NAIROBI, Kenya, Mar 24 – Absa Bank Kenya PLC has reported a normalised profit after tax of Sh6.5 billion, a 23 percent decline mainly driven by COVID19 related provisions compared to a similar period last year.
Normalised performance excludes an exceptional cost of Sh3.2 billion which went towards the recently concluded brand transition to Absa and restructuring programmes.
The bank’s performance was significantly impacted by a two-fold growth in impairment as customers struggled to keep up with loan repayments due to the economic effects of Covid-19 and pro-active provisioning for an uncertain future. In line with this, the management took decisive action to increase provisions in order to best position for future potential credit losses.
During this period, the bank offered loan relief and restructures totaling to over Sh62 billion to customers, equivalent to 30 percent of its loan portfolio.
It also contributed over Sh50 million to the COVID-19 Fund, some of which facilitated provision of 210,000 personal protective equipment (PPEs) to frontline health workers in public hospitals and an additional 20,000 reusable masks to bodaboda riders and others at-risk.
A further Sh13 million was invested through colleague-led initiatives in the fight against the pandemic. In order to alleviate the psychological challenges that those who were directly or indirectly affected, we partnered with our wellness partner Minet Kenya, to provide the necessary psychosocial support.
Speaking during the release of the bank’s full year results, Absa Kenya Managing Director Jeremy Awori noted that governments, businesses, societies and individuals continue to grapple with one of the most difficult challenges of our time.
One whose full impact is yet to be understood and therefore, the management says it took the decision to increase credit impairment provisions by two-fold to position ourselves for the future. “2020 was a tough year and as is expected, the hardships of the banking sector have continued to follow those of the customers and the broader economy. As a result, many sectors have slowed down and peoples’ livelihoods have been greatly disrupted,” said Awori.
“The evolving impact of the pandemic has required us to re-visit our strategic priorities and it is clear that greater priority must be given to capital and liquidity preservation. Our focus in the last year has been to help our customers manage through the pandemic and we cushioned them through various interventions such as loan moratoriums and restructures, fee waivers for digital transactions, capacity building for SMEs and other Force for Good initiatives,” Awori added.
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 2 percent to Sh34.5 billion mainly driven by the growth of non-interest income, which was up 5 percent year on year. Normalised costs were well maintained, dropping by 4 percent year on year. Net customer loans went up 7 percent to close at Sh209 billion driven by key focus products namely; general lending, trade loans, mortgage and scheme loans which recorded strong growth year on year.
Interest income grew by 1 percent from the 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 7 percent to Sh254 billion with transactional accounts making up to 69 percent of the total deposits.