Absa Bank Kenya PLC on Wednesday 18th reported 3rd Quarter Normalised profit after tax of KES 3.0 billion and a 51% decline compared to a similar period last year.
The normalised performance excludes an exceptional cost item of KES 1.9billion relating to separation and brand transition to Absa which is largely concluded.
The KES 1.9 billion has been reported as an exceptional item relating to the cost incurred in the transition project year-to-date which was invested towards enhancement of technology systems, rebranding as well as marketing and communication efforts to engage various stakeholders.
“The evolving impact of the pandemic has required us to re-visit our strategic priorities. Our focus in the last few months has been to help our customers manage through the pandemic through various interventions such as loan moratoriums and restructures, fee waivers for digital transaction, capacity building for SMEs and other Force for good initiatives. We continue to improve on our channels optimization with significant increase in customer using alternate channels. In the period, our digitally active customers grew by 49% YoY,” said Jeremy Awori, Managing Director, Absa Bank Kenya PLC.
According to ABSA,the performance was significantly impacted by a 147% growth in impairment as customers struggled to keep up with loan repayments due to the economic effects of the COVID-19 pandemic, and a decisive action by the management to increase provisions in order to best position for future potential credit losses.
“The Bank continued to support its customers manage through the adverse economic effects of the COVID-19 pandemic through increased lending, capacity building and other financial solutions. For instance, the bank advanced over KES 57 billion in lending, an uplift of 41% compared to the same period last year. A majority portion of this was advanced to retail as well as small and mid-sized business customers to support their resilience efforts and growth through this period,” Jeremy added.
The Bank offered loan relief and restructures totalling over KES 62 billion to customers, equivalent to 30% of loan portfolio, alongside other response interventions such as provision of PPE to public hospitals and psychosocial support for front line health workers.
Despite the raging effects of the pandemic, all business units remained profitable and resilient, registering growth on key lines, with Business Banking and Global Markets divisions revenue growing in double digits.
ABSA reports that the total income grew by 3% to KES 25.4 billion mainly driven by the growth of non- interest income, which was up 4% year on year. Costs were well maintained, dropping by 1% year on year while the total assets grew by 8% year on year driven by growth in customer loans, investments in Government securities as well as other liquid assets.
Loans for the net customers was up 8% to close at KES 209 billion driven by key focus products namely General lending, trade loans, mortgage and scheme loans that recorded strong growth year on year.
In addition to, the interest income grew 2% from prior year largely because of growth in the lending book; though 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.
Customer deposits grew by 5% to KES 247 billion with transactional accounts making up 68% of the total deposits.
However, the normalised profit after tax is KES 3.0 billion leading to a 51% drop from prior year. The bank will use the normalised profit in making its decision on dividend and therefore exclude the impact of the one off costs for separation.
The bank says it will continue with its key agenda of digital transformation in order to grow and improve on customer experience