Absa Bank Kenya Profit Jumps 328% to KSh8.2 Bn

Absa Bank Kenya PLC reported KES.8.2Bn in Profit After Tax (PAT) Q3 2021, 328.3% growth compared to KES.2Bn Q3 2020 driven mainly by 23% decline in total operating expenses to KES.15.4Bn caused by 55.2% drop in loan loss provision to KES.3.4Bn.

ABSA KENYA Nairobi Office

Absa Bank Kenya reported strong growth in profit after tax to Ksh 8.2 billion shillings for the period ending 30 September 2021 as provision for bad debt declined sharply.

The bank said the reduction in provision for bad debt reflects “the strengthening macro-economic environment, quality of credit, and resilience in customer operations”.

Total income increased by 7 per cent to Ksh 27.3 billion, primarily due to higher interest income, which increased by 9 per cent year on year due to increased lending.

Net customer loans increased by 9 per cent to Ksh 229 billion, owing to robust year-on-year growth in key core products such as general lending, trade loans, mortgages, and scheme loans.

Customer deposits increased by 9 per cent to Ksh 269 billion, with transactional accounts accounting for 69 per cent of the total deposit book.

Key Highlights

  • Net customer assets up 9% to Kshs.229 billion with total assets at Kshs.411 billion
  • Customer deposits grew by 9% to Kshs.269 billion
  • Total revenue up 7% to Kshs.27.3 billion
  • Operating expenses dropped by 3% to Kshs.12 billion
  • Impairment dropped by 55% to Kshs.3.4 billion
  • Profit after tax increased strongly to Kshs.8.2 billion

No interim dividend was declared, however, the bank has stated that it will resume dividend payouts come the full year.

“We are confident, at this point in time, to resume payment of dividend at the full year 2021,” the bank said in a statement.

As the bank continues to diversify its revenues into new areas such as brokerage and asset management while leveraging on its digitization strategy, Sterling Capital comments that:

“All these factors combine to point to a robust dividend payout at the end of the year which we expect to come in the range of Ksh 1 – 1.20 per share, against earnings of between Ksh2- 2.20 per share.

We, therefore, maintain a BUY recommendation on Absa guided by our fair value estimate of Ksh 13.18, representing a 26.1% upside from Monday’s closing share price of Ksh.10.45 (22nd November 2021).”

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