Absa shares jump on CEO reshuffle

Absa, South Africa’s third-biggest bank by assets, surged after it named Charles Russon as interim CEO to replace incumbent Arrie Rautenbach, who requested early retirement. 

The shares jumped as much as 5.4% in Johannesburg as of 12:30 p.m., the biggest advance in two months.

Russon, the head of the lender’s commercial and investment banking unit, will take over as interim CEO on October 15, while Rautenbach will retire on April 15, 2025, according to a regulatory filing.

Credit losses that were lower than forecasts also lured investors. 

Absa’s shares have dropped 18% since Rautenbach was named head of the lender in March 2022, and on Monday the firm reported its biggest profit decline in about four years.

Rautenbach’s appointment also riled South Africa’s state-run fund manager for choosing a White man as leader after Daniel Mminele, the bank’s first Black CEO, quit unexpectedly.

“The positive market reaction obviously suggests that the market wasn’t really backing Arrie and his strategy,” said Adrienne Damant, an analyst at Avior Capital Markets.

Still, the frequent management changes at the lender have made it difficult to implement strategy, which contributed to Absa’s under-performance relative to peers, she said.

There have been a string of CEOs, in an interim or permanent basis, at the bank since Maria Ramos retired in 2019.

Ramos was replaced by René van Wyk, who was followed by Mminele, whose exit saw Jason Quinn step into the position as interim CEO before Rautenbach’s appointment.

Russon’s position at CIB will be taken over by Yasmin Masithela on an interim basis, effective October 15.

Profit drops

Absa on Monday also reported that net profit in the six months to June fell 8.8% to R9.85 billion. Revenue rose 3.4% to R53.71 billion. 

“The weaker currency in the regions against the rand does mean that the translation into the rand is less,” Deon Raju, the bank’s financial director, said.

“The regional operations continue to face fiscal challenges and debt sustainability issues, so the backdrop there does remain challenging.”

Still, Absa took credit impairment charges of R8.3 billion, beating RMB Morgan Stanley’s forecasts, analyst James Starke wrote in a note to clients. 

The lender said it was optimistic that performance would improve in the second half, buoyed by optimism in South Africa, as macroeconomic conditions in the rest of the continent improved.

The bank proposed a dividend of 6.85 rand per share for the period.