Absa Group (ABG) H2 2024 earnings summary

Executive summary

• Headline earnings grew 10% to over ZAR 22 billion, with a strong recovery in the second half and all business segments reporting higher headline earnings year-over-year.

• ROE improved to 14.8%, exceeding cost of equity, and NAV per share grew 11% to ZAR 193.

• Strategic focus on sustainable growth, precise capital allocation, and productivity to drive returns.

• Customer experience and digital adoption improved, with 14% growth in digitally active customers and significant franchise health gains.

• Achieved sustainability-linked financing target a year early.

Financial highlights

• Net interest income rose 4%, with margin compression mainly from deposit margin; revenue increased 5% year-over-year.

• Non-interest income increased 6%, led by trading and insurance, with fee and commission income up 4%.

• Operating expenses grew 5%, cost-to-income ratio flat at 53.2%.

• Credit loss ratio improved to 1.03% from 1.18%, slightly above target range.

• CET1 capital ratio increased to 12.6%, above board target; dividend per share up 7%, payout ratio at 55%.

Outlook and guidance

• 2025 guidance: mid-single-digit revenue growth, similar growth in net interest and non-interest income.

• Credit loss ratio expected to improve to top end of 75-100 bps range; ROE expected slightly above 15% in 2025, with 16% targeted for 2026.

• CET1 ratio to finish 2025 at top end of 11%-12.5% range; dividend payout ratio to remain around 55%.

• Africa region expected to deliver faster growth and improving returns medium term, though a stronger Rand may be a drag.

• Customer loan growth forecast at mid- to high-single digits; deposit growth low to mid-single digits.