(4 minutes read)
· Absa’s earnings are expected to fall as much as 85% driven by fewer banking transactions, delayed or non debt repayments, policy lapses and record-low interest rates
· Banking sector in general in South Africa is showing a sharp downward trend since industries are closing down and thousands of people are losing jobs.
Absa’s earnings are expected to fall as much as 85% driven by fewerbanking transactions, delayed or non debt repayments, policy lapses and record-low interest rates.
The banking group has shown some uptrend in 2019. The cumulative effect of continuous recession in the South African economy and the effects of pandemic had considerably shaved off its business in the first half of 2020. The revenue growth would be a mere single digit figure forcing the bank to introspect to be in the reckoning.
Banking sector in general in South Africa is showing a sharp downward trend since industries are closing down and thousands of people are losing jobs. Standard Bank has already announced that it would have a loss of R2-billion. This would likely halve its earnings for the first half of 2020.
Absa said that its credit impairments were much higher- four times higher in the six months ended on 30 June compared to the same period a year ago. The bank’s credit loss ratio jumped to 2.77% from 0.79% in June last year. The silver lining is that the bank expects credit impairments to decrease significantly in the second half of 2020. The headline earnings per share and earnings per share are expected to decline between 92% and 97% respectively. Absa will present its results on 24 August.
