6 082) 'HEWVHFXULWLHVLQLVVXH — 'HULYDWLYHOLDELOLWLHV (9 006) 1RPLQDOYDOXHRIGHULYDWLYHOLDELOLWLHV (375 467) 2WKHUOLDELOLWLHV (267) Transactions ,QWHUHVWUHFHLYHG (80) ,QWHUHVWSDLG 36 1HWIHHDQGFRPPLVVLRQLQFRPH (15) ¥ *DLQVDQGORVVHVIURPEDQNLQJDQGWUDGLQJDFWLYLWLHV 1 646 2WKHURSHUDWLQJLQFRPH (42) 2SHUDWLQJH[SHQGLWXUH 27 'LYLGHQGVSDLG 1 774

$OO WUDQVDFWLRQV HQWHUHG LQWR DUH RQ WKH VDPH FRPPHUFLDO WHUPV DQG FRQGLWLRQV DV LQ WKH QRUPDO FRXUVH RI EXVLQHVV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 439 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

48. Related parties (continued) 48.4 Subsidiaries 'HWDLOVRIWKHPDWHULDOVXEVLGLDULHVDUHDVIROORZV

Name Nature of business Absa Group Limited and its subsidiaries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bsa Bank Limited and subsidiaries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bsa Financial Services and subsidiaries $EVD$VVHW0DQDJHPHQW 3URSULHWDU\ /LPLWHG $QLQVWLWXWLRQDODVVHWPDQDJHPHQWFRPSDQ\WKDWRIIHUVIL[HGLQFRPH HTXLW\VWUXFWXUHGSURGXFWVDQGDOWHUQDWLYHLQYHVWPHQWVROXWLRQVWR FXVWRPHUVWKURXJKYDULRXVSRROHGDQGVHJUHJDWHGLQYHVWPHQW PDQGDWHV $EVD&RQVXOWDQWVDQG$FWXDULHV 3URSULHWDU\ 2IIHUVFRPSUHKHQVLYHDGPLQLVWUDWLYHDFWXDULDODQGFRQVXOWLQJ /LPLWHG VHUYLFHVLQFOXGLQJDVVHWFRQVXOWLQJVHUYLFHVLQUHVSHFWRISHQVLRQ IXQGVSURYLGHQWIXQGVDQGRWKHUHPSOR\HHEHQHILWJURXSVFKHPHV $EVD)LQDQFLDO6HUYLFHV/LPLWHG +ROGLQJFRPSDQ\RIILQDQFLDOVHUYLFHUHODWHGHQWLWLHV $EVD)XQG0DQDJHUV/LPLWHG 2IIHUVDYDULHW\RIXQLWWUXVWLQYHVWPHQWSURGXFWVUDQJLQJIURPORZULVN IL[HGLQWHUHVWIXQGVVXFKDVWKH$EVD0RQH\0DUNHW)XQGWRKLJKHU ULVNVSHFLDOLVWHTXLW\IXQGVLQYHVWLQJERWKGRPHVWLFDOO\DQGLQWHUQDWLRQDOO\ $EVD+HDOWK&DUH&RQVXOWDQWV 3URSULHWDU\ 7RDGYLVHPHGLFDOIXQGVDQGRWKHUSHUVRQVDQGLQVWLWXWLRQVRQDQ\PDWWHUUHODWLQJ /LPLWHG WRWKHVWUXFWXUHDQGPDQDJHPHQWRIPHGLFDOIXQGVDQGKHDOWKFDUHEHQHILWV $EVDidirect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

Notes The entity was incorporated during the current year. Previously disclosed as an associate designated at fair value through proﬁt or loss, became a subsidiary during 2009. Previously disclosed as an equity-accounted joint venture, became a subsidiary during 2010.

440 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group Direct/ 'LUHFW Issued indirect ,VVXHG LQGLUHFW capital holding FDSLWDO KROGLQJ 6KDUHVDWERRNYDOXH Country of 2010 2010 2010 incorporation Rm % 5P Rm 5P

6RXWK$IULFD 0 100 ¥¥ 0 ¥ 6RXWK$IULFD 0 100 0

,VOHRI0DQ 0 100 436

6RXWK$IULFD 0 100 0

6RXWK$IULFD 8 100 857

6RXWK$IULFD 0 100 0

0R]DPELTXH 434 96 399

6RXWK$IULFD 0 100 0 6RXWK$IULFD 0 100 0

6RXWK$IULFD 1 100 1

7DQ]DQLD 81 55 86

6RXWK$IULFD 13 100 0 6RXWK$IULFD 0 100 75

6RXWK$IULFD 918 50 907

6RXWK$IULFD 303 100 13 347

1LJHULD 0 100 ¥¥ 0 ¥

6RXWK$IULFD 0 100 0

6RXWK$IULFD 336 85 301 6RXWK$IULFD 0 100 38

6RXWK$IULFD 0 100 131 6RXWK$IULFD 0 100 ¥¥ — ¥ 6RXWK$IULFD 35 100 161

6RXWK$IULFD 0 100 70

6RXWK$IULFD 0 100 1

6RXWK$IULFD 0 100 118 6RXWK$IULFD 3 100 3

6RXWK$IULFD 0 100 0

6RXWK$IULFD 1 100 40 6RXWK$IULFD 0 100 2

6RXWK$IULFD 31 100 31 6RXWK$IULFD 0 100 0

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 441 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

48. Related parties (continued) 48.4 Subsidiaries (continued) 'HWDLOVRIWKHPDWHULDOVXEVLGLDULHVDUHDVIROORZV

Name Nature of business $EVD/LIH/LPLWHG 3URYLGHVOLIHLQVXUDQFHSURGXFWVIRFXVLQJRQULVNDQGLQYHVWPHQWSURGXFWV WKDWFRPSOHPHQWWKH*URXS©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hare trusts $EVD*URXS/LPLWHG(PSOR\HH6KDUH2ZQHUVKLS 6KDUHSXUFKDVHDQGRSWLRQVFKHPHWRDOOVWDII $GPLQLVWUDWLYH7UXVW $EVD*URXS/LPLWHG6KDUH,QFHQWLYH7UXVW 6KDUHSXUFKDVHDQGRSWLRQVFKHPHWRVHQLRUVWDII %DWKR%RQNH$EVD+LVWRULFDO'LVDGYDQWDJHG %%%((WUXVW 6RXWK$IULFDQV +'6$ (PSOR\HH7UXVW Special purpose entities $EVD%HQHILW)XQG &HOOFDSWLYH $EVD)RXQGDWLRQ7UXVW )XQGVFRPPXQLW\XSOLIWPHQW5HFHLYHVDSHUFHQWDJHRIWKH*URXS©V GLYLGHQGVZKLFKLWGLVWULEXWHVWRLGHQWLILHGFRPPXQLW\UHODWHGSURMHFWV $EVD*HQHUDO)XQG )XQGXVHGWRLQYHVWLQXQLWWUXVWV $OSKD7UXVW 3URYLGHVSUHIHUHQFHVKDUHIXQGLQJ $EVD3URSHUW$TXLW$XQG 8QLWWUXVW $VVHW%DFNHG&ROODWHULVHG6HFXULWLHV 63(IRU$EVD&DSLWDOGLYLVLRQ 3URSULHWDU\ /LPLWHG $EDFDV &ROODWHULVHG$XWR5HFHLYDEOHV6HFXULWLVDWLRQ 6HFXULWLVDWLRQYHKLFOHIRU$EVD9HKLFOHDQG$VVHW)LQDQFHGLYLVLRQ 3URJUDPPH 3URSULHWDU\ /LPLWHG &ROODWHULVHG$XWR5HFHLYDEOHV6HFXULWLVDWLRQ 6HFXULWLVDWLRQYHKLFOHIRU$EVD9HKLFOHDQG$VVHW)LQDQFHGLYLVLRQ 6HULHV 3URSULHWDU\ /LPLWHG &RPPLVVLRQHU6WUHHW1R 3URSULHWDU\ 63(IRU$EVD&DSLWDOGLYLVLRQZLWKDVVHWEDFNHGVHFXULWLHV /LPLWHG +RPH2EOLJRUV0RUWJDJH 6HFXULWLVDWLRQYHKLFOHIRU$EVD+RPH/RDQVGLYLVLRQ (QKDQFHG6HFXULWLHV 3URSULHWDU\ /LPLWHG ,)83URSHUW\)XQG 8QLWWUXVW :RROZRUWKV)LQDQFLDO6HUYLFHV&HOO&DSWLYH 3URYLGHVFUHGLWOLIHLQVXUDQFHWR:RROZRUWKV)LQDQFLDO6HUYLFHV FXVWRPHUV

Notes The entity was disposed of during the current year. The entity was incorporated during the current year. Proﬁt for the year attributable to ordinary equity holders excluding share of post-tax results of associates and joint ventures.

442 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group Direct/ 'LUHFW Issued indirect ,VVXHG LQGLUHFW capital holding FDSLWDO KROGLQJ 6KDUHVDWERRNYDOXH Country of 2010 2010 2010 incorporation Rm % 5P Rm 5P 6RXWK$IULFD 24 100 24

6RXWK$IULFD 2 100 2

6RXWK$IULFD 9 100 9

6RXWK$IULFD 0 100 11

6RXWK$IULFD —— ¥¥ — ¥

6RXWK$IULFD —— ¥¥ — ¥ 6RXWK$IULFD —— ¥¥ — ¥

6RXWK$IULFD n/a n/a QD QD n/a QD 6RXWK$IULFD —— ¥¥ — ¥

6RXWK$IULFD n/a n/a QD QD n/a QD 6RXWK$IULFD —— ¥¥ — ¥ 6RXWK$IULFD —— QD — 6RXWK$IULFD 0 n/a QD n/a QD

6RXWK$IULFD 0 n/a QD n/a QD

6RXWK$IULFD 0 n/a ¥¥n/a ¥

6RXWK$IULFD 0 n/a QD n/a QD

8QLWHG.LQJGRP n/a 100 QD 126 6RXWK$IULFD n/a 100 ¥¥ n/a ¥

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 443 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

48. Related parties (continued) 48.5 Associates, joint ventures and retirement benefit fund 7KH*URXSSURYLGHVFHUWDLQEDQNLQJDQGILQDQFLDOVHUYLFHVWRDVVRFLDWHVDQGMRLQWYHQWXUHV7KH*URXSDOVR SURYLGHV D QXPEHU RI FXUUHQW DQG LQWHUHVWEHDULQJ FDVK DFFRXQWV WR WKH $EVD *URXS 3HQVLRQ )XQG 7KHVH WUDQVDFWLRQVDUHFRQGXFWHGRQWKHVDPHWHUPVDVWKLUGSDUW\WUDQVDFWLRQVDQGDUHQRWLQGLYLGXDOO\PDWHULDO ,QDJJUHJDWHWKHDPRXQWVLQFOXGHGLQWKH*URXS©VILQDQFLDOVWDWHPHQWVDUHDVIROORZV Group 2010 Associates Retirement and joint benefit ventures fund Total Rm Rm Rm 9DOXHRI$EVD*URXS3HQVLRQ)XQGLQYHVWPHQWV PDQDJHGE\WKH*URXS — 7 193 7 193 9DOXHRI$EVD*URXS/LPLWHGRUGLQDU\VKDUHVKHOGE\ WKH$EVD*URXS3HQVLRQ)XQG — 116 116 9DOXHRIRWKHU$EVD%DQN/LPLWHGVHFXULWLHVKHOGE\WKH $EVD*URXS3HQVLRQ)XQG — 1 582 1 582 Statement of financial position /RDQVDQGDGYDQFHV 7 275 — 7 275 2WKHUDVVHWV 17 — 17 'HSRVLWV (0) (30) (30) 2WKHUOLDELOLWLHV (47) — (47) 'HULYDWLYHWUDQVDFWLRQV 4— 4 Statement of comprehensive income ,QWHUHVWDQGVLPLODULQFRPH (617) — (617) ,QWHUHVWH[SHQVHDQGVLPLODUFKDUJHV 819 )HHVUHFHLYHG (106) (17) (123) )HHVSDLG 173 — 173 &XUUHQWVHUYLFHFRVWV — 635 635

$VVRFLDWHV 5HWLUHPHQW DQGMRLQW EHQHILW YHQWXUHV IXQG 7RWDO 5P 5P 5P 9DOXHRI$EVD*URXS3HQVLRQ)XQGLQYHVWPHQWV PDQDJHGE\WKH*URXS ¥ 9DOXHRI$EVD*URXS/LPLWHGRUGLQDU\VKDUHVKHOGE\ WKH$EVD*URXS3HQVLRQ)XQG ¥ 9DOXHRIRWKHU$EVD%DQN/LPLWHGVHFXULWLHVKHOGE\WKH $EVD*URXS3HQVLRQ)XQG ¥ Statement of financial position /RDQVDQGDGYDQFHV ¥ 2WKHUDVVHWV ¥ 'HSRVLWV 2WKHUOLDELOLWLHV ¥ Statement of comprehensive income ,QWHUHVWDQGVLPLODULQFRPH ¥ ,QWHUHVWH[SHQVHDQGVLPLODUFKDUJHV )HHVUHFHLYHG )HHVSDLG ¥ &XUUHQWVHUYLFHFRVWV ¥

444 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 48. Related parties (continued) 48.5 Associates, joint ventures and retirement benefit fund (continued) 'HWDLOVRQLQYHVWPHQWVLQDVVRFLDWHVDQGMRLQWYHQWXUHVDUHDVIROORZV Country of Name Nature of business incorporation Equity-accounted associates %OXH)LQDQFLDO6HUYLFHV/LPLWHG )LQDQFLDOVHUYLFHVSURYLGHUVSHFLILFDOO\PLFUR 6RXWK$IULFD ILQDQFHLQ$IULFD 3LQQDFOH3RLQW*URXS/LPLWHG 3URSHUW\GHYHORSPHQW 6RXWK$IULFD 6HNXQMDOR,QYHVWPHQWV/LPLWHG ,QYHVWPHQWKROGLQJFRPSDQ\ 6RXWK$IULFD 6SULQJ9DOOH\,QYHVWPHQWV 3URSULHWDU\ /LPLWHG 3URSHUW\GHYHORSPHQW 6RXWK$IULFD Equity-accounted joint ventures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ssociates and joint ventures designated at fair value through profit or loss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

Notes The financial statements have different reporting dates to that of the Group, as these were the financial reporting dates established when the entities were incorporated. The impact is not considered to be material. Transferred to investment securities during the year. Disposed of during the year. Became a subsidiary during the year. Acquired during the year. Transferred from investment securities during the year.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 445 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

48. Related parties (continued) 48.5 Associates, joint ventures and retirement benefit fund (continued)

Name Equity-accounted associates %OXH)LQDQFLDO6HUYLFHV/LPLWHG 6HNXQMDOR,QYHVWPHQWV/LPLWHG 6SULQJ9DOOH\,QYHVWPHQWV 3URSULHWDU\ /LPLWHG Equity-accounted joint ventures ))6)LQDQFH6RXWK$IULFD 3URSULHWDU\ /LPLWHG ,QWHJUDWHG3URFHVVLQJ6ROXWLRQV 3URSULHWDU\ /LPLWHG .LONLVKHQ,QYHVWPHQWV 3URSULHWDU\ /LPLWHG 0$1)LQDQFLDO6HUYLFHV 6$ 3URSULHWDU\ /LPLWHG 0HDGRZRRG,QYHVWPHQWV 3URSULHWDU\ /LPLWHG 2QH&RPPHUFLDO,QYHVWPHQW+ROGLQJV 3URSULHWDU\ /LPLWHG 6WDQG+RXJKWRQ 3URSULHWDU\ /LPLWHG 9LUJLQ0RQH\6RXWK$IULFD 3URSULHWDU\ /LPLWHG Associates and joint ventures designated at fair value through profit or loss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

Notes The summary financial information includes 100% of the equity-accounted investees’ total assets and total liabilities. Transferred to investment securities during the year. Became a subsidiary during the year. Disposed of during the year. Loans to entities of R83 million relates to Menlyn Maine Investment Holdings (Proprietary) Limited, which is an associate of African Spirit Trading 309 (Proprietary) Limited. Acquired during the year. Transferred from investment securities during the year.

446 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010 Equity- Loans Carrying Total Total accounted (from)/to value assets1 liabilities1 earnings entities Ownership Rm Rm Rm Rm Rm %

————— 7 41 728 (324) 2 — 26 10 73 (74) (1) 0 37

259 8 025 (7 508) 1 5 50 23 115 (39) 4 — 50 33 108 (52) 2 — 50 41 1 925 (1 842) (15) 1 50 0 550 (742) — 0 50 0 131 (126) 0 0 49 9 19 (10) 1 — 50 ———(3)——

n/a 0 (0) n/a — 50 n/a 0 (83) n/a 83 50 n/a — — n/a — 47 n/a 52 (0) n/a — 50 n/a 46 (47) n/a — 40 n/a 180 (185) n/a — 50 n/a 83 (29) n/a — 30 n/a 262 (203) n/a 118 50 n/a 0 0 n/a — 30 n/a 0 (229) n/a 229 50 n/a — — n/a — 40 n/a 0 (0) n/a — 30 n/a 240 (99) n/a — 50 n/a 348 (204) n/a — 50 n/a 0 (0) n/a (0) 40 n/a 140 (202) n/a 132 25 n/a 36 (37) n/a 20 50 n/a 571 (434) n/a — 30 n/a 34 (16) n/a — 40 n/a 87 (82) n/a 23 33 n/a 4 (4) n/a — 24 n/a 3 (4) n/a — 25 n/a 0 (0) n/a — 20 n/a 10 (10) n/a — 49

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 447 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

48. Related parties (continued) 48.5 Associates, joint ventures and retirement benefit fund (continued)

1DPH

Equity-accounted associates $PELW3URSHUWLHV/LPLWHG %OXH)LQDQFLDO6HUYLFHV/LPLWHG 3LQQDFOH3RLQW*URXS/LPLWHG 6HNXQMDOR,QYHVWPHQWV/LPLWHG 6SULQJ9DOOH\,QYHVWPHQWV 3URSULHWDU\ /LPLWHG 8QLWUDQV)LQDQFH 3URSULHWDU\ /LPLWHG Equity-accounted joint ventures ))6)LQDQFH6RXWK$IULFD 3URSULHWDU\ /LPLWHG ,QWHJUDWHG3URFHVVLQJ6ROXWLRQV 3URSULHWDU\ /LPLWHG .LONLVKHQ,QYHVWPHQWV 3URSULHWDU\ /LPLWHG 0$1)LQDQFLDO6HUYLFHV 6$ 3URSULHWDU\ /LPLWHG 0HDGRZRRG,QYHVWPHQWV 3URSULHWDU\ /LPLWHG 6DQODP+RPH/RDQV 3URSULHWDU\ /LPLWHG 6WDQG+RXJKWRQ 3URSULHWDU\ /LPLWHG 9LUJLQ0RQH\6RXWK$IULFD 3URSULHWDU\ /LPLWHG Associates and joint ventures designated at fair value through profit or loss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

Notes The summary financial information includes 100% of the equity-accounted investees’ total assets and total liabilities. Disposed of during the year. Impaired during the year. Transferred from investment securities during the year. Acquired during the year. Loans to entities of R79 million relates to Menlyn Maine Investment Holdings (Proprietary) Limited, which is an associate of African Spirit Trading 309 (Proprietary) Limited.

448 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU *URXS (TXLW\ /RDQV &DUU\LQJ 7RWDO 7RWDO DFFRXQWHG IURP WR YDOXH DVVHWV OLDELOLWLHV HDUQLQJV HQWLWLHV 2ZQHUVKLS 5P 5P 5P 5P 5P

¥¥¥ ¥¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥

¥ ¥ ¥ ¥ ¥ ¥

QD ¥ QD ¥ QD QD QD ¥ ¥ QD ¥ QD QD ¥ QD QD ¥ QD QD QD QD QD QD ¥ QD QD ¥ QD QD QD QD ¥ QD QD ¥ QD QD ¥ QD QD QD QD QD QD QD QD QD QD QD QD

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 449 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

Group

2010 Rm 5P 49. Assets under management and administration 'HFHDVHGHVWDWHV 2 153 2WKHU 10 898 3DUWLFLSDWLRQERQGVFKHPHV 2 315 3RUWIROLRPDQDJHPHQW 21 145 7UXVWV 6 482 8QLWWUXVWV 125 320 168 313 50. Financial guarantee contracts )LQDQFLDOJXDUDQWHHFRQWUDFWV 599 )LQDQFLDOJXDUDQWHHFRQWUDFWVUHSUHVHQWFRQWUDFWVZKHUHWKH*URXS XQGHUWDNHVWRPDNHVSHFLILHGSD\PHQWVWRDFRXQWHUSDUW\VKRXOGWKH FRXQWHUSDUW\VXIIHUDORVVDVDUHVXOWRIDVSHFLILHGGHEWRUIDLOLQJWRPDNH SD\PHQWZKHQGXHLQDFFRUGDQFHZLWKWKHWHUPVRIDGHEWLQVWUXPHQW7KLV DPRXQWUHSUHVHQWVWKHPD[LPXPRIIVWDWHPHQWRIILQDQFLDOSRVLWLRQH[SRVXUH 51. Commitments Authorised capital expenditure &RQWUDFWHGEXWQRWSURYLGHGIRU 1 061 7KH*URXSKDVFDSLWDOFRPPLWPHQWVLQUHVSHFWRIFRPSXWHUHTXLSPHQWDQG SURSHUW\GHYHORSPHQW0DQDJHPHQWLVFRQILGHQWWKDWIXWXUHQHWUHYHQXHV DQGIXQGLQJZLOOEHVXIILFLHQWWRFRYHUWKHVHFRPPLWPHQWV Operating lease payments due 1RODWHUWKDQRQH\HDU 1 066 /DWHUWKDQRQH\HDUDQGQRODWHUWKDQILYH\HDUV 2 059 /DWHUWKDQILYH\HDUV 482 3 607 7KHRSHUDWLQJOHDVHFRPPLWPHQWVFRPSULVHDQXPEHURIVHSDUDWHRSHUDWLQJ OHDVHVLQUHODWLRQWRSURSHUW\DQGHTXLSPHQWQRQHRIZKLFKLVLQGLYLGXDOO\ VLJQLILFDQWWRWKH*URXS/HDVHVDUHQHJRWLDWHGIRUDQDYHUDJHWHUPRIWKUHH WRILYH\HDUVDQGUHQWDOVDUHUHQHJRWLDWHGDQQXDOO\ 52. Contingencies *XDUDQWHHV 11 051 ,UUHYRFDEOHGHEWIDFLOLWLHV 46 495 ,UUHYRFDEOHHTXLW\IDFLOLWLHV 750 ¥ /HWWHUVRIFUHGLW 4 979 2WKHUFRQWLQJHQFLHV 44 63 319

450 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 52. Contingencies (continued) ,UUHYRFDEOH IDFLOLWLHV DUH FRPPLWPHQWV WR H[WHQG FUHGLW ZKHUH WKH *URXS GRHV QRW KDYH WKH ULJKW WR WHUPLQDWH WKH IDFLOLWLHVE\ZULWWHQQRWLFH&RPPLWPHQWVJHQHUDOO\KDYHIL[HGH[SLU\GDWHV6LQFHFRPPLWPHQWVPD\H[SLUHZLWKRXW EHLQJGUDZQXSRQWKHWRWDOFRQWUDFWDPRXQWVGRQRWQHFHVVDULO\UHSUHVHQWIXWXUHFDVKUHTXLUHPHQWV *XDUDQWHHVLQFOXGHSHUIRUPDQFHJXDUDQWHHFRQWUDFWVDQGSD\PHQW JXDUDQWHHFRQWUDFWV Legal proceedings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egulatory matters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©VFRQWUROEXWHVSHFLDOO\LQWKHDUHDRIEDQNLQJUHJXODWLRQDUHOLNHO\ WRKDYHDQLPSDFWRQWKH*URXS©VEXVLQHVVHVDQGHDUQLQJV 7KH*URXSLVFRQWLQXRXVO\HYDOXDWLQJLWVFRPSOLDQFHSURJUDPPHVDQGFRQWUROVLQJHQHUDO$VDFRQVHTXHQFHRI WKHVH FRPSOLDQFH SURJUDPPHV DQG FRQWUROV LQFOXGLQJ PRQLWRULQJ DQG UHYLHZ DFWLYLWLHV WKH *URXS KDV DOVR DGRSWHGDSSURSULDWHUHPHGLDODQGRUPLWLJDWLQJVWHSVZKHUHQHFHVVDU\RUDGYLVDEOHDQGPDGHGLVFORVXUHVRQ PDWHULDOILQGLQJVDVDQGZKHQDSSURSULDWH Group

2010 Rm 5P 53. Cash and cash equivalents &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDOEDQNV 4 939 /RDQVDQGDGYDQFHVWREDQNV 1 478 6 417 54. Share-based payments 'XULQJWKH\HDU5PLOOLRQ 5PLOOLRQ DQG5PLOOLRQ 5PLOOLRQ ZHUHFKDUJHGWRWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH LQUHVSHFWRIHTXLW\VHWWOHGDQGFDVKVHWWOHGVKDUHEDVHGSD\PHQW WUDQVDFWLRQVUHVSHFWLYHO\ Staff costs 7KHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHFKDUJHIRUVKDUHEDVHG SD\PHQWVLVDVIROORZV UHIHUWRQRWH (TXLW\VHWWOHGDUUDQJHPHQWV $EVD*URXS/LPLWHG([HFXWLYH6KDUH$ZDUG6FKHPH 55 $EVD*URXS/LPLWHG3HUIRUPDQFH6KDUH3ODQ (19) $EVD*URXS/LPLWHG6KDUH,QFHQWLYH6FKHPH 12 &DVKVHWWOHGDUUDQJHPHQWV $EVD*URXS/LPLWHG'HIHUUHG$ZDUG3ODQ 162 ¥ $EVD*URXS/LPLWHG3KDQWRP([HFXWLYH6KDUH$ZDUG6FKHPH (9) $EVD*URXS/LPLWHG3KDQWRP-RLQHUV6KDUH$ZDUG3ODQ 72 $EVD*URXS/LPLWHG3KDQWRP3HUIRUPDQFH6KDUH3ODQ — $EVD*URXS/LPLWHG5HWHQWLRQ3ODQ 24 ¥ 297 7RWDOFDUU\LQJDPRXQWRIOLDELOLWLHVIRUFDVKVHWWOHGDUUDQJHPHQWV UHIHUWRQRWH 302 Note The plan was implemented during the current year. 7KHLQWULQVLFYDOXHRIWKHOLDELOLW\UHIOHFWVWKHGLIIHUHQFHEHWZHHQWKHIDLUYDOXHRIWKHRSWLRQVYHVWHGDVDWWKH UHSRUWLQJGDWHDQGWKHRSWLRQH[HUFLVHSULFHDQGDPRXQWVWR5PLOOLRQ 5PLOOLRQ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 451 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

54. Share-based payments (continued) 54.1 Absa Group Limited Share Incentive Scheme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roup 2010 Number Weighted of exercise options price ’000 R 2XWVWDQGLQJDWWKHEHJLQQLQJRIWKH\HDU 6 298 79,09 ([HUFLVHGGXULQJWKH\HDU (2 889) 79,09 )RUIHLWHGGXULQJWKH\HDU (173) 84,99 2XWVWDQGLQJDWWKHHQGRIWKH\HDU 3 236 78,72 2IZKLFKDUHH[HUFLVDEOH 2 691 73,02 1XPEHU :HLJKWHG RI H[HUFLVH RSWLRQV SULFH © 5 2XWVWDQGLQJDWWKHEHJLQQLQJRIWKH\HDU ([HUFLVHGGXULQJWKH\HDU )RUIHLWHGGXULQJWKH\HDU 2XWVWDQGLQJDWWKHHQGRIWKH\HDU 2IZKLFKDUHH[HUFLVDEOH 2SWLRQVH[HUFLVHGGXULQJWKH\HDUUHVXOWHGLQ VKDUHVEHLQJDOORFDWHGDWDQDYHUDJH H[HUFLVHSULFHRI5 5 HDFK7KHUHODWHGZHLJKWHGDYHUDJHVKDUHSULFHDWWKHWLPHRIH[HUFLVH ZDV5 5

452 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 54. Share-based payments (continued) 54.1 Absa Group Limited Share Incentive Scheme (continued) 6KDUHRSWLRQVRXWVWDQGLQJDWWKHUHSRUWLQJGDWHLQWHUPVRIWKH6KDUH,QFHQWLYH7UXVWKDYHWKHIROORZLQJZHLJKWHG DYHUDJHUHPDLQLQJFRQWUDFWXDOOLYHVDQGH[HUFLVHSULFHV Group 2010 Average Weighted Weighted option average average Number of exercise contractual fair options price remaining life value outstanding Exercise price ranges (R) R Years R ¤ 37,31 0,46 13,93 188 402 ¤ 33,61 1,45 11,37 230 914 ¤ 35,01 2,43 12,04 251 179 ¤ 49,23 3,47 30,02 1 002 073 ¤ 90,98 4,62 30,13 1 125 787 ¤ 105,35 5,48 39,82 437 502

$YHUDJH :HLJKWHG RSWLRQ DYHUDJH :HLJKWHG 1XPEHU H[HUFLVH FRQWUDFWXDO DYHUDJH RIRSWLRQV SULFH UHPDLQLQJOLIH IDLUYDOXH RXWVWDQGLQJ ([HUFLVHSULFHUDQJHV 5 5

7KHIROORZLQJVKDUHVDQGRSWLRQVDUHDYDLODEOHIRUDOORFDWLRQ Group 2010 Percentage Number of total of shares issued shares ’000 0D[LPXPVKDUHVDQGRSWLRQVDYDLODEOH 10,0 71 821 6KDUHVDQGRSWLRQVVXEMHFWWRWKHWUXVW (0,5) (3 236) Balance of shares and options available 9,5 68 585

3HUFHQWDJH 1XPEHU RIWRWDO RIVKDUHV LVVXHGVKDUHV © 0D[LPXPVKDUHVDQGRSWLRQVDYDLODEOH 6KDUHVDQGRSWLRQVVXEMHFWWRWKHWUXVW Balance of shares and options available

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 453 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

54. Share-based payments (continued) 54.2 Batho Bonke Capital (Proprietary) Limited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roup

:HLJKWHG 1XPEHURIRSWLRQV DYHUDJH H[HUFLVHSULFH 2010 5 ’000 © Outstanding at the beginning of the year ¤ — ([HUFLVHGGXULQJWKH\HDU — 5HSXUFKDVHGGXULQJWKH\HDU ¥ — Outstanding at the end of the year ¤ — ¥ Of which are exercisable ¤ — ¥

54.3 Absa Group Limited Employee Share Ownership Administrative Trust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roup

:HLJKWHG 1XPEHURIRSWLRQV DYHUDJH H[HUFLVHSULFH 2010 5 ’000 © Outstanding at the beginning of the year ¤ — ([HUFLVHGGXULQJWKH\HDU — )RUIHLWHGGXULQJWKH\HDU ¤ — Outstanding at the end of the year ¤ — ¥ Of which are exercisable ¤ — ¥

454 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 54. Share-based payments (continued) 54.4 Absa Group Limited Phantom Performance Share Plan (Phantom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©VSHUIRUPDQFHIDLOVWRPHHWWKHPLQLPXPSHUIRUPDQFHFULWHULD ,QWKHFXUUHQW\HDUWKHRXWVWDQGLQJDZDUGVIDLOHGWRPHHWWKHPLQLPXPSHUIRUPDQFHFRQGLWLRQVDQGWKHUHIRUH KDYHEHHQODSVHGLQWRWDO Group 1XPEHURIDZDUGV 2010 ’000 © Outstanding at the beginning of the year 1 186 ([HUFLVHGGXULQJWKH\HDU — )RUIHLWHGGXULQJWKH\HDU (1 186) Outstanding at the end of the year —

7KHUH DUH QR SKDQWRP DZDUGV RXWVWDQGLQJ DW WKH UHSRUWLQJ GDWH 7KH SKDQWRP DZDUGV RXWVWDQGLQJ DW WKH SUHYLRXVUHSRUWLQJGDWHKDGQRH[HUFLVHSULFHDQGDZHLJKWHGDYHUDJHFRQWUDFWXDOOLIHRI\HDUV 54.5 Absa Group Limited Executive Share Award Scheme (ESAS) 7KH (6$6 LV DQ HTXLW\VHWWOHG VKDUHEDVHG SD\PHQW DUUDQJHPHQW ZKHUH WKH SDUWLFLSDQW©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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 455 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

