STANBANK: 18,028 +428 (+2.43%)
Absa's profit rise clouded by mixed results underneath
* H1 headline earnings per share 918.4 cents vs 877.8 last
* Earnings at South African retail division up 4%
* Profits at South African corporate and investment bank
* Shares flat, recovering from early decline
(Recasts, adds details, quotes, shares)
By Emma Rumney
JOHANNESBURG, Aug 13 (Reuters) - A drop in earnings at
Absa's South African corporate and investment bank took
the shine off progress at its core domestic retail business as
the lender reported a 5% rise in first-half profit on Tuesday.
Once a market leader, Absa has been trying to regain ground
lost under the stewardship of former parent Barclays
following its split from the British lender in 2017, but is
battling with competition and a weak South African economy.
Its drive to regain retail banking market share at home and
grow sales elsewhere in Africa helped boost headline earnings
per share (HEPS) - the main profit measure in South Africa - to
918.4 cents ($0.6019) in the first half, against 877.8 cents in
"There's still a lot to do, but we are doing the right
things and we are on the right road," interim chief executive
Rene van Wyk told an investor call.
Absa is hoping its turnaround plan and a series of ambitious
targets can help win back customers and investors' confidence.
Its South African retail division, which contributes more
than half of its overall earnings and has lagged behind peers,
grew earnings by 4%.
That was above the flat earnings at rivals Nedbank
and Standard Bank, which struggled after a shock
economic contraction and spike in unemployment to an 11-year
However, analysts said this - as well as 8% growth in Absa's
earnings outside of South Africa - was undermined by a poor
showing in other units. The bank's shares fell just over 1.5% at
the market open, but were flat at 0957 GMT.
The lender's South African corporate and investment bank saw
earnings decline 10%, while overall return on equity also fell
and Absa revised down its guidance for this for the full year.
"I think the market is probably reacting to that," Harry
Botha, analyst at Avior Capital Markets said, adding the results
were below expectations due to the performance at the domestic
corporate and investment bank.
Absa has also been without a permanent chief executive since
February, when long-time boss Maria Ramos stepped down - a move
which, while a surprise, was welcomed by analysts and investors
keen for fresh thinking at the top.
It said at the time it would name her replacement by its
half-year results. On Monday, it said it had identified a new
CEO, who would start in the new year, but it could not give a
name due to regulatory conditions.
Van Wyk said on Tuesday Absa was not expecting to name the
person until January.
When normalised for the impact of the Barclays separation,
Absa's overall HEPS were up 3%.
($1 = 15.2572 rand)
(Reporting by Emma Rumney; Editing by Uttaresh.V and Mark
First Published: 2019-08-13 08:25:19
Updated 2019-08-13 12:38:35
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