Absa Bank Kenya Plc has announced a 12% increase in net profit to KSh 16.4 billion for the financial year ended 31st December 2023.
- Absa Bank Kenya Plc saw its pre-tax profit increase by 13%, from KSh 19.8 billion in 2022 to KSh 22.3 billion in 2023.
- The lender’s revenues surged by 19% to KSh 54.6 billion.
- Earnings per share, which is a measure of profitability, rose to KSh 2.83 per share from KSh 2.55 per share in 2022.
These financial results come at a time when the Kenyan subsidiary of South African-based Absa Group is executing its ambitious five-year strategy.
In this article
Breaking Down the Balance Sheet
According to the bank’s investor briefing, two-thirds of its balance sheet is local currency denominated, reducing its exposure to recent foreign exchange fluctuations.
Customer loans and advances surged by 18% to KSh 336 billion, while customer deposits rose by 19% from KShs. 304 billion to KShs. 363 billion. Absa Bank Kenya made a loan loss provision of KSh 9.2 billion in 2023 from KSh 6.5 billion in 2022, an increase of 29.1%.
Gross non-performing loans grew from KShs. 22 billion in 2022 to KShs. 35.254 billion in 2023, raising its net NPLs from KShs. 1.12 billion to KShs. 2.751 billion. However, the yield on loans increased from 11% to 13.3%, triggered by increases in the Central Bank Rate (CBR).
Owing to a tough macroeconomic environment, impairment increased by 43% to KSh 9.2 billion, translating into a return on equity at 23.7%. In accounting, impairment is a permanent reduction in the value of a company asset. It may be a fixed asset or an intangible asset.
Breaking Down the Income Statement
According to the lender’s income statement, interest on loans and advances to customers increased from KSh 30.6 billion in 2022 to KSh 44.3 billion, while interest income from Government Securities declined from KSh 9.4 billion in 2022 to KSh 9.4 billion in 2023.
Absa Group’s total interest income increased from KSh 40.9 billion in 2022 to KSh 54.3 billion in 2023, an increase of 33.1%, and it channeled over KSh 22 billion into sustainability-linked loans, financing projects in renewable energy, green construction, and climate-smart agriculture.
Dividends and the Year Ahead
The bank’s board of directors has proposed a final dividend payout of KShs. 1.35 per ordinary share, amounting to KShs 7.3 billion. In addition to the KShs 0.20 billion paid out in October 2023, the bank will pay a total amount of KSh 8.42 billion in dividends for the year.
“Absa is well positioned for growth,” the lender’s Board said in a statement, “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.”
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