Absa Bank Kenya’s half-year profit increases by 13% to KES 6.3B, declares interim Dividend

Absa Bank Kenya, a leading financial services group has recorded a sharp jump in net profit for the first half of the year with net profit growing by 13 percent to Sh. 6.3 billion driven by a 20 per cent rise in Net Interest income to Ksh 14.4 Billion.

The Nairobi Securities Exchange listed firm said its revenue for the six month period rose by 17 percent to Ksh 20.9 Billion as the lender enhanced lending to Small and Medium Enterprises (SMEs) to assist them reposition for growth, recognizing the critical role they play in job creation and economic growth. During the period under review, customer deposits grew by 7% to Ksh 282 billion while customer loans recorded a 19% growth to Ksh 262 billion significantly boosted by trade loans, mortgages, and scheme loans as well as asset financing.

In the 6-month period, the Bank continued to invest in new and diverse business lines, which are significantly contributing to its growth. Non-funded income increased by 11% to Ksh 6.4 billion on the back of impressive growth in FX income, Bancassurance and assets management fees.

While commenting on the financial results, Absa Bank Kenya PLC Managing Director Jeremy Awori said: “We are pleased with this performance, which reflects our customers’ resilience and tenacity. It also validates the relevance of our brand to our customers’ needs and demonstrates the role we continue to play in enabling our customers to participate rightfully in the economic development of our nation.”

Also commenting on the results, Absa Kenya CFO Yusuf Omari said the 20% growth in Net Interest income was mainly driven by increased balance sheet volume despite an 11% increase in costs to Ksh 8.8 Billion. The rise in costs was mainly driven by investments the bank made in hiring more staff as the lender hired more than 200 sales staff between Q4 2021 to June 2022.

Absa’s total assets grew by 12% to Ksh 445 Billion from Ksh 398 Billion posted in a similar period last year.

During the period, Absa launched an instant online account opening platform as well as the introduction of Cash Deposit Machines across the country. Other transformation initiatives included the expansion of the agency banking platform, with over 655 Absa outlets commissioned.

Absa Dividend

Absa Bank was among the few bank’s to issue an interim dividend for the half period as the board declared a dividend of Ksh 0.2 per share as the management said that its strong capital position allows it to distribute part of the capital as interim dividend. The interim dividend translates to a total of Kshs 1.09 billion.

Capital & Liquidity

The Bank’s capital and liquidity ratios remain strong with sufficient headroom above the regulatory requirement. The Bank total capital adequacy ratio closed the quarter at 16.5% and liquidity reserve position at 30.3% against the regulatory limits of 14.5% and 20%, respectively.

Absa Strategy and Outlook

According to the Bank’s head of Strategy Moses Muthui, the bank is currently in the process of developing a refreshed strategy for the period 2023 – 2028 after hitting its commitments and milestones set 5 years ago.

The Bank is in the final phase of the five-year strategy which is built on three key pillars; Growth, Transformation and Returns. Having achieved its Transformation and Returns objectives ahead of time, the Bank is now focused on delivering accelerated growth to gain market share as seen in the first half of 2022 where the bank recorded faster growth in revenue than observed industry growth.

“We remain cognizant of the challenges and opportunities presented by our operating environment, which is characterized by rising inflation due to high fuel and food prices, geopolitical instabilities which are negatively impacting the local economy, as well as the government transition process that is currently underway,” Mr Awori said.