Absa half-year profit jumps nearly tenfold to Sh5.57bn

 

The lender also announced repayment breaks of up to three months on all loans as customers hit by cash flow hitches. FILE PHOTO | NMG

    

By OTIATO GUGUYU

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Absa Bank Kenya  has reported a sharp jump in net profit for the first half of the year helped by a large drop in expenses.

The bank said its earnings after tax for the first six months to June rose from Sh589 million for the same period in 2020 to Sh5.57 billion this year.

Its loan loss provisions dropped 63.9 percent to Sh1.9 billion despite gross non-performing loans increasing 7.8 percent to Sh18.3 billion.

The lower provisions contributed the most to operating expenses falling 26.9 percent to Sh9.8 billion.

Most banks have reduced provisions for bad debt amid increasing loan recoveries, enabling them to save on costs and boost the bottom lines. 

“Most of our customers, almost 90 percent of them, reached a point where they no longer required the payment holidays we had given them, which meant they were able to make good their payments. This saw our impairment come down as the balance sheet was picking,” said Absa Chief Finance Officer Yusuf Omari at an investor briefing on Thursday.

The lender also announced repayment breaks of up to three months on all loans as customers hit by cash flow hitches. FILE PHOTO | NMG

    

Absa Bank Kenya  has reported a sharp jump in net profit for the first half of the year helped by a large drop in expenses.

The bank said its earnings after tax for the first six months to June rose from Sh589 million for the same period in 2020 to Sh5.57 billion this year.

Its loan loss provisions dropped 63.9 percent to Sh1.9 billion despite gross non-performing loans increasing 7.8 percent to Sh18.3 billion.

The lower provisions contributed the most to operating expenses falling 26.9 percent to Sh9.8 billion.

Most banks have reduced provisions for bad debt amid increasing loan recoveries, enabling them to save on costs and boost the bottom lines. 

“Most of our customers, almost 90 percent of them, reached a point where they no longer required the payment holidays we had given them, which meant they were able to make good their payments. This saw our impairment come down as the balance sheet was picking,” said Absa Chief Finance Officer Yusuf Omari at an investor briefing on Thursday.Absa also benefitted from the absence of costs of rebranding from Barclays which stood at Sh1.6 billion in the same period last year.

The bank also deferred taxes worth Sh637.3 million, boosting the bottom-line in the review period.

Total interest income declined marginally to Sh15.1 billion as the lender cut its investment in government bonds and T-bills by Sh14.9 billion to Sh77 billion.

Its loan book expanded 8.3 percent to Sh218.8 billion. Customer deposits increased 6.1 percent to Sh263.9 billion but interest expenses dropped 20.3 percent to Sh3.1 billion, boosting lending margins.