Absa Bank Kenya PLC announced today that its Profit after Tax for the quarter ended 31 March 2023 amounted to Kshs.4.5 billion, marking a remarkable 51% increase compared to the same period last year. This outstanding performance was fueled by substantial growth in the bank’s balance sheet, as its total assets surpassed the half-trillion mark, reaching Kshs.515 billion, which represents a growth of 17%. During this period, loans and advances experienced a notable surge of 28%, reaching Kshs.310 billion, with a significant portion of this lending directed towards sectors that are driving economic growth and transformation, particularly Small and Medium Enterprises (SMEs).
During the period, customer deposits witnessed a significant 15% rise, reaching Kshs.311 billion, thereby facilitating further expansion of the bank’s balance sheet. This notable achievement underscores the pivotal role that Absa Bank Kenya PLC continues to fulfill as a key growth partner for its customers and the broader economy.
Furthermore, the bank experienced substantial growth in its revenue, soaring by 40% to Kshs.13.9 billion for the period. Net interest income also saw a commendable increase of 36%, amounting to Kshs.9.4 billion. This remarkable performance can be attributed to the bank’s strategic diversification efforts and transformative investments made over multiple years. The bank’s non-funded income recorded a remarkable growth of 49%, reaching Kshs.4.5 billion.
In addition, the introduction of new businesses has contributed to the bank’s revenue diversification. Absa Asset Management witnessed an outstanding revenue surge of 207%, while stock brokerage revenue experienced a solid 64% increase. Bancassurance revenue also saw a noteworthy rise of 42% compared to the previous year. These positive results reflect the bank’s successful efforts in expanding its business offerings and driving revenue growth across various sectors.
Absa Bank Kenya PLC’s Managing Director, Abdi Mohamed, expressed satisfaction with the remarkable financial results achieved during the quarter, given the challenging business landscape. These results serve as a testament to the resilience of the bank and provide strong evidence that their new strategic direction, centered around creating a larger, improved, and more inclusive financial institution, is effectively addressing customer needs and generating shared value for all stakeholders.
During the period, Absa Bank Kenya PLC accomplished several important strategic milestones. Firstly, they improved their digital onboarding platform, offering customers a more rewarding savings account. Secondly, in alignment with the government’s objective of facilitating affordable housing, the bank expanded its mortgage offering to provide 100% financing options, accompanied by a 25-year repayment period. Lastly, the bank demonstrated its commitment to supporting small and medium enterprises (SMEs) by offering them access to both financial and non-financial assistance through the Wezesha Biashara initiative. This program aimed to assist SMEs in navigating the challenges posed by a difficult business environment.
The Bank also redesigned its agri-business proposition to play a larger role in the country’s agricultural sector transformation. The period further resulted in the revamp of the Bank’s Islamic banking proposition as well as the relaunch of its China Desk to support the growing China-Africa trade.
Other Highlights include:
Efficiency
The Bank’s statutory operating expenses increased by 14% as we continued to execute our transformational and people investments. The Bank has leveraged on these investments to accelerate revenue growth which has led to significant improvement in cost to income ratio to 36% from 45% compared to the same period last year.
Impairment
Impairment increased by 103% compared to the same period last year in line with our principles of prudence in risk management given balance sheet growth and tough operating environment. Despite this increase, our portfolio quality remains better than the industry. In addition, we have ensured adequate coverage ratio which is also better than the industry levels to ensure future credit losses are minimized and better managed.
Capital & Liquidity
The Bank’s capital and liquidity ratios remain strong with sufficient headroom above the regulatory requirement. The Bank’s total capital adequacy ratio closed the quarter at 18.1% and liquidity reserve position at 28.6% against the regulatory limits of 14.5% and 20%, respectively.
Outlook
In conclusion, Mohamed added: “Our capital position remains strong, allowing us to support our customers while responding appropriately to the external environment. We thank our customers, colleagues, shareholders and all our stakeholders for their support as we continue supporting the growth and development of our great nation.”