Absa's numbers look good until you check who's actually pulling the cart

Absa posted headline earnings of R12.8 billion for the first half of 2026, up 8%, as new CEO Kenny Fihla pushes a three-year turnaround. But the detail is less flattering. Corporate and Investment Banking, historically the group's biggest earner, grew just 1%, with returns shrinking. Africa Regions, the continental growth story Absa has sold investors for years, went backwards, earnings down 10%. South Africa did the heavy lifting instead, with retail and business banking earnings up 17%, now 72% of group profit. For South African shareholders, the question is whether Absa's continental ambitions justify the drag, or whether the "boring" domestic bank is what actually works..By Alec Hogg.Absa’s newest CEO Kenny Fihla - the bank’s sixth boss in seven years - wants you to see R12.8 billion. Headline earnings up 8%. Return on equity ticking up to 15%. A dividend that's grown in lockstep. On the surface, the banking group’s first half looks like exactly what a three-year turnaround should deliver — steady, disciplined, moving in the right direction.Dig one layer down, though, and the picture gets more interesting. And less flattering for an organisation whose executive musical chairs will have intensified cynicism among the traditionally change-resistant banker rank and file. Let’s start with Corporate and Investment Banking — historically Absa's crown jewel, the division that delivers nearly half the group's profit. In the first half of 2026 CIB's headline earnings grew all of 1% to R6.2 billion. Its return on equity actually fell, from 20.6% to 19.2%. Transactional Banking earnings dropped 13%. The only thing keeping CIB from reporting a decline was a decent showing from Global Markets and Investment Banking — trading desks and deal fees, not the sticky, relationship-driven banking Fihla says he wants more of. When your flagship business is flat, and its returns are shrinking, the term "solid" is doing a lot of work in that press release.Then there's Africa Regions — the growth story Absa has been selling investors for the better part of a decade and the rationale for its presence in eleven countries from Ghana to Mozambique. Surprisingly, given the Africa-outside-SA-is-booming story, it went backwards this half. Headline earnings down 10%, or 8% in constant currency. Return on equity down to 15.6% from 16.9%. Its share of group earnings slipped from 30% to 28%. Lower interest rates in key markets and, ironically, a stronger rand both worked against it. Meanwhile, Absa kept spending — IT investment up 7% to R8.8 billion, much of it aimed at exactly this pan-African ambition. Fihla's outlook statement talks up 5.1% GDP growth in 2026 across the countries where it has a presence. Fine — but the bank’s profits clearly aren't following that broad growth. That gap needs explaining, not glossing over.So who actually delivered? South Africa, where Absa’s traditional retail base is strong, did the heavy lifting almost entirely on its own — headline earnings up 17%, RoE up to 15.9% from 14.4%. It contributed 72% of group profit. Personal and Private Banking was the standout, up 12%, helped by better-behaved consumers paying down debt and a strong digital uptake. Business Banking grew a respectable 5%. In other words: the "boring" domestic retail and business bank is carrying a group with unbridled ambition that markets itself on a continental scale.Now the credit story, which reads better than it should on closer inspection. In the retail market the credit loss ratio improved to 94 basis points from 100, and bad debt writeoffs (impairments) fell 1% to R7.1 billion — genuinely encouraging, since it reflects better-behaved consumers. But Business Banking impairments rose 5% and CIB's jumped 16% (29% in constant currency), which the release politely calls credit "normalising." And total coverage on the book — the buffer set aside against bad loans — fell from 3.99% to 3.57%. Part of the improved credit story, in other words, is that Absa purposefully cut the rubber in its bad debt shock absorber, not just cleaner loans.Worth flagging too: Head Office, Treasury and other operations more than halved its loss, to R234 million, on the back of bond-disposal gains and reversals of sovereign impairments in Africa Regions. Useful for the bottom line this half. But it’s very much a one-off. Not something you can bank on repeating.On costs, the group's own guidance admits the quiet part out loud: "slightly negative operating JAWS" expected for the full year, meaning expenses will grow faster than revenue. The cost-to-income ratio already crept up to 53.4% from 53.2% — still miles off the low-40s efficiency that FNB and Capitec operate at. It’s a reminder that Absa's cost base remains one of its biggest competitive handicaps, turnaround or no turnaround.And then there's capital. CET1 sits at 12.8%, above even the board's high-water point of 11-12.5% target range. That's a strong balance sheet by any measure — but it also raises the question of whether this is dry powder for African expansion, or a signal that Absa can't find enough good lending opportunities to deploy the capital into? With excess capital now above its own targets, a special dividend or share buyback conversation feels overdue.None of this makes the half a bad one. R12.8 billion is real money, the dividend is up, and Fihla is right that the franchise is growing — 13.4 million customers now, expanding across the continent. But "early days of delivering on our strategy," as he put it, is an honest description. .Read more:.Absa confirms SA cycle turning for better - signals strong earnings as bad debts fall .The engine that's supposed to differentiate Absa from Standard Bank and FirstRand — its African footprint — is currently a drag, not a driver. Until that flips, the real turnaround story is still South Africa doing what South African banks have always done reasonably well: collecting deposits, lending carefully, and grinding out a return. Whether that's worth Absa's continental ambitions is the question shareholders should be asking Fihla at the next results call — not whether R12.8 billion is a big enough number..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

Absa's numbers look good until you check who's actually pulling the cart

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