Thursday, April 18, 2024

Absa Group reports strong earnings; remains well positioned for growth

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By Benedict Tembo

Absa Group reported strong normalised headline earnings of R21 billion for the 2022 financial year, representing a 13 percent increase from last year and well above pre-Covid levels. The result was driven by significantly higher pre-provision profit which, in turn, was driven by very strong revenue growth of 15 percent to just under R100 billion.

Strong pre-provision profit growth was tempered by a 61 percent increase in impairments. This reflects the impact of higher interest rates and inflationary pressures in South Africa and significant Ghana sovereign debt related impairments.

“Our consistent strategy execution produced strong results in 2022,” said Arrie Rautenbach, Absa Group Chief Executive Officer. “We believe in our strategy and we have momentum behind us. Along with a stable and experienced leadership team, I am confident that we will be able to sustainably achieve our targets,” he said.

Absa’s customer base grew through improved product offerings and enhanced digital platforms.

In South Africa, Absa’s largest market, the number of customers increased from 9.6 million to 9.7 million, with digitally active customers increasing by 10 percent as stability improved and functionality was enriched.

Absa was among the first to go to market with Google Wallet and the rollout of the Abby chatbot; Absa ID was also effective, with over two million enrollments in the first year.

Absa won more than 15 awards in the digital space, including Best Digital Bank in South Africa, Mauritius and Tanzania. Key metrics including return on equity and cost-to-income ratio continued to improve as the group continues to deliver against its growth strategy adopted in 2018 and which was refreshed last year.

“We are building a strong and consistent track record of delivery against our strategy and we are well positioned for growth, notwithstanding the more difficult operating environment,” said Jason Quinn, Absa Group Financial Director.

The group capital position remains above the board approved target range and the Common Equity Tier 1 ratio was strong at 12.8 percent. The group loan coverage ratio of 3.9 percent remains robust and well above the pre-Covid position.

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