Performance highlights
- Total assets up 15% to Kshs374 billion
- Customer deposits grew by 15% to Kshs238 billion
- Customer Loans and advances up 10% to Kshs195 billion
- Total revenue growth at 7% to Kshs33.8 billion.
- Normalised Profit after tax growth of 15% to Kshs8.5 billion
- Kshs1.5 billion exceptional item related to spend towards the transition to Absa
Absa Bank Kenya PLC has today reported a normalised profit after tax of Kshs8.5 billion for the period ended 31 December 2019, a growth of 15% compared to a similar period last year. Normalised performance excludes exceptional item of Kes 1.5billion, which relates to costs incurred in the rebranding exercise into Absa. The performance is mainly attributable to a 7% growth in total income, 1% growth in operating costs partially offset by a 9% growth in impairment.
Total assets grew by 15% year on year driven by growth in customer loans, government securities as well as other liquid assets.
Net customer loans was up 10% to close at Kshs195 billion driven by key focus products namely; general lending, asset finance, mortgage and scheme loans that recorded strong growth year on year.
Customer deposits grew by 15% to Kshs.238 billion with transactional accounts making up 70% of the total deposits.
During the period, total income increased by 7% to Kshs33.8 billion driven mainly by the growth of non- interest income, which was up by 9% year on year. The main areas of growth were risk fees, fixed income trading and risk managed products (RMPs). Interest income grew by 5% from the previous year largely because of growth in the lending book; though partially offset by the margin compression as a result of drop in Central Bank Reference rate (CBR).
Other Highlights include
1. Costs
The Bank costs were well managed at Kshs17.3 billion reflecting a 1% increase year on year largely because of spend discipline and cost saves initiatives. The cost saves initiatives included automation of the processing centres, investment in alternative channels and branch rationalisation programmes. The savings derived were used to fund sustainable investments especially in automation and digitization.
2. Update on the transition to Absa
We successfully completed our brand transition journey in February 2020 having:
- Delivered 100% on separation projects including successfully migrating all technology systems that were previously hosted in Barclays UK. The bank is still upgrading to more advanced systems which will ultimately help enhance the service experience
- Re-branded our business to our new name Absa replacing Barclays after 103 years
- Embedded the new Absa values across the organisation
- Rebranded all our legal names and assets including changing of our trading ticker at the NSE to Absa
“What has been really exciting about our transition is that we are building on a strong foundation, a rich legacy that spans over a century. As we look into the future, we are excited about the opportunities as well as the challenges. Particularly so because, just like our fellow Kenyans, challenges present us with opportunities to innovative, to create and continue adding value to our communities. We are excited about this and the chance to co-create the future of our country,” Absa Bank Kenya PLC Managing Director, Jeremy Awori, said.
3. Normalised financials
To ensure the financial performance is comparable and to report the progress on the underlying business, Kshs1.5billion has been reported as an exceptional item relating to the cost incurred in the transition to Absa. Adjusting this number, the normalised profit after tax is Kshs8.5 billion; a 15% growth from the previous year. The Bank will use the normalised profit in making its decision on dividend and therefore exclude the impact of the one-off separation costs.
4. Impairment
Impairment increased by 9% compared to similar period last year largely attributable to a few clients. The Bank’s average loan loss ratio remained at 2.2% (2.2% in 2018) and Net NPL ratio dropped to 1.6% from 2.4% in 2018.
5. Capital & Liquidity
Absa Bank Kenya Plc capital and liquidity ratios remain strong with sufficient headroom above the regulatory requirement; total capital adequacy ratio at 16.7% and liquidity reserve position at 35.7% against the regulatory limits of 14.5% and 20% respectively.
In conclusion
During this period, nothing is more important than our collective ability to protect ourselves and our loved ones from the Coronavirus. We have taken a number of measures to minimize the risk of infection in our premises including providing alcohol-based hand sanitizers across our branches and ATMs. We have enhanced our cleaning and sanitation procedures to allow for regular and thorough cleaning of shared spaces and made handwashing facilities available outside some of our branches.
Further, we have made the following additional commitments:
- In order to help Small and Medium Enterprises (SME) meet their financial obligations during this period, we shall endeavour to pay all supplier invoices within 14 days. Additionally, we will work towards paying all invoices of Kes1 million and below, within 7 days. This should go a long way in helping these businesses maintain their cash flow and working capital.
- Further to the statement by the Central Bank of Kenya earlier in the week, we understand that this is a difficult period and we want to work with our customers to find a way to overcome these financial challenges. As such, customers with active personal and business loans, who may be experiencing financial strain due to the prevailing circumstances, can speak to our personal bankers and relationship managers to discuss a suitable repayment plan. We will provide options for customers to either restructure their loans by reducing their monthly instalments over a period of up to one year, or take a short-term repayment holiday. The Bank will assess each case based on its individual merit and respond to requests within 7 days. We hope and trust that this will enable all affected customers to cope with any financial difficulties during this period.
