Absa Group Limited, one of Africa’s largest financial services providers and parent company of Barclays Bank Ghana Limited, reported a 3% increase in earnings for the first half of 2019 as its retail unit in South Africa gained market share, mitigating the negative effects of a difficult economy.
Absa Group, which has a presence in 12 countries in Africa and an office in London, said normalised headline earnings increased to R8.3 billion during the first six months of the year from R8.04 billion during the same period in 2018. Income and costs both grew at 6%. Normalised earnings are considered the best measure of underlying group performance as it strips out the distorting effect of items related to the separation from Barclays PLC.
“Despite the tough operating environment, we have been able to maintain revenue momentum in our key target areas, with total revenue growth improving to 6%,” said Jason Quinn, Absa Group Financial Director.
Absa Group’s largest business unit, Retail and Business Banking South Africa (RBB SA), is showing faster than market growth in key product areas, in line with the group’s commitment to regain its leading position. RBB SA increased its share of home loans new business, with home loan registrations growing 16% - more than double the growth in total home loan registrations in South Africa during the first half. Retail deposits grew 12% while the market increased 9%. New personal loans increased 20%. RBB SA reported a 4% increase in earnings.
Corporate and Investment Banking (CIB) earnings decreased 5% on a pan-African basis, following a difficult trading period in South Africa. However, the client franchise continued to perform well with notable client acquisitions across the countries in which Absa has a presence. The corporate franchise extended its track record of double-digit revenue growth.
Absa’s subsidiaries outside of South Africa, collectively known as Absa Regional Operations (ARO), continued to increase their contribution to group earnings. ARO’s earnings rose 8% during the period, to account for more than a fifth of total Absa Group earnings.
“We’ve made significant progress with Absa’s reorganisation following the implementation of our new strategy in March 2018, and we are beginning to see the benefits,” said René van Wyk, Absa Group CEO.
“There is still, however, significant work to be done before we can reach our growth, returns and cost targets - a difficult task in a challenging environment,” he said.