Absa Bank Kenya PLC has announced a commendable 34% growth in its profit after tax to Kshs.5.9 billion for the period ending 31 March 2024, which illustrates the Bank’s progress in meeting its strategic objectives through diligent execution.
Amidst a challenging operating context characterized by volatile rates and elevated inflation, the Bank grew its loans and advances by 5% to reach Kshs.327 billion, underscoring its broader mission to empower its customers’ growth stories. Customer deposits for the period rose by 14% to Kshs.355 billion, further propelling balance sheet momentum.
Underpinned by the Bank’s ongoing revenue diversification strategies that are supported by new businesses such as bancassurance, asset management, Timiza, and stock brokerage, as well as rising customer assets, total revenues accelerated by 19% to Kshs.16.5 billion. Resultingly, interest income grew by 22% to Kshs.11.4 billion, while non-funded income rose by 13% to Kshs.5.1 billion.
Speaking about the financial performance, Abdi Mohamed, Absa Bank Kenya PLC Managing Director and CEO said: “We are pleased with the resilient financial outcomes attained in the quarter under review, which demonstrates that we are sustaining strong business performance anchored on our new strategy while aligning with the needs of individuals, businesses, and society and living our purpose of empowering Africa’s tomorrow together…one story at a time.
The quarter under review has seen the Bank accelerate the execution of its refreshed strategy unveiled last year. Under this strategy, a key priority is to transform Absa into a modern consumer financial services company. Through the rollout of new products, technologies, and relationship models, the Bank has recorded the fastest growth in customer numbers in the first quarter of the year. The Bank has also continued to entrench itself as a market leader in Business Banking, undertaking significant growth campaigns focused on critical economic sectors such as agriculture, trade, and manufacturing. Additionally, Absa continues to be a leading corporate and investment banking partner in the region.
Resulting of the Bank’s enhanced strategic investments in its human capital and digital transformation agenda for better customer experiences, underlying costs grew by 11% in the period. However, the Bank’s cost-to-income ratio improved to 33.9% because of its efficiency efforts. Impairment increased marginally in the quarter compared to the same period last year, in keeping with the Bank’s prudence in risk management.
“We remain cognizant of the challenges in our operating environment but also mindful of the numerous opportunities that await us. As we navigate these uncertain times, we are confident that the Bank’s resilience, agility, and unwavering commitment to excellence will guide us toward long-term development and prosperity,” added Mr Mohamed.
Other Highlights include:
Efficiency
The Bank’s statutory operating expenses increased by 11% as the Bank executed transformational and people investments. The Bank has leveraged these investments to accelerate revenue growth, which has led to a significant improvement in cost to income ratio to 33.9%.
Impairment
Impairment increased marginally compared to the same period last year, which is in line with principles of prudence in risk management given the balance sheet growth and challenging operating environment. Despite this increase, portfolio quality remains better than that of the industry. In addition, Absa has ensured an adequate coverage ratio, which is also better than the industry levels, to ensure future credit losses are minimized and better managed.
Capital & Liquidity
The Bank’s capital and liquidity ratios remain strong, with sufficient headroom above the regulatory requirement. The Bank’s total capital adequacy ratio closed at 17.9% and liquidity reserve position at 33.5% against the regulatory limits of 14.5% and 20%, respectively.
Outlook
In conclusion, Mohamed stated: “Looking ahead, we aim to continue sustaining the growth and momentum in our core business through a relentless focus on executing our strategy and thus driving our market share objectives. This will be driven by deliberately transforming our business for the future by making the necessary investments in technology and innovation while remaining customer-centric.”
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