Absa Group has more than doubled its interim dividend to 650 cents per share (HY 2021 310 cents) for the interval ended 30 June 2022, off the again of double-digit progress in income and headline earnings. The dividends have been declared out of earnings reserves.
The group’s half-year outcomes, revealed on Monday, confirmed the financial institution’s continued restoration on most of its key metrics from the financial fallout of the Covid-19 pandemic. In truth, most efficiency metrics are above pre-Covid ranges.
Africa’s third largest financial institution reported a 14% rise in income to R46.9 billion in the course of the interval and a 27% rise in headline earnings to R11 billion.
Pre-provision revenue grew 23% to R22.8 billion in comparison with the earlier interval, a rise the financial institution says was supported by progress throughout its “business units and supported by a rebound in the insurance business in South Africa and increased interest rates across key markets”.
Headline earnings per share for the half-year surged 27% to 1 298.5 cents, up from 1 019.7 cents within the 2021 comparable interval.
“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,” Absa Group CEO Arrie Rautenbach says in his first interim outcomes as captain of the ship.
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“With a strong, experienced leadership team and an improved operating model, we now have a strong foundation for outperformance,” he provides.
Segmental efficiency
Absa’s Retail and Business Banking (RBB) section – the group’s largest income generator – reported optimistic progress tendencies in the course of the interval, regardless of seeing an more and more troublesome working atmosphere within the second quarter of 2022.
According to the financial institution, RBB’s efficiency was supported by a rise in dwelling loans registrations, automobile asset financing and private loans.
“Absa gained market share in key areas in retail advances including home loans and vehicle asset financing and our deposit market share continued to be strong at 22%. Customer numbers increased 1% to 9.6 million,” it stated.
The financial institution’s Corporate and Investment Banking (CIB) division additionally reported income progress throughout all its enterprise items, with the section’s income up 7% in the course of the interval.
“All of our key measures are significantly above the pre-Covid levels of the first half of 2019,” Group Financial Director Jason Quinn says.
“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 provides.
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Outlook
In an outlook for the remainder of the 12 months, Absa says it expects to see low double-digit progress in income in comparison with the 2021 full 12 months.
The financial institution additional anticipates an no less than low- to mid-single digit enhance in working bills within the full 12 months. It reported a 7% rise in working prices to R24.1 billion for the most recent half-year.
“The macro backdrop deteriorated noticeably in the past six months and global growth expectations have reduced materially. There are considerably higher inflationary pressures across most of the markets in which Absa operates and policy rates are increasing faster than we expected,” the group notes.
“Absa remains well positioned for the tougher operating environment, with a strong balance sheet and high levels of capital and provisioning.”
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Absa’s share value traded virtually 1% up round noon on Monday (at R187.71), following the discharge of its interim outcomes.
