The top five private South African banks, including Absa - among the continent's biggest - are generally known to have well-capitalised balance sheets and strictly conservative lending practices.

But inflationary pressures, high interest rates, regular power blackouts and logistical bottlenecks are taking a toll on these banks' most sensitive retail and small business customers, leading to defaults.

The lender posted headline earnings of 20.9 billion rand ($1.11 billion) for the year ended Dec. 31, up 1% compared to the corresponding period a year earlier.

Revenue climbed 8% to 104.5 billion rand, while pre-provision profit rose by 6% to 50.1 billion rand.

Credit impairments rose by 13% to 15.5 billion rand, as impairments in the secured lending businesses surged, especially in South Africa, Absa's largest market by revenue.

Absa declared a dividend of 13.70 rand per share, up 5%.

($1 = 18.7725 rand)

(Reporting by Nqobile Dludla; Editing by Jamie Freed and Rashmi Aich)