{"id":829690,"date":"2025-06-27T09:18:00","date_gmt":"2025-06-27T07:18:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=829690"},"modified":"2025-06-27T09:30:59","modified_gmt":"2025-06-27T07:30:59","slug":"good-times-for-absa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/829690\/good-times-for-absa\/","title":{"rendered":"Good times for Absa"},"content":{"rendered":"\n

Absa expects mid-teen earnings growth in its upcoming interim financial results, led by a strong performance in South Africa<\/p>\n\n\n\n

In a voluntary trading update for the first half of 2025, Absa said the global economic environment remains uncertain and volatile.<\/p>\n\n\n\n

This comes amidst increased trade tensions and other major geopolitical developments, reducing growth expectations.<\/p>\n\n\n\n

Across its presence markets, lower inflation also resulted in policy rate cuts in most countries. GDP growth expectations for 2025 also declined in all countries it operates, except Ghana.<\/p>\n\n\n\n

Contrary to expectations, the average exchange rates in its African regions did not depreciate against the Rand and have not been a drag on the group during the first half of 2025.<\/p>\n\n\n\n

Against this backdrop, the group expects mid-single-digit revenue growth, with higher growth in non-interest income than net interest income.<\/p>\n\n\n\n

Continuing in the second half of 2024 trend, net interest income growth is expected to be muted given the mid-single digit loan growth and some margin compression, especially in South Africa.<\/p>\n\n\n\n

The group expects high single-digit non-interest income growth, with strong trading revenue, mid-single digit growth in net fee and commission income and modest net insurance income growth.<\/p>\n\n\n\n

It expects mid-single digit operating expense growth, producing low- to mid-single digit growth in pre-provision profit and a slightly higher cost-to-income ratio than the 52.7% in the first half of 2024.<\/p>\n\n\n\n

The group’s credit loss ratio is also expected to improve noticeably to around the top end of its through-the-cycle range of 75 to 100 basis points, reducing from 123 basis points in 1H24.<\/p>\n\n\n\n

The group thus expects mid-teen earnings growth in the first half of 2025, while its RoE should improve from 14.0% in 1H24 to roughly 14.8%.<\/p>\n\n\n\n

The bank’s Common Equity Tier 1 ratio is expected to finish the first half of 2025 around the top end of the board’s target range of 11.0% to 12.5%, with the group planning to maintain a dividend of 55%.<\/p>\n\n\n\n

South Africa drives earnings growth<\/strong><\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

Absa said South Africa is expected to drive its earnings growth, mostly due to lower credit impairments, since net interest income growth remains muted.<\/p>\n\n\n\n

On the other hand, it expects strong pre-provision profit growth in African regions, partially offset by higher credit impairments.<\/p>\n\n\n\n

From a divisional perspective, the group expects strong earnings growth from its reorganised Personal and Private Banking.<\/p>\n\n\n\n

This was driven by lower credit impairments, while revenue growth remains muted amid modest loan growth and our risk appetite reduction in personal loans.<\/p>\n\n\n\n

In Business Banking, low revenue growth and a higher credit loss ratio are also expected to reduce earnings.<\/p>\n\n\n\n

It expects Corporate and Investment Banking to benefit from lower credit losses and substantial trading revenue, while net interest income growth remains muted.<\/p>\n\n\n\n

Absa Regional Operations Retail and Business Banking are maintaining solid revenue and pre-provision profit growth, with growth in active customers and fee income offsetting higher credit impairments.<\/p>\n\n\n\n

The group also expects a substantially reduced loss in Head Office, Treasury and other operations.<\/p>\n\n\n\n

This comes from several drives, such as asset and liability management optimisation initiatives, and no longer using hyperinflationary accounting at Absa Bank Ghana.<\/p>\n\n\n\n

More precise figures will be released in the group’s interim results for the first six months of the year, due on 18 August 2025. <\/p>\n\n\n\n


<\/p>\n","protected":false},"excerpt":{"rendered":"

Absa is expecting a strong increase in earnings, as the group’s credit loss ratio improves significantly. <\/p>\n","protected":false},"author":95,"featured_media":816040,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[29],"class_list":["post-829690","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-absa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/829690","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=829690"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/829690\/revisions"}],"predecessor-version":[{"id":829710,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/829690\/revisions\/829710"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/816040"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=829690"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=829690"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=829690"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}