BANKING group Absa has cut more than 3 100 jobs since last year but still saw headline earnings drop by 19 percent in the past six months.

BANKING group Absa has cut more than 3 100 jobs since last year but still saw headline earnings drop by 19 percent in the past six months.

Group chief executive Maria Ramos said at the results presentation yesterday: "The group's results reflect the challenging macroeconomic environment.

"Rising impairments, margin contraction and a reduction in the value of investment portfolios have impacted the group's performance. Absa, however, remains profitable and well capitalised."

The retail bank unit recorded a 30,9 percent decline in earnings as a result of slowing advances growth, but despite a deteriorating economic environment, the retail bank increased its gross income by 11,2percent and kept costs down to 1,2percent.

The bank experienced a sharp increase in impairments, which was offset by growth in advances, deposits and non-interest income.

While the company increased revenue by 3,6 percent to R21billion, a R1,1billion asset write-off pushed headline earnings down to R3,8billion.

Last year Absa was forced to buy shares in JSE-listed companies after a single stock futures portfolio lost hundreds of millions of rands.

Single stocks futures allow investors the right to buy or sell shares at a fixed price on a given date regardless of the price on that date.

When shares fell below a certain level the investor would have had to provide additional collateral. In Absa's case, the company was forced to buy the toxic shares.

John Vitalo, head of Absa Capital, said that lessons had been learnt from the single stock futures default and that the bank had placed restrictions on the size of positions investors could take on.

Ramos said: "In this environment it is important that we manage our businesses to protect and enhance our financial performance. Our priorities are therefore to support our customers, maintain asset quality and improve cost efficiencies."