Ghana’s economy has demonstrated exceptional resilience in the face of the ongoing pandemic and this is largely responsible for the stellar performance of Absa Ghana across the Group as it emerged as the largest contributor of earnings for countries outside South Africa for 2020.
This was disclosed by Chief Executive Officer for the Absa Group, Daniel Mminele during an earnings call for the year’s financial results, where he suggested that the performance was an outlier when compared to the headwinds recorded in other countries and tipped the local operations to continue along the same trajectory in the current financial year.
Without pre-empting the release of local results, he said: “Ghana has been only one of two countries in our portfolio which managed to turn a positive growth in 2020. The overall environment has been rather strong, compared to headwinds elsewhere and Ghana has been the largest contributor of earnings as far as our countries outside SA is concerned.
“We are projecting an average growth of other countries come in at 4.5% and we expect that a significant contribution to that growth performance would be coming from Ghana.”
Expressing similar sentiments, Financial Director, Jason Quinn described the country’s operations as the ‘star of the group’ as it “proved to be very resilient and its numbers are strong.”
Group Performance
Performance was a mixed bag, particularly due to the economic downturn in South Africa, where the number of confirmed COVID-19 infections stands at more than 2.5% of its population. This saw normalised headline earnings decline by some 51% for the year ended December 2020, to R8 billion (US$ 537.5million) with impairments rising by 163% to R20.6 billion (US$1.3 billion).
“Earnings and returns improved materially in the second half of the year as lockdown restrictions eased, particularly in South Africa, which accounts for more than 80% of the group’s earnings. Group headline earnings fell 82% in the first half of 2020 compared with the first half of 2019. Headline earnings in the second half of last year were 19% lower than in the second half of 2019,” the bank reports.
Outlook
Following a review of its strategy on account of the pandemic, the Absa Group will seek to place more emphasis on digital distribution, investing in new technology architecture, and on building a diverse market footprint.
Touching on its approach to Ghana, Mr. Mminele said whilst COVID-19 has necessitated a focus on capital preservation, managing liquidity and credit risk, the longer term thinking is consistent with its aspiration to be the leading bank on the continent.
“We will combine the level of uncertainty with pragmatic approach which strikes a balance between ensuring financial operational resilience, preserving capital but also, in a targeted way, pursuing growth. And if opportunities continue to present themselves in the manner that we saw pre-COVID, and the resilience that we have seen in Ghana, I see no reason why we would not want to participate in those opportunities,” he said.
