Picture: Simon Dawson/Bloomberg

JOHANNESBURG - Absa has said that its units outside South Africa would begin their reposition and rebranding process from next year to complete the overall separation from its former parent company Barclays Plc. 

Absa said it had made progress on repositioning its local operations, charging that the new corporate strategy launched in March would double its share of banking revenues in Africa to 12 percent. 

The group said a positive momentum seen in the latter half of last year had carried through into the first half of 2018. It said new home loans increased 14 percent in the first half of the year against a 4 percent growth in the market. 

Chief executive Maria Ramos said Absa achieved full regulatory deconsolidation, which meant that UK regulators no longer regarded it and Barclays as a single entity. Ramos said that this meant that Absa was now free of Barclays and had a separate risk appetite. 

“In our retail and business banking unit in South Africa, we now have an operating model which has reduced management layers, enables faster decision making and brings the leadership team closer to customers and colleagues,” Ramos said. 

In July the group changed its name to Absa Group and rebranded as an expression of its new identity and its digital ambition. “We have made it clear that our ambition is to be a digitally-led organisation, digitally capable and scalable,” said Ramos. 

Absa reported an 8 percent increase in normalised earnings to R8 billion for the halfyear results yesterday for the six months to end June. 

It said this was boosted by growth in the group’s retail and business banking business in South Africa. The group said it also realised strong growth in its business outside of South Africa as well as the wealth, investment management and insurance unit. 

However, the group said this growth was partially offset by a 6 percent decrease in earnings from the corporate and investment banking business in South Africa. 

It said revenue increased 3 percent to R37bn, while diluted headline earnings per share (Heps) which includes R1.4bn of separation costs decreased 4 percent to 877.8 cents a share. 

On a normalised basis, Heps increased by 3 percent, 5 percent on a constant currency basis, to 949.5c a share. Nesan Nair, a senior portfolio manager at Sasfin Securities, said the results were below market expectations. 

Nair said anaemic growth of the SA lending book, particularly mortgages and poor corporate and investment banking performance, contributed to the subdued results. 

“Headline earnings per share were down and there were several reasons for this and one should look at costs and adverse revenue recognition relating to Barclays separation,” Nair said. 

“The bank also reported weaker net interest margin on the lending book, even though the product mix pointed to higher market products being sold.” 

Operating expenses were up by 4 percent to R20.8bn and costto-income ratio deteriorated slightly to 56.2 percent. 

The group declared an interim dividend of 490c a share, up by 3 percent as compared to last year’s 475c. Jordan Weir, an equity trader at Citadel Investment Services, said a tougher trading environment created a slight drag on the bank’s core business. 

“The risk-off trade environment currently playing out within emerging markets also didn’t help Absa’s share price on the day of their financial results release,” Weir said. 

Absa closed 2.98 percent lower on the JSE yesterday at R166.16.

-BUSINESS REPORT