Avior Capital Markets - Absa Group Limited (101N) ABSA | Set to deliver growth despite SA constraints

Report

Avior Capital Markets

Harry Botha

ABSA | Set to deliver growth despite SA constraints

ABSA's (ABG) H1 '19 results showed positive cost containment trends and an operational improvement in RBB SA (65% of Group earnings). However, the results highlighted a disappointing revenue growth performance considering the Group's renewed focus on advances growth (Group +12% y/y, CIB SA +23% y/y). In our view, ABG's ROE target of 18% to 20% by FY â€˜21f will be challenging to achieve in a weak SA economic environment. However, we expect management's actions to improve the Group's cost efficiency and competitiveness to result in 8% CAGR in earnings to FY '21f. Please find our analysis and updated forecasts in this note.

21/08/2019 15 EN

Underlying

Absa Group Limited

Barclays Africa Group is engaged in provision of personal and business banking, credit cards, corporate and investment banking, wealth and investment management as well as bancassurance. Co. operates in three business segments; Retail and Business Banking (RBB) delivers targeted solutions to individuals and small businesses; Corporate, Investment Bank and Wealth operates a global model, leveraging their offerings, tapping into global expertise to provide comprehensive solutions across borders; and Financial Services cluster enhances the RBB customer and client value proposition with financial solutions.

See profile

ZAE000255915 Johannesburg Stock Exchange South Africa

Provider

Avior Capital Markets

Avior is a globally recognised capital markets research and trading firm, with the broadest research coverage within the region, with 100+ SA and 20+ SSA companies under coverage. Avior services clients from offices in London, Cape Town and Johannesburg.

Our research quality is consistently recognised in local and global surveys, with 18 analysts currently rated in their respective sectors (FM 2017). Value add through in-depth, innovative, high quality and consistent research with comprehensive underlying fundamental modelling supported by regular analyst and roadshow interactions.

Avior has proven that by working closely with our clients we can mutually develop dominant positions in certain sectors, going from strength to strength. Avior has a dedicated ESG team, having been ranked #1 in Corporate Governance research since 2008.

See profile

Analysts

Harry Botha

Other Reports on these Companies

TheScreener

ABSA GROUP is downgraded to Slightly Positive due to increased risk

The independent financial analyst theScreener just slightly lowered the general evaluation of ABSA GROUP (ZA), active in the Money Center Banks industry. As regards its fundamental valuation, the title confirms its rating of 3 out of 4 stars. Its market behaviour, however, has slightly deteriorated and can be now qualified as moderately risky. This risk increase, even if marginal, forces theScreener to slightly downgrade the title, which now displays an overall rating of Slightly Positive. As of the analysis date January 18, 2022, the closing price was ZAR 161.39 and its potential was estimate...

Free Trial

January 19, 2022 January 19, 2022 1 EN

Avior Capital Markets

SA Banks | Resilient earnings growth

We expect the big five SA banks (ABG, CPI, FSR, NED and SBK) to continue reporting earnings growth ahead of SA nominal GDP (forecast 6%) over the next three years. We expect cost containment, retail lending growth, the banks' operations outside SA and SA interest rate cuts (keeping credit impairment charges low) to support earnings growth. We also believe that the diversification of SA banks' corporate lending should result in benign credit write-offs compared to previous cycles. In our view, ABSA (ABG), Nedbank (NED) and Standard Bank (SBK) remain undervalued using sustainable ROEs. We ex...

July 9, 2019 July 9, 2019 29 EN

Tiger Brands | ESG | Pressed to execute

TBS receives a corporate governance score of 3.37 out of 5 (FY '18: 3.42) and is rated as â€˜good'. TBS receives an ESG risk score of 2.6 (FY '18: 2.6) which we consider moderate. As in FY '18, there were various changes to the Board which raises corporate governance concerns surrounding succession planning and the execution of strategies. Post year-end, L Mac Dougall retired as CEO of the Group. N Doyle has become the new CEO of the Group as of 1 Feb '20. We note the corporate governance concerns around the appointment of N Doyle given that he left the Group at an important juncture in FY...

February 7, 2020 February 7, 2020 15 EN

Ayan Ghosh

Ayan Ghosh

SA Investment Strategy | Review of January 2020 for SA investors: Coronavirus weighs on the ZAR

From an SA asset-allocation perspective, SA Bonds (ALBI +1.2%) outperformed cash (STEFI +0.6%) and equities (Capped SWIX -2.6%) in Jan â€˜20. The ZAR was the worst performing EM currency in Jan â€˜20, depreciating by 6.8% against the USD, as EM risk appetite declined, with the Coronavirus spreading further than the Sars virus, which began in 2002, likely to hit global growth. Our discussions with various corporates in China suggest that the Coronavirus will peak over the coming weeks and could take until Mar '20 to resolve. In USDs, MSCI SA (-8.8%) underperformed MSCI EM (-4.7%) in 2020, as ...

February 5, 2020 February 5, 2020 9 EN

Harry Botha

Harry Botha

SA Banks | Low credit risk in commercial property | Time to buy SA banks

Challenging SA economic conditions bring SA REITs credit health and banks' lending to the sector into the spotlight. Our analysis in this report provides greater detail on SA banks' exposure to commercial property and listed REITs. Our stress tests highlight that SA banks' lending to listed REITs (exposed to SA or offshore operations) has been conservative to date. REITs' equity capital and diversified portfolios support the property companies' credit health. While SA banks' near-term earnings growth prospects are geared to SA economic conditions, we highlight that valuations are undemandin...

January 28, 2020 January 28, 2020 36 EN

Sign-up for free to access full reports immediately

Email Address*

Choose Password* ( 6 or more characters )

Due to regulatory restrictions regarding the distribution of financial research, this report is restricted to a specific region or investor type. Get access to exclusive reports by answering the questions below.

Select your country*

Get financial insights straight to your inbox

By clicking "register" you accept the Terms and Conditions & Privacy Policy

Already on ResearchPool?

Almost there...

Are you a professional investor?

Select your country

REGISTER

Create a free ResearchPool account to access full reports, get a personalised dashboard and follow providers or companies

In order to access this report please create an account.

LOGIN

ABSA | Set to deliver growth despite SA constraints

ABSA GROUP is downgraded to Slightly Positive due to increased risk

SA Banks | Resilient earnings growth

Tiger Brands | ESG | Pressed to execute

SA Investment Strategy | Review of January 2020 for SA investors: Coronavirus weighs on the ZAR

SA Banks | Low credit risk in commercial property | Time to buy SA banks

Create a free ResearchPool account to access full reports, get a personalised dashboard and follow providers or companies

Sign-up for free to access full reports immediately

ResearchPool Subscriptions

Get the most out of your insights

Why subscribe?

How to subscribe

ResearchPool Subscriptions

This report is only available to subscribers

Why subscribe?

How to subscribe