Absa, one of South Africa's largest banking groups, is shifting more of its customers onto digital channels, but its latest interim results expose a tension at the heart of its technology strategy: digital adoption is climbing while the cost of running the business is not coming down.

Digitally active customers grew 14% in the period, yet the group's cost-to-income ratio edged higher as technology costs reached R8.78 billion ($538.7 million), accompanied by a further R200 million ($12.3 million) impairment on software assets.

The figures point to a broader pattern among African banks: rather than eliminating the cost of physical infrastructure, lenders may simply be trading it for an expensive technology stack. Mobile apps can lower the cost of serving an individual customer, but banks still have to fund the software, cloud infrastructure, cybersecurity, data systems and technical talent required to keep those platforms running.

Absa says it serves more than 13.4 million customers across its pan-African operations, and that growth is arriving alongside a substantial technology bill.

"Total IT spend, including staff, amortisation and depreciation, increased 7% to R8.8 billion," the Group said in its interim results.

That spending amounted to roughly 28% of Absa's R31.4 billion ($1.9 billion) operating expense base in the first half of 2026. The bank impaired a further R200 million ($12.3 million) in software assets during the six months ended June, after a R2.4 billion ($147.2 million) write-down in 2025 set out in its full-year results announcement.

"The Group impaired certain software assets for which the value in use is determined to be zero, mainly derived from head office," Absa explained in its results.

The bank is not cutting its investment in technology; it is spending more while recognising that some of its existing systems no longer carry economic value. That matters because large banks often have to modernise while still keeping older platforms and day-to-day services running, so technology outlays can stay elevated even when more customers move online. Absa added that the latest write-downs need to be understood against changes in its operations and investments.

"The impairments were mainly driven by changes in the Group's strategy, regulatory developments and the pace of technological change," the lender stated.

A digital customer may be cheaper to serve for some transactions than a customer visiting a branch, but Absa's footprint helps explain why digital migration has not translated directly into a lower cost base. The group operates across 17 countries, with banking businesses in South Africa, Kenya, Ghana, Uganda, Zambia, Tanzania, Botswana, Mozambique, Mauritius and Seychelles. It runs 1,043 outlets, 6,212 ATMs and 37,030 employees serving its 13.4 million customers.

Elsewhere in the results, Absa reported total income of R58.79 billion ($3.61 billion) for the six months ended 30 June, up 4.1%. Headline earnings per ordinary share rose 7.9%, while return on equity improved to 15%, from 14.8%.

Gross loans and advances increased 5%, while deposits and debt funding grew 8%. The bank declared an interim dividend of 850 cents per share, an 8.3% increase from 785 cents.