Companies / 12 March 2019, 09:30am / Sandile Mchunu
DURBAN – The Absa group has refuted reports that the restructuring in its South African retail and business banking unit will lead to job losses in the future.
Last week it was reported that about 827 jobs are at risk if the restructuring of the group goes ahead.
However, Absa said yesterday that in April 2018 it announced a new group operating model that began to align the organisation with its new corporate strategy.
“We also stated that each business and enabling function would undergo individual structural reviews in order to enable delivery against the strategy. This process is underway, and involves both new opportunities and redundancies across the business.
“It is only once the realignment is complete that the total number of people who have either been appointed to new roles or have left the organisation will be known with certainty,” the group said yesterday after it delivered its results for the year to end December.
In the results, the group reported a 3 percent increase in normalised headline earnings to R16.1billion, while revenue increased by 4 percent to R75.7bn.
Diluted headline earnings per share increased by 4 percent to 1910cents a share, up from 1845.4c, with the group’s normalised return on equity at 16.8percent from 16.5percent.
Gross loans and advances to customers grew 13 percent to R872bn, while deposits due to customers rose 7 percent to R736bn.
South African earnings grew 3percent to R13bn and Africa Regions were higher at 6percent.
Retail Banking South Africa headline earnings grew 2percent to R6.36bn, while Business Banking South Africa increased 1 percent to R2.52bn.
Corporate South Africa were up by 4 percent to R1.17bn and Investment Banking South Africa decreased by 4 percent to R2.20bn.
Chief executive René van Wyk said last year was a year of almost unprecedented activity for Absa Group as the business was re-set as an independent bank after Barclays Plc reduced its shareholding to a minority stake in 2017.
“With major changes bedded down in 2018, the framework for the business has been re-set. The strong leadership team and structure that was put in place over the past year can now deepen the efforts within our business units to deliver against our ambitious growth strategy,” Van Wyk said.
Van Wyk took over the leadership after Maria Ramos stepped down at the end of February.
The group declared a dividend of 1110c a share, which was up by 4percent compared to last year.
Kokkie Kooyman, a portfolio manager at Denker Capital, said the the increase in headline earnings was slightly below market expectations.
“The group has lost considerable market share in the past few years, but are trying to turn that around. It looks as if they did grow their loan book at a higher rate than the other banks, but judged by their lower net interest margin they grew in lower yield products (mortgages) which over time should also mean a lower cost of risk,” Kooyman said.
Absa share closed 3.10 percent lower at R 167 on the JSE yesterday.