Absa 1st Half Earnings Fall 39%, More Than It Earlier Forecast
July 31 2009 - 1:42PM
Dow Jones News
Absa Group Ltd. (ASA.JO) Friday said its earnings fell 39% in
the first half of the year, more than it had forecast last month
because of an impairment of assets bought from clients that
defaulted on futures contracts.
The Johannesburg-based lender, majority owned by the U.K.'s
Barclays PLC (BCS), said its earnings per share fell 39% compared
with guidance given in June for a decline of 25%-35%. EPS at its
core Absa Bank Ltd. (ABSP.JO) dropped by 50%, more than the 35%-45%
forecast previously.
South African banks are struggling with rising bad debts as
clients, primarily in the retail segment, default on home and car
loans. The economy slipped into its first recession in 17 years in
the first quarter and is expected to remain subdued for the
remainder of the year as demand remains weak in key export
markets.
Absa additional bought stakes in four listed companies after its
clients defaulted on single stock futures transactions. It Friday
said it would recognize an impairment of almost 1.1 billion rand
($141 million) before tax, reducing the carrying value of the
investments to ZAR445 million from ZAR1.54 billion.
Absa will be the first of South Africa's four largest banks to
report full earnings when it posts results Monday.
Standard Bank Group Ltd. (SBK.JO), Africa's largest lender by
assets, Thursday said its first-half earnings per share were likely
to be down by 30%-35% on an international accounting basis.
Headline normalized EPS, which it said reflects its local black
ownership scheme and other items, will be down 20%-25%.
It is scheduled to report its six-month earnings Aug. 13.
South Africa's economy contracted an annualized 6.4% in the
first three months of the year - the most since 1984 - after
shrinking 1.8% in the final quarter of 2008.
-By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848;
robb.stewart@dowjones.com