Absa Bank Kenya PLC has announced that it has reported a profit after tax of Ksh. 2.3 billion for the period ended 31 March 2020. This is a 13% growth compared to a similar period in 2019.
The profit excludes exceptional item of Ksh. 0.6 billion, which relates to costs incurred in the transition to Absa. The performance is mainly attributable to a 8% growth in total income, 5% drop in operating costs partially offset by a 75% growth in impairment.
Totals assets grew by 10% year on year driven by growth in customer loans, investments in Government securities as well as other liquid assets.
Net Customer loans was up 12% to close at Ksh. 203 billion driven by key focus products namely General lending, trade loans, mortgage and scheme loans that recorded strong growth year on year. Customer deposits grew by 7% to Ksh. 239 billion with transactional accounts making up 66% of the total deposits.
During the period, total income increased by 8% to Ksh. 8.6 billion driven mainly by the growth of non- interest income, which was up 16% year on year. The main areas of growth were risk fees, fixed income trading and risk managed products. Interest income grew 5% from prior year largely because of growth in the lending book; though partially offset by the margin compression as a result of drop in Central Bank Reference rate (CBR).
Other Highlights include:
- The Bank costs were managed at Ksh. 4.1 billion reflecting a 5% reduction year on year largely because of spend discipline and cost saves initiatives. The savings derived were used to fund sustainable strategic investments especially in automation and digitization.
- We have made significant progress on their rebranding journey having unveiled their new Absa brand in our Kenya market in February 2020. They have:
- Delivered the vast majority of separation projects including successfully migrating most of our technology systems that were previously hosted in Barclays UK. The bank is still upgrading to more advanced systems which will ultimately help enhance the customer service experience
- Rebranded legal assets including changing of the trading ticket at the NSE
- The investment in the transition program will continue to have an impact on the financial results. This includes a substantial spend on modernizing systems as well as the continued investment towards building awareness, consideration and love for the Absa brand. In the period under review, they have reported separation costs of Ksh. 0.6 billion; this is an exceptional item and will be incurred throughout the separation period.
- Impairment increased by 75% compared to similar period last year largely attributable to a few specific client names. The Bank’s average loan loss ratio increased to 2.2% (1.4% in 2019) and Net NPL ratio increased to 3.0% from 2.8% in 2019.
- Absa Bank Kenya Plc capital and liquidity ratios remain strong with sufficient headroom above the regulatory requirement; total capital adequacy ratio at 16.5% and liquidity reserve position at 37.9% against the regulatory limits of 14.5% and 20% respectively.