Absa bank ups nine-month earnings

JOHANNESBURG – South Africa’s biggest retail bank, Absa, said yesterday it increased diluted headline earnings per share for the nine months through December by 18,3 per cent due to sharply lower bad debts and strong loan growth.

Absa, reporting nine-month results to align its financial year to that of majority owner Barclays Plc., said net interest income for the period under review increased 21,7 per cent to 9,647 billion rand compared with the nine months ended December 31, 2004. The results beat market expectations and were driven by sharply reduced impairment charges for bad debts, one Johannesburg-based analyst said.”It (bad debts) just keeps on going lower and lower, at some point it will go back up and clearly we are in abnormal times here,” said the analyst, who declined to be named.Shares in Absa were 0,34 per cent lower at 117,60 rand by 0805 GMT, underperforming the JSE Securities Exchange’s banking sector which stood 0,46 per cent firmer.Absa’s bad debt charges decreased to 569 million rand from 978 million in the same period in 2004 and its impairment ratio fell to 0,26 per cent on an annualised basis from 0,52 per cent reported in March 2005.The impairment ration reflects impairment losses on loans and advances as a percentage of average loans and advances to customers.Retail loans increased by 24,7 per cent for the period while total advances rose 20,1 per cent to 26,7 per cent on an annualised basis.It said normal headline earnings per share rose 20 per cent to 740,4 cents while headline earnings were 4,902 billion rand, compared with 1,38 billion rand in the year-ago period.Headline EPS excludes non-trading, capital and certain extraordinary items.Barclays bought control of Absa in July 2005 and Absa Chief Executive Officer Steve Booysen said the South African bank was progressing well with initiatives to realise synergy benefits stemming from the transaction.Absa said it expected further solid results in 2006 with a low inflation and interest rate environment.”Favourable trading conditions, with stable interest rates and low customer defaults, look set to continue for the next financial year,” Booysen said.Absa said its return on equity was 26,5 per cent compared with 25,2 per cent in the comparable year-ago period.- Nampa-ReutersThe results beat market expectations and were driven by sharply reduced impairment charges for bad debts, one Johannesburg-based analyst said.”It (bad debts) just keeps on going lower and lower, at some point it will go back up and clearly we are in abnormal times here,” said the analyst, who declined to be named.Shares in Absa were 0,34 per cent lower at 117,60 rand by 0805 GMT, underperforming the JSE Securities Exchange’s banking sector which stood 0,46 per cent firmer.Absa’s bad debt charges decreased to 569 million rand from 978 million in the same period in 2004 and its impairment ratio fell to 0,26 per cent on an annualised basis from 0,52 per cent reported in March 2005.The impairment ration reflects impairment losses on loans and advances as a percentage of average loans and advances to customers.Retail loans increased by 24,7 per cent for the period while total advances rose 20,1 per cent to 26,7 per cent on an annualised basis.It said normal headline earnings per share rose 20 per cent to 740,4 cents while headline earnings were 4,902 billion rand, compared with 1,38 billion rand in the year-ago period.Headline EPS excludes non-trading, capital and certain extraordinary items.Barclays bought control of Absa in July 2005 and Absa Chief Executive Officer Steve Booysen said the South African bank was progressing well with initiatives to realise synergy benefits stemming from the transaction.Absa said it expected further solid results in 2006 with a low inflation and interest rate environment.”Favourable trading conditions, with stable interest rates and low customer defaults, look set to continue for the next financial year,” Booysen said.Absa said its return on equity was 26,5 per cent compared with 25,2 per cent in the comparable year-ago period.- Nampa-Reuters