Absa grows earnings after ‘unprecedented’ year


Absa grows earnings after ‘unprecedented’ year

Published Date: 2019-03-12 | Source: Stephen Gunnion | Author: Stephen Gunnion

Absa grows earnings after ‘unprecedented’ year

The banking group's results for 2018 are still impacted by its separation from former parent Barclays Plc.

Absa says last year was almost unprecedented in terms of corporate activity as it finalised its separation from Barclays Plc and repositioned itself as an independent African bank. The banking group changed its name back from Barclays Africa after its former UK parent sold down its stake to 14.9%. Its results for the year are still skewed by the related costs - and will be for the next few years.

So, while headline earnings for the year were marginally lower, on a normalised basis which excludes the impact of the separation, they're up.

For the year to end-December, it said lending momentum at its largest business, retail banking in SA, outpaced the market with good new business growth across home loans, vehicle and asset finance and personal loans. It grew deposits 11% with strong growth in fixed and notice deposits.

Retail and Business Banking grew headline earnings by 2% to R8.9 billion, helped by a 10% decline in credit impairments, while headline earnings at its Corporate and Investment Banking unit fell 1% to R3.4 billion as impairments rose 76%. Wealth, Investment Management and Insurance (WIMI) grew headline earnings by 3% to R1.3 billion. Its Regional Operations, previously called Rest of Africa Banking, reported a 9% rise in headline earnings to R3.2 billion. Africa Regions now contributes 20% of group earnings.

Group revenue grew 4% to R75.7 billion while operating expenses increased 5% to R43.6 billion. Headline earnings per share (HEPS) declined by 1% to 1,703.7c. These include R3.2 billion of costs associated with the group's separation from Barclays, which have been recognised as operating expenses. On a normalised basis, HEPS rose 4% to 1,910c. It's raised its full-year dividend by 4% to 1,110c.

Its return on equity declined to 13.4% from 14.2%, but on a normalised basis it increased slightly to 16.8%.

Its shares slipped 3.1% to R167 yesterday.

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