Absa Group records 10% increase in 2024 earnings ..after arterial second-half recovery
Absa Group earnings has been increased by 10 per cent in 2024, underpinned by a material improvement in the second half, demonstrating meaningful progress after a disappointing first half.
Earnings were driven by both a more supportive operating environment as well as deliberate steps taken to support performance.
“Our organisation rallied in the second half, refining our focus areas to ensure that our actions are targeted and precise in generating value and earnings uplift,” Charles Russon, Interim Chief Executive Officer at Absa Group, said in a statement issued yesterday.
“We are confident in our strategic direction and our ability to continue delivering value to our stakeholders while expanding access to innovative financial solutions across our markets,” he emphasised.
Absa Group’s financial performance in 2024 signals recovery and demonstrates improving franchise health.
The Group made progress with recent strategic execution changes introduced to set the Group on a path to delivering appropriate returns.
Revenue increased by 5 per cent and headline earnings increased 10 per cent, bolstered by a reduction in retail impairments in South Africa.
Non-interest revenue saw growth of 6 per cent, reinforcing the strength of the Group’s underlying business and diversified income streams.
Enhanced risk management practices and improving customer financial health drove an 8 per cent decline in impairment charges.
Consequently, Absa reported a decline in the Credit Loss Ratio (CLR) to end the year at 103 basis points, which remains slightly above the upper end of the group’s target range. CLR in the second half was 85 basis points.
The balance sheet remains strong, with a Common Equity Tier 1 (CET1) ratio of 12.6 per cent which is at the top-end of our target range and liquidity metrics are healthy.
While Return on Equity (RoE) remains below medium-term ambitions, the Group made clear year-on-year progress, with a visible pathway toward achieving its 16 per cent RoE target by 2026.
“Key structural improvements, including disciplined risk management, cost efficiencies, and optimised capital allocation, are starting to translate into improved results. Our stronger second-half performance gives us confidence that we are taking the right action to support delivery of a 16 per cent RoE by 2026,” Deon Raju, Absa Group Financial Director, explained.
A key driver of the Group’s strong recovery in the second of the year was a strategic pivot towards prioritising sustainable growth over market share expansion.
On the outlook for the group, the statement indicated that building on the second-half momentum, Absa Group would continue to focus on driving earnings growth and generating shareholder value.
“While the external environment is uncertain and may affect earnings, the Group remains confident in its ability to manage these effectively. RoE is expected to continue improving, supported by disciplined capital allocation and the ongoing benefits of the Group’s strategic initiatives,” the statement said.
BY TIMES REPORTER
