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 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, with franchise health and digital adoption improving significantly.

• Notable progress in sustainability, achieving the R100bn financing target a year ahead of schedule.

• Performance rebounded in 2H24, with headline earnings up 22% sequentially and RoE rising to 15.5%.

Financial highlights

• Net interest income rose 4% to R71.1bn, with margin compression mainly from deposit margin; net interest margin declined to 4.63%.

• Non-interest income increased 6% to R38.8bn, led by trading and insurance, with fee and commission income up 4%.

• Operating expenses grew 5% to R58.5bn, cost-to-income ratio flat at 53.2%.

• Credit loss ratio improved to 1.03% from 1.18%, with credit impairment charges down 8% to R14.3bn.

• CET1 capital ratio increased to 12.6%, above board target, and dividend per share up 7% to 1,460 cents, payout ratio at 55%.

Outlook and guidance

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

• Credit loss ratio expected to improve to the 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 the 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.