Absa Grows Profit by 3%, Loans Increased by 9% in FY 2019

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• Headline earnings increased 1% to R16.3 billion
• Revenue increased 6% to R80 billion
• Operating expenses growth contained to inflationary levels, increasing 6% to R46.4 billion
• Pre-provision profit increased 5% to R33.6 billion
• Return on equity declined to 15.8% from 16.8%
• Dividends increased 1% to R11.25 per share

Absa Group Ltd., the parent company of Absa Bank Kenya PLC, on Wednesday, reported improved revenue growth for the 2019 financial year, considering the challenging macroeconomic backdrop.

The group’s revenue increased 6% while headline earnings, the measure most analysts use to gauge profit, rose 1% as impairments increased.

“Our revenue growth is showing an improving trend, with strong deposit growth of 12% and customer loan growth of 9% for the Group,” said Absa Group Financial Director Jason Quinn.

Overall, Absa’s balance sheet, revenue and earnings growth were in line with peers after lagging for a number of years.

The Absa Regional Operations (ARO) business, comprising Absa Group’s African operations excluding South Africa, delivered strong financial performance in 2019 with earnings growth of 16% (12% in constant currency), enhancing the overall Group’s position.

“We are pleased with the results of our Absa Regional Operations and their contribution to Absa Group’s

overall performance, having maintained double-digit growth and growing our headline earnings. We look forward to continuing to grow our revenue market share on the continent over the coming years,” said Peter Matlare, Chief Executive Absa Regional Operations.

Prospects

Looking ahead, Absa projects 0.9% real growth for South Africa in 2020.

“We expect a continued difficult environment for the consumer, while heightened uncertainty will continue to dampen business confidence and investment.

“Downside risks are significant and include the risk of protracted load shedding, a sharper global slowdown due to the coronavirus outbreak and the impact of a potential sovereign credit rating downgrade from Moody’s,” the bank said.