Absa Group Ltd. reported profits of 22.06 billion rand, exceeding estimates as South Africa’s economy recovers. Despite challenges in Ghana’s hyperinflation, the bank’s management and consumer demand in South Africa contributed to strong earnings. A dividend of 14.6 rand was announced, higher than analyst estimates, amid improvements in credit-loss ratios and net interest income.
Absa Group Ltd. announced profits that surpassed analyst expectations, benefiting from the economic recovery in South Africa. The company’s headline earnings increased by 9.9%, reaching 22.06 billion rand ($1.21 billion) in the quarter ending December, exceeding the forecast of 21.6 billion rand by seven analysts in a Bloomberg survey.
Interim Chief Executive Officer 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.” The strong consumer demand in South Africa also positively impacted various businesses, including those of Shoprite Holdings Ltd. and Nedbank Group Ltd.
Despite facing challenges in other regions, notably Ghana, where inflation surged, Absa managed to perform well. The bank noted that Ghana’s economy was deemed hyperinflationary as the cumulative inflation rate over three years exceeded 100%, leading to a profit reduction of 653 million rand after tax. Absa anticipates concluding hyperinflation accounting for its Ghanaian operations by mid-2025.
Additionally, net interest income growth slowed to 4.5% from the previous year’s 21%. Higher cash-reserve requirements in several African nations restricted cash flow. However, impairments fell 8% to 14.3 billion rand, improving the credit-loss ratio to 1.03%, while still remaining above Absa’s target of 75 to 100 basis points.
For the full year, Absa announced a dividend of 14.6 rand per share, which surpassed the analysts’ estimate of 14.36 rand. Overall, Absa’s performance showcases its resilience amid regional economic challenges and highlights its focus on strategic areas for growth.
In conclusion, Absa Group Ltd. has demonstrated a robust financial performance, backed by South Africa’s recovering economy, with significant profit growth and a declared dividend exceeding analyst expectations. The bank must navigate ongoing challenges in Ghana, where inflation poses risks, yet its overall management strategies appear effective in sustaining profitability. A commitment to refining their operational focus signals strong potential for future developments.
Original Source: www.livemint.com
