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Wednesday, December 8, 2021

Absa Bank Kenya records KES8.2 Billion in profit after tax in 2021 Q3

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Absa Bank Kenya PLC has today reported strong growth in profit after tax to Kshs.8.2 billion for the period ending 30 September 2021 compared to a similar period last year.

Growth in interest income, notably in the small and medium enterprise segment, drove the bank’s solid performance as it stepped up its efforts to help these businesses recover from the pandemic’s effects and reposition for growth.

While announcing the results, Absa Bank Kenya Managing Director Jeremy Awori attributed the bank’s performance to the strengthening macro-economic environment, quality of credit and resilience in customer operations.

  • Customer deposits grew by 9% to Kshs.269 billion
  • Net customer assets up 9% to Kshs.229 billion with total assets at Kshs.411 billion
  • Total revenue up 7% to Kshs.27.3 billion
  • Operating expenses dropped by 3% to Kshs.12 billion
  • Impairment dropped by 55% to Kshs.3.4 billion
  • Profit after tax increased strongly to Kshs.8.2 billion
  • Confident to resume dividend at the full year 2021

Despite the negative economic effects of the pandemic, all business units remained profitable, registering growth on key lines.

Total income increased by 7% to Kshs.27.3 billion, primarily due to higher interest income, which increased by 9% year on year due to increased lending.

This was however 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. Non-funded income grew by 5% as a result of our new innovations and digitization, while costs fell by 3% year over year.

Net customer loans increased by 9% to Kshs.229 billion, owing to robust year-on-year growth in key core products such as general lending, trade loans, mortgages, and scheme loans. Customer deposits increased by 9% to Kshs.269 billion, with transactional accounts accounting for 69% of the total deposit book.

“The pandemic and its negative effects continue to persist, but we have drawn inspiration from our customers to rise above the storm and continue working together to keep the wheels of our economy turning. We are optimistic that we shall make good our commitment to continue innovating and enhancing our customers’ banking experience,” Mr Awori added.

In line with our commitment to continue enhancing our customer experience, we upgraded our Timiza App making it more interactive and significantly reducing the customer journey and consequently, transaction time. We also introduced a goal-based saving feature where our customers can set their saving target at a certain amount and track their progress.

Partnerships are becoming increasingly important in ensuring relevance, creating purpose, and providing returns and customer value in an increasingly complex business environment.

New mobile banking Features

Absa has added a new feature to our internet and mobile banking platforms that allow customers to view and manage their frequently used debit card functionalities online. These include temporary card freezing and unfreezing, card replacement, PIN setting and resetting, and card withdrawal limit management.

Other Highlights include:

Costs

The bank’s costs were well managed, coming in at Kshs.12 billion, down 3% year on year due to spending discipline and cost initiatives, which built on previous periods of underlying cost savings. Automation of the processing centre and continuing movement of consumer transactions to alternative channels were among the cost-cutting strategies. The savings were used towards long-term investments, particularly in automation and digitization. The firm’s efficiency ratio improved to 44% in Q3 2021, down from 49% in the third quarter of 2020.

Impairment

Impairment decreased by 55% compared to the similar period last year reflecting an improving macroeconomic environment for our business and our customers. The bank’s average loan loss ratio was reduced to 2.0% (4.9% in Q3 2020).

Capital & Liquidity

Our capital and liquidity ratios remain strong with sufficient headroom above the regulatory requirement. The bank total capital adequacy ratio closed the third quarter of 2021 at 17.3% and liquidity reserve position at 39.7% against the regulatory limits of 14.5% and 20% respectively.

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