Absa Group Reports 12% Rise in Headline Earnings to R24.8bn on Improved Credit Outcomes

Absa Group  has reported a solid financial performance for the full year, recording a 12% increase in headline earnings, supported by lower credit impairments, disciplined cost management, and strong momentum across key business segments. The group said growth was particularly notable in Corporate and Investment Banking (CIB) and its Africa Regions operations, while strategic initiatives aimed at strengthening revenue growth, improving balance sheet resilience, and enhancing return on equity also contributed to the results.

The bank’s revenue increased by 5% during the period, driven largely by growth in non-interest income, especially robust trading revenue. Net interest income also grew moderately despite relatively modest retail loan growth and pressure on margins. From a geographic perspective, Absa’s Africa Regions delivered stronger earnings growth compared to South Africa, supported by solid pre-provision profit growth and ongoing customer expansion. In South Africa, the performance was helped by a significant improvement in credit impairments across several portfolios.

“Our performance over the past year reflects clear progress on delivering on our strategic priorities supported by disciplined execution across the Group. We are seeing the benefits of our operating model changes, sharper client focus, and continued improvements in credit outcomes. Growth across several of our businesses, particularly in Corporate and Investment Banking and our Africa Regions operations, highlights the strength of our diversified franchise and our ability to deliver under evolving market conditions.”

– Kenny Fihla, Chief Executive Officer, Absa Group 

Credit impairments declined by 6% over the year, with the group’s credit loss ratio improving to 88 basis points, compared to 103 basis points in 2024, placing it at the midpoint of Absa’s through-the-cycle range. The improvement was attributed mainly to stronger performance across key Personal and Private Banking (PPB) portfolios in South Africa and Africa Regions, as well as improvements in CIB. Absa said the improvement was supported by proactive risk management, enhanced collections effectiveness, and strategic portfolio repositioning.

“Our financial performance reflects disciplined execution in a year marked by improved credit trends, strong non-interest income growth, and continued cost containment. We are encouraged by the improvement in our credit loss ratio supported by better outcomes across key portfolios, as well as momentum in trading revenue and customer activity. This foundation enables us to continue investing in strategic priorities while maintaining balance sheet strength and a resilient capital position.”

– Deon Raju, Financial Director, Absa Group 

As part of its productivity programme launched in 2024, Absa reported cumulative savings of R3.1 billion, achieved through optimisation of back-office operations, channels, third-party suppliers, and software licensing costs.

“As we look ahead, we remain focused on enhancing operational efficiencies, driving sustainable revenue growth and delivering improved returns for our shareholders.”

– Deon Raju, Financial Director, Absa Group 

Across its business units, Corporate and Investment Banking reported headline earnings of R13 billion, representing a 14% year-on-year increase, supported by strong performance in the Global Markets business during a period of market volatility. The Personal and Private Banking segment generated R7.5 billion in headline earnings, a 7% increase, driven by improved credit quality, disciplined risk management, and continued investment in strategic capabilities in a competitive, lower-margin environment. Initiatives such as expanding the Absa Rewards programme and increasing digital adoption also supported customer engagement.

The Business Banking unit recorded R3.9 billion in headline earnings, representing an 8% decline, as margin compression, higher impairments, and rising cost pressures weighed on performance. In contrast, Africa Regions – Personal and Private Banking & Business Banking delivered strong results, with headline earnings rising 51% to R2.5 billion, supported by margin expansion and improved credit quality despite challenging operating conditions.

The group also reported improvements in its non-financial performance. Its customer base grew to 13.1 million, largely driven by expansion in Africa Regions through targeted customer engagement initiatives and new-to-bank acquisition programmes. Digitally active customers increased to 5.4 million, supported by continued migration to digital channels and greater adoption of the banking app.

Investment in technology also increased, with IT-related spending rising 6% to R16.7 billion. The bank said the investment reflects continued spending on digital infrastructure, cybersecurity, data capabilities, and cloud technologies, partly offset by ongoing optimisation of infrastructure costs.

Looking ahead, Absa said the global economic outlook remains uncertain due to volatile U.S. policy dynamics and ongoing geopolitical conflicts, including those in the Middle East and Ukraine. The group noted that rising geopolitical risks and sustained higher energy prices could weigh on global growth and limit the ability of major central banks to cut interest rates further.

In South Africa, the bank forecasts economic growth of 1.9% in 2026, with inflation expected to remain in the low-3% range and a further 50 basis points of interest rate cuts anticipated. The bank said these conditions could support gradual improvements in household finances, employment levels, and both consumer and business confidence, although prolonged geopolitical tensions could weaken the rand and raise inflationary pressures.

Across Absa’s Africa Regions, GDP-weighted growth is expected to rise to 5.3% in 2026, supported by economic recoveries in Botswana, Mozambique, and Zambia, alongside steady performance in other markets.

Based on its current outlook, Absa expects mid-single-digit revenue growth in 2026, with non-interest income growing faster than net interest income. Customer loans and deposits are projected to grow in the mid- to high-single-digit range, while the credit loss ratio is expected to improve slightly into the lower half of the bank’s 75 to 100 basis points through-the-cycle target range.

Operating expenses are forecast to increase by low- to mid-single digits, resulting in positive operating JAWS and mid-single-digit pre-provision profit growth. The group expects return on equity to remain around 16%, while its CET1 capital ratio is projected to end 2026 at the upper end of its 11.0% to 12.5% target range. Absa also indicated it intends to maintain its 55% dividend payout ratio.

The bank reaffirmed its medium-term targets for 2027–2030, including a return on equity of 16% to 19%, with improvements expected by 2028 as the group continues to reduce its cost-to-income ratio toward 50%.