By 
Absa Group has reported a solid performance for the six months ended 30 June 2026, delivering an 8% increase in headline earnings to R12.8 billion. The bank’s South African franchise provided strong momentum against a broader backdrop defined by changing interest rate dynamics, geopolitical tension, and global economic volatility.
Driven by robust growth in non-interest revenue and improved credit performance, the financial results underscore the initial outcomes of Absa’s newly implemented pan-African operating model. The Group declared an 8% increase in its interim dividend per share to 850 cents, while return on equity (RoE) expanded to 15% from 14.8% in the previous period.
Core Financial Highlights
Group revenue expanded 4% year-on-year to R58.8 billion, underpinned by non-interest income growth, which outpaced net interest income. Pre-provision profit matched top-line expansion, rising 4% to R27.4 billion.
+------------------------------------+------------------+---------------+| Key Performance Metric | H1 2026 Value | YoY Growth % |+------------------------------------+------------------+---------------+| Revenue | R58.8 billion | +4% || Pre-Provision Profit | R27.4 billion | +4% || Headline Earnings | R12.8 billion | +8% || Dividend Per Share | 850 cents | +8% || Operating Expenses | R31.4 billion | +4% || Credit Impairments | R7.1 billion | -1% |+------------------------------------+------------------+---------------+Non-Interest Revenue Outpaces Net Interest Income
Net interest income rose 3%, held back by margin compression despite balance sheet growth. Lower interest rate environments across Africa Regions and competitive lending and deposit pricing within the South African Corporate and Investment Banking (CIB) division weighed on margins. Nevertheless, client franchise expansion remained steady, with net customer loans and advances growing 6% and customer deposits up 5%.
Non-interest income expanded by 6%, propelled by higher fee and commission income on the back of active client acquisition and stronger lending activity, alongside solid trading performance within Global Markets.
Group Chief Executive Officer Kenny Fihla highlighted the early execution of the bank’s strategy:
“Our first-half performance demonstrates the strength of our franchise in a complex operating environment, and early days of delivering on our strategy… Our healthy client franchise growth and the expected stabilisation of net interest margins position us well to accelerate sustainable growth over the medium term.”
Credit Impairments and Cost Management
Credit performance showed resilience as impairments dropped 1% to R7.1 billion. Consequently, the credit loss ratio improved to 94 basis points (bps) from 100 bps, landing comfortably within the Group’s through-the-cycle target range of 75 to 100 bps. Lower impairments in Personal and Private Banking (PPB)—driven by better customer payment behaviour—helped offset normalising credit impairments in Business Banking and CIB.
Operating expenses grew 4% to R31.4 billion, reflecting continued strategic investments. The Group’s cost-to-income ratio edged up slightly to 53.4% from 53.2%. Total IT-related spend rose 7% to R8.8 billion as the group expanded its cyber resilience, cloud infrastructure, and AI capabilities.
Segmental and Geographic Breakdown
For the first time, Absa reported all three primary business units on a unified pan-African basis.
- Corporate and Investment Banking (CIB): Delivered headline earnings of R6.2 billion, up 1%. Growth in Investment Banking and Global Markets was partially offset by margin pressure, lower Transactional Banking revenue, and higher operating expenses.
- Personal and Private Banking (PPB): Headline earnings surged 12% to R4.1 billion, aided by active customer growth, higher digital adoption, improved margins, and reduced credit impairments. Total group customer headcount reached 13.4 million.
- Business Banking (BB): Earnings rose 5% to R2.7 billion. Commercial and SME lending demand in South Africa remained solid, though margin compression in Africa Regions presented a drag.
Geographically, South Africa generated strong headline earnings growth. Conversely, earnings in Africa Regions faced pressures from rate cuts impacting net interest margins, elevated expenses, and a stronger South African rand, which dampened foreign earnings conversions.
Capital Position and Macroeconomic Outlook
Absa maintained a solid capital structure, reporting a Common Equity Tier 1 (CET1) ratio of 12.8%, sitting slightly above the Board’s target range of 11.0% to 12.5%. Deon Raju, Group Financial Director, noted that this capital strength enables the group to invest in core growth while maintaining an attractive dividend pay-out.
Looking ahead, Absa cited macroeconomic risks, including ongoing Middle East conflicts, new US tariff announcements, and potential weather impacts from an impending El Niño event. The bank trimmed its baseline real GDP growth forecast for South Africa to 1.5%, anticipating policy interest rates to remain steady into early 2027. Growth in regional African presence economies is projected to slightly exceed last year’s 5.0%.
Full-Year 2026 Guidance Summary:
- Revenue: Low- to mid-single digit growth.
- Loans & Deposits: High single-digit loan growth; mid-to-high single digit deposit growth.
- Credit Loss Ratio: Similar to H1, positioned near the midpoint of the 75–100 bps target range.
- RoE: Expected around 15%.
- Payout Ratio: Target dividend pay-out ratio maintained at 55%.
