Absa Group Ltd. reported a 9.9% increase in headline earnings to 22.06 billion rand, surpassing forecasts. Strong South African consumer demand contributed to this growth, despite challenges in Ghana’s hyperinflation. The bank’s impairments decreased, and it declared a dividend of 14.6 rand per share, exceeding analyst predictions.
Absa Group Ltd. has reported a profit that surpassed analysts’ expectations, reflecting the recovery of South Africa’s economy. The lender’s headline earnings increased by 9.9% to 22.06 billion rand ($1.21 billion) for the three months ending December, exceeding the forecast of 21.6 billion rand made by seven analysts surveyed by Bloomberg.
Interim Chief Executive Officer Charles Russon stated, “Our organization rallied in the second half, refining our focus areas to ensure that our actions are targeted and precise in generating value and earnings uplift.” Strong consumer demand within South Africa has benefited various companies, enabling Absa to mitigate challenges faced in other African markets, notably escalating inflation in Ghana.
In the last quarter of the year, Absa identified Ghana’s economy as hyperinflationary, with a cumulative three-year inflation rate exceeding 100%, which adversely impacted its profit after tax by 653 million rand. The bank anticipates concluding the hyperinflation accounting for its Ghanaian operations by mid-2025.
Growth in net interest income declined to 4.5%, down from 21% in the previous year, primarily due to higher cash-reserve requirements across some African countries. Moreover, impairments decreased by 8% to 14.3 billion rand, contributing to an improved credit-loss ratio of 1.03%, although still above Absa’s target range of 75 to 100 basis points, and higher than its competitors.
In addition, the bank announced a full-year dividend of 14.6 rand per share, exceeding analyst estimates of 14.36 rand. This announcement highlights Absa’s resilience and proactive approach amidst challenging economic conditions.
In conclusion, Absa Group Ltd. has demonstrated financial strength by exceeding profit expectations, primarily driven by South African market recovery. The bank has faced challenges in Ghana due to hyperinflation, yet it anticipates a resolution by mid-2025. Despite lower growth in net interest income, improved credit-loss ratios and a favorable dividend declaration reflect the lender’s strategic focus and operational resilience.
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