Absa had a strong year in 2025 and expects even more in 2026 (JSE: ABG)
The positioning in Africa is paying off
Absa generated solid growth for investors in 2025, with HEPS up by 12.2% and the dividend per share up by a similar 12.0%. The overall value of the bank moved in the right direction, with the net asset value per share increasing by 8%. Return on Equity (ROE), the core driver of a bank’s valuation, increased from 14.8% to 15.0%.
If we dig deeper into the numbers, we find that Corporate and Investment Banking (CIB) grew earnings by 14% and achieved ROE of 21.1%. I expect to see a strong ROE here, as this business unit enjoys the best opportunities for advisory work. This boosts ROE by generating the “R” without needing to use much of the “E” in its business model. Sure enough, non-interest income grew by 16%.
In Personal and Private Banking, earnings grew by 7%. Active transactional customers grew by 3%, and Absa’s efforts to cross-sell products in the customer base appear to be paying off. ROE was 17.6% in this business unit.
Business Banking is where things headed in the wrong direction. Earnings fell by 8%, although ROE was the highest in the group at 21.5%. Revenue was up by just 2% in that business unit.
Finally, the Africa regions did ridiculously well. The macroeconomic improvements on the continent filtered through into Absa’s business, with earnings up by a whopping 51%. But ROE is only 17.1%, so they need to get that much higher – especially given the underlying risks.
I must point out that the Africa business unit doesn’t include the CIB activities in Africa. Those fall under the CIB business unit, with Africa generating R5.5 billion vs. R7.5 billion in South Africa within CIB. In other words, Absa has much more exposure to Africa than you might think – especially if you only gave the segmental breakdown a cursory glance, instead of digging into the detail.
Special mention must go to the net trading line within non-interest income, up by 30% year-on-year. The star of the show was the FICC business (Fixed Income, Currencies and Commodities), up by a delicious 51% vs. the prior period. There’s a reason why the people with multiple screens and Bloomberg terminals get paid the big bucks. Again, this sits inside CIB.
The group credit loss ratio of 88 basis points is nicely in the middle of the 75 – 100 basis points target range. This is encouraging for the general credit picture.
In terms of the 2026 outlook, they expect mid-single digit revenue growth, with the credit loss ratio expected to improve towards the bottom half of the target range. With operating expenses expected to grow by low- to mid-single digits, positive JAWS is the flavour of the year.
This is exactly what investors want to see, with JAWS measuring the difference between the growth rate in income and expenses. If JAWS is positive, it means that operating income margin is going the right way.
Finally, they expect ROE of around 16%, which would be a significant improvement vs. 2025.
The bank may be red, but the story is very green right now!
Which of these banks would you choose to invest in at the moment, if you could only choose one?
Attacq ticks the box of beating inflation – and by quite some margin (JSE: ATT)
More than 9% growth in the dividend is excellent
Investors in property companies are generally happy to see growth in the mid-single digits. They want to beat inflation as a minimum hurdle, with a few hundred basis points on top for good measure.
To see a local fund grow the dividend by 9.1% is impressive – and that’s exactly what Attacq has done in the six months to December 2025.
Attacq’s net operating income grew by 5.2%. That’s a good start to any income statement.
There was a slight decrease in the gearing (debt) ratio from 25.9% to 25.1%. Thanks to a decrease in overall interest rates, this means that net lower finance costs helped offset cost growth at the centre, allowing the increase in net operating income in the property portfolio to flow through to shareholders.
The retail properties enjoyed positive rental reversions of 3.6%. Logistics had negative reversions of 6.1%, but this portfolio tends to be lumpy with only a few leases churning in any given period. As for the office portfolio (or “collaboration hubs” as Attacq likes to call them), reversions were negative 5.9%.
Across the three portfolios, lease escalations ranged from 6.3% to 7.2%. This is a reminder that property companies face different inflationary pressures to the CPI basket that the SARB works off.
It’s also worth highlighting that Waterfall City contributed 30.9 cents per share of distributable income, while the Rest of South Africa was 29.5 cents. Investors often forget that Attacq has a portfolio that stretches well beyond the Waterfall area.
And in case you’re wondering, trading density growth at the key Mall of Africa property grew by 4.2%. The best performer in the portfolio on this metric was Lynnwood Bridge, up by 6% and boasting the highest trading density in the group by a substantial margin.
Burstone’s platform strategy makes further progress (JSE: BTN)
They’ve announced a new joint venture in Europe
Burstone Group has announced the launch of a joint venture in Germany and the Netherlands with Hines European Real Estate Partners III. The portfolio will be seeded with light industrial assets.
This is precisely the strategy that Burstone has been talking about for ages now. Essentially, they want to act as property investor and asset manager, generating fees along the way that boost performance. That’s the theory, at least.
The Hines fund and Burstone will contribute a combined R3.2 billion in equity to this joint venture. Burstone is on the hook for only 20% of the equity (funded through existing credit lines), yet they will act as the investment and asset manager for the entire joint venture.
Why does this make sense for Hines? Well, these enormous offshore funds have neither the time, nor the inclination, to actively manage their portfolios to the same extent that Burstone is able to. Burstone has more than enough skin in the game here to create alignment with Hines, so it seems like a decent deal for all involved.
There’s no shortage of financial leverage in this structure. The joint venture itself will be funded at a loan-to-value of 60%. As noted above, Burstone’s equity contribution is being funded by existing group facilities on the Burstone balance sheet.
This shows you that in a developed market environment with structurally lower rates, there’s more debt in property deals than you would typically see in South Africa.
