ABSA increase borrowing spree with Sh2 billion loan takeout from the parent unit

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Absa Kenya, formerly Barclays Bank, has had to take out an Sh2.6 billion loan from its parent company. The banker seeks the investment from its South-African parent unit to help consolidate the firm’s capital position.

“The $25 million(Sh2.6 billion) subordinated loan from Absa Group Limited was obtained on October 16, 2019, and has a maturity date of October 16,2029,” reads its latest annual report.

In the report announcement, Absa Kenya also anticipates the new loan will help shoulder the economic fall-out from Coronavirus pandemic.

“Our Holding company Absa Group Limited(AGL) will provide capital support to help mitigate the capital and cash flow impact of the separation costs over time,” said Absa Kenya’s report.

As part of the credit line, the move now sees Absa Kenya Group rise in ranking to land at tier 2 capital position. The sum of Sh7.6 billion on its financial book in the year December 2019 puts the lender at a better positon than the previous year’s Sh5 billion capital.

Data from the report also further highlights Absa Kenya’s performance for financial year ending 2019. The review period indicates net profit saw an increase to Sh1.95 billion with the total interest revenue standing at Sh7.6 billion.

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Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: anthony@finsolutions.co.ke Contact: +254 780216631

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