# Absa Kenya FY24 Results

An episode of [The Mwango Capital Podcast](https://invisiblenetwork.ai/podcast/1583367792), 11 Apr 2025, 54 min.

Audio: https://api.substack.com/feed/podcast/161081250/c0a9fece2da0ed4dbea4e1ef71192393.mp3

In this episode recorded on 20.03.2025, we host the Absa Bank Kenya CFO, Yusuf Omari, to break down Absa Bank's 2024 performance. We cover revenue growth, cost management, investments in digital transformation, capital requirements, acquisition strategy, and the company’s future outlook. Subscribe to get notified when we make a new post. Show Notes 00:00:00 Introduction 00:01:03 Yusuf’s Career Journey 00:03:56 Short-Term vs Long-Term Loans 00:06:47 FY24 Financial Performance 00:09:48 Revenue Growth, Cost Management, and Efficiency 00:16:26 Asset Quality and Loan Losses 00:21:16 Economic Environment, Profitability, and Balance Sheet Insights 00:29:01 Dividends, Capital Requirements, and Acquisition Strategy 00:34:14 Investments in Digital Transformation 00:37:12 Medium and Long-Term Goals 00:43:29 Personal Reflections, Professional Growth, and Future Outlook Get full access to The Mwango Weekly at mwangocapital.substack.com/subscribe

## Transcript

[0:00] SPEAKER_01: Welcome to Mwango Spaces this Thursday evening.
[0:02] SPEAKER_01: We are hosting the CFO at Absarth Bank Kenya.
[0:06] Get started with a quick intro of himself and then we can
[0:09] dissect the numbers.
[0:10] SPEAKER_01: Please briefly introduce yourself to the public.
[0:13] SPEAKER_01: Let people know who you are,
[0:14] SPEAKER_01: what you do,
[0:15] SPEAKER_01: and maybe perhaps a little bit of your journey to Absarth Bank Kenya.
[0:19] Thank you so much and good evening,
[0:21] at least the ones we are on the same time zone.
[0:23] SPEAKER_00: By introduction, Omari is my name.
[0:25] SPEAKER_00: I'm the finance director for Absa Bank Kenya.
[0:29] SPEAKER_00: I look at,
[0:30] SPEAKER_00: of course,
[0:30] SPEAKER_00: the usual finance markers,
[0:33] SPEAKER_00: the core finance,
[0:34] SPEAKER_00: which is financial control,
[0:36] SPEAKER_00: financial decision,
[0:37] SPEAKER_00: support,
[0:39] SPEAKER_00: treasury,
[0:40] SPEAKER_00: tax.
[0:40] SPEAKER_00: I call those ones traditional.
[0:42] SPEAKER_00: But then I also head and lead the strategy and transformation team.
[0:48] SPEAKER_00: And lastly,
[0:48] really on this one is also I look at the ESG agenda for
[0:52] sustainability for the bank
[0:54] SPEAKER_00: as well.
[0:54] So really glad to be here and to be able to dissect our
[0:58] financials and respond to
[1:00] SPEAKER_00: any queries just on the resource that we need to put in.
[1:03] SPEAKER_01: I wanted to maybe double click on your journey.
[1:05] SPEAKER_01: How did you get to Apsa Bank, Kenya?
[1:07] SPEAKER_00: I started my career as an auditor working with KPMG.
[1:11] SPEAKER_00: So I'm a external auditor,
[1:12] SPEAKER_00: auditing from financial institutions,
[1:15] SPEAKER_00: manufacturing companies,
[1:17] SPEAKER_00: telcos.
[1:18] SPEAKER_00: Here in Kenya, I had a stint in Rwanda as well.
[1:22] SPEAKER_00: Then after that's when I joined Apsa.
[1:24] SPEAKER_00: Then, of course, it was Barclays as head of internal audit.
[1:27] SPEAKER_00: So I moved from external auditor to being a head of internal audit.
[1:32] And then after that,
[1:33] I moved to be the compliance director four years later.
[1:37] And then from the compliance director,
[1:38] that's when I then moved to the CFO world.
[1:41] SPEAKER_00: and all that have been leading for quite some time.
[1:44] And we've now expanded also that I mentioned to you,
[1:47] which includes strategy and transformation.
[1:49] SPEAKER_00: And then of course, the sustainability agenda of the bank.
[1:52] SPEAKER_00: So a nice journey,
[1:53] SPEAKER_00: really understanding the bank very well,
[1:56] SPEAKER_00: right from the time when I was doing audits in the bank to compliance,
[2:00] SPEAKER_00: when I was looking at the regulatory environment,
[2:03] SPEAKER_00: dealing with quite a number of regulators.
[2:05] SPEAKER_00: And then now, of course, in finance, understanding the numbers.
[2:09] SPEAKER_00: understanding the whole budgeting process.
[2:11] SPEAKER_00: And now,
[2:12] SPEAKER_00: of course,
[2:12] now spending a lot of my time at this point in time on strategy
[2:16] and transformation.
[2:17] SPEAKER_00: We launched our five-year strategy back in 2022.
[2:20] We are spot on halfway on that five-year journey and really
[2:25] exciting times looking
[2:26] SPEAKER_00: at how we're executing on the strategy,
[2:28] SPEAKER_00: which then informs the numbers that we've been releasing over the period.
[2:32] So if I get it right,
[2:32] the work of a CFO is almost to be in the weeds in the ground.
[2:36] SPEAKER_01: At the same time,
[2:36] SPEAKER_01: a bad side view of the organization at the end of the day,
[2:39] drive it forward in terms of making sure that there's liquidity everywhere.
[2:42] You're following the strategy,
[2:44] you're locating resources and all that kind of stuff.
[2:46] Is that how your kind of week look like in terms of making sure
[2:49] that the bank is properly run?
[2:52] SPEAKER_00: Yeah, absolutely.
[2:53] I think lots and lots of engagement with different stakeholders
[2:56] within the bank,
[2:57] SPEAKER_00: understanding our competitive advantage,
[3:00] SPEAKER_00: understand where to win and what we need to do,
[3:03] SPEAKER_00: the investments that need to be made.
[3:05] And then of course,
[3:05] once we sign off the strategy,
[3:07] now it's actually on the side of execution.
[3:09] SPEAKER_00: So it doesn't stop there.
[3:10] SPEAKER_00: Strategy is a simpler bit.
[3:12] SPEAKER_00: I think the most important thing for us is we know what our strategy is.
[3:16] SPEAKER_00: We articulated that also in our financials today.
[3:19] SPEAKER_00: But then now it's actually to execute.
[3:21] SPEAKER_00: And execution means the investments that are required.
[3:24] SPEAKER_00: Now being a CFO makes that work very easy because we have agreed.
[3:29] SPEAKER_00: We've actually budgeted for this.
[3:31] We've done business cases to see how through these executions
[3:35] we'll be able to get
[3:36] SPEAKER_00: returns from this.
[3:38] And so right now we are in an execution mood where we are doing investments.
[3:43] SPEAKER_00: We're coming up with timelines.
[3:45] SPEAKER_00: And as we execute,
[3:46] SPEAKER_00: we are monitoring,
[3:48] which again still falls under my docket to monitor and report
[3:51] on a continuous basis.
[3:52] SPEAKER_00: And if we see we need some interventions, again, that becomes quite easy.
[3:56] Today morning,
[3:57] when you're doing the presentation,
[3:58] something struck me about the presentation.
[4:00] You were saying something a bit about businesses being more
[4:03] oriented toward taking
[4:04] SPEAKER_01: short-term loans as opposed to more long-term investments.
[4:08] Could you expand a little bit on it and see how it affects on
[4:10] the current state of
[4:11] SPEAKER_01: the economy,
[4:12] SPEAKER_01: so to speak?
[4:13] SPEAKER_00: Yeah, I think a strategic response by our customers.
[4:17] SPEAKER_00: If you look at 2024,
[4:17] SPEAKER_00: we were operating in an environment of very high interest rates,
[4:22] SPEAKER_00: you know,
[4:22] SPEAKER_00: with loans as high as 20,
[4:25] SPEAKER_00: 24 percent,
[4:26] SPEAKER_00: of course,
[4:26] SPEAKER_00: depending on the unique credit appraisal of the customers.
[4:30] And so the logical thing was not to go for long term,
[4:33] which is the right thing to do.
[4:35] SPEAKER_00: You don't want to lock yourself on an expensive loan.
[4:38] And as the rates come down,
[4:39] you find yourself still exposed from that perspective.
[4:43] SPEAKER_00: Now, the responses were different.
[4:45] SPEAKER_00: If it's a business all the way to SMEs,
[4:47] they have to still get these facilities because they still want
[4:50] to be able to buy goods,
[4:52] SPEAKER_00: be able to sell.
[4:53] If you're in the manufacturing sectors,
[4:55] you still have to manufacture and be in business.
[4:58] SPEAKER_00: So for them,
[4:58] SPEAKER_00: lots of trade loans,
[5:00] SPEAKER_00: lots of overdraft,
[5:01] SPEAKER_00: which all of these,
[5:02] SPEAKER_00: we consider them to be short-term.
[5:04] SPEAKER_00: But then if they are thinking of heavy capex investments,
[5:08] SPEAKER_00: we saw quite a number of businesses postponing those investments.
[5:12] SPEAKER_00: And for good reasons,
[5:13] you don't want to be acquiring that expensive machinery in an
[5:17] environment where the
[5:18] SPEAKER_00: rates are extremely high.
[5:19] You don't even know whether you'll be able to sell your produce
[5:22] at that level.
[5:22] SPEAKER_00: So that was the response on the business side.
[5:24] SPEAKER_00: On the consumer side, also short-term lending in the industry.
[5:28] SPEAKER_00: Certainly ourselves, we had to be innovative.
[5:31] SPEAKER_00: We started facilities with tenors of one year.
[5:35] SPEAKER_00: Most of our facilities, term loans, they'll go for 60 months.
[5:38] SPEAKER_00: Five years have been a longer period than that.
