Absa has reiterated its promise to improve the bank's financial performance by lifting its return on investment (ROE) to 16% in 2026 after lagging behind its competitors.
Speaking during the results presentation for the half-year ended June on Monday, senior executive Charles Russon said Absa's ROE ambition will not stop at 16% as the group improves its financial performance in line with its message to investors in December that it was in a recovery period.
“Having an ROE below cost of equity is not where we need to be and we ultimately need to rebuild the confidence in the organisation and our ability to deliver short and medium term. Once we have done that and we have our ROE well above 15% we will, in line with our approach and strategy, set a new ambition as to where we ultimately want to be. Clearly it does not stop at 16%", said Russon, who served as interim CEO until the appointment of Kenny Fihla, previously Standard Bank SA CEO.
Fihla said he was preparing to appoint permanent CEOs for the group's Personal and Private Banking, Corporate and Investment Banking and Corporate and Investment Banking divisions.
The appointments were imminent given that Absa has finalised its operating model.
“It is all systems go with regard to making permanent appointments across all three businesses. Those processes have started and we will make announcements in due course. It is my intention that the process should be finalised in the next two months or so, and in the event that we appoint someone externally, to any of the businesses, that will be dependent on the notice period they need to serve, but the decision will be made within the next two months,” he said.
Absa was rocked by a leadership scandal, which led to the departure of former CEO Arrie Rautenbach last year.
Fihla said while there was a range of initiatives to improve the group's performance, the leadership changes did not bode well for the bank.
“If we are honest with ourselves, those initiatives are intended to stabilise and give us a foundation on which we can build. In addition to those, we need a strategy reset to sharpen the focus of the organisation. I think that is then Absa's biggest challenge in the past couple of years. When you have repeated leadership changes the organisation will be unable to have a singular goal and able to execute towards that goal consistently over a period of time. The unintended consequence of having too many leadership changes is that each product house, each business unit and each geography is effectively on autopilot.”
The bank's highlights during the half year include a 16% increase in headline earnings per share to 1,422.9 cents, a 5% growth in revenue to R56.5bn and an improved ROE to 14.8% in the first half of 2025 from 14% a year earlier, though it was still lower than its peers.
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