Absa interim results June 2019
Total income for the interim period increased to R39.2 billion (2018: R37.3 billion), operating profit before income tax rose to R11.7 billion (2018: R11.1 billion), profit attributable to ordinary equity holders climbed to R7.6 billion (2018: R7.3 billion), while headline earnings per ordinary share grew to 920 cents per share (2018: 880.3 cents per share).
Shareholders are advised that an interim ordinary dividend of 505 cents per ordinary share was declared on 13 August 2019, for the period ended 30 June 2019.
South Africaís economic growth outlook appears muted. We forecast 0.5% real GDP growth in 2019 with a modest rise to 1.6% in 2020. The prospects for stronger growth are constrained by the slowing global economy, plus weak business sentiment and decelerating household income growth in South Africa. Following the 25 bps cut in the repurchase rate in July, we expect the Reserve Bank to leave interest rates unchanged for some time. In our ARO markets, we forecast average real GDP growth for those markets of 5.5% for 2019 and 5.9% for 2020 with risks tilted to the downside. Ghana, Kenya and Uganda are expected to continue recording strong growth, although the recovery in other markets is unlikely to be smooth. Downside risks to the region include upcoming elections, slow pace of economic reforms and rising fiscal and debt risks. Global uncertainties will continue to weigh on the regionís currency, inflation and interest rate outlook. Based on these assumptions, and excluding any major unforeseen political, macroeconomic or regulatory developments, our guidance for 2019 has changed slightly. We continue to expect stronger deposit growth this year, which should exceed our loan growth. We expect better loan growth from ARO in constant currency than from South Africa. RBB SAís loan growth momentum should continue, although CIB is likely to slow given a high base. Our net interest margin is likely to decline this year. Costs will remain well controlled and we are targeting flat to positive operating Jaws for the full year. Our credit loss ratio is likely to be similar to 2018. Our CET 1 ratio should remain at the top end of our Board target range and we are comfortable with our dividend cover at 2018 levels. Lastly, our RoE is likely to be marginally lower in 2019, given our weak markets performance year to date. However, we remain committed to our RoE target of 18% to 20% in 2021.