Despite significantly higher credit impairments and the material impact of the lockdowns on transactional volumes, Absa Group, including all business units, remained profitable. In addition, revenue increased by 3% while cost-to-income ratio reduced from 56.7% to 53.9%.
The group also reported an 82% decline in normalised interim earnings after impairments increased four-fold to 5.01 billion cedis. Impairment charges rose as customers and clients struggled to repay debt and as the Group took decisive action to increase impairment provisions against future potential credit losses. The Group expects a continued difficult environment for the consumer and heightened uncertainty is expected in the remainder of 2020.
“In the current economic climate, ensuring continued operational and financial resilience is paramount. We are therefore temporarily holding our growth ambitions in abeyance to focus on cost management and capital and liquidity preservation, while continuing to support customers,” said Daniel Mminele, Absa Group Chief Executive.
While the negative impact of the crisis on Absa’s earnings is clear, the interim results also highlight the resilience of the business.
“Our revenue remained resilient and our operating costs were well managed and responded to the crisis, resulting in encouraging pre-provision profit growth of 9%,” said Absa Group Financial Director Jason Quinn. “Our capital and liquidity levels are strong and will allow us to further support our customers as we emerge from the crisis,” he said.
Absa extended significant support to customers and clients across its operating markets. In South Africa, the Group’s largest market, Absa implemented comprehensive payment relief plan. Measures included credit payment relief, insurance premium relief, and the temporary expansion of credit life products to cover wider definition of loss of income among others.
Absa regional operations, including Absa Bank Ghana, afforded customers payment relief on loans totalling 8.52 billion cedis.
Source:Starrfm.com.gh