Absa total revenue posts 15p.c. growth

ABSA Zambia plc financial year

2020 earnings bore the brunt of high risk weightings in widened credit impairments whose stock totalled K249.3million.

However, total revenue for the institution grew 15.3 percent to K1.4 billion supported by 8.7 percent stronger interest income supported by duration risk related investment in treasury assets.

This weighed its After Tax Profits (PAT) lower by 41.2 percent on an annual basis to K143.8 million.

Adding pressure to revenues were widening non-interest expenses that grew 64.1 percent to K1.2 billion weighed most likely by disease pandemic related spend, revaluation effect on foreign currency invoices and promotional spend on new branch rollout throughout the year.

This is contained in the financial statement released by the Bank.

With steep depreciation of the Kwacha, exchange rate related costs remained a persistent theme across all commercial banks in 2020.

As a consequence, Absa’s cost to income ratio widened to 73 percent from 51 percent a year ago.

“Total revenue grew 15.3 percent to K1.4 billion supported by 8.7 percent stronger interest income supported by duration risk related investment in treasury assets and advances income reflecting the aggressive 22.2 percent growth in its loan book,” the Bank said.

Supporting a 9.2 percent upward growth in non-interest income was a 21.2 percent growth in foreign exchange trading earnings while fee and commissions were flat compared to a year ago.

Commenting on result, the Kwacha Arbitrageur Magazine said the analysis effects of the central banks directive to eradicate unwarranted fees was an evident theme across the banking sector.

“It is highly likely that credit extension through relief packages in the COVID year coupled with revaluation effects in part impacting the foreign currency portions of loan books has been a consistent theme for asset book growth for many banks.

“Absa Zambia’s credit book furthered its aggressive expansion to K7.1 billion (FY20) from K5.9million (FY19),” the Magazine said.

Deterioration in Zambia’s fiscal posture leading to sovereign downgrade has not spared commercial banks in the country.