Major South African bank cutting costs

Absa is seeking to save R5 billion over the next three years by cutting costs at South Africa’s third-largest lender. 

Absa’s interim chief executive officer, Charles Russon, said Tuesday that the bank already saved R1.4 billion last year. The company reported a profit that exceeded analysts’ forecasts.

Absa is preparing to tap a revival in its home market of South Africa, where the economy is projected to expand as much as 2% in the next two years, according to the bank’s projection. 

The formation of a coalition government and the steady supply of electricity after years of power blackouts is helping revive consumer sentiment in Africa’s most industrialised nation. 

“We’re all looking at it and thinking, you know, the macros are starting to look a little bit better,” Russon said in an interview. The proposed savings will help the bank “ultimately reinvest where we see opportunities,” he said. 

The bank has began to revamp some of its units that will see it reintroduce a focused retail-lending business and combine it with private wealth operations as it looks regain market share in the segment at home.

The new retail business is expected to be in place by June.  

“South Africa is still 70% of our bottom line, so it’s still very significant to us, and so we have to ensure that this business delivers and delivers in line with expectations,” Russon said.

The bank also sees opportunities to expand trade with partners outside the US and develop new markets as US President Donald Trump targets South Africa, claiming that the nation is confiscating farmers’ land.

The country hasn’t seized any private land since the end of White-minority rule in 1994.

“There is a significant level of uncertainty, but I still believe there’s going to be opportunities, and we’ve got to be there to take them,” Russon said.