Oral East AfricaAbsa Bank Kenya has reported an impressive 28.9 percent jump in net profits in a difficult half year of Kes10.7 billion after revenues outpaced rise in costs.
The Pan African lender saw interest income rise by Kes7.1 billion which was enough to cover for the sharp rise in costs that came especially from expensive money.
Interest expense doubled from Kes4.6 billion to Kes8.8 billion as Absa Bank Kenya sought cheaper money from customers raising to Kes353.3 billion in deposits.
Absa Bank Kenya reported a 29% growth in profit after tax to Kshs.10.7 billion for the half year ended 30 June 2024
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The bank also kept cost in check by keeping provisions flat at Kes5 billion supported by higher quality of credit that minimized defaults.
“We continue to diversify our revenue with scalable payment solutions, improving customer experience and advancing financial inclusion through digital finance, affordable housing, and SME offerings like Wezesha and Microinsurance,” Absa Bank Kenya PLC Managing Director and CEO, Abdi Mohamed said.
“While the transformational investments contributed to a 12% cost increase, ongoing prudent cost control improved our cost-to-income ratio to 35.8 percent,” he said.
Restructuring
Absa Bank strategy of playing it close with customers has helped it hunt for cheap money and prevent widespread defaults that would have required money for provisioning.
Mr Mohamed said that in response to the current economic realities, the Bank took deliberate actions to support its customers, restructuring approximately Kes1.4 billion in loans for retail consumers impacted by tough economic times.
Timiza
In addition, the Bank enhanced the provision of non-financial skills towards supporting the growth ambitions of MSMEs and Women in Business, impacting more than 14,000 entrepreneurs in the period.
Absa Bank also diversified its lending through Timiza, its digital platform that allowed the lender to scale volumes at reduced costs. An additional Kes12 billion was advanced to start-ups and youth through the Timiza platform
"In line with our strategic ambitions, we are committed to becoming a sustainable financial services company that addresses the evolving needs of a modern-day consumer through innovation and strong partnerships. Our focus is on diversifying revenue streams with scalable payment solutions, enhancing customer experience, and advancing financial inclusion through digital finance, digital savings, affordable housing, and SME offerings like Wezesha and Microinsurance," Mr. Mohamed added.
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