Good morning, thank you for joining us for Absa's 2022 results presentation. Before I get into the results, I would like to begin with thanking our stakeholders. Our customers for believing in us, our colleagues for their dedication throughout the year, the communities we operate in across the continent for giving us a license to operate, our board of directors for their guidance, and our shareholders for their unwavering support. Turning to our results, I will first share my thoughts on the operating environment that we faced last year and where we are as a group in delivering our strategy before briefly giving my perspective on our strong 2022 performance. Thereafter, Jason will unpack our numbers in detail and provide our guidance for 2023, and then we will take your questions. The global, regional, and domestic environments remained unusually uncertain throughout 2022.
COVID-19 receded as an immediate threat to the economy, although it remained a key driver of the Chinese outlook. Geopolitical issues rose to the fore, particularly surrounding the ongoing Russia-Ukraine conflict and rising tension between the U.S. And China. Energy and food markets were particularly disrupted, adding to broader supply chain pressures globally, pushing inflation to multi-decade highs in many countries, including the U.K. and the U.S. Central banks responded by increasing policy rates materially from a very low level. As global financial conditions tightened materially through the year, it placed pressure on many categories of financial assets, including emerging markets. Turning to our ARO presence countries, inflation surprised to the high side in most markets during 2022, pushed up by the same fuel and food price pressures that are evident globally.
Increased inflation, tighter global finance conditions, and higher country risk premiums in some ARO countries saw average policy rates rise in all our ARO countries besides the Seychelles. These headwinds to economic growth further complicate efforts to reduce fiscal deficits and improve debt sustainability. Some ARO countries are engaging with the IMF for support. Zambia continues to work through its sovereign debt default, while notably Ghana restructured much of its domestic public debt. We continue to actively monitor sovereign risk across our portfolio. However, given good economic and geographic diversity across our ARO portfolio, we expect real GDP growth of 4.4% from it in 2022. In South Africa, the economy initially benefit from strong commodity prices and a resilient rand in 2022.
Nonetheless, consumer price inflation rose faster than expected and breached the Reserve Bank's 6% upper target early in the year, largely due to sharply higher food and fuel prices. The Reserve Bank responded by increasing rates 350 basis points from November 2021 through to November 2022. While faster and more than what we initially expected, importantly rates increased off record lows and current levels are not dissimilar to pre-COVID interest rates. Significantly higher load shedding in the fourth quarter of 2022 became an increasing drag on South Africa's economy as GDP contracted 1.3% in the fourth quarter, with overall growth of just 2% in 2022 as a result. Consumer financial distress has escalated as cost of living has increased sharply with inflation at highs last seen in the global financial crisis.
Whilst the recently published Business Confidence Index for Q1 2023 shows a further deterioration in private business sentiment, with 64% of survey respondents reporting the prevailing business conditions as unsatisfactory. As a systemic financial institution within South Africa, we see the impact of all of this on all South Africans, despite how resilient the country has been to this point, the time for decisive and cohesive action has come. As Absa, we are committed to forging partnerships across the social compact to drive sustainable solutions to the challenges that plague our country. To this end, we welcome President Ramaphosa's call for decisive action and a zero tolerance to corruption during his recent cabinet announcement. We view the reaffirmation of Operation Vulindlela as absolutely vital and urgent.
While our separation from Barclays PLC was completed some time ago, Barclays sold their remaining 15% last year in two accelerated book builds in April and September, ending any ownership of Absa. We continue to see benefits from the successful separation, including a contribution to our planned BEE deal, enhanced systems in CIB and ARO, and our refreshed brand, while management capacity was freed up after the separation.
Last year was the right time to refine our group operating model, to adopt a flatter structure and bring management closer to customers while allowing us to accelerate strategy execution. In the second half, our structure changed to five divisions from two as we split retail and business banking into four businesses with executives joining my group Exco. CIB is unchanged and still runs the Pan-African business.
We expect the change in our operating model to generate clear commercial benefits over time. Given the importance of ESG and its clear link to strategy, we established a new ExCo role of Group Chief Strategy and Sustainability Officer. We have a diverse leadership team in place with our ExCo completed by the three final appointments. The ExCo's track record in navigating the COVID-19 pandemic and fixing the business over the past three years gives me the confidence that we have the right leaders in place to deliver our strategy.
Transformation is a priority for us as we aim to be a leader in shaping business that fosters diversity, equity, and inclusion. Our new ExCo demonstrates our commitment to a fully transformed and representative organization. As a group, we also aim to grow our own timber. Nearly 80% of the ExCo were internal appointments. We continue to consistently deliver against our group strategy. As you know, we reanchored it to our original 2018 standalone strategy while emphasizing digital and sustainability more.
We are confident that we have the right strategy, which is evident in our 2022 performance. Our strategic execution journey had two clear phases. The first, fixing and turning around the business, particularly retail and business banking, is complete, and we are now in the outperformance phase of our execution plan. As Jason will show, our balance sheet is strong. We have ample capital to support our growth ambitions with our CET 1 capital ratio of 12.8% above our board target range and healthy deposit growth in recent years. Given the fact that 2023 looks tough from a macro perspective, we are well positioned for a difficult operating environment.
In particular, along with strong capital levels, our provision coverage remains appropriate. Moreover, even with our structural hedge, we continue to benefit from rising rates, and our ARO portfolio provides some diversification from South Africa's low GDP growth. Importantly, we continue to invest in growth with ZAR 3.3 billion of strategic investments spent last year and with substantial growth in our marketing. Savings in other areas enabled this investment while maintaining comparatively low overall expense growth.
We also invested in system stability, which is evident. Last year, we had no severity one and two IT incidents, down from three in 2021 and considerably better than the 30 back in 2015. Despite the dearth of macro tailwinds, consistent strategy execution produced strong 2022 results with strong underlying earnings growth and returns, particularly excluding the significant Ghana sovereign debt related credit impairments.
The market is starting to recognize our performance. Our 34% total shareholder return last year was the best among the large SA banks and well ahead of the market, following on the 30% TSR in 2021. We recently completed a collaborative process to redefine our group purpose, which involved all our staff and generated significant excitement and energy. Our new purpose statement of Empowering Africa's Tomorrow, Together, One Story at a Time reflects collective commitment to all our stakeholders in contributing to Africa's growth now and in the future. This revised purpose is being embedded at the center of all that we do, given our vision of being a purpose-led organization.
My message is that we enter a tough 2023 with solid momentum and full of confidence that we will deliver once again. Next, I want to cover the strategic progress that we made in 2022. I will share some examples of what we delivered across our five strategic focus areas. Firstly, we continue to accelerate our digital transformation, although there is considerably more to do here. For example, Everyday Banking aims to become a digital bank with an empathetic front line. Over 3/4 of our core middle market and retail affluent customers bank remotely and entirely digitally. Absa Advantage challenges in our app encourage digital adoption with customer participation up 90%.
We also launched Absa Abby, an AI-powered virtual assistant to help customers navigate our banking app. Rolling out Absa Abby and Absa ID saw over 2 million enrollments in the first year, which reduced call center volumes for in-scope queries by a third. In ARO RBB, 60% of customers are digitally active, up from 53%. In total, improved stability and enriched functionality saw our digitally active customers grow 11% to 3 million.
