Absa projects improved outlook

By BUUMBA CHIMBULU ABSA Group expects an improved macro-economic backdrop this year following a 51 percent decline in normalised headline earnings, as it provides relief to over 670,000 customers. The group looks forward to playing its role in the recovery of the global economy and re-setting for the future, says group Chief Executive, Daniel Mminele. “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,” Mr Mminele said in the 2020 Financial Statement for the group released yesterday. Meanwhile, the group reported a 51 percent decline in normalised headline earnings to R8 billion after impairments nearly trebled to R20.6 billion amid the economic downturn that was precipitated by the Covid-19 pandemic. The group’s headline earnings fell 82 percent in the first half of 2020 compared with the first half of 2019. Headline earnings in the second half of last year were 19 percent lower than in the second half of 2019. The group’s earnings and returns however improved materially in the second half of the year as lockdown restrictions eased, particularly in South Africa, which accounts for more than 80 percent of the group’s earnings. Absa Group Financial Director, Jason Quinn, said: “I was really pleased with our seven percent rise in pre-provision profit as this is an important indicator of positive underlying performance. On relief to customers, Absa subsidiaries in countries outside of South Africa such as Zambia extended Covid-19 payment relief to more than 60,000 retail and business banking customers. In South Africa alone, Mr Mmienele said the group offered the most comprehensive relief programme providing approximately R9.8 billion in cash-flow relief to 613 000 retail and business banking customers. In addition, he said, Absa waived various transaction fees and provided insurance premium relief, while temporarily extending credit cover to include a wider definition of ‘loss of income’ events. “Absa responded decisively to the COVID-19 pandemic and the resulting economic downturn. We supported our staff, customers and communities through a difficult period and produced a resilient financial performance in a very challenging operating environment,” he said.