South African lender Absa Group reported an 8% increase in half-year headline earnings, supported by higher revenue and lower credit impairment charges.
Headline earnings rose to 12.8 billion rand ($787.61 million) for the six months ended June 30, according to the lender’s results released on Tuesday.
Absa, South Africa’s third-largest lender by assets, declared an interim dividend of 850 cents per share, representing an 8.3% increase from the prior-year period.
Revenue increased 4% to 58.8 billion rand, driven by growth in both net interest income and non-interest income.
Net interest income rose 3% to 37.4 billion rand as customer loans and deposits increased, although the benefit of balance-sheet growth was partly offset by pressure on margins.
Absa’s net interest margin declined to 4.46% from 4.58%.
The bank said lower interest rates across its rest-of-Africa operations, alongside competitive lending and deposit pricing in its South African corporate and investment banking business, weighed on margins.
Non-interest income increased 6% to 21.4 billion rand, supported by higher fee and commission income as client activity and lending volumes increased.
A strong contribution from Global Markets trading income also supported the growth in non-interest revenue.
Operating expenses rose 4% to 31.4 billion rand, resulting in a slightly higher cost-to-income ratio of 53.4%.
Meanwhile, credit impairment charges declined 1% to 7.1 billion rand.
The reduction in impairment charges improved Absa’s credit loss ratio to 94 basis points, compared with 100 basis points in the corresponding period.
The results highlight the lender’s ability to grow earnings despite continued pressure on net interest margins and operating costs, with stronger revenue generation and improved credit performance supporting the bottom line.
