After a slower start to the year in 1Q21 one of Zambia’s strongest franchises Absa PLC in 2Q21 demonstrated both greater revenue momentum and cost efficiency. According to financial statements published in the press, the banks after tax earnings levitated to K296.8 million (5x compared to a year ago) after a strong 2Q21 rebound to K237.4 million for the quarter.
READ ALSO: Country risks weigh Absa Zambia’s 1Q21 credit appetite
The Africanacity brands 1H21 cost to income ratio narrowed to 52.0% from 59.0% in 1Q21 and 73.0% in FY20. Absa’s non interest income grew by a softer 9.9% margin to K561.6 million supporting a more aggressive positive jaws velocity in the period.
Total 1H21 income expanded 65.1% to slight over a billion Kwacha compared a year ago, supported by faster growth in the interest and non interest revenue lines. The bank additionally took a positive cue from credit impairment write back position of K22.3 million easing pressure on earnings in the second quarter. Absa was the second best performing bank in the copper producers banking sector in the second quarter.
Absa PLCs balance sheet reveals a very minimal to infinitesimal change of risk appetite given marginal change in stock of investment in government securities (K3.6 billion – 1H21 versus K3.5 billion – 1H20) and a 13.6% growth in the advances book to K7.5 billion in local currency terms a function in part of currency translation given exchange rate depreciation for the foreign currency denominated portion. This could suggest the banks constrained appetite given the pandemic induced and sovereign related credit risks.
READ ALSO: Africanacity and Entreprenuership converge in Absa PLC – ZDA financing memorandum
Absa Zambia has remained committed to driving Zambia’s growth through various initiatives such as partnering to finance food security and more recently signed a financing memorandum with Zambia Development Agency – ZDA to fund Small to Medium Entrepreneurs – SMEs as the bank seeks to plug the nations funding gaps in this faculty.
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