Absa Kenya posts 30% solid net profits
Listed lender Absa Kenya has weathered a tough economic environment in East Africa to post a 30 per cent jump in its quarter three earnings. The solid profits were attributed to a saw a spike in interest income which was up by 25 per cent to hit 23.3 billion shillings. CNBC Africa spoke with the bank’s interim CEO Yusuf Omari for more.
Tue, 29 Nov 2022 10:32:58 GMT
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AI Generated Summary
- Absa Kenya's net profits surged by 30 per cent in the third quarter, driven by a rise in interest income and proactive measures to support SMEs.
- The bank is actively engaging with SMEs through tailored solutions, training, mentorship programs, and access to international markets to foster growth and sustainability.
- Absa Kenya is supportive of the government's Hasla Fund initiative and aims to collaborate with authorities to extend financial services, leveraging its expertise in fund management.
Listed lender Absa Kenya has reported a remarkable 30 per cent increase in its net profits for the third quarter, defying a challenging economic environment in East Africa. This surge in profits can be attributed to a substantial spike in interest income, which rose by 25 per cent to reach 23.3 billion shillings. In an exclusive interview with CNBC Africa, the bank's interim CEO, Yusuf Omari, shed light on the bank's strategic agenda to support SMEs, enhance regional partnerships, and navigate potential challenges in the banking industry. Omari emphasized the critical role of SMEs in the Kenyan economy, highlighting their significant contribution to GDP and employment generation. Absa Kenya has made it a priority to tailor solutions to meet the needs of SMEs, offering facilities such as invoice discounting to expedite cash flows for these businesses. Moreover, the bank is providing training, mentorship programs, and access to international markets, aiming to foster growth and sustainability for SMEs. Omari underscored the importance of capacity-building and strategic partnerships in driving the performance of the bank, particularly in the SME sector. The conversation also touched upon the government's Hasla Fund, a funding initiative targeting young entrepreneurs. Omari expressed support for the initiative, signaling Absa's willingness to collaborate with government entities and local counties to extend financial services under the Hasla Fund. The CEO highlighted Absa's expertise in fund management and commitment to facilitating access to credit for eligible borrowers in line with the fund's revolving nature. As part of its regional outlook, Absa Kenya is eyeing expansion opportunities in markets like the Democratic Republic of Congo (DRC) and Ethiopia. Omari emphasized the group's readiness to explore M&A deals and strategic partnerships to capitalize on growth prospects across different geographies. Despite concerns around non-performing loans in the industry, Omari provided assurance of Absa Kenya's strong performance metrics, with the NPL ratio currently standing at 6.9%, well below the industry average of 14%. The CEO attributed this resilience to proactive measures taken by the bank to mitigate risks and support borrowers amid evolving economic conditions. Looking ahead, Absa Kenya is focused on diversifying its service offerings, with recent launches in offshore investments, asset management, and custodial services. The bank is also targeting the lucrative diaspora remittance market through partnerships with foreign exchange providers. Additionally, Absa is exploring innovative banking solutions for corporates, suppliers, and employees, leveraging partnerships with fintech companies to enhance its ecosystem approach. The strategic initiatives outlined by Omari underscore Absa Kenya's commitment to sustainable growth, customer-centric innovation, and regional expansion, positioning the bank as a key player in the dynamic East African banking landscape.