Banking group Absa (ASA) has reported a 6% decline in diluted headline earnings per share‚ to 602.3 cents for the six months ended June 2012 from 638.5 cents a year ago.
The group said fear about the euro debt crisis and its potential impact on the global economy had been the main driver of the volatility in global financial markets over the past six months.
CE Maria Ramos told a presentation of the group’s results that the first-half headline earnings were below expectations‚ declining by 6%.
“This was due to two factors: subdued revenue growth and two significant impairment issues. The first relates to our mortgage legal book and the second to our commercial property finance book‚” she said.
“While consumer demand has been a pillar of strength for SA’s economic recovery‚ there are signs that consumers are starting to take strain‚” Absa said in a statement.
Headline earnings declined to R4.332bn from R4.595bn and attributable profit was 9% lower at R4.189bn. Absa said headline earnings declined due to higher impairments‚ especially in mortgages.
“Revenue growth remained subdued‚ despite solid noninterest revenue growth in target areas‚ given a slightly lower net interest margin and limited loan growth‚” the bank said.
The group declared an interim dividend of 315 cents per share.
Absa expects the next six months to remain volatile due to the uncertainty about the euro debt crisis and its potential impact on global growth.
“We expect global growth to slow somewhat‚ to 3.4% from 3.8% in 2011. Data show that the US recovery is durable but not robust as there are clear signs of a loss in momentum. The eurozone is solidly in recession‚ with agreement on a lasting solution to its structural problems yet to be reached‚” it said.
Ramos said the group’s strategy remained on track.
“We set out in 2009 to build a very resilient bank. At that time we envisaged a prolonged‚ uneven five- to seven-year recovery‚ with customers remaining stretched and business confidence low. Our single-minded focus continues to be to build solid bedrock for the bank.
“In the last three years we have changed the way we do business and we have shifted Absa’s model to adapt to the changing environment. I believe we have achieved a great deal. We remain convinced that the strategy we set out in 2009 is the right strategy for 2012 and beyond‚ “ Ramos said. - I-Net Bridge