[5:41] But then we saw the need from our customers to go for these
[5:44] shorter dated facilities.
[5:46] SPEAKER_00: It makes sense.
[5:47] SPEAKER_00: Even if you're paying at high interest rates,
[5:50] SPEAKER_00: you're paying it over a very short time,
[5:51] SPEAKER_00: which is 12 months.
[5:52] Of course,
[5:53] the client has an option to repay these facilities once their
[5:57] cash flows improve.
[5:58] SPEAKER_00: So they could take a one-year loan,
[6:00] SPEAKER_00: but then there'd be three months,
[6:01] SPEAKER_00: six months down the lane,
[6:02] SPEAKER_00: they repay all of it,
[6:03] SPEAKER_00: of course,
[6:04] SPEAKER_00: and no penalties in Kenya for that.
[6:06] SPEAKER_00: And it makes sense.
[6:08] SPEAKER_00: We saw a lot of digital loans.
[6:09] We saw a lot of payroll loans from,
[6:11] again,
[6:12] on the consumer side,
[6:13] the retail customers.
[6:14] And all of this was just to respond to that environment that
[6:18] was prevailing at that
[6:18] SPEAKER_00: point in time.
[6:19] SPEAKER_00: First track that,
[6:20] SPEAKER_00: at this point in time,
[6:21] SPEAKER_00: rates have come down significantly,
[6:23] SPEAKER_00: 700 basis points in the last two months.
[6:26] And so we are now in another phase where we expect uptake of
[6:30] loans and long-added loans.
[6:33] SPEAKER_00: Again, the right thing to do in this environment.
[6:36] SPEAKER_01: So giving that as a starting point in terms of the macro,
[6:39] then you can give us a bit of a bird's eye view of the earnings
[6:42] results for 2024.
[6:43] SPEAKER_01: And then we can dissect a few components here and there along the way.
[6:47] SPEAKER_00: I think a good set of results.
[6:49] SPEAKER_00: We reported profit after tax growth here only of about 28%.
[6:53] SPEAKER_00: This is informed by top line growth with revenue picking up 14%.
[6:59] SPEAKER_00: And within that revenue,
[7:00] SPEAKER_00: the two components of revenue that we normally track,
[7:03] SPEAKER_00: of course,
[7:04] SPEAKER_00: is net interest income,
[7:06] SPEAKER_00: which is tied 100% to the balance sheet.
[7:09] The effects we are putting through for deposits,
[7:12] you see our deposit grew by about 1%.
[7:15] Then we really control the significant uptick on our cost of
[7:20] funds with a lot of
[7:21] SPEAKER_00: the emphasis on transactional count.
[7:23] SPEAKER_00: So that's one element of the revenue.
[7:25] SPEAKER_00: That was a 15% growth.
[7:26] SPEAKER_00: And then the non-interest revenue or the non-funded income,
[7:30] SPEAKER_00: which is really capital-like issues to do with fees and commissions,
[7:34] SPEAKER_00: FX revenue,
[7:36] SPEAKER_00: our new revenue streams,
[7:37] SPEAKER_00: our subsidiaries,
[7:39] SPEAKER_00: securities,
[7:40] SPEAKER_00: bank assurance,
[7:41] SPEAKER_00: asset management,
[7:42] SPEAKER_00: custody.
[7:43] SPEAKER_00: So that non-funded income line picked up 11%.
[7:46] SPEAKER_00: So combining the two, that's what gave us a revenue growth of about 14%.
[7:51] SPEAKER_00: We drove our cost efficiency productivity initiatives.
[7:56] SPEAKER_00: You see our costs grew by 9%.
[7:59] SPEAKER_00: So a positive draw of 5%.
[8:01] SPEAKER_00: Revenue is 14 less this nine.
[8:05] SPEAKER_00: So 5% positive draws.
[8:07] SPEAKER_00: Really emphasizing the element of the investments that you're doing,
[8:12] SPEAKER_00: you are actually able to drive higher revenue growth.
[8:15] And this is really informed when you look at one of the key
[8:18] ratios that we monitor,
[8:19] SPEAKER_00: cost-to-income ratio,
[8:20] SPEAKER_00: at around 37%,
[8:21] pretty much implying that we're getting higher revenue for
[8:26] every shilling that we
[8:27] SPEAKER_00: invest in on the cost line.
[8:29] SPEAKER_00: Impairment was down 2% in this period,
[8:32] SPEAKER_00: although the loan loss ratios were higher at about 2.9,
[8:37] SPEAKER_00: really showing the map of economic conditions,
[8:40] SPEAKER_00: the way the economy was operating in 2024.
[8:43] SPEAKER_00: We know with the high interest rates,
[8:45] SPEAKER_00: with the taxes that had been introduced,
[8:47] SPEAKER_00: you'll call the finance bill,
[8:49] SPEAKER_00: the issues of affordability came through the issues of being able to want
[8:54] SPEAKER_00: businesses to run their businesses profitably.
[8:56] SPEAKER_00: And so in there,
[8:57] SPEAKER_00: we saw an uptake in our NPL ratio,
[9:00] SPEAKER_00: which still is a 12%,
[9:02] SPEAKER_00: still way better than the industry.
[9:05] SPEAKER_00: But again, just to appreciate the environment that was there.
[9:07] SPEAKER_00: So impairment, 2% down, but the loan loss ratio picking up 2.9.
[9:13] And then after that,
[9:14] of course,
[9:14] is then what we have as the profit after tax,
[9:17] the 28% up.
[9:20] SPEAKER_00: On the balance sheet, I mentioned that deposits was up.
[9:23] SPEAKER_00: However, on loans and advances, we saw that coming down 8%.
[9:26] But then there's a big chunk of our loans and advances that is
[9:31] foreign currency,
[9:32] about 32%.
[9:33] SPEAKER_00: And because of the strengthening of the local currency,
[9:36] SPEAKER_00: if we do the financials on a constant currency basis,
[9:40] SPEAKER_00: then you'll see that our loans and advances was actually flat.
[9:43] SPEAKER_00: That's just some quick highlight on our financials.
[9:46] SPEAKER_00: We're happy to dive into any area.
[9:48] SPEAKER_01: Let's start with the revenue side.
[9:50] SPEAKER_01: You have WGG revenue growth in a really tight environment.
[9:53] SPEAKER_01: What's driving that growth?
[9:54] And then you can also give us the mix between a funded income
[9:58] and net interest income.
[10:00] SPEAKER_00: I think the first one there really,
[10:02] SPEAKER_00: which is the bigger component of our revenue,
[10:04] SPEAKER_00: is the net interest income.
[10:05] SPEAKER_00: You saw that picking up 15% year on year.
[10:08] SPEAKER_00: And this is really tied to the growth in deposits.
[10:12] SPEAKER_00: So we saw deposits picking up 2% in this period.
[10:17] SPEAKER_00: As mentioned, our loans and advances was actually a drop.
[10:20] SPEAKER_00: It was a drop of 8%.
[10:22] SPEAKER_00: However,
[10:22] SPEAKER_00: in constant currency,
[10:24] because we have a component of loans and advances that is in
[10:27] foreign currency,
[10:27] SPEAKER_00: 32% actually,
[10:29] SPEAKER_00: then it was flat.
[10:30] SPEAKER_00: So not massive growth from a balance sheet perspective.
[10:34] SPEAKER_00: It was more a margin play because of the high interest rate environment.
[10:39] SPEAKER_00: We saw our yields on lending increasing by 250 basis points.
[10:45] Whereas on the side of deposits,
[10:47] we saw our cost of deposits picking up by 160 basis points.
[10:53] SPEAKER_00: So really managing the margin within that environment,
[10:57] a much higher growth on the lending rate compared to the cost
[11:00] of deposits.
[11:01] SPEAKER_00: And so that informed that 15% growth in net interest income.
[11:07] On the side of unfunded revenue or the non-interest revenue,
[11:11] as mentioned,
[11:12] that picked up 11%.
[11:14] SPEAKER_00: This was informed by our subsidiaries.
[11:17] SPEAKER_00: Most of them are new, less than three, four, five years in operation.
[11:22] A subsidiary like the ones for our custody business,
[11:25] we introduced that in January of 2024.
[11:28] SPEAKER_00: Our asset management business is about two to three years old.
[11:33] SPEAKER_00: We have a bank assurance business that's likely older than the rest.
[11:37] SPEAKER_00: And then we have a securities business.
[11:39] SPEAKER_00: All of these are subsidiaries, are the new growth.
[11:42] SPEAKER_00: So really helping on that 11% growth in an unfunded income.
[11:46] SPEAKER_00: The other lines there where we saw growth is the card fees.
[11:51] SPEAKER_00: That reflected a good fraction.
[11:53] Again,
[11:53] just an emphasis telling you that consumers were preferring a
[11:57] short-term facility.
[11:58] SPEAKER_00: So credit cards, it means that's easier for customers to go for.
[12:03] SPEAKER_00: You get advances from your cards.
[12:05] SPEAKER_00: You repay it within a month or two or three.
[12:07] SPEAKER_00: That's short-term.
[12:08] The last one on the non-funded income is the revenue we make
[12:12] from bond,
[12:13] trading in bonds.
[12:14] That also was a good year considering that the rates were very
[12:18] high at the
[12:19] SPEAKER_00: beginning of the year and then towards the end of the year in Q4,
[12:23] SPEAKER_00: we saw rates coming down quite aggressively.
[12:26] SPEAKER_01: If I look at the mix in terms of non-funded income,
[12:28] SPEAKER_01: net interest income,
[12:30] SPEAKER_01: NFI was like 29% of total income like in 2023.
[12:33] SPEAKER_01: And then 2024, it went down to 26%.
[12:37] And then also if I look at the revenue as a diversification
[12:40] aspect of each consumer,
[12:41] it's 48%.
[12:42] SPEAKER_01: Wholesale bank is 52%.
