Finweek English Edition - - COMPANIES & INVESTMENTS - Bruce Whit­field brucew@fin­

1-year re­turn: 16.46%

The money quote: “I think I’m pretty tough. I have very high ex­pec­ta­tions of the peo­ple I work with. “- City Press

Grade: D

UPPED FROM AN E at the last minute by a face-sav­ing deal that, if ap­proved by mi­nori­ties, will make Absa the con­ti­nent’s big­gest bank. Re­turns from Absa since Ramos’s ap­point­ment as Group CEO, have been clunky. To be fair, so have Stan­dard Bank’s and both FirstRand and to a lesser ex­tent Ned­bank have been re­cov­ery tales.

But Absa has had a par­tic­u­larly un­spec­tac­u­lar year marred by an un­set­tling profit warn­ing re­lated to write-offs in its le­gal mort­gage book that the mar­ket did not see coming. The group’s 2012 full-year re­sults showed HEPS just 4% ahead of where they had been in the heady days of 2007. ROE, at 16.4%, is way be­low the pre­vi­ous highs.

The en­vi­ron­ment in which Absa op­er­ates has not been sup­porti ve. Banks have be­come con­sid­er­ably more r isk averse in an en­vi­ron­ment that has been bet­ter lev­era ged i n the re­tail sec­tor, which has seen key play­ers con­sis­tently grow­ing earn­ings in the re­gion of 20% de­spite sim­i­lar drivers af­fect­ing them and re­tail bank­ing.

Per­haps more dam­ag­ing than the first half profit warn­ing has been the mas­sive out­flow of ex­ec­u­tive tal­ent, ei­ther by ac­ci­dent or de­sign. It does not make for great con­ti­nu­ity for in­vestors. The group this month saw the de­par­ture of the last of the old guard of Absa man­agers, Louis von Ze­uner, who stays on in a non-ex­ec­u­tive role but is no longer in­volved on a daily ba­sis.

For staff, 2012 has been un­set­tling courtesy of the hashed mes­sag­ing from the group, which ear­lier this year seemed con­founded by its own peo­ple strat­egy. While ru­mours cir­cu­lated about Bar­clays­driven mass lay­offs – the group ap­peared un­able to calm the wa­ters.

None of this was helped by the ar­rival of the Red Ants at Absa HQ one af­ter­noon to col­lect fur­ni­ture as part of a court case the bank was in­volved in. The f u r n i t u r e wa s re­turned; how­ever, it did a bruised im­age lit­tle


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