Home Southern Africa Headline earnings of Absa drops sharply

Headline earnings of Absa drops sharply

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·        The headline earnings of Absa  dropped  by 93%, from R7.6 billion to R560 million

·        Revenues of Absa rose by 3% to R40.4 billion. However, the credit impairments were four times higher at R14.7 billion

·        The bank has reported an 82% decline  in the  interim earnings

The headline earnings of Absa dropped by 93%, from R7.6 billion to R560 million as revealed in the annual financial results the bank has come out on August 24,2020. Revenues of Absa rose by 3% to R40.4 billion. However, the credit impairments were four times higher at R14.7 billion.  Thanks to that, the bank has reported an 82% decline in the interim earnings. As customers and debtors of the bank defaulted on repayments, the impairment charges went up for the bank. Yet, the group remained profitable.

However, the bank expects a continued difficult environment for the consumer and heightened uncertainty,  which will dampen business confidence and investment  to continue for some more time.

Part of the losses of Absa are due to a comprehensive payment relief plan extended to consumers, such as  credit payment relief, insurance premium relief, the temporary expansion of the Credit Life product etc. Absa had provided R8.7 billion of relief on R154 billion worth of loans to 538 000 customers, including 20 000 businesses in South Africa, as of 30th June. Also, it assisted corporate clients on a one-to-one basis and granted payment relief on R37 billion of loans, 12% of their book.

During the Covid-19 pandemic, Absa and its employees contributed over R71 million in support across the continent for screening and testing,  providing personal protective equipment for thousands of health workers and humanitarian support to vulnerable communities in the Southern, East and West African countries.

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