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Johannesburg - Absa Group [JSE:ASA], which is majority owned by British lender Barclays, posted a worse-than-expected 9% drop in full-year earnings on Tuesday after bad debts spiked.
Absa, the first of South Africa's top four banks to report earnings this season, said diluted headline earnings per share totalled 1,224.6 cents in the year to end-December, from 1,350 cents a year earlier.
That was worse than the 6.3% decline to 1,265 cents forecast by StarMine's SmartEstimate, which gives more weight to forecasts from top-ranked analysts.
Net-interest income, or profit made from lending, fell 1% to R24.11bn. Non-interest revenue, or income from charges such as fees and commissions, grew 6% to R22.7bn.
Credit impairments rose 63% to R8.29bn.
Absa beat expectations with a 684 cents per share dividend, unchanged from the previous year. Analysts had expected a 0.3% decline to 682 cents.
Barclays is expected to raise its stake in Absa to 62.3% from 55.5% this year, in a $2bn deal that will see the British lender hand over most of its African operations to the South African bank.
Absa's focus has been slashing costs in the near term but analysts expect the merger with Barclays will create growth opportunities on mainland Africa, where it previously did not operate.
The bank acquired the store credit card business of Edcon, an unlisted domestic retailer last year, hoping to boost its single-digit loan growth with high margin unsecured lending.
Absa shares are up 0.5% this year, lagging behind a 4% rise by the Top 40 - (Tradeable) [JSE:J200] index.
