Absa earnings take a dip

Johannesburg - Banking group Absa advised on Friday that its headline earnings per share (HEPS) for the year ending 31 December 2009 are expected to be between 25% and 35% lower than that reported for the previous financial year.

Earnings per share (EPS) for the same period are expected to be between 35% and 45% lower than for the year ended 31 December 2008.

Absa Bank's HEPS for the 12-month period are expected to be between 25% and 35% lower than that reported for the previous financial year. EPS for the same period are expected to be between 35% and 45% lower than for the year ended 31 December 2008.

Absa said the difference between the decline in HEPS and EPS is largely attributable to the impairment of investments acquired through single stock futures trading defaults, which is excluded from headline earnings in 2009.

"The financial performance of the Group has been particularly impacted by the effect of adverse market conditions on its investment banking cluster. The value of investments in the private equity portfolio has declined over the period, resulting in a negative valuation adjustment in the income statement.

"Additionally, difficulties reported by Blue Financial Services Limited have necessitated that the Group consider a further impairment of this investment and related credit exposures at year-end," the group stated.

While the business environment remains under pressure and asset growth is constrained, the remainder of the business clusters have performed in line with the guidance communicated at the Group's interim results, the group added.

"There has been an improvement in credit portfolios and as a result, no further deterioration in the Group's impairment ratio, relative to that reported at the half-year, is expected for the full year.

"The Group and Bank remain capitalised well above the minimum regulatory requirements and above board-approved targets."

- I-Net Bridge