Johannesburg - Shares of Absa Group [JSE:ASA] continue to
slide, dropping 2.9% to R135.04, after hitting their lowest level since late
November. Shares in the bank have been hammered since Tuesday, when it stunned
the market with a profit warning, citing an increase in mortgage-related bad
debts.
The sell-off has lopped R15.5bn off the market value of the
Barclays controlled bank, putting it on track for its biggest weekly drop since
October 2008.
The steep sell-off may be a reaction to the fact that Absa,
like other South African banks, has been trading at a lofty valuation,
especially compared to overseas lenders, says Abri du Plessis, chief portfolio
manager at Gryphon Asset Management.
Even after this week’s woeful performance Absa is still at
1.6 times its book value, according to Reuters data, making it more expensive
than both Wells Fargo and Goldman Sachs.