ABSA Group share price trades lower on mixed earnings
ABSA results showed a slight increase in headline earnings per share and a decrease in basic earnings per share
The key takeaways from ABSA Group Limited's 2023 financial results:
- Steady Growth: ABSA showcased a steady growth in total income, with an 8.1% increase on an IFRS basis and an 8.0% increase on a normalised basis, indicating resilience and adaptability.
- Earnings Complexity: The bank experienced a mixed performance in earnings, with a slight increase in headline earnings per share juxtaposed against a decrease in basic earnings per share, reflecting the complexity of its operating environment post-separation from Barclays PLC.
- Asset and Equity Performance: There was a notable increase in net asset value per share, though return on equity experienced a slight dip, outlining a scenario of asset growth concomitant with areas for efficiency improvement.
- Strategic Dividend Adjustment: The dividend saw a decrease, which may be viewed in the context of the bank's broader strategic adjustments and focus on solidifying its post-separation standing.
- Healthy Loan and Deposit Growth: ABSA reported healthy growth rates in both loans and deposits, suggesting a robust business operation with increasing customer trust and market share.
- Sound Financial Ratios: The bank maintained stable liquidity and capital ratios, indicating sound financial health despite the slight uptick in Stage 3 loan ratios, which signals the need for careful risk management.
- Transitioning Away From Normalised Results: The decision to cease presenting normalised results from 2024 signifies ABSA's move towards stability and standardisation of reporting post-Barclays separation.
Long term broker rating and price target
A consensus of 11 analyst estimates sourced from Refinitiv data (as of the 11th of March 2024) suggests a long-term buy for ABSA Group Limited. A mean of these analyst’s price targets suggests a long term (12 month) fair value of 20219c for the stock.
ABSA Group – technical analysis view
The share price of ABSA Group has sold off following the release of its FY23 results. The move lower is now testing support at 15970.
For long entry traders might look for a bullish reversal off support confirmed with a close above the 16220 level. In this scenario, 16840 becomes the initial resistance target, while a close below support at 15970 would suggest the reversal to have failed.
Should the price instead move to close below the 15970-support level, a downside breakout would be considered with 15430 the initial support target. In this scenario, a close above the 16220 level would suggest the breakout to have failed.
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