CA Sales is doing much better than I expected (JSE: CAA)
With plenty of concerns around Botswana in the market, this company has bucked the trend
I’ve been holding my breath for an earnings update by CA Sales Holdings. Although the company has done a great job of diversifying its earnings in Africa, Botswana is still the market that it calls home.
And as we know from the issues facing De Beers in the mined diamond space, as well as the recent update from retailer Choppies (JSE: CHP), the macroeconomic pressures are piling up in that market.
Despite these concerns, CA Sales released a trading statement for the right reasons. They expect HEPS to grow by between 15% and 20% for the year ended December 2025. Sure, acquisitions will play a role here, but this is still an impressive performance.
I look forward to the release of full results on 26 March.
Hyprop will increase its payout ratio (JSE: HYP)
Shareholders will have to be patient for the juicier full-year dividend, though
Hyprop has amended the dividend policy for FY26, with an increase in the payout ratio from 80% to 82.5%. The shape over the year is interesting, as they pay 95% of distributable income from the South African portfolio as an interim dividend, with the final dividend then taking into account the group results.
With the group believing that they are on track to achieve the upper end of the guided growth of 10% to 12% in distributable income per share for the year ended June 2026, this is an encouraging outlook for the dividend.
The interim numbers for the six months to December are far less exciting, though. Distributable income may have increased by 12.9%, but distributable income per share was only up by 5.4% thanks to additional shares in issue. The interim dividend grew by just 4.9%.
There are encouraging underlying metrics, like trading density up by 7.5% in the South African portfolio and positive rent reversions of 7.6%. In Eastern Europe, trading density increased by 3.6%, while positive rent reversions were 2.7%.
The footfall stats are interesting. This metric increased by 1.9% in South Africa, but fell by 3.0% in Eastern Europe.
I noted that the vacancy level at Table Bay Mall is 2.3%, significantly above Canal Walk (1.4%) and especially Somerset Mall and CapeGate, both just 0.1%. Even though Table Bay Mall is almost as big as CapeGate, footfall was just 2.9 million for the period vs. 5.3 million at CapeGate. I still think they overpaid for Table Bay Mall, despite all the growth happening out there.
The vacancy levels in the properties in Gauteng are significantly higher. Clearwater is sitting at a worrying 6.9%!
The group loan-to-value ratio has improved from 33.6% to 31.0%. They have R7.9 billion in ZAR-denominated debt and R5.9 billion in EUR-denominated debt.
Trellidor’s HEPS did a magical disappearing act (JSE: TRL)
They are still profitable – but only just
Trellidor has released results for the six months to December 2025. HEPS fell by a revolting 98.1%, coming in at just 0.6 cents for the period.
The problems started right at the top of the income statement, with revenue from continuing operations down by 21.3%. If you use total operations, it fell by 47.1%. The disposal of Taylor and NMC are relevant here.
The main reason for the drop in revenue from R204.8 million to R161.1 million is that there was a lumpy contract in the UK of R38 million that didn’t repeat in this period. That accounts for most, but not all, of the drop.
If there’s a silver lining, it’s that net debt was almost halved. Still, with net debt of R46.7 million vs. interim EBIT of just R3.5 million, Trellidor looks to be in a precarious position.
The houses protected by the products are much safer than the balance sheet at the moment. It’s little wonder that the share price is down 40% in the past 12 months.
A casual 40% increase in HEPS at Weaver Fintech (JSE: WVR)
I’m a very happy shareholder
The J-curve is such a pretty thing. When a technology company hits that upward slope and starts generating profits at a high incremental margin, it’s a good time to be a shareholder. It’s even better if you got in before the market actually realised just how good things were going to be.
Weaver’s share price is up 123% over 12 months. I bought my shares after the company appeared on Unlock the Stock last year (when they were still called Homechoice International). That’s all the evidence you need that my platforms are also my research processes.
Why is it doing so well? Buy Now, Pay Later (BNPL) adoption has really taken off in South Africa. Weaver has a variety of financial products, but BNPL seems to have been the catalyst for the upswing in growth.
With revenue growth of 23% and return on equity of 14.7%, Weaver is putting out exceptional numbers. HEPS is up 40% and the full-year dividend grew by 42%, so the cash quality of earnings is excellent.
With 4.3 million customers vs. 3.1 million a year ago, Weaver is growing at a remarkable pace. And like all great technology ecosystems, they have plenty of product opportunities in the pipeline.
Curious to learn more? Register to attend Unlock the Stock on Thursday this week at midday. As I said, this platform was core to my due diligence process on Weaver last year! You can attend for free, but you must register here.
Nibbles:
- Director dealings:
- The CEO of AngloGold Ashanti (JSE: ANG) received share awards worth R58.7 million and sold the entire lot.
- Through participation in the Ethos Capital (JSE: EPE) pro-rata repurchase, three directors of the company sold shares worth around R36 million.
- The CEO of KAL Group (JSE: KAL) bought shares in the company worth R995k.
- NEPI Rockcastle (JSE: NRP) announced that an associate of Andre van der Veer bought CFDs with a value of almost R900k.
- A non-executive director of Anglo American (JSE: AGL) bought shares worth around R370k.
- The CEO of Astral Foods (JSE: ARL) bought shares worth R131k.
- KAL Group (JSE: KAL) announced that the Eswatini Competition Commission has approved the sale of Agriplus. The deal has therefore met all conditions and will now also be implemented in the Kingdom of Eswatini.
- Lighthouse Properties (JSE: LTE) has posted a circular to shareholders regarding the scrip dividend option. This gives shareholders the ability to receive shares in lieu of cash. The benefit to the company is that it retains cash on the balance sheet. The downsides are that it is dilutionary for shareholders who don’t take the scrip alternative, and it increases the number of shares in issue – thus puts pressure on growth in distribution per share.