CIB's Absa Access, a single sign-on transactional banking platform with Global Markets products integrated, has won numerous awards, including Best Online Portal by Global Finance recently. After migrating all ARO clients onto it in the first half, 2/3 of CIB's total client base are active on it. While behind our regional targets for migrating South African and Pan-African clients, we opted to focus on client experience during the migration process. We have rolled out numerous digital products. For example, Instant Life is one of South Africa's first fully digitally underwritten life products. It continues to perform well with 15% growth in digital sales, while our non-life insurance digital product, Activate, reported growth of over 200% in policy sales.
Moreover, about 1/5 of home loans and personal loan sales were on the Absa app. In payments, we were one of the first to launch Google Wallet following Apple Pay and QR Pay in 2021. Relationship banking also rolled out Mobile Pay to enable its SME customers to use Android mobile phones as point of sale devices through the app. One indicator of our progress is that The Digital Banker ranked Absa the best digital bank in South Africa, while several other groups ranked as best digital bank in Ghana, Zambia, Mauritius, and Tanzania. We have ensured that our winning talented and diverse team is our competitive advantage. Simply put, looking after our colleagues enables us to better service our customers.
Over the past few years, we have developed an employee value proposition that both engages our colleagues and has put Absa at the forefront of attracting top talent. We have been deliberate in pay distribution, specifically in 2022, where the majority of the increase in our short-term incentives was directed to our frontline staff. Investment in our colleagues' development is critical. We increased staff training by 55% to ZAR 590 million last year. These changes are becoming tangible within our organization. As evidence of our progress, colleague advocacy improved materially as our employee net promoter score almost doubled last year, while our ability to retain top talent remains above the industry benchmark. We are attracting top talent to our organization with our recent exec appointments as a testimony to that.
Our progress has been recognized externally, and we were recently awarded Top Employer Africa certification for the second consecutive year in South Africa, Zambia, Kenya, Botswana, and Ghana with our overall score of 87% above the best practice benchmark of 85%. More broadly, we were rated the top South African company and 36 globally out of 400 for championing women at work by Forbes. Thirdly, we further elevated ESG as a priority in our strategy as we aim to be an active force for good in everything we do. Within this, we have identified three focus areas: climate change, financial inclusion, and promoting diversity and inclusion. Under combating climate change, we published fossil fuel financing standards and caps last year, as well as our second TCFD report.
We are the leader in renewable finance in South Africa, having participated in almost 4.2 GW of closed deals to date, including 55% of the REIPP projects. We see significant growth in the captive power market over the medium- term, where about 3 GW of projects are likely to reach close in the next year, mostly in the industrial and mining sectors. We were mandated lead arranger and lender to the first two utility scale projects that reached financial close during the fourth quarter of 2022. We also made progress in inclusive finance. For instance, home loans housed almost 7,000 households through a ZAR 2 billion social loan secured from the IFC. Our total affordable housing book in South Africa increased to ZAR 17 billion. In ARO RBB, our mobile lending to under and unbanked customers grew 54% to ZAR 6.7 billion.
In Kenya, we drove social inclusivity as the sole lender to Acorn's KES 6.7 billion green loan to increase student housing. In total, CIB's ESG related financing and arranging totaled ZAR 31 billion, up 66% year-on-year. Of note, we were the sustainability coordinator for the largest syndicated sustainable finance deal in South Africa to date, a ZAR 10 billion loan to a gold miner. We are proud to be the leaders in financial solutions for agriculture, one of Africa's largest and most employment intensive sectors, and vital for food security and inclusive growth. Across our African markets, we are empowering businesses all along the agriculture value chain to mitigate climate change and raise productivity and yields. For example, by funding water and irrigation projects and investing in technology solutions for farmers. We are also keenly aware of our societal role in agriculture.
We are prioritizing our support of Black, women, and youth-owned agribusiness. On the funding side, we published a sustainable finance issuance framework and issued our inaugural ZAR 2.6 billion green bond with use of proceeds earmarked for solar and wind renewable projects. We also concluded our first sustainability linked syndicated loan, a $400 million facility where rates depend on us achieving specific renewable financing targets and using a proportion of renewable power in our own operations. Finally, our community investment increased 37% to ZAR 267 million, almost three quarters of which went to education and skills development, including youth employability, financial literacy training, university scholarships, and school initiatives. Our redefined purpose statement is especially critical to our sustainability journey and being purpose led. Putting this at the center of everything we do will create a sustainable organization.
Fourth, as we shift from the fixing to the outperformance phase of our strategy, we are purposeful on competing in attractive growth areas by geography, segment, and product. The shift to five business units with a deep commercial focus will highlight these areas of growth for us to leverage the power of our group ecosystem. Integrating bancassurance into our retail franchise is a good example of this. With improved customer offerings and cross-selling strike rates. Net life insurance premiums in South Africa grew 8% to ZAR 4.3 billion. We continue to see strong uptake of funeral, digital, and fully underwritten life products by our customers. Absa Life sold 950,000 policies last year.
We also maintained our loan momentum in secured lending in PSC with solid 9% growth in home loans and vehicle finance, where our market shares are 24% and 23% respectively. Our total retail customers grew 1% to 9.7 million, with solid 8% growth in the retail affluent segment. Importantly, our transaction account sales rose 21% with substantial growth in check accounts. Pleasingly, in line with our strategy, youth account sales more than doubled, and this segment grew 4% in total. While Relationship Banking has a strong franchise in the commercial segment, we view SMEs as a material opportunity. Clients are able to select the extended Business Evolve proposition that meets the requirements, and we launched an SME rewards program, SME Friday, that is gaining traction along with our Mobile Pay product.
ARO is a key part of our strategy, particularly given its structural growth prospects versus the more mature South African market. It is also important for our CIB franchise. Excluding Ghana, the rest of our ARO portfolio performed strongly with substantial revenue and earnings growth. We see scope to improve ARO RBB earnings and returns over the medium term. Finally, our Corporate Bank has focused on trade finance and transactional activities, where it has grown strongly for some time. For example, last year its meaningful revenues in transactions grew 19% due to higher volumes and increased customer primacy, while trade finance in SA rose 21%. Lastly, being the primary partner for our clients is a crucial part of our strategy, particularly in growing capital light revenue.
Doing so requires understanding our clients' needs. I am particularly pleased with the progress we have made on customer experience across the group. I will highlight some of the progress we are making here. Improving customer experience is a key part of Everyday Banking strategy, including embedding a culture of being closer to customers. It continues to reduce customer complaints. We received the least Ombudsman complaints of the big five banks for the third consecutive year, having improved from being the worst. Everyday Banking's pricing strategy focus on offering value for money while addressing customer pain points with a focus on offering unrivaled value to primary customers. This year, we reduced fees by another ZAR 500 million, taking the cumulative reduction since 2021 to ZAR 1 billion. Absa Rewards is an effective platform to drive primacy. 80% more rewards customers became primary last year.
