The group Absa has written off an additional 200 million rand for software assets in the first six months ending June 30, 2026. This figure followed a write-off of 2.4 billion rand just five months prior, which the bank attributed to a strategy review and faster-than-expected technological obsolescence.
The latest write-off amount, disclosed in the interim results published on Tuesday, is almost three times higher than the 74 million rand Absa wrote off over the same period last year. Similar to the much larger write-off in the 2025 financial year, the largest portion of this amount relates to the head office.
Absa reported writing off certain software assets whose useful life was assessed as zero, with the majority of these assets linked to the head office. The recurrence of this situation complicates the picture Absa presented in March, when the 2.4 billion rand write-off was presented as a result of adjusting the group strategy, which changed investment priorities.
Distribution of Write-offs
The head office, treasury, and other divisions absorbed 1.1 billion rand of this write-off, followed by personal and private banking divisions at 611 million rand, corporate and investment banking at 559 million rand, African regions at 63 million rand, and business banking at 43 million rand. The total annual figure was more than 13 times higher than the 179 million rand written off the previous year.
Absa's Group Chief Information Officer, Johnson Ideso, told TechCentral in March that artificial intelligence is accelerating software obsolescence, but this is only part of a broader acceleration of technology cycles across platforms, cloud, data, and cybersecurity. He emphasized that 'Absa is not cutting back on technology investments.'
Small Assets
Speaking on the TechCentral Meet the CIO podcast in May, Ideso clarified that the write-off is not related to one failed project. When asked about a single large asset making up this amount, he replied that the total sum comprises over 100 individual small assets. He highlighted three main factors influencing this:
- The first factor is the change in group strategy, as Absa now manages three pan-African business units, requiring a reassessment of the bank's assets.
- The second factor is regulation, which has advanced in areas where Absa still held intangible assets.
- The third factor is the pace of technological change itself.
He also described the structural shift from owning software to consuming it as a service, which initially reduces the volume of assets capitalized by the bank. Interim data shows that IT spending is not decreasing. Total IT costs, including personnel, depreciation, and wear and tear, increased by 7% to reach 8.78 billion rand for the first half, representing 28% of the group's operational base of 31.4 billion rand.
Ideso had previously informed TechCentral in March that Absa spent 16.7 billion rand on IT, including personnel costs, in the 2025 financial year; the interim figure, which also includes depreciation and wear and tear, exceeds half of that amount. In May, he noted that technology accounts for approximately a quarter of Absa's annual operating expenses. The interim disclosure shows this percentage is slightly higher—28%.
Of non-personnel expenses, which rose by 3% to 13.1 billion rand, IT expenses grew by 6% due to ongoing investments in new digital capabilities, including cloud technologies, data, and cybersecurity. Professional fees increased by 7%, which the bank attributes to continuous investment in technological initiatives.
At the same time, the asset base subject to these write-offs continues to shrink. Depreciation of intangible assets decreased by 6% for the reporting period, reflecting a drop in goodwill and intangible assets to 14.2 billion rand from 16 billion rand the previous year. Absa is spending more on technology in every period while having fewer such assets on its balance sheet.
Software was the largest item in the write-off of 'other losses' amounting to 355 million rand for the half-year, compared to 769 million rand the previous year. The remainder of the write-off included 155 million rand against property and equipment, of which 33 million rand was for computer hardware and 62 million rand for leased property. Absa stated that these write-offs align with its property consolidation plan.
Absa's disclosures on technology remain focused on the unseen work of asset management: simplifying architecture, transitioning to cloud platforms, and decommissioning outdated systems. Ideso argued that the limitation is not hardware—Absa still uses IBM z16 mainframes in Randburg and Sandton—but software written four decades ago that still retains the mental model of banking from that era. The bank has resumed partnerships with Amazon Web Services and Huawei to support this transition.
The group's gross profit increased by 8% to 12.8 billion rand for the six months, while diluted earnings per share increased by 7% to 1.5171 cents, and the interim dividend amounted to 850 cents, which is 8% higher than the previous year. Return on equity improved to 15% from 14.8%.
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