South Africa’s third-largest lender by assets has posted a 12% rise in full-year headline earnings, driven largely by an outsized performance from its operations across the African continent. Absa Group reported headline earnings of R24.76bn for the year to end-December 2025, with diluted headline earnings per share up 11% to 2,955.5 cents.
The numbers tell a story of two speeds within the same institution. South African headline earnings grew 7% to just under R17bn, a solid but measured performance. Africa Regions, by contrast, surged 25% to R7.77bn, now accounting for 31% of both group revenue and total earnings. Within that, the Africa Regions personal and private banking unit delivered a 51% leap in headline earnings to R2.5bn — a figure that reflects both the pace of customer acquisition across the continent and the maturation of Absa’s decade-long push to establish a standalone African identity after its separation from Barclays.
The group’s 11 rest-of-Africa businesses delivered noticeably stronger earnings growth than South Africa, driven by solid pre-provision profit growth and continued customer expansion. Corporate and Investment Banking, which remains the group’s single largest earnings contributor, rose 14% to R13bn — underlining the continued importance of wholesale and institutional banking to Absa’s overall profitability.
Not all divisions performed equally. Business Banking in South Africa declined 8% to R3.86bn, a setback that points to ongoing pressure on small and medium-sized enterprises in a low-growth domestic economy. The segment’s underperformance stands in contrast to the broader group narrative and may require structural attention as Absa pushes toward its medium-term return-on-equity targets.
Overall credit impairments decreased 6% to R13.4bn, with the group’s credit loss ratio improving to 88 basis points — the midpoint of Absa’s target range — compared with 103 basis points in 2024. South Africa benefited from a meaningful improvement in credit impairments across several portfolios. Revenue grew 5% to R115.7bn, with net interest income up 4% and non-interest income rising 7%. Net loans and advances grew 7%, while deposits and debt funding rose 8%. The dividend per share was lifted 12% to 1,635 cents, at a payout ratio of 55%, and the group’s return on equity edged up to 15% from 14.8%.
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Looking ahead, Absa’s outlook is shaped heavily by external risk. The group’s baseline forecast for South Africa — drawn up before recent military action in the Middle East — projects GDP growth of 1.9% for 2026, with inflation averaging in the low 3% range and a further 50 basis points in interest rate reductions during the year. However, the group cautioned that a prolonged escalation in the Middle East could push energy prices higher, weigh on global risk appetite, weaken the rand, and place upward pressure on inflation — complicating the path for monetary easing. As reported by Reuters, the group considers it highly unlikely that global conditions would trigger an interest rate hiking cycle in South Africa, though the bar for the Reserve Bank’s monetary policy committee to reverse course on cuts is viewed as considerable.
Across the continent, the group expects Botswana’s economy to return to modest positive growth after a difficult period, while Mozambique and Zambia’s recoveries are forecast to gather pace. Ghana’s expansion, which has been running hot, is expected to cool slightly. Policy rates across the Africa Regions are projected to be flat to lower in 2026, with the exception of Botswana. Non-interest revenue growth continues to reinforce the strength of the group’s diversified income streams, a dynamic that is expected to persist, with Absa guiding for non-interest income growth to outpace net interest income in 2026.
For the full year 2026, Absa is guiding for mid-single-digit revenue growth, mid- to high-single-digit growth in both customer loans and deposits, and a credit loss ratio that improves slightly into the bottom half of its 75–100 basis points through-the-cycle target range. The group expects a return on equity of approximately 16%, with rand appreciation identified as a potential headwind to group revenue and earnings. Over the medium term, Absa has reiterated its ROE target range of 16%–19% for the period 2027 to 2030, with a stated ambition to approach a cost-to-income ratio of 50% by 2028.
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