Absa Group Ltd. (ASA.JO), South Africa's largest retail lender, Monday said its first-half net profit fell 39% after the value of investment portfolios was dented by rising impairments and margin contraction.

"Absa, however, remains profitable and well-capitalized," Chief Executive Maria Ramos said.

Net profit for the period fell to 3.27 billion rand ($421.6 million) from ZAR5.34 billion a year earlier, the Johannesburg-based company said. Net interest income was 2% higher at ZAR10.77 billion, and non-interest income up 5.4% at ZAR10.21 billion.

Absa, majority owned by the U.K.'s Barclays PLC (BCS), said credit impairments to average advances increased to 1.86% from 0.93% in June 2008. The impairment charge to income increased by 122% to ZAR4.83 billion. The financial services company also took an almost ZAR1.1 billion impairment charge against stakes in four Johannesburg-listed companies it took stakes in last December after a client defaulted on stock futures deals.

Absa shares ended Friday at ZAR117.50, up less than 9% since the start of the year compared with a roughly 12% gain in Johannesburg's blue chip Top 40 index.

Company Web site: www.absa.co.za

-By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848; robb.stewart@dowjones.com