Absa Group Limited

Absa reported first-half 2026 headline earnings of ZAR 12.8 billion, up 8%, on revenue of ZAR 58.8 billion, up 4%. Diluted HEPS grew 7%, ROE improved to 15%, and CET1 was 12.8%; the interim dividend per share was raised 8% to ZAR 8.50 and NAV per share increased 5% to ZAR 2.10. Net interest income rose 3% and non-interest income rose 6%; customer loans grew 6% and customer deposits grew 5%, while operating expenses increased 4% and the cost-to-income ratio was 53.4%. For 2026, management guided to low- to mid-single-digit revenue growth, high-single-digit customer loan growth, mid- to high-single-digit deposit growth, low- to mid-single-digit operating expense growth, low- to mid-single-digit pre-provision profit growth, a credit loss ratio broadly similar to last year and in the middle of the target range, ROE of around 15%, CET1 finishing at the top end of the target range, and a 55% dividend payout ratio.

The CEO framed 2026 as a transition year focused on building a stronger platform for longer-term growth, with leadership stabilization largely complete and execution improving across the organization. He emphasized the four strategic pillars—customer-led growth, diversification, operational excellence, and new growth opportunities—and said the group is seeing more alignment, accountability, and responsiveness to clients. His tone was confident but measured, repeatedly noting that there is still work to do while pointing to stronger momentum, a better culture, and a more diversified future.

The CFO said earnings grew 8% to almost ZAR 13 billion, helped by 4% pre-provision profit growth and slightly lower credit impairments. He highlighted NII growth of 3% despite 6% higher average interest-bearing assets, margin compression, and a 12 bps decline in group NIM to 446 bps, driven largely by Africa Regions endowment pressure; South Africa benefited from a ZAR 348 million structural hedge release. He also cited a 53.4% cost-to-income ratio, almost ZAR 800 million of gross productivity benefits in H1, cumulative benefits of ZAR 4.4 billion, and capital strength with CET1 at 12.8%, above the top end of the 11% to 12.5% target range. He said 2026 guidance assumes continued Ghana rate pressure into H2, broad-based loan growth, and CET1 ending the year at the top end of the target range.

Analysts pressed management on whether first-half 2026 marked the trough for revenue growth, margins, and Africa profitability, and management said the biggest drag is the rate-cut cycle in Ghana and Kenya, with Ghana still affecting H2. On loan growth, management said the uplift should come from wholesale, Business Banking, CIB, and selected sectors such as metals and mining, energy, real estate, and structured trade, while PPB is working to improve home loans and unsecured lending. Questions on fee and commission income and expense drew an admission that this line needs to improve, with management saying some costs are fixed or linked to transaction volumes, but there is also catch-up in rewards. On Africa Regions and sovereign risk, management said the business is concentrated in Ghana and Kenya and that they actively monitor and de-risk sovereign exposures where possible.