54. Share-based payments (continued) 54.5 Absa Group Limited Executive Share Award Scheme (ESAS) (continued) 7KH IROORZLQJ QXPEHU RI LQLWLDO RSWLRQV DOORFDWHG LQ WHUPV RI WKH VFKHPH DUH HOLJLEOH IRU WKH DQGRU PDWFKHGRSWLRQV Group 1XPEHURIRSWLRQV 2010 ’000 © Outstanding at the beginning of the year 2 184 )RUIHLWHGGXULQJWKH\HDU (109) *UDQWHGGXULQJWKH\HDU — Outstanding at the end of the year 2 075 7KHRSWLRQVRXWVWDQGLQJDWWKHUHSRUWLQJGDWHKDYHQRH[HUFLVHSULFHDQGDZHLJKWHGDYHUDJHFRQWUDFWXDOOLIHRI \HDUV \HDUV 1RQHRIWKHVHRSWLRQVZHUHH[HUFLVDEOHDWWKHUHSRUWLQJGDWH Fair value assumptions of share options granted during the previous year 7KHIDLUYDOXHRIWKH(6$6RSWLRQVDWJUDQWGDWHLVEDVHGRQWKHVKDUHSULFHDWJUDQWGDWH7KH*URXSFRQVLGHUV DGMXVWPHQWVWRUHIOHFWH[SHFWDWLRQVIRURSWLRQVWKDWPLJKWEHIRUIHLWHGEHIRUHWKHVKDUHVYHVW )RUSXUSRVHVRIGHWHUPLQLQJWKHH[SHFWHGOLIHDQGQXPEHURIRSWLRQVWRYHVWKLVWRULFDOH[HUFLVHDQGIRUIHLWXUH SDWWHUQVZHUHXVHG 54.6 Absa Group Limited Phantom Joiners Share Award Plan (JSAP) 7KH-6$3LVDFDVKVHWWOHGVKDUHEDVHGSD\PHQWDUUDQJHPHQWWKDWHQDEOHVWKH*URXSWRDWWUDFWDQGPRWLYDWH QHZHPSOR\HHVE\EX\LQJRXWWKH¨LQWKHPRQH\©SRUWLRQRIDSDUWLFLSDQW©VVKDUHVRURSWLRQVXQGHUWKHLUSUHYLRXV HPSOR\HUV© VKDUH VFKHPH E\ RIIHULQJ WKH HPSOR\HHV $EVD *URXS /LPLWHG SKDQWRP DZDUGV 7KHUH LV QR FRQVLGHUDWLRQ SD\DEOH IRU WKH JUDQW RI DQ DZDUG DQG WKH YHVWLQJ RI WKH DZDUG LV QRW VXEMHFW WR SHUIRUPDQFH FRQGLWLRQV 'LYLGHQGV DFFUXH WR WKH SDUWLFLSDQW RYHU WKH YHVWLQJ SHULRG ZKLFK FDQ EH RYHU WZR WKUHH ILYH RU VL[\HDUV Group 1XPEHURIDZDUGV 2010 ’000 © Outstanding at the beginning of the year 923 ([HUFLVHGGXULQJWKH\HDU (255) )RUIHLWHGGXULQJWKH\HDU (87) *UDQWHGGXULQJWKH\HDU 602 Outstanding at the end of the year 1 183

7KHDZDUGVRXWVWDQGLQJDWWKHUHSRUWLQJGDWHKDYHQRH[HUFLVHSULFHDQGDZHLJKWHGDYHUDJHFRQWUDFWXDOOLIHRI \HDUV \HDUV $VWKHWHUPVDQGFRQGLWLRQVRIWKLVVKDUHVFKHPHGLFWDWHWKDWDZDUGVEHVHWWOHGLPPHGLDWHO\RQYHVWLQJDWDQ\ JLYHQWLPHWKHUHDUHQRDZDUGVZKLFKKDYHYHVWHGEXWKDYHQRW\HWEHHQVHWWOHG

Fair value assumptions of phantom share awards granted during the current and previous year 7KHIDLUYDOXHRIWKH-6$3DZDUGVDWJUDQWGDWHLVEDVHGRQWKHVKDUHSULFHDWJUDQWGDWH7KH*URXSFRQVLGHUV DGMXVWPHQWVWRUHIOHFWH[SHFWDWLRQVIRUSKDQWRPDZDUGVWKDWPLJKWEHIRUIHLWHGEHIRUHWKHDZDUGVYHVW$WHDFK UHSRUWLQJGDWHWKH*URXSDGMXVWVWKHOLDELOLW\WRUHIOHFWGLIIHUHQFHV EHWZHHQWKHVKDUHSULFHDWJUDQWGDWHDQGWKHVKDUHSULFHDWYDOXDWLRQGDWHDQG EHWZHHQDFWXDODQGH[SHFWHGIRUIHLWHGDZDUGV

456 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 54. Share-based payments (continued) 54.7 Absa Group Limited Phantom Executive Share Award Scheme (Phantom ESAS) 7KH3KDQWRP(6$6LVDFDVKVHWWOHGVKDUHEDVHGSD\PHQWDUUDQJHPHQWZKHUHWKHSDUWLFLSDQW©VQRWLRQDOERQXV FRPSULVHVDQXPEHURIUHVWULFWHGQLOFRVWSKDQWRPDZDUGVEDVHGRQWKHDOORFDWLRQSULFHRI$EVD*URXS/LPLWHG©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roup 1XPEHURIDZDUGV 2010 ’000 © Outstanding at the beginning of the year 455 ([HUFLVHGGXULQJWKH\HDU (394) )RUIHLWHGGXULQJWKH\HDU (36) *UDQWHGGXULQJWKH\HDU 128 Outstanding at the end of the year 153

Of which are exercisable 114

7KH SKDQWRP DZDUGV RXWVWDQGLQJ DW WKH UHSRUWLQJ GDWH KDYH QR H[HUFLVH SULFH DQG D ZHLJKWHG DYHUDJH FRQWUDFWXDOOLIHRI\HDUV \HDUV

Fair value assumptions of phantom awards granted during the current and previous year 7KHIDLUYDOXHRIWKH3KDQWRP(6$6DZDUGVDWJUDQWGDWHLVEDVHGRQWKHVKDUHSULFHDWJUDQWGDWH7KH*URXS FRQVLGHUVDGMXVWPHQWVWRUHIOHFWH[SHFWDWLRQVRISKDQWRPDZDUGVWKDWPLJKWEHIRUIHLWHGEHIRUHWKHDZDUGVYHVW $WHDFKUHSRUWLQJGDWHWKH*URXSDGMXVWVWKHOLDELOLW\WRUHIOHFWGLIIHUHQFHV EHWZHHQWKHVKDUHSULFHDWJUDQWGDWHDQGWKHVKDUHSULFHDWYDOXDWLRQGDWHDQG EHWZHHQDFWXDODQGH[SHFWHGIRUIHLWHGDZDUGV 54.8 Absa Group Limited Performance Share Plan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roup 1XPEHURIRSWLRQV 2010 ’000 © Outstanding at the beginning of the year 3 417 )RUIHLWHGGXULQJWKH\HDU (199) *UDQWHGGXULQJWKH\HDU — Outstanding at the end of the year 3 218

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 457 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

54. Share-based payments (continued) 54.8 Absa Group Limited Performance Share Plan (PSP) (continued) 7KHRSWLRQVRXWVWDQGLQJDWWKHUHSRUWLQJGDWHKDYHQRH[HUFLVH SULFHDQGDZHLJKWHGDYHUDJHFRQWUDFWXDOOLIHRI \HDUV \HDUV 1RQHRIWKHVHRSWLRQVZHUHH[HUFLVDEOHDWWKHUHSRUWLQJGDWH Fair value assumptions of share options granted during the current and previous year 7KHIDLUYDOXHRIWKH363RSWLRQVDWJUDQWGDWHLVEDVHGRQWKH VKDUHSULFHDWJUDQWGDWH7KH*URXSFRQVLGHUV DGMXVWPHQWV WR UHIOHFW H[SHFWDWLRQV IRU RSWLRQV WKDW PLJKW EH IRUIHLWHG EHIRUH WKH RSWLRQV YHVW )RU SXUSRVHV RI GHWHUPLQLQJWKHH[SHFWHGOLIHDQGQXPEHURIRSWLRQVWRYHVWKLVWRULFDOH[HUFLVHDQGIRUIHLWXUHSDWWHUQVZHUHXVHG 54.9 Absa Group Limited Deferred Award Plan (DAP) 7KH'$3LVDFDVKVHWWOHGVKDUHEDVHGSD\PHQWDUUDQJHPHQW7KH '$3DZDUGV DQGDQ\DVVRFLDWHGQRWLRQDO GLYLGHQGV DUHDZDUGHGDWQRFRVWWRWKHSDUWLFLSDQWV7KHDZDUGVYHVWLQHTXDOWUDQFKHVDIWHURQHWZRDQGWKUHH \HDUVZLWKHDFKWUDQFKHVXEMHFWWRLWVRZQLQGHSHQGHQWQRQPDUNHWUHODWHGSHUIRUPDQFHFRQGLWLRQ7KHDPRXQW WKDWLVSDLGWRWKHSDUWLFLSDQWVLVHTXDOWRWKHPDUNHWYDOXHRIDQXPEHURI$EVD*URXS/LPLWHG©VRUGLQDU\VKDUHV DVGHWHUPLQHGRQWKHYHVWLQJGDWHWRWKHH[WHQWWKDWWKHQRQPDUNHWUHODWHGFRQGLWLRQVDWWDFKHGWRWKHDZDUGV DUH PHW ,I WKH *URXS IDLOV WR PHHW WKH PLQLPXP SHUIRUPDQFH FULWHULD WKH DZDUGV PDGH LQ WKDW WUDQFKH DUH IRUIHLWHGLQWRWDO Group 1XPEHURIDZDUGV 2010 ’000 © Outstanding at the beginning of the year — ¥ *UDQWHGGXULQJWKH\HDU 2 613 ¥ )RUIHLWHGGXULQJWKH\HDU (145) ¥ Outstanding at the end of the year 2 468 ¥

7KHSKDQWRPDZDUGVRXWVWDQGLQJKDYHQRH[HUFLVHSULFHDQGDZHLJKWHGDYHUDJHFRQWUDFWXDOOLIHRI\HDUV $VWKHWHUPVDQGFRQGLWLRQVRIWKLVVKDUHVFKHPHGLFWDWHWKDWDZDUGVEHVHWWOHGLPPHGLDWHO\RQYHVWLQJDWDQ\ JLYHQWLPHWKHUHDUHQRDZDUGVZKLFKKDYHYHVWHGEXWKDYHQRW\HWEHHQVHWWOHG 54.10 Absa Group Limited Retention Plan (RP) 7KH53LVDFDVKVHWWOHGVKDUHEDVHGSD\PHQWDUUDQJHPHQW7KHU HWHQWLRQDZDUGV DQGDQ\DVVRFLDWHGQRWLRQDO GLYLGHQGV DUHDZDUGHGDWQRFRVWWRWKHSDUWLFLSDQWV7KHDPRXQWWKDWLVXOWLPDWHO\SDLGWRWKHSDUWLFLSDQWVLV HTXDOWRWKHPDUNHWYDOXHRIDQXPEHURI$EVD*URXS/LPLWHG©VRUGLQDU\VKDUHVDVGHWHUPLQHGDIWHUDWKUHH\HDU YHVWLQJSHULRG Group 1XPEHURIDZDUGV 2010 ’000 © Outstanding at the beginning of the year — ¥ *UDQWHGGXULQJWKH\HDU 613 ¥ )RUIHLWHGGXULQJWKH\HDU (17) ¥ Outstanding at the end of the year 596 ¥

458 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 55. Acquisitions and disposals of businesses 55.1 Acquisitions of businesses during the current year 55.1.1 2Q -XQH WKH 906$ MRLQW YHQWXUH DUUDQJHPHQW ZDV WHUPLQDWHG 7KLV ZDV EDVHG RQ D FRQWUDFWXDOO\ DJUHHGDUUDQJHPHQWZKHUHE\GHSHQGLQJRQWKHILQDQFLDOSHUIRUPDQFHRIWKHMRLQWYHQWXUHLWVIXWXUHH[LVWHQFH ZLOOEHGHWHUPLQHG'XHWRWKHXQGHUSHUIRUPDQFHRIWKHMRLQWYHQWXUHWKHDUUDQJHPHQWZDVWHUPLQDWHGDQGWKH *URXSDFTXLUHGWKHXQGHUO\LQJEXVLQHVV7KHWHUPLQDWLRQUHVXOWHGLQWKH*URXSVHOOLQJLWVLQWHUHVWLQ906$ IRU 5 ZKLOH DFTXLULQJ 906$©V FUHGLW DQG KRPH ORDQ EXVLQHVV IRU 5 906$©V FUHGLW FDUG DQG KRPH ORDQ EXVLQHVVFRQWULEXWHGDQHWSURILWEHIRUHWD[RI5PLOOLRQDQGUHYHQXHRI5PLOOLRQWRWKH*URXSIRUWKHSHULRG IURP-XQHWR'HFHPEHU,IWKHDFTXLVLWLRQRFFXUUHGRQ-DQXDU\WKH*URXS©VUHYHQXH ZRXOGKDYHEHHQ5PLOOLRQKLJKHUDQGWKHQHWSURILWEHIRUHWD[IRUWKH\HDUZRXOGKDYHEHHQ5PLOOLRQ KLJKHU Group 2010 Fair value recognised on acquisition 'HWDLOVRIWKHQHWDVVHWVDFTXLUHGDQGJDLQRQEDUJDLQSXUFKDVHDUHDVIROORZV Rm ,QWDQJLEOHDVVHWV 3 2WKHUOLDELOLWLHV (1) 'HIHUUHGWD[OLDELOLWLHV (1) Net assets acquired 1 Satisfied by: )DLUYDOXHRIQHWDVVHWVDFTXLUHG (1) Gain on bargain purchase (1) 7KLVEDUJDLQSXUFKDVHJDLQDURVHSULPDULO\GXHWRWKHXQGHUSHUIRUPDQFHRIWKHXQGHUO\LQJ906$FUHGLWFDUGDQG KRPH ORDQ SRUWIROLR 1R FRQWLQJHQW OLDELOLWLHV ZHUH UHFRJQLVHG DV D UHVXOW RI WKH DFTXLVLWLRQ DQG QR FRQWLQJHQW FRQVLGHUDWLRQ LV SD\DEOH 1R LGHQWLILDEOH DVVHWV ZHUH LGHQWLILHG RI ZKLFK WKH IDLU YDOXHV FRXOG QRW EH UHOLDEO\ PHDVXUHG1RPDWHULDOUHFHLYDEOHVZHUHDFTXLUHGDVSDUWRIWKHWUDQVDFWLRQ

55.1.2 7KH *URXS SUHYLRXVO\ KDG D VKDUH LQ WKH SUHIHUHQFH VKDUHV RI 6+/ WKH KROGLQJ FRPSDQ\ RI WKUHH VHFXULWLVDWLRQYHKLFOHV7KHLQYHVWPHQWLQ6+/KDVSUHYLRXVO\EHHQHTXLW\DFFRXQWHGDVWKH*URXSDQG6DQODP KDGMRLQWFRQWURORYHU6+/2Q$XJXVWWKH*URXSDFTXLUHGWKHUHPDLQLQJSUHIHUHQFHVKDUHVLQ6+/ ZKLFK UHVXOWHG LQ WKH *URXS FRQWUROOLQJ DQG FRQVROLGDWLQJ 6+/ 6+/ FRQWULEXWHG D QHW SURILW EHIRUH WD[ RI 5PLOOLRQDQGUHYHQXHRI5PLOOLRQWRWKH*URXSIRUWKHSHULRGIURP$XJXVWWR'HFHPEHU ,IWKHDFTXLVLWLRQRFFXUUHGRQ-DQXDU\WKH*URXS©VUHYHQXHZRXOGKDYHEHHQ5PLOOLRQKLJKHUDQGWKH QHWSURILWEHIRUHWD[IRUWKH\HDUZRXOGKDYHEHHQ5PLOOLRQKLJKHU Group 2010 Fair value recognised on acquisition 'HWDLOVRIWKHQHWDVVHWVDFTXLUHGDQGJDLQRQEDUJDLQSXUFKDVHDUHDVIROORZV Rm &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDOEDQNV 409 2WKHUDVVHWV 11 /RDQVDQGDGYDQFHVWRFXVWRPHUV 4 621 2WKHUOLDELOLWLHV (9) 'HEWVHFXULWLHVLQLVVXH (3 687) 6KDUHKROGHUV©ORDQV (1 325) 3UHYLRXVO\KHOGLQWHUHVW (10) Net assets acquired 10 Satisfied by: &DVKLQIORZRQDFTXLVLWLRQ (61) )DLUYDOXHRIQHWDVVHWVDFTXLUHG (10) Gain on bargain purchase (71)

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 459 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

55. Acquisitions and disposals of businesses (continued) 55.1 Acquisitions of businesses during the current year (continued) 55.1.2 (continued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roup 2010 Rm Total cash and cash equivalents acquired 470

55.2 Acquisitions of businesses during the previous year 55.2.1 2Q-DQXDU\WKH*URXSDFTXLUHGDQDGGLWLRQDOLQWHUHVWLQ$EVHT3URSHUWLHV 3URSULHWDU\ /LPLWHG $EVHT LQFUHDVLQJLWVVKDUHKROGLQJWR$EVHTZDVSUHYLRXVO\UHFRJQLVHGDVDQDVVRFLDWHGHVLJQDWHGDVIDLU YDOXHWKURXJKSURILWRUORVV$EVHTFRQWULEXWHGDQHWSURILWEHIRUHWD[RI5PLOOLRQWRWKH*URXSIRUWKHSHULRG -DQXDU\WR'HFHPEHU,IWKHDFTXLVLWLRQVKDGRFFXUUHGRQ-DQXDU\WKH*URXS©VUHYHQXH ZRXOGKDYHEHHQ5PLOOLRQKLJKHUDQGWKHWRWDOSURILWIRUWKH\HDUZRXOGKDYHEHHQ5PLOOLRQKLJKHU *URXS )DLUYDOXH UHFRJQLVHG RQ DFTXLVLWLRQ 'HWDLOVRIWKHQHWDVVHWVDFTXLUHGDQGJRRGZLOODUHDVIROORZV 5P 2WKHUDVVHWV ,QYHVWPHQWVLQDVVRFLDWHVDQGMRLQWYHQWXUHV ,QYHVWPHQWSURSHUWLHV 'HSRVLWVIURPEDQNV 'HIHUUHGWD[OLDELOLWLHV 2WKHUOLDELOLWLHV 3UHYLRXVO\KHOGLQWHUHVW 1RQFRQWUROOLQJLQWHUHVW

Net assets acquired Satisfied by: &DVKRXWIORZRQDFTXLVLWLRQ )DLUYDOXHRIQHWDVVHWVDFTXLUHG

Goodwill 7KHJRRGZLOOLVDWWULEXWHGWRWKHV\QHUJLHVH[SHFWHGWRDULVHDIWHUWKH*URXS©VDFTXLVLWLRQRI$EVHT7KHFRVWRI DFTXLVLWLRQLQFOXGHVGLUHFWO\DWWULEXWDEOHFRVWVLQFOXGLQJOHJDODXGLWDQGRWKHUSURIHVVLRQDOIHHV1RFRQWLQJHQW OLDELOLWLHVZHUHUHFRJQLVHGDVDUHVXOWRIWKHDFTXLVLWLRQDQGQRFRQWLQJHQWFRQVLGHUDWLRQLVSD\DEOH

460 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 55. Acquisitions and disposals of businesses (continued) 55.2 Acquisitions of businesses during the previous year (continued) 55.2.2 2Q-XQHWKH*URXSDFTXLUHGDLQWHUHVWLQ%OXH$JH 3URSHUWLHV 3URSULHWDU\ /LPLWHG *URXS )DLUYDOXH UHFRJQLVHG RQ DFTXLVLWLRQ 5P

Net assets acquired

Satisfied by: &DVKRXWIORZRQDFTXLVLWLRQ )DLUYDOXHRIQHWDVVHWVDFTXLUHG

Goodwill Net cash outflow due to acquisitions

55.3 Disposal of businesses during the current year 55.3.1 $EVD3URSHUW$TXLW$XQGRSHUDWHGDVDQ63(IRUWKHLQYHVWPHQWRIFRPPXQLW\XSOLIWPHQWSURMHFWV7KLVIXQGZDV SUHYLRXVO\FRQVROLGDWHGXQGHU6,&DVWKH*URXSKHOGEHWZHHQDQGRIXQLWV GHSHQGLQJRQWKHWRWDORIXQLWV LQLVVXHDWDVSHFLILFSRLQWLQWLPH DQGZHUHWKHUHE\H[SRVHGWRWKHPDMRULW\RIULVNVDQGUHZDUGVRIWKHIXQG %HWZHHQ-DQXDU\DQG$XJXVWWKH*URXSGLVSRVHGRIVRPHRIWKHXQLWVLWRZQHGWRWKHH[WHQWWKDWLWV HIIHFWLYHKROGLQJGHFUHDVHGWREHORZRIWKHXQLWVLQLVVXHDWZKLFKSRLQWWKHIXQGZDVGHFRQVROLGDWHGGXH WRWKH*URXSQRORQJHUEHLQJH[SRVHGWRWKHPDMRULW\RIWKHULVNVDQGUHZDUGVRIWKHIXQG 1RJDLQRUORVVZDVUHFRJQLVHGRQGHFRQVROLGDWLRQRIWKHIXQGGXHWRWKHXQGHUO\LQJDVVHWVEHLQJPHDVXUHGDW IDLUYDOXH 7KH UHPDLQGHU RI WKH LQYHVWPHQW UHWDLQHG DIWHU GHFRQVROLGDWLRQ ZDV GLVSRVHG GXULQJ 6HSWHPEHU DQG 2FWREHU Group 2010 'HWDLOVRIWKHQHWDVVHWVGLVSRVHGRIDUHDVIROORZV Rm &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDOEDQNV 22 ,QYHVWPHQWVHFXULWLHV 136 Net assets disposed 158 Satisfied by: 1RQFRQWUROOLQJLQWHUHVW (78) )DLUYDOXHRILQWHUHVWUHWDLQHG (64) &RQVLGHUDWLRQUHFHLYHG 16 &DVKDQGFDVKHTXLYDOHQWVGLVSRVHG (22) Net cash outflow on disposal (6)

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 461 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

56. Fair value of ﬁnancial instruments 7KHWDEOHEHORZVXPPDULVHVWKHFDUU\LQJDPRXQWVDQGIDLUYDOXHVRIWKRVHILQDQFLDOLQVWUXPHQWVQRWKHOGDWIDLU YDOXH Group 2010 Carrying &DUU\LQJ value Fair value YDOXH )DLUYDOXH Rm Rm 5P 5P Financial assets %DODQFHVZLWKRWKHUFHQWUDOEDQNV 859 859 %DODQFHVZLWKWKH6$5% 12 912 12 912 &RLQVDQGEDQNQRWHV 4 939 4 939 0RQH\PDUNHWDVVHWV 2 180 2 180 Cash, cash balances and balances with central banks (refer to note 2) 20 890 20 890 Loans and advances to banks (refer to note 4) 17 830 17 829 Other assets (refer to note 6) 13 490 13 490 5HWDLO%DQNLQJ 325 790 326 475 &KHTXHDFFRXQWV 2 211 2 211 &UHGLWFDUGV 18 319 18 319 ,QVWDOPHQWFUHGLWDJUHHPHQWV 39 549 39 927 /RDQVWRDVVRFLDWHVDQGMRLQWYHQWXUHV 4 827 4 827 0LFURORDQV 1 662 1 784 0RUWJDJHV 245 963 246 148 2WKHU 31 31 3HUVRQDODQGWHUPORDQV 13 228 13 228 $EVD&DSLWDO 41 178 41 315 $EVD%XVLQHVV%DQN 121 983 122 357 &RUSRUDWH 23 173 23 244 /DUJHDQG0HGLXP 73 127 73 351 2WKHU 20 615 20 679 6PDOO 5 068 5 083 2WKHUDQGLQWHUJURXSHOLPLQDWLRQV (1 053) (1 053) Loans and advances to customers – net of impairment (refer to note 8) 487 898 489 094 Investment securities (refer to note 11) 388 388 Total 540 496 541 691

Note Comparatives have been reclassiﬁed, refer to note 1.26.

462 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 56. Fair value of ﬁnancial instruments (continued) Group 2010 Carrying &DUU\LQJ value Fair value YDOXH )DLUYDOXH Rm Rm 5P 5P Financial liabilities Deposits from banks (refer to note 17) 13 727 13 728 Other liabilities (refer to note 19) 9 076 9 075 &DOOGHSRVLWV 54 707 54 828 &KHTXHDFFRXQWGHSRVLWV 107 787 107 787 &UHGLWFDUGGHSRVLWV 1 830 1 830 )L[HGGHSRVLWV 104 359 104 784 )RUHLJQFXUUHQF\GHSRVLWV 9 661 9 661 1RWLFHGHSRVLWV 11 365 11 370 2WKHUGHSRVLWV 3 702 3 703 6DYLQJDQGWUDQVPLVVLRQGHSRVLWV 67 844 67 844 Deposits due to customers (refer to note 21) 361 255 361 807 Debt securities in issue (refer to note 22) 157 711 158 491 Borrowed funds (refer to note 25) 7 440 8 109 Total 549 209 551 210

Note Comparatives have been reclassiﬁed, refer to note 1.26. 57. Segment report 57.1 Segment report per geographical segment Group 2010 Other South Rest of foreign Africa Africa countries Total Rm Rm Rm Rm 1HWLQWHUHVWLQFRPH¤H[WHUQDO 22 522 707 111 23 340 1RQLQWHUHVWLQFRPH¤H[WHUQDO 19 101 403 (30) 19 474 7RWDODVVHWV 701 591 9 230 5 649 716 470

2WKHU 6RXWK 5HVWRI IRUHLJQ $IULFD $IULFD FRXQWULHV 7RWDO 5P 5P 5P 5P 1HWLQWHUHVWLQFRPH¤H[WHUQDO 1RQLQWHUHVWLQFRPH¤H[WHUQDO 7RWDODVVHWV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 463 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

57. Segment report (continued) 57.2 Segment report per market segment

$EVD 5HWDLO%DQNLQJ %XVLQHVV%DQN 2010 2010 Rm 5P Rm 5P Statement of comprehensive income 1HWLQWHUHVWLQFRPH 12 923 7 205 1HWLQWHUHVWLQFRPH¤H[WHUQDO 26 885 5 968 1HWLQWHUHVWLQFRPH¤LQWHUQDO (13 962) 1 237 ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHV (4 820) (1 075) 1RQLQWHUHVWLQFRPH 10 368 4 421 1RQLQWHUHVWLQFRPH¤H[WHUQDO 9 873 3 778 1RQLQWHUHVWLQFRPH¤LQWHUQDO 495 643 2SHUDWLQJH[SHQVHV (13 301) (6 397) 'HSUHFLDWLRQDQGDPRUWLVDWLRQ (404) (45) 2WKHURSHUDWLQJH[SHQVHV (12 897) (6 352) 2WKHULPSDLUPHQWV (25) (1) ,QGLUHFWWD[DWLRQ (228) (62) 6KDUHRISRVWWD[UHVXOWVRIDVVRFLDWHVDQGMRLQWYHQWXUHV (2) (12) Operating profit before income tax 4 915 4 079 7D[DWLRQH[SHQVH (1 470) (1 156) Profit for the year 3 445 2 923 Profit attributable to: 2UGLQDU\HTXLW\KROGHUVRIWKH*URXS 3 353 2 903 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV 92 19 1RQFRQWUROOLQJLQWHUHVW¤SUHIHUHQFHVKDUHV — ¥ 1 3 445 2 923

Headline earnings 3 232 2 848

Operating performance (%) 1HWLQWHUHVWPDUJLQRQDYHUDJHLQWHUHVWEHDULQJDVVHWV 2,86 5,09 ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHVDVDSHUFHQWDJH RIDYHUDJHORDQVDQGDGYDQFHVWRFXVWRPHUV 1,49 0,90 1RQLQWHUHVWLQFRPHDVDSHUFHQWDJHRIWRWDORSHUDWLQJLQFRPH 44,5 38,0 7RSOLQHJURZWK 1 1 &RVWJURZWK 9 14 &RVWWRLQFRPHUDWLR 57,1 55,0 &RVWWRDVVHWVUDWLR 2,8 4,1 Statement of ﬁnancial position as at 31 December (Rm) /RDQVDQGDGYDQFHVWRFXVWRPHUV 325 790 123 618 ,QYHVWPHQWVHFXULWLHV — ¥ 2 226 2WKHUDVVHWV 143 253 40 994 Total assets 469 043 166 838 'HSRVLWVGXHWRFXVWRPHUV 115 046 136 619 'HEWVHFXULWLHVLQLVVXH 4 216 — ¥ 2WKHUOLDELOLWLHV 345 883 27 247 Total liabilities 465 145 163 866

Notes Comparatives have been reclassified for the move of Absa Small Business from Retail Banking to Absa Business Bank. Also refer to note 1.26 for additional reclassifications. The Group reassessed the criteria of certain internal loans during the year and re-aligned it to the definition of interest-bearing assets, resulting in the restatement of the comparative ratio of certain segments. The re-alignment did not affect the Group consolidated ratio.

464 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU +HDGRIILFHDQG LQWHUVHJPHQW $EVD&DSLWDO )LQDQFLDO6HUYLFHV 2WKHU HOLPLQDWLRQV $EVD*URXS 2010 2010 2010 2010 2010 Rm 5P Rm 5P Rm 5P Rm 5P Rm 5P

2 730 10 (254) 726 23 340 (10 388) 10 676 189 23 340 13 118 — (930) 537 — ¥ (108) (6) — 4 (6 005) 2 496 3 594 (276) (1 129) 19 474 3 294 3 084 (338) (217) 19 474 (798) 510 62 (912) — ¥ (2 836) (1 797) (86) 347 (24 070) (110) (41) (108) (604) (1 312) (2 726) (1 756) 22 951 (22 758) (66) 1 (14) (3) (108) (82) (80) (81) (238) (771) 2 ¥ — ¥ — ¥ 3 (9) 2 136 1 722 (711) (290) 11 851 (616) (432) 362 50 (3 262) 1 520 1 290 (349) (240) 8 589

1 480 1 290 (669) (239) 8 118 40 — ¥ — ¥ — ¥ 151 — ¥ — ¥ 320 (1) 320 1 520 1 290 (349) (240) 8 589

1 527 1 291 (623) (234) 8 041

n/a QD n/a QD n/a QD n/a QD 4,01

0,20 n/a QD n/a QD n/a QD 1,20 47,8 99,7 n/a QD n/a QD 45,5 18 6 n/a QD n/a QD 2 23 16 n/a QD n/a QD 15 54,3 49,9 n/a QD n/a QD 56,2 0,8 5,3 n/a QD n/a QD 3,3

50 044 242 622 (1 681) 498 635 10 611 10 541 — 448 23 826 304 653 12 164 78 465 (385 520) 194 009 365 308 22 947 79 087 (386 753) 716 470 127 462 — ¥ — ¥ (1 016) 378 111 148 061 — ¥ 14 465 (2 197) 164 545 86 455 18 975 19 357 (386 252) 111 665 361 978 18 975 33 822 (389 465) 654 321

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 465 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

57. Segment report (continued) 57.2 Segment report per market segment (continued)

$EVD 5HWDLO%DQNLQJ %XVLQHVV%DQN 2010 2010 Rm 5P Rm 5P Financial performance (%) 5HWXUQRQDYHUDJHHFRQRPLFFDSLWDO XQDXGLWHG 17,9 23,9 5HWXUQRQDYHUDJHDVVHWV 0,68 1,82 Other (unaudited) %DQNLQJFXVWRPHUEDVHE\VHJPHQW PLOOLRQV 11,3 0,5 $WWULEXWDEOHLQFRPHIURPWKHUHVWRI$IULFD 5P (85) (23)

9HKLFOHDQG$VVHW +RPH/RDQV )LQDQFH 2010 2010 57.3 Retail Banking segment Rm 5P Rm 5P Statement of comprehensive income 1HWLQWHUHVWLQFRPH 3 204 1 830 1HWLQWHUHVWLQFRPH¤H[WHUQDO 18 493 4 773 1HWLQWHUHVWLQFRPH¤LQWHUQDO (15 289) (2 943) ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHV (2 202) (941) 1RQLQWHUHVWLQFRPH 327 363 1RQLQWHUHVWLQFRPH¤H[WHUQDO 157 338 1RQLQWHUHVWLQFRPH¤LQWHUQDO 170 25 2SHUDWLQJH[SHQVHV (1 090) (906) 2WKHU 12 21 Operating profit before income tax 251 367 7D[DWLRQH[SHQVH (55) (87) Profit for the year 196 280 Profit attributable to: 2UGLQDU\HTXLW\KROGHUVRIWKH*URXS 196 280 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV — ¥ — ¥ 196 280

Headline earnings 125 280

Notes Comparatives have been reclassiﬁed for the move of Absa Small Business from Retail Banking to Absa Business Bank. Also refer to note 1.26 for additional reclassiﬁcations. Financial Services’ return on average equity is 34,8% (2009: 37,9%) and Absa Group’s return on average equity is 15,1% (2009: 15,5%). Includes African operations. Personal Loans were previously disclosed as part of Retail Bank.

466 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU +HDGRIILFHDQG LQWHUVHJPHQW $EVD&DSLWDO )LQDQFLDO6HUYLFHV 2WKHU HOLPLQDWLRQV $EVD*URXS 2010 2010 2010 2010 2010 Rm 5P Rm 5P Rm 5P Rm 5P Rm 5P

16,5 n/a QD n/a QD n/a QD 19,7 0,41 3,81 n/a QD n/a QD 1,12

0,0 — ¥ — ¥ — ¥ 11,8 219 3 — (22) ¥ 92

&DUG 3HUVRQDO/RDQV 5HWDLO%DQN 7RWDO 2010 2010 2010 2010 Rm 5P Rm 5P Rm 5P Rm 5P

2 304 1 652 3 933 12 923 3 094 2 313 (1 788) 26 885 (790) (661) 5 721 (13 962) (466) (510) (701) (4 820) 2 051 284 7 343 10 368 2 076 234 7 068 9 873 (25) 50 275 495 (1 732) (673) (8 900) (13 301) (66) (9) (213) (255) 2 091 744 1 462 4 915 (643) (229) (456) (1 470) 1 448 515 1 006 3 445

1 346 515 1 016 3 353 102 — ¥ (10) 92 1 448 515 1 006 3 445

1 344 515 968 3 232

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 467 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

57. Segment report (continued)

9HKLFOHDQG$VVHW +RPH/RDQV )LQDQFH 2010 2010 57.3 Retail Banking segment (continued) Rm 5P Rm 5P Operating performance (%) ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHVDVRIDYHUDJH ORDQVDQGDGYDQFHVWRFXVWRPHUV 0,98 2,16 &RVWWRLQFRPHUDWLR 30,9 41,3 Statement of ﬁnancial position as at 31 December (Rm) /RDQVDQGDGYDQFHVWRFXVWRPHUV 226 137 44 247 7RWDODVVHWV 247 881 51 020 'HSRVLWVGXHWRFXVWRPHUV — ¥ 9 7RWDOOLDELOLWLHV 247 676 50 264 Financial performance (%) 5HWXUQRQDYHUDJHHFRQRPLFFDSLWDO XQDXGLWHG 1,6 8,5

Notes Personal Loans were previously disclosed as part of Retail Bank. Comparatives have been reclassified for the move of Absa Small Business from Retail Banking to Absa Business Bank.

