Absa Bank Kenya PLC has today reported a Profit after Tax of Kshs.14.6 billion for the year ended 31 December 2022, representing a 34% growth in comparison to the previous year.
As a result, the Bank has declared a total dividend of Kshs.1.35 per share, a 23% increase from last year, bringing the total dividend payout to Kshs. 7.3 billion.
The commendable performance was driven by sustained double-digit growth across all business segments as the Bank scaled efforts to support key sectors of the economy, helping businesses and individuals to thrive. As such, customers loans in the period grew by 21% to Kshs.284 billion. Customer deposits rose by 13% to Kshs.304 billion further supporting balance sheet growth.
Total revenues went up 25% to Kshs.45.9 billion, driven by a 28% growth in net interest income of Kshs.32.3 billion. This was supported by increased lending, including to the Small and Medium Sized Enterprises (SMEs) and to key economic sectors such as manufacturing, energy and agriculture in recognition of the critical role they play in the advancement of our economy and job creation.
Additionally, our business diversification strategy has continued to pay off with non-funded income expanding by 17% to Kshs.13.7 billion, reinforced by strong growth from our asset management business, foreign exchange income, bancassurance as well as cards operations.
Speaking about the financial results, Absa Bank Kenya PLC Interim Managing Director Yusuf Omari said: "We are pleased with this outstanding financial performance, which was achieved in the face of an unprecedented and complex operating environment characterized by significant events such as the General Elections, drought, and persistent Covid-19 pandemic impacts.”
He added: “This set of results is a clear demonstration of our remarkable success in executing our Growth, Transformation and Returns Strategy where we outperformed in all the core measures. We have significantly transformed our business and set a strong foundation to outperform in the next horizon of our strategy.”
The financial year under review has been momentous for the Bank in terms of scaling its innovation and digital transformation agenda, with more than 92% of all transactions now taking place outside of the branch. Among others, the year resulted in the launch of the Digital
Onboarding platform - an instant online account opening option - as well as the nationwide rollout of Cash Deposit Machines. Other transformation initiatives for the year included the expansion of the agency banking platform, with 668 Absa outlets commissioned. Absa also partnered with Visa to launch a domestic and cross-border remittance service.
Additionally, the Bank has continued to leverage on critical partnerships to complement its four- pronged approach of access to markets, access to information, access to mentorship and coaching, and access to sustainable finance particularly targeted at Women in Business and SMEs customers, with more than 10,000 entrepreneurs engaged and empowered in the second half of the year through strategic County engagement tours.
“Having holistically transformed our business for relevance, I am confident that we are now at our best and well anchored for takeoff into our new horizon,” added Mr. Omari. “Looking ahead, 2023 represents yet another critical milestone that will set us on a path to build an even more relevant business that has meaning for those it is privileged to serve.”
Other Highlights include:
The Bank’s statutory operating expenses increased by 12% with Transformational investments continuing to yield desired results leading to a cost to income ratio of 41% which is within our strategy of maintaining a Cost to Income ratio of mid 40%’s and supports reinvestment for future growth.
Impairment increased by 38% compared to a similar period last year mainly driven by one-off releases that were booked in 2021. Non-performing loans ratio is at 7.3% and better than the industry average demonstrating the prudence of the Bank’s lending decisions.
Capital & Liquidity
The Bank’s capital and liquidity ratios remain strong with sufficient headroom above the regulatory requirement. The Bank total capital adequacy ratio closed the year at 18.5% and liquidity reserve position at 33.6% against the regulatory limits of 14.5% and 20%, respectively.
In the year under review, Absa Kenya received KES6.1 billion in additional capital from parent company, Absa Group Limited, to support its fast-growing balance sheet and strategic investments in new business lines. The supplementary capital injection further demonstrates Absa Group's commitment to Kenya and will accelerate lending to critical sectors driving Kenya's economic growth and development, particularly in the Small and Medium Enterprises (SME) segment.
After successfully implementing the Growth, Transformation and Returns strategy, we have curated our new strategic aspirations for the next horizon, in which we aim to become a modern- day business that is holistic in financial services and inclusive to people. The new strategic horizon necessitates the application of Absa’s competitive advantages in pursuit of our corporate
purpose, to bring possibilities to life and create shared value for our stakeholders. This is built on a foundation of a resilient business, strong capital and liquidity, improved customer responsiveness, an enabling culture, and colleagues who are passionate and proud of their work. Building on these capabilities, the goal is to increase the gains from the previous strategic horizon, resulting in increased value for stakeholders.
“We aim to transform into a well-rounded financial services company that offers a wide range of relevant financial services. However, we remain cognisant of the enormous challenges ahead of us as we prepare to deliver on our new strategic goals in order to continue creating shared value for our stakeholders,” Mr Omari added.