Rolling out free Absa Rewards this year will further address the value perception and improve customer experience and cross-sell. In South Africa, our average product holding in retail improved to 2.46 from 2.39, indicating a deepening of customer relationships. The product solutions cluster plays a valuable role in deepening our client relationships with home loans and anchor product for middle-market customers. bancassurance also plays an important role in ensuring we become customers' primary partner, and PSC provides integrated propositions that lower the acquisition cost and provide more value to our customers. Pleasingly, Absa Life came first for the second consecutive year in the SA-csi by Consulta survey, which highlights its excellent customer service levels. Given its focus on customer primacy, relationship banking changed its operating model, shifting to a client segment-centric model across SME, commercial, and private wealth from a region-based model.
The change will bring customer experience into sharper focus across channel and product, among other benefits. We are hiring over 100 bankers to increase capacity on the front line. We have also put new leadership into private bank and wealth, which we view as a growth opportunity. Lastly, having completed the initial balance sheet led phase of its strategy, CIB is prioritizing growth with sustainable returns and a focus on capital light non-interest revenue. Corporate Bank is building a strong track record here with strong non-interest income growth driven by transactions and trade finance. Increasing customer primacy is a crucial part of the strategy. CIB continues to improve customer primacy in both South Africa and ARO. In South Africa, it added over 100 new-to-bank clients last year, with a majority of them primary.
Moving to the salient features of our 2022 performance, we have recovered strongly from COVID-19 lows in 2020. In fact, the key measures are all significantly above the pre-COVID levels of 2019. Importantly, our performance is due to strong pre-provision profit growth, which is driven by solid revenue growth and a relentless focus on efficiency. Our revenue is 24% above 2019 levels, with our pre-provision profit 43% higher, a 13% compound annual growth rate. This resulted in our cost-to-income ratio reducing to 51.5% and achieving our medium-term target of the low 50s-percent ahead of schedule. Our diluted normalized headline earnings per share has recovered well and is 29% higher than pre-COVID levels.
The impact of the Ghana sovereign debt crisis was material, and our earnings performance has been resilient to be able to absorb this impact and still show this level of growth. Similarly, our 16.6% ROE is higher than pre-COVID-19 levels and well above our cost of equity, whilst our net asset value per share is 23% above 2019. As you can see, we are building momentum as well as a consistent track record of delivery, and this gives us confidence as we move into 2023. I will now hand over to Jason to take you through our financial performance in detail.
Well, thanks, Arrie, and good morning, everybody. As usual, throughout my presentation, I'll talk to our normalized results, which better reflects our underlying performance as it adjusts for the remaining consequences of separating from Barclays. We reconcile these with the reported IFRS results in our booklet, as always. Starting with our income statement, headline earnings increased 13% to ZAR 21 billion. It's very clear from this graph that our earnings growth was due to significantly higher pre-provision profits, which in turn was driven by very strong revenue growth of 15% to just under ZAR 100 billion, which is now 24% above pre-COVID levels in 2019. Within this, net interest income increased 13%, reflecting further margin expansion and 11% growth in average interest-bearing assets.
Non-interest income grew 18%, in part due to a substantial recovery in insurance revenue, while fee income growth was also strong at 7% and net trading income up 9%. As you've come to expect of us, operating expenses remain very well controlled, growing 7%. While excluding performance costs, the increase was only 6%. These combined to produce 25% higher pre-provision profits. Excluding the rebound in insurance in South Africa, our pre-provision profits still increased very nicely by 20%. Our credit impairment charge rose 61% to ZAR 13.7 billion, reflecting the impact of higher interest rates and inflationary pressures in South Africa and significant Ghana sovereign debt related impairments. Half the increase was due to the Ghana sovereign debt related impairments, which totaled ZAR 2.7 billion.
There was also ZAR 1.1 billion of non-recurring model enhancement benefits, which we realized in 2021, which had set a slightly softer base. The increase in other largely reflects our higher taxation expense as well as higher minorities and headline earnings adjustments. The Ghana sovereign debt-related impairment reduced our headline earnings by ZAR 1.8 billion. Excluding this charge, our headline earnings would have increased by 23%, and ROE would have been 18%. Our net interest margin recovered back to pre-COVID-19 levels of 4.5%, mainly on the back of higher policy rates across our business. Unpacking the moving parts, our lending margin continued to improve with higher rates and reduced suspended interest in Everyday Banking.
Deposit margins widened, largely due to the impact of higher policy rates in Corporate Bank and Everyday Banking, which offset foster growth in wholesale funding that was negative for composition. Higher average policy rates and growth in South African endowment balances added 8 basis points to the overall margin. Prime increased by 325 basis points during the period, with average rates 160 basis points higher. The endowment uplift was partially offset by a smaller release from our structural hedge of ZAR 1.6 billion from ZAR 3.2 billion in the prior. The cash flow hedge reserve decreased to a ZAR 3 billion debit balance from a credit of ZAR 0.8 billion at 31st of December 2021.
Within other, investing excess liquidity in ARO was a drag, while the reset gains of South Africa's rising prime rate during the current period enhanced our margin, with these items having a small 5 basis points impact. Turning now to our balance sheet. Total loans grew 11% to over ZAR 1.2 trillion. Excluding reverse repurchase agreements, the underlying growth was higher at 16%. Group loans to customers rose 9%, while loans to banks increased 38%. South African customer loans grew 8% to almost ZAR 970 billion, and the Africa regions increased 14% or 17% in constant currency to ZAR 140 billion. Looking at our divisions, loan growth was pretty well diversified. Product Solutions Cluster loans grew 9% to ZAR 400 billion, with healthy production levels across the portfolios.
Everyday Banking increased 12% to ZAR 67 billion due to improved customer activity levels. Relationship Banking grew 7% to ZAR 135 billion, given continued momentum in the agri-portfolio, plus better growth in commercial asset finance and overdrafts, where improved business investment confidence was evident in some sectors, particularly transport and logistics. ARO RBB loans grew 13% or 16% in constant currency to ZAR 72 billion, with growth evident across personal lending, mortgages, and commercial. CIB customer loans grew 8% to ZAR 432 billion, driven by 14% growth in Corporate Bank as demand for short-term funding improved, while Investment Bank loans increased 7% or 15%, excluding reverse repos. CIB South Africa loans grew 7% or 15% excluding reverse repos, with CIB ARO double that at 14% or 17% in constant currency.
Our retail market share remains strong at 22% in South Africa, with continued momentum in secured lending and focused improved production in unsecured. Home loans grew 9%, improving our market share to almost 24% on strong first half production. We saw a mix shift in customers from first time homeowners to more affluent customers, which together with competition, saw some pricing pressure. Vehicle and asset finance also rose 9% with 5% higher production, maintaining our market share just over 23%. Margins are stable with some pressure emerging on new business pricing due to increased competition more recently. Credit cards grew 13%, reflecting strong new account sales together with increased limits and utilizations with turnover volume up 13%. We remain the largest by market share just over 26%, which excludes our large Woolworths Financial Services book.
Personal loans increased 10% with production up 30%. With strong growth in digital sales on our mobile banking app, personal loans remain a small portion of our retail lending and our market share is very low at just 10%. Having increased our total customer deposits by 15% and 12% the previous two years, growth slowed to 3% or 4% in constant currency to ZAR 1.1 trillion, including strong 30% bank deposit growth. Overall deposits rose 6% to over ZAR 1.2 trillion. Everyday Banking and customer deposits grew 4% to ZAR 290 billion, driven by 9% growth in fixed deposits and 4% higher savings and transmissions deposits, while check account deposits decreased 1%.
