BANKING

Absa Kenya posts Sh7.4bn net profit amid re-branding costs

The bank incurred a Sh1.5 billion separation cost as it moved away from the Barclays brand.

In Summary

•During the period, the bank's loan book expanded 9.8 per cent to Sh194.9 billion .

•The Nairobi Securities Exchange listed lender completed its brand transition from Barclays to Absa in February this year.

Absa Bank Kenya PLC managing director Jeremy Awori celebrates with staff at the Sarit Centre branch during the official unveiling of the Absa brand in Kenya on February 10
Absa Bank Kenya PLC managing director Jeremy Awori celebrates with staff at the Sarit Centre branch during the official unveiling of the Absa brand in Kenya on February 10
Image: COURTESY

Absa Kenya, formerly Barclays Kenya, has posted a Sh7.45 billion profit after tax for the year ended December 2019, despite high rebranding costs.

The profit, however, remained flat falling within the same range of the Sh7.41 billion posted in 2018.

The bank incurred a Sh1.5 billion separation and re-branding cost as it moved away from the Barclays brand, costs which weighed down its final earnings.

 

Normalised profit after tax (excluding the Sh1.5 billion exceptional item) however was Sh8.5 billion, reflecting growth in earnings in the year under review.

This was buoyed by growth in interest income from loans, government securities, and non-interest income mainly fees and commissions and foreign exchange trading.

“The separation from Barclays PLC continues to have an impact on our financial results. This includes a substantial change spend, as we invest in the systems required to be separated,the lender notes in its full-year results released on Tuesday.

During the period, the bank's loan book expanded 9.8 per cent to Sh194.9 billion compared to Sh177.4 billion.

Interest income from loans grew 4.6 per cent to Sh22.5 billion from Sh21.5 billion the previous year. Government securities earned the lender Sh8.1 billion up from Sh7.3 billion in 2018.

The growth in customer loans has been attributed to general lending, asset finance, mortgage and scheme loans that recorded strong growth year-on-year.

Non-interest income edged up to close at Sh10.6 billion compared to Sh9.7 billion a year earlier.

 

Total income grew from Sh31.7 billion to Sh33.8 billion.

“The main areas of growth were risk fees, fixed income trading and risk-managed products,” managing director Jeremy Awori said.

In the year to December, customer deposits stood at Sh237.7 billion, up from Sh207.4 billion in 2018.

Total assets equally grew to Sh373.9 billion from Sh324.8 billion the previous year.

The listed lender completed its brand transition from Barclays to Absa in February this year, delivered 100 percent on separation projects including successfully migrating all technology systems that were previously hosted in Barclays UK.