- Absa thinks the fifth wave of Covid-19 infections will hit SA in late April.
- The banking group has increased Covid-19 provisions for its insurance business by another R330 million.
- But it says death claims in the fourth wave were much lower than expected, and it remains to be seen if the fifth wave will be the same.
Absa says it is expecting the fifth wave of Covid-19 infections to emerge as soon as next month. New daily Covid-19 infections in South Africa are currently below 1 000 a day, and there have been no new deaths recorded in the official tally in the past two days.
The country is waiting for President Cyril Ramaphosa to announce new Covid-19 regulations as he's alluded to a possible end to the State of National Disaster, amid calls for mask regulations to be dropped outdoors and temperature checks to be scrapped.
We are looking into ending the State of National Disaster, but we must ensure that we have the necessary health measures in place to help us effectively manage the pandemic. pic.twitter.com/gNlh07VjpI— Cyril Ramaphosa ???? (@CyrilRamaphosa) March 12, 2022
"We do anticipate a fifth wave. We think it will start as early as late next month," said Absa interim CEO Jason Quinn.
Absa said it expects that waves of infection will continue, but social-distancing restrictions in each wave will likely become less prohibitive.
The bank said Covid-19 claims in the fourth wave were better than its insurance business expected. So, it might be the case that the fifth wave could also be less severe than the third wave, which hit SA life insurers hard.
In the first half of 2021, Absa increased its Covid-19 provisions to R846 million, with most of that – R836 million – set aside for the South African operations. The bank used R701 million to cover claims in the third and fourth waves.
Quinn believes that the Omicron wave was less severe because the level of vaccination in the countries that Absa operates has created strong population immunity. Consequently, the impact on the economy may be less going forward.
But he said Absa's actuaries have provided for a number of other possible waves still in the insurance business.
Absa has topped up the R146 million left from the provisions set aside in June 2021 by another R330 million, taking its provision for the fifth wave and some of the fourth wave claims to R476 million. These are just Covid-19 provisions. There is money set aside for other ordinary death claims. Absa's interim financial director, Punki Modise, believes this is enough for now.
"When we looked at how the last wave saw itself out, the claims experience has largely been a lot lower than what we originally anticipated. So, we feel comfortable that we have appropriately catered for claims that are still to come," said Modise.
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