JOHANNESBURG - Banking group Absa reported a three percent increase to R8.3 billion in interim headline earnings on Tuesday, while revenue was up six percent to R39.1 billion.
Absa, one of Africa’s largest financial services providers with a presence in 12 countries on the continent and an office in London, said its retail unit in South Africa gained market share, mitigating the negative effects of a difficult economy.
The bank's operating expenses for the six months to June 30 rose six percent to R22.1 billion and return on equity declined to 16.4 percent from 17.1 percent.
The dividend increased three percent to R5.05 per preference share.
“Despite the tough operating environment, we have been able to maintain revenue momentum in our key target areas, with total revenue growth improving to 6 percent," group financial director Jason Quinn said.
Absa said its largest business unit Retail and Business Banking South Africa (RBB SA) was showing faster than market growth in key product areas, in line with the group’s commitment to regaining its leading position.
RBB SA increased its share of home loans new business, with home loan registrations growing 16 percent, more than double the growth in total home loan registrations in South Africa during the first half.
Absa’s subsidiaries outside of South Africa continued to increase their contribution to group earnings, rising eight percent during the period, to account for more than a fifth of total group earnings.
“We’ve made significant progress with Absa’s reorganisation following the implementation of our new strategy in March 2018, and we are beginning to see the benefits,” group CEO René van Wyk said.
"There is still, however, significant work to be done before we can reach our growth, returns and cost targets - a difficult task in a challenging environment."
Absa said South Africa’s economic growth outlook appeared muted, with gross domestic product expected to expand by just 0.5 percent in 2019.
"The prospects for stronger growth are constrained by the slowing global economy, plus weak business sentiment and decelerating household income growth in South Africa," the bank said.
- African News Agency (ANA)