South Africa's Absa lifted annual earnings by more than a fifth on Monday as lending grew and the banking firm said plans by Barclays to take a majority stake in the group would boost its performance. South Africa's biggest consumer bank said that headline earnings in the year to end March were 841 cents per share versus 688.5 cents a year ago - a 22 percent gain. The annual results were the last before shareholders vote on June 13 on selling control to Britain's Barclays bank.
Diluted headline earnings beat analysts' forecasts to rise 18.8 percent to 811.1 cents from 682.8 cents in the year-ago period. Headline earnings strip out capital, one-off and non-trading items.
According to a survey of seven analysts by Reuters Estimates, Absa was expected to post a 16 percent jump in diluted headline EPS to 792.55 cents.
"The group is well positioned to sustain its good performance of the past three years. The Barclays transaction, if approved by shareholders, will add impetus to this performance," the company said in a statement.
If Absa shareholders approve Barclays' offer, the South African banking group will be in Barclays' stable from mid-July and a new executive team, including Barclays executives, will be appointed, Absa Chief Executive Officer Steve Booysen said.
"If you want to move from a leading retail bank to a leading financial services institution and the pre-eminent bank (in Africa) then you will have to bring in people with global capablities," Booysen said in an interview.
"We will have an executive team, with Barclays people forming part of the executive and we will announce this at the right time".
Barclays earlier this month agreed a $5.5 billion deal for control of Absa, marking its return to South African retail banking and the biggest direct foreign investment in the country.
Booysen has said Absa - which will purchase Barclays' African operations - aims to be the biggest bank in Africa within five years.
Absa said its solid performance was boosted by growth in lending as consumers took advantage of South Africa's lowest interest rates in more than two decades and as bad debts declined.
But the low interest rate environment put pressure on the group's net interest income margins, which slipped to 3.27 percent at the end of March from 3.40 the same period last year.
"We are in a low interest rate environment and that is unknown territory for us," Booysen told analysts at a results presentation.
Absa shares were unchanged at 81.75 rand by 1250 GMT, in line with a 0.08 percent decline in the JSE Securities Exchange's banking sector.
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