This archive report was first published on 26 August 2021.
On August 26, 2021, Absa Bank Kenya Plc announced a strong performance in the first half of 2021, despite the negative economic effects of the pandemic.
Total income grew by 6% to Kshs17.8 billion, mainly driven by the growth of net interest income, which was up 6% year on year on the back of increased lending. Non-funded income, driven by new innovations and digitization, also grew by 6%.
Net customer loans went up by 8% to close at Kshs219 billion, driven by key focus products such as general lending, trade loans, mortgage, and scheme loans. Customer deposits grew by 6% to Kshs264 billion, with transactional accounts contributing 68% of the total deposits.
The bank continued to execute its growth strategy, introducing new exciting propositions, including the launch of a fund and wealth management subsidiary, Absa Asset Management Limited (AAML). AAML provides investment services for Absa customers with a diverse portfolio of local and international capital markets options.
As part of efforts to support enterprise development, the bank launched the Absa SHE Business account, which aims to support at least 1 million women-led SMEs with both financial and non-financial resources. The account enables women entrepreneurs to access unsecured lending of up to KES10 million.
The bank also introduced WhatsApp banking as part of its commitment to invest over Kshs1.6 billion in technology and innovation this year. Customers can now transact via WhatsApp, including account-to-Mpesa/Airtel Money transfers, inter-account transfers, bill payments, and balance enquiry, among others.
“The pandemic and its negative effects continue to persist, but we have drawn inspiration from our customers to rise above the storm and continue working together to keep the wheels of our economy turning. We are optimistic that we shall make good our commitment to continue innovating and enhancing our customers’ banking experience,” said Mr Awori.
Other highlights include:
Costs
The bank costs were well managed at Kshs8.0 billion, reflecting a 3% reduction year on year, largely due to spend discipline and cost initiatives. The cost save initiatives included automation of the processing centre and continued migration of customer transactions to alternative channels.
Impairment
Impairment decreased by 64% compared to the similar period last year, reflecting an improving macroeconomic environment for the business and its customers. The bank’s average loan loss ratio reduced to 1.8% (5.4% in H1 2020).
Capital & Liquidity
Absa Bank Kenya Plc capital and liquidity ratios remain strong, with sufficient headroom above the regulatory requirement. The bank’s total capital adequacy ratio closed the first half of 2021 at 17.3%, and liquidity reserve position at 38.1%, against the regulatory limits of 14.5% and 20% respectively.
