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Absa Bank Kenya Posts Normalised Net Profit of Kes 6.5 Billion for Full Year 2020

Absa Bank Kenya PLC posted a normalised profit after tax for the period ended December 2020 of Kes 6.5 billion a 23% decline compared to the period in 2019. The group attributed the decline to pandemic related provisions.

The normalised financial performance excludes an exceptional cost of Kes 3.2 billion which went towards the recently concluded brand transition to Absa and restructuring programmes.

Loan impairments recorded a two-fold growth to kes 208 billion as the lender’s customers struggled to keep up with loan repayments due to the economic disruptions caused by Covid-19.

In a virtual briefing with analysts, Absa’s management said they took decisive action to increase provisions in order to the best position for future potential credit losses.

“2020 was a tough year and as is expected, the hardships of the banking sector have continued to follow those of the customers and the broader economy. As a result, many sectors have slowed down and peoples’ livelihoods have been greatly disrupted,” Absa Kenya Managing Director Jeremy Awori at the briefing.

During this period, the bank offered loan relief and restructures totalling over Kes62 billion to more than 59,000 customers, equivalent to 30% of its loan portfolio.

Total income for the year rose by 2% to Kes34.5 billion due to growth of non-interest income, which went up 5% year on year. Normalised costs fell by 4% year on year while net customer loans rose 7% to Kes.209 billion.

Interest income was up slightly by 1% on the back of growth in the lending book while customer deposits also went up by 7% to Kes 254 billion with transactional accounts making up to 69% of the total deposits.

Absa Management Outlook 

The management said that they are cautiously optimistic and that 2021 presents a positive outlook especially with the on-going vaccination against the virus. However, the level of uncertainty relating to the pandemic still remains high and unprecedented and its impact on the global economy is already profound.

“We recognise that the economy is still reeling from the effect of COVID19 and it’s yet to recover fully. We anticipate write-backs of provisions we made as to the economy recovers.”

The board of directors did not recommend the payment of an interim dividend.