Absa’s newly installed chief executive, Kenny Fihla, has launched a determined assault on wasteful spending, most notably by sharply curtailing the bank’s reliance on external consultants, as part of a broader drive to slash the cost-to-income ratio towards 50 per cent and lift returns on equity to levels that match larger domestic peers. Speaking during an investor presentation on Monday, Fihla signalled an end to what he described as the outsourcing of strategic thinking, a practice that had ballooned consultancy fees across South African banks to an estimated R18 billion annually in recent years. Early measures have already delivered meaningful savings, freeing capital for technology upgrades and geographic expansion at a time when the Johannesburg Stock Exchange’s banking index has lagged the broader market by 11 per cent year-to-date.
Fihla, who assumed the helm in June 2025 amid a decade of leadership churn that had eroded staff confidence and investor patience, unveiled a refreshed strategy anchored on four pillars: customer primacy, diversification across the continent, operational excellence, and the pursuit of emerging opportunities. The blueprint marks a decisive shift from Absa’s historical over-reliance on South Africa, Kenya, and Ghana, which together still generate roughly 85 per cent of group revenue despite representing only a fraction of the continent’s growth potential. According to the bank’s own projections shared with investors, the contribution from the rest of its African footprint is targeted to rise materially over the medium term, capitalising on GDP growth rates that average 5.8 per cent in priority markets compared with South Africa’s anaemic 1.2 per cent.
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Central to this reorientation is a deliberate pivot towards Tanzania, Uganda, and Mozambique—countries that Fihla believes offer outsized infrastructure financing opportunities despite near-term headwinds. Tanzania and Uganda, with combined infrastructure funding gaps exceeding $90 billion over the next decade as reported by the African Development Bank, are viewed as natural hunting grounds for Absa’s project-finance and corporate banking franchises. In Tanzania, the bank is merging its corporate and retail operations to create a unified platform capable of competing more aggressively with CRDB and NMB, while Uganda has already been earmarked for accelerated investment following Fihla’s inaugural country visit as chief executive.
Mozambique presents a more nuanced prospect: sovereign debt restructuring talks continue to weigh on sentiment, yet the imminent restart of TotalEnergies’ $20 billion LNG project and a nascent gas-to-power pipeline have rekindled corporate appetite for long-term funding. Absa’s presence in the country, though modest at present, positions it to capture advisory and lending mandates as investor confidence returns, particularly after the recent peace accord between the government and Renamo eased political risk premiums that had pushed local bond yields above 16 per cent.
To sharpen execution across the continent, Fihla appointed veteran banker Charles Russon in October as chief executive for Africa regions, a newly created role that consolidates oversight of 11 markets outside South Africa. Russon’s mandate includes driving cross-border synergies and lifting the return on equity from the current mid-single digits in several territories to the group target of 16–18 per cent by 2028. As noted in Bloomberg coverage of the strategy update, this geographic rebalancing mirrors tactics successfully employed by Standard Bank during Fihla’s earlier tenure there, when the contribution from the rest of Africa climbed from 22 per cent to over 40 per cent of headline earnings within a decade.
The efficiency crusade extends beyond consultancy contracts to a root-and-branch review of procurement, property footprints, and technology spend. Absa has already reduced its South African branch network by a further 42 outlets in 2025, bringing the total contraction since 2020 to nearly 220, while simultaneously expanding its digital client base to 4.8 million active users. Transaction migration to mobile and internet channels now exceeds 92 per cent, enabling the bank to operate with a cost-to-income ratio that, although still elevated at 56.4 per cent, is trending downwards faster than the 54.8 per cent average of its big-four peers.
With South Africa’s economic outlook clouded by electricity shortages and policy uncertainty, Fihla’s determination to harvest what he terms “money left on the table” in faster-growing jurisdictions carries strategic urgency. Analysts covering the stock have responded cautiously but positively, with several lifting price targets on the back of the clearer growth narrative and visible cost discipline. If the execution matches the ambition, Absa could finally close the valuation discount—currently trading at 0.8 times book versus Standard Bank’s 1.2 times—that has persisted since its 2019 separation from Barclays, reaffirming its credentials as a genuine pan-African banking contender rather than a South African lender with peripheral operations.