468 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU &DUG 3HUVRQDO/RDQV 5HWDLO%DQN 7RWDO 2010 2010 2010 2010 Rm 5P Rm 5P Rm 5P Rm 5P

2,57 4,78 2,55 1,49 39,8 34,8 78,9 57,1

19 264 11 843 24 299 325 790 26 609 12 887 130 646 469 043 1 826 4 ¥ 113 207 115 046 25 143 12 578 129 484 465 145

44,4 33,3 36,8 17,9

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 469 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

57. Segment report (continued) 57.4 Absa Business Bank segment Excluding ([FOXGLQJ real estate UHDOHVWDWH investment LQYHVWPHQW portfolio1 SRUWIROLR 2010 2010 Rm Rm 5P 5P Statement of comprehensive income 1HWLQWHUHVWLQFRPH 7 205 7 624 ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHV (1 075) (1 075) 1RQLQWHUHVWLQFRPH 4 421 3 951 2SHUDWLQJH[SHQVHV (6 397) (6 296) 2WKHU (75) (78) Operating profit before income tax 4 079 4 126 7D[DWLRQH[SHQVH (1 156) (1 169) Profit for the year 2 923 2 957 Profit attributable to: 2UGLQDU\HTXLW\KROGHUVRIWKH*URXS 2 903 2 937 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV 19 19 1RQFRQWUROOLQJLQWHUHVW¤SUHIHUHQFHVKDUHV 11 2 923 2 957 Headline earnings 2 848 2 882

2010 Rm 5P Operating profit before income tax by business area /DUJH 1 293 0HGLXP 1 046 6PDOO 1 367 &RUSRUDWH 425 $IULFD (5) 5HDOHVWDWHLQYHVWPHQWSRUWIROLR (47) &3)HTXLWLHV 23 'HYFR (70)

4 079 Statement of financial position as at 31 December /RDQVDQGDGYDQFHVWRFXVWRPHUV 123 618 7RWDODVVHWV 166 838 'HSRVLWVGXHWRFXVWRPHUV 136 619 7RWDOOLDELOLWLHV 163 866

Notes Devco is now disclosed as part of the real estate portfolio together with the CPF equity portfolio. Comparatives have been reclassified for the move of Absa Small Business from Retail Banking to Absa Business Bank. Operating profit before income tax includes realised and unrealised profits on listed CPF equities, unlisted CPF equities and Devco.

470 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 57. Segment report (continued) 57.5 Absa Capital segment 2010 Rm 5P Statement of comprehensive income 1HWLQWHUHVWLQFRPH 2 730 ,PSDLUPHQWORVVHVRQORDQVDQGDGYDQFHV (108) 1RQLQWHUHVWLQFRPH 2 496 2SHUDWLQJH[SHQVHV (2 836) 2WKHU (146) Operating profit before income tax 2 136 7D[DWLRQH[SHQVH (616) Profit for the year 1 520 Profit attributable to: 2UGLQDU\HTXLW\KROGHUVRIWKH*URXS 1 480 1RQFRQWUROOLQJLQWHUHVW¤RUGLQDU\VKDUHV 40 1 520 Headline earnings 1 527

Statement of ﬁnancial position as at 31 December /RDQVDQGDGYDQFHVWRFXVWRPHUV 50 044 7RWDODVVHWV 365 308 'HSRVLWVGXHWRFXVWRPHUV 127 462 7RWDOOLDELOLWLHV 361 978

Note Comparatives have been reclassified, refer to note 1.26 for additional information.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 471 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

57. Segment report (continued) 57.6 Financial Services Statement of ﬁnancial position 2010 1RWH Rm 5P Assets &DVKEDODQFHVDQGORDQVDQGDGYDQFHVWREDQNV 9 194 ,QVXUDQFHRSHUDWLRQV 8 330 2WKHUVXEVLGLDULHV 864 2WKHUDVVHWV 2 135 )LQDQFLDODVVHWVEDFNLQJLQYHVWPHQWDQGLQVXUDQFHOLDELOLWLHV 11 537 ,QYHVWPHQWVHFXULWLHV 10 541 ,QVXUDQFHRSHUDWLRQV 10 418 2WKHUVXEVLGLDULHV 123 2WKHUDVVHWVEDFNLQJVKDUHKROGHUDQGSROLF\KROGHUOLDELOLWLHV ,QVXUDQFHRSHUDWLRQV 996 3URSHUW\DQGHTXLSPHQW 81 Total assets 22 947 Liabilities 2WKHUOLDELOLWLHV 1 980 /LDELOLWLHVXQGHULQYHVWPHQWFRQWUDFWV 13 964 3ROLF\KROGHUOLDELOLWLHVXQGHULQVXUDQFHFRQWUDFWV 2 988 'HIHUUHGWD[OLDELOLWLHV 43 Total liabilities 18 975 Total equity 3 972 Total equity and liabilities 22 947

Notes Other assets and liabilities include settlement account balances in Absa Stockbrokers (Proprietary) Limited. Comparatives have been reclassified, refer to note 1.26. In managing the policyholder liability, certain assets have been allocated specifically for the purpose of backing this liability. The disclosure to follow reflects this split of assets between policyholders and shareholders.

472 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 57. Segment report (continued) 57.6 Financial Services (continued) 57.6.1 Financial assets backing investment and insurance liabilities 2010 Unlisted Cash equity balances Listed and and Debt equity hybrid loans and instru- instru- instru- advances ments ments ments Other to banks Total Rm Rm Rm Rm Rm Rm Shareholder investment securities 767 898 193 — 638 2 496 /LIH 216 858 2 — 186 1 262 1RQOLIH 551 40 191 — 452 1 234 Policyholder investment securities 495 6 317 1 748 996 7 692 17 248 ,QYHVWPHQWFRQWUDFWV — 6 317 695 474 6 474 13 960 ,QVXUDQFHFRQWUDFWV 495 — 1 053 522 1 218 3 288

1 262 7 215 1 941 996 8 330 19 744

8QOLVWHG &DVK HTXLW\ EDODQFHV /LVWHG DQG DQG 'HEW HTXLW\ K\EULG ORDQVDQG LQVWUX LQVWUX LQVWUX DGYDQFHV PHQWV PHQWV PHQWV 2WKHU WREDQNV 7RWDO 5P 5P 5P 5P 5P 5P Shareholder investment securities /LIH 1RQOLIH ¥ Policyholder investment securities ,QYHVWPHQWFRQWUDFWV ,QVXUDQFHFRQWUDFWV ¥

Note Includes R853 million (2009: R725 million) in unlisted insurance contracts representing Absa Life’s investment in the Absa General Fund. This fund is consolidated as an investment contract at a Group level and disclosed as such in the consolidated ﬁnancial statements.

57.6.2 Financial performance (unaudited) 2010 $VVHWVXQGHUPDQDJHPHQWDQGDGPLQLVWUDWLRQ 5EQ 163 1HWPRQH\PDUNHWIORZV 5EQ 10,9 1HWQRQPRQH\PDUNHWIORZV 5EQ 0,4 5HWXUQRQDYHUDJHHTXLW\ 34,8 6ROYHQF\PDUJLQ 55,3

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 473 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

57. Segment report (continued) 57.6 Financial Services (continued) Statement of comprehensive income

Life Insurance 2010 2010 1RWH Rm 5P Rm 5P 1HWLQVXUDQFHSUHPLXPLQFRPH 1 583 2 885 1HWLQVXUDQFHFODLPVDQGEHQHILWVSDLG (429) (1 977) ,QYHVWPHQWLQFRPH 3ROLF\KROGHULQYHVWPHQWFRQWUDFWV 957 — ¥ 3ROLF\KROGHULQVXUDQFHFRQWUDFWV 167 67 &KDQJHVLQLQYHVWPHQWDQGLQVXUDQFHOLDELOLWLHV 3ROLF\KROGHULQYHVWPHQWFRQWUDFWV (954) — ¥ 3ROLF\KROGHULQVXUDQFHFRQWUDFWV (31) — ¥ 2WKHULQFRPH (20) 18 Gross operating income 1 273 993 1HWFRPPLVVLRQSDLGE\LQVXUDQFHFRPSDQLHV (280) (448) 2SHUDWLQJH[SHQVHV (210) (309) 2WKHULPSDLUPHQWVDQGLQGLUHFWWD[DWLRQ (64) (2) Net operating income 719 234 ,QYHVWPHQWLQFRPH 6KDUHKROGHUIXQGV 165 132 7D[DWLRQH[SHQVH (222) (88) Proﬁt attributable to ordinary equity holders of the Group 662 278

Note Net commission paid includes internal commission, eliminated on consolidation of the Group’s results.

474 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Total Investments Other Financial Services 2010 2010 2010 Rm 5P Rm 5P Rm 5P — ¥ — ¥ 4 468 — ¥ — ¥ (2 406)

— ¥ 83 1 040 — ¥ — ¥ 234

— ¥ (60) (1 014) — ¥ — ¥ (31) 752 953 1 703 752 976 3 994 — ¥ — ¥ (728) (362) (916) (1 797) (2) (11) (79) 388 49 1 390

17 18 332 (105) (17) (432)

300 50 1 290

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 475 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

57. Segment report (continued) 57.6 Financial Services (continued) 57.6.3 Investment income

Life Insurance 2010 2010 Rm 5P Rm 5P Policyholder investment contracts 957 — ¥ 1HWLQWHUHVWLQFRPH 584 — ¥ 'LYLGHQGLQFRPH 33 — ¥ )DLUYDOXHJDLQV 340 — ¥

Policyholder insurance contracts 167 67 1HWLQWHUHVWLQFRPH 49 67 'LYLGHQGLQFRPH 7 — ¥ )DLUYDOXHJDLQV 111 — ¥

Shareholder funds 165 132 1HWLQWHUHVWLQFRPH 29 99 'LYLGHQGLQFRPH 24 32 )DLUYDOXHJDLQV ORVVHV 112 1

Total 1 289 199 1HWLQWHUHVWLQFRPH 662 166 'LYLGHQGLQFRPH 64 32 )DLUYDOXHJDLQV ORVVHV 563 1

57.6.4 Operating performance $QQXDOSUHPLXPHTXLYDOHQW 5P 880 n/a QD *URVVSUHPLXPLQFRPH 5P 1 732 3 420 8QGHUZULWLQJVXUSOXV 5P n/a QD 445 *URVVPDUJLQ ESV n/a QD n/a QD 8QGHUZULWLQJPDUJLQ n/a QD n/a /RVVUDWLR n/a QD n/a

Note

Unaudited.

476 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Total Investments Other Financial Services 2010 2010 2010 Rm 5P Rm 5P Rm 5P — ¥ 83 1 040 — ¥ 1 585 — ¥ 14 47 — ¥ 68 408

— ¥ — ¥ 234 — ¥ — ¥ 116 — ¥ — ¥ 7 — ¥ — ¥ 111

17 18 332 10 1 139 — ¥ 3 59 7 ¥ 14 134

17 101 1 606 10 2 840 — ¥ 17 113 7 ¥ 82 653

n/a QD n/a QD n/a QD n/a QD n/a QD 5 152 n/a QD n/a QD n/a QD 46,0 n/a QD n/a QD n/a QD n/a QD n/a QD n/a QD n/a QD n/a QD

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 477 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

57. Segment report (continued) 57.6 Financial Services (continued) 57.6.5 Reconciliation with Absa Group 2010 Inter-group balances and Financial trans- Absa Services actions Other1 Group 1RWH Rm Rm Rm Rm Statement of ﬁnancial position ,QYHVWPHQWVOLQNHGWRLQYHVWPHQWFRQWUDFWV 7 012 835 — 7 847 3ROLF\KROGHUOLDELOLWLHVXQGHULQVXUDQFH FRQWUDFWV (2 988) 244 (257) (3 001) Statement of comprehensive income 1HWLQVXUDQFHSUHPLXPLQFRPH 4 468 (40) 174 4 602 1HWLQVXUDQFHFODLPVDQGEHQHILWVSDLG (2 406) 136 (135) (2 405) ,QYHVWPHQWLQFRPH¤SROLF\KROGHULQYHVWPHQW FRQWUDFWVJDLQVDQGORVVHVIURPLQYHVWPHQW DFWLYLWLHV 1 040 (826) — 214 &DVKFDVKEDODQFHVDQGEDODQFHV ZLWKFHQWUDOEDQNV 450 (501) — (51) 'HEWLQVWUXPHQWV (24) — — (24) (TXLW\LQVWUXPHQWV 614 (325) — 289

,QWHUJURXS EDODQFHV DQG )LQDQFLDO WUDQV $EVD 6HUYLFHV DFWLRQV 2WKHU *URXS 1RWH 5P 5P 5P 5P Statement of ﬁnancial position ,QYHVWPHQWVOLQNHGWRLQYHVWPHQWFRQWUDFWV ¥ 3ROLF\KROGHUOLDELOLWLHVXQGHULQVXUDQFH FRQWUDFWV ¥ Statement of comprehensive income 1HWLQVXUDQFHSUHPLXPLQFRPH 1HWLQVXUDQFHFODLPVDQGEHQHILWVSDLG ,QYHVWPHQWLQFRPH¤SROLF\KROGHULQYHVWPHQW FRQWUDFWVJDLQVDQGORVVHVIURPLQYHVWPHQW DFWLYLWLHV ¥ ¥ &DVKFDVKEDODQFHVDQGEDODQFHV ZLWKFHQWUDOEDQNV ¥ ¥ 'HEWLQVWUXPHQWV ¥ ¥ (TXLW\LQVWUXPHQWV ¥ ¥

Note Consists of Absa Manx Insurance Company Limited and Woolworths Financial Services (Proprietary) Limited.

478 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 58. Derivatives 'HULYDWLYHILQDQFLDOLQVWUXPHQWVDUHHQWHUHGLQWRLQWKHQRUPDOFRXUVHRIEXVLQHVVWRPDQDJHYDULRXVILQDQFLDO ULVNV 'HULYDWLYH ILQDQFLDO LQVWUXPHQWV HQWHUHG LQWR LQ WHUPV RI DVVHW DQG OLDELOLW\ PDQDJHPHQW VWUDWHJLHV DUH GHILQHG DV KHGJLQJ WUDQVDFWLRQV DQG VXFK LQVWUXPHQWV DUH DFFRXQWHG IRU LQ WHUPV RI WKH *URXS©V DFFRXQWLQJ SROLFLHV $W WKH UHSRUWLQJ GDWH WKH *URXS GLG QRW KDYH DQ\ FRPSRXQG ILQDQFLDO LQVWUXPHQWV ZLWK PXOWLSOH HPEHGGHG GHULYDWLYHVLQLVVXH 58.1 Derivatives held for trading $VSDUWRIWKH*URXS©VWUDGLQJDFWLYLWLHVLWHQWHUVLQWRGHULYDWLYHWUDQVDFWLRQVLQWKHQRUPDOFRXUVHRIEXVLQHVV 58.2 Derivatives held for hedging $VSDUWRIWKH*URXS©VKHGJLQJDFWLYLWLHVLWHQWHUVLQWRGHULYDWLYHWUDQVDFWLRQVZKLFKDUHGHVLJQDWHGDVHLWKHUIDLU YDOXHRUFDVKIORZKHGJHVIRUUHFRJQLVHGDVVHWVRUOLDELOLWLHVRUIRUHFDVWHGWUDQVDFWLRQV Derivatives designated as fair value hedges )DLUYDOXHKHGJHVDUHXVHGE\WKH*URXSWRSURWHFWDJDLQVWFKDQJHVLQIDLUYDOXHRIILQDQFLDOLQVWUXPHQWVRZLQJ WRPRYHPHQWVLQH[FKDQJHUDWHVDQGLQWHUHVWUDWHV7KHILQDQFLDOLQVWUXPHQWVKHGJHGIRULQWHUHVWUDWHULVNLQFOXGH ORDQVDYDLODEOHIRUVDOHDVVHWVGHEWVHFXULWLHVDQGERUURZHGIXQGV 7KH*URXS©VIDLUYDOXHKHGJHVSULQFLSDOO\FRQVLVWRILQWHUHVWUDWHVZDSVWKDWDUHXVHGWRSURWHFWDJDLQVWFKDQJHV LQPDUNHWLQWHUHVWUDWHV 7KH*URXSUHFRJQLVHGWKHIROORZLQJJDLQVDQGORVVHVRQKHGJLQJLQVWUXPHQWVDQGKHGJLQJLWHPV

Group 2010 Rm 5P *DLQV ORVVHV RQKHGJHGLWHPV DVVHWV UHIHUWRQRWH 497 /RVVHV JDLQVRQKHGJLQJLQVWUXPHQWV DVVHWV UHIHUWRQRWH (369) /RVVHV JDLQVRQKHGJHGLWHPV OLDELOLWLHV UHIHUWRQRWH (504) *DLQV ORVVHV RQKHGJLQJLQVWUXPHQWV OLDELOLWLHV UHIHUWRQRWH 472

+HGJHHIIHFWLYHQHVVLVPHDVXUHGXVLQJDVWDWLVWLFDOPHWKRGDQGUHVXOWVZRXOGKDYHWREHZLWKLQWKHWR UDQJHLQRUGHUIRUKHGJHDFFRXQWLQJWREHDSSOLHG 7KHDPRXQWRIPRYHPHQWLQIDLUYDOXHWKDWKDVEHHQUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQW RIFRPSUHKHQVLYHLQFRPHLQUHODWLRQWRLQHIIHFWLYHQHVVLV Group 2010 Rm 5P ,QHIIHFWLYHQHVV RXWVLGHUDQJH UHIHUWRQRWH (15) ,QHIIHFWLYHQHVV LQVLGHUDQJH 107

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 479 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

58. Derivatives (continued) 58.2 Derivatives held for hedging (continued) Derivatives designated as cash ﬂow hedges 7KHREMHFWLYHRIFDVKIORZKHGJHVLVWRSURWHFWDJDLQVWFKDQJHVLQIXWXUHLQWHUHVWFDVKIORZVUHVXOWLQJIURPWKH LPSDFWRIFKDQJHVLQPDUNHWLQWHUHVWUDWHULVNDQGUHLQYHVWPHQWRUUHERUURZLQJRIFXUUHQWEDODQFHV 7KH*URXSXVHVLQWHUHVWUDWHVZDSVWRSURWHFWDJDLQVWFKDQJHVLQFDVKIORZVRIFHUWDLQYDULDEOHUDWHGHEWLVVXHV 7KH*URXSDSSOLHVKHGJHDFFRXQWLQJIRULWVQRQWUDGLQJLQWHUHVWUDWHULVNLQPDMRUFXUUHQFLHVE\DQDO\VLQJWKH H[SHFWHGFDVKIORZVRQDJURXSEDVLV 7KH*URXSLVH[SRVHGWRYDULDELOLW\LQIXWXUHLQWHUHVWFDVKIORZVRQQRQWUDGLQJSRUWIROLRDVVHWVDQGOLDELOLWLHVZKLFK EHDULQWHUHVWDWDYDULDEOHUDWH7KH*URXSGHVLJQDWHVLQWHUHVWUDWHVZDSVDVKHGJLQJLQVWUXPHQWVLQDFDVKIORZ KHGJLQJUHODWLRQVKLSWRKHGJHWKHYDULDELOLW\LQFDVKIORZVRZLQJWRFKDQJHVLQLQWHUHVWUDWHV $VFKHGXOHLQGLFDWLQJWKHSHULRGVZKHQWKHKHGJHGFDVKIORZVDUHH[SHFWHGWRRFFXUDQGZKHQWKH\DUHH[SHFWHG WRDIIHFWWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHDVDWWKHUHSRUWLQJGDWHLVDV IROORZV Group 2010 Less More than 1 – 2 2 – 3 3 – 4 4 – 5 than 1 year years years years years 5 years Total Rm Rm Rm Rm Rm Rm Rm )RUHFDVW UHFHLYDEOHFDVK IORZ 1 695 1 049 528 220 62 9 3 563 )RUHFDVW SD\DEOHFDVK IORZ (46) (13) (13) (14) (13) (49) (148) 1HWFDVKIORZ 1 649 1 036 515 206 49 (40) 3 415

/HVV 0RUH WKDQ ¤ ¤ ¤ ¤ WKDQ \HDU \HDUV \HDUV \HDUV \HDUV \HDUV 7RWDO 5P 5P 5P 5P 5P 5P 5P )RUHFDVW UHFHLYDEOHFDVK IORZ )RUHFDVW SD\DEOHFDVK IORZ 1HWFDVKIORZ

Note These balances are shown before taxation.

480 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 58. Derivatives (continued) 58.2 Derivatives held for hedging (continued) 7KHIROORZLQJQHWJDLQV ORVVHV RQFDVKIORZKHGJHVZDVUHF\FOHGIURPRWKHUFRPSUHKHQVLYHLQFRPHWRWKHSURILW RUORVVFRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH Group 2010 Rm 5P ,QWHUHVWDQGVLPLODULQFRPH UHIHUWRQRWH 1 485 ,QWHUHVWH[SHQVHDQGVLPLODUFKDUJHV UHIHUWRQRWH 644 *DLQVDQGORVVHVIURPEDQNLQJDQGWUDGLQJDFWLYLWLHV UHIHUWRQRWH 115 2 244

7KHDPRXQWRIPRYHPHQWLQIDLUYDOXHWKDWKDVEHHQUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQW RIFRPSUHKHQVLYHLQFRPHLQUHODWLRQWRLQHIIHFWLYHQHVVLV Group 2010 Rm 5P ,QHIIHFWLYHQHVV RXWVLGHUDQJH UHIHUWRQRWH 115 ,QHIIHFWLYHQHVV LQVLGHUDQJH (95)

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 481 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

58. Derivatives (continued) 58.3 Detailed breakdown of derivatives 7KH*URXSXVHVWKHIROORZLQJGHULYDWLYHLQVWUXPHQWVIRUERWKKHGJLQJDQGQRQKHGJLQJSXUSRVHV Foreign exchange contractsUHSUHVHQWFRPPLWPHQWVWRSXUFKDVHIRUHLJQDQGGRPHVWLFFXUUHQF\LQFOXGLQJ XQGHOLYHUHGVSRWWUDQVDFWLRQV Foreign currency and interest rate futuresDUHFRQWUDFWXDOREOLJDWLRQVWRUHFHLYHRUSD\DQHWDPRXQWEDVHG RQFKDQJHVLQFXUUHQF\UDWHVRULQWHUHVWUDWHVRUWREX\RUVHOOIRUHLJQFXUUHQF\RUDILQDQFLDOLQVWUXPHQWRQD IXWXUHGDWHDWDVSHFLILHGSULFHHVWDEOLVKHGLQDQRUJDQLVHGILQDQFLDOPDUNHW7KHFUHGLWULVNLVQHJOLJLEOHDV IXWXUHVFRQWUDFWVDUHFROODWHUDOLVHGE\FDVKRUPDUNHWDEOHVHFXULWLHVDQGFKDQJHVLQWKHIXWXUHVFRQWUDFWYDOXH DUHVHWWOHGGDLO\ZLWKWKHH[FKDQJH Forward rate agreements DUHLQGLYLGXDOO\QHJRWLDWHGLQWHUHVWUDWHIXWXUHVWKDWFDOOIRUDFDVKVHWWOHPHQWDWD IXWXUHGDWHIRUWKHGLIIHUHQFHEHWZHHQDFRQWUDFWHGUDWHRILQWHUHVWDQGWKHFXUUHQWPDUNHWUDWHEDVHGRQD QRWLRQDOSULQFLSDODPRXQW Currency and interest rate swapsDUHFRPPLWPHQWVWRH[FKDQJHRQHVHWRIFDVKIORZVIRUDQRWKHU6ZDSV UHVXOWLQDQHFRQRPLFH[FKDQJHRIFXUUHQFLHVRULQWHUHVWUDWHV LHIL[HGUDWHIRUIORDWLQJUDWH RUDFRPELQDWLRQ RIDOOWKHVH LHFURVVFXUUHQF\LQWHUHVWUDWHVZDSV 1RH[FKDQJHRISULQFLSDOWDNHVSODFHH[FHSWIRUFHUWDLQ FXUUHQF\ VZDSV 7KH *URXS©V FUHGLW ULVN UHSUHVHQWV WKH SRWHQWLDO FRVW WR UHSODFH WKH VZDS FRQWUDFWV LI FRXQWHUSDUWLHVIDLOWRIXOILOWKHLUREOLJDWLRQ7KLVULVNLVPRQLWRUHGRQDQRQJRLQJEDVLVZLWKUHIHUHQFHWRWKH FXUUHQWIDLUYDOXHDSURSRUWLRQRIWKHQRWLRQDODPRXQWRIWKHFRQWUDFWVDQGWKHOLTXLGLW\RIWKHPDUNHW7RFRQWURO WKHOHYHORIFUHGLWULVNWDNHQWKH*URXSDVVHVVHVFRXQWHUSDUWLHVXVLQJWKHVDPHWHFKQLTXHVDVIRULWVOHQGLQJ DFWLYLWLHV Options DUHFRQWUDFWXDODJUHHPHQWVXQGHUZKLFKWKHVHOOHU ZULWHU JUDQWVWKHSXUFKDVHU KROGHU WKHULJKWEXW QRWWKHREOLJDWLRQHLWKHUWREX\ DFDOORSWLRQ RUVHOO DSXWRSWLRQ DWRUE\DVHWGDWHGXULQJDVHWSHULRGD VSHFLILFDPRXQWRIDIRUHLJQFXUUHQF\RUDILQDQFLDOLQVWUXPHQWDWDSUHGHWHUPLQHGSULFH7KHVHOOHUUHFHLYHVD SUHPLXP IURP WKH SXUFKDVHU LQ FRQVLGHUDWLRQ IRU WKH DVVXPSWLRQ RI IRUHLJQ H[FKDQJH RU LQWHUHVW UDWH ULVN 2SWLRQVPD\EHHLWKHUH[FKDQJHWUDGHGRUQHJRWLDWHGEHWZHHQWKH*URXSDQGDFXVWRPHU

482 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 58. Derivatives (continued) 58.3 Detailed breakdown of derivatives (continued) Group 2010 Fair Fair Notional Net fair value value 1RWLRQDO 1HWIDLU amount value assets liabilities DPRXQW YDOXH Rm Rm Rm Rm 5P 5P Trading Foreign exchange derivatives )RUHLJQH[FKDQJHIRUZDUGV 22 726 824 1 278 (454) &XUUHQF\VZDSV 310 689 (654) 11 024 (11 678) 2YHUWKHFRXQWHU 27& IRUHLJQ H[FKDQJHRSWLRQV 18 469 298 630 (332) 27&IRUHLJQH[FKDQJH RSWLRQVSXUFKDVHG 9 517 630 630 — 27&IRUHLJQH[FKDQJH RSWLRQVZULWWHQ 8 952 (332) — (332) 2WKHU27&IRUHLJQH[FKDQJH GHULYDWLYHV 114 (1) — (1) ([FKDQJHWUDGHGGHULYDWLYHV 285 747——— (XURGROODUIXWXUHV 285 718——— ([FKDQJHWUDGHGIXWXUHV 29——— ¥¥

Total foreign exchange derivatives 637 745 467 12 932 (12 465) Interest rate derivatives )RUZDUGUDWHDJUHHPHQWV )5$V 1 316 018 (454) 1 301 (1 755) &XUUHQF\LQWHUHVWUDWHVZDSV 131 495 (616) 4 480 (5 096) 6ZDSV 32 132 (127) 4 (131) ,QWHUHVWUDWHVZDSV 1 171 332 1 475 22 936 (21 461) 27&RSWLRQVRQ)5$VDQG VZDSV 158 715 56 379 (323) 27&RSWLRQVRQ)5$VDQG VZDSVSXUFKDVHG 88 010 379 379 — 27&RSWLRQVRQ)5$VDQG VZDSVZULWWHQ 70 705 (323) — (323) 27&ERQGRSWLRQFRQWUDFWV ———— ¥ 27&ERQGRSWLRQVSXUFKDVHG ———— 2WKHUERQGRSWLRQVZULWWHQ ———— 2WKHU27&LQWHUHVWUDWH GHULYDWLYHV 296 33 74 (41) ([FKDQJHWUDGHGGHULYDWLYHV 10 904 2 4 (2) ([FKDQJHWUDGHGRSWLRQVRQ )5$VDQGVZDSVSXUFKDVHG 10 027 3 4 (1) ([FKDQJHWUDGHGRSWLRQVRQ )5$VDQGVZDSVZULWWHQ 877 (1) — (1) ¥¥

Total interest rate derivatives 2 820 892 369 29 178 (28 809) Balance carried forward 3 458 637 836 42 110 (41 274)

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 483 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

58. Derivatives (continued) 58.3 Detailed breakdown of derivatives (continued) Group 2010 Fair Fair Notional Net fair value value 1RWLRQDO 1HWIDLU amount value assets liabilities DPRXQW YDOXH Rm Rm Rm Rm 5P 5P Balance brought forward 3 458 637 836 42 110 (41 274) Equity derivatives 27&RSWLRQVSXUFKDVHG 11 606 422 422 — 27&RSWLRQVZULWWHQ 16 062 (1 239) — (1 239) (TXLW\IXWXUHV 5 936 (48) 188 (236) 2WKHU27&HTXLW\GHULYDWLYHV 45 438 (275) 153 (428) 27&HTXLW\GHULYDWLYHV 79 042 (1 140) 763 (1 903) ([FKDQJHWUDGHGGHULYDWLYHV 16 292 47 112 (65) ([FKDQJHWUDGHGRSWLRQV SXUFKDVHG 7 942 112 112 — ¥ ([FKDQJHWUDGHGRSWLRQVZULWWHQ 8 350 (65) — (65) ¥ ([FKDQJHWUDGHGIXWXUHV ———— 2WKHUH[FKDQJHWUDGHGHTXLW\ GHULYDWLYHV ———— Total equity derivatives 95 334 (1 093) 875 (1 968) Commodity derivatives $JULFXOWXUDOIRUZDUGV 104 6 12 (6) 27&DJULFXOWXUDORSWLRQV 154 (10) 1 (11) 27&DJULFXOWXUDORSWLRQV SXUFKDVHG 2711— 27&DJULFXOWXUDORSWLRQVZULWWHQ 127 (11) — (11) ¥ 27&RSWLRQVRQJROG 226 (1) 8 (9) 27&JROGRSWLRQVSXUFKDVHG 142 5 8 (3) 27&JROGRSWLRQVZULWWHQ 84 (6) — (6) 2WKHU27&FRPPRGLW\GHULYDWLYHV 3 000 119 247 (128) 27&FRPPRGLW\GHULYDWLYHV 3 484 114 268 (154) ([FKDQJHWUDGHGDJULFXOWXUDO GHULYDWLYHV 16 395 33 33 — ¥ ([FKDQJHWUDGHGDJULFXOWXUDO GHULYDWLYHVSXUFKDVHG 184——— ¥ ([FKDQJHWUDGHGDJULFXOWXUDO GHULYDWLYHVZULWWHQ 256——— ¥ ([FKDQJHWUDGHGDJULFXOWXUDO IXWXUHV 15 955 33 33 — ¥

([FKDQJHWUDGHGJROG GHULYDWLYHVSXUFKDVHG ————

Total commodity derivatives 19 879 147 301 (154) Balance carried forward 3 573 850 (110) 43 286 (43 396)

484 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 58. Derivatives (continued) 58.3 Detailed breakdown of derivatives (continued) Group 2010 Fair Fair Notional Net fair value value 1RWLRQDO 1HWIDLU amount value assets liabilities DPRXQW YDOXH Rm Rm Rm Rm 5P 5P Balance brought forward 3 573 850 (110) 43 286 (43 396) Credit derivatives &UHGLWGHULYDWLYHVSXUFKDVHG VZDSV ———— &UHGLWGHULYDWLYHVZULWWHQ VZDSV ———— 27&FUHGLWGHULYDWLYHVSXUFKDVHG RSWLRQV 2 197 (58) 4 (62) ¥¥ 27&FUHGLWGHULYDWLYHVZULWWHQ RSWLRQV 6 884 70 90 (20) ¥¥ (PEHGGHGGHULYDWLYHV 5 781 (25) 24 (49) Total credit derivatives 14 862 (13) 118 (131) Total trading 3 588 712 (123) 43 404 (43 527) Hedging Cash ﬂow hedges ,QWHUHVWUDWHVZDSV 126 962 3 719 3 813 (94) )RUZDUGIRUHLJQH[FKDQJH ———— Total cash ﬂow hedges 126 962 3 719 3 813 (94) Fair value hedges &XUUHQF\VZDSV 6 966 (556) — (556) ,QWHUHVWUDWHVZDSV 31 919 (382) 849 (1 231) Total fair value hedges 38 885 (938) 849 (1 787) Total hedges 165 847 2 781 4 662 (1 881) Investments Interest rate derivatives 27&ERQGRSWLRQVSXUFKDVHG 17244— Total interest rate derivatives 172 4 4 — 27&ERQGRSWLRQVSXUFKDVHG 570 211 211 — Total equity derivatives 570 211 211 — Total investments 742 215 215 — Total derivative instruments 3 755 301 2 873 48 281 (45 408) 'HULYDWLYH DVVHWV DQG OLDELOLWLHV VXEMHFW WR FRXQWHUSDUW\ QHWWLQJ DJUHHPHQWV DPRXQWHG WR 5 PLOOLRQ 5PLOOLRQ $GGLWLRQDOO\WKH*URXSKHOG5PLOOLRQ 5PLOOLRQ RIFROODWHUDODJDLQVWWKHQHWGHULYDWLYH DVVHWH[SRVXUH Notional amount 7KHJURVVQRWLRQDODPRXQWLVWKHVXPRIWKHDEVROXWHYDOXHRIDOOERXJKWDQGVROGFRQWUDFWV7KHQRWLRQDODPRXQW ZLOOQRWJHQHUDOO\UHIOHFWWKHDPRXQWUHFHLYDEOHRUSD\DEOHXQGHUDGHULYDWLYHFRQWUDFW7KHQRWLRQDODPRXQWVKRXOG EHYLHZHGRQO\DVDPHDQVRIDVVHVVLQJWKH*URXS©VSDUWLFLSDWLRQLQGHULYDWLYHFRQWUDFWVDQGQRWWKHPDUNHWULVN SRVLWLRQRUWKHFUHGLWH[SRVXUHDULVLQJRQVXFKFRQWUDFWV 7KH QRWLRQDO DPRXQWV RI FHUWDLQ W\SHV RI ILQDQFLDO LQVWUXPHQWV SURYLGH D EDVLV IRU FRPSDULVRQ ZLWK LQVWUXPHQWV UHFRJQLVHGRQWKHVWDWHPHQWRIILQDQFLDOSRVLWLRQEXWGRQRWQHFHVVDULO\LQGLFDWHWKHDPRXQWVRIIXWXUHFDVKIORZV LQYROYHGRUWKHFXUUHQWIDLUYDOXHRIWKHLQVWUXPHQWVDQGWKHUHIRUHGRQRWLQGLFDWHWKH*URXS©VH[SRVXUHWRFUHGLWRU SULFHULVNV7KHGHULYDWLYHLQVWUXPHQWVEHFRPHIDYRXUDEOH DVVHWV RUXQIDYRXUDEOH OLDELOLWLHV DVDUHVXOWRIIOXFWXDWLRQV LQ PDUNHW LQWHUHVW UDWHV RU IRUHLJQ H[FKDQJH UDWHV RQ KDQG WKH H[WHQW WR ZKLFK LQVWUXPHQWV DUH IDYRXUDEOH RU XQIDYRXUDEOHDQGWKXVWKHDJJUHJDWHIDLUYDOXHVRIGHULYDWLYHILQDQFLDOLQVWUXPHQWVFDQIOXFWXDWHVLJQLILFDQWO\IURP WLPHWRWLPH Fair value 7KHDPRXQWVGLVFORVHGUHSUHVHQWWKHIDLUYDOXHDVDWWKHUHSRUWLQJGDWHRIDOOGHULYDWLYHILQDQFLDOLQVWUXPHQWVKHOG 3RVLWLYHDPRXQWVUHIOHFWSRVLWLYHIDLUYDOXHVZKLOHDPRXQWVLQGLFDWHGLQEUDFNHWVUHIOHFWQHJDWLYHIDLUYDOXHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 485 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

