Absa Bank Kenya Plc has posted a 5.3 percent growth in net profit for the first three months of the year to Kes 2.0 billion from Kes 1.9 billion posted in a similar period in 2019. The company attributes the rise in profit to a rise in non-interest funded income (NFI) which increased by 15.4 percent to Kes.3 billion from improved trading gains.
Interest income meanwhile grew at a slower pace of 2.7 percent to Kes.7.6 billion bringing total operating income to Kes.8.6 billion from a flat Kes.8 billion a year ago.
The company’s balance sheet remained on an expansionary curve with net loans and advances to customers hitting Kes.203 billion while customer deposits rose by 6.6 percent in the period to Kes.238.7 billion.
“These results are a strong testament that our strategic choices under our growth, transformation and returns strategy have set us firmly on a path to continue growing,” the company noted in a statement issued on Wednesday.
However, the company’s operating expenses increased by 6.1 percent on the back of higher loan loss provisioning as the bank set aside Kes 1.1 billion on expected loan losses in comparison to Kes.636.7 million last year. This is as the lender’s gross non-performing loans (NPLs) soared by 12.3 percent to Kes.17.3 billion after falling marginally to Kes.13.5 billion at the end of 2019.
Absa’s one off exceptional costs related to its re-branding exercise from Barclays totaled Kes.552.1 million in the period as the lender finalizes on the migration. The bank has so far undertaken the vast majority of its separation projects with the new brand having been unveiled in February this year.
The company says it will stay on the growth curve is expected to be shaken up by the prevailing pandemic which has equally hit out at the banking industry.
“We are cognizant that the Covid-19 pandemic continues to pose significant challenges for the industry and the economy at large. The level of uncertainty relating to this crisis is high and unprecedented and will have a negative impact on business globally including the banking industry in Kenya,” Absa added.
“The banking industry will feel the Covid-19 impact from April onward and the impact will likely continue throughout the year.”