Absa posts flat profit growth on cost of rebranding

Absa Bank Kenya #ticker:ABSA has posted a flat growth in net profit of Sh7.45 billion, slowed by costs incurred on rebranding from Barclays Kenya.

The profit grew by 0.53 percent from Sh7.4 billion.

The lender incurred Sh1.5 billion in the rebranding process, which led to name change from Barclays Bank to Absa Kenya in February.

Net profit would have risen by 15 percent to Sh8.5 billion in the absence of the one-off cost, which was disclosed as an exceptional item in the income statement. 

The last month has seen the Group, with headquarters in South Africa, engaged in rigorous campaigns as it rebranded to Absa Group after the former parent company Barclays Plc reduced its stake at Absa Group, formerly Barclays Group.

London-based Barclays Plc now owns 14.9 percent stake in Absa Group, down from controlling stake of 68.5 percent.

Absa will pay Sh0.90 per ordinary share after a Sh0.20 was paid in October as interim dividend. This bring the final dividend paid in the year unchanged from Sh1.10 paid in 2018.

Net interest income grew to Sh23.18 billion from Sh21.99 billion over the period, while the total non-interest income from fees and commissions increased to Sh10.59 billion from Sh9.70 billion.

Operating income grew to Sh33.77 billion from Sh31.69 billion.

The bank reported 2.08 percent increase in operating expenses to Sh21.49 billion due to increase in staff costs and loan provisions.

The gross non-performing loans declined from 13.91 billion.

The listed lender’s assets also grew by 15.12 percent to Sh373.98 billion.

Customer deposits increased by 14.6 percent to Sh237.74 billion, while the net loans and advances increased by 9.89 percent to Sh194.89 billion.

The bank’s share price has dropped by 16.35 percent over the last one month trading at Sh10.20 compared, as foreign investors continue to sell off equity held in banking stocks at the Nairobi Securities Exchange.