The bank has announced that the performance was greatly impacted by a 147 percent growth in impairment as customers struggled to keep up with loan repayments due to the economic effects of the COVID-19 pandemic, and a decisive action by the management to increase provisions in order to best position for future potential credit losses.
The Bank continued to support its customers manage through the adverse economic effects of the COVID-19 pandemic through increased lending, capacity building and other financial solutions.
For instance, the bank advanced over Sh 57 billion in lending, an uplift of 41 percent compared to the same period last year.
A majority portion of this was advanced to retail as well as small and mid-sized business customers to support their resilience efforts and growth through this period.
In addition, the Bank offered loan relief and restructures totalling over Sh 62 billion to customers, equivalent to 30 percent of loan portfolio, alongside other response interventions such as provision of PPE to public hospitals and psychosocial support for frontline health workers.
“The evolving impact of the pandemic has required us to re-visit our strategic priorities. Our focus in the last few months has been to help our customers manage through the pandemic through various interventions such as loan moratoriums and restructures, fee waivers for digital transaction, capacity building for SMEs and other Force for Good initiatives. We continue to improve on our channels optimization with significant increase in customer using alternate channels. In the period, our digitally active customers grew by 49 percent YoY,” said Jeremy Awori, Managing Director, Absa Bank Kenya PLC.
Despite the raging effects of the pandemic, all business units remained profitable and resilient, registering growth on key lines, with Business Banking and Global Markets divisions revenue growing in double digits.
Total income grew by percent to Sh25.4 billion mainly driven by the growth of non- interest income, which was up 4percent year on year.
Costs were well maintained, dropping by 1percent year on year.
Total assets grew by 8percent year on year driven by growth in customer loans, investments in Government securities as well as other liquid assets.
Net Customer loans was up 8percent to close at Sh209 billion driven by key focus products namely General lending, trade loans, mortgage and scheme loans that recorded strong growth year on year.
Interest income grew 2 percent from prior year largely because of growth in the lending book; though 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.
Customer deposits grew by 5percent to Sh247 billion with transactional accounts making up 68 percentof the total deposits.
The lender has also added that the transition to Absa has been successfully completed on time and on budget, having migrated all our technology systems and rebranded all business assets to Absa.
” The bank will continue upgrading to more advanced systems which will ultimately help enhance the service experience, ” reads the firm’s statement.
ABSA has painted a level of uncertainty in its outlook relating to the COVID-19 pandemic where it has highlighted that it is high and unprecedented, and its impact on markets and the global economy is profound.
“The impact of the pandemic on our financial performance has become clearer in Q3 2020. Our capital and liquidity levels are solid. We are in a strong position to navigate the future and we are seeing opportunities for growth in our balance sheet with recovery in revenue growth and profits expected in 2021,” it added.