Absa reiterates plan to resume paying some dividends this year

After withholding dividends for its 2020 financial year in the face of the Covid-19 financial fallout, banking giant Absa reiterated in a voluntary trading update and statement on the JSE on Thursday that it will be paying a dividend this year.

“As indicated in March, the group expects to resume paying dividends from the first half of 2021,” Absa notes in its update.

However, the group adds that it will start to pay dividends with a payout ratio of 30% and increase this to 50% over the medium term.

The bank’s more cautious move to pay out some sort of dividend comes on the back of a recovery this year, with South Africa not having any major pandemic-related lockdowns thus far.

Read: Absa holds off on dividend, profits drop 58%

According to Absa’s trading statement, normalised headline earnings per share (Heps) for the six months ending June 30, 2021 is expected to be between five and six times the normalised Heps of 173.6 cents for the first half of 2020.

“Risks to this guidance include a significantly more severe third wave of Covid-19 than currently expected, plus any material unforeseen political, macroeconomic or regulatory changes,” the bank however warns.

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Absa, which is set to release its financial results for the first half of 2021 on August 16, notes that it will provide a more specific guidance range once there is “reasonable certainty regarding the extent of the increase in earnings”

The group’s share price traded marginally lower, down just under 1% (R122.91) in afternoon trade on Thursday.