ABSA BANK POSTS ASTRONOMICAL AFTER-TAX PROFIT RISE

Absa Bank Managing Director, Abdi Mohamed.

• Absa Bank recovers strongly from the COVID - 19 effects to post astronomical after-tax profit rise

Absa Bank Tanzania has maintained outstanding operational viability in the aftermath of the COVID 19 pandemic, defying a year marked by turmoil in all sectors including the banking sector to register an after-tax profit rise of 1,875% in the financial year 2021, the bank’s Managing Director (MD) Abdi Mohamed has revealed.

“The year 2021 has been a very good year from the financial performance perspective as the Bank was able to recover from a reported loss position of TZS 532million in 2020 to register a Tzs 9.4billion profit after tax (PAT) in 2021,” said Abdi Mohamed.

“The 2020 reported loss was mainly contributed by the negative effects of the COVID-19 pandemic that affected most of the sectors in the economy which impacted Bank’s financial performance in terms of decreasing revenues and increased loan impairment losses. “

According to the Bank’s MD, profit before tax (PBT) also grew significantly by 210% year on year from Tzs 4billion last year to a Tzs 13billion in 2021, mainly contributed by declining loan impairment charges by 30% and decreasing operating costs by 8% while the Bank was able to maintain stability in the revenue performance year on year.

Abdi Mohamed also said that the bank’s Net Interest Income (NII) grew by 2% in 2021 despite decent growths in customer loans mainly due to timing of the customer loan growth during the year and declining margin as the bank continue to improve on customer pricing and make lending more affordable to its customers.

Absa Finance Director, Obedi Laiser said, “In 2021 most businesses recovered albeit not fully from the pandemic impact of 2020 and the Bank registered growths in customer loans and customers deposits of 17% and 2.1% respectively from previous year with a corresponding 30% decrease in loan impairment charges due to improvements in the financial performance of most borrowers in the year. Customer deposits would have grown by a decent 11% in the year but was impacted by a regulatory change during the year on mobile money trust account deposit holdings. “

The Bank recorded growths in customer loans across all its business customer segments of Retail, Business Banking and Corporate Banking as it continues to drive and execute its Strategic plan to ensure it continues to improve its digital offerings, customer segment expansion and participate more broadly into the public sector support initiatives, according to Mr Laiser.

According to the Finance Director, during the year 2021, the bank launched a number of innovative product diversification, including launching a retail mobile lending product in partnership with Tigo Tanzania that has reached thousands of customers and enabled them to access financial services more conveniently and improve their lives and wellbeing.

Mr Laiser continued saying, during the year the bank also launched an SME lending product and improved its SME digital transactional banking channel as part of product and customer segments expansion and digital offering improvements. Public sector support participation improved significantly in 2021 as the Bank’s role to contribute more positively to the socio-economic development of Tanzania continues to gather more pace.

In terms of expansion, Absa total capital position of the bank grew by a decent 8.3% year on year largely contributed by the profitability generated during the year 2021 which was reinvested into the capital of the bank. Total Capital of the bank increased by Tzs 11bn adding more capital resources which are deployed in expanding Bank’s lending capabilities to serve our customers better.

The bank continues to have a strong capital position and operates well above the regulatory and internal capital requirements. The bank’s digital capabilities continued to evolve and improve attracting more customers and increased usage from existing customers, said Finance Director, Mr Obedi Laiser.

In 2021 Absa Bank won several international and local Excellence Awards including, the Best Banking Cards Tanzania Award (by Global Brands Magazine), The Most Innovative Retail Bank, Tanzania Award (by Global Business Outlook) and Best Financial Institution in using ICT 2021 by Tanzania Commission of Information Communication and Technology (ICT).