Absa Bank Kenya PLC has reported a Profit after Tax of 10.7 billion shillings for the period ended September 30, 2022, a 30 percent growth compared to a similar period last year.
The impressive results have been realized on the back of double-digit revenue growth, powered by accelerated lending, especially to the Small and Medium Enterprises (SMEs) in recognition of the central role they play in Kenya’s economic transformation and job creation.
As a result, loans and advances to customers increased by 26 percent to 289 billion shillings, underpinned by a solid strategy centered on being a partner for growth for all our customers.
“We have continued to advance financial and non-financial support to other critical sectors of the economy such as manufacturing, energy, agribusiness, health, and housing, enabling them to actively contribute to the growth and development of our country. Consequently, our net interest income grew by 25 percent to 23.3 billion shillings,” said Absa in a statement.
Speaking while releasing the results, Absa Bank Kenya PLC Interim CEO Yusuf Omari said: “We are greatly inspired by the entrepreneurial spirit of Kenyans and are committed to continue providing them with the necessary financial and non-financial resources required for their businesses to thrive. Over the last few weeks, we have empowered over 10,000 SMEs in 10 counties with capacity-building trainings, mentorship and financial support.”
In the period, the Bank’s transformation agenda has continued to pay off, with the non-funded income stream registering a 16 percent growth to 10.2 billion shillings, driven mainly by better performance in FX income and growth from new businesses such as asset management and bancassurance.
“To further improve our customer experience, we revamped our alternate channel capabilities, including updating our mobile banking platform with a QR Code functionality and introduced Cash Deposit Machines. These developments have resulted in the significant adoption of our alternative channels, with more than 92 percent of all transactions now taking place outside the branch,” Mr Omari said.
At the same time, transformational investments continue to yield desired results.
The Bank’s statutory operating expenses increased by 10 percent driven by investments to improve customer experience and drive growth. The cost-to-income ratio has improved to 40 percent, which is within the Bank’s target of mid 40 percent.
According to the lender, impairment increased by 48 percent compared to a similar period last year mainly driven by one-off releases that were booked in 2021.
Non-performing loans ratio is at 6.9% and expected to be better than the industry average, demonstrating the prudence of the Bank’s lending decisions.
During the period, the Banks capital and liquidity ratios remain strong with sufficient headroom above the regulatory requirement.
The Bank’s total capital adequacy ratio closed the quarter at 16.2 percent and liquidity reserve position at 25.8 percent against the regulatory limits of 14.5% and 20 percent, respectively.
The Bank is coming to the successful conclusion of its 5-year strategy anchored on Growth, Transformation and Returns. Among many other achievements, the business has accelerated growth and generated significant returns for shareholders with the Absa stock price being one of the best performing among banks over the 5-year period. These achievements have been delivered while managing through the complex and unique transition programme to Absa, the COVID-19 pandemic and the evolving exogenous Geopolitical shocks.
“We are inspired by the successes of our last 5-year strategy and are excited about the opportunities in our next strategic horizon as we continue building value for all our stakeholders, Mr Omari added.