Absa Bank Kenya has increased its dividend payout by 12.9 percent to Sh1.75 per share amounting to Sh9.5 billion, on the back of a 27.5 percent rise in net profit for the full year to December to Sh20.87 billion.
The lender announced Thursday that its board had recommended a rise in the final dividend per share to Sh1.55 from Sh1.35 declared in the preceding year, bringing the total payout to Sh1.75 when added to the interim payout of Sh0.20.
The latest payout represents a rise from Sh1.55 per share, amounting to Sh8.42 billion paid a year earlier when net profit was Sh16.3 billion. The final dividend will be paid on May 22 to shareholders on the register as of April 30.
“We have shown consistent revenue and profit growth. We continue to show greater efficiency as we automate and we also continue to show improvement on return on equity,” said Abdi Mohamed, CEO of Absa Bank Kenya.
The increase in profits during the period was driven by a 15 percent rise in net interest income to Sh46.23 billion, while non-funded income grew by 11 percent to Sh14.5 billion.
Absa chief financial officer Yusuf Omari said the lender disbursed Sh180 billion in new loans during the year under review despite a decline in its loan book to Sh309.1 billion from Sh335.7 billion. He explained that 32 percent of Absa’s loan book is denominated in foreign currency and therefore the recorded drop was mainly due to the appreciation of the shilling against the dollar.
“We saw more preference for short-term loans. We saw businesses shy away from long term loans. Preference was also on short-term loans for our consumer customers. Our consumer clients were impacted because of macros like higher cost of credit. Now this is changing and we are seeing consumer appetite for loans returning,” said Mr Omari.
Operating expenses went up by 5.5 percent to Sh32.6 billion from Sh30.89 billion, mainly driven by a rise in staff costs even as provisioning for non-performing loans reduced. There was also a Sh3 billion investment in automation.
Mr Omari explained that the non-performing loans ratio jumped to 12.3 percent from 9.6 percent as customers in segments such as manufacturing and real estate came under pressure in the regime of higher interest rates.
Mr Mohamed said there had been “significant restructuring and rescheduling” of loans to the tune of Sh3.4 billion to accommodate customers who were struggling to keep up with loan repayments.
On staff costs, Mr Omari said that the jump from Sh11.72 billion to Sh13.02 billion was due to the hiring of an additional 280 full-time employees, salary increments and the onset of the 1.5 percent housing levy.
Absa chairman Charles Muchene said the lender expects to continue on a growth trajectory as it seeks a balance between growing the loan book and keeping in check the quality of the loan book.
“We are intentional at growing this business at a pace that is faster than our competitors...We look at challenges as dark clouds with silver lining,” said Mr Muchene.
