Absa's first-half profit up 19%

Absa Group, the South African bank majority owned by Barclays, reported a better-than-expected 19% rise in first-half profit on Tuesday, helped by a decline in bad loan charges and rising income from transactions.

South Africa’s largest retail lender said diluted headline earnings per share totalled 638.5 cents in the six months to end-June, from 535.9 cents a year earlier.

Headline EPS, which excludes certain one-time items, is the main gauge of profit in South Africa.

The results compare with an expected 619 cents, according to the average of two analyst estimates taken by Thomson Reuters.

South Africa’s banks were hit hard by a 2009 recession that sparked a million job losses, eroded corporate demand for loans and left houses with ballooning debt.

Like its rivals in Africa’s top economy, Absa’s recovery has been slow as costs continue to rise and bad debts remain a concern. It has been on a push to rein in costs and take a cautious lending stance.

It is also looking to more business in Africa with parent Barclays. The two in July combined their African operations through a joint regional office.

Net interest income, a measure of earnings from lending, totalled R11.62-billion compared with R11.29-billion a year earlier.

Absa rival Nedbank posted a 26% rise in first-half earnings on Monday.

Absa shares are down 5% so far this year, making it the second-biggest decliner among Johannesburg’s index of bank stocks.—Reuters

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