Absa raises dividend as profit hits Sh16.4 billion

Absa Bank Kenya managing director Abdi Mohammed speaks during a breakfast roundtable event. PHOTO | EVANS HABIL | NMG   

By KEPHA MUIRURI More by this Author

Absa Bank Kenya Plc has raised its total dividend to Sh1.55 from Sh1.35 after posting a 12.2 percent growth in its net profit for the year ended December 2023 to Sh16.4 billion.

The total payout of Sh8.4 billion, after the payment of Sh1.15 final dividend and a 20-cent interim dividend per share paid last year, is the highest distribution for the lender on record.

The higher payout to shareholders is on the back of improved profitability, which was anchored on greater operating income, which rose 18.7 percent to Sh54.5 billion from Sh45.9 billion previously.

Net interest income jumped the highest by 23.8 percent to Sh40 billion from Sh32.3 billion supported by increased lending rates to customers.

Absa's loan book in the period expanded by 18.4 percent to Sh335.7 billion from Sh283.5 billion, while customer deposits edged upward by 19.4 percent to Sh362.7 billion.

Meanwhile, the lender's non-interest funded income improved by 6.6 percent to Sh14.5 billion from Sh13.6 billion.

The lender, however, saw a 22.7 percent jump in total operating expenses to Sh30.8 billion from Sh25.1 billion, largely from an uptick in loan-loss provisions.

Read: Banks open loan restructuring as higher rates raise defaults

Absa increased the size of its provisions for expected bad loans to Sh9.2 billion from Sh6.4 billion previously as its gross non-performing loans jumped by 56.4 percent to Sh35.2 billion from Sh22.5 billion.

The bank says it expects to continue yielding greater revenues as it leverages on diversification of its business to deliver growth.

The lender has been aggressive in expanding its branch network as it seeks to be more front-facing to its customers.

Absa has also returned to custodial services in line with its diversification strategy.

"We see continuous momentum in our revenues which crossed the Sh50 billion mark for the first time. Our NPL ratio is still in the single digits and well below the industry's average despite the uptick in non-performing loans," noted Absa Bank Kenya Plc Managing Director Abdi Mohammed.

The final Sh1.15 dividend will be paid to shareholders on the bank books as of April 30, on or before May 23.

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