Absa CEO Rene van Wyk at a media briefing on the Absa interim results in Sandton. Photo: Karen Sandison/African News Agency (ANA)

DURBAN – Absa’s push to regain its market share of South African retail and business banking after it was separated from the UK’s Barclays is reaping rewards, which saw it announce an interim profit growth of 3 percent.

Absa in the six months to end June yesterday said that normalised headline earnings per share increased by 3 percent to 977 cents a share, with return on equity declining to 16.4 percent compared to last year’s 17.1 percent. 

The group reported that its largest division, Retail and Business Banking South Africa (RBB SA) was showing faster than average market growth in key product areas, in line with its commitment to regain its leading position and despite a weaker economy. 

“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. Retail deposits grew 12 percent, while the market increased 9 percent. New personal loans increased 20 percent. RBB SA reported a 4 percent increase in earnings,” the group said.

RBB SA, which accounts for more than 60 percent of Absa Group’s income, had largely completed its reorganisation and is expected to reap further benefits from its integration with Absa’s wealth and investment management and insurance business, it said. 

“The integration, which is under way, will result in a seamless offer for customers between banking and non-banking services,” the group said. 

The unit’s headline earnings were up by 4 percent to R4.85 billion during the period while the overall headline earnings increased by 3 percent to R8.3 billion.  

Acting chief executive René van Wyk said Absa had made significant progress with Absa’s reorganisation following the implementation of its new strategy in March 2018.

“We are beginning to see the benefits. 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,” Van Wyk said. 

Absa on Monday announced that the boards of Absa Group and Absa Bank had completed their processes to appoint a chief executive, who was expected to “take up office in January 2020”. 

Absa’s operations in Africa, Absa Regional Operations (ARO), increased earnings by 8 percent to R1.7bn, while its corporate and investment banking in South Africa declined by 10 percent to R1.5bn. ARO now accounts for more than a fifth of total Absa’s earnings.

Absa declared an interim dividend of 505c, up by 3 percent compared to last year.

Jordan Weir, a trader at Citadel, said the results were good considering the economic conditions in the country. “These are promising and positive results for the bank, especially considering the current pressured economic climate and the rollout of the company-wide reorganisation strategy seems to have been successfully managed so far." He said Absa still had a way to go before achieving its long-term growth strategies, but appeared to be heading in the right direction.

Absa’s share price closed 1.13 percent higher at R149.97 on the JSE on Tuesday.