Absa Group, a bank, improved on its half-year performance for 2020 with a three per cent growth in revenue.
The Group’s half-year revenue increased by three per cent to 40.1 billion rands.
Absa, in a statement on its half-year group interim results copied to the Ghanaian Times, said operating cost fell by two per cent to 21.6 billion rands.
“Absa cost-to-income ratio improved to 53.9 per cent from 56.7 per cent and pre-provision profit increased by 9 per cent to 18.5 billion rands,” the statement said.
It, however, said headline earnings declined by 82 per cent to 1.46 billion rands and impairment increased four-fold to 14.7 billion rands, while return on equity declined to 2.6 per cent from 16.4 per cent.
“Impairment charges rose as customers and clients struggled to repay debt and as the Group took decisive action to increase impairment provisions against future potential credit losses. The Group expects a continued difficult environment for the consumer and the heightened uncertainty is expected in the remainder of 2020,” the statement said.
It said despite the significantly higher credit impairments and the impact of the lockdowns on transactional volumes, all business units of Absa Group remained profitable.
The statement said the Absa was putting a temporary break on its growth ambitions in view of the impact on the Coronavirus pandemic on the bank.
“In the current economic climate, ensuring continued operational and financial resilience is paramount. We are therefore temporarily holding our growth ambitions in abeyance to focus on cost management and capital and liquidity preservation, while continuing to support customers,” Daniel Mminele, Absa Group Chief Executive, said.
In South Africa, the Group’s largest market, the statement said Absa implemented a comprehensive payment relief plan, including credit payment relief, the temporary expansion of the Credit Life product to cover a wider definition of loss of income and supporting the distribution of social grants and pension payments.
“As at June 30, 2020, Absa has provided 8.7 billion Rands of relief on 154 billion worth of loans to 583,000 customers, including 20,000 businesses in South Africa.
Highlighting the Absa Regional Operations (ARO), which comprises the operations in Africa outside of South Africa, the statement said the Absa Group continued to show strong top-line growth during the period and now contributed 26 per cent of Group revenue.
On the outlook of the Group, the statement said, “While uncertainty remains high, the Group is well-positioned with a strong capital and liquidity position allowing it to continue to support its customers. With the decisive actions that have been taken in the first half to improve balance sheet resilience, the Group expects the second-half impairment outcome and returns to improve.”
BY TIMES REPORTER