[12:43] Is that like reflective of your deliberate strategy towards
[12:48] being weighted more
[12:48] SPEAKER_01: towards wholesale bank and being weighted more towards NRI?
[12:51] SPEAKER_01: Yeah.
[12:52] SPEAKER_00: Actually,
[12:52] SPEAKER_00: the main,
[12:53] if you look at it from a strategic point of view and some of
[12:56] the strategic
[12:56] SPEAKER_00: initiatives we've put through,
[12:58] SPEAKER_00: we want to be a well-diversified bank.
[13:00] Several years ago,
[13:02] this bank used to be heavily inclined on the side of consumer banking.
[13:08] SPEAKER_00: 55% revenue with wholesale make it 45%.
[13:11] SPEAKER_00: Now,
[13:12] SPEAKER_00: the challenge with that is these two set of businesses,
[13:17] SPEAKER_00: consumer and wholesale,
[13:18] SPEAKER_00: will respond in a different way depending on the macros.
[13:22] SPEAKER_00: If we have stability in the macros over a certain period,
[13:26] SPEAKER_00: then you'll see both of them will thrive.
[13:28] SPEAKER_00: But when you have an aggressive change in the macros, if rates go up,
[13:35] The wholesale business will continue doing well for the simple
[13:38] reason that
[13:39] SPEAKER_00: businesses will not close down as such.
[13:41] SPEAKER_00: Even when the rates are up, they'll still open their doors.
[13:44] They'll still have to get working capital,
[13:47] get their produce and still sell.
[13:49] SPEAKER_00: However,
[13:50] SPEAKER_00: for the consumer business,
[13:52] SPEAKER_00: when the rates have gone up,
[13:53] SPEAKER_00: you find that the consumer business slows down.
[13:56] SPEAKER_00: The retailers, employees will shelf.
[14:00] SPEAKER_00: the long-term loan plans.
[14:02] If someone wants to buy a house,
[14:03] a mortgage,
[14:04] you may find them postponing that.
[14:06] SPEAKER_00: If someone wants to buy a car,
[14:08] SPEAKER_00: I'm looking at the retail customers,
[14:10] SPEAKER_00: you may find them postponing that.
[14:12] SPEAKER_00: However,
[14:12] SPEAKER_00: the opposite happens when the rates go down significantly,
[14:16] SPEAKER_00: like now what we've seen at the beginning of this year.
[14:18] SPEAKER_00: Then you find the consumer business now coming up.
[14:21] Now,
[14:21] to be able to balance that,
[14:22] our strategy is to have 50-50 between these two businesses.
[14:26] SPEAKER_00: And if you look at 48-52, it's really close to that.
[14:30] SPEAKER_01: Now let's move to the cost side.
[14:32] 9% increase in cost on total income or at least revenue was
[14:36] growing at 14%.
[14:37] SPEAKER_01: Not much to worry about,
[14:38] but maybe you can break it down in terms of what's driving that
[14:41] cost growth.
[14:43] SPEAKER_00: So the biggest component in our cost journey,
[14:45] SPEAKER_00: and this also cuts across the industry,
[14:47] SPEAKER_00: it's people.
[14:48] SPEAKER_00: 55% of our cost is staff cost.
[14:52] SPEAKER_00: We don't have machinery like a manufacturing company aside.
[14:55] SPEAKER_00: So people is really core for us.
[14:58] SPEAKER_00: And in this period, the staff cost went up.
[15:02] SPEAKER_00: It went up 11%.
[15:04] SPEAKER_00: We actually hired,
[15:05] SPEAKER_00: and this is when I'm looking at a gross number,
[15:07] SPEAKER_00: we had about 280 employees in 2024.
[15:11] SPEAKER_00: Over 90% of these employees were customer facing.
[15:15] SPEAKER_00: So we've done a lot of automation of our office right now at 65% levels.
[15:22] SPEAKER_00: We've done a lot of digitizing the key customer journeys.
[15:27] SPEAKER_00: Today,
[15:27] we are doing over 94% of our transactions outside the branches
[15:32] or outside the core
[15:34] SPEAKER_00: brick and mortar.
[15:34] SPEAKER_00: We are using alternate channels like agency banking,
[15:38] SPEAKER_00: points of sales,
[15:39] SPEAKER_00: ATMs,
[15:40] SPEAKER_00: internet banking,
[15:41] SPEAKER_00: mobile banking.
[15:42] SPEAKER_00: A very big chunk of our transaction now has been pushed to that route.
[15:47] However,
[15:47] still the investments have to be done,
[15:51] hence the higher of customer-facing staff.
[15:55] And in there,
[15:56] you'll also see that our depreciation has picked up over the period.
[16:00] SPEAKER_00: We'll see that growing 16%.
[16:02] SPEAKER_00: And these are the investments we are doing,
[16:04] SPEAKER_00: both in our co-banking system,
[16:05] SPEAKER_00: in the digital banking priority areas,
[16:08] SPEAKER_00: those ones we are working on them,
[16:10] SPEAKER_00: and still contributing to that 9%.
[16:12] SPEAKER_00: And then other costs, growth of about 5%.
[16:16] SPEAKER_00: It's mainly the usual marketing, the usual software licenses.
[16:21] SPEAKER_00: But a very big chunk of this cost growth,
[16:23] SPEAKER_00: again,
[16:24] SPEAKER_00: to just emphasize,
[16:24] SPEAKER_00: is on the side of staff cost.
[16:26] Now you can break it down for us in terms of provisioning and
[16:29] asset quality.
[16:30] SPEAKER_01: So I see customer assets also down around 8%.
[16:32] SPEAKER_01: Your loan loss ratio remains at around 9.1%.
[16:35] SPEAKER_01: So not so bad.
[16:37] But you can break it down for us how that will go up over the
[16:39] course of 2024 and
[16:41] SPEAKER_01: how that reflects the macro situation and how you're handling it.
[16:44] SPEAKER_00: So we saw impairment coming down about 2% to 9.1 billion.
[16:48] SPEAKER_00: However,
[16:49] SPEAKER_00: when we look at the loan loss ratio,
[16:51] SPEAKER_00: which is at 9.1 billion,
[16:53] SPEAKER_00: overlaid on our net customer assets,
[16:56] SPEAKER_00: this is this failure,
[16:57] SPEAKER_00: lots and advances of 309 billion.
[17:00] SPEAKER_00: You see that the loan loss ratio picked up to 2.9.
[17:02] SPEAKER_00: A year ago, that was 2.7.
[17:05] The main reason of that increment is mainly because of the
[17:09] environment that we were
[17:10] SPEAKER_00: operating on.
[17:11] SPEAKER_00: A tough environment, which witnessed some very high interest rates.
[17:15] SPEAKER_00: When you lend to customers,
[17:17] SPEAKER_00: to businesses at those high interest rates,
[17:19] SPEAKER_00: you'll get customers will be affected.
[17:22] The issues of default will pick up because if they're unable to
[17:26] meet all the
[17:27] SPEAKER_00: principal and the interest for these facilities,
[17:29] SPEAKER_00: then those loans will be distressed and through our models,
[17:33] SPEAKER_00: we'll have to make provisions.
[17:35] SPEAKER_00: Coupled with high taxes,
[17:37] SPEAKER_00: we saw taxes introduced,
[17:39] SPEAKER_00: housing levy,
[17:40] SPEAKER_00: we saw social health coming through,
[17:43] SPEAKER_00: and then the cap on pay as you want also went up above 37%.
[17:48] And so that impacted the net disposable income is mainly for
[17:53] the retail customers.
[17:55] SPEAKER_00: And so if they had facilities, the strain was there.
[17:58] And for sure,
[17:59] then of course,
[18:00] we saw the portfolio quality being impacted.
[18:03] SPEAKER_00: But having said that on impairment,
[18:05] SPEAKER_00: because of the strengthening of the effects,
[18:08] the facilities we had made provisions in the past that are
[18:11] denominated in foreign currency,
[18:13] SPEAKER_00: we had a relief on those ones.
[18:15] SPEAKER_00: And then also our efforts on recoveries,
[18:18] SPEAKER_00: especially for the wholesale NPLs,
[18:21] SPEAKER_00: we were able to do some recoveries.
[18:22] SPEAKER_00: And hence that 2% drop in impairment.
[18:26] Looking at it from a balance sheet perspective,
[18:28] yes,
[18:29] loans and advances was down 8%.
[18:32] SPEAKER_00: Constant currency is flat.
[18:34] SPEAKER_00: That is anticipated.
[18:36] SPEAKER_00: In the industry,
[18:37] SPEAKER_00: as at November,
[18:39] SPEAKER_00: loans and advances to the private sector was a drop of about 1%.
[18:43] SPEAKER_00: I don't have the full year number.
[18:45] SPEAKER_00: That's something I need to check.
[18:47] SPEAKER_00: But for sure,
[18:47] SPEAKER_00: in most of the banks,
[18:48] you'll see that lending actually came down when you compare it
[18:52] year on year,
[18:53] SPEAKER_00: and it's for the reason of that transformation.
[18:55] SPEAKER_00: The loan,
[18:56] SPEAKER_00: in terms from a sector perspective,
[18:58] SPEAKER_00: that we saw uptakes,
[19:00] SPEAKER_00: still we saw on the side of manufacturing,
[19:03] SPEAKER_00: grid,
[19:04] SPEAKER_00: real estate,
[19:04] SPEAKER_00: we still saw those ones picking up in that year.
[19:08] SPEAKER_00: Now,
[19:08] SPEAKER_00: with the non-performing book picking up,
[19:11] SPEAKER_00: we saw that increase in 20% from 35 billion to 42 billion.
[19:16] SPEAKER_00: And also the NPL ratios increasing to 12.3%.
[19:19] SPEAKER_00: That's just evidence of the kind of environment that we're operating in.
[19:24] SPEAKER_00: For us specifically as ABSA,
[19:27] SPEAKER_00: our credit quality is always one that is among the best in the industry.
