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Barclays’s Absa Declines After Missing Earnings Estimates

Absa Group Ltd., the South African bank controlled by Barclays Plc, fell the most in more than a year after first-half earnings per share missed analysts’ estimates.

The stock slumped 7 percent, the most since June last year, to 141 rand by the close in Johannesburg. About 5.6 million shares, or almost four times the three-month daily average, changed hands. The six-member FTSE/JSE Africa Banks Index fell 1.7 percent.

Net income rose to 4.7 billion rand ($479 million) from 4.17 billion rand a year earlier, the Johannesburg-based lender said in a statement today. Earnings per share excluding one-time items rose 8 percent to 6.50 rand, less than the median estimate of 7.08 rand by four analysts in a Bloomberg survey.

“Operationally this wasn’t a great result with weak margins and poor top line growth,” Ryan Wibberley, head of equity dealing for frontier and emerging markets at Investec Asset Management, which manages the equivalent of $105 billion, said in an e-mailed reply to questions. “Absa’s share price has run hard into these results, putting on 8 percent in the last week as the market maneuvered for the special dividend.”

Absa, the worst-performing stock on the banks gauge this year, losing 14 percent, declared a special dividend for the six months through June of 7.08 rand per share. Some investor expectations had been “overly ambitious,” Wibberley said.

Revenue Disappointment

The lender’s net interest income rose 5.7 percent to 11.5 billion rand, from 10.9 billion rand a year earlier, while non-interest revenue declined 1.9 percent to 8.7 billion rand from 8.9 billion rand, according to the statement. The bank’s revenues were “a disappointment,” Chief Financial Officer David Hodnett told a presentation in Johannesburg today.

Absa in December said it would buy the bulk of Barclays’s African assets in an all-share deal worth 18.3 billion rand.

The bank plans to spend 1.25 billion rand by 2015 on branches in Africa, Chief Executive Officer Maria Ramos told investors at a presentation in Johannesburg today. The bank is on track to meet its return-on-equity target of 20 percent by 2015, she said.

“We expect mid-single digit loan growth this year and a broadly stable net interest margin,” Absa said.

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