{"id":865027,"date":"2026-06-30T14:12:00","date_gmt":"2026-06-30T12:12:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=865027"},"modified":"2026-06-30T14:12:03","modified_gmt":"2026-06-30T12:12:03","slug":"absa-takes-a-hit-in-its-three-largest-markets","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/865027\/absa-takes-a-hit-in-its-three-largest-markets\/","title":{"rendered":"Absa takes a hit in its three largest markets"},"content":{"rendered":"\n

Absa has lowered its growth expectations for its three largest markets, with the Big Four bank seeing minimal revenue growth. <\/p>\n\n\n\n

In a trading update for the first six months of the year, Absa said that the Middle East conflict increased global inflation expectations and dampened GDP growth. <\/p>\n\n\n\n

It was thus forced to lower its GDP growth expectations for its largest markets, South Africa, Ghana and Kenya. <\/p>\n\n\n\n

“In South Africa, the South African Reserve Bank increased the policy rate in May, whereas we previously expected further rate cuts,” it said.<\/p>\n\n\n\n

“Conversely, policy rates in Ghana have reduced materially and are lower than we expected, which is a near-term drag but should stimulate growth.” <\/p>\n\n\n\n

Its revenue is expected to grow by low to mid-single digits, with non-interest income growing faster than net interest income. <\/p>\n\n\n\n

It said that its net interest income growth was modest, rising in the low single digits, reflecting margin compression largely due to lower policy rates in the Africa regions. <\/p>\n\n\n\n

Net customer loans and customer deposits are also expected to grow only in the mid-single digits. <\/p>\n\n\n\n

Personal and Private Banking (PPB) net customer loans are expected to grow by mid-single digits as well. <\/p>\n\n\n\n

In PPB, stronger Vehicle and Asset Finance growth is expected to offset modest growth in Home Loans and unsecured lending. <\/p>\n\n\n\n

Corporate and Investment Banking (CIB) net customer loans, excluding reverse repurchase agreements, and Business Banking (BB) net customer loans are expected to grow by high single digits.<\/p>\n\n\n\n

The group sees mid-single digit growth in non-interest income, with growth in fee and Commission income and insurance income in South Africa are expected to be solid. <\/p>\n\n\n\n

The group also expects its operating expenses to grow by low to mid-single digits, which should result in a slightly negative JAWS and a slightly higher cost-to-income ratio<\/p>\n\n\n\n

Customers under strain <\/h2>\n\n\n
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Regarding its customers, Absa said it expects broadly flat credit impairments and an improved credit loss ratio.<\/p>\n\n\n\n

It predicts slightly lower PPB credit impairments, driven by an improved delinquency performance, partly offset by an increase in coverage due to the deteriorating macroeconomic forecast.<\/p>\n\n\n\n

BB and CIB credit impairments are expected to increase, with the latter off a low base, it said. <\/p>\n\n\n\n

The group thus expects headline earnings growth of around mid- to high-single digits for the first half of the year. <\/p>\n\n\n\n

The group added that the stronger rand will reduce group revenue, costs and headline earnings slightly during the first six months. <\/p>\n\n\n\n

“We expect strong headline earnings growth in South Africa, given solid pre-provision profit growth and a lower credit loss ratio,” it said. <\/p>\n\n\n\n

“Conversely, we expect Africa Regions headline earnings to decline due to lower net interest income and higher credit impairments.” <\/p>\n\n\n\n

For the year ahead, the group expects its return on equity to be around 15%, mostly due to weaker net interest income than it originally anticipated, amid margin compression in Africa Regions. <\/p>\n\n\n\n

“We are confident that our revenue and earnings momentum remains on track medium-term, given healthy growth in our client franchise and net interest margin stabilisation post the rate cutting cycle, particularly in Africa Regions.”<\/p>\n\n\n\n


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

While South Africa has seen interest rates increase, Ghana’s interest rates have declined materially more than Absa expected. <\/p>\n","protected":false},"author":95,"featured_media":856689,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[29],"class_list":["post-865027","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\/865027","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=865027"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/865027\/revisions"}],"predecessor-version":[{"id":865037,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/865027\/revisions\/865037"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/856689"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=865027"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=865027"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=865027"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}