Growth slowed in part because the Absa Money Market Fund migration to our balance sheet is now in the base. Our market share decreased slightly to 21.4%. Relationship banking deposits increased 7% to ZAR 201 billion on the back of 8% higher savings and investments with transactional deposits up 6% where customers have built up liquidity the past two years. ARO RBB deposits rose 9% or 13% in constant currency to ZAR 110 billion, with transactional deposits 11% higher and investments up 23%. Deposits also remain a priority for CIB, and while its customer deposits were unchanged at ZAR 407 billion, the underlying picture is better. Core check deposits grew 17%, largely offset by reduced national government balances that are more short-term in nature.
CIB South Africa deposits decreased 1%, although excluding repos and National Treasury deposits it grew 4%. CIB ARO deposits were flat or up 4% in constant currency and 6% on average. Growing non-interest income remains a key priority for us with improving underlying trends. Total non-interest income grew 18% to account for almost 40% of our revenues. There were three drivers of this growth. Firstly, the largest component, net fee and commission income grew 7% with transactional income up 9% and merchant income increasing 10%. It was pleasing to see Everyday Banking's growth improve to 9%, while CIB remained robust at 11% or 13% in constant currency. Second, other non-interest income rebounded strongly after dropping significantly last year.
Within this, South African insurance increased by ZAR 1.8 billion from 2021, given significantly lower COVID-19 claims and reduced reserves. Excluding this rebound, group non-interest income still grew very nicely, about 13%. Thirdly, net trading excluding hedging effectiveness grew 9%, which is higher than the 3% increase in Global Markets income, which was coming off a high base. I should note that sundry income included over ZAR 750 million profit on disposal of the Absa investment cluster, which is a non-headline item. At a divisional level, Product Solutions Cluster non-interest income grew 60%. This is reflecting the large rebound in South Africa insurance revenue as well as 8% growth in life net premiums.
Everyday Banking grew 9% to ZAR 12 billion, driven by growth in customers and normalizing economic activity that outweighed the continued drag from migration to lower margin digital channels. Card issuing turnover grew 13% and digital transactions 15%, while cash withdrawals from branches and ATM activity decreased noticeably. Relationship Banking increased 3% due to 4% growth in digital volumes, plus 12% higher acquiring volumes partly offset by 10% lower cash volumes industry-wide as customers continue migrating to digital channels. ARO RBB rose 27% or 25% in constant currency due to growth in active customers. Improved cross-selling, plus strong growth in foreign exchange and card revenues up 51 and 42% respectively. These outweighed limited fee increases and the shift to digital transactions. CIB's non-interest revenue grew 11% or 13% in constant currency.
Drivers included very strong 21% growth in Corporate Bank trade finance in South Africa and transactional revenues up 19%. Global Markets ARO increased 20% in addition to strong Investment Banking Division fees and a one-off litigation recovery. Global Markets South Africa decreased 8% off a high base given reduced client activity, particularly in fixed income. Moving to costs, our operating expenses increased 7%. Staff costs also rose 7%, accounting for 55% of total operating expenses. Within this, salaries and other staff costs increased as reduced restructuring costs partly offset salary inflation. Provisions for bonuses grew 20% linked to our improved performance, while deferred cash and share-based payments increased 25%. Non-staff costs grew 8% or 7% in constant currency.
Calling out areas of higher growth first, IT costs increased 12% due to continued investment in digital platforms requiring cybersecurity and licensing spend. Total IT spend, including staff, amortization, and depreciation, grew 8% to almost ZAR 13 billion, which is now 25% of group costs. Professional fees rose 22%, mainly from higher investments on strategic initiatives. Marketing costs grew 34% due to increased campaign spend, sponsorship, and corporate social investment spend, all off a low base. Amortization of intangible assets increased 15% given investment in new digital data and automation capabilities. Costs also reduced in several areas. Depreciation fell 10%, primarily due to continued optimization of property and physical IT infrastructure. Property costs declined 1%, reflecting ongoing property optimization. Cash transportation costs fell 1% given migration to digital banking and benefits from increased cash recycling.
We spent ZAR 80 million on diesel last year to keep our infrastructure running during load shedding, with more than half of that in the fourth quarter. If load shedding stays at February's level and the price of diesel doesn't change, we could spend about ZAR 200 million this year. Should load shedding average Stage 6 during this year, the cost would increase to over ZAR 350 million. Standing back, I'm very pleased that our cost-income ratio has improved to 51% from 58% pre-COVID in 2019. You can expect continued focus from us on this effort. Turning to credit impairments, our charge grew 61% to ZAR 13.7 billion, largely due to substantially higher credit charges in the South Africa retail lending portfolios and coverage raised against Ghana Sovereign Investment securities and related exposures in the banking book.
Rising interest rates and higher inflation, plus non-recurrence of 2021 model enhancement benefits totaling ZAR 1.1 billion, saw South African retail credit impairments increase across loan categories. Product Solutions Cluster credit impairments doubled to ZAR 2.6 billion, a 65 basis points credit loss ratio. Within this, home loans swung to a ZAR 688 million charge from a ZAR 134 million credit. Although its 24 basis points credit loss ratio remains comparatively low. Vehicle and asset finances credit impairments grew 33% to ZAR 1.9 billion, a 176 basis points credit loss ratio. Its charge improved materially in the second half as we resolved DebiCheck implementation issues that I mentioned in the first half. With its credit loss ratio well back within its target range in the second half.
Everyday Banking credit impairments grew 33% to ZAR 5.8 billion, a 645 basis points credit loss ratio. Card credit impairments increased 23% to ZAR 2.9 billion off a base with significant model enhancement benefits. Personal loans charge rose 49% to ZAR 2.4 billion at 10.2% credit loss ratio. Its credit impairments reflect book growth and pressure on consumers, particularly in the second half of 2022. Relationship Banking's charge fell 29% to ZAR 618 million due to an improved book construct, reducing its credit loss ratio to 45 basis points. ARO RBB credit impairments decreased 8% to ZAR 1.2 billion, reducing its credit loss ratio to 164 basis points. The decline reflects a better retail book construct, improved collections, and single name releases in Business Banking.
CIB credit impairments grew 87% to ZAR 1.4 billion, a credit loss ratio of 27 basis points. Corporate Bank credit impairments swung to a ZAR 440 million charge from a net ZAR 35 million credit, increasing its loss ratio to 40 basis points. The increase was due to a single name impairment in South Africa and higher charges in Ghana. Bank credit impairments increased 22% to ZAR 937 million at 24 basis points credit loss ratio as higher Ghana related charges outweighed lower stage three and performing impairments in South Africa. CIB South Africa credit impairments dropped 36% to ZAR 424 million at 12 basis points credit loss ratio.
However, CIB ARO's credit charge increased substantially from ZAR 76 million to ZAR 954 million, a 109 basis point credit loss ratio, due to Ghana-related charges. Lastly, we took a ZAR 2.2 billion impairment at head office and treasury due to a Stage 3 impairment recognized on investment securities issued by the Government of Ghana. We do not include impairments on investment securities in our credit loss ratio calculation. Had we included them, our group credit loss ratio would have increased to 114 basis points rather than the 96 basis points we report. Excluding all the Ghana sovereign-related charges, our credit loss ratio was 91 basis points, slightly above the midpoint of our through the cycle target range of 75-100 basis points and similar to first-half levels.
