Absa Bank Kenya has posted a 50.7 per cent growth in net profit through the first quarter to March 2023 with net earnings hitting Sh4.45 billion from Sh2.95 billion previously.
Growth in the lender’s profitability is largely attributable to higher income in the period with total operating income rising by 40 per cent to Sh13.9 billion from Sh9.9 billion in March 2022.
The bank’s non-interest income grew the fastest in the period, rising by 49.3 per cent to Sh4.5 billion from Sh3 billion previously, backed in large part by an 80 per cent rise in foreign exchange trading income to Sh2.2 billion.
Interest income, which represents revenues from lending, grew by 36 per cent to Sh9.4 billion from Sh6.9 billion representing the effect of rising interest rates and increased loan disbursements by the lender in the quarter.
For instance, Absa’s loan book expanded by 27.7 per cent to Sh310 billion from Sh242.7 billion in the comparable quarter last year.
Absa Bank investments in government securities have fallen marginally by 0.9 per cent to Sh87 billion to mirror the continued banking sector portfolio reallocation away from government paper as private sector lending proves to be more lucrative.
The bank, which has approval from the Central Bank of Kenya (CBK) for risk-based approval, has previously disclosed its expectations to roll out the risk-based credit scoring metric on loans in the second half of 2023.
The lender’s loan book grew faster than customer deposits which rose by 15.3 per cent to Sh310.8 billion from Sh269.5 billion.
Absa says the performance in the opening quarter mirrors the execution of the bank’s new strategy from which it seeks to grow to a fully-fledged financial services provider.