Absa Bank Kenya has raised its dividend payout to a record of Sh1.35 per share or a total of Sh7.3 billion as interest income boosted its earnings in the year ended December.
The lender declared a final dividend of Sh1.15 per share to be distributed on May 25 to shareholders on record as of April 28. This is in addition to an interim payout of Sh0.2 which was disbursed last year.
The total dividend for the review period has been raised 22.7 percent from Sh1.1 per share in the year before.
“The bank’s Return on Equity grew to 23 percent in the period under review, having improved from 19.3 percent the same period last year,” the bank said in a statement.
“The improvement in returns and profitability supported a total dividend per share of Sh1.35, an increase of 23 percent over the previous year.”
Absa joins other Nairobi Securities Exchange-listed lenders like Standard Chartered Bank Kenya and Stanbic Holdings in raising shareholder payouts to record levels in the review period.
Absa reported a 34.2 percent net profit growth in the year ended December, largely supported by increased lending with net interest income growing ahead of non-funded income by 27.7 percent to Sh32.3 billion.
By comparison, non-interest income grew 17.7 percent from Sh11.7 billion to Sh13.7 billion with foreign exchange trading income hitting Sh6.6 billion in the period.
Absa has credited the growth in net interest income to increased lending to small and medium enterprises against what the lender terms as a tough operating environment.
Its loan book in the year was up by 21.1 percent at Sh283.6 billion from Sh234.2 billion previously.
The bank’s deposit base was likewise higher, expanding by 13.1 percent to Sh303.8 billion from Sh268.7 billion.
"We are pleased with this outstanding financial performance, which was achieved in the face of an unprecedented and complex operating environment characterized by significant events such as the general elections, drought, and persistent Covid-19 pandemic impacts,” said Absa Bank Kenya Interim Managing Director Yusuf Omari.
Combined, Absa has seen its total operating income hit Sh46 billion in the 12-month period from Sh36.9 billion previously with income growing ahead of overall operating costs which were up by 17.3 percent at Sh25.1 billion.
The rise in costs was primarily driven by a 38.3 percent rise in loan-loss provisioning costs to Sh6.5 billion which the lender attributes to one-off releases booked in 2021.
Absa’s non-performing loans ratio nevertheless sits below the industry average at 7.3 percent even as gross non-performing loans increased to Sh22.5 billion from Sh19.8 billion previously.
The slower growth in costs has been partly driven by increased automation with the bank now reporting that 92 percent of its transactions are now taking place outside the branch.
During the review period, the bank has reported receiving Sh6.1 billion in additional capital from its parent firm to support the expanding balance sheet and meet strategic investments in new business lines.
The bank is betting on continued revenue diversification including the launch of new business segments/lines to maintain its growth momentum which has seen its asset base near the half-a-trillion mark at Sh477.2 billion.