Absa customer deposits grow on profit fall
Absa Bank customer deposits continue to grow despite the tough economic challenges brought by COVID 19 pandemic. In the year ended December 2020 the bank recorded 11 percent increase in customer deposit to P15.9 billion
The bank saw its digital number of customers rise by 34 percent; loans increased by four percent to P13.9 billion while balance sheet growth increased by nine percent to P20.6 billion. Presenting the results on Tuesday, Absa Bank Managing Director Keabetswe Pheko- Moshagane said the bank demonstrated resilience of its business with the launch of numerous product offerings that offer convenience. “Our people delivered exceptional support for our customers and clients under very challenging circumstances brought about by the pandemic throughout our 32 branches which remained operational during the entire lockdown periods.” She said although policy rates were cut, the Central Bank reduced the primary reserve requirement ( PRR) from five percent to 2.5 percent releasing P1.6 billion into the banking system. “This allowed commercial banks to be unconstrained in performing financial intermediation to support economic activities.”
One of the country’s leading bank continues to put the customer at the center of its strategic focus, by providing payment relief on loans amounting to P1.6 billion. “We discounted digital platform fees and waived some fees to encourage our customers to transact safely digitally. The growth in loans was realised across all business segments as we continue to focus on client penetration and acquisition to drive up our volumes.”
Meanwhile, Absa Bank Finance Director Cynthia Maravedi said explained that growth in customer deposits was driven by positive growth across business segments.
“Our balance sheet position remains solid at a total financial position of P20.6 billion, with strong liquidity and capital adequacy levels. Our regulatory capital position stood at P2.9 billion representing a capital adequacy ratio of 18 percent against the regulatory limit of 12.5 percent,”
However, the bank’s total profits after tax declined by 46 percent to P364 million. The bank expects its credit loss to expand by 674 percent to P263 million compared to last year. “The key driver here is the approach we took in terms of dealing with significant increase in credit risk out of covid- 19 impact. Our ECL modelling uses macro’s data and the negative downturn of these macros, predominately GDP, heavily impacted our ECL provisioning for the current period.”
On its Retail and business banking segment the bank’s total income has remained flat year on year at P1.1 billion. “This is encouraging given the negative head winds we had to navigate as a business. Total assets have growth year on year by six percent, customer liabilities have increased year on year which has been the driver for the income out turn.
The banks corporate investment segment also recorded strong performance. “In our CIB business transactional deposits produced very strong performance for 2020 which is in line with our overall strategy of diversifying from NII to NFI on the back of increased momentum on deposits.” The finance chief said, “the performance of our balance sheet shows the bank’s continued commitment to endeavour to delight its customers with world class service and value proposition that not only meet their needs but provide solutions for the future. To that effect we continue to focus on ways of optimising our balance sheet and the resultant funding sources.”