Absa Group said a stronger rand will negatively impact its earnings growth from its Africa Regions in the six months to March 31, 2026.
Absa Group’s share price fell more than 5% early Tuesday morning after it forecast headline earnings growth of mid- to high single digits for the six months to March 31, with growth pared by a weaker Africa Regions segment.
The share price fell 5,72% in early trading to R230,14 on the JSE after the release of the trading statement, although the price was still 29,5% higher than the same time last year.
The earnings forecast would leave the group with a similar RoE (return on equity) to the 14,8% in the first half of last year. A more than 5% decline in the share price represents a relatively large decline for one of South Africa’s biggest banks.
“The stronger rand will reduce group revenue, costs, and headline earnings slightly during the first half. We expect strong headline earnings growth in South Africa, given solid pre-provision profit growth and a lower credit loss ratio. Conversely, we expect Africa Regions headline earnings to decline due to lower net interest income and higher credit impairments,” the bank's directors said in a trading update.
