Absa Bank’s growth strategy yields 34% net profit rise

May 29, 2024 Newsroom

Absa Bank Kenya has reported 34 percent rise in net profit for the first quarter of 2024, reaching Kes5.9 billion. The bank said this performance reflects the Pan-African lender’s strategic execution and adaptability in a challenging economic environment marked by volatile interest rates and high inflation.

In the quarter, total revenue surged by 19 percent to Kes16.5 billion, driven by an increase in both net interest income and non-interest income.

Absa’s net interest income went up by 22 percent in the quarter to Kes11.4 billion, while non-interest income increased by 13 percent to Kes5.1 billion.

In a market update, the lender said these gains highlight the bank’s successful diversification strategies and its ability to capitalize on emerging business opportunities such as bancassurance, asset management, and stock brokerage activities during the quarter.

Further, Absa’s customer deposits grew by 14 percent to Kes355 billion, while its loans and advances expanded by 5 percent to Kes327 billion as the lender enhanced its customers’ growth stories while at the same time empowering economic progress.

Abdi Mohamed, the Managing Director and CEO of Absa Bank Kenya PLC, noted, “We are pleased with the resilient financial outcomes attained in the quarter under review, which demonstrate that we are sustaining strong business performance anchored on our new strategy while aligning with the needs of individuals, business, and society. We continue to live our purpose of empowering Africa’s tomorrow together, one story at a time.”

Last year, Absa unveiled a new strategy, putting a priority on transforming the Pan-African lender into a modern consumer financial services company.

Through the rollout of new products, technologies, and relationship models, the bank has recorded the fastest growth in customer numbers in the three months to March 2024. Additionally, Absa has continued to establish itself as a market leader in Business Banking, undertaking growth campaigns focused on vital sectors of the economy such as agriculture, trade, and manufacturing. The bank also maintains a strong presence as a corporate and investment banking partner in the region.

Despite an 11 percent increase in operating expenses due to strategic investments in human capital and digital transformation, the bank’s cost-to-income ratio improved to 33.9 percent, reflecting its efficiency efforts.

At the same time, the bank’s impairment charges increased marginally compared to a similar quarter in 2023, amidst balance sheet growth and a challenging operating environment. Nevertheless, Absa’s portfolio quality remains superior to industry standards, with adequate coverage ration to manage future credit losses.

Absa Bank closed the quarter with total capital adequacy ratio of 17.9 percent and a liquidity reserve position of 33.5 percent, both above the set statutory levels of 14.5 percent and 20 percent.

“We aim to continue sustaining the growth and momentum in our core business through a relentless focus on executing our strategy and thus driving our market share objectives,” explained Abdi Mohamed.