By Benadeta Mwaura - Reporter
Kenya, May 29, 2026 - Absa Bank Kenya has reported a profit after tax of Sh5.3 billion for the first quarter of 2026, supported by growth in customer deposits and continued expansion in digital and transaction banking services.
The lender said the performance reflects resilience in a challenging operating environment marked by rising inflation, pressure on household incomes, and slowing economic activity.
Customer deposits continued to strengthen during the quarter as the bank deepened its retail and corporate banking base, reinforcing liquidity levels at a time when competition for deposits across the banking sector remains intense.
The Q1 results build on Absa’s strong full-year 2025 performance, where the bank posted a record Sh22.9 billion profit after tax, driven largely by cost management, growth in non-interest income, and improved asset quality.
“In an operating environment that remains largely complex, our profit after tax grew by 10% year-on-year to Sh22.9 billion,” Absa Kenya Managing Director and CEO Abdi Mohamed said earlier during the release of the lender’s annual results.
The bank has increasingly shifted focus towards transaction banking, payments, digital platforms, and wealth management as interest income from lending faces pressure following successive Central Bank rate cuts.
According to earlier disclosures, customer deposits at Absa rose to over Sh372 billion during the 2025 financial year, while the bank continued expanding alternative revenue streams, including asset management, bancassurance, foreign exchange services, and custodial business.
The lender has also accelerated digitisation efforts, with more than 90 percent of transactions now occurring through digital and alternative channels.
Banks are increasingly relying on transaction fees and digital ecosystems to offset declining lending margins caused by lower interest rates and slower credit growth.
Absa’s latest results come at a time when Kenya’s banking sector is navigating a difficult economic environment characterised by rising inflation, weaker consumer spending, and growing pressure on households and businesses.
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Kenya’s inflation rate rose to 6.7% in May, driven largely by higher fuel, transport, and food costs, intensifying the cost-of-living burden across the economy.
At the same time, businesses are facing slower demand and tighter cash flows as consumers cut spending amid mounting statutory deductions and rising living expenses.
Despite the challenging environment, Kenyan banks have continued posting relatively strong earnings, supported by diversification into digital financial services, government securities investments, and improved recovery of non-performing loans.
Absa has particularly focused on operational efficiency, automation, and wealth management growth as part of its long-term strategy to diversify beyond traditional lending income.
The bank’s asset management business has emerged as one of its fastest-growing segments, with assets under management and custodial services expanding significantly over the past year.
Even with the strong Q1 performance, the broader economic outlook remains uncertain.
Persistent inflation, slower economic growth, and weakening household purchasing power could continue affecting loan demand and repayment capacity across the banking sector.
At the same time, lower interest rates are expected to keep squeezing lending margins, forcing banks to accelerate diversification into fee-based income streams and digital banking ecosystems.
Still, Absa’s latest performance signals continued confidence within Kenya’s financial sector despite the mounting economic pressure facing consumers and businesses alike.
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