Absa Bank Kenya Plc reported a net profit of KES 12.3 billion for the third quarter of 2023, marking a 14.9% increase from the KES 10.7 billion recorded in the corresponding period last year.
This growth is attributed to a 20% surge in revenue, reaching KES 40.2 billion, propelled by a 26% rise in net interest income and a 6.4% increase in non-funded income.
The bank’s net interest income, the disparity between interest earned from loans and interest paid to depositors, experienced a 26% boost to KES 29.3 billion, up from KES 23.3 billion in Q3 2022. This was primarily driven by a 14.3% expansion of the loan book to KES 330.9 billion, compared to KES 289.4 billion in Q3 2022. Despite the challenging operating environment, the bank continued to support its customers and the economy through lending and the introduction of new business lines such as asset management, digital finance, stock brokerage, and bancassurance.
The bank’s non-funded income, encompassing fees, commissions, and other income, rose by 6.4% to KES 10.8 billion, up from KES 10.2 billion in Q3 2022. This growth was largely propelled by a 25.5% increase in other fees income, reaching KES 4.4 billion, compared to KES 3.5 billion in Q3 2022. The result of the bank’s efforts to enhance its digital channels and products, such as the Wezesha Stock digital platform, aimed at providing convenience and value to its customers.
Total operating expenses for the bank increased by 21.9% to KES 22.3 billion, up from KES 18.3 billion in Q3 2022. This was attributed to a 16.1% rise in staff costs to KES 8.6 billion, compared to KES 7.4 billion in Q3 2022, coupled with a 34.3% increase in loan loss provision to KES 6.8 billion, up from KES 5.0 billion in Q3 2022, reflecting a prudent approach in the bank’s risk management strategy.
The bank’s balance sheet witnessed expansion as total assets increased by 4.9% to KES 504.9 billion, from KES 481.3 billion in Q3 2022. Holdings in Kenya government securities saw a 23.8% decrease to KES 106.6 billion, down from KES 139.8 billion in Q3 2022, indicating a shift in the bank’s asset allocation strategy. Customer deposits rose by 26.1% to KES 354.3 billion, compared to KES 281.1 billion in Q3 2022, reflecting strong customer confidence and loyalty. The bank’s liquidity ratio stood at 30%, surpassing the regulatory minimum of 20%.
Abdi Mohamed, Managing Director of Absa Bank Kenya, emphasized the bank’s strong momentum in revenue, balance sheet, and customer growth over the past one to two years. He added that the bank’s focus on customer growth and revenue diversification has enabled it to maintain its position as one of the leading banks in Kenya.
