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Absa Group expects lower headline earnings
Absa Group has announced that headline earnings for the six months ending 30 June 2012 are likely to be 0% to 10% below the R4.6 billion achieved in the first half of 2011, largely on the back of an increase in credit impairments in the group's mortgage legal book.
During the period under review property prices and distressed customers remained pressured resulting in higher impairments requirements on our mortgage legal book.
"Given that economic conditions continue to be difficult and distressed customers remain under pressure, we believe we are taking appropriate measures. Although we have had to write off more than expected in terms of distressed mortgages in the legal process, we continue to focus on trying to keep customers in their homes," said Maria Ramos, Group CE of Absa.
Economic conditions will remain fragile
Absa management indicated at FY11 results that domestic economic conditions were expected to be fragile in 2012, and hence asset and revenue growth was likely to remain muted. This has proven to be the case in the first five months of 2012.
Maria Ramos commented: "The economic environment remains tough and while our new lending is improving, this growth is only expected to become evident during the second half of 2012. In the current environment, sustainable productivity improvements remain a group priority and we continue to manage our costs effectively," Ramos commented.
Absa will release results for the six months ending 30 June on Friday, 27 July 2012.
