Absa Bank Kenya PLC has joined top-tier banks reporting huge declines in profits as a result of the higher provisioning for bad loans.
In its third quarter report, Absa reported a 66.1 per cent profit decline in nine months this year of $19 million from $56 million last year, joining the ranks of Equity and KCB.
Early this month, KCB Group Plc net profits for the nine months ending September 2020 dropped to $109 million, 43 per cent lower than $192 million recorded same period last year while Equity Group posted a 14 per cent drop in profit after tax from $148 million down from $173 million, a similar period last year.
The banks’ performance was largely impacted by increased provision on loans and advances in the wake of increased risk of credit default associated with the Covid-19 pandemic.
"The evolving impact of the pandemic has required us to revisit our strategic priorities. Our focus in the past few months has been to help our customers manage through the pandemic through various interventions such as loan moratoriums and restructures, fee waivers for digital transaction, capacity building for SMEs and other Force for Good initiatives," said Absa Bank Kenya PLc managing director Jeremy Awori.
In its Q3 report released this week, Absa bank has reported the conclusion of transition from Barclays Bank to Absa at a cost of $19 million for the past nine months as it records increase of net customer assets by eight per cent to reach $209 million.
The lender’s performance was significantly impacted by a 147 per cent growth in impairment as customers struggled to keep up with loan repayments due to the economic effects of the Covid-19 pandemic, and a decisive action by the management to increase provisions in order to best position for future potential credit losses.
The bank continued to support its customers manage through the adverse economic effects of the pandemic through increased lending, capacity building and other financial solutions.
During the pandemic period, the bank advanced over $57 million in lending, an uplift of 41 per cent compared with the same period last year with a bigger portion being advanced to retail as well as small and mid-sized business customers to support their resilience and growth through this period.
The bank offered loan relief and restructures totalling over $62 million to customers, equivalent to 30 per cent of loan portfolio, alongside other response interventions such as provision of PPEs to […]