Absa plunges after profit warningComment on this story
Shares in the country’s biggest retail banking group Absa (ASA) ended 8.3% lower on Tuesday after the group issued a voluntary profit warning indicating that its interim headline earnings were expected to be up to 10% lower than last year.
The group’s shares closed at R143.50 – a discount of R12.99 on Monday’s closing price.
Absa said earlier that its headline earnings for the six months ending June 2012 were likely to be 0%-10% below the R4.595bn achieved for the six months ended June 2011‚ largely on the back of an increase in credit impairments in the group’s mortgage legal book.
The group noted in a voluntary trading statement that credit impairments had increased due to higher cover required on its mortgage legal book‚ as property prices and distressed customers remained under pressure.
However‚ early arrears on most portfolios continued to improve.
The group’s revenue growth was also subdued in the first five months.
Avior Research analyst Faizal Moolla said the expected headline earnings for the period were “disappointing compared with our expectations”. Avior had expected a 13% increase in headline earnings‚ he said.
Ferdi Heyneke‚ portfolio manager at Afrifocus Securities‚ said the market was “not happy” with the statement and had reacted very negatively. - I-Net Bridge