Absa Group has released its interim financial results for the six months ended 30 June 2024, reflecting a period of strategic adjustments and financial resilience.
The Product Solutions Cluster (PSC) recorded an overall improvement in its credit impairments and credit loss ratios, particularly in home loans, due to better management of early arrears and handling of loans in the legal process.
Key Financial Highlights:
Diluted Headline Earnings Per Share (HEPS): Decreased by 5% to 1,227.7 cents from 1,289.1 cents.
Interim Ordinary Dividend Per Share (DPS): Declared flat at 685 cents.
Divisional Headline Earnings: Product Solutions Cluster (PSC) increased by 7% to R1,173 million, Everyday Banking (EB) grew by 9% to R1,565 million, Relationship Banking (RB) rose by 1% to R2,005 million, while ARO RBB decreased by 12% to R875 million, and Corporate and
Investment Bank (CIB) remained flat at R5,892 million.
Return on Equity (RoE): Declined to 14.0% from 15.7%.
Revenue: Grew by 3% to R53.7 billion.
Operating Expenses: Increased by 8% to R28.3 billion, resulting in a cost-to-income ratio of 52.7% from 50.6%.
Pre-Provision Profit: Fell by 1% to R25.4 billion from R25.7 billion.
Credit Impairment Charges: Remained flat at R8.3 billion, with a credit loss ratio of 1.23% from 1.27%.
Home Loans Performance
Within the PSC, net loans and advances to customers rose by 4% to R423 billion. Home Loans specifically grew by 3% to R307 billion.
Home Loans headline earnings grew by 17% to R727 million, as credit impairments fell by 21% to R771 million, resulting in an improved credit loss ratio of 0.49% from 0.65%.
This improvement was driven by better management of early arrears and handling of loans in the legal process.
Home Loans pre-provision profits declined by 4%, due to flat revenue growth and a 7% increase in operating expenses.
Overall Credit Impairments: PSC’s credit impairments decreased by 6%, with fewer losses from bad loans.
The credit loss ratio improved from 1.11% to 1.00%. This ratio measures the proportion of loans that are not expected to be repaid. A lower ratio indicates better loan performance.
Product Solutions Cluster:
Headline Earnings increased by 7% to R1,173 million.
Revenue rose by 3% to R7,027 million, driven by a 5% increase in non-interest income.
Comments