Companies
Absa first-quarter profit rises 51 percent to Sh4.5 billion
Wednesday May 31 2023
Absa head office in Westlands, Nairobi. FILE PHOTO | NMG
Absa Bank Kenya has posted a 50.7 percent rise in net profit to Sh4.45 billion for the three months to March on the back of increase in non-interest income.
The total operating income rose 40 percent to Sh13.9 billion compared to a similar period last year.
The bank’s non-interest income grew the fastest in the period, rising to Sh4.5 billion from Sh3 billion, backed by an 80 percent rise in foreign exchange trading income to Sh2.2 billion.
Interest income which represents revenues from lending grew by 36 percent to Sh9.4 billion from Sh6.9 billion. The lender’s loan book grew to Sh310 billion from Sh242.7 billion in the comparable quarter last year.
“We are pleased with this impressive financial performance which was delivered against a challenging business environment,” Absa Bank Kenya Managing Director Abdi Mohamed said.
“It is a demonstration of the resilience of our business and serves as a good indication that our new strategy focused on building a bigger, better and more inclusive financial institution that consistently meets the needs of its customers and creates shared value for all its stakeholders is working.”
Absa’s investment in government securities dropped marginally by 0.9 percent to Sh87 billion in the wake of banking sector portfolio reallocation away from government paper as private sector lending proves more lucrative.
The bank, which has approval from the Central Bank of Kenya (CBK) for risk-based lending, has previously disclosed its expectations to roll out the credit scoring metric on loans in the second half of 2023.
Interest expenses grew by 46.8 percent as the bank released cash to attract and retain deposits by matching savings and deposit rates.
Absa’s management says the performance in the opening quarter mirrors the execution of the bank’s new strategy from which it seeks to grow to a fully-fledged financial services provider.
During the three-month period, Absa kept costs growth below income at Sh7.4 billion despite a two-fold rise in loan-loss provisions costs to Sh2.4 billion from Sh1.2 billion at the same time last year.
The rising cover for bad loans came as the bank’s gross non-performing loans soared by 59.7 percent to Sh31.1 billion from Sh19.5 billion previously.
