ABSA Group released their FY’22 earnings results posting a 34.28% & 34.20% climb in EPS & PAT respectively to KES 2.69/share and KES 14.59Bn respectively driven by a 27.91% increase in net interest income and a 17.24% growth in non-interest income. Trailing ROaE & ROaA improved to 24.30% & 3.22% respectively in FY’22. NIMs remained adequate at 7.69% while the profit margin edged up 228bps y/y to 31.72%. In line with our expectation, the board of directors recommended a final dividend of KES 1.15 (Our estimates were KES 1.20) taking the total dividend paid out in FY’22 to KES 1.35 representing a 22.73% increase from KES 1.10 paid out in FY’21. The book closure of the dividends is set for 28th April 2023 while payment is expected to be made on 25th May 2023.
Loan book grew 21.07% y/y to KES 283.58Bn faster than the 13.04% y/y growth in the customer deposits to KES 303.75Bn leading to a 619bps growth in the loan deposit ratio to 93.36% from 87.17% recorded in FY’21. Despite a minimum statutory requirement of 20%, its liquidity ratio dropped 470bps to close FY’22 at 33.60% from 38.30% recorded the prior year pointing to rising liquidity risk. We observed a notable jump in income from the Consumer Banking Business (+19.00% to 3.78Bn), Corporate Business( +37.00% to 2.36Bn), Business banking ( 26.00% to 1.74Bn) and the Financial Services business (+29.00% to 1.18Bn) highlighting improved performance. Allocation to government securities grew 69bps y/y to 133.49Bn in FY’22 driven by hunt for higher yields. Fair Value changes through OCI recorded a 1.96x growth y/y to 2.92Bn highlighting the negative impact of rising yields on banks’ government paper holdings.
