Absa half year profit up eight-fold at Ksh.5.6 billion

Absa Bank Kenya has posted an eight fold growth in earnings through six months with profit in June coming in at Ksh.5.6 billion from a lower Ksh.589 million last year.

The astronomical surge in earnings for the lender is largely attributable to lower costs in the period coupled with a modest rise in operating income.

Absa’s total operating income was up six per cent in the period at Ksh.17.8 billion with net interest income and non-interest funded income growing by equal margins to Ksh.12 billion and Ksh.5.8 billion respectively.

The bank’s cost containment measures have however taken the greatest share of credit in the profit surge with total operating expenses declining by 27.7 per cent to Ksh.9.9 billion from Ksh.13.6 billion last year.

This is as Absa truncated its loan-loss provision costs by Ksh.3.5 billion to just Ksh.1.9 billion. The credit impairment charges stood at Ksh.5.4 billion last year.

Meanwhile, Absa has seen its transition costs disappear having completed the process by June last year.

The bank had spent a cumulative Ksh.1.7 billion in transitioning to the Absa brand from Barclays across the last three years including an upgrade of key infrastructure and the launching of new products.

With the transition costs out of the way and an improving economic environment, the bank preempts its growth inhibiting shackles are now unlocked.

“The results should be an indication of what the bank is about. We’ve seen what we believe is a strong first half performance and that is still in fairly challenging environment. Hopefully as the economy continues to pick up, we will experience further growth,” said Absa Bank Kenya Managing Director Jeremy Awori.

“For the last three years, we have spent time on the transition and that frankly did occupy us a bit. Now that the process is through, we’ve got the opportunity to benefit from not just the investments made through the transition process but also future investments.”

Across the transition period, the bank made investments towards digitization and automation including a re-launch of its agency banking and whatsapp banking.

“Our launches have been encouraging and successful and now it’s really about scaling those investments and seeing the revenues and cost-efficiencies coming through in our financial results,” he added.

Absa now has a balance sheet represented by assets worth Ksh.398.2 billion including Ksh.218.9 billion in net loans and advances to customers.

The bank’s customer deposits meanwhile sit at Ksh.263.9 billion.

Absa board of directors have not recommended the payment of an interim dividend for the period but the lender is expected to resume the shareholder payouts at the end of this year.

The bank’s earnings per share (EPS) has improved to Ksh.1.03 from a low 11 cents last year.