Absa has reduced its physical banking footprint in South Africa, closing about 79 traditional branches and more than 100 ATMs as customers increasingly turn to digital banking services.
The changes form part of the banking group’s broader strategy to reshape its distribution network in response to changing customer habits and declining demand for in-branch cash transactions.
The move was highlighted in Absa’s interim results for the six months ended 30 June 2026, which showed continued growth in the bank’s digital customer base.
Across the Absa Group, active digital customers increased by 14% year-on-year during the first half of the year.
In South Africa, the number of digitally active customers rose by 10% to 3.8 million, while digital customers across the group’s Africa Regions increased by 21% to 1.6 million.
Active transactional customers in South Africa also grew by 4%, which Absa attributed to the growing role of digital services in maintaining customer engagement, increasing transactional activity and strengthening relationships.
The shift has resulted in a significant reduction in the bank’s traditional branch network.
Absa said changing customer preferences and behaviour had driven the transformation of its distribution network, while declining cash transactions at branches contributed to the decision to reduce its physical footprint.
Traditional branches declined by 18% to 359, representing approximately 79 fewer branches than in the previous reporting period.
The bank’s ATM network also fell by 2% to 4,976 machines, a reduction of more than 100 ATMs.
At the same time, Absa significantly expanded its smaller Sales and Service outlets, increasing their number by 76% to 215.
These outlets now account for 37% of the group’s total physical network, up from 22% during the previous reporting period.
Household pressure weighs on customers
The changes come as South African consumers continue to face financial pressure from rising living costs and high household debt.
Absa said economic conditions remained challenging during the first half of 2026. While the economy had shown signs of stabilisation towards the end of 2025, renewed inflationary pressures linked to geopolitical uncertainty in the Middle East created additional challenges.
Consumer inflation increased from 3.1% in March to 5.0% in June, largely due to higher fuel prices.
The South African Reserve Bank also increased the repo rate by 25 basis points to 7.0% in May.
Absa said consumers continued to face affordability challenges as a result of elevated debt levels, limited real income growth and rising fuel and essential living costs.
These conditions weighed on some parts of the group’s operations.
Personal Loans recorded a headline earnings loss of R38 million, unchanged from the previous year, while credit impairments increased by 5% despite a smaller loan book.
In Corporate and Investment Banking, Transactional Banking headline earnings declined by 13% to R1.508 billion, partly due to lower revenue and higher credit impairments.
The bank said pricing pressure in Working Capital Solutions and increased competition offset some of the gains generated by higher transaction volumes.
CIB’s return on equity fell to 19.2%, compared with 20.6% a year earlier.
In the Africa Regions, Business Banking headline earnings declined by 18% to R346 million, with lower net interest income and higher credit impairments contributing to the decline.
Group earnings improve
Despite the challenges, Absa reported an improvement in overall group earnings.
Headline earnings increased by 8% to R12.807 billion, compared with R11.874 billion during the first half of 2025.
Return on equity improved from 14.8% to 15.0%.
The group also reported an improvement in its credit quality. Credit impairment charges declined by 1% to R7.099 billion, while the credit loss ratio fell to 0.94% from 1.00%.
Non-performing loans decreased by 5% to R82 billion, reducing their share of gross loans and advances to 5.3%, compared with 5.9% a year earlier.
Absa’s board declared an ordinary dividend of 850 cents per share, an 8% increase from the 785 cents declared in the first half of 2025.
The payout ratio remained unchanged at 55%.
The group’s Common Equity Tier 1 capital ratio also strengthened, increasing from 12.5% to 12.8%.
Absa said the ratio remained comfortably above regulatory requirements and around the upper end of its stated target range of 11.0% to 12.5%.
The results highlight the accelerating shift away from traditional branch banking as customers increasingly use digital platforms for everyday financial transactions.