By Our Reporter
Absa Group, one of the prominent banking groups in Africa, reported a 10% increase in earnings for 2024, driven by a strong recovery in the second half of the year.
This improvement follows a challenging first half, highlighting the Group’s ability to adapt and execute strategic initiatives effectively.
Earnings growth was supported by both a more favourable operating environment and deliberate actions taken to enhance performance.
“Our organisation rallied in the second half, refining our focus to ensure targeted and precise actions that drive value and earnings growth,” said Charles Russon, Interim Chief Executive Officer of Absa Group. “We remain confident in our strategic direction and our ability to deliver sustainable value to stakeholders while expanding access to innovative financial solutions across our markets.”
The Group’s 2024 financial performance signals recovery and an improvement in overall franchise health.
Strategic execution changes introduced recently have set the Group on a path toward achieving stronger returns.
Revenue increased by 5%, while headline earnings grew by 10%, supported by a reduction in retail impairments in South Africa.
Non-interest revenue rose by 6%, reflecting the strength of Absa’s diversified income streams.
Improved risk management practices and enhanced customer financial health contributed to an 8% decline in impairment charges.
As a result, the credit loss ratio (CLR) fell to 103 basis points by year-end, with a second-half CLR of 85 basis points.
Absa’s balance sheet remains strong, with a Common Equity Tier 1 (CET1) ratio of 12.6%, positioning it at the top end of its target range. Liquidity metrics also remain healthy.
While return on equity (RoE) is still below the Group’s medium-term ambitions, notable year-on-year progress has been made, setting a clear trajectory toward achieving the 16% RoE target by 2026.
“Key structural improvements, including disciplined risk management, cost efficiencies, and optimized capital allocation, are starting to yield results,” said Deon Raju, Absa Group Financial Director. “Our strong second-half performance reinforces our confidence in delivering a 16% RoE by 2026.”
Strategic Shifts Driving Recovery
A key factor in the Group’s second-half recovery was its strategic pivot toward sustainable growth rather than aggressive market share expansion.
This shift led to more disciplined capital allocation, refined pricing strategies aligned with risk, and a greater focus on customer franchise profitability over product profitability.
These measures enhanced decision-making and performance tracking.
Customer growth and digital adoption remain top priorities for Absa.
The Group’s total customer base expanded by 4% to 12.7 million, with digitally active customers increasing by 14%.
Absa’s customer experience index improved to a weighted score of 101, up from 96 in 2023, with enhancements recorded across all business segments.
The Corporate and Investment Banking (CIB) unit increased primacy to 42%, up from 40%, as more clients leveraged Absa’s broad product suite.
Enhanced customer experiences, supported by digital innovation and service improvements, have strengthened client relationships and engagement.
Additionally, Absa made significant progress in sustainability and ESG initiatives, advancing its commitments to financial inclusion, youth and women empowerment, SME development, and climate change mitigation.
The Group achieved its goal of facilitating R100 billion in sustainable financing a year ahead of schedule.
“We are strategically investing where it matters most—creating meaningful value for customers while ensuring sustainable, long-term growth,” said Russon. “By optimizing operations and enhancing efficiency, we are improving affordability, expanding financial access, and strengthening customer experiences across all touchpoints.”
Business Unit Performance; Product Solutions Cluster (PSC): Headline earnings rose by 38% to R3.3 billion; Everyday Banking (EB): Increased by 18% to R4.0 billion; Relationship Banking (RB): Grew by 4% to R4.3 billion; Absa Regional Operations – Retail and Business Banking (ARO RBB): Increased by 12% to R1.8 billion and Corporate and Investment Banking (CIB): Rose by 6% to R11.7 billion.
Outlook
Building on the strong second-half momentum, Absa Group will continue prioritizing earnings growth and shareholder value creation.
While external uncertainties may impact earnings, the Group remains confident in its ability to navigate these challenges effectively.
RoE is expected to improve further, supported by disciplined capital allocation and ongoing strategic initiatives.
Credit loss ratios are anticipated to decline, with continued recovery in South Africa’s retail portfolio.
Additionally, the impact of hyperinflationary accounting for Ghanaian operations is expected to ease.
Absa is also reviewing its retail operations in South Africa to enhance customer service and strengthen its competitive position.
This transformation program is on track to deliver a refreshed retail bank in the first half of the year.
The review aims to reinforce Absa’s strengths in retail banking while optimizing efficiencies and enhancing the customer experience with minimal disruption.
“Our strategic execution remains clear and disciplined, focusing on user experience, digital innovation, and sustainable business practices,” said Russon. “As we build on our recovery momentum, we remain committed to sustained, profitable growth and creating meaningful value for customers, colleagues, and shareholders across the continent.”
