Absa reports decline in earnings amid economic downturn

As Covid-19 lockdown restrictions were implemented across countries last year, the group said it moved swiftly to adopt remote-working, implement payment relief measures for clients, and to launch initiatives to support the communities it serves, while ensuring operational and financial resilience.

CAPE TOWN, March 15 (ANA) – Financial services group, Absa Group on Monday reported a 51% 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.

Earnings and returns improved materially in the second half of the year as lockdown restrictions eased, particularly in South Africa, which accounts for more than 80% of the group’s earnings.

Group headline earnings fell 82% in the first half of 2020 compared with the first half of 2019. Headline earnings in the second half of last year were 19% lower than in the second half of 2019.

As Covid-19 lockdown restrictions were implemented across countries last year, the group said it would move swiftly to adopt remote-working, implement payment relief measures for clients, and to launch initiatives to support the communities it serves, while ensuring operational and financial resilience.

“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,” said Daniel Mminele, Absa Group chief executive.

“We also successfully completed our separation from Barclays and reviewed our strategy to ensure that it continues to be relevant in the context of rapid changes in the operating environment.”

Colleague safety and wellbeing was the immediate priority, following which substantial customer and community support initiatives were implemented.

“We believe we offered the most comprehensive relief programme in the South African banking sector, providing approximately R9.8 billion in cash-flow relief to 613,000 retail and business banking customers,” Mminele said.

In addition, 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, the statement read.

Absa subsidiaries in countries outside of South Africa extended Covid-19 payment relief to more than 60,000 retail and business banking customers.

Approximately R54.4 billion in payment relief was extended to corporate and investment banking clients during the year under review. This included interest and capital moratoriums, covenant concessions and extensions of maturity dates on expiring facilities.

Absa said it also mobilised its citizenship programme to support communities across presence markets. Absa and its employees directed R83 million towards Covid-19 response initiatives across the continent.

– African News Agency (ANA); Editing by Naomi Mackay