Absa Bank’s net Profit Up by 20% KSh 14.7Bn in Q3

Absa Bank Kenya has reported a strong financial performance, with its profit after tax rising by 20 percent to Sh14.7 billion in the first nine months of the year. The impressive growth was primarily driven by increased earnings from their loan portfolio.

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The bank’s lending activities showed significant expansion, with total loans reaching Sh311 billion. Of this amount, Sh94 billion in new gross lending was strategically directed toward key economic sectors. The bank’s overall revenue performance was equally impressive, recording a 16 percent increase to reach Sh46.8 billion. This growth was supported by funded income of Sh34.5 billion, while non-funded income saw a 13 percent rise to Sh12.2 billion.

According to Absa Bank Kenya Managing Director Abdi Mohamed, this revenue growth reflects both the strength of their traditional revenue streams and the successful expansion into new areas, including asset management and brokerage services. The bank also demonstrated resilience in its deposit base, with customer deposits growing modestly to Sh352 billion despite challenging economic conditions, indicating strong customer confidence in Absa as their primary financial partner.

However, the expanded lending activities led to an increase in impairment costs, which rose by 19 percent to Sh8 billion. Despite this challenge, the bank maintains that its portfolio quality remains healthy, with adequate coverage ratios in place to manage potential future credit risks effectively.

The bank continues to maintain a strong financial position, with its capital and liquidity ratios comfortably exceeding regulatory requirements. As of the quarter’s end, the total capital adequacy ratio stood at 19.4 percent, while the liquidity reserve position was at 38.1 percent, both well above the regulatory threshold of 14.5 percent.

Here’s what it means for you:

1. The increased lending (Sh94B new loans) suggests they may be more open to giving loans if you need one. However, rising impairment costs (up 19%) might mean they could become more strict with lending criteria.
2. Their liquidity ratio (38.1%) is well above requirements, meaning they can readily handle customer withdrawals.
3. The bank’s ability to grow despite tough economic conditions suggests some resilience in the economy.

Source; Absa Bank Kenya.

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