Assess bank over a longer period — Ramos

ABSA group CEO Maria Ramos has defended her management of the banking group, suggesting that criticism of her following a recent profit warning ignored the strength of the business.

In an interview on Friday, Ms Ramos said Absa had built solid liquid assets since 2009, achieved a return on equity above the cost of capital, which was higher than that of rivals, and still had a strong retail and investment banking business.

Her management style came under scrutiny after Absa said headline earnings to June would fall by up to 10%, though they were actually 6% lower, at R4,3bn.

The recent resignation of senior executives, including long-serving group deputy CEO Louis von Zeuner, had also thrown the spotlight on how Ms Ramos would implement her strategy.

Ms Ramos said banking went through cycles of boom and downturns and what was important was to assess Absa’s performance over a longer period than single individual reporting periods. She said Absa had warned as early as 2009 that the local and global economy was entering a period of turbulence owing to the global recession.

That had led to a slowdown in business with South African banks suffering from soaring impairments, which have forced them to make high provisions for bad debts. “There are a lot of bright spots (at Absa) and I know it is sometimes difficult to see these when headline earnings are down,” Ms Ramos said.

“But what I hope investors will do is to look back through the (past trading) cycle and see what the business has done since 2009, and that we have really managed to grow profits and manage a difficult period.” She said full-year earnings this year would be subdued.

Adrian Cloete, equity analyst at Cadiz Asset Management, said he expected Absa would achieve 5% growth in earnings this year, lower than projections of as high as 16%. Sure Kamhunga