Absa Bank Kenya Issues Profit Warning For FY 2020 on High Impairment Costs

Absa Bank has partnered with SAP, a technology company, to implement a core finance transformation.

Absa Bank Kenya Plc has issued a profit warning saying its net profit for the 2020 full year. The listed lender cites increased impairment provisions due to the Covid-19 pandemic.

“Trends and forecasts show that the rate of impairment is increasing due to the delayed loans repayments and potential additional stress due to COVID-19 after-effects,” Absa notified its investors.

The bank’s asset quality deteriorated, with the NPL ratio increased to 7.6% in Q3’2020, from 6.8% in Q3’2019, due to the faster 20.8% growth in gross NPLs, which outpaced the 7.3% growth in gross loans.

“Notably, on a y/y basis, the bank’s asset quality deteriorated, however, on a quarter on quarter basis, the bank recorded an improvement on its asset quality with the NPL ratio improving to 7.6% from 8.0% recorded in H1’2020,” according to Cytonn Investments.

Other lenders that have issued profit warning alerts include Standard Chartered Bank Kenya, KCB Group, I&M Holdings, and HF Group.