NAIROBI, Kenya, Dec 29-ABSA Bank Kenya has warned that its net profit for the year 2020 will be lower than the earnings reported in the 2019 financial year.
In a notice issued by the bank’s Company Secretary Loise Gakumo, ABSA said this is due to exceptional costs incurred in 2020 relating to separation from Barclays Bank and the brand transition to ABSA.
A significant increase in impairment provisions due to the COVID-19 pandemic is also contributing to the expected reduction in profitability.
Gakumo added that the trends and the forecasts show that the rate of impairment is increasing due to delayed loan repayments and potential additional stress due to COVID-19 aftereffects.
“In that regard, the company has advanced over Sh70 billion in lending and has offered loan relief and structures totaling over Sh62 billion,” said Gakumo.
“This is equivalent to 30percent of our loan portfolio and has enabled small enterprises and individuals to manage their day to day working capital and personal needs,” she added.
For the financial year 2019, Absa Bank Kenya reported a normalized Sh8.5 billion profit after tax on the back of higher operating income.
The bank also saw its transition costs totaling up to Sh1.5 billion at the end of the period under review.
The lender’s total operating income stood at Sh33.8 billion in the period from Sh31.7.
In 2019, ABSA, formerly known as Barclays retained its dividend per share at Sh1.10 for the year.