Absa Bank Kenya Half-Year Profit Jumps To Ksh.6.3 Billion

 

By Kepha Muiruri

Absa Bank Kenya Plc has posted a 12.5 per cent rise in its half-year profit to Ksh.6.3 billion from Ksh.5.6 billion previously.

Growth for the lender has been supported mainly by increased income from lending with net interest income stretching by 20 per cent to Ksh.14.4 billion from Ksh.12 billion last year.

The higher interest income has been supported by improved lending in the period with the bank’s loan book rising by 19.5 per cent to Ksh.261.5 billion from Ksh.218.9 billion.

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“COVID-19 is behind us and businesses have begun to pick-up as we see a big lift to the business environment. We are seeing a return of vibrancy in the economy,” noted Absa Bank Kenya Chief Finance Officer Yusuf Omari.

Absa bank has also grown its non-interest funded income (NFI) by 12.2 per cent to Ksh.6.5 billion from Ksh.5.8 billion on improved income from fees and commissions on loans and foreign exchange trading income.

Absa Bank Kenya Managing Director Jeremy Awori says the bank has now become a fully-fledged financial service provider having ventured into new businesses such as bancassurance.

The bank has further invested behind technology to drive down cost with its cost to income ratio (CIR) falling to 42 per cent.

According to Awori, the bank will focus on investments in the fastest growing business segments in the industry to sustain growth into the medium term.

“Our business is evolving and transforming. We want to get into the fastest growing revenue pools in banking,” he said.

The plan will include focusing on asset management, customer payments business, investment banking advisory and custody.

Absa’s growing cost efficiencies have nevertheless been masked by a 19.1 per cent rise in operating expenses to Ksh.11.8 billion on higher loan-loss provisions and staff costs.

The bank has lifted its cover for bad loans by 57.9 per cent to Ksh.3 billion from Ksh.1.9 billion at the same stage last year as its gross non-performing loans (NPLs) rise by 8.2 per cent to Ksh.19.8 billion.

Absa has become the second tier one lender to declare interim dividends after NCBA with its board recommending the pay-out of 20 cents per share for the period.

The banks have underpinned the need to balance capital preservation and paying dividends to shareholders even as peers in the industry fall back on the former on freezing the interim pay-out.