Johannesburg – Absa Group [JSE:ASA] and Absa Bank said in a trading update on Thursday that it anticipates Absa Group's headline earnings per share (HEPS) for the six months ended June 30 2010 (1H10) to be between 3% and 5% lower than 1H09.
   
Earnings per share (EPS) for 1H10 are expected to be between 10% and 12% higher than 1H09.
   
"The decline in diluted HEPS will be slightly lower than HEPS as the impact of the shares issued to Batho Bonke Capital (Proprietary) Limited in 2009 was already partially discounted in the June 2009 diluted number of shares.
   
"The difference between the change in EPS and HEPS mainly relates to the impairments against the value of equity positions acquired resulting from single stock future defaults incurred in 1H09," Absa said.
   
Absa Bank's HEPS for 1H10 are expected to be between 1% and 3% higher than 1H09. EPS for 1H10 are expected to be between 28% and 30% higher than 1H09, due to the greater impact on Absa Bank's smaller earnings base of the single stock future impairment recorded in 1H09, it said.
   
Absa said that the operating environment for the six months ended June 30,2010 was subdued and revenue levels had not grown during the period. "Consumers' appetite for credit remained low and volumes in all businesses have remained under pressure.

In addition, the results for the first six months of 2009 (1H09) included one-off gains on the sale of various investments and weak equity markets at the end of June 2010 impacted negatively on the Group's listed investments," it said.
   
The level of retail impairments declined during the period under review in line with expectations, it said.
   
Absa said that at the release of its financial results for the year ended December 31 2009, the Absa Group board indicated that the economic outlook would remain challenging both globally and locally.
   
"A return to growth in the domestic economy supported by a modest upturn in consumption and continued investment in infrastructure spending by government was expected. The market was cautioned against a number of operating environment risks, namely the weak employment market, high levels of existing debt and concern about the sustainability of the global recovery," it said.

- I-Net Bridge