Absa Group has told shareholders to expect broadly flat earnings from its Africa Regions business in the first half of 2026, as a deteriorating economic backdrop and margin compression cut into a division that delivered some of the bank’s strongest growth just a year earlier.
The Johannesburg-listed lender issued a voluntary trading update on 30 June, ahead of a pre-close call with analysts and investors. The update covers the six months to 30 June 2026 and lands at a rough moment for the stock: Absa shares have fallen 10.3% over the past five days, a slide that tracks closely with the bank’s own admission that its outlook has darkened since the start of the year.
Why Absa Cut Its Growth Forecasts
Absa pointed to a specific trigger.
“Our operating environment remains challenging and uncertain,” the bank told shareholders. “The Middle East conflict increased global inflation expectations and dampened GDP growth. We have reduced our 2026 GDP growth expectations slightly for our largest countries, South Africa, Ghana and Kenya.”
Interest rate paths diverged sharply across the bank’s footprint. South Africa’s Reserve Bank raised its policy rate in May, reversing course from the cuts Absa had penciled in earlier. Ghana moved the opposite way, cutting rates more aggressively than expected. Absa called that a near-term drag on earnings, even as it should support growth over time.
What The Numbers Say About H1 2026
Absa expects revenue to grow by low to mid-single digits for the half, with non-interest income outpacing net interest income. Net interest income itself will likely grow only modestly, a low single digit pace that reflects margin compression tied specifically to lower policy rates across Africa Regions.
Loan growth should hold up better than the revenue line. Absa expects net customer loans and deposits to grow by mid-single digits, with Personal and Private Banking loans in South Africa rising by mid-single digits too, driven by solid vehicle and asset finance growth that offsets weaker demand for home loans and unsecured lending. Corporate and Investment Banking loans, excluding reverse repurchase agreements, should grow faster, alongside Business Banking loans, both at high single digit rates.
On costs, Absa expects operating expenses to rise by low to mid-single digits, pushing the bank’s JAWS ratio slightly negative and nudging its cost to income ratio marginally higher. Credit impairments should stay broadly flat, with a slightly improved credit loss ratio. The bank expects modest relief in Personal and Private Banking impairments thanks to better delinquency trends, partly offset by increased provisioning coverage tied to a worsening macroeconomic forecast. Business Banking and Corporate and Investment Banking impairments are both expected to rise, with the latter climbing off a low base.
Put together, Absa expects headline earnings growth of mid to high single digits for the first half, translating into a return on equity similar to the 14.8% it posted in the same period last year. The bank expects its Common Equity Tier 1 ratio to land slightly above the top end of its 11.0% to 12.5% target range, and plans to maintain a dividend payout ratio of around 55%.
A Weaker Story For Africa Regions
For the first time, Absa will report all three of its business units on a Pan-African basis rather than splitting results by geography alone. The bank expects broadly flat headline earnings from Corporate and Investment Banking, with solid growth in Investment Banking and Global Markets offsetting weaker Transactional Banking earnings. Personal and Private Banking should post low double digit headline earnings growth, helped in part by lower credit impairments.
Business Banking tells a more divided story. Absa expects modest headline earnings growth overall, with solid growth in South Africa offset by a decline in Africa Regions, where margin compression is biting hardest. Head Office is expected to report a smaller loss, aided by better asset and liability management within Treasury.
Currency moves add another layer. A stronger Rand is expected to reduce Group revenue, costs and headline earnings slightly during the period. South Africa should deliver strong headline earnings growth on solid pre-provision profit growth and a lower credit loss ratio. Africa Regions, by contrast, is expected to post a headline earnings decline, driven by lower net interest income and higher credit impairments, the same forces squeezing margins across the bank’s non-South African footprint.
Absa now targets a 2026 return on equity of around 15%, below what it had originally guided, largely because net interest income is coming in weaker than anticipated amid margin compression in Africa Regions. The bank struck a more confident note about the medium term, saying its revenue and earnings momentum remains on track as net interest margins stabilise once the rate cutting cycle ends, particularly across Africa Regions.
Africa Regions Carries Real Weight For The Group
Absa’s Africa Regions segment, which spans 12 countries outside South Africa, generated 31% of the group’s total headline earnings in 2025. That business posted a 25% jump in profit to R7.76 billion for the full year, with return on equity climbing to 16.3% from 15.1% the year before, outpacing the more modest 7% profit growth Absa’s South African operations delivered over the same period.
Kenya sits at the centre of that growth story. Absa is in the process of raising its stake in Absa Kenya from 68.5% to 85% through a roughly R4 billion transaction, a deal Moody’s has called credit positive, describing Absa Kenya as an established, profitable subsidiary with strong growth prospects. That makes Kenya’s downgraded 2026 GDP outlook, one of only three countries the bank singled out alongside South Africa and Ghana, particularly relevant to how investors read this trading update.
| Market | Absa Ownership Stake | 2025 Performance Signal |
|---|---|---|
| Kenya | 68.5%, rising to 85% pending approval | Grew solidly with manageable inflation in 2025; Moody’s calls the stake increase credit positive |
| Ghana | Majority owned | Rebounded strongly in 2025, a key driver of Africa Regions’ 25% profit growth, though debt and banking sector risks persist |
| Zambia | Majority owned | Named alongside Ghana as a primary driver of stronger African subsidiary earnings in 2025 |
| Botswana | 67.8% | Flagged by Absa’s own economists for a 2026 growth recovery |
| Mozambique | 98.7% | Also expected to recover in 2026, alongside Botswana and Zambia |
| Tanzania | 55% in National Bank of Commerce; Absa Bank Tanzania separate | Delivered robust, low inflation growth in 2025; group operates two banks and plans to consolidate them |
| Uganda | Majority owned | Absorbed Standard Chartered Uganda’s wealth and retail banking business in 2025 |
| Mauritius | Majority owned | Remained stable with strong reserves despite foreign exchange pressure |
| Seychelles | 99.8% | Smallest market in the portfolio by scale |
What To Watch On 18 August
Absa will release its full first half results on 18 August 2026, when the guidance in this update gets tested against actual numbers. The bank was careful to flag the limits of what it has shared. “Shareholders are advised that the financial information contained in this trading update has not been reviewed or reported on by our auditors,” the statement noted. “The forecast financial information above is the sole responsibility of the Board.”
The gap between last year’s 25% profit surge in Africa Regions and this year’s flat to declining outlook says something bigger than a single reporting period. It marks the moment when currency stabilisation, rate cuts across several markets, and a tougher credit environment converge to squeeze the very division that carried Absa’s growth story in 2025. Whether that squeeze proves temporary, easing once rate cuts finish working through the system, or signals a longer stretch of margin pressure across the continent, will shape how investors price Absa’s Pan-African ambitions well beyond this single trading update.
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