Absa impairs R2.4-billion in software after strategy rethink

Absa Group has written off R2.4-billion in software assets after a revision of its overall strategy led to changes in investment priorities and faster-than-expected technology obsolescence, its annual financial statements show.

The software impairments – more than 13 times the R179-million written off a year earlier – were spread across the group, with the largest hit taken by head office, treasury and other operations (R1.1-billion), followed by personal and private banking (R611-million), corporate and investment banking (R559-million), Africa regions (R63-million) and business banking (R43-million).

Absa said the recoverable amount of the affected software assets was determined to be zero.

“The group’s overall strategy was revised, resulting in changes in the prioritisation of strategic investment,” the bank said in its results for the year ended 31 December 2025. “Furthermore, the pace of technological change continues to escalate, resulting in faster software obsolescence than previously experienced.”

The write-downs contributed to a sharp increase in total other impairments, which rose to R3.2-billion from R914-million in 2024. Property and equipment impairments of R629-million, linked to the group’s property consolidation plan, accounted for much of the remainder.

The carrying value of Absa’s computer software development costs fell to R13.7-billion from R15.2-billion a year earlier, despite R3.9-billion in new additions during the year. Amortisation consumed R2.8-billion while the R2.4-billion in impairments erased much of the value created by new investment. Software assets under construction totalled R4.5-billion at year-end.

Deceleration

Absa’s IT spending – as reported in its operating expenses and excluding staff costs – rose 3.4% to R7.1-billion in the 2025 financial year from R6.8-billion a year earlier, a marked slowdown from the 13% growth recorded in FY2024.

The deceleration places Absa at the lower end of the IT spending growth spectrum among South Africa’s big five banks. As TechCentral reported in September, Capitec led the sector with a 32% year-on-year increase in IT spending to R2.5-billion for the year ended February 2025, driven by a nearly 40% surge in cloud computing costs.

Read: Inside Standard Bank’s R1-billion business banking overhaul

FirstRand’s IT costs rose 9% to R10.9-billion, Nedbank’s grew 7% to R7.4-billion – the latter reflecting the completion of its multi-year IT modernisation programme – and Standard Bank increased spending by just 2% to R12.7-billion, though it remains the largest IT spender in the sector by a considerable margin.

Absa did not provide a detailed breakdown of its IT spending in its annual financial statements, but the combination of lower spending growth and a large write-off of legacy software suggests a bank in the midst of reassessing its technology portfolio under its revised strategy.

The results were released under the watch of CEO Kenny Fihla, who was appointed in June 2025 and has been tasked with sharpening the group’s strategic direction. The bank reported headline earnings growth of 12.25% to R24.8-billion for the period, with total income rising 5.2% to R115.7-billion.  — (c) 2026 NewsCentral Media