The logo of South Africa's Absa bank is seen outside an Absa branch in Cape Town, South Africa, March 10, 2020. REUTERS/Mike Hutchingssaid on Friday its loan losses were expected to have risen above its target range in the first half of this year as consumers felt the burden of higher interest rates.
The South African Reserve Bank has raised rates by 475 basis points since late 2021, taking its main lending rate to"With South African consumers under pressure due to significantly higher interest rates, credit impairments are expected to increase substantially," Absa said in a voluntary trading update.
The bank expects a credit loss ratio of between 1.25% and 1.30% in the six months to the end of June, higher than its "through-the-cycle" target range of 0.75% to 1.0%. A credit loss ratio is a measure of the quality of a bank's loan portfolio, and is calculated as the amount of loan losses it experiences as a percentage of its total loans.