Absa Bank Kenya’s net earnings have risen by 28% to Kshs. 20.9 billion, as the lender navigates shifts in borrower trends, and a rise in non-performing loans whose impact has been tempered by the strong shilling.
- •Customer deposits increased to KSh 367 billion, while total revenue grew by 14% to KSh 62.3 billion, supported by strong funded income of KSh 46.2 billion and an 11% increase in non-funded income to KSh. 16.1 billion.
- •The lender loaned out KSh 309bn and reported a 12.3% in gross non-performing loans to KSh 42.5 billion compared to previous year’s KSh 35.3 billion.
- •Absa has also highlighted a new trend where consumers and businesses are shying away from long term loans opting for short-term products such as overdrafts, and trade loans.
“With the strain we saw last year due to the current macro economic environment, there is an obvious struggle in the entire industry leading to picking up of our NPLs. However, any facility that we had lent out and was struggling was offset by steady shilling which has been strengthening against the dollar,” ABSA’s Chief Financial Officer (CFO) Yusuf Omari said during the full year results release on Thursday.
“The sectors that have been impacted include the manufacturing which formed a big component of the Ksh 42.5 billion, others were the consumer, personal household loans and the real estate industry,” Omari noted.
On the shift in loan consumer trends, digital loans now account for KSh 25 billion of the total gross lending of KSh 180 billion. The bank’s KSh 309bn loan book was 8% lower than what it loaned it in 2023, a trend it attributes to “slow growth in sector lending across the industry.”
The Bank’s total capital adequacy ratio closed at 20.47% and liquidity reserve position at 42.5% against the regulatory limits of 14.5% and 20%, respectively.
The bank has declared a total dividend of Kshs. 9.5 billion, translating to Kshs. 1.75 per ordinary share, an increase of 13% from the previous year.