[19:32] SPEAKER_00: So even with that gross NPL ratio of 12.3%,
[19:34] SPEAKER_00: we are still way below the industry average,
[19:38] SPEAKER_00: which is about 16.4%.
[19:41] How do you work in such a way that you're way below the
[19:44] industry average,
[19:44] first of all?
[19:45] SPEAKER_01: And then secondly,
[19:46] are these like specific names that you have in mind who are
[19:49] driving the challenges
[19:50] that you're having in NPL or is it just an overall perspective
[19:53] in terms of several
[19:54] SPEAKER_01: customers with small goals?
[19:56] Are they either weighted towards specific clients who are
[19:59] bigger or just straight
[20:01] SPEAKER_01: out across their portfolio?
[20:02] SPEAKER_00: And it spread out when we plant the consumer business.
[20:05] SPEAKER_00: For sure, the personal household sector was impacted significantly.
[20:10] SPEAKER_00: And that growth,
[20:11] SPEAKER_00: the 20% growth in NPL,
[20:13] SPEAKER_00: there's a big chunk there that is actually the personal household sector.
[20:17] SPEAKER_00: On the side of wholesale,
[20:19] SPEAKER_00: sectors again that were impacted,
[20:20] manufacturing topped the chart there in terms of sectors
[20:25] significantly impacted.
[20:26] And the other sectors is real estate and trade that contributed
[20:31] to that growth in NPL.
[20:32] I think in terms of how we manage our NPL ratios better than
[20:36] the industry,
[20:37] SPEAKER_00: it's the fundamentals where we are lending after scoring our customers,
[20:42] SPEAKER_00: making sure that the first
[20:44] SPEAKER_00: criteria that we are using.
[20:45] Whenever we are extending facilities to customers,
[20:49] it's always the ability to pay.
[20:50] SPEAKER_00: So scoring individuals,
[20:52] SPEAKER_00: not focusing on their security,
[20:54] SPEAKER_00: because security does not mean the person will pay.
[20:57] SPEAKER_00: You just find yourself in court,
[20:58] SPEAKER_00: lengthy processes for recoveries,
[21:00] SPEAKER_00: and at the end of the day,
[21:01] SPEAKER_00: that's not how you make your money.
[21:02] SPEAKER_00: But I think for us,
[21:03] SPEAKER_00: in the first instance,
[21:05] SPEAKER_00: it's scoring the individuals,
[21:07] SPEAKER_00: looking at the fundamentals of their businesses.
[21:09] SPEAKER_00: And then when we are happy with that,
[21:11] SPEAKER_00: then of course,
[21:12] SPEAKER_00: depending on the quantum of the facility that customers want,
[21:16] SPEAKER_00: you may find security then coming to us.
[21:18] SPEAKER_01: When you talk to your customers and clients,
[21:20] like what do you sense they need at least to get a lead from
[21:24] somewhere so that
[21:25] SPEAKER_01: business can be better?
[21:26] SPEAKER_00: I think businesses will always do well in a thriving economy.
[21:30] SPEAKER_00: That's all what businesses are always asking for.
[21:33] SPEAKER_00: Given an environment that is encouraging businesses to thrive in that,
[21:37] SPEAKER_00: of course,
[21:38] SPEAKER_00: then it means from a government perspective,
[21:40] SPEAKER_00: managing the monetary policies.
[21:42] We saw that coming through at the beginning of the last year
[21:45] where the exchange rate
[21:47] The Kenya shilling currency strengthened nearly 20% of
[21:51] appreciation within two months.
[21:53] You remember the exchange rate in January last year to the
[21:56] dollar was above 160 shillings.
[21:58] SPEAKER_00: And that came down sharply to the levels of about 130.
[22:03] Now that means for importers who have inputs for whatever the manufacturing,
[22:07] SPEAKER_00: it means it becomes cheaper.
[22:09] And so that's what really businesses are looking for coupled
[22:12] with stable interest rates,
[22:14] SPEAKER_00: of course,
[22:14] SPEAKER_00: affordable interest rates.
[22:16] SPEAKER_00: I think that's the only component that,
[22:18] SPEAKER_00: to be honest,
[22:19] SPEAKER_00: last year had not been addressed from a monetary policy perspective.
[22:22] SPEAKER_00: Inflation was under control.
[22:24] SPEAKER_00: FX, I mentioned FX was under control.
[22:26] The bit that was really pending last year was the interest rate environment.
[22:30] SPEAKER_00: So that's one aspect of it, which is really the monetary policy.
[22:33] SPEAKER_00: The other aspect for the government is then the fiscal policies.
[22:37] SPEAKER_00: And here we saw businesses being hit,
[22:40] SPEAKER_00: individuals being hit,
[22:41] SPEAKER_00: because on one side,
[22:42] SPEAKER_00: the government,
[22:43] SPEAKER_00: in terms of raising revenue,
[22:45] SPEAKER_00: it meant raising taxes.
[22:47] SPEAKER_00: And these taxes,
[22:48] SPEAKER_00: both from the personal taxes to other categories of taxes,
[22:52] SPEAKER_00: we saw them going up,
[22:53] which then means it becomes expensive for businesses or for
[22:56] individuals when
[22:57] SPEAKER_00: they're making this payment.
[22:59] SPEAKER_00: From an individual perspective, net possible income basically goes down.
[23:03] So that's one aspect of what businesses will be asking for them
[23:07] to be able to thrive.
[23:08] And then,
[23:08] of course,
[23:09] there are these factors that have nothing to do with anyone.
[23:11] SPEAKER_00: It's your political risk.
[23:13] SPEAKER_00: There's nothing businesses can do.
[23:15] SPEAKER_00: Of course, before, we never thought that countries would be impacted.
[23:19] SPEAKER_00: But we've seen the Russia-Ukraine war,
[23:21] I didn't know we actually import wheat from Ukraine until when
[23:25] this happened.
[23:26] SPEAKER_00: So that had an impact.
[23:27] SPEAKER_00: The price of oil was impacted.
[23:30] SPEAKER_00: Again, as mentioned, it's not anything that we can be able to control.
[23:34] And then the other last one,
[23:35] which is quite fundamental,
[23:37] is also climate risk.
[23:38] SPEAKER_00: We were in a drought situation for about five,
[23:42] SPEAKER_00: six years continuously until last year,
[23:45] SPEAKER_00: when we had our long reads actually floods.
[23:47] SPEAKER_00: Again, this environment that impacts businesses as well.
[23:50] SPEAKER_01: Yusuf,
[23:50] now you can take us through the profitability aspect now that
[23:53] you've dealt with the
[23:54] SPEAKER_01: net interest income,
[23:55] SPEAKER_01: the operating costs and the impairments.
[23:57] SPEAKER_01: How is the mix that drove now the bottom line?
[23:59] SPEAKER_01: A bit decent growth, year-over-year, double-digit growth.
[24:02] SPEAKER_01: Very nice.
[24:03] SPEAKER_00: So I think for that,
[24:05] SPEAKER_00: if I look at the main categories for P&L,
[24:08] SPEAKER_00: all of them trend in the right direction.
[24:10] So top line revenue growth of 14%,
[24:13] a positive draw with the cost of growth of only 9%.
[24:17] SPEAKER_00: So meaning growing faster from a revenue perspective.
[24:21] SPEAKER_00: And of course,
[24:21] SPEAKER_00: if you look at our cost to income ratio of 37%,
[24:24] SPEAKER_00: it means the component of revenue is 60%.
[24:26] SPEAKER_00: So it's a bigger one.
[24:28] SPEAKER_00: And if it's growing much faster at 14%,
[24:30] SPEAKER_00: then of course,
[24:31] SPEAKER_00: that has a very big impact on the bottom line,
[24:34] SPEAKER_00: which is our profit after tax.
[24:35] SPEAKER_00: And then also impairment,
[24:37] SPEAKER_00: year on year coming down at 2%,
[24:38] SPEAKER_00: that basically informed that 28% growth in profitability.
[24:44] SPEAKER_01: Now switching a little bit to the balance side,
[24:47] SPEAKER_01: you've hinted at it,
[24:48] SPEAKER_01: but loan to customers fell slightly and deposits rose.
[24:51] SPEAKER_01: So perhaps you can give us a breakdown of those two.
[24:54] SPEAKER_01: What drove the drop in terms of more typically oriented towards loaning?
[24:59] And then do you think banks are being slightly lazy in terms of
[25:02] lending more to
[25:03] SPEAKER_01: governments and even lending to customers decline?
[25:06] Or is that just perhaps more a reflection of the environment
[25:09] that you're in?
[25:11] SPEAKER_00: I think the reflection of the environment last year,
[25:13] SPEAKER_00: because of a high interest rate environment,
[25:16] SPEAKER_00: the uptake of loans from our customers,
[25:19] SPEAKER_00: even the strongest of our customers from a perspective of credit scoring,
[25:24] they shied away from going for these facilities for the obvious
[25:28] reason that it's expensive.
[25:30] SPEAKER_00: So with that then,
[25:31] SPEAKER_00: with our deposits,
[25:32] SPEAKER_00: and these are not just ourselves,
[25:33] SPEAKER_00: but also the industry,
[25:35] SPEAKER_00: we had to get a destination for these deposits.
[25:38] SPEAKER_00: On one hand, you have the funding.
[25:40] SPEAKER_00: You can't stay with this funding without investing.
[25:43] And so the only other alternative area for us to invest was a
[25:46] government paper.
[25:48] SPEAKER_00: And don't forget that the government paper was very attractive last year,
[25:51] SPEAKER_00: a very big,
[25:52] SPEAKER_00: to a very big extent.
[25:53] SPEAKER_00: Three quarters of the period last year,
[25:56] SPEAKER_00: we had rates for a one-year paper tea deal of above 16%.
[26:00] SPEAKER_00: That's a decent return.
[26:02] SPEAKER_00: And so it was easy for banks to then push the investments,
[26:06] SPEAKER_00: the excess funding towards the government paper at a very good rates.
[26:10] If you look at now the current period,
[26:12] this same one-year paper now has gone down.
