FIFI PETERS: Absa is the second of the massive 5 banks to report its annual monetary outcomes. Like Nedbank final week, Absa reported larger profits [on Monday] and likewise greater than doubled its annual dividend to R6.50/share.
We have the CEO, Arrie Rautenbach, who began within the job in March this yr, on the Market Update for extra on the group’s numbers.
Arrie, thanks a lot to your time. I see that it’s round three months that you’ve got been within the place as CEO if I take it to your year-end, the top of June. How are issues going?
ARRIE RAUTENBACH: Fifi, thanks very a lot. If you’re taking it to the top of June, it’s three months, or let’s say type of the primary 100 days. If I take a look at the outcomes that we put out to the market, I have to say I really feel superb about the place we’re as an organisation – our posture within the market and the outcomes that we’ve put out. So as an organisation we really feel very proud about these numbers, and because the new CEO I’m notably proud that I can share these numbers on behalf of 35 000 colleagues with the market.
FIFI PETERS: What we noticed within the pandemic was banks taking over additional warning, given the uncertainty of their atmosphere and taking out these large provisions which are actually coming again into your statements, and are actually filtering into profits. I’d like to grasp then, if we take a look at your 27% enhance in Heps [headline earnings per share], how a lot of that is because of pre-provisions coming again into the system, and the way a lot of it’s because of a resilient economic system?
ARRIE RAUTENBACH: Fifi, I feel what’s essential is that once you look by our outcomes you’ll perceive that the numbers that we’ve simply introduced to the market are literally an element of selections that we’ve taken over an in depth time period.
We’ve been reporting pre-provision working revenue development for a lot of years. And for those who take a look at pre-provision working revenue up type of 23%, if I’ve acquired the numbers proper, then you may see that our efficiency is because of underlying development. If you take a look at underlying development, [there is] very robust income momentum that we’re seeing.
So I feel for us what’s essential is the choices that we’ve taken over a lot of years to get our organisation arrange for development, and rising in the proper areas [is] starting to repay very properly for us, other than the customer-centric selections that we made all through the pandemic. So actually an excellent sense of underlying efficiency additionally on the again of robust development.
That development agenda for us is a vital agenda going ahead, Fifi. So we’re actually going to speak about that much more in our subsequent horizon.
FIFI PETERS: It appears just like the retail a part of the enterprise is performing quite a bit stronger than your company consumer. Perhaps you may break down the respective shoppers for us and the way you describe their state proper now. How is the state of Absa’s retail banking client, and the way totally different is it from the state of your company banking client?
ARRIE RAUTENBACH: Fifi, thanks very a lot for that query. I feel for those who begin with our company financial institution, it’s a enterprise that has additionally centered on development during the last couple of years in addition to new buyer acquisitions. What we’re notably inspired by is the segments that we’ve got publicity to in that atmosphere. If you take a look at the loss ratios that we’ve seen within the first half of this yr, [they are] extraordinarily low.
So that enterprise remains to be very effectively positioned and our clients are very, very resilient, in truth, with fairly a little bit of capability to take a position if the proper alternatives come alongside.
If you take a look at our enterprise banking atmosphere, we’re very robust within the higher finish of enterprise banking, very robust within the agri atmosphere. Again, we’ve seen very resilient efficiency there, [we’re] very near these clients, and once more the publicity that we’ve acquired there speaks to fairly a resilient base.
If you take a look at our retail companies, a really robust bounceback on the again of restoration post-Covid. We’ve been clear that we wish to regain market share over time throughout all these companies, and for those who take a look at our market share postures now on the lending facet, throughout all our companies, [that’s] sitting at 22% on the legal responsibility facet, which is the deposit facet, additionally sitting at 22%. So I feel we’re very assured that our clients have proven the resilience to this point.
Of course we take into consideration the macro atmosphere on a regular basis and what meaning for our shoppers. We’ve been very acutely aware about that for the final 12 months or so already. And once we take into consideration the danger urge for food on this atmosphere and the atmosphere we’re going into, Fifi, we begin stressing this, particularly for affordability as a part of our lending approaches.
So if we take a look at threat urge for food throughout our companies, we haven’t made any materials or risk-appetite cutbacks but. We usually are not seeing any type of misery but to drive us to begin doing that. But after all we’ll keep very near the macro atmosphere, and if we predict there’s causes for us to begin doing that, [if] we begin seeing some early misery coming by, we’ll take the required actions.
FIFI PETERS: Sir, one final transient query on the ‘grey list’. Everyone’s speaking about it proper now. How apprehensive are you about it and, if South Africa will get placed on this record, whether or not you suppose proper now your money-laundering and terrorism-financing controls are as much as scratch?
ARRIE RAUTENBACH: Fifi, thanks very a lot. This is clearly an space which we’re very centered on and which we’re very involved about.
This can be an space which you clearly perceive we’ve got to work throughout, not as a person financial institution – as Absa, to your query, clearly we’re very assured about our personal controls and processes in place – but additionally as a banking sector. And then after all, as we work with National Treasury and likewise legislation enforcement as a result of it is a collective effort throughout the board by that entire worth chain.
The first prize for us is that we don’t find yourself on that greylist. However, ought to we find yourself on that greylist, we’ve got to proceed with all of the efforts throughout all these areas that I’ve talked about to attempt to get out of that scenario as rapidly as doable, as a result of in the long term it’s merely not a place that we wish South Africa to be in, as a result of it speaks to our competitiveness at a worldwide stage. And particularly if sentiment begins altering, that’s not a place we wish to discover ourselves in.
FIFI PETERS: Right. That’s the place we’ll go away it then. That was Arrie Rautenbach, the CEO of Absa.