59. Fair value hierarchy disclosures 59.1 Valuation methodology 7KH WDEOH EHORZ VKRZV WKH *URXS©V ILQDQFLDO LQVWUXPHQWV WKDW DUH UHFRJQLVHG DQG VXEVHTXHQWO\ PHDVXUHG DW IDLU YDOXH DQDO\VHGE\YDOXDWLRQWHFKQLTXH7KHFODVVLILFDWLRQRILQVWUXPHQWVLVEDVHGRQWKHORZHVWOHYHOLQSXWWKDWLVVLJQLILFDQWWRWKH IDLUYDOXHPHDVXUHPHQWLQLWVHQWLUHW\$GHVFULSWLRQRIWKHQDWXUHRIWKHWHFKQLTXHVXVHGWRFDOFXODWHYDOXDWLRQVEDVHGRQ REVHUYDEOHLQSXWVDQGYDOXDWLRQVEDVHGRQXQREVHUYDEOHLQSXWVLVVHWRXWLQWKHWDEOHEHORZ

2010 Valuations Valuations with Valuations based on reference to based on unob- observable observable servable prices inputs inputs Level 11 Level 21 Level 32 Total Rm Rm Rm Rm Available-for-sale financial assets &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDO EDQNV UHIHUWRQRWH 458 — — 458 6WDWXWRU\OLTXLGDVVHWSRUWIROLR UHIHUWRQRWH 26 656 — — 26 656 ,QYHVWPHQWVHFXULWLHV UHIHUWRQRWH 1 297 100 95 1 492 Financial assets designated at fair value through profit or loss &DVKFDVKEDODQFHVDQGEDODQFHVZLWKFHQWUDO EDQNV UHIHUWRQRWH — 3 013 — 3 013 6WDWXWRU\OLTXLGDVVHWSRUWIROLR UHIHUWRQRWH 778 2 685 — 3 463 /RDQVDQGDGYDQFHVWREDQNV UHIHUWRQRWH — 7 047 — 7 047 2WKHUDVVHWV UHIHUWRQRWH 16——16 /RDQVDQGDGYDQFHVWRFXVWRPHUV UHIHUWRQRWH — 4 212 5 778 9 990 ,QYHVWPHQWVHFXULWLHV UHIHUWRQRWH 11 846 4 690 5 195 21 731 Financial assets held for trading 'HULYDWLYHDVVHWV UHIHUWRQRWH 173 43 133 98 43 404 7UDGLQJDVVHWV UHIHUWRQRWH 15 014 2 009 966 17 989 +HGJLQJDVVHWV UHIHUWRQRWH — 4 662 — 4 662 ,QYHVWPHQWVHFXULWLHV UHIHUWRQRWH — 215 — 215 Total financial assets 56 238 71 766 12 132 140 136 Financial liabilities designated at fair value through profit or loss 'HSRVLWVIURPEDQNV UHIHUWRQRWH — 1 679 — 1 679 2WKHUOLDELOLWLHV UHIHUWRQRWH 57—12 'HSRVLWVGXHWRFXVWRPHUV UHIHUWRQRWH 32 8 325 8 499 16 856 'HEWVHFXULWLHVLQLVVXH UHIHUWRQRWH — 1 488 73 1 561 /LDELOLWLHVXQGHULQYHVWPHQWFRQWUDFWV UHIHUWRQRWH — 13 964 — 13 964 %RUURZHGIXQGV UHIHUWRQRWH 739 — — 739 Financial liabilities held for trading (refer to note 18) 'HULYDWLYHOLDELOLWLHV — 42 936 591 43 527 7UDGLQJOLDELOLWLHV 3 927 — — 3 927 +HGJLQJOLDELOLWLHV — 1 881 — 1 881 Total financial liabilities 4 703 70 280 9 163 84 146

Notes The nature of the valuation techniques is summarised in note 59.2. The nature of the valuation techniques is summarised in note 59.3.

486 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 9DOXDWLRQV 9DOXDWLRQV ZLWK 9DOXDWLRQV EDVHGRQ UHIHUHQFHWR EDVHGRQ XQRE REVHUYDEOH REVHUYDEOH VHUYDEOH SULFHV LQSXWV LQSXWV /HYHO /HYHO /HYHO 7RWDO 5P 5P 5P 5P

¥ ¥ ¥ ¥

¥ ¥ ¥ ¥ ¥ ¥ ¥¥¥¥ ¥

¥ ¥ ¥ ¥ ¥

¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥

¥ ¥ ¥ ¥

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 487 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

59. Fair value hierarchy disclosures (continued) 59.2 Valuations based on observable inputs 9DOXDWLRQVEDVHGRQREVHUYDEOHLQSXWVLQFOXGH

Level 1 )LQDQFLDOLQVWUXPHQWVYDOXHGZLWKUHIHUHQFHWRXQDGMXVWHGTXRWHGSULFHVIRULGHQWLFDODVVHWVRUOLDELOLWLHVLQDFWLYH PDUNHWVZKHUHWKHTXRWHGSULFHLVUHDGLO\DYDLODEOHDQGWKHSULFHUHSUHVHQWVDFWXDODQGUHJXODUO\RFFXUULQJPDUNHW WUDQVDFWLRQVRQDQDUP©VOHQJWKEDVLV $Q DFWLYH PDUNHW LV RQH LQ ZKLFK WUDQVDFWLRQV RFFXU ZLWK VXIILFLHQW YROXPH DQG IUHTXHQF\ WR SURYLGH SULFLQJ LQIRUPDWLRQRQDQRQJRLQJEDVLV 7KLV FDWHJRU\ LQFOXGHV KLJKO\ OLTXLG JRYHUQPHQW DQG RWKHU ERQGV DFWLYH OLVWHG HTXLWLHV H[FKDQJHWUDGHG FRPPRGLWLHVDQGH[FKDQJHWUDGHGGHULYDWLYHV Level 2 )LQDQFLDOLQVWUXPHQWVYDOXHGXVLQJLQSXWVRWKHUWKDQTXRWHGSULFHVDVGHVFULEHGDERYHIRUOHYHOEXWZKLFKDUH REVHUYDEOHIRUWKHDVVHWRUOLDELOLW\HLWKHUGLUHFWO\RULQGLUHFWO\VXFKDV TXRWHGSULFHIRUVLPLODUDVVHWVRUOLDELOLWLHVLQDQDFWLYHPDUNHW TXRWHGSULFHIRULGHQWLFDORUVLPLODUDVVHWVRUOLDELOLWLHVLQLQDFWLYHPDUNHWV YDOXDWLRQPRGHOXVLQJREVHUYDEOHLQSXWVDQG YDOXDWLRQPRGHOXVLQJLQSXWVGHULYHGIURPFRUURERUDWHGE\REVHUYDEOHPDUNHWGDWD 7KLV FDWHJRU\ LQFOXGHV FHUWDLQ $IULFDQ JRYHUQPHQW ELOOV SULYDWH HTXLW\ LQYHVWPHQWV ORDQV DQG DGYDQFHV LQYHVWPHQWVLQGHEWLQVWUXPHQWVFRPPRGLW\GHULYDWLYHVFUHGLWGHULYDWLYHVHTXLW\GHULYDWLYHVIRUHLJQH[FKDQJH GHULYDWLYHVLQWHUHVWUDWHGHULYDWLYHVUHSXUFKDVHDJUHHPHQWVGHSRVLWVDQGGHEWVHFXULWLHV

59.3 Valuations based on unobservable inputs 9DOXDWLRQVEDVHGRQXQREVHUYDEOHLQSXWVLQFOXGH

Level 3 )LQDQFLDOLQVWUXPHQWVYDOXHGXVLQJLQSXWVWKDWDUHQRWEDVHGRQREVHUYDEOHPDUNHWGDWD XQREVHUYDEOHGDWD VXFKDVDQHQWLW\©VRZQDVVXPSWLRQVDERXWDVVXPSWLRQVRIPDUNHWSDUWLFLSDQWVLQSULFLQJWKHDVVHWRUOLDELOLW\ 7KLVFDWHJRU\LQFOXGHVFHUWDLQSULYDWHHTXLW\LQYHVWPHQWVORDQVDQGDGYDQFHVLQYHVWPHQWVLQGHEWLQVWUXPHQWV FUHGLW GHULYDWLYHV HTXLW\ GHULYDWLYHV IRUHLJQ H[FKDQJH GHULYDWLYHV LQWHUHVW UDWH GHULYDWLYHV UHSXUFKDVH DJUHHPHQWVGHSRVLWVDQGGHEWVHFXULWLHV ,QGHWHUPLQLQJWKHYDOXHRIOHYHOILQDQFLDOLQVWUXPHQWVWKHIROORZLQJDUHWKHSULQFLSDOLQSXWVWKDWFDQUHTXLUH MXGJHPHQW (i) Volatility 9RODWLOLW\LVDNH\LQSXWLQWKHYDOXDWLRQRIRSWLRQVDFURVVDOODVVHWFODVVHV)RUVRPHDVVHWFODVVHVYRODWLOLW\LV XQREVHUYDEOH (ii) Basis risk %DVLVULVNLVDNH\LQSXWLQWKHYDOXDWLRQRIFURVVFXUUHQF\VZDSV)RUVRPHFXUUHQF\SDLUVRUPDWXULWLHVEDVLV ULVNLVXQREVHUYDEOH (iii) Credit spreads &UHGLWVSUHDGVDUHNH\LQSXWVLQWKHYDOXDWLRQRIFUHGLWGHIDXOWVZDSVFUHGLWOLQNHGQRWHVDQGGHEWLQVWUXPHQWVRU OLDELOLWLHV)RUVRPHLVVXHUVRUWHQRUVFUHGLWVSUHDGVDUHXQREVHUYDEOH (iv) Yield curves

488 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 59. Fair value hierarchy disclosures (continued) 59.3 Valuations based on unobservable inputs (continued) 7KHIROORZLQJVXPPDU\VHWVRXWWKHSULQFLSDOLQVWUXPHQWVZKRVHYDOXDWLRQPD\LQYROYHMXGJHPHQWDOLQSXWV

Debt securities and treasury and other eligible bills 7KHVHLQVWUXPHQWVDUHYDOXHGEDVHGRQTXRWHGPDUNHWSULFHVIURPDQH[FKDQJHGHDOHUEURNHULQGXVWU\JURXS RUSULFLQJVHUYLFHZKHUHDYDLODEOH:KHUHXQDYDLODEOHIDLUYDOXHLVGHWHUPLQHGE\UHIHUHQFHWRTXRWHGPDUNHW SULFHVIRUVLPLODULQVWUXPHQWVRULQWKHFDVHRIFHUWDLQPRUWJDJHEDFNHGVHFXULWLHVYDOXDWLRQWHFKQLTXHVXVLQJ LQSXWVGHULYHGIURPREVHUYDEOHPDUNHWGDWDDQGZKHUHUHOHYDQWDVVXPSWLRQVLQUHVSHFWRIXQREVHUYDEOHLQSXWV

Equity instruments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

Derivatives 'HULYDWLYHFRQWUDFWVFDQEHH[FKDQJHWUDGHGRUWUDGHG27&27&GHULYDWLYHFRQWUDFWVLQFOXGHIRUZDUGVZDSDQG RSWLRQFRQWUDFWVUHODWHGWRLQWHUHVWUDWHVERQGVIRUHLJQFXUUHQFLHVFUHGLWVSUHDGVHTXLW\SULFHVDQGFRPPRGLW\ SULFHVRULQGLFHVRQWKHVHLQVWUXPHQWV)DLUYDOXHVRIGHULYDWLYHVDUHREWDLQHGIURPTXRWHGPDUNHWSULFHVGHDOHU SULFHTXRWDWLRQVGLVFRXQWHGFDVKIORZDQGRSWLRQSULFLQJPRGHOV

Loans and advances /RDQV DQG DGYDQFHV DUH YDOXHG XVLQJ GLVFRXQWHG FDVK IORZ PRGHOV DSSO\LQJ HLWKHU PDUNHW UDWHV ZKHUH DSSOLFDEOHRUZKHUHWKHFRXQWHUSDUW\LVDEDQNUDWHVFXUUHQWO\RIIHUHGE\RWKHUILQDQFLDOLQVWLWXWLRQVIRUSODFLQJV ZLWKVLPLODUFKDUDFWHULVWLFV

Deposits, debt securities in issue and borrowed funds 'HSRVLWVGHEWVHFXULWLHVLQLVVXHDQGERUURZHGIXQGVDUHYDOXHGXVLQJGLVFRXQWHGFDVKIORZPRGHOVDSSO\LQJ UDWHV FXUUHQWO\ RIIHUHG IRU LVVXDQFHV ZLWK VLPLODU FKDUDFWHULVWLFV :KHUH WKHVH LQVWUXPHQWV LQFOXGH HPEHGGHG GHULYDWLYHV WKH HPEHGGHG GHULYDWLYH FRPSRQHQW LV YDOXHG XVLQJ WKH PHWKRGRORJ\ IRU GHULYDWLYHV DV GHWDLOHG DERYH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 489 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

59. Fair value hierarchy disclosures (continued) 59.4 Movements on ﬁnancial instruments subsequently measured at fair value using valuations based on unobservable inputs (level 3) $UHFRQFLOLDWLRQRIWKHRSHQLQJEDODQFHVWRFORVLQJEDODQFHVLVVHWRXWEHORZ

Financial Available-for- Financial assets designated assets sale ﬁnancial at fair value through held for assets proﬁt or loss trading

Loans and Investment advances to Investment Trading securities customers securities assets Rm Rm Rm Rm Opening balance 176 5 416 6 128 — 1HWLQWHUHVWLQFRPH — (227) — — *DLQVDQGORVVHVIURPEDQNLQJDQG WUDGLQJDFWLYLWLHV 3 (175) 35 — *DLQVDQGORVVHVIURPLQYHVWPHQWDFWLYLWLHV — — 36 — 2WKHUFRPSUHKHQVLYHLQFRPH (22) — (1) — 3XUFKDVHV — 1 602 2 449 966 6DOHV — (146) (2 976) — ,VVXHV ———— 6HWWOHPHQWV (104) (1 219) (477) — 0RYHPHQWLQ RXW RIOHYHO 42 527 1 — Closing balance 95 5 778 5 195 966

)LQDQFLDO $YDLODEOHIRU )LQDQFLDODVVHWVGHVLJQDWHG DVVHWV VDOHILQDQFLDO DWIDLUYDOXHWKURXJK KHOGIRU DVVHWV SURILWRUORVV WUDGLQJ

/RDQVDQG ,QYHVWPHQW DGYDQFHVWR ,QYHVWPHQW 7UDGLQJ VHFXULWLHV FXVWRPHUV VHFXULWLHV DVVHWV 5P 5P 5P 5P 2SHQLQJEDODQFH ¥ 1HWLQWHUHVWLQFRPH ¥ ¥ ¥ *DLQVDQGORVVHVIURPEDQNLQJDQG WUDGLQJDFWLYLWLHV ¥ 2WKHUFRPSUHKHQVLYHLQFRPH ¥ ¥ ¥ 3XUFKDVHV ¥ ¥ 6DOHV ¥ ¥ ¥ ,VVXHV ¥ ¥ ¥ ¥ 6HWWOHPHQWV ¥ 0RYHPHQWRXWRIOHYHO ¥¥¥¥ &ORVLQJEDODQFH ¥

Note Transfers out of level 3 principally reflect transfers to level 2 within the fair value hierarchy of equity – related derivative instruments, as the remaining maturity of these instruments has entered the range for which the unobservable parameter can be observed.

490 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010

Financial Financial liabilities designated at fair value liabilities held through profit or loss for trading Total financial Total financial assets liabilities excluding Other Deposits due Debt Net including net derivatives liabilities to customers securities derivatives derivatives Rm Rm Rm Rm Rm Rm 11 720 274 10 435 246 325 11 280 (227) —————

(137) — 867 6 (23) 850 36————— (23) ————— 5 017 376 — — (11) 365 (3 122) ————— — — 619 3 101 723 (1 800) (650) (3 152) (5) 14 (3 793) 570 — (270) (177) 87 (360) 12 034 — 8 499 73 493 9 065

)LQDQFLDO )LQDQFLDOOLDELOLWLHVGHVLJQDWHGDWIDLUYDOXH OLDELOLWLHVKHOG WKURXJKSURILWRUORVV IRUWUDGLQJ 7RWDOILQDQFLDO 7RWDOILQDQFLDO DVVHWV OLDELOLWLHV H[FOXGLQJ 2WKHU 'HSRVLWVGXH 'HEW 1HW LQFOXGLQJQHW GHULYDWLYHV OLDELOLWLHV WRFXVWRPHUV VHFXULWLHV GHULYDWLYHV GHULYDWLYHV 5P 5P 5P 5P 5P 5P ¥ ¥

¥¥¥¥¥ ¥¥¥ ¥¥¥¥¥ ¥ ¥ ¥ ¥ ¥¥¥¥

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 491 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

59. Fair value hierarchy disclosures (continued) 59.5 Total unrealised gains and losses for the year on level 3 positions held at the reporting date

Available-for- Financial assets designated sale ﬁnancial at fair value through assets proﬁt or loss

Loans and Investment advances to Investment securities customers securities Rm Rm Rm 1HWLQWHUHVWLQFRPH FKDUJHV — (112) — *DLQVDQG ORVVHV IURPEDQNLQJDQG WUDGLQJDFWLYLWLHV 142 190 102 142 78 102

$YDLODEOHIRU )LQDQFLDODVVHWVGHVLJQDWHG VDOHILQDQFLDO DWIDLUYDOXHWKURXJK DVVHWV SURILWRUORVV

/RDQVDQG ,QYHVWPHQW DGYDQFHVWR ,QYHVWPHQW VHFXULWLHV FXVWRPHUV VHFXULWLHV 5P 5P 5P 1HWLQWHUHVWLQFRPH FKDUJHV *DLQVDQG ORVVHV IURPEDQNLQJDQG WUDGLQJDFWLYLWLHV ¥

492 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Group 2010 Financial Financial liabilities designated at fair value liabilities held through profit or loss for trading Total financial Total financial assets liabilities excluding Other Deposits due Debt Net including net derivatives liabilities to customers securities derivatives derivatives Rm Rm Rm Rm Rm Rm (112) —————

434 — (861) 4 (261) (1 118) 322 — (861) 4 (261) (1 118)

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 493 Financial performance

Notes to the consolidated financial statements )RUWKH\HDUHQGHG'HFHPEHU

59. Fair value hierarchy disclosures (continued) 59.6 Sensitivity analysis of valuations using unobservable inputs $V SDUW RI WKH *URXS©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roup 2010 Potential effect Potential effect recorded in profit recorded directly Signiﬁcant and loss in equity unobserv- Favour- Un- Favour- Un- able para- able favourable able favourable 2010 meters1 Rm Rm Rm Rm /RDQVDQGDGYDQFHVGHVLJQDWHG i, iii, iv, v, DWIDLUYDOXHWKURXJKSURILWRUORVV vi, vii 141 455 — — 1HWGHULYDWLYHV i, iii 10 9 — — 3ULYDWHHTXLW\ i, iii, v, vi, vii 775 775 — 4 6WUXFWXUHGQRWHVDQGGHSRVLWV GHVLJQDWHGDWIDLUYDOXHWKURXJK SURILWRUORVV iv 46 51 — — 7UDGLQJDVVHWV i 77——

979 1 297 — 4 3RWHQWLDOHIIHFWUHFRUGHG 3RWHQWLDOHIIHFW LQSURILW UHFRUGHGGLUHFWO\ 6LJQLILFDQW DQGORVV LQHTXLW\ XQREVHUY )DYRXU 8Q )DYRXU 8Q DEOHSDUD DEOH IDYRXUDEOH DEOH IDYRXUDEOH PHWHUV 5P 5P 5P 5P /RDQVDQGDGYDQFHVGHVLJQDWHG DWIDLUYDOXHWKURXJKSURILWRUORVV LLL ¥ ¥ 1HWGHULYDWLYHV LLLLLLLY ¥ ¥ 3ULYDWHHTXLW\ YYLYLL ¥ ¥ 6WUXFWXUHGQRWHVDQGGHSRVLWV GHVLJQDWHGDWIDLUYDOXHWKURXJK SURILWRUORVV LY ¥ ¥

¥ ¥

Note Refer to note 59.3.

494 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 59. Fair value hierarchy disclosures (continued) 59.6 Sensitivity analysis of valuations using unobservable inputs (continued) 7KHIROORZLQJWDEOHUHIOHFWVKRZWKHXQREVHUYDEOHSDUDPHWHUVZHUHFKDQJHGLQRUGHUWRHYDOXDWHWKHVHQVLWLYLWLHV RIOHYHOILQDQFLDOLQVWUXPHQWV Positive variance Negative variance Instrument Parameter in parameters in parameters &UHGLWGHULYDWLYHV &UHGLWVSUHDGV ESV ¤ESV (TXLW\GHULYDWLYHV 9RODWLOLWLHV ¤ )RUHLJQFXUUHQF\RSWLRQV 9RODWLOLWLHV ¤ )RUHLJQFXUUHQF\VZDSV %DVLVULVNDQG\LHOGFXUYH ESV ¤ESV DQGIRUHLJQLQWHUHVWUDWH SURGXFWV /RDQVDQGDGYDQFHV &UHGLWVSUHDGV ESV ¤ESV GHVLJQDWHGDWIDLUYDOXH WKURXJKSURILWRUORVV 3ULYDWHHTXLW\ )XWXUHHDUQLQJVDQG ¤ PDUNHWDELOLW\GLVFRXQWV &RPSDUDWRUPXOWLSOHV 'LVFRXQWUDWHV 6WUXFWXUHGQRWHVDQG

Group 2010 Rm 5P Opening balance 24 ¥ 1HZWUDQVDFWLRQV 84 $PRXQWVUHFRJQLVHGLQWKHSURILWDQGORVVFRPSRQHQWRIWKHVWDWHPHQWRI FRPSUHKHQVLYHLQFRPHGXULQJWKH\HDU (35) Closing balance 73 61. Financial risks ,QOLJKWRI.LQJ,,,WKH*URXSKDVHQKDQFHGLWVULVNPDQDJHPHQWGLVFORVXUHVE\FRPELQLQJDFFRXQWLQJDQGUHJXODWRU\ GLVFORVXUHVLQRUGHUWRSURYLGHJUHDWHUWUDQVSDUHQF\WRVWDNHKROGHUVLQWKHLUHYDOXDWLRQRIWKH*URXS©VSHUIRUPDQFH $OOILQDQFLDOULVNGLVFORVXUHVDUHLQFOXGHGLQWKH*URXS©VULVNUHSRUW 61.1 Credit risk 7KHGLVFORVXUHVPDUNHGDVDXGLWHGUHODWLQJWRFUHGLWULVNDUHVHWRXWLQWDEOHVDQG¤RIWKHULVN UHSRUW 61.2 Market risk 7KHGLVFORVXUHVPDUNHGDVDXGLWHGUHODWLQJWRPDUNHWULVNDUHVHWRXWLQWDEOHV¤DQGRIWKHULVN UHSRUW 61.3 Liquidity risk 7KHGLVFORVXUHVPDUNHGDVDXGLWHGUHODWLQJWROLTXLGLW\ULVNDUHVHWRXWLQWDEOHVDQGRIWKHULVNUHSRUW 61.4 Insurance risk 7KHGLVFORVXUHVPDUNHGDVDXGLWHGUHODWLQJWRXQGHUZULWLQJULVNDUHVHWRXWLQWDEOHV¤RIWKHULVNUHSRUW

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 495 Financial performance

Annexure A: Embedded value report of Absa Life Limited (unaudited)

Scope of the embedded value report 7KLVUHSRUWGHDOVZLWKWKHHPEHGGHGYDOXHRI$EVD/LIHDQGWKHYDOXHRIQHZEXVLQHVVZULWWHQGXULQJWKHILQDQFLDO\HDU 7KHHPEHGGHGYDOXHDWWKHUHSRUWLQJGDWHKDVEHHQFDOFXODWHGLQDFFRUGDQFHZLWKWKHSULQFLSOHVFRQWDLQHGLQWKHODWHVW YHUVLRQRI3*1RIWKH$66$ Embedded value 7KHHPEHGGHGYDOXHRIWKHFRYHUHGEXVLQHVVLVWKHGLVFRXQWHGYDOXHRIIXWXUHDIWHUWD[VKDUHKROGHUSURILWV QHWRIWKH RSSRUWXQLW\FRVWRIWKHUHTXLUHGFDSLWDO DULVLQJIURPFRYHUHGEXVLQHVVLQIRUFHDWWKHYDOXDWLRQGDWHWRJHWKHUZLWKWKH DGMXVWHGQHWZRUWKRIWKHFRYHUHGEXVLQHVV&RYHUHGEXVLQHVVLVWDNHQWREHDOOORQJWHUPLQVXUDQFHEXVLQHVVZULWWHQ XQGHU$EVD/LIH©VOLFHQFH 7KHIUHHVXUSOXVLVWKHH[FHVVRIDVVHWVRYHUWKHVXPRIOLDELOLWLHVDQGUHTXLUHGFDSLWDOZLWKDVVHWVDWPDUNHWYDOXHDQG OLDELOLWLHVRQWKHVWDWXWRU\YDOXDWLRQPHWKRGDGMXVWHGWRDGGEDFNLQDGPLVVLEOHDVVHWV7KHUHTXLUHGFDSLWDOLVWDNHQWREH WZRWLPHVWKHVWDWXWRU\FDSLWDODGHTXDF\UHTXLUHPHQWLQOLQHZLWKWKHUHVXOWVRILQWHUQDOFDSLWDOPRGHOV Value of new business 7KHYDOXHRIQHZEXVLQHVVLVWKHGLVFRXQWHGYDOXHDWWKHGDWHRIVDOHRIWKHSURMHFWHGDIWHUWD[VKDUHKROGHUSURILWVIURP QHZFRYHUHGEXVLQHVV QHWRIWKHRSSRUWXQLW\FRVWRIWKHUHTXLUHGFDSLWDOIRUQHZEXVLQHVV 1HZFRYHUHGEXVLQHVVLV GHILQHGDVORQJWHUPLQVXUDQFHFRQWUDFWVZULWWHQE\$EVD/LIHGXULQJWKHILQDQFLDO\HDUDQGIRUZKLFKDWOHDVWRQHSUHPLXP KDVEHHQUHFRJQLVHGLQWKHILQDQFLDOVWDWHPHQWV7KHYDOXHRIQHZEXVLQHVVLVFDOFXODWHGXVLQJFORVLQJDVVXPSWLRQVIRU DOOEDVLVLWHPV Embedded value and value of new business 2010 Rm 5P )UHHVXUSOXV 731 5HTXLUHGFDSLWDO 794 &RYHUHGEXVLQHVVDGMXVWHGQHWZRUWK $1: 1 525 3UHVHQWYDOXHRILQIRUFHEXVLQHVV 39,) 1 745 &RVWRIUHTXLUHGFDSLWDO &R& (457) Total embedded value 2 813 9DOXHRIQHZEXVLQHVV EHIRUH&R& 574 &RVWRIUHTXLUHGFDSLWDO &R& (109) Value of new business (VNB) 465 3UHVHQWYDOXHRIIXWXUHSUHPLXPV 4 884 9DOXHRIQHZEXVLQHVVDVDSHUFHQWDJHRIWKHSUHVHQWYDOXHRIIXWXUHSUHPLXPV ¤DOOEXVLQHVV 9,5 ¤H[FOXGLQJLQYHVWPHQWEXVLQHVV 22,1

Note A dividend of R250 million (2009: R294 million) was proposed. Assumptions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

2010 % 5LVNIUHHUDWHRIUHWXUQ 8,0 (TXLW\UHWXUQ¤KHGJHG 8,2 (TXLW\UHWXUQ¤XQKHGJHG 11,5 &DVKUHWXUQ 6,0 2YHUDOOLQYHVWPHQWUHWXUQ 7,9 5LVNGLVFRXQWUDWH 11,25 ([SHQVHLQIODWLRQ 4,5

496 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

Sensitivities 7KHIROORZLQJWDEOHVXPPDULVHVWKHVHQVLWLYLW\RIWKHHPEHGGHGYDOXHDQGYDOXHRIQHZEXVLQHVVFDOFXODWLRQWRFKDQJHV LQWKHXQGHUO\LQJDVVXPSWLRQV,QHDFKRIWKHVFHQDULRVQRRIIVHWWLQJPDQDJHPHQWDFWLRQVDUHDVVXPHGWRRFFXU

Risk Equity Mainte- discount Interest capital Equity Mortality/ nance Lapse/ Initial (%) rate rates values returns morbidity expenses surrender expenses change +1% –1% x 0,9 +1% x 0,95 x 0,9 x 0,9 x 0,9 $1: 0% 0% 0% 0% 0% 0% 0% n/a 39,) (4%) 3% (1%) 0% 5% 3% 4% n/a &R& 7% 13% 1% (8%) (12%) (5%) 18% n/a EV (3% 0% (1%) 2% 5% 3% (1%) n/a VNB (5%) 0% (3%) 0% 7% 3% (1%) 1%

7KHGHYHORSPHQWRIWKHHPEHGGHGYDOXHFDQEHDQDO\VHGDVIROORZV 2010 Rm 5P (PEHGGHGYDOXHDWWKHHQGRIWKH\HDU 2 813 'LYLGHQGVDFFUXHGRUSDLG 458 (PEHGGHGYDOXHDWWKHEHJLQQLQJRIWKH\HDU (2 340) Embedded value earnings 931 &RPSRQHQWVRIHPEHGGHGYDOXHHDUQLQJV 9DOXHRIQHZEXVLQHVVDWSRLQWRIVDOH 465 ([SHFWHGUHWXUQRQFRYHUHGEXVLQHVV XQZLQGLQJ 184 2SHUDWLQJH[SHULHQFHYDULDQFHV 64 2SHUDWLQJDVVXPSWLRQDQGPRGHOFKDQJHV 48 ([SHFWHGUHWXUQRQ$1: 123 Embedded value operating return 884 ,QYHVWPHQWUHWXUQYDULDQFHVRQLQIRUFHFRYHUHGEXVLQHVV 29 ,QYHVWPHQWUHWXUQYDULDQFHVRQ$1: 13 (IIHFWRIHFRQRPLFDVVXPSWLRQFKDQJHV 5 Embedded value earnings 931 Return on embedded value 39,8%

Review by the independent actuaries 7KHHPEHGGHGYDOXHRI$EVD/LIHDQGWKHYDOXHRIQHZEXVLQHVVZULWWHQGXULQJWKH\HDUKDYHEHHQUHYLHZHGDQGDJUHHG E\WKHLQGHSHQGHQWFRQVXOWLQJDFWXDULHV'HORLWWH 7RXFKH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 497 Financial performance

Company statement of financial position $VDW'HFHPEHU

Company 2010 1RWH Rm 5P Assets /RDQVDQGDGYDQFHVWREDQNV 186 2WKHUDVVHWV — &XUUHQWWD[DVVHWV 15 ,QYHVWPHQWVHFXULWLHV 139 6XEVLGLDULHV 16 773 'HIHUUHGWD[DVVHW — Total assets 17 113 Liabilities 2WKHUOLDELOLWLHV 87 Total liabilities 87 Equity Capital and reserves $WWULEXWDEOHWRRUGLQDU\HTXLW\KROGHUVRIWKH&RPSDQ\ 6KDUHFDSLWDO 1 437 6KDUHSUHPLXP 5 367 2WKHUUHVHUYHV 285 5HWDLQHGHDUQLQJV 9 937 Total equity 17 026 Total equity and liabilities 17 113

498 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Company statement of comprehensive income )RUWKH\HDUHQGHG'HFHPEHU