[26:15] SPEAKER_00: It's about 9%, from 16% to 9%.
[26:17] That 706 point drop,
[26:20] it's no longer very attractive at this point in time.
[26:24] And hence the reason why we are saying with this low interest
[26:26] rate environment,
[26:27] SPEAKER_00: we will see an uptick in loans.
[26:29] SPEAKER_00: But again, it takes time.
[26:31] There's an element still of affordability,
[26:34] especially for the consumer business.
[26:36] SPEAKER_00: The retailers still...
[26:38] SPEAKER_00: They're still going through the impact of the taxes.
[26:40] SPEAKER_00: Still, you go through a cycle.
[26:42] SPEAKER_00: If you're an employee, you get a salary increment.
[26:44] SPEAKER_00: Your net disposable income is still impacted.
[26:46] SPEAKER_00: But we expect in this year, loans and advances to pick up.
[26:50] Last year,
[26:51] for the same reason,
[26:53] so not only did we have less customers going for loans,
[26:58] SPEAKER_00: We also had the impact of the strengthening of the Kenya shillings.
[27:02] At the beginning of the year and back in 2023,
[27:05] the local currency had weakened significantly.
[27:08] SPEAKER_00: And so when we were translating our balance sheet,
[27:12] SPEAKER_00: and this is specifically to loans that are in foreign currency,
[27:15] SPEAKER_00: then it means you're using a high exchange rate.
[27:18] SPEAKER_00: And so the base, the numbers were much higher.
[27:20] SPEAKER_00: I struck that the currency has strengthened, it's appreciated 20%.
[27:25] from 160 to less than 130,
[27:28] it means just from a translation level,
[27:31] your balance sheet is down.
[27:32] SPEAKER_00: So those are the two reasons on the side of loans and advances.
[27:36] SPEAKER_00: On the side of deposits, we saw a growth of about 1%.
[27:40] Of course,
[27:40] if the businesses are not borrowing,
[27:42] it means the trading environment is impacted.
[27:45] SPEAKER_00: So even deposits get impacted at the same level.
[27:48] SPEAKER_00: So you get those significant growth in deposits.
[27:51] SPEAKER_00: I think if we look at that also,
[27:53] SPEAKER_00: the impact on deposits that are denominated in foreign currency,
[27:57] SPEAKER_00: those ones also were impacted.
[27:59] SPEAKER_00: About 28% of our deposits is in foreign currency.
[28:02] So whenever you do the translation because of the strengthening
[28:05] of the Kenya shillings,
[28:06] SPEAKER_00: again,
[28:06] SPEAKER_00: that gets impacted.
[28:08] SPEAKER_00: But I think for us now with all of this,
[28:10] we contained the massive jump of coastal funds that would have
[28:15] been major impact.
[28:16] SPEAKER_00: much higher than what we have here,
[28:18] SPEAKER_00: which was about 160 basis points,
[28:20] SPEAKER_00: with a lot of emphasis on transactional deposits.
[28:24] SPEAKER_00: So the structure of our deposits changed.
[28:26] SPEAKER_00: We used to be 55% is transactional and 45% is fixed deposit.
[28:33] Last year,
[28:34] we improved that with 60% being transactional and fixed deposit
[28:38] at 40.
[28:39] SPEAKER_00: So that helps to contain that higher cost of funds.
[28:42] I think lastly,
[28:43] just on the balance sheet,
[28:44] there's also this impact on unpaid bills.
[28:48] SPEAKER_00: It runs in billions of shillings.
[28:51] SPEAKER_00: Ultimately,
[28:51] those businesses get affected because it impacts their appetite
[28:55] for loans,
[28:56] SPEAKER_00: but then it also impacts their cash flow.
[28:58] SPEAKER_00: So the deposits, on the other hand, get impacted as well.
[29:01] Looking at your return on equity,
[29:03] I think your calculations show it's at around 25%.
[29:07] SPEAKER_01: Your double-digit growth in terms of profit after tax on 21%.
[29:11] SPEAKER_01: And then we switch a little bit to the investor return.
[29:14] They're looking at dividends,
[29:16] which you increase by 13% total dividend for 2024.
[29:20] So shareholders are wondering,
[29:21] why not another maybe high 20% kind of increase in dividends?
[29:26] SPEAKER_01: Why not more and why not a higher payout ratio?
[29:30] SPEAKER_00: I think in the first instance,
[29:31] SPEAKER_00: whenever we make decisions on dividend,
[29:34] SPEAKER_00: we look at our projections on asset growth in the subsequent period.
[29:38] SPEAKER_00: So for us, this is 2025.
[29:40] Now,
[29:41] remember,
[29:42] laws and advances,
[29:43] and this is in the entire industry,
[29:45] came down.
[29:45] SPEAKER_00: Certainly for us, you've seen it came down 8%.
[29:48] SPEAKER_00: So it basically means the demand for capital,
[29:51] SPEAKER_00: which is a risk-created assets,
[29:52] SPEAKER_00: was much lower in 2024.
[29:55] SPEAKER_00: Now,
[29:55] SPEAKER_00: if you go ahead and pay out massive dividends,
[29:59] SPEAKER_00: and then in 2025,
[30:01] SPEAKER_00: you grow your assets aggressively,
[30:03] SPEAKER_00: then you get impacted because that means you'll have shortage of capital.
[30:07] SPEAKER_00: You may be breaching on capital ratio.
[30:08] SPEAKER_00: So that's one component.
[30:10] SPEAKER_00: We appreciated that our respected assets in 2024 went down year on year.
[30:16] SPEAKER_00: The rates have come down.
[30:17] SPEAKER_00: So we anticipate the RWAs to pick up in 2025.
[30:21] SPEAKER_00: So the demand for capital will increase.
[30:23] SPEAKER_00: So that's one aspect.
[30:25] The second one is really,
[30:26] we always say,
[30:27] whatever we pay,
[30:28] it needs to be sustainable.
[30:30] SPEAKER_00: And this one, we are looking at it from a dividend per share.
[30:33] So dividend per share,
[30:34] if you look at it over the period,
[30:36] have been improving consistently.
[30:39] And if it's not improving,
[30:40] then as a minimum,
[30:41] we are maintaining what was there before.
[30:44] SPEAKER_00: So from a low of 1.1 per share in 2021 to 21.55 in 2023,
[30:46] SPEAKER_00: and then for this year,
[30:47] SPEAKER_00: we are pushing it to 1.75.
[30:48] SPEAKER_00: So you can be able to see consistently
[30:57] We are sustaining what we paid in the previous year and where
[31:01] we see a significant improvement,
[31:04] SPEAKER_00: then we increase it.
[31:04] SPEAKER_00: So in 2024, total dividend payout was 1.55 shillings per share.
[31:10] SPEAKER_00: And now we've improved it to 1.75.
[31:12] What this means is we are using 1.75 now as a base for our
[31:16] future dividends.
[31:17] SPEAKER_00: So the element of sustainability is also very big here.
[31:21] Generally,
[31:21] whenever we declare dividends,
[31:23] we look to a payout ratio of about 50%.
[31:26] SPEAKER_00: So in good years,
[31:28] we've increased that all the way to 80% if we see ourselves
[31:32] with excess capital.
[31:33] I think my last comment on dividend is something we mentioned
[31:37] to our investors.
[31:38] SPEAKER_00: It's not just the dividend.
[31:39] SPEAKER_00: You also look at capital appreciation.
[31:42] Our share right now is at around 19,
[31:44] about 48% appreciation of our stock price.
[31:48] SPEAKER_00: So from an investor perspective, you're looking at two things.
[31:51] SPEAKER_00: One is the dividend you've gotten, which is a good dividend yield of 10%.
[31:55] SPEAKER_00: And then you have an appreciation on the stock price of 48%.
[31:59] SPEAKER_00: You add those two, you're nearly 60% up, which is a decent return.
[32:05] SPEAKER_01: But they're also wondering,
[32:06] there's an increase in the requirement in terms of co-capital
[32:09] coming in this year.
[32:10] And there are a couple of banks here and there which may not
[32:12] meet that threshold.
[32:14] Do you have an eye in the market in terms of wanting to make an
[32:17] acquisition here and there?
[32:19] SPEAKER_00: I think we are open to business.
[32:20] If we see an opportunity,
[32:22] something that makes us stronger,
[32:24] we'd be interested.
[32:26] I think for us,
[32:27] one key issue that we are following,
[32:29] it's not all about growing in size.
[32:32] For us,
[32:33] we're looking at the investor and what we promise them in terms
[32:36] of their returns.
[32:36] SPEAKER_00: So that's the most important.
[32:38] So if we do an acquisition and ultimately it means from an
[32:42] investor perspective,
[32:43] SPEAKER_00: their returns increases.
[32:45] SPEAKER_00: With this, you saw our return to our investors at 20, 24.5.
[32:51] If we do an acquisition and it shows us we'll go to 25,
[32:54] 26,
[32:54] then that's a good acquisition.
[32:56] SPEAKER_00: Question is,
[32:57] what is that acquisition that will be doing that will be for
[33:00] the right price and it
[33:02] SPEAKER_00: makes you better and more competitive?
[33:04] SPEAKER_00: We don't do acquisitions for scale.
[33:06] SPEAKER_00: So like we say, we have increased our branches by 50, 20.
[33:09] It has to be,
[33:12] we've come together and through that merger,
[33:15] collectively,
[33:15] we are in a good space.
[33:17] So the way you look at it is,
[33:19] one is you're getting competencies that you don't have.
[33:24] So which is that bank that may be stronger in a sector or in a
[33:28] business that we are
[33:30] SPEAKER_00: not strong in.
[33:31] SPEAKER_00: That will be one.
[33:32] Which is a business which has a category of customers who will
[33:35] make us collectively stronger.
[33:38] So if our customer number is a million,
[33:40] we get them,
[33:41] our customer numbers goes to 2 million.
[33:43] SPEAKER_00: Again, that's something that we'll be able to improve, et cetera.
