ABSA Bank Kenya posts Ksh8.3bn H1 net earnings

Absa Bank Kenya PLC has announced a stellar performance for the first half of 2023, with net earnings soaring to Ksh8.3 billion, marking a 32% increase compared to the same period last year. The impressive financial results were largely attributed to double-digit revenue growth across key revenue streams. In an exclusive interview with CNBC Africa, Abdi Mohamed, the CEO of Absa Bank Kenya, delved into the details of the bank's exceptional performance and its strategies for sustaining growth in the future. Mohamed highlighted the significant momentum the bank had achieved in its revenue streams, with a remarkable 31% growth. This growth was primarily driven by the expansion of the balance sheet and the increase in non-funded revenues. The CEO emphasized the bank's commitment to operational efficiency, as evidenced by the decreasing cost-income ratios and the improvement in returns to shareholders. The focus on prudent asset growth was evident in the bank's loan book performance, particularly in corporate lending and business banking. Mohamed outlined the bank's strategy of aligning its lending activities with key sectors of the economy experiencing growth, such as SMEs. He expressed optimism about the bank's prospects for growth in the second half of the year, with a heightened focus on SME lending. Absa Bank Kenya also saw a substantial increase in customer deposits, with a growth rate of 18% to reach 332.6 billion shillings. Mohamed underscored the bank's commitment to digital innovation, emphasizing the importance of digital platforms in driving customer engagement and operational efficiency. The bank has invested significantly in digital initiatives and plans to continue enhancing its digital offerings to attract new customers and improve profitability. One of the bank's standout digital products is MobiTap, a solution that enables small-scale traders and SMEs to accept card payments on mobile phones. Mohamed noted that MobiTap was part of a broader digital strategy that included expanding digital banking services and fostering partnerships with fintech companies. The bank aims to leverage digital technologies to enhance customer experience and expand its market reach. Despite the positive outlook for the Kenyan market, Mohamed acknowledged the existing macroeconomic risks, such as inflation and interest rate fluctuations. He highlighted the importance of strategic risk management in navigating the dynamic economic environment and delivering sustainable growth. The CEO reiterated the bank's focus on identifying opportunities for growth while ensuring prudent risk management practices. In response to the recent uptick in interest rates following the central bank's monetary policy review, Mohamed discussed the impact on credit growth forecasts. He acknowledged the new corridor framework introduced by the central bank to enhance interest rate transmission mechanisms and expressed support for the initiative. Mohamed emphasized the need for effective monitoring and management of interest rate fluctuations to mitigate risks and optimize revenue streams. As Absa Bank Kenya continues its growth trajectory, fueled by robust financial performance and a strategic focus on digital innovation and prudent risk management, the bank remains positioned to capitalize on emerging opportunities in the Kenyan market and drive sustainable value for its stakeholders.