Absa Bank Kenya (NSE:ABSA) received Sh6.17 billion ($50 million) subordinate loan from its South Africa-based parent company to boost its capital and meet strategic investments in new business lines in the year ended December 2022.
The listed lender revealed that it received other loans from the parent including a $50 million loan in 2020 and a USD 25 million in 2019, raising its borrowing to Sh19.7 billion at the end of last December from Sh8.5 billion in 2021.
“The Sh6.17 billion (at December’s exchange rate) or $50 million subordinated loan from Absa Group Limited was obtained on 21 December 2022 and has a maturity date of 21 December 2032. Interest is paid quarterly in arrears at a rate of 472bps above USD SOFR (Secured Overnight Financing Rate) which re-sets every three months,” Absa’s annual report reads in part.
South African Absa Group disclosed it did not have any defaults from its loans to its Nairobi Securities Exchange-listed subsidiary.
Absa’s capital adequacy ratio closed at 18.5 percent against the regulatory limits of 14.5 percent with the liquidity of 33.6 percent against 20 percent, showing enough headroom against the requirements of the Central Bank of Kenya.
Absa posted a 50.7 percent rise in net profit to Sh4.45 billion for the three months to March on the back of an increase in non-interest income.
Its loan book grew to Sh310 billion from Sh242.7 billion in the comparable quarter last year.
The lender saw its non-interest income grow fastest in the period, rising to Sh4.5 billion from Sh3 billion, backed by an 80 percent rise in forex trading income to Sh2.2 billion.
The bank is betting on continued revenue diversification including the launch of new business segments/lines to maintain its growth momentum.
The company’s proceeds from borrowing rose to Sh10.4 billion last year.
Its operating income rose 40 percent to Sh13.9 billion compared to a similar period last year.
The financial performance last year came amid an unprecedented and complex operating environment characterised by significant events such as the general elections, drought, and persistent Covid-19 impacts.
Nonetheless, the lender raised its dividend payout to a record of Sh1.35 per share or a total of Sh7.3 billion as interest income boosted its earnings in the year ended December.
