Absa Group has announced a 10% increase in earnings for 2024, marking a significant recovery after a challenging first half of the year.
The financial services giant, which operates across Africa, attributed the turnaround to a combination of a more supportive operating environment and strategic initiatives aimed at driving sustainable growth.
“Our organisation rallied in the second half, refining our focus areas to ensure that our actions are targeted and precise in generating value and earnings uplift,” said Charles Russon, Interim Chief Executive Officer at Absa Group.
“We are confident in our strategic direction and our ability to continue delivering value to our stakeholders while expanding access to innovative financial solutions across our markets.”
A Year of Strategic Shifts and Strong Recovery
Absa’s 2024 performance signals a robust recovery, with revenue growing by 5% and headline earnings increasing by 10%.
Key drivers included a reduction in retail impairments in South Africa and a 6% growth in non-interest revenue, underscoring the strength of the Group’s diversified income streams.
Enhanced risk management practices and improved customer financial health also played a critical role, leading to an 8% decline in impairment charges.
The credit loss ratio (CLR) improved to 103 basis points, with the second half of the year recording an even stronger CLR of 85 basis points.
The Group’s balance sheet remains solid, with a Common Equity Tier 1 (CET1) ratio of 12.6%, at the top end of its target range. Liquidity metrics are also healthy, positioning Absa well for future growth.
Focus on Customer Experience and Digital Innovation
A key pillar of Absa’s recovery has been its focus on customer experience and digital adoption. The Group expanded its total customer base by 4% to 12.7 million, with digitally active customers growing by 14%.
The customer experience index improved to a weighted score of 101, up from 96 in 2023, reflecting enhancements across all business units.
Notably, the Corporate and Investment Banking unit increased its primacy ratio to 42%, up from 40%, as new clients leveraged Absa’s broader product offerings.
“We are making strategic investments where they have the greatest impact—delivering meaningful value to our customers while ensuring sustainable, long-term growth,” said Russon.
Sustainability and ESG Initiatives
Absa also made significant strides in its non-financial performance metrics, particularly in sustainability and environmental, social, and governance (ESG) initiatives.
The Group achieved its goal of facilitating R100 billion in sustainable financing a year ahead of schedule, demonstrating its commitment to financial inclusion, youth and women empowerment, small and medium enterprise development, and climate change mitigation across the continent.
Outlook: Building on Momentum
Looking ahead, Absa Group is focused on driving earnings growth and generating shareholder value.
While the external environment remains uncertain, the Group is confident in its ability to navigate challenges effectively.
Key priorities include:
- Improving Return on Equity (RoE): Absa aims to achieve its 16% RoE target by 2026, supported by disciplined capital allocation and strategic initiatives.
- Reducing Credit Loss Ratios: Further recovery in South Africa’s retail portfolio is expected to drive CLR improvements.
- Enhancing Retail Operations: Absa is reviewing its retail operations in South Africa to better serve customers and strengthen its competitive position.
“The execution of our strategy remains clear and disciplined, anchored in enhancing user experiences, maintaining primacy, driving digital innovation, and acting as an active force for good in everything we do,” said Russon.
Absa Group’s 2024 performance is a testament to its resilience and strategic agility.
By prioritizing customer experience, digital innovation, and sustainability, the Group is not only driving financial recovery but also positioning itself as a leader in Africa’s evolving financial landscape.
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