Absa Kenya reported a three percent net profit growth in the first quarter ended March, weighed down by costs of separating from its former parent company Barclays Plc.
The lender’s net profit stood at Sh1.95 billion in the review period compared to Sh1.89 billion a year earlier.
Its cost of rebranding to Absa, captured as exceptional items, increased 2.2 times to Sh552 million.
“The investment in transition programme will continue to have an impact on our financial results,” Absa said in a statement.
“This includes a substantial spend on modernising our systems as well as the continued investment towards building awareness, consideration and love for the Absa brand.”
Absa’s mainstay lending business generated total interest revenue of Sh7.6 billion, a 2.7 percent increase from Sh7.4 billion the year before.
The bank’s loan book expanded 12.4 percent to Sh202.9 billion while its investment in government debt dropped by a marginal one percent to Sh82.2 billion.
Other income, including fees on transactions, surged 15.7 percent to Sh2.9 billion.
The bank’s stock of non-performing loans jumped 12.4 percent to Sh17.3 billion, a move that saw it respond by lifting loan loss provisions 75.2 percent to Sh1.1 billion.
“Impairment increased by 75 percent compared to similar period last year largely attributable to a few specific client names,” Absa said.
The higher provisioning contributed to total operating expenses increasing nearly five percent to Sh5.1 billion.
The bank managed to cut its interest expenses 1.9 percent to Sh1.9 billion despite customer deposits rising 6.5 percent to Sh238.7 billion.
Following the quarter under review, Absa disclosed that it had restructured loans worth Sh8.3 billion or four percent of its loan book due to the economic fallout brought by the Covid-19 pandemic.