Absa Bank Ltd.

We do not assign outlooks to South Africa national scale ratings. However, our national scale ratings on Absa Bank Ltd. could move because of any rating action on South Africa (foreign currency BB-/Positive/B; local currency BB/Positive/B; national scale zaAAA/zaA-1+). S&P Global Ratings classifies the banking sector of South Africa in group '6' under its Banking Industry Country Risk Assessment (BICRA). Its closest peers are Brazil, Morocco, and Thailand. India and China, which we also consider major emerging national economies, are also in group 6. ABG's business position reflects its leading market position in South Africa, business diversification, and geographic footprint in sub-Saharan Africa. ABG is the third-largest banking group in South Africa and has an overall market share of 21%

...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 presence. The group's business diversification underpins business resilience through the cycle, recording an average operating revenue growth rate of 6.5% per year over the past five years, largely in line with the top-tier average of 6.8%. 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. We expect capitalization under our RAC framework to remain stable. We forecast our RAC ratio will remain at 5.8%-6.0% over the next 12-18 months. This balances our expected growth in earnings, moderate asset growth, and a higher dividend...

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