Absa Bank Ltd.

We do not assign outlooks to South Africa national scale ratings. However, our national scale ratings on Absa Bank Ltd. would likely move in line with any rating action on South Africa (BB-/Stable/B). We use our Banking Industry Country Risk Assessment (BICRA) economic risk and industry risk scores to determine a bank's anchor, the starting point in assigning an issuer credit rating. The anchor for banks operating only in South Africa is 'bb+'. The acute energy crisis in South Africa is undermining production capacity and long-term growth prospects. We expect GDP to be marginally positive in 2023 at 0.7%. Decayed infrastructure, entrenched corruption, and organized crime in public enterprises have undermined South Africa's exports capacity in 2022 in a context

...Absa Group Ltd.'s diversified business model supports its earnings. As one of the top four banking groups in South Africa, Absa Group Ltd.'s (ABG/group) business profile benefits from its strong retail and business banking (RBB) division, as well as its wider African and growing international presence. The group's business diversification helps it to maintain revenue stability through the cycle, recording an average operating revenue growth rate of 6% per year over the past five years, slightly above the top-tier average of 5%. We believe the group's revenue and earnings mix will remain stable and skewed toward the RBB division as it continues to drive growth. Exposures to the rest of Africa are balanced between commodity-driven (oil in particular) and non-commodity-driven economies, which will partly offset the risks stemming from higher interest rates and inflation....

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