It's pleasing that group non-performing loans or Stage 3 loans declined further to 5.3% from 5.4%. The improvement was due to loan growth in the denominator and concerted efforts to manage our NPLs in our South African consumer lending portfolios. NPLs reduced across home loans, cards, and Relationship Banking, while vehicle and asset finance increased due to customers in debt review and some pressure on the legal book, while personal loan inflows into NPLs grew in the second half. Relationship Banking NPLs decreased due to recoveries and higher write-offs. Strong loan growth improved ARO RBB's NPL ratio. Lastly, CIB's NPL ratio increased, reflecting loans to the Government of Ghana.
Our stage three coverage remains appropriately positioned in this environment, improving slightly to over 46% due to an aging legal book in home loans and additional stage three impairments in CIB on some specific names. As you'd expect, given the sharp increase in load shedding from the fourth quarter of 2022, we've done substantial work on its impact on our customers and credit impairments. To date, we have not seen load shedding directly cause a noticeable increase in credit impairments, although its severity only worsened from September, so it's relatively early days. The impact differs across sectors, provinces and client size. SMEs ability to absorb the additional cost and disruption tends to be lower, although our SME book is relatively small.
Given that load shedding has occurred for several years, often larger clients have already invested in alternative sources of energy such as generators, but many are now looking at solar solutions given the extent of load shedding and high costs of fuel. Across sectors, the primary agri-portfolio has the most direct correlation between power supply and stress, but this is not observed in other sectors. While at current levels, load shedding may be manageable, the confluence of cost pressure and other disruptions, including water and transport, will continue to weigh on marginal businesses. Water supply is also starting to be a major issue in several areas. In many cases, clients have not passed on the additional cost to their customers, but this is likely to change in future.
Load shedding has also had an impact on our service providers, including courts, attorneys, and collectors, that could increase costs and slow down recoveries and the collections process across our portfolios. Moving to divisional performances now, m ost produced strong pre-provision profit growth, although earnings trends were more mixed and show the benefits of our diversification. Product Solutions Cluster earnings grew 26% to ZAR 3.5 Billion rand, driven by 42% higher pre-provision profits. Revenues grew 25%, including 60% higher non-interest income growth as Insurance SA revenue rebounded from elevated COVID-19 claims and reserving in 2021. Costs grew 9%, resulting in a 45% cost income ratio. Credit impairments were a drag, doubling in large part due to one-off model benefits in 2021.
Everyday Banking's earnings were unchanged at ZAR 4.1 billion as 33% higher credit impairments offset 17% growth in pre-provision profits. Revenues grew 10% with net interest income up 11% in line with the growth in customer loans. Non-interest income increased 9% given growth in customers and transactional activity. Costs rose 5%, improving its cost income ratio to 53%. Relationship Banking's earnings rose 8% to ZAR 4 billion as pre-provision profits increased 4% and credit impairments dropped 29%. Revenues grew 5% with net interest income up 7% in line with balance sheet growth. Non-interest income was muted, growing 3% despite 12% higher acquiring turnover given lower cash volumes. Costs grew 6% producing a 55% cost income ratio.
ARO RBB earnings grew nine-fold to ZAR 1.1 billion from ZAR 106 million due to a combination of 30% pre-provision profit growth and 8% lower credit impairments. Revenues grew 19% with particularly strong non-interest revenue growth up 27% with higher active customer numbers and activity levels, plus growth in targeted areas such as cards and foreign exchange. Costs rose 15% slightly above the 11% average inflation across our ARO markets, reflecting performance costs and investments in digital. CIB, our largest division now, increased earnings 9% to ZAR 9 billion, driven by 13% higher pre-provision profits. Revenue increased 12% with an improved second half. Net interest income grew 13% in line with 14% loan growth. Non-interest income increased 11% to account for almost 40% of total revenue, given strong growth from Corporate Bank.
Costs grew 12%, reflecting higher performance costs, inflationary pressures across several countries, increased travel spend and strategic investment in digital capabilities. CIB's cost income ratio improved to just below 47%. Head Office, Treasury and Other earnings fell 72% to a ZAR 692 million loss as credit impairments swung from a small credit in 2021 to ZAR 2.2 billion due to Ghana sovereign debt charges. The charge offsets strong revenue growth as net interest income more than doubled because Treasury had reset benefits from rising policy rates in South Africa, higher investment returns and increased endowment revenue. Non-interest income also more than doubled, largely due to the substantial profit on selling down our asset management business, which is excluded from headline earnings.
The diversity of our earnings is very evident, particularly when you consider that the businesses themselves are all diversified by activity and/or geography. Our large businesses generated returns comfortably above our 14.5% cost of equity, with Everyday Banking and Relationship Banking producing very attractive returns. ARO RBB's return on regulatory capital increased materially off a low base, and we expect it to improve further over the medium- term. We allocate capital based on sustainable expected returns with a focus on continuing to grow capital light revenue over the medium -term. Unpacking the Product Solutions Cluster now. Home loans earnings declined 17% to ZAR 2.2 billion as credit impairments increased off a very low base to outweigh the 5% pre-provision profit growth. Home loans net interest income grew 6%, reflecting loan growth, partially offset by increasing pricing pressure and higher funding costs.
Its cost income ratio remained efficient at just below 33%. Similarly, vehicle and asset finance earnings fell 27% to ZAR 493 million because credit impairments grew 33% to offset 13% higher pre-provision profits. Net interest income grew 12%, also in line with loan growth. Its cost income ratio is also relatively attractive at 36%. Insurance South Africa's earnings rebounded to almost ZAR 1.4 billion from just ZAR 68 million. Life insurance earnings recovered to ZAR 1.2 billion from a ZAR 174 million loss on the back of 8% net premium growth, 36% lower net claims and a ZAR 423 million release from the COVID-19 reserve. Non-life insurance earnings dropped 36% to ZAR 155 million due to higher weather-related and load shedding surge claims.
Moving to the Everyday Banking franchises, higher credit impairments offset strong pre-provision profit growth in its unsecured lending businesses. Card earnings declined 13% to ZAR 856 million as credit impairments rose 23% off a low base to outweigh 14% growth in pre-provision profit. Card revenues grew 12% with net interest income up 13% in line with book growth, while non-interest income increased 9% benefiting from growth in customers. Personal loans swung from a ZAR 146 million profit to a ZAR 108 million loss as credit impairments rose 49% to offset 26% higher pre-provision profit. Revenue growth was strong up 18%, driven by 19% higher net interest income. This business remains relatively subscale given its low market share of just 10%.
The largest business here, transactions and deposits, grew headline earnings 6% to ZAR 3.3 billion due to 9% higher pre-provision profit on the back of pleasing 9% non-interest income growth. Cost growth of 6% was well contained, considering large investments here in digital marketing, fraud detection, prevention activities as well. I covered Relationship Banking's performance somewhat earlier, but want to make three key points here. Firstly, it's a strong contributor to group deposit gathering as a large net originator of customer deposits, and we see further potential here. Secondly, reflecting this and our large card acquiring business, Relationship Banking generates attractive returns in the mid-twenties. Third, we see several growth opportunities in this division. While we have a large SME franchise, we aim to grow this segment using our digital offerings.
