Absa grows profit by 3%, loans increased by 9%

ABSA's new logo. (Photo: Supplied)
ABSA's new logo. (Photo: Supplied)

Absa reported 3% growth in its headline earnings - which reached R14.5 billion in the financial year to end-December. .

Its revenue increased by 5%. Diluted headline earnings per share rose 3% to 1 747.6 cents. Its net asset value per share increased 3% to 13 669 cents, and a final dividend of 630 cents per ordinary share was declared, bringing the dividend for the year to 1 125 cents - up 1% from the previous year.

Former deputy reserve bank governor Daniel Mminele recently joined the bank as its new CEO.

The group's South African earnings declined 3% to R12.7 billion, while the rest of Africa's earnings are up 17% to R3.6 billion.

Interest income increased by 6% and non-interest income increased by 3%. The net interest margin decreased from 4.65% to 4.5%, mainly due to lower deposit margins, the group said. Gross loans and advances to customers grew 9% to R947 billion. Deposits due to consumers rose 12% to R826 billion.

"Credit impairments grew 24% to R7.8 billion, resulting in a 0.80% credit loss ratio from 0.73%," the statement read.

The retail business banking division's headline earnings declined 2% to R9.5 billion due to 38% higher credit impairments. Revenue for this division grew 5% to R49 billion.

The Corporate Investment Banking division's earnings fell 6% to R3 230 billion, due to a 4% decline in revenue. 

The group expects a continued difficult environment for consumers and that "heightened uncertainty" will dampen business confidence and investment.

"Downside risks are significant and include the risk of protracted load shedding, a sharper global slowdown due to the coronavirus outbreak and the impact of a potential sovereign credit rating downgrade from Moody's," Absa said.


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