Company 2010 1RWH Rm 5P 1HWLQWHUHVWLQFRPH 10 ,QWHUHVWDQGVLPLODULQFRPH 12 10 ,QWHUHVWH[SHQVHDQGVLPLODUFKDUJHV 13 —

Net interest income after impairment losses on loans and advances 10 *DLQVDQGORVVHVIURPLQYHVWPHQWDFWLYLWLHV 14 4 201 2WKHURSHUDWLQJLQFRPH 15 50 Operating profit before operating expenses 4 261 2SHUDWLQJH[SHQVHV 16 (5) 2WKHULPSDLUPHQW 17 — ,QGLUHFWWD[DWLRQ — Operating profit before income tax 4 256 7D[DWLRQH[SHQVH 18 (99) Profit and total comprehensive income for the year 4 157 Total comprehensive income attributable to: 2UGLQDU\HTXLW\KROGHUVRIWKH&RPSDQ\ 4 157 Earnings per share: %DVLFHDUQLQJVSHUVKDUH FHQWV 19 578,8 'LOXWHGHDUQLQJVSHUVKDUH FHQWV 19 578,8

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 499 Financial performance

Company statement of changes in equity )RUWKH\HDUHQGHG'HFHPEHU

Company 2010 Number Share- of based ordinary Share Share payment Retained shares capital premium reserve earnings Total ’000 Rm Rm Rm Rm Rm Balance at the beginning of the year 718 210 1 437 5 308 298 8 976 16 019 3URILWDQGWRWDOFRPSUHKHQVLYHLQFRPH ————4 1574 157 'LYLGHQGVSDLG ————(3 196) (3 196) 0RYHPHQWLQVKDUHEDVHGSD\PHQW UHVHUYH — — 59 (13) — 46 7UDQVIHUIURPVKDUHEDVHGSD\PHQW UHVHUYH — — 59 (59) — — 9DOXHRIHPSOR\HHVHUYLFHV ———46—46

Balance at the end of the year 718 210 1 437 5 367 285 9 937 17 026

1XPEHU 6KDUH RI EDVHG RUGLQDU\ 6KDUH 6KDUH SD\PHQW 5HWDLQHG VKDUHV FDSLWDO SUHPLXP UHVHUYH HDUQLQJV 7RWDO © 5P 5P 5P 5P 5P %DODQFHDWWKHEHJLQQLQJRIWKH\HDU 3URILWDQGWRWDOFRPSUHKHQVLYHLQFRPH ¥¥¥¥ 'LYLGHQGVSDLG ¥¥¥¥ 6KDUHVLVVXHG ¥ ¥ 5HSXUFKDVHRISUHIHUHQFHVKDUHVKHOG E\%DWKR%RQNH&DSLWDO 3URSULHWDU\ /LPLWHG ¥ ¥ ¥ &RVWVLQFXUUHG ¥ ¥ ¥ ¥ 0RYHPHQWLQVKDUHEDVHGSD\PHQW UHVHUYH ¥ ¥ ¥ 7UDQVIHUIURPVKDUHEDVHGSD\PHQW UHVHUYH ¥ ¥ ¥ ¥ 9DOXHRIHPSOR\HHVHUYLFHV ¥ ¥ ¥ ¥

%DODQFHDWWKHHQGRIWKH\HDU

Notes 10 10 10 11

500 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Company statement of cash flows )RUWKH\HDUHQGHG'HFHPEHU

Company 2010 1RWH Rm 5P Cash flow from operating activities ,QWHUHVWLQFRPH 12 10 ,QWHUHVWH[SHQVH 13 — 1HWWUDGLQJDQGRWKHULQFRPH 11 &DVKSD\PHQWVWRHPSOR\HHVDQGVXSSOLHUV (5) 'LYLGHQGVUHFHLYHG 4 241 ,QFRPHWD[HVSDLG (100) &DVKIORZIURPRSHUDWLQJSURILWEHIRUHFKDQJHVLQRSHUDWLQJDVVHWV DQGOLDELOLWLHV 4 157 1HWLQFUHDVHLQGHULYDWLYHDVVHW — 1HWGHFUHDVH LQFUHDVH LQRWKHUDVVHWV 304 1HWLQFUHDVH GHFUHDVH LQRWKHUOLDELOLWLHV 3 1HWFDVKJHQHUDWHGIURPRSHUDWLQJDFWLYLWLHV 4 464 Cash flow from investing activities ,QYHVWPHQWLQVKDUHV (768) 'HFUHDVHLQQHWORDQVIURPWRVXEVLGLDULHV (500) 1HW GHFUHDVH LQFUHDVHLQVHFXULWLHV (30) 1HWFDVKXWLOLVHGIURPLQYHVWLQJDFWLYLWLHV (1 298) Cash flow from financing activities ,VVXHRIRUGLQDU\VKDUHV — 5HGHPSWLRQRIERUURZHGIXQGV — 'LYLGHQGVSDLG 21 (3 196) 1HWFDVKXWLOLVHGIURPILQDQFLQJDFWLYLWLHV (3 196) 1HWGHFUHDVHLQFDVKDQGFDVKHTXLYDOHQWV (30) &DVKDQGFDVKHTXLYDOHQWVDWWKHEHJLQQLQJRIWKH\HDU 216 Cash and cash equivalents at the end of the year 186

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 501 Financial performance Notes to the Company financial statements )RUWKH\HDUHQGHG'HFHPEHU

Company 2010 Rm 5P

1. Accounting policies 7KHILQDQFLDOVWDWHPHQWVRI$EVD*URXS/LPLWHG &RPSDQ\ DUHSUHSDUHG DFFRUGLQJWRWKHVDPHDFFRXQWLQJSULQFLSOHVXVHGLQSUHSDULQJWKHFRQVROLGDWHG ILQDQFLDOVWDWHPHQWVRIWKH*URXS)RUGHWDLOHGDFFRXQWLQJSROLFLHVUHIHUWRWKH *URXS©VILQDQFLDOVWDWHPHQWV 2. Loans and advances to banks 2WKHUORDQVDQGDGYDQFHVWREDQNV 186 Portfolio analysis /RDQVDQGUHFHLYDEOHV 186 /RDQVZLWKYDULDEOHUDWHVDUH5PLOOLRQ 5PLOOLRQ DQGIL[HGUDWHVDUH5PLOOLRQ 5PLOOLRQ 3. Other assets $FFRXQWVUHFHLYDEOHDQGSUHSD\PHQWV — Portfolio analysis /RDQVDQGUHFHLYDEOHV — 4. Current tax $PRXQWGXHIURPUHYHQXHDXWKRULWLHV 15

5. Investment securities 'HEWLQVWUXPHQWV 139 Market value and directors’ valuation 0DUNHWYDOXHRIGHEWLQVWUXPHQWV 139 Portfolio analysis $YDLODEOHIRUVDOHILQDQFLDODVVHWV 'HEWLQVWUXPHQWV 139 5.1 Available-for-sale investments &RVWSOXVIDLUYDOXHPRYHPHQWVDWWKHEHJLQQLQJRIWKH\HDU 109 1HWDFTXLVLWLRQVDQG GLVSRVDOV 30 &RVWSOXVIDLUYDOXHPRYHPHQWVDWWKHHQGRIWKH\HDU 139 5.2 Fair value hierarchy disclosure 7KH&RPSDQ\KROGVLQYHVWPHQWVLQGHEWLQVWUXPHQWVZKLFKLVPHDVXUHGDWIDLUYDOXH 7KHFODVVLILFDWLRQRILQVWUXPHQWVLVEDVHGRQWKHORZHVWOHYHOLQSXWWKDWLVVLJQLILFDQWWRWKHIDLUYDOXHPHDVXUHPHQW LQLWVHQWLUHW\$GHVFULSWLRQRIWKHQDWXUHRIWKHWHFKQLTXHVXVHGWRFDOFXODWHYDOXDWLRQVEDVHGRQREVHUYDEOHLQSXWV DQGYDOXDWLRQVEDVHGRQXQREVHUYDEOHLQSXWVLVVHWRXWLQQRWHVDQGRIWKH*URXS©VILQDQFLDOVWDWHPHQWV

502 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

5. Investment securities (continued) 5.2 Fair value hierarchy disclosure (continued) Company 2010 Valuations Valuations Valuations with reference based on based on to observable observable unobservable prices inputs inputs Level 1 Level 2 Level 3 Total Rm Rm Rm Rm Available-for-sale ﬁnancial assets ,QYHVWPHQWVHFXULWLHV UHIHUWRQRWH ¥ 139 — 139 9DOXDWLRQV 9DOXDWLRQV 9DOXDWLRQV ZLWKUHIHUHQFH EDVHGRQ EDVHGRQ WRREVHUYDEOH REVHUYDEOH XQREVHUYDEOH SULFHV LQSXWV LQSXWV /HYHO /HYHO /HYHO 7RWDO 5P 5P 5P 5P

Available-for-sale ﬁnancial assets ,QYHVWPHQWVHFXULWLHV UHIHUWRQRWH ¥ ¥

1The investment relates to notes in a securitisation vehicles and the movement in fair value is the result of acquisitions, disposals and accrued interest. Company 2010 Rm 5P 6. Investments in associates and joint ventures 8QOLVWHGLQYHVWPHQWV — ¥ 6.1 Movement in carrying value Balance at the beginning of the year — 1HWPRYHPHQWUHVXOWLQJIURPDFTXLVLWLRQVDQGGLVSRVDOVRILQYHVWPHQWVLQ DVVRFLDWHVDQGMRLQWYHQWXUHV UHIHUWRQRWH — Balance at the end of the year — ¥ Directors’ valuation of unlisted investments — ¥

Note 1The directors’ valuation of unlisted investments is measured at fair value. 6.2 Net movement resulting from acquisitions and disposals of investments in associates and joint ventures Company 2010 Effective (IIHFWLYH holding (%) Rm KROGLQJ 5P Disposed during the previous year: %DQFR&RPPHUFLDO$QJRODQR — n/a ¥ n/a Company 2010 Rm 5P 7. Subsidiaries /RDQVIURPVXEVLGLDU\FRPSDQLHV — 6KDUHVDWFRVW 16 773 16 773

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 503 Financial performance Notes to the Company financial statements )RUWKH\HDUHQGHG'HFHPEHU

Company 2010 Rm 5P

8. Deferred tax 8.1 Reconciliation of net deferred tax asset Balance at the beginning of the year 2 ¥ 'HIHUUHGWD[DVVHW UHOHDVHG UDLVHGRQ67&FUHGLWV UHIHUWRQRWH (2) Balance at the end of the year — 8.2 Deferred tax asset 'HIHUUHGWD[DVVHW¤67&FUHGLWV UHIHUWRQRWH — 8.3 Secondary taxation on companies (STC) $FFXPXODWHG67&FUHGLWV — 'HIHUUHGWD[DVVHWUDLVHGDW UHIHUWRQRWH — Movement in deferred tax asset for the year (refer to note 8.1) (2) ,IWKHWRWDOUHVHUYHVRI5PLOOLRQDVDWWKHUHSRUWLQJGDWH 5PLOOLRQ ZHUHWREHGHFODUHGDVGLYLGHQGV WKH67&LPSDFWDWDUDWHRIZRXOGEH5PLOOLRQ 5PLOOLRQ 9. Other liabilities &UHGLWRUV 87 Portfolio analysis )LQDQFLDOOLDELOLWLHVDWDPRUWLVHGFRVW 87

504 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

Company 2010 Rm 5P

10. Share capital and premium Ordinary share capital Authorised 880 467 500 RUGLQDU\VKDUHVRI5HDFK 1 761 Issued 718 210 043 RUGLQDU\VKDUHVRI5HDFK 1 437 Total issued capital 6KDUHFDSLWDO 1 437 6KDUHSUHPLXP 5 367 6 804

Authorised shares 7KH DXWKRULVHG VKDUH FDSLWDO ZDV LQFUHDVHG GXULQJ WKH SUHYLRXV \HDU LQ WHUPV RI DUWLFOH RI WKH $UWLFOHV RI $VVRFLDWLRQ RI WKH &RPSDQ\ ZKLFK VWDWHV WKDW XSRQ UHGHPSWLRQ RI DQ\ LVVXHG UHGHHPDEOH SUHIHUHQFH VKDUH WKDW LVVXHGVKDUHVKDOO EHDXWRPDWLFDOO\FDQFHOOHGDVWRLWVLVVXHEXWQRWDVWRLWVDXWKRULVDWLRQDQGVLPXOWDQHRXVO\ EHDXWRPDWLFDOO\FRQYHUWHGIURPDQDXWKRULVHGEXWXQLVVXHGUHGHHPDEOHSUHIHUHQFHVKDUHWRDQDXWKRULVHGEXW XQLVVXHGRUGLQDU\VKDUHRI5HDFKUDQNLQJSDULSDVVXLQDOOUHVSHFWVZLWKWKHDXWKRULVHGRUGLQDU\VKDUHV Unissued shares 7KHXQLVVXHGVKDUHVDUHXQGHUWKHFRQWURORIWKHGLUHFWRUVVXEMHFWWRDOLPLWRIRILVVXHGRUGLQDU\VKDUHFDSLWDODVDW WKHUHSRUWLQJGDWHLQWHUPVRIDJHQHUDODXWKRULW\WRDOORWDQGLVVXHWKHPRQVXFKWHUPVDQGFRQGLWLRQVDQGDWVXFK WLPHVDVWKH\GHHPILW7KLVDXWKRULW\H[SLUHVDWWKHIRUWKFRPLQJDQQXDOJHQHUDOPHHWLQJRIWKH&RPSDQ\ Shares issued during the current year 7KHUHZHUHQRVKDUHVLVVXHGGXULQJWKHFXUUHQW\HDU Shares issued during the previous year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ther reserves Share-based payment reserve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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 505 Financial performance Notes to the Company financial statements )RUWKH\HDUHQGHG'HFHPEHU

Company 2010 Rm 5P

12. Interest and similar income ,QWHUHVWDQGVLPLODULQFRPHLVHDUQHGIURP /RDQVDQGDGYDQFHVWREDQNV 10 Portfolio analysis ,QWHUHVWRQILQDQFLDODVVHWVKHOGDWDPRUWLVHGFRVW 10

13. Interest expense and similar charges ,QWHUHVWH[SHQVHDQGVLPLODUFKDUJHVDUHSDLGRQ %RUURZHGIXQGV — Portfolio analysis ,QWHUHVWRQILQDQFLDOOLDELOLWLHVKHOGDWDPRUWLVHGFRVW —

14. Gains and losses from investment activities 3URILWUHDOLVHGRQGLVSRVDORIDVVRFLDWHVDQGMRLQWYHQWXUHV — 6XEVLGLDULHV 4 201 'LYLGHQGVUHFHLYHG 4 201 /RVVUHDOLVHGRQGLVSRVDO —

4 201

15. Other operating income ([FKDQJHGLIIHUHQFHV — 6XQGU\LQFRPH 50 50

16. Operating expenditure $GPLQLVWUDWLYHH[SHQVHV 5

17. Other impairments ,QYHVWPHQWLQVXEVLGLDU\ — 'XULQJWKHSUHYLRXV\HDUWKHIDLUYDOXHRIWKHLQYHVWPHQWLQ$EYHVW +ROGLQJV 3URSULHWDU\ /LPLWHGZDVUHDVVHVVHG,WZDVIRXQGWREHORZHU WKDQWKHFDUU\LQJDPRXQW7KHLQYHVWPHQWZDVLPSDLUHGDQGDQLPSDLUPHQW ORVVZDVUHFRJQLVHG

18. Taxation expense Current 6RXWK$IULFDQFXUUHQWWD[ 6 6RXWK$IULFDQFXUUHQWWD[¤SUHYLRXV\HDU (2) 67& 93 97 Deferred 'HIHUUHGWD[ UHIHUWRQRWH 2 99

506 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

Company 2010 Rm 5P

18. Taxation expense (continued) Reconciliation between operating proﬁt and the taxation expense 2SHUDWLQJSURILWEHIRUHLQFRPHWD[ 4 256 7D[FDOFXODWHGDWDWD[UDWHRI 1 192 (IIHFWVRISUHYLRXV\HDUDGMXVWPHQWV — ([SHQVHVQRWGHGXFWLEOHIRUWD[SXUSRVHV 6 ,QFRPHQRWVXEMHFWWRWD[ (1 190) 2WKHU (2) 67& 93 99 7KHHIIHFWLYH67&UDWHLVORZHUWKDQWKHVWDWXWRU\UDWHRIGXHWR67& EHLQJSURYLGHGIRUGLYLGHQGVGHFODUHGQHWRIGLYLGHQGVUHFHLYHGDQG XQXWLOLVHG67&FUHGLWVIURPSUHYLRXV\HDUV 19. Earnings per share Basic and diluted earnings per share %DVLFHDUQLQJVSHUVKDUHLVFDOFXODWHGE\GLYLGLQJWKHSURILWDWWULEXWDEOHWR RUGLQDU\HTXLW\KROGHUVRIWKH&RPSDQ\REWDLQHGIURPWKHSURILWDQGORVV FRPSRQHQWRIWKHVWDWHPHQWRIFRPSUHKHQVLYHLQFRPHE\WKHZHLJKWHG DYHUDJHQXPEHURIRUGLQDU\VKDUHVRXWVWDQGLQJGXULQJWKH\HDU 3URILWDWWULEXWDEOHWRRUGLQDU\HTXLW\KROGHUVRIWKH&RPSDQ\ 4 157 :HLJKWHGDYHUDJHQXPEHURIRUGLQDU\VKDUHVLQLVVXH PLOOLRQV 718,2 ,VVXHGVKDUHVDWWKHEHJLQQLQJRIWKH\HDU PLOOLRQV 718,2 (IIHFWRIVKDUHVLVVXHGGXULQJWKH\HDU ZHLJKWHGPLOOLRQV —

Basic earnings per share (cents) 578,8 Diluted earnings per share (cents) 578,8

Company 2010 Gross Net1 *URVV 1HW Rm Rm 5P 5P

20. Headline earnings Headline earnings is determined as follows: 3URILWDWWULEXWDEOHWRRUGLQDU\HTXLW\KROGHUV RIWKH&RPSDQ\ 4 157 Adjustments for: ,$6¤/RVVRQGLVSRVDORIVXEVLGLDULHV UHIHUWRQRWH —— ,$6DQG¤3URILWRQGLVSRVDORI LQYHVWPHQWVLQDVVRFLDWHVDQGMRLQWYHQWXUHV UHIHUWRQRWH —— ,$6¤,PSDLUPHQWRILQYHVWPHQWVLQ VXEVLGLDULHV UHIHUWRQRWH —— Headline and diluted headline earnings 4 157 Headline earnings per share (cents) 578,8 Diluted headline earnings per share (cents) 578,8

Note 1The net amount is reﬂected after tax.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 507 Financial performance Notes to the Company financial statements )RUWKH\HDUHQGHG'HFHPEHU

Company 2010 Rm 5P

21. Dividends per share Dividends paid to ordinary equity holders during the year )HEUXDU\ILQDOGLYLGHQGQXPEHURIFHQWVSHURUGLQDU\VKDUH )HEUXDU\FHQWV 1 580 $XJXVWLQWHULPGLYLGHQGQXPEHURIFHQWVSHURUGLQDU\VKDUH $XJXVWFHQWV 1 616 'LYLGHQGVSDLGRQVKDUHVKHOGE\%DWKR%RQNH&DSLWDO 3URSULHWDU\ /LPLWHG LQWHUPVRIWKHEULGJLQJILQDQFHDUUDQJHPHQW UHIHUWRQRWHRIWKH *URXS©VILQDQFLDOVWDWHPHQWV — 3 196 Dividends paid to ordinary equity holders relating to income for the year $XJXVWLQWHULPGLYLGHQGQXPEHURIFHQWVSHURUGLQDU\VKDUH $XJXVWFHQWV 1 616 )HEUXDU\ILQDOGLYLGHQGQXPEHURIFHQWVSHURUGLQDU\VKDUH )HEUXDU\FHQWV 1 652 'LYLGHQGVSDLGRQVKDUHVKHOGE\%DWKR%RQNH&DSLWDO 3URSULHWDU\ /LPLWHG LQWHUPVRIEULGJLQJILQDQFHDUUDQJHPHQW UHIHUWRQRWHRIWKH*URXS©V ILQDQFLDOVWDWHPHQWV — 3 268 7KH67&SD\DEOHE\WKH&RPSDQ\LQUHVSHFWRIWKHGLYLGHQGDSSURYHGDQG GHFODUHG VXEVHTXHQW WR WKH UHSRUWLQJ GDWH DPRXQWV WR 5 PLOOLRQ 5PLOOLRQ 1RSURYLVLRQKDVEHHQPDGHIRUWKLVGLYLGHQGDQGWKH UHODWHG67&LQWKHILQDQFLDOVWDWHPHQWVDWWKHUHSRUWLQJGDWH

22. Related parties 5HIHUWRQRWHRIWKH*URXS©VILQDQFLDOVWDWHPHQWVIRUWKHIXOOGLVFORVXUHRI UHODWHGSDUW\WUDQVDFWLRQV 22.1 Transactions with subsidiaries 7KHIROORZLQJDUHWUDQVDFWLRQVHQWHUHGLQWRZLWKVXEVLGLDULHV Transactions ,QWHUHVWDQGVLPLODULQFRPH UHIHUWRQRWH 10

508 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Shareholder information Contents

Shareholder information Pages 511 – 526

511 /HWWHUIURPWKH&KDLUPDQ ,PSRUWDQWVKDUHKROGHULQIRUPDWLRQLQFOXGLQJ WKHQRWLFHRIDQQXDOJHQHUDOPHHWLQJ 512 6KDUHSHUIRUPDQFHDQG VKDUHKROGHUV©LQIRUPDWLRQ

Annual general meeting information 515 1RWLFHRIDQQXDOJHQHUDOPHHWLQJ 524 $SSHQGL[WRWKHQRWLFHRIDQQXDO JHQHUDOPHHWLQJ 525 )RUPRISUR[\ Shareholder information

Letter from the Chairman

'HDU6KDUHKROGHU , DP GHOLJKWHG WR LQYLWH \RX WR WKH WK $EVD *URXS $*0 RI RUGLQDU\ VKDUHKROGHUV WR EH KHOG DW WKH 3:6FHDOHV$XGLWRULXP$EVD7RZHUV0DLQ6WUHHW-RKDQQHVEXUJRQ7KXUVGD\$SULO 7KLVPHHWLQJSURYLGHVDOOVKDUHKROGHUVWKHLPSRUWDQWRSSRUWXQLW\WRPHHWZLWKWKH$EVD*URXSERDUGRI GLUHFWRUVWRYRWHRQWKHUHVROXWLRQVDQGWRSRVHTXHVWLRQVRUFRPPHQWVRQWKHUHVXOWVRIWKH*URXSIRUWKH \HDUHQGHG'HFHPEHU9RWLQJZLOOEHFRQGXFWHGE\PHDQVRIDQHOHFWURQLFSROO¤NLQGO\UHIHUWRWKH VHFWLRQ¨3UR[\DQGYRWLQJSURFHGXUHV©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©$IIDLUV&RPPLWWHHKDVXQGHUWDNHQDFRPSUHKHQVLYHHYDOXDWLRQRIWKHERDUG©V HIIHFWLYHQHVVDVZHOODVWKHSHUIRUPDQFHRILQGLYLGXDOGLUHFWRUV,QOLJKWRIWKHVHUHYLHZVZHUHFRPPHQG WKHUHHOHFWLRQRIWKHGLUHFWRUVZKRUHWLUHE\URWDWLRQDVVHWRXWLQWKH$*0QRWLFH Special resolutions $WWKLV$*0VKDUHKROGHUVZLOOEHUHTXHVWHGWRDSSURYHDWRWDORIUHVROXWLRQVRIZKLFKDUHRUGLQDU\ DQGILYHVSHFLDOUHVROXWLRQV,ZRXOGOLNHWRGUDZ\RXUSDUWLFXODUDWWHQWLRQWRWKHVSHFLDOUHVROXWLRQV7KHQHZ &RPSDQLHV$FWRIUHTXLUHVWKDWWKHUHPXQHUDWLRQRIQRQH[HFXWLYHGLUHFWRUVEHDSSURYHGE\RI VKDUHKROGHUVDVRSSRVHGWRDVLPSOHPDMRULW\UHTXLUHGE\WKH&RPSDQLHV$FWRI :H DUH DOVR VHHNLQJ \RXU DSSURYDO WR DPHQG WKH &RPSDQ\©V DUWLFOHV RI DVVRFLDWLRQ ZLWK UHJDUG WR WKH GLVWULEXWLRQWRVKDUHKROGHUVRIVXPPDULVHGILQDQFLDOVWDWHPHQWVLQSULQWHGIRUPDWZKLOHSXEOLVKLQJWKHIXOO VHWRIILQDQFLDOVRQWKH*URXS©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

Garth Grifﬁn Group Chairman

0DUFK

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 511 Shareholder information

Share performance and shareholders’ information

Key information Share performance

&HQWV %DQNV¶LQGH[ 14 000 Ordinary shares 40 984,62 $XWKRULVHG

,VVXHG 1XPEHURIVKDUHKROGHUV

Year-end 'HFHPEHU

2010 Annual general meeting $EVD%DQNV¶LQGH[ $SULO

Transfer secretaries &RPSXWHUVKDUH,QYHVWRU6HUYLFHV 3URSULHWDU\ /LPLWHG 3RVWDODGGUHVV 32%R[0DUVKDOOWRZQ 7HOHSKRQH

JSE share code $6$

Issuer code $0$*%

ISIN =$(

2010 &KDQJH

1XPEHURIRUGLQDU\VKDUHVLQLVVXH 718 210 043 ¥ 6KDUHSULFH FHQWVSHUVKDUH FORVLQJ 14 000 KLJK 14 295 ORZ 12 000 DYHUDJH 13 292 &ORVLQJSULFHQHWDVVHWYDOXHSHUVKDUH H[FOXGLQJ SUHIHUHQFHVKDUHV 1,79 3ULFHHDUQLQJV 3( UDWLR FORVLQJSULFHKHDGOLQHHDUQLQJVSHUVKDUH 12,5 9ROXPHRIVKDUHVWUDGHG PLOOLRQV 363,3 9DOXHRIVKDUHVWUDGHG 5P 48 266,8 0DUNHWFDSLWDOLVDWLRQ 5P 100 549,4

Notes Absa Group’s annual total return for the year ended 31 December 2010 was 12,4%. The Banks’ index outperformed Absa’s share price by 7,28% during the year ended 31 December 2010. Total return was used to calculate the relative performance (calculated using the dividend yield for the year). Includes 1 049 790 shares held by Absa Group Limited Share Incentive Trust (2009: 1 841 624) and 570 000 shares held by Absa Group companies (2009: 545 111).

512 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Ordinary shareholders $VDW'HFHPEHU 2010 Number of 1XPEHURI shares held % VKDUHVKHOG Major ordinary shareholders %DUFOD\V%DQN3/& 398 774 945 55,5 3XEOLF,QYHVWPHQW&RUSRUDWLRQ 67 870 310 9,4 %DWKR%RQNH&DSLWDO 3URSULHWDU\ /LPLWHG 36 649 300 5,1 2OG0XWXDO$VVHW0DQDJHUV 21 678 767 3,0 &RURQDWLRQ)XQG0DQDJHUV 13 863 560 1,9 6WDQOLE$VVHW0DQDJHPHQW 11 880 641 1,7 6DQODP,QYHVWPHQW0DQDJHPHQW 11 578 727 1,6 'LPHQVLRQDO)XQG$GYLVRUV,QFRUSRUDWHG 7 319 695 1,0 7KH9DQJXDUG*URXS,QFRUSRUDWHG 7 160 170 1,0 3UXGHQWLDO3RUWIROLR0DQDJHUV 5 951 365 0,8 2WKHU 135 482 563 19,0 Total 718 210 043 100,0 Shareholder type 3ULQFLSDOVKDUHKROGHU %DUFOD\V%DQN3/& 398 774 945 55,5 3ULYDWH,QYHVWRUV 32 986 031 4,6 2WKHU 286 449 067 39,9 Total 718 210 043 100,0

Ordinary shareholders’ geographical split (%)

4,5 1,7 4,5 2,5 4,6 4,7

56,2 56,5 33,0 31,8

2010 2009

● England and Wales ● South Africa ● United States ● Other countries ● Below threshold

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 513 Shareholder information

Share performance and shareholders’ information

Public and non-public shareholders $VDW'HFHPEHU 2010 Number Number 1XPEHU 1XPEHU of share- of shares RIVKDUH RIVKDUHV holders held % KROGHUV KHOG Public shareholders 40 333 278 947 605 38,8 Non-public shareholders %DUFOD\V%DQN3/& 2 398 774 945 55,5 7UXVWHHVRIWKH$EVD6KDUH ,QFHQWLYH7UXVW 1 1 049 790 0,2 5HODWHGKROGLQJV 19 39 184 642 5,5 'LUHFWRUV©DQGDVVRFLDWHV© EHQHILFLDOKROGLQJV 17 253 061 0,0 °'LUHFW 242 061 °,QGLUHFW 11 000 'LUHFWRUV©DQGDVVRFLDWHV© QRQEHQHILFLDOKROGLQJV °'LUHFW — ¥ °,QGLUHFW —

Total 40 372 718 210 043 100,0

Note Includes the BBBEE shareholding held by Batho Bonke Capital (Proprietary) Limited.

Shareholders’ diary

)LQDQFLDO\HDUHQG 31 December 2010

$QQXDOJHQHUDOPHHWLQJ 21 April 2011

Announcements

$QQRXQFHPHQWRIILQDOUHVXOWV 15 February 2011

$QQRXQFHPHQWRILQWHULPUHVXOWV 2 August 2011

Dividends Declaration Last day Ex dividend Record Payment Dividend date to trade date date date Final December 2010 15 Feb 2011 4 Mar 2011 7 Mar 2011 11 Mar 2011 14 Mar 2011 ,QWHULP-XQH 2 Aug 2011 19 Aug 2011 22 Aug 2011 26 Aug 2011 29 Aug 2011

Note Subject to change.

514 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Shareholder information

Notice of annual general meeting (AGM)

A member of the Company entitled to attend and vote at the below-mentioned meeting is entitled to appoint a proxy or proxies to attend, speak and vote in his/her stead. A proxy need not be a member of the Company. Meeting attendees will be required to provide satisfactory identiﬁcation before being allowed to participate in the meeting.