We also view the wealth franchise as an area that we can improve materially, and we put new leadership in place to do that. We also have plans to improve the relatively low cross-sell of commercial asset finance into our Relationship Banking client base. We expect to see benefits from changing Relationship Banking to a more client-centric model. Turning to CIB now. This slide breaks it out by business and geography, although as you know, we run it on a Pan-African basis. Starting from corporate, which performed very well, headline earnings grew 30% to almost ZAR 3.5 billion, as 36% higher pre-provision profits outweighed a substantial swing in credit impairments from a small net credit in the prior year.
Revenues grew 19% with pleasing growth in transactional revenues and improved customer primacy, wider deposit margins, good execution of its Pan-African trade strategy, and a one-off litigation recovery. Investment Bank earnings declined 1% to ZAR 5.5 Billion , as 22% higher credit impairments offset 1% pre-provision profit growth. Revenues grew 7%, driven by 21% growth in ARO, where Global Markets revenues were strong, while South African Global Markets revenues were flat. Using a geographic lens, CIB South Africa earnings grew 6% to over ZAR 6 billion , reflecting 2% higher pre-provision profits and 36% lower credit impairments. Revenue growth of 6% was well below 11% cost growth, resulting in a 49% cost-income ratio.
Conversely, CIB ARO earnings rose 15% or 9% in constant currency to nearly ZAR 3 billion as substantially higher credit impairments partially offset strong 33% growth in pre-provision profits. 23% revenue growth was well ahead of 12% cost growth, improving its cost-income ratio to below 43%. ARO RBB's improved revenue momentum and strong earnings recovery is an encouraging performance as we seek to reposition its growth trajectory and returns. While its profitability increased significantly, its regulatory return on capital remains well below of cost of equity. Its cost-income ratio remains above 70%, which we expect to improve materially over the medium -term. We see opportunities on both the cost and revenue front with scope to continue growing our customer base, roll out enhanced digital products, including in payments, integrate our insurance business, and extract opportunities from our corporate client ecosystems.
In total, our Africa region's revenue grew 21% or 22% in constant currency off a relatively low base to almost ZAR 25 billion. As such, it grew ahead of South Africa's 13% and now accounts for 1/4 of our group revenue. Revenue growth was strong across ARO, RBB, and CIB, up 19% and 23% respectively. Strong Africa region's revenue growth drove 34% higher pre-provision profits. However, its credit impairments more than trebled because of the significant Ghana sovereign debt-related charge. As a result, Africa region's earnings fell 4% to ZAR 2.7 billion, reducing its return on regulatory capital to 10% from 12%. Its contribution to group earnings also decreased to 13%. The other countries besides Ghana performed very well last year, illustrating the benefits of having a portfolio of countries across the continent.
For instance, excluding Ghana's sovereign debt related impairments, Africa region's earnings would have been up 60% and its ROE well above cost of equity. We continue to see significant potential to grow our existing portfolio and enhance its returns over the medium -term. We remain very well capitalized to fund our growth opportunities. Our CET1 ratio was consistent with the prior year at 12.8%. It's higher than the top end of our board target range of 11%-12.5%, well above pre-COVID-19 levels, and comfortably exceeds regulatory requirements. Group risk-weighted assets increased 8% to ZAR 1 trillion, with the largest component, credit risk, also up 8%. These are slightly less than the growth in group gross loans and total assets of 11% and 9% respectively, indicative of continued optimization efforts.
We remain strongly capital generative, with profits adding 2% to the CET1 ratio over the year, partially offset by paying 90 basis points worth of dividends. The strong CET1 ratio allowed us to increase our dividend payout ratio to 52% from 36%, resulting in a 66% higher ordinary dividend of ZAR 13 per share, our highest on record. It's 16% above pre-COVID-19 levels in 2019. We are deliberately well-positioned for the tough macro backdrop that we expect this year. Specifically, I want to emphasize our strong capital levels. Our group total capital adequacy ratio of 16.6% is comfortably above our target of over 14.5%. Moreover, we remain very capital generative. Importantly, we are also appropriately provisioned, having built considerable coverage during 2020.
While our total coverage has reduced slightly, it remains very strong at 3.9%, again, well above pre-COVID levels. Our strategies of growing customer deposits have worked out well, and thus we have very strong levels of liquidity, including in hard currency. The outlook for the global, regional, and domestic macro environment remains very uncertain. Geopolitical concerns, particularly the Russia-Ukraine conflict and rising tension between the West and China, look likely to impact the outlook for some time. We expect global financial conditions to tighten further as central banks continue to express concern over underlying inflation pressure, even as headline inflation eases. We expect global financial markets to remain volatile and financial flows into emerging markets will remain vulnerable. We expect the South African economy to grow by less than 1% in 2023.
Electricity supply is likely to remain a significant risk for the economy for the foreseeable future. We believe that the Reserve Bank will increase rates by 25 basis points this month, given the more hawkish Fed, January's large increase in food price inflation, and the weak rand. We see the repo rate ending the year at 7.5%, with Prime at 11%, with rate cuts pushed out to at least next March. We forecast 4.4% GDP weighted economic growth for our ARO presence countries in 2023. On balance, the risks to growth are to the downside, as the more depressed global environment, high domestic inflation, and tighter monetary policy in most ARO countries are likely to provide a headwind to growth. Ghana's near-term outlook is clouded by its debt and structural adjustment challenges.
We expect East African markets, along with Mozambique, to generally perform strongly. Based on these assumptions, and excluding further major unforeseen political, macroeconomic, or regulatory developments, our guidance for 2023 is as follows: We expect high single-digit revenue growth driven by net interest income, given high single-digit growth in customer loans and higher policy rates. Our net interest margin benefits from rising rates with a ZAR 550 million uplift on an annualized basis for a 100 basis points increase in policy rates post the structural hedge. Given higher rates and inflationary pressures, our credit loss ratio is likely to be at the top end of our through the cycle target range of 75-100 bp s.
We expect mid-to-high single-digit operating expense growth, resulting in a similar cost-income ratio to 2022, and we expect mid-to-high single-digit growth in pre-provision profits. Consequently, we expect to generate an ROE of around 17%. Lastly, our Group CET1 capital ratio is expected to remain at the top end of the board target range of 11%-12.5%. We expect to maintain a dividend payout ratio of at least 52%. Given material base effects in 2022, we see differing trends between the first half and second half in 2023. In the first half, we expect stronger revenue and pre-provision profit growth, although our credit loss ratio is likely to exceed our through the cycle range in the half and dampen earnings growth off a relatively high base.
Conversely, despite slower second half revenue growth, credit impairments are expected to decline substantially to support stronger earnings growth in the second half. In terms of medium-term guidance, we still aim to achieve a cost income ratio in the low fifties and an ROE above 17% on a sustainable basis, which is heavily dependent on the macro backdrop globally and in our presence countries. Thanks very much for your attention and for your support, and I look forward to meeting many of you over the coming week. I'll hand you back to Arrie now.
Thanks, Jason. In concluding, I would like to add the following remarks. We are conscious that the macro environment is tough and is expected to get tougher, but we have a well-positioned and resilient balance sheet to withstand it. We believe in our strategy, and we have momentum behind us. Along with a stable and experienced leadership team, I am confident that we will be able to sustainably achieve our targets. We will now take your questions on Slido.
