Absa Group dividends up by 1% as it reports improved revenue growth for2019

Adnan Adams Mohammed
Absa Group, the parent company of Absa Bank Ghana, has
recorded a 1 percent increase in its dividends to R11.25 per share after
achieving 6 percent revenue growth for the 2019 financial year, with the headline
earnings growing slightly.
The Bank’s revenue growth shows an improved trend, with
strong deposit growth of 12% and customer loan growth of 9%,” said Absa Group
Financial Director Jason Quinn.
Headline earnings of the Group rose by 1% as loan
impairments increased. Its balance sheet, revenue and earnings growth were in
line with peers after lagging for a number of years.
The Absa Regional Operations (ARO) business, comprising Absa
Group’s African operations excluding South Africa, delivered strong financial
performance in 2019 with earnings growth of 16% (12% in constant currency),
enhancing the overall Group’s position.
“We are pleased with the results of our Absa Regional
Operations and their contribution to Absa Group’s overall performance, having
maintained double-digit growth and growing our headline earnings. We look
forward to continuing to grow our revenue market share on the continent over
the coming years,” said Peter Matlare, Chief Executive Absa Regional Operations
during the launch of its report last week.
Daniel Mminele, Absa Group Chief Executive Officer in his
remarks at the launch said, “We delivered a resilient performance against a
challenging macroeconomic backdrop. We maintained balance sheet momentum and
growth was broad-based across most businesses”.
The rebranded bank from Barclays to Absa is optimistic about
the future and the opportunities across its African markets. Its objective is
to develop strong, digital-first financial systems in a sustainable manner and
to contribute positively to the development of our communities in which we
operate.
The publication of Absa Group’s results comes just barely
after the completion of Absa Bank Ghana brand transition. The bank has begun a
new journey which is one of striving to be customer-obsessed, acknowledging the
strength of its people and delivering results sustainably.
Absa Group launched its growth strategy in March 2018 after
Barclays PLC ceased to be the controlling shareholder in the Pan African
banking group. Absa Group is on track to complete its separation programme, one
of the largest in the banking sector in terms of size and complexity, on time
and within budget by the middle of 2020.
The Group’s core businesses highlights were given as
follows. The Retail and Business Banking South Africa continued to show signs
of a turnaround as the unit gained ground in key areas, recording increases in
customer loans and deposits. Revenue momentum increased and costs were well
contained. However, an increase in impairments impacted on earnings. Gross
loans and advances grew by 7% to R530bn; Deposits grew by 10% to R373bn;
Non-interest income grew by 6%; Cost-to-income ratio improved to 57.7% from
58.4% in 2018.
Also, Customer growth of 1% to 9.7m; Market share growth in
retail deposits and retail loans and advances, including personal loans, new
home loans and vehicle finance.
Corporate and Investment Banking earnings growth was driven
by strong performances in countries outside South Africa, which partially
offset a decline in earnings in South Africa.
Highlights include: Continued growth momentum in ARO with
total income growing 15% (12% in constant currency) to R7.4bn; Solid income
growth from Corporate Bank franchise up 9% (8% in constant currency) to
R10.6bn; and Strong growth momentum in the trade finance business in SA, with a
CAGR of 19% in the last four years.
Additionally, Absa Regional Operations (ARO) performance
highlights included: Revenue grew by 14% (11% in constant currency);
Pre-provision profits increased by 17% (14% in constant currency); Cost-to-income
ratio improved to 57.8%; while separating, ARO has grown its retail primary
customer base in 2019 to 1.5 million customers
The Group indicated that, South Africa’s macro environment
has consistently disappointed for the past five years, concluding that, the
outlook remains muted, compounded by the recent outbreak of coronavirus which
will have an impact on the global macro outlook, and which will also have
implications for the economic prospects in our other operating regions.
“We will continue to drive the execution of our strategic
objectives with agility, and take advantage of emerging opportunities, while
managing risks more effectively in response to changes in the operating
environment” said Mminele.
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