Absa Bank investors get record Sh7b dividend after bank posts Sh16b profit

Absa Bank Kenya Managing Director Abdi Mohamed. [Jonah Onyango, Standard]

Absa Bank Kenya has posted Sh16.4 billion for the full year for the year ending 2023, an increase of 12 per cent net earnings compared to the previous year.

The lender attributed increased earnings to increased funding of core sectors fueling Kenya's economic growth.

Based on the improved profitability, Absa’s board has recommended a 15 per cent increase on its dividend to shareholders a final total dividend payout of Sh7.3 billion, translating to Sh1.35 per ordinary share.

This will be in addition to the interim dividend of Sh0.20 per share paid in October 2023, bringing the total dividend for the year to Sh8.42 billion - representing a 14.8 per cent increase compared to the preceding year.

During the period, customer loans and advances increased by 18 per cent to Sh336 billion as the lender focused on supporting key economic sectors such as energy, telecommunications, manufacturing, trade, commercial property and affordable housing.

The Bank also prioritised the needs of the SME sector, facilitating increased access to financing, access to markets, mentorship, and networking opportunities, as well as driving digital enhancements to improve the customer experience.

In the period under review, revenues increased by 19 per cent to Sh54.6 billion on the back of growing customer assets as well as faster growth of new business lines such as bancassurance, asset management, and digital finance.

Interest income increased by 24 per cent to Sh40 billion, while non-funded income grew by six per cent to Sh14.5 billion, despite a challenging macros environment.

Speaking while announcing the results in Nairobi, Absa Bank Kenya Managing Director Abdi Mohamed attributed the performance to the growth and resilience of its customers.

“It is also a demonstration that our strategy is effective in creating value for all our stakeholders while delivering long-term growth in a dynamic operating environment. With 2023 being the first year of implementation of our five-year strategy, this performance gives us a strong launch pad from which we will execute our set priorities.”

The Bank’s capital and liquidity ratios remain strong with sufficient headroom above the regulatory requirement. The Bank’s total capital adequacy ratio closed at 18.1 per cent and liquidity reserve position at 31.1 per cent against the regulatory limits of 14.5 per cent and 20 per cent, respectively.

Through the review year, its customer deposits increased by 19 per cent to Sh363 billion, with total assets ending the year at Sh520 billion, up from Sh477 billion the year before, representing a nine per cent increase.

The Bank has channelled over Sh22 billion into sustainability-linked loans, financing projects in renewable energy, green construction, and climate-smart agriculture.

As part of the strategic milestones that drove this impressive performance, Absa continued to evolve towards becoming a modern, digitally powered business. In this regard, the Bank launched the diaspora banking proposition and optimized its digital banking offerings, including the launch of its digital savings proposition, introduction of Buy Now Pay Later solution and term loans on Timiza -its virtual banking proposition.

The Bank’s statutory operating expenses increased by 16% as the bank executed transformational and people investments. The Bank has leveraged these investments to accelerate revenue growth which has led to a significant improvement in cost to income ratio to 39.7%.

“Absa is well positioned for growth. With our robust balance sheet and a strong capital position, we will continue to invest in relevant initiatives that empower our customers and stakeholders to pursue and achieve their aspirations, while adeptly navigating external challenges. We are confident in our ability to accelerate growth momentum and sustainably create value for all our stakeholders.” Mr. Mohamed said.