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ABSA GROUP LIMITED - Trading Statement update for the six months ended 30 June 2020
2020/08/12 17:18:00Download PDF Stock report
Trading Statement update for the six months ended 30 June 2020
ABSA GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 1986/003934/06
ISIN: ZAE000255915
JSE share code: ABG
(“Absa Group” or “the Group”)
TRADING STATEMENT UPDATE FOR THE SIX MONTHS ENDED 30 JUNE 2020
In accordance with section 3.4(b) of the JSE Listings Requirements, and updating Absa Group’s trading
statement published on 26 May 2020, shareholders are advised that there is a reasonable degree of
certainty regarding our financial results for the six months ended 30 June 2020 (1H20).
The Group’s normalised headline earnings per share (HEPS) for 1H20 is expected to be between 80%
and 85% lower than the 977.5 cents for the six months ended 30 June 2019 (the “comparative period”).
On an IFRS basis, 1H20 HEPS and earnings per share are expected to decline by between 92% and
97% from the comparative period’s 920.0 and 918.9 cents, respectively.
In line with our recent trading statement, the Covid-19 pandemic, national lockdowns and weak economy
during the first half had a material impact on customer loan and transaction volumes, while significantly
lower policy rates reduced our net interest margin, despite protection from our structural hedge.
Consequently, 1H20 revenue growth slowed to low single digit year-on-year. Operating expenses
reduced from the comparative period, producing positive JAWS and high single digit pre-provision profit
growth, with an improved cost-to-income ratio for the half. However, credit impairments were four times
higher, resulting in a credit loss ratio of 2.77% from 0.79% in the comparative period. Half of the increase
reflects judgmental macro-economic overlays, which strengthened stage 1 and 2 loan coverage
materially. Based on our current expectations, credit impairments should decrease significantly in the
second half of 2020. Absa Group’s balance sheet remains resilient, with an 11.0% common equity tier 1
ratio at 30 June 2020, together with strong levels of liquidity and an 85% loans-to-deposits and debt
securities ratio.
We will announce 1H20 results on 24 August 2020. Details of our results presentation are available at:
https://www.absa.africa/absaafrica/investor-relations/annual-results-announcement/
Shareholders are advised that the information contained in this announcement has not been reviewed or
reported on by our auditors.
Johannesburg
12 August 2020
Enquiries:
Alan Hartdegen
(+27 72) 576-2713
E-mail: alan.hartdegen@absa.africa
Lead Independent Sponsor:
J.P. Morgan Equities South Africa Proprietary Limited
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Joint Sponsor:
Absa Bank Limited (Corporate & Investment Bank)
Editors Note:
Normalised reporting
Given the process of separating from Barclays PLC, Absa Group continues to report IFRS-compliant
financial results and a normalised view. The latter adjusts for the consequences of the separation and
better reflects its underlying performance. The Group will present normalised results for periods where
the financial impact of separation is considered material.
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Date: 12-08-2020 05:18:00
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