ABSA GROUP LIMITED
Incorporated within the Republic of South Africa Registration quantity: 1986/003934/06 ISIN: ZAE000255915
JSE share code: ABG
JSE bond issuer code: ABGI (“Absa Group” or “the Group”)
VOLUNTARY TRADING UPDATE FOR THE FIVE MONTHS ENDED 31 MAY 2022 AND TRADING STATEMENT FOR THE SIX MONTHS ENDING 30 JUNE 2022
This buying and selling replace gives info on Absa Group’s monetary efficiency for the 5 months ended 31 May 2022. The commentary all through refers back to the p.c change year-on- 12 months (except in any other case famous) within the Group’s normalised monetary outcomes, which modify for the results of separating from Barclays PLC. On common, the Rand was broadly in step with the currencies in our Absa Regional Operations (ARO) throughout the interval, and had a restricted influence on our income, working bills and earnings.
Growth in gross buyer loans was excessive single digit, reflecting improved development in Corporate and Investment Banking (CIB), with Retail and Business Banking (RBB) additionally rising excessive single digits, pushed largely by Home Loans and Vehicle and Asset Finance. Customer deposit development slowed to mid-single digits, with strong RBB development partially offset by decrease CIB deposits resulting from a big discount in low-margin nationwide authorities deposits.
Total income development for the 5 months improved strongly, rising by low double digits year- on-year. South Africa’s income grew by low double digits and Africa areas was increased. Reflecting strong mortgage development and the margin advantage of rising rates of interest, web curiosity revenue was increased than we anticipated, rising by low double digits year-on-year. As anticipated, non- curiosity revenue development improved materially, rising by low double digits year-on-year. Life insurance coverage income rebounded very strongly off a low base that included vital Covid-19 claims and provisions. Fee and fee revenue grew mid-single digit year-on-year, whereas buying and selling revenues have been at related ranges to the excessive base recorded within the prior 12 months.
Operating bills grew by excessive single digits year-on-year, partly resulting from significantly increased incentives, reflecting our improved efficiency.
Operating JAWS have been optimistic and our cost-to-income ratio improved to the low 50s. Pre- provision revenue for the 5 months elevated by mid-teensyear-on-year.
Credit impairments grew materially year-on-year, off a comparatively low base that included substantial mannequin enhancement advantages in RBB South Africa. Our credit score loss ratio was barely above our through-the-cycle goal vary of 75 to 100 foundation factors. RBB South Africa’s cost elevated considerably, resulting from increased Vehicle and Asset Finance credit score impairments and the mannequin enhancement advantages within the base. CIB’s credit score cost decreased materially.
Our return on fairness for the interval improved noticeably year-on-year to nearly 17%.
Our capital ranges stay sturdy. Absa Group’s frequent fairness tier 1 (CET1) capital ratio at 31 March 2022 was 12.6% after paying our last 2021 dividend, and our complete capital adequacy ratio was 16.5%.
Based on our efficiency for the primary 5 months, and our present expectations for the working surroundings, our monetary steering for the primary half of 2022 is as follows:
We count on income for the half to extend by low teenagers year-on-year, pushed by sturdy non- curiosity revenue development due partly to improved life insurance coverage income off a low base. We count on low double digit web curiosity revenue development, benefiting from rising rates of interest.
Operating bills are anticipated to extend by excessive single digits year-on-year, reflecting efficiency prices, plus continued development in advertising and marketing and expertise investments.
We count on extensive optimistic working JAWS for the half to provide substantial pre-provision revenue development, whereas our our cost-to-income ratio is probably going to enhance noticeably to the low 50s.
Our credit score impairments are anticipated to extend year-on-year, leading to a credit score loss ratio within the higher half of our through-the-cycle vary, versus 88 foundation factors within the first half of 2021. Given the unsure macroeconomic outlook, our mortgage protection stays sturdy, with conservative forward-looking provisions.
We count on our return on fairness to enhance considerably year-on-year to round 17%, properly above our value of fairness.
As beforehand guided, given our sturdy CET1 ratio, we count on to extend our dividend payout ratio to 50%, from 30% within the first half of 2021.
In accordance with part 3.4(b) of the JSE Listings Requirements, shareholders are suggested that the Group’s IFRS headline earnings per share (HEPS) and earnings per share for the six months ending 30 June 2022 are anticipated to be greater than 20% above the comparatives for the
first half of 2021 of 986.2 cents and 983.3 cents respectively. Normalised HEPS for the six months ending 30 June 2022 can be anticipated to exceed the 1019.7 within the first half of 2021 by greater than 20%. Risks to our steering embody any materials unexpected political, macroeconomic or regulatory modifications. We will present a extra particular steering vary as soon as there’s cheap certainty relating to the extent of our earnings improve.
Shareholders are suggested that the monetary info contained on this buying and selling replace and buying and selling assertion haven’t been reviewed or reported on by our auditors.
We will launch our first half 2022 monetary outcomes on 15 August 2022, together with steering on our expectations for remainder of the 12 months.
21 June 2022
Enquiries: Alan Hartdegen (+27 72) 576-2713
Lead Independent Sponsor:
J.P. Morgan Equities South Africa Proprietary Limited
Absa Bank Limited (Corporate & Investment Bank)
Given the method of separating from Barclays PLC, Absa Group continues to report IFRS- compliant monetary outcomes and a normalised view. The latter adjusts for the results of the separation and higher displays its underlying efficiency.