We've got a host of questions coming through here on Slido. What we're going to do is I'm going to read them out to us, just so everyone's sighted on what the questions are in case you haven't got access to the questions. I'll attribute them to whoever's raised them. Between Arrie and myself, we're going to answer all of them. I've brought two questions here. One's from Charles Russell at SBG Securities and one's from Kian at Citi, dealing with Ghana and the sovereign debt portfolio impairment that we raised. I'm going to cover those together. In essence, firstly, our posture was to deal materially and decisively with that risk in Ghana in our 2022 accounts. There's a host of instruments there.
They were all held in our banking book, though, very much for liquid asset purposes. In other words, you know, providing us with liquidity. We basically marked all of the instruments that were applicable to the debt swap entirely to the debt swap arrangements. That's fully dealt with. Where there are instruments that they aren't included in the debt swap, we looked at the risk of those and treated them pretty consistently with the instruments that were in the debt swap. In essence, our process was to build very material coverage to put that risk in the 2022 accounts. If you just look at the other parts of the questions there, you know, there's...
Charles is asking about how that plays out in going forward, the tail risk, so to speak. Like I said, we really believe we've built material coverage for this item. Of course, there are dependencies in tail risk terms, more on the success of the IMF intervention in that market, which is not in our hands, but which the government of Ghana is making great progress with, as we understand it. That's probably where the tail risk or opportunity may result as opposed to what's going on in our accounts.
Then Charles, on the credit loss ratio, we, well, you know, credit loss ratio is usually expressed, there's a numerator and denominator, which excludes sovereign bond investments because simply they're more, you know, sovereign bond investments as opposed to loans. We sort of showed three ratios, in fact, so anyone can make up their own mind in terms of how to analyze it. The ZAR 12.7 billion credit charge includes all of our exposures in Ghana, which is ZAR 2.7 billion. ZAR 2.2 billion of that was sovereign bond related exposures.
About ZAR 500 m illion were exposures that we had to the government generally, through SOEs or others, which we basically applied a default grade to the calculation. We dealt with that risk as well. If you had to exclude Ghana in total, all of these risks from our loan loss ratio, it'd be 91 basis points, very similar to the first half. If you had to include it, if you had to include the actual loans, in other words, the ZAR 500 million, which are loans, the ratio would be about 95, 96 basis points. We showed a pro forma. If you had to include the investment securities in this as well, it would be 140 basis points.
I think the right ratio is probably the 95, 96 basis points, 'cause that shows, let's call it everything related to lending. I hope that helps, guys, that's, you know, should give you a sense. That's the level of coverage we built for those risks. I read there's one from [Donata from Mipta]. She says, "With the increase in credit impairments in the South Africa retail book, how is that expected to impact your book writing abilities for 2023?" Do you want to start on that?
Yeah, let me start, Jason. Donata, thank you very much for that question. Of course, you're referring to retail SA book, which means you're referring to, you know, what we see in the South African environment. Of course, as expected, we would expect consumer distress to rise in the current SA environment. I think, of course, right at the center of that is just apart from inflation and the other components that we've seen, is just how the central bank has reacted. I think what we've seen over the last year is not just the number of rate increases, but also the pace of rate increases.
I think, what we always know is that, you know, consumers can normally adjust to these sort of rate changes, but when they come as fast as what they have, it takes consumers a little bit more time to adjust to those changes. If we look at the rate outlook, our view is that we're probably almost at the end of the cycle. These rates that we're currently seeing in the South African market is not unlike what we're used to. It's really just getting used to that sort of level of rate hikes, from a consumer perspective.
As we look at our risk appetite, what's important is that we look at our risk appetite across all our asset classes in a very dynamic way, you know, to ensure that we stay within appetite, which we said quite clearly. Of course, you know, our appetite is 75 - 100 basis points. As we look at the current South African market across all these asset classes, we still believe we're well-positioned to find the opportunities of growth in all these, you know, in all these asset classes. We've invested significantly over the last couple of years in our risk management capability across the full value chain. Of course, we clear where we can lend, how we can lend. And as I said earlier, because we're dynamic, we stress these portfolios and vintages continuously.
Of course, a key part of that stress is how we think of percentages of the income versus versus the actual installment. Those stresses are all built into our portfolio. I think we've got confidence in our risk management capability. Our files are still operating within our risk appetite, and we continue to see growth. We will make the adjustments, you know, as we see the need for that. [Donata], hopefully that gives you a sense of our posture in this space.
Super. Thanks, Arrie. Just to be absolutely clear there, we've guided for high single-digit loan growth, which implies, as Arrie said, a continuation of momentum, on a realistic basis, given the stress we see out there, of course. Kiamu, I think we've covered your question there on Ghana. There's just one little part at the end of it that I might want to add to, which is, in essence, what would happen with group exposure and what would catalyze provision releases related to exposures in future periods. I think I've covered most of it with respect to how it plays out and the dependency on the IMF intervention. Of course, what we're also looking for there is trade in those bonds being established again and price discovery occurring.
Our sense would be that with IMF intervention being successful at some point, hopefully relatively soon, that price discovery would be more positive than what was experienced when there was a lack of confidence towards the end of the year last year. Next, we've got Kabelo from Mazi. Hi, Kabelo. You've got four questions there. We'll deal them between Arrie and myself. The first two deal with the progress on our net zero plan, options to invest in alternative energy to reduce the impact of load shedding on the business. We've got the regions we see the most opportunities in Africa, and then a specific question on recap of Ghana. Arrie, will you take the first three of those, and then I'll cover, four and whatever else.
Kabelo, thanks very much. There's quite a couple of questions in there. I think firstly, on the point of net zero, I think it's important that we take a step back and just sort of reconfirm again that we've made quite a significant commitment to ESG in our last strategy revision process. In fact, we've appointed a Group Chief Strategy and Sustainability Officer by Punki Modise into that role, which now sits right at the executive committee. I think that was exactly the right thing for us to do, given this given this focus. Of course, as we look at that strategy, we're looking for three areas of focus, which of course includes climate.
The first one is climate, the second one is financial inclusion, and the third one is promoting diversity and inclusion. If we specifically focus on climate, which is your question, you would have seen that in this last year, we published our fossil fuel financing standards and caps, as well as issued our second TCFD report. Clearly in there, we're very clear around what our ambition is in this space. I think to your point around, do we see opportunities around load shedding, we certainly see this area as an absolute area of growth.
What we are seeing as we talk to our customers and our clients across our franchise in South Africa, everybody is looking at opportunities to invest, to reduce the resilience on the national grid. You would have seen in our results and reports over the last couple of years that, in fact, Absa has built up quite a strong leading position in terms of financing renewable projects. I think the specific area that we see as an opportunity is specifically the captive power market, where we've seen some significant success, and we will definitely see some more as these projects come off the line. Apart from that, Kabelo, there's obviously also a lot of focus now on reducing demand.
I think apart from dealing with corporates, specifically in the mining and manufacturing space, you know, we're also going to drive quite a few solutions for our business bank clients and in fact, individual clients, you know, as we look at this year. Certainly an area of big, you know, big focus for us. As we talk about the region, and where we see opportunities, I think if you look at our ARO portfolio today, we've got a well-diversified portfolio, very strong in Southern Africa, very strong in Eastern Africa, with som e West Africa exposure.
