Absa Group Defers Its Dividends After Its Earnings Dropped By 51%
Absa Group Defers Its Dividends After Its Earnings Dropped By 51%. Absa Group reported a 51% decline in normalised headline earnings for the year ended December 2020, to R8 billion, after impairments nearly trebled to R20.6 billion amid the economic downturn that was precipitated by the Covid-19 pandemic. “We believe we offered the most comprehensive relief programme in the South African banking sector, providing approximately R9.8 billion in cash-flow relief to 613,000 retail and business banking customers.” Daniel Mminele, the Chief Executive Officer of Absa Group told Business Tech.
According to Economy24, Absa said revenue increased 2% to R81.4 billion; however, impairments increased 163% to R20.6 billion. Diluted headline earnings per ordinary share declined 58% to 730.9 cents per share, while the group decided against a dividend declaration to preserve capital in the current environment. “I was really pleased with our 7% rise in pre-provision profit as this is an important indicator of positive underlying performance. I believe that we have appropriately prioritised balance sheet strength balanced against selective targeted growth during these uncertain times.” Jason Quinn, Absa Group financial director told Business Tech.
The lender said that earnings and returns improved materially in the second half of the year as lockdown restrictions eased, particularly in South Africa, which accounts for more than 80% of the group’s earnings. “The review process concluded that, while our strategic choices from the 2018 strategy remain relevant, the world in which we seek to achieve them has changed. As a consequence, some shifts and accelerations are required to drive the modernisation our business, not only to maintain relevance but to thrive and advance as a business.” Mminele added.
Absa Group Limited (ABGL) (formerly Barclays Africa Group Limited), and originally Amalgamated Banks of South Africa, is a South African -based financial services group, offering personal and business banking, credit cards, corporate and investment banking, wealth and investment management, as well as bancassurance.
“The group has delivered respectable progress over the last two-and-half years against the strategy journey that was adopted in 2018, and we have seen good traction in some parts of the business. Our refreshed strategy enables us to become more precise in expressing how we want to embed customer-centricity at the heart of our business, how we will evolve our digital maturity, and what it means to be purpose-led. While there is some way to go before economies stabilise, the roll-out of vaccines globally hold the promise of greater stability and we look forward to playing our role in the recovery and re-setting for the future,” Mminele explained further to Business Tech.
