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

David Indeje is Khusoko’s Digital Editor, covering East African markets.
Absa Bank Kenya has resumed modest shareholder payouts after a year-long hiatus due to the COVID-19 pandemic.

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.

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David Indeje is Khusoko’s Digital Editor, covering East African markets.

In my role as Community Engagement Editor For Khusoko, I care about our audience. engaging them, getting news delivered to them across a variety of platforms, and expanding the diversity of voices on our website.

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