Absa Bank Profits Drop By 72% In 6 Months Of 2020

Absa Bank Kenya PLC has announced profits after tax of 1.2 billion shillings, a 72% decline compared to a similar period in 2019.

According to the lender, the “normalized performance” for the first half of 2020 excludes an “exceptional item of 1.7 billion shillings” which the bank incurred as part of the just-concluded separation project and brand transition to Absa.

The performance was significantly impacted by a 228% growth in impairment largely caused by increased provisions as customers struggled to keep up with loan repayments due to the economic effects of the Covid-19 pandemic.

Total income grew by 3 percent to 16.8 billion shillings mainly driven by the growth of non- interest income, which was up 4 percent year on year.

Costs dropped by 3 percent year on year. Total assets grew by 11 percent year on year driven by growth in customer loans, investments in Government securities as well as other liquid assets.

Net Customer loans were up 8 percent to close at 202 billion shillings driven by key focus products namely General lending, trade loans, mortgage, and scheme loans that recorded strong growth year on year.

Interest income grew 2 percent from the prior year because of growth in the balance sheet and success in the management of the cost of funds.

The lender says that since the advent of Covid-19, he has managed to restructure loans totaling 57 billion shillings to customers, equivalent to 28 percent of net customer loans and advances, “alongside other response interventions such as the provision of Personal Protective Equipment (PPE) to public hospitals and psychosocial support for frontline health workers.”

“The world is facing one of the most difficult challenges of our lifetime, one which governments, industries, businesses and societies around the world were not sufficiently prepared for and whose full impact is yet to be understood.  As management, we have taken the decision to increase credit impairment provisions to position ourselves for the uncertain future. The fortunes of the banking sector follow those of its customers and the broader economy and therefore 2020 will be a tough year for the sector. We believe we must help protect lives and livelihoods and that is why we have extended loan repayment holidays of up to KES57billion in the first half,” said Jeremy Awori, the Managing Director of Absa Bank Kenya.

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