Absa Kenya posts flat profit growth on rebranding

Absa Kenya #ticker:ABSA has posted a flat growth in net full year profits, slowed down by costs incurred in rebranding from Barclays Kenya.

Earnings grew by 0.53 per cent from Sh7.4 billion to Sh7.45 billion. The group incurred Sh1.5 billion in rebranding.

Absa Bank Kenya CEO Jeremy Awori said the lender expects a growth in loan book propelled by government’ move to boost advances to individuals and businesses amid the Covid-19 pandemic.

“It is no doubt that Covid-19 will have a far-reaching impact on the economy. We are still creating an agile strategy with the industry and government, and we expect the NPLS to grow as businesses’ working capital worsen in the next two to three months,” Mr Awori said yesterday.

Central Bank of Kenya lowered the amount of deposits banks must hold with the regulator or cash reserve ratio for commercial banks to 4.25 percent from 5.25 percent.

The move to lower the cash ratio is expected to release an extra Sh35.2 billion for banks to lend to customers trying to deal with the outbreak, the committee said.

Absa Kenya loan book grew from Sh177 billion to Sh194 billion in the period under review, allowing it grow income from lending to homes and business by an extra Sh1 billion to Sh22.5 billion.

Total non-interest income from transactional fees and commissions increased to Sh10.59 billion from Sh9.70 billion.

Absa will pay Sh0.90 per ordinary share after Sh0.20 was paid in October as interim dividend. This brings the final dividend paid in the year unchanged at Sh1.10 paid in 2018.