- Title: SOUTH AFRICA FILE: South African banking group Absa projects muted growth in 2010
- Date: 17th February 2010
- Summary: LAGOS, NIGERIA (RECENT) (REUTERS) VARIOUS EXTERIORS OF BANKS
- Embargoed: 4th March 2010 12:00
- Location: South Africa
- Country: South Africa
- Topics: Finance
- Reuters ID: LVA1IYO0K17UNS8YC2Z113ZX5VEO
- Story Text: South African banking group Absa, forecast muted growth as the economy recovers from recession and pressure on credit-squeezed consumers begins to ease, Chief Executive Maria Ramos said on Tuesday (February 16).
"For this year, we expect growth to average out at around two and a half percent. That is good news for all of us but it is really still quite muted growth, we think real strong growth is probably only going to be seen in South Africa from 2011 onwards and I think we also need to take account of a pretty fragile global economic environment. I mean we are seeing growth across the world but as we can see with what is happening in the Eurozone now, that recovery is still quite fragile," said Ramos.
Absa, majority-owned by Britain's Barclays posted lower 2009 profit on Tuesday.
The first of South Africa's big four banks to report results said headline earnings per share for the year to end-December fell 25.5 percent to 1,099.40 cents, in line with its own forecast of a 25-35 percent drop.
Ramos also noted that the World Cup would be a big part of the South Africa's economic recovery. She indicated that this year's growth would come from revenues earned during the tournament as infrastructure contributions have already been accounted for.
"So I think the World Cup itself is a very positive contributor to South Africa's economic growth and you have to take into consideration, that the infrastructure component of the world cup's impact is not in this year's growth, that's already been accounted for in the growth that's taken place before because the building of the stadium has already happened, there is very little left to do in this year, the stadiums have already been built. So what we have coming through this year is the revenues that will come and the economic uplift that will come from tourism etcetera so people spending coming to South Africa and South Africans spending, additional spending, attending the World Cup will be on the back of a very traumatic year for consumers and for bad debts, but we seeing impairments moderating and moving down," added Ramos.
Asked about Absa's growth prospects in the rest of Africa, Ramos said that the group would only be interested in countries like Nigeria, sub-Saharan Africa's second largest economy, where Barclays is not active. Absa's parent Barclays beat expectations on Tuesday with profits of over 11 billion pounds last year. Shares in Barclays, the first UK lender to report earnings, jumped over seven percent on the bumper profit.
"We are looking at different places. I mean of course Nigeria is an interesting country, it's an important country on our continent. It's a country that we can't ignore. Everyone's looking at Nigeria," said Ramos.
"Our position is we will look at countries where Barclays is currently not present...Barclays has got a fifty-five and a half percent share holding in Absa and we can leverage off the Barclays footprint without having to own those geographies and so, you know, Barclays is not present in countries that we would find interesting," she added.
Shares in the Absa banking group gained 1.23 percent at 134.63 rand by 0731 GMT, ahead of firmer JSE Top-40 and JSE banking indices.
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