Absa Group Reports 10% Growth in 2024 Earnings

Absa Group has reported a strong financial performance for the 2024 fiscal year, posting earnings of R22.1 billion ($1.2 billion), reflecting a 10% increase compared to the previous year. This growth follows a notable recovery in the second half of the year, which helped offset a weaker first half. The group attributes this performance to a more favorable operating environment and strategic initiatives aimed at boosting performance.

According to a statement from the bank, Absa saw a 5% increase in revenue, totaling R109.9 billion, and a 5% rise in pre-provision profit, which reached R51.4 billion. However, operating costs also grew by 5%, amounting to R58.5 billion, which kept the cost-to-income ratio at 53.2%, unchanged from the previous year. On a positive note, impairments declined by 8%, falling to R14.3 billion, and the credit loss ratio improved substantially from 118 to 103 basis points.

A significant contributor to the improved earnings was a reduction in impairments within South Africa’s retail sector. Additionally, the group saw a 6% growth in non-interest revenue, showcasing the resilience of its diversified income streams. Customer growth was also a highlight, with Absa expanding its customer base by 4%, reaching 12.7 million customers. Of this, digitally active customers increased by 14%. Customer satisfaction also improved, as reflected in the customer experience index, which rose from 96 to 101.

In the bank’s statement, Absa highlighted that its performance in 2024 marks a recovery and signifies improved health of the business. “The Group has made solid progress in executing recent strategic changes designed to set it on a path to delivering appropriate returns,” the statement noted.

Absa’s business units performed well across the board. The Product Solutions Cluster saw an impressive 38% increase in earnings, reaching R3.3 billion. Everyday Banking also performed strongly, with an 18% growth to R4.0 billion. Relationship Banking grew by 4%, posting earnings of R4.3 billion, while Absa Regional Operations for Retail and Business Banking (ARO RBB) achieved a 12% rise in earnings to R1.8 billion. Corporate and Investment Banking (CIB) reported a 6% increase, generating R11.7 billion in headline earnings.

Looking to the future, Absa Group remains optimistic, despite potential external challenges. The group plans to build on its second-half momentum, focusing on continuing to drive earnings growth and creating value for shareholders. Absa expects its return on equity (RoE) to improve further, supported by disciplined capital allocation and the ongoing execution of its strategic initiatives. Additionally, the credit loss ratios are expected to continue improving, largely driven by a recovery in South Africa’s retail portfolio. The impact of hyperinflationary accounting in its Ghanaian operations is also expected to ease.

Charles Russon, Absa’s Interim CEO, explained that the bank refined its focus during the second half of the year to ensure its actions were targeted and effective in driving value. He expressed confidence in the group’s strategic direction and its ability to continue delivering value to its stakeholders. Russon emphasized the importance of making strategic investments where they would have the most impact, aiming to deliver meaningful value to customers while ensuring sustainable, long-term growth. He also stressed that optimizing operations and improving efficiency would enhance affordability, expand access to financial services, and strengthen the customer experience at every interaction.

Deon Raju, Absa’s Financial Director, added that key structural improvements, such as disciplined risk management, cost efficiencies, and optimized capital allocation, were beginning to show results. He pointed out that the group’s stronger second-half performance instilled confidence that the right actions were being taken to achieve the goal of a 16% RoE by 2026.

In conclusion, Absa Group’s 2024 financial results demonstrate resilience and recovery, driven by strategic efforts to optimize performance, improve customer experience, and strengthen its business operations. With an optimistic outlook for the future, Absa aims to continue its growth trajectory and deliver value to its customers and shareholders in the years to come.