Absa Group Limited (Incorporated in the Republic of South Africa) Registration number: 1986/003934/06 (the Company) JSE share code: ASA Issuer code: AMAGB ISIN: ZAE000067237 Record date: 19 April 2011

1RWLFHLVKHUHE\JLYHQWKDWWKHWK WZHQW\ILIWK DQQXDOJHQHUDOPHHWLQJ $*0 RIRUGLQDU\VKDUHKROGHUVZLOOEHKHOGLQ WKH3:6FHDOHV$XGLWRULXP$EVD7RZHUV0DLQ6WUHHW-RKDQQHVEXUJRQ7KXUVGD\$SULODWIRUWKH SXUSRVHVRIFRQVLGHULQJDQGLIGHHPHGILWSDVVLQJWKHRUGLQDU\DQGVSHFLDOUHVROXWLRQVEHORZ

Agenda

1. Ordinary resolution number 1 – Annual ﬁnancial statements 7RFRQVLGHUWKH*URXS©VDQGWKH&RPSDQ\©VDXGLWHGDQQXDOILQDQFLDOVWDWHPHQWVLQFOXGLQJWKHUHSRUWVRIWKH GLUHFWRUVDXGLWFRPPLWWHHDQGDXGLWRUVIRUWKH\HDUHQGHG'HFHPEHU Percentage of voting rights required to pass this resolution: 50% + 1 vote

2. Ordinary resolution number 2 – Re-appointment of the auditors ¦5HVROYHGWRUHDSSRLQW3ULFHZDWHUKRXVH&RRSHUV,QF ZLWK0U-RKQ%HQQHWWDVGHVLJQDWHGDXGLWRU DQG(UQVW

Motivation for ordinary resolution number 2 6KDUHKROGHUVDUHUHTXHVWHGWRFRQVLGHUDQGLIGHHPHGDSSURSULDWHWRUHDSSRLQW3ULFHZDWHUKRXVH&RRSHUV,QF ZLWK0U-RKQ%HQQHWWDVGHVLJQDWHGDXGLWRU DQG(UQVW

3. Ordinary resolution number 3 – Re-election of B P Connellan ¦5HVROYHGWKDW%3&RQQHOODQZKRLVUHTXLUHGWRUHWLUHDVDGLUHFWRURIWKH&RPSDQ\DWWKLV$*0 KDYLQJVHUYHG RQWKHERDUGIRUPRUHWKDQQLQH\HDUV DQGZKRLVHOLJLEOHIRUUHHOHFWLRQDQGZKRKDVRIIHUHGKLPVHOIIRUUH HOHFWLRQLVKHUHE\UHDSSRLQWHGDVDGLUHFWRURIWKH&RPSDQ\ZLWKLPPHGLDWHHIIHFW§ Percentage of voting rights required to pass this resolution: 50% + 1 vote

4. Ordinary resolution number 4 – Re-election of G Grifﬁn ¦5HVROYHGWKDW**ULIILQZKRLVUHTXLUHGWRUHWLUHDVDGLUHFWRURIWKH&RPSDQ\DWWKLV$*0 KDYLQJVHUYHGRQ WKHERDUGIRUPRUHWKDQQLQH\HDUV DQGZKRLVHOLJLEOHIRUUHHOHFWLRQDQGZKRKDVRIIHUHGKLPVHOIIRUUHHOHFWLRQ LVKHUHE\UHDSSRLQWHGDVDGLUHFWRURIWKH&RPSDQ\ZLWKLPPHGLDWHHIIHFW§ Percentage of voting rights required to pass this resolution: 50% + 1 vote

Motivation for ordinary resolutions numbers 3 and 4 7KH&RPSDQ\KDVLQWURGXFHGDUHTXLUHPHQWLQWHUPVRIZKLFKDOOGLUHFWRUVZKRKDYHEHHQRQWKHERDUGIRUORQJHU WKDQQLQH\HDUVDUHVXEMHFWWRDQQXDOUHHOHFWLRQE\VKDUHKROGHUVDWWKH$*07KHGLUHFWRUVZKRUHWLUHLQWHUPV RIWKHDERYHUHTXLUHPHQWDWWKH$*0DUH%3&RQQHOODQDQG**ULIILQ7KHWZRGLUHFWRUVDUHHOLJLEOHIRU UHHOHFWLRQDQGKDYHPDGHWKHPVHOYHVDYDLODEOHIRUUHHOHFWLRQ7KHERDUGUHFRPPHQGVWKHLUUHHOHFWLRQ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 515 Shareholder information

Notice of annual general meeting (AGM)

5. Ordinary resolution number 5 – Re-election of Y Z Cuba ¦5HVROYHGWKDW<=&XEDZKRLVUHTXLUHGWRUHWLUHDVDGLUHFWRURIWKH&RPSDQ\DWWKLV$*0DQGZKRLVHOLJLEOH IRUUHHOHFWLRQDQGZKRKDVRIIHUHGKHUVHOIIRUUHHOHFWLRQLVKHUHE\UHDSSRLQWHGDVDGLUHFWRURIWKH&RPSDQ\ ZLWKLPPHGLDWHHIIHFW§ Percentage of voting rights required to pass this resolution: 50% + 1 vote

6. Ordinary resolution number 6 – Re-election of B C M M de Vitry d’Avaucourt ¦5HVROYHGWKDW%&00GH9LWU\G©$YDXFRXUWZKRLVUHTXLUHGWRUHWLUHDVDGLUHFWRURIWKH&RPSDQ\DWWKLV$*0 DQGZKRLVHOLJLEOHIRUUHHOHFWLRQDQGZKRKDVRIIHUHGKLPVHOIIRUUHHOHFWLRQLVKHUHE\UHDSSRLQWHGDVDGLUHFWRU RIWKH&RPSDQ\ZLWKLPPHGLDWHHIIHFW Percentage of voting rights required to pass this resolution: 50% + 1 vote

7. Ordinary resolution number 7 – Re-election of A P Jenkins ¦5HVROYHGWKDW$3-HQNLQVZKRLVUHTXLUHGWRUHWLUHDVDGLUHFWRURIWKH&RPSDQ\DWWKLV$*0DQGZKRLVHOLJLEOH IRUUHHOHFWLRQDQGZKRKDVRIIHUHGKLPVHOIIRUUHHOHFWLRQLVKHUHE\UHDSSRLQWHGDVDGLUHFWRURIWKH&RPSDQ\ ZLWKLPPHGLDWHHIIHFW§ Percentage of voting rights required to pass this resolution: 50% + 1 vote

8. Ordinary resolution number 8 – Re-election of T M Mokgosi-Mwantembe ¦5HVROYHGWKDW700RNJRVL0ZDQWHPEHZKRLVUHTXLUHGWRUHWLUHDVDGLUHFWRURIWKH&RPSDQ\DWWKLV$*0DQG ZKRLVHOLJLEOHIRUUHHOHFWLRQDQGZKRKDVRIIHUHGKHUVHOIIRUUHHOHFWLRQLVKHUHE\UHDSSRLQWHGDVDGLUHFWRURI WKH&RPSDQ\ZLWKLPPHGLDWHHIIHFW§ Percentage of voting rights required to pass this resolution: 50% + 1 vote

9. Ordinary resolution number 9 – Re-election of T S Munday ¦5HVROYHGWKDW760XQGD\ZKRLVUHTXLUHGWRUHWLUHDVDGLUHFWRURIWKH&RPSDQ\DWWKLV$*0DQGZKRLVHOLJLEOH IRUUHHOHFWLRQDQGZKRKDVRIIHUHGKLPVHOIIRUUHHOHFWLRQLVKHUHE\UHDSSRLQWHGDVDGLUHFWRURIWKH&RPSDQ\ ZLWKLPPHGLDWHHIIHFW§ Percentage of voting rights required to pass this resolution: 50% + 1 vote

10. Ordinary resolution number 10 – Re-election of M D C D N C Ramos ¦5HVROYHGWKDW0'&'1&5DPRVZKRLVUHTXLUHGWRUHWLUHDVDGLUHFWRURIWKH&RPSDQ\DWWKLV$*0DQGZKR LVHOLJLEOHIRUUHHOHFWLRQDQGZKRKDVRIIHUHGKHUVHOIIRUUHHOHFWLRQLVKHUHE\UHDSSRLQWHGDVDGLUHFWRURIWKH &RPSDQ\ZLWKLPPHGLDWHHIIHFW§ Percentage of voting rights required to pass this resolution: 50% + 1 vote

Motivation for ordinary resolutions numbers 5 to 10 ,QDGGLWLRQWRWKHUHHOHFWLRQRIWKHGLUHFWRUVZKRKDYHVHUYHGRQWKHERDUGIRUPRUHWKDQQLQH\HDUVRQHWKLUG RI WKH GLUHFWRUV DUH UHTXLUHG WR UHWLUH DW HDFK $*0 LQ WHUPV RI WKH &RPSDQ\©V DUWLFOHV RI DVVRFLDWLRQ 7KHVH GLUHFWRUV PD\ RIIHU WKHPVHOYHV IRU UHHOHFWLRQ 7KH ERDUG UHFRPPHQGV WR VKDUHKROGHUV WKH UHHOHFWLRQ RI WKH GLUHFWRUVPHQWLRQHGDERYHZKRUHWLUHE\URWDWLRQLQWHUPVRI$UWLFOHRIWKH&RPSDQ\©VDUWLFOHVRIDVVRFLDWLRQ DQGZKRDUHHOLJLEOHIRUUHHOHFWLRQDQGZKRKDYHRIIHUHGWKHPVHOYHVIRUUHHOHFWLRQ0:+ODKODZKRDOVRUHWLUHV E\URWDWLRQKDVQRWRIIHUHGKHUVHOIIRUUHHOHFWLRQ

7KHSURILOHVRIWKHGLUHFWRUVVWDQGLQJIRUUHHOHFWLRQDVRXWOLQHGLQRUGLQDU\UHVROXWLRQVWRDERYHDSSHDURQ SDJHRIWKHDQQXDOUHSRUW

516 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

11. Ordinary resolution number 11 – Conﬁrmation of appointment of a director ¦5HVROYHGWKDWWKHDSSRLQWPHQWRI&%HJJVDVDGLUHFWRURIWKH&RPSDQ\RQ-XQHLVKHUHE\FRQILUPHG§

Motivation for ordinary resolution number 11 ,QWHUPVRIWKH&RPSDQ\©VDUWLFOHVRIDVVRFLDWLRQWKHDSSRLQWPHQWE\WKHERDUGRIGLUHFWRUVRUDQ\SHUVRQVDV GLUHFWRUVRIWKH&RPSDQ\GXULQJWKH\HDUDIWHUWKHODVW$*0UHTXLUHVFRQILUPDWLRQE\VKDUHKROGHUVDWWKHILUVW $*0RIWKH&RPSDQ\IROORZLQJWKHDSSRLQWPHQWRIVXFKSHUVRQV0U%HJJVZDVDSSRLQWHGDVDGLUHFWRURIWKH &RPSDQ\ VXEVHTXHQW WR WKH ODVW $*0 7KH ERDUG UHFRPPHQGV WR VKDUHKROGHUV WKDW KLV DSSRLQWPHQW EH FRQILUPHG

12. Ordinary resolution number 12 – Placing of the authorised but unissued ordinary share capital under the control of the directors ¦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§

7KH PD[LPXP QXPEHU RI VKDUHV WKDW FDQ EH DOORWWHG DQG LVVXHG LQ WHUPV RI WKH DERYH LV WKLUW\ILYH PLOOLRQ QLQH KXQGUHG DQG WHQ WKRXVDQG ILYH KXQGUHG DQG WZR RUGLQDU\ VKDUHV EHLQJ ILYHSHUFHQW RIWKH VHYHQKXQGUHGDQGHLJKWHHQPLOOLRQWZRKXQGUHGDQGWHQWKRXVDQGDQGIRUW\ WKUHH RUGLQDU\VKDUHVLQLVVXHDVDW'HFHPEHU Percentage of voting rights required to pass this resolution: 50% + 1 vote

Motivation for ordinary resolution number 12 ,QWHUPVRIWKH&RPSDQLHV$FWWKHPHPEHUVRIWKH&RPSDQ\KDYHWRDSSURYHWKHSODFHPHQWRIWKHXQLVVXHG RUGLQDU\VKDUHVXQGHUWKHFRQWURORIWKHGLUHFWRUV

8QOHVVUHQHZHGWKHH[LVWLQJDXWKRULW\JUDQWHGE\WKHPHPEHUVDWWKHSUHYLRXV$*0RQ$SULOH[SLUHVDW WKHIRUWKFRPLQJDQQXDOJHQHUDOPHHWLQJ7KHDXWKRULW\ZLOOEHVXEMHFWWRWKH&RPSDQLHV$FWWKH%DQNV$FWDQG WKH-6(/LVWLQJV5HTXLUHPHQWV7KHDJJUHJDWHQXPEHURIRUGLQDU\VKDUHVDEOHWREHDOORWWHGDQGLVVXHGLQWHUPV RIWKLVUHVROXWLRQVKDOOEHOLPLWHGWR ILYHSHUFHQW RIWKHQXPEHURIRUGLQDU\VKDUHVLQLVVXHDVDW'HFHPEHU

7KH GLUHFWRUV KDYH GHFLGHG WR VHHN DQQXDO UHQHZDO RI WKLV DXWKRULW\ LQ DFFRUGDQFH ZLWK EHVW SUDFWLFH 7KH GLUHFWRUV KDYH QR FXUUHQW SODQV WR PDNH XVH RI WKLV DXWKRULW\ EXW DUH VHHNLQJ LWV UHQHZDO WR HQVXUH WKDW WKH &RPSDQ\KDVPD[LPXPIOH[LELOLW\LQPDQDJLQJWKH*URXS©VFDSLWDOUHVRXUFHV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 517 Shareholder information

Notice of annual general meeting (AGM)

13. Special resolution number 1 – Remuneration of non-executive directors ¦5HVROYHGWRDSSURYHWKHSURSRVHGIHHVSD\DEOHWRQRQH[HFXWLYHGLUHFWRUVZLWKHIIHFWIURP0D\DVVHW RXWLQWKHWDEOHEHORZ

)HHVIRUWKH Fees for the PRQWKSHULRG 12-month period IURP0D\ from 1 May 2010 to WR$SULO 30 April 2011 ,QFUHDVH &DWHJRU\ 5 R %RDUG&KDLUPDQ 3 500 000 %RDUGPHPEHU 166 900 *URXS$XGLWDQG&RPSOLDQFH&RPPLWWHH *$&& PHPEHU 155 300 *URXS5LVNDQG&DSLWDO0DQDJHPHQW&RPPLWWHH *5&0& PHPEHU 155 300 *URXS5HPXQHUDWLRQDQG+XPDQ5HVRXUFHV &RPPLWWHH *5+5& PHPEHU 82 600 'LUHFWRUV©$IIDLUV&RPPLWWHH '$& PHPEHU 56 800 &RQFHQWUDWLRQ5LVN&RPPLWWHH &R5& LQFRUSRUDWLQJ &UHGLW&RPPLWWHH DQG 56 800 and /DUJH([SRVXUHVDQG*URXS SHU 1 100 per &UHGLW&RPPLWWHH PHPEHU IDFLOLW\UHYLHZHG facility reviewed 6SHFLDOERDUGPHHWLQJ SHUPHHWLQJ 22 900 6SHFLDOERDUGFRPPLWWHHPHHWLQJV LQFOXGLQJ%RDUG )LQDQFH&RPPLWWHH SHUPHHWLQJ 14 700 $GKRFERDUGIHHV 14 700 SHUDGKRFERDUGFRPPLWWHHPHHWLQJRUVWDQGLQJ ERDUGVXEFRPPLWWHHPHHWLQJDWWHQGHG FRQVXOWDQF\ZRUN SHUKRXU 3 300 per hour

Notes

1The Group Chairman’s fee covers chairmanship and membership of all other board committees and subcommittees. 2Executive directors of Absa Group Limited no longer receive fees as members of the Absa Group Limited board. 3The GACC Chairman receives fees equal to three times the fee payable to a GACC member. 4 The Chairmen of board committees and subcommittees other than the GACC receive fees equal to twice the fee payable to members of these committees.

)XOO SDUWLFXODUV RI DOO UHPXQHUDWLRQ DQG EHQHILWV IRU WKH SDVW \HDU DV ZHOO DV WKH SURFHVV IROORZHG E\ WKH *URXS 5HPXQHUDWLRQDQG+XPDQ5HVRXUFHV&RPPLWWHHLQUHFRPPHQGLQJVXFKERDUGUHPXQHUDWLRQDQGEHQHILWVDUHFRQWDLQHG RQSDJHVWRRIWKHDQQXDOUHSRUW Percentage of voting rights required to pass this resolution: 75%

Motivation for special resolution number 1 6KDUHKROGHUV DUH UHTXHVWHG WR FRQVLGHU DQG LI GHHPHG DSSURSULDWH VDQFWLRQ WKH SURSRVHG UHPXQHUDWLRQ SD\DEOH WR QRQH[HFXWLYHGLUHFWRUVDVVHWRXWDERYHZLWKHIIHFWIURP0D\

7KHUHDVRQIRUWKHSDVVLQJRIWKHVSHFLDOUHVROXWLRQLVWRFRPSO\ZLWKWKHSURYLVLRQVRIWKH&RPSDQLHV$FW

7KHHIIHFWRIWKHVSHFLDOUHVROXWLRQLVWKDWLIDSSURYHGE\WKHVKDUHKROGHUVDWWKH$*0WKHIHHVSD\DEOHWRQRQH[HFXWLYH GLUHFWRUVXQWLOWKHQH[W$*0ZLOOEHDVVHWRXWLQWKHWDEOHDERYH

518 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

14. Special resolution number 2 – Amendment of article 149

¦5HVROYHGWKDWWKHHQWLUHH[LVWLQJDUWLFOHRIWKH&RPSDQ\©VDUWLFOHVRIDVVRFLDWLRQEHDQGLVKHUHE\VXEVWLWXWHG IRUWKHIROORZLQJQHZDUWLFOH

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

1RWKLQJFRQWDLQHGLQWKLV$UWLFOHVKDOOLPSRVHDGXW\RQWKHGLUHFWRUVWRVHQGFRSLHVRIVXFKGRFXPHQWVWRDQ\ SHUVRQZKRVHDGGUHVVLVQRWNQRZQWRWKH&RPSDQ\RUZKHUHDQ\VKDUHVRUGHEHQWXUHVDUHMRLQWO\KHOGWRPRUH WKDQRQHRIWKHMRLQWKROGHUVRIVXFKVKDUHVRUGHEHQWXUHV

7KLVUHVROXWLRQLVVXEMHFWWRWKHFRPLQJLQWRODZRIWKH&RPSDQLHV$FWRQRUEHIRUH-XO\

5HDVRQ7KHUHDVRQIRUWKHSDVVLQJRIWKHVSHFLDOUHVROXWLRQLVWRHQDEOHWKH&RPSDQ\WRSURYLGHPHPEHUV GHEHQWXUHKROGHUVDQGSDUWLFLSDQWVZLWKDFRS\RIVXPPDULVHGILQDQFLDOVWDWHPHQWVDQGGLUHFWLRQVIRUREWDLQLQJ FRPSOHWHDQQXDOILQDQFLDOVWDWHPHQWVLQDFFRUGDQFHZLWKWKH$FW

(IIHFW7KLVZLOODOORZWKH&RPSDQ\IRUH[DPSOHWRGLUHFWPHPEHUVGHEHQWXUHKROGHUVDQGSDUWLFLSDQWVWRDQ LQWHUQHWZHEVLWHWRREWDLQDFRS\RIWKHFRPSOHWHDQQXDOILQDQFLDOVWDWHPHQWVIRUWKHSUHFHGLQJILQDQFLDO\HDU 0HPEHUVGHEHQWXUHKROGHUVDQGSDUWLFLSDQWVZLOOKRZHYHUEHHQWLWOHGWRUHTXHVWWKH&RPSDQ\WRVHQGWRWKHP DFRS\RIWKHFRPSOHWHDQQXDOILQDQFLDOVWDWHPHQWV Percentage of voting rights required to pass this resolution: 75%.

15. Special resolution number 3 – Amendment of article 157

¦5HVROYHGWKDWWKHHQWLUHH[LVWLQJDUWLFOHRIWKH&RPSDQ\©VDUWLFOHVRIDVVRFLDWLRQEHDQGLVKHUHE\VXEVWLWXWHG IRUWKHIROORZLQJQHZDUWLFOH

1RWZLWKVWDQGLQJ $UWLFOH DQG DQ\ QRWLFH WR EH JLYHQ E\ WKH &RPSDQ\ VKDOO EH JLYHQ LQ DFFRUGDQFHZLWKWKHSURYLVLRQVRIWKH$FWWKH-6(DQGDQ\DSSOLFDEOHODZDQGJHQHUDOO\WKH&RPSDQ\FDQJLYH DQ\QRWLFHRUGRFXPHQW LQFOXGLQJDVKDUHFHUWLILFDWH WRDVKDUHKROGHU

D SHUVRQDOO\

F DVDJUHHGLQZULWLQJE\WKHVKDUHKROGHUFRQFHUQHG

G ZKHUHDSSURSULDWHE\VHQGLQJRUVXSSO\LQJLWE\HOHFWURQLFPHGLXPWRDQDGGUHVVQRWLILHGE\WKHUHOHYDQW VKDUHKROGHUWRWKH&RPSDQ\IRUWKDWSXUSRVHRU

H ZKHUH DSSURSULDWH E\ PDNLQJ LW DYDLODEOH RQ D ZHEVLWH DQG QRWLI\LQJ WKH VKDUHKROGHU RI LWV DYDLODELOLW\ LQ DFFRUGDQFHZLWKWKLV$UWLFOH§

5HDVRQ7KHUHDVRQIRUWKHUHVROXWLRQLVWRHQDEOHWKH&RPSDQ\WRSURYLGHQRWLFHWRPHPEHUVDQGRWKHUVE\ PHDQVRIHOHFWURQLFPHGLXPLQDFFRUGDQFHZLWKWKH$FWWKH-6(DQGDQ\DSSOLFDEOHODZ

(IIHFW 7KLV ZLOO DOORZ WKH &RPSDQ\ DOZD\V VXEMHFW WR DSSOLFDEOH ODZ WR SURYLGH QRWLFHV DQG GRFXPHQWV WR PHPEHUV GHEHQWXUH KROGHUV DQG SDUWLFLSDQWV E\ YDULRXV PHWKRGV LQFOXGLQJ E\ HOHFWURQLF PHGLXP ZKHUH DSSURSULDWHDQGDSSOLFDEOH Percentage of voting rights required to pass this resolution: 75%.

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 519 Shareholder information

Notice of annual general meeting (AGM)

16. Special resolution number 4 – Deletion of article 157A

5HDVRQ7KHDPHQGPHQWVWRDUWLFOHVDQGZLOOUHVXOWLQDUWLFOH$EHLQJREVROHWHDVWKHDPHQGPHQWV WRVXFKDUWLFOHVZLOODGGUHVVQRWLFHVRUGRFXPHQWVWREHJLYHQE\WKH&RPSDQ\WRDPHPEHUPD\EHJLYHQE\ HOHFWURQLFPHGLXP

(IIHFW$UWLFOH$ZLOOEHGHOHWHGLQLWVHQWLUHW\EXWDVDUHVXOWRIWKHDPHQGPHQWVWRDUWLFOHVDQGWKH &RPSDQ\ZLOOEHHQWLWOHGWRJLYHQRWLFHVRUGRFXPHQWVWRDPHPEHUE\HOHFWURQLFPHGLXP Percentage of voting rights required to pass this resolution: 75%.

Motivation for the special resolutions numbers 2 to 4

6SHFLDOUHVROXWLRQVQXPEHUVWRVHHNWRDPHQGWKHDUWLFOHVRIWKH&RPSDQ\LQRUGHUWRIDFLOLWDWHHOHFWURQLF FRPPXQLFDWLRQV

17. Special resolution number 5 – General repurchases

¦5HVROYHG WKDW WKH &RPSDQ\ RU DQ\ VXEVLGLDU\ RI WKH &RPSDQ\ PD\ VXEMHFW WR WKH &RPSDQLHV $FW WKH &RPSDQ\©VDUWLFOHVRIDVVRFLDWLRQDQGWKH-6(/LVWLQJV5HTXLUHPHQWVDQGDQ\RWKHUVWRFNH[FKDQJHXSRQZKLFK WKHVHFXULWLHVLQWKHFDSLWDORIWKH&RPSDQ\PD\EHTXRWHGRUOLVWHGIURPWLPHWRWLPHUHSXUFKDVHRUGLQDU\VKDUHV LVVXHGE\WKH&RPSDQ\SURYLGHGWKDWWKLVDXWKRULW\VKDOOEHYDOLGRQO\XQWLOWKHGDWHRIWKHQH[W$*0RIWKH &RPSDQ\RUIRU ILIWHHQ PRQWKVIURPWKHGDWHRIWKHUHVROXWLRQZKLFKHYHULVWKHVKRUWHUDQGPD\EHYDULHG E\Dspecial resolutionDWDQ\JHQHUDOPHHWLQJRIWKH&RPSDQ\DWDQ\WLPHSULRUWRWKH$*0§

3XUVXDQWWRWKHDERYHDQGUHTXLUHGLQWHUPVRIWKH-6(/LVWLQJV5HTXLUHPHQWVWKHIROORZLQJDGGLWLRQDOLQIRUPDWLRQLV VXEPLWWHG

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©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

520 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

WKH JHQHUDO UHSXUFKDVH RI DQ\ RUGLQDU\ VKDUHV LV QRWZLWKVWDQGLQJ WKH OLPLW LQ WKH -6( /LVWLQJV 5HTXLUHPHQWV OLPLWHGWRDPD[LPXPRI WHQSHUFHQW RIWKH&RPSDQ\©VLVVXHGRUGLQDU\VKDUHFDSLWDOLQ DQ\RQHILQDQFLDO\HDU ,QWHUPVRIWKHJHQHUDODXWKRULW\JLYHQXQGHUWKLVVSHFLDOUHVROXWLRQDQ\DFTXLVLWLRQRIRUGLQDU\VKDUHVVKDOOEH VXEMHFWWR WKH&RPSDQLHV$FW WKH-6(/LVWLQJV5HTXLUHPHQWVDQGDQ\RWKHUDSSOLFDEOHVWRFNH[FKDQJHUXOHVDVPD\EHDPHQGHGIURPWLPHWR WLPHDQG WKHVDQFWLRQRIDQ\RWKHUUHOHYDQWDXWKRULW\ZKRVHDSSURYDOLVUHTXLUHGLQE\ODZ

$IWHUKDYLQJFRQVLGHUHGWKHHIIHFWRIDQ\UHSXUFKDVHVRIRUGLQDU\VKDUHVSXUVXDQWWRWKLVJHQHUDODXWKRULW\WKH GLUHFWRUVRIWKH&RPSDQ\LQWHUPVRIWKH&RPSDQLHV$FWDQGWKH-6(/LVWLQJV5HTXLUHPHQWVFRQILUPWKDWWKH\ ZLOOQRWXQGHUWDNHVXFKUHSXUFKDVHRIRUGLQDU\VKDUHVXQOHVV WKH&RPSDQ\DQGWKH*URXSZRXOGEHDEOHWRUHSD\WKHLUGHEWVLQWKHRUGLQDU\FRXUVHRIEXVLQHVVIRUWKHSHULRG RI WZHOYH PRQWKVDIWHUWKHGDWHRIWKHQRWLFHRIWKH$*0 WKHDVVHWVRIWKH&RPSDQ\DQGWKH*URXSIDLUO\YDOXHGLQDFFRUGDQFHZLWK,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ 6WDQGDUGVDQGWKH&RPSDQ\©VDFFRXQWLQJSROLFLHVXVHGLQWKHODWHVWDXGLWHG*URXSILQDQFLDOVWDWHPHQWVZLOO EHLQH[FHVVRIWKHOLDELOLWLHVRIWKH&RPSDQ\DQGWKH*URXSIRUWKHSHULRGRI WZHOYH PRQWKVDIWHUWKHGDWH RIWKHQRWLFHRIWKH$*0 WKH&RPSDQ\DQGWKH*URXSZLOOKDYHDGHTXDWHFDSLWDODQGUHVHUYHVIRURUGLQDU\EXVLQHVVSXUSRVHVIRUWKH SHULRGRI WZHOYH PRQWKVDIWHUWKHGDWHRIWKHQRWLFHRIWKH$*0DQG WKHZRUNLQJFDSLWDORIWKH&RPSDQ\DQGWKH*URXSZLOOEHDGHTXDWHIRURUGLQDU\EXVLQHVVSXUSRVHVIRUWKH SHULRGRI WZHOYH PRQWKVDIWHUWKHGDWHRIWKHQRWLFHRIWKH$*0

7KH&RPSDQ\XQGHUWDNHVWKDWLWZLOOQRWHQWHUWKHPDUNHWWRUHSXUFKDVHWKH&RPSDQ\©VVHFXULWLHVLQWHUPVRIWKLV JHQHUDO DXWKRULW\ XQWLO VXFK WLPH DV WKH &RPSDQ\©V VSRQVRU KDV SURYLGHG ZULWWHQ FRQILUPDWLRQ WR WKH -6( UHJDUGLQJWKHDGHTXDF\RIWKH&RPSDQ\©VZRUNLQJFDSLWDOLQDFFRUGDQFHZLWK6FKHGXOHRIWKH-6(/LVWLQJV 5HTXLUHPHQWV

7KH PD[LPXP QXPEHU RI VKDUHV WKDW FDQ EH UHSXUFKDVHG XQGHU WKLV DXWKRULW\ DPRXQWV WR VHYHQW\RQH PLOOLRQ HLJKW KXQGUHG DQG WZHQW\RQH WKRXVDQG DQG IRXU RUGLQDU\ VKDUHV WHQ SHUFHQW RI VHYHQKXQGUHGDQGHLJKWHHQPLOOLRQWZRKXQGUHGDQGWHQWKRXVDQGDQGIRUW\WKUHH RUGLQDU\VKDUHV LQLVVXHDVDW'HFHPEHU

)RUWKHSXUSRVHVRIFRQVLGHULQJWKHVSHFLDOUHVROXWLRQDQGLQFRPSOLDQFHZLWKSDUDJUDSKRIWKH-6(/LVWLQJV 5HTXLUHPHQWVFHUWDLQLQIRUPDWLRQLVHLWKHUOLVWHGEHORZRUKDVEHHQLQFOXGHGLQWKHDQQXDOUHSRUW 'LUHFWRUVDQGPDQDJHPHQW¤UHIHUWRSDJHVWRDQGWRRIWKHDQQXDOUHSRUW 0DMRUVKDUHKROGHUV¤UHIHUWRSDJHRIWKHDQQXDOUHSRUW 1RPDWHULDOFKDQJHVLQWKHILQDQFLDORUWUDGLQJSRVLWLRQRIWKH&RPSDQ\DQGLWVVXEVLGLDULHVVLQFH'HFHPEHU 'LUHFWRUV©LQWHUHVWVLQVHFXULWLHV¤UHIHUWRSDJHRIWKHDQQXDOUHSRUW 6KDUHFDSLWDORIWKH&RPSDQ\¤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©VILQDQFLDOSRVLWLRQ RYHUWKHSDVW WZHOYH PRQWKVSUHFHGLQJWKHGDWHRIWKLVQRWLFHRI$*0 Percentage of voting rights required to pass this resolution: 75%

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 521 Shareholder information

Notice of annual general meeting (AGM)

Motivation for the special resolution number 5

7KH &RPSDQ\©V DUWLFOHV RI DVVRFLDWLRQ FRQWDLQ D SURYLVLRQ DOORZLQJ WKH &RPSDQ\ RU DQ\ VXEVLGLDU\ RI WKH &RPSDQ\WRUHSXUFKDVHVHFXULWLHVLVVXHGE\WKH&RPSDQ\7KLVLVVXEMHFWWRWKHDSSURYDORIWKHPHPEHUVLQ WHUPV RI WKH &RPSDQ\©V DUWLFOHV RI DVVRFLDWLRQ WKH &RPSDQLHV $FW WKH %DQNV $FW DQG WKH -6( /LVWLQJV 5HTXLUHPHQWV7KHH[LVWLQJJHQHUDODXWKRULW\JUDQWHGE\PHPEHUVDWWKHSUHYLRXV$*0RQ$SULOLVGXH WRH[SLUHXQOHVVUHQHZHG

7KHGLUHFWRUVDUHRIWKHRSLQLRQWKDWLWZRXOGEHLQWKHEHVWLQWHUHVWVRIWKH&RPSDQ\WRH[WHQGVXFKJHQHUDO DXWKRULW\DQGWKHUHE\DOORZWKH&RPSDQ\RUDQ\VXEVLGLDU\RIWKH&RPSDQ\WREHLQDSRVLWLRQWRUHSXUFKDVHWKH VHFXULWLHVLVVXHGE\WKH&RPSDQ\WKURXJKWKHRUGHUERRNRIWKH-6(VKRXOGWKHPDUNHWFRQGLWLRQVDQGSULFH MXVWLI\VXFKDFWLRQ

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

7KHUHDVRQIRUWKHSDVVLQJRIWKHVSHFLDOUHVROXWLRQLVWRHQDEOHWKH&RPSDQ\RUDQ\RILWVVXEVLGLDULHVE\ZD\ RIDJHQHUDODXWKRULW\IURPVKDUHKROGHUVWRUHSXUFKDVHRUGLQDU\VKDUHVLVVXHGE\WKH&RPSDQ\

7KHHIIHFWRIWKHVSHFLDOUHVROXWLRQRQFHUHJLVWHUHGZLOOEHWRSHUPLWWKH&RPSDQ\RUDQ\RILWVVXEVLGLDULHVWR UHSXUFKDVHVXFKRUGLQDU\VKDUHVLQWHUPVRIWKH&RPSDQLHV$FW7KLVDXWKRULW\ZLOORQO\EHXVHGLIFLUFXPVWDQFHV DUHDSSURSULDWH

522 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU

Proxy and voting procedures 0HPEHUVZKRKDYHQRWGHPDWHULDOLVHGWKHLUVKDUHVRUZKRKDYHGHPDWHULDOLVHGWKHLUVKDUHVZLWK¨RZQQDPH©UHJLVWUDWLRQ DUHHQWLWOHGWRDWWHQGRUYRWHDWWKH$*0DQGDUHHQWLWOHGWRDSSRLQWDSUR[\WRDWWHQGVSHDNDQGYRWHLQWKHLUVWHDG7KH SHUVRQVRDSSRLQWHGQHHGQRWEHDPHPEHURIWKH&RPSDQ\

&HUWLILFDWHG PHPEHUV RU GHPDWHULDOLVHG PHPEHUV ZLWK ¨RZQ QDPH© UHJLVWUDWLRQ ZKR DUH XQDEOH WR DWWHQG WKH $*0PHHWLQJEXWZLVKWREHUHSUHVHQWHGWKHUHDWPXVWFRPSOHWHWKHSUR[\IRUPRQSDJHRIWKHDQQXDOUHSRUW

,QRUGHUWREHHIIHFWLYHSUR[\IRUPVVKRXOGEHGHOLYHUHGWRWKHWUDQVIHUVHFUHWDULHV&RPSXWHUVKDUH,QYHVWRU6HUYLFHV 3URSULHWDU\ /LPLWHGDW0DUVKDOO6WUHHW-RKDQQHVEXUJRUEHSRVWHGWR32%R[0DUVKDOOWRZQ VRDVWRUHDFKWKLVDGGUHVVQRODWHUWKDQRQ7XHVGD\$SULO

0HPEHUVZKRKDYHGHPDWHULDOLVHGWKHLUVKDUHVRWKHUWKDQWKRVHPHPEHUVZKRKDYHGHPDWHULDOLVHGWKHLUVKDUHVZLWK¨RZQ QDPH©UHJLVWUDWLRQVKRXOGFRQWDFWWKHLUSDUWLFLSDQW IRUPHUO\&HQWUDO6HFXULWLHV'HSRVLWRU\3DUWLFLSDQW RUWKHLUVWRFNEURNHU WRIXUQLVKWKHLUSDUWLFLSDQWRUVWRFNEURNHUZLWKWKHLUYRWLQJLQVWUXFWLRQVRU LQWKHHYHQWWKDWWKH\ZLVKWRDWWHQGWKHPHHWLQJWRREWDLQWKHQHFHVVDU\OHWWHURIUHSUHVHQWDWLRQWRGRVR $VKDUHKROGHUHQWLWOHGWRDWWHQGDQGYRWHDWWKHPHHWLQJLVHQWLWOHGWRDSSRLQWDSUR[\WRDWWHQGSDUWLFLSDWHLQDQGYRWHDW WKHPHHWLQJLQWKHSODFHRIWKHVKDUHKROGHU$SUR[\QHHGQRWEHDPHPEHURIWKH&RPSDQ\

0HHWLQJDWWHQGHHVZLOOEHUHTXLUHGWRSURYLGHVDWLVIDFWRU\LGHQWLILFDWLRQEHIRUHEHLQJDOORZHGWRSDUWLFLSDWHLQWKHPHHWLQJ

%\RUGHUWRWKHERDUG

S Martin Group Secretary -RKDQQHVEXUJ 0DUFK

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 523 Shareholder information

Appendix to the notice of annual general meeting

Important notes about the annual general meeting (AGM)

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

Other important notes

1. General 6KDUHKROGHUVZLVKLQJWRDWWHQGWKH$*0KDYHWRHQVXUHEHIRUHKDQGZLWKWKH&RPSDQ\©VWUDQVIHUVHFUHWDULHVWKDW WKHLUVKDUHVDUHLQIDFWUHJLVWHUHGLQWKHLUQDPH6KRXOGWKLVQRWEHWKHFDVHDQGWKHVKDUHVDUHUHJLVWHUHGLQDQ\ RWKHUQDPHRULQWKHQDPHRIDQRPLQHHFRPSDQ\LWLVLQFXPEHQWRQVKDUHKROGHUVDWWHQGLQJWKHPHHWLQJWRPDNH WKHQHFHVVDU\DUUDQJHPHQWVZLWKWKDWSDUW\LQZKRVHQDPHWKHVKDUHVDUHUHJLVWHUHGWREHDEOHWRDWWHQGDQG YRWHLQWKHLUSHUVRQDOFDSDFLW\7KHSUR[\IRUPFRQWDLQVGHWDLOHGLQVWUXFWLRQVLQWKLVUHJDUG

