Absa Group Ltd. reported a 9.9% increase in profit, reaching 22.06 billion rand, surpassing analyst expectations. Interim CEO Charles Russon highlighted focused strategies driving growth, despite challenges in Ghana due to hyperinflation. Net interest income growth slowed, but impairments decreased, leading to improved credit-loss ratios. A dividend of 14.6 rand per share was declared.
Absa Group Ltd. reported a profit that exceeded analysts’ expectations, attributing the growth to South Africa’s improving economy. Headline earnings rose by 9.9% to 22.06 billion rand ($1.21 billion) for the quarter ending December, surpassing the 21.6 billion rand projected by analysts in a Bloomberg survey.
Interim CEO 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 spurred higher profits for various companies, including Shoprite and Nedbank, supported by substantial repairs to the state-run power utility, ensuring continuous electricity supply.
Despite these gains, Absa faced challenges in other regions, particularly in Ghana, where inflation surged. The bank marked Ghana’s economy as hyperinflationary for the quarter ended December 31, with inflation exceeding 100%. Consequently, the inflation impact caused a profit tax reduction of 653 million rand for the bank.
Absa anticipates concluding hyperinflation accounting for its Ghana division by mid-2025. Meanwhile, net interest income growth slowed to 4.5%, down from 21% the previous year due to increased cash-reserve requirements across some African nations.
Additionally, impairments fell by 8% to 14.3 billion rand, improving the lender’s credit-loss ratio to 1.03%, exceeding Absa’s target range of 75 to 100 basis points. Following this performance, the bank declared a full-year dividend of 14.6 rand per share, surpassing the 14.36 rand estimated by analysts.
Absa Group Ltd. showcased a robust profit performance driven by South Africa’s economic recovery, despite challenges in Ghana. With significant growth in headline earnings, well-managed focus on operations, and the reduction in impairments, the bank is positioned well within its sector. Notably, a promising dividend declaration reflects confidence in its ongoing strategy and performance.
Original Source: www.livemint.com
