Absa Group expects headline earnings to rise by a mid‑ to high‑single‑digit rate in the first half of 2026, even as net interest income (NII) grows only modestly, thanks to faster growth in non-interest revenue and an improved credit loss ratio. Credit impairments are set to be broadly flat year on year, indicating that the share of loans going bad is easing from last year’s levels.
The mix matters: softer interest-driven income points to pressure on lending margins in a lower‑rate environment, while stronger fees, commissions and trading lines are doing more of the lifting. A better credit loss ratio suggests customer stress is stabilising, which can support profitability without banks having to tighten lending further. Together, these trends imply earnings resilience built more on diversified revenue than on interest margins.
For South African investors, the update flags a steadier credit backdrop at one of the country’s largest banks and hints that sector earnings may hold up despite margin headwinds. Watch the interim results for detail on the sustainability of non-interest income, the direction of lending margins as rates cycle lower, operating cost growth, and any commentary on capital and dividend intentions for the rest of 2026.
For more detail, read the full announcement.