Absa boosts tech spend 7% to R8.8bn

South African big-four bank Absa announced a 7% increase in its IT-related spending to R8.8 billion for the six months ending June 30. The financial services institution reported its interim results, highlighting that the increased investment focused on enhancing digital infrastructure, cybersecurity, data, cloud, AI initiatives, and improving customer experiences.

Absa emphasized its commitment to strengthening cyber resilience by investing in advanced security capabilities, threat detection, response technologies, and protecting customer data and digital assets. The bank stated that these investments contribute to customer trust, safeguard digital banking platforms, and improve operational resilience.

Absa also stated that it continues to modernize technology platforms, expand cloud, data, and AI capabilities to support scalability, operational efficiency, and innovation while driving sustainable long-term growth. The first half of 2026 is marked by geopolitical uncertainty, changing interest rates, and varying economic conditions across the group's markets.

Despite these challenges, the group reported a headline earnings of R12.8 billion and a return on equity of 15%. Group revenue rose by 4%, driven by a faster growth rate in non-interest income compared to net interest income. Net interest income grew by 3%, with increased customer loans and deposits partially offset by margin compression.

Absa noted that margins were impacted by the lower interest rate environment in African regions and competitive pricing in corporate investment banking in South Africa. Non-interest income increased by 6%, driven by higher fee and commission income from increased client activity, higher lending volumes, and solid trading income from global markets.

Operating expenses grew by 4% as the bank continues to invest in strategic initiatives while maintaining cost discipline. Credit performance remained resilient, with declining credit impairments leading to an improved credit loss ratio. Pre-provision profit grew by 4%, reflecting the balance between revenue growth and business investment.

Absa CEO Kenny Fihla attributed the first-half performance to the bank's strength in a complex operating environment, disciplined execution across businesses, and a strong capital position. Fihla stated that the bank remains focused on executing strategic priorities, including deepening client relationships, enhancing digital capabilities, expanding in key African markets, and building a more integrated Pan-African business.

The bank expects healthy client franchise growth and stabilizing net interest margins to position it for medium-term sustainable growth despite an uncertain trading environment.