First listed lender to withhold dividends
Posts 44% Profit After Tax, Ksh 4.2 billion
Absa Bank Kenya on Tuesday posted an 8% pre-provision profit growth of Ksh 17.9 billion which was described as ‘decent growth’ from Ksh 16.3 billion in 2019 amid the economic downturn that was precipitated by the Covid-19 pandemic.
Mr Yusuf K. Omari, Chief Financial Officer said for the financial results for the full year ended December 2020, it posted a 44 per cent Profit After Tax equivalent to Ksh 4.2 billion from KSh7.47 billion a year earlier.
It attributed the decline to high loan provisions and a restructuring plan that impacted some of its staff.
The bank reported a 115 per cent rise in loan provisions to KSh9 billion, having restructured loans worth over KSh62 billion.
Total income grew by 2 per cent to Ksh 34.5 billion driven by the growth of non-interest income, which was up 5 per cent year on year. Normalised costs were well maintained, dropping by 4 per cent year on year.
Net customer loans went up 7 per cent to close at Ksh 209 billion driven by key focus products namely; general lending, trade loans, mortgage and scheme loans which recorded strong growth year on year.
Interest income grew by 1 per cent from the prior year largely because of growth in the lending book; though partially offset by margin compression as a result of drops in Central Bank Rate (CBR), whose benefits the bank passed to customers as a responsible lender.
Customer deposits grew by 7 per cent to K sh 254 billion with transactional accounts making up to 69 per cent of the total deposits.
The bank’s capital adequacy ratio is at 17.5% and liquidity reserve position at 38.7% against the regulatory limits of 14.5% and 20% respectively, Moses Muthui, Absa Kenya, Strategy Director said, “We’ve come through a significant period of change and we believe that with the capital base we have, we are well-positioned to take on opportunities for the future.”
“We have a clear runway ahead of us to invest for the top line and for the future. we believe beginning Q1 2021, our statutory profit performance will be ahead/in-line with the industry average,” he added.
The bank’s Board of Directors did not recommend any dividend for the year.
“The directors did not recommend a dividend payout because Covid-19 is still here with us and we are expecting a big third wave. Until vaccinations have been done, we are still sceptical to say we are already on the recovery. We are positioning ourselves for business growth. We had Sh103 billion lending in a year of pandemic,” Absa Bank chief finance officer Yusuf Omari said.