Absa Group reported a resilient set of results for 2023, delivered in an operating environment that was weaker than expected, particularly in South Africa where continued electricity supply disruptions, supply chain logistic issues and sticky inflation along with a higher interest rate environment weighed on growth prospects for customers and clients alike. However, Africa regions reported very strong growth, well ahead of South Africa.
Within this context, normalised headline earnings increased 1% as pre-provision growth of 6% reflected continued momentum in the business, offset by higher credit impairments, particularly in South Africa, Absa’s largest market by revenue. Strong revenue growth of 8% to R104.5 billion meant that the Group crossed the R100 billion revenue threshold for the first time, with stronger growth being generated within Africa Regions.
Despite a challenging climate, Absa remains resilient and the underlying franchise is strong and growing. We are seeing the benefits of the strategic choices we made in 2018, as is evident from our diversified business, growing customer franchise and engaged workforce.
Arrie Rautenbach, Chief Executive Officer, Absa Group
The Group’s customer base expanded 4% to 12.2 million in 2023 from 11.7 million a year earlier and customer experience scoreswhich measure the quality of service experienced by customers, increased across all business units.
Absa is driving organisational health gains through a journey that commenced with a strengthened leadership team and a reorganised business model in 2022. In 2023, the Group rallied behind a co-created corporate purpose and a refreshed set of values as it drives a culture shift in order to promote sustainable outcomes.
Employee net promoter score, which indicates the likelihood of employees recommending Absa as a bank of choice, increased materially, signaling enhanced organisational health.
The Group’s broad-based black economic empowerment transaction, which placed 7% of Group shareholding (equivalent to R11.2 billion at the time) in the hands of employees and communities, is anticipated to further support this culture shift.
In addition to its investment in the B-BBEE transaction, Absa invested in other areas for future growth, recruiting additional frontline staff, acquiring new technology and refreshing its brand. These were among costs that contributed to a 10% increase in operating expenses. Absa expanded its employee base and at the same time invested more in new digital capabilities to enhance customer experience both in branches and online. The number of digitally active customers increased from 3.4 million to 3.8 million.
Absa also invested in updating its brand identity and positioning during 2023, culminating in the launch in February 2024 of its repositioned brand, signaling a shift to being a more deliberately customer-centric business with the new brand promise of ‘Your Story Matters’. The new brand promise commits Absa to demonstrating empathy and offering seamless customer experience.
We have made significant strides in the last five years in strengthening our business. We have strengthened our balance sheet, enhanced diversification and we continued to grow, while focusing on efficiency.
Chris Snyman, Interim Financial Director, Absa Group
The Group achieved 7% compound growth in revenues since 2018, while cost-to-income ratio improved to 52% from 58% in 2018.
Absa’s results showed the benefit of diversification and Africa regions grew to 29% of total Group pre-provision profit, compared with 20% in 2018. The Group’s Corporate and Investment Banking arm now contributes a third of Group pre-provision profit, compared with 28% in 2018.
Absa acquired HSBC Mauritius’ Wealth, and Personal Banking and Business Banking businesses, pending regulatory approvals, during the year. Further afield, the Group has established an office in Beijing as it looks to be a facilitator of trade flows into Africa through a strategic presence in the North, West and East of the globe.
This expansion is testament to our ambition to grow in strategic markets, as we look to further diversify our operations.
Arrie Rautenbach, Chief Executive Officer, Absa Group
