Absa expects an increase of 20% in earnings per proportion

Absa expects an increase of 20% in earnings per proportion

Absa is expecting a jump of more than 20% in its headline earnings per proportion for the six months to end June, against the first half of 2021.

This was included in a statement on the banking group’s trading update for the five months ended 31 May, which reflected low double digit growth year-on-year. In line with JSE regulations, it must notify shareholders as soon as there is reasonable certainty that results will differ by more than 20%, already if they cannot give specifics regarding the range. Absa did not give detailed information on its calculate.

It said there was high single digit growth in gross customer loans over the period, largely due to improved growth in corporate and investment banking, with retail and business banking also growing high single digits, pushed by home loans and means and asset finance.

Customer place growth, however slowed to mid-single digits, with substantial retail and business banking growth slightly offset by lower corporate and investment banking deposits due to “a large reduction in low-margin national government deposits”.

Its return on equity for the period improved year-on-year to almost 17%. Based on this performance for the period, Absa said it expects revenue for the first half of 2022 to increase by low teens year-on-year, and low double digit net interest income growth, benefiting from rising interest rates.

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“Operating expenses are expected to increase by high single digits year-on-year, reflecting performance costs, plus continued growth in marketing and technology investments.”

Absa expects its credit impairments to increase year-on-year, resulting in a credit loss ratio in the upper half of its by the cycle range, versus 88 basis points in the first half of 2021. 

“Given the uncertain macroeconomic outlook, our loan coverage remains strong, with conservative forward-looking provisions.”

Source: News 24

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