As Covid-19 continued to sweep around the world, and as many Kenyans and businesses continue to feel the heat, Absa Bank Kenya has been working towards easing pressure on its customers through the restructuring of loans and joining in the Covid-19 fight.
Since the advent of Covid-19 into the country, Absa Bank Kenya has offered loan relief and restructures totaling 57 billion shillings to customers, equivalent to 28 percent of net customer loans and advances.
The lender has also taking part in other response interventions such as the provision of Personal Protective Equipment (PPE) to public hospitals and psychosocial support for frontline health workers.
“The world is facing one of the most difficult challenges of our lifetime, one which governments, industries, businesses, and societies around the world were not sufficiently prepared for and whose full impact is yet to be understood,” said Jeremy Awori, Managing Director, Absa Bank Kenya PLC.
According to Jeremy, the management of the bank has taken the decision to increase credit impairment provisions to position itself for the uncertain future.
“The fortunes of the banking sector follow those of its customers and the broader economy and therefore 2020 will be a tough year for the sector. We believe we must help protect lives and livelihoods and that is why we have extended loan repayment holidays of up to 57 billion shillings in the first half,” he added.
The MD says that the evolving impact of the pandemic has required the lender to revisit its strategic priorities and that it is clear that greater priority must be given to capital and liquidity preservation.
“Our focus in the last few months has been to help our customers manage through the pandemic through various interventions such as loan moratoriums and restructures, fee waivers for digital transaction, capacity building for SMEs, and other Force for Good initiatives,” he said.
Mr. Awori was speaking during the release of the financial results for the first half of 2020. The lender has reported a half-year Normalised profit after tax of KES 1.2 billion.
According to the lender, the normalized performance excludes an exceptional item of 1.7 billion shillings which the bank incurred as part of the just-concluded separation project and brand transition to Absa.
The performance was significantly impacted by a 228 percent growth in impairment largely caused by increased provisions as customers struggled to keep up with loan repayments due to the economic effects of the Covid-19 pandemic.
Non-Performing loans remained broadly unchanged, an indication that the significant increase in impairment provisions is related to management overlay on performing loans.
Despite the raging effects of the pandemic, all business units remained profitable and resilient, registering growth on key lines, with Business Banking and Global Markets divisions revenue growing in double digits.
Total income grew by 3 percent to 16.8 billion shillings mainly driven by the growth of non- interest income, which was up 4 percent year on year.
Costs were well maintained, dropping by 3 percent year on year. Total assets grew by 11 percent year on year driven by growth in customer loans, investments in Government securities as well as other liquid assets.
Net Customer loans were up 8 percent to close at 202 billion shillings driven by key focus products namely General lending, trade loans, mortgage, and scheme loans that recorded strong growth year on year.
Interest income grew 2 percent from the prior year largely because of growth in the balance sheet and success in the management of the cost of funds. Customer deposits grew by 8 percent to 249 billion shillings with transactional accounts making up 67 percent of the total.