If we look at growth expectations across our markets, Jason's still well above 4%. Of course, South Africa is the one that is, that is quite low you know, at 1%. If we look at the performance across all these markets, of course, Ghana is an outlier for us, but we are seeing good performance in markets like Kenya, Botswana, Zambia. You see some good progress in, you know, in Tanzania. Certainly our ARO environment for us is an area that we expect faster growth than South Africa. I think we're still very clear as well that there may be some other opportunities that we will look at, we'll be very thoughtful about, you know, as we look for expansion opportunities outside our existing markets. There's significant growth organically to look at, you know, in all those markets. Jason, do you want to talk about Ghana recap?
Yeah. Thanks, Arrie. Thanks, [Kabelo]. Firstly, you know, just to reiterate our commitment to a business that, and I'm talking about Absa Bank Ghana now, that is strategically important to us. Secondly, as we see it now, that business is exceptionally well-capitalized, well above board targets and minimum regulatory requirements. At the moment, we don't see a need to recapitalize our Ghana business based on everything that we've done and including the impairments that we've already taken. Thanks, [Kabelo]. I'm just checking what's next here. We've got Harry Botha from Anchor Stockbrokers. Harry's got two questions. Can you unpack the expansion in margin in financial year 2022, and your view on the impact of NIM in 2023?
What's the outlook for IT CapEx and total operating expenses in FY 23? Can you provide more detail on what the CapEx relates to? Harry, I'll take those two. Firstly, Harry, you know, I think we've done very well around margin expansion for the last number of years, and especially in the period post-COVID. Our margin's back to about 4.5% at a group level. We're very pleased with that margin. You'll see relative to peers, it's very competitive. Our view going forward would be that we are still geared towards rising rates. Although there were, you know, substantial rate increases last year, the effect of some of that is still ahead of us.
We see Prime going to 11% now in South Africa, for instance, up another 25 basis points, then staying at these levels for the entire year. Where previously we thought rates would start coming down towards the end of the year. We think that actually only happens or starts again in first quarter of next year. We clarified that for every 100 basis points, we have ZAR 550 million of net interest income. That should help you understand that, you know, we expect our margin to at least maintain the 4.5 and go up slightly.
If you look at the outlook for IT CapEx and operating expenses, we've said that, you know, we're actually very proud, Arrie and myself, to get the cost income ratio down now to 51.5%. We want to keep it there. There's two parts, of course. Some continued revenue momentum and continued focus on costs. We expect mid to high single digit cost growth this year. On the IT side, you know, if you include all aspects of IT, including the staff that work in those departments and others, that's about 25% of our cost base now. It's an area that will continue to grow faster than the rest of our cost base because of exactly those investments that we're making. They're largely in the digital space, of course some cybersecurity related to that as well.
That'll be the outlook for cost there, Harry. James Starke has two questions. Please share some thoughts on how you see events in the U.S. banking system possibly impacting the cost of funding in South Africa's bank system. James, yeah, of course you're referring to the Silicon Valley Bank episode that's playing out in the U.S. We don't see an impact of that on the South African banking system as we know it. That's probably a question more for our regulators than for us. We're certainly not aware of any impact and certainly on cost of funding as well. We don't see that event having an impact on cost of funding. You know, we have a very structurally long hard currency position, meaningfully so in our funding profile, and we expect to maintain that. Sorry, I don't know if you want to add to that?
Yeah, let me add to that. James, thanks for that question. I think, you know, Jason spoke to our funding structure, the quality of that funding structure and of course, the quality of our deposits book. I think if you look what happened in the U.S. last week, I think it's actually a combination of a number of factors. You know, firstly, what we've seen in Silicon Valley Bank, and I think we haven't had a lot of time to actually unpack that. If you quickly look at some of the structural issues that they dealt with, of course, you know, they needed to deal with the interest rate in their banking book, which caused some level of uncertainty.
Because they're mostly a digital bank, you saw a very fast run off of deposits, which put them in a very, very difficult situation. In the U.S., I think they're about the 16th largest bank. I think the market reacted quite strongly to that. James, it was because at the same time, you've also seen some large crypto exchange failures happening at the same time. You saw that reaction. I agree with Jason. I think the inflow into SA banking stocks, I think is a little bit earlier. It's a little bit earlier. I think we just need to give that a bit of time. I think if you look at how we structured, how we funded, we don't expect any, you know, short-term pressure as a consequence of that.
Thanks, Arrie. Thanks, James. James has one more question, which is about the credit loss ratio outlook guidance and predicated on our 1.1%, South African real GDP base case. Does the guidance bake in a softer GDP outlook? Yeah, James. Our South African GDP outlook has been moderated down to only 0.7% now, and that's our base case. Okay. Thanks for that, James. Thanks for both of those questions. Right. Let's go to the next one here. This is an anonymous one. Your dividend cover looks comparatively high to peers with similar CET1 and CET1 above board target ranges. Can you explain your motivation? Is there a potential capital call in Ghana? Are you retaining capital for potential BBEE financing or are you just being conservative?
Thanks for that question. A couple of things. You know, we paid out sort of ZAR 13 last year. If you do a dividend deal calculation, you'll see that's a 7% dividend yield. I think reasonably attractive. Of course, our primary reason for retaining our CET1 above our board target range at 12.8% at the moment deals more with the conversation that Arrie and I had earlier with one of the other questions around growth. We intend to grow. We see high single digit loan growth this year, and certainly that would be the reason why we would want capital for that. We've got a slight bias towards caution still, given all of these global uncertainties.
No, it's certainly nothing to do with a potential capital call in Ghana. Like I said, Ghana is well capitalized in its own right, stand alone, well above its target range and a very resilient business. Certainly, we are also not retaining capital for potential BE financing. I don't think we're being conservative. I think we're just being realistic given the growth prospects we see in our company right now. We've got Harry Botha from Anchor Stockbrokers again. Harry, thanks for another question. It's a specific question on deal closures in REIPP Round 5. How many closed in H1 2022? What's the outlook for 2023 regarding timing and NIR impact? Quite specific there.
Look, like Arrie said, we've done very well, I think, on renewable power strategies for a number of years with a leading position. The very specific answer there is two wind deals closed last year. Four more closed in January and February. Those were more wind-related. With respect to the PPAs for PV projects, they were signed in December with Eskom, and we expect to sort of see finance closure or financial closure in the second quarter of this year. To actually give you a sense as to where those are in the pipeline.
Of course, you know, when we speak of, you know, not just what Arrie said in terms of the benefits, for the country in terms of transition to renewable, these are very positive for margins as well as NIR, particularly given some of the interest rates and FX hedging we do on the side of those transactions. Harry, net positive for NIR. You know, we've got a fairly good base there, and a fairly good pipeline. I think that was the last question. Yeah, I'm just looking at the team. There are no more questions. From our side, thank you. Then, Arrie, do you want to close for us?
Yeah, no. Thanks, thanks, Jason. Again, just from our side, thank you very much for everybody that has joined us. Thank you also for the questions. We look forward to more detailed engagements as we, you know, as we go through the week. Yeah, again, thank you very much for joining us. Much appreciated.