[33:46] SPEAKER_00: So there are quite a number of categories that we look,
[33:48] SPEAKER_00: but it's not just getting an acquisition.
[33:50] SPEAKER_00: Now the challenge with tier three, tier four bank, they're so small.
[33:54] SPEAKER_00: You do an acquisition for a very small bank,
[33:56] SPEAKER_00: the effort,
[33:57] SPEAKER_00: which is the due diligence that you're going to do,
[34:00] SPEAKER_00: will be the same as a due diligence you'll do for a big bank,
[34:03] SPEAKER_00: only for you to get a small incremental on a return perspective.
[34:08] So I guess it has to be compelling enough for you to go out of
[34:11] your way to do that.
[34:13] SPEAKER_01: A couple more questions for you.
[34:14] SPEAKER_01: You said 3 billion invested in digital transformation last year.
[34:17] SPEAKER_01: Did I get that right?
[34:19] SPEAKER_00: Yeah, 3 billion is the one we are working on.
[34:21] SPEAKER_00: So not all of it went into our balance sheet.
[34:25] SPEAKER_00: We have a company which is still working from this,
[34:28] SPEAKER_00: but that's the investments we are looking at.
[34:30] SPEAKER_01: How do you usually look at that?
[34:31] Is that a tax that goes straight to maybe be capitalized or do
[34:35] you expense that straight away?
[34:38] SPEAKER_00: That's capital.
[34:39] Now,
[34:39] if we have not concluded on the project,
[34:42] that means that will be under work in progress.
[34:45] SPEAKER_00: So it doesn't get capitalized until we conclude on that investment.
[34:50] The big line that always comes through whenever we look at this
[34:53] is you see the
[34:54] SPEAKER_00: intangible asset line where you see that picking up in there.
[34:59] SPEAKER_00: Whenever we look at intangibles,
[35:01] it then basically just tells you that we have a carpet that is
[35:05] applications or a
[35:07] SPEAKER_00: co-banking system.
[35:08] SPEAKER_00: So if you look at these financials,
[35:09] you see that our intangible assets have basically picked up in
[35:12] this period,
[35:13] SPEAKER_00: which is to some extent those investments that we had with.
[35:17] SPEAKER_01: You had some very interesting numbers.
[35:19] SPEAKER_01: Maybe you are the CEO,
[35:20] SPEAKER_01: I can't remember who exactly,
[35:22] had some numbers in terms of the part of Absa Bank of Kenya
[35:24] that we've digitized so far.
[35:26] SPEAKER_01: Could you just reiterate your digitization strategy there?
[35:30] SPEAKER_00: So we've done quite a number of investments, back office automation.
[35:35] SPEAKER_00: Today,
[35:35] now we've been able to automate about 65% of our back office
[35:39] and we are still going
[35:40] SPEAKER_00: through investments in that area.
[35:42] SPEAKER_00: We've mapped the key customer journeys just to make sure then that we are
[35:46] SPEAKER_00: prioritizing our automation process.
[35:49] SPEAKER_00: Coupled with that,
[35:50] SPEAKER_00: we've done significant investment,
[35:53] SPEAKER_00: digitizing customer channels,
[35:56] giving them alternative channels for them to be able to do
[35:58] business with us.
[36:00] And that's the one I was saying today,
[36:02] over 94% of the transactions are actually happening.
[36:05] SPEAKER_00: I would say the traditional brick and mortar, the traditional branches.
[36:08] SPEAKER_00: So that is something that is still continuing.
[36:11] SPEAKER_00: That's where our ambition is.
[36:13] SPEAKER_00: And that's what these investments that we spoke about,
[36:16] SPEAKER_00: the three people,
[36:17] that's where we're putting these investments just to make sure
[36:19] that we're able to
[36:20] SPEAKER_00: digitize that.
[36:21] I think the last one,
[36:23] just maybe to conclude on the channels,
[36:25] we started agency banking.
[36:26] SPEAKER_00: Today we have over 3,000 agents.
[36:28] And that also is a very cheap channel for us to be able to do
[36:34] business with our customer.
[36:36] SPEAKER_00: It's one of those variable channels,
[36:37] SPEAKER_00: call it pay to go,
[36:39] SPEAKER_00: which is,
[36:39] SPEAKER_00: you know,
[36:40] SPEAKER_00: you can scale or you can cut depending on the needs that we have.
[36:44] SPEAKER_01: Someone here is asking about an ETF that you are to launch.
[36:48] SPEAKER_01: I don't know if it's a bank that is launching that.
[36:50] SPEAKER_01: Are you aware of that?
[36:51] SPEAKER_01: It's something I should bother you too much,
[36:54] SPEAKER_01: but if you have some information on it,
[36:55] SPEAKER_01: you can share.
[36:56] SPEAKER_00: So that is work in progress.
[36:58] SPEAKER_00: That's the one with Morgan Stanley.
[37:00] SPEAKER_00: It's still work in progress.
[37:01] SPEAKER_00: I think early days for us to speak to it.
[37:04] SPEAKER_00: It's still been crafted, still engagement with regulators.
[37:08] SPEAKER_00: Let me say early days.
[37:09] SPEAKER_00: At the right time, we'll come and share more details on that one.
[37:12] Now it's that point in time when you can remind us a little bit
[37:15] about your longer-term targets.
[37:16] I think you have some medium-term targets,
[37:18] which include the growth in balance sheets.
[37:20] So perhaps you can remind the agents in terms of how that is
[37:23] going as your strategy
[37:25] SPEAKER_01: and how the FY24 results fit into that strategy.
[37:29] SPEAKER_01: And perhaps at the end, then you can share also your outlook for 2025.
[37:32] SPEAKER_01: We find off our strategy.
[37:35] SPEAKER_00: which was effective from 1st January 2023.
[37:39] SPEAKER_00: So we've done 2023, we've done 2024, and now nearly way into 2025.
[37:45] SPEAKER_00: We looked at three core pillars,
[37:48] SPEAKER_00: a modern consumer business,
[37:50] which means you modernize the consumer business with a lot of
[37:55] emphasis on the three
[37:57] SPEAKER_00: main segments,
[37:58] SPEAKER_00: affluent,
[37:59] SPEAKER_00: the core middle,
[38:01] SPEAKER_00: and the next gen.
[38:02] SPEAKER_00: which is mainly youth banking.
[38:03] SPEAKER_00: So that is a work in progress.
[38:05] SPEAKER_00: To some extent, the affluent, we start for that.
[38:08] SPEAKER_00: We start for the co-middle.
[38:10] SPEAKER_00: We are now working on next-gen, which is youth banking.
[38:13] SPEAKER_00: That is a work in progress.
[38:15] We are hoping that we'll be able to do co-live with that by
[38:18] mid-weeks here.
[38:20] SPEAKER_00: The other core pillar,
[38:21] SPEAKER_00: of course,
[38:21] SPEAKER_00: was our business banking,
[38:24] an area where we want to win in that area with a lot of
[38:28] synergies with our
[38:30] SPEAKER_00: corporate business,
[38:31] where we are looking to strengthen that leadership positions in
[38:35] East Africa and a
[38:37] SPEAKER_00: lot of emphasis from a perspective of ecosystem.
[38:40] SPEAKER_00: Again, those are work in progress.
[38:42] SPEAKER_00: The three enablers that we had in our strategy,
[38:44] SPEAKER_00: digitizing our core,
[38:46] SPEAKER_00: so that's the digital banking.
[38:48] SPEAKER_00: We have three pillars there,
[38:49] SPEAKER_00: embedded finance,
[38:50] SPEAKER_00: digitizing the core,
[38:52] and then developing the youth bank is the one that we're
[38:55] calling next gen.
[38:56] SPEAKER_00: So that is work in progress.
[38:59] SPEAKER_00: We started that investment early last year,
[39:02] SPEAKER_00: and it's still ongoing even in this financial period,
[39:04] SPEAKER_00: 2025.
[39:05] SPEAKER_00: And the other enabler,
[39:07] SPEAKER_00: the second enabler is our people,
[39:10] SPEAKER_00: a talented team,
[39:11] SPEAKER_00: ensuring that we're investing in the right people.
[39:15] SPEAKER_00: Today,
[39:15] we introduced quite a number of new people who have joined us
[39:18] from different sectors,
[39:20] SPEAKER_00: including banking industry.
[39:22] SPEAKER_00: And that's really trying to attract talent and retain talent,
[39:26] SPEAKER_00: which is a big effort for us and is still as part of Wynabla.
[39:29] SPEAKER_00: And the last thing really is our brand together with sustainability,
[39:33] SPEAKER_00: which we also making progress.
[39:35] SPEAKER_00: So in a good position, we did well in 2023.
[39:38] We're looking at our financials in 2024 and all of this speaks
[39:41] to the strategy that
[39:42] SPEAKER_00: I've just mentioned.
[39:44] SPEAKER_00: First tracking that,
[39:45] SPEAKER_00: what we see in 2025,
[39:47] I think we are cautious not to say double-digit growth rates in
[39:53] balance sheet.
[39:54] SPEAKER_00: If you look at our guidance today,
[39:56] all the keyword we brought there was sustainable growth in our
[39:59] balance sheet.
[40:00] SPEAKER_00: And by sustainable, we mean depending on the environment.
[40:04] SPEAKER_00: You may find we can be able to do double-digit growth rates,
[40:07] SPEAKER_00: but if we don't see the right metrics,
[40:10] SPEAKER_00: the right macros and issues of affordability of our customers,
[40:15] SPEAKER_00: then we can just say we'll do double-digit growth rates in balance sheet.
[40:18] SPEAKER_00: So the key word there is sustainable.
[40:20] SPEAKER_00: But our expectation in this year, everything held constant.
[40:24] SPEAKER_00: The current macroeconomic variables,
[40:27] SPEAKER_00: the maintaining for a bigger part of this year,
[40:30] SPEAKER_00: then we should be able to see some balance sheet momentum.
[40:33] And certainly we could be able to see double digital growth
[40:36] rates in that front.
