Absa Hit by Coronavirus Pandemic Leading to a 65% Loss on Profits

• Absa group profits decreased by 65% between the months of January and September 2020.
• The group has since been forced to restructure its loans to a 30% customer loans.
• Absa Group Customer deposits increased from Sh 235.4 to 246.6 billion as liabilities shot to Ksh343.2 billion from Ksh316 billion.

Absa Group Plc has reported over  50% loss from its transactions within the last nine months. This is according to the Absa progress assessment which was done on September 30, 2020.

Undoubtedly, the drawdown is as a result of the Coronavirus pandemic

The bank’s profit decreased by 65% between the months of January and September 2020 following the loss on loans which has shot up to Sh 5.6 billion from 1.9billion recorded in 2019.

Absa’s balance sheet further shows that the loan loss provision has gone up from Sh 2 billion which was recorded last year to Sh 7.6 billion.

The peak of the loss was experienced between the months of September and March when the first case of the virus was reported.

According to the bank’s Chief Executive Officer Mr. Jeremy Awori, the group has since been forced to restructure its loans to a 30% customer loans and advances which relates to Sh 63 billion.

“Our profits have drastically shrunk from Sh 5.6 billion to Sh 1.9 billion thus making us restructure our loans and account for higher loans provisioning with expectations that most customers will default,” said Mr. Awori.

The group’s Customer deposits increased from Sh 235.4 to 246.6 billion as liabilities shot to Ksh343.2 billion from Ksh316 billion.

By the end of September 2020, the group had accumulated Ksh17.1 billion as its interest income driven by loans and advances to customers.

On the other hand, non-interest income rose to Ksh8.3 billion from Ksh7.9 billion.

As a result of the financial performance, Earnings Per Share (EPS)  has also dropped to Sh0.35 from Sh1.02.

Mr. Awori has however applauded the group for its resilience and sustainable performance having recorded pre-provision profit growth of 6% against a background of a challenging local and global macro-economic environment.