Absa Group posts marginal rise in annual profit

TANZANIA: ABSA Group posted a marginal rise in annual profit for 2023, as a boost from preprovision growth was offset by higher credit impairments, particularly in South Africa, its largest market by revenue.

The top five private South African banks, including Absa – among the continent’s biggest – are generally known to have wellcapitalised balance sheets and strictly conservative lending practices.

But inflationary pressures, high-interest rates, regular power blackouts and logistical bottlenecks looked to have taken a toll on the banks’ most sensitive retail and small business customers leading to defaults.

The lender posted headline earnings of 20.9 billion rand (1.11 billion US dollars) for the year ended last December, up 1.0 per cent compared to the corresponding period a year earlier as pre-provision profit growth of 6 per cent reflected continued momentum in the business.

It posted a strong revenue growth of 8.0 per cent to 104.5 billion rand to cross the 100-billion-rand revenue threshold for the first time, with stronger growth being generated within African regions.

Absa has a presence in 12 countries in Africa including Tanzania where it has Absa Tanzania and NBC Bank. Credit impairments rose by 13 per cent to 15.5 billion rand, as impairments in the secured lending businesses surged, especially in South Africa.

The lender’s creditloss ratio a measure of bad loans as a percentage of the total book  climbed to 1.18per cent in the period. That’s above Absa’s target range of 75 to 100 basis points and ahead of all its peers. Absa declared a dividend of 13.70 rand per share, up 5.0 per cent.