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S.African bank Absa’s warns of steep drop in half-year profits

JOHANNESBURG (Reuters) – South African lender Absa said on Wednesday its half-year earnings could be almost wiped out as a steep rise in bad loans dented its performance.

The bank, previously owned by Barclays, said first-half headline earnings per share were expected to decline by between 92% and 97% from the comparative period’s 920 cents ($0.5286).

“Credit impairments were four times higher,” Absa said, adding it expected bad debts to fall significantly in the second half of the year.

“The Covid-19 pandemic, national lockdowns and weak economy during the first half had a material impact on customer loan and transaction volumes, while significantly lower policy rates reduced our net interest margin,” it said.

Its balance sheet, however, remained resilient, it said.

Its shares, which had finished trading for the day when the statement was released, closed 0.94% lower on Wednesday.

($1 = 17.3985 rand)

($1 = 17.4051 rand)

(Reporting by Emma Rumney; Editing by Promit Mukherjee and Jane Merriman)

The logo of South Africa's Absa bank is seen outside an Absa branch in Cape Town

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