Bulletin: Absa Bank's Higher Credit Losses Reflect South Africa's Challenging Macroeconomic Conditions

JOHANNESBURG (S&P Global Ratings) March 12, 2024--S&P Global Ratings today said that Absa Group's credit loss ratio of 1.3% reported for the financial year ending Dec. 31, 2023 (FY2023) is in line with our expectation. We project sector credit losses will continue to be above the historical low of 0.75%, averaging 1.4% in 2024 because of the challenging macroeconomic environment, characterized by high interest rates and food prices. Interest rates in South Africa have increased by 475 basis points since November 2021. We expect inflation will average 5.0% in 2024, remaining near the top of the South African Reserve Bank's 3%-6% target range. Similarly, nonperforming loans will likely remain elevated, at above 4% of systemwide loans in 2024. South African

...March 12, 2024 JOHANNESBURG (S&P Global Ratings) March 12, 2024--S&P Global Ratings today said that Absa Group's credit loss ratio of 1.3% reported for the financial year ending Dec. 31, 2023 (FY2023) is in line with our expectation. We project sector credit losses will continue to be above the historical low of 0.75%, averaging 1.4% in 2024 because of the challenging macroeconomic environment, characterized by high interest rates and food prices. Interest rates in South Africa have increased by 475 basis points since November 2021. We expect inflation will average 5.0% in 2024, remaining near the top of the South African Reserve Bank's 3%-6% target range. Similarly, nonperforming loans will likely remain elevated, at above 4% of systemwide loans in 2024. South African consumers are more vulnerable to these difficult and protracted conditions, which will continue to constrain households' affordability and ability to repay loans in 2024. Absa Group's loan portfolio is more tilted toward...

Bulletin