Revenue increased 14% to R46.9billion
Operating costs rose 7% to R24.1 billion
Cost-to-income ratio decreased to 51.4% from 54.9%
Pre-provision profit increased 23% to R22.8 billion
Impairments increased 10% to R5.2 billion
Headline earnings per share increased 27% to 1298.5 cents from 1019.7
Return on equity improved to 17.7% from 15.3%
Group CET 1 ratio improved to 13.1% from 12.4%
The dividend per share more than doubled to 650 cents


Data shows that Absa Group headline earnings for the past year increased 27% to R11 billion in the first half of the year as revenue increased, demonstrating a continued strong recovery from the global economic the downturn in 2020.
Absa reported a solid pre-prevision profit for the first half of the year, supported by revenue which rose by 14%, underpinned by growth across our business units and supported by a rebound in the
insurance business in South Africa and increased interest rates across key markets. Net interest
income and non-interest income rose 12% and 18%, respectively.
“Our strong results reaffirm the strategic choices we made in 2018 and are testimony to the work we
have undertaken in creating a business that is closer to customers,” said Arrie Rautenbach, Absa
Group Chief Executive Officer. “With a strong, experienced leadership team and an improved
operating model, we now have a strong foundation for outperformance.”
In June, Absa announced a strengthened and more diverse executive leadership team. Absa refined
its operating model, adopting a flatter structure, bringing management closer to customers, and
allowing the Group to accelerate strategy execution. Effective 1 July, Absa has five business units,
from two previously.
All business units reported improved earnings and stronger returns during the first half.
“All of our key measures are significantly above the pre-Covid levels of the first half of 2019,” said
Jason Quinn, Absa Group Financial Director. “The strategic decisions we made in the last few years
have ensured that we remain capital generative and we are appropriately provisioned as we face a
tougher environment,” he said.
The Group balance sheet remains well positioned, with Common Equity Tier 1 (CET1) having
improved. CET1 and liquidity levels remain well ahead of regulatory and Board target ranges.
Costs were well maintained even as the Group increased investment in IT for enhanced digital
performance and improved customer experience. Total IT spending grew 11% to R6 billion. Improved
stability and enriched functionality saw digitally active customers grow across our businesses including
a 10% increase to 2.2 million in retail and business banking in South Africa. Digital volumes have grown by 86% compared to 2019 levels whilst branch and ATM volumes have declined substantially.
Business unit performance during the first half.


Retail and Business Banking (RBB)
RBB South Africa, the Group’s largest revenue generator, continued to execute against its
2018 strategic transformation journey, supported by the momentum of the economic recovery,
specifically in the first quarter of the year. Although the operating environment became
increasingly difficult in the second quarter, key performance indicators continued to trend
positively and in line with expectations, benefitting from deliberate execution over the past three
years. Home loans registrations, vehicle asset financing and personal loans, among other
areas, increased.
Absa gained market share in key areas in retail advances including home loans and vehicle
asset financing and our deposit market share continued to be strong at 22%. Customer
numbers increased 1% to 9.6 million.
RBB earnings from Absa Regional Operations (ARO) increased strongly following very strong
revenue growth, an encouraging performance as Absa repositions the business on a growth
trajectory and improve returns.
*An operating model change, effective 1 July 2022, will see the following units reporting separately going forward:
Everyday Banking, Relationship Banking, Product Solutions and RBB ARO.
Corporate and Investment Banking (CIB)
CIB benefited from portfolio diversity and all business units delivered revenue growth.
CIB improved its primacy metrics and client acquisition with notable improvements in its
regional franchise.
CIB revenue growth of 7% reflects solid growth in the client franchise.
The performance solidifies CIB’s commitment to delivering its Pan Africa growth strategy.
An active force for good Absa rallied its resources during the April floods in KwaZulu-Natal to assist with immediate and longer term needs to the value of R10 million. In recognition of the direct impact on many households, Absa also waived excess fees on insurance claims.
During the first half of the year, Absa invested R125 million in societal impact initiatives in Africa and
reached more than 50,600 individuals through financial education literacy and tools.
Absa, the largest funder of renewable energy in South Africa, continued to make progress on its
sustainability agenda. While the Group’s fossil fuel exposure is set to decline, Absa is looking to double
its renewable energy loans as a percent of total group loans by 2030.


Outlook
The macro backdrop deteriorated noticeably in the past six months and global growth expectations
have reduced materially. There are considerably higher inflationary pressures across most of the
markets in which Absa operates and policy rates are increasing faster than we expected.
Absa remains well positioned for the tougher operating environment, with a strong balance sheet and
high levels of capital and provisioning.
Absa expects to achieve low double-digit revenue growth in 2022 compared with 2021. Operating
expenses will likely increase by low to mid-single digits, with pre-provision profit growth in the teens,
resulting in a cost-to-income ratio which is expected to be lower than 2021 levels. Return on equity is
also expected to improve to approximately 17%.