[40:37] SPEAKER_00: Guidance on cost to income ratio still, we're looking at low 40s.
[40:41] SPEAKER_00: I know people say you are 37, why are you looking at low 40?
[40:44] SPEAKER_00: I think it's that balance where we say we will continue investing.
[40:48] SPEAKER_00: So it's not just an issue of driving cost down.
[40:51] SPEAKER_00: We have productivity measures, which we have already embarked on.
[40:54] We are looking at our split between back office and front
[40:59] office with an emphasis
[41:01] SPEAKER_00: and an ambition to have more of our staff serving customers,
[41:04] SPEAKER_00: being on the first lane,
[41:05] SPEAKER_00: which is the front office staff.
[41:08] But that means you then do a lot of automation on the side of
[41:10] the back office.
[41:11] From a return perspective,
[41:13] which is what is our main effort,
[41:15] this is the main focus for us.
[41:18] We want to make sure that we are doing returns that are above
[41:21] the cost of equity
[41:22] SPEAKER_00: for our shareholders.
[41:24] SPEAKER_00: Our cost of equity at this point in time around 19%.
[41:26] SPEAKER_00: We've put a target to say to our shareholders,
[41:30] SPEAKER_00: we are going to target a return that is 5% above the cost of equity.
[41:34] SPEAKER_00: So that adds up to about 24%.
[41:37] SPEAKER_00: So the one we did for 2024, 24.5%, that is already hitting that target.
[41:43] SPEAKER_00: And then lastly really is the quality of our asset book.
[41:46] We want to continue those NPL ratios that you're seeing to be
[41:50] best in the industry
[41:51] SPEAKER_00: is something that we'll still continue pursuing.
[41:54] SPEAKER_01: My assessment is that it was a good year for you.
[41:56] SPEAKER_01: If you can do this in an environment like this,
[41:59] my assessment is that you can actually do way better in a
[42:02] better business environment,
[42:03] SPEAKER_01: I would say.
[42:04] So looking at least some of the challenges that we had in 2024
[42:07] are behind us in
[42:07] SPEAKER_01: terms of currency and stuff.
[42:09] SPEAKER_01: So we would expect 2025 to be better for you.
[42:12] SPEAKER_01: Do you share that same kind of positive outlook for 2025?
[42:15] SPEAKER_00: Yes, we are looking forward to that.
[42:17] But one thing that we've come to appreciate is you could plan
[42:21] one thing and then
[42:22] SPEAKER_00: depending on policies that are adopted by the government,
[42:25] SPEAKER_00: you find a completely different stance.
[42:27] And that's why we say like for the balance sheet,
[42:29] we are looking for what is sustainable.
[42:31] SPEAKER_00: So we hope that the prevailing macros continues.
[42:35] We are praying that the monetary policies that have already
[42:38] been implemented continues.
[42:40] SPEAKER_00: And then to a very big extent, which is what is still pending up to now,
[42:44] You saw the meeting between the government and IMF recently
[42:48] where they agreed not
[42:50] SPEAKER_00: to continue with the fiscal program.
[42:53] SPEAKER_00: And through that then, of course, the last funding was withheld.
[42:58] The plan is the government wants to come up with a new program
[43:02] and agree on that
[43:03] SPEAKER_00: program with IMF.
[43:05] SPEAKER_00: Now, this is a heavy lifting.
[43:06] SPEAKER_00: It's a fiscal.
[43:07] It's how the government raises its revenue and how the
[43:09] government is going to spend
[43:11] SPEAKER_00: and contain things like corruptions,
[43:13] SPEAKER_00: et cetera,
[43:13] SPEAKER_00: et cetera.
[43:14] SPEAKER_00: Now, that is a big dependency on the environment that we operate in.
[43:19] SPEAKER_00: It's a big dependency on how the government gets funding.
[43:23] SPEAKER_00: And if it doesn't go well,
[43:25] then this environment that we're speaking about could
[43:27] significantly change.
[43:29] I want to switch a bit now to you as a person in terms of 2024
[43:32] and how it was for you.
[43:33] Are there books that you read that were interesting that you
[43:36] want to share with our listeners?
[43:38] SPEAKER_01: And then also reflecting at least for 2024 for you,
[43:41] any lessons or reflections you had in terms of you growing a
[43:45] CFO and also advice
[43:47] SPEAKER_01: some of the young professionals who want to be CFO of a bank like you.
[43:52] And then I'll ask you one more question later about what really
[43:54] worries you as a CEP almost.
[43:56] SPEAKER_01: All right, this keeps you awake at night.
[43:58] SPEAKER_01: So let's start with you as a person.
[44:00] Any books you read,
[44:01] any reflections you had,
[44:02] and any lessons that you earned in 2024?
[44:05] I think one is when I got expanded roles in sustainability and
[44:11] also expanded roles
[44:12] SPEAKER_00: in strategy and transformation,
[44:14] SPEAKER_00: I knew I had to start upskilling myself in this area.
[44:18] SPEAKER_00: So for sustainability,
[44:20] I went for a course last year in the School of Economics just
[44:24] to sharpen my skills
[44:26] SPEAKER_00: in that area,
[44:27] get to learn from economies that have really advanced this
[44:30] agenda and really diving
[44:33] SPEAKER_00: into the details of sustainability.
[44:35] SPEAKER_00: I put a big tick on that one, a good space at this point in time.
[44:39] And then on the bit of strategy,
[44:42] strategy formulation is not the big issue.
[44:44] SPEAKER_00: The big issue is always on execution.
[44:47] SPEAKER_00: If you pick the strategy of ABSA and pick any other bank out there,
[44:51] SPEAKER_00: you bring them together,
[44:52] SPEAKER_00: you'll find common things.
[44:54] SPEAKER_00: All the banks right now are talking about automation.
[44:56] SPEAKER_00: All the banks are talking about digitizing the customer journey.
[45:00] SPEAKER_00: All the banks are talking about partnerships.
[45:02] You could actually bring it together and you don't know which
[45:05] strategies for which bank.
[45:07] SPEAKER_00: simply because they're quite thematic and it's obvious.
[45:10] SPEAKER_00: The big issue there is execution.
[45:12] And through that,
[45:13] again,
[45:14] I picked quite a number of learnings,
[45:16] some courses.
[45:17] SPEAKER_00: I read that book on execution, the discipline of getting things done.
[45:20] SPEAKER_00: This is by Jack Welch.
[45:22] And just to try and see the experiences people have gone in
[45:26] terms of strategy execution.
[45:28] SPEAKER_00: And that really helped me.
[45:29] SPEAKER_00: I'm reading quite a number of books,
[45:31] SPEAKER_00: journals,
[45:32] SPEAKER_00: McKinsey reports,
[45:34] just to make sure that then I'm putting myself up there in
[45:37] terms of looking at the future,
[45:40] SPEAKER_00: not just the now,
[45:41] SPEAKER_00: but how does the banking industry rewire itself in the future?
[45:46] What are the trends that we expect to come 10 years from now
[45:50] and really for us to
[45:51] SPEAKER_00: be able to prep ourselves and lead the bank direction?
[45:54] I'm really impressed to keep yourself up to date in terms of
[45:57] information and you keep reading.
[45:59] What inspires you to keep reading that way and to keep growing
[46:02] as a professional?
[46:02] SPEAKER_01: You could just as well say, hey, I'm arrived.
[46:04] SPEAKER_01: I don't want to read anymore.
[46:06] SPEAKER_01: I've read enough.
[46:07] SPEAKER_01: What keeps you hungry for more information and more growth?
[46:09] And then what's one of your biggest lessons you can share for
[46:12] the younger people
[46:13] SPEAKER_01: who want to become a CEO at some point?
[46:17] SPEAKER_00: I think what inspires me is the responsibility that has been put to us.
[46:21] SPEAKER_00: We are in the leadership space.
[46:23] SPEAKER_00: We are leading a bank.
[46:25] SPEAKER_00: We look at employees.
[46:26] SPEAKER_00: In total, it's over 3,000 employees.
[46:29] SPEAKER_00: And they're looking for leadership.
[46:30] They're looking at you to make the right call,
[46:33] to make the right decisions.
[46:35] Today,
[46:35] when we stood in front of the different stakeholders to release
[46:39] our results,
[46:40] aside by saying I'm privileged to stand in front here and
[46:43] release these good
[46:45] SPEAKER_00: results on behalf of the 3,000 employees who are not in that room,
[46:49] SPEAKER_00: but they've given us this responsibility.
[46:51] SPEAKER_00: So with that then,
[46:53] that puts back a burden to us to make sure that for us to make
[46:56] the right call,
[46:57] SPEAKER_00: to make the right decision,
[46:58] SPEAKER_00: Then we must expand our knowledge.
[47:00] SPEAKER_00: We must collaborate with the right partners.
[47:03] SPEAKER_00: We must consult.
[47:05] SPEAKER_00: And through that, then, of course, you have to sharpen your skills.
[47:07] The element of continuous learning,
[47:10] reading books,
[47:10] getting the latest trend is up there.
[47:13] SPEAKER_00: When we finished releasing the results, we were at Radisson today.
[47:16] SPEAKER_00: I was driving, I was going to the office.
[47:18] SPEAKER_00: I reached Hurlingham and I entered our branch in Hurlingham.
[47:22] SPEAKER_00: start my car,
[47:23] SPEAKER_00: enter the branch,
[47:24] SPEAKER_00: and I wanted to enter the branch and leave within a very short time.
[47:29] SPEAKER_00: I was going to do an RCGS, two RCGSs.
[47:32] And when I entered the branch,
[47:34] right from the reception,
[47:36] the lady who was there knew me.
[47:37] SPEAKER_00: She welcomed me, gave me a chair.
[47:40] SPEAKER_00: I said my placentories and wanted to do this RCGS and leave.
[47:44] And before I realized,
[47:46] I spoke to,
[47:46] I think,
[47:47] 20 of our employees in that branch.
