Punki says Absa’s new strengthened balance sheet gives it a strong base to navigate new challenges.
Despite having experienced a turbulent two years and the material impact of Covid-19 on its operating environment, interim FD Punki Modise says Absa has navigated this difficult period very well and produced very strong results during 2021 by staying close to its customers and making the right strategic calls.
She explains that, as a systemic bank in most markets, Absa’s performance is closely linked to the macro-economic environment, which included a material negative impact in 2020 because of Covid-19, and some recovery in 2021.
Punki adds that, from an internal perspective, Absa has placed the growth agenda firmly back on the radar since 2017/18 following its exit from Barclays. “It’s been pleasing to see us improve our competitive positioning on many products, including retail deposits, home loans and vehicle financing.
The bank’s headline earnings more than doubled in the 2021 financial year to R18.6 billion, exceeding pre-Covid-19 levels. It also reported a revenue increase of six percent to R85.9 billion.
“I am proud of the resilience of these results and that we have outperformed our peers in many areas,” Punki says. “We also have a balance sheet which has been strengthened and gives us a strong base from which to navigate the new challenges in the operating environment.”
Following the success and growth of most of Absa’s key performance indicators over the last year, including its return on equity and cost-to-income ratio, she explains that the bank’s non-interest revenue contribution is an area of strategic focus. “We see scope for improvement [in the non-interest revenue contribution], which will benefit from being the primary partner of our clients.”
Additionally, the bank has identified its ESG agenda as a significant opportunity to assist with the energy transition. “We are well-placed and have developed a track record and strong credentials in the renewable energy space.”
