Key Points:
- Absa Bank Kenya reported a strong Q1 with profits up 35% year-over-year, driven by loan growth and a focus on customer needs.
- Loan advances surged 41%, and customer deposits climbed 14%, reflecting a healthy balance sheet and customer trust.
- Solid Q1 performance positions Absa Kenya well for the year. Continued focus on growth and digital transformation is key for long-term success.
Absa Bank Kenya, a subsidiary of South Africa’s Absa Group Limited with partial ownership by Kenyan businessman Baloobhai Patel, reported a robust financial performance in the first quarter of 2024.
Profit after tax jumped 35.4 percent year-on-year to Ksh5.59 billion ($42.45 million) from Ksh4.13 billion ($31.31 million) in Q1 2023. This increase was driven by a 31.8 percent improvement in return on equity and a focus on strategic growth initiatives.
Overall revenue grew 19 percent to Ksh16.5 billion ($125.82 million) on a strengthened balance sheet. Interest income surged 33.83 percent to Ksh16.24 billion ($123.83 million), supported by a 14.81 percent rise in non-interest income to Ksh4.61 billion ($35.12 million). Customer deposits also climbed 14.47 percent to Ksh359.46 billion ($2.74 billion), reflecting the bank’s customer-centric approach.
Loan growth and asset management
Revenues from loans and advances to customers increased by 41 percent, rising from Ksh 9.5 billion ($72.53 million) to Ksh13.4 billion ($102.31 million). This demonstrates the bank’s effective loan portfolio repricing in a rising interest rate environment. However, total assets declined from Ksh514.82 billion ($3.93 billion) to Ksh498.12 billion ($3.80 billion).
Abdi Mohamed, Absa Bank Kenya’s Managing Director, attributed the performance to the bank’s diversification strategy. “We are pleased with the resilient financial outcomes attained in the quarter under review, which demonstrates that we are sustaining strong business performance anchored on our new strategy while aligning with the needs of individuals, businesses, and society and living our purpose of empowering Africa’s tomorrow together, one story at a time.”
Mohamed added that the bank’s cost-to-income ratio improved to 33.9 percent due to efficiency efforts. “Impairment increased marginally compared to the same period last year,” he noted, “reflecting the bank’s prudent risk management approach.”
Background and outlook
Formerly Barclays Bank Kenya Limited, Absa Bank Kenya plays a key role in the Kenyan banking sector, offering retail, corporate, treasury, and card services. It also fosters local enterprises and SMEs through strategic partnerships.
Baloobhai Patel, a prominent Kenyan businessman, holds a 1.03 percent stake in Absa Kenya with 55.86 million shares. His strategic investments in blue-chip stocks have solidified his position as one of Kenya’s wealthiest individuals.
Absa Kenya’s Q1 2024 performance marks a strong start to the year. The bank’s focus on growth, customer engagement, and digital transformation positions it well within the competitive Kenyan banking landscape. Continued strategic execution remains key to achieving long-term sustainability and success.
