South Africa: Absa Group earnings increase by  27%

Absa Group headline earnings increased 27% to Rands 11 billion in the first half of the year as revenue increased, demonstrating a continued strong recovery from the global economic downturn in 2020.

Absa reported solid pre-prevision profit for the first half of the year, supported by revenue which rose by 14%, underpinned by growth across our business units and supported by a rebound in the insurance business in South Africa and increased interest rates across key markets.

Net interest income and non-interest income rose 12% and 18%, respectively.

“Our strong results reaffirm the strategic choices we made in 2018 and are testimony to the work we have undertaken in creating a business that is closer to customers,” said Arrie Rautenbach, Absa Group Chief Executive Officer.

“With a strong, experienced leadership team and an improved operating model, we now have a strong foundation for outperformance.”

In June, Absa announced a strengthened and more diverse executive leadership team.

Absa refined its operating model, adopting a flatter structure, bringing management closer to customers and allowing the group to accelerate strategy execution. Effective 1 July, Absa has five business units, from two previously.

All business units reported improved earnings and stronger returns during the first half.

“All of our key measures are significantly above the pre-Covid levels of the first half of 2019,” said Jason Quinn, Absa Group Financial Director.

“The strategic decisions we made in the last few years have ensured that we remain capital generative and we are appropriately provisioned as we face a tougher environment,” he said.

The group balance sheet remains well positioned, with Common Equity Tier 1 (CET1) having improved.

CET1 and liquidity levels remain well ahead of regulatory and board target ranges.

Costs were well maintained even as the group increased investment in IT for enhanced digital performance and improved customer experience.

Total IT spend grew 11% to R6 billion.

Improved stability and enriched functionality saw digitally active customers grow across our businesses including a 10% increase to 2.2 million in retail and business banking in South Africa.

Digital volumes have grown by 86% compared to 2019 levels whilst branch and ATM volumes have declined substantially.