Absa has posted earnings growth of 3% for the first half of 2019, it was bolstered mainly by its South African retail and business banking unit.
The group on Tuesday released its unaudited financial results for the half-year ended June 30, 2019. According to a shareholder notice the earnings were normalised to account for the consequences of separating from Barclays.
Although the group posted a 3% growth in headline earnings to R8.3bn, Absa's Return on Equity (RoE) decreased to 16.4% compared to the 17.1% reported for the same period in 2018.
"While Absa's return on equity is likely to be marginally lower in 2019, the group remains committed to its RoE target of 18% to 20% in 2021," said Jason Quinn, Absa group financial director.
"Despite the tough operating environment, we have been able to maintain revenue momentum in our key target areas, with total revenue growth improving to 6% [to R39.1bn]," Quinn said. Absa declared a dividend of R5.05 per share, up 3%.
Retail and business banking shines
Absa's retail and business banking unit in South Africa showed faster market growth during the period and reported a 4% increase in earnngs. The unit increased its share of home loans new business. Home loan registrations grew 16%. Retail deposits grew 12% while the market increased 9%. New personal loans increased 20%.
Absa subsidiaries outside of Africa increased earnings by 8%, contributing a fifth of total group earnings.
However, Absa's corporate and investment banking earnings decreased 5%, the group attributes this to a "difficult trading period in South Africa."
Commenting on Absa's separation from Barclays, Absa Group CEO René van Wyk said there had been "significant progress" with Absa's reorganisation since the implementation of the strategy since March 2018.
"There is still, however, significant work to be done before we can reach our growth, returns and cost targets - a difficult task in a challenging environment," he added.