Absa nets Sh1.9b as revenues rise
By Dominic Omondi | May 28th 2020
Absa Bank Kenya made a net profit of Sh1.95 billion in the first three months of this year, a growth of 6.5 per cent compared to Sh1.83 billion recorded last year.
The lender attributed the growth to increased income even as it managed to keep its expenses down.
Revenues from net interest and non-funded income grew by eight per cent to Sh8.6 billion.
However, net interest from loans and advances remained flat at Sh5.4 billion, while earnings from government securities increased marginally from Sh2.07 billion to Sh2.08 billion.
Non-funded income grew from Sh2.7 billion to Sh2.9 billion.
However, ABSA Kenya, formerly Barclays Kenya, did not factor a one-off Sh0.6 billion exceptional item related to spending towards the transition to Absa. This left it with a normalised profit after tax of Sh2.3 billion for the period ended 31 March 2020, which is a growth of 13 per cent compared to a similar period last year.
The lender experienced a 75 per cent growth in impairment, which was offset by a drop in expenses.
Growth in impairment was largely attributable to a few specific client names, said Absa.
“The bank costs were well managed at Sh4.1billion reflecting a five per cent reduction year on year largely because of spending discipline and cost saves initiatives. The cost saves initiatives included automation of the processing centres, investment in alternative channels and branch rationalisation programmes,” said Absa Kenya Chief Executive Jeremy Awuori.
Mr Awuori noted that these savings were used to fund sustainable investments, especially in automation and digitisation.
Totals assets grew by 10 per cent year on year, driven by growth in customer loans, investments in government securities as well as other liquid assets.
Net customer loans were up 12 per cent to close at Sh203 billion, driven by key focus products namely general lending, trade loans, mortgage and scheme loans that recorded strong growth year on year.
Customer deposits grew by seven per cent to Sh239 billion, with transactional accounts making up 66 per cent of the total deposits.
Awuori noted that the level of uncertainty relating to the Covid-19 crisis is high and unprecedented this will have a negative impact on businesses globally, including the banking industry in Kenya.
“The banking industry will feel the covid impact from April and most likely continue throughout the year.”
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