Absa Kenya’s Net Profits Jumps 161% to Hit Ksh.10.9 Bn

Absa Bank Kenya PLC has today reported a Profit after Tax of Kshs.10.9 billion, a growth of 161 percent compared to a similar period the previous year.

The strong performance was driven by growth in interest income as the Bank stepped up efforts to support businesses recover from the adverse effects of the Covid-19 pandemic and reposition for growth, particularly in the Small and Medium Enterprises segment.

The Bank reported that its business units remained profitable, registering growth on crucial lines. Total income increased by 7 percent to Kshs.36.9 billion, primarily due to higher interest income, which increased by 8 percent year on year due to increased lending.

Non-funded income grew by 5 percent, driven by innovations and continued digitization. However, this was partially offset by margin compression occasioned by drops in the Central Bank Rate (CBR) whose benefits the Bank continued to pass to customers as a responsible lender.

Total Assets increased by 13 percent to Kshs.429 billion in the period, with growth driven by customer lending such as general lending, trade loans, mortgages and scheme. Customer deposits increased by 6 percent to Kshs.269 billion.

Announcing the results, Absa Kenya Managing Director, Jeremy Awori, said the Bank’s strong performance reflects customers’ resilience in a challenging environment and points to improving macro-economic conditions.

“We have drawn inspiration from the resilience of our customers and are committed to continuing to provide them with the financial solutions they need to pursue their growth ambitions. We are also pleased to resume dividend payment to our shareholders, demonstrating the strength and resilience of our business. The Board has recommended a dividend pay-out of Kshs.6 billion for the year in review,” Mr Awori said.

The Bank’s investment in new businesses is bearing fruit, with Timiza, Bancassurance, Asset Management, among others, contributing to growth in the year under review.

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Apart from the continued investment in digitalisation and automation to improve customer experience, Absa Kenya also significantly increased lending and business support to women entrepreneurs under its Women in Business proposition.

“In the recent past, we have invested over Kshs.5 billion in different platforms and capabilities, including the launch of our first-in-market WhatsApp banking proposition, upgrade of our Timiza platform and improvement of our Absa Mobile app with new features,” Mr Awori said.

In the meantime, the efficiency efforts geared towards creating an easier, faster and better customer experience have paid off and resulted in an improved cost to income ratio of 45 percent from 48 percent in the same period.

“Investments towards building the “most customer-obsessed, digitally-led bank” have improved Net promoter Scores, with approximately 90 percent of all our transactions now being serviced on alternate channels,” said Absa in a statement.

Absa Bank’s impairment decreased by 48 percent compared to a similar period in 2021, reflecting an improving macroeconomic environment for our business and our customers.

Its average loan loss ratio was reduced to 2.0 percent, demonstrating the prudence of our lending decisions.

In regards to capital and liquidity, the ratios remain strong with sufficient headroom above the regulatory requirement. The Bank’s total capital adequacy ratio closed the year at 17.5 percent and liquidity reserve position at 39.7 percent against the regulatory limits of 14.5 percent and 20 percent, respectively.

In light of these improvements, the Bank remains committed to its Growth, Transformation and Returns strategy, which is currently in the fifth year.

Having delivered the core targets on Transformation and Returns strategic pillars ahead of time, the next phase of the strategy will be primarily focused on customer experience as an enabler for growth.

“The Board is pleased to recommend a dividend of KES1.1 per share, totalling Kshs.6 billion final pay-out. This is in light of the strong business performance and continued recovery of the macro-economic environment in the period under review,” Absa concluded.