ABSA remains committed to growth…despite prioritising capital and liquidity

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Daniel Mminele, Absa Group Chief Executive

Absa Group Limited has indicated that it is still committed to a growth pathway despite prioritising capital and liquidity security in the short-term, as both approaches are not mutually exclusive, its Chief Executive Officer Daniel Mminele has said.

Speaking at a virtual meeting to discuss the group’s interim financial results for the first half of 2020, he revealed that his outfit has had to readjust its growth forecast due to impairments brought about by the ongoing pandemic and related events – with profit plunging over 80% as a result.

“Our initial response to the crisis as it became more settled was that we began to establish concrete steps to recalibrate the business for the near-term and the future. During the second quarter, we began to pivot from a growth focus to prioritising protecting our balance sheet by preserving capital and ensuring we have sufficient liquidity buffers.

“There is a growing consensus that when we emerge from this crisis, economic life, the business environment and social interactions as well as customer needs and preferences will have undergone a fundamental structural change. We need to ensure that we are prepared for this by having a relevant and competent business model,” Mr. Mminele stated.

He however proceeded to indicate that while the group is taking a cautious approach, especially as the full extent of impacts from covid-19 cannot be ascertained at the moment, there will still be prudent expansionary endeavours as local economies begin opening up.

He added that the group is particularly well-placed, as evidenced by its resilience, to spur the needed recovery. This, he stated, is the primary advantage that has accrued to the group as a result of its separation from Barclays – which led to improved systems and capabilities.

Touching on the various regions where the group operates, he explained that the robust performance in some countries serves as a buffer for dwindling fortunes in other regions. Commenting on the Ghanaian context, he reaffirmed: “We are temporarily focusing on capital and liquidity; but that does not mean we have entirely abandoned the growth ambition we had before.

“That would pertain to the group, including Ghana. Projects and contributions that we’ve been making to growth of the Ghanaian economy with regard to developing new propositions for customers to understand better how their preferences, how their needs would’ve changed; and with support of the group, new innovation capabilities, new programmes will be developed and customised to needs of the Ghanaian market.

“All those processes will continue, but the key focus at the moment is to make sure that we transition from this crisis environment Covid-19 is causing to migrating into the new world. The Ghanaian economy is one that we expect to drive this,” he concluded.

The group’s operations have been hard-hit, particularly in South Africa where there have been over 611,000 confirmed cases of the virus. With over 13,000 deaths, it represents the highest mortality figure from the virus in an African country. This has resulted in intermittent localised lockdowns since the pandemic broke out. By contrast, Ghana has recorded 43,622 cases with 263 deaths.

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