Kenya: ABSA Bank’s business units profitability grows net profit by 22 per cent

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  • ABSA Bank Kenya has a posted a 22 per cent rise in its profit after tax for the quarter ending in March 31, 2022 
  • The bank attributed the performance to improving macroeconomic conditions compared to the same period last year
  • The bank added that its investment in new businesses is bearing fruit with bancassurance, asset management and financial markets products contributing significantly to income growth 

Kenya’s Absa Bank has posted a 22 per cent rise in its Profit after Tax to hit KSh 3 billion for the quarter ending 31 March 2022.

In a statement seen by The Exchange Africa, the Kenyan lender said all its business units remained profitable, registering growth on crucial lines in the period.

During the period under review, total income grew by 12 per cent to KSh 9.9 billion, primarily driven by higher net interest income, which went up by 15 per cent year on year because of increased lending. Non-funded income grew by 6 per cent, driven by innovations and continued digitisation.

Absa Bank Kenya Managing Director, Jeremy Awori, said the attributed the performance improving macroeconomic conditions compared to the same period last year and the successful execution of its five-year strategy focused on driving Growth, Transformation, and Returns.

“The year has started with great momentum, and we are encouraged by this performance, which reflects the tenacity, determination, and resilience of our customers across our different business segments. Our business is on a growth trajectory and well-positioned to continue playing its rightful role in driving economic recovery from the slowdown experienced in the last two years,” Awori said.

For the period, total assets increased by 14 per cent to KSh 438 billion, with growth mainly driven by customer lending. Customer deposits increased by 5 per cent to KSh 270 billion.

The bank said its investment in new businesses is bearing fruit with bancassurance, asset management and financial markets products contributing significantly to income growth in the period under review.

“Our capital position remains strong to continue supporting a robust balance sheet growth. We have also accelerated our investment towards enabling new growth areas, improving customer experience and driving operational efficiency,” Awori said. 

In 2022, the bank has committed a capital investment of KSh 2 billion in over 70 projects designed to increase operational efficiency and improve customer experience. 

Improved customer experience pays off 

ABSA Bank Kenya also reported that its efficiency efforts geared towards creating a more effortless, faster and better customer experience were paying off and resulted in an improvement of cost to income ratio to 45 per cent from 46 per cent in the same period last year. Awori added that investments towards building the “most customer-obsessed, digitally-led bank” have resulted in improvement in Net Promoter Score with approximately 90 per cent of all our transactions now being serviced on alternate channels.

The bank also noted that impairment decreased by 15 per cent compared to a similar period last year, reflecting an improving macroeconomic environment for our business and our customers. The bank’s average loan loss ratio reduced to 2.0 per cent from 3.0 per cent demonstrating the prudence of our lending decisions.

The bank’s capital and liquidity ratios remain strong with sufficient headroom above the regulatory requirement during the period. The bank’s total capital adequacy ratio closed the quarter at 17 per cent and liquidity reserve position at 36.7 per cent against the regulatory limits of 14.5 per cent and 20 per cent, respectively.

ABSA Bank is Africa’s top employer for 2022

Outlook

The bank said it will now be primarily focused on accelerating growth to gain market share and improve customer experience.

In a separate story, ABSA Kenya was recently certified as a top employer in Kenya and Africa in 2022 by the Top Employers Institute.

According to the Institute, being certified as a Top Employer showcases an organisation’s dedication to a better world of work and exhibits this through excellent HR policies and people practices.

The Top Employers Institute programme certifies organisations based on the participation and results of their HR Best Practices Survey. The survey covers 6 HR domains comprising 20 topics, including People Strategy, Work Environment, Talent Acquisition, Learning, Well-being and Diversity & Inclusion and more.

Awori said the achievement places ABSA Kenya amongst a prestigious group of globally recognised companies for excellence in supporting employee growth and innovation.

“It is a great testament that our strategy on transforming our workplace and evolving our ways of working is sound and underlines one of our core values at ABSA, which is that ‘Our People are our Strength,” he said.

Absa Bank Kenya Invests Sh23mn to Enhance Digital Literacy

Wanjiku Njuguna is a Kenyan-based business reporter with experience of more than eight years.

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