Absa, the Pan African bank with presence in Botswana, this week announced pre-provision profit for the six months to June 2023, has jumped double-digit, in the face of a tough trading environment, mostly outside its sphere of control. During the period under review, pre-provision profit closed at R26 billion. Arrie Rautenbach, the CEO, earlier this week said the period under review was particularly tough.
“The global, regional and domestic environments entered the year on an uncertain footing. Persistent high inflation forced central banks to continue increasing policy rates, which had implications on consumer uptake on loans,” said Rautenbach, speaking from Johannesburg, South Africa. He was quick to point out that the failure of some regional banks in the world’s No. 1 economy, the United States also had negatively impacted on the banking industry which they are part of.
Weak commodity prices also affected commodity rich countries in Africa, where they have various operations. The Ukraine/Russia war as well as tensions between China and the West did not make the situation any better. In fact, it made matters worse. Nonetheless, the Absa group CEO was over the moon that despite the ongoing challenges, the bank has managed to stay above waters. “We are executing consistently against our strategic five focus areas as we strive to become a leading Pan Africa bank.
This is evident in the continued progress we have made against key targets,” stated Rauntenbach. The bank is meeting their strategic goals in the medium. For example, the Johannesburg Stock Exchanged quoted banking group has managed to maintain their Return on Equity (ROE) at 17 percent. ROE is a gauge of a corporation's profitability and how efficiently it generates those profits. The bank, which separated with British banking juggernaut, Barclays, some few years ago, has also kept cost to income ratio, at below 50’s in the medium term.
The bank, which has its subsidiary in Botswana, is among the leading banks in the country, and has, despite impediment, continued to diversify, both in terms of geographies, segments and product offerings. “We are looking into areas with more growth projections,” disclosed Rautenbach, who was appointed to the coveted position early last year. The Absa CEO further said they continued to build and strengthen their digital banking platforms. This has been evident by the number of customers who transact digitally and subsequent increased volumes.
In South Africa, growth in the numbers of those who are transacting digital went up by 8 percent, while 18 percent growth was registered for the Rest of Africa region, Botswana included. Talking to the financials, Quinn said revenue increased 13% to R52.3 billion. Operating costs increased 10% to R26.1 billion. Cost-to-income ratio improved to 49.8%. “We are particularly pleased with our return on equity of 16.7% and with our cost-to-income ratio improving further to 49.8%, driven by solid revenue growth,” said Jason Quinn, Absa Group Financial Director. “We remain well capitalised to fund growth opportunities,” he said.
Absa continued to grow as a primary partner, with a focus on building its transactional business through investments across its businesses, notably in Private & Wealth, Youth propositions, Bancassurance and Business Banking during the period. “We are seeing tangible progress in becoming the primary partner for our customers, which is shown by improved client experience, accelerated customer growth and solid deposit growth,” said Rautenbach. Customer numbers grew 4% to 11.8 million, while customer deposits increased 11% to R1.2 trillion.
New-to-bank retail transactional account sales increased by 23% in South Africa, with active customers in Absa Regional Operations (ARO) up 16%. Meanwhie, during the period under discussion, more Absa customers roll into arrears and fall into debt review, forcing the bank to take on heavier loan losses that pushed credit impairments up by 60%. The bank handed out R8.3 billion in bad debt charges during the six-month period to the end of June 2023, with credit impairment charges in mortgage lending, its biggest loan book, growing the fastest. Despite a tough trading period, Rautenbach has reiterated the bank’s trust on its strategy to deliver the intended results.
“The global, regional and domestic environments entered the year on an uncertain footing. Persistent high inflation forced central banks to continue increasing policy rates, which had implications on consumer uptake on loans,” said Rautenbach, speaking from Johannesburg, South Africa. He was quick to point out that the failure of some regional banks in the world’s No. 1 economy, the United States also had negatively impacted on the banking industry which they are part of.
Weak commodity prices also affected commodity rich countries in Africa, where they have various operations. The Ukraine/Russia war as well as tensions between China and the West did not make the situation any better. In fact, it made matters worse. Nonetheless, the Absa group CEO was over the moon that despite the ongoing challenges, the bank has managed to stay above waters. “We are executing consistently against our strategic five focus areas as we strive to become a leading Pan Africa bank.
This is evident in the continued progress we have made against key targets,” stated Rauntenbach. The bank is meeting their strategic goals in the medium. For example, the Johannesburg Stock Exchanged quoted banking group has managed to maintain their Return on Equity (ROE) at 17 percent. ROE is a gauge of a corporation's profitability and how efficiently it generates those profits. The bank, which separated with British banking juggernaut, Barclays, some few years ago, has also kept cost to income ratio, at below 50’s in the medium term.
The bank, which has its subsidiary in Botswana, is among the leading banks in the country, and has, despite impediment, continued to diversify, both in terms of geographies, segments and product offerings. “We are looking into areas with more growth projections,” disclosed Rautenbach, who was appointed to the coveted position early last year. The Absa CEO further said they continued to build and strengthen their digital banking platforms. This has been evident by the number of customers who transact digitally and subsequent increased volumes.
In South Africa, growth in the numbers of those who are transacting digital went up by 8 percent, while 18 percent growth was registered for the Rest of Africa region, Botswana included. Talking to the financials, Quinn said revenue increased 13% to R52.3 billion. Operating costs increased 10% to R26.1 billion. Cost-to-income ratio improved to 49.8%. “We are particularly pleased with our return on equity of 16.7% and with our cost-to-income ratio improving further to 49.8%, driven by solid revenue growth,” said Jason Quinn, Absa Group Financial Director. “We remain well capitalised to fund growth opportunities,” he said.
Absa continued to grow as a primary partner, with a focus on building its transactional business through investments across its businesses, notably in Private & Wealth, Youth propositions, Bancassurance and Business Banking during the period. “We are seeing tangible progress in becoming the primary partner for our customers, which is shown by improved client experience, accelerated customer growth and solid deposit growth,” said Rautenbach. Customer numbers grew 4% to 11.8 million, while customer deposits increased 11% to R1.2 trillion.
New-to-bank retail transactional account sales increased by 23% in South Africa, with active customers in Absa Regional Operations (ARO) up 16%. Meanwhie, during the period under discussion, more Absa customers roll into arrears and fall into debt review, forcing the bank to take on heavier loan losses that pushed credit impairments up by 60%. The bank handed out R8.3 billion in bad debt charges during the six-month period to the end of June 2023, with credit impairment charges in mortgage lending, its biggest loan book, growing the fastest. Despite a tough trading period, Rautenbach has reiterated the bank’s trust on its strategy to deliver the intended results.
