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Absa Bank Kenya’s profit increases 328pc to Sh8.2 billion

Absa Bank Kenya’s net profit has increased to Sh8.2 billion in the nine months ended September as provision for bad debt fell sharply.

The lender’s net income rose 328.2 percent from Sh1.9 billion a year earlier as provision for defaults declined 55.2 percent to Sh3.4 billion.

The lower provision came despite the stock of gross defaults increasing by Sh2.8 billion to Sh19.6 billion.

Absa said the performance has given it the confidence to announce the resumption of dividends for the full year ending December.

“We are confident, at this point in time, to resume payment of dividend at the full year 2021,” the bank said in a statement.

The lender previously paid annual dividends of up to Sh1.1 per share before suspending the payouts in the wake of the economic uncertainty brought by the Covid-19 pandemic.

Absa says the reduction in provision for bad debt reflects “an improving macroeconomic environment for our business and our customers.”

The lender added that its average loan loss ratio declined to two percent in the review period compared to 4.9 percent the year before.

Absa’s total interest income rose by a marginal 1.3 percent to Sh23.5 billion as investment in government debt paper shrunk by Sh12.9 billion to Sh81.6 billion and interest rates on ordinary loans declined.

Loans and advances on the other hand increased by Sh19.8 billion to Sh229 billion.

Absa benefitted from a 19.1 percent fall in interest expenses to Sh4.9 billion despite customer deposits growing nine percent to Sh268.8 billion.

The bank’s bottom-line was also boosted by the absence of exceptional expenses which stood at Sh1.9 billion a year earlier.

Absa had spent heavily in rebranding and technology change as part of its separation from its former London-based parent company Barclays Plc.

The lender says its balance sheet is strong enough to enable it to pursue growth and the resumption of dividend payments.

“Our business remains very well positioned to help our customers reposition for recovery,” Absa said in a statement. “Our capital and liquidity levels are solid to navigate the coming quarters and we are seeing opportunities for growth in our balance sheet with recovery in revenue growth and profits expected.” It added

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