Home ECONOMY Rebranding, delinking costs pull down Absa Kenya’s financial performance

Rebranding, delinking costs pull down Absa Kenya’s financial performance

by biasharadigest

Huge costs associated with rebranding and delinking from UK-based Barclays Bank weighed heavily of the financial performance of ABSA Bank Kenya Limited. These expenses include investments in new systems as well as settlements to Barclays Plc for the provision of various services during the transition period.

In the period ended 31st December, 2019, Absa Bank Kenya net profit rose from KSh 7.4 billion to KSh 7.5 billion, a marginal increase as the lender soaked up a one-off cost of KSh 1.5 billion as a result of transiting from Barclays Bank Kenya to Absa Bank Kenya Limited.

Audited financial results of the lender indicate a separation cost of KSh 1.5 billion. Without this exceptional item, Absa’s net profit is KSh 8.5 billion, an increase of 15 per cent from 2018.

The balance sheet size grew from KSh 324.8 billion to KSh 373.9 billion, a 15 per cent growth. Interest income from loans to customers increased from KSh 21.5 billion to KSh 22.5 billion during the period under review as banks cut down their lending to retail customers.

A sluggish economy and prevailing high cost of living for most parts of last year, slashed the borrowing appetites of households as well as businesses.

Customer deposits increased from KSh 207.4 billion to KSh 237.7 billion, a 15 per cent growth while Shareholders funds grew to KSh 45.2 billion from KSh 44.2 billion.

Investment in Government paper increased from KSh 63.2 billion to KSh 79.2 billion as the rate cap law saw lenders prefer the more lucrative fixed securities segment.

Absa’s Total interest income grew from KSh 29.1 billion to KSh 31 billion while cash balances increased from KSh 5.8 billion to KSh 7.1 billion.

Purchase of property and equipment as a result of its transition from Barclays Bank Kenya rose from KSh 428 million to KSh 1.7 billion.

Absa Bank Kenya directors have postponed a scheduled annual general meeting until a later date, in compliance with a CMA directive advising against large public gatherings to stem the spread of COVID-19.

Shareholders will be paid a dividend of 90 cents per ordinary share. This is an addition to an interim dividend of 20 cents paid out on October 11th 2019.

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