Our opinion on the current state of ABG

ABSA (ABG) is one of the largest banking groups operating in Africa. It has well-established branches in 12 African countries and representative offices in at least 6 more. It offers a range of products for personal and business banking, credit cards, insurance, and asset management.

Obviously, as one of the "big five" banks, ABSA has been impacted by the recession in South Africa and the generally low consumer spending in the economy. The company announced a joint venture with Patrice Motsepe's African Rainbow Energy to launch a R6,5bn renewable energy fund. ABSA is certainly a blue-chip share and is worthy of your attention. The separation from Barclays is now complete.

On 31st March 2023, the company announced a BBBEE transaction that will take its Black ownership to more than 25%. In its results for the year to 31st December 2023, the company reported headline earnings per share (HEPS) up 0,6% and total income up 8,1%. The company's net asset value (NAV) increased by 7,3% to 16828c per share. Return on equity (EOQ) was 15,3% unchanged from the previous year.

Technically, the share made a low in March 2020 and then moved sideways for the next six months before beginning a new upward trend which is continuing. We are generally very positive about the potential of banking shares on the JSE. On a P:E of 6,54 and a dividend yield (DY) of 6,92, ABSA looks cheap to us.