Absa Bank Kenya Profits Up 15% After A 7% Growth In Total Income

By Soko Directory Team / March 24, 2020 | 11:30 am




The newly rebranded Absa Bank Kenya PLC has reported a normalized profit after tax of 8.5 billion shillings for the period ended 31 December 2019, a growth of 15 percent compared to a similar period last year.

According to the lender, normalized performance excludes exceptional items of 1.5 billion shillings, which relates to costs incurred in the rebranding exercise into Absa.

Absa Bank Kenya, initially Barclays Back of Kenya fully rebranded into Absa after a journey that took almost two years in what most customers are now describing as a revamped service delivery of their bank.

“What has been really exciting about our transition is that we are building on a strong foundation, a rich legacy that spans over a century. As we look into the future, we are excited about the opportunities as well as the challenges.

Particularly so because, just like our fellow Kenyans, challenges present us with opportunities to innovate, to create and continue adding value to our communities. We are excited about this and the chance to co-create the future of our country,” Absa Bank Kenya PLC Managing Director, Jeremy Awori, said.

The performance of the 2019 financial year has mainly been attributed to a 7 percent growth in total income, a 1 percent growth in operating costs partially offset by a 9 percent growth in impairment.

Total assets grew by 15 percent year on year driven by growth in customer loans, government securities as well as other liquid assets.

Net customer loans were up 10 percent to close at Kshs195 billion driven by key focus products namely; general lending, asset finance, mortgage and scheme loans that recorded strong growth year on year.

Customer deposits grew by 15 percent to 238 billion shillings with transactional accounts making up 70 percent of the total deposits.

During the period, total income increased by 7 percent to 33.8 billion driven mainly by the growth of non- interest income, which was up by 9 percent year on year.

The main areas of growth were risk fees, fixed income trading, and risk-managed products (RMPs).  Interest income grew by 5 percent from the previous year largely because of growth in the lending book; though partially offset by the margin compression as a result of a drop in Central Bank Reference rate (CBR).

“The Bank costs were well managed at 17.3 billion shillings reflecting a 1 percent increase year on year largely because of spend discipline and cost save initiatives. The cost saves initiatives included the automation of the processing centers, investment in alternative channels and branch rationalization programs,” said Absa in a statement.

To ensure the financial performance is comparable and to report the progress on the underlying business, Kshs1.5billion has been reported as an exceptional item relating to the cost incurred in the transition to Absa.

Adjusting this number, the normalized profit after tax is Kshs8.5 billion; a 15% growth from the previous year. The Bank will use the normalized profit in making its decision on dividend and therefore exclude the impact of the one-off separation costs.

READ: Absa Bank Kenya To Pay Supplier SMEs Within 14 Days





About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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