Absa Group, which also operates in 12 African markets and derived 31% of its 2025 earnings from other African markets, has set its sights on becoming a leading pan-African bank
Image: File
Absa Group reported a solid 12% increase in headline earnings after benefiting from lower credit impairments and solid growth across all its key business segments, as it progresses under a refocused strategy.
Prior to the appointment of the current CEO Kenny Fihla in October 2024, Absa Group was focused on purpose-led transformation, sustainability and growth in Africa, but the group is now aiming for customer-led operational resilience and to become a leading pan-African bank.
Revenue for the bank that already operates in 12 other African countries and derives 31% of earnings from those markets, increased 5% to R115,7 billion. Pre-provision profit increased 4% to R53,5 billion. Impairments fell 6%. The credit loss ratio improved to 55 basis points from 103 basis points previously. The dividend was raised 12% to 1,635 cents per share.
“We are seeing the benefits of our operating model changes, sharper client focus, and continued improvements in credit outcomes. Growth across several of our businesses, particularly in Corporate and Investment Banking and our Africa Regions operations, highlights the strength of our diversified franchise,” said CEO Kenny Fihla in a statement.
The financial performance for the group with 13.1 million customers reflected lower credit impairments, cost management and solid momentum across key business segments, particularly in Corporate and Investment Banking (CIB) and Africa Regions. There were also actions to strengthen revenue growth, enhance balance sheet resilience, and improve return on equity, he said.
Revenue growth was supported by non‑interest income momentum, particularly robust trading revenue and moderate net interest income growth, despite modest retail loan growth and margin compression.
From a geographic perspective, Africa Regions delivered noticeably stronger earnings growth than South Africa, driven by solid pre‑provision profit growth and continued customer expansion, while the domestic market benefited from a meaningful improvement in credit impairments across several portfolios.
Impairments decreased by 6%. The improvement in credit loss ratio was primarily driven by stronger performance across key Personal and Private Banking (PPB) portfolios in South Africa, Africa Regions, and CIB, underpinned by proactive risk management, enhanced collections effectiveness and a strategic repositioning of the portfolio.
“This foundation enables us to continue investing in strategic priorities while maintaining balance sheet strength and a resilient capital position,” said group financial director Deon Raju.
A productivity program saw Absa achieve cumulative savings of R3,1bn since its launch in 2024. These were achieved through optimisation of back office and channel, third party suppliers and software licensing.
“As we look ahead, we remain focused on enhancing operational efficiencies, driving sustainable revenue growth and delivering improved returns for our shareholders,” said Raju.
Most units delivered solid earnings growth across the period. CIB’s headline earnings increased by 14% to R13bn. PPB increased headline earnings by 7% toR7,5bn Business banking headline earnings increased by 8% to R3.9bn. Africa Regions increased headline earnings 51% to R2.5bn.
CIB’s earnings growth was underpinned by the Global Markets business in a period of heightened volatility and strong market moves. Client franchise growth, cost management and improved credit quality, partially offset by ongoing margin pressure in the lending and transactional banking portfolio, is expected to support growth going forward.
PPB benefited from improved credit quality and enhanced returns. The business is strengthening a high‑quality customer franchise, with gains emerging in higher-income segments through initiatives that include positioning Absa Rewards as a key lever.
BB delivered sound balance sheet growth, but earnings and returns were negatively impacted by margin compression, higher impairments, and cost pressures. Africa Regions’ earnings were supported by expanded margins and improved credit quality.
The group said the global economic outlook remained highly uncertain due to volatile US policy dynamics and the ongoing conflicts in the Middle East and Ukraine. Rising geopolitical risks, particularly the potential for sustained higher energy prices, could weigh on global growth and limit the ability of major central banks to cut interest rates further.
In South Africa, economic growth of 1.9% was forecasted for 2026, a forecast made ahead of military action against Iran, with inflation expected to remain in the low‑3% range and a further 50 basis points of interest rate cuts anticipated. Across Absa’s Africa Regions, GDP‑weighted growth is expected to rise to 5.3% in 2026, supported by recoveries in Botswana, Mozambique, and Zambia, and steady performance in other markets.
Visit:www.businessreport.co.za