Absa Reports Strong H1 Growth
Absa Group reports 8% rise in half-year earnings, driven by higher revenue
Key Points
Absa's net interest margin narrowed to 4.46% in the half-year, down from 4.58%, as lower rates in rest-of-Africa and competitive lending and deposit pricing in South Africa's Corporate and Investment Banking offset the benefit of balance-sheet growth.
Non-interest income climbed 6% to 21.4 billion rand, underpinned by higher client activity and lending volumes, with a solid contribution from Global Markets trading income and stronger fee and commission income.
Return on equity rose to 15% and the common equity tier 1 (CET1) ratio was 12.8%, slightly above the board's target range of 11% to 12.5%, signaling a robust capital position.
Credit growth remained positive with net customer loans and advances up 6% and customer deposits up 5%, reflecting healthy activity and franchise strength across markets.
Operating expenses rose about 4%, with pre-provision profit also up around 4%, as the group continued to invest in strategic initiatives while maintaining cost discipline.
Absa Group posted an 8% rise in headline earnings to 12.8 billion rand for the six months ending June 30, 2026, driven by higher revenue and a drop in bad-debt charges, according to MarketScreener. The group declared an interim dividend of 8.50 rand per share.
Net income climbed to ZAR 12,579 million from ZAR 11,231 million a year ago, MarketScreener reported. The results signal solid momentum even as the bank faces margin pressure and an uneven performance across its African markets.
Revenue Grows but Margins Squeeze Under Rate Pressure
Total revenue rose 4%, lifted by growth in net interest income. But the net interest margin — the gap between what Absa earns on loans and pays on deposits — narrowed to 4.46% from 4.58% a year earlier. Lower interest rates across the rest of Africa put pressure on earnings there. In South Africa, competitive pricing in corporate and investment banking added to the squeeze.
Non-interest income — fees, trading, and commissions — grew 6% to 21.4 billion rand. Strong client activity and higher lending volumes drove that gain. Trading income from Absa's Global Markets desk also contributed. The fee and commission business held up well across the group.
Credit Losses Fall as Loans and Deposits Keep Growing
Credit impairment charges fell about 1%, nudging the credit loss ratio lower. That means fewer customers are defaulting on loans relative to the size of Absa's book. Net customer loans and advances grew 6%. Customer deposits rose 5%. Both figures point to healthy demand and franchise strength across the group's markets.
The improvement in credit quality helped offset the margin compression. It also gave earnings a meaningful lift at a time when revenue growth remained modest. Absa did not flag any sharp deterioration in asset quality heading into the second half.
South Africa Outperforms as Rest-of-Africa Drags
Absa's South African business delivered stronger results, helping to offset weaker earnings from operations elsewhere on the continent. The group highlighted regional divergence as a key theme for the period. Lower rates and tougher conditions in several African markets weighed on the broader group's performance.
Despite that drag, the overall picture remained positive. Return on equity rose to 15%. The common equity tier 1 (CET1) ratio — a measure of financial strength — came in at 12.8%. That sits just above the board's own target range of 11% to 12.5%, signaling a well-capitalised bank.
Absa Kenya Posts KES 10.5 Billion Profit Amid Rate Headwinds
Absa Bank Kenya reported a profit after tax of KES 10.5 billion for the same six-month period, according to TechMoran. The Kenyan unit achieved a return on equity of 21.7%, a market-leading figure. Growth in customer assets and deposits underpinned the result, even as the broader operating environment stayed difficult.
However, Streamline Feed noted that the KES 10.5 billion figure marks a 10% decline from KES 11.7 billion in the same period last year. Rate pressures weighed on net interest income in Kenya. The Kenyan unit's experience mirrors the wider group trend: growing balance sheets but thinner margins.
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