Absa Bank reported the largest jump in profits this year, posting Kes5.5 billion after tax profits from Kes500 million in a similar period last year, an 847 per cent surge.
The bank cut loan loss provisions from Kes5.4 billion last year to Kes1.9 billion which is part of profits set aside to cover for defaults is drag on the bottom line and the huge cut meant the lender was able to save on the cost.
The lender also made a three per cent savings on general costs and did not incur the Sh1.6 billion costs of rebranding from Barclays experienced last year.
The Kes3.5 billion exercise that involved rebranding and acquisition of technology systems was concluded last year.
“Most of our customers almost 90 per cent of them reached a point where they no longer required the payment holidays we had given them which meant they were able to make good their payments. This saw our impairment come down as the balance sheet was picking,” said Absa Chief Finance Officer Yusuf Omari.
The lender said they have managed to tackle costs and maximise revenues in an environment where interest income has been impacted by lower lending rates.
Despite the negative economic effects of the pandemic, customers resumed making payments following the end of the Covid-19 loan repayment holiday.
Income grew 6 per cent to Kes17.8 billion mainly driven by the growth of net interest income, which was up 6 per cent year on year on the back of increased lending
The growth was, however, tapered by margin compression as a result of drops in Central Bank Rate (CBR) whose benefits the bank passed on to customers as a responsible lender.
Non-funded income driven by our new innovations and digitization grew by 6 per cent and costs were well managed, dropping by 3 per cent year on year, the bank noted.