Absa Bank Kenya PLC has reported a normalized profit after tax of 6.5 billion shillings, a 23 percent decline mainly driven by COVID19 related provisions compared to a similar period last year.
Normalized performance excludes an exceptional cost of 3.2 billion shillings which went towards the recently concluded brand transition to Absa and restructuring programs.
The bank’s performance was significantly impacted by a two-fold growth in impairment as customers struggled to keep up with loan repayments due to the economic effects of Covid-19 and pro-active provisioning for an uncertain future.
During this period, the bank offered loan relief and restructures totaling over 62 billion shillings to customers, equivalent to 30 percent of its loan portfolio.
The bank contributed over 50 million shillings to the COVID-19 Fund, some of which facilitated the provision of 210,000 PPEs to frontline health workers in public hospitals and an additional 20,000 reusable masks to bodaboda riders and others at-risk.
A further 13 million shillings were invested through colleague-led initiatives in the fight against the pandemic. The bank also partnered with our wellness partner Minet Kenya to provide the necessary psychosocial support to Kenyans during Covid-19.
Speaking during the release of the bank’s full-year results, Absa Kenya Managing Director Jeremy Awori noted that governments, businesses, societies, and individuals continue to grapple with one of the most difficult challenges of our time.
Read More:
- Absa Bank Kenya To Invest Ksh 1.6 Billion In Technology
- Absa Bank Restructured Ksh 57 Billion Since Covid-19, Assets Up By 11%
“We took the decision to increase credit impairment provisions by two-fold to position ourselves for the future. 2020 was a tough year and as is expected, the hardships of the banking sector have continued to follow those of the customers and the broader economy,” said Mr. Awori.
“The evolving impact of the pandemic has required us to re-visit our strategic priorities and it is clear that greater priority must be given to capital and liquidity preservation. Our focus in the last year has been to help our customers manage through the pandemic and we cushioned them through various interventions such as loan moratoriums and restructures, fee waivers for digital transactions, capacity building for SMEs, and other Force for Good initiatives,” Mr. Awori added.
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 2 percent to 34.5 billion shillings mainly driven by the growth of non-interest income, which was up 5 percent year on year.
Normalized costs were well maintained, dropping by 4 percent year on year. Net customer loans went up 7 percent to close at 209 billion shillings driven by key focus products namely; general lending, trade loans, mortgage, and scheme loans which recorded strong growth year on year.
Interest income grew by 1 percent from the prior year largely because of growth in the lending book; though partially offset by margin compression as a result of drops in Central Bank Rate (CBR), whose benefits the bank passed to customers as a responsible lender.
Customer deposits grew by 7 percent to 254 billion shillings with transactional accounts making up to 69 percent of the total deposits.