By Adelaide Changole.
Absa Group said first-half profit climbed to a new high as growth in its South Africa business offset a decline in earnings from its operations elsewhere on the continent.
Headline earnings rose 8% to R12.8 billion in the six months through June, the Johannesburg-based lender said in a statement on Tuesday. The bank declared an interim dividend of R8.50 per share, its biggest to date.
Earnings from the bank’s South Africa unit – its largest – increased 17% to R9.19 billion, as a 7% jump in net interest income and a 9% gain in fees and commissions lifted revenue.
Those increases countered a 10% profit decline in the bank’s Africa regions, as interest-rate cuts in key markets – particularly Kenya and Ghana, its two biggest markets outside its home market – cut net interest income by 5%. A stronger rand also reduced the region’s contribution to growth.
South Africa now generates 72% of Absa’s headline earnings, compared with 28% for its rest-of-Africa business.
Africa’s largest economy has expanded at less than 1% annually on average for more than a decade because of chronic government mismanagement and corruption. Some green shoots are emerging as bottlenecks in electricity, logistics and other infrastructure ease, delivering an earnings bump for the continent’s biggest lenders.
Absa sees the economy expanding by 1.5% this year, which would be the fastest growth rate since 2022. That’s quicker than the 1.1% estimate from the International Monetary Fund.
Absa shares have pared some of their decline that began on June 30, when it said first-half earnings and revenue would fall short of investor expectations. The announcement triggered downgrades as analysts and investors raised questions about whether Chief Executive Officer Kenny Fihla can fully implement his pan-African expansion strategy that includes targeting commodity-rich nations including Tanzania, Uganda and Zambia.
The bank, which operates in 17 countries, is also seeking to raise its stake in its Kenyan unit to 85% through a $238.7 million tender offer and combine the operations of its two banks in Tanzania. It also opened its new offices in Dubai in April.
Absa is still the only lender in South Africa to decline since January, shedding 6.8% compared to a 9.3% gain for peers in the FTSE/JSE Banks Index, and a 1% drop for the benchmark FTSE/JSE Africa All-Share index.
Fihla took over as CEO on June 17, 2025, after being poached from larger rival Standard Bank Group. He’s outlined plans to change the fortunes of its retail unit in its biggest market in South Africa, and bring stability to a firm that saw the departure of six top managers in as many years.
The lender expects its performance to improve slightly in the second half, buoyed by continued growth in non-interest income, as well as further gains in customer loan growth and customer deposits.
The bank’s return on equity improved by 20 basis points to 15% in the six months through June, and the lender expects it to remain at the same levels in 2026, before climbing to as much as 19% by 2028.