The Absa Group said on Monday that it had resilient set of results for 2023 but noted normalised headline earnings only increased by 1% as pre-provision growth of 6% reflected continued momentum in the business.
The banking giant said that there was revenue growth of 8% to R104.5 billion and this meant that the group crossed the R100 billion revenue threshold.
The company as noted that its customer base expanded by 4% to 12.2 million in 2023 from 11.7 million a year earlier.
The bank said it’s operating costs increased by 10% to R54.5 billion when compared to the year before.
Absa said it achieved 7% compound growth in revenues since 2018, while cost-to-income ratio improved to 52% from 58% in 2018.
“Despite a challenging climate, Absa remains resilient and the underlying franchise is strong and growing,” Arrie Rautenbach, Absa Group Chief Executive Officer said in a statement.
Some of the issues the company admitted to included electricity supply disruptions, supply chain logistic issues, “sticky” inflation along with a higher interest rate environment.
Rautenbach noted that Absa is seeing the benefits of the strategic choices the company made in 2018 and this is evident from their diversified business, growing customer franchise and engaged workforce.
“We have made significant strides in the last five years in strengthening our business,” said Chris Snyman, Absa Group interim Financial Director.
“We have strengthened our balance sheet, enhanced diversification and we continued to grow, while focusing on efficiency," he added.
Absa share price
On Monday Absa’s share price was trading at around R158,32.
Absa’s share price was trading at around R157.51 on Tuesday at 12:00.
This indicated a 4.39% decline when compared to Monday’s share price.
Over the last year the share price has declined by 3.29%.
Nedbank showed a strong performance
In sharp contrast to Absa, last week Nedbank Group Limited reported an 11% growth in headline earnings to R15.7 billion for the year ended 31 December 2023.
The growth was underpinned by strong revenue and associate income growth of 12% and prudent expense management that enabled preprovisioning operating profit growth of 15%, the bank noted in its company report.
“This growth was partially offset by a 30% increase in the impairment charge, which is a decrease from the 57% increase reported in H1 2023”.
The bank also noted that the group’s credit loss ratio improved from 121 bps (H1 2023) to 109 bps for the full year.
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