Absa Group reports 10% increase in 2024 earnings

Absa Group reported strong earnings of R22.1 billion ($1.2 billion) for the 2024 financial year, representing a 10 per cent increase from the previous year.

This improvement follows a robust second-half recovery, after a disappointing first half. 

The performance was driven by both a more supportive operating environment, as well as deliberate steps taken to support performance.

A release issued by the bank said the Group recorded a five per cent rise in revenue to R109.9 billion and a five per cent increase in pre-provision profit to R51.4 billion. 

It said despite these gains, operating costs also rose by five per cent to R58.5 billion, keeping the cost-to-income ratio stable at 53.2 per cent. 

Impairments, however, showed a positive decline, falling eight per cent to R14.3 billion, with a significant improvement in the credit loss ratio from 118 to 103 basis points.

A key aspect of the improved earnings was a reduction in impairments within South Africa’s retail sector. The Group also saw a six per cent growth in non-interest revenue, reflecting the resilience of its diversified income streams. 

Additionally, the Group expanded its customer base by four per cent to 12.7 million, with digitally active customers increasing by 14 per cent. Customer experience also improved, with the Group’s customer experience index rising to 101 from 96 in the previous year.

“Absa Group’s financial performance in 2024 signals recovery and demonstrates improving franchise health. The Group made progress with recent strategic execution changes introduced to set the Group on a path to delivering appropriate returns,” the release said.

Business unit performance

Absa’s various business units demonstrated solid performances, with a significant increase in headline earnings. 

The Product Solutions Cluster saw a 38 per cent increase in earnings to R3.3 billion while Everyday Banking improved by 18 per cent to R4.0 billion. 

Relationship Banking grew four per cent to R4.3 billion and the Absa Regional Operations for Retail and Business Banking (ARO RBB) posted a 12 per cent rise in earnings to R1.8 billion. Corporate and Investment Banking (CIB) also saw a six per cent increase, generating R11.7 billion in headline earnings.

Outlook

According to the release, Absa Group remains optimistic for the future, despite potential external challenges. 

It said building on its second-half momentum, the group plans to continue driving earnings growth and creating shareholder value and expects its return on equity (RoE) to further improve, supported by disciplined capital allocation and ongoing strategic initiatives. 

“Credit loss ratios are expected to improve further into the top end of the Group’s target range, largely driven by further recovery in South Africa’s retail portfolio. 

Additionally, the impact of substantial items is expected to ease, particularly regarding hyperinflationary accounting for the Ghanaian operations,” the release added.

The Interim Chief Executive Officer (CEO) at Absa Group, Charles Russon, explained that the organisation rallied in the second half, refining its focus areas to ensure that actions were targeted and precise in generating value and earnings uplift.

He said the group was confident in its strategic direction and ability to continue delivering value to stakeholders while expanding access to innovative financial solutions across its markets.

“We are making strategic investments where they have the greatest impact—delivering meaningful value to our customers while ensuring sustainable, long-term growth. 

By optimising our operations and enhancing efficiency, we are improving affordability, expanding access to financial services and strengthening the customer experience at every touchpoint,” Mr Russon said.

Absa Group Financial Director, Deon Raju, said key structural improvements, including disciplined risk management, cost efficiencies and optimised capital allocation, were starting to translate into improved results. 

“Our stronger second-half performance gives us confidence that we are taking the right action to support the delivery of a 16 per cent RoE by 2026,” he added.