Absa (JSE: ABG) is an African group among the world’s largest diversified financial services groups and has its presence in fourteen countries. Absa aims to provide all people with advanced and transformative techniques of financial services for a better life and sustainable growth of society. They find unique ideas to deliver innovative propositions and technologies to make the world a better place to live for that purpose.
About Absa
Absa (JSE: ABG) is subordinated by Barclays Bank PLC, which contains 55.4% shares in the Absa group. Barclays is an international financial service provider engaged in credit cards, retailing and commercial banking, investment banking and management, and wealth management globally.
Absa, Amalgamated Banks of South Africa Limited emerged in 1991 through the amalgamation of Volkskas and Allied groups, UBS Holdings, and Sage Group’s interests.
In 1992, Absa extended by acquiring all the shares of Bankorp Group (including Trustbank, Blankfein, and Senbank). In 1998, Amalgamated Banks of South Africa Limited became a single brand by uniting United, Trustbank, Allied, and Volkskas and acquired a new corporate identity and changed into Absa Group Limited. Finally, Absa becomes one of the first South Arica’s major four banks by giving its 10% ownership to Batho Bonke and direct shares to the BEE consortium.
Absa IPO
On Jun 30 2009, Absa Group had 11.3 million customers, 718.2 million stakes in issue, 754.3 billion assets, a market capitalization of R79 billion, and 9211 teller machines.
Absa group also holds initial public offering plans for the National Bank of Commerce (NBC) of Tanzania, one of the largest banks of Tanzania among the 34 registered banks in which Absa contains 55.5% of its shares. By holding IPO, the government stake of Tanzania would be diluted and subjected to regulatory approvals.
In the second half of the year, 2008, South African group Absa also plans to extend its investment banking operations in Nigeria and provide financial services in other markets of Egypt and Angola with the partnership of one of the French banking groups and Society General SA. Absa Group Limited is expected to launch its offices in New York and London in the third half.
Moreover, in 2008 Absa bought 50% shares of Woolworth’s financial services and 50, 3% shares of Meg Bank Limited. In 2009 Absa relaunched its South African government Inflation Linked Bond Index with Barclays Capital. Also, the International Finance Corporation of World Bank provides funds to Absa for the infrastructure projects.
Absa investments
Absa Group Limited is a global financial service company of South African groups. This organization has segmented into three business sectors that are:
- Corporate and Investment banking
- Business and retail banking
- Wealth, insurance, and investment management
This corporation mainly operates most of its business in South Africa and has a presence and businesses in other African countries. Business banking and retail banking make out the maximum return of the business because it deals with different types of credit cards and loans. Abas Group limited also generate profit from commissions, premiums, and fees
Absa has invested a large amount and continues to invest in the future to make a profit and grow its business and assets. Absa is emerging in South Africa, and its deep pockets allow it to grow more to maintain its position in the market.
Recently, Absa Group Limited made three important investments to grow and make a profit in the future. Absa made the investment in Teraco Data Environments, A2X markets, and in Fintec Labs
Teraco Data Environments
Absa made its most recent investment in Teraco Data Environments on Feb 2, 2021. It is a network and hosting corporation that provides vendor-neutral data centre mainly in South
Absa made an investment of 2.5 billion ZAR in Teraco data environments
a2x markets
Absa group limited made an investment in a2x markets on May 13, 2020. This is an organization that provides a marketplace of South African trading venues at the most reduced cost
FINTEC Labs
Absa made an investment of 30 million ZAR in fintec labs on Dec 18, 2018. Fintec labs are the South African financial technology suppliers to the South African banking and insurance institutions
Absa Business Strategies
Absa Group’s strategy is to improve Absa’s competencies, reduce risks and deliver market leadership. Absa aims to increase the number of customers, grow its assets and capital, and improve operational excellence. Absa’s strategies also include changing the earning mix for higher profits and position
Absa’s competencies and market leadership anchoring
The market leadership and competencies of Absa Group will improve by enhancing customer loyalty and by providing quality services, and retaining long-dated assets in the market
Grow customers and assets
Absa Group grows its customers and gains profits for further increase in assets by expanding Absa’s Group distributions and by adding value propositions products in the market. It also anchors the Absa brand to sell its products and to grow
Improving Operational functions
The operational intelligence of Absa will improve by enhancing its operational efficiencies and by adopting the Lean Approach to increase the automation of the process and streamlining its operational excellence
Diversity in earning mix
Absa Group limited have to change the earning mix of higher and lower retail assets, South and non-South African Groups, bank and non-bank and of retails and non-retails earnings for improving profits predictability and for acceptable earning returns
Reducing risk
Absa Group have to invest in advanced technology and resources for ensuring the security of information, and their main focus should be to protect the collection management for retaining the optimal balance between reward and risk
Stock analysis of Absa
Absa is currently trading at 146.31 ZAC. The stock has made the highest high at 146.60 on May 28, 2021
In the short term, Absa Group shows a downward momentum, and in the long term, the trend is growing downward. In the 2021 Absa groups earnings decline and 7%, Pre-provision profit growth occurs, indicating positive performance. The revenue rate increases by 2%, and the headline earnings decline 51%.
The Absa group limited is in the middle of the economic downturn that was triggered by COVID – 19 pandemic
Bottom Line
There remains the uncertainty of the recovery of global economic situations, but Absa expected a more sustainable macro-economic backup in 2021, which should enhance the financial conditions of Absa Group. Absa predicted 3.1% of growth in South Africa during 2021 and anticipates that GDP should recuperate to 2019 levels by 2024. Absa expects the economy in ARO presence nations to bounce back in 2021, with GDP-weighted 4.5% of growth
