Financial services provider Absa Group Ltd has recorded a 5 percent increase in half-year profits despite South Africa’s challenging economic environment.
“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 percent,” said Jason Quinn, Absa Group financial director.
The results have been attributed to improved performance in the South African retail-banking business as well as general growth in operations across the continent.
Absa noted that its core Retail and Business Banking South Africa grew undeterred by the country’s weak economy.
For the six month period, normalised headline earnings increased to ZAR 8.3 Bn compared to ZAR 8.04 Bn recorded the same period last year.
Operational costs for the period to June 30 rose six percent to ZAR 22.1 Bn while the return on equity declined to 16.4 percent from 17.1 percent.
“We’ve made significant progress with Absa’s reorganization following the implementation of our new strategy in March 2018, and we are beginning to see the benefits,” group CEO René van Wyk said.
Absa Regional Operations (ARO), which are Absa’s subsidiaries outside South Africa recorded an increase boosting the contribution to group earnings. During the period, ARO’s contribution rose by 8 percent, accounting to more than a fifth of the total group earnings.
“The prospects for stronger growth are constrained by the slowing global economy, plus weak business sentiment and decelerating household income growth in South Africa,” the bank said.
Revenue increased by 6 percent to ZAR 39.1 Bn and the dividend rose by 3 percent to ZAR 5.05 per share.
The bank which was founded in 1991 has presence in 12 African countries.
The lender has revealed that it has completed the process of appointing a new CEO and is expected to unveil the name at a later date. The bank has been without a CEO since February when the former head, Maria Ramos retired.
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