Absa Bank Kenya posted a 30 per cent jump in net profit in the nine months that ended September on the back of higher income from lending.
The company’s net earnings stood at Sh10.7 billion in the review period, up from Sh8.2 billion the year before.
“The impressive results have been realised on the back of double-digit revenue growth, powered by accelerated lending, especially to the Small and Medium Enterprises (SMEs) in recognition of the central role they play in Kenya’s economic transformation and job creation,” Absa said in a statement.
Absa’s bottom line was also boosted by a 16.4 per cent rise in non-interest income to Sh10.1 billion which the institution attributed to new business lines and foreign exchange earnings.
“In the period, the bank’s transformation agenda has continued to pay off … driven mainly by better performance in forex income and growth from new businesses such as asset management and bancassurance,” the lender said.
It is among the big banks that have reported strong growth in revenue from forex transactions at a time there has been a huge demand for dollars.
Absa raised its provisions for bad debt 47.9 per cent to Sh5 billion, contributing to its operating expenses increasing 22.4 per cent to Sh18.3 billion.
The bank said the higher provisions are due to one-off releases that were booked last year, adding that its default rate is still lower than the sector’s overall.
“Non-performing loans ratio is at 6.9 per cent and expected to be better than the industry average, demonstrating the prudence of the bank’s lending decisions,” Absa said.
Its gross defaults rose by Sh402.3 million to Sh20 billion. Most of the big banks have reduced their provisions substantially, with some cutting back despite an increase in defaults.
Absa’s customer deposits increased 4.5 per cent to Sh281 billion, contributing to interest expenses jumping 22.4 per cent to Sh6 billion.
It had declared and paid an interim dividend of Sh0.2 per share for the half year ended June. Other big banks had delayed the interim payout that they announced in the results for the nine months that ended in September.
StanChart declared an interim payout of Sh6 per share while KCB's was Sh1 per share.
The big listed banks are set to announce record earnings for the year ending December, helped by economic recovery and rising interest rates in loans and government debt securities.