2. Certiﬁcated shareholders and dematerialised shareholders with ‘own name’ registration ,I\RXDUHWKHUHJLVWHUHGKROGHURIFHUWLILFDWHG$EVD*URXS/LPLWHGRUGLQDU\VKDUHVRUKROGGHPDWHULDOLVHG$EVD *URXS /LPLWHG RUGLQDU\ VKDUHV LQ \RXU RZQ QDPH DQG \RX DUH XQDEOH WR DWWHQG WKH $*0 EXW ZLVK WR EH UHSUHVHQWHG DW WKH $*0 \RX PXVW FRPSOHWH DQG UHWXUQ WKH DWWDFKHG IRUP RI SUR[\ LQ DFFRUGDQFH ZLWK WKH LQVWUXFWLRQVFRQWDLQHGWKHUHLQVRDVWREHUHFHLYHGE\WKHWUDQVIHUVHFUHWDULHV&RPSXWHUVKDUH,QYHVWRU6HUYLFHV 3URSULHWDU\ /LPLWHGDW0DUVKDOO6WUHHW-RKDQQHVEXUJ 32%R[0DUVKDOOWRZQ E\QRODWHU WKDQRQ7XHVGD\$SULO

3. Dematerialised shareholders ,I\RXDUHWKHKROGHURIGHPDWHULDOLVHG$EVD*URXSRUGLQDU\VKDUHVEXWQRWWKHKROGHURIGHPDWHULDOLVHG$EVD RUGLQDU\VKDUHVLQ\RXURZQQDPH\RXPXVWWLPHRXVO\SURYLGH\RXUSDUWLFLSDQWRUVWRFNEURNHUZLWK\RXUYRWLQJ LQVWUXFWLRQVIRUWKH$*0LQWHUPVRIWKHFXVWRG\DJUHHPHQWHQWHUHGLQWRZLWK\RXUSDUWLFLSDQWRUVWRFNEURNHU,I KRZHYHU\RXZLVKWRDWWHQGWKH$*0LQSHUVRQWKHQ\RXPXVWUHTXHVW\RXUSDUWLFLSDQWRUVWRFNEURNHUWLPHRXVO\ WRSURYLGH\RXZLWKWKHQHFHVVDU\OHWWHURIUHSUHVHQWDWLRQWRDWWHQGDQGYRWH\RXUVKDUHV

4. Proxies 6KDUHKROGHUVPXVWHQVXUHWKDWWKHLUSUR[\IRUPVUHDFKWKHWUDQVIHUVHFUHWDULHVDVLQGLFDWHGLQQRWHDERYHE\ QRODWHUWKDQRQ7XHVGD\$SULO

5. Enquiries $Q\ VKDUHKROGHU KDYLQJ GLIILFXOWLHV RU TXHULHV ZLWK UHJDUG WR WKH $*0 RU WKH DERYH PD\ FRQWDFW WKH *URXS 6HFUHWDU\6DULWD0DUWLQRQ

6. Results of the AGM 7KHUHVXOWVRIWKHPHHWLQJZLOOEHSRVWHGRQ6(16DVVRRQDVSUDFWLFDEO\SRVVLEOHDIWHUWKH$*0

524 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Form of proxy

Annual general meeting NUMBER OF SHARES Absa Group Limited 5HJLVWUDWLRQQXPEHU -6(FRGH$6$ ,VVXHUFRGH$0$*% ,6,1FRGH=$( $EVDRUWKH*URXS Record date: 19 April 2011 72%(&203/(7('21/<%<&(57,),&$7('6+$5(+2/'(56$1''(0$7(5,$/,6('6+$5(+2/'(56:,7+ ¨2:11$0(©5(*,675$7,21 ,:H QDPH V LQEORFNOHWWHUV RI DGGUHVVLQEORFNOHWWHUV EHLQJDPHPEHURIWKH&RPSDQ\HQWLWOHGWRYRWHDQGKROGLQJ VKDUHVGRKHUHE\DSSRLQW RUIDLOLQJKLPKHU

RUIDLOLQJKLPKHU WKHFKDLUSHUVRQRIWKHDQQXDOJHQHUDOPHHWLQJ $*0 DVP\RXUSUR[\WRDWWHQGDQGVSHDNDQGYRWHIRUPHXVDQGRQP\ RXUEHKDOIDWWKH$*0RIPHPEHUVRIWKH&RPSDQ\WREHKHOGLQWKH3:6FHDOHV$XGLWRULXP$EVD7RZHUV0DLQ 6WUHHW-RKDQQHVEXUJRQ7KXUVGD\$SULODWDQGDWDQ\DGMRXUQPHQWWKHUHRIDVIROORZV In favour of Against Abstain 7RFRQVLGHUWKH*URXSDQG&RPSDQ\ILQDQFLDOVWDWHPHQWV 7RUHDSSRLQWWKH&RPSDQ\©VDXGLWRUV 5HHOHFWLRQRI%3&RQQHOODQ 5HHOHFWLRQRI**ULIILQ 5HHOHFWLRQRI<=&XED 5HHOHFWLRQRI%&00GH9LWU\G©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

3OHDVHLQGLFDWHZLWKDQ¨;©LQWKHDSSURSULDWHVSDFHVSURYLGHGDERYHKRZ\RXZLVK\RXUYRWHWREHFDVW,IQRLQGLFDWLRQLV JLYHQWKHSUR[\ZLOOEHHQWLWOHGWRYRWHRUDEVWDLQDVKHVKHGHHPVILW $PHPEHURIWKH&RPSDQ\HQWLWOHGWRDWWHQGDQGYRWHDWWKHDERYHPHQWLRQHGPHHWLQJLVHQWLWOHGWRDSSRLQWDSUR[\RU SUR[LHVWRDWWHQGVSHDNDQGYRWHLQKLVKHUVWHDG$SUR[\QHHGQRWEHDPHPEHURIWKH&RPSDQ\0HHWLQJDWWHQGHHV ZLOOEHUHTXLUHGWRSURYLGHVDWLVIDFWRU\LGHQWLILFDWLRQEHIRUHEHLQJDOORZHGWRSDUWLFLSDWHLQWKHPHHWLQJ 6LJQHGDW RQ )XOOQDPH V LQEORFNOHWWHUV 6LJQDWXUH V $VVLVWHGE\ JXDUGLDQ 'DWH ,IVLJQLQJLQDUHSUHVHQWDWLYHFDSDFLW\VHHQRWHRQSDJH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 525 Shareholder information

Notes to the form of proxy

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©VUHJLVWHU ZKRWHQGHUVDYRWH ZKHWKHULQSHUVRQRUE\SUR[\ ZLOO EHDFFHSWHGWRWKHH[FOXVLRQRIWKHYRWH V RIWKHRWKHUMRLQWVKDUHKROGHUV 6KDUHKROGHUVKROGLQJGHPDWHULDOLVHGVKDUHV ZLWKRXW¨RZQQDPH© UHJLVWUDWLRQ ZKRZLVKWRDWWHQGWKH$*0PXVW FRQWDFWWKHLUSDUWLFLSDQWRUVWRFNEURNHUZKRZLOOIXUQLVKWKHPZLWKWKHQHFHVVDU\OHWWHURIUHSUHVHQWDWLRQWRDWWHQG WKH$*0$OWHUQDWLYHO\VXFKVKDUHKROGHUVPXVWLQVWUXFWWKHLUSDUWLFLSDQWRUVWRFNEURNHUDVWRKRZWKH\ZLVKWRYRWH LQWKLVUHJDUG7KLVKDVWREHGRQHLQWHUPVRIWKHDJUHHPHQWHQWHUHGLQWREHWZHHQVXFKVKDUHKROGHUVDQGWKHLU SDUWLFLSDQWRUVWRFNEURNHU

526 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Reference tools Contents

Reference tools Pages 529 – 546

529 *OREDO5HSRUWLQJ,QLWLDWLYHLQGH[ 5HIHUHQFHWRROVWRDVVLVWWKHUHDGHU 543 *ORVVDU\ Reference tools

Global Reporting Initiative (GRI) G3 Index

GRI Indi- cator Index Disclosure Page

Strategy and analysis

6WDWHPHQWIURPWKHPRVWVHQLRUGHFLVLRQ $EVDLVFRPPLWWHGWRHQVXULQJWKHVXVWDLQDELOLW\ PDNHURIWKHRUJDQLVDWLRQ HJFKLHIH[HFXWLYH RILWVRSHUDWLRQV$EVDDLPVWREHDUHVSHFWHG FKDLUSHUVRQRUHTXLYDOHQWVHQLRUSRVLWLRQ FRUSRUDWHFLWL]HQ7KLVLVHYLGHQFHGLQERWK DERXWWKHUHOHYDQFHRIVXVWDLQDELOLW\WRWKH WKH&KDLUPDQ©VVWDWHPHQWDQG*URXS&KLHI RUJDQLVDWLRQDQGLWVVWUDWHJ\ ([HFXWLYH©VUHYLHZ 'HVFULSWLRQRINH\LPSDFWVULVNVDQG $EVD©VLPSDFWVULVNDQGRSSRUWXQLWLHVDUH RSSRUWXQLWLHV LGHQWLILHGWKURXJKRXWWKHUHSRUWVSHFLILFDOO\LQ WKHULVNPDQDJHPHQWDQGVXVWDLQDELOLW\VHFWLRQV RIWKHUHSRUW

Organisational proﬁle

1DPHRIWKHRUJDQLVDWLRQ $EVD*URXS/LPLWHG 3ULPDU\EUDQGVSURGXFWVDQGRUVHUYLFHV $EVDSURYLGHVWKHIXOOUDQJHRIEDQNLQJDQG ILQDQFLDOVHUYLFHVSURGXFWVDQGVROXWLRQV 2SHUDWLRQDOVWUXFWXUHRIWKHRUJDQLVDWLRQ $EVDKDVDQXPEHURIFRUHVHJPHQWVEHLQJ LQFOXGLQJPDLQGLYLVLRQVRSHUDWLQJFRPSDQLHV 5HWDLO%DQNLQJ$EVD%XVLQHVV%DQN$EVD VXEVLGLDULHVDQGMRLQWYHQWXUHV &DSLWDO)LQDQFLDO6HUYLFHVDQGWKHFRUSRUDWH FDSLWDODQGIXQGLQJFHQWUHV%RWKOHJDODQG ILQDQFLDOUHSRUWLQJVWUXFWXUHVDUHGLVFORVHG /RFDWLRQRIWKHRUJDQLVDWLRQ©VKHDGTXDUWHUV $EVD*URXS/LPLWHGKHDGTXDUWHUVDUHEDVHG ¥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©VVL]HVWUXFWXUHRURZQHUVKLS 6RPHDFTXLVLWLRQVDQGGLVSRVDOVZHUHPDGHLQ WKHQRUPDOFRXUVHRIEXVLQHVV $ZDUGVUHFHLYHGGXULQJWKHUHSRUWLQJSHULRG $EVDUHFHLYHGQXPHURXVDZDUGVGXULQJWKH\HDU XQGHUUHYLHZ

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 529 Reference tools

Global Reporting Initiative (GRI) G3 Index

GRI Indi- cator Index Disclosure Page

Report parameters

5HSRUWLQJSHULRGIRULQIRUPDWLRQSURYLGHG )RUWKH\HDUHQGHG'HFHPEHU ¥ 'DWHRIPRVWUHFHQWSUHYLRXVUHSRUW )RUWKH\HDUHQGHG'HFHPEHU ¥ 5HSRUWLQJF\FOH DQQXDOELDQQXDOHWF $EVDUHSRUWVRQFHD\HDU DQQXDOUHVXOWV ¥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©VVWDNHKROGHUJURXSVDUHGHILQHGE\ WKHERDUG %RXQGDU\RIWKHUHSRUW $EVD©VUHSRUWLQJFRYHUVWKHHQWLUH*URXSEHLQJ ,QVLGHIURQW UHWDLOFRPPHUFLDOFRUSRUDWHDQGLQYHVWPHQW FRYHU EDQNLQJDVZHOODVWKH*URXS©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¥ UHSRUWLQJSHULRGVLQWKHVFRSHERXQGDU\RU PHDVXUHPHQWPHWKRGVDSSOLHGLQWKHUHSRUW 7DEOHLGHQWLI\LQJWKHORFDWLRQRIWKHVWDQGDUG *OREDO5HSRUWLQJ,QLWLDWLYH,QGH[ GLVFORVXUHVLQWKHUHSRUW 3ROLF\DQGFXUUHQWSUDFWLFHZLWKUHJDUGWR )LQDQFLDOLQIRUPDWLRQ7KHUHSRUWKDVEHHQ VHHNLQJH[WHUQDODVVXUDQFHRIWKHUHSRUW UHYLHZHGE\WKH$EVD©VH[WHUQDODXGLWRUV 1RQILQDQFLDOLQIRUPDWLRQ/LPLWHGDVVXUDQFHKDV EHHQREWDLQHGRQDQXPEHURILQGLFDWRUV

530 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU GRI Indi- cator Index Disclosure Page

Governance, commitments and engagement

Governance issues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©V$*0VSHFLDOJHQHUDOPHHWLQJV WRSURYLGHUHFRPPHQGDWLRQVRUGLUHFWLRQWRWKH DQGGLUHFWDQGLQGLUHFWFRPPXQLFDWLRQPHGLD KLJKHVWJRYHUQDQFHERG\ SURYLGHPHFKDQLVPVIRUIHHGEDFN,QDGGLWLRQ PDQDJHPHQWLQWHUDFWGLUHFWO\ZLWKVKDUHKROGHUV /LQNDJHEHWZHHQFRPSHQVDWLRQIRU 1RQH[HFXWLYHGLUHFWRUV©FRPSHQVDWLRQLVEDVHG PHPEHUVRIWKHKLJKHVWJRYHUQDQFHERG\ RQWKHVL]HDQGFRPSOH[LW\RIWKH*URXS VHQLRUPDQDJHUVDQGH[HFXWLYHVDQGWKH 3HUIRUPDQFHERQXVHVDUHOLQNHGWRSHUIRUPDQFH RUJDQLVDWLRQ©VSHUIRUPDQFH LQWHUPVRIWDUJHWHGSHUIRUPDQFHJRDOVDQGDUH EDVHGRQDQHFRQRPLFYDOXHDGGHGDSSURDFK 3URFHVVLQSODFHIRUWKHKLJKHVWJRYHUQDQFH 7KH*URXSKDVDSROLF\JRYHUQLQJFRQIOLFWV ERG\WRHQVXUHFRQIOLFWVRILQWHUHVWDUH RILQWHUHVW7KHSROLF\LVSURYLGHGWRDOOQHZ DYRLGHG GLUHFWRUVRQDSSRLQWPHQWDQGLVUHYLHZHGE\WKH ERDUGDQQXDOO\ 3URFHVVIRUGHWHUPLQLQJWKHTXDOLILFDWLRQVDQG 7KHERDUG©VVNLOOVH[SHULHQFHFRPSHWHQFLHV H[SHUWLVHRIWKHKLJKHVWJRYHUQDQFHERG\ DQGTXDOLILFDWLRQVDUHUHYLHZHGDQQXDOO\ IRUJXLGLQJWKHRUJDQLVDWLRQ©VVWUDWHJ\RQ HFRQRPLFHQYLURQPHQWDODQGVRFLDOWRSLFV ,QWHUQDOO\GHYHORSHGVWDWHPHQWVRIPLVVLRQ $EVDKDVDZHOOGHILQHGSXUSRVHYLVLRQ RUYDOXHVFRGHVRIFRQGXFWDQGSULQFLSOHV DQGPLVVLRQVWDWHPHQW7KH*URXSDOVRKDV UHOHYDQWWRHFRQRPLFHQYLURQPHQWDODQG LGHQWLILHGYDOXHVDQGDFRGHRIHWKLFV VRFLDOSHUIRUPDQFHDQGWKHVWDWXVRIWKHLU 7KHVHDUHDSSOLHGFRQVLVWHQWO\DFURVVWKH LPSOHPHQWDWLRQ *URXS 3URFHGXUHVRIWKHKLJKHVWJRYHUQLQJERG\IRU &RYHUHGLQWKHFRUSRUDWHJRYHUQDQFHVWDWHPHQW RYHUVHHLQJWKHRUJDQLVDWLRQ©VLGHQWLILFDWLRQDQG PDQDJHPHQWRIHFRQRPLFHQYLURQPHQWDODQG VRFLDOSHUIRUPDQFH 3URFHVVHVIRUHYDOXDWLQJWKHKLJKHVW 7KHERDUGFRQGXFWVDFROOHFWLYHERDUG JRYHUQDQFHERG\©VRZQSHUIRUPDQFH HYDOXDWLRQGXULQJWKHILUVWTXDUWHURIHYHU\\HDU SDUWLFXODUO\ZLWKUHVSHFWWRHFRQRPLF 7KH'$&FRQVLGHUVWKHUHVXOWVRIWKHHYDOXDWLRQ HQYLURQPHQWDODQGVRFLDOSHUIRUPDQFH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 531 Reference tools

Global Reporting Initiative (GRI) G3 Index

GRI Indi- cator Index Disclosure Page

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©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

Economic approach and performance indicators

(& 'LUHFWHFRQRPLFYDOXHJHQHUDWHGDQG 7KH*URXSSRVWHGKHDGOLQHHDUQLQJV GLVWULEXWHGLQFOXGLQJUHYHQXHVRSHUDWLQJ RI5PLOOLRQIRUWKH\HDUHQGHG FRVWVHPSOR\HHFRPSHQVDWLRQGRQDWLRQV 'HFHPEHU DQGRWKHUFRPPXQLW\LQYHVWPHQWVUHWDLQHG HDUQLQJVDQGSD\PHQWVWRFDSLWDOSURYLGHUV DQGJRYHUQPHQWV (& )LQDQFLDOLPSOLFDWLRQVDQGRWKHUULVNVDQG 7KHHQYLURQPHQWDOULVNGHSDUWPHQWHQVXUHV RSSRUWXQLWLHVIRUWKHRUJDQLVDWLRQ©VDFWLYLWLHV WKDWHQYLURQPHQWDOULVNVDUHPDQDJHGDWDQ GXHWRFOLPDWHFKDQJH DSSURSULDWHVWDQGDUGDFURVVWKH*URXS (& &RYHUDJHRIWKHRUJDQLVDWLRQ©VGHILQHGEHQHILW &RQWDLQHGLQQRWHRIWKHILQDQFLDOVWDWHPHQWV SODQREOLJDWLRQV (& 6LJQLILFDQWILQDQFLDODVVLVWDQFHUHFHLYHGIURP $EVDGRHVQRWUHFHLYHDQ\ILQDQFLDODVVLVWDQFH ¥ JRYHUQPHQW IURPDQ\JRYHUQPHQW (& 5DQJHRIUDWLRVRIVWDQGDUGHQWU\OHYHOZDJH (QWU\OHYHOVDODULHVDUHEDVHGRQDQQXDOUHYLHZV FRPSDUHGZLWKORFDOPLQLPXPZDJHDW RIVDODULHVDPRQJVWWKHPDUNHW$EVDFRPSOLHV VLJQLILFDQWORFDWLRQVRIRSHUDWLRQ ZLWKDOODSSOLFDEOHPLQLPXPZDJHOHJLVODWLRQDQG RIIHUVFRPSHWLWLYHVDODULHV

532 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU GRI Indi- cator Index Disclosure Page

(& 3ROLF\SUDFWLFHVDQGSURSRUWLRQRIVSHQGLQJRQ $EVDKDVDFOHDUDSSURDFKSURFXUHPHQWZKLFKLV ORFDOO\EDVHGVXSSOLHUVDWVLJQLILFDQWORFDWLRQV JXLGHGE\WKH%%%((&R*3 RIRSHUDWLRQ (& 3URFHGXUHVIRUORFDOKLULQJDQGSURSRUWLRQ 7KHPDMRULW\RI$EVD©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

Environmental performance indicators

(1 0DWHULDOVXVHGE\ZHLJKWRUYROXPH $EVDLVQRWDPDMRUFRQVXPHURIPDWHULDO3DSHU LVWKHPDMRUPDWHULDOXVHG (1 3HUFHQWDJHRIPDWHULDOVXVHGWKDWDUHUHF\FOHG $EVDHQGHDYRXUVWRIDFLOLWDWHUHF\FOLQJZKHUHYHU LQSXWPDWHULDOV SRVVLEOH (1 'LUHFWHQHUJ\FRQVXPSWLRQE\SULPDU\HQHUJ\ (OHFWULFLW\LVWKH*URXS©VFRUHHQHUJ\VRXUFH VRXUFH *DVLVEHFRPLQJLQFUHDVLQJO\LPSRUWDQWZLWKWKH FRPSOHWLRQRIWKHHQHUJ\FHQWUHDWWKH*URXS©V KHDGRIILFHFDPSXV (1 ,QGLUHFWHQHUJ\FRQVXPSWLRQE\SULPDU\ $EVDSULPDULO\XVHVHOHFWULFLW\ VRXUFH (1 (QHUJ\VDYHGGXHWRFRQVHUYDWLRQDQG $QXPEHURILQLWLDWLYHVZHUHLPSOHPHQWHG HIILFLHQF\LPSURYHPHQWV FRXSOHGZLWKWKHFRPSOHWLRQRIWKHHQHUJ\FHQWUH DWWKH*URXS©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¥ ZLWKGUDZDORIZDWHU (1 3HUFHQWDJHDQGWRWDOYROXPHRIZDWHUUHF\FOHG 1RWGLVFORVHG RUUHXVHG

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 533 Reference tools

Global Reporting Initiative (GRI) G3 Index

GRI Indi- cator Index Disclosure Page

(1 /RFDWLRQDQGVL]HRIODQGRZQHGOHDVHG $EVDKDVQRGLUHFWLPSDFWRQELRGLYHUVLW\ ¥ PDQDJHGLQRUDGMDFHQWWRSURWHFWHGDUHDV SURWHFWHGDUHDVDVWKH*URXSSUHGRPLQDQWO\ DQGDUHDVRIKLJKELRGLYHUVLW\YDOXHRXWVLGH RFFXSLHVRIILFHV SURWHFWHGDUHDV (1 'HVFULSWLRQRIVLJQLILFDQWLPSDFWVRIDFWLYLWLHV $EVDRSHUDWLRQVKDYHQRGLUHFWLPSDFWRQ ¥ SURGXFWVDQGVHUYLFHVRQELRGLYHUVLW\LQ ELRGLYHUVLW\LQSURWHFWHGDUHDV SURWHFWHGDUHDV (1 +DELWDWVSURWHFWHGRUUHVWRUHG 1RWDSSOLFDEOH ¥ (1 6WUDWHJLHVFXUUHQWDFWLRQVDQGIXWXUHSODQVIRU 1RWDSSOLFDEOH ¥ PDQDJLQJLPSDFWVRQELRGLYHUVLW\ (1 1XPEHURI,8&15HG/LVWVSHFLHV 1RQH ¥ (1 7RWDOGLUHFWDQGLQGLUHFWJUHHQKRXVHJDV $EVDODXQFKHGDSURMHFWWRPHDVXUHRYHUDOO HPLVVLRQVE\ZHLJKW HOHFWULFLW\XVHDQGWRSURYLGHDQDFFXUDWHHQHUJ\ XVDJHEDVHOLQHDVHOHFWULFLW\LVRIWKH FDUERQIRRWSULQW (1 2WKHUUHOHYDQWLQGLUHFWJUHHQKRXVHJDV 1RWPHDVXUHG ¥ HPLVVLRQVE\ZHLJKW (1 ,QLWLDWLYHVWRUHGXFHJUHHQKRXVHJDVHPLVVLRQV $EVDKDVLQVWDOOHGDJDVHQHUJ\FHQWUHDQGKDV DQGUHGXFWLRQVDFKLHYHG LPSOHPHQWHGDQXPEHURILQLWLDWLYHVWRUHGXFH HOHFWULFDOXVDJH (1 (PLVVLRQVRIR]RQHGHSOHWLQJVXEVWDQFHVE\ &DUERQGLR[LGHIRRWSULQWGLVFORVHG ZHLJKW (1 2WKHUVLJQLILFDQWDLUHPLVVLRQVE\W\SHDQG 1RWDSSOLFDEOH ¥ ZHLJKW (1 7RWDOZDWHUGLVFKDUJHE\TXDOLW\DQG 1RWDSSOLFDEOH ¥ GHVWLQDWLRQ (1 7RWDOZHLJKWRIZDVWHE\W\SHDQGGLVSRVDO 3DSHULVWKH*URXS©VFRUHZDVWHSURGXFW PHWKRG (1 7RWDOQXPEHUDQGYROXPHRIVLJQLILFDQWVSLOOV 1RQH ¥ (1 :HLJKWRIWUDQVSRUWHGLPSRUWHGH[SRUWHGRU $OOZDVWHLVKDQGOHGDVSHUOHJDOUHTXLUHPHQWV ¥ WUHDWHGZDVWHGHHPHGKD]DUGRXVXQGHUWKH WHUPVRIWKH%DVHO&RQYHQWLRQ (1 ,GHQWLW\VL]HSURWHFWHGVWDWXVDQGELRGLYHUVLW\ 1RQH ¥ YDOXHRIZDWHUERGLHVDQGUHODWHGKDELWDWV VLJQLILFDQWO\DIIHFWHGE\WKHUHSRUWLQJ RUJDQLVDWLRQ©VGLVFKDUJHVWRZDWHUDQGUXQRII (1 ,QLWLDWLYHVWRPLJUDWHHQYLURQPHQWDOLPSDFWVRI $EVDVXEVFULEHVWRWKH(TXDWRU3ULQFLSOHV SURGXFWVDQGVHUYLFHVDQGH[WHQWRILPSDFW PLWLJDWLRQ (1 3HUFHQWDJHRISURGXFWVVROGDQGWKHLU 1RWDSSOLFDEOH ¥ SDFNDJLQJPDWHULDOVWKDWDUHUHFODLPHGE\ FDWHJRU\

534 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU GRI Indi- cator Index Disclosure Page

(1 0RQHWDU\YDOXHRIVLJQLILFDQWILQHVDQGWRWDO 7KH*URXSKDVQRWLQFXUUHGDQ\ILQHIRUQRQ QXPEHURIQRQPRQHWDU\VDQFWLRQVIRUQRQ FRPSOLDQFHZLWKHQYLURQPHQWDOUHJXODWLRQV FRPSOLDQFHZLWKHQYLURQPHQWDOODZVDQG UHJXODWLRQV (1 6LJQLILFDQWHQYLURQPHQWDOLPSDFWVRI 1RWPDWHULDO ¥ WUDQVSRUWLQJSURGXFWVDQGRWKHUJRRGV DQGPDWHULDOVXVHGIRUWKHRUJDQLVDWLRQ©V RSHUDWLRQVDQGWUDQVSRUWLQJPHPEHUVRIWKH ZRUNIRUFH (1 7RWDOHQYLURQPHQWDOSURWHFWLRQH[SHQGLWXUHV 1RWPHDVXUHG ¥ DQGLQYHVWPHQWVE\W\SH

Social performance indicators

Labour practices /$ 7RWDOZRUNIRUFHE\HPSOR\PHQWW\SH 3HUPDQHQWHPSOR\HHV¤ HPSOR\PHQWFRQWUDFWDQGUHJLRQ 1RQSHUPDQHQWHPSOR\HHV¤ /$ 7RWDOQXPEHUDQGUDWHRIHPSOR\HHWXUQRYHUE\ 3HUPDQHQWHPSOR\HHWXUQRYHUUDWHIRU DJHJURXSJHQGHUDQGUHJLRQ 6RXWK$IULFDRIIRU /$ %HQHILWVSURYLGHGWRIXOOWLPHHPSOR\HHV &OLQLFVJ\PQDVLXPVFDQWHHQV+,9$LGV JXLGDQFHSDLGPDWHUQLW\DQGSDWHUQLW\OHDYH DQGDVLFNOHDYHEHQHILWEDQN /$ 3HUFHQWDJHRIHPSOR\HHVFRYHUHGE\FROOHFWLYH $SSUR[LPDWHO\RI$EVD©VZRUNIRUFHLV EDUJDLQLQJDJUHHPHQWV XQLRQLVHG /$ 0LQLPXPQRWLFHSHULRGVUHJDUGLQJRSHUDWLRQDO $EVDKDVUHFRJQLWLRQDJUHHPHQWVZLWK FKDQJHVLQFOXGLQJZKHWKHULWLVVSHFLILFLQ WUDGHXQLRQV FROOHFWLYHDJUHHPHQWV /$ 3HUFHQWDJHRIWRWDOZRUNIRUFHUHSUHVHQWHG 7KHUHDUHGHGLFDWHGFRPPLWWHHVLQHDFK LQIRUPDOMRLQWPDQDJHPHQWZRUNHUKHDOWK RIWKH*URXS©VEXLOGLQJV DQGVDIHW\FRPPLWWHHVWKDWKHOSPRQLWRUDQG DGYLVHRQRFFXSDWLRQDOKHDOWKDQGVDIHW\ SURJUDPPHV /$ 5DWHVRILQMXU\RFFXSDWLRQDOGLVHDVHVORVW 0DMRULQMXULHV¤ GD\VDQGDEVHQWHHLVPDQGQXPEHURIZRUN 1XPEHURIUHFRUGHGDFFLGHQWV¤ UHODWHGIDWDOLWLHVE\UHJLRQ $EVHQWHHUDWH¤ /$ (GXFDWLRQWUDLQLQJFRXQVHOOLQJSUHYHQWLRQ :HOOQHVVPDQDJHPHQWLQFOXGHVWKHLGHQWLILFDWLRQ DQGULVNFRQWUROSURJUDPPHVLQSODFHWR RIEHKDYLRXUDOULVNVIURPERWKRUJDQLVDWLRQDO DVVLVWZRUNIRUFHPHPEHUVUHJDUGLQJVHULRXV DQGLQGLYLGXDOVRXUFHVDVZHOODVSURYLGLQJ GLVHDVHV LQWHUYHQWLRQVUHODWLQJWRWKHVH /$ +HDOWKDQGVDIHW\WRSLFVFRYHUHGLQIRUPDO 1RWLQFOXGHG ¥ DJUHHPHQWVZLWKWUDGHXQLRQV /$ $YHUDJHKRXUVRIWUDLQLQJSHU\HDUSHU $EVDSURYLGHVLWVHPSOR\HHVZLWKDQXPEHURI HPSOR\HHE\HPSOR\HHFDWHJRU\ WUDLQLQJLQWHUYHQWLRQV /$ 3URJUDPPHVIRUVNLOOVPDQDJHPHQWDQG &RPSUHKHQVLYHSURJUDPPHVLQSODFH OLIHORQJOHDUQLQJWKDWVXSSRUWWKHFRQWLQXHG HPSOR\DELOLW\RIHPSOR\HHVDQGDVVLVWWKHPLQ PDQDJLQJFDUHHUHQGLQJV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 535 Reference tools

Global Reporting Initiative (GRI) G3 Index

GRI Indi- cator Index Disclosure Page

/$ 3HUFHQWDJHRIHPSOR\HHVUHFHLYLQJUHJXODU $OOHPSOR\HHVKDYHSHUIRUPDQFHGHYHORSPHQW SHUIRUPDQFHDQGFDUHHUGHYHORSPHQWUHYLHZV SODQVLQSODFH5HYLHZRISURJUHVVDJDLQVW REMHFWLYHVDQGGHYHORSPHQWDFWLRQVWDNH SODFHDWOHDVWWZLFHDQQXDOO\DQGDGGLWLRQDO LQIRUPDO UHTXLUHG UHYLHZVKDSSHQWZLFHD\HDU LQDOWHUQDWHTXDUWHUV/HDGHUVKLSDQGWDOHQW UHYLHZVDUHFRQGXFWHGWZLFHDQQXDOO\WRHQVXUH $EVDQXUWXUHVGHYHORSVDQGVWUHWFKHVLWVWDOHQW /$ &RPSRVLWLRQRIJRYHUQDQFHERGLHVDQG 7KHFRUSRUDWHJRYHUQDQFHVWDWHPHQWSURYLGHV EUHDNGRZQRIHPSOR\HHVSHUFDWHJRU\ DGHWDLOHGRYHUYLHZRIWKH*URXS©VJRYHUQDQFH DFFRUGLQJWRJHQGHUDJHJURXSPLQRULW\JURXS VWUXFWXUHV.H\GLYHUVLW\LQGLFDWRUVDUHLQGLFDWHG PHPEHUVKLSDQGRWKHULQGLFDWRUVRIGLYHUVLW\ LQWKHUHSRUW /$ 5DWLRRIEDVLFVDODU\RIPHQWRZRPHQE\ 1RWGLVFORVHG ¥ HPSOR\HHFDWHJRU\

