Absa half-year profit jumps 32 pc on increased revenue
Abdi Mohamed, CEO of Absa Bank Kenya gives his remarks during the launch of the 2022 Kenyan Banking Sector Total Tax Contribution study by PricewaterhouseCoopers Limited (PwC)and Kenya Bankers Association on August 2, 2023, at Serena Hotel, Nairobi. PHOTO | BILLY OGADA | NMG
Absa Bank Kenya's net profit for the half year ended June grew by 32 percent to Sh8.31 billion on increased income, prompting the board to pay shareholders an interim dividend.
The latest earnings were a growth from Sh6.29 billion posted in the previous year and came despite the lender’s operating expenses rising on the back of increased provisioning for loan defaults.
Net interest income rose by a third to Sh19.2 billion as Absa’s loan book expanded by 21.6 percent to Sh317.95 billion. Non-interest income grew by 26 percent to Sh8.14 billion, supporting the growth.
“I am very pleased with the set of numbers we have posted. It demonstrates that our strategy is working and that we are executing it well. We will continue to do that as we move forward,” said Abdi Mohamed, CEO at Absa Bank Kenya.
The bank’s board has announced a Sh0.20 interim dividend amounting to Sh1.09 billion, joining Stanbic Holdings and NCBA Group who also announced interim payout.
Absa’s interim dividend will be paid on or about October 12 to shareholders who will be in the lender’s shareholder register by the end of September 21.
The review period saw Absa’s operating expenses hit Sh15.3 billion, being a 30 percent jump from Sh11.8 billion as the Nairobi Securities Exchange-listed lender increased its loan loss provisioning.
Absa raised the loan loss provisioning by 74 percent to Sh5.16 billion, which together with a 16 percent jump in staff costs to Sh5.6 billion contributed the most to the rise in the operating expenses.
“We have made forward-looking provisioning. There is a Sh0.8 billion booking of impairment that is tied to forward-looking provisioning. We expect the provisioning to come down once the macro environment improves,” said Yusuf Omari, chief financial officer at Absa.
Mr Omari said the increased provisioning considered factors such as high inflation, high-interest rates and the performance of employment in the current macro-economic environment.
Staff costs were up by 16 percent, with Mr Omari saying this was tied to the continued investment in employees in terms of personal development, automation and rebalancing between customer-facing and back-office workers.
The lender also said non-performing loans have picked up because of exposure from the commercial side with two big names in manufacturing and several small and medium-sized enterprises(SMEs) contributing to the rise.
Gross non-performing loans hit Sh32.18 billion at the end of June compared with Sh19.79 billion in a similar period last year.
Chief strategy officer at Absa Bank Kenya Moses Muthui said the lender will be investing further in adding branches from the current 84, strengthening consumer banking with a focus on SMEs and making corporate and investment banking dominant.
