Absa Group earnings increased 10% in 2024, underpinned by a material improvement in the second half, demonstrating meaningful progress after a disappointing first half. Earnings were driven by both a more supportive operating environment as well as deliberate steps taken to support performance.
“Our organisation rallied in the second half, refining our focus areas to ensure that our actions are targeted and precise in generating value and earnings uplift,” said Charles Russon, Interim Chief Executive Officer at Absa Group. “We are confident in our strategic direction and our ability to continue delivering value to our stakeholders while expanding access to innovative financial solutions across our markets.”
Absa Group’s financial performance in 2024 signals recovery and demonstrates improving franchise health. The Group made progress with recent strategic execution changes introduced to set the Group on a path to delivering appropriate returns.
Revenue increased by 5% and headline earnings increased 10%, bolstered by a reduction in retail impairments in South Africa. Non-interest revenue saw growth of 6%, reinforcing the strength of the Group’s underlying business and diversified income streams.
Enhanced risk management practices and improving customer financial health drove an 8% decline in impairment charges. Consequently, Absa reported a decline in the credit loss ratio (CLR) to end the year at 103 basis points, which remains slightly above the upper end of the group’s target range. CLR in the second half was 85 basis points.
The balance sheet remains strong, with a Common Equity Tier 1 (CET1) ratio of 12.6% which is at the top-end of our target range and liquidity metrics are healthy.
While return on equity (RoE) remains below medium-term ambitions, the Group has made clear year-on-year progress, with a visible pathway toward achieving its 16% RoE target by 2026.
“Key structural improvements, including disciplined risk management, cost efficiencies, and optimised capital allocation, are starting to translate into improved results. Our stronger second-half performance gives us confidence that we are taking the right action to support delivery of a 16% RoE by 2026,” said Deon Raju, Absa Group Financial Director.
A key driver of the Group’s strong recovery in the second of the year was a strategic pivot towards prioritising sustainable growth over market share expansion. This ensured more disciplined capital allocation to higher-value sectors, refined pricing strategies to better reflect risk, and a shift from product profitability to customer franchise profitability, enabling better decision-making and performance tracking.
Growing customer numbers and digital adoption and improving customer experience remain a key priority for Absa. The Group expanded its total customer base by 4% to 12.7 million, with digitally active customers up 14% across the Group. Absa’s customer experience index improved to a weighted score of 101, from 96 in 2023, with improvements noted across all businesses. The Corporate and Investment Banking unit increased primacy to 42% from 40% as new clients leveraged our broader product set.
Enhanced customer experiences, supported by digital innovation and service enhancements, have contributed to increased engagement and stronger client relationships.
The organisation also made significant progress on its non-financial performance metrics, particularly in sustainability and ESG initiatives, advancing its commitment to financial inclusion, youth and women empowerment, small and medium enterprise development, and climate change mitigation on the continent. The Group achieved its goal of facilitating R100 billion in sustainable financing a year ahead of schedule.
“We are making strategic investments where they have the greatest impact—delivering meaningful value to our customers while ensuring sustainable, long-term growth. By optimising our operations and enhancing efficiency, we are improving affordability, expanding access to financial services, and strengthening the customer experience at every touchpoint,” said Russon.
Business Unit Performance
- Product Solutions Cluster (PSC) headline earnings increased 38% to R3.3 billion.
- Everyday Banking (EB) increased 18% to R4.0 billion.
- Relationship Banking (RB) increased 4% to R4.3 billion.
- Absa Regional Operations – Retail and Business Banking (ARO RBB) increased 12% to R1.8 billion.
- Corporate and Investment Banking (CIB) increased 6% to R11.7 billion.
Outlook
Building on the second-half momentum, Absa Group will continue to focus on driving earnings growth and generating shareholder value. While the external environment is uncertain and may affect earnings, the Group remains confident in its ability to manage these effectively.
RoE is expected to continue improving, supported by disciplined capital allocation and the ongoing benefits of the Group’s strategic initiatives.
Credit loss ratios are expected to improve further, into the top end of the Group’s target range, largely driven by further recovery in South Africa’s retail portfolio. Additionally, the impact of substantial items is expected to ease, particularly regarding hyperinflationary accounting for the Ghanaian operations.
Absa is in the process of reviewing its retail operations in South Africa, to better serve its customers and clients and strengthen its position in a highly competitive market. The programme is on track to deliver a retail bank in the first half of this year.
The primary aim of the review is to reinforce Absa’s foundational strengths in retail and fortify the company’s market-differentiating products and services. The outcome of the design phase will determine how Absa integrates various capabilities for maximum efficiency and improved customer experience, while achieving minimal disruption.
“The execution of our strategy remains clear and disciplined, anchored in enhancing user experiences, maintaining primacy, driving digital innovation, and acting as an active force for good in everything we do,” said Russon. “As we build on the momentum of our recovery, we are focused on sustained, profitable growth—ensuring we continue to create meaningful value for our customers, colleagues, and shareholders across the continent.”
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