Human rights

+5 3HUFHQWDJHDQGWRWDOQXPEHURIVLJQLILFDQW $EVDXQGHUWDNHVQRWWRSURYLGHIXQGLQJWR LQYHVWPHQWDJUHHPHQWVWKDWLQFOXGHKXPDQ SURMHFWVLIWKHERUURZHULVXQDEOHRUXQZLOOLQJWR ULJKWVFODXVHVRUWKDWKDYHXQGHUJRQHKXPDQ FRPSO\ZLWKWKHJXLGHOLQHVVWDWHGLQWKH(TXDWRU ULJKWVVFUHHQLQJ 3ULQFLSOHV +5 3HUFHQWDJHRIVLJQLILFDQWVXSSOLHUVDQG 7KHDVVRFLDWHGJRYHUQDQFHUHTXLUHPHQWVDUH ¥ FRQWUDFWRUVWKDWKDYHXQGHUJRQHVFUHHQLQJRQ HPEHGGHGLQ$EVD©VDSSURDFK KXPDQULJKWVDQGDFWLRQVWDNHQ +5 7RWDOKRXUVRIHPSOR\HHWUDLQLQJRQSROLFLHV 7KH*URXS©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¥ IRULQFLGHQWVRIFKLOGODERXUDQGPHDVXUHV WDNHQWRFRQWULEXWHWRWKHHOLPLQDWLRQRIFKLOG ODERXU +5 2SHUDWLRQVLGHQWLILHGDVKDYLQJVLJQLILFDQWULVN 1RWDSSOLFDEOH ¥ IRULQFLGHQWVRIIRUFHGRUFRPSXOVRU\ODERXU DQGPHDVXUHVWDNHQWRFRQWULEXWHWRWKH HOLPLQDWLRQRIIRUFHGRUFRPSXOVRU\ODERXU +5 3HUFHQWDJHRIVHFXULW\SHUVRQQHOWUDLQHG 7KHRSHUDWLRQDOVHFXULW\IXQFWLRQIRUWKH*URXSLV ¥ LQWKHRUJDQLVDWLRQ©VSROLFLHVRUSURFHGXUHV RXWVRXUFHGDQGWKHUHIRUHWUDLQLQJLVXQGHUWDNHQ FRQFHUQLQJDVSHFWVRIKXPDQULJKWVWKDWDUH E\WKHYHQGRU UHOHYDQWWRRSHUDWLRQV +5 7RWDOQXPEHURILQFLGHQWVRIYLRODWLRQV $FRPSUHKHQVLYHHPSOR\PHQWHTXLW\DQG LQYROYLQJULJKWVRILQGLJHQRXVSHRSOHDQG GLYHUVLW\SURJUDPPHLVLQSODFH7KHPRQLWRULQJ DFWLRQVWDNHQ RIDQ\LQFLGHQWVLVSDUWRIWKHSURFHVV

536 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU GRI Indi- cator Index Disclosure Page

Society performance indicators

62 1DWXUHVFRSHDQGHIIHFWLYHQHVVRIDQ\ 3ULRUWRDSSURYLQJWKHILQDQFLQJRISURMHFWVWKH SURJUDPPHVDQGSUDFWLFHVWKDWDVVHVV UHOHYDQWFRPPXQLWLHVDUHFRQVXOWHG DQGPDQDJHWKHLPSDFWVRIRSHUDWLRQVRQ FRPPXQLWLHVLQFOXGLQJHQWHULQJRSHUDWLQJDQG H[LWLQJ 62 3HUFHQWDJHDQGWRWDOQXPEHURIEXVLQHVVXQLWV 3ROLFLHVDQGSURFHGXUHVDUHLQSODFHDQG DQDO\VHGIRUULVNVUHODWHGWRFRUUXSWLRQ PDQDJHGDQGPRQLWRUHGE\*URXS&RPSOLDQFH DQGWKH*URXS©VLQWHUQDODXGLWGHSDUWPHQW 62 3HUFHQWDJHRIHPSOR\HHVWUDLQHGLQWKH $OO$EVDHPSOR\HHVKDYHVLJQHGWKHHPSOR\HH RUJDQLVDWLRQ©VDQWLFRUUXSWLRQSROLFLHVDQG &RGHRI&RQGXFW*XLGHDFNQRZOHGJLQJ$EVD©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

Product responsibility performance indicators

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

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 537 Reference tools

Global Reporting Initiative (GRI) G3 Index

GRI Indi- cator Index Disclosure Page

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

Financial services sector speciﬁc disclosure on management approach

)6 3ROLFLHVZLWKVSHFLILFHQYLURQPHQWDODQGVRFLDO $EVDKDVSROLFLHVWKDWKDYHDVSHFLILFIRFXVRQ FRPSRQHQWVDSSOLHGWREXVLQHVVOLQHV HQYLURQPHQWDODQGVRFLDOFRPSRQHQWV )6 3URFHGXUHVIRUDVVHVVLQJDQGVFUHHQLQJ $EVDLVFRPPLWWHGWREDODQFLQJVRXQGULVN HQYLURQPHQWDODQGVRFLDOULVNVLQEXVLQHVV PDQDJHPHQWZLWKHFRQRPLFVRFLDODQG OLQHV HQYLURQPHQWDOYLDELOLW\7KHHQYLURQPHQWDODQG VRFLDOLPSDFWDVVHVVPHQW (6,$ SROLF\JRYHUQV $EVD©VPDQDJHPHQWRIHQYLURQPHQWDODQGVRFLDO ULVNDVVHVVPHQW )6 3URFHVVHVIRUPRQLWRULQJFOLHQWV©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

538 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU GRI Indi- cator Index Disclosure Page

)6 ,QWHUDFWLRQVZLWKFOLHQWVLQYHVWHHVEXVLQHVV 8QGHUWDNHQLQWKHQRUPDOFRXUVHRIEXVLQHVV SDUWQHUVUHJDUGLQJHQYLURQPHQWDODQGVRFLDO ULVNVDQGRSSRUWXQLWLHV )6 3HUFHQWDJHRIWKHSRUWIROLRIRUEXVLQHVVOLQHV 'LVFORVHGLQGHWDLOLQWKHILQDQFLDOVWDWHPHQWV E\VSHFLILFUHJLRQVL]H HJPLFUR60(ODUJH DQGE\VHFWRU )6 0RQHWDU\YDOXHRISURGXFWVDQGVHUYLFHV 7KHPDMRULW\RIWKH*URXS©VEXVLQHVVDLPVWR GHVLJQHGWRGHOLYHUDVSHFLILFVRFLDOEHQHILWIRU HQKDQFHVRFLHW\ERWKGLUHFWO\DQGLQGLUHFWO\$ HDFKEXVLQHVVOLQHEURNHQGRZQE\SXUSRVH IXOOUHYLHZRIWKH*URXS©VRSHUDWLRQVLVFRQWDLQHG LQWKHVHFWLRQWLWOHGEXVLQHVVRSHUDWLRQV )6 0RQHWDU\YDOXHRISURGXFWVDQGVHUYLFHV $EVDVXEVFULEHVWRWKH(TXDWRU3ULQFLSOHVDQG GHVLJQHGWRGHOLYHUDVSHFLILFHQYLURQPHQWDO VWULYHVIRUDFFRXQWDEOHLQYHVWLQJ EHQHILWIRUHDFKEXVLQHVVOLQHEURNHQGRZQ E\SXUSRVH )6 &RYHUDJHDQGIUHTXHQF\RIDXGLWVWRDVVHVV 7KLVLVXQGHUWDNHQDVSDUWRIWKH*URXS©V353 LPSOHPHQWDWLRQRIHQYLURQPHQWDODQGVRFLDO SROLFLHVDQGULVNDVVHVVPHQWSURFHGXUHV )6 3HUFHQWDJHDQGQXPEHURIFRPSDQLHVKHOG 7KHPDMRULW\RIWKH*URXS©VHQWLWLHVDUHLQFOXGHG LQWKHLQVWLWXWLRQ©VSRUWIROLRZLWKZKLFKWKH LQWKLVUHJDUG UHSRUWLQJRUJDQLVDWLRQKDVLQWHUDFWHGRQ HQYLURQPHQWDORUVRFLDOLVVXHV )6 3HUFHQWDJHRIDVVHWVVXEMHFWWRSRVLWLYHDQG 'XULQJWKH\HDUWKH*URXSZDVLQWHJUDOO\ QHJDWLYHHQYLURQPHQWDORUVRFLDOVFUHHQLQJ LQYROYHGLQWUDQVDFWLRQVIURPDQ HQYLURQPHQWDODQGVRFLDOULVNSHUVSHFWLYH2I WKHVHZHUHQRQSURMHFWILQDQFHWUDQVDFWLRQV DQGVHYHQZHUHSURMHFWILQDQFHWUDQVDFWLRQV WKDWZHUHVXEMHFWWRWKH(TXDWRU3ULQFLSOH UHTXLUHPHQWV )6 9RWLQJSROLF\ LHV DSSOLHGWRHQYLURQPHQWDO (QYLURQPHQWDODQGVRFLDOLVVXHVDUHLQFOXGHGLQ ¥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©VVWURQJ SRVLWLRQLQWKHPRUHWUDGLWLRQDOPDUNHWV7KH GHVLJQDQGLPSOHPHQWDWLRQRIYDULRXVDOWHUQDWLYH VROXWLRQVKDVHQDEOHG$EVDWRGHOLYHUWKHULJKW PL[RIUHSUHVHQWDWLRQ )6 3ROLFLHVIRUWKHIDLUGHVLJQDQGVDOHRIILQDQFLDO 7UHDWLQJ&XVWRPHUV)DLUO\SULQFLSOHVDQG SURGXFWVDQGVHUYLFHV RXWFRPHVIRUPSDUWRIWKHQHZSURGXFWDSSURYDO SROLF\DQGSURFHGXUHV )6 ,QLWLDWLYHVWRHQKDQFHILQDQFLDOOLWHUDF\E\W\SH $EVDKDVDQXPEHURIILQDQFLDOOLWHUDF\LQLWLDWLYHV RIEHQHILFLDU\ DLPHGDWERWKFXVWRPHUVDQGFRQVXPHUV

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 539 Reference tools

Global Reporting Initiative (GRI) G3 Index

GRI Indi- cator Index Disclosure Page

HIV/Aids reporting 2010

'HVFULEHWKHRUJDQLVDWLRQ©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¤ GDWDZDUHKRXVHWKDWWUDFNVDOOEHKDYLRXUDO ULVNVLQFOXGLQJ+,9DQG$LGVIURPDOOVHUYLFH SURYLGHUV 7KHUHSRUWVDUHJHQHUDWHGPRQWKO\DQG VXEPLWWHGWR([FRDQGGHSDUWPHQWDOFOXVWHU KHDGVWRSURYLGHDFROODERUDWLYHQHWZRUNDQG FRPPLWPHQWLQWKHPDQDJHPHQWRI+,9DQG$LGV $EVDDOLJQVLWVLQIRUPDWLRQZLWKQDWLRQDOGDWD WRSURYLGHDKROLVWLFVWUDWHJ\DQGH[WHQGVLWV SURJUDPPHVWRIDPLO\PHPEHUVZKHUHDSSOLFDEOH DQGSDUWQHUVZLWK$EVD©V&6,GHSDUWPHQWWR H[WHQGWKHSURJUDPPHVWRWKHFRPPXQLW\

540 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU GRI Indi- cator Index Disclosure Page

'HVFULEHKRZWKHRUJDQLVDWLRQLQYROYHV ,QWHUQDODQGH[WHUQDOH[SHUWVDUHLQYROYHGDQG ¥ VWDNHKROGHUVLQWKHIRUPXODWLRQRISROLF\ FRPPXQLFDWLRQLVXQGHUWDNHQWKURXJKQXPHURXV VWUDWHJ\DQGLPSOHPHQWDWLRQ FKDQQHOV 7KHVHLQFOXGHDOOVHUYLFHSURYLGHUVXQLRQ DOLJQPHQWZLWKJRYHUQPHQWLQLWLDWLYHVDQGGDWD JDWKHUHGRQDQRQJRLQJEDVLV ,QGLFDWHFXUUHQWDQGSURMHFWHGIXWXUH 1RWGLVFORVHG ¥ +,9$LGVSUHYDOHQFHDQGLQFLGHQFHUDWHV DPRQJUHOHYDQWSRSXODWLRQV 5HSRUWFXUUHQW+,9$LGVDVVRFLDWHGFRVWVDQG $EVDKDVDQLQWHJUDWHGKHDOWKDQGZHOOQHVV ¥ H[SRVXUHVWRWKHRUJDQLVDWLRQ SURJUDPPHWKDWLQFRUSRUDWHV+,9$LGV PDQDJHPHQW7KHGLUHFWFRVWVIRU DPRXQWHGWR5PLOOLRQ$EVDDOVRKDVDQ H[WHUQDO+,9$LGVVSHQGZKLFKUHVLGHVZLWKWKH *URXS©V&6,GHSDUWPHQW ,QGLFDWHWRWDODVVXPHGIXWXUH+,9$LGV 1RWGLVFORVHG ¥ DVVRFLDWHGFRVWVDQGH[SRVXUHV 'HVFULEHWKHZRUNSODFHDQGZRUNSODFHUHODWHG $EVDKDVIRFXVHGRQYDULRXV+,9$LGVLQLWLDWLYHV ¥ +,9$LGVSURJUDPPHVDQGLQWHUYHQWLRQVDQG 7KHPRVWVLJQLILFDQWZDVWKH¨,NQRZ©KHDOWK WKHH[WHQWWRZKLFKWKH\PDLQWDLQDZRUNSODFH SURJUDPPHZKLFKUDQIRUPRQWKV HQYLURQPHQWUHVSHFWIXORIKXPDQDQGOHJDO $EVDLPSOHPHQWHGDWKUHHSKDVHSURMHFWLQWKH ULJKWV PDQDJHPHQWRI+,9$LGVLQZKLFKZLOO FRQWLQXHLQ $KHDOWKDQGZHOOQHVVVXUYH\WRDVVHVVWKH NQRZOHGJHDWWLWXGHVDQGSHUFHSWLRQZLWKLQ $EVDRIDOOFKURQLFGLVHDVHVLQFOXGLQJ+,9 $LGV7KHLQIRUPDWLRQLVXVHGWRGHYHORS WUDLQLQJLQIRUPDWLRQRQJDSVLGHQWLILHG :$'XVLQJWKH9XYX]HODWR¨%ORZDZD\WKH VWLJPD©ZKLFKZDVDGGUHVVHGE\WKHVHQLRU PDQDJHPHQW ,PSOHPHQWLQJWKH+&7FDPSDLJQZKLFKDOLJQV DQGZLOOFRQWULEXWHWRWKHQDWLRQDOFDPSDLJQRI WHVWLQJPLOOLRQLQGLYLGXDOV ,QGLFDWHWRWDODOORFDWHGEXGJHWGHGLFDWHGWR $EVDQRORQJHUEXGJHWVIRU+,9$LGVVHSDUDWHO\ +,9$LGVSURJUDPPHVSHUDQQXP 7KH*URXSODXQFKHGWKHLQWHJUDWHGKHDOWKDQG ZHOOQHVVSURJUDPPHWKDWDGGUHVVHVHPSOR\HH ZHOOQHVVKROLVWLFDOO\+,9$LGVLVLQFOXGHG 'HWDLOWKHRUJDQLVDWLRQ©VYROXQWDU\FRXQVHOOLQJ $OOZHOOQHVVSUDFWLWLRQHUVLQWKHUHJLRQVDUH DQGWHVWLQJ 9&7 SURJUDPPH WUDLQHGLQFRQGXFWLQJ9&7DQGHPSOR\HHVFDQ DQGDUHWHVWHGLQWKHYDULRXVZHOOQHVVFHQWUHV %DQNPHGSURYLGHVIRUWKLVVHUYLFHRQWKHLQVXUHG EHQHILWLQLWVFRPPLWPHQWWRSURPRWHSUHYHQWDWLYH KHDOWK 'HVFULEHRWKHUVXSSRUWDQGFRXQVHOOLQJ 7KLVLQFOXGHV,&$6ZHHNO\YLVLWVE\PHGLFDO SURJUDPPHVDQGPHDVXUHV SUDFWLWLRQHUVDWWKHZHOOQHVVFHQWUHVKHDOWKULVN DVVHVVPHQWVDVZHOODVWKHUHOHYDQWUHIHUUDOVIRU HDUO\DQGRSWLPDOWUHDWPHQWFDUHDQGVXSSRUW

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 541 Reference tools

Global Reporting Initiative (GRI) G3 Index

GRI Indi- cator Index Disclosure Page

'HVFULEHWKHRUJDQLVDWLRQ©V+,9$LGVHGXFDWLRQ ,QIRUPDWLRQHGXFDWLRQDQGFRPPXQLFDWLRQ DQGWUDLQLQJSURJUDPPHV DFWLYLWLHVDUHSURYLGHGWKURXJKHFDUHDKHDOWK HGXFDWLRQZHOOQHVVZHEVLWHZHOOQHVVGD\V :$'FDPSDLJQVDQGDQHWZRUNRIZHOOQHVV FKDPSLRQV 'HVFULEHWKHRUJDQLVDWLRQ©VFRQGRPDQG $EVDSURYLGHVDQGGLVWULEXWHVFRQGRPVDW ¥ IHPLGRPGLVWULEXWLRQSURJUDPPH DSSURSULDWHDQGFRQYHQLHQWVLWHV 'HVFULEHWKHRUJDQLVDWLRQ©VJHQHUDOKHDOWKFDUH $EVDKDVDFRPSUHKHQVLYH+,9$LGVWUHDWPHQW DQGZHOOQHVVSURYLVLRQRIHPSOR\HHVDQGWKHLU SURJUDPPHLQSDUWQHUVKLSZLWK%DQNPHGZKHUH IDPLOLHV EHQHILWVDUHDYDLODEOHDQGDGGLWLRQDOWRWKH QRUPDOEHQHILWV 'HVFULEHDGGLWLRQDOEHQHILWVDQGVXSSRUWIRU +,9SRVLWLYH$EVDHPSR\HHVDQGWKHLU ¥ HPSOR\HHVVLFNG\LQJRUGHFHDVHGIURP$LGV GHSHQGDQWVFDQSDUWLFLSDWHLQDVSHFLDOLVHG UHODWHGFRQGLWLRQV GLVHDVHPDQDJHPHQWSURJUDPPHFRQVXOW,&$6 IRUFRXQVHOOLQJVHUYLFHVYLVLWWKHHFDUHDQG ZHOOQHVVZHEVLWHDQGYLVLWZHOOQHVVFHQWUHV WRFRQVXOWZLWKDPHGLFDOGRFWRUDQGRUD ZHOOQHVVSUDFWLWLRQHU7KHGLVDELOLW\SROLF\RIIHUV HPSOR\HHVDQRSSRUWXQLW\WRUHFRYHUDWKRPH ZLWKRXWMHRSDUGLVLQJHPSOR\PHQWRSSRUWXQLWLHV

542 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Reference tools

Glossary

$EEUHYLDWLRQV DQG DFURQ\PV XVHG LQ WKH $EVD *URXS DQQXDO UHSRUW IRU WKH \HDU HQGHG 'HFHPEHU

A BESA %RQG([FKDQJH6RXWK$IULFD

Abacas $VVHW%DFNHG&ROODWHULVHG6HFXULWLHV BFC %RDUG)LQDQFH&RPPLWWHH 3URSULHWDU\ /LPLWHG BIA %DVLF,QGLFDWRU$SSURDFK ABB $EVD%XVLQHVV%DQN bps EDVLVSRLQWV AbCap $EVD&DSLWDO BU EXVLQHVVXQLW Absa $EVD'HYHORSPHQW&RPSDQ\+ROGLQJV Devco 3URSULHWDU\ /LPLWHG C ADI $EVD'HYHORSPHQW,QLWLDWLYH AEaR DQQXDOHDUQLQJVDWULVN CA &RPSDQLHV$FW AFS $EVD)LQDQFLDO6HUYLFHV CAF &RPPHUFLDO$VVHW)LQDQFH AGCC $EVD*URXS&UHGLW&RPPLWWHH CAGR FRPSRXQGDQQXDOJURZWKUDWH AGM DQQXDOJHQHUDOPHHWLQJ CAPM FDSLWDODVVHWSULFLQJPRGHO AIC $EVD,QVXUDQFH&RPSDQ\/,PLWHG CAR FDSLWDODGHTXDF\UHTXLUHPHQW Aids DFTXLUHGLPPXQHGHILFLHQF\V\QGURPH Carries ORDQVJUDQWHGXQGHUUHVDOHDJUHHPHQWV AIMS $EVD,QYHVWPHQW0DQDJHPHQW6HUYLFHV Cars &ROODWHUDOLVHG$XWR5HFHLYDEOHV 3URSULHWDU\ /LPLWHG 6HFXULWLVDWLRQ 3URSULHWDU\ /LPLWHG AIRB $GYDQFHG,QWHUQDO5DWLQJV%DVHG CDP &DUERQ'LVFORVXUH3URMHFW AIRMS $EVD,QVXUDQFH5LVN0DQDJHPHQW CEM &XUUHQW([SRVXUH0HWKRG 6HUYLFHV/LPLWHG CFLP FRQWLQJHQF\IXQGLQJDQGOLTXLGLW\SODQ ALD $FFHOHUDWHG/HDGHUVKLS'HYHORSPHQW CGU FDVKJHQHUDWLQJXQLW 3URJUDPPH CIT FDVKLQWUDQVLW Alco *URXS$OFRDQG%DODQFH6KHHW 0DQDJHPHQW&RPPLWWHH CMMC &UHGLW0RGHO0RQLWRULQJ&RPPLWWHH

AllPay $OO3D\&RQVROLGDWHG,QYHVWPHQW+ROGLQJV CO2 FDUERQGLR[LGH /LPLWHG CoBit &RQWURO2EMHFWLYHVIRU,QIRUPDWLRQUHODWHG AMA $GYDQFHG0HDVXUHPHQW$SSURDFK 7HFKQRORJ\ AMP $GYDQFHG0DQDJHPHQW3URJUDPPH COC FRVWRIUHTXLUHGFDSLWDO Amrich $PULFKSURS3URSHUWLHV 3URSULHWDU\ CODM FKLHIRSHUDWLQJGHFLVLRQPDNHU /LPLWHG CoE FRVWRIHTXLW\ ANW DGMXVWHGQHWZRUWK CoGP &RGHVRI*RRG3UDFWLFH ASSA $FWXDULDO6RFLHW\RI6RXWK$IULFD COO &KLHI2SHUDWLQJ2IILFHU DXWRPDWHGWHOOHUPDFKLQH ATM CoRC &RQFHQWUDWLRQ5LVN&RPPLWWHH AUM DVVHWVXQGHUPDQDJHPHQW CPA &RQVXPHU3URWHFWLRQ$FW CPF &RPPHUFLDO3URSHUW\)LQDQFH B CPI FRQVXPHUSULFHLQGH[

BankSeta %DQNLQJ6HFWRU(GXFDWLRQDQG7UDLQLQJ CPIX FRQVXPHUSULFHLQGH[H[FOXGLQJLQWHUHVW $XWKRULW\ UDWHVRQPRUWJDJHERQGV &UHGLW5LVN&RPPLWWHH Basel II %DVHO,,&DSLWDO$FFRUG CRC &RUSRUDWH5HDO(VWDWH6HUYLFHV BBBEE EURDGEDVHGEODFNHFRQRPLF CRES HPSRZHUPHQW CRM FUHGLWULVNPLWLJDWLRQ BBM %DUFOD\V%DQN0R]DPELTXH6$ CRO &KLHI5LVN2IILFHU BEE EODFNHFRQRPLFHPSRZHUPHQW CRTC &UHGLW5LVN7HFKQLFDO&RPPLWWHH

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 543 Reference tools

Glossary

CSI FRUSRUDWHVRFLDOLQYHVWPHQW FSB )LQDQFLDO6HUYLFHV%RDUG CTC FRVWWRFRPSDQ\ FSV ILQDQFLDOVRXQGQHVVYDOXDWLRQ FX IRUHLJQH[FKDQJH D

DAC 'LUHFWRUV $IIDLUV&RPPLWWHH G

DAP 'HIHUUHG$ZDUG3ODQ GAAP *HQHUDOO\$FFHSWHG$FFRXQWLQJ3UDFWLFH GHIDXOWJUDGH DG GACC *URXS$XGLWDQG&RPSOLDQFH&RPPLWWHH Devco $EVD'HYHORSPHQW&RPSDQ\+ROGLQJV GBP VWHUOLQJ*UHDW%ULWLVKSRXQGV 3URSULHWDU\ /LPLWHG GCE *URXS&KLHI([HFXWLYH DRL GHIHUUHGUHYHQXHOLDELOLW\ GGCC *URXS*RYHUQDQFHDQG&RQWURO DTI 'HSDUWPHQWRI7UDGHDQG,QGXVWU\ &RPPLWWHH GDLO\YDOXHDWULVN DVaR GIC *URXS,QYHVWPHQW&RPPLWWHH GMSLA *OREDO0DVWHU6HFXULWLHV/HQGLQJ E $UUDQJHPHQW

EAD H[SRVXUHDWGHIDXOW GMV JXDUDQWHHGPDWXULW\YDOXH EAP (PSOR\HH$VVLVWDQFH3URJUDPPH GRCMC *URXS5LVNDQG&DSLWDO0DQDJHPHQW &RPPLWWHH EC HFRQRPLFFDSLWDO GRHRC *URXS5HPXQHUDWLRQDQG+XPDQ ECAI H[WHUQDOFUHGLWDVVHVVPHQWLQVWLWXWLRQ 5HVRXUFHV&RPPLWWHH (DVWHUQ&HQWUDODQG6RXWKHUQ$IULFDQ ECSAFA GRI *OREDO5HSRUWLQJ,QLWLDWLYH )HGHUDWLRQRI$FFRXQWDQWV GRPC *URXS5HFUXLWPHQWDQG3URPRWLRQV EL H[SHFWHGORVV &RPPLWWHH EMC ([HFXWLYH0RGHO&RPPLWWHH GWh JLJDZDWWKRXU EOS HPSOR\HHRSLQLRQVXUYH\ EPS HDUQLQJVSHUVKDUH H ERMD (QYLURQPHQWDO5LVN0DQDJHPHQW GHSDUWPHQW HCT +,9FRXQVHOOLQJDQGWHVWLQJ ESAS ([HFXWLYH6KDUH$ZDUG6FKHPH HDSA KLVWRULFDOO\GLVDGYDQWDJHG6RXWK$IULFDQ ESC (QYLURQPHQWDO6WHHULQJ&RPPLWWHH HEPS KHDGOLQHHDUQLQJVSHUVKDUH ESIA HQYLURQPHQWDODQGVRFLDODVVHVVPHQW HIV KXPDQLPPXQRGHILFLHQF\YLUXV EVE HFRQRPLFYDOXHRIHTXLW\ Homes +RPH2EOLJRUV0RUWJDJH(QKDQFHG EWL HDUO\ZDUQLQJOLVWV 6HFXULWLHV 3URSULHWDU\ /LPLWHG Exco ([HFXWLYH&RPPLWWHH I F IAS ,QWHUQDWLRQDO$FFRXQWLQJ6WDQGDUGV FAIS )LQDQFLDO$GYLVRU\DQG,QWHUPHGLDU\ IASB ,QWHUQDWLRQDO$FFRXQWLQJ6WDQGDUGV 6HUYLFHV$FW1RRI %RDUG FASSA )HOORZRIWKH$FWXDULDO6RFLHW\RI IBNR LQFXUUHGEXWQRWUHSRUWHG 6RXWK$IULFD ICAAP LQWHUQDOFDSLWDODGHTXDF\DVVHVVPHQW FFA )HOORZRIWKH)DFXOW\RI$FWXDULHV SURFHVV FIA )LQDQFLDO,QWHUPHGLDULHV$VVRFLDWLRQ IFAC ,QWHUQDWLRQDO)HGHUDWLRQRI$FFRXQWDQWV FICA )LQDQFLDO,QWHOOLJHQFH&HQWUH$FW IFRIC ,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ 1RRI ,QWHUSUHWDWLRQ&RPPLWWHH FIRB )RXQGDWLRQ,QWHUQDO5DWLQJV%DVHG IFRS ,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ FSA )LQDQFLDO6HUYLFHV$XWKRULW\ 6WDQGDUGV

544 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU IMA ,QWHUQDO0RGHOV$SSURDFK NCDs 1HJRWLDEOHFHUWLILFDWHVRIGHSRVLWV Insurance 6KRUWWHUP,QVXUDQFH NGA 1DWLRQDO*DPEOLQJ$FW IRB ,QWHUQDO5DWLQJV%DVHG NGO 1RQJRYHUQPHQWDORUJDQLVDWLRQ ISDA ,QWHUQDWLRQDO6ZDSVDQG'HULYDWLYHV NPL QRQSHUIRUPLQJORDQ $VVRFLDWLRQ NRF 1HZ5HJXODWRU\)RUXP IT LQIRUPDWLRQWHFKQRORJ\ NWP QHWZULWWHQSUHPLXP ITSC ,QIRUPDWLRQ7HFKQRORJ\6WHHULQJ &RPPLWWHH O

J OCR RXWVWDQGLQJFODLPVUHVHUYH JIBAR -RKDQQHVEXUJ,QWHUEDQN$JUHHG5DWH OG 2YDWLRQ*URXS JSAP -RLQHUV6KDUH$ZDUG3ODQ ORC 2SHUDWLRQDO5LVN&RPPLWWHH JSE -6(/LPLWHG OTC RYHUWKHFRXQWHU

K P

King II .LQJ5HSRUWRQ&RUSRUDWH*RYHUQDQFH PAT SURILWDIWHUWD[DWLRQ IRU6RXWK$IULFD PBT SURILWEHIRUHWD[DWLRQ King III &RGHRI*RYHUQDQFH3ULQFLSOHVIRU6RXWK PD SUREDELOLW\RIGHIDXOW $IULFD P/E SULFHWRHDUQLQJVUDWLR KLR .H\/HDGHUV5HWHQWLRQ3URJUDPPH PGN 3URIHVVLRQDO*XLGDQFH1RWH KPI NH\SHUIRUPDQFHLQGLFDWRUV PIT KRSs NH\ULVNVFHQDULRV SRLQWLQWLPH PLC SXEOLFOLVWHGFRPSDQ\

L POPI 3URWHFWLRQRI3HUVRQDO,QIRUPDWLRQ PRO 3ULQFLSDO5LVN2ZQHU LERC /HJDO(QWLW\5HYLHZ&RPPLWWHH PRP SULQFLSDOULVNVSROLF\ LGD ORVVJLYHQGHIDXOW PSP 3HUIRUPDQFH6KDUH3ODQ Life OLIHLQVXUDQFH PPG 3LQQDFOH3RLQW*URXS LTV ORDQWRYDOXH PVIF SUHVHQWYDOXHRILQIRUFHEXVLQHVV

M R MEF PLFURHQWHUSULVHILQDQFH R UDQG MRC 0DUNHW5LVN&RPPLWWHH RC UHJXODWRU\FDSLWDO MRP PDUNHWULVNSROLF\ R&CC 5LVNDQG&RQWURO&RPPLWWHH MT 0HWLFDO0HWLFDOV RoA UHWXUQRQDYHUDJHDVVHWV MTM PDUNWRPDUNHW RoE UHWXUQRQDYHUDJHHTXLW\ RoEC UHWXUQRQDYHUDJHHFRQRPLFFDSLWDO N RoRC UHWXUQRQUHJXODWRU\FDSLWDO RSA 5HSXEOLFRI6RXWK$IULFD NAV QHWDVVHWYDOXH RWAs ULVNZHLJKWHGDVVHWV NBC 1DWLRQDO%DQNRI&RPPHUFH/LPLWHG NCA 1DWLRQDO&UHGLW$FW1RRI

Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU 545 Reference tools

Glossary

S U

SA 6WDQGDUGLVHG$SSURDFK UK 8QLWHG.LQJGRP SAICA 6RXWK$IULFDQ,QVWLWXWHRI&KDUWHUHG UK Code 8.&RUSRUDWH*RYHUQDQFH&RGH $FFRXQWDQWV UL XQH[SHFWHGORVV Sanlam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

T Z

TCF 7UHDWLQJ&XVWRPHUV)DLUO\ ZAR 6RXWK$IULFDQUDQG TCTS 7HDFK&KLOGUHQWR6DYH TDC 7HFKQLFDO'LVFORVXUH&RPPLWWHH TPRR 7UDGLQJ3RVLWLRQ5LVN5HYLHZ)RUXP TRC 7UDGLQJ5LVN&RPPLWWHH TTC WKURXJKWKHF\FOH TZS 7DQ]DQLDQVKLOOLQJ

546 Absa Group Limited $QQXDOUHSRUWIRUWKH\HDUHQGHG'HFHPEHU Administration and contact details

Absa Group Limited Auditors Shareholder contact $XWKRULVHGILQDQFLDOVHUYLFHVDQG PricewaterhouseCoopers information UHJLVWHUHGFUHGLWSURYLGHU 1&5&3 Inc. 6KDUHKROGHUDQGLQYHVWPHQWTXHULHV Registration number: (JOLQ5RDG DERXWWKH$EVD*URXSVKRXOGEH 6XQQLQJKLOO GLUHFWHGWRWKHIROORZLQJDUHDV JSE share code:$6$ 5HSXEOLFRI6RXWK$IULFD ISIN:=$( Telephone: Group Investor Relations Issuer code:$0$*% Fax: Alan Hartdegen Telephone: Registered ofﬁce Ernst & Young Inc. Email:LQYHVWRUUHODWLRQV#DEVDFR]D WK)ORRU$EVD7RZHUV:HVW :DQGHUHUV2IILFH3DUN 7UR\H6WUHHW &RUOHWW'ULYH,OORYR Group Secretary -RKDQQHVEXUJ -RKDQQHVEXUJ Sarita Martin 32%R[ 5HSXEOLFRI6RXWK$IULFD Telephone: -RKDQQHVEXUJ Telephone: Email:JURXSVHF#DEVDFR]D 5HSXEOLFRI6RXWK$IULFD Fax: Telephone: Group Legal General Email:JURXSVHF#DEVDFR]D Sponsor :HEVLWHZZZDEVDFR]D Counsel J.P. Morgan Equities Marthinus van Rensburg Limited Telephone: Transfer secretaries )ULFNHU5RDG South Africa &QU+XUOLQJKDP5RDG Head ofﬁce switchboard Computershare Investor ,OORYR Telephone: Services (Proprietary) Limited -RKDQQHVEXUJ 32%R[ 3ULYDWH%DJ; 0DUVKDOOWRZQ 6DQGWRQ Customer support RU -RKDQQHVEXUJ Telephone: Actionline: DFWLRQOLQH#DEVDFR]D 5HSXEOLFRI6RXWK$IULFD Fax: Telephone: Absa call centre:RU Fax: General email enquiries: ADR depositary DEVD#DEVDFR]D BNY Mellon %DUFOD\6WUHHW: Reporting fraud and 1HZ

%$67,21*5$3+,&6

Absa Group Limited Absa Group Limited Annual Report IRUWKH\HDUHQGHG'HFHPEHU

Absa Group Limited Absa Group Limited Annual Report IRUWKH\HDUHQGHG'HFHPEHU