[47:49] And this has really landed the point on the shoulder of
[47:52] responsibilities and people
[47:54] SPEAKER_00: looking forward to guidance is really an important role.
[47:57] SPEAKER_00: And you can only do this if you're always a step ahead.
[48:01] SPEAKER_00: I think lastly for me,
[48:02] SPEAKER_00: in terms of the journey of a CFO,
[48:04] SPEAKER_00: if you want to pursue this journey,
[48:06] SPEAKER_00: there's the basic skill that you must have.
[48:09] SPEAKER_00: Accountancy is a must.
[48:11] SPEAKER_00: There's no CFO.
[48:12] You can't be even allowed to become a CFO without the right qualifications.
[48:17] So there's a bare minimum having a degree,
[48:20] but then tied to that is a professional courses.
[48:22] SPEAKER_00: That could be the British system, the Kenya system, CPA or the ACCA.
[48:27] SPEAKER_00: So that qualification is quite important.
[48:30] SPEAKER_00: And then once you have that,
[48:31] SPEAKER_00: it's an issue of continuous improvement,
[48:34] SPEAKER_00: getting the right skills,
[48:35] SPEAKER_00: making sure that you're an all-rounder.
[48:38] SPEAKER_00: A CFO,
[48:39] SPEAKER_00: there's a traditional CFO who keeps the books,
[48:43] SPEAKER_00: makes sure that the ledgers,
[48:45] SPEAKER_00: the booking of transactions are done,
[48:47] SPEAKER_00: the necessary financial controls have been implemented,
[48:51] SPEAKER_00: et cetera,
[48:51] SPEAKER_00: et cetera.
[48:52] SPEAKER_00: That's the old traditional role of a CFO.
[48:54] SPEAKER_00: Today, a CFO role is really expanded.
[48:57] SPEAKER_00: You're seen as a deputy to the CEO.
[49:00] You're seen as an advisor to the business and skipping a step
[49:03] ahead from a strategy
[49:05] SPEAKER_00: point of view,
[49:06] SPEAKER_00: the trends in the industry.
[49:07] SPEAKER_00: You're seen as a strategist.
[49:09] SPEAKER_00: You're seen as someone who is transforming the business.
[49:13] SPEAKER_00: You're seen as someone who is driving productivity measures.
[49:17] SPEAKER_00: You're seen as an individual who deals with external stakeholders.
[49:22] SPEAKER_00: Today, we dealt with mainly our shareholders.
[49:25] Before this,
[49:26] I was dealing with our regulator,
[49:27] engaging them on these financials.
[49:30] SPEAKER_00: Before that,
[49:30] SPEAKER_00: I was dealing with our board,
[49:32] SPEAKER_00: taking them through these financials,
[49:35] SPEAKER_00: of course,
[49:35] SPEAKER_00: talking to them in a different forum on our strategy.
[49:38] SPEAKER_00: So you become a center,
[49:40] the heart of the organization where you need to have certain
[49:43] skills and not the
[49:45] SPEAKER_00: traditional competency kind of skills.
[49:47] SPEAKER_00: My advice to anyone who wants to join that,
[49:49] SPEAKER_00: it's the bare minimum,
[49:50] SPEAKER_00: which is what I've mentioned in terms of education,
[49:53] SPEAKER_00: qualifications.
[49:54] SPEAKER_00: But then after that,
[49:55] SPEAKER_00: you really now start expanding your knowledge to many other topics,
[49:59] SPEAKER_00: not just the traditional content in the middle.
[50:01] Maybe you can give you a chance to give us your closing
[50:03] thoughts and then we'll see
[50:05] SPEAKER_01: you again soon for another update.
[50:07] SPEAKER_00: Thanks for this opportunity.
[50:09] Always glad to share the experiences,
[50:12] share more insights on our financials.
[50:15] Tomorrow we wake up in the morning,
[50:16] we share the same resource with our 3,000 plus employees.
[50:20] SPEAKER_00: And in there, of course, we now move very forward.
[50:23] SPEAKER_00: This is historical news.
[50:25] SPEAKER_00: We now go forward to what we need to do in 2025.
[50:30] I think my closing remarks here really is whenever you achieve
[50:35] certain targets,
[50:36] SPEAKER_00: you achieve certain levels of performance.
[50:39] SPEAKER_00: Unfortunately, that becomes your benchmark for the future.
[50:42] SPEAKER_00: With these results, a 28% growth in earnings.
[50:45] SPEAKER_00: And guess what?
[50:46] SPEAKER_00: That's a benchmark for us.
[50:47] SPEAKER_00: And that's the message that will be passing to the team tomorrow.
[50:49] SPEAKER_00: And just emphasizing that bit of continuous improvement.
[50:53] SPEAKER_00: You challenge yourselves.
[50:54] SPEAKER_00: At the beginning of last year,
[50:56] we cannot believe we'll be able to do this 28% growth that
[50:58] we've reported.
[50:59] SPEAKER_00: Now we are at the beginning of another period.
[51:01] SPEAKER_00: And now we are saying,
[51:02] how much can we be able to improve over and above the benchmark
[51:05] that we've set?
[51:07] SPEAKER_00: And really,
[51:08] that is a mantra in life where you go out on a daily basis and
[51:12] you're asking yourself,
[51:13] SPEAKER_00: how can I be better than me yesterday?
[51:16] SPEAKER_00: How can I be better than me today when I wake up tomorrow?
[51:19] SPEAKER_00: And that's the element of continuous improvement.
[51:22] SPEAKER_00: If you don't do that, then you're dead.
[51:24] SPEAKER_00: Then you're obsolete.
[51:25] SPEAKER_00: You're no longer relevant to the economy.
[51:27] SPEAKER_00: And this cuts across on everything.
[51:29] If you look at sport,
[51:30] if you're watching Premier League,
[51:32] how do they improve continuously?
[51:34] SPEAKER_00: You win a trophy,
[51:35] SPEAKER_00: you celebrate,
[51:36] SPEAKER_00: put that behind you,
[51:37] SPEAKER_00: a new season comes,
[51:39] SPEAKER_00: and the teams are improving,
[51:40] SPEAKER_00: they're investing,
[51:41] SPEAKER_00: you can't stand still.
[51:43] SPEAKER_00: And that's the same example that I would use,
[51:45] SPEAKER_00: even from a personal perspective,
[51:46] SPEAKER_00: that the element of continuous improvement is quite important.
[51:50] SPEAKER_01: A quick one,
[51:50] I want to squeeze in from a friend of mine who's asking whether
[51:53] they proposed CBK
[51:55] SPEAKER_01: law on annual licensing fees.
[51:57] SPEAKER_01: That's changed gross annual revenue, how that impacts banks.
[52:01] Is it significant or is that something not so significant from
[52:03] your perspective?
[52:05] SPEAKER_00: To be honest, we are still working on this to see the impact on that.
[52:09] I think I'll tackle that together with also the proposals that
[52:12] are coming from CBK
[52:14] SPEAKER_00: on benchmark rates.
[52:17] SPEAKER_00: I think that has been very topical as well.
[52:19] SPEAKER_00: So it's things that are still under discussion.
[52:21] SPEAKER_00: I must give credit to the regulator.
[52:24] SPEAKER_00: There's a lot of consultations before executing.
[52:26] And also for this on the licensing,
[52:28] it's also a matter of consultation as well.
[52:30] SPEAKER_01: And buybacks, is that something you've ever discussed?
[52:33] SPEAKER_00: buyback on the shares?
[52:35] SPEAKER_00: Not yet.
[52:36] SPEAKER_00: Not yet.
[52:37] SPEAKER_00: I think we are looking at other investments.
[52:39] SPEAKER_00: The digital one that we're talking about,
[52:41] SPEAKER_00: those are investments,
[52:42] SPEAKER_00: but buyback is not one that we've discussed.
[52:45] SPEAKER_00: But again, as mentioned, watch this piece.
[52:48] SPEAKER_00: Someone asked me today whether M&A is in play,
[52:51] SPEAKER_00: and I just said,
[52:52] SPEAKER_00: show me the bank,
[52:53] SPEAKER_00: show me the business.
[52:54] If it's going to lead to an increase in ROEs,
[52:57] then it will definitely be considered.
[53:00] SPEAKER_01: I'll be on the lookout.
[53:01] If I see something,
[53:01] I'll definitely knock and then let you know here is something
[53:04] for you.
[53:05] We must thank you for taking your time to come and dissect for
[53:07] perhaps Bank Kenya FY24 results.
[53:11] SPEAKER_01: Really much appreciated.
[53:12] SPEAKER_01: As you said, you set for yourself a higher benchmark.
[53:14] SPEAKER_01: From here, investors will be disappointed if you decline even slightly.
[53:18] SPEAKER_01: And you know the kind of punishment that comes in terms of share price.
[53:21] So I bet you're rolling up your sleeves and getting to work for
[53:24] 2025 results.
[53:26] SPEAKER_01: And I can only but wish you well.
[53:28] SPEAKER_01: For the audience,
[53:28] also thank you for taking an hour of your time to come and
[53:31] listen to the results.
[53:32] SPEAKER_01: An appreciation to the sponsors of the space is also Absa Bank Kenya.
[53:36] SPEAKER_01: Very nice that we could partner with you on this.
[53:38] SPEAKER_01: Hope to do more with you.
[53:40] SPEAKER_01: For all of you, thank you also for following us on Mwango Capital.
[53:43] SPEAKER_01: We've now reached around 150,000 plus followers.
[53:46] SPEAKER_01: It's not a small feat.
[53:48] We take that with a heavy responsibility to measure you
[53:50] informed in whatever is
[53:51] SPEAKER_01: happening in markets.
[53:52] SPEAKER_01: Thank you for today.
[53:53] SPEAKER_01: See you again soon.
[53:54] SPEAKER_01: Yusuf, you can say goodbye.
[53:56] SPEAKER_01: Thank you.
[53:56] SPEAKER_01: Thank you so much.
[53:57] SPEAKER_01: Happy evening to everyone.

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