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Johannesburg - Shares of Absa Group [JSE:ASA] dropped nearly
7% to a five-month low after South Africa’s largest retail bank warned
half-year earnings would fall by as much as 10%.
Absa shares are trading 6.9% lower at R145.60, compared with
a 0.04% rise by the Top 40 - (Tradeable) [JSE:J200] index at 07:09 GMT.
Absa, the South African bank majority-owned by Barclays,
said on Tuesday it expects to report a drop of up to 10% in first-half
earnings, hit by an increase in bad loans and subdued revenue growth.
Absa said in a statement that its headline earnings for the
six months to end-June would be as much as 10% below the R4.6bn it reported in
the same period a year earlier.
The bank said that credit impairments, or bad loan costs,
related to mortgages had increased as property prices and customers remained
under pressure.
It also said it was struggling to improve revenue. “While
our new lending volume is improving, this is only expected to become evident
during the second half of 2012,” the bank said.
Absa is due to report its results on July 27.
