Absa Bank Kenya PLC has posted a significant rise of 328% in profit after tax to Kshs. 8.2 billion for the third quarter period ending 30 September 2021 compared to the same period last year.
The bank attributes the solid growth to growth in interest income, especially in the small and medium enterprise segment, which drove the bank’s performance as it stepped up its efforts to help support these businesses recover from the effects of thepandemic.
According to Absa Bank Kenya Managing Director Jeremy Awori, the bank’s performance was also as a result of strengthening macro-economic environment, quality of credit and resilience in customer operations.
“The pandemic and its negative effects continue to persist, but we have drawn inspiration from our customers to rise above the storm and continue working together to keep the wheels of our economy turning. We are optimistic that we shall make good our commitment to continue innovating and enhancing our customers’ banking experience,” Mr Awori said.
The bank’s total income was up by 7% to Ksh 27.3 billion on the back of higher interest income, which rose 9% year on year due to increased lending.
“This was however partially offset by margin compression as a result of drops in Central Bank Rate (CBR) whose benefits the bank passed to customers as a responsible lender. Non-funded income grew by 5% as a result of our new innovations and digitization, while costs fell by 3% year over year.” the bank noted in a statement.
Net customer loans for the period increased by 9% to Ksh 229 billion as the bank said that there was growth in key core products such as general lending, trade loans, mortgages, and scheme loans.
Customer deposits increased by 9% to Ksh 269 billion, with transactional accounts accounting for 69% of the total deposit book.
During the quarter, Absa teamed up with Postbank and Kenswitch to help the bank deliver Agency Banking and ATMs, respectively. Additionally, the bank played a key role in the recently concluded historic Ksh 11 billion medium-term note to East Africa Breweries Plc by being the lead arranger through its investment banking arm.
Capital & Liquidity
The lender’s capital and liquidity ratios remain solid with sufficient headroom above the regulatory requirement. The bank’s total capital adequacy ratio closed the third quarter of 2021 at 17.3% and liquidity reserve position at 39.7% against the regulatory limits of 14.5% and 20% respectively.
Absa Dividend Resumption
In 2020, Absa Bank withheld dividends after the lender’s profit fell on costs linked to rising loan defaults coupled by economic uncertainty in the wake of the Covid-19 pandemic.
However, Absa’s management has noted that the business now remains very well positioned to help its customers reposition for recovery.
“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. We are confident, at this point in time, to resume payment of dividend at the full year 2021.” The lender said in a statement.