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(Bloomberg) — Absa Group Ltd.’s profit rose to a record as business outside the lender’s home market of South Africa surged.
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Headline earnings climbed 12% to 24.8 billion rand ($1.5 billion), the Johannesburg-based lender said in a filing on Tuesday. It declared a final dividend of 8.50 rand per share, bringing the total payout for the year to 16.35 rand, the highest on record.
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Profit at the lender’s Africa business — which comprises 10% of overall headline earnings — advanced 51% to 2.52 billion rand, outpacing the growth in all other units.
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The gains in the rest of the continent outweighed moderate growth in the personal and private-banking unit, as well as lower earnings from its business bank.
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South Africa’s central bank resumed its rate-cutting cycle in November, easing borrowing costs for consumers in the continent’s biggest economy. While the bank’s projection model showed further reductions this year, the outbreak of war in the Middle East has seen interest-rate traders price in a chance of a hike as the conflict raises energy prices and revives concerns about faster price growth.
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“Prolonged geopolitical tension, especially in the Middle East, could weaken the rand, raise inflation, and reduce the scope for monetary easing,” Absa said, reiterating that it expects mid-single-digit revenue growth for 2026
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Absa is scaling up its rest-of-Africa business as it seeks to bolster its footprint. In 2024, the lender acquired HSBC Holdings Plc’s wealth and personal, and its business-banking divisions in Mauritius, placing them into its unit in the East African nation. In October, Absa said it would buy Standard Chartered Plc’s wealth and retail-banking unit in Uganda to broaden its range of services. It also plans to combine its two banking operations in Tanzania.
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Peers are also looking to grow their operations on the continent. FirstRand Ltd. is exploring opportunities in Nigeria, Ghana and Zambia as it seeks to diversify earnings away from South Africa. Nedbank Group Ltd. announced in January that it agreed to acquire a majority stake in Kenya’s NCBA Group Plc to help it expand in East Africa, home to some of the continent’s fastest-growing economies. It is also mulling “exciting” oil and gas opportunities in Namibia and Mozambique.
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Net interest income climbed 4% due to modest retail-loan growth in South Africa, while non-interest revenues climbed 7.5% as trading revenue continued to grow strongly.
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The bank’s return on equity improved to 15% from 14.8% in 2024. The bank expects to lift ROE to 16% by 2026 and further to as much as 19% by 2030.
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