Absa Bank Kenya PLC has today reported a strong performance for the full year 2023 as net earnings increased 12% to Kshs.16.4 billion compared to the previous year, supported by increased funding of core sectors fueling Kenya’s economic growth.
During the period, customer loans and advances increased by 18% to Kshs.336 billion as the Bank focused on supporting key economic sectors such as energy, telecommunications, manufacturing, trade, commercial property, and affordable housing. The Bank also prioritized the needs of the SME sector, facilitating increased access to financing, access to markets, mentorship, and networking opportunities, as well as driving digital enhancements to improve the customer experience.
In the period, revenues increased by 19% to Kshs.54.6 billion on the back of growing customer assets as well as faster growth of new business lines such as bancassurance, asset management, and digital finance. Interest income increased by 24% to Kshs.40 billion, while non-funded income grew by 6% to Kshs.14.5 billion despite a challenging macros environment.
Speaking while announcing the results, Abdi Mohamed, Absa Bank Kenya PLC Managing Director and CEO said:
“This impressive performance truly reflects the growth and resilience of our customers who have continued to give us a chance to contribute to their growth story as their financial partner. It is also a demonstration that our strategy is effective in creating value for all our stakeholders while delivering long-term growth in a dynamic operating environment. With 2023 being the first year of implementation of our five-year strategy, this performance gives us a strong launch pad from which we will execute our set priorities.”
Through the review year, Absa remained the primary partner for its customers and a proponent of a savings culture among Kenyans, with customer deposits increasing 19% to Kshs.363 billion. Total assets ended the year at Kshs.520 billion, up from Kshs.477 billion the year before, representing a 9% increase.
As part of the strategic milestones that drove this impressive performance, Absa continued to evolve towards becoming a modern, digitally powered business that offers intuitive and seamless customer experiences across our channels. In this regard, the Bank launched the diaspora banking proposition and
optimized its digital banking offerings, including the launch of its digital savings proposition, the introduction of the Buy Now Pay Later solution, and term loans on Timiza -its virtual banking proposition. Furthermore, in pursuit of its ambition to become the leading bank for SMEs, the Bank continued to enhance its transactional capabilities for businesses with solutions such as MobiTap a first-to-market mobile payment solution- as well as the Wezesha Stock digital platform which enables retailers and distributors to expediently obtain financing.
Absa has made significant strides in its sustainability journey, underpinned by a resolute commitment to ensure its operations, and those of its customers, are attuned to environmental and social imperatives. The Bank has channelled over Kshs. 22 billion into sustainability-linked loans, financing projects in renewable energy, green construction, and climate-smart agriculture.
Other Highlights include:
Shareholder value
Based on the improved profitability, the Board has proposed to shareholders a final total dividend payout of Kshs.7.3 billion, translating to Kshs. 1.35 per ordinary share. Taken together with the interim dividend of Shs 0.20 per share paid in October 2023, the total dividend for the year amounts to Shs 8.42 billion, representing a 14.8% increase compared to the preceding year.
Efficiency
The Bank’s statutory operating expenses increased by 16% as the bank executed transformational and people investments. The Bank has leveraged these investments to accelerate revenue growth which has led to a significant improvement in cost-to-income ratio to 39.7%.
Impairment
Impairment increased by 43% compared to the same period last year in line with principles of prudence in risk management given balance sheet growth and tough operating environment. Despite this increase, portfolio quality remains better than the industry. In addition, Absa has ensured an adequate coverage ratio which is also better than the industry levels to ensure future credit losses are minimized and better managed.
Capital & Liquidity
The Bank’s capital and liquidity ratios remain strong with sufficient headroom above the regulatory requirement. The Bank’s total capital adequacy ratio closed at 18.1% and liquidity reserve position at 31.1% against the regulatory limits of 14.5% and 20%, respectively.
Outlook
“Absa is well positioned for growth. With our robust balance sheet and a strong capital position, we will continue to invest in relevant initiatives that empower our customers and stakeholders to pursue and achieve their aspirations, while adeptly navigating external challenges.
We are confident in our ability to accelerate growth momentum and sustainably create value for all our stakeholders. We will continue to diligently execute our strategy, aiming to position Absa as a modern
and innovative consumer financial services provider, a leading partner for small and medium businesses, and a powerhouse in corporate and investment banking.
We will remain steadfast in our digitalization efforts towards enhancing customer experience while leveraging the strong market presence and reputation the Absa brand enjoys. Additionally, we are committed to continue enriching our employee value proposition through investments in training, future skills, and wellbeing, appreciating that our people are the cornerstone of our success.”
Mr Mohamed said.
