Absa headline earnings rise 8% to R12.8bn as IT spend hits R8.8bn

Absa Group reported headline earnings of R12.8 billion for the six months ended 30 June 2026, an increase of 8%, on revenue that rose 4% to R58.8 billion. The bank declared a dividend per share of 850 cents, also up 8%, and lifted its return on equity to 15% from 14.8%.

The results were published by Absa Group on 18 August 2026 (https://www.absa.africa/media-statements/2026/absa-group-delivered-an-8-increase-in-headline-earnings-to-r12-8-billion-supported-by-revenue-growth-of-4-to-r58-8-billion).

The headline number sits on top of a cost base of R31.4 billion, up 4%, and impairments of R7.1 billion, down 1%. The credit loss ratio improved to 94 basis points from 100 basis points, inside the group’s through-the-cycle target range of 75 to 100 basis points. Pre-provision profit grew 4% to R27.4 billion. The cost-to-income ratio edged up to 53.4% from 53.2%.

The balance sheet grew faster than income. Net customer loans and advances expanded 6% and customer deposits rose 5%, which the group attributes to client activity across its markets. Net interest income grew 3%, held back by margin compression in Africa Regions and by competitive lending and deposit pricing in Corporate and Investment Banking South Africa. Non-interest income grew 6%, faster than net interest income, on higher fee and commission income and a solid trading contribution from Global Markets.

Three units, one continent, three different outcomes

This is the first reporting period in which all three business units are presented on a pan-African basis, and the spread between them is wide.

Personal and Private Banking produced the strongest growth, with headline earnings up 12% to R4.1 billion. The group credits growth in active customers, digital adoption in South Africa and Africa Regions, improved margins and lower credit impairments. Business Banking grew headline earnings 5% to R2.7 billion, with South Africa carrying the unit on commercial and SME lending demand while margin compression in Africa Regions weighed on those markets.

Corporate and Investment Banking, the largest of the three at R6.2 billion, grew headline earnings 1%. Investment Banking and Global Markets performed solidly and customer loan and deposit growth held up, but lower revenue from Transactional Banking, higher credit impairments and higher operating expenses offset most of that gain.

Head Office, Treasury and other operations improved, helped by asset and liability management, realised gains on bond disposals, reversals of sovereign credit impairments and lower operating costs. A lower interest rate environment in Africa Regions reduced yields on liquid asset portfolios.

Geographically, South Africa produced strong headline earnings growth on solid pre-provision profit and a lower credit loss ratio. Africa Regions were hit by lower net interest income as lower rates compressed margins, and by higher operating expenses. A stronger rand slightly reduced the contribution from operations outside South Africa.

“Our first-half performance demonstrates the strength of our franchise in a complex operating environment, and early days of delivering on our strategy,” group chief executive Kenny Fihla said.

Fihla pointed to deepening client relationships, digital capabilities and a more integrated pan-African business, and said client franchise growth and an expected stabilisation of net interest margins position the group to accelerate growth over the medium term.

R8.8bn on technology, and a customer base of 13.4 million

IT-related spend rose 7% to R8.8 billion. The group states the money went to digital infrastructure, cybersecurity, and data, cloud and artificial intelligence work, and to improving customer experience across the group. Absa also reports continued investment in threat detection and response, and in protecting customer data and digital assets.

The customer base grew to 13.4 million, with growth across Africa Regions from acquisition programmes and changes to customer value propositions.

Capital remains comfortable. The Common Equity Tier 1 ratio closed the period at 12.8%, slightly above the board’s target range of 11.0% to 12.5%.

“Revenue growth was supported by continued momentum in non-interest income, while disciplined cost management and an improved credit performance underpinned earnings growth,” group financial director Deon Raju said.

Raju said the capital position allows the group to keep investing in growth while maintaining the dividend payout.

What the bank expects for the rest of 2026

Absa has trimmed its baseline real GDP growth forecast for South Africa to 1.5% and expects policy rates to stay unchanged into early 2027. It expects real GDP growth in its Africa Regions presence economies to slightly exceed last year’s 5.0%, on infrastructure investment, multilateral support and reforms. It flags the Middle East, a new round of United States tariffs and a possible large El Nino event from late 2026 into 2027 as risks, the last with potential knock-on effects on global food prices.

For 2026 the group guides to low to mid single digit revenue growth, high single digit growth in customer loans, mid to high single digit growth in customer deposits, a credit loss ratio in the middle of the 75 to 100 basis point target range, and a return on equity of around 15%. It expects the CET1 ratio to finish the year at the top end of the 11.0% to 12.5% board target range, and to maintain a dividend payout ratio of 55%.