DECLINE

Absa Kenya’s end year profit drop 23% on Covid-19 pressures

Normalised performance excludes an exceptional cost of Sh3.2 billion which went towards the recently concluded brand transition to Absa

In Summary
  • The bank’s normalised profit after tax shrunk to Sh6.5 billion compared to Sh8.5 billion the previous year.
  • Customer deposits grew by seven per cent to Sh254 billion with transactional accounts making up to 69 per cent of the total deposits.
Absa Kenya MD Jeremy Awori on March 28,2018./EZEKIEL AMING'A
Absa Kenya MD Jeremy Awori on March 28,2018./EZEKIEL AMING'A

Absa Bank Kenya’s 2020 full year profits dropped 23 per cent mainly driven by Covid-19 related provisions compared to 2019.

The bank’s normalised profit after tax for the period ending December 31, 2020, shrunk to Sh6.5 billion compared to Sh8.5 billion the previous year.

Normalised performance excludes an exceptional cost of Sh3.2 billion which went towards the recently concluded brand transition to Absa from Barclays Bank and restructuring programmes.

During the period, the bank offered loan relief and restructures totalling over Sh62 billion to customers, equivalent to 30 per cent of its loan portfolio.

 Absa Kenya managing director Jeremy Awori admitted that 2020 was a tough year.

''We took the decision to increase credit impairment provisions by two-fold to position ourselves for the future,’’ Awori said.

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.

Total income grew by two per cent to Sh34.5 billion mainly driven by the growth of non-interest income, which was up five per cent year on year.

Normalised costs were well maintained, dropping by four per cent during the period under review. Net customer loans grew seven per cent to Sh209 billion.

Interest income grew by 100 basis points from the prior year largely on 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 seven per cent to Sh254 billion with transactional accounts making up to 69 per cent of the total deposits.

The lender’s transition from Barclays to Absa was successfully completed on time and on budget, having migrated all technology systems and rebranded all business assets.

''The bank will continue upgrading to more advanced systems, which will ultimately help, enhance the service experience,’’ Absa said in a statement.

The bank's capital adequacy ratio is at 17.5 per cent and liquidity reserve position at 38.7 per cent against the regulatory limits of 14.5 per cent and 20 per cent respectively.