Absa Group (ABG) H1 2024 earnings summary

Executive summary

• Headline earnings declined 5% year-over-year to ZAR 10.2bn, with ROE dropping to 14.0% as net asset value per share increased 6% to ZAR 180.14.

• Revenue grew 3% to almost ZAR 54bn, while operating expenses rose 8%, increasing the cost-to-income ratio to 52.7%.

• Net interest margin improved to 4.69%, supported by better loan pricing and margin expansion in Africa Regions.

• Non-interest income fell 2% due to lower insurance and trading revenue.

• CEO announced early retirement effective April 2025.

Financial highlights

• Diluted HEPS decreased 5% to 1,227.7c, at the upper end of guidance; five-year CAGR is 6%.

• Interim ordinary dividend declared flat at ZAR 6.85 per share, payout ratio increased to 56%.

• Net interest income up 7% on 5% higher average interest-bearing assets and wider margin.

• Credit loss ratio at 1.23%, above the through-the-cycle target, with credit impairment charges flat at ZAR 8.3bn.

• CET1 capital ratio at 12.7%, above Board target and regulatory requirements.

Outlook and guidance

• Expects mid-single-digit revenue growth for 2024, with similar growth in net interest and non-interest income.

• Net interest income growth to slow in H2; non-interest income growth to improve.

• Credit loss ratio expected to improve slightly but remain above the through-the-cycle target range.

• ROE guidance for 2024 is 14–15%; medium-term target of >17% remains, but timing may be delayed.

• CET1 ratio expected in the upper half of the 11%-12.5% Board target range.