Absa Kenya investments on its retail market are bearing fruits after the lender reported a 34 per cent increase in its net profit to Sh5.9 billion for the period ending 31 March 2024.
The lenders non-performing loans increased by Sh6 billion to Sh32.7billion compared to a similar period in 2023.
The bank announced in 2023 that it would focus on the retail market.
Absa Kenya's loans and advances grew by five per cent to Sh327 billion, while customer deposits rose by 14 per cent to Sh355 billion.
It attributed this to revenue diversification, supported by new ventures like bancassurance, asset management, Timiza, and stock brokerage, which contributed to a 19 per cent increase in total revenues to Sh16.5 billion.
The retail-banking model has increased non-funded incomes for banks like Equity Group and KCB Bank. It focuses on high-volume, low-margin operations aimed at the low-income segment of the population.
Interest income went up by 22 per cent to Sh11.4 billion, and non-funded income increased by 13 per cent to Sh5.1 billion.
Managing Director and CEO Abdi Mohamed said the bank's resilience and alignment with its strategic objectives had yielded fruit.
“We are pleased with the resilient financial outcomes attained in the quarter under review, which demonstrates that we are sustaining strong business performance anchored on our new strategy,” said Mohamed.
The first quarter saw significant growth in customer numbers, driven by new products, technologies, and relationship models.
The bank also focused on critical sectors such as agriculture, trade, and manufacturing, and maintained its position in corporate and investment banking.
Underlying costs grew by 11 per cent due to investments in human capital and digital transformation, but the cost-to-income ratio improved to 33.9 per cent.
Impairment increased slightly compared to the same period last year, reflecting prudent risk management.
The bank's capital and liquidity ratios remained strong, with a total capital adequacy ratio of 17.9 per cent and a liquidity reserve position of 33.5per cent, both above regulatory requirements.
In the review period, the bank’s revenue grew by 19 per cent to Sh16.5 billion supported by robust growth in balance sheet.
Customer deposits rose by 14 per cent to Sh355 billion while customer assets increased by 5 per cent to Sh327 billion.